UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report August 23, 1997
(Date of earliest event reported)
GENERAL SIGNAL CORPORATION
(exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation)
1-996 16-0445660
(Commission File Number) (IRS Employer
Identification
Number)
P.O. Box 10010
HIGH RIDGE PARK, STAMFORD, CONNECTICUT 06904
(Address of principal executive offices) (Zip Code)
(203) 329-4100
(Registrant's telephone number, including area code)
Item 2. Acquisition or Disposition of Assets.
(a) On August 23, 1997, General Signal Corporation (the
"Company"), together with its wholly owned subsidiaries, General
Signal Limited, a Canadian corporation, Aurora/Hydromatic Pumps
Inc., a Delaware corporation and Fairbanks Morse Pump
Corporation, a Kansas corporation (collectively, "Sellers"),
completed the sale to Pentair Pump Group, Inc. ("Buyer"), a
Minnesota corporation and a wholly owned subsidiary of Pentair,
Inc., a Minnesota corporation ("Pentair"), of the General Signal
Pump Group on the terms of a Purchase Agreement dated as of July
18, 1997 by and among Sellers and Pentair, a copy of which is
filed herewith as Exhibit 2.1 and incorporated herein by this
reference. The sales price was approximately $200 million,
subject to final balance sheet adjustments, including payments
under lease agreements relating to certain facilities owned by
Sellers. The consideration paid in the sale was determined
through arms-length negotiations between the Company and Pentair.
(b) Not applicable.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) The pro forma financial information furnished herein
reflects the disposition of the General Signal Pump Group on the
Company's consolidated financial statements.
Page Number
Unaudited Pro Forma Consolidated Balance
Sheet at June 30, 1997 F-2
Unaudited Pro Forma Consolidated Statement of
Earnings for the Six Month Period Ended June 30, 1997 F-4
Unaudited Pro Forma Consolidated Statement of
Earnings for the Year Ended December 31, 1996 F-5
(c) The exhibits furnished in connection with this Report
are as follows:
Exhibit
Number Description
2.1 Purchase Agreement dated as of July 18, 1997 among
General Signal Corporation, General Signal Limited,
Aurora/Hydromatic Pumps Inc., Fairbanks Morse Pump
Corporation and Pentair, Inc.
99.1 Press Release dated July 21, 1997.
99.2 Press Release dated August 25, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
GENERAL SIGNAL CORPORATION
(Registrant)
Date: September 8, 1997 By: /s/ Raymond L. Arthur
Raymond L. Arthur
Vice President and Controller
GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Pro Forma Consolidated Financial Data
The following unaudited pro forma consolidated statements of
earnings of General Signal Corporation for the six month period
ended June 30, 1997 and for the year ended December 31, 1996
present the results of the company as if its sale of the General
Signal Pump Group had occurred as of January 1, 1997 and January
1, 1996, respectively. The accompanying unaudited pro forma
consolidated balance sheet as of June 30, 1997 gives effect to
the sale as if it had occurred on June 30, 1997.
The pro forma data do not purport to represent what the company's
financial position or results of operations actually would have
been had the sale in fact occurred on the dates indicated, or to
project the company's financial position or results of operations
for any future date or period. The pro forma adjustments are
based on available information and certain assumptions that the
company currently believes are reasonable in the circumstances.
Further, the pro forma adjustments related to the pro forma
consolidated statements of earnings do not give effect to any
nonrecurring/unusual restructuring charges resulting from the
sale. The unaudited pro forma condensed consolidated financial
information should be read in conjunction with the accompanying
notes thereto, the separate historical financial statements of
the company as of and for the six month period ended June 30,
1997 which are contained in the company's quarterly report on
Form 10-Q filed for the second quarter and six month period ended
June 30, 1997, and the separate historical financial statements
of the company as of and for the year ended December 31, 1996
which are contained in the company's annual report on Form 10-K
for the year ended December 31, 1996.
The pro forma adjustments and the pro forma amounts are provided
for informational purposes only, and the company's financial
statements will reflect the effects of the sale from August 23,
1997, the effective date of such sale.
GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Pro Forma Consolidated Balance Sheet
(In millions)
(Unaudited)
June 30, 1997
Pro Forma As
Historical Adjustments Adjusted
Assets
Current assets:
Cash and cash equivalents $ 24.3 $ 58.2 (a) $ 82.5
Accounts receivable, net 362.4 (37.1) (b) 325.3
Inventories, net 242.6 (29.0) (c) 213.6
Prepaid expenses and other
current assets 22.4 0.9 (d) 23.3
Deferred income taxes 51.6 2.1 (e) 53.7
-------- --------
Total current assets 703.3 698.4
-------- --------
Property, plant and equipment, net of
accumulated depreciation and
amortization 305.8 (31.7) (f) 274.1
Intangibles, net of accumulated
amortization 366.5 (64.7) (g) 301.8
Other assets 174.3 14.4 (h) 188.7
-------- --------
Total assets $1,549.9 $ 1,463.0
========= ==========
Liabilities and Shareholders' equity
Current liabilities:
Short-term borrowings and current
maturities of long-term debt $ 9.1 $ 9.1
Accounts payable 180.9 (15.3) (i) 165.6
Accrued expenses 193.3 7.3 (j) 200.6
Income taxes 28.0 51.6 (k) 79.6
-------- -------
Total current liabilities 411.3 454.9
-------- -------
Long-term debt, less current
maturities 243.2 (140.1) (l) 103.1
Accrued post-retirement and post-
employment obligations 128.1 (2.6) (m) 125.5
Deferred income taxes 28.1 (1.2) (n) 26.9
Other liabilities 16.8 (1.9) (o) 14.9
-------- --------
Total long-term liabilities 416.2 270.4
-------- --------
Shareholders' equity:
Common stock 78.4 78.4
Additional paid-in capital 360.8 360.8
Retained earnings 700.2 15.3 (p) 715.5
Cumulative translation adjustments (5.5) (5.5)
Common stock in treasury (411.5) (411.5)
--------- ---------
Total shareholders' equity 722.4 737.7
--------- ---------
Total liabilities and shareholders'
equity $1,549.9 $1,463.0
========= ==========
See accompanying notes to the June 30, 1997 unaudited pro forma consolidated
balance sheet.
Notes to the June 30, 1997 Unaudited Pro Forma Consolidated
Balance Sheet
The following are explanations of the adjustments reflected on
the unaudited pro forma consolidated balance sheet (dollars in millions):
(a) Amount of cash proceeds set aside to pay income taxes,
severance costs and related transaction costs.
(b) Reflects pro forma adjustment to record sale of accounts
receivable.
(c) Reflects pro forma adjustment to record sale of inventory.
(d) Reflects pro forma adjustments to record sale of prepaid
expenses ($0.2) and to record current portion of lease receivable
related to the land and building ($1.1).
(e) Reflects pro forma adjustments to record deferred tax assets
for reserves established at date of sale ($3.6) and to transfer
recorded deferred tax assets to income taxes payable ($1.5).
(f) Reflects pro forma adjustments of property, plant and
equipment sold ($20.7), record the buildings and land as a
capital lease ($9.3) and write off impaired retained assets
($1.7).
(g) Reflects pro forma adjustment to record sale of intangibles.
(h) Reflects pro forma adjustments to record sale of other
assets ($0.3), write off deferred professional fees ($0.9) and to
record long term lease receivable on the lease of the land and
buildings ($15.6).
(i) Reflects pro forma adjustments to record the assumption of
accounts payable by the Buyer.
(j) Reflects pro forma adjustments to record the assumption of
accrued expenses by the Buyer ($8.3), and to set up accruals for
severance, transaction costs and other contingencies ($15.6).
(k) Reflects pro forma adjustments to record income tax payable
on the gain ($49.9) and to transfer recorded deferred tax assets
and liabilities to income taxes payable ($1.7).
(l) Reflects pro forma adjustments to record retirement of long-
term debt with net proceeds ($140.0) and to record the assumption
of long term debt by the Buyer ($0.1). On June 19, 1997, the
Board of Directors approved a stock buy-back program of up to
$150.0 subject to the consummation of the General Signal Pump
business divestiture which is not reflected in the accompanying
pro forma consolidated balance sheet.
(m) Reflects pro forma adjustment to record curtailment gain on
other post employment benefits.
(n) Reflects pro forma adjustments to record deferred tax
liability on land and building lease ($2.0) and to transfer
recorded deferred tax liability to income taxes payable ($3.2).
(o) Reflects pro forma adjustment to record curtailment gain on
pension plan.
(p) Reflects pro forma adjustment to record after tax gain on
sale of business.
GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Pro Forma Consolidated Statement of Earnings
For the Six Month Period Ended June 30, 1997
(In millions, except per share data)
(Unaudited)
June 30, 1997
Pro Forma As
Historical Adjustments Adjusted
Net sales $1,045.2 $(104.3) (a) $ 940.9
--------- --------
Cost of sales 733.2 (83.1) (a) 650.1
Selling, general and administrative
expenses 206.1 (12.4) (a) 193.7
-------- -------
939.3 843.8
------- -------
Operating earnings 105.9 97.1
Interest expense, net 8.0 (4.3) (b) 3.7
------- -------
Earnings before income taxes 97.9 93.4
Income taxes 39.2 (1.8) (c) 37.4
------- -------
Net earnings $58.7 $56.0
======== =======
Net earnings per share $1.15 $1.09
======== =======
Average shares outstanding 51.2 51.2
======== =======
Notes to the June 30, 1997 Unaudited Pro Forma Consolidated Statement of
Earnings
The following are explanations of the adjustments reflected on the unaudited
pro forma consolidated statement of earnings:
(a) Reflects pro forma adjustment to remove results of operations of the
General Signal Pump Group for the six months ended June 30, 1997. These
amounts exclude $1.4 of corporate allocations for services incurred on
behalf of the General Signal Pump Group during the period which may not be
incurred in the future.
(b) Reflects pro forma adjustments to record lower interest expense from
the retirement of long-term debt ($3.9) and interest income on the capital
lease for the land and buildings ($0.4). On June 19, 1997, the Board of
Directors approved a stock buy-back program of up to $150.0 subject to the
consummation of the General Signal Pump business divestiture, which is not
reflected in the accompanying pro forma consolidated statement of earnings.
(c) Reflects pro forma adjustment to record the income tax effect of the
pro forma adjustments described in (a) and (b) above.
GENERAL SIGNAL CORPORATION AND CONSOLIDATED SUBSIDIARIES
Pro Forma Consolidated Statement of Earnings
For the year ended December 31, 1996
(In millions, except per share data)
(Unaudited)
December 31, 1996
Pro Forma As
Historical Adjustments Adjusted
Net sales $2,065.0 $(200.7) (a) $1,864.3
-------- ---------
Cost of sales 1,435.7 (153.4) (a) 1,282.3
Selling, general and administrative
expenses 406.2 (26.4) (a) 379.8
Gain on disposition (20.8) (20.8)
-------- ---------
1,821.1 1,641.3
-------- ---------
Operating earnings 243.9 223.0
Interest expense, net 21.5 (8.5) (b) 13.0
-------- ---------
Earnings before income taxes 222.4 210.0
Income taxes 89.0 (5.0) (c) 84.0
-------- ---------
Net earnings $133.4 $126.0
======== =========
Net earnings per share $2.68 $2.54
======== =========
Average shares outstanding 49.7 49.7
======== ===========
Notes to the December 31, 1996 Unaudited Pro Forma Consolidated Statement
of Earnings
The following are explanations of the adjustments reflected on the unaudited
pro forma consolidated statement of earnings:
(a) Reflects pro forma adjustment to remove results of operations of the
General Signal Pump Group for the year ended December 31, 1996. These
amounts exclude $2.3 of corporate allocations for services incurred on
behalf of the General Signal Pump Group during the period which may not be
incurred in the future.
(b) Reflects pro forma adjustments to record lower interest expense from
the retirement of long-term debt ($7.6) and interest income on the capital
lease for the land and buildings ($0.9). On June 19, 1997, the Board of
Directors approved a stock buy-back program of up to $150.0 subject to the
consummation of the General Signal Pump business divestiture, which is not
reflected in the accompanying pro forma consolidated statement of earnings.
(c) Reflects pro forma adjustment to record the income tax effect of the
pro forma adjustments described in (a) and (b) above.
EXHIBIT 2.1
PURCHASE AGREEMENT
by and among
GENERAL SIGNAL CORPORATION
GENERAL SIGNAL LIMITED
AURORA/HYDROMATIC PUMPS INC.
FAIRBANKS MORSE PUMP CORPORATION
and
PENTAIR, INC.
REGARDING THE PURCHASE AND SALE OF
GENERAL SIGNAL PUMP GROUP
Dated as of July 18, 1997
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS 1
1.1. Sale and Transfer of Assets 1
1.2. Retained Assets 2
2. LIABILITIES 4
2.1. Assumption of Liabilities 4
2.2. Excluded Liabilities 4
3. PURCHASE PRICE 5
3.1. Purchase Price 5
3.2. Purchase Price Adjustment 5
4. CLOSING 7
4.1. Closing 7
4.2. Deliveries by Sellers 8
4.3. Deliveries by Buyer 9
5. REPRESENTATIONS AND WARRANTIES OF SELLERS 10
5.1. Organization and Existence 10
5.2. Authorization, Execution and Validity 10
5.3. Conflicts; Defaults 10
5.4. India JVs 11
5.5. Financial Statements 12
5.6. No Undisclosed or Contingent Liabilities 13
5.7. Absence of Certain Changes 13
5.8. Owned Equipment 14
5.9. Leases 14
5.10. Owned Real Property 14
5.11. Condition of Property 14
5.12. Intellectual Property 15
5.13. Contracts 16
5.14. Suppliers, Distributors and Customers 17
5.15. Litigation 17
5.16. Environmental Laws 18
5.17. Compliance with Other Laws 18
5.18. Employees 19
5.19. Employee Benefits 20
5.20. Taxes 22
5.21. Insurance 24
5.22 Transactions with Related Parties 24
5.23. Sufficiency of Assets 24
5.24. Brokers 25
6. REPRESENTATIONS AND WARRANTIES OF BUYER 25
6.1. Organization and Existence 25
6.2. Authorization, Execution and Validity 25
6.3. Conflicts; Defaults 25
6.4. Litigation 26
6.5. Sufficient Funds 26
6.6. Brokers 26
7. CERTAIN COVENANTS AND AGREEMENTS 27
7.1. Information and Access 27
7.2. Conduct of Business Pending Closing 27
7.3. Assignment of Confidentiality Agreements 29
7.4. No Solicitation 30
7.5. Consents; Non-Transferability 30
7.6. Governmental Filings 31
7.7. Trademarks, Etc. 32
7.8. Covenant Not-to-Compete 32
7.9. Release from Guarantees 34
7.10 Further Assurances 34
7.11. Intercompany Obligations 34
7.12. Supplements to Schedules 34
7.13. Cooperation 35
7.14. India JVs 35
7.15. Cancellation of Procurement Cards 36
7.16. Cooperation with Actions 36
8. CONDITIONS PRECEDENT TO CLOSING 37
8.1. Conditions Precedent to Sellers' Obligations 37
8.2. Conditions Precedent To Buyer's Obligations 38
8.3. If Conditions Not Satisfied 39
9. EMPLOYEE MATTERS 39
9.1. Nonbargaining Employees 39
9.2. Bargaining Employees 40
9.3. Employee Benefit Plans Generally 41
9.4. Pension Plans 42
9.5. Savings Plans 43
9.6. Welfare and Fringe Benefits Generally 44
10. TAXES 45
10.1. Allocation of Certain Taxes 45
10.2. Information to be Provided by Buyer 46
10.3. Cooperation 46
10.4. Books and Records 46
10.5. Confidentiality 47
10.6. Allocation of Purchase Price 47
11. TERMINATION OF AGREEMENT 48
11.1. Termination 48
11.2. Effect of Termination 48
12. SURVIVAL AND INDEMNIFICATION 49
12.1. Survival 49
12.2. Indemnification by GSC 49
12.3. Indemnification by Buyer 50
12.4. Notice and Resolution of Claims 50
12.5. Limits on Indemnification 51
12.6. Environmental Matters 53
12.7. Payment and Assignment of Claims 55
13. DEFINITIONS; INTERPRETATION 56
13.1. Definitions 56
13.2. Certain Interpretive Matters and Limitations 66
14. MISCELLANEOUS 67
14.1. Assignability and Binding Effect 67
14.2. Modification and Waivers 67
14.3. Notices 68
14.4. Section and Other Headings 69
14.5. Governing Law and Consent to Jurisdiction 69
14.6. Bulk Sales 69
14.7. Public Announcements 69
14.8. Expenses 69
14.9. Parties in Interest; No Third Party Beneficiaries 69
14.10. Return of Information 69
14.11. Counterparts 70
14.12. Arbitration of Disputes 70
14.13. Entire Agreement 71
Exhibits
Exhibit A Form of Bill of Sale and Assignment
Exhibit B Form of Intellectual Property Assignment
Exhibit C Form of Real Property Site Lease
Exhibit D Form of Transition Services Agreement
Exhibit E Form of Assumption Agreement
Schedules
Schedule 1.1.1 Certain Bank Accounts
Schedule 1.2.9 Seller Guarantees
Schedule 1.2.14 Certain Retained Assets
Schedule 2.2.4 Excluded Litigation
Schedule 3.2.1 Closing Net Equity Statement Adjustments
and Methodology
Schedule 5.3 Certain Conflicts and Consents of
Sellers
Schedule 5.5 Financial Statements
Schedule 5.6 Certain Liabilities
Schedule 5.7 Certain Changes
Schedule 5.8 Exceptions to Personal Property Title
Schedule 5.9 Leases
Schedule 5.10 Owned Real Property
Schedule 5.12.1 Intellectual Property
Schedule 5.12.2 Intellectual Property Licenses
Schedule 5.12.5 Certain Invention Obligations
Schedule 5.13 Material Contracts
Schedule 5.14.1 Certain Suppliers
Schedule 5.14.2 Certain Customers
Schedule 5.15 Litigation
Schedule 5.16.1 Compliance with Environmental Laws
Schedule 5.16.2 Environmental Permits
Schedule 5.16.3 Environmental Litigation
Schedule 5.16.4 Hazardous Substances
Schedule 5.17 Compliance with Other Laws
Schedule 5.18.2 Collective Bargaining Agreements
Schedule 5.18.3 Labor Practices
Schedule 5.19.1 Employee Benefit Plans
Schedule 5.19.3 Employee Benefit Plan Funding
Schedule 5.19.4 Multiemployer Plans
Schedule 5.19.5 Acceleration of Benefits
Schedule 5.19.6 Certain Additional Benefits
Schedule 5.20 Taxes
Schedule 5.21 Insurance
Schedule 6.3 Certain Conflicts and Consents of Buyer
Schedule 7.9 Certain Guarantees and Other Instruments
Schedule 10.6 Purchase Price Allocation
Schedule 13.2 Sellers' Knowledge
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is made and
entered into as of July 18, 1997 by and among General Signal
Corporation, a New York corporation ("GSC"), General Signal
Limited, a Canadian corporation ("GS Limited"), Aurora/Hydromatic
Pumps Inc., a Delaware corporation ("Aurora/ Hydromatic"),
Fairbanks Morse Pump Corporation, a Kansas corporation
("Fairbanks Morse") (the foregoing being collectively referred to
herein as "Sellers"), and Pentair, Inc., a Minnesota corporation
("Buyer"). Unless otherwise defined herein, terms the first
letter of which are capitalized shall have the meanings ascribed
to them in Article 13.
WHEREAS, Sellers desire to sell and assign to Buyer and
Buyer desires to purchase and assume from Sellers substantially
all the assets and liabilities of the Pump Group, as a going
concern, as more particularly described herein;
NOW, THEREFORE, Sellers and Buyer intending to be legally
bound, hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1. Sale and Transfer of Assets. On the terms and subject
to the conditions of this Agreement, each of Sellers shall sell
and assign to Buyer all of its respective right, title and
interest in and to all of the property and assets, real, personal
or mixed, tangible and intangible, of every kind and description,
wherever located (the "Assets") which are owned by Sellers or any
of them at the close of business on the Closing Date and which
are used in or relate primarily to the business of the Aurora
Pump division of GSC or the Aurora/Hydromatic division of GS
Limited (collectively, the "Divisions") or of Aurora/Hydromatic
or Fairbanks Morse (collectively, the "Subsidiaries" and,
together with the Divisions, the "Pump Group"), other than the
Retained Assets, including without limitation the following:
1.1.1. The bank accounts listed in Schedule 1.1.1.
1.2. Retained Assets. Notwithstanding anything contained
herein to the contrary, the following (collectively, "Retained
Assets") are not part of the sale and purchase contemplated by
this Agreement, are excluded from the Assets being conveyed
hereunder and shall remain the properties and rights of the
Sellers:
1.2.1. The name "General Signal", the letters "GS", or the
"GS design" trademark, or derivatives thereof and all related trade
names and trademarks, service marks and copyrights (collectively,
the "Marks").
1.2.2. Any and all insurance claims and rights under all
current and past insurance policies and contracts of Sellers and
proceeds thereof.
1.2.3. All tax records and litigation files related to any
of the Retained Assets or Excluded Liabilities.
1.2.4. All rights and interests under or pursuant to all
warranties and guarantees of or made by suppliers of the Pump
Group in connection with any of the Retained Assets or Excluded
Liabilities.
1.2.5. Any and all claims (including counterclaims, cross
claims and other claims in the nature of indemnification or
contribution), rights, refunds and causes of action against third
parties relating to or arising out of any of the Retained Assets
or Excluded Liabilities.
1.2.6. All prepaid and similar items, including without
limitation all prepaid expenses, deferred charges, deposits,
rebates and advance payments made or incurred in respect of any
of the Retained Assets or Excluded Liabilities.
1.2.7. Any prepaid expenses or other prepaid assets not
reflected on the Final Closing Net Equity Statement.
1.2.8. Any cash or cash equivalents, such as bank deposits
and marketable securities, except to the extent reflected as assets
in the Final Closing Net Equity Statement, bank accounts (other
than the bank accounts listed in Schedule 1.1.1), safe deposit
boxes and checking accounts of the Pump Group.
1.2.9. All rights and interests under any bank guarantees
and any other instruments and proceeds thereof of a Seller or any
Continuing Affiliate, as listed in Schedule 1.2.9 (collectively,
the "Seller Guarantees").
1.2.10. Assets of or rights under any Employee Benefit Plan
identified as a Retained Asset or Excluded Liability in Article 9.
1.2.11. Except as set forth in Article 10, any and all claims
of Sellers or any of the Continuing Affiliates or either of the
Subsidiaries for refunds, credits, carrybacks or carryforwards in
connection with any Taxes for tax periods ending on or prior to
the Closing Date and proceeds thereof.
1.2.12. The land and structures (a) used by the Aurora Pump
division of GSC at 800 Airport Road, North Aurora, Illinois (the
"Aurora Site"), (b) used by Aurora/Hydromatic at 1840 Baney Road,
Ashland, Ohio (the "Ashland Site"), and (c) used by Fairbanks
Morse at 3601 Fairbanks Avenue, Kansas City, Kansas ( the "Kansas
City Site") (collectively the "Real Property Sites"), including
all permanent improvements and non-trade fixtures (including any
above ground tanks with a capacity of more than 500 gallons
located on any Real Property Site at the Closing Date), but
excluding all furniture, trade fixtures and equipment located
thereon and non-permanent improvements thereto, which constitute
a part of the Assets.
1.2.13. Any and all information technology and equipment
owned or licensed by any Seller and all employees of Sellers located at
GSC's headquarters or at its North Wales data center who may
provide information technology services to the Pump Group,
including without limitation, one DEC 8200 Unix Computer.
1.2.14. The assets identified in Schedule 1.2.14.
1.2.15. The minute books, stock records, corporate seal and
capital stock of each Seller.
2. LIABILITIES
2.1. Assumption of Liabilities. Except as otherwise
provided in Section 2.2, Buyer shall assume, and agrees to pay,
perform or discharge all of the debts, liabilities, contracts,
commitments, engagements, licenses and other obligations,
accrued, absolute, contingent or otherwise, whatsoever, of
Sellers or any of them which relate to or arise out of the
business of the Pump Group as of the Closing Date, including
without limitation all Assumed Environmental Liabilities
(collectively, the "Assumed Liabilities").
2.2. Excluded Liabilities. Notwithstanding anything in
this Agreement to the contrary, Buyer shall not assume and shall
not be deemed to have assumed, any of the following (collectively
"Excluded Liabilities"), except to the extent that any such
liabilities or obligations are reflected on the Final Closing Net
Equity Statement:
2.2.1. Any liability or obligation relating to employee
matters to the extent retained by Sellers or any Continuing
Affiliate pursuant to Article 9.
2.2.2. Any liability or obligation of Sellers, the
Subsidiaries or the Divisions for Taxes as to which Sellers or
any of the Continuing Affiliates remains responsible pursuant to
Article 10.
2.2.3. Any liability or obligation for the payment of workers'
compensation claims and benefits to employees and former
employees of the Pump Group, to the extent arising out of any
event occurring prior to the Closing Date.
2.2.4. 50% of any liability or obligation arising under the
claim by Electrical and Mechanical Services (Israel) in a letter
dated June 12, 1997 up to the first $100,000 and thereafter any
liability or obligation therefor.
2.2.5. Any Excluded Environmental Liability.
2.2.6. Any liability or obligation arising under the policy
disclosed on Schedule 5.12.5.
2.2.7. Except as otherwise provided in Article 9, any
liability or obligation relating to (a) persons who were employees
of the Pump Group but who are not Active Employees on the Closing
Date or (b) the 9.1.1. Employees.
2.2.8. Any liability or obligation for Layne & Bowler Post
Retirement Benefits Other Than Pensions (FAS 106).
3. PURCHASE PRICE
3.1. Purchase Price. In consideration for the sale and
transfer of the Assets of the Pump Group, Buyer shall on the
Closing Date (a) assume the Assumed Liabilities and (b) deliver
or cause to be delivered, by wire transfer of immediately
available funds to a bank account or bank accounts designated by
GSC, on behalf of Sellers, in writing at least one business day
prior to the Closing, an amount equal to $190,500,000 (the
"Purchase Price"), subject to adjustment pursuant to Section 3.2.
3.2. Purchase Price Adjustment.
3.2.1. As soon as reasonably practicable, but not later than
60 calendar days after the Closing Date, GSC shall deliver to
Buyer (a) an audited Combined Statement of Net Equity of the Pump
Group as of the Closing Date ("Closing Net Equity Statement") and
(b) a calculation of Closing Date Net Equity based on the Closing
Net Equity Statement, setting forth in reasonable detail the
computation of any adjustment to the Purchase Price in accordance
with Section 3.2.4 and accompanied by a report of Ernst & Young
LLP in the form attached to Schedule 3.2.1. The Closing Net
Equity Statement shall be prepared using the same accounting
methods, policies , principles, practices and procedures, with
consistent classification, judgments and estimation methodology
as used in the preparation of the 12/31 Net Equity Statement,
subject to any adjustments and using any modifications to the
methodology set forth in Schedule 3.2.1 with respect to the
Closing Net Equity Statement. In connection with the audit of
the Closing Net Equity Statement, Ernst & Young LLP shall observe
a physical inventory of the Divisions and the Subsidiaries as of
the close of business on the Closing Date. Sellers shall cause
Ernst & Young LLP to permit Buyer and its auditors the
opportunity to observe the taking of such inventory.
3.2.2. In connection with the preparation of the Closing Net
Equity Statement, Buyer shall afford Sellers and Ernst & Young
LLP reasonable access to personnel, books, records and facilities
to permit the preparation of the Closing Net Equity Statement.
Buyer shall also cooperate with Sellers and Ernst & Young LLP to
seek to cause the persons who were financial officers and plant
controllers of the Pump Group immediately prior to the Closing to
sign and deliver to Ernst & Young LLP a standard representation
statement relating to the Closing Net Equity Statement. Buyer
and Sellers each shall make available to the other (upon the
request of the other) their respective work papers generated in
connection with the preparation or review of the Closing Net
Equity Statement.
3.2.3. Within 30 calendar days after receipt of the Closing
Net Equity Statement, Buyer shall either inform Sellers in
writing that the Closing Net Equity Statement is acceptable or
object to the Net Equity Statement in writing, setting forth a
specific description of each of its objections. If Buyer so
objects and the parties do not resolve such objections on a
mutually agreeable basis within 30 calendar days after Sellers'
receipt thereof, the disagreement shall be resolved within an
additional 60 calendar days by an Independent Firm. The decision
of the Independent Firm shall be final and binding upon the
parties. Upon the agreement of the parties or the decision of
the Independent Firm, or if Buyer fails to deliver an objection
to Seller within the first 30-day period referred to above, the
Net Equity Statement (as adjusted, if necessary) shall be deemed
the Final Net Equity Statement (the "Final Net Equity Statement")
and the Net Equity reflected in the Closing Net Equity Statement
calculated on the basis of such Final Net Equity Statement shall
be deemed final. Each party shall bear the fees, costs and
expenses of its own accountants and each of Buyer and Sellers
shall be responsible for one-half of the fees, costs and expenses
of the Independent Firm, if any. In resolving any disputed item,
the Independent Firm (a) shall be bound by the provisions of
Section 3.2.1 and (b) may not assign a value to any item greater
than the greatest value claims for such item by either Buyer or
Sellers or less than the smallest value for such item claimed by
either Buyer or Sellers.
3.2.4. Upon the determination of the Final Closing Net Equity
Statement and Net Equity in accordance with Section 3.2.3, the
Purchase Price shall be adjusted, up or down, as follows: (a) if
Net Equity is greater than $120,100,000, the amount of such
difference shall be paid by Buyer to Sellers and (b) if Net
Equity is less than $120,100,000, the amount of such difference
shall be paid by Sellers. Such payments, if any, shall be made
by wire transfer of immediately available funds within five
business days after the date that determination of Net Equity is
deemed final in accordance with Section 3.2.3, together with
interest thereon from the Closing Date to the date of payment,
calculated at the Specified Rate.
4. CLOSING
4.1. Closing. The closing of the purchase and sale of the
Shares and Assets (the "Closing") shall take place at 10:00 a.m.
Eastern time on the fifth business day after the satisfaction or
waiver of all of the conditions set forth in Article 8 (other
than those set forth in Sections 8.1.5 and 8.2.5), or at such
other time and place as the parties may agree (the "Closing
Date"). The Closing shall be deemed effective at 11:59 p.m.,
Eastern time on the last day of the fiscal month of the Pump
Group on or preceding the Closing Date.
4.2. Deliveries by Sellers. At the Closing, Sellers shall
deliver or cause to be delivered to Buyer the following:
4.2.1. Duly executed bills of sale and assignments with
respect to the Assets, in substantially the form of Exhibit A
hereto.
4.2.2. A duly executed instrument of assignment in recordable
form sufficient to transfer title in the Intellectual Property to
Buyer, in substantially the form of Exhibit B hereto and such
other duly executed individual instruments of assignment by
country in recordable form appropriate to transfer title in
Intellectual Property to Buyer in each foreign jurisdiction in
which such Intellectual Property is registered or in which an
application for registration is pending.
4.2.3. A certificate signed by an executive officer of GSC,
dated the Closing Date, certifying that (a) each of Sellers'
representations and warranties contained in this Agreement is
true and correct as of the Closing Date in all material respects
and (b) all the terms, covenants and conditions of this Agreement
to be complied with and performed by Sellers on or before the
Closing Date have been complied with and performed in all
material respects.
4.2.4. A lease and/or sublease for each of the Real Property
Sites substantially in the form of Exhibit C hereto.
4.2.5. The Transition Services Agreement in substantially the
form of Exhibit D hereto.
4.2.6. Consents and/or estoppel certificates regarding any
Material Leases received by Sellers on or before the Closing Date
and the consent to the assignment required pursuant to Section
8.2.6, in each case in form and substance reasonably satisfactory
to Buyer.
4.2.7. Such other documents, instruments and certificates as
Buyer may reasonably request prior to the Closing Date in order
to give effect to the transactions contemplated by this Agreement.
4.3. Deliveries by Buyer. At the Closing, Buyer shall
deliver or cause to be delivered to Sellers the following:
4.3.1. The payment of the Purchase Price in accordance with
Section 3.1.
4.3.2. Duly executed instruments of assumption, in
substantially the form of Exhibit E hereto.
4.3.3. A certificate signed by an executive officer of
Buyer,dated the Closing Date, certifying that (a) each of Buyer's
representations and warranties contained in this Agreement is
true and correct as of the Closing Date in all material respects
and (b) all the terms, covenants and conditions of this Agreement
to be complied with and performed by Buyer on or before the
Closing Date have been complied with and performed in all
material respects.
4.3.4. A lease and/or sublease for each of the Real Property
Sites substantially in the form of Exhibit C hereto.
4.3.5. The Transition Services Agreement in substantially the
form of Exhibit D hereto.
4.3.6. Such other documents, instruments and certificates as
Sellers may reasonably request prior to the Closing Date in order
to give effect to the transactions contemplated by this
Agreement.
5. REPRESENTATIONS AND WARRANTIES OF SELLERS
On behalf of itself and each of the other Sellers, GSC
represents and warrants to Buyer as follows:
5.1. Organization and Existence. Each Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Each
Seller has all requisite corporate authority to own, lease and
operate its properties and to carry on its business as now being
conducted. Each Seller is duly qualified or licensed and in good
standing in each jurisdiction in which the character or location
of the properties owned or leased by each of them or the nature
of the business conducted by each of them makes such
qualification or licensing necessary, except in such
jurisdictions in which applicable law does not provide for such
qualification, licensing or being in good standing and except in
such jurisdictions in which the failure to be so qualified or
licensed and in good standing would not, in the aggregate, have a
Material Adverse Effect.
5.2. Authorization, Execution and Validity. Each Seller has
the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby to be performed by it. The execution and
delivery by each Seller of this Agreement and the consummation by
each Seller of the respective transactions contemplated hereby to
be performed by it have been duly authorized by all requisite
corporate action. This Agreement has been duly executed and
delivered by each Seller and each instrument contemplated hereby
that is to be executed and delivered to Buyer by a Seller will
constitute, when executed and delivered to Buyer by each such
Seller, a valid and binding obligation of each such Seller,
enforceable against each such Seller in accordance with its
respective terms.
5.3. Conflicts; Defaults. Except as listed in Schedule 5.3
or as may relate to the India JVs or the India JV Agreements,
neither the execution and delivery of this Agreement by Sellers
nor the consummation by Sellers of the transactions contemplated
hereby will (a) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws of any
Seller, (b) without regard to the provisions of Section 7.5
hereof, result in a violation or breach of or constitute a
default (or would so constitute with notice or lapse of time) or
result in the acceleration of, create in any third party the
right to accelerate, terminate, modify or cancel or require any
notice under any note, bond, mortgage, indenture, agreement,
obligation or other instrument to which any Seller is a party or
by which any Seller or any of the Assets (other than the Retained
Assets) is bound, (c) violate any Order, statute, treaty, rule or
regulation of any Governmental Authority applicable to any Seller
or any of the Assets (other than the Retained Assets), except in
the case of (b) or (c), for violations, breaches or defaults
which would not, in the aggregate, constitute a Material Adverse
Effect and which would not prevent or delay the consummation by
any Seller of the transactions contemplated by this Agreement.
Except as set forth in Schedule 5.3 and for consents, approvals
or authorizations required under the HSR Act, and, if required,
the Investment Canada Act and any applicable laws of India, and
any filings and approval requirements under any applicable "bulk
sales" laws, no filing with, and no permit, authorization,
consent or approval by, any Governmental Authority is required in
connection with the execution and delivery by Sellers of this
Agreement or the consummation by Sellers of the transactions
contemplated hereby.
5.4. India JVs. (a) Fairbanks Morse is the holder of 4,500
equity shares of Rupees 100 per share (the "FM India Shares") of
the issued and outstanding stock of Fairbanks Morse India Limited
("FM India"), a company organized under the laws of India, the
transfer of which is subject to certain restrictions provided for
in the Memorandum and Articles of Association of Fairbanks Morse
India Limited and in a Stockholders/Heads of Agreement, a copy of
each of which has been previously made available to Buyer along
with a copy of an Agreement dated as of December 10, 1970,
between Flowmore Pvt. Ltd and Fairbanks Morse relating to FM
India (collectively, the "FM India Agreements").
(b) Aurora/Hydromatic is a party to a Shareholders Agreement
("Hydromatic India Shareholders Agreement"), dated as of November
26, 1991 relating to a joint venture to be formed under the laws
of India and to be called "Hydromatic Pumps (India) Private
Limited ("Hydromatic India"). Sellers have previously furnished
to Buyer a copy of the Hydromatic India Shareholders Agreement,
together with a copy of the Memorandum and Articles of
Association of Hydromatic India, an Arbitration Agreement, dated
as of November 26, 1991, a Trademark Agreement, dated as of
January 14, 1992, a Technical Collaboration Agreement, dated as
of January 14, 1992 and a Supplemental Agreement, dated as of
March 30, 1992 (collectively, the "Hydromatic India Agreements").
(c) Notwithstanding any other provision of this Agreement
to the contrary, except as set forth in this Section 5.4, no
Seller makes any representation or warranty concerning FM India
or Hydromatic India (collectively, the "India JVs"), the FM India
Agreements or the Hydromatic India Agreements (collectively, the
"India JV Agreements").
5.5. Financial Statements. Attached hereto as Schedule 5.5.
are (a) the unaudited Combined Statement of Operations for the
Pump Group for the years ended December 31, 1995 and 1996, (b)
the unaudited Combined Statement of Net Equity for the Pump Group
as of December 31, 1995 and 1996, (c) the unaudited combined
Rollforward of Net Equity for the Pump Group for the years ended
December 31, 1995 and 1996, (d) the notes accompanying the items
referred to in clauses (a) through (c) (the items referred to in
clauses (a) through (d) being herein collectively referred to as
the "Financial Statements"), (e) the unaudited Combined Statement
of Operations for the Pump Group for the three months ended March
31, 1996 and 1997, (f) the unaudited Combined Statement of Net
Equity for the Pump Group as of March 31, 1997 (the "Interim Net
Equity Statement"), (g) the unaudited Combined Rollforward of Net
Equity for the Pump Group for the three months ended March 31,
1997, and (h) the notes accompanying the items referred to in
clauses (e) through (g) (the items referred to in clauses (e)
through (h) being herein collectively referred to as the "Interim
Financial Statements"). The Financial Statements have been
prepared by GSC's management in accordance with the books and
records of the Pump Group which were used in the preparation of
GSC's audited consolidated financial statements for the
corresponding periods and in conformity with GSC accounting
policies and procedures which in all material respects comply
with GAAP applied on a consistent basis, except where indicated
in the notes thereto or as otherwise provided in Schedule 3.2.1
and include such estimates and adjustments as deemed necessary to
present fairly, in all material respects, the financial positions
and results of operations of the Pump Group. The Interim
Financial Statements have been prepared by GSC's management in
conformity with GSC accounting policies and procedures which in
all material respects comply with GAAP applied on a consistent
basis except where indicated in the notes thereto and include
such estimates and adjustments as deemed necessary to present
fairly, in all material respects, the financial positions and
results of operations of the Pump Group as of the dates indicated
therein, subject to normal year-end adjustments.
5.6. No Undisclosed or Contingent Liabilities. Except as
set forth in Schedule 3.2.1 or in Schedule 5.6, no Seller has any
liabilities or obligations of any nature (absolute, accrued,
contingent or otherwise) which are to be Assumed Liabilities
other than (a) liabilities or obligations which are reflected or
reserved against on the 12/31Net Equity Statement or which are
not required to be reflected or reserved against on the 12/31 Net
Equity Statement in accordance with GSC accounting policies and
procedures or (b) liabilities or obligations incurred in the
ordinary course of business since December 31, 1996.
5.7. Absence of Certain Changes. Except as set forth in
Schedule 5.7 and except as relates to the transactions
contemplated by this Agreement, since December 31, 1996, (a)
there has been no event or occurrence that has had a Material
Adverse Effect, (b) no Seller has taken or agreed to take any of
the actions set forth in Section 7.2.1 through 7.2.10 hereof with
respect to the Pump Group, and (c) no Seller has entered into any
transaction involving the Pump Group , including without
limitation the incurrence of any material liability or
obligation, other than in the ordinary course of business.
5.8. Owned Equipment. Except as set forth in Schedule 5.8.
and except for Permitted Liens, Sellers have good and
merchantable title, free and clear of all Liens, to all of the
Equipment other than the Equipment leased to a Seller for use in
the Pump Group.
5.9. Leases. Schedule 5.9 contains a list of (a) all
written leases relating to real property, whether as lessor or
lessee, which is leased by a Seller for use in the operations of
the Pump Group and (b) all written leases relating to personal
property owned or used by a Seller in the Pump Group requiring
payments in excess of $25,000 during any calendar year or having
an initial term of greater than 36 months, whether as lessor or
lessee (collectively, the "Material Leases"). All Material
Leases are in full force and effect and there has been no
substantial breach of any such Material Lease by any Seller or,
to Sellers' Knowledge, any other party thereto, that is
reasonably likely to have a Material Adverse Effect.
5.10. Owned Real Property. Schedule 5.10 contains a list of
the real property owned by a Seller and used in the operations of
the Pump Group (the "Owned Real Property"). Except as set forth
in Schedule 5.10 and except for Permitted Liens, Sellers have
good and insurable fee simple title to the Owned Real Property
free and clear of all Liens. Except as set forth in Schedule
5.10, to Sellers' Knowledge, no Seller has received any written
notice from any Governmental Authority (a) of any pending or
threatened condemnation proceedings with respect to any of the
Real Property Sites and (b) that any of the improvements on any
of the Real Property Sites violate in any material respect any
use or occupancy restriction, any covenant or record or any
zoning or building law, code or ordinance. Sellers have
delivered or made available to Buyer copies of all title
insurance policies, title reports and surveys, if any, for each
parcel of Owned Real Property which, to Sellers' Knowledge, are
in the possession of Sellers.
5.11. Condition of Property. The Equipment and the
improvements and structures located on the Real Property Sites
and the fixtures and appurtenances thereto are in good working
order, reasonable wear and tear excepted, are reasonably suitable
for the uses for which they are intended and conform to the
requirements of applicable law in all material respects. Except
as otherwise specifically set forth in this Agreement, no Seller
makes any express or implied warranty of merchantability or
fitness for a specific purpose, or any other warranty as to the
condition or operation of any asset.
5.12. Intellectual Property.
5.12.1. Schedule 5.12.1 contains a list of all patents,
registered trademarks, registered copyrights and registered
service marks (and applications for any of the foregoing) owned
or used (other than pursuant to license) by Sellers in the
operation of the Pump Group (collectively "Intellectual
Property"). Except as set forth in Schedule 5.12.1 and except as
may relate to the India JVs, (a) Sellers own all right, title and
interest in and to the Intellectual Property, free and clear of
any Liens other than (i) Permitted Liens and (ii) limitations on
assignment identified in Schedule 5.3, and (b) to Sellers'
Knowledge, none of the Intellectual Property is the subject of
any claim of invalidity and no third party is infringing upon any
Intellectual Property.
5.12.2. Except as may relate to the India JVs, Schedule
5.12.2 contains a list of all licenses to and from third parties for
patents, trademarks, copyrights or other intellectual properties
which are used by a Seller in the operations of the Pump Group.
All such listed licenses are valid and in full force and effect
and, except for the limitations identified in Schedule 5.3, to
Sellers' Knowledge, there exists no circumstance which might
entitle any licensor to terminate any license, other than
pursuant to the terms thereof, or to prohibit the assignment of
any license.
5.12.3. There is no pending or, to Sellers' Knowledge,
threatened, Action against any Seller contesting its rights to or
the validity of any Intellectual Property that it owns or
licenses. Sellers have not received written notice that they, in
the operation of the Pump Group, are infringing upon intellectual
property rights of others and, to Sellers' Knowledge, there
exists no facts, events or conditions upon which a valid claim
for such infringement may be made.
5.12.4. Except as set forth in one of the Schedules to this
Section 5.12, to Sellers' Knowledge, there are no agreements
relating to or affecting Intellectual Property or the use or
ownership of any Intellectual Property by Sellers, including, but
not limited to, confidentiality and nondisclosure agreements,
assignments or agreements to assign, development agreements and
settlement agreements.
5.12.5. Except as set forth in Schedule 5.12.5, no Seller is
subject to any obligation to compensation former or current
employees for inventions used in the business of the Pump Group.
5.12.6. Except as may be included in the information contained
in Schedule 5.20, all charges, fees and taxes relating to the
Intellectual Property have been duly and timely paid.
5.13. Contracts. Except for (a) purchase orders, invoices,
confirmations and similar documents, (b) leases, (c) licenses of
intellectual property, and (d) Employee Benefit Plans, Schedule
5.13 sets forth, as of the date hereof, all of the following
contracts, agreements, instruments, licenses and commitments
("Contracts") to which any Seller is a party under which the Pump
Group has rights or obligations (collectively, the "Material
Contracts"): (i) Contracts pertaining to the borrowing of money;
(ii) Contracts creating Liens other than Permitted Liens; (iii)
Contracts creating a guarantee of payment or otherwise to assure
a creditor against loss; (iv) Contracts relating to material
employment or consulting services; (v) Contracts relating to
material capital expenditures; (vi) Contracts limiting the
freedom of any Seller, to the extent relating to the operations
of the Pump Group, to engage in or compete with any business;
(vii) Contracts for the purchase or sale of real property or any
business or line of business or for any merger or consolidation;
(viii) joint venture or partnership Contracts; (ix) Contracts
that individually require after the date hereof the payment or
receipt of $25,000 or more during any 12-month period; (x)
Contracts that are not terminable by a Seller prior to December
31, 1997 and (xi) Contracts for the purchase of raw materials or
supplies or the furnishing of services for the operations of the
Pump Group, (A) for which, to Sellers' Knowledge, comparable
goods or services are not readily available in the ordinary
course of business, or (B) any required purchases under which are
in excess of the normal operating requirements of the business of
the Pump Group. All Material Contracts are valid and binding and
in full force and effect, except where otherwise indicated on
Schedule 5.13 or where the failure to be valid or binding or in
full force and effect is not reasonably likely to have a Material
Adverse Effect. There has been no breach of any Material
Contract by any Seller or, to Sellers' Knowledge, any other party
thereto, that is reasonably likely to have a Material Adverse
Effect.
5.14. Suppliers, Distributors and Customers.
5.14.1. Schedule 5.14.1 sets forth the name of each supplier
which accounted for more than $500,000 of the Pump Group's
purchases for the year ended December 31, 1996, together with the
approximate volume purchased from each during such period.
Except as set forth in Schedule 5.14.1, Sellers have not been
advised that the aggregate volumes set forth therein will be
reduced by an amount that, were such reductions to occur, is
reasonably likely to have a Material Adverse Effect.
5.14.2. Schedule 5.14.2 sets forth the name and address of
each customer (including dealers, distributors, brokers, agents and
sales representatives) of the Pump Group which accounted for
more than $500,000 of the Pump Group's sales for the year ended
December 31, 1996, together with the approximate volume sold to
each during such period. Except as set forth in Schedule 5.14.2,
Sellers have not been advised that the aggregate volumes set
forth therein will be reduced by an amount that, were such
reductions to occur, is reasonably likely to have a Material
Adverse Effect.
5.15. Litigation. Except as set forth in Schedule 5.15,
there is no Action by or before any Governmental Authority that
is pending or, to Sellers' Knowledge, threatened against any
member of the Pump Group or by which it or any of the Assets is
bound that would, if determined adversely, be reasonably likely
to have a Material Adverse Effect, or to have a material adverse
effect on Sellers' ability to consummate the transactions
contemplated by this Agreement, nor is any Seller subject to any
Order which would be reasonably likely to have any such effect.
5.16. Environmental Laws.
5.16.1. Except as set forth in Schedule 5.16.1, to Sellers'
Knowledge, the Pump Group is in compliance with (a) all
Environmental Laws, (b) and maintains in effect all material
Permits required by any Environmental Law and (c) all consent
agreements and Orders to which it is a party or by which it is
bound that relates to any Environmental Law, except, in each
case, for noncompliance that is not reasonably likely to have a
Material Adverse Effect.
5.16.2. Schedule 5.16.2 sets forth all of the material
Permits required for the Pump Group under any Environmental Law and
consent agreements and Orders to which the Pump Group is a party
or by which it is bound that relate to any Environmental Law.
5.16.3. Except as set forth in Schedule 5.16.3, there are no
Actions relating to any Environmental Law pending or, to Sellers'
Knowledge, threatened against the Pump Group or by which it or
any of the Assets is bound that would, if determined adversely,
be reasonably likely to have a Material Adverse Effect.
5.16.4. Except as set forth in Schedule 5.16.4, to Sellers'
Knowledge, no Hazardous Substances have been released by the Pump
Group from any Owned Real Property, except in substantial
compliance with applicable Environmental Laws, which require
Cleanup.
5.16.5. Except as set forth in this Section 5.16, Sellers
make no express or implied representation or warranty in this
Agreement relating to environmental matters.
5.17. Compliance with Other Laws. Except as set forth in
Schedule 5.17 and except with respect to any Environmental Law or
any statute, rule, regulation or ordinance relating to ERISA or
Taxes, to Sellers' Knowledge, no member of the Pump Group is in
violation of any statute, rule, regulation, ordinance, Permit or
Order pertaining to the operation or conduct of the business of
the Pump Group or the ownership of the Assets, the violation of
which would reasonably be likely to have a Material Adverse
Effect.
5.18. Employees.
5.18.1. GSC has delivered to Buyer, on or prior to the date
hereof, a list of each person who was an employee of the Pump
Group who earned more than $100,000 annually as of December 31,
1996, including each such person's (a) name, (b) total period of
employment, (c) current position or job classification, and (d)
employer. As soon as practicable after the date hereof, GSC
shall provide Buyer with a separate, confidential list of wage or
salary and bonus information for each Employee.
5.18.2. Except as set forth in Schedule 5.18.2, there are no
collective bargaining or other labor union agreements applicable
to any Employees. No material work stoppage or material labor
dispute against the Pump Group is pending or, to Sellers'
Knowledge, threatened, and, to Sellers' Knowledge, there is no
organizational activity currently underway with respect to the
Pump Group, except for any such stoppage, dispute or activity
which is not reasonably likely to have a Material Adverse Effect.
5.18.3. Except as set forth in Schedule 5.18.3, none of Sellers
is engaged in, and has received any written notice of any unfair
labor practice related to the Pump Group and no such complaints
are pending before the National Labor Relations Board or any
other Governmental Authority, except for any such complaint or
practice which is not reasonably likely to have a Material
Adverse Effect.
5.19. Employee Benefits.
5.19.1. Schedule 5.19.1 lists each written pension,
retirement,profit-sharing, deferred compensation, bonus, incentive,
performance, stock option, stock appreciation, phantom stock,
stock purchase, restricted stock, medical, hospitalization,
vision, dental or other health, life, disability, severance,
termination or other employee benefit plan, program, arrangement,
agreement or policy (including each ERISA Plan) which or to which
any Seller, any sponsor or any Continuing Affiliate contributes
or is obligated to contribute or under which any Seller, any
sponsor or any Continuing Affiliate may have any liability and
under which any Employee or former employee of the Subsidiaries
(or their respective beneficiaries or dependents) is eligible to
participate or to accrue a benefit (each, an "Employee Benefit
Plan"). Except as set forth in Schedule 5.19.1, (a) each
Employee Benefit Plan complies in all material respects, and has
been operated and administered in all material respects, in
accordance with all applicable requirements of all applicable
laws and regulations of any Governmental Authority, including
ERISA and the Code, (b) no "reportable event", or "prohibited
transaction" (as such terms are defined in ERISA and the Code, as
applicable) or full or partial termination has occurred whether
under Title IV of ERISA or otherwise with respect to any Employee
Benefit Plan. Each ERISA Plan and related funding arrangement
intended to so qualify under Sections 401(a) and 501(a),
respectively of the Code has received a ruling or determination
letter concluding that such ERISA Plan so qualifies, and, to
Sellers' Knowledge, no event has occurred, amendment been adopted
or action been taken or not taken that would cause such ERISA
Plan to lose its tax-qualified status.
5.19.2. GSC has delivered or made available to Buyer, on or
prior to the date hereof, copies of each Employee Benefit Plan
and any amendments thereto and any related trust agreement,
funding agreement and insurance contract relating thereto and, if
applicable (a) the most recent actuarial valuation reports for
the last three years, (b) the last three years' filed Form 5500
or 5500-C and Schedules A and B thereto, (c) the summary plan
description currently in effect for each Employee Benefit Plan
and all material modifications thereto, (d) the last three years'
summary annual report issued to participants with respect to each
Employee Benefit Plan, (e) the last three years' financial
statements for each Employee Benefit Plan and its related trust,
if any, (f) if applicable, the most recent determination letter
issued with respect to each Employee Benefit Plan, and (g) each
form of loan document under each ERISA Plan, and (h) the most
recent premium filings with the Pension Benefit Guaranty
Corporation covering or related to an Employee Benefit Plan.
5.19.3. All contributions required under applicable law or an
Employee Benefit Plan to be made on or prior to the date hereof
by Sellers or any Continuing Affiliate to an Employee Benefit
Plan have been made within the time prescribed by such law or
Employee Benefit Plan. There does not exist any accumulated
funding deficiency within the meaning of either Section 412 of
the Code or Section 302 of ERISA as to any ERISA Plan, nor would
there exist any such deficiency but for the application of the
minimum funding standards imposed by the Code with respect to any
such ERISA Plan. Except as set forth in Schedule 5.19.3, on the
date hereof, the fair market value of the assets of each ERISA
Plan that is a funded defined benefit pension plan equals or
exceeds the actuarial present value of all accrued benefits under
such ERISA Plan, including early retirement subsidies, plant
closing benefits and all other amounts considered to be benefit
liabilities upon a standard termination of a defined benefit plan
subject to Title IV of ERISA with the said actuarial present
value being determined by application of the actuarial methods
and assumptions applied by such ERISA Plan's enrolled actuary at
the most recent annual valuation of such ERISA Plan, plus all
administrative expenses, fiduciaries' fees and similar charges
payable by such ERISA Plan, plus all Taxes, if any, payable from
plan assets.
5.19.4. Except as set forth in Schedule 5.19.4, (a) no ERISA
Plan is a "multiple employer" plan within the meaning of Section
4063 or 4064 of ERISA, (b) no ERISA Plan is a "multiemployer
plan" within the meaning of Section 4001(a)(3) of ERISA, (c)
neither Sellers nor any Continuing Affiliate has either primary
or secondary liability under the provisions of Section 4204 of
ERISA or any agreement entered into in accordance with the
provisions of such Section, and (d) neither Sellers nor any
Continuing Affiliate has (i) engaged in any transaction that
could result in the imposition of any material liability pursuant
to Section 4069 or 4212 of ERISA or (ii) incurred any material
liability under or pursuant to Title I or IV of ERISA or the
penalty or excise tax provisions of the Code relating to employee
benefit plans.
5.19.5. Except as set forth in Schedule 5.19.5, the
consummation of the transactions contemplated by this Agreement
will not result in any increase in the amount of compensation or
benefits or accelerate the vesting or timing of payment of any
benefits payable by the Pump Group to or in respect of any
Employee or former employee of the Pump Group or the beneficiary
or dependent of any Employee or former employee of the Pump
Group.
5.19.6. Except as described in Schedule 3.2.1 or in Schedule
5.19.6, no Employee Benefit Plan provides benefits, including
without limitation death or medical benefits (whether or not
insured), with respect to Active Employees beyond their
retirement or other termination of service (other than (a)
coverage mandated by applicable law, (b) death benefits or
retirement benefits under any ERISA Plan, (c) deferred
compensation accrued on the Financial Statements or the Interim
Financial Statements, or (d) benefits, the full cost of which is
borne by the Active Employee (or his or her beneficiary)). No
"leased employee," as that term is defined in Section 414(n) of
the code, performs services for any member of the Pump Group.
5.20. Taxes. Except as set forth in Schedule 5.20 or as
reflected in the Financial Statements or the Interim Financial
Statements:
5.20.1. (a) All federal, state, local and foreign tax
information and other tax returns or reports pertaining to Pump
Group required to be filed before the date hereof have been duly
filed and as filed, were correct and complete in all material
respects, (b) all Taxes shown to be due in such tax information,
returns and reports have been paid in full, (c) no deficiencies
for any Taxes with respect to such tax information and returns
have been asserted, and (d) no agreements for the extension of
the periods for the assessment or collection of taxes and no
waivers of statutes of limitation have been entered into, given
or requested regarding any Taxes with respect to such tax
information, and returns and reports.
5.20.2. No unresolved issue has been raised in writing by
any Governmental Authority in the course of any audit with respect to
Taxes for which the Divisions or the Subsidiaries would be held
liable and, to Sellers' Knowledge, no member of the Pump Group
has received any written notice that any material claim has been
made by any Governmental Authority in a jurisdiction where a
member of the Pump Group does not currently file a tax return or
report that it is or may be subject to taxation by or in that
jurisdiction.
5.20.3. Neither the Divisions nor the Subsidiaries are
parties to or bound by any tax sharing or similar Contract.
5.20.4. Since December 31, 1993, none of the members of the
Pump Group was a member of an affiliated group (within the
meaning of Section 1504 of the Code) filing a consolidated
federal tax return, other than a group the common parent of which
is GSC, except Fairbanks Morse, which was acquired by GSC in
1994.
5.20.5. None of the members of the Pump Group has any
liability for the Taxes of any person other than the members of the
Pump Group and other members of GSC's consolidated group (a) under
Treasury Regulation 1.1502-6 (or any similar provision of state,
local, or foreign law), (b) as a transferee or successor, (c) by
contract, or (d) otherwise.
5.20.6. None of the members of the Pump Group has filed a
consent under Section 341(f) of the Code concerning collapsible
corporations. None of the members of the Pump Group has made any
payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances or the circumstances
or events contemplated by this Agreement could obligate it to
make any payments that will not be deductible by reason of
Section 280G of the Code. None of the members of the Pump Group
has been a United States real property holding corporation within
the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
5.21. Insurance. Schedule 5.21 sets forth a list of all
insurance policies owned or held by a Subsidiary. All material
insurance policies owned or held by a Seller or a Subsidiary on
the date hereof which cover the Pump Group or the Assets are in
full force and effect, all premiums with respect thereto have
been paid to the extent due, no notice of cancellation or
termination has been received with respect to any such policy
(other than policies which a Seller or a Subsidiary has replaced
or intends to replace prior to the expiration thereof by policies
providing substantially the same types and amounts of coverage).
5.22. Transactions with Related Parties. Except as set forth
on one or more of the Schedules hereto, no member of the Pump
Group is or was a party to any transaction or proposed
transaction, including, without limitation, the leasing of real
or personal property, the purchase or sale of raw materials or
finished goods, or the furnishing of services, with Sellers or
any person related to or affiliated with Sellers (other than
another member of the Pump Group) involving the payment or
accrual of more than $1,000,000 during fiscal years 1995 or 1996,
or which will amount to more than $1,000,000 during fiscal year
1997.
5.23. Sufficiency of Assets. Except for the Retained Assets,
the Assets, together with Buyer's rights under the Transition
Services Agreement, constitute all of the assets, rights and/or
interests which are used in, and are sufficient for, the
operation of the business of the Pump Group as it is currently
being conducted in all material respects.
5.24. Brokers. Other than Lazard, no person or entity is or
will become entitled to receive any brokerage or finder's fee,
advisory fee or other similar payment for the transactions
contemplated by this Agreement by virtue of having been engaged
by or acted on behalf of Sellers.
6. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
6.1. Organization and Existence. Buyer is a corporation
duly organized, validly existing and in good standing under the
laws of Minnesota.
6.2. Authorization, Execution and Validity. Buyer has the
requisite corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated
hereby to be performed by it. The execution and delivery by
Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby to be performed by it have been
duly authorized by all requisite corporate action. This
Agreement has been duly executed and delivered by Buyer and each
instrument contemplated hereby that is to be executed and
delivered to a Seller by Buyer will constitute, when executed and
delivered to a Seller by Buyer, a valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its
respective terms.
6.3. Conflicts; Defaults. Except as listed in Schedule 6.3
or as may relate to the India JVs, neither the execution and
delivery of this Agreement by Buyer nor the consummation by Buyer
of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the certificate of
incorporation or by-laws of Buyer, (b) without regard to the
provisions of Section 7.5 hereof, result in a violation or breach
of or constitute a default (or would so constitute with notice or
lapse of time) or result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, or
require any notice under any note, bond, mortgage, indenture,
agreement, obligation or other instrument to which Buyer is a
party or by which any of Buyer's assets is bound, (c) violate any
Order, statute, treaty, rule or regulation of any Governmental
Authority applicable to Buyer, except in all cases, for
violations, breaches or defaults which would not, in the
aggregate, prevent or delay the consummation by Buyer of the
transactions contemplated by this Agreement. Except for
consents, approvals or authorizations required under the HSR Act,
and, if required, the Investment Canada Act and any applicable
laws of India, and any filings and approval requirements under
any applicable "bulk sales" laws, no filing with, and no permit,
authorization, consent or approval by, any Governmental Authority
is required in connection with the execution and delivery by
Buyer of this Agreement or the consummation by Buyer of the
transactions contemplated hereby.
6.4. Litigation. There is no Action by or before any
Governmental Authority that is pending or, to the knowledge of
Buyer, threatened by or against or affecting Buyer or any of its
assets which would, if adversely determined, be reasonably likely
to have a material adverse effect on Buyer's ability to
consummate the transactions contemplated by this Agreement, nor
is Buyer subject to any Order which would be reasonably likely to
have any such effect.
6.5. Sufficient Funds. Buyer has, on the date hereof, the
financial capability to purchase the Assets and to assume the
Liabilities on the terms and subject to the conditions set forth
in this Agreement, and Buyer shall have such capability on the
Closing Date.
6.6. Brokers. Other than Credit Suisse First Boston
Corporation, no person or entity is or will become entitled to
receive any brokerage or finder's fee, advisory fee or other
similar payment for the transactions contemplated by this
Agreement by virtue of having been engaged by or acted on behalf
of Buyer.
7. CERTAIN COVENANTS AND AGREEMENTS
7.1. Information and Access.
7.1.1. From the date hereof to the Closing Date, Sellers
shall, subject to applicable contractual obligations, afford to
Buyer, its accountants, counsel and other authorized
representatives reasonable access, upon reasonable notice, to all
of the Pump Group's assets, properties, books, records,
agreements and commitments, to the officers and employees of the
Pump Group and to representatives of GSC's auditors; and furnish
Buyer's representatives during such period with all such
information concerning the Pump Group's affairs as Buyer may
reasonably request, including, without limitation, a so-called
Phase I (i.e., documentary review and walk-through site
inspection) preliminary environmental evaluation; provided,
however, that no environmental testing shall be performed without
GSC's written consent, which may be given or withheld in GSC's
sole discretion and that Sellers shall have no obligation to give
Buyer access to information that (a) is subject to attorney-
client privilege or (b) is subject to confidentiality
restrictions with respect to which Sellers, using all reasonable
efforts, are unable to obtain waivers.
7.1.2. All information provided or obtained pursuant to this
Section 7.1 shall be held by Buyer in accordance with and subject
to the terms of the confidentiality agreement, dated February
27, 1997, between GSC and Buyer (the "Confidentiality
Agreement").
7.2. Conduct of Business Pending Closing. From the date of
this Agreement and until the Closing Date, and except as
otherwise expressly permitted by this Agreement or consented to
by Buyer in writing, each Seller covenants and agrees that, with
respect to the operations of the Pump Group, it shall:
7.2.1. Operate its business only in the ordinary course
consistent with past practice and to use reasonable efforts to
preserve its properties and business and relationship with
suppliers, customers, distributors and employees;
7.2.2. Not (a) change or amend its certificate of
incorporation or by-laws, (b) authorize, issue or sell any shares
of its capital stock, or authorize, issue or sell any securities
convertible into, or options with respect to, or warrants to
purchase or rights to subscribe for, any shares of its capital
stock or enter into any agreement obligating it to do any of the
foregoing, or (c) merge or consolidate with any other entity;
7.2.3. Not grant any increase in the compensation payable
to any of Pump Group's officers, employees or agents, except for
normal merit, cost of living or promotional increases in
accordance with past practices;
7.2.4. Not fill any open employee requisition, except pursuant
to offers outstanding prior to the date hereof;
7.2.5. Not decrease any insurance coverage on the Assets, so
long as such insurance is available at commercially reasonable
rates;
7.2.6. Not incur or guaranty any new debt which would
constitute an Assumed Liability, except for (a) accounts payable
incurred in the ordinary course, and (b) intercompany debt;
7.2.7. Not make any capital expenditures or any additions
to Pump Group's premises other than those which have been approved
as of April 30, 1997 and those which are contained in the Pump
Group's 1997 capital budget, a copy of which has previously been
delivered or made available to Buyer; provided, that, whether or
not included in such capital budget, it shall not make any
capital expenditures relating to information technology or
equipment other than in the ordinary course;
7.2.8. Not purchase any real property or real property
interest to be included as part of the Assets or to sell or
dispose of any of the material property, plant or equipment shown
on the Interim Net Equity Statement;
7.2.9. Not permit to be incurred any Liens on any Assets,
except Permitted Liens;
7.2.10. Not accelerate or delay the sale of the products of
the Pump Group or the collection of accounts receivable, other than
in the ordinary course of business; and
7.2.11. Not conduct its business in violation of any law,
ordinance or regulation of any Governmental Authority, except for
possible violations which individually or in the aggregate do not
and are not reasonably likely to have a Material Adverse Effect.
7.2.12. Not make any change in accounting method or principles.
7.3. Assignment of Confidentiality Agreements. GSC shall
not amend, modify or supplement or grant any consent or waiver
under or with respect to, any confidentiality agreements entered
into by GSC (or its representatives or Affiliates) and each party
to whom confidential information was provided in connection with
the sale of the Pump Group (collectively, the "Sale
Confidentiality Agreements") without Buyer's prior written
consent. GSC shall as promptly as reasonably practicable request
each party to whom confidential information was provided pursuant
to a Sale Confidentiality Agreement to return to GSC or destroy
such information, in each case as provided in the applicable Sale
Confidentiality Agreement. At the Closing, GSC shall assign to
Buyer all of its right, title and interest in the Sale
Confidentiality Agreements (to the extent any thereof are capable
of being assigned). Prior to the Closing and thereafter with
respect to any rights under any Sale Confidentiality Agreement
which are not capable of being assigned, upon request by Buyer,
GSC shall use its reasonable efforts to enforce such rights.
7.4. No Solicitation. Sellers shall immediately cease any
existing discussions or negotiations with any third parties
conducted prior to the date hereof with respect to any sale,
merger or other business combination transaction involving the
Pump Group. From the date of this Agreement until the Closing
Date, Sellers shall not directly or indirectly (through a
representative or otherwise) solicit or furnish information to
any prospective buyer (other than Buyer) or commence negotiations
with any other party or enter into any agreement with any other
party concerning the sale, merger or other business combination
transaction involving the Pump Group.
7.5. Consents; Non-Transferability.
7.5.1. Sellers shall use all reasonable efforts, and Buyer
shall cooperate with Sellers, to obtain all consents and waivers
of any third party (including a Governmental Authority) necessary
to effect the transfer of all the Assets; provided, however, that
neither Buyer nor Sellers shall be obligated to pay any
consideration therefor to any person in order to obtain any
consent or waiver. Notwithstanding anything in this Agreement to
the contrary, with respect to any asset to which Section 7.5.2
applies, no Seller shall be obligated to sell, assign or
otherwise transfer and Buyer shall not be obligated to accept,
such asset without first having obtained all necessary consents
and waivers.
7.5.2. To the extent that any of the Assets is not capable of
being sold, assigned or otherwise transferred without the consent
or waiver of any third party (including a Governmental Authority)
or if such sale, assignment or transfer would constitute a breach
thereof or a violation of any Order, statute, treaty, rule or
regulation, this Agreement shall not constitute a sale,
assignment or other transfer thereof, or an attempted sale,
assignment or other transfer thereof.
7.5.3. To the extent that any of the consents or waivers
referred to in Section 7.5.2 are not obtained by Sellers prior to
the Closing, Sellers shall cooperate with Buyer in any reasonable
arrangement, at Buyer's risk and expense, designed to provide for
Buyer the benefit and burden of any asset not sold, assigned or
transferred as a result thereof, including, without limitation,
enforcement for the benefit of Buyer of any and all rights of
Sellers against any other person or entity arising out of any
breach of contract, and further including, if so requested by
Buyer, acting as agent on behalf of Buyer, or as Buyer shall
otherwise reasonably require (including the retention of Buyer as
a subcontractor). Notwithstanding the foregoing, the risks and
consequences of a failure to obtain any required consent shall be
borne by Buyer.
7.5.4. To the extent that Buyer is provided the benefits of
any asset in accordance with Section 7.5.3, Buyer shall perform
at the direction of GSC and for the benefit of any third party
the obligations of Sellers thereunder or in connection therewith;
provided, that if Buyer shall fail to perform to the extent
required herein, Buyer shall indemnify, defend and hold Sellers
harmless therefor and, in the event of a failure of such
indemnity, Sellers shall cease to be obligated under this Section
7.5 in respect of the asset which is the subject of such failure
to perform.
7.6. Governmental Filings.
7.6.1. Promptly after the date hereof, Buyer and GSC shall
file with the Federal Trade Commission and the United States
Department of Justice the notification required to be filed with
respect to the transactions contemplated by this Agreement.
Without limiting the provisions set forth in Section 11.1.4, each
of Buyer and GSC shall use its reasonable best efforts to take or
cause to be taken all actions necessary, proper or advisable to
obtain any consent, waiver, approval or authorization relating to
the HSR Act that is required for the consummation of the
transactions contemplated by this Agreement and each shall share
equally in any costs relating thereto, including the statutory
filing fee required by the HSR Act and any fees and expenses of
counsel or any consultants who may be retained by mutual consent
after the filing of the notification.
7.6.2. Sellers and Buyer shall comply with the laws of any
country (including Canada) which are applicable to the
transactions contemplated by this Agreement and pursuant to which
government notification or approval of such transactions is
necessary. Sellers and Buyer shall cooperate with the other in
any manner reasonably requested by the other in providing any
information which is required for this purpose and in promptly
filing, separately or jointly, any applications for such
governmental notification or approval.
7.7. Trademarks, Etc. Buyer recognizes and acknowledges
that neither of the Subsidiaries has, and as a result of the
purchase of the Assets, neither Buyer nor any of its Affiliates
shall have, any right, title or interest in or to the Marks;
provided, however, that Buyer shall be permitted to use finished
goods, supplies and sales literature transferred pursuant to this
Agreement carrying the Marks in conjunction with the names
"Aurora Pump", "Layne & Bowler", "Aurora/Hydromatic", "Aurora",
"Hydromatic", "Verti-Line" and "Fairbanks Morse" until, in the
case of finished goods, the depletion of such finished goods and
in the case of supplies and sales literature the earlier to occur
of: (a) the depletion of such supplies and sales literature or
(b) 180 days following the Closing Date, unless the Marks are
used in castings, in which case the time period shall be one
year; and further provided, however, that Buyer and its
Affiliates shall not in any way hold themselves out as doing
business under the Marks and shall not in any way discredit the
Marks.
7.8. Covenant Not-to-Compete.
7.8.1. Sellers acknowledge and agree that the value to
Buyer of the transactions contemplated by this agreement would be
substantially diminished if Sellers or any of the Continuing
Affiliates were to enter into certain business activities, and
Sellers have agreed to the covenant in this Section 7.8 as an
inducement to Buyer to enter into this Agreement. Sellers
specifically acknowledge and agree that the covenants in this
Section 7.8 are commercially reasonable and reasonably necessary
to protect the interests Buyer intends to acquire hereunder. If
any court of competent jurisdiction shall in any proceedings
refuse to enforce such covenant, in whole or in part, because the
time limit or geographical extent applicable thereto is deemed
unreasonable in the jurisdiction, it is expressly understood and
agreed that such covenant shall not be void. Instead, for the
purpose of such proceedings, such temporal or geographic
limitations shall be deemed to be reduced to the extent necessary
to permit the enforcement of such covenant in the particular
jurisdiction.
7.8.2. For a period of five years following the Closing
Date,Sellers and the Continuing Affiliates shall not engage directly
or indirectly in the business of manufacturing or selling vertical
or horizontal centrifugal and turbine water and sewage
pumps anywhere in the world; provided, however, that Sellers and
the Continuing Affiliates may:
(a) maintain and continue their operations
in accordance with current and past practice;
(b) acquire securities and other interests
in any entity as investments of any employee benefit plan of
Sellers or any Continuing Affiliate;
(c) acquire up to 10% of the outstanding
securities and other interests in any entity;
(d) acquire any securities and other
interests in any entity if the revenues of such entity that are
attributable to businesses that compete directly with the current
business of the Pump Group does not exceed 10% of such entity's
total annual revenues; or
(e) perform any act or conduct any business
contemplated by this Agreement.
7.8.3. The parties agree that money Damages would be an
inadequate remedy for a violation of the covenant set forth in
this Section 7.8. Accordingly, Buyer shall be entitled, in
addition to any other rights and remedies that it may have, to
injunction relief to enjoin any such breach.
7.9. Release from Guarantees. Buyer shall use reasonable
efforts and Seller shall cooperate with Buyer to secure,
effective as of the Closing Date, full releases for Sellers and
the Continuing Affiliates under the letters of credit, bank
guarantees, surety bonds, foreign exchange contracts and other
obligations listed in Schedule 7.9. After the Closing Date,
Buyer shall indemnify, defend and hold Sellers and the Continuing
Affiliates harmless from and against all Damage attributable to
any Seller Guarantees and to any of the obligations of the Pump
Group listed in Schedule 7.9 which remain outstanding following
such date.
7.10. Further Assurances. At any time after the Closing
Date, Sellers and Buyer shall and cause their respective
Affiliates promptly to, execute, acknowledge and deliver any
other documents or instruments reasonably requested by Sellers or
Buyer, as the case may be, to satisfy their respective
obligations hereunder or to obtain the benefits contemplated
hereby.
7.11. Intercompany Obligations. Immediately prior to the
Closing, all Intercompany Obligations due and payable as of the
Closing Date or attributable to any period ending on or prior to
the Closing Date shall, for all purposes of this Agreement, be
netted as between the appropriate obligors and obligees and the
resulting balances shall be charged to the equity account of the
appropriate Continuing Affiliate or the Pump Group, as the case
may be, and shall be treated as discharged as of the Closing,
with the result that as of and following the Closing, there shall
be no further obligation or liability with respect to any
Intercompany Obligations.
7.12. Supplements to Schedules. Each of Sellers and Buyer
shall notify the other of any development(s) which might or shall
constitute a breach of any of the warranties and representations
in Article 5 which is reasonably likely to have a Material
Adverse Effect. Buyer shall have the right to terminate this
Agreement within the period of 5 business days from the date such
notice is given, or if less than 5 business days remain prior to
the Closing Date, such shorter period. If within such period,
Buyer shall not have exercised its right to terminate this
Agreement, the written notice shall be deemed to have amended
this Agreement and the relevant Schedules attached thereto, to
have qualified the representations and warranties contained in
Article 5 above, or to have cured any misrepresentation or breach
of warranty that otherwise might have existed hereunder by reason
of such development, including for purposes of Article 12 hereof,
and the party making the warranty or representation shall
continue to use its reasonable best efforts to obtain fulfillment
of all conditions to Closing set forth in Article 8 hereto,
including the cure of the actual or potential breach to which
reference is made in the notice. The provisions hereof shall
apply mutatis mutandis if there is any development(s) which might
or shall constitute a breach of any of the warranties and
representations in Article 6 which could have a material adverse
effect on Buyer.
7.13. Cooperation. Subject to their respective rights under
Article 11, each of Sellers and Buyer shall use, and shall cause
their respective Affiliates to use, all reasonable efforts to
take all actions and to do all things necessary or advisable to
consummate the transactions contemplated by this Agreement and to
obtain fulfillment of all conditions to Closing set forth in
Article 8 as soon as reasonably possible.
7.14. India JVs.
7.14.1. FM India. As soon as reasonably practicable,
Fairbanks Morse shall give notice under the applicable FM India
Agreements of its intent to transfer the FM India Shares to Buyer
and giving the other party or its nominee the right to purchase/first
option of refusal pursuant thereto. Buyer and Sellers shall cooperate
and use their respective reasonable efforts to effect a transfer
of the FM India Shares to Buyer or a sale thereof to a third
party as soon as reasonably practicable; provided, however, that
neither Buyer nor Sellers shall be obligated to pay any
consideration therefor to any person except as otherwise provided
herein. In the event that a sale or other transfer to a third
party of the FM India Shares is effected, (a) promptly thereafter
Sellers shall pay to Buyer an amount equal to $156,000,
representing the book value of the FM India Shares on the 12/31
Net Equity Statement, (b) Fairbanks Morse shall take all action
pursuant to the FM India Agreements to terminate all license
agreements, if any, relating to any Intellectual Property, and
(c) Sellers and Buyer shall cooperate and use their respective
reasonable efforts to cause FM India to cease the use of any
Intellectual Property. In the event that Fairbanks Morse is able
to transfer the FM India Shares to Buyer, Sellers and Buyer shall
cooperate and make any filings and obtain any approvals required
to effect such transfer under Indian law. In the event that on
or before the fifth anniversary of the Closing Date the FM India
Shares have not been transferred to Buyer or sold or otherwise
transferred to a third party, Sellers shall promptly pay to Buyer
an amount equal to $156,000, representing the book value of the
FM India Shares on the 12/31 Net Equity Statement.
7.14.2. Hydromatic India. As soon as reasonably
practicable,Aurora/Hydromatic shall give notice of termination of all
Hydromatic India Agreements (other than the Arbitration Agreement
referred to in Section 5.4(b)) to which it is a party. Sellers
and Buyer shall cooperate and use their respective reasonable
efforts to cause all Hydromatic India Agreements to which any
Seller is a party to be terminated; provided, however, that
neither Buyer nor Sellers shall be obligated to pay any
consideration therefor to any person.
7.15. Cancellation of Procurement Cards. Effective on or
prior to the Closing Date, Sellers shall cancel any and all
procurement cards issued to any Active Employee pursuant to the
Chase Visa Purchasing Card Agreement dated July 2, 1997 between
The Chase Manhattan Bank (USA) and GSC.
7.16. Cooperation with Actions. If and for so long as any
Seller is contesting or defending against any Action in
connection with (a) any transaction contemplated by this
Agreement or (b) any Action, circumstance, condition, conduct,
event, fact, failure to act, incident, occurrence or transaction
on or before the Closing Date involving the Pump Group or any of
Sellers, Buyer shall cooperate with Sellers and their counsel in
the contest or defense, make available its personnel and provide
any testimony and access to its books and records in connection
with such contest or defense, with all actual out-of-pocket costs
to third parties at Sellers' expense unless Sellers are entitled
to indemnification therefor under Article 12.
8. CONDITIONS PRECEDENT TO CLOSING
8.1. Conditions Precedent to Sellers' Obligations. The
obligations of Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the
satisfaction of the following conditions, any of which may be
waived by GSC on behalf of Sellers:
8.1.1. Representations and Warranties. Each of the
representations and warranties made by Buyer in this Agreement
shall be true and correct in all material respects as of the date
hereof and as of the Closing Date.
8.1.2. Covenants. Buyer shall have performed and complied in
all material respects with all covenants and agreements required
by this Agreement to be performed by it prior to or at the
Closing.
8.1.3. HSR Act; Etc. All applicable waiting periods under
the HSR Act shall have expired or been terminated and (to the extent
required) any required approval under the Investment Canada Act
shall have been obtained.
8.1.4. No Legal Action. No Order shall be in effect
forbidding or enjoining the consummation of the transactions
contemplated hereby and no Action shall be pending or threatened
which, if adversely determined, would result in any such Order.
8.1.5. Deliveries. Buyer shall have made all of the
deliveries required of it by Section 4.3.
8.2. Conditions Precedent To Buyer's Obligations. The
obligations of Buyer to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction of the
following conditions, any of which may be waived by Buyer:
8.2.1. Representations and Warranties. Each of the
representations and warranties made by Sellers in this Agreement
shall be true and correct in all material respects as of the date
hereof and as of the Closing Date, except for (a) representations
and warranties made as of a specified date, which shall be true
and correct as of the specified date and (b) breaches and
inaccuracies that do not have a Material Adverse Effect.
8.2.2. Covenants. Sellers shall have performed and complied
in all material respects with all covenants and agreements
required by this Agreement to be performed by them prior to or at
the Closing.
8.2.3. HSR Act; Etc. All applicable waiting periods under
the HSR Act shall have expired or been terminated and (to the extent
required) any required approval under the Investment Canada Act
shall have been obtained.
8.2.4. No Legal Action. No Order shall be in effect
forbidding or enjoining the consummation of the transactions
contemplated hereby and no Action shall be pending or threatened
which, if adversely determined, would result in any such Order.
8.2.5. Deliveries. Sellers shall have made all of the
deliveries required of them by Section 4.2.
8.2.6. Required Consent. Consent to the assignment to Buyer
of the Trademark License Agreement dated August 21, 1985 between
Colt Industries Operating Corp., as licensor, and FMPD Purchasing
Corporation, as licensee shall have been obtained.
8.3. If Conditions Not Satisfied. In the event that any of
the conditions set forth in this Article 8 are not satisfied and
the parties hereto consummate the transactions contemplated by
this Agreement to take place at the Closing despite such failure,
the parties shall be deemed to have waived any claim for Damages
or other relief arising from or in connection with such failure.
9. EMPLOYEE MATTERS
9.1. Nonbargaining Employees.
9.1.1. Except as otherwise provided herein, Buyer shall, or
shall cause one or more of its Affiliates to, offer employment to
each nonbargaining Active Employee, at the same salary or wage
and with other benefits and conditions of employment which Buyer
reasonably believes to be substantially comparable in the
aggregate as in effect immediately prior to the Closing Date,
with such employment to commence as of the Closing Date or such
later date as shall be agreed by Buyer or its Affiliates and any
such Active Employee, except for the 9.1.1 Employees, each of
whom Sellers and Buyer mutually agree shall be retained by
Sellers or a Continuing Affiliate (all such non-bargaining Active
Employees transferring to Buyer or its Affiliates shall be
referred to collectively as the "Business Employees"). Such
offer of employment does not confer upon Buyer or its Affiliates
any obligation to retain any Employee beyond his or her initial
hiring. With respect to any Active Employee on an individual
leave of absence as of the Closing Date, Buyer shall promptly
give GSC notice of the date employment of such employee commences
with Buyer or any of its Affiliates.
9.1.2. Severance pay and other separation benefits under
Seller's plans for the 9.1.1 Employees shall be Retained
Liabilities; provided, however, that Buyer shall promptly
reimburse Seller for the amounts of such severance or other
separation benefits paid to any 9.1.1 Employees who are not
Designated 9.1.1 Employees. Any liability to any Business
Employee for severance pay and other separation benefits under
Buyer's plans that arises out of transactions that occur on or
after the Closing Date and any liability or obligation that
arises out of any breach by Buyer of any of the provisions of
this Article 9 shall be an Assumed Liability.
9.2. Bargaining Employees.
9.2.1. Except as otherwise provided herein, Buyer shall or
shall cause one or more of its Affiliates to, offer employment to
each bargaining Active Employee, at compensation rates and
benefits competitive in the respective hiring marketplace, with
such employment to commence as of the Closing Date or such later
date as shall be agreed by Buyer or its Affiliates and any such
employee. Buyer and Sellers agree that Sellers shall have no
obligation for severance, shutdown or permanent job separation
benefits to such bargaining Active Employees, which shall be the
sole responsibility of Buyer or its Affiliates, under Buyer's
severance pay plans or under collective bargaining agreements
between Buyer or its Affiliates and bargaining representatives of
such employees, following the Closing Date. Such offer of
employment does not confer upon Buyer or its Affiliates any
obligation to retain any bargaining Active Employee beyond his or
her initial hiring.
9.2.2. Union Representation. Buyer agrees to recognize those
unions which represent any of the Active Employees at the Closing
Date as the collective bargaining representatives of such
employees as of the Closing Date. Buyer does not agree to assume
the collective bargaining agreements in effect as of the Closing.
After the Closing Date, Buyer shall set its own initial terms and
conditions of employment of the Active Employees represented by
unions and others it may hire, including without limitation work
rules, benefits and salary and wage structure, all as permitted
by law. Any bargaining obligations of Buyer with unions shall be
the sole responsibility of Buyer and Buyer shall indemnify
Sellers with respect to any such obligations.
9.3. Employee Benefit Plans Generally.
9.3.1. Employee Benefit Plans for Business Employees.
Effective as of the Closing Date, and soon as practicable, Buyer
shall establish and qualify or register with applicable
regulatory authorities employee benefit plans for, or shall
extend existing Buyer employee benefit plans to, the Business
Employees which provide benefits to such Business Employees on
terms and conditions which Buyer reasonably believes to be
substantially comparable in the aggregate to those provided to
such Business Employees by Sellers or their Affiliates
immediately prior to the Closing Date. Except as provided
hereinafter in this Article 9 with respect to specific types of
benefits, Buyer shall, or shall cause one or more of its
Affiliates to, take into account each Business Employee's period
of service with Sellers or their Affiliates prior to the Closing
under any employee benefit plans, programs or arrangements
sponsored by Buyer or its Affiliates after the Closing in which
any of the Business Employees are eligible to participate. Buyer
(or its Affiliates) reserves the right to amend or terminate any
employee benefit plans as it (or they) may deem appropriate from
time to time following the Closing Date.
9.3.2. Termination of Coverage under Sellers' Employee Benefit
Plans. Effective as of the Closing Date, each Active Employee
who is an active participant in any Employee Benefit Plans of any
Seller (including but not limited to all life insurance, health
insurance, welfare and health benefit plans, pension, profit
sharing and savings and stock ownership plans, workers'
compensation insurance and payments into State Unemployment
Compensation Funds) shall cease to be an active participant and
all of such employees shall become eligible to participate in
each of Buyer's employee benefit plans in accordance with the
applicable provisions of this Agreement and the terms and
conditions of each such plan. Sellers agree that they are
responsible for terminating all the active participation of such
employees in their respective Employee Benefit Plans, if any,
pursuant to applicable laws and will seek any necessary approvals
with respect to the termination of any such active participation.
Sellers agree that Buyer shall have no responsibility for any
issue dealing with the termination of the active participation of
any Active Employee under any such Employee Benefit Plans.
9.4. Pension Plans.
9.4.1. All assets and liabilities under the GSC Pension Plan
attributable to service prior to the Closing Date for each U.S.
Active Employee who is a participant in GSC's Pension Plan
immediately prior to the Closing Date shall be Retained Assets
and Excluded Liabilities, respectively. GSC agrees that nothing
contained in this Section 9.4 shall in any way otherwise affect
each U. S. Active Employee's right to his or her accrued benefits
under the GSC Pension Plan. Subject to the approval of the
appropriate pension plan administration committee of GSC, GSC
shall cause the GSC Pension Plan to vest fully each U.S. Active
Employee who is a participant in GSC's Pension Plan immediately
prior to the Closing Date in his or her accrued benefits under
the GSC Pension Plan. Buyer shall grant to each U.S. Business
Employee credit for his or her period of employment with GSC and
its Affiliates (and their predecessors) prior to the Closing
Date, as if so employed by Buyer, for the purpose of eligibility
and vesting under any pension benefit plan by which such U.S.
Business Employees become covered, but not for the purpose of
benefit accrual and early retirement subsidies thereunder.
9.4.2. All assets and liabilities under GSC Hourly Employees
Pension Plan attributable to service prior to the Closing Date
for each Active Employee participating therein shall be Retained
Assets and Excluded Liabilities, respectively. Buyer shall grant
to each U. S. bargaining Active Employee credit for his or her
period of employment with GSC and its Affiliates (and their
predecessors) prior to the Closing Date, as if so employed by
Buyer, for the purpose of eligibility and vesting under any
pension benefit plan by which such U.S. bargaining Active
Employees become covered but not for the purpose of benefit
accrual and early retirement subsidies thereunder.
9.4.3. All assets and liabilities under the GS Limited
Pension Plan attributable to service prior to the Closing Date for each
Canadian Active Employee shall be Retained Assets and Excluded
Liabilities, respectively. As of the Closing Date, GS Limited
shall cause each Canadian Active Employee who is employed by GS
Limited immediately prior to the Closing Date to vest fully in
his or her accrued benefits under the GS Limited Pension Plan.
9.5. Savings Plans.
9.5.1. As soon as practicable after the Closing Date, Buyer
shall (a) establish a savings plan or plans or use an existing
savings plan or plans (the "Buyer Savings Plan") providing
competitive benefits for U.S. Business Employees; (b) establish
one or more trusts or insurance arrangements or use one or more
existing trusts or insurance arrangements (the "Buyer Savings
Plan Trust") with respect to the Buyer Savings Plan; and (c)
apply for, and use its reasonable best efforts to obtain, a
determination of a District Director of Internal Revenue Service
having jurisdiction over a new savings plan of Buyer to the
effect that such savings plan and any trust established
thereunder constitute a plan and trust meeting all applicable
requirements for qualification under Sections 401(a), 401(k) and
501(a) of the Code or provide evidence to the satisfaction of
Sellers that an existing plan and existing trust arrangements of
Buyer satisfy such requirements.
9.5.2. Sellers shall allow Active Employees participating
therein to retain their account balances in Sellers' existing
applicable 401(k) plans. Sellers shall encourage (and Buyer
shall allow) such participants to roll over cash balances to
Buyer's (or an Affiliate's) 401(k) plan to the extent provided by
law.
9.5.3. Fairbanks Morse shall allow bargaining Active
Employees covered by the Fairbanks Morse Pump Corporation Union
Employee 401(k) Plan to retain their account balances in such plan.
Fairbanks Morse shall encourage (and Buyer shall allow)
participants thereunder employed by Buyer or its Affiliates to
roll over cash balances to Buyer's (or an Affiliate's) 401(k)
plan to the extent provided by law.
9.5.4. Each of the parties shall be responsible for its
respective governmental filings, including but not limited to
Internal Revenue Service Form 5310.
9.6. Welfare and Fringe Benefits Generally. Except as
further provided herein, Buyer shall, or shall cause one or more
of its Affiliates to, (a) grant to each Active Employee credit
under any employee welfare benefit plan covering such employee
after the Closing for any deductible and co-payments paid by such
employee under any corresponding Employee Benefit Plan during the
plan year which includes the Closing Date, and (b) amend any
employee welfare plan covering Active Employees participating
therein from and after the Closing so that such plan does not
exclude from coverage any pre-existing conditions of any of such
employees or their dependents, which pre-existing conditions were
covered under any Employee Benefit Plan immediately prior to the
Closing, provided, however, that nothing herein shall require
Buyer's (or any Affiliate's) employee welfare benefit plan to
cover any particular disease, condition or other event or prevent
any such plan from applying any limits (other than a limit
directed to such a pre-existing condition) which affect coverage
or the amount of benefits covered thereunder.
9.6.1. Assets and Liabilities Regarding Non-Active
Employees. Sellers shall retain all assets or reserves, if any,
and all liabilities for benefits, compensation and the like for
Employees who are not Active Employees on or as of the Closing
Date, as Retained Assets or Excluded Liabilities, respectively.
9.6.2. Benefits of Non-Active Employees. Retirement and
welfare benefits, including without limitation retiree medical
benefits and medical coverage rights under COBRA, for former
Employees of any of the Sellers or their predecessors who shall
have retired on or prior to the Closing Date shall be Excluded
Liabilities.
9.6.3. Business Employees. Retirement and welfare benefits,
including without limitation retiree medical benefits and medical
coverage rights under COBRA, for Business Employees shall be
Assumed Liabilities.
9.6.4. Assignment of Contract Rights. Sellers shall assign,
to the extent possible, at Closing all applicable ASO Agreements
to Buyer for the purpose of permitting Buyer to administer all
self-insured medical/dental plans, cafeteria plans and similar
arrangements for Business Employees. Sellers shall assign, to
the extent possible, at Closing all applicable HMO/DMO contracts
to Buyer for the purpose of permitting Buyer to continue coverage
of U. S. Active Employees for the remainder of the contract term.
Incurred but not reported (IBNR) claims, and related reserves and
accruals, under Sellers' medical/dental and similar plans shall
be Assumed Liabilities.
10. TAXES
10.1. Allocation of Certain Taxes. Sellers shall include the
income of the Pump Group (including any deferred income whether
arising from deferred intercompany transactions or otherwise and
any excess loss accounts pursuant to relevant rules and
regulations of the Internal Revenue service) on the respective
consolidated federal Tax returns (or similar returns for Canadian
corporations) of Sellers for all period s through the Closing
Date and pay any federal income taxes attributable to such
income. The income of the Pump Group shall be apportioned to
period up to and including the Closing Date and the period after
the Closing Date by closing the books of the Pump Group as of the
end of the Closing Date. Any Taxes (such as real estate taxes)
that are measured by the passage of time (rather than by
reference to income, sales, profits or results of operations)
shall be apportioned for purposes of this Section 10.1.2 between
Sellers and Buyer based on the respective number of days during
the taxable period that each owns the relevant Assets.
10.2. Information to be Provided by Buyer. With respect to
the taxable year of GSC within which the Closing Date occurs,
Buyer shall promptly cause to be prepared and provided to
Sellers, at no cost to Sellers, a package of tax information
materials (the "Tax Package"), which shall be completed in
accordance with past practice including past practice as to
providing the information, schedules and work papers and as to
the method of computation of separate taxable income or other
relevant measure of income. Buyer shall cause the Tax Package
for the portion of the taxable period ending on the Closing Date
to be delivered to Sellers within 180 calendar days after the
Closing Date.
10.3. Cooperation. Buyer and Sellers and their respective
Affiliates shall cooperate in the preparation of all Tax returns
relating in whole or in part to taxable periods ending on or
before or including the Closing Date that are required to be
filed after such date. Such cooperation shall include, but not
be limited to, furnishing prior years' returns or return
preparation packages illustrating previous reporting practices or
containing historical information relevant to the preparation of
such returns, and furnishing such other information within such
party's possession requested by the party filing such returns as
is relevant to their preparation. In the case of any state,
local or foreign joint, consolidated, combined, unitary or group
relief system returns, such cooperation shall also relate to any
other taxable periods in which one party could reasonably require
the assistance of the other party in obtaining any necessary
information.
10.4. Books and Records.
10.4.1. Access. For a period of ten years after the
Closing, each of Sellers and Buyer shall provide the other with
reasonable access during normal business hours to its books and
records and the books and records of the Subsidiaries and Divisions
to the extent they relate to the condition or operation of the Pump
Group prior to the Closing and are requested to prepare tax
returns, to respond to third party claims or for any other
legitimate purpose specified in writing. Each of Sellers and
Buyer shall have the right, at its own expense, to make copies of
any such books and records.
10.4.2. Destruction. Neither Sellers nor Buyer shall destroy
any books or records of the Pump Group to the extent that they
relate to the condition or operation of the Subsidiaries or
Divisions prior to the Closing without first offering to turn
over possession to the other by written notice at least 30
calendar days prior to the proposed date of destruction.
10.5. Confidentiality. Each of Sellers and Buyer may take
such action as it deems reasonably appropriate to separate or
redact information unrelated to the Subsidiaries or Divisions
from documents and other materials requested and made available
pursuant to this Section and to condition access to materials
that it deems confidential to the execution and delivery of any
agreement by the other party not to disclose or misuse such
information.
10.6. Allocation of Purchase Price. The Purchase Price and
the Assumed Liabilities shall be allocated to the Assets for all
purposes (including tax and financial accounting purposes) in a
manner consistent with the Allocation Schedule attached hereto as
Schedule 10.6. After taking into account any adjustment to the
Purchase Price pursuant to Section 3.2, Buyer and Sellers shall,
and shall cause their respective Affiliates to, file all tax
returns (including amended returns and claims for refund) and
information reports in a manner consistent with such values.
Buyer shall prepare and deliver to Sellers within 45 days after
the determination of the Final Closing Net Equity Statement,
three separate Forms 8594, required to be filed under section
1060 of the Code, to reflect the sale by each U.S. member of the
Pump Group.
11. TERMINATION OF AGREEMENT
11.1. Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the
Closing Date only as follows:
11.1.1. By mutual written consent of Buyer and GSC;
11.1.2. By either Buyer or GSC, by giving written notice of
such termination to the other, if (a) any condition to the
terminating party's obligations hereunder (other than those
relating to deliveries at the Closing) has not been satisfied or
waived and (b) the Closing shall not have occurred on or before
December 31, 1997; provided that the terminating party is not in
material breach of its obligations under this Agreement;
11.1.3. By either Buyer or GSC, by giving written notice of
such termination to the other within 10 days of receipt from the
other of any notice of a development that has a Material Adverse
Effect or a material adverse effect, as applicable, entitling it
to terminate this Agreement in accordance with Section 7.12; or
11.1.4. By either Buyer or GSC, by giving written notice of
such termination to the other, if consummation of the Closing
would violate any non-appealable, final Order.
11.2. Effect of Termination. In the event of termination of
this Agreement in accordance with Section 11.1, this Agreement
shall thereafter become void and have no effect, and Sellers and
Buyer shall have no liability to the other or its respective
Affiliates, directors, officers or employees, except for the
obligations of the parties contained in this Section 11.2 and in
Sections 13.2.1, 14.5, 14.7, 14.8 and 14.10 hereof and pursuant
to the Confidentiality Agreement, which shall survive any
termination hereof, and except that nothing herein shall relieve
any party from liability for any breach of this Agreement prior
to termination.
12. SURVIVAL AND INDEMNIFICATION
12.1. Survival. Notwithstanding any otherwise applicable
statute of limitations, the representations and warranties
included or provided for herein shall survive the Closing until
the first anniversary of the Closing Date; provided, however,
that (a) any representation or warranty contained in Sections
5.19 and 5.20 shall survive the Closing until the expiration of
the applicable statute of limitations (including any waivers or
extensions thereof), and (b) any representation or warranty
contained in Sections 5.1, 5.2, 5.4, 6.1 and 6.2 shall survive
the Closing and shall remain in effect without limitation as to
time.
12.2. Indemnification by GSC. GSC, on behalf of all Sellers,
shall indemnify, defend and hold harmless Buyer from and against
any and all Damages suffered by Buyer arising out of:
(a) any claim for which GSC receives notice from Buyer
during the period commencing on the Closing Date and ending, as
the case may be, upon the expiration of the period, if any,
specified in Section 12.1, relating to any breach of any
representation or warranty made by Sellers in this Agreement;
provided, however, that Buyer shall not be entitled to any
Damages for any breach of any representation or warranty
contained in Sections 5.5, 5.6 or 5.19.6 so long as the
methodology used in the preparation of the Final Net Equity
Statement is consistent with the methodology set forth therefor
in Schedule 3.2.1.
(b) any claim relating to any breach of any covenant
by Sellers in this Agreement;
(c) any claim under Treas. Reg. 1.1502 by the Internal
Revenue Service against any member of the Pump Group as a member
of GSC's consolidated group prior to the Closing Date with
respect to any federal income tax liability of GSC for any period
ending on or prior to December 31, 1997; and
(d) any failure by Sellers or any of the Continuing
Affiliates to pay or satisfy or cause to be paid or satisfied any
of the Excluded Liabilities.
12.3. Indemnification by Buyer. Buyer shall indemnify,
defend and hold harmless Sellers from and against any and all
Damages suffered by Sellers arising out of:
(a) any claim for which Buyer receives notice from
Sellers during the period commencing on the Closing Date and
ending, as the case may be, upon the expiration of the period, if
any, specified in Section 12.1, relating to any breach of any
representation or warranty made by Buyer in this Agreement;
(b) any claim relating to any breach of any covenant
by Buyer in this Agreement; and
(c) any failure by Buyer or any Affiliate of Buyer to
pay or satisfy or cause to be paid or satisfied any of the
Assumed Liabilities.
(d) any breach of any obligation of or relating to the
Pump Group occurring on or after the Closing Date for which any
Seller has any obligation or liability under any of the Seller
Guarantees.
12.4. Notice and Resolution of Claims.
12.4.1. Notice. Each party entitled to indemnification
pursuant to Section 12.2 or Section 12.3 (an "Indemnitee") shall
promptly give written notice to the party required to provide
indemnification respectively thereunder (an "Indemnifying Party")
after obtaining knowledge of any claim that it may have pursuant
to this Article 12. Such notice shall set forth in reasonable
detail the claim and the basis for indemnification.
12.4.2. Right to Assume Defense. If such claim for indemnity
shall arise from a claim or Action involving a third party (a
"Third Party Claim"), the Indemnitee shall permit the
Indemnifying Party to assume its defense. If the Indemnifying
Party assumes the defense of such Third party claim, it shall
take all steps reasonably necessary to investigate, defend or
settle diligently such Action and shall, subject to Section 12.5,
hold the Indemnitee harmless from and against any and all Damages
caused by or arising out of any settlement approved by the
Indemnifying Party or any judgment in connection with such Third
Party Claim. Without the written consent of the Indemnitee, the
Indemnifying Party shall not consent to entry of any judgment or
enter into any settlement which would result in the imposition of
an Order which would restrict the future activity or conduct of,
or which would otherwise have a material adverse effect on the
Indemnitee or any Affiliate thereof. The Indemnitee may
participate in such defense or settlement through its own
counsel, but at its own expense.
12.4.3. Failure to Assume Defense. Failure by the Indemnifying
Party to notify the Indemnitee of its election to assume the
defense of any Third Party Claim within 30 calendar days after
its receipt of notice thereof shall be deemed a waiver by the
Indemnifying Party of its right to assume the defense of such
Third Party Claim. In such event, the Indemnitee may defend
against such Third Party Claim in any manner it deems
appropriate. The Indemnitee may settle such Third Party Claim or
consent to the entry of any judgment with respect thereto,
provided that it acts reasonably and in good faith. The
Indemnifying Party shall promptly reimburse Indemnitee (a) for
the amount of all costs and expenses, legal or otherwise,
reasonably incurred by the Indemnitee in connection with the
defense against or settlement of such claims or litigation, and
(b) if no settlement of such claim or litigation is made, for the
amount of any final judgment with respect to such claim or in
such litigation, to the extent that such amount has been actually
paid.
12.5. Limits on Indemnification.
12.5.1. Indemnification Threshold. Neither GSC nor Buyer
shall be liable to any Indemnitee for any Damages that are
indemnifiable pursuant to Section 12.2(a) or Section 12.3(a),
except to the extent that the Damages for any breach exceed
$$50,000 (the "Indemnification Threshold").
12.5.2. Deductible. If Damages exceed the Indemnification
Threshold, GSC shall be liable to Buyer for Damages that are
indemnifiable pursuant to Section 12.2(a) and (b), and Buyer
shall be liable to Sellers for Damages that are indemnifiable
pursuant to Section 12.3(a) and (b), only to the extent that the
aggregate amount of Damages to Buyer or Sellers, respectively,
exceeds $2,000,000 (the "Deductible").
12.5.3. Limit of Liability. The total aggregate liability
of GSC to Buyer for Damages that are indemnifiable pursuant to
Section 12.2(a) and (b), and the total liability of Buyer to
Sellers for Damages that are indemnifiable pursuant to Section
12.3(a) and (b) shall not exceed the amount of the Purchase
Price, as adjusted.
12.5.4. Actual Knowledge. Neither Sellers nor Buyer shall have
any liability hereunder for Damages arising from or relating to a
breach of any representation or warranty if the Indemnifying
Party can establish that the Indemnitee had actual knowledge on
or before the Closing Date of the condition or event constituting
such breach.
12.5.5. Consequential Damages; Mitigation. Neither Sellers
nor Buyer shall have any obligation to indemnify any Indemnitee for
any Consequential Damages or for Damages that are (a) caused,
contributed to or exacerbated by the actions of the other or its
directors, officers, employees or representatives, (b) recovered
or recoverable by the Indemnitee from any third party (including
any insurer), or (c) offset by tax savings realized on account of
such Damages by the Indemnitee or any of its Affiliates.
12.5.6. Exclusive Remedy. This Article 12 sets forth the
exclusive remedy for monetary damages owing from Sellers to Buyer
and from Buyer to Sellers that arise from the matters described
in Sections 12.2, 12.3 and 12.6. Each of the parties hereby
waives any claim or cause of action for monetary damages that it
might assert against the other with respect to the matters
described in Sections 12.2, 12.3 and 12.6, whether under common
law or under any Environmental Law or securities, trade
regulation or other law, regulation or ordinance.
12.5.7. Effect of Materiality Qualifications. For purposes of
determining whether Buyer or Sellers are entitled to
indemnification under Section 12.2(a) or 12.3(a), and whether
limitations on claims or on recovery under Sections 12.5.1
through 12.5.3 above apply to any demand for indemnification,
qualifications as to materiality in individual representations
and warranties shall be disregarded.
12.6. Environmental Matters.
12.6.1. Confidentiality. Buyer shall not and shall cause
its Affillates and their respective employees, officers, directors,
representatives, agents, contractors, consultants and attorneys
(collectively, its "Representatives"), successors and assigns (to
any of the foregoing such disclosure may be made but shall be
made subject to this Section 12.6.1) not to disclose or permit to
be disclosed prior to or after the Closing Date to any third
parties (including Governmental Authorities) without the prior
written consent of GSC, which shall not be unreasonably withheld
for matters within the normal course of operations of the Pump
Group, any information regarding the environmental condition of
any Pump Group Property, including any environmental audit
reports, site assessments, testing results, and evaluations (the
"Environmental Information") if such Environmental Information
could result in or form a basis of an Environmental Claim for
which Sellers are required to indemnify Buyer pursuant to this
Agreement or to any lease entered into between Buyer and Sellers
with respect to any Pump Group Property, (a) unless and to the
extent (i) Buyer is required to disclose such information to a
Governmental Authority or other third parties pursuant to an
applicable Environmental Law or other law or by subpoena or Order
and (ii) to the extent permitted by law, Buyer promptly notifies
Sellers of the reporting obligation or request for disclosure and
permits Sellers to make the disclosure or to defend the request
for the Environmental Information, (b) except in connection with
any proposed transfer of any of the Real Property Sites or the
business or operations of all or a part of the Pump Group (of
which disclosure Buyer shall give prompt notice to GSC and which
shall be made subject to the confidentiality restrictions set
forth in this Section 12.6.1), or (c) except to the extent
reasonably believed to be required to be disclosed in an
emergency.
12.6.2. Conduct of Cleanup. Sellers shall have the right to
perform and control any Cleanup (including all communications
with Governmental Authorities) with respect to any Environmental
Claim for which Buyer is seeking indemnification pursuant to this
Agreement; provided, however, that such Cleanups shall be
designed to achieve compliance in all material respects with
Environmental Laws. All Cleanups shall be effected in a manner
that is designed to minimize, to the greatest extent reasonably
possible, disruption to the normal operations of the Pump Group.
To the extent that any environmental conditions requiring Cleanup
has been materially exacerbated or the costs thereof materially
increased by any acts or failures to act (excluding the mere
passage of time), of Buyer or its Affiliates following the
Closing Date, Buyer shall be responsible for, and shall indemnify
Sellers against, any increase in costs attributable thereto.
12.6.3. Site Access. Buyer and Buyer's successors and
successors in interest shall following the Closing and until the
completion of Sellers' obligations under this Agreement and any
Orders and Permits for which Seller is responsible:
(a) permit Sellers and Sellers' contractors,
consultants and representatives reasonable access to and freedom
of movement at the Pump Group Property in order to perform all
activities required to be performed by Sellers after the Closing
Date pursuant to this Agreement, any Order or any Permit,
including without limitation to perform any Cleanup, installation
of ground water monitoring wells, sampling of ground water,
surface water, surface and subsurface soil, air and other
environmental media, excavation of soil, installation of
pollution control and/or monitoring equipment, capping of and/or
restriction of access to contaminated areas, installation of
ground water collection, treatment, pumping and conveyance
systems, asbestos abatement, and such other measures as may be
reasonably necessary.
(b) permit any duly designated employee, consultant,
contractor, agent or representative of a Governmental Authority
access to the Pump Group Property for purposes of inspection,
sampling and other activities necessary to effectuate the
oversight of Sellers' activities under this Agreement, any Order
or any Permit.
(c) cooperate with Sellers and Sellers' contractors,
consultants, and representatives (with such cooperation including
providing reasonable access to utilities, piping and plumbing at
each Pump Group Property and providing space at such sites for
the mobilization of vehicles and equipment) and not interfere,
delay, increase the cost of, or require modification or
repetition of all or any part of the activities Sellers are
reasonably required to perform under this Agreement, any Order or
any Permit.
12.6.4. Site Testing. Buyer and Sellers have agreed that
Buyer shall not test, and Buyer acknowledges that it has not
performed testing of, any environmental media at the Pump Group
Property prior to entering into this Agreement. Following the
Closing, Buyer shall not arrange for or conduct investigations
of any environmental conditions other than (a) testing or Cleanups
required to be performed under applicable Environmental Laws,
which GSC does not perform in a timely fashion following receipt
of timely notice from Buyer, (b) in the exercise of good faith
business judgment (exercised without regard to the availability
of indemnification hereunder), or (c) in connection with the
investigation of a Third Party Claim if Sellers shall have failed
to perform an obligation and/or to indemnify Buyer for such Third
Party Claim following receipt of timely notice thereof.
12.6.5. Emergency Actions. Notwithstanding the foregoing,
Buyer may take immediate emergency action to the extent necessary
to comply with applicable Environmental Laws.
12.7. Payment and Assignment of Claims.
12.7.1. Payment. All payments made pursuant to this Article
12(other than any interest payments) shall be treated by the
parties hereto on all Tax returns as an adjustment to the
Purchase Price.
12.7.2. Assignment of Claims. If any of the Damages for
which an Indemnifying Party is responsible or allegedly responsible
under this Article 12 are recoverable or potentially recoverable
against any third party at the time when payment is due
hereunder, the Indemnitee shall assign any and all rights that it
may have to recover such Damages to the Indemnifying Party or, if
such rights are not assignable, shall use all reasonable efforts
in good faith to collect any Damages from such third party for
the benefit of the Indemnifying Party.
13. DEFINITIONS; INTERPRETATION
13.1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:
13.1.1. "ACM" means, collectively, asbestos or asbestos-
containing materials.
13.1.2. "Action" means any action, suit, arbitration,
inquiry, proceeding or investigation by or before any Governmental
Authority.
13.1.3. "Active Employee" means any employee of a Seller who
is as of the Closing Date (a) actively employed in the business of
the Pump Group or (b) on an individual leave of absence, with
respect to each employee employed in the business of the Pump
Group who is on vacation, workers' compensation, short-term
disability leave, military leave, layoff with recall rights
pursuant to the recall provisions of the location in question or
other approved leave of absence.
13.1.4. "Affiliate" means, with respect to any entity, any
other entity directly or indirectly controlling, controlled by,
or under common control with such other entity.
13.1.5. "Agreement" as defined in the first paragraph.
13.1.6. "Ashland Site" as defined in Section 1.2.11.
13.1.7. "Assets" as defined in Section 1.1.
13.1.8. "Assumed Environmental Liabilities" means (a) all
liabilities or obligations relating to or arising out of (i) any
investigation or remediation of areas at any Pump Group Property
after a Cleanup has been completed by Sellers under an Order to
the satisfaction of the appropriate Governmental Authorities,
(ii) the release into the environment of Hazardous Substances at,
onto, under or from any Real Property Site if a Third Party Claim
regarding such release is first made after the date that Buyer or
an Affiliate purchases such Real Property Site, (iii) any
remediation, encapsulation, treatment or removal of any ACM on
the currently sealed third floor at the foundry of the Kansas
City Site, which action is attributable to any activity on the
part of Buyer or its Affiliates not required under applicable
law, (iv) any ACM or any ACM encapsulation material at the Real
Property Sites which becomes damaged or friable after the Closing
Date to the extent that such damage results from the negligence
or willful misconduct of Buyer, its Affiliates or their
respective Representatives or invitees, (v) any environmental
condition to the extent arising from and after the Closing Date,
including any release into the environment of Hazardous
Substances at, onto, under or from any Pump Group Property, but
excluding any continuing release first arising prior to the
Closing Date to the extent Sellers shall not have been required
to remediate such condition prior to the date that Buyer or an
Affiliate purchases an affected Real Property Site, (vi) Damages
or Cleanup caused by or resulting from any breach by Buyer of
Section 12.6, and/or (vii) all business operations at the Real
Property Sites or elsewhere by Buyer or any of its Affiliates
from and after the Closing Date, including without limitation any
Damages and/or Cleanup relating to any change after the Closing
Date in the nature of the business operations or manufacturing
processes employed at the Real Property Sites, and (b) fifty
percent (50%) of the first $100,000 of costs incurred annually at
each separate Real Property Site by Sellers for each Third Party
Claim (including any claim or Action involving a Governmental
Authority) first made after the Closing Date and prior to the
purchase of such Real Property Site seeking Cleanup or Damages
arising out of (i) the release into the environment prior to the
Closing Date of Hazardous Substances at, onto, under or from the
Pump Group Property or (ii) the failure of Sellers to comply
prior to the Closing Date with any applicable Environmental Law
in effect prior to the Closing Date with respect to the business
operations of the Pump Group at any Pump Group Property.
13.1.9. "Assumed Liabilities" as defined in Section 2.1.
13.1.10. "Aurora Site" as defined in Section 1.2.11.
13.1.11. "Aurora/Hydromatic" as defined in the first
paragraph.
13.1.12. "Business Employees" as defined in Section 9.1.1.
13.1.13. "Buyer" as defined in the first paragraph.
13.1.14. "Buyer Savings Plan" as defined in Section 9.5.1.
13.1.15. "Buyer Savings Plan Trust" as defined in Section 9.5.1.
13.1.16. "Buyer's Canadian Pension Plan" as defined in Section
9.4.4.
13.1.17. "CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980.
13.1.18. "Cleanup" means the containment, control, removal,
treatment, remediation, mitigation, investigation or evaluation
of any Hazardous Substances, which are imposed by an affirmative
obligation of an Environmental Law.
13.1.19. "Closing" as defined in Section 4.1.
13.1.20. "Closing Net Equity Statement" as defined in
Section 3.2.1.
13.1.21. "Closing Date" as defined in Section 4.1.
13.1.22. "Code" means the Internal Revenue Code of 1986, as
amended.
13.1.23. "Confidentiality Agreement" as defined in Section
7.1.2.
13.1.24. "Consequential Damages" means Damages arising out
of any interruption of business, loss of profits, loss of use of
facilities, claims of customers, loss of goodwill or other
indirect Damages.
13.1.25. "Continuing Affiliates" means any Affiliate of
Sellers following the Closing.
13.1.26. "Contracts" as defined in Section 5.13.
13.1.27. "Damages" means all losses, claims, damages, costs,
fines, penalties, obligations, payments and liabilities, together
with all reasonable and actual costs and expenses (including, in
the case of Third Party Claims only, reasonable outside
attorneys' fees and expenses) incurred in connection with the
foregoing.
13.1.28. "Deductible" as defined in Section 12.5.2.
13.1.29. "Designated 9.1.1 Employees" means up to fifteen
9.1.1 Employees designated by Buyer to Sellers in writing on or before
July 31, 1997.
13.1.30. "Divisions" as defined in Section 1.1.
13.1.31. "Employee Benefit Plan" as defined in Section 5.19.
13.1.32. "Environmental Information" as defined in Section
12.6.1
13.1.33. "Environmental Laws" means the Federal Water
Pollution Control Act, the Clean Air Act, the Toxic Substances Control
Act,the Resource Conservation and Recovery Act, the Solid Waste
Disposal Act, CERCLA, the Emergency Planning and Community Right-
To-Know Act, the Safe Drinking Water Act and similar state and
local laws, and the rules and regulations thereunder, and any
federal, state and local law regulating public health and safety
or worker health and safety, as such laws may apply to
environmental matters and conditions, and the rules and
regulations thereunder.
13.1.34. "Equipment" means any and all machinery, equipment,
mechanical systems, utilities serving the Real Property Sites,
tools, dies and jigs, patterns, computer, vehicles, trailers,
furniture and all other tangible personal property (other than
inventory and corporate books and records) owned or leased by
Sellers and used in the business of the Pump Group, whether or
not reflected on the Financial Statements, but excluding any
above ground tanks with a capacity of more than 500 gallons
located on any Real Property Site at the Closing Date.
13.1.35. "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended.
13.1.36. "ERISA Plan" shall have the meaning set forth in
Section 3(3) of ERISA with respect to any employee benefit plan
maintained or contributed to by a Seller or any of their
Affiliates that currently covers Employees and is subject to
ERISA.
13.1.37. "Excluded Environmental Liabilities" means all
liabilities arising from any Third Party Claim with respect to
any environmental conditions to the extent arising out or
relating to the operations of the Pump Group prior to the Closing
Date, other than Assumed Environmental Liabilities), including
without limitation any Third Party Claim (including any claim or
Action involving a Governmental Authority) seeking Cleanup or
Damages arising out of (a) any environmental condition to the
extent arising prior to the Closing Date, including any release
into the environment of Hazardous Substances at, onto, under or
from any other real property formerly owned, leased or operated
by any Seller for use in the Pump Group prior to the Closing
Date, excluding the Pump Group Property, (b) all Cleanup or other
Damages arising under each of the Actions identified in Schedule
5.16.3, and (c) any negligent acts or willful misconduct of any
Seller and its employees, agents, contractors, consultants or
invitees at the Pump Group Property after the Closing Date to the
extent they are a cause of a Cleanup required to be performed
pursuant to an applicable Environmental Law in effect at the date
of such act or misconduct.
13.1.38. "Excluded Liabilities" as defined in Section 2.2.
13.1.39. "Fairbanks Morse" as defined in the first paragraph.
13.1.40. "Final Net Equity Statement" as defined in
Section 3.2.3.
13.1.41. "Financial Statements" as defined in Section 5.5.
13.1.42. "FM India" as defined in Section 5.4(a).
13.1.43. "FM India Agreements" as defined in Section 5.4(a).
13.1.44. "FM India Shares" as defined in Section 5.4(a).
13.1.45. "GAAP" means generally accepted accounting
principles in the United States.
13.1.46. "Governmental Authority" means any federal,
state,local or foreign government, any of its subdivisions, agencies,
authorities, commissions, boards or bureaus or any federal,
state, local or foreign court of competent jurisdiction.
13.1.47. "GSC" as defined in the first paragraph.
13.1.48. "GSC Pension Plan" means, collectively, the
Corporate Retirement Plan of GSC and the Pension Plan for Bargaining Unit
Employees of GSC.
13.1.49. "GS Limited" as defined in the first paragraph.
13.1.50. "GS Limited Pension Plan" means the Retirement
Plan for Salaried Employees of General Signal Limited in Canada.
13.1.51. "Hazardous Substance" means any "hazardous substance,"
as such term is defined in CERCLA and the rules and regulations
thereunder promulgated in final form prior to the date hereof as
interpreted in accordance with public announcements made prior to
the date hereof.
13.1.52. "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, including the rules and
regulations promulgated thereunder.
13.1.53. "Hydromatic India" as defined in Section 5.4(b).
13.1.54. "Hydromatic India Agreements" as defined in
Section 5.4(b).
13.1.55. "Hydromatic India Shareholders Agreement" as
defined in Section 5.4(b).
13.1.56. "Indemnifying Party" as defined in Section 12.4.1.
13.1.57. "Indemnification Threshold" as defined in Section
12.5.1.
13.1.58. "Indemnitee" as defined in Section 12.4.1.
13.1.59. "Independent Firm" means an accounting firm jointly
selected by Buyer and GSC within two business days after the
expiration of the period for mutual resolution by the parties of
any disagreement under Section 3.2 or, absent such agreement,
Coopers & Lybrand L.L.P.
13.1.60. "India JV Agreements" as defined in Section 5.4(c).
13.1.61. "India JVs" as defined in Section 5.4(c).
13.1.62. "Intellectual Property" as defined in Section 5.12.1.
13.1.63. "Intercompany Obligation" means any intercompany
note,cash advance or payable between GSC or any Continuing Affiliate,
on the one hand, and either Division or Subsidiary, on the other
hand, except for trade payables.
13.1.64. "Interim Net Equity Statement" as defined in
Section 5.5.
13.1.65. "Interim Financial Statements" as defined in
Section 5.5.
13.1.66. "Kansas City Site" as defined in Section 1.2.11.
13.1.67. "Lazard" means Lazard Freres & Co. LLC.
13.1.68. "Lien" means any lien, mortgage, deed of trust,
security interest, charge, pledge, retention of title agreement,
easement, encroachment, condition, reservation, covenant or other
encumbrance affecting title.
13.1.69. "Marks" as defined in Section 1.2.1.
13.1.70. "Material Adverse Effect" means a material adverse
effect on the business, financial condition or results of
operation of the Pump Group, taken as a whole.
13.1.71. "Material Contracts" as defined in Section 5.13.
13.1.72. "Material Leases" as defined in Section 5.9.
13.1.73. "Net Equity" means (a) total assets minus (b) total
current liabilities and minus (c) other non-current liabilities,
as shown on the Closing Net Equity Statement or the Final Net
Equity Statement, as the case may be.
13.1.74. "9.1.1. Employees" means the Active Employees
identified on or before July 31, 1997 by Buyer to GSC to whom
neither Buyer nor its Affiliates shall be obligated to offer
employment pursuant to Section 9.1.1.
13.1.75. "Order" means any order, judgment, injunction,
decree or award of any Governmental Authority.
13.1.76. "Owned Real Property" as defined in Section 5.10.
13.1.77. "Permits" means any permit, license, certificate,
registration, authorization or approval issued by a Governmental
Authority.
13.1.78. "Permitted Liens" means (a) Liens for Taxes that are
not yet due and payable or that are being contested in good faith
by appropriate proceedings, (b) worker's, repairmen's and similar
Liens imposed by Law that have been incurred in the ordinary
course of business, (c) minor imperfections of title and
encumbrances which, individually or in the aggregate, are not
substantial in amount and do not materially detract from the
value of or impair the use of the affected properties or assets
to which they relate, (d) retention of title agreements with
suppliers entered into in the ordinary course of business, (e)
Liens securing any liabilities or obligations disclosed in the
Interim Net Equity Statement, or (f) Liens listed in Schedule
5.8.
13.1.79. "Pump Group" as defined in Section 1.1.
13.1.80. "Pump Group Property" means the Real Property Sites and
any other real property currently leased by Sellers for use in
the Pump Group.
13.1.81. "Purchase Price" as defined in Section 3.1.
13.1.82. "Real Property Sites" as defined in Section 1.2.11.
13.1.83. "Representatives" as defined in Section 12.6.1.
13.1.84. "Retained Assets" as defined in Section 1.2.
13.1.85. " Reuters Screen LIBO Page" means the display
designated as page "LIBO" on the Reuter Monitor Money Rates
Service (or such other page as may replace the LIBO Page on that
service for the purpose of displaying London interbank offered
rates of major banks for United States Dollar deposits).
13.1.86. "Sale Confidentiality Agreements" as defined in
Section 7.3.
13.1.87. "Savings Plan" as defined in Section 9.5.1.
13.1.88. "Seller Guarantees" as defined in Section 1.2.9.
13.1.89. "Sellers" as defined in the first paragraph.
13.1.90. Specified Rate" means with respect to any day, (a)
the offered rate for deposits in United States Dollars (rounded
upwards, if necessary, to the nearest 1/16 of 1%), for delivery
of such deposits on such day, for an interest period of one
month, which appears on the Reuters Screen LIBO Page as of 4:00
p.m. Eastern time on such day, plus (b) 30 basis points. If at
least two rates appear on the Reuters Screen LIBO Page, the rate
used in clause (a) above shall be the arithmetic mean of such
rates (rounded as provided above).
13.1.91. "Subsidiaries" as defined in Section 1.1.
13.1.92. "Tax" or "Taxes" means all income, profits, franchise,
gross receipts, capital, sales, use, withholding, value added, ad
valorem, transfer, employment, social security, disability,
occupation, property, severance, production, excise and other
taxes, duties and similar governmental charges and assessments
imposed by or on behalf of any Governmental Authority (including
interest and penalties thereon).
13.1.93. "Tax Package" as defined in Section 10.2.
13.1.94. "Third Party Claim" as defined in Section 12.4.2.
13.1.95. "12/31 Net Equity Statement" means the unaudited
combined Statement of Net Equity for the Pump Group as of
December 31, 1996, together with the accompanying notes, included
in the Financial Statements.
13.2. Certain Interpretive Matters and Limitations.
13.2.1. Each of the parties hereto is a sophisticated legal
entity that was represented by experienced counsel and, to the
extent it deemed necessary, other advisors in connection with the
Agreement. Accordingly, each of the parties hereto expressly
acknowledges that (a) no party has relied or will rely in respect
of this Agreement or the transactions contemplated hereby upon
any document or written or oral information previously furnished
to or discovered by it or its representatives, other than this
Agreement (including the Schedules hereto) or such of the
foregoing as are delivered at the Closing, and (b) there are no
representations or warranties by or on behalf of either Sellers
or Buyer or any of their respective Affiliates or representatives
other than those expressly set forth in this Agreement.
13.2.2. Any item disclosed in one Section or Schedule shall
be deemed to be disclosed in any other Section or Schedule where
such disclosure is relevant, even if there is no express cross-
reference, provided that the relevance of the disclosure is
reasonably apparent. Disclosure of items that may or may be
required to be disclosed by this Agreement does not mean that
such items are material or create a standard of materiality and
shall not be deemed an admission that any such disclosed matter
is or may give rise to a violation of any law, ordinance or
regulation.
13.2.3. All references in this Agreement to "Sellers'
Knowledge" or phrases such as "to the knowledge of Sellers" or
"known to Sellers" and any similar phrases shall mean that no
person named in Schedule 13.2 has any actual knowledge that such
representation and warranty is not true and correct to the same
extent as provided therein and that:
(a) such person has made reasonable inquiry and
investigation of the officers and business records of
Sellers to the extent considered appropriate by such person.
(b) nothing has come to the attention of such person
in the course of such investigation and review or otherwise
which would reasonably cause Sellers to believe that such
representation and warranty is not true and correct.
13.2.4. Unless the context otherwise requires, (a) all
references to Sections or Schedules are to Sections or Schedules
of or to this Agreement, (b) the term "or" is disjunctive, not
necessarily exclusive, (c) words in the singular include the
plural and vice versa, (c) the term "person shall mean and
include any individual, corporation, partnership, association,
trust or other entity and shall include any successor (by merger
or otherwise) of such entity, (d) all references to "business
days" shall be to any day other than a weekend or day which is a
United States federal holiday or a holiday in New York,
Connecticut or Minnesota, and (e) all references to "$" or dollar
amounts shall be to lawful currency of the United States.
13.2.5. No provision of this Agreement shall be interpreted in
favor of, or against, either Sellers or Buyer by reason of the
extent to which either Sellers or Buyer or their counsel
participated in the drafting thereof or by reason of the extent
to which any such provision is inconsistent with any prior draft
hereof or thereof.
14. MISCELLANEOUS
14.1. Assignability and Binding Effect. Neither this
Agreement nor any party's rights hereunder shall be assignable by
any party hereto without the prior written consent of all other
parties hereto; provided that Buyer may assign this Agreement to
a wholly owned subsidiary; provided, however, that any such
assignment shall not relieve Buyer of any of its obligations
under this Agreement. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their
respective successors and assigns.
14.2. Modification and Waivers. This Agreement may only be
amended or modified in a writing, signed by Buyer and Sellers.
Buyer and GSC, on behalf of Sellers, may extend the time for or
waive the performance of any of the obligations of the others or
waive compliance by the others with any of the covenants or
conditions contained in this Agreement.
14.3. Notices. Any notice, request, instruction or other
documents to be given hereunder by any party to another shall be
in writing and delivered personally or sent by telecopy or
registered mail, postage prepaid (return receipt requested):
If to Sellers, addressed to:
c/o General Signal Corporation
High Ridge Park
Stamford, Connecticut 06904
Attention: Terence D. Martin
Executive Vice President and Chief
Financial Officer
Fax: 203-329-4314
copy to: Joanne L. Bober, Senior Vice
President and General Counsel
General Signal Corporation
High Ridge Park
Stamford, Connecticut 06904
Fax: 203-329-4396
If to Buyer, addressed to:
Pentair, Inc.
Water's Edge Plaza
1500 County Road B2 West
Roseville, MN 55113-310
Attention: : Richard J. Cathcart
Executive Vice President
Fax: (612) 639-5209
Copy to: Louis L. Ainsworth, Senior Vice
President and General Counsel
Water's Edge Plaza
1500 County Road B2 West
Roseville, MN 55113-310
Fax: (612) 639-5203
or at such other address or addresses as may hereafter by
furnished by Buyer or GSC. Any notice given by mail shall be
effective when received. Any notice given by telecopy shall be
effective when the appropriate answerback is received.
14.4. Section and Other Headings. The section and other
headings contained in this Agreement are for reference purposes
only and shall not in any way affect the meaning or
interpretation of this Agreement.
14.5. Governing Law and Consent to Jurisdiction. This
Agreement shall be governed by the laws of the State of New York
applicable to contracts entered into and to be performed therein.
In the event of a dispute or enforcement action hereunder the
parties hereto agree to submit to the venue and jurisdiction of
the New York federal and/or state courts, which courts shall have
exclusive jurisdiction over any dispute or enforcement action
arising hereunder.
14.6. Bulk Sales. Buyer waives compliance by Sellers with
the provisions of the bulk sales law of any state.
14.7. Public Announcements. GSC and Buyer shall agree on the
terms of any press releases to be issued upon the execution of
this Agreement and shall consult each other before issuing any
other press releases with respect to this Agreement and the
transactions contemplated hereby, including any termination of
this Agreement for any reason.
14.8. Expenses. Except as otherwise expressly provided for
herein or in any agreement entered into on or after the date
hereof, Buyer and Sellers shall each pay their own fees and
expenses incident to the negotiation, preparation and execution
of this Agreement, including, without limitation, all of their
respective attorneys' and accounting fees. Buyer shall be
responsible for any sales or transfer taxes payable in connection
with the transactions contemplated by this Agreement.
14.9. Parties in Interest; No Third Party Beneficiaries.
Nothing in this Agreement shall create any third-party
beneficiary rights in any person.
14.10. Return of Information. If for any reason the Closing
does not occur, Buyer shall promptly return to GSC all books,
records and documents of Sellers, either Subsidiary or the Pump
Group (including all copies, if any, thereof) furnished by
Sellers, the Subsidiaries or any of their respective agents,
employees or representatives and shall not use or disclose the
information contained in such books, records or documents for any
purpose or make such information available to any other person.
14.11. Counterparts. This Agreement may be executed in
counterparts, each of which when so executed shall be deemed to
be an original, and such counterparts shall together constitute
but one and the same instrument.
14.12. Arbitration of Disputes.
14.12.1. Except as otherwise provided in Article 3 hereof,
any dispute arising out of or in connection with this Agreement,
including any question regarding its existence, validity,
interpretation or termination, that cannot be resolved amicably
by the parties shall be referred to and finally resolved by
binding arbitration, under the auspices and the then applicable
Commercial Arbitration Rules of the American Arbitration
Association as herein modified or supplemented or otherwise
agreed to by the parties hereto. At any time by express written
agreement, the parties may modify, limit the application of, add
to, or avoid the operation of one or more rules of such
association. The arbitrator or arbitrators shall be selected in
accordance with such rules. The number of arbitrators when the
amount in dispute is $500,000 or less shall be one, and the
number of arbitrators when the amount in dispute is more than
$500,000 shall be three. The location of the arbitration
proceedings shall be Chicago, Illinois. The American Arbitration
Association shall arrange for a prehearing conference as soon as
practicable after the appointment of the arbitrators. At the
prehearing conference, the arbitrators shall set a hearing date,
which shall commence not later than 60 days after the prehearing
conference.
14.12.2. The parties agree that the arbitrators may call
and question any witness, including any expert witness, and may
require a party to produce any relevant documents or evidence
prior to or at any hearing. The parties and the arbitrators
shall proceed expeditiously so that the arbitral award is issued
as soon as practicable. The arbitrators shall be empowered to
grant injunctive relief in the form of interim orders pending the
outcome of the arbitration and in the final arbitral award. The
costs, expenses, and fees of a party incurred in connection with
any arbitration proceeding shall be borne by that party. Costs,
expenses and fees of the arbitration panel shall be borne equally
by Buyer and Sellers, unless the final arbitral award otherwise
provides.
14.12.3. The arbitral award will be the exclusive remedy
for all claims, counterclaims, issues, or accountings presented or
pled to the arbitrators. Any award may, in the discretion of the
arbitrators, include interest from the date of the breach or
other violation of the Agreement until the award is fully paid.
The parties hereto irrevocably submit to the jurisdiction of the
courts of, and United States federal courts sitting in, the State
of New York, for enforcement of the arbitral award. Any
additional costs, fees or expenses incurred in enforcing the
arbitral award will be charged against the party that resists
enforcement.
14.13. Entire Agreement. This Agreement (including the
Schedules hereto) embodies the entire agreement among the parties
and supersedes without limitation all prior agreements,
representations or warranties, whether written or oral, among
Buyer and Sellers and there have been and there are no
agreements, representations or warranties among the parties other
than those set forth herein; except for the Confidentiality
Agreement which shall remain in full force and effect for the
term provided for therein
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
GENERAL SIGNAL CORPORATION
By: \s\ Terence D. Martin
Title: Executive Vice President
and Chief Financial Officer
GENERAL SIGNAL LIMITED
By: \s\ Terence D.Martin
Vice President
AURORA/HYDROMATIC PUMPS INC.
By: \s\ Terry J.Mortimer
Title: Vice President and
Treasurer
FAIRBANKS MORSE PUMP CORPORATION
By: \s\ Terry J.Mortimer
Title: Vice President and Treasurer
PENTAIR, INC.
By: \s\ Winslow H.Buxton
Title: Chief Executive Officer
EXHIBIT 99.1
GENERAL SIGNAL
For Immediate Release Contact: Sue Warner
Phone: (203) 329-1454
Fax: (203) 968-7014
Email: [email protected]
General Signal To Sell Pump Business to Pentair, Inc.
Board Approves Stock Repurchase of up to $150 million of
Common Stock
Stamford, CT (July 21, 1997 ) -- General Signal Corporation
has announced today that it has entered into an agreement to
sell its Pump business unit to Pentair, Inc., a diversified
manufacturer headquartered in St. Paul, Minn. The selling
price is approximately $200 million. It's expected that the
sale will be completed by the fall. Concurrently, the
board of directors has approved a repurchase of up to $150
million of common stock .
Included in the sale of the Pump unit will be all
businesses and brands of the Pump business, including Aurora
Pump, Hydromatic, Layne & Bowler and Fairbanks Morse.
"We are pleased that the Pump business and its employees
will be affiliated with such a highly respected and
successful manufacturer," said General Signal chairman and
CEO Michael D. Lockhart. "Pentair is committed to the pump
industry, and will be able to give the GS Pump business and
its employees the opportunity to be successful in an
industry which has become increasingly competitive in an
expanding global market," Lockhart added.
In addition to its concentration in water products,
Pentair, Inc. operates in the electrical and electronic
enclosures and professional tools and equipment markets, in
addition to water products.
Regarding the stock repurchase, Lockhart noted, "This action
was based on the strong financial condition of the company
and the attractiveness of buying the shares as a sound way
to build shareholder value."
General Signal Corporation of Stamford, CT (NYSE:GSX), with
1996 sales of more than $2 billion, is a leading
manufacturer of quality products serving customers in the
process control, electrical control and industrial
technology industries throughout the world. Please visit
our web site at: http://www.Generalsignal.com.
EXHIBIT 99.2
GENERAL SIGNAL
For Immediate Release Contact: Sue Warner
Phone: 203-329-4322
Fax: 203-968-7014
Email:
[email protected]
General Signal Closes Sale of Its Pump Group to Pentair,
Inc.
Stamford, Conn. (August 25, 1997) - Effective August 23,
General Signal has closed the previously announced sale of
its Pump Group to Pentair, Inc.
General Signal Corporation of Stamford, CT (NYSE:GSX), with
1996 sales of more than $2 billion, is a leading
manufacturer of quality products serving customers in the
process control, electrical control and industrial
technology industries throughout the world. Please visit
our web site at: http://www.GeneralSignal.com.
General Signal Corporation
One High Ridge Park
Stamford, Connecticut
06904-2010 (203) 329-
4100
