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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
------------------------
GOULDS PUMPS, INCORPORATED
(NAME OF SUBJECT COMPANY)
GEORGE ACQUISITION, INC.
ITT INDUSTRIES, INC.
(BIDDERS)
COMMON STOCK, $1.00 PAR VALUE PER SHARE
(TITLE OF CLASS OF SECURITIES)
383550 10 0
(CUSIP NUMBER OF CLASS OF SECURITIES)
VINCENT A. MAFFEO, ESQ.
SENIOR VICE PRESIDENT AND GENERAL COUNSEL
ITT INDUSTRIES, INC.
FOUR WEST RED OAK LANE
WHITE PLAINS, NEW YORK 10604
TELEPHONE: (914) 641-2000
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
WILLIAM E. CURBOW, ESQ.
SIMPSON THACHER & BARTLETT
425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
TELEPHONE: (212) 455-2000
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE**
- ------------------------------------------------------------------------------------------------------
$855,862,614 $171,172.53
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* Based on the offer to purchase all of the outstanding shares of Common Stock
of the Subject Company at $37 cash per share, 21,381,593 Shares outstanding
and 1,689,829 options outstanding as of April 16, 1997 and a maximum of
60,000 shares that may be issued pursuant to certain of the Subject Company's
agreements or plans.
** 1/50 of 1% of Transaction Valuation.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount Previously Paid:
Form or Registration No.:
Filing Party:
Date Filed:
================================================================================
<PAGE> 2
This Tender Offer Statement on Schedule 14D-1 relates to the offer by
George Acquisition, Inc., a Delaware corporation (the "Purchaser"), a wholly
owned subsidiary of ITT Industries, Inc., an Indiana corporation (the "Parent"),
to purchase all of the outstanding shares of Common Stock, par value $1.00 per
share (the "Shares"), of Goulds Pumps, Incorporated, a Delaware corporation (the
"Company"), at a purchase price of $37 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase dated April 25, 1997 (the "Offer to Purchase"), a copy
of which is attached hereto as Exhibit (a)(1), and in the related Letter of
Transmittal (which, together with the Offer to Purchase, as amended from time to
time, constitute the "Offer"), a copy of which is attached hereto as Exhibit
(a)(2).
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Goulds Pumps, Incorporated. The
information set forth in Section 7 ("Certain Information Concerning the
Company") of the Offer to Purchase is incorporated herein by reference.
(b) The exact title of the class of equity securities being sought in the
Offer is Common Stock, par value $1.00 per share, of the Company. The
information set forth in the Introduction (the "Introduction") of the Offer to
Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by the Purchaser and the Parent.
The information set forth in Section 8 ("Certain Information Concerning the
Purchaser and the Parent") of the Offer to Purchase and in Schedule I thereto is
incorporated herein by reference.
(e) and (f) During the last five years, neither the Purchaser nor the
Parent nor, to the best knowledge of the Purchaser or the Parent, any of the
persons listed in Schedule I to the Offer to Purchase (i) has been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) was a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) Since January 1, 1994, there have been no transactions which would be
required to be disclosed under this Item 3(a) between any of the Purchaser or
the Parent or, to the best knowledge of the Purchaser and the Parent, any of the
persons listed in Schedule I to the Offer to Purchase and the Company or any of
its executive officers, directors or affiliates.
(b) The information set forth in the Introduction, Section 10 ("Background
of the Offer; Contacts with the Company") and Section 11 ("The Merger
Agreement") of the Offer to Purchase and in Exhibit (c)(1) of this Schedule
14D-1 is incorporated herein by reference. Except as set forth in the
Introduction, Section 10 and Section 11 of the Offer to Purchase and in Exhibit
(c)(1) of this Schedule 14D-1, since January 1, 1994, there have been no
contacts, negotiations or transactions which would be required to be disclosed
under this Item 3(b) between any of the Purchaser or the Parent or any of their
respective subsidiaries or, to the best knowledge of the Purchaser and the
Parent, any of those persons listed in Schedule I to the Offer to Purchase and
the Company or its affiliates concerning a merger, consolidation or acquisition,
a tender offer or other acquisition of securities, an election of directors or a
sale or other transfer of a material amount of assets.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(c) Not applicable.
2
<PAGE> 3
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e)The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company"), Section 11 ("The Merger
Agreement"), Section 12 ("Purpose of the Offer; the Merger; Plans for the
Company") and Section 13 ("Dividends and Distributions") of the Offer to
Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 14 ("Effect of the Offer
on the Market for the Shares, Nasdaq Listing and Exchange Act Registration") of
the Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction and Section 8
("Certain Information Concerning the Purchaser and the Parent") of and Schedule
I to the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning the Purchaser and the Parent"), Section 10 ("Background
of the Offer; Contacts with the Company"), Section 11 ("The Merger Agreement")
and Section 12 ("Purpose of the Offer; the Merger; Plans for the Company") of
the Offer to Purchase is incorporated herein by reference. Except as set forth
in the Introduction, Section 8, Section 10, Section 11 and Section 12 of the
Offer to Purchase, none of the Purchaser and the Parent nor, to the best
knowledge of the Purchaser and the Parent, any of the persons listed in Schedule
I to the Offer to Purchase, has any contract, arrangement, understanding or
relationship with any other person with respect to any securities of the Company
(including, but not limited to, any contract, arrangement, understanding or
relationship concerning the transfer or the voting of any such securities, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies).
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning the
Purchaser and the Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) None.
(b) and (c) The information set forth in Section 16 ("Certain Legal Matters
and Regulatory Approvals") of the Offer to Purchase is incorporated herein by
reference.
(d) The information set forth in Section 14 ("Effect of the Offer on the
Market for the Shares, Nasdaq Listing and Exchange Act Registration") and
Section 16 ("Certain Legal Matters and Regulatory Approvals") of the Offer to
Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
3
<PAGE> 4
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
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(a)(1) Offer to Purchase dated April 25, 1997.
(a)(2) Letter of Transmittal.
(a)(3) Notice of Guaranteed Delivery.
(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees.
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust Companies
and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9.
(a)(7) Summary Advertisement as published on April 25, 1997.
(b)(1) Five-year Competitive Advance and Revolving Credit Facility Agreement (the
"Credit Agreement") dated as of November 10, 1995.
(b)(2) First Amendment to the Credit Agreement dated as of May 23, 1996.
(c) Agreement and Plan of Merger, dated as of April 20, 1997, by and among ITT
Industries, Inc., George Acquisition, Inc. and Goulds Pumps, Incorporated.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
</TABLE>
4
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this Statement is true, complete and correct.
ITT INDUSTRIES, INC.
By: /s/ VINCENT A. MAFFEO
------------------------------------
Name: Vincent A. Maffeo
Title: Senior Vice President
and General Counsel
GEORGE ACQUISITION, INC.
By: /s/ LAWRENCE J. SWIRE
------------------------------------
Name: Lawrence J. Swire
Title: Vice President
Date: April 25, 1997
5
<PAGE> 6
EXHIBIT INDEX
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EXHIBIT PAGE
NO. DESCRIPTION NO.
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(a)(1) Offer to Purchase dated April 25, 1997........................................
(a)(2) Letter of Transmittal.........................................................
(a)(3) Notice of Guaranteed Delivery.................................................
(a)(4) Letter from the Dealer Manager to Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees......................................................
(a)(5) Letter to clients for use by Brokers, Dealers, Commercial Banks, Trust
Companies and Nominees......................................................
(a)(6) Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9....................................................................
(a)(7) Summary Advertisement as published on April 25, 1997..........................
(b)(1) Five-year Competitive Advance and Revolving Credit Facility Agreement (the
"Credit Agreement") dated as of November 10, 1995...........................
(b)(2) First Amendment to the Credit Agreement dated as of May 23, 1996..............
(c) Agreement and Plan of Merger, dated as of April 20, 1997, by and among ITT
Industries, Inc., George Acquisition, Inc. and Goulds Pumps, Incorporated...
</TABLE>
<PAGE> 1
Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Goulds Pumps, Incorporated
at
$37.00 Net Per Share
by
George Acquisition, Inc.
a wholly owned subsidiary of
ITT Industries, Inc.
------------------------
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT,
NEW YORK CITY TIME, ON THURSDAY, MAY 22, 1997, UNLESS THE OFFER IS EXTENDED.
------------------------
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER A
NUMBER OF SHARES OF COMMON STOCK WHICH, TOGETHER WITH ANY SHARES OWNED BY ITT
INDUSTRIES, INC. OR GEORGE ACQUISITION, INC. (THE "PURCHASER"), CONSTITUTES MORE
THAN 50% OF THE VOTING POWER (DETERMINED ON A FULLY-DILUTED BASIS) OF ALL
SECURITIES OF GOULDS PUMPS, INCORPORATED (THE "COMPANY") ENTITLED TO VOTE
GENERALLY IN THE ELECTION OF DIRECTORS OR IN A MERGER AND (II) THE EXPIRATION OR
TERMINATION OF ALL APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS. SEE THE INTRODUCTION AND SECTIONS 1 AND 15.
------------------------
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY AND DETERMINED THAT THE
OFFER AND THE MERGER PURSUANT THERETO ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE HOLDERS OF SHARES AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE
OFFER AND TENDER THEIR SHARES TO THE PURCHASER.
------------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
Shares (as defined herein) of the Company should either (1) complete and sign
the Letter of Transmittal (or a facsimile thereof) in accordance with the
instructions in the Letter of Transmittal, mail or deliver the Letter of
Transmittal (or such facsimile) and any other required documents to the
Depositary (as defined herein), and either deliver the certificates representing
the tendered Shares and any other required documents to the Depositary or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
Section 3 or (2) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder.
Stockholders having Shares registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if they desire to tender
Shares so registered.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot comply
with the procedure for book-entry transfer on a timely basis, may tender such
Shares by following the procedures for guaranteed delivery set forth in Section
3.
Questions and requests for assistance may be directed to Morgan Stanley &
Co. Incorporated (the "Dealer Manager") or to Georgeson & Company Inc. (the
"Information Agent") at their respective addresses and telephone numbers set
forth on the back cover of this Offer to Purchase. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent or the Dealer Manager,
or from brokers, dealers, commercial banks or trust companies.
------------------------
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
Incorporated
April 25, 1997
<PAGE> 2
TABLE OF CONTENTS
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PAGE
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INTRODUCTION........................................................................ 1
THE TENDER OFFER.................................................................... 3
1. Term of the Offer; Expiration Date........................................... 3
2. Acceptance for Payment and Payment for Shares................................ 4
3. Procedure for Tendering Shares............................................... 5
4. Withdrawal Rights............................................................ 7
5. Certain Federal Income Tax Consequences...................................... 8
6. Price Range of Shares; Dividends............................................. 8
7. Certain Information Concerning the Company................................... 9
8. Certain Information Concerning the Purchaser and the Parent.................. 11
9. Source and Amount of Funds................................................... 12
10. Background of the Offer; Contacts with the Company........................... 13
11. The Merger Agreement......................................................... 16
12. Purpose of the Offer; the Merger; Plans for the Company...................... 26
13. Dividends and Distributions.................................................. 27
14. Effect of the Offer on the Market for the Shares, Nasdaq Listing and Exchange
Act Registration......................................................... 28
15. Certain Conditions of the Offer.............................................. 29
16. Certain Legal Matters and Regulatory Approvals............................... 31
17. Fees and Expenses............................................................ 33
18. Miscellaneous................................................................ 34
SCHEDULE I Certain Information Regarding the Directors and Executive Officers of the
Purchaser and the Parent.
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<PAGE> 3
To: The Stockholders of
GOULDS PUMPS, INCORPORATED
INTRODUCTION
George Acquisition, Inc., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of ITT Industries, Inc., an Indiana corporation (the
"Parent"), hereby offers to purchase all of the outstanding shares of Common
Stock, par value $1.00 per share (the "Shares"), of Goulds Pumps, Incorporated,
a Delaware corporation (the "Company"), at a purchase price of $37.00 per Share,
net to the seller in cash without interest thereon, upon the terms and subject
to the conditions set forth in this Offer to Purchase and in the related Letter
of Transmittal (which, as amended from time to time, together constitute the
"Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the transfer and sale of Shares pursuant to the Offer. The
Purchaser will pay all fees and expenses of Morgan Stanley & Co. Incorporated
("Morgan Stanley"), which is acting as Dealer Manager for the Offer (in such
capacity, the "Dealer Manager"), The Bank of New York, which is acting as the
Depositary (in such capacity, the "Depositary") and Georgeson & Company Inc.,
which is acting as the Information Agent (in such capacity, the "Information
Agent"), incurred in connection with the Offer. See Section 17.
The Board of Directors of the Company (the "Board of Directors") has
unanimously approved the Merger Agreement (as defined below) and the
transactions contemplated thereby, and determined that the Offer and the Merger
(as defined below) are fair to, and in the best interests of, the holders of the
Shares and recommends that the stockholders of the Company accept the Offer and
tender their Shares to the Purchaser.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (i) THERE BEING VALIDLY
TENDERED AND NOT PROPERLY WITHDRAWN PRIOR TO THE EXPIRATION DATE (AS DEFINED IN
SECTION 1) A NUMBER OF SHARES WHICH, TOGETHER WITH ANY SHARES OWNED BY THE
PARENT OR THE PURCHASER, CONSTITUTES MORE THAN 50% OF THE VOTING POWER
(DETERMINED ON A FULLY-DILUTED BASIS), ON THE DATE OF PURCHASE, OF ALL THE
SECURITIES OF THE COMPANY ENTITLED TO VOTE GENERALLY IN THE ELECTION OF
DIRECTORS OR IN A MERGER (THE "MINIMUM CONDITION") AND (ii) THE EXPIRATION OR
TERMINATION OF ALL APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR ACT"). SEE SECTIONS 1
AND 15. IF THE PURCHASER PURCHASES NOT LESS THAN THAT NUMBER OF SHARES NEEDED TO
SATISFY THE MINIMUM CONDITION, IT WILL BE ABLE TO EFFECT THE MERGER WITHOUT THE
AFFIRMATIVE VOTE OF ANY OTHER STOCKHOLDER OF THE COMPANY. SEE SECTION 12.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of April 20, 1997 (the "Merger Agreement"), among the Parent, the Purchaser
and the Company. The Merger Agreement provides, among other things, for the
making of the Offer by the Purchaser, and further provides that, following the
completion of the Offer, upon the terms and subject to the conditions of the
Merger Agreement and the Delaware General Corporation Law (the "DGCL"), the
Purchaser will be merged with and into the Company (the "Merger"). Following the
Merger, the Company will continue as the surviving corporation (the "Surviving
Corporation") and become a wholly owned subsidiary of the Parent, and the
separate corporate existence of the Purchaser will cease. See Section 12.
At the effective time of the Merger (the "Effective Time"), each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares held in the treasury of the Company and each Share owned by the Parent,
the Purchaser or any other direct or indirect subsidiary of the Parent or of the
Company, which shall be cancelled, and other than Shares, if any (collectively,
"Dissenting Shares"), held by stockholders who have not voted in favor of or
consented to the Merger and who have delivered a written demand for appraisal of
such Shares in the time and manner provided in Section 262 of the DGCL will be
cancelled, extinguished and converted into the right to receive $37.00 in cash
(the "Merger Consideration"), payable to the holder thereof, without interest,
upon surrender of the certificate formerly representing such Share, less any
required withholding taxes.
The Company has represented to the Parent that (i) as of April 16, 1997,
there were 21,381,593 Shares issued and outstanding and 1,689,829 Shares
reserved for issuance upon the exercise of outstanding stock
<PAGE> 4
options and (ii) between April 16, 1997 and the date of the Merger Agreement, no
Shares have been issued by the Company (except upon exercise of such options).
Under the terms of the Merger Agreement, the Company has reserved the right to
issue up to an additional 60,000 Shares pursuant to an existing employment
agreement and a non-employee director plan pursuant to which non-employee
directors are paid a portion of their annual retainer in Shares and, as a
result, all of such additional Shares (whether or not issued) will be assumed to
be outstanding for purposes of determining whether the Minimum Condition is
satisfied. Based upon the foregoing, the Purchaser believes that approximately
11,565,712 Shares constitute a majority of the outstanding Shares on a
fully-diluted basis.
The Company has advised the Purchaser that, to the knowledge of the
Company, all the directors of the Company intend to tender their Shares pursuant
to the Offer.
The Merger Agreement is more fully described in Section 11. Certain federal
income tax consequences of the sale of the Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
2
<PAGE> 5
THE TENDER OFFER
1. TERM OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), the Purchaser will accept
for payment and pay for all Shares validly tendered on or prior to the
Expiration Date and not properly withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 Midnight, New York City time, on Thursday, May 22,
1997, unless and until the Purchaser, in its sole discretion (but subject to the
terms and conditions of the Merger Agreement), shall have extended the period
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by the
Purchaser, shall expire.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, SATISFACTION OF THE
MINIMUM CONDITION AND CERTAIN OTHER CONDITIONS. SEE SECTION 15, WHICH SETS FORTH
IN FULL THE CONDITIONS TO THE OFFER. SUBJECT TO THE PROVISIONS OF THE MERGER
AGREEMENT AND THE APPLICABLE RULES AND REGULATIONS OF THE SECURITIES AND
EXCHANGE COMMISSION (THE "COMMISSION"), THE PURCHASER RESERVES THE RIGHT, IN ITS
SOLE DISCRETION, TO WAIVE ANY OR ALL CONDITIONS TO THE OFFER (OTHER THAN THE
MINIMUM CONDITION) AND TO MAKE ANY OTHER CHANGES IN THE TERMS AND CONDITIONS OF
THE OFFER. SUBJECT TO THE PROVISIONS OF THE MERGER AGREEMENT, INCLUDING THE
PROVISIONS OF THE MERGER AGREEMENT SET FORTH IN THE NEXT PARAGRAPH, AND THE
APPLICABLE RULES AND REGULATIONS OF THE COMMISSION, IF BY THE EXPIRATION DATE
ANY OR ALL OF SUCH CONDITIONS TO THE OFFER HAVE NOT BEEN SATISFIED, THE
PURCHASER RESERVES THE RIGHT (BUT SHALL NOT BE OBLIGATED) TO (i) TERMINATE THE
OFFER AND RETURN ALL TENDERED SHARES TO TENDERING STOCKHOLDERS, (ii) WAIVE SUCH
UNSATISFIED CONDITIONS AND PURCHASE ALL SHARES VALIDLY TENDERED OR (iii) EXTEND
THE OFFER AND, SUBJECT TO THE TERMS OF THE OFFER (INCLUDING THE RIGHTS OF
STOCKHOLDERS TO WITHDRAW THEIR SHARES), RETAIN THE SHARES WHICH HAVE BEEN
TENDERED, UNTIL THE TERMINATION OF THE OFFER, AS EXTENDED.
Subject to the applicable rules and regulations of the Commission and the
terms of the Merger Agreement, the Purchaser expressly reserves the right, in
its sole discretion, at any time and from time to time, and regardless of
whether or not any of the events set forth in Section 15 shall have occurred, to
(i) extend the period of time during which the Offer is open and thereby delay
acceptance for payment of, and the payment for, any Shares, by giving oral or
written notice of such extension to the Depositary and (ii) amend the Offer in
any respect by giving oral or written notice of such amendment to the
Depositary. During any such extension, all Shares previously tendered and not
properly withdrawn will remain subject to the Offer, subject to the right of a
tendering stockholder to withdraw such stockholder's Shares. Under the terms of
the Merger Agreement, however, unless previously approved by the Company in
writing, the Purchaser will not change the Minimum Condition or decrease the
price per Share payable in the Offer, change the form of consideration payable
in the Offer (other than by adding consideration), reduce the maximum number of
Shares to be purchased in the Offer, or amend the terms or conditions to the
Offer or impose conditions or terms to the Offer in addition to those set forth
in Section 15 which, in either case, are adverse to the holders of Shares. The
Purchaser shall have no obligation to pay interest on the purchase price of
tendered Shares. The rights reserved by the Purchaser in this paragraph are in
addition to the Purchaser's rights to terminate the Offer pursuant to Section
15.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof, and such announcement in
the case of an extension will be made in accordance with Rule 14e-1(d) no later
than 9:00 A.M., New York City time, on the next business day after the
previously scheduled Expiration Date. Without limiting the manner in which the
Purchaser may choose to make any public announcement, except as provided by
applicable law (including Rules 14d-4(c) and 14(d)-6(d) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which require that
material changes be promptly disseminated to holders of Shares), the Purchaser
shall have no obligation to publish, advertise or otherwise communicate any such
public announcement other than by issuing a release to the Dow Jones News
Service.
If the Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, the Purchaser will disseminate
additional tender offer material and extend the Offer to the extent required by
Rules 14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period
during which
3
<PAGE> 6
an offer must remain open following material changes in the terms of the offer,
other than a change in price or a change in the percentage of securities sought,
will depend upon the facts and circumstances, including the materiality, of the
changes. With respect to a change in price or, subject to certain limitations, a
change in the percentage of securities sought, a minimum ten business day period
from the day of such change is generally required to allow for adequate
dissemination to stockholders. For purposes of the Offer, a "business day" means
any day other than a Saturday, Sunday, or a federal holiday and consists of the
time period from 12:01 A.M. through 12:00 Midnight, New York City time.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. This Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and furnished to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing, for subsequent transmittal to beneficial
owners of Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), the
Purchaser will accept for payment and will pay for all Shares validly tendered
and not properly withdrawn on or prior to the Expiration Date as soon as
practicable after the later to occur of (i) the Expiration Date and (ii) the
satisfaction or waiver of the conditions of the Offer set forth in Section 15,
including without limitation the expiration or termination of the waiting period
applicable to the acquisition of Shares pursuant to the Offer and the Merger
under the HSR Act, and satisfaction of any applicable foreign regulatory
requirements. In addition, subject to applicable rules of the Commission, the
Purchaser expressly reserves the right to delay acceptance for payment of or
payment for Shares pending receipt of any other regulatory approvals specified
in Section 16. Any such delays will be effected in compliance with Rule 14e-1(c)
under the Exchange Act.
For information with respect to approvals required to be obtained prior to
the consummation of the Offer, including the HSR Act, see Section 16.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
Certificates for such Shares ("Share Certificates") or timely confirmation (a
"Book-Entry Confirmation") of a book-entry transfer of such Shares into the
Depositary's account at The Depository Trust Company or the Philadelphia
Depository Trust Company (each a "Book-Entry Transfer Facility" and,
collectively, the "Book-Entry Transfer Facilities") pursuant to the procedures
set forth in Section 3, (ii) the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees, or
an Agent's Message (as defined below) in connection with a book-entry transfer,
and (iii) any other documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by a Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to the
Depositary of the Purchaser's acceptance for payment of such Shares pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from the Purchaser
and transmitting such payments to stockholders whose Shares have been accepted
for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE PURCHASE PRICE FOR
SHARES BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY
DELAY IN MAKING SUCH PAYMENT. If for any reason whatsoever acceptance for
payment of or payment for any Shares tendered pursuant to the Offer is delayed
or the Purchaser is unable to accept for payment or pay for Shares tendered
pursuant to the Offer, then without prejudice to the Purchaser's
4
<PAGE> 7
rights set forth herein, the Depositary may nevertheless, on behalf of the
Purchaser and subject to Rule 14e-1(c) under the Exchange Act, retain tendered
Shares and such Shares may not be withdrawn except to the extent that the
tendering stockholder is entitled to and duly exercises withdrawal rights as
described in Section 4.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted for more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned
without expense to the tendering stockholder (or, in the case of Shares tendered
by book-entry transfer into the Depositary's account at a Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, such Shares will be
credited to an account maintained at such Book-Entry Transfer Facility), as
promptly as practicable following the expiration, termination or withdrawal of
the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to one or more of its affiliates the right to purchase all
or any portion of the Shares tendered pursuant to the Offer, but any such
transfer or assignment will not relieve the Purchaser of its obligations under
the Offer and will in no way prejudice the rights of tendering stockholders to
receive payment for Shares validly tendered and accepted for payment pursuant to
the Offer.
3. PROCEDURE FOR TENDERING SHARES. Valid Tenders. Except as set forth
below, in order for Shares to be validly tendered pursuant to the Offer, the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry delivery of Shares, and any other documents
required by the Letter of Transmittal, must be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase on or
prior to the Expiration Date and either (i) Share Certificates evidencing
tendered Shares must be received by the Depositary at such address or such
Shares must be tendered pursuant to the procedure for book-entry transfer
described below and a Book-Entry Confirmation must be received by the
Depositary, in each case on or prior to the Expiration Date, or (ii) the
guaranteed delivery procedures described below must be complied with.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Shares at the Book-Entry Transfer Facilities for
purposes of the Offer within two business days after the date of this Offer to
Purchase. Any financial institution that is a participant in the system of any
Book-Entry Transfer Facility may make book-entry delivery of Shares by causing
such Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account at such Book-Entry Transfer Facility in accordance with such Book-Entry
Transfer Facility's procedures for such transfer. However, although delivery of
Shares may be effected through book-entry transfer at a Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, together with any required signature guarantees, or an
Agent's Message in connection with a book-entry transfer, and any other
documents required by the Letter of Transmittal, must in any case be received by
the Depositary at one of its addresses set forth on the back cover of this Offer
to Purchase on or prior to the Expiration Date, or the guaranteed delivery
procedures described below must be complied with.
DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH
SUCH BOOK-ENTRY TRANSFER FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO
THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE DELIVERY WILL BE DEEMED
MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN THE CASE OF
BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED.
IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of the Securities
Transfer Agents Medallion Program (each of the foregoing being referred to as an
"Eligible Institution"), except in cases where Shares are tendered (i) by a
registered holder of Shares who has not
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<PAGE> 8
completed either the box labeled "Special Payment Instructions" or the box
labeled "Special Delivery Instructions" on the Letter of Transmittal or (ii) for
the account of an Eligible Institution. See Instructions 1 and 5 of the Letter
of Transmittal.
If the Share Certificates are registered in the name of a person other than
the signer of the Letter of Transmittal, or if payment is to be made, or Share
Certificates not accepted for payment or not tendered are to be returned, to a
person other than the registered holder, the Share Certificates must be endorsed
or accompanied by appropriate stock powers, in either case, signed exactly as
the name of the registered holder appears on such certificates, with the
signatures on such certificates or stock powers guaranteed as aforesaid. See
Instructions 1 and 5 of the Letter of Transmittal.
If Share Certificates are forwarded separately to the Depositary, a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof) must accompany each such delivery.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available, or such stockholder cannot deliver the Share Certificates and all
other required documents to reach the Depositary on or prior to the Expiration
Date, or such stockholder cannot complete the procedure for delivery by
book-entry transfer on a timely basis, such Shares may nevertheless be tendered,
provided that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery substantially in the form made available by the Purchaser is
received by the Depositary as provided below on or prior to the Expiration
Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation),
representing all tendered Shares in proper form for transfer, together with
the Letter of Transmittal (or a facsimile thereof) properly completed and
duly executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
Nasdaq National Market trading days after the date of execution of such
Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution and a representation that the
stockholder owns the Shares tendered within the meaning of, and that the tender
of the Shares effected thereby complies with, Rule 14e-4 under the Exchange Act,
each in the form set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and any other documents required by the Letter of Transmittal.
Accordingly, payment might not be made to all tendering stockholders at the same
time and will depend upon when Share Certificates or Book-Entry Confirmations of
such Shares are received into the Depositary's account at a Book-Entry Transfer
Facility.
Appointment as Proxy. By executing the Letter of Transmittal, a tendering
stockholder irrevocably appoints designees of the Purchaser and each of them as
such stockholder's attorneys-in-fact and proxies, with full power of
substitution, in the manner set forth in the Letter of Transmittal, to the full
extent of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser (and with respect to any
and all other Shares or other securities issued or issuable in respect of such
Shares on or after the date hereof). All such powers of attorney and proxies
shall be considered irrevocable and coupled with an interest in the tendered
Shares. Such appointment will be effective when, and only to the extent that,
the Purchaser accepts such Shares for payment. Upon such acceptance for payment,
all prior powers of attorney and proxies given by such stockholder with respect
to such Shares (and such other Shares
6
<PAGE> 9
and securities) will be revoked without further action, and no subsequent powers
of attorney and proxies may be given nor any subsequent written consents
executed (and, if given or executed, will not be deemed effective). The
designees of the Purchaser will, with respect to the Shares (and such other
Shares and securities) for which such appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's payment for such Shares, the Purchaser must be able to
exercise full voting rights with respect to such Shares and other securities,
including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser in its sole discretion, which
determination shall be final and binding on all parties. The Purchaser reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may in the opinion of its
counsel be unlawful. The Purchaser also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender of
Shares of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of the Purchaser, the Parent, any of their
affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification. The Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of federal income tax law, the Depositary may be
required to withhold 31% of the amount of any payments of cash pursuant to the
Offer. In order to avoid backup withholding, each stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the payor of such
cash with such stockholder's correct taxpayer identification number ("TIN") on a
substitute Form W-9 and certify, under penalties of perjury, that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such stockholder and payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31%. All stockholders
surrendering Shares pursuant to the Offer should complete and sign the
substitute Form W-9 included in the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to the
Depositary). Certain stockholders (including among others all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 of the
Letter of Transmittal.
Other Requirements. The Purchaser's acceptance for payment of Shares
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering stockholder and the Purchaser upon the
terms and subject to the conditions of the Offer, including the tendering
stockholder's representation and warranty that the stockholder is the holder of
the Shares within the meaning of, and that the tender of the Shares complies
with, Rule 14e-4 under the Exchange Act.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless theretofore accepted
for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after June 23, 1997. If the Purchaser extends the Offer, is delayed in its
acceptance for payment of Shares or is unable to purchase Shares validly
tendered pursuant to the Offer for any reason, then without prejudice to the
Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf
of the Purchaser, retain tendered Shares and such Shares may not be withdrawn
except to the extent that tendering
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<PAGE> 10
stockholders are entitled to withdrawal rights as described in this Section 4.
Any such delay in acceptance for payment will be accompanied by an extension of
the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Share Certificates to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signatures on the notice of withdrawal must
be guaranteed by an Eligible Institution unless such Shares have been tendered
for the account of an Eligible Institution. If Shares have been tendered
pursuant to the procedure for book-entry transfer as set forth in Section 3, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, the Parent, any of their affiliates or assigns, the Dealer Manager,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The summary of tax
consequences set forth below is for general information only and is based on the
law as currently in effect. The tax treatment of each stockholder will depend in
part upon such stockholder's particular situation. Special tax consequences not
described herein may be applicable to particular classes of taxpayers, such as
financial institutions, broker-dealers, persons who are not citizens or
residents of the United States, stockholders who acquired their Shares through
the exercise of an employee stock option or otherwise as compensation, and
persons who received payments in respect of options to acquire Shares. ALL
STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY
AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended, and may also be a taxable transaction under applicable state,
local, foreign income or other tax laws. Generally, for Federal income tax
purposes, a tendering stockholder will recognize gain or loss in an amount equal
to the difference between the cash received by the stockholder pursuant to the
Offer or the Merger and the stockholder's adjusted tax basis in the Shares
tendered by the stockholder and purchased pursuant to the Offer or the Merger.
For Federal income tax purposes, such gain or loss will be a capital gain or
loss if the Shares are a capital asset in the hands of the stockholder, and a
long-term capital gain or loss if the stockholder's holding period is more than
one year as of the date the Purchaser accepts such Shares for payment pursuant
to the Offer or the effective date of the Merger, as the case may be. There are
limitations on the deductibility of capital losses.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and traded on
the Nasdaq National Market under the symbol "GULD". The following table sets
forth, for the quarters indicated, the high and low sales prices per Share on
the Nasdaq National Market as reported in the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (the "1996 Annual Report") with
respect to periods occurring in 1995
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<PAGE> 11
and 1996 and as reported by the Dow Jones News Service thereafter, and the
amount of cash dividends paid or declared per share for each quarter based on
publicly available sources.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------ ------ ---------
<S> <C> <C> <C>
Year Ended December 31, 1995:
First Quarter.................................... $24.25 $19.63 $ .20
Second Quarter................................... 25.50 20.38 .20
Third Quarter.................................... 23.63 21.00 .20
Fourth Quarter................................... 26.00 22.63 .20
Year Ended December 31, 1996:
First Quarter.................................... 25.13 20.88 .20
Second Quarter................................... 25.88 20.00 .20
Third Quarter.................................... 25.88 21.13 .20
Fourth Quarter................................... 25.00 20.38 .20
Year Ended December 31, 1997:
First Quarter.................................... 24.88 22.63 .20
Second Quarter (through April 24, 1997).......... 24.25 22.75 .20
</TABLE>
On March 24, 1997, the last full trading day prior to the date that the
Parent sent a letter to the Company expressing interest in acquiring the
Company, the closing sale price per Share reported on the Nasdaq National Market
was $23.00. On April 18, 1997, the last full trading day prior to announcement
of the Offer, the closing sale price per Share reported on the Nasdaq National
Market was $22.88. On April 24, 1997, the last full trading day before
commencement of the Offer, the closing sale price per Share reported on the
Nasdaq National Market was $36.25. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
Pursuant to the Merger Agreement, the Company has agreed not to declare,
set aside, make or pay any dividend or other distribution, other than regular
quarterly dividends consistent with past practice, in an amount not to exceed
$.20 per share, and the distribution of the Rights pursuant to the Rights Plan
(as defined in Section 11).
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including financial
information, has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources. The summary
information concerning the Company in this Section 7 and elsewhere in this Offer
to Purchase is derived from the 1996 Annual Report and other publicly available
information. The summary information set forth below is qualified in its
entirety by reference to such reports (which may be obtained and inspected as
described below) and should be considered in conjunction with the more
comprehensive financial and other information in such reports and other publicly
available reports and documents filed by the Company with the Commission and
other publicly available information. Although the Purchaser and the Parent do
not have any knowledge that would indicate that any statements contained herein
based upon such reports are untrue, neither the Purchaser nor the Parent assumes
any responsibility for the accuracy or completeness of the information contained
therein, or for any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such information but
which are unknown to the Purchaser and the Parent.
General. The Company started business in 1848 and was later incorporated
in 1864 under the laws of New York State as Downs & Co. Manufacturing Company.
In 1869, the Company's name was changed to The Goulds Manufacturing Company and
in 1926 the name was changed to Goulds Pumps, Incorporated. Effective December
31, 1984, the Company was reincorporated under the laws of the State of Delaware
by virtue of a merger transaction. The Company's principal executive offices are
located at 300 WillowBrook Office Park, Fairport, New York 14450. The telephone
number of the Company at such offices is (716) 387-6600.
The Company designs, manufactures, sells and repairs centrifugal pumps and
accessories for diverse applications. The Company's pumps are used in the
following worldwide markets: residential, chemical,
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<PAGE> 12
commercial, pulp and paper, general industry, sewage/drainage, oil refining and
gas processing, agriculture/irrigation and power generation. The Company is
organized into two divisions: Industrial Products and Water Technologies.
Financial Information. Set forth below are certain selected consolidated
financial data for the Company's last three fiscal years which were derived from
the 1996 Annual Report. More comprehensive financial information is included in
the reports (including management's discussion and analysis of financial
condition and results of operations) and other documents filed by the Company
with the Commission, and the following financial data is qualified in its
entirety by reference to such reports and other documents including the
financial information and related notes contained therein. Such reports and
other documents may be examined and copies thereof may be obtained from the
offices of the Commission and the Nasdaq National Market in the manner set forth
below.
GOULDS PUMPS, INCORPORATED
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
----------------------------------
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net sales.................................................. $774,420 $718,763 $585,476
Cost and expenses.......................................... 720,518 693,667 555,833
Earnings before income taxes............................... 53,902 25,096 29,643
Income taxes............................................... 19,195 7,024 11,442
Net earnings............................................... 34,707 18,072 18,201
Net earnings per common share.............................. 1.63 .85 .86
Weighted average number of common shares outstanding....... 21,313 21,240 21,175
BALANCE SHEET DATA (AT PERIOD END)
Total assets............................................... $554,871 $553,986 $457,241
Total liabilities.......................................... 343,765 363,672 265,954
Total stockholders' equity................................. 211,106 190,314 191,287
</TABLE>
The Shares are registered under the Exchange Act. Accordingly, the Company
is subject to the informational filing requirements of the Exchange Act and in
accordance therewith is obligated to file periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. Information as of particular dates concerning the
Company's directors and officers, their remuneration, options granted to them,
the principal holders of the Company's securities and any material interest of
such persons in transactions with the Company is required to be disclosed in
such proxy statements and distributed to the Company's stockholders and filed
with the Commission. Such reports, proxy statements and other information should
be available for inspection at the public reference facilities of the Commission
located in Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and
should also be available for inspection and copying at prescribed rates at the
regional offices of the Commission located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, Suite
1300, New York, New York 10048. Such reports, proxy statements and other
information may also be obtained at the Web site that the Commission maintains
at http://www.sec.gov. Copies of this material may also be obtained by mail,
upon payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, such
material should also be available for inspection at the library of the Nasdaq
Stock Market, 1735 K Street, N.W., Washington, D.C. 20006. Except as otherwise
noted in this Offer to Purchase, all of the information with respect to the
Company set forth in this Offer to Purchase has been derived from publicly
available information.
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<PAGE> 13
8. CERTAIN INFORMATION CONCERNING THE PURCHASER AND THE PARENT. The
Purchaser, a Delaware corporation and a wholly owned subsidiary of the Parent,
was organized in connection with the Offer and has not carried on any activities
to date other than those incident to its formation and the commencement of the
Offer.
The Parent, an Indiana corporation incorporated on September 5, 1995 as,
and originally named, ITT Indiana, Inc., is the successor pursuant to a
statutory merger of ITT Corporation, a Delaware corporation ("ITT Delaware"),
into Parent effective December 20, 1995. ITT Delaware, originally incorporated
in Maryland in 1920 as International Telephone and Telegraph Corporation, was
reincorporated in Delaware in 1968 and changed its name to ITT Corporation in
1983. On December 19, 1995, ITT Delaware made a distribution (the
"Distribution") to its stockholders consisting of all the shares of common stock
of ITT Destinations, Inc., a Nevada corporation ("ITT Destinations"), and all
the shares of common stock of ITT Hartford Group, Inc., a Delaware corporation,
both of which were wholly owned subsidiaries of ITT Delaware. Immediately prior
to the Distribution, ITT Destinations changed its name to ITT Corporation.
The Parent has its World Headquarters at Four West Red Oak Lane, White
Plains, NY 10604 and has approximately 59,000 employees based in over 40
countries. The telephone number for the Parent is (914) 641-2000. The address
and telephone number for the Purchaser is the same as that for the Parent.
The Parent, with 1996 sales of approximately $8.7 billion, is a worldwide
enterprise engaged directly and through its subsidiaries in the design and
manufacture of a wide range of engineered products, focused on the three
principal business segments of ITT Automotive, ITT Defense & Electronics and ITT
Fluid Technology.
The name, citizenship, business address, principal occupation or
employment, and five-year employment history of each of the directors and
executive officers of the Purchaser and the Parent and certain other information
are set forth in Schedule I hereto.
Set forth below are certain selected consolidated financial data relating
to the Parent and its subsidiaries for the Parent's last three fiscal years
which have been derived from the financial statements contained in the Parent's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 filed by
the Parent with the Commission. More comprehensive financial information is
included in the reports (including management's discussion and analysis of
financial condition and results of operations) and other documents filed by the
Parent with the Commission, and the following financial data is qualified in its
entirety by reference to such reports and other documents, including the
financial information and related notes contained therein. Such reports and
other documents may be examined and copies thereof may be obtained from the
offices of the Commission and the New York Stock Exchange, Inc. (the "NYSE") in
the manner set forth below.
ITT INDUSTRIES, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
1996 1995 1994
-------- -------- ---------
<S> <C> <C> <C>
INCOME STATEMENT DATA
Net sales................................................... $8,718.1 $8,884.2 $ 7,757.7
Operating income............................................ 508.4 446.2 417.7
Income from continuing operations........................... 222.6 20.7 201.6
Net income.................................................. 222.6 707.9 1,021.8
BALANCE SHEET DATA (AT PERIOD END)
Total assets................................................ $5,491.2 $5,879.2 $11,035.0
Total liabilities........................................... 4,692.0 5,252.5 5,576.0
Shareholders' equity........................................ 799.2 626.7 5,459.0
</TABLE>
11
<PAGE> 14
The Parent is subject to the informational filing requirements of the
Exchange Act and in accordance therewith is obligated to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Parent's directors and officers, their remuneration,
options granted to them, the principal holders of the Parent's securities and
any material interest of such persons in transactions with the Parent is
required to be disclosed in such proxy statements and distributed to the
Parent's stockholders and filed with the Commission. Such reports, proxy
statements and other information should be available for inspection at the
public reference facilities of the Commission located in Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and should also be available for
inspection and copying at prescribed rates at the regional offices of the
Commission located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661, and Seven World Trade Center, Suite 1300, New York, New
York 10048. Such reports, proxy statements and other information may also be
obtained at the Web site that the Commission maintains at http://www.sec.gov.
Copies of this material may also be obtained by mail, upon payment of the
Commission's customary fees, from the Commission's principal office at 450 Fifth
Street, N.W., Washington, D.C. 20549. Such material is also available for
inspection at the offices of the NYSE, 20 Broad Street, New York, New York
10005.
None of the Purchaser, the Parent nor, to the best knowledge of the
Purchaser and the Parent, any of the persons listed on Schedule I hereto or any
associate or majority-owned subsidiary of the Purchaser, the Parent or any of
the persons so listed, beneficially owns or has a right to acquire directly or
indirectly any Shares, and none of the Purchaser, the Parent nor, to the best
knowledge of the Purchaser and the Parent, any of the persons or entities
referred to above, or any of the respective executive officers, directors or
subsidiaries of any of the foregoing, has effected any transactions in the
Shares during the past 60 days.
9. SOURCE AND AMOUNT OF FUNDS. The total amount of funds required by the
Purchaser to purchase all outstanding Shares pursuant to the Offer and to pay
fees and expenses related to the Offer and the proposed Merger is estimated to
be approximately $821 million. The Purchaser plans to obtain all funds needed
for the Offer and the Merger through a capital contribution and/or a loan which
will be made by the Parent to the Purchaser. The Parent plans to use funds it
has available in its cash accounts and by borrowing under its existing lines of
credit. The Parent expects that such borrowings would be repaid from cash flow
from the normal operations of the Parent's businesses. The Offer is not
conditioned on obtaining financing.
The revolving credit facility is provided by a group of lenders including
The Chase Manhattan Bank, as administrative agent (the "Agent"), and as a
lender. The revolving credit facility allows the Parent and its borrowing
subsidiaries (each a "Borrower") to borrow up to $1.5 billion through the
incurrence of revolving standby loans, competitive loans, local currency loans
or the issuance of letters of credit.
The commitments under the revolving credit facility terminate on November
10, 2000.
The amounts borrowed pursuant to the revolving credit facility bear
interest at the following rates per annum: (A) in the case of standby loans, at
the Borrower's option, either: (i) the LIBO Rate (as defined therein) plus an
amount ranging from .115% to .250% or (ii) the greater of the Prime Rate (as
defined therein) or the Federal Funds Effective Rate (as defined therein) plus
1/2 of 1%; (B) in the case of competitive loans, at the Borrower's option,
either: (i) the LIBO Rate plus an amount ranging from .115% to .250% or (ii) at
a fixed rate of interest offered by a lender in its bid and agreed to by the
Borrower; or (C) in the case of local currency loans, at the Borrower's option,
either: (i) the LIBO Rate plus an amount ranging from .115% to .250% or (ii)
that rate of interest specified in a local currency addendum to the revolving
credit agreement. The Parent has agreed to pay a quarterly facility fee to each
lender under the revolving credit facility, certain fees with respect to the
issuance of letters of credit and an annual administrative fee to the Agent.
The covenants in the revolving credit facility, among other things,
restrict the Parent and borrowing subsidiaries from consolidating or merging
with or into, or selling, leasing or transferring substantially all their assets
to, any other person other than pursuant to the revolving credit facility or
incurring liens other than pursuant to the revolving credit facility. In
addition, the revolving credit facility requires that the Parent and its
restricted subsidiaries, on a consolidated basis, satisfy an interest coverage
test. Borrowings under the revolving credit facility are guaranteed by the
Parent.
12
<PAGE> 15
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY. For more than one
year prior to the Offer, members of the Parent's senior management have
considered potential transactions which could enhance the value of the Parent
for its stockholders, including the possibility of a strategic acquisition of
another industrial company or business such as the Company. The Parent developed
an extensive list of potential acquisition candidates and then gradually
narrowed the list of potential candidates by applying various acquisition
criteria. Detailed analysis was then performed on a select group of companies to
help narrow the list of potential acquisition candidates even further. In
December 1996, the Parent's discussions regarding possible acquisitions began to
focus particularly on the Company and actions were taken to effect a more formal
analysis of the Company. In March 1997, after a presentation by management to
the Board of Directors of the Parent, the Board of Directors of the Parent
approved the initiation of contact with the Company to discuss the possibility
of a negotiated transaction.
On March 19, 1997, Richard Labrecque, President of ITT Fluid Technology
Corporation, contacted Thomas C. McDermott, Chairman, President and Chief
Executive Officer of the Company, to suggest in general terms the possibility of
an acquisition of the Company by the Parent. After some discussion, Mr.
McDermott indicated that the Company currently planned to carry out its existing
"Goulds 2000" strategic plan as an independent company.
On March 25, 1997, Travis Engen, Chairman, President and Chief Executive
Officer of the Parent, called Mr. McDermott to reiterate the Parent's interest
in acquiring the Company and to express his willingness to meet and discuss the
specific terms of the Parent's proposal. Mr. McDermott restated his view that
the Company wished to carry out its strategic plan and declined to meet with Mr.
Engen. Mr. Engen then informed Mr. McDermott that he would send Mr. McDermott a
letter containing the Parent's proposal. Later that day, Mr. Engen sent the
following letter to Mr. McDermott.
13
<PAGE> 16
March 25, 1997
Mr. Thomas C. McDermott
Chairman, President and Chief Executive Officer
Goulds Pumps, Incorporated
300 WillowBrook Office Park
Fairport, New York 14450
Dear Mr. McDermott:
I enjoyed talking to you earlier today but I was disappointed that you have
continued your unwillingness to meet with us to discuss our proposal. Since we
are not able to meet with you in person to explain our thinking, I am sending
this letter.
ITT Industries, Inc. proposes to acquire Goulds Pumps, Incorporated
("Goulds") through a negotiated merger transaction in which Goulds' stockholders
would receive $34.00 in cash for each share of outstanding common stock. This
price is based on our review of public information and our assessment of the
benefits of combining our organizations. This proposal represents what we
believe is an excellent opportunity for you and ITT Industries to maximize value
for your stockholders at a price which represents a premium of approximately 48%
over the closing market price of Goulds' common stock yesterday. We are
confident that this price is at a level which your stockholders would
enthusiastically support.
As I am sure you are aware, ITT Industries is a leading supplier of pumps,
valves, heat exchangers, mixers, instruments and controls for the management of
fluids with annual sales in these areas in excess of $1.3 billion. ITT
Industries has, as Goulds does, an enviable reputation for the quality of its
products and service. We have been studying the benefits of a combination with
Goulds for some time. We strongly believe the complementary aspects of our
products, our production capabilities and technologies would be a perfect
strategic fit and would enable the combined operation to compete more
effectively in the global marketplace. For these reasons, a combination of
Goulds with our current fluid technology business has become a leading interest
of our management and the ITT Industries Board of Directors.
We envision that we would negotiate a mutually acceptable definitive merger
agreement on appropriate and customary terms and conditions. Our antitrust
counsel has conducted a preliminary review of the two businesses and we do not
believe that our proposal gives rise to any meaningful antitrust concerns.
Obviously given our financial strength, financing would not pose a problem for
the consummation of the transaction, and Morgan Stanley, our financial advisor,
concurs.
We hope that you will view this proposal as we do -- a unique opportunity
for Goulds' stockholders to realize full value for their shares in a transaction
that can quickly be consummated. We are prepared to meet with you and your
advisors to answer any questions that you may have about our proposal and to
proceed expeditiously to negotiate a definitive merger agreement with you.
My purpose in sending this letter is to provide you with more information
about our proposal and to express our sincere desire to work together with you
to reach agreement on a consensual basis. At this point, we are hoping that our
discussions can remain a private matter between us, although we would expect you
to share this proposal with the members of your Board of Directors. We seek to
move quickly on our proposal and would like to hear back from you as soon as
possible. Accordingly, unless we hear back from you before then, we will contact
you on Monday, March 31st to discuss the timing of your Board's response to our
proposal.
Sincerely,
Travis Engen
Chairman, President and Chief
Executive
14
<PAGE> 17
On March 31, 1997, Mr. Engen called Mr. McDermott to discuss the proposal
contained in the letter. Mr. McDermott informed Mr. Engen that the Board of
Directors of the Company would be meeting on April 4, 1997 and would consider
the proposal at that meeting. Mr. Engen requested that Mr. McDermott promptly
respond to the proposal after the Board of Directors meeting on April 4th.
On April 4, 1997, the Board of Directors of the Company held a meeting with
management and its legal and financial advisors to consider the Parent's
proposal. Legal counsel advised the Board of Directors regarding its fiduciary
duties. Mr. McDermott outlined the chronology of events leading to the proposal.
Goldman, Sachs & Co. ("Goldman Sachs") then made a presentation to the Board of
Directors concerning the proposal, including background information on the
Parent and various financial analyses. The Board, recognizing the strategic fit
between the Company and the Parent's fluid technology business and taking into
account the advice and presentation of legal counsel and Goldman Sachs,
concluded by asking Mr. McDermott to schedule a meeting with Mr. Engen to
further discuss the proposal. The Board also authorized management and Goldman
Sachs to contact one other party that had previously contacted the Company to
determine their level of interest. The Board also considered the adoption of the
Rights Plan (as defined in Section 11).
On April 7, 1997, Mr. McDermott called Mr. Engen to inform him that the
Board of Directors of the Company had considered the proposal and that he was
available to discuss the proposal and the two agreed to meet on April 9th.
On April 8, 1997, a representative of Morgan Stanley discussed the proposal
contained in Mr. Engen's March 25 letter with a representative of Goldman Sachs.
Goldman Sachs indicated that the $34.00 per share price level included in the
letter was not at a level that would justify commencing a process that could
result in a sale of the Company.
On April 9, 1997, Mr. Engen, Mr. Labrecque, Mr. McDermott and John Murphy,
Vice President and Chief Financial Officer of the Company, met to discuss the
Parent's proposal. Mr. McDermott informed Mr. Engen and Mr. Labrecque that the
Company's preference was to remain independent but that he would be willing to
discuss with the Company's Board of Directors a possible acquisition by the
Parent at a price which the Board of Directors of the Company believed to be in
the best interests of the Company's stockholders. Mr. McDermott stated that he
thought the $34.00 per share price level indicated in the letter was too low but
did not indicate the specific price level he considered to be an adequate basis
for continued discussions with the Parent. After further discussion, Mr.
McDermott agreed with Mr. Engen that the Company's financial advisors be
available to discuss the valuation of the Company with the Parent's financial
advisors. In telephone calls on April 10 and April 11, 1997 a representative
from Morgan Stanley and a representative from Goldman Sachs discussed their
respective methodologies for valuing the Company, but were unable to reach any
agreements in furtherance of the discussions between the principals.
On April 14, 1997, Mr. Engen again spoke to Mr. McDermott. Mr. McDermott
continued to decline to specify a per share price for the Company and reiterated
that the Company was not for sale, but indicated that if the parties could come
to a preliminary understanding concerning a valuation range for the Company, he
believed that the Company would be willing to have discussions with the Parent
regarding the terms of a possible transaction, and, in that regard, to permit
the Parent to commence a due diligence review of the Company subject to entering
into an appropriate confidentiality agreement. Later that day, a representative
of Morgan Stanley indicated in a telephone conversation with a representative of
Goldman Sachs that the Parent would be willing to consider, subject to due
diligence and an acceptable process for discussing definitive terms of an
acquisition, an increase in the price included in the March 25 letter by up to
5%.
On April 15, 1997, the Board of Directors of the Company had a telephone
meeting with Company management and its legal and financial advisors to update
the directors on developments. After discussion, the Board authorized management
and its advisors (subject to further approval by the Board in the event that a
definitive agreement could be concluded with the Parent) to proceed with
negotiations, including the provision of confidential information, if the Parent
indicated its willingness to pay a price of not less than $37.00 per Share.
Representatives of Goldman Sachs thereafter contacted representatives of Morgan
Stanley and stated that the Company would be willing to provide the Parent with
access to the Company for due diligence
15
<PAGE> 18
purposes and to have discussions with the Parent for a short time period if the
Parent would be willing to consider a price level of not less than $37.00 per
Share.
On April 16, 1997, Morgan Stanley advised Goldman Sachs that the Parent was
prepared to move forward on the bases suggested by the Company. On April 17,
1997, the Parent and the Company executed a confidentiality letter and the
Parent began its due diligence review of the Company, which it completed on
April 19, 1997.
Negotiations of the terms of the merger agreement were conducted in a
series of meetings and telephone conversations held between April 18 and April
20, 1997.
On April 20, 1997, the Board of Directors of the Company met to consider
the results of that negotiation process and, after considering reports from
management and the Company's financial and legal advisors, unanimously voted to
enter into the Merger Agreement and to recommend that stockholders accept the
Offer and tender their Shares. The Board also decided to adopt the Rights Plan
in order to prevent any stockholder or group of stockholders from accumulating
sufficient shares to trigger a condition under the Offer or payments to
employees by causing a change in control (as defined in various employee plans
and arrangements) to occur. The Board of Directors of the Parent also had a
telephonic meeting to approve the Merger Agreement on April 20th.
Following the approval of the Board of Directors of the Company and the
Parent, on April 20, 1997, the Company, the Parent and the Purchaser entered
into the Merger Agreement.
11. THE MERGER AGREEMENT. The following is a summary of the Merger
Agreement, which summary is qualified in its entirety by reference to the Merger
Agreement which is filed as an exhibit to the Tender Offer Statement on Schedule
14D-1.
The Offer. The Merger Agreement provides for the commencement of the Offer
as soon as reasonably practicable after the date of the Merger Agreement, but in
no event later than five business days from the date of public announcement of
the execution of the Merger Agreement. The obligation of the Purchaser to accept
for payment Shares tendered pursuant to the Offer is subject only to the
satisfaction or waiver by the Purchaser of the conditions described in Section
15. Under the Merger Agreement, the Purchaser expressly reserves the right, in
its sole discretion, to waive any such condition (other than the Minimum
Condition) and make any other changes in the terms and conditions of the Offer;
provided, that, unless previously approved by the Company in writing, no change
may be made which (a) changes the Minimum Condition, (b) decreases the price per
Share payable in the Offer, (c) changes the form of consideration payable in the
Offer (other than by adding consideration), (d) reduces the maximum number of
Shares to be purchased in the Offer, or (e) amends the terms or Offer Conditions
or imposes conditions or terms to the Offer in addition to those set forth in
the Merger Agreement which, in either case, are adverse to holders of the
Shares. Pursuant to the Merger Agreement, the Purchaser agrees that, unless it
is permitted to terminate the Merger Agreement pursuant to certain applicable
termination provisions in the Merger Agreement, it can terminate the Offer only
on a scheduled expiration date. The Purchaser further agrees that: (A) in the
event it would otherwise be entitled to terminate the Offer at any scheduled
expiration thereof due to the failure of one or more of the conditions set forth
in paragraphs (a), (b), (c), (d)(i), (e) or (h) of the Offer Conditions to be
satisfied or waived, it shall give the Company notice thereof and, at the
request of the Company, extend the Offer until the earlier of (1) such time as
such condition is or conditions are satisfied or waived and (2) the date chosen
by the Company which shall not be later than (x) the Outside Date applicable to
the condition or conditions with respect to which the extension is requested or
(y) the earliest date on which the Company reasonably believes such condition or
conditions will be satisfied; provided that if such condition is not or
conditions are not satisfied by any date chosen by the Company pursuant to
clause (y), the Company may request further extensions of the Offer in
accordance with the terms of this paragraph; and (B) in the event that it would
otherwise be entitled to terminate the Offer at the initial scheduled expiration
date thereof due solely to the failure of the Minimum Condition to be satisfied
or waived, it shall, at the request of the Company (which request may be made by
the Company only on one occasion), extend the Offer for up to five business days
from such initial scheduled expiration date. The Merger Agreement provides that,
subject to the terms and
16
<PAGE> 19
conditions of the Merger Agreement, including but not limited to the Offer
Conditions, the Purchaser will accept for payment and pay for Shares as soon as
it is permitted to do so under applicable law.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof and in accordance with the DGCL, at the Effective
Time, the Purchaser shall be merged with and into the Company (the "Surviving
Corporation"). As a result of the Merger, the separate corporate existence of
the Purchaser will cease and the Company will continue as the surviving
corporation. At the Parent's election, any direct or indirect subsidiary of the
Parent other than the Purchaser may be merged with and into the Company instead
of the Purchaser.
At the Effective Time, each Share issued and outstanding immediately prior
to the Effective Time (unless otherwise provided for) will be cancelled,
extinguished and converted into the right to receive $37 in cash or any higher
price that may be paid pursuant to the Offer, payable to the holder thereof,
without interest, upon surrender of the certificate formerly representing such
Share in the manner described in the Merger Agreement, less any required
withholding taxes.
The Merger Agreement provides that, immediately prior to the Effective
Time, each outstanding stock option and any related stock appreciation right
granted to employees and non-employee directors of the Company and its
subsidiaries (together, an "Option"), whether or not then exercisable, will be
cancelled by the Company, and the holder thereof will be entitled to receive at
the Effective Time or as soon as practicable thereafter from the Company in
consideration for such cancellation an amount in cash equal to the product of
(a) the number of Shares previously subject to such Option and (b) the excess,
if any, of the Merger Consideration over the exercise price per Share previously
subject to such Option.
The Merger Agreement provides that Shares that are issued and outstanding
immediately prior to the Effective Time and which are held by stockholders who
have not voted in favor of or consented to the Merger and shall have delivered a
written demand for appraisal of such Shares in the time and manner provided in
Section 262 of the DGCL and shall not have failed to perfect or shall not have
effectively withdrawn or lost their rights to appraisal and payment under the
DGCL shall not be converted into the right to receive the Merger Consideration,
but shall be entitled to receive the consideration as shall be determined
pursuant to Section 262 of the DGCL; provided, however, that if such holder
shall have failed to perfect or shall have effectively withdrawn or lost his,
her or its right to appraisal and payment under the DGCL, such holder's Shares
shall thereupon be deemed to have been converted, at the Effective Time, into
the right to receive the Merger Consideration as described above
The Merger Agreement also provides that at the Effective Time and without
any further action on the part of the Company and the Purchaser, the Restated
Certificate of Incorporation (the "Certificate of Incorporation") of the
Company, as in effect immediately prior to the Effective Time, shall be the
certificate of incorporation of the Surviving Corporation until thereafter and
further amended as provided therein and under the DGCL. At the Effective Time
and without any further action on the part of the Company and the Purchaser, the
By-Laws of the Purchaser shall be the By-Laws of the Surviving Corporation and
thereafter may be amended or repealed in accordance with their terms or the
Certificate of Incorporation of the Purchaser and as provided by law. The Merger
Agreement provides that the directors of the Purchaser immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and By-Laws
of the Surviving Corporation, and the officers of the Company immediately prior
to the Effective Time shall be the initial officers of the Surviving
Corporation, in each case until their respective successors are duly elected or
appointed (as the case may be) and qualified.
Agreements of the Parent, the Purchaser and the Company.
Stockholders Meeting. Pursuant to the Merger Agreement, the Company, if
required, shall, in accordance with and subject to applicable law and the
Company's Certificate of Incorporation and By-Laws, (i) duly call, give notice
of, convene and hold a meeting of its stockholders as soon as practicable
following consummation of the Offer for the purpose of considering and taking
action on the Merger Agreement and the transactions contemplated thereby (the
"Stockholders Meeting") and (ii) subject to the fiduciary duties of
17
<PAGE> 20
the Company's Board of Directors under applicable law, (A) include in the Proxy
Statement (as defined below) the unanimous recommendation of the Board of
Directors that the stockholders of the Company vote in favor of the approval of
the Merger Agreement and the transactions contemplated thereby and the written
opinion of the Financial Adviser (as defined in the Merger Agreement) that the
consideration to be received by the stockholders of the Company pursuant to the
Offer and the Merger is fair to such stockholders and (B) use its reasonable
best efforts to obtain the necessary approval of the Merger Agreement and the
transactions contemplated thereby by its stockholders. At the Stockholders
Meeting, the Parent and the Purchaser shall cause all Shares then owned by them
and their subsidiaries to be voted in favor of approval of the Merger Agreement
and the transactions contemplated thereby.
The Merger Agreement provides that, notwithstanding the foregoing, in the
event that the Purchaser shall acquire at least 90% of the outstanding Shares,
the Company agrees, at the request of the Purchaser, subject to the Merger
Agreement, to take all necessary and appropriate action to cause the Merger to
become effective as soon as reasonably practicable after such acquisition,
without a meeting of the Company's stockholders, in accordance with Section 253
of the DGCL.
Proxy Statement. The Merger Agreement provides that, if required by
applicable law, as soon as practicable following the Parent's request, the
Company will file with the Commission under the Exchange Act and the rules and
regulations promulgated thereunder, and will use its reasonable best efforts to
have cleared by the Commission the proxy statement with respect to the
Stockholders' Meeting (the "Proxy Statement").
Company Board Representation. The Merger Agreement provides that, promptly
upon the purchase by the Purchaser of Shares pursuant to the Offer, and from
time to time thereafter, the Purchaser will be entitled to designate up to such
number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as will give the Purchaser representation on the Board
of Directors equal to the product of the total number of directors on such Board
(giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of Shares beneficially owned by the
Purchaser or any affiliate of the Purchaser bears to the total number of Shares
then outstanding, and the Company shall, at such time, promptly take all action
necessary to cause the Purchaser's designees to be so elected, including either
increasing the size of the Board of Directors or securing the resignations of
incumbent directors or both. At such times, the Company will use its reasonable
best efforts to cause persons designated by the Purchaser to constitute the same
percentage as is on the board of (i) each committee of the Board of Directors,
(ii) each board of directors of each subsidiary of the Company and (iii) each
committee of each such board, in each case only to the extent permitted by law.
The Company's obligations to appoint designees to its Board of Directors shall
be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder.
Following the election or appointment of the Purchaser's designees pursuant
to the Merger Agreement and prior to the Effective Time, any amendment, or
waiver of any term or condition, of the Merger Agreement or the Certificate of
Incorporation or By-Laws of the Company, any termination of the Merger Agreement
by the Company, any extension by the Company of the time for the performance of
any of the obligations or other acts of the Purchaser or waiver or assertion of
any of the Company's rights thereunder, and any other consent or action by the
Board of Directors with respect to the Merger Agreement, will require only the
concurrence of a majority of the directors of the Company then in office who are
neither designated by the Purchaser nor are employees of the Company (the
"Disinterested Directors") and such concurrence shall constitute the
authorization of the Board of Directors of the Company and no other action by
the Company, including any action by any other director of the Company, shall be
required for purposes of the Merger Agreement. The number of Disinterested
Directors shall be not less than two.
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
from the date thereof to the Effective Time, the Company shall, and shall cause
its subsidiaries, officers, directors, employees, auditors and other agents to,
afford the officers, employees, auditors and other agents of the Parent, and
financing sources who shall agree to be bound by the provisions of such section
of the Merger Agreement as though a party thereto, complete access, consistent
with applicable law, at all reasonable times to its officers, employees, agents,
properties, offices, plants and other facilities and to all books and records,
and will furnish the Parent
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<PAGE> 21
and such financing sources with all financial, operating and other data and
information as the Parent, through its officers, employees or agents, or such
financing sources may from time to time reasonably request.
The Merger Agreement further provides that each of the Parent and the
Purchaser will hold and will cause its officers, employees, auditors and other
agents to hold in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all documents and
information concerning the Company and its subsidiaries furnished to the Parent
or the Purchaser in connection with the transactions contemplated in the Merger
Agreement (except to the extent that such information can be shown to have been
generally available to the Parent or the Purchaser on a non-confidential basis
prior to the date thereof; provided that the source of such information was not
known by the Parent or the Purchaser to be bound by a confidentiality agreement
and will not release or disclose such information to any other person, except
(1) the officers, directors, employees, counsel, investment bankers and other
representatives of the Parent and the Purchaser who need to know such
information for the purposes of evaluating the Merger and the other transactions
contemplated by the Merger Agreement and (2) any other person after the Company
has provided written consent to such disclosure). If the transactions
contemplated by the Merger Agreement are not consummated, such confidence will
be maintained for a period of two years from the date thereof and, if requested
by or on behalf of the Company, the Parent and the Purchaser will, and will use
all reasonable efforts to cause their auditors and other agents to, return to
the Company or destroy all copies of written information furnished by the
Company to the Parent and the Purchaser or their agents, representatives or
advisors. It is understood that Parent and Purchaser shall be deemed to have
satisfied their obligation to hold such information confidential if they
exercise the same care as they take to preserve confidentiality for their own
similar information.
No Solicitation of Transactions. The Merger Agreement provides that the
Company, its affiliates and their respective officers, directors, employees,
representatives and agents will immediately cease any existing discussions or
negotiations, if any, with any parties conducted theretofore with respect to any
acquisition or exchange of all or any material portion of the assets of, or more
than 20% of the equity interest in, the Company or any business combination with
the Company. Except as set forth in the Merger Agreement, neither the Company or
any of its affiliates, nor any of its or their respective officers, directors,
employees, representatives or agents, will, directly or indirectly, encourage,
solicit, participate in or initiate discussions or negotiations with, or provide
any information to, any corporation, partnership, person or other entity or
group (other than the Parent and the Purchaser, any affiliate or associate of
the Parent and the Purchaser or any designees of the Parent or the Purchaser)
concerning any merger, sale of any material portion or assets, sale of more than
20% of the shares of capital stock or similar transactions (including an
exchange of stock or assets) involving the Company or any subsidiary of the
Company. The Company may, directly or indirectly, furnish information and
access, in each case only in response to a request for such information or
access to any person made after the date of the Merger Agreement which was not
encouraged, solicited or initiated by the Company or any of its affiliates or
any of its or their respective officers, directors, employees, representatives
or agents after the date thereof, pursuant to appropriate confidentiality
agreements, and may participate in discussions and negotiate with such person
concerning any merger, sale of assets, sale of shares of capital stock or
similar transaction (including an exchange of stock or assets) involving the
Company or any subsidiary or division of the Company, if such person has
submitted a written proposal to the Board of Directors of the Company relating
to any such transaction and the Board determines in good faith, based upon the
advice of outside counsel to the Company, that failing to take such action would
constitute a breach of the Board's fiduciary duty under applicable law. The
Board will notify the Parent immediately if any such proposal is made and will
in such notice, indicate in reasonable detail the identity of the offeror and
the terms and conditions of any proposal and shall keep the Parent promptly
advised of all developments which could reasonably be expected to culminate in
the Board of Directors withdrawing, modifying or amending its recommendation of
the Offer, the Merger and the other transactions contemplated by the Merger
Agreement. The Company has also agreed not to release any third party from, or
waive any provisions of, any confidentiality or standstill agreement to which
the Company is a party, unless the Board shall have determined in good faith,
based upon the advice of outside counsel, that failing to release such third
party or waive such provisions would constitute a breach of the fiduciary duties
of the Board of Directors under applicable law.
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Directors' and Officers' Indemnification and Insurance. The Merger
Agreement provides that the By-Laws of the Surviving Corporation will contain
provisions no less favorable with respect to indemnification than are set forth
in Article 12 of the By-laws of the Company, which provisions shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers or employees
of the Company.
Pursuant to the Merger Agreement the Parent will use its reasonable best
efforts to cause to be maintained in effect for six years from the Effective
Time the current policies of the directors' and officers' liability insurance
maintained by the Company (provided that the Parent may substitute therefor
policies of at least the same coverage containing terms and conditions which are
not materially less advantageous) with respect to matters occurring prior to the
Effective Time to the extent available; provided, however, that in no event
shall the Parent or the Company be required to expend more than an amount per
year equal to 150% of current annual premiums paid by the Company (which the
Company represents and warrants to be not more than $250,000) to maintain or
procure insurance coverage pursuant to the Merger Agreement.
The Merger Agreement also provides that for six years after the Effective
Time, the Parent agrees that it will or will cause the Surviving Corporation to
indemnify and hold harmless each present and former director and officer of the
Company, determined as of the Effective Time (the "Indemnified Parties"),
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, the "Costs") (but
only to the extent such Costs are not otherwise covered by insurance and paid)
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters existing or occurring at or prior to the
Effective Time, whether asserted or claimed prior to, at or after the Effective
Time, to the fullest extent permitted under applicable law (and the Parent will,
or will cause the Surviving Corporation to, also advance expenses as incurred to
the fullest extent permitted under applicable law provided the person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to indemnification).
Further Action; Reasonable Best Efforts. The Merger Agreement provides
that, upon the terms and subject to the conditions thereof, each of the parties
thereto shall use its reasonable best efforts to take, or cause to be taken, all
appropriate action, and to do or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by the Merger Agreement as soon as
practicable, including but not limited to (i) cooperation in the preparation and
filing of the Offer Documents (as defined in the Merger Agreement), the Schedule
14D-9, the Proxy Statement, any required filings under the HSR Act or other
foreign filings and any amendments to any thereof and (ii) using its reasonable
best efforts to promptly make all required regulatory filings and applications
including, without limitation, responding promptly to requests for further
information and to obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities and
parties to contracts with the Company and its subsidiaries as are necessary for
the consummation of the transactions contemplated by the Merger Agreement and to
fulfill the conditions to the Offer and the Merger. The Merger Agreement also
provides that the Company and the Parent each shall keep the other apprised of
the status of matters relating to completion of the transactions contemplated by
the Merger Agreement, including promptly furnishing the other with copies of
notices or other communications received by the Parent or the Company, as the
case may be, or any of their subsidiaries, from any Governmental Authority (as
defined in the Merger Agreement) with respect to the Offer or the Merger or any
of the other transactions contemplated by the Merger Agreement. The parties also
agree to consult and cooperate with one another, and consider in good faith the
views of one another in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party thereto in connection with proceedings
under or relating to the HSR Act or any other antitrust law.
Without limiting the generality of the foregoing undertakings, in the
Merger Agreement: (i) the Parent agrees to, if necessary to prevent any
Governmental Authority from taking steps to obtain, or from issuing, any order,
injunction, decree, judgment or ruling or the taking of any other action
restraining, enjoining or
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otherwise prohibiting the Offer or the Merger, offer to accept an order to
divest (or enter into a consent decree or other agreement giving effect thereto)
such of the Company's or the Parent's assets and business as may be necessary to
forestall such order, decree, ruling or action and to hold separate such assets
and business pending such divestiture, but only if the amount of such assets and
businesses would not be material (measured in relation to the combined assets or
revenues of the Company and its subsidiaries and the Parent's fluid technology
business, taken as a whole); and (ii) the Company and the Parent each agree to
contest and resist any action seeking to have imposed any order, decree,
judgment, injunction, ruling or other order (whether temporary, preliminary or
permanent) (an "Order") that would delay, restrain, enjoin or otherwise prohibit
consummation of the Offer or the Merger and in the event that any such temporary
or preliminary Order is entered in any proceeding that would make consummation
of the Offer or the Merger in accordance with the terms of the Merger Agreement
unlawful or that would prevent or delay consummation of the Offer or the Merger
or the other transactions contemplated by the Merger Agreement, to use its
reasonable best efforts to take promptly any and all steps (including the appeal
thereof, the posting of a bond or the taking of the steps contemplated by clause
(i) of this paragraph) necessary to vacate, modify or suspend such Order so as
to permit such consummation as promptly as practicable after the date of the
Merger Agreement.
Conduct of Business Pending the Merger. Pursuant to the Merger Agreement,
the Company has covenanted and agreed that, during the period from the date of
the Merger Agreement to the Effective Time, unless the Parent shall otherwise
agree in writing, (1)the businesses of the Company and its subsidiaries shall be
conducted only in, and the Company and its subsidiaries shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice, (2) the Company and its subsidiaries shall each use its
reasonable best efforts to preserve substantially intact the business
organization of the Company and its subsidiaries, to keep available the services
of the present officers, employees and consultants of the Company and its
subsidiaries and to preserve the present relationships of the Company and its
subsidiaries with customers, suppliers and other persons with which the Company
or any of its subsidiaries has significant business relations and (3) neither
the Company nor any of its subsidiaries shall, between the date of the Merger
Agreement and the Effective Time, directly or indirectly do, or commit to do,
any of the following without the prior written consent of the Parent: (i) amend
or otherwise change its certificate of incorporation or by-laws or equivalent
organizational documents; (ii) issue, deliver, sell, pledge, dispose of or
encumber, or authorize or commit to the issuance, sale, pledge, disposition or
encumbrance of, (A) any shares of capital stock of any class, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest (including but not
limited to stock appreciation rights or phantom stock), of the Company or any of
its subsidiaries (except for the issuance of up to 1,749,829 shares of Company
Common Stock required to be issued pursuant to (x) the terms of Options
outstanding as of April 16, 1997, (y) the employment agreement effective July 1,
1996 between the Company and Thomas C. McDermott, and (z) the plan under which
non-employee directors are paid one-half of their annual retainer in shares of
Company Common Stock) or (B) any assets of the Company or any of its
subsidiaries, except for sales of products in the ordinary course of business
and in a manner consistent with past practice; (iii) declare, set aside, make or
pay any dividend or other distribution, payable in cash, stock, property or
otherwise, with respect to any of its capital stock (other than (A) regular
quarterly dividends consistent with past practice, in an amount not to exceed
$.20 per share and (B) the distribution of Rights (as defined below) pursuant to
the Rights Plan (as defined below)); (iv) reclassify, combine, split, subdivide
or redeem, purchase or otherwise acquire, directly or indirectly, any of its
capital stock; (v) (A) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof; (B) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person, or make any
loans, advances or capital contributions to, or investments in, any other person
(other than in the ordinary course of business consistent with past practice);
(C) enter into any contract or agreement other than in the ordinary course of
business consistent with past practice; or (D) authorize any single capital
expenditure which is in excess of $1,500,000 or capital expenditures (during any
three month period) which are, in the aggregate, in excess of $7,500,000 for the
Company and its subsidiaries taken as a whole; (vi) except to the extent
required under existing employee and director benefit plans, agreements or
arrangements as in effect on the date of the Merger Agreement, increase the
compensation or fringe benefits of any of its directors, officers or employees,
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except for increases in salary or wages of employees of the Company or its
subsidiaries who are not officers of the Company in the ordinary course of
business in accordance with past practice, or grant any severance or termination
pay not currently required to be paid under existing severance plans to or enter
into any employment, consulting or severance agreement or arrangement with any
present or former director, officer or other employee of the Company or any of
its subsidiaries, or establish, adopt, enter into or amend or terminate any
collective bargaining agreement or Company Plan (as defined in the Merger
Agreement), including, but not limited to, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors, officers or
employees; (vii) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting practices
or principles used by it; (viii) make any material tax election or settle or
compromise any material federal, state, local or foreign tax liability; (ix)
settle or compromise any pending or threatened suit, action or claim which is
material or which relates to the transactions contemplated by the Merger
Agreement; (x) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its subsidiaries not constituting an inactive
subsidiary (other than the Merger); (xi) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction (A)
in the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements of the
Company or incurred in the ordinary course of business and consistent with past
practice and (B) of liabilities required to be paid, discharged or satisfied
pursuant to the terms of any contract in existence on the date of the Merger
Agreement (including, without limitation, benefit plans relating to directors);
or (xii) take, or offer or propose to take, or agree to take in writing or
otherwise, any of the actions described here above or any action which would
make any of the representations or warranties of the Company contained in the
Merger Agreement untrue and incorrect as of the date when made if such action
had then been taken, or would result in any of the conditions set forth in Annex
A of the Merger Agreement not being satisfied.
Employee Benefits Matters. The Merger Agreement provides that on and after
the Effective Time, the Parent shall cause the Surviving Corporation and its
subsidiaries to promptly pay or provide when due all compensation and benefits
earned through or prior to the Effective Time as provided pursuant to the terms
of any compensation arrangements, employment agreements and employee or director
benefit plans (including, without limitation, deferred compensation plans),
programs and policies in existence as of the date thereof for all employees (and
former employees) and directors (and former directors) of the Company and its
subsidiaries. The Parent and the Company have agreed that the Surviving
Corporation and its subsidiaries shall pay promptly or provide when due all
compensation and benefits required to be paid pursuant to the terms of any
individual agreement with any employee, former employee, director or former
director in effect as of the date thereof.
Pursuant to the Merger Agreement the Parent has agreed to cause the
Surviving Corporation, for the period commencing at the Effective Time and
ending on the first anniversary thereof, to provide employee benefits under
plans, programs and arrangements which, in the aggregate, will provide benefits
to the employees of the Surviving Corporation and its subsidiaries (other than
employees covered by a collective bargaining agreement) which are no less
favorable in the aggregate than those provided pursuant to the plans, programs
and arrangements (other than those related to the equity securities of the
Company) of the Company and its subsidiaries in effect on the date thereof and
employees covered by collective bargaining agreements shall be provided with
such benefits as shall be required under the terms of any applicable collective
bargaining agreement; provided, however, that nothing in the Merger Agreement
shall prevent the amendment or termination of any specific plan, program or
arrangement, require that the Surviving Corporation provide or permit investment
in the securities of the Parent, the Company or the Surviving Corporation or
interfere with the Surviving Corporation's right or obligation to make such
changes as are necessary to conform with applicable law. Employees of the
Surviving Corporation shall be given credit for all service with the Company and
its subsidiaries, to the same extent as such service was credited for such
purpose by the Company, under each employee benefit plan, program, or
arrangement of the Parent in which such employees are eligible to participate
for purposes of eligibility and vesting; provided, however, that in no
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event shall the employees be entitled to any credit to the extent that it would
result in a duplication of benefits with respect to the same period of service.
Disposition of Litigation. The Merger Agreement provides that the Company
agrees that it will not settle any litigation currently pending, or commenced
after the date thereof, against the Company or any of its directors by any
stockholder of the Company relating to the Offer or the Merger Agreement,
without the prior written consent of Parent (which shall not be unreasonably
withheld).
Rights. The Company also agreed in the Merger Agreement to promptly adopt
a Stockholder Rights Plan (the "Rights Plan") in the form delivered to the
Parent on or prior to the date of the Merger Agreement and that immediately
prior to the purchase of Shares pursuant to the Offer, the Board of Directors of
the Company will take all necessary action to terminate all of the outstanding
Rights (as defined in the Rights Plan), effective immediately prior thereto. The
Company has taken, or prior to the adoption of such Rights Plan, will take, all
necessary action so that none of the execution of the Merger Agreement, the
making of the Offer, the acquisition of Shares pursuant to the Offer or the
consummation of the Merger will (i) cause the Rights issued pursuant to such
Rights Plan to become exercisable, (ii) cause any person to become an Acquiring
Person (as defined in the Rights Plan) or (iii) give rise to a Separation Time
(as defined in the Rights Plan) or a Flip-In Date (as defined in the Rights
Plan). The Company has also agreed in the Merger Agreement that it will not
amend the Rights Plan.
Representation and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company as to the
Company's capitalization, the absence of any required filings and consents, the
absence of conflicts with charter documents and contracts, SEC filings and
financial statements, absence of certain changes or events, business, compliance
with law, the absence of litigation, employee benefit plans, the filing and
compliance of reports with the requirements of the Commission, environmental
matters, brokers and taxes.
Conditions of the Merger. Under the Merger Agreement, the respective
obligations of the Parent, Purchaser and the Company to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions: (a) if required by the DGCL, the Merger Agreement shall
have been approved by the affirmative vote of the stockholders of the Company by
the requisite vote in accordance with the Company's Certificate of Incorporation
and the DGCL (which the Company has represented shall be solely the affirmative
vote of a majority of the outstanding Shares); (b) no statute, rule, regulation,
executive order, decree, ruling, injunction or other order (whether temporary,
preliminary or permanent) shall have been enacted, entered, promulgated or
enforced by any United States, foreign, federal or state court or governmental
authority which prohibits, restrains, enjoins or restricts the consummation of
the Merger; and (c) the Purchaser shall have purchased Shares pursuant to the
Offer.
Termination; Fees and Expenses. The Merger Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time,
notwithstanding approval thereof by the stockholders of the Company as follows:
(a) by mutual written consent of the Parent, the Purchaser and the
Company;
(b) by the Parent or the Company if any court of competent
jurisdiction or other governmental body located or having jurisdiction
within the United States or any country or economic region in which either
the Company or the Parent, directly or indirectly, has material assets or
operations, shall have issued a final order, injunction, decree, judgment
or ruling or taken any other final action restraining, enjoining or
otherwise prohibiting the Offer or the Merger and such order, injunction,
decree, judgment, ruling or other action is or shall have become final and
nonappealable;
(c) by the Parent (only following the Outside Date (as defined below),
in the case of clause (ii) below) if due to an occurrence or circumstance
which resulted in a failure to satisfy any of the Offer Conditions, the
Purchaser shall have (i) terminated the Offer in accordance with the terms
of the Merger Agreement or (ii) failed to pay for Shares pursuant to the
Offer on or prior to the Outside Date;
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(d) by the Company (only following the Outside Date, in the case of
clause (ii)(B) below) if (i) there shall have been a material breach of any
covenant or agreement on the part of the Parent or the Purchaser contained
in the Merger Agreement which materially adversely affects the Parent's or
the Purchaser's ability to consummate (or materially delays commencement or
consummation of) the Offer, and which shall not have been cured prior to
the earlier of (A) 10 business days following notice of such breach and (B)
two business days prior to the date on which the Offer expires, (ii) the
Purchaser shall have (A) terminated the Offer or (B) failed to pay for
Shares pursuant to the Offer on or prior to the Outside Date (unless such
failure is caused by or results from the failure of any representation or
warranty of the Company to be true and correct in any material respect or
the failure of the Company to perform in any material respect any of its
covenants or agreements contained in the Merger Agreement) or (iii) prior
to the purchase of Shares pursuant to the Offer, any person shall have made
a bona fide offer to acquire the Company (A) that the Board of Directors of
the Company determines in its good faith judgment is more favorable to the
Company's stockholders than the Offer and the Merger and (B) as a result of
which the Board of Directors determines in good faith, based upon the
advice of outside counsel, that it is obligated by its fiduciary
obligations under applicable law to terminate the Merger Agreement,
provided that such termination under this clause (iii) shall not be
effective until the Company has made payment of the full fee and expense
reimbursement in accordance with the Merger Agreement as described below;
or
(e) by the Parent prior to the purchase of Shares pursuant to the
Offer if (i) there shall have been a breach of any covenant or agreement on
the part of the Company contained in the Merger Agreement which is
reasonably likely to have a Material Adverse Effect (as defined in the
Merger Agreement) on the Company or which materially adversely affects (or
materially delays) the consummation of the Offer, which shall not have been
cured prior to the earlier of (A) 10 business days following notice of such
breach and (B) two business days prior to the date on which the Offer
expires, (ii) the Board shall have withdrawn or modified (including by
amendment of the Schedule 14D-9) in a manner adverse to the Purchaser its
approval or recommendation of the Offer, Merger Agreement or the Merger or
shall have recommended another offer or transaction, or shall have resolved
to effect any of the foregoing, or (iii) the Minimum Condition shall not
have been satisfied by the expiration date of the Offer as it may have been
extended pursuant to the Merger Agreement and on or prior to such date (A)
any person (including the Company but not including the Parent or the
Purchaser) shall have made a public announcement with respect to a Third
Party Acquisition that contemplates a direct or indirect consideration (or
implicit valuation) for Shares (including the value of any stub equity) in
excess of the per Share Merger Consideration or (B) any person (including
the Company or any of its affiliates or subsidiaries), other than the
Parent or any of its affiliates shall have become (and remain at the time
of termination) the beneficial owner of 19.9% or more of the Shares (unless
such person shall have tendered and not withdrawn such person's Shares
pursuant to the Offer). As used in the Merger Agreement, the "Outside Date"
means the latest of (A) 70 days following the date thereof, (B) the date
that all conditions to the Offer set forth in paragraph (a) and (h) of the
Offer Conditions, the satisfaction of which involve compliance with or
otherwise relate to any United States antitrust or competition laws or
regulations (including any enforcement thereof), have been satisfied for a
period of 10 business days, or (C) 10 business days following the
conclusion of any ongoing proceedings before any foreign Governmental
Authority (as defined in the Merger Agreement) in connection with its
review of the transactions contemplated by the Merger Agreement pursuant to
any foreign antitrust or competition law or regulation; provided that in no
event shall the Outside Date be later than December 31, 1997.
The Merger Agreement provides that in the event of the termination of the
Merger Agreement pursuant to the above paragraph, the Merger Agreement shall
forthwith become void and there shall be no liability on the part of any party
thereto except as set forth in the Merger Agreement; provided, however, that
nothing therein shall relieve any party from liability for any wilful breach
thereof.
The Merger Agreement further provides that if:
(i) the Parent terminates the Merger Agreement pursuant to (e)(i) above, or
if the Company terminates the Merger Agreement pursuant to (d)(ii) above under
circumstances that would have permitted the Parent
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to terminate the Merger Agreement pursuant to (e)(i) above, and within 15 months
thereafter, the Company enters into an agreement with respect to a Third Party
Acquisition (as defined below), or a Third Party Acquisition occurs, involving
any party (or any affiliate or associate thereof) (x) with whom the Company (or
its agents) had any discussions with respect to a Third Party Acquisition, (y)
to whom the Company (or its agents) furnished information with respect to or
with a view to a Third Party Acquisition or (z) who had submitted a proposal or
expressed any interest publicly or to the Company in a Third Party Acquisition,
in the case of each of clauses (x), (y) and (z) prior to such termination; or
(ii) the Parent terminates the Merger Agreement pursuant to (e)(i) above,
or if the Company terminates the Merger Agreement pursuant to (d)(ii) above
under circumstances that would have permitted the Parent to terminate the Merger
Agreement pursuant to (e)(i) above and within 15 months thereafter the Company
enters into an agreement with respect to a Third Party Acquisition that
contemplates a direct or indirect consideration (or implicit valuation) for
Shares (including the value of any stub equity) in excess of the per Share
Merger Consideration; or
(iii) (1) the Company terminates the Merger Agreement pursuant to (d)(iii)
above or (2) the Company terminates the Merger Agreement pursuant to (d)(ii)(B)
above and at such time the Parent would have been permitted to terminate the
Merger Agreement according to (e)(ii) or (iii) above or (3) the Parent
terminates the Merger Agreement pursuant to (e)(ii) or (iii) above;
then the Company shall according to the Merger Agreement pay to the Parent and
the Purchaser, within one business day following the execution and delivery of
such agreement or such occurrence, as the case may be, or simultaneously with
any termination contemplated by the immediately preceding paragraph, a fee, in
cash, of $22 million (less any amounts previously paid pursuant to the next
paragraph), provided, however, that the Company in no event shall be obligated
to pay more than one such fee with respect to all such agreements and
occurrences and such termination.
The Merger Agreement also provides that upon the termination of the Merger
Agreement (i) under circumstances in which the Parent shall have been entitled
to terminate the Merger Agreement pursuant to (e)(i) above (whether or not
expressly terminated on such basis) or (ii) if any of the representations and
warranties of the Company contained in the Merger Agreement were untrue or
incorrect in any material respect when made and at the time of termination
remained untrue or incorrect in any material respect and such misrepresentation
materially adversely affected the consummation (or materially delayed
commencement or consummation) of the Offer, then the Company shall reimburse the
Parent, the Purchaser and their affiliates (not later than one business day
after submission of statements therefor) for all actual documented out-of-pocket
fees and expenses actually incurred by any of them or on their behalf in
connection with the Offer and the Merger and the consummation of all
transactions contemplated by the Merger Agreement (including, without
limitation, fees and disbursements payable to financing sources, investment
bankers, counsel to the Purchaser or the Parent or any of the foregoing, and
accountants) up to a maximum amount of $2 million; provided, however, that in no
circumstances shall any payment be made under this paragraph after a payment has
been made in the immediately succeeding paragraph. Unless required to be paid
earlier pursuant to (d) as described above, the Company shall in any event pay
the amount requested within one business day of such request, subject to the
Company's right to demand a return of any portion as to which invoices are not
received in due course after request by the Company.
The Merger Agreement defines "Third Party Acquisition" as the occurrence of
any of the following events: (i) the acquisition of the Company by merger or
similar business combination by any person other than the Parent, the Purchaser
or any affiliate thereof (a "Third Party"); (ii) the acquisition by a Third
Party of 20.0% or more of the assets of the Company and its subsidiaries, taken
as a whole; or (iii) the acquisition by a Third Party of 20.0% or more of the
outstanding Shares.
The Merger Agreement also provides that upon the termination of the Merger
Agreement (i) under circumstances in which the Company shall have been entitled
to terminate the Merger Agreement pursuant to (d)(i) above (whether or not
expressly terminated on such basis) or (ii) if any of the representations and
warranties of the Parent or the Purchaser contained in the Merger Agreement were
untrue or incorrect in any material respect when made and at the time of
termination remained untrue or incorrect in any material
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respect and such misrepresentation materially adversely affected the Parent's or
the Purchaser's ability to consummate (or materially delayed commencement or
consummation of) the Offer, then the Parent shall reimburse the Company and its
affiliates (not later than one business day after submission of statements
therefor) for all actual documented out-of-pocket fees and expenses actually
incurred by any of them or on their behalf in connection with the Offer and the
Merger and the consummation of all transactions contemplated by the Merger
Agreement (including, without limitation, fees and disbursements payable to
financing sources, investment bankers, counsel to the Company or any of the
foregoing, and accountants) up to a maximum amount of $2 million.
Except as otherwise specifically provided in the Merger Agreement, each
party shall bear its own expenses in connection with the Merger Agreement and
the transactions contemplated thereby.
12. PURPOSE OF THE OFFER; THE MERGER; PLANS FOR THE COMPANY. Purpose. The
purpose of the Offer is to acquire control of, and the entire equity interest
in, the Company. The Offer is being made pursuant to the Merger Agreement. As
promptly as practicable following consummation of the Offer and after
satisfaction or waiver of all conditions to the Merger set forth in the Merger
Agreement, the Purchaser intends to acquire the remaining equity interest in the
Company not acquired in the Offer by consummating the Merger.
Vote Required to Approve the Merger. The Board of Directors of the Company
has approved the Merger Agreement in accordance with the DGCL. If required for
approval of the Merger, the Company has agreed, subject to the satisfaction of
the conditions to the Merger set forth in the Merger Agreement, in accordance
with and subject to the DGCL, to duly convene a meeting of its stockholders as
soon as practicable following consummation of the Offer for the purpose of
considering and taking action on the Merger Agreement. If stockholder approval
is required, the Merger Agreement must generally be approved by the vote of the
holders of a majority of the outstanding Shares. As a result, if the Minimum
Condition is satisfied, the Purchaser will have the power, to approve the Merger
Agreement without the affirmative vote of any other stockholder. In such case,
the Parent and the Purchaser have agreed to cause all Shares then owned by them
and their subsidiaries to be voted in favor of the approval of the Merger
Agreement and the Merger. If the Purchaser acquires at least 90% of the
outstanding Shares, the Purchaser intends to take, and the Company has agreed,
at the request of the Purchaser, to take all necessary and appropriate action to
cause the Merger to become effective as soon as reasonably practicable after
such acquisition, without a meeting of the Company's stockholders, in accordance
with the DGCL. In such event, the Merger would be accomplished without such a
meeting.
Appraisal Rights. Stockholders do not have appraisal rights as a result of
the Offer. However, if the Merger is consummated, stockholders of the Company at
the time of the Merger who do not vote in favor of the Merger and comply with
all statutory requirements will have the right under the DGCL to demand
appraisal of, and receive payment in cash of the fair value of, their Shares
outstanding immediately prior to the effective date of the Merger in accordance
with Section 262 of the DGCL.
Under the DGCL, stockholders who properly demand appraisal and otherwise
comply with the applicable statutory procedures will be entitled to receive a
judicial determination of the fair value of their Shares (exclusive of any
element of value arising from the accomplishment or expectation of the Merger)
and to receive payment of such fair value in cash. Any such judicial
determination of the fair value of such Shares could be based upon
considerations other than or in addition to the price paid in the Offer and the
Merger and the market value of the Shares. In Weinberger v. UOP, Inc., the
Delaware Supreme Court stated, among other things, that "proof of value by any
techniques or methods which are generally considered acceptable in the financial
community and otherwise admissible in court" should be considered in an
appraisal proceeding. Stockholders should recognize that the value so determined
could be equal to or higher or lower than the price per Share paid pursuant to
the Offer or the consideration per Share to be paid in the Merger.
In addition, several decisions by Delaware courts have held that in certain
circumstances a controlling stockholder of a corporation involved in a merger
has a fiduciary duty to other stockholders that requires that the merger be fair
to other stockholders. In determining whether a merger is fair to minority
stockholders, Delaware courts have considered, among other things, the type and
amount of the consideration to be received by the stockholders and whether there
was fair dealing among the parties. The Delaware Supreme Court
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stated in Weinberger and Rabkin v. Philip A. Hunt Chemical Corp. that the remedy
ordinarily available to minority stockholders in a cash-out merger is the right
to appraisal described above. However, a damages remedy or injunctive relief may
be available if a merger is found to be the product of unfairness, including
fraud, misrepresentation or other misconduct.
THE FOREGOING SUMMARY OF THE RIGHTS OF STOCKHOLDERS DOES NOT PURPORT TO BE
A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING
TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE PRESERVATION AND EXERCISE OF
APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF THE
DELAWARE LAW.
The foregoing description of the DGCL is not necessarily complete and is
qualified in its entirely by reference to the DGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger following the purchase of
Shares pursuant to the Offer in which the Purchaser seeks to acquire any
remaining Shares. Rule 13e-3 should not be applicable to the Merger if the
Merger is consummated within one year after the expiration or termination of the
Offer and the price paid in the Merger is not less than the per Share price paid
pursuant to the Offer. However, in the event that the Purchaser is deemed to
have acquired control of the Company pursuant to the Offer and if the Merger is
consummated more than one year after completion of the Offer or an alternative
acquisition transaction is effected whereby stockholders of the Company receive
consideration less than that paid pursuant to the Offer, in either case at a
time when the Shares are still registered under the Exchange Act, the Purchaser
may be required to comply with Rule 13e-3 under the Exchange Act. If applicable,
Rule 13e-3 would require, among other things, that certain financial information
concerning the Company and certain information relating to the fairness of the
Merger or such alternative transaction and the consideration offered to minority
stockholders in the Merger or such alternative transaction, be filed with the
Commission and disclosed to stockholders prior to consummation of the Merger or
such alternative transaction. The purchase of a substantial number of Shares
pursuant to the Offer may result in the Company being able to terminate its
Exchange Act registration. See Section 14. If such registration were terminated,
Rule 13e-3 would be inapplicable to any such future Merger or such alternative
transaction.
Plans for the Company. If the Purchaser obtains control of the Company
pursuant to the Offer, the Parent expects to conduct a detailed review of the
Company and its businesses, assets, corporate structure, capitalization,
operations, properties, policies, management and personnel and to consider what,
if any, changes would be desirable in light of the circumstances that then
exist. Such changes could include changes in the Company's businesses, corporate
structure, certificate of incorporation, by-laws, capitalization, board of
directors, management or dividend policy.
Except as described in this Offer to Purchase, none of the Purchaser, the
Parent nor, to the best knowledge of the Purchaser and the Parent, any of the
persons listed on Schedule I have any present plans or proposals that would
relate to or result in an extraordinary corporate transaction such as a merger,
reorganization or liquidation involving the Company or any of its subsidiaries
or a sale or other transfer of a material amount of assets of the Company or any
of its subsidiaries, any material change in the capitalization or dividend
policy of the Company or any other material change in the Company's corporate
structure or business or the composition of its Board of Directors or
management.
13. DIVIDENDS AND DISTRIBUTIONS. If the Company should, on or after the
date of the Merger Agreement (except as contemplated thereby), split, combine or
otherwise change the Shares or its capitalization, or disclose that it has taken
any such action, then without prejudice to the Purchaser's rights under Section
15, the Purchaser may make such adjustments to the purchase price and other
terms of the Offer as it deems appropriate to reflect such split, combination or
other change.
If on or after the date of the Merger Agreement (except as contemplated
thereby), the Company should declare or pay any cash or stock dividend or other
distribution on, or issue any right with respect to, the Shares that is payable
or distributable to stockholders of record on a date prior to the transfer to
the name of the
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Purchaser or the nominee or transferee of the Purchaser on the Company's stock
transfer records of such Shares that are purchased pursuant to the Offer, then
without prejudice to the Purchaser's rights under Section 15, (i) the purchase
price payable per Share by the Purchaser pursuant to the Offer will be reduced
to the extent any such dividend or distribution is payable in cash and (ii) any
non-cash dividend, distribution (including additional Shares) or right received
and held by a tendering stockholder shall be required to be promptly remitted
and transferred by the tendering stockholder to the Depositary for the account
of the Purchaser, accompanied by appropriate documentation of transfer. Pending
such remittance or appropriate assurance thereof, the Purchaser will, subject to
applicable law, be entitled to all rights and privileges as owner of any such
non-cash dividend, distribution or right and may withhold the entire purchase
price or deduct from the purchase price the amount or value thereof, as
determined by the Purchaser in its sole discretion.
14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NASDAQ LISTING AND
EXCHANGE ACT REGISTRATION. The purchase of Shares pursuant to the Offer will
reduce the number of Shares that might otherwise trade publicly and will reduce
the number of holders of Shares. This could adversely affect the liquidity and
market value of the remaining Shares held by the public. Depending upon the
number of Shares purchased pursuant to the Offer, the Shares may no longer meet
the requirements of the National Association of Securities Dealers, Inc. (the
"NASD") for continued inclusion in the Nasdaq National Market, which require
that an issuer have at least 200,000 publicly held shares, held by at least 400
stockholders or 300 stockholders of round lots, with a market value of at least
$1,000,000 and have net tangible assets of at least $1,000,000, $2,000,000 or
$4,000,000, depending on profitability levels during the issuer's four most
recent fiscal years. If these standards are not met, the Shares might
nevertheless continue to be included in the NASD's Nasdaq Stock Market (the
"Nasdaq Stock Market") with quotations published in the Nasdaq "additional list"
or in one of the "local lists", but if the number of holders of the Shares were
to fall below 300, or if the number of publicly held Shares were to fall below
100,000 or there were not at least two registered and active market makers for
the Shares, the NASD's rules provide that the Shares would no longer be
"qualified" for Nasdaq Stock Market reporting and the Nasdaq Stock Market would
cease to provide any quotations. Shares held directly or indirectly by
directors, officers or beneficial owners of more than 10% of the Shares are not
considered as being publicly held for this purpose. According to the 1996 Annual
Report, as of February 28, 1997, there were approximately 4,726 holders of
record or through nominee or street name accounts with brokers of Shares and
there were 21,376,093 Shares outstanding. If as a result of the purchase of
Shares pursuant to the Offer or otherwise, the Shares no longer meet the
requirements of the NASD for continued inclusion in the Nasdaq National Market
or in any other tier of the Nasdaq Stock Market and the Shares are no longer
included in the Nasdaq National Market or in any other tier of the Nasdaq Stock
Market, as the case may be, the market for the Shares could be adversely
affected.
In the event that the Shares no longer meet the requirements of the NASD
for continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that such Shares would continue to trade on other securities exchanges or in the
over-the-counter market and that price quotations would be reported by such
exchanges or through other sources. However, the extent of the public market for
the Shares and the availability of such quotations would depend upon such
factors as the number of stockholders and/or the aggregate market value of the
Shares remaining at such time, the interest in maintaining a market in the
Shares on the part of securities firms, the possible termination of registration
under the Exchange Act as described below and other factors. The Purchaser
cannot predict whether the reduction in the number of Shares that might
otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares.
The Shares are currently registered under the Exchange Act. The purchase of
Shares pursuant to the Offer may result in the Shares becoming eligible for
deregistration under the Exchange Act. Registration of the Shares may be
terminated upon application of the Company to the Commission if the Shares are
not listed on a national securities exchange and there are fewer than 300 record
holders. The termination of the registration of the Shares under the Exchange
Act would substantially reduce the information required to be furnished by the
Company to holders of the Shares and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings and the requirements of Rule 13e-3 under the Exchange Act
with respect to "going private" transactions, no longer applicable to the
Shares. Furthermore, "affiliates"
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of the Company and persons holding "restricted securities" of the Company may be
deprived of the ability to dispose of the securities pursuant to Rule 144 under
the Securities Act of 1933.
The Shares are currently "margin securities" under the rules of the Board
of Governors of the Federal Reserve System (the "Federal Reserve Board"), which
has the effect, among other things, of allowing brokers to extend credit on the
collateral of such Shares for the purpose of buying, carrying, or trading in
securities ("purpose loans"). Depending upon factors similar to those described
above with respect to listing and market quotations, it is possible that,
following the Offer, the Shares might no longer constitute "margin securities"
for the purposes of the Federal Reserve Board's margin regulations and therefore
could no longer be used as collateral for purpose loans made by brokers.
15. CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision
of the Offer, but subject to the terms and conditions of the Merger Agreement,
Purchaser shall not be required to accept for payment or, subject to any
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act (relating to Purchaser's obligation to pay for or return
tendered Shares promptly after termination or withdrawal of the Offer), pay for
any Shares tendered pursuant to the Offer, and may postpone the acceptance for
payment or, subject to the restriction referred to above, payment for any Shares
tendered pursuant to the Offer, and may amend or terminate the Offer (whether or
not any Shares have theretofore been purchased or paid for) to the extent
permitted by the Merger Agreement if, (i) at the expiration of the Offer, a
number of Shares which, together with any Shares owned by Parent or Purchaser,
constitutes more than 50% of the voting power (determined on a fully-diluted
basis), on the date of purchase, of all the securities of the Company entitled
to vote generally in the election of directors or in a merger shall not have
been validly tendered and not properly withdrawn prior to the expiration of the
Offer, the ("Minimum Condition") or (ii) at any time on or after the date of
this Agreement and prior to the acceptance for payment of Shares, any of the
following conditions occurs or has occurred:
(a) there shall have been entered any order, preliminary or permanent
injunction, decree, judgment or ruling in any action or proceeding before
any court or governmental, administrative or regulatory authority or
agency, or any statute, rule or regulation enacted, entered, enforced,
promulgated, amended or issued that is applicable to Parent, Purchaser, the
Company or any subsidiary or affiliate of Purchaser or the Company or the
Offer or the Merger, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency that: (i)
makes illegal or otherwise directly or indirectly restrains or prohibits or
makes materially more costly the making of the Offer in accordance with the
terms of the Merger Agreement, the acceptance for payment of, or payment
for, some of or all the Shares by Purchaser or any of its affiliates or the
consummation of the Merger; (ii) prohibits the ownership or operation by
the Company or any of its subsidiaries, or Parent or any of its
subsidiaries, of all or any material portion of the business or assets of
the Company or any of its subsidiaries, taken as a whole, or Parent or its
subsidiaries, taken as a whole; or (iii) materially limits the ownership or
operation by the Company or any of its subsidiaries, or Parent or any of
its subsidiaries, of all or any material portion of the business or assets
of the Company or any of its subsidiaries, taken as a whole, or Parent or
its subsidiaries, taken as a whole (other than, in either case, assets or
businesses of the Company or its subsidiaries or Parent's fluid technology
business that are not material (measured in relation to the combined assets
or revenues of the Company and its subsidiaries and Parent's fluid
technology business, taken as a whole)) or compels Parent or any of its
subsidiaries to dispose of or hold separate all or any portion of the
businesses or assets of the Company or any of its subsidiaries or Parent or
any of its subsidiaries (other than, in either case, assets or businesses
of the Company or its subsidiaries or Parent's fluid technology business
that are not material (measured in relation to the combined assets or
revenues of the Company and its subsidiaries and Parent's fluid technology
business, taken as a whole)), as a result of the transactions contemplated
by the Offer or the Merger Agreement; (iv) imposes limitations on the
ability of Parent, Purchaser or any of Parent's affiliates effectively to
acquire or hold or to exercise full rights of ownership of Shares,
including without limitation the right to vote any Shares acquired or owned
by Parent or Purchaser or any of its affiliates on all matters properly
presented to the stockholders of the Company, including without limitation
the adoption and approval of the Merger Agreement and the
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Merger or the right to vote any shares of capital stock of any subsidiary
directly or indirectly owned by the Company; or (v) requires divestiture by
Parent or Purchaser or any of their affiliates of any Shares;
(b) there shall have occurred any event that is reasonably likely to
have a Material Adverse Effect;
(c) there shall have occurred (i) any general suspension of trading
in, or limitation on prices (other than suspensions or limitations
triggered on the New York Stock Exchange by price fluctuations on a trading
day) for, securities on any national securities exchange or in the
over-the-counter market in the United States, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any material limitation (whether or not mandatory) by
any government or governmental, administrative or regulatory authority or
agency, domestic or foreign, on, the extension of credit by banks or other
lending institutions, (iv) a commencement of a war or armed hostilities or
other national calamity directly involving the United States or materially
adversely affecting (or material delaying) the consummation of the Offer or
(v) in the case of any of the foregoing existing at the time of
commencement of the Offer, a material acceleration or worsening thereof;
(d) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of more than 25.0% of the outstanding Shares has been acquired by any
corporation (including the Company or any of its subsidiaries or
affiliates), partnership, person or other entity or group (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent or any of its
affiliates, or (ii) (A) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to
Parent or Purchaser the approval or recommendation of the Offer, the Merger
or the Merger Agreement, or approved or recommended any takeover proposal
or any other acquisition of more than 5% of the outstanding Shares other
than the Offer and the Merger, (B) any such corporation, partnership,
person or other entity or group shall have entered into a definitive
agreement or an agreement in principle with the Company with respect to a
tender offer or exchange offer for any Shares or a merger, consolidation or
other business combination with or involving the Company or any of its
subsidiaries, or (C) the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing;
(e) any of the representations and warranties of the Company set forth
in the Merger Agreement that are qualified by reference to a Material
Adverse Effect shall not be true and correct, or any such representations
and warranties that are not so qualified shall not be true and correct in
any respect that is reasonably likely to have a Material Adverse Effect, in
each case as if such representations and warranties were made at the time
of such determination;
(f) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Merger Agreement;
(g) the Merger Agreement shall have been terminated in accordance with
its terms or the Offer shall have been terminated with the consent of the
Company; or
(h) any waiting periods under the HSR Act applicable to the purchase
of Shares pursuant to the Offer or the Merger, and any applicable waiting
periods under any foreign statutes or regulations, shall not have expired
or been terminated;
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (except for any
action or inaction by Purchaser or any of its affiliates constituting a breach
of the Merger Agreement) giving rise to any such condition, makes it inadvisable
to proceed with the Offer or with such acceptance for payment of or payment for
Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition (except for any action or inaction by Purchaser or any of its
affiliates constituting a breach of the Merger Agreement) or (other than the
Minimum
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Condition) may be waived by Purchaser in whole or in part at any time and from
time to time in its sole discretion (subject to the terms of the Merger
Agreement). The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS. General. Except as
set forth below, based upon its examination of publicly available filings by the
Company with the Commission and other publicly available information concerning
the Company, neither the Purchaser nor the Parent is aware of any licenses or
other regulatory permits that appear to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by the Purchaser's acquisition of Shares (and the indirect acquisition of the
stock of the Company's subsidiaries) as contemplated herein, or of any filings,
approvals or other actions by or with any domestic (federal or state), foreign
or supranational governmental authority or administrative or regulatory agency
that would be required prior to the acquisition of Shares (or the indirect
acquisition of the stock of the Company's subsidiaries) by the Purchaser
pursuant to the Offer as contemplated herein. Should any such approval or other
action be required, it is the Purchaser's present intention to seek such
approval or action. There can be no assurance that any such approval or other
action, if needed, would be obtained without substantial conditions or that
adverse consequences might not result to the business of the Company, the Parent
or the Purchaser or that certain parts of the businesses of the Company, the
Parent or the Purchaser might not have to be disposed of or held separate or
other substantial conditions complied with in order to obtain such approval or
other action or in the event that such approval was not obtained or such other
action was not taken, any of which could cause the Purchaser to elect (subject
to the terms of the Merger Agreement) to terminate the Offer without the
purchase of the Shares thereunder. The Purchaser's obligation under the Offer to
accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section 15.
State Takeover Laws. A number of states have adopted takeover laws and
regulations which purport to varying degrees to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have or whose business operations have substantial economic effects in
such states, or which have substantial assets, security holders, principal
executive offices or principal places of business therein. To the extent that
certain provisions of certain of these state takeover statutes purport to apply
to the Offer, the Purchaser believes that such laws conflict with federal law
and constitute an unconstitutional burden on interstate commerce. In 1982, the
Supreme Court of the United States, in Edgar v. Mite Corp., invalidated on
constitutional grounds the Illinois Business Takeovers Act, which as a matter of
state securities law made takeovers of corporations meeting certain requirements
more difficult, and the reasoning in such decision is likely to apply to certain
other state takeover statutes. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court of the United States held that the State of
Indiana could, as a matter of corporate law and in particular those aspects of
corporate law concerning corporate governance, constitutionally disqualify a
potential acquiror from voting on the affairs of a target corporation without
the prior approval of the remaining stockholders, provided that such laws were
applicable only under certain conditions. Subsequently, in TLX Acquisition Corp.
v. Telex Corp., a federal district court in Oklahoma ruled that the Oklahoma
statutes were unconstitutional insofar as they applied to corporations
incorporated outside Oklahoma in that they would subject such corporations to
inconsistent regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a
federal district court in Tennessee ruled that four Tennessee takeover statutes
were unconstitutional as applied to corporations incorporated outside Tennessee.
This decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held in Grand
Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated
Transactions Act and the Florida Control Share Acquisition Act were
unconstitutional as applied to corporations incorporated outside of Florida.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity or applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchase nor any action
taken in
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connection herewith is intended as a waiver of that right. In the event that any
state takeover statute is found applicable to the Offer, the Purchaser might be
unable to accept for payment or purchase Shares tendered pursuant to the Offer
or be delayed in continuing or consummating the Offer. In such case, the
Purchaser may not be obligated to accept for purchase or pay for, any Shares
tendered. See Section 15.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the Federal Trade Commission ("FTC"), certain acquisition
transactions may not be consummated unless certain information has been
furnished to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and certain waiting period requirements have been
satisfied. The acquisition of Shares pursuant to the Offer is subject to such
requirements. See Section 2.
The Parent intends, as soon as reasonably practicable following the date
hereof, to file with the FTC and the Antitrust Division a Premerger Notification
and Report Form in connection with the purchase of Shares pursuant to the Offer.
Under the provisions of the HSR Act applicable to the Offer, the purchase of
Shares pursuant to the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by the Parent, unless both
the Antitrust Division and the FTC terminate the waiting period prior thereto.
If, within such 15-calendar day waiting period, either the Antitrust Division or
the FTC requests additional information or documentary material from the Parent,
the waiting period would be extended for an additional 10 calendar days
following substantial compliance by the Parent with such request. Thereafter,
the waiting period could be extended only by court order. If the acquisition of
Shares is delayed pursuant to a request by the FTC or the Antitrust Division for
additional information or documentary material pursuant to the HSR Act, the
Offer may, but need not (other than as may be requested by the Company pursuant
to the Merger Agreement), be extended and in any event the purchase of and
payment for Shares will be deferred until 10 days after the request is
substantially complied with, unless the waiting period is sooner terminated by
the FTC and the Antitrust Division. See Section 2. Only one extension of such
waiting period pursuant to a request for additional information is authorized by
the HSR Act and the rules promulgated thereunder, except by court order. Any
such extension of the waiting period will not give rise to any withdrawal rights
not otherwise provided for by applicable law. See Section 4.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
the Purchaser pursuant to the Offer. At any time before or after the purchase by
the Purchaser of Shares pursuant to the Offer, either of the FTC and the
Antitrust Division could take such action under the antitrust laws as it deems
necessary or desirable in the public interest, including seeking to enjoin the
purchase of Shares pursuant to the Offer or seeking the divestiture of Shares
purchased by the Purchaser or the divestiture of substantial assets of the
Parent, its subsidiaries or the Company. Private parties and state attorneys
general may also bring legal action under federal or state antitrust laws under
certain circumstances.
Based upon an examination of publicly available information relating to the
businesses in which the Company and its subsidiaries are engaged, the Purchaser
has determined that the Company and the Parent both produce and distribute
similar product lines in certain geographic areas. Although the Purchaser
believes that the acquisition of Shares pursuant to the Offer would not violate
the antitrust laws, there can be no assurance that a challenge to the Offer on
antitrust grounds will not be made or, if such challenge is made, what the
outcome will be. See Section 15 for certain conditions to the Offer, including
conditions with respect to litigation and certain government actions.
Certain Foreign Approvals. The Company has informed the Purchaser that the
Company has interests in certain businesses and assets in Italy and Canada with
respect to which certain filings may be acquired.
Under Italian antitrust law, the Purchaser may have to provide notice of
the consummation of the Offer to the Italian antitrust authorities in advance
thereof. Upon such filing, such authorities will have 30 days to either (i)
approve the indirect transfer of Italian assets that would result from
consummation of the Offer or (ii) institute a full investigation of the effect
of the transactions pursuant to the Merger Agreement on competition in the
Italian pump market. Within 45 days of commencing such investigation, such
authorities will either (a) approve such consummation, (b) prohibit the indirect
transfer of Italian assets, (c) condition
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such transfer on divestiture of some portion of such assets or (d) extend the
investigation for an additional 30 days.
Certain provisions of Canada's Competition Act require pre-notification to
the Director of Investigation and Research (the "Director") of a significant
acquisition of assets in Canada of an operating business or, subject to certain
share thresholds, voting shares of a corporation that directly or through
subsidiaries conducts an operating business in Canada (a "Notifiable
Transaction"). If a transaction is a Notifiable Transaction it may not be
completed prior to the expiration or earlier termination of the applicable
waiting period after notice of such transaction has been delivered to the
Director. The waiting periods may be seven or 21 days from the time information
provided to the Director is certified to be completed, depending upon the type
of information provided to the Director. The Director may waive or abridge the
waiting period. If the Director determines that the Notifiable Transaction
would, or is likely to, have the effect of lessening or preventing competition
substantially in a definable market, the Director may apply to the Competition
Tribunal (a special purpose Canadian tribunal) for an order to require, among
other things, the disposition of the Canadian assets or shares acquired in such
Notifiable Transaction in the case of a completed merger, or to prevent the
acquisition of Canadian assets or shares in the case of a proposed merger.
The Purchaser intends to file any required notices or applications with
respect to the Merger with the appropriate Italian and Canadian authorities and,
to the extent necessary, observe the applicable waiting periods and to seek any
requisite approvals from such authorities.
Other Foreign Approvals. Based on publicly available information, it
appears that the Company also owns property or conducts business in other
foreign countries and jurisdictions. In connection with the acquisition of the
Shares pursuant to the Offer, the laws of certain of those foreign countries and
jurisdictions may require the filing of information with, or the obtaining of
the approval of, governmental authorities in such countries and jurisdictions.
The governments in such countries and jurisdictions might attempt to impose
additional conditions on the Company's operations conducted in such countries
and jurisdictions as a result of the acquisition of the Shares pursuant to the
Offer. There can be no assurance that the Purchaser will be able to cause the
Company or its subsidiaries to satisfy or comply with such laws or that
compliance or non-compliance will not have adverse consequences for the Company
or any subsidiary after purchase of the Shares pursuant to the Offer.
Margin Credit Regulations. Federal Reserve Board Regulations G, T, U and X
(the "Margin Credit Regulations") restrict the extension or maintenance of
credit for the purpose of buying or carrying margin stock, including the Shares,
if the credit is secured directly or indirectly thereby. Such secured credit may
not be extended or maintained in an amount that exceeds the maximum loan value
of the margin stock. Under the Margin Credit Regulations, the Shares are
presently margin stock and the maximum loan value thereof is generally 50% of
their current market value. The definition of "indirectly secured" contained in
the Margin Credit Regulations provides that the term does not include an
arrangement with a customer if the lender in good faith has not relied upon
margin stock as collateral in extending or maintaining the particular credit.
17. FEES AND EXPENSES. Morgan Stanley is acting as Dealer Manager in
connection with the Offer and serving as financial advisor to the Parent and the
Purchaser in connection with the acquisition of the Company. The Parent has
agreed, pursuant to an engagement letter, to pay to Morgan Stanley an advisory
fee, in the event a transaction is not consummated, estimated to be between
$200,000 and $300,000. The Parent has agreed to pay Morgan Stanley a fee of $4.3
million upon the consummation of the Offer or a merger or other business
combination with, or acquisition of 50% or more of the Shares or of all or
substantially all of the assets of, the Company. The Parent and the Purchaser
will also reimburse Morgan Stanley for reasonable out-of-pocket expenses,
including reasonable attorneys' fees, and have also agreed to indemnify Morgan
Stanley against certain liabilities and expenses in connection with the Offer,
including certain liabilities under the federal securities laws.
The Purchaser has retained Georgeson & Company Inc. to act as the
Information Agent and The Bank of New York to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, telex, telegraph and personal interview and may request
brokers, dealers and other nominee stockholders to forward the Offer materials
to beneficial owners. The Information Agent and
33
<PAGE> 36
the Depositary will receive reasonable and customary compensation for services
relating to the Offer and will be reimbursed for certain out-of-pocket expenses.
The Purchaser and the Parent have also agreed to indemnify the Information Agent
and the Depositary against certain liabilities and expenses in connection with
the Offer, including certain liabilities under the federal securities laws.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person for soliciting tenders of Shares pursuant to the Offer
(other than to the Dealer Manager, the Information Agent and the Depositary).
Brokers, dealers, commercial banks and trust companies will, upon request, be
reimbursed by the Purchaser for customary mailing and handling expenses incurred
by them in forwarding offering materials to their customers.
18. MISCELLANEOUS. The Offer is being made solely by this Offer to
Purchase and the related Letter of Transmittal and is being made to all holders
of Shares. The Purchaser is not aware of any state where the making of the Offer
is prohibited by administrative or judicial action pursuant to any valid state
statute. If the Purchaser becomes aware of any valid state statute prohibiting
the making of the Offer or the acceptance of Shares pursuant thereto, the
Purchaser will make a good faith effort to comply with any such state statute.
If after such good faith effort, the Purchaser cannot comply with such state
statute, the Offer will not be made to nor will tenders be accepted from or on
behalf of the holders of Shares in such state. In any jurisdiction where the
securities, blue sky or other laws require the Offer to be made by a licensed
broker or dealer, the Offer shall be deemed to be made on behalf of the
Purchaser by the Dealer Manager or one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
The Purchaser and the Parent have filed with the Commission a Schedule
14D-1 (including exhibits) pursuant to Rule 14d-3 under the Exchange Act,
furnishing certain additional information with respect to the Offer. Such
statement and any amendments thereto, including exhibits, may be inspected and
copies may be obtained from the offices of the Commission (except that they will
not be available at the regional offices of the Commission) in the manner set
forth in Section 8 of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF THE PURCHASER OR THE PARENT NOT CONTAINED HEREIN OR
IN THE LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
GEORGE ACQUISITION, INC.
APRIL 25, 1997
34
<PAGE> 37
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF THE PURCHASER AND THE PARENT
1. Directors and Executive Officers of the Purchaser. The name and
position with the Purchaser of each director and executive officer of the
Purchaser are set forth below. The other required information with respect to
each such person, with the exception of Lawrence J. Swire, for whom such
information is provided below, is set forth under "Directors and Executive
Officers of the Parent". All directors and executive officers listed below are
citizens of the United States, except that Mr. Kamber is a citizen of Austria.
<TABLE>
<CAPTION>
NAME POSITION
- --------------------------------- ----------------------------------------------------------
<S> <C>
Martin Kamber.................... President and Director.
Vincent A. Maffeo................ Vice President, Treasurer and Director.
Lawrence J. Swire................ Vice President, Secretary and Director. He has been
Associate General Counsel of the Parent since December
1995. Prior thereto, he was Assistant General Counsel of
ITT Corporation, the corporate predecessor of the
Parent.
</TABLE>
2. Directors and Executive Officers of the Parent. The name, business
address, present principal occupation or employment and material occupations,
positions, offices or employments during the last five years of each director
and executive officer of the Parent and certain other information are set forth
below. Unless otherwise indicated, the business address of each such director
and executive officer is Four West Red Oak Lane, White Plains, NY 10604. Unless
otherwise indicated, each occupation set forth opposite an individual's name
refers to employment with the Parent. All directors and executive officers
listed below are citizens of the United States, except that Mr. David-Weill is a
citizen of France and Mr. Kamber is a citizen of Austria.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- --------------------------------- ----------------------------------------------------------
<S> <C>
Travis Engen..................... Director since 1995; Chairman, President and Chief
Executive of ITT Industries since December 1995. From
January 1991 through December 19, 1995, he was an
Executive Vice President of ITT Corporation, the
corporate predecessor of ITT Industries. Mr. Engen is a
director of Lyondell Petrochemical Company and of Alcan
Aluminium Limited. He is a member of the Business
Roundtable and the Manufacturers Alliance Board of
Trustees. He also is a director of Fundacion Chile, a
non-profit research organization in Chile.
Rand V. Araskog.................. Director since 1995, Chairman and Chief Executive of ITT
Corporation since December 1995. Previously he had
served as the Chief Executive of the corporate
predecessor of ITT Industries since 1979 and as Chairman
since 1980. He is a director of ITT Corporation, ITT
Hartford Group, Inc., ITT Educational Services, Inc.,
Alcatel Alsthom of France, Dow Jones & Company, Inc.,
Rayonier Inc., and Shell Oil Company. Mr. Araskog is a
member of The Business Council, The Business Roundtable,
and a trustee of the New York Zoological Society and of
the Salk Institute.
</TABLE>
I-1
<PAGE> 38
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- --------------------------------- ----------------------------------------------------------
<S> <C>
Robert A. Burnett................ Director since 1995, former Chairman of Meredith
Corporation (1988-1992). He is a director of ITT
Corporation, ITT Hartford Group, Inc., Meredith
Corporation, Whirlpool Corporation, and Mid American
Energy. He is a member of the Board of Trustees of
Grinnell College, Grinnell, Iowa.
Curtis J. Crawford............... Director since 1996; President of Microelectronics Group
of Lucent Technologies, Inc. since 1996. He served in a
similar capacity with AT&T from 1993 to 1996. From 1991
to 1993, he was Vice President and Co-Chief Executive
Officer of Microelectronics, formerly a division of
AT&T. He is a director of Lyondell Petrochemical Company
and chairman of the board of i-STAT Corporation. He also
is a director of the Semiconductor Industry Association.
Michel David-Weill............... Director since 1995; Chairman of Lazard Freres & Co. LLC
since May 1, 1995 when Lazard Freres & Co., of which he
had been Senior Partner since 1977, was restructured and
its name changed. Mr. David-Weill is a director of a
number of corporations, including Groupe Danone and
Publicis S.A. in France, Instituto Finanziario
Industriale S.p.A. in Italy, Pearson plc in England, The
Dannon Company, Inc. and the New York Stock Exchange,
Inc. in the United States, as well as other companies of
which Lazard Freres & Cie., Paris, or one of its
affiliates, is the principal stockholder.
S. Parker Gilbert................ Director since 1995; Chairman, Morgan Stanley Advisory
Board; retired in 1990 from Morgan Stanley Group Inc.,
where he served as Chairman from 1984. Mr. Gilbert is a
director of Morgan Stanley Group Inc., Burlington
Resources Inc., and Taubman Centers, Inc. He is
President, Board of Trustees of the Pierpont Morgan
Library, and a member of the Board of Trustees of the
Metropolitan Museum of Art and the Alfred P. Sloan
Foundation.
Edward C. Meyer.................. Director since 1995; Chairman of Mitretek Systems retired
in 1983 as chief of staff of the United States Army. He is
a director of ITT Corporation, FMC Corporation and its
joint venture company in Turkey, the Brown Group, Aegon
U.S.A., and GRC International. He is a managing partner
of Cilluffo Associates Limited Partnership, a trustee of
the George C. Marshall Foundation, and a board member of
the Smith Richardson Foundation. He is President of the
Army Emergency Relief Association and a member of the
Board of Overseers of the Hoover Institution and the
Board of Advisors of the Center for Strategic and
International Studies.
</TABLE>
I-2
<PAGE> 39
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
AND MATERIAL OCCUPATIONS, POSITIONS, OFFICES
NAME AND ADDRESS OR EMPLOYMENT HELD DURING THE LAST FIVE YEARS
- --------------------------------- ----------------------------------------------------------
<S> <C>
Sidney Taurel.................... Director since 1996; President and Chief Operating Officer
of Eli Lilly and Company since February 1996. In 1986, he
was named President of Eli Lilly International
Corporation and became executive Vice President of the
pharmaceutical division in 1991. In 1993, he became
executive Vice President of Eli Lilly and Company and
President of its pharmaceutical division. Mr. Taurel is
a director of Eli Lilly and Company and The McGraw Hill
Companies, Inc. He also is Chairman of the Board of
Directors of the Pharmaceutical Research and
Manufacturers of America and a member of the Board of
Overseers of the Columbia University Business School and
the Board of the RCA Tennis Championships.
Ralph D. Allen................... Vice President, Director of Investor Relations since
December 1995 and prior thereto, Mr. Allen served in a
similar capacity with the corporate predecessor of the
Parent since 1981.
Donald E. Foley.................. Vice President and Treasurer since May 1996. Prior
thereto, Mr. Foley was Assistant Treasurer of the
International Paper Company.
Louis J. Giuliano................ Senior Vice President since December 1995 and, prior
thereto, Mr. Giuliano served in a similar capacity with
the corporate predecessor of the Parent since 1988.
Martin Kamber.................... Senior Vice President, Director of Corporate Development
since December 1995. From 1993 until December 1995, Mr.
Kamber was Vice President, Corporate Development of ITT
Automotive, Inc. and Executive Assistant to the
President, Chief Operating Officer and Executive Vice
President of the corporate predecessor of the Parent.
Heidi Kunz....................... Senior Vice President and Chief Financial Officer since
December 1995. Prior thereto, Ms. Kunz was Vice President
since 1994 and Treasurer since 1993 of the General
Motors Corporation. Prior thereto, she was Assistant
Treasurer of the General Motors Corporation.
Richard J. Labrecque............. Senior Vice President since March 1996. Prior thereto, Mr.
Labrecque was Vice President of the corporate
predecessor of the Parent since 1985.
Vincent A. Maffeo................ Senior Vice President and General Counsel since December
1995. Prior thereto, Mr. Maffeo was Vice President and
General Counsel to ITT Automotive, Inc. since 1992 and
prior thereto, Vice President and General Counsel of ITT
Defense, Inc.
Thomas R. Martin................. Vice President, Director of Corporate Relations since
September 1996. Mr. Martin was Vice President of Corporate
Communications since 1995 and prior thereto, Managing
Director of Public Relations of Federal Express Corp.
Richard W. Powers................ Vice President, Director of Taxes since December 1995.
Prior thereto, Mr. Powers was Vice President of the
corporate predecessor of the Parent since 1991.
</TABLE>
I-3
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
GOULDS PUMPS, INCORPORATED
PURSUANT TO THE OFFER TO PURCHASE
DATED APRIL 25, 1997
BY
GEORGE ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY OF
ITT INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON THURSDAY, MAY 22, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
Tender & Exchange Department (for Eligible Institutions only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 New York, NY 10286
</TABLE>
Confirm by Telephone:
(800) 507-9357
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET
FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE
READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders, either if
certificates for Shares (as defined below) are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase) is utilized, if
tenders of Shares are to be made by book-entry transfer into the account of The
Bank of New York, as Depositary (the "Depositary"), at The Depository Trust
Company ("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each a
"Book-Entry Transfer Facility" and collectively the "Book-Entry Transfer
Facilities") pursuant to the procedures set forth in Section 3 of the Offer to
Purchase (as defined below). Stockholders who tender Shares by book-entry
transfer are referred to herein as "Book-Entry Stockholders".
Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase), or who
cannot complete the procedure for book-entry transfer on a timely basis, must
tender their Shares according to the guaranteed delivery procedure set forth in
Section 3 of the Offer to Purchase. See Instruction 2. DELIVERY OF DOCUMENTS TO
A BOOK-ENTRY TRANSFER FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TOTAL NUMBER
SHARE OF SHARES NUMBER OF
CERTIFICATE REPRESENTED BY SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total Shares
------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, all Shares represented by certificates
delivered to the Depositary will be deemed to have been tendered. See
Instruction 4.
================================================================================
[ ] CHECK HERE IF SHARES ARE BEING TENDERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH A BOOK-ENTRY TRANSFER FACILITY AND
COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN A BOOK-ENTRY TRANSFER FACILITY
MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
Name of Tendering Institution
-------------------------------------------------
Check box of Book-Entry Transfer Facility (check one):
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
----------------------------------------------------------------
Transaction Code Number
-------------------------------------------------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
-----------------------------------------------
Window Ticket Number (if any):
------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
---------------------------
Name of Institution that Guaranteed Delivery:
---------------------------------
If delivered by Book-Entry Transfer, check box of Book-Entry Transfer Facility
(check one):
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
Account Number
---------------------------------------------------------------
Transaction Code Number
------------------------------------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
The undersigned hereby tenders to George Acquisition, Inc., a Delaware
corporation (the "Purchaser"), a wholly owned subsidiary of ITT Industries,
Inc., an Indiana corporation ("Parent"), the above-described shares of Common
Stock, par value $1.00 per share (the "Shares"), of Goulds Pumps, Incorporated,
a Delaware corporation (the "Company"), at a purchase price of $37.00 per Share,
net to the seller in cash without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated April 25, 1997 (the
"Offer to Purchase") and in this Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer"). The undersigned understands that
the Purchaser reserves the right to transfer or assign, in whole or from time to
time in part, to one or more of its affiliates, the right to purchase all or any
portion of the Shares tendered pursuant to the Offer, receipt of which is hereby
acknowledged.
Subject to, and effective upon, acceptance for payment for the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, the Purchaser all
right, title and interest in and to all of the Shares that are being tendered
hereby and any and all dividends, distributions (including additional Shares) or
rights declared, paid or issued with respect to the tendered Shares on or after
the date hereof and payable or distributable to the undersigned on a date prior
to the transfer to the name of the Purchaser or nominee or transferee of the
Purchaser on the Company's stock transfer records of the Shares tendered
herewith (collectively, a "Distribution"), and appoints the Depositary the true
and lawful agent and attorney-in-fact of the undersigned with respect to such
Shares (and any Distribution) with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest) to
(a) deliver such Share Certificates (as defined herein) (and any Distribution)
or transfer ownership of such Shares (and any Distribution) on the account books
maintained by a Book-Entry Transfer Facility, together in either case with
appropriate evidences of transfer, to the Depositary for the account of the
Purchaser, (b) present such Shares (and any Distribution) for transfer on the
books of the Company and (c) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares (and any Distribution), all in
accordance with the terms and subject to the conditions of the Offer.
The undersigned irrevocably appoints designees of the Purchaser as such
stockholder's proxy, with full power of substitution, to the full extent of such
stockholder's rights with respect to the Shares tendered by such stockholder and
accepted for payment by the Purchaser and with respect to any and all other
Shares or other securities issued or issuable in respect of such Shares on or
after the date hereof. Such appointment will be effective when, and only to the
extent that, the Purchaser accepts such Shares for payment. Upon such acceptance
for payment, all prior proxies given by such stockholder with respect to such
Shares (and such other shares and securities) will be revoked without further
action, and no subsequent proxies may be given nor any subsequent written
consents executed (and, if given or executed, will not be deemed effective). The
designees of the Purchaser will be empowered to exercise all voting and other
rights of such stockholder as they in their sole discretion may deem proper at
any annual or special meeting of the Company's stockholders or any adjournment
or postponement thereof, by written consent in lieu of any such meeting or
otherwise. The Purchaser reserves the right to require that, in order for Shares
to be deemed validly tendered, immediately upon the Purchaser's payment for such
Shares the Purchaser must be able to exercise full voting rights with respect to
such Shares.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares (and
any Distribution) tendered hereby and (b) when the Shares are accepted for
payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title to the Shares (and any Distribution), free and clear of all
liens, restrictions, charges and encumbrances, and the same will not be subject
to any adverse claim. The undersigned, upon request, will execute and deliver
any additional documents deemed by the Depositary or the Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby (and any Distribution). In addition, the undersigned
shall promptly remit and transfer to the Depositary for the account of the
Purchaser any and all Distributions in respect of the Shares tendered hereby,
accompanied by appropriate documentation of transfer;
<PAGE> 4
and pending such remittance or appropriate assurance thereof, the Purchaser will
be, subject to applicable law, entitled to all rights and privileges as owner of
any such Distribution and may withhold the entire purchase price or deduct from
the purchase price the amount or value thereof, as determined by the Purchaser
in its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date (as defined in the Offer to Purchase) and, unless theretofore
accepted for payment by the Purchaser pursuant to the Offer, may also be
withdrawn at any time after June 23, 1997. See Section 4 of the Offer to
Purchase.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions set forth in the
Offer, including the undersigned's representation that the undersigned owns the
Shares being tendered.
Unless otherwise indicated herein under "Special Payment Instructions",
please issue the check for the purchase price and/or issue or return any
certificate(s) for Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered". Similarly, unless otherwise indicated herein under "Special Delivery
Instructions", please mail the check for the purchase price and/or any
certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered". In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or any
certificate(s) for Shares not tendered or accepted for payment in the name of,
and deliver such check and/or such certificates to, the person or persons so
indicated. Unless otherwise indicated herein under "Special Payment
Instructions", please credit any Shares tendered herewith by book-entry transfer
that are not accepted for payment by crediting the account at the Book-Entry
Transfer Facility (as defined herein) designated above. The undersigned
recognizes that the Purchaser has no obligation, pursuant to the Special Payment
Instructions, to transfer any Shares from the name(s) of the registered
holder(s) thereof if the Purchaser does not accept for payment any of the Shares
so tendered.
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned or if Shares tendered by book-entry transfer which are not
accepted for payment are to be returned by credit to an account maintained
at a Book-Entry Transfer Facility.
Issue [ ] check [ ] certificates to:
Name
--------------------------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX ID. OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
Credit Shares tendered by book-entry transfer that are not accepted for
payment to (Check one):
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
------------------------------------------------------------
(DTC OR PDTC ACCOUNT NO.)
============================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned
or to the undersigned at an address other than that shown above.
Mail [ ] check [ ] certificates to:
Name
---------------------------------------------------------------
(PLEASE PRINT)
Address
------------------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
(TAX ID. OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN SHARES (SEE INSTRUCTION 12)
This section is to be completed ONLY if Shares held in the Dividend Reinvestment
Plan are to be tendered.
[ ] By checking this box, the undersigned represents that the undersigned is a
participant in the Dividend Reinvestment Plan and hereby instructs the
Depositary to tender on behalf of the undersigned the following number of
Shares credited to the Dividend Reinvestment Plan account of the
undersigned:
Shares*
* The undersigned understands and agrees that all Shares held in the Dividend
Reinvestment Plan account(s) of the undersigned will be tendered if the above
box is checked and the space above is left blank.
<PAGE> 6
- --------------------------------------------------------------------------------
SIGN HERE
AND COMPLETE SUBSTITUTE FORM W-9
X ------------------------------------------------------
X ------------------------------------------------------
(SIGNATURE(S) OF HOLDER(S))
Dated: , 1997
----------------------------------------------------
(Must be signed by the registered holder(s) exactly as
name(s) appear(s) on Share Certificate(s) or on a
security position listing or by person(s) authorized to
become registered holder(s) by certificates and
documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, please
provide the following information and see Instruction
5.)
Name(s)-------------------------------------------------
--------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
----------------------------------
Address
--------------------------------------------------
--------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
---------------------------
Tax Identification or Social Security No.
----------------
COMPLETE SUBSTITUTE FORM W-9
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
-------------------------------------
Name
-----------------------------------------------------
Name of Firm
---------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
----------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone Number
---------------------------
Dated:
----------------------------------------------- , 1997
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares tendered herewith, unless such holder(s) has
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" above, or (b) if such Shares are
tendered for the account of a firm which is a bank, broker, dealer, credit
union, savings association or other entity which is a member in good standing of
the Securities Transfer Agents Medallion Program (each of the foregoing being
referred to as an "Eligible Institution"). In all other cases, all signatures on
this Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5 of this Letter of Transmittal.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by stockholders either if certificates are to be forwarded herewith or, unless
an Agent's Message is utilized, if tenders are to be made pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Share Certificates evidencing tendered Shares, or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of Shares
into the Depositary's account at a Book-Entry Transfer Facility, as well as this
Letter of Transmittal (or a facsimile hereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other documents required by this
Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date (as defined in Section 1
of the Offer to Purchase). Stockholders whose Share Certificates are not
immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary prior to the Expiration Date or who
cannot complete the procedure for delivery by book-entry transfer on a timely
basis may tender their Shares by properly completing and duly executing a Notice
of Guaranteed Delivery pursuant to the guaranteed delivery procedure set forth
in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i) such
tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form made available by the Purchaser, must be received by the Depositary prior
to the Expiration Date; and (iii) the Share Certificates (or a Book-Entry
Confirmation) representing all tendered Shares, in proper form for transfer, in
each case together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry delivery, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three Nasdaq National Market trading days after the date of
execution of such Notice of Guaranteed Delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
3. Inadequate Space. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.
4. Partial Tenders (Not Applicable to Book-Entry Stockholders). If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered". In such cases, new Share Certificates for
the Shares that were evidenced by your old Share Certificates, but were not
tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Shares represented by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
<PAGE> 8
5. Signatures on Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the certificate(s) without alteration, enlargement or any change
whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or not purchased are to be issued in the
name of a person other than the registered holder(s). Signatures on such
certificates or stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the certificate(s) listed, the certificate(s) must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name(s) of the registered holder(s) appear on the certificate(s).
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, the Purchaser will pay any stock transfer taxes with respect to the transfer
and sale of Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price is to be made to, or if certificate(s) for Shares
not tendered or accepted for payment are to be registered in the name of, any
person other than the registered holder(s), or if tendered certificate(s) are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or an exemption therefrom, is submitted.
Except as otherwise provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the certificate(s) listed in
this Letter of Transmittal.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be issued or returned to, a person other than the signer of this
Letter of Transmittal or if a check and/or such certificates are to be returned
to a person other than the person(s) signing this Letter of Transmittal or to an
address other than that shown in this Letter of Transmittal, the appropriate
boxes on this Letter of Transmittal must be completed. A Book-Entry Stockholder
may request that Shares not accepted for payment be credited to such account
maintained at a Book-Entry Transfer Facility as such Book-Entry Stockholder may
designate under "Special Payment Instructions". If no such instructions are
given, such Shares not accepted for payment will be returned by crediting the
account at the Book-Entry Transfer Facility designated above.
8. Waiver of Conditions. Subject to the terms and conditions of the Merger
Agreement (as defined in the Offer to Purchase), the conditions of the Offer
(other than the Minimum Condition (as defined in the Offer to Purchase)) may be
waived by the Purchaser in whole or in part at any time and from time to time in
its sole discretion.
<PAGE> 9
9. 31% Backup Withholding; Substitute Form W-9. Under U.S. federal income
tax law, a stockholder whose tendered Shares are accepted for payment is
required to provide the Depositary with such stockholder's correct taxpayer
identification number ("TIN") on Substitute Form W-9 below. If the Depositary is
not provided with the correct TIN, the Internal Revenue Service may subject the
stockholder or other payee to a $50 penalty. In addition, payments that are made
to such stockholder or other payee with respect to Shares purchased pursuant to
the Offer may be subject to 31% backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, the stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. A Form W-8 can be
obtained from the Depositary. See the enclosed "Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9" for more instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any such payments made to the stockholder or other payee. Backup withholding
is not an additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% of all payments made prior to the time a properly certified TIN is
provided to the Depositary.
The stockholder is required to give the Depositary the TIN (e.g., social
security number or employer identification number) of the record owner of the
Shares or of the last transferee appearing on the transfers attached to, or
endorsed on, the Shares. If the Shares are in more than one name or are not in
the name of the actual owner, consult the enclosed "Guidelines for Certification
of Taxpayer Identification Number on Substitute Form W-9" for additional
guidance on which number to report.
10. Requests for Assistance or Additional Copies. Questions or requests
for assistance may be directed to the Dealer Manager or the Information Agent at
their respective addresses and telephone numbers set forth below. Additional
copies of the Offer to Purchase, this Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent or the
Dealer Manager or from brokers, dealers, commercial banks or trust companies.
11. Lost, Destroyed or Stolen Certificates. If any certificate
representing Shares has been lost, destroyed or stolen, the stockholder should
promptly notify the Depositary. The stockholder will then be instructed as to
the steps that must be taken in order to replace the certificate. This Letter of
Transmittal and related documents cannot be processed until the procedures for
replacing lost or destroyed certificates have been followed.
12. Dividend Reinvestment Plan. If a tendering stockholder desires to have
tendered pursuant to the Offer Shares credited to the stockholder's account
under the Dividend Reinvestment Plan, the box captioned "Dividend Reinvestment
Plan Shares" should be completed. A participant in the Dividend Reinvestment
Plan may complete such box on only one Letter of Transmittal submitted by such
participant. If a participant submits more than one Letter of Transmittal and
completes such box on more than one Letter of Transmittal, the participant will
be deemed to have elected to tender all Shares credited to the stockholder's
account under the Dividend Reinvestment Plan.
If a stockholder authorizes a tender of Shares held in the Dividend
Reinvestment Plan, all such Shares credited to such stockholder's account(s),
including fractional Shares, will be tendered, unless otherwise specified in the
appropriate space in the box captioned "Dividend Reinvestment Plan Shares." In
the event that the box captioned "Dividend Reinvestment Plan Shares" is not
completed, no Shares held in the tendering stockholder's account will be
tendered.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR THE NOTICE OF
GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY PRIOR TO THE EXPIRATION DATE.
<PAGE> 10
<TABLE>
- --------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
- ----------------------------------------------------------------------------------------------------------
<S> <C>
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX Social Security Number
FORM W-9 AT THE RIGHT AND CERTIFY BY SIGNING AND OR
DEPARTMENT OF THE TREASURY DATING BELOW. ------------------------------
INTERNAL REVENUE SERVICE Employer Identification Number
----------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER Part 2 -- Certification -- Under penalties of perjury, I certify that:
IDENTIFICATION NUMBER (1) The number shown on this form is my correct Taxpayer Identification
("TIN") Number (or I am waiting for a number to be issued to me) and
(2) I am not subject to backup withholding because: (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal
Revenue Service (the "IRS") that I am subject to backup withholding
as a result of a failure to report all interest or dividends, or (c)
the IRS has notified me that I am no longer subject to backup
withholding.
Certification Instructions -- You must cross out item (2) above if you
have been notified by the IRS that you are currently subject to backup
withholding because of under-reporting interest or dividends on your tax
return. However, if after being notified by the IRS that you were subject
to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out such
Item (2).
--------------------------------------------------------------------------
SIGN HERE& SIGNATURE DATE , 1997 Part 3 -- Awaiting TIN [ ]
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all reportable payments made to me will be withheld.
Signature Date , 1997
------------------------------- -------------------------
<PAGE> 11
The Information Agent for the Offer is:
[GEORGESON & COMPANY LOGO]
Wall Street Plaza
New York, New York 10005
BANKS AND BROKERS CALL COLLECT:
(212) 440-9800
ALL OTHERS CALL TOLL FREE:
1-800-223-2064
The Dealer Manager for the Offer is:
MORGAN STANLEY & CO.
Incorporated
1585 Broadway
New York, New York 10036
(212) 761-4341
April 25, 1997
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF COMMON STOCK
OF
GOULDS PUMPS, INCORPORATED
As set forth in Section 3 of the Offer to Purchase described below, this
instrument or one substantially equivalent hereto must be used to accept the
Offer (as defined below) if certificates for Shares (as defined below) are not
immediately available or the certificates for Shares and all other required
documents cannot be delivered to The Bank of New York (the "Depositary") on or
prior to the Expiration Date (as defined in Section 1 of the Offer to Purchase)
or if the procedure for delivery by book-entry transfer cannot be completed on a
timely basis. This instrument may be delivered by hand or transmitted by
facsimile transmission or mailed to the Depositary.
The Depositary for the Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
Tender & Exchange Department (for Eligible Institutions only) Tender & Exchange Department
P.O. Box 11248 (212) 815-6213 101 Barclay Street
Church Street Station Receive and Deliver Window
New York, NY 10286-1248 Confirm by Telephone: New York, NY 10286
(800) 507-9357
</TABLE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box in the Letter of Transmittal.
Ladies and Gentlemen:
The undersigned hereby tender(s) to George Acquisition, Inc., a Delaware
corporation and a wholly owned subsidiary of ITT Industries, Inc., an Indiana
corporation, upon the terms and subject to the conditions set forth in the Offer
to Purchase dated April 25, 1997 (the "Offer to Purchase"), and in the related
Letter of Transmittal (which together constitute the "Offer"), receipt of which
is hereby acknowledged, the number of shares of Common Stock, par value $1.00
per share (the "Shares"), of Goulds Pumps, Incorporated, a Delaware corporation,
pursuant to the guaranteed delivery procedure set forth in Section 3 of the
Offer to Purchase.
<PAGE> 2
<TABLE>
<S> <C>
Signature(s) Address(es)
--------------------------------- ----------------------------------
Name(s) of Record Holders ----------------------------------------------
ZIP CODE
- ---------------------------------------------- Area Code and Tel. No(s)
PLEASE TYPE OR PRINT ---------------------
Check one box if Shares will be tendered by
Number of Shares book-entry transfer)
-----------------------------
[ ] The Depository Trust Company
Certificate Nos. (If Available) [ ] Philadelphia Depository Trust Company
- ---------------------------------------------- Account Number
-------------------------------
- ----------------------------------------------
Dated , 1997 ----------------------------------------------
---------------------------------
</TABLE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program, (a) represents that the above
named person(s) "own(s)" the Shares tendered hereby within the meaning of Rule
14e-4 under the Securities Exchange Act of 1934, as amended ("Rule 14e-4"), (b)
represents that such tender of Shares complies with Rule 14e-4, and (c)
guarantees to deliver to the Depositary either the certificates evidencing all
tendered Shares, in proper form for transfer, or to deliver Shares pursuant to
the procedure for book-entry transfer into the Depositary's account at The
Depository Trust Company or the Philadelphia Depository Trust Company (each a
"Book-Entry Transfer Facility"), in either case together with the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees or an Agent's Message (as defined in the Offer
to Purchase) in the case of a book-entry delivery, and any other required
documents, all within three Nasdaq National Market trading days after the date
hereof.
<TABLE>
<S> <C>
- ---------------------------------------------- ----------------------------------------------
NAME OF FIRM AUTHORIZED SIGNATURE
Name
- ---------------------------------------------- -----------------------------------------
ADDRESS PLEASE TYPE OR PRINT
Title
- ---------------------------------------------- ----------------------------------------
ZIP CODE
Dated , 1997
- ---------------------------------------------- ----------------------------------
AREA CODE AND TEL. NO.
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
and securities) will be revoked without further action, and no subsequent powers
of attorney and proxies may be given nor any subsequent written consents
executed (and, if given or executed, will not be deemed effective). The
designees of the Purchaser will, with respect to the Shares (and such other
Shares and securities) for which such appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise. The Purchaser reserves the right to
require that, in order for Shares to be deemed validly tendered, immediately
upon the Purchaser's payment for such Shares, the Purchaser must be able to
exercise full voting rights with respect to such Shares and other securities,
including voting at any meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by the Purchaser in its sole discretion, which
determination shall be final and binding on all parties. The Purchaser reserves
the absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may in the opinion of its
counsel be unlawful. The Purchaser also reserves the absolute right to waive any
of the conditions of the Offer or any defect or irregularity in any tender of
Shares of any particular stockholder whether or not similar defects or
irregularities are waived in the case of other stockholders. No tender of Shares
will be deemed to have been validly made until all defects and irregularities
have been cured or waived. None of the Purchaser, the Parent, any of their
affiliates or assigns, the Dealer Manager, the Depositary, the Information Agent
or any other person will be under any duty to give notification of any defects
or irregularities in tenders or incur any liability for failure to give any such
notification. The Purchaser's interpretation of the terms and conditions of the
Offer (including the Letter of Transmittal and the instructions thereto) will be
final and binding.
Backup Federal Income Tax Withholding and Substitute Form W-9. Under the
"backup withholding" provisions of federal income tax law, the Depositary may be
required to withhold 31% of the amount of any payments of cash pursuant to the
Offer. In order to avoid backup withholding, each stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the payor of such
cash with such stockholder's correct taxpayer identification number ("TIN") on a
substitute Form W-9 and certify, under penalties of perjury, that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide its correct TIN or fails to provide the
certifications described above, the Internal Revenue Service ("IRS") may impose
a penalty on such stockholder and payment of cash to such stockholder pursuant
to the Offer may be subject to backup withholding of 31%. All stockholders
surrendering Shares pursuant to the Offer should complete and sign the
substitute Form W-9 included in the Letter of Transmittal to provide the
information and certification necessary to avoid backup withholding (unless an
applicable exemption exists and is proved in a manner satisfactory to the
Depositary). Certain stockholders (including among others all corporations and
certain foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign a Form W-8,
Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 of the
Letter of Transmittal.
Other Requirements. The Purchaser's acceptance for payment of Shares
tendered pursuant to any of the procedures described above will constitute a
binding agreement between the tendering stockholder and the Purchaser upon the
terms and subject to the conditions of the Offer, including the tendering
stockholder's representation and warranty that the stockholder is the holder of
the Shares within the meaning of, and that the tender of the Shares complies
with, Rule 14e-4 under the Exchange Act.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable, except that Shares tendered pursuant to the Offer may be withdrawn
at any time on or prior to the Expiration Date and, unless theretofore accepted
for payment by the Purchaser pursuant to the Offer, may also be withdrawn at any
time after June 23, 1997. If the Purchaser extends the Offer, is delayed in its
acceptance for payment of Shares or is unable to purchase Shares validly
tendered pursuant to the Offer for any reason, then without prejudice to the
Purchaser's rights under the Offer, the Depositary may nevertheless, on behalf
of the Purchaser, retain tendered Shares and such Shares may not be withdrawn
except to the extent that tendering
7
<PAGE> 2
stockholders are entitled to withdrawal rights as described in this Section 4.
Any such delay in acceptance for payment will be accompanied by an extension of
the Offer to the extent required by law.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Share Certificates to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signatures on the notice of withdrawal must
be guaranteed by an Eligible Institution unless such Shares have been tendered
for the account of an Eligible Institution. If Shares have been tendered
pursuant to the procedure for book-entry transfer as set forth in Section 3, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding. None of the
Purchaser, the Parent, any of their affiliates or assigns, the Dealer Manager,
the Depositary, the Information Agent or any other person will be under any duty
to give notification of any defects or irregularities in any notice of
withdrawal or incur any liability for failure to give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The summary of tax
consequences set forth below is for general information only and is based on the
law as currently in effect. The tax treatment of each stockholder will depend in
part upon such stockholder's particular situation. Special tax consequences not
described herein may be applicable to particular classes of taxpayers, such as
financial institutions, broker-dealers, persons who are not citizens or
residents of the United States, stockholders who acquired their Shares through
the exercise of an employee stock option or otherwise as compensation, and
persons who received payments in respect of options to acquire Shares. ALL
STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE PARTICULAR TAX
CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY
AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR FOREIGN INCOME
AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for Federal income tax purposes under the Internal Revenue Code of
1986, as amended, and may also be a taxable transaction under applicable state,
local, foreign income or other tax laws. Generally, for Federal income tax
purposes, a tendering stockholder will recognize gain or loss in an amount equal
to the difference between the cash received by the stockholder pursuant to the
Offer or the Merger and the stockholder's adjusted tax basis in the Shares
tendered by the stockholder and purchased pursuant to the Offer or the Merger.
For Federal income tax purposes, such gain or loss will be a capital gain or
loss if the Shares are a capital asset in the hands of the stockholder, and a
long-term capital gain or loss if the stockholder's holding period is more than
one year as of the date the Purchaser accepts such Shares for payment pursuant
to the Offer or the effective date of the Merger, as the case may be. There are
limitations on the deductibility of capital losses.
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and traded on
the Nasdaq National Market under the symbol "GULD". The following table sets
forth, for the quarters indicated, the high and low sales prices per Share on
the Nasdaq National Market as reported in the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (the "1996 Annual Report") with
respect to periods occurring in 1995
8
<PAGE> 3
and 1996 and as reported by the Dow Jones News Service thereafter, and the
amount of cash dividends paid or declared per share for each quarter based on
publicly available sources.
<TABLE>
<CAPTION>
HIGH LOW DIVIDENDS
------ ------ ---------
<S> <C> <C> <C>
Year Ended December 31, 1995:
First Quarter.................................... $24.25 $19.63 $ .20
Second Quarter................................... 25.50 20.38 .20
Third Quarter.................................... 23.63 21.00 .20
Fourth Quarter................................... 26.00 22.63 .20
Year Ended December 31, 1996:
First Quarter.................................... 25.13 20.88 .20
Second Quarter................................... 25.88 20.00 .20
Third Quarter.................................... 25.88 21.13 .20
Fourth Quarter................................... 25.00 20.38 .20
Year Ended December 31, 1997:
First Quarter.................................... 24.88 22.63 .20
Second Quarter (through April 24, 1997).......... 24.25 22.75 .20
</TABLE>
On March 24, 1997, the last full trading day prior to the date that the
Parent sent a letter to the Company expressing interest in acquiring the
Company, the closing sale price per Share reported on the Nasdaq National Market
was $23.00. On April 18, 1997, the last full trading day prior to announcement
of the Offer, the closing sale price per Share reported on the Nasdaq National
Market was $22.88. On April 24, 1997, the last full trading day before
commencement of the Offer, the closing sale price per Share reported on the
Nasdaq National Market was $36.25. STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT
MARKET QUOTATION FOR THE SHARES.
Pursuant to the Merger Agreement, the Company has agreed not to declare,
set aside, make or pay any dividend or other distribution, other than regular
quarterly dividends consistent with past practice, in an amount not to exceed
$.20 per share, and the distribution of the Rights pursuant to the Rights Plan
(as defined in Section 11).
7. CERTAIN INFORMATION CONCERNING THE COMPANY. The information concerning
the Company contained in this Offer to Purchase, including financial
information, has been taken from or based upon publicly available documents and
records on file with the Commission and other public sources. The summary
information concerning the Company in this Section 7 and elsewhere in this Offer
to Purchase is derived from the 1996 Annual Report and other publicly available
information. The summary information set forth below is qualified in its
entirety by reference to such reports (which may be obtained and inspected as
described below) and should be considered in conjunction with the more
comprehensive financial and other information in such reports and other publicly
available reports and documents filed by the Company with the Commission and
other publicly available information. Although the Purchaser and the Parent do
not have any knowledge that would indicate that any statements contained herein
based upon such reports are untrue, neither the Purchaser nor the Parent assumes
any responsibility for the accuracy or completeness of the information contained
therein, or for any failure by the Company to disclose events that may have
occurred and may affect the significance or accuracy of any such information but
which are unknown to the Purchaser and the Parent.
General. The Company started business in 1848 and was later incorporated
in 1864 under the laws of New York State as Downs & Co. Manufacturing Company.
In 1869, the Company's name was changed to The Goulds Manufacturing Company and
in 1926 the name was changed to Goulds Pumps, Incorporated. Effective December
31, 1984, the Company was reincorporated under the laws of the State of Delaware
by virtue of a merger transaction. The Company's principal executive offices are
located at 300 WillowBrook Office Park, Fairport, New York 14450. The telephone
number of the Company at such offices is (716) 387-6600.
The Company designs, manufactures, sells and repairs centrifugal pumps and
accessories for diverse applications. The Company's pumps are used in the
following worldwide markets: residential, chemical,
9
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GOULDS PUMPS, INCORPORATED
AT
$37.00 NET PER SHARE
BY
GEORGE ACQUISITION, INC.
A WHOLLY OWNED SUBSIDIARY OF
ITT INDUSTRIES, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON THURSDAY, MAY 22, 1997, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated April 25,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal relating
to the offer by George Acquisition, Inc., a Delaware corporation (the
"Purchaser") and a wholly owned subsidiary of ITT Industries, Inc., an Indiana
corporation (the "Parent"), to purchase all of the outstanding shares of Common
Stock, par value $1.00 per share (the "Shares"), of Goulds Pumps, Incorporated,
a Delaware corporation (the "Company"), at a purchase price of $37.00 per Share,
net to the seller in cash without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase and in the related Letter
of Transmittal (which, as amended from time to time, together constitute the
"Offer"). Holders of Shares whose certificates for such Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other required documents to The Bank of New York, the
Depositary, prior to the Expiration Date (as defined in the Offer to Purchase),
or who cannot complete the procedures for book-entry transfer on a timely basis,
must tender their Shares according to the guaranteed delivery procedures set
forth in Section 3 of the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US FOR YOUR
ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of such Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer to Purchase.
Your attention is directed to the following:
1. The tender price is $37.00 per share, net to the seller in cash
without interest thereon.
2. The Offer is made for all of the outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Merger Agreement (as defined below) and the transactions contemplated
thereby, and determined that the Offer and the Merger (as defined below)
are fair to, and in the best interests of, the holders of Shares and
recommends that holders of the Shares accept the Offer and tender their
Shares to the Purchaser.
4. The Offer is being made pursuant to the Agreement and Plan of
Merger, dated as of April 20, 1997 (the "Merger Agreement"), which provides
that subsequent to the consummation of the Offer, the
<PAGE> 2
Purchaser will merge with and into the Company (the "Merger"). At the
effective time of the Merger (the "Effective Time"), each Share issued and
outstanding immediately prior to the Effective Time (other than Shares held
in the treasury of the Company and each Share owned by the Parent, the
Purchaser or any other direct or indirect subsidiary of the Parent or of
the Company and other than Shares, if any, held by stockholders who have
not voted in favor of or consented to the Merger and who have delivered a
written demand for appraisal of such Shares in accordance with the Delaware
General Corporation Law) will be cancelled, extinguished and converted into
the right to receive $37.00 in cash, without interest thereon.
5. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Thursday, May 22, 1997, unless the Offer is extended.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to the
Offer.
7. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not properly withdrawn prior to the expiration of the
Offer, a number of Shares which, together with the Shares owned by the
Parent or the Purchaser, constitute more than 50% of the voting power
(determined on a fully-diluted basis) of all securities of the Company
entitled to vote generally in the election of directors or in a merger and
(ii) the expiration or termination of all applicable waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. The Purchaser
is not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If the
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, the Purchaser will make a
good faith effort to comply with any such state statute. If, after such good
faith effort, the Purchaser cannot comply with such state statute, the Offer
will not be made to, nor will tenders be accepted from or on behalf of, the
holders of Shares in such state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer shall be deemed to be made on behalf of the Purchaser by Morgan
Stanley & Co. Incorporated, the Dealer Manager for the Offer, or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
If you wish to have us tender any or all of the Shares held by us for your
account, please instruct us by completing, executing and returning to us the
instruction form contained in this letter. If you authorize a tender of your
Shares, all such Shares will be tendered unless otherwise specified in such
instruction form. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO
PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
OFFER.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
GOULDS PUMPS, INCORPORATED
BY
GEORGE ACQUISITION, INC.
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated April 25, 1997 (the "Offer to Purchase") and the related
Letter of Transmittal pursuant to an offer by George Acquisition, Inc., a
Delaware corporation and a wholly owned subsidiary of ITT Industries, Inc., an
Indiana corporation, to purchase all outstanding shares of Common Stock, par
value $1.00 per share (the "Shares"), of Goulds Pumps, Incorporated, a Delaware
corporation, at a purchase price of $37.00 per Share, net to the seller in cash
without interest thereon, upon the terms and subject to the conditions set forth
in the Offer to Purchase and the related Letter of Transmittal.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) which are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
=================================
Number of Shares to be Tendered*
Shares
- -------------------------
Dated , 1997
--------------------
=================================
==============================================
SIGN HERE
--------------------------------------------
--------------------------------------------
Signature(s)
--------------------------------------------
Please print name(s)
--------------------------------------------
Address
--------------------------------------------
Area Code and Telephone Number
--------------------------------------------
Tax Identification or Social Security Number
==============================================
- ---------------
* Unless otherwise indicated, it will be assumed that all of your Shares held by
us for your account are to be tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e., 00-0000000. The table below will help determine the
number to give the payer.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- --------------------------------------------------------------------------------
<S> <C> <C>
1. An individual's account The individual
2. Two or more individuals The actual owner of the
(joint account) account or, if combined
funds, the first individual
on the account(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint funds,
either person(1)
4. Custodian account of a The minor(2)
minor (Uniform Gift to
Minors Act)
5. Adult and minor (joint The adult, or if the minor
account) is the only contributor, the
minor(1)
6. Account in the name of The ward, minor, or
guardian or committee for incompetent person(3)
a designated ward, minor,
or incompetent person
7. a. The usual revocable The grantor-trustee(1)
savings trust account
(grantor is also
trustee)
b. So-called trust The actual owner(4)
account that is not a
legal or valid trust
under State law
8. Sole proprietorship The owner(4)
account
9. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.)(5)
10. Corporate account The corporation
11. Religious, charitable or The organization
educational organization
account
12. Partnership account held The partnership
in the name of the
partnership
13. Association, club or The organization
other tax-exempt
organization
14. A broker or registered The broker or nominee
nominee
15. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State
or local government,
school district or
prison) that receives
agricultural program
payments
</TABLE>
- --------------------------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your Social Security Number or your Employer Identification
Number.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), or an individual retirement plan.
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency or instrumentality thereof.
- - An international organization or any agency or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a) of the Code.
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1) of the Code.
- - An entity registered at all times under the Investment Company Act of 1940.
- - A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under Section 1441 of
the Code.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received is not paid in
money.
- - Payments made by certain foreign organizations.
- - Payment made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals.
NOTE: You may be subject to backup withholding if this interest is $600 or
more and is paid in the course of the payer's trade or business and you have
not provided your correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt-interest dividends under
section 852 of the Code).
- - Payments described in section 6049(b)(5) of the Code to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451 of the Code.
- - Payments made by certain foreign organizations.
- - Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER. FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED INTERNAL
REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, and 6050A and 6050N
of the Code and the regulations promulgated therein.
PRIVACY ACT NOTICE -- Section 6109 requires most recipients of dividends,
interest or other payments to give taxpayer identification numbers to payers who
must report the payments to the IRS. The IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividends and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
Exhibit (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated April 25, 1997 and the related Letter of
Transmittal (and any amendments thereto) and is being made to all holders of
Shares. The Purchaser (as defined below) is not aware of any state where the
making of the Offer is prohibited by administrative or judicial action pursuant
to a state statute. If the Purchaser becomes aware of any state where the making
of the Offer is prohibited, the Purchaser will make a good faith effort to
comply with any such statute or seek to have such statute declared inapplicable
to the Offer. If, after such good faith effort, the Purchaser cannot comply with
any applicable statute, the Offer will not be made to (nor will tenders be
accepted from or on behalf of) the holders of Shares in such state. In those
jurisdictions where the securities, blue sky or other laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of the Purchaser by Morgan Stanley & Co. Incorporated or one or more
registered brokers or dealers licensed under the laws of such jurisdictions.
Notice of Offer to Purchase for Cash
All Outstanding Shares of Common Stock
of
Goulds Pumps, Incorporated
at
$37.00 Net Per Share
by
George Acquisition, Inc.
a wholly owned subsidiary of
ITT Industries, Inc.
George Acquisition, Inc., a Delaware corporation (the "Purchaser") and a
wholly owned subsidiary of ITT Industries, Inc., an Indiana corporation (the
"Parent"), is offering to purchase all of the outstanding shares of Common
Stock, $1.00 par value per share (the "Shares"), of Goulds Pumps, Incorporated,
a Delaware corporation (the "Company"), at a purchase price of $37.00 per Share,
net to the seller in cash without interest thereon, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated April 25, 1997 (the
"Offer to Purchase") and in the related Letter of Transmittal (which, as amended
from time to time, together constitute the "Offer").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, MAY 22, 1997, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being validly
tendered and not properly withdrawn prior to the expiration of the Offer a
number of Shares which, together with any Shares owned by the Parent or the
Purchaser, constitutes more than 50% of the voting power (determined on a
fully-diluted basis), of all the securities of the Company entitled to vote
generally in the election of directors or in a merger and (ii) the expiration
or termination of all applicable waiting periods under the Hart-Scott-Rodino
Act of 1976, as amended.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. Following the consummation of the Offer, the Purchaser
intends to effect the Merger described below.
<PAGE> 2
2
The Offer is being made pursuant to an Agreement and Plan of Merger, dated as of
April 20, 1997 (the "Merger Agreement"), among the Parent, the Purchaser and the
Company. The Merger Agreement provides, among other things, for the making of
the Offer by the Purchaser, and further provides that, following the completion
of the Offer, upon the terms and subject to the conditions of the Merger
Agreement and the Delaware General Corporation Law ("DGCL"), the Purchaser will
be merged with and into the Company (the "Merger"), and each Share issued and
outstanding immediately prior to the effective time of the Merger (other than
Shares held in the treasury of the Company and each Share owned by the Parent,
the Purchaser or any other direct or indirect subsidiary of the Parent or of the
Company, which shall be cancelled, and other than Shares, if any, held by
stockholders who have not voted in favor of or consented to the Merger and who
have delivered a written demand for appraisal of such Shares in the time and
manner provided in the DGCL) will, by virtue of the Merger and without any
action on the part of the Purchaser, the Company or the holders of the capital
stock, be cancelled, extinguished and converted into the right to receive $37 in
cash payable to the holder thereof, without interest, upon the surrender of the
certificate formerly representing such Share, less any required withholding
taxes. The Merger Agreement is more fully described in Section 11 of the Offer
to Purchase.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY, AND DETERMINED THAT THE
OFFER AND THE MERGER ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF
SHARES AND RECOMMENDS THAT HOLDERS OF SHARES ACCEPT THE OFFER AND TENDER THEIR
SHARES TO THE PURCHASER.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when the Purchaser gives oral or written notice to The Bank
of New York (the "Depositary") of the Purchaser's acceptance of such Shares for
payment pursuant to the Offer. Upon the terms and subject to the conditions of
the Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payments
from the Purchaser and transmitting such payments to stockholders whose Shares
have been accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST ON THE
PURCHASE PRICE FOR SHARES BE PAID BY THE PURCHASER, REGARDLESS OF ANY EXTENSION
OF THE OFFER OR ANY DELAY IN MAKING SUCH PAYMENT. In all cases, payment for
Shares tendered and accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) certificates representing Shares
(the "Share Certificates") or timely confirmation of a book-entry transfer of
such Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (each a "Book-Entry Transfer Facility")
pursuant to the procedures set forth in Section 3 of the Offer to Purchase, (ii)
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message (as
defined in Section 2 of the Offer to Purchase) in connection with a book-entry
transfer, and (iii) any other documents required by the Letter of Transmittal.
Subject to the applicable rules and regulations of the Securities and
Exchange Commission and the terms of the Merger Agreement, the Purchaser
expressly reserves the right, in its sole discretion, at any time and from time
to time, and regardless of whether or not any of the events set forth in Section
15 of the Offer to Purchase shall have occurred, to (i) extend the period of
time during which the Offer is open and thereby delay acceptance for payment of,
and the payment for, any Shares, by giving oral or written notice of such
extension to the Depositary and (ii) amend the Offer in any respect by giving
oral or written notice of such amendment to the Depositary. Any extension,
delay, termination, waiver or amendment will be followed as promptly as
practicable by public announcement to be made no later than 9:00 A.M., New York
City time, on the next business day after the previously scheduled Expiration
Date. During any such extension, all Shares
<PAGE> 3
3
previously tendered and not properly withdrawn will remain subject to the Offer,
subject to the rights of a tendering stockholder to withdraw such stockholder's
Shares.
The term "Expiration Date" means 12:00 Midnight, New York City time, on
Thursday, May 22, 1997, unless and until the Purchaser, in its sole discretion
(but subject to the terms and conditions of the Merger Agreement), shall have
extended the period during which the Offer is open, in which event the term
"Expiration Date" shall mean the latest time and date at which the Offer, as so
extended by the Purchaser, shall expire.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment by the
Purchaser pursuant to the Offer, may also be withdrawn at any time after June
23, 1997. For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered such Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Share Certificates to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution (as defined in Section 3 of the
Offer to Purchase) unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the second sentence of this paragraph. All
questions as to the form and validity (including time of receipt) of any notice
of withdrawal will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided the Purchaser with the Company's stockholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares. The Offer to Purchase and the related Letter of Transmittal
and other relevant materials will be mailed by the Purchaser to record holders
of Shares and furnished to brokers, dealers, commercial banks, trust companies
and similar persons whose names, or the names of whose nominees, appear on the
stockholder list or, if applicable, who are listed as participants in a clearing
agency's security position listing for subsequent transmittal to beneficial
owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Dealer
Manager or the Information Agent as set forth below. Requests for copies of the
Offer to Purchase and the related Letter of Transmittal and all other tender
offer materials may be directed to the Information Agent or the Dealer Manager,
and copies will be furnished promptly at the Purchaser's expense. The Purchaser
will not pay any fees or commissions to any broker or dealer or any other person
(other than the Dealer Manager and the Information Agent) for soliciting tenders
of Shares pursuant to the Offer.
<PAGE> 4
4
The Information Agent for the Offer is:
GEORGESON & COMPANY INC.
------------
Wall Street Plaza
88 Pine Street
New York, New York 10005
1-800-223-2064 (Toll-Free)
The Dealer Manager for the Offer is:
Morgan Stanley & Co. Incorporated
1585 Broadway 35th Floor
New York, New York 10036
(212) 761-4341
April 25, 1997
<PAGE> 1
Exhibit (b)(1)
================================================================================
FIVE-YEAR COMPETITIVE ADVANCE AND
REVOLVING CREDIT FACILITY AGREEMENT
Dated as of November 10, 1995
among
ITT INDUSTRIES, INC.
THE LENDERS NAMED HEREIN
and
CHEMICAL BANK, as Administrative Agent
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Article Section Page
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I. DEFINITIONS
1.01. Defined Terms .......................................................... 1
1.02. Terms Generally ........................................................ 15
II. THE CREDITS
2.01. Commitments............................................................. 15
2.02. Loans .................................................................. 16
2.03. Competitive Bid Procedure .............................................. 17
2.04. Standby and Local Currency Borrowing Procedure.......................... 19
2.05. Conversion and Continuation of Standby Loans............................ 20
2.06. Fees ................................................................... 21
2.07. Repayment of Loans; Evidence of Debt ................................... 21
2.08. Interest on Loans ...................................................... 22
2.09. Default Interest ....................................................... 22
2.10. Alternate Rate of Interest ............................................. 23
2.11. Termination and Reduction of Commitments................................ 23
2.12. Prepayment ............................................................. 24
2.13. Reserve Requirements; Change in Circumstances........................... 24
2.14. Change in Legality ..................................................... 25
2.15. Indemnity .............................................................. 26
2.16. Pro Rata Treatment ..................................................... 26
2.17. Sharing of Setoffs ..................................................... 27
2.18. Payments ............................................................... 27
2.19. Taxes .................................................................. 28
2.20. Duty to Mitigate; Assignment of Commitments
Under Certain Circumstances........................................... 30
2.21. Terms of Local Currency Facilities...................................... 31
2.22. Currency Fluctuations, Etc.............................................. 32
2.23. Letters of Credit....................................................... 34
III. REPRESENTATIONS AND WARRANTIES
3.01. Organization; Powers ................................................... 37
3.02. Authorization .......................................................... 37
3.03. Enforceability ......................................................... 37
3.04. Governmental Approvals ................................................. 37
3.05. Financial Statements ................................................... 38
3.06. Litigation; Compliance with Laws........................................ 38
3.07. Federal Reserve Regulations............................................. 38
3.08. Investment Company Act; Public Utility Holding Company Act.............. 39
3.09. Use of Proceeds......................................................... 39
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Contents, p. 2
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3.10. Full Disclosure; No Material Misstatements ............................. 39
3.11. Taxes .................................................................. 39
3.12. Employee Pension Benefit Plans ......................................... 39
3.13. Distribution ........................................................... 39
IV. CONDITIONS OF LENDING
4.01. All Extensions of Credit................................................ 40
4.02. Effective Date.......................................................... 40
4.03. First Borrowing by Each Borrowing Subsidiary............................ 41
V. COVENANTS
5.01. Existence............................................................... 41
5.02. Business and Properties . .............................................. 41
5.03. Financial Statements, Reports, Etc...................................... 42
5.04. Insurance . . . . ..................................................... 42
5.05. Obligations and Taxes .................................................. 42
5.06. Litigation and Other Notices ........................................... 43
5.07. Maintaining Records; Access to Properties and Inspections............... 43
5.08. Use of Proceeds......................................................... 43
5.09. Consolidations, Mergers, and Sales of Assets............................ 43
5.10. Limitations on Liens ................................................... 43
5.11. Limitations on Sale and Leaseback Transactions.......................... 45
5.12. Consolidated EBITDA to Consolidated Interest Expense.................... 46
VI. EVENTS OF DEFAULT.............................................................. 46
VII. GUARANTEE...................................................................... 48
VIII. THE ADMINISTRATIVE AGENT ...................................................... 49
IX. MISCELLANEOUS
9.01. Notices................................................................. 51
9.02. Survival of Agreement .................................................. 52
9.03. Binding Effect ......................................................... 52
9.04. Successors and Assigns ................................................. 52
9.05. Expenses; Indemnity .................................................... 54
9.06. Applicable Law ......................................................... 55
9.07. Waivers; Amendment ..................................................... 55
9.08. Entire Agreement ....................................................... 56
9.09. Severability ........................................................... 56
9.10. Counterparts ........................................................... 56
9.11. Headings ............................................................... 56
9.12. Right of Setoff ........................................................ 56
9.13. Jurisdiction; Consent to Service of Process............................. 56
9.14. Waiver of Jury Trial ................................................... 57
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9.15. Addition of Borrowing Subsidiaries...................................... 57
9.16. Conversion of Currencies................................................ 57
9.17 Execution............................................................... 58
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EXHIBITS AND SCHEDULES
Exhibit A-1 Form of Competitive Bid Request
Exhibit A-2 Form of Notice of Competitive Bid Request
Exhibit A-3 Form of Competitive Bid
Exhibit A-4 Form of Competitive Bid Accept/Reject Letter
Exhibit A-5 Form of Standby Borrowing Request
Exhibit B Administrative Questionnaire
Exhibit C Form of Assignment and Acceptance
Exhibit D Form of Opinion of Counsel for ITT Industries, Inc.
Exhibit E Form of Borrowing Subsidiary Agreement
Exhibit F Form of Issuing Bank Agreement
Exhibit G Form of Local Currency Addendum
Exhibit H Form of Letter Agreement
Schedule 2.01 Commitments
Schedule 3.13 Assumptions
Schedule 5.10 Existing Liens
<PAGE> 5
<PAGE> 6
FIVE-YEAR COMPETITIVE ADVANCE AND REVOLVING
CREDIT FACILITY AGREEMENT (as it may be amended,
supplemented or otherwise modified, the "Agreement")
dated as of November 10, 1995, among ITT INDUSTRIES,
INC., an Indiana corporation (the "Company"), each
Borrowing Subsidiary party hereto, the lenders listed
in Schedule 2.01 (together with their permitted
assigns, the "Lenders"), Chemical Bank, as issuing
bank (in such capacity, the initial "Issuing Bank")
and CHEMICAL BANK, a New York banking corporation, as
administrative agent for the Lenders (in such
capacity, the "Administrative Agent").
The Lenders have been requested to extend credit to the
Borrowers (such term and each other capitalized term used but not otherwise
defined herein having the meaning assigned to it in Article I) to enable them
to borrow on a standby revolving credit basis on and after the date hereof and
at any time and from time to time prior to the Maturity Date a principal amount
not in excess of $1,500,000,000 at any time outstanding. The Lenders have also
been requested to provide procedures pursuant to which the Borrowers may invite
the Lenders to bid on an uncommitted basis on short-term borrowings by the
Borrowers and issuances of letters of credit for the Borrowers. The proceeds
of such borrowings are to be used for the repurchase or repayment of
indebtedness and certain other payments to be made in connection with the
Distribution, as well as for working capital and other general corporate
purposes. The letters of credit shall support payment obligations incurred in
the ordinary course of business by the Borrowers. The Lenders are willing to
extend credit on the terms and subject to the conditions herein set forth.
Accordingly, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the
following terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Standby Loan .
"ABR Standby Loan" shall mean any Standby Loan bearing
interest at a rate determined by reference to the Alternate Base Rate in
accordance with the provisions of Article II.
"Administrative Fees" shall have the meaning assigned to such
term in Section 2.06(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit B hereto.
<PAGE> 7
2
"Affiliate" shall mean, when used with respect to a specified
person, another person that directly or indirectly controls or is controlled by
or is under common control with the person specified.
"Aggregate Credit Exposure" shall mean the aggregate amount of
the Lenders' Credit Exposures.
"Agreement Currency" shall have the meaning assigned to such
term in Section 9.16(b).
"Alternate Base Rate" shall mean, for any day, a rate per
annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof,
"Prime Rate" shall mean the rate of interest per annum publicly announced from
time to time by the Administrative Agent as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective on the date such change is publicly announced as effective. "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as released on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if such
rate is not so released for any day which is a Business Day, the arithmetic
average (rounded upwards to the next 1/100th of 1%), as determined by the
Administrative Agent, of the quotations for the day of such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it. If for any reason the Administrative Agent
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Federal Funds Effective Rate for any
reason, including the inability or failure of the Administrative Agent to
obtain sufficient quotations in accordance with the terms thereof, the
Alternate Base Rate shall be determined without regard to clause (b) of the
first sentence of this definition until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a
change in the Prime Rate or the Federal Funds Effective Rate shall be effective
on the effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.
"Applicable Percentage" shall mean on any date, with respect
to Eurocurrency Loans or with respect to the Facility Fee, as the case may be,
the applicable percentage set forth below under the caption "Eurocurrency
Spread" or "Facility Fee Percentage", as the case may be, based upon the
Ratings in effect on such date:
<TABLE>
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Category 1 Eurocurrency Spread Facility Fee Percentage
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AA- or higher by D&P; .115% .060%
AA- or higher by Fitch;
Aa3 or higher by Moody's;
AA- or higher by S&P
Category 2
- ----------
A+ or A by D&P; .130% .070%
A+ or A by Fitch;
A1 or A2 by Moody's;
A+ or A by S&P
</TABLE>
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3
<TABLE>
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Category 3
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A- by D&P; .170% .080%
A- by Fitch;
A3 by Moody's;
A- by S&P
Category 4
- ----------
BBB+ by D&P; .205% .095%
BBB+ by Fitch;
Baa1 by Moody's;
BBB+ by S&P
Category 5
- ----------
BBB by D&P; .225% .125%
BBB by Fitch;
Baa2 by Moody's;
BBB by S&P
Category 6
- ----------
BBB- or lower by D&P; .250% .150%
BBB- or lower by Fitch;
Baa3 or lower by Moody's;
BBB- or lower by S&P
</TABLE>
For purposes of the foregoing; (i) if the Ratings shall fall within different
Categories, then (A) if all the Ratings fall within two adjacent Categories,
the Applicable Percentage will be determined by reference to the superior (or
numerically lower) of such Categories unless one or more of the Ratings shall
fall within Category 6, in which case the Applicable Percentage shall be
determined by reference to Category 6, and (B) if the Ratings fall within more
than two Categories or within two Categories that are not adjacent, then one
Rating from each of the highest Category and the lowest Category in which
Ratings shall fall shall be excluded and the Applicable Percentage shall be
determined by reference to the superior (or numerically lower) of the remaining
Ratings unless one or both of such Ratings shall fall within Category 6, in
which case the Applicable Percentage shall be determined by reference to
Category 6, (ii) if only two Ratings exist, the Applicable Percentage shall be
based upon the lower (numerically higher) of the available Ratings, (iii) if
only one Rating exists, the Applicable Percentage will be based upon the lower
(numerically higher) of Category 5 and the Category corresponding to the
available Rating, (iv) if no Ratings exist, the Applicable Percentage shall be
based upon Category 6, and (v) if any Rating shall be changed (other than as a
result of a change in the rating system of the applicable Rating Agency), such
change shall be effective as of the date on which it is first announced by the
Rating Agency making such change. Each such change in the Applicable
Percentage shall apply to all outstanding Eurocurrency Loans and to L/C
Participation Fees and Facility Fees accruing during the period commencing on
the effective date of such change and ending on the date immediately preceding
the effective date of the next such change. If the rating system of any Rating
Agency shall change, the parties hereto shall negotiate in good faith to amend
the references to specific ratings in this definition to reflect such changed
rating system.
<PAGE> 9
4
"Applicable Share" of any Lender at any time shall mean the
percentage of the Total Commitment represented by such Lender's Commitment. If
the Commitments shall be terminated pursuant to Article VI, the Applicable
Shares of the Lenders shall, subject only to assignments pursuant to Section
9.04, be based upon the Commitments in effect immediately prior to such
termination.
"Assignment and Acceptance" shall mean an assignment and
acceptance entered into by a Lender and an assignee in the form of Exhibit C.
"Available Commitment" shall mean, as to any Lender at any
time, an amount equal to such Lender's Commitment at such time minus the
aggregate of all such Lender's Local Currency Loans (Dollar Equivalent)
outstanding at such time.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Board of Directors" shall mean the Board of Directors of a
Borrower or any duly authorized committee thereof.
"Borrower" shall mean the Company or any Borrowing Subsidiary.
"Borrowing" shall mean a group of Loans of a single Type made
by the Lenders (or, in the case of a Competitive Borrowing, by the Lender or
Lenders whose Competitive Bids have been accepted pursuant to Section 2.03) on
a single date and as to which a single Interest Period is in effect.
"Borrowing Date" shall mean any date on which a Borrowing is
made hereunder.
"Borrowing Subsidiary" shall mean any Subsidiary which shall
have executed and delivered to the Administrative Agent for distribution to
each Lender a Borrowing Subsidiary Agreement.
"Borrowing Subsidiary Agreement" shall mean an agreement, in
the form of Exhibit E hereto, duly executed by the Company and a Subsidiary.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks are
open for business in New York City; provided, however, that, when used in
connection with a Eurocurrency Loan, the term "Business Day" shall also exclude
any day on which banks are not open for dealings in deposits in the applicable
currency in the London interbank market, and, when used in connection with
determining any date on which any amount is to be paid or made available in a
Local Currency, the term "Business Day" shall also exclude any day on which
commercial banks and foreign exchange markets are not open for business in the
principal financial center in the country of such Local Currency.
"Calculation Date" shall mean the last Business Day of each
calendar week.
"Capitalized Lease-Back Obligation" shall mean with respect to
a Principal Property, at any date as of which the same is to be determined, the
total net rental obligations of the Company or a Restricted Subsidiary under a
lease of such Principal Property, entered into as part of an arrangement to
which the provisions of Section 5.11 are applicable (or would have been
applicable had such Restricted Subsidiary been a Restricted Subsidiary at the
time it entered into such lease), discounted to the date of computation at the
rate of interest per annum implicit in the lease (determined in accordance with
GAAP). The amount of the net rental obligation for any calendar year under any
lease shall be
<PAGE> 10
5
the sum of the rental and other payments required to be paid in such calendar
year by the lessee thereunder, not including, however, any amounts required to
be paid by such lessee (whether or not therein designated as rental or
additional rental) on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges.
A "Change in Control" shall be deemed to have occurred if (a)
any person or group of persons shall have acquired beneficial ownership of more
than 30% of the outstanding Voting Shares of the Company (within the meaning of
Section 13(d) or 14(d) of the Exchange Act and the applicable rules and
regulations thereunder), or (b) during any period of 12 consecutive months,
commencing after the Effective Date, individuals who on the first day of such
period were directors of the Company (together with any replacement or
additional directors who were nominated or elected by a majority of directors
then in office) cease to constitute a majority of the Board of Directors of the
Company.
"Code" shall mean the Internal Revenue Code of 1986, as the
same may be amended from time to time.
"Commitment" shall mean, with respect to each Lender, the
commitment of such Lender hereunder as set forth as of the Effective Date in
Schedule 2.01 under the heading "Commitment" or in an Assignment and Acceptance
delivered by such Lender under Section 9.04 as such Lender's Commitment may be
permanently terminated or reduced from time to time pursuant to Section 2.11 or
pursuant to one or more assignments under Section 9.04. The Commitment of each
Lender shall automatically and permanently terminate on the Maturity Date if
not terminated earlier pursuant to the terms hereof.
"Competitive Bid" shall mean an offer by a Lender to make a
Competitive Loan pursuant to Section 2.03.
"Competitive Bid Accept/Reject Letter" shall mean a
notification made by a Borrower pursuant to Section 2.03(d) in the form of
Exhibit A-4.
"Competitive Bid Rate" shall mean, as to any Competitive Bid,
(i) in the case of a Eurocurrency Loan, the Margin, and (ii) in the case of a
Fixed Rate Loan, the fixed rate of interest offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" shall mean a request made pursuant
to Section 2.03(a) in the form of Exhibit A-1.
"Competitive Borrowing" shall mean a Borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or Lenders
whose Competitive Bids for such Borrowing have been accepted under the bidding
procedure described in Section 2.03.
"Competitive Loan" shall mean a Loan made pursuant to the
bidding procedure described in Section 2.03. Each Competitive Loan shall be a
Eurocurrency Competitive Loan or a Fixed Rate Loan.
"Competitive Loan Exposure" shall mean, with respect to any
Lender at any time, the sum of the aggregate principal amount of all
outstanding Competitive Loans made by such Lender.
"Consolidated EBITDA" shall mean, for any period, the sum of
(a) Consolidated Net Income, (b) provisions for taxes based on income, (c)
Consolidated Interest Expense, (d) total
<PAGE> 11
6
depreciation expense and (e) total amortization expense, all of the foregoing as
determined on a consolidated basis for the Company and the Subsidiaries in
accordance with GAAP.
"Consolidated Interest Expense" shall mean, for any period,
the gross interest expense of the Company and the Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" shall mean, for any period, net
income or loss of the Company and the Subsidiaries for such period determined
on a consolidated basis in accordance with GAAP.
"Consolidated Net Tangible Assets" shall mean the total of all
assets appearing on a consolidated balance sheet of the Company and its
Restricted Subsidiaries, prepared in accordance with GAAP (and as of a date not
more than 90 days prior to the date as of which Consolidated Net Tangible
Assets are to be determined), less the sum of the following items as shown on
said consolidated balance sheet:
(i) the book amount of all segregated intangible assets,
including such items as good will, trademarks, trademark rights, trade
names, trade name rights, copyrights, patents, patent rights and
licenses and unamortized debt discount and expense less unamortized
debt premium;
(ii) all depreciation, valuation and other reserves;
(iii) current liabilities;
(iv) any minority interest in the shares of stock (other than
Preferred Stock) and surplus of Restricted Subsidiaries of the
Company;
(v) the investment of the Company and its Restricted
Subsidiaries in any Unrestricted Subsidiary of the Company;
(vi) the total indebtedness of the Company and its Restricted
Subsidiaries incurred in any manner to finance or recover the cost to
the Company or any Restricted Subsidiary of any physical property,
real or personal, which prior to or simultaneously with the creation
of such indebtedness shall have been leased by the Company or a
Restricted Subsidiary to the United States of America or a department
or agency thereof at an aggregate rental, payable during that portion
of the initial term of such lease (without giving effect to any
options of renewal or extension) which shall be unexpired at the date
of the creation of such indebtedness, sufficient (taken together with
any amounts required to be paid by the lessee to the lessor upon any
termination of such lease) to pay in full at the stated maturity date
or dates thereof the principal of and the interest on such
indebtedness;
(vii) deferred income and deferred liabilities; and
(viii) other items deductible under GAAP.
"Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding Loans
of such Lender, plus the aggregate amount at such time of such Lender's L/C
Exposure.
"D&P" shall mean Duff & Phelps Credit Rating Co. or any of its
successors.
<PAGE> 12
7
"Default" shall mean any event or condition which upon notice,
lapse of time or both would constitute an Event of Default.
"Distribution" shall mean the consummation of the transactions
described in the Proxy Statement.
"Dollars" or "$" shall mean lawful money of the United States
of America.
"Dollar Borrowing" shall mean a Borrowing comprised of Dollar
Loans.
"Dollar Equivalent" shall mean, on any date of determination,
with respect to any amount in any Local Currency, the equivalent in Dollars of
such amount, determined by the Administrative Agent using the Exchange Rate
with respect to such Local Currency then in effect as determined pursuant to
Section 2.22(a).
"Dollar Facility Excess" shall have the meaning assigned to
such term in Section 2.22(d).
"Dollar Facility Overage" shall mean an amount equal to the
excess of (a) the Total Commitment over (b) the aggregate amount of all Local
Currency Facility Maximum Borrowing Amounts (determined, if applicable, after
giving effect to any reduction therein made pursuant to Section 2.22(c)).
"Dollar Loan" shall mean any Loan denominated in Dollars.
"Dollar Standby Credit Excess" shall have the meaning assigned
to such term in Section 2.22(c).
"Dollar Standby Credit Overage" shall mean, with respect to
any Lender, an amount equal to the excess, if any, of (a) such Lender's
Commitment over (b) the aggregate Local Currency Lender Maximum Borrowing
Amounts of such Lender with respect to all Local Currency Addenda to which such
Lender or any of its Affiliates is a party.
"Dollar Standby Extensions of Credit" shall mean, with respect
to any Lender at any time, the aggregate principal amount of all Standby Loans
made by such Lender then outstanding.
"Effective Date" shall mean the first date on or after
November 10, 1995, on which the conditions set forth in Section 4.02 are
satisfied.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or
not incorporated) that, together with the Company, is treated as a single
employer under Section 414(b) or (c) of the Code, or, solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as
defined in Section 4043 of ERISA or the regulations issued thereunder, with
respect to a Plan; (b) the adoption of any amendment to a Plan that would
require the provision of security pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA; (c) the existence with respect to any Plan of an
"accumulated funding
<PAGE> 13
8
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),
whether or not waived; (d) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the incurrence of any liability under
Title IV of ERISA with respect to the termination of any Plan or the withdrawal
or partial withdrawal of the Company or any of its ERISA Affiliates from any
Plan or Multiemployer Plan; (f) the receipt by the Company or any ERISA
Affiliate from the PBGC or a plan administrator of any notice relating to the
intention to terminate any Plan or Plans or to appoint a trustee to administer
any Plan; (g) the receipt by the Company or any ERISA Affiliate of any notice
that Withdrawal Liability is being imposed or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; and (h) the occurrence of a
"prohibited transaction" with respect to which the Company or any of its
Subsidiaries is a "disqualified person" (within the meaning of Section 4975) of
the Code, or with respect to which the Company or any such Subsidiary could
otherwise be liable.
"Eurocurrency Borrowing" shall mean a Borrowing comprised of
Eurocurrency Loans.
"Eurocurrency Competitive Loan" shall mean any Competitive
Loan bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Eurocurrency Loan" shall mean any Eurocurrency Competitive
Loan, Eurocurrency Standby Loan or Eurocurrency Local Currency Loan.
"Eurocurrency Local Currency Loan" shall mean any Local
Currency Loan bearing interest at a rate determined by reference to the LIBO
Rate in accordance with the provisions of Article II.
"Eurocurrency Standby Loan" shall mean any Standby Loan
bearing interest at a rate determined by reference to the LIBO Rate in
accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term
in Article VI.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
"Exchange Rate" shall mean, with respect to any Local Currency
on a particular date, the rate at which such Local Currency may be exchanged
into Dollars, as set forth on such date on the Reuters currency page more
particularly described in the Local Currency Addendum for Loans to be made in
such Local Currency. In the event that such rate does not appear on any
Reuters currency page, the Exchange Rate with respect to such Local Currency
shall be determined by reference to such other publicly available service for
displaying exchange rates as may be agreed upon by the Administrative Agent and
the Company or, in the absence of such agreement, such Exchange Rate shall
instead be the Administrative Agent's spot rate of exchange in the London
interbank market where its foreign currency exchange operations in respect of
such Local Currency are then being conducted, at or about 10:00 A.M., local
time, at such date for the purchase of Dollars with such Local Currency, for
delivery two Business Days later; provided, however, that if at the time of any
such determination, for any reason, no such spot rate is being quoted, the
Administrative Agent may use any reasonable method it deems applicable to
determine such rate, and such determination shall be conclusive absent manifest
error.
"Existing Credit Facilities" shall mean the 364-Day
Competitive Advance and Revolving Credit Facility Agreement dated as of
February 24, 1995 and the Five-Year Competitive
<PAGE> 14
9
Advance and Revolving Credit Facility Agreement dated as of February 24,
1995, among Old ITT, certain lenders and Chemical Bank, as Administrative
Agent.
"Facility A Credit Agreement" shall mean the $1,500,000,000
364-Day Competitive Advance and Revolving Credit Facility Agreement dated the
date hereof among the parties hereto, as such agreement may be amended,
supplemented or modified from time to time.
"Facility Fee" shall have the meaning assigned to such term in
Section 2.06(a).
"Fair Value", when used with respect to property, shall mean
the fair value as determined in good faith by the board of directors of the
Company.
"Fees" shall mean the Facility Fee, the Administrative Fees,
the L/C Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any corporation shall mean the chief
financial officer, principal accounting officer, treasurer, associate or
assistant treasurer or director of treasury services of such corporation.
"Fitch" shall mean Fitch Investors Service, Inc. or any of its
successors.
"Fixed Rate Borrowing" shall mean a Borrowing comprised of
Fixed Rate Loans.
"Fixed Rate Loan" shall mean any Competitive Loan bearing
interest at a fixed percentage rate per annum (the "Fixed Rate") (expressed in
the form of a decimal to no more than four decimal places) specified by the
Lender making such Loan in its Competitive Bid.
"GAAP" shall mean generally accepted accounting principles,
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local
or foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guaranteed Obligations" shall mean the principal of and
interest on the Loans made to, and all other obligations, monetary or otherwise
(including fee and reimbursement obligations in respect of Letters of Credit)
of, the Borrowing Subsidiaries hereunder or under any Local Currency Addendum.
"Indebtedness" of any person shall mean all indebtedness
representing money borrowed or the deferred purchase price of property (other
than trade accounts payable) or any capitalized lease obligation, which in any
case is created, assumed, incurred or guaranteed in any manner by such
corporation or for which such corporation is responsible or liable (whether by
agreement to purchase indebtedness of, or to supply funds to or invest in,
others or otherwise).
"Interest Payment Date" shall mean (a) with respect to any
Loan, the last day of each Interest Period applicable thereto, (b) with respect
to a Eurocurrency Loan with an Interest Period of more than three months'
duration or a Fixed Rate Loan with an Interest Period of more than 90 days'
duration, each day that would have been an Interest Payment Date for such Loan
had successive Interest Periods of three months' duration or 90 days' duration,
as the case may be, been applicable to such Loan and, in addition, the date of
any prepayment of each Loan or conversion of such Loan to a
<PAGE> 15
10
Loan of a different Type and (c) with respect to any Local Currency Loan, such
days as shall be specified in the applicable Local Currency Addendum.
"Interest Period" shall mean (a) as to any Eurocurrency
Borrowing, the period commencing on the date of such Borrowing or on the last
day of the immediately preceding Interest Period applicable to such Borrowing,
as the case may be, and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the calendar
month that is 1, 2, 3 or 6 months thereafter, as the Borrower may elect, (b) as
to any ABR Borrowing, the period commencing on the date of such Borrowing or on
the last day of the immediately preceding Interest Period applicable to such
Borrowing, as the case may be, and ending on the earliest of (i) the next
succeeding March 31, June 30, September 30 or December 31, (ii) the Maturity
Date, and (iii) the date such Borrowing is converted to a Borrowing of a
different Type in accordance with Section 2.05 or repaid or prepaid in
accordance with Section 2.07 or Section 2.12, (c) as to any Fixed Rate
Borrowing, the period commencing on the date of such Borrowing and ending on
the date specified in the Competitive Bids in which the offers to make the
Fixed Rate Loans comprising such Borrowing were extended, which shall not be
earlier than seven days after the date of such Borrowing or later than 360 days
after the date of such Borrowing and (d) as to any Local Currency Borrowing,
such periods as shall be specified in the applicable Local Currency Addendum;
provided, however, that if any Interest Period would end on a day other than a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless, in the case of Eurocurrency Loans only, such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Issuing Bank" shall mean Chemical Bank and any other Lender
that may become an Issuing Bank pursuant to Section 2.23(i) or 2.23(j).
"Issuing Bank Agreement" shall mean an agreement in
substantially the form of Exhibit F.
"Issuing Bank Fees" shall have the meaning assigned to such
term in Section 2.06(c).
"Judgment Currency" shall have the meaning assigned to such
term in Section 9.16(b).
"L/C Commitment" shall mean, with respect to any Issuing Bank,
the Commitment of such Issuing Bank to issue Letters of Credit pursuant to
Section 2.23.
"L/C Disbursement" shall mean a payment or disbursement made
by an Issuing Bank pursuant to a Letter of Credit.
"L/C Exposure" shall mean at any time the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(b) the aggregate principal amount of all L/C Disbursements that have not yet
been reimbursed at such time. The L/C Exposure of any Lender at any time shall
mean its Applicable Share of the aggregate L/C Exposure at such time.
"L/C Participation Fee" shall have the meaning assigned to such
term in Section 2.06(c).
"Letter of Credit" shall mean any letter of credit issued
pursuant to Section 2.23.
<PAGE> 16
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"LIBO Rate" shall mean, with respect to any Eurocurrency
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the rate at which dollar
deposits or deposits in the applicable Local Currency approximately equal in
principal amount to (i) in the case of a Standby Borrowing that is a
Eurocurrency Borrowing, the Administrative Agent's portion of such Eurocurrency
Borrowing, (ii) in the case of a Competitive Borrowing, a principal amount that
would have been the Administrative Agent's portion of such Competitive
Borrowing had such Competitive Borrowing been a Standby Borrowing and (iii) in
the case of a Local Currency Borrowing, such Borrowing, and for a maturity
comparable to such Interest Period, are offered to the principal London office
of the Administrative Agent in immediately available funds in the London
interbank market at approximately 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period.
"Lien" shall mean, with respect to any property or asset, any
mortgage, deed of trust, lien, pledge, security interest charge or other
encumbrance on, of or in such property or asset.
"Loan" shall mean a Competitive Loan, a Local Currency Loan or
a Standby Loan, whether made as a Eurocurrency Loan, an ABR Loan or a Fixed
Rate Loan, as permitted hereby.
"Loan Documents" shall mean this Agreement, the Letters of
Credit, the Borrowing Subsidiary Agreements, any Issuing Bank Agreements, the
Local Currency Addenda and promissory, if any, issued pursuant to Section
9.04(i).
"Local Currency" shall mean any currency other than Dollars as
to which an Exchange Rate may be calculated.
"Local Currency Addendum" shall mean a local currency addendum
between a Borrower and one or more Local Currency Lenders, substantially in the
form of Exhibit G, and the documentation referred to therein, to the extent not
inconsistent with this Agreement.
"Local Currency Borrowing" shall mean a Borrowing comprised of
Local Currency Loans.
"Local Currency Credit Event" shall mean each Borrowing under a
Local Currency Addendum.
"Local Currency Equivalent" shall mean, on any date of
determination, with respect to any amount in Dollars, the equivalent in the
relevant Local Currency of such amount, determined by the Administrative Agent
using the Exchange Rate with respect to such Local Currency then in effect as
determined pursuant to Section 2.22(a).
"Local Currency Facility Maximum Borrowing Amount" shall have
the meaning assigned to such term in Section 2.21(b).
"Local Currency Lender" shall mean any Lender (or any
Affiliate, branch or agency thereof) party to a Local Currency Addendum. In
the event any agency or Affiliate of a Lender shall be party to a Local
Currency Addendum, such agency, branch or Affiliate shall, to the extent of any
commitment extended and any Loans made by it, have all the rights of such
Lender hereunder; provided, that such Lender shall continue to the exclusion of
such agency or Affiliate to have all the voting and consensual rights vested in
it by the terms hereof.
<PAGE> 17
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"Local Currency Lender Maximum Borrowing Amount" shall have
the meaning assigned to such term in Section 2.21(b).
"Local Currency Loan" shall mean any Loan, denominated in a
currency other than Dollars, made to a Borrower pursuant to Section 2.01(b) and
a Local Currency Addendum.
"Local Currency Loans (Dollar Equivalent)" shall mean the
Dollar Equivalent of the relevant Local Currency Loans.
"Local Currency Standby Borrowing" shall mean any Standby
Borrowing comprised of Local Currency Loans.
"Margin" shall mean, as to any Eurocurrency Competitive Loan,
the margin (expressed as a percentage rate per annum in the form of a decimal
to no more than four decimal places) to be added to or subtracted from the LIBO
Rate in order to determine the interest rate applicable to such Loan, as
specified in the Competitive Bid relating to such Loan.
"Margin Regulations" shall mean Regulations G, T, U and X of
the Board as from time to time in effect, and all official rulings and
interpretations thereunder or thereof.
"Margin Stock" shall have the meaning given such term under
Regulation U of the Board.
"Material Adverse Effect" shall mean a materially adverse
effect on the business, assets, operations or condition, financial or
otherwise, of the Company and Subsidiaries taken as a whole.
"Maturity Date" shall mean the fifth anniversary of the date
hereof.
"Moody's" shall mean Moody's Investors Service, Inc. or any of
its successors.
"Multiemployer Plan" shall mean a multiemployer plan as
defined in Section 4001(a)(3) of ERISA to which the Company or any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to
subsection (m) or (o) of Code Section 414) is making or accruing an obligation
to make contributions, or has within any of the preceding five plan years made
or accrued an obligation to make contributions.
"Notice of Competitive Bid Request" shall mean a notification
made pursuant to Section 2.03(a) in the form of Exhibit A-2.
"Old ITT" shall mean ITT Corporation, a Delaware corporation.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA.
"person" shall mean any natural person, corporation, limited
liability company, business trust, joint venture, association, company,
partnership or government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other
than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 307 of
<PAGE> 18
13
ERISA, and in respect of which any Borrower or any ERISA Affiliate is (or, if
such plans were terminated, would under Section 4069 of ERISA be deemed to be)
an "employer" as defined in Section 3(5) of ERISA.
"Preferred Stock" shall mean any capital stock entitled by its
terms to a preference (a) as to dividends or (b) upon a distribution of assets.
"Principal Property" shall mean any single manufacturing or
processing facility owned by the Company or any Restricted Subsidiary having a
gross book value in excess of 2% of Consolidated Net Tangible Assets, except
any such facility or portion thereof which the board of directors of the
Company by resolution declares is not of material importance to the total
business conducted by the Company and its Restricted Subsidiaries as an
entirety.
"Proxy Statement" shall mean the Proxy Statement of Old ITT
dated August 30, 1995 and filed with the SEC under the Exchange Act.
"Rating Agencies" shall mean D&P, Fitch, Moody's and S&P.
"Ratings" shall mean the ratings from time to time established
by the Rating Agencies for senior, unsecured, non-credit-enhanced long-term
debt of the Company.
"Register" shall have the meaning given such term in Section
9.04(d).
"Regulation D" shall mean Regulation D of the Board as from
time to time in effect and all official rulings and interpretations thereunder
or thereof.
"Reportable Event" shall mean any reportable event as defined
in Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).
"Required Lenders" shall mean, at any time, Lenders having
Commitments representing at least 66-2/3% of the Total Commitment or, for
purposes of acceleration pursuant to clause (ii) of Article VI, Lenders holding
Loans and L/C Exposures representing at least 66-2/3% of the aggregate
principal amount of the Loans outstanding and L/C Exposures. For purposes of
determining the Required Lenders, any amounts denominated in a Local Currency
shall be translated into Dollars at the Exchange Rates in effect on the first
Reset Date to occur in each calendar month.
"Reset Date" shall have the meaning assigned to such term in
Section 2.22(a).
"Responsible Officer" of any corporation shall mean any
executive officer or Financial Officer of such corporation and any other
officer or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"Restricted Subsidiary" shall mean any Subsidiary other than an
Unrestricted Subsidiary.
"S&P" shall mean Standard and Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. or any of its successors.
"SEC" shall mean the Securities and Exchange Commission.
<PAGE> 19
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"Standby Borrowing" shall mean a Borrowing consisting of
simultaneous Standby Loans from each of the Lenders.
"Standby Borrowing Request" shall mean a request made pursuant
to Section 2.04 in the form of Exhibit A-5.
"Standby Credit Exposure" shall mean, with respect to any
Lender at any time, the sum of the aggregate principal amount at such time of
all outstanding Standby Loans of such Lender and the aggregate Dollar
Equivalent of the principal amount of all outstanding Local Currency Loans of
such Lender (and each agency, branch or Affiliate of such Lender acting as a
Local Currency Lender).
"Standby Loans" shall mean the revolving loans made pursuant
to Section 2.04(a). Each Standby Loan shall be in Dollars and shall be a
Eurocurrency Standby Loan or an ABR Loan.
"subsidiary" shall mean, with respect to any person (the
"parent"), any corporation, association or other business entity of which
securities or other ownership interests representing more than 50% of the
ordinary voting power are, at the time as of which any determination is being
made, owned or controlled by the parent or one or more subsidiaries of the
parent or by the parent and one or more subsidiaries of the parent.
"Subsidiary" shall mean a subsidiary of the Company.
"Total Commitment" shall mean, at any time, the aggregate
amount of Commitments of all the Lenders, as in effect at such time.
"Transactions" shall have the meaning assigned to such term in
Section 3.02.
"Type", when used in respect of any Loan or Borrowing, shall
refer to the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined and the currency in which such Loan or
the Loans comprising such Borrowing are denominated. For purposes hereof,
"Rate" shall include the LIBO Rate, the Alternate Base Rate and the Fixed Rate,
and currency shall include Dollars and any Local Currency permitted hereunder.
"Unrestricted Subsidiary" shall mean (a) any Subsidiary which
has been designated an Unrestricted Subsidiary by resolution of the board of
directors of the Company (which resolution has been communicated in a notice
delivered by the Company to the Administrative Agent for distribution to the
Lenders) as an Unrestricted Subsidiary, other than any such Subsidiary as to
which such a designation has been rescinded by resolution of said board of
directors and not thereafter, or after some subsequent such rescission,
restored by resolution of said board, or (b) any Subsidiary 50% or less of the
Voting Shares of which is owned directly by the Company and/or one or more
Restricted Subsidiaries. A Subsidiary may not be designated as (or otherwise
permitted to become) an Unrestricted Subsidiary unless, immediately after such
Subsidiary becomes an Unrestricted Subsidiary, such Subsidiary would not own
any capital stock of, or hold any indebtedness of, any Restricted Subsidiary.
A designation as an Unrestricted Subsidiary may not be rescinded (or an
Unrestricted Subsidiary otherwise permitted to become a Restricted Subsidiary)
unless such Subsidiary (i) is not a party to any lease which it would have been
prohibited by this Agreement from entering into had it been a Restricted
Subsidiary at the time it entered into such lease, unless (x) such Subsidiary
had not been a Restricted Subsidiary prior to its entering into such lease, or
(y) the property subject to such lease shall be owned by the Company and/or one
or more Subsidiaries, or (z) such Subsidiary would not be prohibited by this
Agreement from entering into such lease immediately after it becomes a
Restricted Subsidiary, and (ii) does not have outstanding upon any of its
property any mortgage, pledge
<PAGE> 20
15
or other lien which it would be prohibited by this Agreement from creating,
suffering to be created, or assuming, immediately after it becomes a Restricted
Subsidiary.
"Voting Shares" shall mean, as to a particular corporation or
other person, outstanding shares of stock or other equity interests of any
class of such person entitled to vote in the election of directors, or
otherwise to participate in the direction of the management and policies, of
such person, excluding shares or interests entitled so to vote or participate
only upon the happening of some contingency.
SECTION 1.02. Terms Generally. The definitions in Section
1.01 shall apply equally to both the singular and plural forms of the terms
defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". All references herein to Articles, Sections, Exhibits
and Schedules shall be deemed references to Articles and Sections of, and
Exhibits and Schedules to, this Agreement unless the context shall otherwise
require. Except as otherwise expressly provided herein, all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as
in effect from time to time; provided, however, that for purposes of
determining compliance with any covenant set forth in Article V, such terms
shall be construed in accordance with GAAP as in effect on the date hereof
applied on a basis consistent with the application used in preparing the
Company's audited financial statements referred to in Section 3.05.
ARTICLE II
THE CREDITS
SECTION 2.01. Commitments. (a) Subject to the terms and
conditions and relying upon the representations and warranties herein set
forth, each Lender agrees, severally and not jointly, to make Standby Loans to
the Borrowers, at any time and from time to time on and after the date hereof
and until the earlier of the Maturity Date and the termination of the
Commitment of such Lender.
(b) Subject to the terms and conditions and relying upon the
representations and warranties set forth herein and in the applicable Local
Currency Addendum, each Local Currency Lender agrees, severally and not
jointly, to make Local Currency Loans to the Borrowers at any time and from
time to time on and after the execution of the applicable Local Currency
Addendum and until earlier of the Maturity Date and the termination of the
Commitment (or the commitment under such Local Currency Addendum) of such Local
Currency Lender.
(c) Notwithstanding anything to the contrary contained in
this Agreement, in no event may Standby Loans or Local Currency Loans be
borrowed under this Article II if, after giving effect thereto (and to any
concurrent repayment or prepayment of Loans), (i) the sum of the aggregate
Standby Credit Exposures, the aggregate Competitive Loan Exposures and the
aggregate L/C Exposures would exceed the Total Commitment then in effect, (ii)
the sum of the Standby Credit Exposure and the L/C Exposure of any Lender would
exceed such Lender's Commitment or (iii) the Dollar Equivalent of the aggregate
principal amount of the outstanding Local Currency Loans of any Local Currency
Lender denominated in a specified Local Currency would exceed the applicable
Local Currency Facility Maximum Borrowing Amount or any Local Currency Lender
Maximum Borrowing Amount.
<PAGE> 21
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Within the foregoing limits, the Borrowers may borrow, pay or
prepay and reborrow Standby Loans and Local Currency Loans hereunder, on and
after the Effective Date and prior to the Maturity Date, subject to the terms,
conditions and limitations set forth herein.
SECTION 2.02. Loans. (a) Each Standby Loan shall be made as
part of a Borrowing consisting of Standby Loans made by the Lenders ratably in
accordance with their respective Available Commitments; provided, however, that
the failure of any Lender to make any Standby Loan shall not in itself relieve
any other Lender of its obligation to lend hereunder (it being understood,
however, that no Lender shall be responsible for the failure of any other
Lender to make any Loan required to be made by such other Lender). Each Local
Currency Loan shall be made as part of a Borrowing consisting of Local Currency
Loans made by the Local Currency Lenders ratably in accordance with the
applicable Local Currency Lender Maximum Borrowing Amounts, provided, however,
that the failure of any Local Currency Lender to make any Local Currency Loan
shall not in itself relieve any other Local Currency Lender of its obligation
to lend hereunder (it being understood, however, that no Local Currency Lender
shall be responsible for the failure of any other Local Currency Lender to make
any Local Currency Loan required to be made by such other Local Currency
Lender). Each Competitive Loan shall be made in accordance with the procedures
set forth in Section 2.03. The Loans comprising any Borrowing shall be (i) in
the case of Competitive Loans, in an aggregate principal amount which is an
integral multiple of $1,000,000 and not less than $5,000,000, (ii) in the case
of Standby Loans, in an aggregate principal amount which is an integral
multiple of $5,000,000 and not less than $20,000,000 (or an aggregate principal
amount equal to the remaining balance of the Available Commitments) and (iii)
in the case of Local Currency Loans, in an aggregate principal amount which
complies with the requirements set forth in the applicable Local Currency
Addendum. All Standby Loans and Competitive Loans made pursuant to this
Article II shall be denominated in Dollars.
(b) Each Competitive Borrowing shall be comprised entirely of
Eurocurrency Competitive Loans or Fixed Rate Loans, and each Standby Borrowing
shall be comprised entirely of Eurocurrency Standby Loans or ABR Loans, as the
Borrower may request pursuant to Section 2.03 or 2.04, as applicable. Each
Lender may at its option make any Eurocurrency Loan by causing any domestic or
foreign branch, agency or Affiliate of such Lender to make such Loan; provided
that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan in accordance with the terms of this Agreement.
Borrowings of more than one Type may be outstanding at the same time. For
purposes of the foregoing, Loans having different Interest Periods, regardless
of whether they commence on the same date, shall be considered separate Loans.
(c) Subject to Section 2.05 and, in the case of any Local
Currency Loan, to any alternative procedures set forth in the applicable Local
Currency Addendum, each Lender shall make each Loan to be made by it hereunder
on the proposed date thereof by wire transfer of immediately available funds to
the Administrative Agent in New York, New York, not later than 12:00 noon, New
York City time, and the Administrative Agent shall by 2:00 p.m., New York City
time, credit the amounts so received to the account or accounts specified from
time to time in one or more notices delivered by the Company to the
Administrative Agent or, if a Borrowing shall not occur on such date because
any condition precedent herein specified shall not have been met, return the
amounts so received to the respective Lenders. Competitive Loans shall be made
by the Lender or Lenders whose Competitive Bids therefor are accepted pursuant
to Section 2.03 in the amounts so accepted. Standby Loans and Local Currency
Loans shall be made by the Lenders and the Local Currency Lenders, as
applicable, pro rata in accordance with Section 2.16. Unless the
Administrative Agent shall have received notice from a Lender prior to the date
(or, in the case of ABR Borrowings, on the date) of any Borrowing that such
Lender will not make available to the Administrative Agent such Lender's
portion of such Borrowing, the Administrative Agent may assume that such Lender
has made such
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portion available to the Administrative Agent on the date of such Borrowing in
accordance with this paragraph (c) and the Administrative Agent may, in reliance
upon such assumption, make available to the Borrower on such date a
corresponding amount in the required currency. If and to the extent that such
Lender shall not have made such portion available to the Administrative Agent,
such Lender and the Borrower severally agree to repay to the Administrative
Agent forthwith on demand such corresponding amount together with interest
thereon in such currency, for each day from the date such amount is made
available to the Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Loans comprising such Borrowing and (ii) in the
case of such Lender, a rate determined by the Administrative Agent to represent
its cost of overnight funds. If such Lender shall repay to the Administrative
Agent such corresponding amount, such amount shall constitute such Lender's Loan
as part of such Borrowing for purposes of this Agreement.
(d) Each Competitive Loan shall be a Eurocurrency
Competitive Loan or a Fixed Rate Loan. Each Standby Loan shall be a
Eurocurrency Standby Loan or an ABR Standby Loan. Each Local Currency Loan
shall be a Eurocurrency Local Currency Loan or shall bear interest at a rate
specified in the applicable Loan Currency Addendum.
(e) If any Issuing Bank shall not have received from a
Borrower the payment required to be made by Section 2.23(e) within two hours
after such Borrower shall have received notice from such Issuing Bank that
payment of a draft presented under any Letter of Credit will be made, or, if
the Borrower shall have received such notice later than 10:00 a.m., New York
City time, on any Business Day, not later than 10:00 a.m., New York City time,
on the immediately following Business Day, as provided in Section 2.23(e), such
Issuing Bank will promptly notify the Administrative Agent of the L/C
Disbursement and the Administrative Agent will promptly notify each Lender of
such L/C Disbursement and its Applicable Share thereof. Each Lender shall pay
by wire transfer of immediately available funds to the Administrative Agent not
later than 2:00 p.m., New York City time, on such date (or, if such Lender
shall have received such notice later than 12:00 (noon), New York City time, on
any day, not later than 10:00 a.m., New York City time, on the immediately
following Business Day), an amount equal to such Lender's Applicable Share of
such L/C Disbursement (it being understood that such amount shall be deemed to
constitute an ABR Loan of such Lender and shall bear interest as provided
herein), and the Administrative Agent will promptly pay to the Issuing Bank any
amounts so received by it from the Lenders. The Administrative Agent will
promptly pay to the Issuing Bank any amounts received by it from the Borrower
pursuant to Section 2.23(e) prior to the time that any Lender makes any payment
pursuant to this paragraph 2.02(e); any such amounts received by the
Administrative Agent thereafter will be promptly remitted by the Administrative
Agent to the Lenders that shall have made such payments and to the Issuing
Bank, as their interests may appear. If any Lender shall not have made its
Applicable Share of such L/C Disbursement available to the Administrative Agent
as provided above, such Lender and the Borrowers severally agree to pay
interest on such amount, for each day from and including the date such amount
is required to be paid in accordance with this paragraph to but excluding the
date such amount is paid, to the Administrative Agent at (i) in the case of the
Borrowers, a rate per annum equal to the interest rate applicable to Loans
pursuant to Section 2.08, and (ii) in the case of such Lender, for the first
such day, the Federal Funds Effective Rate, and for each day thereafter, the
Alternate Base Rate.
SECTION 2.03. Competitive Bid Procedure. (a) In order to
request Competitive Bids, a Borrower (the "Applicable Borrower") shall hand
deliver or telecopy to the Administrative Agent a duly completed Competitive
Bid Request in the form of Exhibit A-1 hereto, to be received by the
Administrative Agent (i) in the case of a Eurocurrency Competitive Loan, not
later than 10:00 a.m., New York City time, four Business Days before a proposed
Competitive Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later
than 10:00 a.m., New York City time, one
<PAGE> 23
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Business Day before a proposed Competitive Borrowing. No ABR Loan shall be
requested in, or made pursuant to, a Competitive Bid Request. A Competitive Bid
Request that does not conform substantially to the format of Exhibit A-1 may be
rejected in the Administrative Agent's sole discretion, and the Administrative
Agent shall promptly notify the Borrower of such rejection by telecopy. Each
Competitive Bid Request shall refer to this Agreement and specify (w) whether
the Borrowing then being requested is to be a Eurocurrency Borrowing or a Fixed
Rate Borrowing, (x) the date of such Borrowing (which shall be a Business Day)
and the aggregate principal amount thereof which shall be in a minimum principal
amount of $10,000,000 and in an integral multiple of $5,000,000 and (y) the
Interest Period with respect thereto (which may not end after the Maturity
Date). Promptly after its receipt of a Competitive Bid Request that is not
rejected as aforesaid, the Administrative Agent shall telecopy to the Lenders a
Notice of Competitive Bid Request inviting the Lenders to bid, on the terms and
conditions of this Agreement, to make Competitive Loans.
(b) Each Lender invited to bid may, in its sole discretion,
make one or more Competitive Bids to the Applicable Borrower responsive to such
Borrower's Competitive Bid Request. Each Competitive Bid by a Lender must be
received by the Administrative Agent by telecopy, in the form of Exhibit A-3
hereto, (i) in the case of a Eurocurrency Competitive Loan, not later than 9:30
a.m., New York City time, three Business Days before a proposed Competitive
Borrowing and (ii) in the case of a Fixed Rate Borrowing, not later than 9:30
a.m., New York City time, on the day of a proposed Competitive Borrowing. A
Lender may submit multiple bids to the Administrative Agent. Competitive Bids
that do not conform substantially to the format of Exhibit A-3 may be rejected
by the Administrative Agent, and the Administrative Agent shall notify the
Lender making such nonconforming bid of such rejection as soon as practicable.
Each Competitive Bid shall refer to this Agreement and specify (x) the
principal amount (which shall be in a minimum principal amount of $5,000,000
and in an integral multiple of $1,000,000 and which may equal the entire
principal amount of the Competitive Borrowing requested) of the Competitive
Loan or Loans that the Lender is willing to make, (y) the Competitive Bid Rate
or Rates at which the Lender is prepared to make the Competitive Loan or Loans
and (z) the Interest Period and the last day thereof. If any Lender invited to
bid shall elect not to make a Competitive Bid, such Lender shall so notify the
Administrative Agent by telecopy (I) in the case of Eurocurrency Competitive
Loans, not later than 9:30 a.m., New York City time, three Business Days before
a proposed Competitive Borrowing, and (II) in the case of Fixed Rate Loans, not
later than 9:30 a.m., New York City time, on the day of a proposed Competitive
Borrowing; provided, however, that failure by any Lender to give such notice
shall not cause such Lender to be obligated to make any Competitive Loan as
part of such Competitive Borrowing. A Competitive Bid submitted by a Lender
pursuant to this paragraph (b) shall be irrevocable.
(c) The Administrative Agent shall as promptly as practicable
notify the Borrower, by telecopy, of all the Competitive Bids made, the
Competitive Bid Rate and the principal amount of each Competitive Loan in
respect of which a Competitive Bid was made and the identity of the Lender that
made each bid. The Administrative Agent shall send a copy of all Competitive
Bids to the Borrower for its records as soon as practicable after completion of
the bidding process set forth in this Section 2.03.
(d) The Borrower may in its sole and absolute discretion,
subject only to the provisions of this paragraph (d), accept or reject any
Competitive Bid referred to in paragraph (c) above. The Borrower shall notify
the Administrative Agent by telephone, confirmed by telecopy in the form of a
Competitive Bid Accept/Reject Letter, whether and to what extent it has decided
to accept or reject any of or all the bids referred to in paragraph (c) above
not more than one hour after it shall have been notified of such bids by the
Administrative Agent pursuant to such paragraph (c); provided, however, that
(i) the failure of the Borrower to give such notice shall be deemed to be a
rejection of all the bids referred to in paragraph (c) above, (ii) the Borrower
shall not accept a bid made at a particular
<PAGE> 24
19
Competitive Bid Rate if it has decided to reject a bid made at a lower
Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids
accepted by the Borrower shall not exceed the principal amount specified in the
Competitive Bid Request, (iv) if the Borrower shall accept a bid or bids made at
a particular Competitive Bid Rate but the amount of such bid or bids shall cause
the total amount of bids to be accepted to exceed the amount specified in the
Competitive Bid Request, then the Borrower shall accept a portion of such bid or
bids in an amount equal to the amount specified in the Competitive Bid Request
less the amount of all other Competitive Bids accepted with respect to such
Competitive Bid Request, which acceptance, in the case of multiple bids at such
Competitive Bid Rate, shall be made pro rata in accordance with the amount of
each such bid at such Competitive Bid Rate, and (v) except pursuant to clause
(iv) above, no bid shall be accepted for a Competitive Loan unless such
Competitive Loan is in a minimum principal amount of $5,000,000 and an integral
multiple of $1,000,000; provided further, however, that if a Competitive Loan
must be in an amount less than $5,000,000 because of the provisions of clause
(iv) above, such Competitive Loan may be for a minimum of $1,000,000 or any
integral multiple thereof, and in calculating the pro rata allocation of
acceptances of portions of multiple bids at a particular Competitive Bid Rate
pursuant to clause (iv) the amounts shall be rounded to integral multiples of
$1,000,000 in a manner which shall be in the discretion of the Borrower. A
notice given pursuant to this paragraph (d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each
bidding Lender whether or not its Competitive Bid has been accepted (and if so,
in what amount and at what Competitive Bid Rate) by telecopy, and each
successful bidder will thereupon become bound, subject to the other applicable
conditions hereof, to make the Competitive Loan in respect of which its bid has
been accepted.
(f) No Competitive Borrowing shall be requested or made
hereunder if after giving effect thereto any of the conditions set forth in
paragraph (c) of Section 2.01 would not be met.
(g) If the Administrative Agent shall elect to submit a
Competitive Bid in its capacity as a Lender, it shall submit such bid directly
to the Applicable Borrower one quarter of an hour earlier than the latest time
at which the other Lenders are required to submit their bids to the
Administrative Agent pursuant to paragraph (b) above.
(h) All notices required by this Section 2.03 shall be given
in accordance with Section 9.01.
SECTION 2.04. Standby and Local Currency Borrowing Procedure.
(a) In order to request a Standby Borrowing, a Borrower shall hand deliver or
telecopy to the Administrative Agent a duly completed Standby Borrowing Request
in the form of Exhibit A-5 (i) in the case of a Eurocurrency Standby Loan, not
later than 10:30 a.m., New York City time (or, if the Standby Borrowing request
is delivered or telecopied to the Administrative Agent in London, 9:30 a.m.,
London time), three Business Days before such Borrowing, and (ii) in the case
of an ABR Borrowing, not later than 10:30 a.m., New York City time, on the day
of such Borrowing. No Fixed Rate Loan shall be requested or made pursuant to a
Standby Borrowing Request. Such notice shall be irrevocable and shall in each
case specify (A) whether the Borrowing then being requested is to be a
Eurocurrency Standby Loan or an ABR Borrowing; (B) the date of such Standby
Borrowing (which shall be a Business Day) and the amount thereof; and (C) if
such Borrowing is to be a Eurocurrency Standby Loan, the Interest Period with
respect thereto, which shall not end after the Maturity Date. If no election
as to the Type of Standby Borrowing is specified in any such notice, then the
requested Standby Borrowing shall be an ABR Borrowing. If no Interest Period
with respect to any Eurocurrency Standby is specified in any such notice, then
the Borrower shall be deemed to have selected an Interest Period of one month's
duration. Notwithstanding any other provision of this
<PAGE> 25
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Agreement to the contrary, no Standby Borrowing shall be requested if the
Interest Period with respect thereto would end after the Maturity Date. The
Administrative Agent shall promptly advise each of the Lenders of any notice
given pursuant to this Section 2.04 and of each Lender's portion of the
requested Borrowing.
(b) In order to request a Local Currency Borrowing, a
Borrower shall give the notice required under the applicable Local Currency
Addendum and shall simultaneously deliver a copy of such notice to the
Administrative Agent.
SECTION 2.05. Conversion and Continuation of Standby Loans.
Each Borrower shall have the right at any time upon prior irrevocable notice to
the Administrative Agent (i) not later than 10:30 a.m., New York City time, on
the day of the conversion, to convert all or any part of any Eurocurrency
Standby Loan into an ABR Standby Loan, and (ii) not later than 10:30 a.m., New
York City time, three Business Days prior to conversion or continuation, to
convert any ABR Standby Loan into a Eurocurrency Standby Loan or to continue
any Eurocurrency Standby Loan as a Eurocurrency Standby Loan for an additional
Interest Period, subject in each case to the following:
(a) if less than all the outstanding principal amount of any
Standby Borrowing shall be converted or continued, the aggregate
principal amount of the Standby Borrowing converted or continued shall
be an integral multiple of $5,000,000 and not less than $20,000,000;
(b) accrued interest on a Standby Borrowing (or portion
thereof) being converted shall be paid by the Borrower at the time of
conversion;
(c) if any Eurocurrency Standby Loan is converted at a time
other than the end of the Interest Period applicable thereto, the
Borrower shall pay, upon demand, any amounts due to the Lenders
pursuant to Section 2.15;
(d) any portion of a Standby Borrowing maturing or required to
be repaid in less than one month may not be converted into or
continued as a Eurocurrency Standby Loan;
(e) any portion of a Eurocurrency Standby Loan which cannot be
continued as a Eurocurrency Standby Loan by reason of clause (d) above
shall be automatically converted at the end of the Interest Period in
effect for such Eurocurrency Standby Loan into an ABR Borrowing;
(f) no Interest Period may be selected for any Eurocurrency
Standby Borrowing that would end later than the Maturity Date; and
(g) at any time when there shall have occurred and be
continuing any Default or Event of Default, no Standby Loan may be
converted into or continued as a Eurocurrency Standby Loan.
Each notice pursuant to this Section 2.05 shall be irrevocable
and shall refer to this Agreement and specify (i) the identity and amount of
the Standby Borrowing to be converted or continued, (ii) whether such Standby
Borrowing is to be converted to or continued as a Eurocurrency Standby Loan or
an ABR Standby Loan, (iii) if such notice requests a conversion, the date of
such conversion (which shall be a Business Day) and (iv) if such Standby
Borrowing is to be converted to or continued as a Eurocurrency Standby Loan,
the Interest Period with respect thereto. If no Interest Period is specified
in any such notice with respect to any conversion to or continuation as a
Eurocurrency Standby Loan, the Borrower shall be deemed to have selected an
Interest Period of one
<PAGE> 26
21
month's duration. If no notice shall have been given in accordance with this
Section 2.05 to convert or continue any Standby Borrowing, such Standby
Borrowing shall, at the end of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be continued into a new
Interest Period as an ABR Standby Loan.
SECTION 2.06. Fees. (a) The Company agrees to pay to each
Lender, through the Administrative Agent, on each March 31, June 30, September
30 and December 31 (with the first payment being due on December 31, 1995) and
on each date on which the Commitment of such Lender shall be terminated as
provided herein, a facility fee (a "Facility Fee"), at a rate per annum equal
to the Applicable Percentage from time to time in effect on the amount of the
Commitment of such Lender, whether used or unused, during the preceding quarter
(or other period commencing on the Effective Date, or ending with the Maturity
Date or any date on which the Commitment of such Lender shall be terminated).
All Facility Fees shall be computed on the basis of the actual number of days
elapsed in a year of 365 or 366 days, as the case may be. The Facility Fee due
to each Lender shall commence to accrue on the Effective Date, and shall cease
to accrue on the earlier of the Maturity Date and the termination of the
Commitment of such Lender as provided herein.
(b) The Company agrees to pay the Administrative Agent, for
its own account, the administrative and other fees separately agreed to by the
Company and the Administrative Agent (the "Administrative Fees").
(c) The Company agrees to pay (i) to each Lender, through the
Administrative Agent, on each March 31, June 30, September 30 and December 31
and on the date on which the Commitment of such Lender shall be terminated as
provided herein, a fee (an "L/C Participation Fee") calculated on such Lender's
average daily L/C Exposure (excluding the portion thereof attributable to
unreimbursed L/C Disbursements) during the preceding quarter (or shorter period
commencing with the Effective Date or ending with the Maturity Date or the date
on which the Commitment of such Lender shall be terminated) at a rate equal to
the Applicable Percentage from time to time applicable for purposes of
determining the interest rate on Borrowings comprised of Eurocurrency Loans
pursuant to Section 2.08, and (ii) to the Issuing Bank with respect to each
Letter of Credit the fees agreed upon by the Company and such Issuing Bank in
the applicable Issuing Bank Agreement plus, in connection with the issuance,
amendment or transfer of any Letter of Credit or any L/C Disbursement, the
Issuing Bank's customary documentary and processing charges (collectively, the
"Issuing Bank Fees"). All L/C Participation Fees and Issuing Bank Fees shall be
computed on the basis of the actual number of days elapsed in a year of 360
days. Notwithstanding the foregoing, in the case of any Letter of Credit that
will expire later than the first anniversary of the issuance, amendment, renewal
or extension thereof, the L/C Participation Fee and Issuing Bank Fees shall be
increased by an amount to be agreed upon prior to such issuance, amendment,
renewal or extension by the applicable Borrower, the applicable Issuing Bank and
the Required Lenders.
(d) All Fees shall be paid on the dates due, in immediately
available funds, to the Administrative Agent for distribution, if and as
appropriate, among the Lenders except that the Issuing Bank Fees shall be paid
directly to the applicable Issuing Bank and the Administrative Fees shall be
paid pursuant to paragraph (b) above. Once paid, none of the Fees shall be
refundable under any circumstances.
SECTION 2.07. Repayment of Loans; Evidence of Debt. (a)
Each Borrower hereby agrees that the outstanding principal balance of each
Standby Loan or Local Currency Loan shall be payable on the Maturity Date
(unless an earlier date is specified in the Local Currency Addendum relating to
such Local Currency Loan) and that the outstanding principal balance of each
Competitive
<PAGE> 27
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Loan shall be payable on the last day of the Interest Period applicable thereto.
Each Loan shall bear interest on the outstanding principal balance thereof as
set forth in Section 2.08.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness to such Lender
resulting from each Loan made by such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which
it will record (i) the amount of each Loan made hereunder, the currency of each
Loan, the Borrower of each Loan, the Type of each Loan made and the Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from each Borrower to each Lender
hereunder and (iii) the amount of any sum received by the Administrative Agent
hereunder from each Borrower and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraphs (b) and (c) of this Section 2.07 shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations therein recorded; provided, however, that the failure of any Lender
or the Administrative Agent to maintain such accounts or any error therein
shall not in any manner affect the obligations of the Borrowers to repay the
Loans in accordance with their terms.
SECTION 2.08. Interest on Loans. (a) Subject to the
provisions of Section 2.09, the Loans comprising each Eurocurrency Borrowing
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 360 days) at a rate per annum equal to (i) in the case of each
Eurocurrency Standby Loan, the LIBO Rate for the Interest Period in effect for
such Borrowing plus the Applicable Percentage from time to time in effect, (ii)
in the case of each Eurocurrency Competitive Loan, the LIBO Rate for the
Interest Period in effect for such Borrowing plus the Margin offered by the
Lender making such Loan and accepted by the Borrower pursuant to Section 2.03
and (iii) in the case of each Eurocurrency Local Currency Loan, the LIBO Rate
for the Interest Period in effect for such Loan plus any spread specified in
the applicable Local Currency Addendum.
(b) Subject to the provisions of Section 2.09, the Loans
comprising each ABR Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 365 or 366 days, as the case may
be, for periods during which the Alternate Base Rate is determined by reference
to the Prime Rate and 360 days for other periods) at a rate per annum equal to
the Alternate Base Rate.
(c) Subject to the provisions of Section 2.09, each Fixed
Rate Loan shall bear interest at a rate per annum (computed on the basis of the
actual number of days elapsed over a year of 360 days) equal to the fixed rate
of interest offered by the Lender making such Loan and accepted by the Borrower
pursuant to Section 2.03.
(d) Subject to the provisions of Section 2.09, any Local
Currency Loan that is not a Eurocurrency Loan shall bear interest at the rate
or rates per annum set forth in the applicable Local Currency Addendum.
(e) Interest on each Loan shall be payable on each Interest
Payment Date applicable to such Loan except as otherwise provided in this
Agreement or in an applicable Local Currency Addendum. The applicable LIBO
Rate or Alternate Base Rate for each Interest Period or day within an Interest
Period, as the case may be, shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
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SECTION 2.09. Default Interest. If a Borrower shall default
in the payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, whether by scheduled maturity, notice of prepayment,
acceleration or otherwise, such Borrower shall on demand from time to time from
the Administrative Agent pay interest, to the extent permitted by law, on such
defaulted amount up to (but not including) the date of actual payment (after as
well as before judgment) at a rate per annum (computed as provided in Section
2.08(b)) equal to the Alternate Base Rate plus 2% (or, in the case of Local
Currency Loans, such other rate as may be specified in the applicable Local
Currency Addendum).
SECTION 2.10. Alternate Rate of Interest. In the event, and
on each occasion, that on the day two Business Days prior to the commencement
of any Interest Period for a Eurocurrency Borrowing, the Administrative Agent
shall have determined (i) that deposits in the currency and principal amounts
of the Eurocurrency Loans comprising such Borrowing are not generally available
in the London market or (ii) that reasonable means do not exist for
ascertaining the LIBO Rate, the Administrative Agent shall, as soon as
practicable thereafter, give telecopy notice of such determination to the
Borrower and the Lenders. In the event of any such determination under clause
(i) or (ii) above, until the Administrative Agent shall have advised the
Company and the Lenders that the circumstances giving rise to such notice no
longer exist, (x) any request by a Borrower for a Eurocurrency Competitive Loan
pursuant to Section 2.03 shall be of no force and effect and shall be denied by
the Administrative Agent, (y) any request by a Borrower for a Eurocurrency
Standby Loan pursuant to Section 2.04(a) shall be deemed to be a request for an
ABR Borrowing and (z) any request for a Eurocurrency Local Currency Loan
pursuant to Section 2.04(b) and to a Local Currency Addendum shall be deemed to
be a request for a Local Currency Loan bearing interest by reference to the
rate specified in the applicable Local Currency Addendum (provided that if the
requested Eurocurrency Local Currency Loan was to be made pursuant to a Local
Currency Addendum in which no rate is specified such request shall be of no
force and effect and shall be denied by the Administrative Agent). In the
event the Required Lenders notify the Administrative Agent that the rates at
which Dollar deposits are being offered will not adequately and fairly reflect
the cost to such Lenders of making or maintaining Eurocurrency Loans in Dollars
during such Interest Period, the Administrative Agent shall notify the
applicable Borrower of such notice and until the Required Lenders shall have
advised the Administrative Agent that the circumstances giving rise to such
notice no longer exist, any request by such Borrower for a Eurocurrency Standby
Loan shall be deemed a request for an ABR Borrowing. Each determination by the
Administrative Agent hereunder shall be made in good faith and shall be
conclusive absent manifest error.
SECTION 2.11. Termination and Reduction of Commitments. (a)
The Commitments shall be automatically terminated on the Maturity Date.
(b) Upon at least three Business Days' prior irrevocable
telecopy notice to the Administrative Agent, the Company may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
the Total Commitment; provided, however, that (i) each partial reduction of the
Total Commitment shall be in an integral multiple of $10,000,000 and in a
minimum principal amount of $50,000,000 and (ii) no such termination or
reduction shall be made (A) which would reduce the Total Commitment to an
amount less than the sum of the aggregate Standby Credit Exposures, Competitive
Loan Exposures and L/C Exposures or (B) which would reduce any Lender's
Commitment to an amount that is less than the sum of such Lender's Standby
Credit Exposure and L/C Exposure.
(c) Each reduction in the Total Commitment hereunder shall be
made ratably among the Lenders in accordance with their respective Commitments.
The Borrowers shall pay to the Administrative Agent for the account of the
Lenders, on the date of each reduction or termination of
<PAGE> 29
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the Total Commitment, the Facility Fees on the amount of the Commitments
terminated accrued through the date of such termination or reduction.
SECTION 2.12. Prepayment. (a) Each Borrower shall have the
right at any time and from time to time to prepay any Standby Borrowing or
Local Currency Borrowing, as the case may be, in whole or in part, upon giving
telecopy notice (or telephone notice promptly confirmed by telecopy) to the
Administrative Agent: (i) before 10:00 a.m., New York City time, three
Business Days prior to prepayment, in the case of Eurocurrency Standby Loans,
and (ii) before 10:00 a.m., New York City time, one Business Day prior to
prepayment, in the case of ABR Standby Loans and (iii) in the case of Local
Currency Loans, by such time as shall be specified in the applicable Local
Currency Addendum; provided, however, that each partial prepayment shall be in
an amount which is (x) in the case of any Standby Borrowing, an integral
multiple of $10,000,000 and not less than $50,000,000, and (ii) in the case of
any Local Currency Borrowing, an amount in which prepayments are permitted to
be made under the applicable Local Currency Addendum. No prepayment may be
made in respect of any Competitive Borrowing.
(b) On the date of any termination or reduction of the
Commitments pursuant to Section 2.11, the Borrowers shall pay or prepay so much
of the Standby Borrowings as shall be necessary in order that the sum of the
aggregate Competitive Loan Exposures, Standby Credit Exposures and L/C
Exposures will not exceed the Total Commitment after giving effect to such
termination or reduction.
(c) Each notice of prepayment shall specify the prepayment
date and the principal amount of each Borrowing (or portion thereof) to be
prepaid, shall be irrevocable and shall commit the applicable Borrower to
prepay such Borrowing (or portion thereof) by the amount stated therein on the
date stated therein. All prepayments under this Section 2.12 shall be subject
to Section 2.15 but otherwise without premium or penalty. All prepayments
under this Section 2.12 shall be accompanied by accrued interest on the
principal amount being prepaid to the date of payment.
SECTION 2.13. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if after the date of this
Agreement any change in applicable law or regulation or in the interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall result in the imposition, modification or applicability of any
reserve, special deposit or similar requirement against assets of, deposits
with or for the account of or credit extended by any Lender or any Issuing
Bank, or shall result in the imposition on any Lender or the London interbank
market of any other condition affecting this Agreement, such Lender's
Commitment or any Eurocurrency Loan or Fixed Rate Loan made by such Lender or
any Letter of Credit, and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurocurrency Loan
or Fixed Rate Loan or of issuing or maintaining any Letter of Credit or to
reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender or such Issuing Bank to be material, then such
additional amount or amounts as will compensate such Lender, or such Issuing
Bank, as the case may be, for such additional costs or reduction will be paid
by the Borrowers to such Lender, or such Issuing Bank, as the case may be, upon
demand. Notwithstanding the foregoing, no Lender or Issuing Bank shall be
entitled to request compensation under this paragraph with respect to any
Competitive Loan or Letter of Credit if the change giving rise to such request
was applicable to such Lender or Issuing Bank at the time of submission of the
Competitive Bid or L/C Competitive Bid pursuant to which such Competitive Loan
or Letter of Credit was made or issued.
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(b) If any Lender or any Issuing Bank shall have determined
that the adoption of any law, rule, regulation or guideline arising out of the
July 1988 report of the Basle Committee on Banking Regulations and Supervisory
Practices entitled "International Convergence of Capital Measurement and
Capital Standards", or the adoption after the date hereof of any other law,
rule, regulation or guideline regarding capital adequacy, or any change in any
of the foregoing or in the interpretation or administration of any of the
foregoing by any Governmental Authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by any
Lender or Issuing Bank (or any lending office of such Lender or such Issuing
Bank) or any Lender's or Issuing Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on such Lender's or Issuing Bank's
capital or on the capital of such Lender's or Issuing Bank's holding company,
if any, as a consequence of this Agreement, such Lender's Commitment or the
Loans made or Letters of Credit issued by such Lender or Issuing Bank pursuant
hereto to a level below that which such Lender or Issuing Bank or such Lender's
or Issuing Bank's holding company could have achieved but for such adoption,
change or compliance (taking into consideration such Lender's or Issuing Bank's
policies and the policies of such Lender's or Issuing Bank's holding company
with respect to capital adequacy) by an amount deemed by such Lender or Issuing
Bank to be material, then from time to time such additional amount or amounts
as will compensate such Lender or Issuing Bank for such reduction will be paid
by the Borrowers to such Lender or Issuing Bank.
(c) A certificate of any Lender or Issuing Bank setting forth
such amount or amounts as shall be necessary to compensate such Lender or
Issuing Bank or its holding company, as applicable, as specified in paragraph
(a) or (b) above, as the case may be, shall be delivered to the Company and
shall be conclusive absent manifest error. The Borrowers shall pay such Lender
or Issuing Bank the amount shown as due on any such certificate delivered by it
within 10 days after its receipt of the same.
(d) Failure on the part of any Lender or Issuing Bank to
demand compensation for any increased costs or reduction in amounts received or
receivable or reduction in return on capital with respect to any period shall
not constitute a waiver of such Lender's or Issuing Bank's right to demand
compensation with respect to such period or any other period; provided,
however, that no Lender or Issuing Bank shall be entitled to compensation under
this Section 2.13 for any costs incurred or reductions suffered with respect to
any date unless it shall have notified the Company that it will demand
compensation for such costs or reductions under paragraph (c) above not more
than 90 days after the later of (i) such date and (ii) the date on which it
shall have become aware of such costs or reductions. The protection of this
Section shall be available to each Lender and Issuing Bank regardless of any
possible contention of the invalidity or inapplicability of the law, rule,
regulation, guideline or other change or condition which shall have occurred or
been imposed.
SECTION 2.14. Change in Legality. (a) Notwithstanding any
other provision herein, if any change in any law or regulation or in the
interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
or any of its Affiliates which shall be party to a Local Currency Addendum to
make or maintain any Eurocurrency Loan or Local Currency Loan or to give effect
to its obligations as contemplated hereby with respect to any Eurocurrency Loan
or Local Currency Loan, or shall limit the convertibility into Dollars of any
Local Currency (or make such conversion commercially impracticable), then, by
written notice to the Company and to the Administrative Agent, such Lender may:
(i) declare that Eurocurrency Loans or Loans in any affected
Local Currency will not thereafter be made by such Lender hereunder,
whereupon such Lender shall not submit a
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Competitive Bid in response to a request for a Eurocurrency
Competitive Loan, any request for a Eurocurrency Standby Loan shall,
as to such Lender only, be deemed a request for an ABR Loan, and any
request for a Local Currency Borrowing in such Local Currency shall be
disregarded, unless such declaration shall be subsequently withdrawn;
and
(ii) require that all outstanding Eurocurrency Loans in
Dollars made by it be converted to ABR Loans and that all outstanding
Local Currency Loans made by it in the affected Local Currency be
promptly prepaid, in which event all such Eurocurrency Loans in
Dollars shall be automatically converted to ABR Loans as of the
effective date of such notice as provided in paragraph (b) below and
all such Local Currency Loans shall be promptly prepaid.
In the event any Lender shall exercise its rights under (i) or (ii) above with
respect to Eurocurrency Loans in Dollars, all payments and prepayments of
principal which would otherwise have been applied to repay the Eurocurrency
Loans that would have been made by such Lender or the converted Eurocurrency
Loans, of such Lender shall instead be applied to repay the ABR Loans made by
such Lender in lieu of, or resulting from the conversion of, such Eurocurrency
Loans.
(b) For purposes of this Section 2.14, a notice by any Lender
shall be effective as to each Eurocurrency Loan or Local Currency Loan, if
lawful, on the last day of the Interest Period currently applicable to such
Eurocurrency Loan or Local Currency Loan; in all other cases such notice shall
be effective on the date of receipt.
SECTION 2.15. Indemnity. The Borrowers shall indemnify each
Lender against any out-of-pocket loss or expense which such Lender may sustain
or incur as a consequence of (a) any failure to borrow or to refinance, convert
or continue any Loan hereunder after irrevocable notice of such borrowing,
refinancing, conversion or continuation has been given pursuant to Section 2.03,
2.04 or 2.05 or pursuant to any Local Currency Addendum, (b) any payment,
prepayment or conversion, or assignment required under Section 2.20, of a
Eurocurrency Loan required by any other provision of this Agreement or otherwise
made or deemed made on a date other than the last day of the Interest Period, if
any, applicable thereto, (c) any default in payment or prepayment of the
principal amount of any Loan or any part thereof or interest accrued thereon, as
and when due and payable (at the due date thereof, whether by scheduled
maturity, acceleration, irrevocable notice of prepayment or otherwise) or (d)
the occurrence of any Event of Default, including, in each such case, any loss
or reasonable expense sustained or incurred or to be sustained or incurred in
liquidating or employing deposits from third parties acquired to effect or
maintain such Loan or any part thereof as a Eurocurrency Loan. Such loss or
reasonable expense shall include an amount equal to the excess, if any, as
reasonably determined by such Lender, of (i) its cost of obtaining the funds for
the Loan being paid, prepaid, refinanced or not borrowed (assumed to be the LIBO
Rate applicable thereto) for the period from the date of such payment,
prepayment, refinancing or failure to borrow or refinance to the last day of the
Interest Period for such Loan (or, in the case of a failure to borrow or
refinance the Interest Period for such Loan which would have commenced on the
date of such failure) over (ii) the amount of interest (as reasonably determined
by such Lender) that would be realized by such Lender in reemploying the funds
so paid, prepaid or not borrowed or refinanced for such period or Interest
Period, as the case may be. A certificate of any Lender setting forth any
amount or amounts which such Lender is entitled to receive pursuant to this
Section shall be delivered to such Borrower and shall be conclusive absent
manifest error.
SECTION 2.16. Pro Rata Treatment. Except as required under
Sections 2.14 and 2.20, each payment of the Facility Fees and each reduction of
the Commitments shall be allocated pro rata among the Lenders in accordance
with their respective Commitments (or, if such Commitments shall have expired
or been terminated, in accordance with the respective principal amounts of
their
<PAGE> 32
27
outstanding Standby Loans). Each payment of principal of any Competitive
Borrowing shall be allocated pro rata among the Lenders participating in such
Borrowing in accordance with the respective principal amounts of their
outstanding Competitive Loans comprising such Borrowing. Except as required
under Section 2.14, each payment or repayment of principal of any Standby
Borrowing and each refinancing or conversion of any Standby Borrowing shall be
allocated pro rata among the Lenders in such Borrowing in accordance with the
respective principal amounts of their outstanding Standby Loans comprising such
Borrowing, and each payment of interest on any Standby Borrowing shall be
allocated pro rata among the Lenders participating in such a Borrowing in
accordance with the respective amounts of accrued and unpaid interest on their
outstanding Standby Loans comprising such Borrowing. Each payment of principal
of any Competitive Borrowing shall be allocated pro rata among the Lenders
participating in such Borrowing in accordance with the respective principal
amounts of their outstanding Competitive Loans comprising such Borrowing. Each
payment of interest on any Competitive Borrowing shall be allocated pro rata
among the Lenders participating in such Borrowing in accordance with the
respective amounts of accrued and unpaid interest on their outstanding
Competitive Loans comprising such Borrowing. For purposes of determining the
Available Commitments of the Lenders at any time, each outstanding Competitive
Borrowing shall be deemed to have utilized the Commitments of the Lenders
(including those Lenders which shall not have made Loans as part of such
Competitive Borrowing) pro rata in accordance with their respective
Commitments. Each Lender agrees that in computing such Lender's portion of any
Borrowing to be made hereunder, the Administrative Agent may, in its
discretion, round each Lender's percentage of such Borrowing to the next higher
or lower whole Dollar amount.
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if
it shall, through the exercise of a right of banker's lien, setoff or
counterclaim, or pursuant to a secured claim under Section 506 of Title 11 of
the United States Code or other security or interest arising from, or in lieu
of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other
means, obtain payment (voluntary or involuntary) in respect of any Standby Loan
or Loans as a result of which the unpaid principal portion of its Standby Loans
shall be proportionately less than the unpaid principal portion of the Standby
Loans of any other Lender, it shall be deemed simultaneously to have purchased
from such other Lender at face value, and shall promptly pay to such other
Lender the purchase price for, a participation in the Standby Loans of such
other Lender, so that the aggregate unpaid principal amount of the Standby
Loans and participations in the Standby Loans held by each Lender shall be in
the same proportion to the aggregate unpaid principal amount of all Standby
Loans then outstanding as the principal amount of its Standby Loans prior to
such exercise of banker's lien, setoff or counterclaim or other event was to
the principal amount of all Standby Loans outstanding prior to such exercise of
banker's lien, setoff or counterclaim or other event; provided, however, that,
if any such purchase or purchases or adjustments shall be made pursuant to this
Section 2.17 and the payment giving rise thereto shall thereafter be recovered,
such purchase or purchases or adjustments shall be rescinded to the extent of
such recovery and the purchase price or prices or adjustment restored without
interest. Any Lender holding a participation in a Standby Loan deemed to have
been so purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing to such Lender by reason
thereof as fully as if such Lender had made a Standby Loan in the amount of
such participation.
SECTION 2.18. Payments. (a) The Borrowers shall make each
payment (including principal of or interest on any Borrowing or any L/C
Disbursement and any Fees or other amounts) hereunder from an account in the
United States not later than 12:00 noon, local time at the place of payment, on
the date when due in immediately available funds to the Administrative Agent at
its offices at 270 Park Avenue, New York, New York (or, in the case of Local
Currency Loans, such other time and place as shall be specified in the
applicable Local Currency Addendum). Each such payment (other than principal
of and interest on Local Currency Loans) shall be made in Dollars.
<PAGE> 33
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(b) Whenever any payment (including principal of or interest
on any Borrowing or any Fees or other amounts) hereunder shall become due, or
otherwise would occur, on a day that is not a Business Day, such payment may be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) Any and all payments to the
Lenders hereunder shall be made, in accordance with Section 2.18, free and
clear of and without deduction for any and all current or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding (i) income taxes imposed on the income of the Administrative
Agent, any Lender or any Issuing Bank (or any transferee or assignee thereof,
including a participation holder (any such entity a "Transferee")) and (ii)
franchise taxes imposed on the income, assets or net worth of the
Administrative Agent, any Lender or any Issuing Bank (or Transferee), in each
case by the jurisdiction under the laws of which the Administrative Agent, such
Lender or such Issuing Bank (or Transferee) is organized or doing business
(other than as a result of entering into this Agreement, performing any
obligations hereunder, receiving any payments hereunder or enforcing any rights
hereunder), or any political subdivision thereof (all such nonexcluded taxes,
levies, imposts, deductions, charges, withholdings and liabilities,
collectively or individually, "Taxes"). If any Borrower shall be required to
deduct any Taxes from or in respect of any sum payable hereunder to any Lender
(or any Transferee), the Administrative Agent or any Issuing Bank, (i) the sum
payable shall be increased by the amount (an "additional amount") necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.19) such Lender (or Transferee),
the Administrative Agent or such Issuing Bank (as the case may be) shall
receive an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions and (iii)
such Borrower shall pay the full amount deducted to the relevant Governmental
Authority in accordance with applicable law.
(b) In addition, the Borrowers shall pay to the relevant
Governmental Authority in accordance with applicable law any current or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document ("Other Taxes").
(c) The Borrowers shall indemnify each Lender (or
Transferee), the Administrative Agent and each Issuing Bank for the full amount
of Taxes and Other Taxes paid by such Lender (or Transferee), the
Administrative Agent or such Issuing Bank, as the case may be, and any
liability (including penalties, interest and expenses (including reasonable
attorney's fees and expenses)) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted by
the relevant Governmental Authority. A certificate as to the amount of such
payment or liability prepared by a Lender (or Transferee), Issuing Bank or the
Administrative Agent on its behalf, absent manifest error, shall be final,
conclusive and binding for all purposes. Such indemnification shall be made
within 30 days after the date any Lender (or Transferee), an Issuing Bank or
the Administrative Agent, as the case may be, makes written demand therefor,
which written demand shall be made within 60 days of the date such Lender (or
Transferee), such Issuing Bank or the Administrative Agent receives written
demand for payment of such Taxes or Other Taxes from the relevant Governmental
Authority.
(d) If a Lender (or Transferee), an Issuing Bank or the
Administrative Agent shall become aware that it is entitled to claim a refund
from a Governmental Authority in respect of Taxes or Other Taxes as to which it
has been indemnified by the Borrowers, or with respect to which the Borrowers
have paid additional amounts, pursuant to this Section 2.19, it shall promptly
notify the Borrowers of the availability of such refund claim and shall, within
30 days after receipt of a request
<PAGE> 34
29
by the Borrowers, make a claim to such Governmental Authority for such refund at
the Borrowers' expense. If a Lender (or Transferee), an Issuing Bank or the
Administrative Agent receives a refund (including pursuant to a claim for refund
made pursuant to the preceding sentence) in respect of any Taxes or Other Taxes
as to which it has been indemnified by the Borrowers or with respect to which
the Borrowers have paid additional amounts pursuant to this Section 2.19, it
shall within 30 days from the date of such receipt pay over such refund to the
Borrowers (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrowers under this Section 2.19 with respect to the Taxes
or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
such Lender (or Transferee), such Issuing Bank or the Administrative Agent and
without interest (other than interest paid by the relevant Governmental
Authority with respect to such refund); provided, however, that the Borrowers,
upon the request of such Lender (or Transferee), such Issuing Bank or the
Administrative Agent, agree to repay the amount paid over to the Borrowers (plus
penalties, interest or other charges) to such Lender (or Transferee), such
Issuing Bank or the Administrative Agent in the event such Lender (or
Transferee), such Issuing Bank or the Administrative Agent is required to repay
such refund to such Governmental Authority.
(e) As soon as practicable after the date of any payment of
Taxes or Other Taxes by the Borrowers to the relevant Governmental Authority,
the Borrowers will deliver to the Administrative Agent, at its address referred
to in Section 9.01, the original or a certified copy of a receipt issued by
such Governmental Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.19
shall survive the payment in full of the principal of and interest on all Loans
made hereunder and the expiration or cancellation of all Letters of Credit and
the payment of all L/C Disbursements thereunder.
(g) Each Lender and Issuing Bank (or Transferee) that is
organized under the laws of a jurisdiction other than the United States, any
State thereof or the District of Columbia (a "Non-U.S. Lender") shall deliver
to the Company and the Administrative Agent two copies of either United States
Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S.
Lender or Issuing Bank claiming exemption from U.S. Federal withholding tax
under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest", a Form W-8, or any subsequent versions thereof or
successors thereto (and, if such Non-U.S. Lender or Issuing Bank delivers a
Form W-8, a certificate representing that such Non-U.S. Lender or Issuing Bank
is not a bank for purposes of Section 881(c) of the Code, is not a 10 percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of the
Company and is not a controlled foreign corporation related to the Company
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Non-U.S. Lender or Issuing Bank claiming complete
exemption from, or reduced rate of, U.S. Federal withholding tax on payments by
the Company under this Agreement. Such forms shall be delivered by each
Non-U.S. Lender or Issuing Bank on or before the date it becomes a party to
this Agreement (or, in the case of a Transferee that is a participation holder,
on or before the date such participation holder becomes a Transferee hereunder)
and on or before the date, if any, such Non-U.S. Lender or Issuing Bank changes
its applicable lending office by designating a different lending office (a "New
Lending Office"). In addition, each Non-U.S. Lender or Issuing Bank shall
deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender or Issuing Bank. Notwithstanding
any other provision of this Section 2.19(g), a Non-U.S. Lender or Issuing Bank
shall not be required to deliver any form pursuant to this Section 2.19(g) that
such Non-U.S. Lender or Issuing Bank is not legally able to deliver.
(h) The Company shall not be required to indemnify any
Non-U.S. Lender or Issuing Bank, or to pay any additional amounts to any
Non-U.S. Lender or Issuing Bank, in respect of United
<PAGE> 35
30
States Federal withholding tax pursuant to paragraph (a) or (c) above to the
extent that (i) the obligation to withhold amounts with respect to United States
Federal withholding tax existed on the date such Non-U.S. Lender or Issuing Bank
became a party to this Agreement (or, in the case of a Transferee that is a
participation holder, on the date such participation holder became a Transferee
hereunder) or, with respect to payments to a New Lending Office, the date such
Non-U.S. Lender or Issuing Bank designated such New Lending Office with respect
to a Loan; provided, however, that this clause (i) shall not apply to any
Transferee or New Lending Office that becomes a Transferee or New Lending Office
as a result of an assignment, participation, transfer or designation made at the
request of the Company; and provided further, however, that this clause (i)
shall not apply to the extent the indemnity payment or additional amounts any
Transferee, or Lender (or Transferee) or Issuing Bank through a New Lending
Office, would be entitled to receive (without regard to this clause (i)) do not
exceed the indemnity payment or additional amounts that the person making the
assignment, participation or transfer to such Transferee, or Lender (or
Transferee) or Issuing Bank making the designation of such New Lending Office,
would have been entitled to receive in the absence of such assignment,
participation, transfer or designation or (ii) the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S.
Lender or Issuing Bank to comply with the provisions of paragraph (g) above.
(i) Any Lender (or Transferee) or Issuing Bank claiming any
indemnity payment or additional amounts payable pursuant to this Section 2.19
shall use reasonable efforts (consistent with legal and regulatory
restrictions) to file any certificate or document reasonably requested in
writing by the Company or to change the jurisdiction of its applicable lending
office if the making of such a filing or change would avoid the need for or
reduce the amount of any such indemnity payment or additional amounts that may
thereafter accrue and would not, in the sole determination of such Lender (or
Transferee) or Issuing Bank, be otherwise disadvantageous to such Lender (or
Transferee) or Issuing Bank.
(j) Nothing contained in this Section 2.19 shall require any
Lender (or Transferee), any Issuing Bank or the Administrative Agent to make
available any of its tax returns (or any other information that it deems to be
confidential or proprietary).
SECTION 2.20. Duty to Mitigate; Assignment of Commitments
Under Certain Circumstances. (a) Any Lender (or Transferee) or Issuing Bank
claiming any additional amounts payable pursuant to Section 2.13 or Section
2.19 or exercising its rights under Section 2.14 shall use reasonable efforts
(consistent with legal and regulatory restrictions) to file any certificate or
document requested by the Company or to change the jurisdiction of its
applicable lending office if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which may
thereafter accrue or avoid the circumstances giving rise to such exercise and
would not, in the sole determination of such Lender (or Transferee) or Issuing
Bank, be otherwise disadvantageous to such Lender (or Transferee) or Issuing
Bank.
(b) In the event that any Lender or Issuing Bank shall have
delivered a notice or certificate pursuant to Section 2.13 or 2.14, or the
Company shall be required to make additional payments to any Lender or Issuing
Bank under Section 2.19, the Company shall have the right, at its own expense,
upon notice to such Lender or Issuing Bank and the Administrative Agent, to
require such Lender or Issuing Bank to transfer and assign without recourse,
representation or warranty (in accordance with and subject to the restrictions
contained in Section 9.04) all interests, rights and obligations contained
hereunder to another financial institution approved by the Administrative Agent
(which approval shall not be unreasonably withheld) which shall assume such
obligations; provided that (i) no such assignment shall conflict with any law,
rule or regulation or order of any Governmental Authority and (ii) the assignee
or the Company, as the case may be, shall pay to the affected Lender or
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Issuing Bank in immediately available funds on the date of such assignment the
principal of and interest accrued to the date of payment on the Loans and L/C
Disbursements made by it hereunder and all other amounts accrued for its account
or owed to it hereunder and shall cause all Letters of Credit issued by it to be
canceled on such date.
SECTION 2.21. Terms of Local Currency Facilities. (a) The
Company may in its discretion from time to time elect to borrow, or elect that
one or more Borrowing Subsidiaries may borrow, Local Currency Loans on a
revolving basis from any one or more Local Currency Lenders, with the consent
of each such Local Currency Lender in its sole discretion, by delivering a
Local Currency Addendum to the Administrative Agent and the Local Currency
Lenders (through the Administrative Agent), executed by the Company, each such
Borrowing Subsidiary and each such Local Currency Lender; provided, however,
that on the effective date of such election, and after giving effect thereto,
(i) an Exchange Rate with respect to each Local Currency covered by such Local
Currency Addendum shall be determinable by reference to the Reuters currency
pages (or comparable publicly available screen), (ii) no Default or Event of
Default shall have occurred and be continuing and (iii) the aggregate amount of
all Local Currency Facility Maximum Borrowing Amounts under all Local Currency
Addenda at the time in effect shall not exceed $500,000,000. Each Borrower
and, by agreeing to any Local Currency Addendum, each relevant Local Currency
Lender, acknowledges and agrees that each reference in this Agreement to any
Lender shall, to the extent applicable, be deemed to be a reference to such
Local Currency Lender, subject to the second sentence of the definition of such
term.
(b) Each Local Currency Addendum shall set forth (i) the
maximum amount (expressed in Dollars and without duplication) available to be
borrowed from all Local Currency Lenders under such Local Currency Addendum (as
the same may be reduced from time to time pursuant to Section 2.22(c) or (d), a
"Local Currency Facility Maximum Borrowing Amount") and (ii) with respect to
each Local Currency Lender party to such Local Currency Addendum, the maximum
amount (expressed in Dollars and without duplication) available to be borrowed
from such Local Currency Lender thereunder (as the same may be reduced from
time to time pursuant to Section 2.22(c) or (d), a "Local Currency Lender
Maximum Borrowing Amount"). In no event shall the aggregate of all Local
Currency Lender Maximum Borrowing Amounts in respect of any Local Currency
Lender at any time exceed such Lender's Commitment. Except as provided in
Section 2.21(c), the making of Local Currency Loans by a Local Currency Lender
under a Local Currency Addendum shall under no circumstances reduce the amount
available to be borrowed from such Lender under any other Local Currency
Addendum to which such Lender is a party.
(c) Except as otherwise required by applicable law, in no
event shall the Local Currency Lenders have the right to accelerate the Local
Currency Loans outstanding under any Local Currency Addendum, or to terminate
their commitments (if any) thereunder to make Local Currency Loans prior to the
stated termination date in respect thereof, except that such Local Currency
Lenders shall, in each case, have such rights upon an acceleration of the Loans
and a termination of the Commitments pursuant to Article VI, respectively. No
Local Currency Loan may be made if (i) an Exchange Rate with respect to such
Local Currency cannot be determined, (ii) a Default or an Event of Default
shall have occurred and be continuing or would result therefrom or (iii) after
giving effect thereto, (A) the sum of the aggregate principal amount of the
Dollar Loans (other than Competitive Loans) and Local Currency Loans (Dollar
Equivalent) of any Lender (and the Affiliates of such Lender that are Local
Currency Lenders) then outstanding and the L/C Exposure of such Lender would
exceed such Lender's Commitment, (B) the Dollar Equivalent of the aggregate
principal amount of outstanding Local Currency Loans denominated in a specified
Local Currency would exceed the applicable Local Currency Facility Maximum
Borrowing Amount or (C) the sum of the aggregate Standby Credit
<PAGE> 37
32
Exposures, the aggregate L/C Exposures and the aggregate Competitive Loan
Exposures would exceed the Total Commitment.
(d) The applicable Borrower and the applicable Local Currency
Lenders, or, if so specified in the relevant Local Currency Addendum, an agent
acting on their behalf, shall furnish to the Administrative Agent, promptly
following the making, payment or prepayment of each Local Currency Loan, and at
any other time at the request of the Administrative Agent, a statement setting
forth the outstanding Local Currency Loans made under such Local Currency
Addendum.
(e) The applicable Borrower shall furnish to the
Administrative Agent copies of any amendment, supplement or other modification
to the terms of any Local Currency Addendum promptly after the effectiveness
thereof.
(f) The Company may terminate any Local Currency Addendum, if
there are not any Loans outstanding thereunder, in its sole discretion (or, if
there are Loans outstanding thereunder, with the consent of each Local Currency
Lender party thereto), by written notice to the Administrative Agent, which
notice shall be executed by the Company, each relevant Borrowing Subsidiary
and, if their consent is required, each such Local Currency Lender. Once
notice of such termination is received by the Administrative Agent, such Local
Currency Addendum and the loans and other obligations outstanding thereunder
shall immediately cease to be subject to the terms of this Agreement.
SECTION 2.22. Currency Fluctuations, etc. (a) Not later than
1:00 p.m., New York City time, on each Calculation Date, the Administrative
Agent shall (i) determine the Exchange Rate as of such Calculation Date with
respect to each Local Currency covered by a Local Currency Addendum and (ii)
give notice thereof to the Lenders, the Company and the relevant Borrowing
Subsidiaries. The Exchange Rates so determined shall become effective on the
first Business Day immediately following the relevant Calculation Date (a
"Reset Date") and shall remain effective until the next succeeding Reset Date.
(b) Not later than 5:00 p.m., New York City time, on each
Reset Date and each Borrowing Date, the Administrative Agent shall (i)
determine the Dollar Equivalent of the Local Currency Loans then outstanding
(after giving effect to any Local Currency Loans to be made or repaid on such
date) and (ii) notify the Lenders, the Company and the relevant Borrowing
Subsidiaries of the results of such determination.
(c) If, on any Reset Date or any Borrowing Date (after giving
effect to (i) any Loans to be made or repaid on such date and (ii) any
amendment, supplement or other modification to any Local Currency Addendum
effective on such date of which the Administrative Agent has received notice),
the aggregate outstanding Dollar Standby Extensions of Credit of any Lender
exceeds the Dollar Standby Credit Overage of such Lender (the amount of such
excess being called the "Dollar Standby Credit Excess"), then such Lender's
Local Currency Lender Maximum Borrowing Amount under each Local Currency
Addendum to which such Lender is a party shall be reduced on such date by an
amount equal to the product of such Dollar Standby Credit Excess times a
fraction the numerator of which shall equal the Local Currency Lender Maximum
Borrowing Amount under such Local Currency Addendum and the denominator of
which shall equal the aggregate of the Local Currency Lender Maximum Borrowing
Amounts of such Lender. After giving effect to any such reduction in Local
Currency Lender Maximum Borrowing Amounts, the Local Currency Facility Maximum
Borrowing Amount with respect to each Local Currency Addendum shall in turn be
reduced to an amount equal to the aggregate of the Local Currency Lender
Maximum Borrowing Amounts of all Lenders party to such Local Currency Addendum.
Reductions in Local Currency Facility Maximum Borrowing Amounts and Local
Currency Lender Maximum Borrowing Amounts pursuant to this
<PAGE> 38
33
Section 2.22(c) shall be effective until the amount thereof shall be
recalculated by the Administrative Agent on the next succeeding Reset Date or
Borrowing Date, and shall not be deemed to reduce the stated amount of any
commitment of any Local Currency Lender in respect of any Local Currency
Addendum.
(d) If, on any Reset Date or Borrowing Date (after giving
effect to (i) any Loans to be made or repaid on such date, (ii) any amendment,
supplement or other modification to any Local Currency Addendum effective on
such date of which the Administrative Agent has received notice and (iii) any
reduction in the Local Currency Facility Maximum Borrowing Amounts pursuant to
Section 2.22(c) effective on such date), the sum of (A) the aggregate
outstanding Dollar Standby Extensions of Credit of all the Lenders, (B) the
aggregate L/C Exposures and (C) the aggregate Competitive Loan Exposures exceed
the Dollar Facility Overage (the amount of such excess being called the "Dollar
Facility Excess"), then the Local Currency Facility Maximum Borrowing Amount
under each Local Currency Addendum shall be reduced on such date by an amount
equal to the product of such Dollar Facility Excess times a fraction the
numerator of which shall equal the Local Currency Facility Maximum Borrowing
Amount under such Local Currency Addendum and the denominator of which shall
equal the aggregate of the Local Currency Facility Maximum Borrowing Amounts
with respect to all Local Currency Addenda. Each such reduction in the Local
Currency Facility Maximum Borrowing Amount under a Local Currency Addendum
shall in turn reduce the respective Local Currency Lender Maximum Borrowing
Amounts of each Local Currency Lender party to such Local Currency Addendum,
pro rata on the basis of the respective Local Currency Lender Maximum Borrowing
Amounts of such Local Currency Lenders immediately prior to such reduction.
Reductions in Local Currency Facility Maximum Borrowing Amounts and Local
Currency Lender Maximum Borrowing Amounts pursuant to this Section 2.22(d)
shall be effective until the amount thereof shall be recalculated by the
Administrative Agent on the next succeeding Reset Date or Borrowing Date, and
shall not be deemed to reduce the stated amount of any commitment of any Local
Currency Lender in respect of any Local Currency Addendum.
(e) If, on any Reset Date, the Dollar Equivalent of the Local
Currency Loans outstanding under a Local Currency Addendum exceeds 105% of the
Local Currency Facility Maximum Borrowing Amount with respect thereto (after
giving effect to any reductions therein effected pursuant to Section 2.22(c) or
(d) on such date), then the relevant Borrower shall, within three Business Days
after notice thereof from the Administrative Agent, (i) increase the Local
Currency Facility Maximum Borrowing Amount with respect to such Local Currency
Facility in accordance with Section 2.21(e) and/or (ii) prepay Local Currency
Loans, in either case in an aggregate amount such that, after giving effect
thereto, (x) the Dollar Equivalent of all such Local Currency Loans shall be
equal to or less than such Local Currency Facility Maximum Borrowing Amount and
(y) the Dollar Equivalent of the Local Currency Loans of each relevant Local
Currency Lender shall be equal to or less than such Local Currency Lender's
Local Currency Lender Maximum Borrowing Amount with respect to such Local
Currency Addendum.
(f) If, on any Reset Date, the Standby Credit Exposure of any
Lender exceeds 105% of such Lender's Commitment, then, within three Business
Days after notice thereof from the Administrative Agent, the Company shall
prepay and/or cause the relevant Borrowing Subsidiaries to prepay the Loans in
accordance with this Agreement, in an aggregate amount such that, after giving
effect thereto, the Standby Credit Exposure of such Lender shall be equal to or
less than such Lender's Commitment.
(g) The Administrative Agent shall promptly notify the
relevant Lenders of the amount of any reductions in Local Currency Facility
Maximum Borrowing Amounts or Local Currency Lender Maximum Borrowing Amounts
required pursuant to this Section 2.22.
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SECTION 2.23. Letters of Credit. (a) General. The Borrowers
may request the issuance of Letters of Credit, in a form reasonably acceptable
to the Administrative Agent and the applicable Issuing Bank, appropriately
completed, for the accounts of the Borrowers, at any time and from time to time
while the Commitments remain in effect. All Letters of Credit shall be
denominated in Dollars. This Section shall not be construed to impose an
obligation upon any Issuing Bank to issue any Letter of Credit that is
inconsistent with the terms and conditions of this Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension;
Certain Conditions. In order to request the issuance of a Letter of Credit (or
to amend, renew or extend an existing Letter of Credit), the applicable
Borrower shall hand deliver or telecopy to the applicable Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter
of Credit, or identifying the Letter of Credit to be amended, renewed or
extended, the date of issuance, amendment, renewal or extension, the date on
which such Letter of Credit is to expire (which shall comply with paragraph
2.23(c) below), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare such Letter of Credit. Following receipt of such notice and prior to
the issuance of the requested Letter of Credit or the applicable amendment,
renewal or extension, the Administrative Agent shall notify the Borrowers, each
Lender and the applicable Issuing Bank of the amount of the Aggregate Credit
Exposure after giving effect to (i) the issuance, amendment, renewal or
extension of such Letter of Credit, (ii) the issuance or expiration of any
other Letter of Credit that is to be issued or will expire prior to the
requested date of issuance of such Letter of Credit and (iii) the borrowing or
repayment of any Loans that (based upon notices delivered to the Administrative
Agent by the Borrowers) are to be borrowed or repaid prior to the requested
date of issuance of such Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if, and upon issuance, amendment, renewal or
extension of each Letter of Credit, the Borrowers shall be deemed to represent
and warrant that, (i) after giving effect to such issuance, amendment, renewal
or extension (A) the L/C Exposure shall not exceed $500,000,000 and (B) the
Aggregate Credit Exposure shall not exceed the Total Commitment and (ii) in the
case of a Letter of Credit that will expire later than the first anniversary of
such issuance, amendment, renewal or extension, the applicable Borrower, the
applicable Issuing Bank and the Required Lenders shall have reached agreement
on the fees to be applicable thereto as contemplated by the last sentence of
Section 2.06(c).
(c) Expiration Date. Each Letter of Credit shall expire at
the close of business on the earlier of the date five years after the date of
the issuance of such Letter of Credit and the date that is five Business Days
prior to the Maturity Date, unless such Letter of Credit expires by its terms
on an earlier date; provided that a Letter of Credit shall not be issued (nor
shall a Letter of Credit be amended, renewed or extended) that would result in
the Aggregate Credit Exposure exceeding the Total Commitment. Compliance with
the foregoing proviso shall be determined based upon the assumption that (i)
each Letter of Credit remains outstanding and undrawn in accordance with its
terms until its expiration date (taking into account any rights of renewal or
extension that do not require written notice by or consent of the applicable
Issuing Bank, in its sole discretion, in order to effect such renewal or
extension) and (ii) the Commitments will not be reduced voluntarily pursuant to
Section 2.11(b).
(d) Participations. By the issuance of a Letter of Credit and
without any further action on the part of the applicable Issuing Bank or the
Lenders, the applicable Issuing Bank hereby grants to each Lender, and each
such Lender hereby acquires from the applicable Issuing Bank, a participation
in such Letter of Credit equal to such Lender's Applicable Share from time to
time of the aggregate amount available to be drawn under such Letter of Credit,
effective upon the issuance of such Letter of Credit. In consideration and in
furtherance of the foregoing, each Lender hereby absolutely and unconditionally
agrees to pay to the Administrative Agent, for the account of the applicable
Issuing Bank, such Lender's Applicable Share from time to time of each L/C
Disbursement made by such
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35
Issuing Bank and not reimbursed by the Borrower (or, if applicable, another
party pursuant to its obligations under any other Loan Document) forthwith on
the date due as provided in Section 2.02(e). Each Lender acknowledges and
agrees that its obligation to acquire participations pursuant to this paragraph
in respect of Letters of Credit is absolute and unconditional and shall not be
affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or an Event of Default, and that each such payment
shall be made without any offset, abatement, withholding or reduction
whatsoever.
(e) Reimbursement. If an Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, the applicable Borrower shall
pay to the Administrative Agent such L/C Disbursement not later than two hours
after the Borrower shall have received notice from such Issuing Bank that
payment of such draft will be made, or, if the Borrower shall have received
such notice later than 10:00 a.m., New York City time, on any Business Day, not
later than 10:00 a.m., New York City time, on the immediately following
Business Day.
(f) Obligations Absolute. The Borrowers' obligations to
reimburse L/C Disbursements as provided in paragraph 2.23(e) above shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under any and all circumstances
whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of
Credit or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure
from all or any of the provisions of any Letter of Credit or any Loan
Document;
(iii) the existence of any claim, setoff, defense or other
right that the Borrowers, any other party guaranteeing, or otherwise
obligated with, the Borrowers, any Subsidiary or other Affiliate
thereof or any other person may at any time have against the
beneficiary under any Letter of Credit, any Issuing Bank, the
Administrative Agent or any Lender or any other person, whether in
connection with this Agreement, any other Loan Document or any other
related or unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) payment by the applicable Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not
comply with the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of
any Issuing Bank, the Lenders, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of the
Borrowers' obligations hereunder.
Without limiting the generality of the foregoing, it is
expressly understood and agreed that the absolute and unconditional obligation
of the Borrowers hereunder to reimburse L/C Disbursements will not be excused
by the gross negligence or wilful misconduct of any Issuing Bank. However, the
foregoing shall not be construed to excuse any Issuing Bank from liability to
the
<PAGE> 41
36
Borrowers to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrowers to the
extent permitted by applicable law) suffered by the Borrowers that are caused
by such Issuing Bank's gross negligence or wilful misconduct in determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof; it is understood that each Issuing Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
and, in making any payment under any Letter of Credit (i) an Issuing Bank's
exclusive reliance on the documents presented to it under such Letter of Credit
as to any and all matters set forth therein, including reliance on the amount
of any draft presented under such Letter of Credit, whether or not the amount
due to the beneficiary thereunder equals the amount of such draft and whether
or not any document presented pursuant to such Letter of Credit proves to be
insufficient in any respect, if such document on its face appears to be in
order, and whether or not any other statement or any other document presented
pursuant to such Letter of Credit proves to be forged or invalid or any
statement therein proves to be inaccurate or untrue in any respect whatsoever
and (ii) any noncompliance in any immaterial respect of the documents presented
under such Letter of Credit with the terms thereof shall, in each case, be
deemed not to constitute wilful misconduct or gross negligence of an Issuing
Bank.
(g) Disbursement Procedures. The applicable Issuing Bank
shall, promptly following its receipt thereof, examine all documents purporting
to represent a demand for payment under a Letter of Credit. Such Issuing Bank
shall as promptly as possible give telephonic notification, confirmed by
telecopy, to the Administrative Agent and the applicable Borrower of such
demand for payment and whether such Issuing Bank has made or will make an L/C
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Borrower of its obligation to reimburse the
Issuing Bank and the Lenders with respect to any such L/C Disbursement. The
Administrative Agent shall promptly give each Lender notice thereof.
(h) Interim Interest. If an Issuing Bank shall make any L/C
Disbursement in respect of a Letter of Credit, then, unless the Borrower shall
reimburse such L/C Disbursement in full on such date, the unpaid amount thereof
shall bear interest for the account of such Issuing Bank, for each day from and
including the date of such L/C Disbursement, to but excluding the earlier of
the date of payment or the date on which interest shall commence to accrue
thereon as provided in paragraph 2.02(e) above, at the rate per annum that
would apply to such amount if such amount were an ABR Loan.
(i) Resignation or Removal of an Issuing Bank. An Issuing
Bank may resign at any time by giving 180 days' prior written notice to the
Administrative Agent, the Lenders and the Borrowers, and may be removed at any
time by the Borrowers by notice to the Issuing Bank, the Administrative Agent
and the Lenders. Subject to the next succeeding paragraph, upon the acceptance
of any appointment as an Issuing Bank hereunder by a successor Issuing Bank,
such successor shall succeed to and become vested with all the interests, rights
and obligations of the retiring Issuing Bank and the retiring Issuing Bank shall
be discharged from its obligations to issue additional Letters of Credit
hereunder. At the time such removal or resignation shall become effective, the
Borrowers shall pay all accrued and unpaid fees pursuant to Section 2.06(c)(ii).
The acceptance of any appointment as an Issuing Bank hereunder by a successor
Lender shall be evidenced by an agreement entered into by such successor, in a
form satisfactory to the Borrowers and the Administrative Agent, and, from and
after the effective date of such agreement, (i) such successor Lender shall have
all the rights and obligations of the previous Issuing Bank under this Agreement
and the other Loan Documents and (ii) references herein and in the other Loan
Documents to the term "Issuing Bank" shall be deemed to refer to such successor
or to any previous Issuing Bank, or to such successor and all previous Issuing
Banks, as the context shall require. After the resignation or removal of an
Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto
and shall continue to have all the rights and
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37
obligations of an Issuing Bank under this Agreement and the other Loan Documents
with respect to Letters of Credit issued by it prior to such resignation or
removal, but shall not be required to issue additional Letters of Credit.
(j) Additional Issuing Banks. The Borrowers may, at any time
and from time to time with the consent of the Administrative Agent (which
consent shall not be unreasonably withheld) and such Lender, designate one or
more additional Lenders to act as an issuing bank under the terms of the
Agreement. Any Lender designated as an issuing bank pursuant to this paragraph
2.23(j) shall, upon entering into an Issuing Bank Agreement with the Company,
be deemed to be an "Issuing Bank" (in addition to being a Lender) in respect of
Letters of Credit issued or to be issued by such Lender, and, with respect to
such Letters of Credit, such term shall thereafter apply to the other Issuing
Banks and such Lender.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to each of the Lenders
that:
SECTION 3.01. Organization; Powers. Each Borrower and each
of the Subsidiaries (a) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, (b)
has all requisite power and authority to own its property and assets and to
carry on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in every jurisdiction where such qualification is
required, except where the failure so to qualify would not result in a Material
Adverse Effect, and (d) in the case of each Borrower, has the corporate power
and authority to execute, deliver and perform its obligations under the Loan
Documents and to borrow hereunder and thereunder.
SECTION 3.02. Authorization. The execution, delivery and
performance by the Borrowers of this Agreement, the Issuing Bank Agreements,
the promissory notes, if any, issued pursuant to Section 9.04(i) and each Local
Currency Addendum (and by the Borrowing Subsidiaries of each Borrowing
Subsidiary Agreement), the Borrowings hereunder and the completion of the
Distribution (collectively, the "Transactions") (a) have been duly authorized
by all requisite corporate action and (b) will not (i) violate (A) any
provision of any law, statute, rule or regulation (including the Margin
Regulations) or of the certificate of incorporation or other constitutive
documents or by-laws of the Borrowers, (B) any order of any Governmental
Authority or (C) any provision of any indenture, agreement or other instrument
to which any Borrower is a party or by which it or any of its property is or
may be bound, (ii) be in conflict with, result in a breach of or constitute
(alone or with notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or (iii) result in the creation or
imposition of any lien upon any property or assets of any Borrower.
SECTION 3.03. Enforceability. This Agreement and each Loan
Document to which a Borrower is a party constitutes a legal, valid and binding
obligation of each Borrower enforceable in accordance with its terms.
SECTION 3.04. Governmental Approvals. No action, consent or
approval of, registration or filing with or other action by any Governmental
Authority, other than those which have been taken, given or made, as the case
may be, is or will be required with respect to any Borrower in connection with
the Transactions.
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38
SECTION 3.05. Financial Statements. (a) The Company has
heretofore furnished to the Administrative Agent and the Lenders copies of its
combined balance sheet and statements of income, cash flow and retained
earnings as of and for the year ended December 31, 1994, and the six months
ended June 30, 1995, as included in the Proxy Statement. Such financial
statements present fairly, in all material respects, the consolidated combined
financial condition and the results of operations of the Company and the
Subsidiaries as of such dates and for such periods in accordance with GAAP.
(b) The Company has heretofore furnished to the
Administrative Agent and the Lenders copies of its pro forma combined balance
sheet and statements of income as of June 30, 1995, and for the year and the
six months ended December 31, 1994, and June 30, 1995, respectively, giving
effect to the Distribution and certain related transactions. Such financial
statements present fairly, in all material respects, the consolidated combined
financial condition and the results of operations of the Company and the
Subsidiaries on a pro forma basis as of such dates and for such periods in
accordance with GAAP.
(c) As of the Effective Date, there has been no material
adverse change in the consolidated financial condition of the Company and the
Subsidiaries taken as a whole from the financial condition reported in the
financial statements referenced in paragraph (a) of this Section 3.05.
SECTION 3.06. Litigation; Compliance with Laws. (a) As of
the Effective Date, there are no actions, proceedings or investigations filed
or (to the knowledge of the Borrowers) threatened or affecting any Borrower or
any Subsidiary in any court or before any Governmental Authority or arbitration
board or tribunal which question the validity or legality of this Agreement,
the Transactions or any action taken or to be taken pursuant to this Agreement
and no order or judgment has been issued or entered restraining or enjoining
any Borrower or any Subsidiary from the execution, delivery or performance of
this Agreement nor is there any other action, proceeding or investigation filed
or (to the knowledge of any Borrower or any Subsidiary) threatened against any
Borrower or any Subsidiary in any court or before any Governmental Authority or
arbitration board or tribunal which would be reasonably likely to result in a
Material Adverse Effect or materially restrict the ability of any Borrower to
comply with its obligations under the Loan Documents.
(b) Neither any Borrower nor any Subsidiary is in violation
of any law, rule or regulation (including any law, rule or regulation relating
to the protection of the environment or to employee health or safety), or in
default with respect to any judgment, writ, injunction or decree of any
Governmental Authority, where such violation or default would be reasonably
likely to result in a Material Adverse Effect.
(c) No exchange control law or regulation materially
restricts any Borrower from complying with its obligations in respect of any
Loan or Letter of Credit or otherwise under this Agreement or any Local
Currency Addendum.
SECTION 3.07. Federal Reserve Regulations. (a) Neither any
Borrower nor any Subsidiary that will receive proceeds of the Loans hereunder
is engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, to
purchase or carry Margin Stock or to refund indebtedness originally incurred
for such purpose, or for any other purpose which entails a violation of, or
which is inconsistent with, the provisions of the Margin Regulations.
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SECTION 3.08. Investment Company Act; Public Utility Holding
Company Act. No Borrower is (a) an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940 (the "1940
Act") or (b) a "holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.
SECTION 3.09. Use of Proceeds. All proceeds of the Loans and
Letters of Credit shall be used for the purposes referred to in the recitals to
this Agreement.
SECTION 3.10. Full Disclosure; No Material Misstatements.
None of the representations or warranties made by any Borrower in connection
with this Agreement as of the date such representations and warranties are made
or deemed made, and no report, financial statement or other information
furnished by or on behalf of any Borrower to the Administrative Agent or any
Lender pursuant to or in connection with this Agreement or the credit
facilities established hereby, contains or will contain any material
misstatement of fact or omits or will omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were or will be made, not misleading.
SECTION 3.11. Taxes. Each Borrower and each of the material
Subsidiaries have filed or caused to be filed all Federal, state and local tax
returns which are required to be filed by them, and have paid or caused to be
paid all taxes shown to be due and payable on such returns or on any
assessments received by any of them, other than any taxes or assessments the
validity of which is being contested in good faith by appropriate proceedings,
and with respect to which appropriate accounting reserves have to the extent
required by GAAP been set aside.
SECTION 3.12. Employee Pension Benefit Plans. The present
aggregate value of accumulated benefit obligations of all unfunded and
underfunded pension plans of the Company and its Subsidiaries (based on those
assumptions used for disclosure in corporate financial statements in accordance
with GAAP) did not, as of December 31, 1994, exceed by more than $605,000,000
the value of the assets of all such plans. Of such $605,000,000, $540,000,000
is primarily attributable to employee pension plans in countries where the
funding of such obligations is not required or customary and $65,000,000
relates primarily to domestic pension plans where funding is not permitted
under current tax regulations. In these cases the Company has recorded book
reserves to meet the obligations. Trust assets totalling approximately
$45,000,000 have been established to provide for certain of the foregoing
domestic pension benefits, however, because of restrictions relating to
bankruptcy or insolvency, such funds are not included in the funded amount of
plans for purposes of GAAP.
SECTION 3.13. Distribution. At or prior to the Effective
Date, the Distribution will have been duly completed in accordance with
applicable law and as described in the Proxy Statement, and the assets,
liabilities and capitalization of the Company will have been consistent at the
time of and after giving effect to the Distribution in all material respects
with the forecasted capitalization table of the Company set forth in the Proxy
Statement and the pro forma financial statements referred to in Section
3.05(b), except that in the event the Distribution shall occur prior to
December 31, 1995, the transactions set forth in Schedule 3.13 which are
reflected as having occurred in such capitalization table and such pro forma
financial statements might not yet have occurred.
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ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lenders to make Loans and of the
Issuing Banks to issue Letters of Credit hereunder are subject to the
satisfaction of the following conditions:
SECTION 4.01. All Extensions of Credit. On the date of each
Borrowing and on the date of each issuance of a Letter of Credit:
(a) The Administrative Agent shall have received a notice of
such Borrowing as required by Section 2.03 or Section 2.04, as
applicable, or, in the case of the issuance of a Letter of Credit, the
applicable Issuing Bank shall have been selected to issue such Letter
of Credit as contemplated by Section 2.23.
(b) The representations and warranties set forth in Article
III hereof shall be true and correct in all material respects on and
as of the date of such Borrowing or issuance of a Letter of Credit
with the same effect as though made on and as of such date, except to
the extent such representations and warranties expressly relate to an
earlier date.
(c) At the time of and immediately after such Borrowing or
issuance of a Letter of Credit no Event of Default or Default shall
have occurred and be continuing.
Each Borrowing and issuance of a Letter of Credit shall be deemed to constitute
a representation and warranty by each Borrower on the date of such Borrowing or
issuance of a Letter of Credit as to the matters specified in paragraphs (b)
and (c) of this Section 4.01.
SECTION 4.02. Effective Date. On the Effective Date:
(a) The Administrative Agent shall have received a favorable
written opinion of or Robert Beicke, Esq., dated the Effective Date and
addressed to the Lenders and satisfactory to the Lenders, the Administrative
Agent and Cravath, Swaine & Moore, counsel for the Administrative Agent, to the
effect set forth in Exhibit D hereto.
(b) The Administrative Agent shall have received (i) a copy
of the certificate of incorporation, including all amendments thereto, of the
Company, certified as of a recent date by the Secretary of State of its state
of incorporation, and a certificate as to the good standing of the Company as
of a recent date from such Secretary of State; (ii) a certificate of the
Secretary or an Assistant Secretary of the Company dated the Effective Date and
certifying (A) that attached thereto is a true and complete copy of the by-laws
of the Company as in effect on the Effective Date and at all times since a date
prior to the date of the resolutions described in clause (B) below, (B) that
attached thereto is a true and complete copy of resolutions duly adopted by the
Board of Directors of the Company authorizing the execution, delivery and
performance of this Agreement and the Borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (C) that the certificate of incorporation referred to in clause (i)
above has not been amended since the date of the last amendment thereto shown
on the certificate of good standing furnished pursuant to such clause (i) and
(D) as to the incumbency and specimen signature of each officer executing this
Agreement or any other document delivered in connection herewith on behalf of
the Company; and (iii) a certificate of another officer of the Company as to
the incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above.
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(c) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by a Financial Officer of the
Company, confirming compliance with the conditions precedent set forth in
paragraphs (b) and (c) of Section 4.01.
(d) The principal of and accrued and unpaid interest on any
loans outstanding under the Existing Credit Facilities shall have been paid in
full, all other amounts due in respect of the Existing Credit Facilities shall
have been paid in full and the commitments to lend under the Existing Credit
Facilities shall have been permanently terminated.
(e) The Administrative Agent shall have received any Fees or
other amounts due and payable on or prior to the Effective Date.
SECTION 4.03. First Borrowing by Each Borrowing Subsidiary.
On or prior to the first date on which Loans are made to or Letters of Credit
are issued for the benefit of any Borrowing Subsidiary:
(a) The Lenders and any Issuing Banks shall have received the
favorable written opinion of counsel satisfactory to the
Administrative Agent, addressed to the Lenders and satisfactory to the
Lenders, the Administrative Agent and Cravath, Swaine & Moore, counsel
for the Administrative Agent, to the effect set forth in Exhibit D
hereto.
(b) Each Lender and any Issuing Banks shall have received a
copy of the Borrowing Subsidiary Agreement executed by such Borrowing
Subsidiary.
ARTICLE V
COVENANTS
A. Affirmative Covenants. Each Borrower covenants and agrees
with each Lender and the Administrative Agent that so long as this Agreement
shall remain in effect or the principal of or interest on any Loan, any Fees or
any other amounts payable hereunder shall be unpaid or any Letters of Credit
have not been canceled or have not expired or any amounts drawn thereunder have
not been reimbursed in full, unless the Required Lenders shall otherwise
consent in writing, it will, and will cause each of the Subsidiaries to:
SECTION 5.01. Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect its corporate
existence, rights and franchises, except as expressly permitted under Section
5.09; provided, however, that nothing in this Section shall prevent the
abandonment or termination of the existence, rights or franchises of any
Subsidiary or any rights or franchises of any Borrower if such abandonment or
termination is in the best interests of the Borrowers and is not
disadvantageous in any material respect to the Lenders.
SECTION 5.02. Business and Properties. Comply in all
material respects with all applicable laws, rules, regulations and orders of
any Governmental Authority (including any of the foregoing relating to the
protection of the environment or to employee health and safety), whether now in
effect or hereafter enacted; and at all times maintain and preserve all
property material to the conduct of its business and keep such property in good
repair, working order and condition and from time to time make, or cause to be
made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in
connection therewith may be properly conducted at all times.
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SECTION 5.03. Financial Statements, Reports, Etc. In the case
of the Company, furnish to the Administrative Agent for distribution to each
Lender:
(a) within 120 days after the end of each fiscal year, its
consolidated balance sheet and the related consolidated statements of
income and cash flows showing its consolidated financial condition as
of the close of such fiscal year and the consolidated results of its
operations during such year, all audited by Arthur Andersen LLP or
other independent certified public accountants of recognized national
standing selected by the Company and accompanied by an opinion of such
accountants to the effect that such consolidated financial statements
fairly present its financial condition and results of operations on a
consolidated basis in accordance with GAAP (it being agreed that the
requirements of this paragraph may be satisfied by the delivery
pursuant to paragraph (d) below of an annual report on Form 10-K
containing the foregoing);
(b) within 90 days after the end of each of the first three
fiscal quarters of each fiscal year, its consolidated balance sheet
and related consolidated statements of income, cash flow and
stockholders' equity, showing its consolidated financial condition as
of the close of such fiscal quarter and the consolidated results of
its operations during such fiscal quarter and the then elapsed portion
of the fiscal year, all certified by one of its Financial Officers as
fairly presenting its financial condition and results of operations on
a consolidated basis in accordance with GAAP, subject to normal
year-end audit adjustments (it being agreed that the requirements of
this paragraph may be satisfied by the delivery pursuant to paragraph
(d) below of a quarterly report on Form 10-Q containing the
foregoing);
(c) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, a certificate of a Financial Officer
certifying that, to the best of such Financial Officer's knowledge, no
Event of Default or Default has occurred or, if such an Event of
Default or Default has occurred, specifying the nature and extent
thereof and any corrective action taken or proposed to be taken with
respect thereto;
(d) promptly after the same become publicly available, copies
of all reports on forms 10-K, 10-Q and 8-K filed by it with the SEC,
or any Governmental Authority succeeding to any of or all the
functions of the SEC, or, in the case of the Company, copies of all
reports distributed to its shareholders, as the case may be;
(e) promptly, from time to time, such other information as
any Lender shall reasonably request through the Administrative Agent;
and
(f) concurrently with any delivery of financial statements
under paragraph (a) or (b) above, calculations of the financial test
referred to in Section 5.12.
SECTION 5.04. Insurance. Keep its insurable properties
adequately insured at all times by financially sound and reputable insurers,
and maintain such other insurance, to such extent and against such risks,
including fire and other risks insured against by extended coverage, as is
customary with companies similarly situated and in the same or similar
businesses (it being understood that the Borrowers and their Subsidiaries may
self-insure to the extent customary with companies similarly situated and in
the same or similar businesses).
SECTION 5.05. Obligations and Taxes. Pay and discharge
promptly when due all taxes, assessments and governmental charges imposed upon
it or upon its income or profits or in respect of its property, as well as all
other material liabilities, in each case before the same shall
<PAGE> 48
43
become delinquent or in default and before penalties accrue thereon, unless and
to the extent that the same are being contested in good faith by appropriate
proceedings and adequate reserves with respect thereto shall, to the extent
required by GAAP, have been set aside.
SECTION 5.06. Litigation and Other Notices. Give the
Administrative Agent prompt written notice of the following (which the
Administrative Agent shall promptly provide to the Lenders):
(a) the filing or commencement of, or any written threat or
written notice of intention of any person to file or commence, any
action, suit or proceeding which could reasonably be expected to
result in a Material Adverse Effect;
(b) any Event of Default or Default, specifying the nature
and extent thereof and the action (if any) which is proposed to be
taken with respect thereto; and
(c) any change in any of the Ratings.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Maintain financial records in accordance with GAAP and, upon
reasonable notice, at all reasonable times, permit any authorized
representative designated by the Administrative Agent to visit and inspect the
properties of the Company and of any material Subsidiary and to discuss the
affairs, finances and condition of the Company and any material Subsidiary with
a Financial Officer of the Company and such other officers as the Company shall
deem appropriate.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans
only for the purposes set forth in the recitals to this Agreement.
B. Negative Covenants. Each Borrower covenants and agrees
with each Lender and the Administrative Agent that so long as this Agreement
shall remain in effect or the principal of or interest on any Loan, any Fees or
any other amounts payable hereunder shall be unpaid or any Letters of Credit
have not been canceled or have not expired or any amounts drawn thereunder have
not been reimbursed in full, unless the Required Lenders shall otherwise
consent in writing, it will not, and will not cause or permit any of the
Subsidiaries to:
SECTION 5.09. Consolidations, Mergers, and Sales of Assets.
Consolidate or merge with or into any other person or sell, lease or transfer
all or substantially all of its property and assets, or agree to do any of the
foregoing, unless (a) no Default or Event of Default has occurred and is
continuing or would have occurred immediately after giving effect thereto, and
(b) in the case of a consolidation or merger or transfer of assets involving
the Company and in which the Company is not the surviving corporation or sells,
leases or transfers all or substantially all of its property and assets, the
surviving corporation or person purchasing, leasing or receiving such property
and assets is organized in the United States of America or a state thereof and
agrees to be bound by the terms and provisions applicable to the Company
hereunder.
SECTION 5.10. Limitations on Liens. In the case of the
Company, create, suffer to be created, or assume (directly or indirectly) any
mortgage, pledge or other lien upon any Principal Property, or permit any
Restricted Subsidiary to create, suffer to be created, or assume (directly or
indirectly) any mortgage, pledge or other lien upon any Principal Property;
provided, however, that this covenant shall not apply to any of the following:
<PAGE> 49
44
(a) any mortgage, pledge or other lien on any Principal
Property hereafter acquired, constructed or improved by the Company or
any Restricted Subsidiary which is created or assumed to secure or
provide for the payment of any part of the purchase price of such
property or the cost of such construction or improvement, or any
mortgage, pledge or other lien on any Principal Property existing at
the time of acquisition thereof, provided, however, that the mortgage,
pledge or other lien shall not extend to any Principal Property
theretofore owned by the Company or any Restricted Subsidiary;
(b) any mortgage, pledge or other lien on any Principal
Property existing on the date of this Agreement as described in
Schedule 5.10;
(c) any mortgage, pledge or other lien existing upon any
property of a company which is merged with or into or is consolidated
into, or substantially all the assets or shares of capital stock of
which are acquired by, the Company or a Restricted Subsidiary, at the
time of such merger, consolidation or acquisition, provided that such
mortgage, pledge or other lien does not extend to any other Principal
Property, other than improvements to the property subject to such
mortgage, pledge or other lien;
(d) any pledge or deposit to secure payment of workers'
compensation or insurance premiums, or in connection with tenders,
bids, contracts (other than contracts for the payment of money) or
leases;
(e) any pledge of, or other lien upon, any assets as security
for the payment of any tax, assessment or other similar charge by any
Governmental Authority or public body, or as security required by law
or governmental regulation as a condition to the transaction of any
business or the exercise of any privilege or right;
(f) any pledge or lien necessary to secure a stay of any legal
or equitable process in a proceeding to enforce a liability or
obligation contested in good faith by the Company or a Restricted
Subsidiary or required in connection with the institution by the
Company or a Restricted Subsidiary of any legal or equitable
proceeding to enforce a right or to obtain a remedy claimed in good
faith by the Company or a Restricted Subsidiary, or required in
connection with any order or decree in any such proceeding or in
connection with any contest of any tax or other governmental charge;
or the making of any deposit with or the giving of any form of
security to any governmental agency or any body created or approved by
law or governmental regulation in order to entitle the Company or a
Restricted Subsidiary to maintain self-insurance or to participate in
any fund in connection with workers' compensation, unemployment
insurance, old age pensions or other social security or to share in
any provisions or other benefits provided for companies participating
in any such arrangement or for liability on insurance of credits or
other risks;
(g) any mechanics', carriers', workmen's, repairmen's, or
other like liens, if arising in the ordinary course of business, in
respect of obligations which are not overdue or liability for which is
being contested in good faith by appropriate proceedings;
(h) any lien or encumbrance on property in favor of the United
States of America, or of any agency, department or other
instrumentality thereof, to secure partial, progress or advance
payments pursuant to the provisions of any contract;
(i) any mortgage, pledge or other lien securing any
indebtedness incurred in any manner to finance or recover the cost to
the Company or any Restricted Subsidiary of any
<PAGE> 50
45
physical property, real or personal, which prior to or simultaneously
with the creation of such indebtedness shall have been leased by the
Company or a Restricted Subsidiary to the United States of America or
a department or agency thereof at an aggregate rental, payable during
that portion of the initial term of such lease (without giving effect
to any options of renewal or extension) which shall be unexpired at
the date of the creation of such indebtedness, sufficient (taken
together with any amounts required to be paid by the lessee to the
lessor upon any termination of such lease) to pay in full at the
stated maturity date or dates thereof the principal of and the
interest on such indebtedness;
(j) any mortgage, pledge or other lien securing indebtedness
of a Restricted Subsidiary to the Company or a Restricted Subsidiary,
provided that in the case of any sale or other disposition of such
indebtedness by the Company or such Restricted Subsidiary, such sale
or other disposition shall be deemed to constitute the creation of
another mortgage, pledge or other lien not permitted by this clause
(j);
(k) any mortgage, pledge or other lien affecting property of
the Company or any Restricted Subsidiary securing indebtedness of the
United States of America or a State thereof (or any instrumentality or
agency of either thereof) issued in connection with a pollution
control or abatement program required in the opinion of the Company to
meet environmental criteria with respect to manufacturing or
processing operations of the Company or any Restricted Subsidiary and
the proceeds of which indebtedness have financed the cost of
acquisition of such program;
(l) the renewal, extension, replacement or refunding of any
mortgage, pledge, lien, deposit, charge or other encumbrance permitted
by the foregoing provisions of this covenant upon the same property
theretofore subject thereto, or the renewal, extension, replacement or
refunding of the amount secured thereby, provided that in each case
such amount outstanding at that time shall not be increased; or
(m) any other mortgage, pledge or other lien, provided that
immediately after the creation or assumption of such mortgage, pledge
or other lien, the total of (x) the aggregate principal amount of
indebtedness of the Company and all Restricted Subsidiaries secured by
all mortgages, pledges and other liens created or assumed under the
provisions of this clause (m), plus (y) the aggregate amount of
Capitalized Lease-Back Obligations of the Company and Restricted
Subsidiaries under the entire unexpired terms of all leases entered
into in connection with sale and lease-back transactions which would
have been precluded by the provisions of Section 5.11 but for the
satisfaction of the condition set forth in clause (b) thereof, shall
not exceed an amount equal to 5% of Consolidated Net Tangible Assets.
The lease of any property by the Company or a Restricted Subsidiary and rental
obligations with respect thereto (whether or not arising out of a sale and
lease-back of properties and whether or not in accordance with GAAP such
property is carried as an asset and such rental obligations are carried as
indebtedness on the Company's or a Restricted Subsidiary's balance sheet) shall
not in any event be deemed to be the creation of a mortgage, pledge or other
lien.
SECTION 5.11. Limitations on Sale and Leaseback Transactions.
In the case of the Company or any Restricted Subsidiary, enter into any
arrangement with any person providing for the leasing by the Company or any
Restricted Subsidiary of any Principal Property (except for temporary leases
for a term of not more than three years and except for leases between the
Company and a Restricted Subsidiary or between Restricted Subsidiaries), which
property has been or is to be sold or transferred by the Company or such
Restricted Subsidiary to such person more than 120 days after the
<PAGE> 51
46
acquisition thereof or the completion of construction and commencement of full
operation thereof, unless either (a) the Company shall apply an amount equal to
the greater of the Fair Value of such property or the net proceeds of such
sale, within 120 days of the effective date of any such arrangement, to the
retirement (other than any mandatory retirement or by way of payment at
maturity) of Indebtedness or to the acquisition, construction, development or
improvement of properties, facilities or equipment used for operating purposes
which are, or upon such acquisition, construction, development or improvement
will be, a Principal Property or a part thereof; or (b) at the time of entering
into such arrangement, such Principal Property could have been subjected to a
mortgage, pledge or other lien securing indebtedness of the Company or a
Restricted Subsidiary in a principal amount equal to the Capitalized Lease-Back
Obligations with respect to such Principal Property under paragraph (m) of
Section 5.10.
SECTION 5.12. Consolidated EBITDA to Consolidated Interest
Expense. Permit the ratio of (a) Consolidated EBITDA to (b) Consolidated
Interest Expense for any period of four fiscal quarters to be less than 3.75 to
1.0.
ARTICLE VI
EVENTS OF DEFAULT
In case of the happening of any of the following events (each
an "Event of Default"):
(a) any representation or warranty made or deemed made in or
in connection with the execution and delivery of this Agreement or any
Local Currency Addenda or the Borrowings or issuances of Letters of
Credit hereunder shall prove to have been false or misleading in any
material respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of
any Loan or the reimbursement with respect to any L/C Disbursement
when and as the same shall become due and payable, whether at the due
date thereof or at a date fixed for prepayment thereof or by
acceleration thereof or otherwise;
(c) default shall be made in the payment of any interest on
any Loan or L/C Disbursement or any Fee or any other amount (other
than an amount referred to in paragraph (b) above) due hereunder, when
and as the same shall become due and payable, and such default shall
continue unremedied for a period of ten days;
(d) default shall be made in the due observance or performance
of any covenant, condition or agreement contained in Section 5.01,
5.09, 5.10, 5.11 or 5.12 or in any Local Currency Addendum and, in the
case of any default under Section 5.10, such default shall continue
for 30 days;
(e) default shall be made in the due observance or performance
of any covenant, condition or agreement contained herein or in any
other Loan Document (other than those specified in clauses (b), (c) or
(d) above) and such default shall continue unremedied for a period of
30 days after notice thereof from the Administrative Agent or any
Lender to the Company;
(f) the Company or any Subsidiary shall (i) fail to pay any
principal or interest, regardless of amount, due in respect of any
Indebtedness in a principal amount in excess of $20,000,000, beyond
the period of grace, if any, provided in the agreement or instrument
<PAGE> 52
47
under which such Indebtedness was created, or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in
any agreement or instrument evidencing or governing any such
Indebtedness, or any other event shall occur or condition shall exist,
beyond the period of grace, if any, provided in such agreement or
instrument, if the effect of any failure referred to in this clause
(ii) is to cause, or to permit the holder or holders of such
Indebtedness or a trustee on its or their behalf (with or without the
giving of notice) to cause, such Indebtedness to become due prior to
its stated maturity;
(g) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent
jurisdiction seeking (i) relief in respect of the Company, or of a
substantial part of the property or assets of the Company or any
Subsidiary with assets having gross book value in excess of
$25,000,000, under Title 11 of the United States Code, as now
constituted or hereafter amended, or any other Federal or state
bankruptcy, insolvency, receivership or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or for a substantial
part of the property or assets of the Company or any Subsidiary with
assets having gross book value in excess of $25,000,000 or (iii) the
winding up or liquidation of the Company; and such proceeding or
petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;
(h) the Company or any Subsidiary with assets having a gross
book value in excess of $25,000,000 shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any
other Federal or state bankruptcy, insolvency, receivership or similar
law, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or the filing of any
petition described in (g) above, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or for a substantial
part of the property or assets of the Company, (iv) file an answer
admitting the material allegations of a petition filed against it in
any such proceeding, (v) make a general assignment for the benefit of
creditors, (vi) become unable, admit in writing its inability or fail
generally to pay its debts as they become due or (vii) take any action
for the purpose of effecting any of the foregoing;
(i) one or more final judgments shall be entered by any court
against the Company or any of the Subsidiaries for the payment of
money in an aggregate amount in excess of $100,000,000 and such
judgment or judgments shall not have been paid, covered by insurance,
discharged or stayed for a period of 60 days, or a warrant of
attachment or execution or similar process shall have been issued or
levied against property of the Company or any of the Subsidiaries to
enforce any such judgment or judgments;
(j) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other such ERISA
Events, could reasonably be expected to result in a Material Adverse
Effect; or
(k) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Company
or any Subsidiary with assets having gross book value in excess of $25,000,000
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, at the request of the
Required Lenders, shall, by notice to the Company, take any or all of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments, (ii) declare the Loans then
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48
outstanding to be forthwith due and payable in whole or in part, whereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrowers accrued hereunder, without presentment, demand, protest or any other
notice of any kind, all of which are hereby expressly waived anything contained
herein to the contrary notwithstanding, (iii) require the Borrowers to deposit
with the Administrative Agent cash collateral in an amount equal to the
aggregate L/C Exposures to secure the Borrowers' reimbursement obligations
under Section 2.23; and, in the case of any event with respect to the Company
or any Subsidiary having a gross book value in excess of $25,000,000 described
in paragraph (g) or (h) above, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and any unpaid accrued Fees and all other liabilities of the Borrowers
accrued hereunder shall automatically become due and payable, without
presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived anything contained herein to the contrary
notwithstanding, and the Borrowers shall deposit with the Administrative Agent
cash collateral in an amount equal to the aggregate L/C Exposure to secure the
Borrowers' reimbursement obligations under Section 2.23.
ARTICLE VII
GUARANTEE
The Company unconditionally and irrevocably guarantees the due
and punctual payment and performance, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, of the
Guaranteed Obligations. The Company further agrees that the Guaranteed
Obligations may be extended or renewed, in whole or in part, without notice or
further assent from it and that it will remain bound upon its guarantee
notwithstanding any extension or renewal of any Guaranteed Obligations.
The Company waives presentment to, demand of payment from and
protest to the Borrowing Subsidiaries of any of the Guaranteed Obligations, and
also waives notice of acceptance of its guarantee and notice of protest for
nonpayment. The obligations of the Company hereunder shall not be affected by
(a) the failure of any Lender to assert any claim or demand or to enforce any
right or remedy against the Borrowing Subsidiaries under the provisions of this
Agreement or otherwise; (b) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Agreement, any guarantee or any other
agreement; or (c) the failure of any Lender to exercise any right or remedy
against any other guarantor of the Guaranteed Obligations.
The Company further agrees that its guarantee constitutes a
guarantee of payment when due and not of collection, and waives any right to
require that any resort be had by the Administrative Agent or any Lender to any
security, if any, held for payment of the Guaranteed Obligations or to any
balance of any deposit account or credit on its books, in favor of the
Borrowing Subsidiaries or any other person.
The obligations of the Company hereunder shall not be subject
to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of the Company hereunder shall
not be discharged or impaired or otherwise affected by the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce
any remedy under this Agreement, any guarantee or any other agreement, by any
waiver or modification of any provision
<PAGE> 54
49
thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Guaranteed Obligations, or by any other act or omission
which may or might in any manner or to any extent vary the risk of the Company
or otherwise operate as a discharge of the Company as a matter of law or
equity.
To the extent permitted by applicable law, the Company waives
any defense based on or arising out of any defense available to the Borrowing
Subsidiaries, including any defense based on or arising out of any disability
of the Borrowing Subsidiaries, or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrowing Subsidiaries, other than final payment in
full of the Guaranteed Obligations. The Administrative Agent and the Lenders
may, at their election, foreclose on any security held by one or more of them
by one or more judicial or non-judicial sales, or exercise any other right or
remedy available to them against the Borrowing Subsidiaries, or any security
without affecting or impairing in any way the liability of the Company
hereunder except to the extent the Guaranteed Obligations have been fully and
finally paid. The Company waives any defense arising out of any such election
even though such election operates to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of the Company against
the Borrowing Subsidiaries or any security.
The Company further agrees that its guarantee shall continue
to be effective or be reinstated, as the case may be, if at any time payment,
or any part thereof, of principal of or interest on any Guaranteed Obligation
is rescinded or must otherwise be restored by any Lender upon the bankruptcy or
reorganization of any Borrowing Subsidiary or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which the Administrative Agent or any Lender may have at law or in
equity against the Company by virtue hereof, upon the failure of any Borrowing
Subsidiary to pay any Guaranteed Obligation when and as the same shall become
due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, the Company hereby promises to and will, upon receipt of written
demand by the Administrative Agent or any Lender, forthwith pay or cause to be
paid to the Administrative Agent or such Lender in cash the amount of such
unpaid Guaranteed Obligation.
The Company hereby irrevocably waives and releases any and all
rights of subrogation, indemnification, reimbursement and similar rights which
it may have against or in respect of the Borrowing Subsidiaries at any time
relating to the Guaranteed Obligations, including all rights that would result
in its being deemed a "creditor" of the Borrowing Subsidiaries under the United
States Code as now in effect or hereafter amended, or any comparable provision
of any successor statute.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated by this
Agreement, Chemical Bank is hereby appointed to act as Administrative Agent on
behalf of the Lenders and the Issuing Banks. Each of the Lenders and the
Issuing Banks hereby irrevocably authorizes the Administrative Agent to take
such actions on behalf of such Lender or Issuing Bank and to exercise such
powers as are specifically delegated to the Administrative Agent by the terms
and provisions hereof, together with such actions and powers as are reasonably
incidental thereto. The Administrative Agent is hereby expressly authorized by
the Lenders and the Issuing Banks, without hereby limiting any implied
authority, (a) to receive on behalf of the Lenders and the Issuing Banks all
payments of principal of and
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50
interest on the Loans and all other amounts due to the Lenders and the Issuing
Banks hereunder, and promptly to distribute to each Lender or Issuing Bank its
proper share of each payment so received; (b) to give notice on behalf of each
of the Lenders to the Borrowers of any Event of Default of which the
Administrative Agent has actual knowledge acquired in connection with its
agency hereunder; and (c) to distribute to each Lender copies of all notices,
financial statements and other materials delivered by the Borrowers pursuant to
this Agreement as received by the Administrative Agent.
Neither the Administrative Agent nor any of its directors,
officers, employees or agents shall be liable as such for any action taken or
omitted by any of them except for its or his or her own gross negligence or
willful misconduct, or be responsible for any statement, warranty or
representation herein or the contents of any document delivered in connection
herewith, or be required to ascertain or to make any inquiry concerning the
performance or observance by the Borrowers of any of the terms, conditions,
covenants or agreements contained in this Agreement. The Administrative Agent
shall not be responsible to the Lenders for the due execution, genuineness,
validity, enforceability or effectiveness of this Agreement or other
instruments or agreements. The Administrative Agent may deem and treat the
Lender which makes any Loan as the holder of the indebtedness resulting
therefrom for all purposes hereof until it shall have received notice from such
Lender, given as provided herein, of the transfer thereof. The Administrative
Agent shall in all cases be fully protected in acting, or refraining from
acting, in accordance with written instructions signed by the Required Lenders
and, except as otherwise specifically provided herein, such instructions and
any action or inaction pursuant thereto shall be binding on all the Lenders.
The Administrative Agent shall, in the absence of knowledge to the contrary, be
entitled to rely on any instrument or document believed by it in good faith to
be genuine and correct and to have been signed or sent by the proper person or
persons. Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall have any responsibility to the Borrowers on account
of the failure of or delay in performance or breach by any Lender or Issuing
Bank of any of its obligations hereunder or to any Lender or Issuing Bank on
account of the failure of or delay in performance or breach by any other Lender
or Issuing Bank or the Borrowers of any of their respective obligations
hereunder or in connection herewith. The Administrative Agent may execute any
and all duties hereunder by or through agents or employees and shall be
entitled to rely upon the advice of legal counsel selected by it with respect
to all matters arising hereunder and shall not be liable for any action taken
or suffered in good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that the Administrative Agent
shall be under no duty to take any discretionary action permitted to be taken
by it pursuant to the provisions of this Agreement unless it shall be requested
in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor
Administrative Agent as provided below, the Administrative Agent may resign at
any time by notifying the Lenders and the Company. Upon any such resignation,
the Required Lenders shall have the right to appoint a successor Administrative
Agent acceptable to the Company. If no successor shall have been so appointed
by the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation, then
the retiring Administrative Agent may, on behalf of the Lenders, appoint a
successor Administrative Agent which shall be a bank with an office in New
York, New York, having a combined capital and surplus of at least $500,000,000
or an Affiliate of any such bank. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Administrative Agent and the retiring Administrative Agent
shall be discharged from its duties and obligations hereunder. After the
Administrative Agent's resignation hereunder, the provisions of this Article
and Section 9.05 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as
Administrative Agent.
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With respect to the Loans made by it hereunder, the
Administrative Agent in its individual capacity and not as Administrative Agent
shall have the same rights and powers as any other Lender and may exercise the
same as though it were not the Administrative Agent, and the Administrative
Agent and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrowers or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent.
Each Lender agrees (i) to reimburse the Administrative Agent,
on demand, in the amount of its pro rata share (based on its Commitment
hereunder or, if the Commitments shall have been terminated, the amount of its
outstanding Loans and L/C Exposure) of any expenses incurred for the benefit of
the Lenders by the Administrative Agent, including counsel fees and compensation
of agents and employees paid for services rendered on behalf of the Lenders,
which shall not have been reimbursed by the Borrowers and (ii) to indemnify and
hold harmless the Administrative Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata share, from and
against any and all liabilities, taxes, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by or asserted against it in
its capacity as the Administrative Agent in any way relating to or arising out
of this Agreement or any action taken or omitted by it under this Agreement to
the extent the same shall not have been reimbursed by the Borrowers; provided
that no Lender shall be liable to the Administrative Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
wilful misconduct of the Administrative Agent or any of its directors, officers,
employees or agents. Each Lender agrees that any allocation made in good faith
by the Administrative Agent of expenses or other amounts referred to in this
paragraph between this Agreement and the Facility A Credit Agreement shall be
conclusive and binding for all purposes.
Each Lender acknowledges that it has, independently and
without reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement
or any related agreement or any document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications
provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed or sent by telecopy, as follows:
(a) if to any Borrower, to ITT Industries, Inc., Red Oak
Corporate Park, 4 West Red Oak Lane, Harrison, New York 10604,
Attention of Treasurer (Telecopy No. 914-696-2950);
(b) if to the Administrative Agent, to Chemical Bank Agency
Services Corp., 140 East 45th Street, 29th Floor, New York, New York
10017, Attention of Mr. Chris Moriarty, (Telecopy No. 212-622-0002),
with a copy to Chemical Bank at 270 Park Avenue, New York, New York
10017, Re: ITT Industries, Inc.; and
<PAGE> 57
52
(c) if to a Lender, to it at its address (or telecopy number)
set forth in Schedule 2.01 or in the Assignment and Acceptance
pursuant to which such Lender became a party hereto.
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt if delivered by hand or overnight courier service or sent by
telecopy to such party as provided in this Section or in accordance with the
latest unrevoked direction from such party given in accordance with this
Section.
SECTION 9.02. Survival of Agreement. All covenants,
agreements, representations and warranties made by the Borrowers herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement shall be considered to have been relied upon by
the Lenders and the Issuing Banks and shall survive the making by the Lenders
of the Loans and issuance of Letters of Credit regardless of any investigation
made by the Lenders or the Issuing Banks or on their behalf, and shall continue
in full force and effect as long as the principal of or any accrued interest on
any Loan or any Fee or any other amount payable under this Agreement is
outstanding and unpaid, any Letter of Credit is outstanding or the Commitments
have not been terminated. The provisions of Sections 2.13, 2.15, 2.19 and 9.05
shall remain operative and in full force and effect regardless of the
expiration of the term of this Agreement, the consummation of the transactions
contemplated hereby, the repayment of any of the Loans, the expiration of any
Letter of Credit, the expiration of the Commitments, the invalidity or
unenforceability of any term or provision of this Agreement, or any
investigation made by or on behalf of the Administrative Agent or any Lender.
SECTION 9.03. Binding Effect. This Agreement shall become
effective on the Effective Date and when it shall have been executed by the
Company and the Administrative Agent and when the Administrative Agent shall
have received copies hereof (telecopied or otherwise) which, when taken
together, bear the signature of each Lender, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Borrowers shall not have the right to
assign any rights hereunder or any interest herein without the prior consent of
all the Lenders.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants,
promises and agreements by or on behalf of any party that are contained in this
Agreement shall bind and inure to the benefit of its successors and assigns.
(b) Each Lender may assign to one or more assignees all or a
portion of its interests, rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing
to it); provided, however, that (i) except in the case of an assignment to a
Lender or an Affiliate of a Lender, the Company must give its prior written
consent to such assignment (which consent, if required, shall not be
unreasonably withheld in the event an Event of Default has occurred and is
continuing), (ii) the parties to each such assignment shall execute and deliver
to the Administrative Agent an Assignment and Acceptance, and a processing and
recordation fee of $3,000 (provided that, in the case of simultaneous
assignment of interests under this Agreement and the Facility A Credit
Agreement, the aggregate fee shall be $3,000), (iii) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire, and (iv) the amount of the Commitment of the assigning Lender
subject to each such assignment (determined as of the date the Assignment and
Acceptance with respect to such assignment is delivered to the Administrative
Agent) shall not be less than $5,000,000 and the amount of the Commitment of
such Lender remaining after such assignment shall not be less than $5,000,000
or shall be zero. Upon acceptance and recording pursuant to paragraph (e) of
this Section, from and after the effective date specified in each Assignment
and Acceptance, which effective date shall be at least five Business Days after
the
<PAGE> 58
53
execution thereof, (A) the assignee thereunder shall be a party hereto and, to
the extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (B) the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto (but shall continue to
be entitled to the benefits of Sections 2.13, 2.15, 2.19 and 9.05, as well as
to any Fees accrued for its account hereunder and not yet paid)).
Notwithstanding the foregoing, any Lender assigning its rights and obligations
under this Agreement may retain any Competitive Loans made by it outstanding at
such time, and in such case shall retain its rights hereunder in respect of any
Loans so retained until such Loans have been repaid in full in accordance with
this Agreement.
(c) By executing and delivering an Assignment and Acceptance,
the assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim, (ii)
except as set forth in (i) above, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement, or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto or the financial condition of the Borrowers or the performance or
observance by the Borrowers of any obligations under this Agreement or any
other instrument or document furnished pursuant hereto; (iii) such assignee
represents and warrants that it is legally authorized to enter into such
Assignment and Acceptance; (iv) such assignee confirms that it has received a
copy of this Agreement, together with copies of the most recent financial
statements delivered pursuant to Section 5.03 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee will
independently and without reliance upon the Administrative Agent, such
assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent to take such action
as agent on its behalf and to exercise such powers under this Agreement as are
delegated to the Administrative Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (vii) such assignee agrees
that it will perform in accordance with their terms all the obligations which
by the terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at one of its
offices in The City of New York a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and the principal amount of the Loans
owing to, each Lender pursuant to the terms hereof from time to time (the
"Register"). The entries in the Register shall be conclusive in the absence of
manifest error and the Borrowers, the Administrative Agent, the Issuing Banks
and the Lenders may treat each person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection by each party
hereto, at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee together with an
Administrative Questionnaire completed in respect of the assignee (unless the
assignee shall already be a Lender hereunder), the processing and recordation
fee referred to in paragraph (b) above and the written consent of the Company
to such assignment, the
<PAGE> 59
54
Administrative Agent shall (i) accept such Assignment and Acceptance and (ii)
record the information contained therein in the Register.
(f) Each Lender may sell participations to one or more banks
or other entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided, however, that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations, (iii) each
participating bank or other entity shall be entitled to the benefit of the cost
protection provisions contained in Sections 2.13, 2.15 and 2.19 to the same
extent as if it were the selling Lender (and limited to the amount that could
have been claimed by the selling Lender had it continued to hold the interest
of such participating bank or other entity), except that all claims made
pursuant to such Sections shall be made through such selling Lender, and (iv)
the Borrowers, the Administrative Agent, the Issuing Banks and the other
Lenders shall continue to deal solely and directly with such selling Lender in
connection with such Lender's rights and obligations under this Agreement.
(g) Any Lender or participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrowers furnished to such Lender;
provided that, prior to any such disclosure, each such assignee or participant
or proposed assignee or participant shall execute an agreement for the benefit
of the Company whereby such assignee or participant shall agree (subject to
customary exceptions) to preserve the confidentiality of any such information.
(h) The Borrowers shall not assign or delegate any rights and
duties hereunder without the prior written consent of all Lenders.
(i) Any Lender may at any time pledge all or any portion of
its rights under this Agreement to a Federal Reserve Bank; provided that no
such pledge shall release any Lender from its obligations hereunder or
substitute any such Bank for such Lender as a party hereto. In order to
facilitate such an assignment to a Federal Reserve Bank, each Borrower shall,
at the request of the assigning Lender, duly execute and deliver to the
assigning Lender a promissory note or notes evidencing the Loans made to such
Borrower by the assigning Lender hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrowers agree
to pay all reasonable out-of-pocket expenses incurred by the Administrative
Agent in connection with entering into this Agreement or in connection with any
amendments, modifications or waivers of the provisions hereof, or incurred by
the Administrative Agent or any Lender in connection with the enforcement or
protection of their rights in connection with this Agreement or in connection
with the Loans made or Letters of Credit issued hereunder or under any Local
Currency Addendum, including the fees and disbursements of counsel for the
Administrative Agent or, in the case of enforcement, the Lenders.
(b) The Borrowers agree to indemnify the Administrative
Agent, the Issuing Banks, each Lender, each of their Affiliates and the
directors, officers, employees and agents of the foregoing (each such person
being called an "Indemnitee") against, and to hold each Indemnitee harmless
from, any and all losses, claims, damages, liabilities and related expenses,
including reasonable counsel fees and expenses, incurred by or asserted against
any Indemnitee arising out of (i) the consummation of the transactions
contemplated by this Agreement, (ii) the use of the proceeds of the Loans or
issuance of Letters of Credit or (iii) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related
<PAGE> 60
55
expenses are determined by a final judgment of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct
of such Indemnitee.
(c) The provisions of this Section shall remain operative and
in full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement or
any investigation made by or on behalf of the Administrative Agent, the Issuing
Banks or any Lender. All amounts due under this Section shall be payable on
written demand therefor.
SECTION 9.06. APPLICABLE LAW. THIS AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN
ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF
NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICE FOR
DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF COMMERCE,
PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY
THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.07. Waivers; Amendment. (a) No failure or delay
of the Administrative Agent, the Issuing Banks or any Lender in exercising any
power or right hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The
rights and remedies of the Administrative Agent, the Issuing Banks and the
Lenders hereunder are cumulative and are not exclusive of any rights or
remedies which they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure therefrom shall in any event be effective
unless the same shall be permitted by paragraph (b) below, and then such waiver
or consent shall be effective only in the specific instance and for the purpose
for which given. No notice or demand on any Borrower or any Subsidiary in any
case shall entitle such party to any other or further notice or demand in
similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be
waived, amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrowers and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of, or
extend the maturity of or any scheduled principal payment date or date for the
payment of any interest or fees on any Loan or for reimbursement of any L/C
Disbursement, or waive or excuse any such payment or any part thereof, or
decrease the rate of interest on any Loan or L/C Disbursement, without the
prior written consent of each Lender affected thereby, (ii) increase the
Commitment or decrease the Facility Fee, L/C Participation Fee of any Lender or
other amounts due to any Lender of any Lender without the prior written consent
of such Lender, (iii) limit or release the guarantee set forth in Article VII,
or (iv) amend or modify the provisions of Section 2.16 or Section 9.04(h), the
provisions of this Section or the definition of the "Required Lenders", without
the prior written consent of each Lender; provided further, however, that no
such agreement shall amend, modify or otherwise affect the rights or duties of
the Administrative Agent or the Issuing Banks hereunder without the prior
written consent of the Administrative Agent or the Issuing Banks. Each Lender
shall be bound by any waiver, amendment or modification authorized by this
Section and any consent by any Lender pursuant to this Section shall bind any
assignee of its rights and interests hereunder.
<PAGE> 61
56
SECTION 9.08. Entire Agreement. This Agreement, the
agreements referenced in Section 2.06(b) and the letter agreement attached as
Exhibit H constitute the entire contract among the parties relative to the
subject matter hereof. Any previous agreement among the parties with respect
to the subject matter hereof is superseded by this Agreement. Nothing in this
Agreement, expressed or implied, is intended to confer upon any party other
than the parties hereto any rights, remedies, obligations or liabilities under
or by reason of this Agreement.
SECTION 9.09. Severability. In the event any one or more of
the provisions contained in this Agreement should be held invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good-faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
SECTION 9.10. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall constitute an original but all
of which when taken together shall constitute but one contract, and shall
become effective as provided in Section 9.03.
SECTION 9.11. Headings. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.
SECTION 9.12. Right of Setoff. If an Event of Default shall
have occurred and be continuing, each Lender is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final) at any time held and other indebtedness at any time owing by such Lender
to or for the credit or obligations of the Company and any Borrowing Subsidiary
now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under
this Agreement and although such obligations may be unmatured. Each Lender
agrees promptly to notify the Company and the Administrative Agent after such
setoff and application made by such Lender, but the failure to give such notice
shall not affect the validity of such setoff and application. The rights of
each Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 9.13. JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(A) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT
OR FEDERAL COURT OF THE UNITED STATES OF AMERICA SITTING IN NEW YORK CITY, AND
ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT
OF OR RELATING TO THIS AGREEMENT, ANY LOCAL CURRENCY ADDENDA OR ANY LETTER OF
CREDIT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
NEW YORK STATE OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT. EACH
OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. SUBJECT TO THE
FOREGOING AND TO PARAGRAPH (B) BELOW, NOTHING IN THIS AGREEMENT SHALL AFFECT
ANY RIGHT THAT ANY PARTY HERETO MAY OTHERWISE HAVE TO BRING ANY ACTION OR
<PAGE> 62
57
PROCEEDING RELATING TO THIS AGREEMENT, ANY LOCAL CURRENCY ADDENDUM OR ANY
LETTER OF CREDIT AGAINST ANY OTHER PARTY HERETO IN THE COURTS OF ANY
JURISDICTION.
(B) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, ANY
OBJECTION WHICH IT MAY NOW OR THEREAFTER HAVE TO THE LAYING OF VENUE OF ANY
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY
LOCAL CURRENCY ADDENDUM OR ANY LETTER OF CREDIT IN ANY NEW YORK STATE OR
FEDERAL COURT. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.
(C) EACH PARTY TO THIS AGREEMENT IRREVOCABLY CONSENTS TO
SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 9.01. NOTHING
IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY TO THIS AGREEMENT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 9.14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
THAT IT AND OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATION IN THIS SECTION.
SECTION 9.15. Addition of Borrowing Subsidiaries. Each
Borrowing Subsidiary which shall deliver to the Administrative Agent a
Borrowing Subsidiary Agreement executed by such Subsidiary and the Company
shall, upon such delivery and without further act, become a party hereto and a
Borrower hereunder with the same effect as if it had been an original party to
this Agreement.
SECTION 9.16. Conversion of Currencies. (a) If, for the
purpose of obtaining judgment in any court, it is necessary to convert a sum
owing hereunder in one currency into another currency, each party hereto
agrees, to the fullest extent that it may effectively do so, that the rate of
exchange used shall be that at which in accordance with normal banking
procedures in the relevant jurisdiction the first currency could be purchased
with such other currency on the Business Day immediately preceding the day on
which final judgment is given.
(b) The obligations of the Borrowers in respect of any sum
due to any party hereto or any holder of the obligations owing hereunder (the
"Applicable Creditor") shall, notwithstanding any judgment in a currency (the
"Judgment Currency") other than the currency in which such sum is stated to be
due hereunder (the "Agreement Currency"), be discharged only to the extent
that, on the Business Day following receipt by the Applicable Creditor of any
sum adjudged to be so due in the Judgment Currency, the Applicable Creditor may
in accordance with normal banking procedures in the relevant jurisdiction
purchase the Agreement Currency with the Judgment Currency; if the amount of
the Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the
<PAGE> 63
58
Agreement Currency, the Borrowers agree, as a separate obligation and
notwithstanding any such judgment, to indemnify the Applicable Creditor against
such loss. The obligations of the Borrowers contained in this Section 9.16
shall survive the termination of this Agreement and the payment of all other
amounts owing hereunder.
SECTION 9.17 Execution. Upon execution by the Lenders, this
Agreement will be executed with Old ITT as "the Company" all as contemplated by
the letter agreement attached as Exhibit H, and upon execution of this
Agreement by the Company, the Company shall succeed to the rights and
obligations of Old ITT as contemplated in such agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
ITT INDUSTRIES, INC., as Borrower,
by /s/ Richard J. M. Hamilton
--------------------------------------------
Name: Richard J. M. Hamilton
Title: Senior Vice President and Controller
CHEMICAL BANK, individually and as
Administrative Agent,
by /s/ Robert K. Gaynor
--------------------------------------------
Name: Robert K. Gaynor
Title: Vice President
ABN AMRO BANK N.V., NEW YORK BRANCH,
by /s/ Frances O'R. Logan
--------------------------------------------
Name: Frances O'R. Logan
Title: Vice President
by /s/ William J. Van Nostrand
--------------------------------------------
Name: William J. Van Nostrand
Title: Vice President
<PAGE> 64
59
ARAB BANK PLC,
by /s/ Nofal S. Barbar
--------------------------------------------
Name: Nofal S. Barbar
Title: Executive Vice President and
Branch Manager
BANCA COMMERCIALE ITALIANA, NEW
YORK BRANCH,
by /s/ Charles Dougherty
--------------------------------------------
Name: Charles Dougherty
Title: Vice President
BANCA DI ROMA - NEW YORK BRANCH,
by /s/ Ralph L. Riehle
--------------------------------------------
Name: Ralph L. Riehle
Title: First Vice President
by /s/ Luca Balestra
--------------------------------------------
Name: Luca Balestra
Title: Associate Vice President
BANCA NAZIONALE DEL LAVORO S.P.A.,
NEW YORK BRANCH,
by /s/ Giuliano Violetta
--------------------------------------------
Name: Giuliano Violetta
Title: First Vice President
by /s/ Giulio Giovine
--------------------------------------------
Name: Giulio Giovine
Title: Vice President
<PAGE> 65
60
BANCA POPOLARE DI MILANO,
by /s/ Anthony Franco
--------------------------------------------
Name: Anthony Franco
Title: Executive vice President/
General Manager
by /s/ Nicholas Cinosi
--------------------------------------------
Name: Nicholas Cinosi
Title: Vice President
BANK OF AMERICA NT & SA.
by /s/ Ambrish D. Thanawala
--------------------------------------------
Name: Ambrish D. Thanawala
Title: Vice President
BANK OF HAWAII,
by /s/ John R. Landgraf
--------------------------------------------
Name: John R. Landgraf
Title: Officer
THE BANK OF NEW YORK,
by /s/ Mary Anne Zagroba
--------------------------------------------
Name: Mary Anne Zagroba
Title: Vice President
THE BANK OF NOVA SCOTIA,
by /s/ J. Alan Edwards
--------------------------------------------
Name: J. Alan Edwards
Title: Authorized Signatory
THE BANK OF TOKYO TRUST COMPANY,
by /s/ Amanda S. Ryan
--------------------------------------------
Name: Amanda S. Ryan
Title: Vice President
<PAGE> 66
61
BANKERS TRUST COMPANY,
by /s/ Katherine A. Judge
--------------------------------------------
Name: Katherine A. Judge
Title: Vice President
BARCLAYS BANK PLC,
by /s/ John C. Livingston
--------------------------------------------
Name: John C. Livingston
Title: Associate Director
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH,
by /s/ Wilfried Freudenberger
--------------------------------------------
Name: Wilfried Freudenberger
Title: Executive Vice President and
General Manager
by /s/ Peter Oberman
--------------------------------------------
Name: Peter Oberman
Title: Senior Vice President
Manager Lending Division
CIBC, INC.,
by /s/ J. Domkowski
--------------------------------------------
Name: J. Domkowski
Title: Vice President
THE CHASE MANHATTAN BANK, N.A.,
by /s/ David B. Townsend
--------------------------------------------
Name: David B. Townsend
Title: Managing Director
CITIBANK, N.A.,
by /s/ Elizabeth A. Palermo
--------------------------------------------
Name: Elizabeth A. Palermo
Title: Attorney-in-Fact
<PAGE> 67
62
COMERICA BANK,
by /s/ Cheryl W. Ewers
--------------------------------------------
Name: Cheryl W. Ewers
Title: Account Officer
COMMERZBANK AKTIENGESELLSCHAFT,
GRAND CAYMAN BRANCH,
by /s/ Thomas Ausfahl
--------------------------------------------
Name: Thomas Ausfahl
Title: Assistant Vice President
by /s/ Robert Donohue
--------------------------------------------
Name: Robert Donohue
Title: Vice President
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE,
by /s/ Eric Longuet
--------------------------------------------
Name: Eric Longuet
Title: Vice President
by /s/ Albert M. Calo
--------------------------------------------
Name: Albert M. Calo
Title: Vice President
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ Robert Ivosevich
--------------------------------------------
Name: Robert Ivosevich
Title: Senior Vice President
CREDIT SUISSE,
by /s/ Robert B. Potter
--------------------------------------------
Name: Robert B. Potter
Title: Member of Senior Management
by /s/ Chris T. Horgan
--------------------------------------------
Name: Chris T. Horgan
Title: Associate
<PAGE> 68
63
CREDITO ITALIANO, S.P.A.,
by /s/ Harmon P. Butler
--------------------------------------------
Name: Harmon P. Butler
Title: First Vice President and
Deputy Manager
by /s/ Saiyed A. Abbas
--------------------------------------------
Name: Saiyed A. Abbas
Title: Assistant Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW
YORK BRANCH,
by /s/ Timothy White
--------------------------------------------
Name: Timothy White
Title: Vice President
DEN DANSKE BANK, AKTIESELSKAB,
CAYMAN ISLANDS BRANCH,
by /s/ Bent V. Christensen
--------------------------------------------
Name: Bent V. Christensen
Title: Vice President
by /s/ Mogens Sondergaard
--------------------------------------------
Name: Mogens Sondergaard
Title: Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH
AND/OR CAYMAN ISLANDS BRANCH,
by /s/ Hans-Josef Thiele
--------------------------------------------
Name: Hans-Josef Thiele
Title: Vice President
by /s/ Stephan A. Wiedermann
--------------------------------------------
Name: Stephan A. Wiedermann
Title: Vice President
<PAGE> 69
64
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
by /s/ Mark K. Connelly
--------------------------------------------
Name: Mark K. Connelly
Title: Vice President
by /s/ Karen A. Brinkman
--------------------------------------------
Name: Karen A. Brinkman
Title: Vice President
DRESDNER BANK AG, NEW YORK BRANCH
AND GRAND CAYMAN BRANCH,
by /s/ J. Michael Leffler
--------------------------------------------
Name: J. Michael Leffler
Title: Senior Vice President
by /s/ Ernest C. Fung
--------------------------------------------
Name: Ernest C. Fung
Title: Vice President
FIRST INTERSTATE BANK OF CALIFORNIA,
by /s/ William J. Baird
--------------------------------------------
Name: William J. Baird
Title: Senior Vice President
by /s/ Judy A. Maahs
--------------------------------------------
Name: Judy A. Maahs
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF BOSTON,
by /s/ Kevin F. Malone
--------------------------------------------
Name: Kevin F. Malone
Title: Director
THE FIRST NATIONAL BANK OF CHICAGO,
by /s/ Randall L. Faust
--------------------------------------------
Name: Randall L. Faust
Title: Assistant Vice President
<PAGE> 70
65
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by /s/ Mark M. Harden
--------------------------------------------
Name: Mark M. Harden
Title: Vice President
THE FUJI BANK, LIMITED, NEW YORK
BRANCH,
by /s/ Gina M. Kearns
--------------------------------------------
Name: Gina M. Kearns
Title: Vice President and Manager
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
by /s/ John V. Veltri
--------------------------------------------
Name: John V. Veltri
Title: Senior Vice President
ISTITUTO BANCARIO SAN PAOLO DI TORINO
SPA,
by /s/ Wendell Jones
--------------------------------------------
Name: Wendell Jones
Title: Vice President
by /s/ Ettore Viazzo
--------------------------------------------
Name: Ettore Viazzo
Title: Vice President
KREDIETBANK N.V.,
by /s/ Armen Karozichian
--------------------------------------------
Name: Armen Karozichian
Title: Vice President
by /s/ Robert Snauffer
--------------------------------------------
Name: Robert Snauffer
Title: Vice President
<PAGE> 71
66
LLOYDS BANK PLC,
by /s/ Paul D. Briamonte
--------------------------------------------
Name: Paul D. Briamonte
Title: Vice President B374
by /s/ Stephen J. Attree
--------------------------------------------
Name: Stephen J. Attree
Title: Assistant Vice President A088
LTCB TRUST COMPANY,
by /s/ Rene O. LeBlanc
--------------------------------------------
Name: Rene O. LeBlanc
Title: Senior Vice President
THE MITSUBISHI BANK, LIMITED,
by /s/ Paula Mueller
--------------------------------------------
Name: Paula Mueller
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION,
by /s/ Patricia Loret de Mola
--------------------------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK,
by /s/ George J. Stapleton
--------------------------------------------
Name: George J. Stapleton
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
NASSAU BRANCH,
by /s/ Anne Marie Torre
--------------------------------------------
Name: Anne Marie Torre
Title: Vice President
<PAGE> 72
67
NATIONSBANK, N.A.,
by /s/ James T. Gilland
--------------------------------------------
Name: James T. Gilland
Title: Senior Vice President
THE NIPPON CREDIT BANK LTD.,
by /s/ Peter Capitelli
--------------------------------------------
Name: Peter Capitelli
Title: Vice President and Manager
THE NORTHERN TRUST COMPANY,
by /s/ Daryl M. Robicsek
--------------------------------------------
Name: Daryl M. Robicsek
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by /s/ Tom Partridge
--------------------------------------------
Name: Tom Partridge
Title: Commercial Banking Officer
ROYAL BANK OF CANADA,
by /s/ Rainer R. Kraft
--------------------------------------------
Name: Rainer R. Kraft
Title: Manager
THE SAKURA BANK, LIMITED, NEW YORK
BRANCH,
by /s/ Masahiro Nakajo
--------------------------------------------
Name: Masahiro Nakajo
Title: Senior Vice President and Manager
THE SANWA BANK LIMITED, NEW YORK
BRANCH,
by /s/ Stephen C. Small
--------------------------------------------
Name: Stephen C. Small
Title: Vice President and Area Manager
<PAGE> 73
68
SOCIETE GENERALE,
by /s/ Sedare Coradin
--------------------------------------------
Name: Sedare Coradin
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW
YORK BRANCH,
by /s/ Yoshinori Kawamura
--------------------------------------------
Name: Yoshinori Kawamura
Title: Joint General Manager
SUNTRUST BANK, ATLANTA
by /s/ Mary M. Smith
--------------------------------------------
Name: Mary M. Smith
Title: Banking Officer
by /s/ Craig W. Farnsworth
--------------------------------------------
Name: Craig W. Farnsworth
Title: Vice President
SWISS BANK CORPORATION, NEW YORK
BRANCH,
by /s/ Susan N. Isquith
--------------------------------------------
Name: Susan N. Isquith
Title: Director Credit Risk Management
by /s/ Edward J. McDonnell III
--------------------------------------------
Name: Edward J. McDonnell III
Title: Associate Director
International Finance Division
THE TOKAI BANK, LIMITED,
by /s/ Stuart Schulman
--------------------------------------------
Name: Stuart Schulman
Title: Senior Vice President
<PAGE> 74
69
THE TORONTO-DOMINION BANK,
by /s/ Randall Bingham
--------------------------------------------
Name: Randall Bingham
Title: Managing Director
UNION BANK OF SWITZERLAND, NEW YORK
BRANCH,
by /s/ Robert W. Casey Jr.
--------------------------------------------
Name: Robert W. Casey Jr.
Title: Vice President
by /s/ Daniel R. Strickford
--------------------------------------------
Name: Daniel R. Strickford
Title: Assistant Treasurer
WESTDEUTSCHE LANDESBANK
GIROZENTRALE, NEW YORK AND CAYMAN
ISLANDS BRANCHES,
by /s/ A. Kumbie
--------------------------------------------
Name: A. Kumbie
Title: Managing Director
by /s/ MPM Ransley
--------------------------------------------
Name: MPM Ransley
Title: Associate
THE YASUDA TRUST AND BANKING
COMPANY LIMITED, NEW YORK BRANCH,
by /s/ Rohn M. Laudenschlager
--------------------------------------------
Name: Rohn M. Laudenschlager
Title: Senior Vice President
<PAGE> 1
Exhibit (b)(2)
FIRST AMENDMENT dated as of May 23,
1996 (this "Amendment"), to the Credit
Agreement referred to below among ITT
INDUSTRIES, INC. (the "Borrower"), the
financial institutions from time to time party
thereto (the "Lenders") and CHEMICAL BANK, as
administrative agent for the Lenders (in such
capacity, the "Administrative Agent").
A. The parties hereto have entered into a Five-Year
Competitive Advance and Revolving Credit Facility Agreement dated as of
November 10, 1995 (the "Credit Agreement").
B. The Borrower has requested that certain terms of the
Credit Agreement be amended and the Lenders are willing, on the terms and
subject to the conditions set forth below, to agree to amend the Credit
Agreement as provided herein.
C. Capitalized terms used and not otherwise defined herein
shall have the meanings assigned to them in the Credit Agreement.
Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and
receipt of which are hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Amendments to Section 1.01. (a) The definition
of "Consolidated EBITDA" is amended by adding at the end thereof the following
proviso:
"; provided, however, that there shall not be included in determining
Consolidated EBITDA:
(i) any income, gain, loss, tax, depreciation or
amortization, in each case in connection with the discontinued
operations referred to in footnote 18 (Discontinued Operations) of the
Company's 1995 consolidated financial statements,
(ii) any extraordinary gain or loss to the extent that such
gain or loss relates to the Distribution or to the tender offer
referred to in footnote 11 (Early Extinguishment of Debt) of the
Company's 1995 consolidated financial statements, or
(iii) any miscellaneous income or expense to the extent that
such income or expense relates to the disposition of businesses
referred to in footnote 15 (Miscellaneous Income (Expense)) of the
Company's 1995 consolidated financial statements."
(b) The definition of "Consolidated Interest Expense" is
amended by adding at the end thereof the following proviso:
"provided, however, that there shall not be included in
determining Consolidated Interest Expense any interest expense in
connection with the discontinued operations referred to in footnote 18
(Discontinued Operations) of the Company's 1995 consolidated financial
statements."
SECTION 2. Amendment to Section 5.12. Section 5.12 is amended
by adding the word "consecutive" after the word "four."
SECTION 3. Representations and Warranties. The Borrower hereby
represents and warrants to each Lender, on and as of the date hereof, and after
giving effect to this Amendment, that:
(a) This Amendment has been duly executed and delivered by the
Borrower and constitutes a legal, valid and binding obligation of the
Borrower enforceable against the Borrower in accordance with its terms.
(b) The representations and warranties set forth in Article
III of the Credit Agreement are true and correct in all material
respects on and as of the date hereof.
(c) No Event of Default or Default has occurred and is
continuing.
SECTION 4. Effectiveness. This Amendment shall become
effective as of November 10, 1995, upon receipt by the Administrative Agent of
duly executed counterparts of this Amendment that, when taken together, bear
the authorized signatures of the Borrower and the Required Lenders.
SECTION 5. Governing Law. THIS AMENDMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE GOVERNED BY THE LAW OF THE STATE OF NEW YORK.
SECTION 6. Expenses. The borrower shall pay all reasonable
out-of-pocket fees and expenses incurred by the Administrative Agent in
connection with the preparation, negotiation, execution and delivery of this
Amendment, including, but not limited to, the reasonable fees, disbursements
and other charges of Cravath, Swaine & Moore, counsel of the Administrative
Agent.
SECTION 7. Counterparts. This Amendment may be executed in
any number of counterparts, each of which shall be an original but all of
which, when taken together, shall constitute but one instrument. Delivery of an
executed counterpart of a signature page of this Amendment by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart of this Amendment.
SECTION 8. Headings. Section headings used herein are for
convenience of reference only, are not part of this Amendment and are not to
affect the construction of, or to be taken into consideration in interpreting,
this Amendment.
SECTION 9. Effect of Amendment. Except as specifically
amended or modified hereby, the Credit Agreement shall continue in full force
and effect in accordance with the provisions thereof. As used therein, the
terms "Agreement", "herein", "hereunder", "hereinafter", "hereto", "hereof" and
words of similar import shall, unless the context otherwise requires, refer to
the Credit Agreement as amended hereby.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
date first above written.
ITT INDUSTRIES INC., as Borrower,
by /s/ Donald E. Foley
-----------------------------------
Name: Donald E. Foley
Title: Vice President and Treasurer
CHEMICAL BANK, individually and as
Administrative Agent,
by /s/ Joan F. Garvin
--------------------------------
Name: Joan F. Garvin
Title: Vice President
ABN AMRO BANK N.V., NEW YORK BRANCH,
by /s/ Frances Oir Logan
--------------------------------
Name: Frances Oir Logan
Title: Vice President
by /s/ Thomas Rogers
--------------------------------
Name: Thomas Rogers
Title: Assistant Vice President
ARAB BANK PLC,
by /s/ Peter Boyadjian
--------------------------------
Name: Peter Boyadjian
Title: Senior Vice President
<PAGE> 2
4
BANCA CASSA DI RISPARMIO DI TORINO,
by
/s/ Robert P. DeSantes
------------------------------------
Name: Robert P. DeSantes
Title: Vice President
Head of Corporate Banking
by
/s/ Giorgio Cuccolo
------------------------------------
Name: Giorgio Cuccolo
Title: Manager & E.V.P.
BANCA COMMERCIALE ITALIANA, NEW YORK
BRANCH,
by
/s/ Charles Dougherty
------------------------------------
Name: Charles Dougherty
Title: Vice President
by
/s/ Sarah Kim
------------------------------------
Name: Sarah Kim
Title: Assistant Vice President
BANCA DI ROMA - NEW YORK BRANCH,
by
/s/ Luca Balestra
------------------------------------
Name: Luca Balestra
Title: Assistant Vice President
by
/s/ Ralph L. Riehle
------------------------------------
Name: Ralph L. Riehle
Title: First Vice President
BANCA NAZIONALE DEL LAVORO S.P.A., NEW
YORK BRANCH,
by
/s/ Giuliano Violetta
------------------------------------
Name: Giuliano Violetta
Title: First Vice President
by
/s/ Giulio Giovine
------------------------------------
Name: Giulio Giovine
Title: Vice President
<PAGE> 3
5
BANCA POPOLARE DI MILANO,
by
/s/ Anthony Franco
-------------------------------
Name: Anthony Franco
Title: Executive Vice President
& General Manager
by
/s/ Fulvio Montanari
-------------------------------
Name: Fulvio Montanari
Title: First Vice President
BANK OF AMERICA NT & SA,
by
/s/ Donald J. Chin
-------------------------------
Name: Donald J. Chin
Title: Vice President
BANK OF HAWAII,
by
/s/ Alison Sierens
-------------------------------
Name: Alison Sierens
Title: Assistant Vice President
THE BANK OF NEW YORK,
by
/s/ William G.C. Dakin
-------------------------------
Name: William G.C. Dakin
Title: Vice President
THE BANK OF NOVA SCOTIA,
by
/s/ John Hopmans
-------------------------------
Name: John Hopmans
Title: Senior Representative
BANKERS TRUST COMPANY,
by
/s/ Katherine A. Judge
-------------------------------
Name: Katherine A. Judge
Title: Vice President
<PAGE> 4
6
BARCLAYS BANK PLC,
by /s/ John C. Livingston
----------------------------------
Name: John C. Livingston
Title: Director
BAYERISCHE LANDESBANK GIROZENTRALE,
CAYMAN ISLANDS BRANCH,
by /s/ Wilfried Freudenberger
----------------------------------
Name: Wilfried Freudenberger
Title: Executive Vice President
and General Manager
by /s/ Peter Obermann
----------------------------------
Name: Peter Obermann
Title: Senior Vice President
Manager Lending Division
CIBC, INC.,
by /s/ Judy Domkowski
----------------------------------
Name: Judy Domkowski
Title: Authorized Signatory
THE CHASE MANHATTAN BANK, N.A.,
by /s/ Joan F. Garvin
----------------------------------
Name: Joan F. Garvin
Title: Vice President
CITIBANK, N.A.,
by /s/ Elizabeth A. Palermo
----------------------------------
Name: Elizabeth A. Palermo
Title: Attorney-in-fact
COMERICA BANK,
by /s/ Cheryl W. Ewers
----------------------------------
Name: Cheryl W. Ewers
Title: Account Officer
<PAGE> 5
7
COMMERZBANK AKTIENGESELLSCHAFT,
GRAND CAYMAN BRANCH,
by /s/ Juergen Boysen
-----------------------------------
Name: Juergen Boysen
Title: Senior Vice President
by /s/ Sean Harrigan
-----------------------------------
Name: Sean Harrigan
Title: Senior Vice President
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE,
by /s/ Martha Skidmore
-----------------------------------
Name: Martha Skidmore
Title: Vice President
by /s/ Eric Longuet
-----------------------------------
Name: Eric Longuet
Title: Vice President
CREDIT LYONNAIS, NEW YORK BRANCH,
by /s/ Mark Campellone
-----------------------------------
Name: Mark Campellone
Title: Vice President
CREDIT SUISSE,
by /s/ Robert B. Potter
-----------------------------------
Name: Robert B. Potter
Title: Member of Senior Management
by /s/ Lynn Allegaert
-----------------------------------
Name: Lynn Allegaert
Title: Member of Senior Management
<PAGE> 6
8
CREDITO ITALIANO, S.P.A.,
by /s/ Alberto Devoto
----------------------------------
Name: Alberto Devoto
Title: Senior Vice President
and Manager
by /s/ Saiyed A. Abbas
----------------------------------
Name: Saiyed A. Abbas
Title: Assistant Vice President
THE DAI-ICHI KANGYO BANK, LTD., NEW YORK
BRANCH,
by /s/ Timothy White
----------------------------------
Name: Timothy White
Title: Vice President
DEN DANSKE BANK, AKTIESELSKAB, CAYMAN
ISLANDS BRANCH,
by /s/ Mogens Sondargaard
----------------------------------
Name: Mogens Sondergaard
Title: Vice President
by /s/ George B. Wendell
----------------------------------
Name: George B. Wendell
Title: Vice President
DEUTSCHE BANK AG, NEW YORK BRANCH AND/OR
CAYMAN ISLANDS BRANCH,
by /s/ Belinda J. Wheeler
----------------------------------
Name: Belinda J. Wheeler
Title: Assistant Vice President
by /s/ Jean M. Hannigan
----------------------------------
Name: Jean M. Hannigan
Title: Vice President
<PAGE> 7
9
DG BANK DEUTSCHE GENOSSENSCHAFTSBANK,
by
/s/ Mark K. Connelly
----------------------------------
Name: Mark K. Connelly
Title: Vice President
by
/s/ Karen A. Brinkman
----------------------------------
Name: Karen A. Brinkman
Title: Vice President
DRESDNER BANK AG, NEW YORK BRANCH AND
GRAND CAYMAN BRANCH,
by
/s/ J. Curtin Beaudouin
----------------------------------
Name: J. Curtin Beaudouin
Title: First Vice President
by
/s/ Deborah Slusarczyk
----------------------------------
Name: Deborah Slusarczyk
Title: Vice President
FIRST INTERSTATE BANK OF CALIFORNIA,
by
/s/ Peter G. Olson
----------------------------------
Name: Peter G. Olson
Title: Senior Vice President
by
/s/ Lancy Gin
----------------------------------
Name: Lancy Gin
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF BOSTON,
by
/s/ Jack M. Harcourt
---------------------------------
Name: Jack M. Harcourt
Title: Authorized Officer & Director
THE FIRST NATIONAL BANK OF CHICAGO,
by
/s/ Daniel J. Lenckos
---------------------------------
Name: Daniel J. Lenckos
Title: Vice President
<PAGE> 8
10
FIRST UNION NATIONAL BANK OF NORTH
CAROLINA,
by /s/ Jane W. Workman
----------------------------------
Name: Jane W. Workman
Title: Senior Vice President
THE FUJI BANK, LIMITED, NEW YORK BRANCH,
by /s/ Gina Kearns
-----------------------------------
Name: Gina Kearns
Title: Vice President & Manager
THE INDUSTRIAL BANK OF JAPAN, LIMITED,
NEW YORK BRANCH,
by /s/ John V. Veltri
-----------------------------------
Name: John V. Veltri
Title: Senior Vice President
INSTITUTO BANCARIO SAN PAOLO DI TORINO
SPA,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
KREDIETBANK N.V.,
by
-----------------------------------
Name:
Title:
by
-----------------------------------
Name:
Title:
LLOYDS BANK PLC,
by /s/ Paul D. Briamonte
-----------------------------------
Name: Paul D. Briamonte
Title: Vice President
<PAGE> 9
11
B374
by /s/ Windser R. Davies
--------------------------------
Name: Windser R. Davies
Title: Vice President & Manager
D061
LTCB TRUST COMPANY,
by
--------------------------------
Name:
Title:
THE BANK OF TOKYO-MITSUBISHI LTD.,
NEW YORK BRANCH
by /s/ Jean K. Reilly
--------------------------------
Name: Jean K. Reilly
Title: Vice President
THE MITSUBISHI TRUST AND BANKING
CORPORATION,
by /s/ Patricia Loret de Mola
--------------------------------
Name: Patricia Loret de Mola
Title: Senior Vice President
MORGAN GUARANTY TRUST COMPANY OF
NEW YORK,
by /s/ Sandra J.S. Kurek
--------------------------------
Name: Sandra J.S. Kurek
Title: Associate
NATIONAL WESTMINSTER BANK, PLC,
NASSAU BRANCH,
by /s/ Anne Marie Torre
--------------------------------
Name: Anne Marie Torre
Title: Vice President
NATIONAL WESTMINSTER BANK PLC,
NEW YORK BRANCH,
by /s/ Anne Marie Torre
--------------------------------
Name: Anne Marie Torre
<PAGE> 10
12
Title: Vice President
NATIONSBANK, N.A.,
by
/s/ Marcus A. Boyer
-------------------------------
Name: Marcus A. Boyer
Title: Senior Vice President
THE NIPPON CREDIT BANK LTD.,
by
/s/ Barry S. Fein
-------------------------------
Name: Barry S. Fein
Title: Assistant Vice President
THE NORTHERN TRUST COMPANY,
by
/s/ James F. Monhart
-------------------------------
Name: James F. Monhart
Title: Vice President
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Tom Colwell
-------------------------------
Name: Tom Colwell
Title: Vice President
ROYAL BANK OF CANADA,
by
/s/ John M. Crawford
-------------------------------
Name: John M. Crawford
Title: Senior Manager
THE SAKURA BANK, LIMITED,
NEW YORK BRANCH,
by
/s/ Masahiro Nakajo
-------------------------------
Name: Masahiro Nakajo
Title: Senior Vice President
and Manager
THE SANWA BANK LIMITED,
NEW YORK BRANCH,
by
/s/ Stephen C. Small
-------------------------------
Name: Stephen C. Small
Title: Vice President and
Area Manager
<PAGE> 11
13
SOCIETE GENERALE,
by /s/ Sedare Coradin
--------------------------------
Name: Sedare Coradin
Title: Vice President
THE SUMITOMO BANK, LIMITED, NEW YORK
BRANCH,
by /s/ Yoshinori Kawamura
--------------------------------
Name: Yoshinori Kawamura
Title: Joint General Manager
SUNTRUST BANK, ATLANTA,
by /s/ May M. Smith
--------------------------------
Name: May M. Smith
Title: Banking Officer
by /s/ Craig W. Farnsworth
--------------------------------
Name: Craig W. Farnsworth
Title: Vice President and Manager
SVENSKA HANDELSBANKEN,
by /s/ Karl Forsman
--------------------------------
Name: Karl Forsman
Title: Vice President
by /s/ Mark Gay
--------------------------------
Name: Mark Gay
Title: Senior Vice President
SWISS BANK CORPORATION, NEW YORK BRANCH,
by /s/ Stephanie W. Kim
--------------------------------
Name: Stephanie W. Kim
Title: Associate Director
by /s/ Susan N. Isquith
--------------------------------
Name: Susan N. Isquith
Title: Director Credit Risk
Management
<PAGE> 12
14
THE TOKAI BANK, LIMITED,
by /s/ Masaharu Muto
-------------------------------------
Name: Masaharu Muto
Title: Deputy General Manager
THE TORONTO-DOMINION BANK,
by /s/ Jorge A. Garcia
-------------------------------------
Name: Jorge A. Garcia
Title: Manager Credit Administration
UNION BANK OF SWITZERLAND, NEW YORK
BRANCH,
by /s/ Daniel R. Strickford
-------------------------------------
Name: Daniel R. Strickford
Title: Assistant Vice President
by /s/ Christopher W. Criswell
-------------------------------------
Name: Christopher W. Criswell
Title: Managing Director
WESTDEUTSCHE LANDESBANK GIROZENTRALE,
NEW YORK AND CAYMAN ISLANDS BRANCHES,
by /s/ Ralph White
-------------------------------------
Name: Ralph White
Title: Vice President
by /s/ MPM Ransley
-------------------------------------
Name: MPM Ransley
Title: Associate
THE YASUDA TRUST AND BANKING COMPANY
LIMITED, NEW YORK BRANCH,
by /s/ Rohn M. Laudenschlager
-------------------------------------
Name: Rohn M. Laudenschlager
Title: Senior Vice President
<PAGE> 1
Exhibit (c)
CONFORMED COPY
----------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Among
ITT INDUSTRIES, INC.,
GEORGE ACQUISITION, INC.
and
GOULDS PUMPS, INCORPORATED
Dated as of April 20, 1997
----------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I
THE OFFER
SECTION 1.1 The Offer............................................... 1
SECTION 1.2 Company Action.......................................... 3
ARTICLE II
THE MERGER
SECTION 2.1 The Merger.............................................. 4
SECTION 2.2 Effective Time.......................................... 4
SECTION 2.3 Effects of the Merger................................... 5
SECTION 2.4 Certificate of Incorporation; By-Laws................... 5
SECTION 2.5 Directors and Officers.................................. 5
SECTION 2.6 Conversion of Securities................................ 5
SECTION 2.7 Treatment of Options.................................... 6
SECTION 2.8 Dissenting Shares and Section 262 Shares................ 6
SECTION 2.9 Surrender of Shares; Stock Transfer Books............... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1 Organization and Qualification;
Subsidiaries....................................... 8
SECTION 3.2 Certificate of Incorporation and By-Laws................ 9
SECTION 3.3 Capitalization.......................................... 9
SECTION 3.4 Authority Relative to This Agreement.................... 10
SECTION 3.5 No Conflict; Required Filings and
Consents........................................... 11
SECTION 3.6 Compliance.............................................. 12
SECTION 3.7 SEC Filings; Financial Statements....................... 12
SECTION 3.8 Absence of Certain Changes or Events.................... 13
SECTION 3.9 Absence of Litigation................................... 14
SECTION 3.10 Employee Benefit Plans................................. 14
SECTION 3.11 Tax Matters............................................ 16
SECTION 3.12 Offer Documents; Proxy Statement....................... 17
SECTION 3.13 Environmental Matters.................................. 17
SECTION 3.14 Brokers................................................ 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
SECTION 4.1 Corporate Organization.................................. 21
SECTION 4.2 Authority Relative to This Agreement.................... 21
SECTION 4.3 No Conflict; Required Filings and
Consents........................................... 21
SECTION 4.4 Offer Documents; Proxy Statement........................ 22
SECTION 4.5 Brokers................................................. 22
SECTION 4.6 Funds................................................... 23
-i-
<PAGE> 3
Page
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending
the Merger......................................... 23
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholders Meeting.................................... 25
SECTION 6.2 Proxy Statement......................................... 26
SECTION 6.3 Company Board Representation; Section
14(f).............................................. 26
SECTION 6.4 Access to Information; Confidentiality.................. 27
SECTION 6.5 No Solicitation of Transactions......................... 28
SECTION 6.6 Employee Benefits Matters............................... 30
SECTION 6.7 Directors' and Officers' Indemnification
and Insurance...................................... 31
SECTION 6.8 Delivery of Schedules................................... 32
SECTION 6.9 Notification of Certain Matters......................... 33
SECTION 6.10 Further Action; Reasonable Best Efforts................ 33
SECTION 6.11 Public Announcements................................... 34
SECTION 6.12 Disposition of Litigation.............................. 34
SECTION 6.13 Rights................................................. 34
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to
Effect the Merger.................................. 35
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination............................................. 35
SECTION 8.2 Effect of Termination................................... 37
SECTION 8.3 Fees and Expenses....................................... 37
SECTION 8.4 Amendment............................................... 39
SECTION 8.5 Waiver.................................................. 40
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations,
Warranties and Agreements.......................... 40
SECTION 9.2 Notices................................................. 40
SECTION 9.3 Certain Definitions..................................... 41
-ii-
<PAGE> 4
Page
SECTION 9.4 Severability............................................ 42
SECTION 9.5 Entire Agreement; Assignment............................ 42
SECTION 9.6 Parties in Interest..................................... 43
SECTION 9.7 Governing Law........................................... 43
SECTION 9.8 Headings................................................ 43
SECTION 9.9 Counterparts............................................ 43
Annex A - Offer Conditions
-iii-
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 20, 1997 (the
"Agreement"), among ITT INDUSTRIES, INC., an Indiana corporation ("Parent"),
GEORGE ACQUISITION, INC., a Delaware corporation and a wholly owned subsidiary
of Parent ("Purchaser"), and GOULDS PUMPS, INCORPORATED, a Delaware corporation
(the "Company").
WHEREAS, the Board of Directors of the Company has determined that it
is in the best interests of the Company and the stockholders of the Company to
enter into this Agreement with Parent and Purchaser, providing for the merger
(the "Merger") of Purchaser with the Company in accordance with the General
Corporation Law of the State of Delaware ("DGCL"), upon the terms and subject to
the conditions set forth herein; and
WHEREAS, the Board of Directors of Parent and Purchaser have each
approved the Merger of Purchaser with the Company in accordance with the DGCL
upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.1 and no event shall have occurred
and no circumstance shall exist which would result in a failure to satisfy any
of the conditions or events set forth in Annex A hereto (the "Offer
Conditions"), Purchaser shall, as soon as reasonably practicable after the date
hereof (and in any event within five business days from the date of public
announcement of the execution hereof), commence an offer (the "Offer") to
purchase for cash all of the issued and outstanding shares of Common Stock, par
value $1.00 per share (referred to herein as either the "Shares" or "Company
Common Stock"), of the Company at a price of $37.00 per Share, net to the seller
in cash. The obligation of Purchaser to accept for payment Shares tendered
pursuant to the Offer shall be subject only to the satisfaction or waiver by
Purchaser of the Offer Conditions. Purchaser expressly reserves the right, in
its sole discretion, to waive any such condition (other than the Minimum
Condition as defined in the Offer Conditions) and make any other changes in the
terms and conditions of the Offer, provided that, unless previously approved by
the Company in writing, no change may be made which changes the Minimum
Condition or decreases the price per Share payable in the Offer,
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changes the form of consideration payable in the Offer (other than by adding
consideration), reduces the maximum number of Shares to be purchased in the
Offer, or amends the terms or Offer Conditions or imposes conditions or terms to
the Offer in addition to those set forth herein which, in either case, are
adverse to holders of the Shares. Purchaser agrees that, unless it is permitted
to terminate this Agreement pursuant to Section 8.1(a), 8.1(b), 8.1(c)(ii) or
8.1(e), it can terminate the Offer only on a scheduled expiration date.
Purchaser further agrees that: (A) in the event it would otherwise be entitled
to terminate the Offer at any scheduled expiration thereof due to the failure of
one or more of the conditions set forth in paragraphs (a), (b), (c), (d)(i), (e)
or (h) of the Offer Conditions to be satisfied or waived, it shall give the
Company notice thereof and, at the request of the Company, extend the Offer
until the earlier of (1) such time as such condition is or conditions are
satisfied or waived and (2) the date chosen by the Company which shall not be
later than (x) the Outside Date (as defined in Section 8.1) applicable to the
condition or conditions with respect to which the extension is requested or (y)
the earliest date on which the Company reasonably believes such condition or
conditions will be satisfied; provided that if such condition is not or
conditions are not satisfied by any date chosen by the Company pursuant to this
clause (y), the Company may request further extensions of the Offer in
accordance with the terms of this Section 1.2(a); and (B) in the event that it
would otherwise be entitled to terminate the Offer at the initial scheduled
expiration date thereof due solely to the failure of the Minimum Condition to be
satisfied or waived, it shall, at the request of the Company (which request may
be made by the Company only on one occasion), extend the Offer for up to five
business days from such initial scheduled expiration date. Purchaser covenants
and agrees that, subject to the terms and conditions of this Agreement,
including but not limited to the Offer Conditions, it will accept for payment
and pay for Shares as soon as it is permitted to do so under applicable law. It
is agreed that the Offer Conditions are for the benefit of Purchaser and may be
asserted by Purchaser regardless of the circumstances giving rise to any such
condition (except for any action or inaction by Purchaser or Parent constituting
a breach of this Agreement) or, except with respect to the Minimum Condition,
may be waived by Purchaser, in whole or in part at any time and from time to
time, in its sole discretion.
(b) As soon as reasonably practicable on the date the Offer is
commenced, Purchaser shall file a Tender Offer Statement on Schedule 14D-1 (the
"Schedule 14D-1") with respect to the Offer with the Securities and Exchange
Commission (the "SEC"). The Schedule 14D-1 shall contain an Offer to Purchase
and forms of the related letter of transmittal (which Schedule 14D-1, Offer to
Purchase and other documents, together with any supplements or amendments
thereto, are referred to herein collectively as the "Offer Documents"). Parent
and Purchaser agree that the Company and its counsel shall be given an
opportunity to review the
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Schedule 14D-1 before it is filed with the SEC. Parent, Purchaser and the
Company each agrees promptly to correct any information provided by it for use
in the Offer Documents that shall have become false or misleading in any
material respect, and Parent and Purchaser further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to holders of
Shares, in each case as and to the extent required by applicable federal
securities laws.
SECTION 1.2 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that: (i) its Board of
Directors, at a meeting duly called and held on April 20, 1997, has unanimously
(A) determined that this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, are fair to and in the best interests of the
holders of Shares, (B) approved this Agreement and the transactions contemplated
hereby, including each of the Offer and the Merger, and (C) resolved to
recommend that the stockholders of the Company accept the Offer, tender their
Shares to Purchaser thereunder and approve this Agreement and the transactions
contemplated hereby (it being understood that, notwithstanding anything in this
Agreement to the contrary, if the Company's Board of Directors determines in
good faith, based upon the advice of outside counsel, that failure to modify or
withdraw its recommendation would constitute a breach of their fiduciary duties
under applicable law, the Board of Directors may so modify or withdraw its
recommendation and such modification or withdrawal shall not constitute a breach
of this Agreement); and (ii) Goldman, Sachs & Co. (the "Financial Adviser") has
delivered to the Board of Directors of the Company its written opinion that the
consideration to be received by holders of Shares, other than Parent and
Purchaser, pursuant to each of the Offer and the Merger is fair to such holders.
The Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Company's Board of Directors described in this Section
1.2(a).
(b) The Company shall file with the SEC, contemporaneously with the
commencement of the Offer pursuant to Section 1.1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9"), containing the recommendations of the Company's
Board of Directors described in Section 1.2(a)(i) and shall promptly mail the
Schedule 14D-9 to the stockholders of the Company. The Schedule 14D-9 and all
amendments thereto will comply in all material respects with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder. The Company, Parent and Purchaser each
agrees promptly to correct any information provided by it for use in the
Schedule 14D-9 that shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and
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disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws.
(c) In connection with the Offer, if requested by Purchaser, the
Company shall promptly furnish Purchaser with mailing labels, security position
listings, any non-objecting beneficial owner lists and any available listings or
computer files containing the names and addresses of the record holders of
Shares, each as of a recent date, and shall promptly furnish Purchaser with such
additional information (including but not limited to updated lists of
stockholders, mailing labels, security position listings and non-objecting
beneficial owner lists) and such other assistance as Parent, Purchaser or their
agents may reasonably require in communicating the Offer to the record and
beneficial holders of Shares. Subject to the requirements of law, and except for
such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer and the Merger, Parent and each of
their affiliates and associates shall hold in confidence the information
contained in any of such lists, labels or additional information and, if this
Agreement is terminated, shall promptly deliver to the Company all copies of
such information then in their possession.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the DGCL, at the Effective Time (as
defined in Section 2.2), Purchaser shall be merged with and into the Company. As
a result of the Merger, the separate corporate existence of Purchaser shall
cease and the Company shall continue as the surviving corporation of the Merger
(the "Surviving Corporation"). At Parent's election, any direct or indirect
subsidiary of Parent other than Purchaser may be merged with and into the
Company instead of the Purchaser. In the event of such an election, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
such election.
SECTION 2.2 Effective Time. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII, the parties
hereto shall cause the Merger to be consummated by filing this Agreement or a
certificate of merger or a certificate of ownership and merger (the "Certificate
of Merger") with the Secretary of State of the State of Delaware, in such form
as required by and executed in accordance with the relevant provisions of the
DGCL (the date and time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware (or such later time as is specified
in the Certificate of Merger) being the "Effective Time").
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SECTION 2.3 Effects of the Merger. The Merger shall have the effects
set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing and subject thereto, at the Effective Time all the
property, rights, privileges, immunities, powers and franchises of the Company
and Purchaser shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Purchaser shall become the debts,
liabilities and duties of the Surviving Corporation.
SECTION 2.4 Certificate of Incorporation; By-Laws. (a) At the Effective
Time and without any further action on the part of the Company and Purchaser,
the Restated Certificate of Incorporation of the Company (as amended, the
"Certificate of Incorporation"), as in effect immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation
until thereafter and further amended as provided therein and under the DGCL.
(b) At the Effective Time and without any further action on the part
of the Company and Purchaser, the By-Laws of Purchaser shall be the By-Laws of
the Surviving Corporation and thereafter may be amended or repealed in
accordance with their terms or the Certificate of Incorporation of the Purchaser
and as provided by law.
SECTION 2.5 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed (as the case may be) and qualified.
SECTION 2.6 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be cancelled pursuant to Section
2.6(b) and any Dissenting Shares (as defined in Section 2.8(a))) shall be
cancelled, extinguished and converted into the right to receive $37.00 in
cash or any higher price that may be paid pursuant to the Offer (the
"Merger Consideration") payable to the holder thereof, without interest,
upon surrender of the certificate formerly representing such Share in the
manner provided in Section 2.9, less any required withholding taxes.
(b) Each share of Company Common Stock held in the treasury of the
Company and each Share owned by Parent, Purchaser or any other direct or
indirect subsidiary of
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Parent or of the Company, in each case immediately prior to the Effective
Time, shall be cancelled and retired without any conversion thereof and
no payment or distribution shall be made with respect thereto.
(c) Each share of common, preferred or other capital stock of Purchaser
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and nonassessable
share of identical common, preferred or other capital stock of the
Surviving Corporation.
SECTION 2.7 Treatment of Options. Immediately prior to the Effective
Time, each outstanding stock option and any related stock appreciation right
granted to employees and non-employee directors of the Company and its
subsidiaries (together, an "Option"), whether or not then exercisable, shall be
cancelled by the Company, and the holder thereof shall be entitled to receive at
the Effective Time or as soon as practicable thereafter from the Company in
consideration for such cancellation an amount in cash equal to the product of
(a) the number of Shares previously subject to such Option and (b) the excess,
if any, of the Merger Consideration over the exercise price per Share previously
subject to such Option.
SECTION 2.8 Dissenting Shares and Section 262 Shares. (a)
Notwithstanding anything in this Agreement to the contrary, shares of Company
Common Stock that are issued and outstanding immediately prior to the Effective
Time and which are held by stockholders who have not voted in favor of or
consented to the Merger and shall have delivered a written demand for appraisal
of such shares of Company Common Stock in the time and manner provided in
Section 262 of the DGCL and shall not have failed to perfect or shall not have
effectively withdrawn or lost their rights to appraisal and payment under the
DGCL (the "Dissenting Shares") shall not be converted into the right to receive
the Merger Consideration, but shall be entitled to receive the consideration as
shall be determined pursuant to Section 262 of the DGCL; provided, however, that
if such holder shall have failed to perfect or shall have effectively withdrawn
or lost his, her or its right to appraisal and payment under the DGCL, such
holder's shares of Company Common Stock shall thereupon be deemed to have been
converted, at the Effective Time, into the right to receive the Merger
Consideration set forth in Section 2.6(a) of this Agreement, without any
interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal pursuant to Section 262 received by the Company, withdrawals of such
demands, and any other instruments served pursuant to the DGCL and received by
the Company and (ii) the opportunity to direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. The Company shall not,
except with the prior written consent of Parent, make
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any payment with respect to any such demands for appraisal or offer to settle or
settle any such demands.
SECTION 2.9 Surrender of Shares; Stock Transfer Books. (a) Prior to the
Effective Time, Purchaser shall designate a bank or trust company to act as
agent for the holders of Shares in connection with the Merger (the "Paying
Agent") to receive the Merger Consideration to which holders of Shares shall
become entitled pursuant to Section 2.6(a). When and as needed, Parent or
Purchaser will make available to the Paying Agent sufficient funds to make all
payments pursuant to Section 2.9(b). Such funds shall be invested by the Paying
Agent as directed by Purchaser or, after the Effective Time, the Surviving
Corporation, provided that such investments shall be in obligations of or
guaranteed by the United States of America, in commercial paper obligations
rated A-1 or P-1 or better by Moody's Investors Service, Inc. or Standard &
Poor's Corporation, respectively, or in certificates of deposit, bank repurchase
agreements or banker's acceptances of commercial banks with capital exceeding
$500 million. Any net profit resulting from, or interest or income produced by,
such investments will be payable to the Surviving Corporation or Parent, as
Parent directs.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each record holder, as of the Effective Time, of an
outstanding certificate or certificates which immediately prior to the Effective
Time represented Shares (the "Certificates"), a form of letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of the Certificates to
the Paying Agent) and instructions for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Upon surrender to
the Paying Agent of a Certificate, together with such letter of transmittal,
duly completed and validly executed in accordance with the instructions thereto,
and such other documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange therefor the
Merger Consideration for each Share formerly represented by such Certificate,
and such Certificate shall then be cancelled. No interest shall be paid or
accrued for the benefit of holders of the Certificates on the Merger
Consideration payable upon the surrender of the Certificates. If payment of the
Merger Consideration is to be made to a person other than the person in whose
name the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or shall
be otherwise in proper form for transfer and that the person requesting such
payment shall have paid any transfer and other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered holder
of the Certificate surrendered or shall have established to the
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satisfaction of the Surviving Corporation that such tax either has been paid or
is not applicable.
(c) At any time following six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds (including any interest received with respect thereto) which had
been made available to the Paying Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to look
to the Surviving Corporation (subject to abandoned property, escheat or other
similar laws) only as general creditors thereof with respect to the Merger
Consideration payable upon due surrender of their Certificates. Notwithstanding
the foregoing, neither the Surviving Corporation nor the Paying Agent shall be
liable to any holder of a Certificate for Merger Consideration delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
(d) At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of
transfers of shares of Company Common Stock on the records of the Company. From
and after the Effective Time, the holders of Certificates evidencing ownership
of Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares except as otherwise provided for
herein or by applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that, except as set forth in the disclosure schedule delivered by the Company to
Purchaser on or prior to the date of execution of this Agreement:
SECTION 3.1 Organization and Qualification; Subsidiaries. Each of the
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority and any
necessary governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the failure to
be so organized, existing and in good standing or to have such power, authority
and governmental approvals is not reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect (as defined below) or prevent or
materially delay the consummation of the Offer or the Merger. Each of the
Company and each of its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased
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or operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing as are not reasonably likely, individually or in
the aggregate, to have a Material Adverse Effect or prevent or materially delay
the consummation of the Offer or the Merger. When used in connection with the
Company or any of its subsidiaries, the term "Material Adverse Effect" means any
change or effect that would be materially adverse to the business, assets,
financial condition, or results of operations of the Company and its
subsidiaries taken as a whole.
SECTION 3.2 Certificate of Incorporation and By-Laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Certificate of
Incorporation and the By-Laws of the Company as currently in effect. Such
Certificate of Incorporation and By-Laws are in full force and effect and no
other organizational documents are applicable to or binding upon the Company.
The Company is not in violation of any of the provisions of its Certificate of
Incorporation or By-Laws.
SECTION 3.3 Capitalization. The authorized capital stock of the Company
consists of 90,000,000 shares of Company Common Stock and 750,000 shares of
Preferred Stock, par value $20.00 per share ("Company Preferred Stock"). As of
April 16, 1997, (i) 21,381,593 shares of Company Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
were issued free of preemptive (or similar) rights, (ii) no shares of Company
Common Stock were held in the treasury of the Company and (iii) an aggregate of
1,689,829 shares of Company Common Stock were reserved for issuance and issuable
upon or otherwise deliverable in connection with the exercise of outstanding
Options issued pursuant to the Company Plans (as defined in Section 3.10) and
the 1994 Stock Option Plan for Non-Employee Directors. Since April 16, 1997, no
options to purchase shares of Company Common Stock have been granted and no
shares of Company Common Stock have been issued except for shares issued
pursuant to the exercise of Options outstanding as of April 16, 1997. As of the
date hereof, no shares of Company Preferred Stock are issued and outstanding.
Except (i) as set forth above, (ii) as a result of the exercise of Options
outstanding as of April 16, 1997 and (iii) Rights issued pursuant to the Rights
Plan referred to in Section 6.13, there are outstanding (a) no shares of capital
stock or other voting securities of the Company, (b) no securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (c) no options or other rights to acquire from the
Company, and no obligation of the Company to issue, any capital stock, voting
securities or securities convertible into or exchangeable for capital stock or
voting securities of the Company and (d) no equity equivalents, interests in the
ownership or earnings of the Company or other similar rights (collectively,
"Company Securities"). There are no outstanding obligations of the Company or
any of its
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subsidiaries to repurchase, redeem or otherwise acquire any Company Securities.
There are no other options, calls, warrants or other rights (other than Rights
issued pursuant to the Rights Plan), agreements, arrangements or commitments of
any character relating to the issued or unissued capital stock of the Company or
any of its subsidiaries to which the Company or any of its subsidiaries is a
party. All shares of Company Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, shall be duly authorized, validly issued, fully paid
and nonassessable and free of preemptive (or similar) rights. There are no
outstanding contractual obligations of the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of any subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity. Each of the outstanding shares of capital
stock of each of the Company's subsidiaries is duly authorized, validly issued,
fully paid and nonassessable and all such shares are owned by the Company or
another wholly owned subsidiary of the Company and are owned free and clear of
all security interests, liens, claims, pledges, agreements, limitations in
voting rights, charges or other encumbrances of any nature whatsoever, except
where the failure to own such shares free and clear is not, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect. The Company
has delivered to Parent prior to the date hereof a list of the subsidiaries and
associated entities of the Company which evidences, among other things, the
percentage of capital stock or other equity interests owned by the Company,
directly or indirectly, in such subsidiaries or associated entities. No entity
in which the Company owns, directly or indirectly, less than a 50% equity
interest is, individually or when taken together with all such other entities,
material to the business of the Company and its subsidiaries taken as a whole.
SECTION 3.4 Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than, with respect to the Merger, the approval of this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock if and to the extent required by applicable law, and the filing of
appropriate merger documents as required by the DGCL). This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery hereof by Parent and Purchaser,
constitutes a legal, valid and binding obligation of the Company enforceable
against
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the Company in accordance with its terms. The Board of Directors of the Company
has approved this Agreement and the transactions contemplated hereby (including
but not limited to the Offer and the Merger) so as to render inapplicable hereto
and thereto (a) the limitation on business combinations contained in Section 203
of the DGCL (or any similar provision) and (b) the supermajority stockholder
voting requirements of Article VII of the Certificate of Incorporation. As a
result of the foregoing actions, the only vote required to authorize the Merger
is the affirmative vote of a majority of the outstanding Shares.
SECTION 3.5 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by the Company do not and
will not: (i) conflict with or violate the Certificate of Incorporation or
By-Laws of the Company or the equivalent organizational documents of any of its
subsidiaries; (ii) assuming that all consents, approvals and authorizations
contemplated by clauses (i), (ii) and (iii) of subsection (b) below have been
obtained and all filings described in such clauses have been made, conflict with
or violate any law, rule, regulation, order, judgment or decree applicable to
the Company or any of its subsidiaries or by which its or any of their
respective properties are bound or affected; or (iii) result in any breach or
violation of or constitute a default (or an event which with notice or lapse of
time or both could become a default) or result in the loss of a material benefit
under, or give rise to any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of the Company or any of its subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract (other than contracts terminable
at will or upon 90 days' or less notice by the terminating party), agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except, in the case of clauses (ii) and (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which are not, individually
or in the aggregate, reasonably likely to have a Material Adverse Effect or
prevent or materially delay consummation of the Offer or the Merger.
(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the Merger by the Company do not and will not
require any consent, approval, authorization or permit of, action by, filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except for (i) applicable requirements, if any, of the Exchange Act and
the rules and regulations promulgated thereunder, the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), or other foreign
filings or approvals, state securities, takeover and "blue sky" laws, (ii) the
filing and recordation of appropriate merger or other documents as required by
the DGCL and (iii) such
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consents, approvals, authorizations, permits, actions, filings or notifications
the failure of which to make or obtain are not, individually or in the
aggregate, reasonably likely to (x) prevent or materially delay consummation of
the Offer or the Merger, (y) otherwise prevent or materially delay the Company
from performing its obligations under this Agreement or (z) have a Material
Adverse Effect.
SECTION 3.6 Compliance. Neither the Company nor any of its subsidiaries
is in conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to the Company or any of its
subsidiaries or by which its or any of their respective properties are bound or
affected, or (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or its or any of their respective properties are bound or
affected, except for any such conflicts, defaults or violations which are not,
individually or in the aggregate, reasonably likely to have a Material Adverse
Effect or prevent or materially delay consummation of the Offer or the Merger.
SECTION 3.7 SEC Filings; Financial Statements. (a) The Company and, to
the extent applicable, each of its then or current subsidiaries, has filed all
forms, reports, statements and documents required to be filed with the SEC since
January 1, 1995 (collectively, the "SEC Reports"), each of which has complied in
all material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
promulgated thereunder, or the Exchange Act, and the rules and regulations
promulgated thereunder, each as in effect on the date so filed. None of the SEC
Reports (including but not limited to any financial statements or schedules
included or incorporated by reference therein) contained when filed, or (except
to the extent revised or superseded by a subsequent filing with the SEC)
contains, any untrue statement of a material fact or omitted or omits to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Each of the audited and unaudited consolidated financial
statements of the Company (including any related notes thereto) included in its
Annual Reports on Form 10-K for each of the two fiscal years ended December 31,
1995 and 1996 filed with the Commission has been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and fairly presents the consolidated financial position of the Company
and its subsidiaries at the respective date thereof and the consolidated results
of its operations and changes in cash flows for the periods indicated.
<PAGE> 17
13
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and its subsidiaries at December 31, 1996, including the
notes thereto, neither the Company nor any of its subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which would be required to be reflected on a balance sheet or in
the notes thereto prepared in accordance with generally accepted accounting
principles, except for liabilities or obligations incurred since December 31,
1996 which are not, individually or in the aggregate, reasonably likely to have
a Material Adverse Effect.
(d) The Company has heretofore furnished or made available to Parent a
complete and correct copy of any amendments or modifications which have not yet
been filed with the SEC to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the Securities
Act and the rules and regulations promulgated thereunder or the Exchange Act and
the rules and regulations promulgated thereunder.
SECTION 3.8 Absence of Certain Changes or Events. Since December 31,
1996, except as contemplated by this Agreement, disclosed in the SEC Reports
filed and publicly available prior to the date of this Agreement, the Company
and its subsidiaries have conducted their businesses only in the ordinary course
and in a manner consistent with past practice and, since such date, there has
not been: (i) any changes in the financial condition, results of operations,
assets, business or operations of the Company or any of its subsidiaries having
or reasonably likely to have a Material Adverse Effect; (ii) any condition,
event or occurrence which, individually or in the aggregate, is reasonably
likely to have a Material Adverse Effect; (iii) any damage, destruction or loss
(whether or not covered by insurance) with respect to any assets of the Company
or any of its subsidiaries which is reasonably likely, individually or in the
aggregate, to have a Material Adverse Effect; (iv) any change by the Company in
its accounting methods, principles or practices; (v) any revaluation by the
Company of any of its material assets, including but not limited to writing down
the value of inventory or writing off notes or accounts receivable other than in
the ordinary course of business; (vi) any entry by the Company or any of its
subsidiaries into any commitment or transactions material to the Company and its
subsidiaries taken as a whole (other than commitments or transactions entered
into in the ordinary course of business); (vii) any declaration, setting aside
or payment of any dividends or distributions in respect of the Shares other than
the regular quarterly dividend in the amount of $.20 per share; or (viii) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option (including
without limitation the granting of stock options, stock appreciation rights,
performance awards, or restricted stock awards), stock purchase or other
employee
<PAGE> 18
14
benefit plan or agreement or arrangement, or any other increase in the
compensation payable or to become payable to any present or former directors,
officers or key employees of the Company or any of its subsidiaries, except for
increases in base compensation in the ordinary course of business consistent
with past practice, or any employment, consulting or severance agreement or
arrangement entered into with any such present or former directors, officers or
key employees.
SECTION 3.9 Absence of Litigation. Except as disclosed in the SEC
Reports filed and publicly available prior to the date of this Agreement, there
are no suits, claims, actions, proceedings or investigations pending or, to the
best knowledge of the Company, threatened against the Company or any of its
subsidiaries, or any properties or rights of the Company or any of its
subsidiaries, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, that, individually or in the
aggregate, is reasonably likely to have a Material Adverse Effect. As of the
date hereof, neither the Company nor any of its subsidiaries nor any of their
respective properties is or are subject to any order, writ, judgment,
injunction, decree, determination or award having, or which, insofar as can be
reasonably foreseen, is reasonably likely to have a Material Adverse Effect or
prevent or materially delay consummation of the transactions contemplated
hereby.
SECTION 3.10 Employee Benefit Plans. Except (i) as set forth in the SEC
Reports filed and publicly available prior to the date of this Agreement or (ii)
as is not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect or prevent or materially delay the consummation of the
Offer or the Merger:
(a) Schedule 3.10 to this Agreement contains a true and complete list
of each "employee benefit plan" (within the meaning of section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
including, without limitation, multiemployer plans within the meaning of
ERISA section 3(37)), stock purchase, stock option, severance, employment,
change-in-control, fringe benefit, collective bargaining, bonus, incentive,
deferred compensation and all other employee benefit plans, agreements,
programs, policies or other arrangements, whether or not subject to ERISA
(including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or
not, under which any employee or former employee of the Company or any of
its subsidiaries, has any present or future right to benefits or under
which the Company or any of its subsidiaries has any present or future
liability. All such plans, agreements, programs, policies and arrangements
shall be collectively referred to
<PAGE> 19
15
as the "Company Plans". Company Plans which provide benefits to or which
are participated in by, non-U.S. employees and former employees ("Foreign
Company Plans") shall be listed in a separate schedule to be delivered as
set forth in Section 6.8.
(b) With respect to each Company Plan (other than Foreign Company
Plans), the Company has delivered or made available to Parent a current,
accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable: (i) any
related trust agreement or other funding instrument; (ii) the most recent
determination letter, if applicable; (iii) any summary plan description and
other written communications by the Company or any of its subsidiaries to
their employees concerning the extent of the benefits provided under a
Company Plan; and (iv) for the three most recent years (A) the Form 5500
and attached schedules, (B) audited financial statements and (C) actuarial
valuation reports.
(c) (i) Each Company Plan has been established and administered in
accordance with its terms, and in compliance with the applicable provisions
of ERISA, the Internal Revenue Code of 1986, as amended (the "Code"), and
other applicable laws, rules and regulations; (ii) each Company Plan which
is intended to be qualified within the meaning of Code section 401(a) is so
qualified and has received a favorable determination letter as to its
qualification, and nothing has occurred, whether by action or failure to
act, that would cause the loss of such qualification; (iii) no event has
occurred and no condition exists that would subject the Company or any of
its subsidiaries, either directly or by reason of their affiliation with
any member of their "Controlled Group" (defined as any organization which
is a member of a controlled group of organizations within the meaning of
Code sections 414(b), (c), (m) or (o)), to any tax, fine, lien or penalty
imposed by ERISA, the Code or other applicable laws, rules and regulations;
(iv) for each Company Plan with respect to which a Form 5500 has been
filed, no material change has occurred with respect to the matters covered
by the most recent Form since the date thereof; and (v) no "reportable
event" (as such term is defined in ERISA section 4043), "prohibited
transaction" (as such term is defined in ERISA section 406 and Code section
4975) or "accumulated funding deficiency" (as such term is defined in ERISA
section 302 and Code section 412 (whether or not waived)) has occurred with
respect to any Company Plan.
(d) With respect to each of the Company Plans that is not a
multiemployer plan within the meaning of section 4001(a)(3) of ERISA but is
subject to Title IV of ERISA, as of the Effective Time, the assets of each
such Company Plan
<PAGE> 20
16
are at least equal in value to the present value of the accrued benefits
(vested and unvested) of the participants in such Company Plan on a
termination basis, based on the actuarial methods and assumptions indicated
in the most recent actuarial valuation reports.
(e) With respect to any multiemployer plan (within the meaning of ERISA
section 4001(a)(3)): (i) none of the Company, any of its subsidiaries or
any member of their Controlled Group has incurred any withdrawal liability
under Title IV of ERISA or would be subject to such liability if, as of the
Effective Time, the Company, any of its subsidiaries or any member of their
Controlled Group were to engage in a complete withdrawal (as defined in
ERISA section 4203) or partial withdrawal (as defined in ERISA section
4205) from any such multiemployer plan; and (ii) no multiemployer plan to
which the Company, any of its subsidiaries or any member of their
Controlled Group has any liabilities or contributes, is in reorganization
or insolvent (as those terms are defined in ERISA sections 4241 and 4245,
respectively).
(f) With respect to any Company Plan, (i) no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending
or, to the knowledge of the Company, threatened, and (ii) no facts or
circumstances exist, to the knowledge of the Company, that could give rise
to any such actions, suits or claims.
(g) No Company Plan exists that could result in the payment to any
present or former employee of the Company or any of its subsidiaries of any
money or other property or accelerate or provide any other rights or
benefits to any present or former employee of the Company or any of its
subsidiaries as a result of the transaction contemplated by this Agreement,
whether or not such payment would constitute a parachute payment within the
meaning of Code section 280G.
SECTION 3.11 Tax Matters. The Company and each of its subsidiaries, and
any consolidated, combined, unitary or aggregate group for tax purposes of which
the Company or any of its subsidiaries is or has been a member has timely filed
all Tax Returns required to be filed by it in the manner provided by law, has
paid all Taxes (including interest and penalties) shown thereon to be due and
has provided adequate reserves in its financial statements according to
generally accepted accounting principles for any Taxes that have not been paid,
whether or not shown as being due on any returns. All such Tax Returns were
true, correct and complete in all material respects. Except as has been
disclosed to Parent in Schedule 3.11 to this Agreement: (i) no material claim
for unpaid Taxes has become a lien or encumbrance of any kind against the
property of the Company or any of its subsidiaries or is being asserted against
the Company or any of its subsidiaries; (ii) as of the date hereof no audit
<PAGE> 21
17
of any Tax Return of the Company or any of its subsidiaries is being conducted
by a Tax authority; and (iii) no extension of the statute of limitations on the
assessment of any Taxes has been granted by the Company or any of its
subsidiaries and is currently in effect. As used herein, "Taxes" shall mean any
taxes of any kind, including but not limited to those on or measured by or
referred to as income, gross receipts, capital, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any governmental authority, domestic or foreign.
As used herein, "Tax Return" shall mean any return, report or statement required
to be filed with any governmental authority with respect to Taxes.
SECTION 3.12 Offer Documents; Proxy Statement. Neither the Schedule
14D-9, nor any of the information supplied by the Company for inclusion in the
Offer Documents, shall, at the respective times such Schedule 14D-9, the Offer
Documents or any amendments or supplements thereto are filed with the SEC or are
first published, sent or given to stockholders, as the case may be, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
Neither the proxy statement to be sent to the stockholders of the Company in
connection with the Stockholders Meeting (as defined in Section 6.1) or the
information statement to be sent to such stockholders, as appropriate (such
proxy statement or information statement, as amended or supplemented, is herein
referred to as the "Proxy Statement"), shall, at the date the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to stockholders
and at the time of the Stockholders Meeting and at the Effective Time, be false
or misleading with respect to any material fact, or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Stockholders Meeting which
has become false or misleading. Notwithstanding the foregoing, the Company makes
no representation or warranty with respect to any information supplied by Parent
or Purchaser or any of their respective representatives which is contained in
the Schedule 14D-9 or the Proxy Statement. The Schedule 14D-9 and the Proxy
Statement will comply in all material respects as to form with the requirements
of the Exchange Act and the rules and regulations promulgated thereunder.
SECTION 3.13 Environmental Matters. (a) Except as disclosed in SEC
Reports filed and publicly available prior to
<PAGE> 22
18
the date of this Agreement and to the extent that the inaccuracy of any of the
following (or the circumstances giving rise to such inaccuracy), individually or
in the aggregate, is not reasonably likely to have a Material Adverse Effect or
prevent or materially delay consummation of the Offer or the Merger:
(i) (A) the Company and its subsidiaries are, and within the
period of all applicable statutes of limitation have been, in compliance
with all applicable Environmental Laws; and (B) the Company and each of
its subsidiaries believes that each of them will, and will not incur
material expense in excess of the amounts reflected in the Company's
statements and capital budgets to, timely attain or maintain compliance
with any Environmental Laws applicable to any of their current operations
or properties or to any of their planned operations over the next three
years;
(ii) (A) the Company and its subsidiaries hold all Environmental
Permits (each of which is in full force and effect) required for any of
their current operations and for any property owned, leased, or otherwise
operated by any of them, and are, and within the period of all applicable
statutes of limitation have been, in compliance with all such
Environmental Permits; and (B) neither the Company nor any of its
subsidiaries has knowledge that over the next three years: any of their
Environmental Permits will not be, or will entail material expense to be,
timely renewed or complied with; any additional Environmental Permits
required of any of them for current operations or for any property owned,
leased, or otherwise operated by any of them, or for any of their planned
operations, will not be timely granted or complied with; or any transfer
or renewal of, or reapplication for, any Environmental Permit required as
a result of the Merger will not be, timely effected;
(iii) (A) no review by, or approval of, any Governmental
Authority or other person is required under any Environmental Law in
connection with the execution or delivery of this Agreement; and (B)
neither the Company nor any of its subsidiaries has reason to believe that
such review or approval will not be timely obtained or granted;
(iv) neither the Company nor any of its subsidiaries has
received any Environmental Claim (as hereinafter defined) against any of
them, and neither the Company nor any of its subsidiaries has knowledge of
any such Environmental Claim being threatened;
(v) to the knowledge of the Company, Hazardous Materials are
not present on any property owned, leased, or operated by the Company or
any of its subsidiaries, that is reasonably likely to form the basis of
any Environmental Claim against any of them; and neither the Company nor
any of its subsidiaries has reason to believe that Hazardous
<PAGE> 23
19
Materials are present on any other property that is reasonably likely to
form the basis of any Environmental Claim against any of them;
(vi) neither the Company nor any of its subsidiaries has
knowledge of any material Environment Claim pending or threatened, or of
the presence or suspected presence of any Hazardous Materials that is
reasonably likely to form the basis of any Environmental Claim, in any
case against any person or entity (including without limitation any
predecessor of the Company or any of its subsidiaries) whose liability the
Company or any of its subsidiaries has or may have retained or assumed
either contractually or by operation of law. or against any real or
personal property which the Company or any of its subsidiaries formerly
owned, leased, or operated, in whole or in part; and
(vii) to the knowledge of the Company, the Company has informed
the Parent and the Purchaser of: all material facts which the Company or
any of its subsidiaries reasonably believes could form the basis of a
material Environmental Claim against any of them arising out of the
non-compliance or alleged non-compliance with any Environmental Law, or
the presence or suspected presence of Hazardous Materials at any location;
all material costs the Company reasonably expects it and any of its
subsidiaries to incur to comply with Environmental Laws during the next
three years; all material costs the Company and any of its subsidiaries
expect to incur for ongoing, and reasonably anticipated, investigation and
remediation of Hazardous Materials (including, without limitation, any
payments to resolve any threatened or asserted Environmental Claim for
investigation and remediation costs); and any other material matter
affecting the Company or any of its subsidiaries relating to any
Environmental Law.
(b) For purposes of this Agreement, the terms below shall have the
following meanings:
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding, directive, investigation, lien, demand letter, or
notice (written or oral) of noncompliance, violation, or liability, by any
person or entity asserting liability or potential liability (including
without limitation liability or potential liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, natural
resource damages, property damage, personal injury, fines or penalties)
arising out of, based on or resulting from (i) the presence, discharge,
emission, release or threatened release of any Hazardous Materials at any
location, (ii) circumstances forming the basis of any violation or alleged
violation of any Environmental Laws or Environmental Permits, or (iii)
otherwise relating to obligations or liabilities under any Environmental
Law.
<PAGE> 24
20
"Environmental Laws" means any and all laws, rules, orders,
regulations, statutes, ordinances, guidelines, codes, decrees, or other
legally enforceable requirement (including, without limitation, common law)
of any foreign government, the United States, or any state, local,
municipal or other governmental authority, regulating, relating to or
imposing liability or standards of conduct concerning protection of human
health as affected by the environment or Hazardous Materials (including
without limitation employee health and safety) or the environment
(including without limitation indoor air, ambient air, surface water,
groundwater, land surface, subsurface strata, or plant or animal species).
"Environmental Permits" means all permits, licenses, registrations,
approvals, exemptions and other filings with or authorizations by any
Governmental Authority under any Environmental Law.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity (including, without
limitation, a court) exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Hazardous Materials" means all hazardous or toxic substances, wastes,
materials or chemicals, petroleum (including crude oil or any fraction
thereof), petroleum products, asbestos, asbestos-containing materials,
pollutants, contaminants, radioactivity, electromagnetic fields and all
other materials, whether or not defined as such, that are regulated
pursuant to any Environmental Laws or that could result in liability under
any applicable Environmental Laws.
SECTION 3.14 Brokers. No broker, finder or investment banker (other
than the Financial Adviser) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of the Company. The Company has
heretofore furnished to Parent a complete and correct copy of all agreements
between the Company and the Financial Adviser pursuant to which such firm would
be entitled to any payment relating to the transactions contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
<PAGE> 25
21
SECTION 4.1 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has the requisite corporate
power and authority and any necessary governmental authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and governmental approvals is not, individually or in
the aggregate, reasonably likely to prevent the consummation of the Offer or the
Merger.
SECTION 4.2 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to enter into this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Purchaser and the consummation by each of
Parent and Purchaser of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Parent and Purchaser
other than filing and recordation of appropriate merger documents as required by
the DGCL. This Agreement has been duly executed and delivered by Parent and
Purchaser and, assuming due authorization, execution and delivery by the
Company, constitutes a legal, valid and binding obligation of each such
corporation enforceable against such corporation in accordance with its terms.
SECTION 4.3 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by Parent and Purchaser do
not and will not: (i) conflict with or violate the respective certificates of
incorporation or by-laws of Parent or Purchaser; (ii) assuming that all
consents, approvals and authorizations contemplated by clauses (i), (ii) and
(iii) of subsection (b) below have been obtained and all filings described in
such clauses have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or Purchaser or by which either
of them or their respective properties are bound or affected; or (iii) result in
any breach or violation of or constitute a default (or an event which with
notice or lapse of time or both could become a default) or result in the loss of
a material benefit under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the property or assets of Parent or Purchaser pursuant to,
any note, bond, mortgage, indenture, contract (other than contracts terminable
at will or upon 90 days' or less notice by the terminating party), agreement,
lease, license, permit, franchise or other instrument or obligation to which
Parent or Purchaser is a party or by which Parent or Purchaser or any of their
respective properties are bound or affected, except, in the case of clauses (ii)
and (iii), for any such conflicts, violations, breaches, defaults or other
<PAGE> 26
22
occurrences which are not, individually or in the aggregate, reasonably likely
to prevent or materially delay the consummation of the Offer or the Merger.
(b) The execution, delivery and performance of this Agreement by
Parent and Purchaser do not and will not require any consent, approval,
authorization or permit of, action by, filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Exchange Act and the rules and
regulations promulgated thereunder, the HSR Act or other foreign filings or
approvals, state securities, takeover and "blue sky" laws, (ii) the filing and
recordation of appropriate merger or other documents as required by the DGCL,
and (iii) such consents, approvals, authorizations, permits, actions, filings or
notifications the failure of which to make or obtain are not, individually or in
the aggregate, reasonably likely to prevent the consummation of the Offer or the
Merger.
SECTION 4.4 Offer Documents; Proxy Statement. The Offer Documents, as
filed pursuant to Section 1.1, will not, at the time such Offer Documents are
filed with the SEC or are first published, sent or given to stockholders, as the
case may be, contain any untrue statement of a material fact or omit to state
any material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The information supplied by Parent
for inclusion in the Proxy Statement shall not, on the date the Proxy Statement
is first mailed to stockholders, at the time of the Stockholders Meeting (as
defined in Section 6.1) or at the Effective Time, contain any statement which,
at such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or shall omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not false or misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading. Notwithstanding the
foregoing, Parent and Purchaser make no representation or warranty with respect
to any information supplied by the Company or any of its representatives which
is contained in or incorporated by reference in any of the foregoing documents
or the Offer Documents. The Offer Documents, as amended and supplemented, will
comply in all material respects as to form with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder.
SECTION 4.5 Brokers. No broker, finder or investment banker (other than
Morgan Stanley & Co. Incorporated) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by and on behalf of Parent or Purchaser.
<PAGE> 27
23
SECTION 4.6 Funds. Parent or Purchaser, at the expiration date
of the Offer and at the Effective Time, will have the funds necessary to
consummate the Offer and the Merger, respectively.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending the
Merger. The Company covenants and agrees that, during the period from the date
hereof to the Effective Time, unless Parent shall otherwise agree in writing,
the businesses of the Company and its subsidiaries shall be conducted only in,
and the Company and its subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice; and
the Company and its subsidiaries shall each use its reasonable best efforts to
preserve substantially intact the business organization of the Company and its
subsidiaries, to keep available the services of the present officers, employees
and consultants of the Company and its subsidiaries and to preserve the present
relationships of the Company and its subsidiaries with customers, suppliers and
other persons with which the Company or any of its subsidiaries has significant
business relations. By way of amplification and not limitation, neither the
Company nor any of its subsidiaries shall, between the date of this Agreement
and the Effective Time, directly or indirectly do, or commit to do, any of the
following without the prior written consent of Parent:
(a) Amend or otherwise change its certificate of incorporation
or by-laws or equivalent organizational documents;
(b) Issue, deliver, sell, pledge, dispose of or encumber, or
authorize or commit to the issuance, sale, pledge, disposition or
encumbrance of, (A) any shares of capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind
to acquire any shares of capital stock, or any other ownership interest
(including but not limited to stock appreciation rights or phantom
stock), of the Company or any of its subsidiaries (except for the
issuance of up to 1,749,829 shares of Company Common Stock required to
be issued pursuant to (1) the terms of Options outstanding as of April
16, 1997, (2) the employment agreement effective July 1, 1996 between
the Company and Thomas C. McDermott, and (3) the plan under which
non-employee directors are paid one-half of their annual retainer in
shares of Company Common Stock) or (B) any assets of the Company or any
of its subsidiaries, except for sales of products in the ordinary
course of business and in a manner consistent with past practice;
<PAGE> 28
24
(c) Declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock (other than (1) regular quarterly
dividends consistent with past practice, in an amount not to exceed
$.20 per share and (2) the distribution of Rights pursuant to the
Rights Plan);
(d) Reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) Acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business
organization or division thereof; (ii) incur any indebtedness for
borrowed money or issue any debt securities or assume, guarantee or
endorse, or otherwise as an accommodation become responsible for, the
obligations of any person, or make any loans, advances or capital
contributions to, or investments in, any other person (other than in
the ordinary course of business consistent with past practice); (iii)
enter into any contract or agreement other than in the ordinary course
of business consistent with past practice; or (iv) authorize any single
capital expenditure which is in excess of $1,500,000 or capital
expenditures (during any three month period) which are, in the
aggregate, in excess of $7,500,000 for the Company and its subsidiaries
taken as a whole;
(f) Except to the extent required under existing employee and
director benefit plans, agreements or arrangements as in effect on the
date of this Agreement, increase the compensation or fringe benefits of
any of its directors, officers or employees, except for increases in
salary or wages of employees of the Company or its subsidiaries who are
not officers of the Company in the ordinary course of business in
accordance with past practice, or grant any severance or termination
pay not currently required to be paid under existing severance plans to
or enter into any employment, consulting or severance agreement or
arrangement with any present or former director, officer or other
employee of the Company or any of its subsidiaries, or establish,
adopt, enter into or amend or terminate any collective bargaining
agreement or Company Plan, including, but not limited to, bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance
or other plan, agreement, trust, fund, policy or arrangement for the
benefit of any directors, officers or employees;
(g) Except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the
accounting practices or principles used by it;
<PAGE> 29
25
(h) Make any material tax election or settle or compromise any
material federal, state, local or foreign tax liability;
(i) Settle or compromise any pending or threatened suit,
action or claim which is material or which relates to the transactions
contemplated hereby;
(j) Adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its subsidiaries not
constituting an inactive subsidiary (other than the Merger);
(k) Pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (1) in
the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the financial statements
of the Company or incurred in the ordinary course of business and
consistent with past practice and (2) of liabilities required to be
paid, discharged or satisfied pursuant to the terms of any contract in
existence on the date hereof (including, without limitation, benefit
plans relating to directors); or
(l) Take, or offer or propose to take, or agree to take in
writing or otherwise, any of the actions described in Sections 5.1(a)
through 5.1(k) or any action which would make any of the
representations or warranties of the Company contained in this
Agreement untrue and incorrect as of the date when made if such action
had then been taken, or would result in any of the conditions set forth
in Annex A not being satisfied.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholders Meeting. (a) If required, the
Company, acting through its Board of Directors, shall in accordance with and
subject to applicable law and the Company's Certificate of Incorporation and
By-Laws, (i) duly call, give notice of, convene and hold a meeting of its
stockholders as soon as practicable following consummation of the Offer for the
purpose of considering and taking action on this Agreement and the transactions
contemplated hereby (the "Stockholders Meeting") and (ii) subject to its
fiduciary duties under applicable law, (A) include in the Proxy Statement the
unanimous recommendation of the Board of Directors that the stockholders of the
Company vote in favor of the approval of this Agreement and the transactions
contemplated hereby and the written opinion of the
<PAGE> 30
26
Financial Adviser that the consideration to be received by the stockholders of
the Company pursuant to the Offer and the Merger is fair to such stockholders
and (B) use its reasonable best efforts to obtain the necessary approval of this
Agreement and the transactions contemplated hereby by its stockholders. At the
Stockholders Meeting, Parent and Purchaser shall cause all Shares then owned by
them and their subsidiaries to be voted in favor of approval of this Agreement
and the transactions contemplated hereby.
(b) Notwithstanding the foregoing, in the event that Purchaser
shall acquire at least 90% of the outstanding Shares, the Company agrees, at the
request of Purchaser, subject to Article VII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the Company's
stockholders, in accordance with Section 253 of the DGCL.
SECTION 6.2 Proxy Statement. If required by applicable law, as
soon as practicable following Parent's request, the Company shall file with the
SEC under the Exchange Act and the rules and regulations promulgated thereunder,
and shall use its reasonable best efforts to have cleared by the SEC, the Proxy
Statement with respect to the Stockholders Meeting. Parent, Purchaser and the
Company will cooperate with each other in the preparation of the Proxy
Statement; without limiting the generality of the foregoing, each of Parent and
Purchaser will furnish to the Company the information relating to it required by
the Exchange Act and the rules and regulations promulgated thereunder to be set
forth in the Proxy Statement. The Company agrees to use its reasonable best
efforts, after consultation with the other parties hereto, to respond promptly
to any comments made by the SEC with respect to the Proxy Statement and any
preliminary version thereof filed by it and cause such Proxy Statement to be
mailed to the Company's stockholders at the earliest practicable time.
SECTION 6.3 Company Board Representation; Section 14(f). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and
from time to time thereafter, Purchaser shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board of
Directors of the Company as shall give Purchaser representation on the Board of
Directors equal to the product of the total number of directors on such Board
(giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the aggregate number of Shares beneficially owned by
Purchaser or any affiliate of Purchaser bears to the total number of Shares then
outstanding, and the Company shall, at such time, promptly take all action
necessary to cause Purchaser's designees to be so elected, including either
increasing the size of the Board of Directors or securing the resignations of
incumbent directors or both. At such times, the Company will use its
<PAGE> 31
27
reasonable best efforts to cause persons designated by Purchaser to constitute
the same percentage as is on the board of (i) each committee of the Board of
Directors, (ii) each board of directors of each subsidiary of the Company and
(iii) each committee of each such board, in each case only to the extent
permitted by law. Until Purchaser acquires a majority of the outstanding Shares
on a fully diluted basis, the Company shall use its reasonable best efforts to
ensure that all the members of the Board of Directors and such boards and
committees as of the date hereof who are not employees of the Company shall
remain members of the Board of Directors and such boards and committees.
(b) The Company's obligations to appoint designees to its
Board of Directors shall be subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions
required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its
obligations under this Section 6.3 and shall include in the Schedule 14D-9 or a
separate Rule 14f-1 information statement provided to stockholders such
information with respect to the Company and its officers and directors as is
required under Section 14(f) and Rule 14f-1 to fulfill its obligations under
this Section 6.3. Parent or Purchaser will supply to the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
(c) Following the election or appointment of Purchaser's
designees pursuant to this Section 6.3 and prior to the Effective Time, any
amendment, or waiver of any term or condition, of this Agreement or the
Certificate of Incorporation or By-Laws of the Company, any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Purchaser or waiver or
assertion of any of the Company's rights hereunder, and any other consent or
action by the Board of Directors with respect to this Agreement, will require
only the concurrence of a majority of the directors of the Company then in
office who are neither designated by Purchaser nor are employees of the Company
(the "Disinterested Directors") and such concurrence shall constitute the
authorization of the Board of Directors of the Company and no other action by
the Company, including any action by any other director of the Company, shall be
required for purposes of this Agreement. The number of Disinterested Directors
shall be not less than two. Any person who is a director on the date of this
Agreement, but who, in order to carry out the provisions of this Section 6.3, is
not a director at the Effective Time, shall be entitled to receive all payments
at the time such director resigns as he or she otherwise would have been
entitled to receive if he or she had been a director as of the Effective Time.
SECTION 6.4 Access to Information; Confidentiality. (a) From
the date hereof to the Effective Time, the Company
<PAGE> 32
28
shall, and shall cause its subsidiaries, officers, directors, employees,
auditors and other agents to, afford the officers, employees, auditors and other
agents of Parent, and financing sources who shall agree to be bound by the
provisions of this Section 6.4 as though a party hereto, complete access,
consistent with applicable law, at all reasonable times to its officers,
employees, agents, properties, offices, plants and other facilities and to all
books and records, and shall furnish Parent and such financing sources with all
financial, operating and other data and information as Parent, through its
officers, employees or agents, or such financing sources may from time to time
reasonably request.
(b) Each of Parent and Purchaser will hold and will cause its
officers, employees, auditors and other agents to hold in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all documents and information concerning the Company and
its subsidiaries furnished to Parent or Purchaser in connection with the
transactions contemplated in this Agreement (except to the extent that such
information can be shown to have been generally available to you on a
non-confidential basis prior to the date hereof or becomes generally available
to you on a non-confidential basis after the date hereof; provided that the
source of such information was not known by you to be bound by a confidentiality
agreement and will not release or disclose such information to any other person,
except (1) the officers, directors, employees, counsel, investment bankers and
other representatives of Parent and the Purchaser who need to know such
information for the purposes of evaluating the Merger and the other transactions
contemplated by this Agreement and (2) any other person after the Company has
provided written consent to such disclosure. If the transactions contemplated by
this Agreement are not consummated, such confidence shall be maintained for a
period of two years from the date hereof and, if requested by or on behalf of
the Company, Parent and Purchaser will, and will use all reasonable efforts to
cause their auditors and other agents to, return to the Company or destroy all
copies of written information furnished by the Company to Parent and Purchaser
or their agents, representatives or advisors. It is understood that Parent and
Purchaser shall be deemed to have satisfied their obligation to hold such
information confidential if they exercise the same care as they take to preserve
confidentiality for their own similar information.
(c) No investigation pursuant to this Section 6.4 shall affect
any representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
SECTION 6.5 No Solicitation of Transactions. The Company, its
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties
<PAGE> 33
29
conducted heretofore with respect to any acquisition or exchange of all or any
material portion of the assets of, or more than 20% of the equity interest in,
the Company or any of its subsidiaries or any business combination with or
involving the Company or any of its subsidiaries. The Company may, directly or
indirectly, furnish information and access, in each case only in response to a
request for such information or access to any person made after the date hereof
which was not encouraged, solicited or initiated by the Company or any of its
affiliates or any of its or their respective officers, directors, employees,
representatives or agents after the date hereof, pursuant to appropriate
confidentiality agreements, and may participate in discussions and negotiate
with such person concerning any merger, sale of assets, sale of shares of
capital stock or similar transaction (including an exchange of stock or assets)
involving the Company or any subsidiary or division of the Company, if such
person has submitted a written proposal to the Board of Directors of the Company
relating to any such transaction and the Board determines in good faith, based
upon the advice of outside counsel to the Company, that failing to take such
action would constitute a breach of the Board's fiduciary duty under applicable
law. The Board shall notify Parent immediately if any such proposal is made and
shall in such notice, indicate in reasonable detail the identity of the offeror
and the terms and conditions of any proposal and shall keep Parent promptly
advised of all developments which could reasonably be expected to culminate in
the Board of Directors withdrawing, modifying or amending its recommendation of
the Offer, the Merger and the other transactions contemplated by this Agreement.
Except as set forth in this Section 6.5, neither the Company or any of its
affiliates, nor any of its or their respective officers, directors, employees,
representatives or agents, shall, directly or indirectly, encourage, solicit,
participate in or initiate discussions or negotiations with, or provide any
information to, any corporation, partnership, person or other entity or group
(other than Parent and Purchaser, any affiliate or associate of Parent and
Purchaser or any designees of Parent or Purchaser) concerning any merger, sale
of any material portion or assets, sale of more than 20% of the shares of
capital stock or similar transactions (including an exchange of stock or assets)
involving the Company or any subsidiary of the Company; provided, however, that
nothing herein shall prevent the Board from taking, and disclosing to the
Company's stockholders, a position contemplated by Rules 14d-9 and 14e-2
promulgated under the Exchange Act with regard to any tender offer; provided,
further, that the Board shall not recommend that the stockholders of the Company
tender their Shares in connection with any such tender offer unless the Board
shall have determined in good faith, based upon the advice of outside counsel to
the Company, that failing to take such action would constitute a breach of the
Board's fiduciary duty under applicable law. The Company agrees not to release
any third party from, or waive any provisions of, any confidentiality or
standstill agreement to which the Company is a party, unless the Board shall
have determined in good faith, based upon the
<PAGE> 34
30
advice of outside counsel, that failing to release such third party or waive
such provisions would constitute a breach of the fiduciary duties of the Board
of Directors under applicable law.
SECTION 6.6 Employee Benefits Matters. (a) On and after the
Effective Time, Parent shall cause the Surviving Corporation and its
subsidiaries to promptly pay or provide when due all compensation and benefits
earned through or prior to the Effective Time as provided pursuant to the terms
of any compensation arrangements, employment agreements and employee or director
benefit plans (including, without limitation, deferred compensation plans),
programs and policies in existence as of the date hereof for all employees (and
former employees) and directors (and former directors) of the Company and its
subsidiaries. Parent and the Company agree that the Surviving Corporation and
its subsidiaries shall pay promptly or provide when due all compensation and
benefits required to be paid pursuant to the terms of any individual agreement
with any employee, former employee, director or former director in effect as of
the date hereof.
(b) Parent shall cause the Surviving Corporation, for the
period commencing at the Effective Time and ending on the first anniversary
thereof, to provide employee benefits under plans, programs and arrangements
which, in the aggregate, will provide benefits to the employees of the Surviving
Corporation and its subsidiaries (other than employees covered by a collective
bargaining agreement) which are no less favorable in the aggregate than those
provided pursuant to the plans, programs and arrangements (other than those
related to the equity securities of the Company) of the Company and its
subsidiaries in effect on the date hereof and employees covered by collective
bargaining agreements shall be provided with such benefits as shall be required
under the terms of any applicable collective bargaining agreement; provided,
however, that nothing herein shall prevent the amendment or termination of any
specific plan, program or arrangement, require that the Surviving Corporation
provide or permit investment in the securities of Parent, the Company or the
Surviving Corporation or interfere with the Surviving Corporation's right or
obligation to make such changes as are necessary to conform with applicable law.
Employees of the Surviving Corporation shall be given credit for all service
with the Company and its subsidiaries, to the same extent as such service was
credited for such purpose by the Company, under each employee benefit plan,
program, or arrangement of the Parent in which such employees are eligible to
participate for purposes of eligibility and vesting; provided, however, that in
no event shall the employees be entitled to any credit to the extent that it
would result in a duplication of benefits with respect to the same period of
service.
(c) If employees of the Surviving Corporation and its
subsidiaries become eligible to participate in a medical, dental or health plan
of Parent or its subsidiaries, Parent shall cause
<PAGE> 35
31
such plan to (i) waive any preexisting condition limitations for conditions
covered under the applicable medical, health or dental plans of the Company and
its subsidiaries and (ii) honor any deductible and out of pocket expenses
incurred by the employees and their beneficiaries under such plans during the
portion of the calendar year prior to such participation.
(d) Nothing in this Section 6.8 shall require the continued
employment of any person or, with respect to clauses (b) and (c) hereof, prevent
the Company and/or the Surviving Corporation and their subsidiaries from taking
any action or refraining from taking any action which the Company and its
subsidiaries prior to the Effective Time, could have taken or refrained from
taking.
SECTION 6.7 Directors' and Officers' Indemnification and
Insurance. (a) The By-Laws of the Surviving Corporation shall contain provisions
no less favorable with respect to indemnification than are set forth in Article
12 of the By-laws of the Company, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of individuals
who at the Effective Time were directors, officers or employees of the Company.
(b) Parent shall use its reasonable best efforts to cause to
be maintained in effect for six years from the Effective Time the current
policies of the directors' and officers' liability insurance maintained by the
Company (provided that Parent may substitute therefor policies of at least the
same coverage containing terms and conditions which are not materially less
advantageous) with respect to matters occurring prior to the Effective Time to
the extent available; provided, however, that in no event shall Parent or the
Company be required to expend more than an amount per year equal to 150% of
current annual premiums paid by the Company (which the Company represents and
warrants to be not more than $250,000) to maintain or procure insurance coverage
pursuant hereto.
(c) For six years after the Effective Time, Parent agrees that
it will or will cause the Surviving Corporation to indemnify and hold harmless
each present and former director and officer of the Company, determined as of
the Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") (but only to the extent such
Costs are not otherwise covered by insurance and paid) incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of or pertaining to
matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent permitted under applicable law (and Parent shall ,or shall cause the
Surviving Corporation to, also
<PAGE> 36
32
advance expenses as incurred to the fullest extent permitted under applicable
law provided the person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such person is not
entitled to indemnification).
(d) Any Indemnified Party wishing to claim indemnification
under paragraph (c) of this Section 6.7, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Parent thereof,
but the failure to so notify shall not relieve Parent of any liability it may
have to such Indemnified Party if such failure does not materially prejudice
Parent. In the event of any such claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), (i) Parent
or the Surviving Corporation shall have the right to assume the defense thereof
and Parent shall not be liable to such Indemnified Parties for any legal
expenses of other counsel or any other expenses subsequently incurred by such
Indemnified Parties in connection with the defense thereof, except that if
Parent or the Surviving Corporation elects not to assume such defense or counsel
for the Indemnified Parties advises that there are issues that raise conflicts
of interest between Parent or the Surviving Corporation and the Indemnified
Parties, the Indemnified Parties may retain counsel satisfactory to them, and
Parent or the Surviving Corporation shall pay all reasonable fees and expenses
of such counsel for the Indemnified Parties promptly as statements therefor are
received; provided, however, that Parent shall be obligated pursuant to this
paragraph (d) to pay for only one firm of counsel for all Indemnified Parties in
any jurisdiction unless the use of one counsel for such Indemnified Parties
would present such counsel with a conflict of interest, (ii) the Indemnified
Parties will cooperate in the defense of any such matter and (iii) Parent shall
not be liable for any settlement effected without its prior written consent,
which consent shall not be unreasonably withheld; and provided, further, that
Parent shall not have any obligation hereunder to any Indemnified Party when and
if a court of competent jurisdiction shall ultimately determine, and such
determination shall have become final, that the indemnification of such
Indemnified Party in the manner contemplated hereby is prohibited by applicable
law.
SECTION 6.8 Delivery of Schedules. The Company shall deliver
to Parent, within ten business days after the date hereof, a schedule listing
all Foreign Company Plans. With respect to each Foreign Company Plan, the
Company will deliver or make available within ten business days after the date
hereof, to Parent a current, accurate and complete copy (or, to the extent no
such copy exists, an accurate description) thereof and, to the extent
applicable: (i) any related trust agreement or other funding instrument; (ii)
the most recent determination letter, if applicable; (iii) any summary plan
description and other written communications by the Company or any of its
subsidiaries to their employees concerning the extent of the benefits provided
under a
<PAGE> 37
33
Company Plan; and (iv) for the three most recent years (A) the Form 5500 and
attached schedules, (B) audited financial statements and (C) actuarial valuation
reports.
SECTION 6.9 Notification of Certain Matters. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would, if such representation or warranty were required
to be made at such time, be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate; provided, however, that
the delivery of any notice pursuant to this Section 6.9 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 6.10 Further Action; Reasonable Best Efforts. (a) Upon
the terms and subject to the conditions hereof, each of the parties hereto shall
use its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do or cause to be done, all things necessary, proper or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement as soon as practicable, including
but not limited to (i) cooperation in the preparation and filing of the Offer
Documents, the Schedule 14D- 9, the Proxy Statement, any required filings under
the HSR Act or other foreign filings and any amendments to any thereof and (ii)
using its reasonable best efforts to promptly make all required regulatory
filings and applications including, without limitation, responding promptly to
requests for further information and to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of governmental authorities
and parties to contracts with the Company and its subsidiaries as are necessary
for the consummation of the transactions contemplated by this Agreement and to
fulfill the conditions to the Offer and the Merger. In case at any time after
the Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use their reasonable best efforts to take all such
necessary action.
(b) The Company and Parent each shall keep the other apprised
of the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
their subsidiaries, from any Governmental Authority with respect to the Offer or
the Merger or any of the other transactions contemplated by this Agreement. The
parties hereto will consult and cooperate with one another, and consider in good
faith the views of one another in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto
<PAGE> 38
34
in connection with proceedings under or relating to the HSR Act or any other
antitrust law.
(c) Without limiting the generality of the undertakings
pursuant to this Section 6.10: (i) Parent agrees to, if necessary to prevent any
Governmental Authority from taking steps to obtain, or from issuing, any order,
injunction, decree, judgment or ruling or the taking of any other action
restraining, enjoining or otherwise prohibiting the Offer or the Merger, offer
to accept an order to divest (or enter into a consent decree or other agreement
giving effect thereto) such of the Company's or Parent's assets and business as
may be necessary to forestall such order, decree, ruling or action and to hold
separate such assets and business pending such divestiture, but only if the
amount of such assets and businesses would not be material (measured in relation
to the combined assets or revenues of the Company and its subsidiaries and
Parent's fluid technology business, taken as a whole); and (ii) the Company and
Parent each agree to contest and resist any action seeking to have imposed any
order, decree, judgment, injunction, ruling or other order (whether temporary,
preliminary or permanent) (an "Order") that would delay, restrain, enjoin or
otherwise prohibit consummation of the Offer or the Merger and in the event that
any such temporary or preliminary Order is entered in any proceeding that would
make consummation of the Offer or the Merger in accordance with the terms of
this Agreement unlawful or that would prevent or delay consummation of the Offer
or the Merger or the other transactions contemplated by this Agreement, to use
its reasonable best efforts to take promptly any and all steps (including the
appeal thereof, the posting of a bond or the taking of the steps contemplated by
clause (i) of this paragraph) necessary to vacate, modify or suspend such Order
so as to permit such consummation as promptly as practicable after the date
hereof.
SECTION 6.11 Public Announcements. Parent and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to the Offer or the Merger and shall
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with its
securities exchange.
SECTION 6.12 Disposition of Litigation. The Company agrees
that it will not settle any litigation currently pending, or commenced after the
date hereof, against the Company or any of its directors by any stockholder of
the Company relating to the Offer or this Agreement, without the prior written
consent of Parent (which shall not be unreasonably withheld).
SECTION 6.13 Rights. The Company will promptly adopt a
Stockholder Rights Plan (the "Rights Plan") in the form delivered to Parent on
or prior to the date hereof. Immediately prior to the purchase of Shares
pursuant to the Offer, the Board
<PAGE> 39
35
of Directors of the Company shall take all necessary action to terminate all of
the outstanding Rights (as defined in the Rights Plan), effective immediately
prior thereto. The Company has taken, or prior to the adoption of such Rights
Plan, will take, all necessary action so that none of the execution of this
Agreement, the making of the Offer, the acquisition of Shares pursuant to the
Offer or the consummation of the Merger will (i) cause the Rights issued
pursuant to such Rights Plan to become exercisable, (ii) cause any person to
become an Acquiring Person (as defined in the Rights Plan) or (iii) give rise to
a Separation Time (as defined in the Rights Plan) or a Flip-In Date (as defined
in the Rights Plan). The Company will not amend the Rights Plan.
ARTICLE VII
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect
the Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) If required by the DGCL, this Agreement shall have been
approved by the affirmative vote of the stockholders of the Company by
the requisite vote in accordance with the Company's Certificate of
Incorporation and the DGCL (which the Company has represented shall be
solely the affirmative vote of a majority of the outstanding Shares).
(b) No statute, rule, regulation, executive order, decree,
ruling, injunction or other order (whether temporary, preliminary or
permanent) shall have been enacted, entered, promulgated or enforced by
any United States, foreign, federal or state court or governmental
authority which prohibits, restrains, enjoins or restricts the
consummation of the Merger.
(c) Purchaser shall have purchased Shares pursuant to the
Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and
the Merger contemplated hereby may be abandoned at any time prior to the
Effective Time, notwithstanding approval thereof by the stockholders of the
Company:
(a) By mutual written consent of Parent, Purchaser and the
Company;
<PAGE> 40
36
(b) By Parent or the Company if any court of competent
jurisdiction or other governmental body located or having jurisdiction
within the United States or any country or economic region in which
either the Company or Parent, directly or indirectly, has material
assets or operations, shall have issued a final order, injunction,
decree, judgment or ruling or taken any other final action restraining,
enjoining or otherwise prohibiting the Offer or the Merger and such
order, injunction, decree, judgment, ruling or other action is or shall
have become final and nonappealable;
(c) By Parent (only following the Outside Date (as defined
below), in the case of clause (ii) below) if due to an occurrence or
circumstance which resulted in a failure to satisfy any of the Offer
Conditions, Purchaser shall have (i) terminated the Offer in accordance
with the terms of this Agreement or (ii) failed to pay for Shares
pursuant to the Offer on or prior to the Outside Date;
(d) By the Company (only following the Outside Date, in the
case of clause (ii)(B) below) if (i) there shall have been a material
breach of any covenant or agreement on the part of Parent or the
Purchaser contained in this Agreement which materially adversely
affects Parent's or Purchaser's ability to consummate (or materially
delays commencement or consummation of) the Offer, and which shall not
have been cured prior to the earlier of (A) 10 business days following
notice of such breach and (B) two business days prior to the date on
which the Offer expires, (ii) Purchaser shall have (A) terminated the
Offer or (B) failed to pay for Shares pursuant to the Offer on or prior
to the Outside Date (unless such failure is caused by or results from
the failure of any representation or warranty of the Company to be true
and correct in any material respect or the failure of the Company to
perform in any material respect any of its covenants or agreements
contained in this Agreement) or (iii) prior to the purchase of Shares
pursuant to the Offer, any person shall have made a bona fide offer to
acquire the Company (A) that the Board of Directors of the Company
determines in its good faith judgment is more favorable to the
Company's stockholders than the Offer and the Merger and (B) as a
result of which the Board of Directors determines in good faith, based
upon the advice of outside counsel, that it is obligated by its
fiduciary obligations under applicable law to terminate this Agreement,
provided that such termination under this clause (iii) shall not be
effective until the Company has made payment of the full fee and
expense reimbursement required by Section 8.3; or
(e) By Parent prior to the purchase of Shares pursuant to the
Offer, if (i) there shall have been a breach of any covenant or
agreement on the part of the Company contained in this Agreement which
is reasonably likely to have a
<PAGE> 41
37
Material Adverse Effect on the Company or which materially adversely
affects (or materially delays) the consummation of the Offer, which
shall not have been cured prior to the earlier of (A) 10 business days
following notice of such breach and (B) two business days prior to the
date on which the Offer expires, (ii) the Board shall have withdrawn or
modified (including by amendment of the Schedule 14D-9) in a manner
adverse to Purchaser its approval or recommendation of the Offer, this
Agreement or the Merger or shall have recommended another offer or
transaction, or shall have resolved to effect any of the foregoing, or
(iii) the Minimum Condition shall not have been satisfied by the
expiration date of the Offer as it may have been extended pursuant
hereto and on or prior to such date (A) any person (including the
Company but not including Parent or Purchaser) shall have made a public
announcement with respect to a Third Party Acquisition that
contemplates a direct or indirect consideration (or implicit valuation)
for Shares (including the value of any stub equity) in excess of the
per Share Merger Consideration or (B) any person (including the Company
or any of its affiliates or subsidiaries), other than Parent or any of
its affiliates shall have become (and remain at the time of
termination) the beneficial owner of 19.9% or more of the Shares
(unless such person shall have tendered and not withdrawn such person's
Shares pursuant to the Offer). As used herein, the "Outside Date" shall
mean the latest of (A) 70 days following the date hereof, (B) the date
that all conditions to the Offer set forth in paragraph (a) and (h) of
the Offer Conditions, the satisfaction of which involve compliance with
or otherwise relate to any United States antitrust or competition laws
or regulations (including any enforcement thereof), have been satisfied
for a period of 10 business days, or (C) 10 business days following the
conclusion of any ongoing proceedings before any foreign Governmental
Authority in connection with its review of the transactions
contemplated hereby pursuant to any foreign antitrust or competition
law or regulation; provided that in no event shall the Outside Date be
later than December 31, 1997.
SECTION 8.2 Effect of Termination. In the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except as set forth in Section 8.3 and Section 9.1; provided, however,
that nothing herein shall relieve any party from liability for any wilful breach
hereof.
SECTION 8.3 Fees and Expenses.
(a) If:
(i) Parent terminates this Agreement pursuant to Section
8.1(e)(i) hereof, or if the Company terminates this
<PAGE> 42
38
Agreement pursuant to Section 8.1(d)(ii) hereof under circumstances
that would have permitted Parent to terminate this Agreement pursuant
to Section 8.1(e)(i) hereof, and within 15 months thereafter, the
Company enters into an agreement with respect to a Third Party
Acquisition, or a Third Party Acquisition occurs, involving any party
(or any affiliate or associate thereof) (x) with whom the Company (or
its agents) had any discussions with respect to a Third Party
Acquisition, (y) to whom the Company (or its agents) furnished
information with respect to or with a view to a Third Party Acquisition
or (z) who had submitted a proposal or expressed any interest publicly
or to the Company in a Third Party Acquisition, in the case of each of
clauses (x), (y) and (z) prior to such termination; or
(ii) Parent terminates this Agreement pursuant to Section
8.1(e)(i) hereof, or if the Company terminates this Agreement pursuant
to Section 8.1(d)(ii) hereof under circumstances that would have
permitted Parent to terminate this Agreement pursuant to Section
8.1(e)(i) hereof and within 15 months thereafter the Company enters
into an agreement with respect to a Third Party Acquisition that
contemplates a direct or indirect consideration (or implicit valuation)
for Shares (including the value of any stub equity) in excess of the
per Share Merger Consideration; or
(iii) (1) the Company terminates this Agreement pursuant to
8.1(d)(iii) or (2) the Company terminates this Agreement pursuant to
Section 8.1(d)(ii)(B) hereof and at such time Parent would have been
permitted to terminate this Agreement under Section 8.1(e)(ii) or (iii)
hereof or (3) Parent terminates this Agreement pursuant to Section
8.1(e)(ii) or (iii) hereof;
then the Company shall pay to Parent and Purchaser, within one business day
following the execution and delivery of such agreement or such occurrence, as
the case may be, or simultaneously with any termination contemplated by Section
8.3(a)(iii) above, a fee, in cash, of $22 million (less any amounts previously
paid pursuant to Section 8.3(b)), provided, however, that the Company in no
event shall be obligated to pay more than one such fee with respect to all such
agreements and occurrences and such termination.
"Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger or similar
business combination by any person other than Parent, Purchaser or any affiliate
thereof (a "Third Party"); (ii) the acquisition by a Third Party of 20.0% or
more of the assets of the Company and its subsidiaries, taken as a whole; or
(iii) the acquisition by a Third Party of 20.0% or more of the outstanding
Shares.
<PAGE> 43
39
(b) Upon the termination of this Agreement (i) under
circumstances in which Parent shall have been entitled to terminate this
Agreement pursuant to Section 8.1(e)(i) hereof (whether or not expressly
terminated on such basis) or (ii) if any of the representations and warranties
of the Company contained in this Agreement were untrue or incorrect in any
material respect when made and at the time of termination remained untrue or
incorrect in any material respect and such misrepresentation materially
adversely affected the consummation (or materially delayed commencement or
consummation) of the Offer, then the Company shall reimburse Parent, Purchaser
and their affiliates (not later than one business day after submission of
statements therefor) for all actual documented out-of-pocket fees and expenses
actually incurred by any of them or on their behalf in connection with the Offer
and the Merger and the consummation of all transactions contemplated by this
Agreement (including, without limitation, fees and disbursements payable to
financing sources, investment bankers, counsel to Purchaser or Parent or any of
the foregoing, and accountants) up to a maximum amount of $2 million; provided,
however, that in no circumstances shall any payment be made under this Section
8.3(b) after a payment has been made under Section 8.3(a). Unless required to be
paid earlier pursuant to Section 8.1(d), the Company shall in any event pay the
amount requested within one business day of such request, subject to the
Company's right to demand a return of any portion as to which invoices are not
received in due course after request by the Company.
(c) Upon the termination of this Agreement (i) under
circumstances in which the Company shall have been entitled to terminate this
Agreement pursuant to Section 8.1(d)(i) hereof (whether or not expressly
terminated on such basis) or (ii) if any of the representations and warranties
of Parent or Purchaser contained in this Agreement were untrue or incorrect in
any material respect when made and at the time of termination remained untrue or
incorrect in any material respect and such misrepresentation materially
adversely affected Parent's or Purchaser's ability to consummate (or materially
delayed commencement or consummation of) the Offer, then Parent shall reimburse
the Company and its affiliates (not later than one business day after submission
of statements therefor) for all actual documented out-of-pocket fees and
expenses actually incurred by any of them or on their behalf in connection with
the Offer and the Merger and the consummation of all transactions contemplated
by this Agreement (including, without limitation, fees and disbursements payable
to financing sources, investment bankers, counsel to the Company or any of the
foregoing, and accountants) up to a maximum amount of $2 million.
(d) Except as otherwise specifically provided herein, each
party shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby.
<PAGE> 44
40
SECTION 8.4 Amendment. Subject to Section 6.3, this Agreement
may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after approval of the Merger by the stockholders of the
Company, no amendment may be made which would reduce the amount or change the
type of consideration into which each Share shall be converted upon consummation
of the Merger. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 8.5 Waiver. Subject to Section 6.3, at any time prior
to the Effective Time, any party hereto may (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.6, Section 6.7 and Article IX shall survive the
Effective Time and those set forth in Section 6.4, Section 8.3 and Article IX
shall survive termination of this Agreement.
SECTION 9.2 Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telecopy, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to Parent or Purchaser:
ITT Industries, Inc.
4 West Red Oak Lane
White Plains, NY 10604
Attention: Vincent A. Maffeo, Esq.
<PAGE> 45
41
with an additional copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: William E. Curbow, Esq.
if to the Company:
Goulds Pumps, Incorporated
300 Willow Brook Office Park
Fairport, NY 14450
Attention: Michael T. Tomaino, Esq.
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: James C. Morphy, Esq.
SECTION 9.3 Certain Definitions. For purposes of this
Agreement, the term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, the first mentioned person;
(b) "beneficial owner" with respect to any Shares means a
person who shall be deemed to be the beneficial owner of such Shares
(i) which such person or any of its affiliates or associates
beneficially owns, directly or indirectly, (ii) which such person or
any of its affiliates or associates (as such term is defined in Rule
12b-2 of the Exchange Act) has, directly or indirectly, (A) the right
to acquire (whether such right is exercisable immediately or subject
only to the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) which
are beneficially owned, directly or indirectly, by any other persons
with whom such person or any of its affiliates or person with whom such
person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any shares;
(c) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or
as trustee or executor, of the power to direct or cause the direction
of the management policies of
<PAGE> 46
42
a person, whether through the ownership of stock, as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a
significant segment of the accounting profession in the United States,
in each case applied on a basis consistent with the manner in which the
audited financial statements for the fiscal year of the Company ended
December 31, 1994 were prepared;
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group
(as defined in Section 13(d)(3) of the Exchange Act); and
(f) "subsidiary" or "subsidiaries" of the Company, the
Surviving Corporation, Parent or any other person means any
corporation, partnership, joint venture or other legal entity of which
the Company, the Surviving Corporation, Parent or such other person, as
the case may be (either alone or through or together with any other
subsidiary), owns, directly or indirectly, 50% or more of the stock or
other equity interests the holder of which is generally entitled to
vote for the election of the board of directors or other governing body
of such corporation or other legal entity.
SECTION 9.4 Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
SECTION 9.5 Entire Agreement; Assignment. This Agreement
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
and oral, among the parties, or any of them, with respect to the subject matter
hereof. This Agreement shall not be assigned by operation of law or otherwise,
except that Parent and Purchaser may assign all or
<PAGE> 47
43
any of their respective rights and obligations hereunder to any direct or
indirect wholly owned subsidiary or subsidiaries of Parent, provided that no
such assignment shall relieve the assigning party of its obligations hereunder
if such assignee does not perform such obligations.
SECTION 9.6 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and nothing
in this Agreement, express or implied, except for the provisions of Section 6.7,
is intended to or shall confer upon any other person any rights, benefits or
remedies of any nature whatsoever under or by reason of this Agreement.
SECTION 9.7 Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Delaware,
regardless of the laws that might otherwise govern under applicable principles
of conflicts of laws thereof.
SECTION 9.8 Headings. The descriptive headings contained in
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
<PAGE> 48
44
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ITT INDUSTRIES, INC.
By:/s/ Lawrence J. Swire
--------------------------------
Title: Authorized Person
GEORGE ACQUISITION, INC.
By:/s/ Lawrence J. Swire
--------------------------------
Title: Vice President
GOULDS PUMPS, INCORPORATED
By:/s/ Thomas C. McDermott
--------------------------------
Title: Chairman, Chief Executive
Officer and President
<PAGE> 49
ANNEX A
Offer Conditions
The capitalized terms used in this Annex A have the meanings
set forth in the attached Agreement, except that the term "Merger Agreement"
shall be deemed to refer to the attached Agreement and the term "Commission"
shall be deemed to refer to the SEC.
Notwithstanding any other provision of the Offer, but subject
to the terms and conditions of the Merger Agreement, Purchaser shall not be
required to accept for payment or, subject to any applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), pay for any Shares
tendered pursuant to the Offer, and may postpone the acceptance for payment or,
subject to the restriction referred to above, payment for any Shares tendered
pursuant to the Offer, and may amend or terminate the Offer (whether or not any
Shares have theretofore been purchased or paid for) to the extent permitted by
the Merger Agreement if, (i) at the expiration of the Offer, a number of shares
of Company Common Stock which, together with any Shares owned by Parent or
Purchaser, constitutes more than 50% of the voting power (determined on a
fully-diluted basis), on the date of purchase, of all the securities of the
Company entitled to vote generally in the election of directors or in a merger
shall not have been validly tendered and not properly withdrawn prior to the
expiration of the Offer, the ("Minimum Condition") or (ii) at any time on or
after the date of this Agreement and prior to the acceptance for payment of
Shares, any of the following conditions occurs or has occurred:
(a) there shall have been entered any order, preliminary or
permanent injunction, decree, judgment or ruling in any action or
proceeding before any court or governmental, administrative or
regulatory authority or agency, or any statute, rule or regulation
enacted, entered, enforced, promulgated, amended or issued that is
applicable to Parent, Purchaser, the Company or any subsidiary or
affiliate of Purchaser or the Company or the Offer or the Merger, by
any legislative body, court, government or governmental, administrative
or regulatory authority or agency that: (i) makes illegal or otherwise
directly or indirectly restrains or prohibits or makes materially more
costly the making of the Offer in accordance with the terms of the
Merger Agreement, the acceptance for payment of, or payment for, some
of or all the Shares by Purchaser or any of its affiliates or the
consummation of the Merger; (ii) prohibits the ownership or operation
by the Company or any of its subsidiaries, or Parent or any of its
subsidiaries, of all or any material portion of the business or assets
of the Company or any of its subsidiaries, taken as a whole, or
A-1
<PAGE> 50
Parent or its subsidiaries, taken as a whole, or (iii) materially
limits the ownership or operation by the Company or any of its
subsidiaries, or Parent or any of its subsidiaries, of all or any
material portion of the business or assets of the Company or any of its
subsidiaries, taken as a whole, or Parent or its subsidiaries, taken as
a whole (other than, in either case, assets or businesses of the
Company or its subsidiaries or Parent's fluid technology business that
are not material (measured in relation to the combined assets or
revenues of the Company and its subsidiaries and Parent's fluid
technology business, taken as a whole)) or compels Parent or any of its
subsidiaries to dispose of or hold separate all or any portion of the
businesses or assets of the Company or any of its subsidiaries or
Parent or any of its subsidiaries (other than, in either case, assets
or businesses of the Company or its subsidiaries or Parent's fluid
technology business that are not material (measured in relation to the
combined assets or revenues of the Company and its subsidiaries and
Parent's fluid technology business, taken as a whole)), as a result of
the transactions contemplated by the Offer or the Merger Agreement;
(iii) imposes limitations on the ability of Parent, Purchaser or any of
Parent's affiliates effectively to acquire or hold or to exercise full
rights of ownership of Shares, including without limitation the right
to vote any Shares acquired or owned by Parent or Purchaser or any of
its affiliates on all matters properly presented to the stockholders of
the Company, including without limitation the adoption and approval of
the Merger Agreement and the Merger or the right to vote any shares of
capital stock of any subsidiary directly or indirectly owned by the
Company; or (iv) requires divestiture by Parent or Purchaser or any of
their affiliates of any Shares;
(b) there shall have occurred any event that is reasonably
likely to have a Material Adverse Effect;
(c) there shall have occurred (i) any general suspension of
trading in, or limitation on prices (other than suspensions or
limitations triggered on the New York Stock Exchange by price
fluctuations on a trading day) for, securities on any national
securities exchange or in the over-the-counter market in the United
States, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any material
limitation (whether or not mandatory) by any government or
governmental, administrative or regulatory authority or agency,
domestic or foreign, on, the extension of credit by banks or other
lending institutions, (iv) a commencement of a war or armed hostilities
or other national calamity directly involving the United States or
materially adversely affecting (or material delaying) the consummation
of the Offer or (v) in the case of any of the foregoing
A-2
<PAGE> 51
existing at the time of commencement of the Offer, a material
acceleration or worsening thereof;
(d) (i) it shall have been publicly disclosed or Purchaser
shall have otherwise learned that beneficial ownership (determined for
the purposes of this paragraph as set forth in Rule 13d-3 promulgated
under the Exchange Act) of more than 25.0% of the outstanding Shares
has been acquired by any corporation (including the Company or any of
its subsidiaries or affiliates), partnership, person or other entity or
group (as defined in Section 13(d)(3) of the Exchange Act), other than
Parent or any of its affiliates, or (ii) (A) the Board of Directors of
the Company or any committee thereof shall have withdrawn or modified
in a manner adverse to Parent or Purchaser the approval or
recommendation of the Offer, the Merger or the Merger Agreement, or
approved or recommended any takeover proposal or any other acquisition
of more than 5% of the outstanding Shares other than the Offer and the
Merger, (B) any such corporation, partnership, person or other entity
or group shall have entered into a definitive agreement or an agreement
in principle with the Company with respect to a tender offer or
exchange offer for any Shares or a merger, consolidation or other
business combination with or involving the Company or any of its
subsidiaries, or (C) the Board of Directors of the Company or any
committee thereof shall have resolved to do any of the foregoing;
(e) any of the representations and warranties of the Company
set forth in the Merger Agreement that are qualified by reference to a
Material Adverse Effect shall not be true and correct, or any such
representations and warranties that are not so qualified shall not be
true and correct in any respect that is reasonably likely to have a
Material Adverse Effect, in each case as if such representations and
warranties were made at the time of such determination;
(f) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be
performed or complied with by it under the Merger Agreement;
(g) the Merger Agreement shall have been terminated in
accordance with its terms or the Offer shall have been terminated with
the consent of the Company; or
(h) any waiting periods under the HSR Act applicable to the
purchase of Shares pursuant to the Offer or the Merger, and any
applicable waiting periods under any foreign statutes or regulations,
shall not have expired or been terminated;
A-3
<PAGE> 52
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances (except for any
action or inaction by Purchaser or any of its affiliates constituting a breach
of the Merger Agreement) giving rise to any such condition, makes it inadvisable
to proceed with the Offer or with such acceptance for payment of or payment for
Shares or to proceed with the Merger.
The foregoing conditions are for the sole benefit of Purchaser
and may be asserted by Purchaser regardless of the circumstances giving rise to
any such condition (except for any action or inaction by Purchaser or any of its
affiliates constituting a breach of the Merger Agreement) or (other than the
Minimum Condition) may be waived by Purchaser in whole or in part at any time
and from time to time in its sole discretion (subject to the terms of the Merger
Agreement). The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances, and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
A-4
