<PAGE> 1
- - -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - -------------------------------------------------------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 19, 1994
Hubbell Incorporated
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Connecticut 1-2958 06-0397030
- - --------------------- -------------------------- ----------------------
(State or other (Commission File No.) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
584 Derby Milford Road, Orange, Connecticut 06477-4024
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 799-4100
-------------------------
N/A
- - -------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
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<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
(a) On April 19, 1994, Chance Holdings, Inc., a Delaware corporation and
newly-formed wholly-owned subsidiary of the Registrant, acquired all of the
issued and outstanding capital stock of A. B. Chance Industries, Inc., a
Delaware corporation ("Chance"), from Chance's stockholders. Chance is engaged
in the manufacture of electrical apparatus (overhead and underground
distribution switches, fuses, contacts, enclosures and sectionalizers);
anchors; hardware; insulators (porcelain and polymer); and hot-line tools and
other safety equipment.
Pursuant to the terms of the Stock Purchase Agreement, dated March
16, 1994, by and among Registrant, Chance, and the stockholders of Chance,
attached hereto as Exhibit (c)1., Registrant (a) purchased all the issued and
outstanding capital stock of Chance for $40,379,821 (including the "cash-out"
of stock options for $1,140,692 and the redemption of preferred stock for $10
million), and (b) retired Chance's existing debt of $69,620,179. The funds
required for the acquisition were provided from (a) the liquidation of certain
portfolio investments and (b) short-term borrowings of $45 million from Shawmut
Bank Connecticut, N.A.
The purchase price was a result of arm's-length negotiation among
representatives of the respective managements of Registrant and Chance, and the
principal stockholders of Chance. There is no material relationship between
any of the stockholders of Chance and the Registrant or any of its affiliates,
any director or officer of the Registrant, or any associate of any such
director or officer.
(b) Certain of the assets of Chance constitute plant, equipment, and
other physical property utilized in the business of Chance as previously
described, and Registrant intends to continue such use.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired. Audited financial
statements of Chance for the years ended November 30, 1993 and 1992.
(b) Pro forma financial information. Unaudited pro forma combined
balance sheet as of March 31, 1994 and a combined summary of operations for the
year 1993.
(c) Exhibits. The following exhibits are filed with this report, and
their contents are incorporated herein by reference:
1. Stock Purchase Agreement, dated March 16, 1994, by and among
Registrant, Chance and the stockholders of Chance. A copy of
any Exhibit or Schedule to said Stock Purchase Agreement will
be supplied to the Securities & Exchange Commission upon
request.
- 2 -
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HUBBELL INCORPORATED
Dated: April 29, 1994 By: /s/Richard W. Davies
-------------------------- -------------------------------
Richard W. Davies
Secretary
- 3 -
<PAGE> 4
Item 7(a) Financial Statements of Business Acquired
A. B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1993 AND 1992
(WITH INDEPENDENT AUDITORS' REPORT THEREON)
<PAGE> 5
Independent Auditors' Report
The Board of Directors
A. B. Chance Industries, Inc.:
We have audited the accompanying consolidated balance sheets of A. B. Chance
Industries, Inc. and subsidiaries as of November 30, 1993 and 1992, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for the years then ended. These consolidated financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of A. B. Chance
Industries, Inc. and subsidiaries as of November 30, 1993 and 1992, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.
As discussed in Notes 1(h), 4, and 6 to the consolidated financial statements,
the Company changed its method of accounting for income taxes in fiscal year
1993 to adopt the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." As discussed in Notes 1(i), 4, and 10 to the consolidated financial
statements, the Company has also adopted the provisions of the Financial
Accounting Standards Board's Statement of Financial Accounting Standards No.
106, "Employees' Accounting for Postretirement Benefits other than Pensions" in
fiscal year 1993.
/s/ KPMG Peat Marwick
Certified Public Accountants
1010 Market Street
St. Louis, MO 63101-2085
January 6, 1994
<PAGE> 6
A. B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
Assets 1993 1992
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,533 2,245
Accounts receivable, less allowance for doubtful accounts
of $172 and $173 in 1993 and 1992, respectively 22,972 21,286
Inventories:
Finished goods 9,433 9,684
Raw material and work in process 14,338 15,388
Inventory of discontinued operations, net of
reserve of $1,379 in 1993 1,000 1,613
------- -------
Total inventories 24,771 26,685
------- -------
Deferred income taxes 4,899 -
Other current assets 949 1,034
------- -------
Total current assets 55,124 51,250
------- -------
Property, plant and equipment:
Land 1,511 1,444
Buildings 15,456 15,437
Machinery and equipment 44,672 41,256
Construction in progress 1,612 1,654
------- -------
63,251 59,791
Accumulated depreciation (33,972) (29,185)
Property, plant and equipment of discontinued
operations, net of reserve of $3,877 in 1993 936 5,236
------- -------
Property, plant and equipment, net 30,215 35,842
------- -------
Excess of cost over net assets of businesses acquired, less
accumulated amortization of $5,846 and $4,869 in 1993
and 1992, respectively 33,664 34,641
Other assets 2,758 3,671
------- -------
Total assets $ 121,761 125,404
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 7
<TABLE>
<CAPTION>
Liabilities and Stockholders' Equity 1993 1992
------------------------------------ ---- ----
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 6,601 6,940
Accounts payable 10,407 8,690
Accrued expenses 14,585 12,297
Accrued expenses of discontinued operations 1,646 -
Income taxes payable 732 336
------- -------
Total current liabilities 33,971 28,263
Long-term debt, less current maturities 60,867 69,413
Deferred income taxes 4,020 4,996
Other liabilities 6,430 2,383
------- -------
Total liabilities 105,288 105,055
------- -------
Stockholders' equity:
Preferred stock, par value $.01; 100 shares authorized,
issued, and outstanding (liquidating preference $100,000
per share aggregating $10,000,000) 4,952 4,412
Common stock:
Class A, par value $.01; 1,100,000 shares authorized;
150,355 shares issued and outstanding 1 1
Class B, par value $.01; 229,000 shares authorized;
197,632 shares issued and outstanding 2 2
Class C, par value $.01; 665,500 shares authorized;
652,013 shares issued and outstanding 7 7
Additional paid-in capital 15,988 16,528
Accumulated deficit (3,242) (393)
Unfunded pension losses, net of tax (1,131) (210)
Cumulative translation adjustment (60) 61
------- -------
16,517 20,408
Less treasury stock, 3,818 and 5,118 shares of Class A
common stock for the year ended 1993 and 1992, respectively 44 59
------- -------
Total stockholders' equity 16,473 20,349
Commitments and contingencies
------- -------
Total liabilities and stockholders' equity $ 121,761 125,404
======= =======
</TABLE>
<PAGE> 8
A. B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED NOVEMBER 30, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Net sales $ 156,830 150,907
Cost of sales 110,463 108,163
------- -------
Gross profit 46,367 42,744
Selling, general and administrative expense 29,749 28,324
------- -------
Operating income 16,618 14,420
Other deductions:
Interest expense, net 7,437 8,442
Amortization of excess of cost over net
assets of businesses acquired 977 982
Amortization of noncompete agreement 201 2,406
Other expenses, net 889 1,618
------- -------
Income from continuing operations
before income tax expense (benefit),
discontinued operations, and
cumulative effect of changes in
accounting principles 7,114 972
Income tax expense (benefit) 3,056 (429)
------- -------
Income before discontinued operations and
cumulative effect of changes in account-
ing principles 4,058 1401
Discontinued operations:
Loss from operations of the Parkersburg Division
to be discontinued (net of applicable income tax
benefit of $1,114 in 1993 and $11 in 1992) (1,818) (17)
Estimated loss on disposal of Parkersburg
Division (net of applicable income tax benefit
of $2,618) (4,272) -
------- -------
Income (loss) before cumulative effect
of accounting changes (2,032) 1384
Cumulative effect of changes in accounting for
postretirement benefits other than pensions
and income taxes (817) -
------- -------
Net income (loss) $ (2,849) 1,384
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 9
A. B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED NOVEMBER 30, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Preferred stock:
Beginning of year $ 4,412 3,930
Accretion of redeemable preferred stock 540 482
------ ------
End of year 4,952 4,412
------ ------
Common stock:
Class A 1 1
Class B 2 2
Class C 7 7
Additional paid-in capital:
Beginning of year 16,528 17,010
Accretion of redeemable preferred stock (540) (482)
------ ------
End of year 15,988 16,528
------ ------
Accumulated deficit:
Beginning of year (393) (1,777)
Net income (2,849) 1,384
------ ------
End of year (3,242) (393)
------ ------
Unfunded pension losses, net of tax
Beginning of year (210) -
Unfunded losses (921) (210)
------ ------
End of year (1,131) (210)
------ ------
Cumulative translation adjustment:
Beginning of year 61 561
Translation adjustment (121) (500)
------ ------
End of year (60) 61
------ ------
Treasury stock:
Beginning of year (59) (59)
Sale of 1,300 shares of Class A common stock from treasury 15 -
------ ------
End of year (44) (59)
------ ------
Total stockholders' equity $ 16,473 20,349
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 10
A. B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED NOVEMBER 30, 1993 AND 1992
(IN THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (2,849) 1,384
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Discontinued operations 6,090 17
Cumulative effect of Statement 106 change 1,242 -
Cumulative effect of Statement 109 change (425) -
Depreciation 5,301 6,506
Amortization of excess of cost over net assets of
businesses acquired 977 982
Amortization of noncompete agreement 201 2,406
Amortization of other intangibles 698 695
Write-off of note receivable - 679
Foreign currency transaction losses 187 567
Change in deferred income taxes (393) (2,325)
Junior Subordinated Note interest added
to principal 1,655 1,509
Changes in working capital items:
Accounts receivable, net (1,686) 1,997
Inventories at continuing operations 1,301 (1,930)
Inventories at discontinued operations (766) -
Other current assets 85 (143)
Accounts payable 1,717 (325)
Accrued expenses 606 (881)
Income taxes payable 396 (11)
Other 233 (55)
------ ------
17,419 9,688
------ ------
Net cash provided by operating activities 14,570 11,072
------ ------
Cash flows from investing activities:
Capital expenditures (4,326) (4,318)
Capital expenditures of discontinued operations (244) (176)
Other (187) (567)
------ ------
Net cash used in investing activities (4,757) (5,061)
------ ------
Cash flows from financing activities:
Principal payments of long-term debt (10,090) (3,812)
Principal payments of long term debt of discontinued operations (450) (900)
Proceeds from sale of stock from treasury 15 -
------ ------
Net cash used in financing activities (10,525) (4,712)
------ ------
Increase (decrease) in cash and cash equivalents (712) 1,299
Cash and cash equivalents at beginning of year 2,245 946
------ ------
Cash and cash equivalents at end of year $ 1,533 2,245
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 11
A. B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1993 AND 1992
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements include the accounts of A. B.
Chance Industries, Inc. (Industries), A. B. Chance Company
(Chance), A. B. Chance Canada Ltd. (Chance Canada), and A. B.
Chance U.K. Ltd. (Chance U.K.), collectively referred to
hereinafter as "the Company." All significant intercompany
accounts and transactions have been eliminated in consolidation.
(b) Inventories
Inventories are stated at the lower of cost or market. Inventory
values are based upon standard costs which approximate average
costs. Standard costs are revised at the beginning of the
fiscal year, and variances incurred during the year are
allocated to inventories and cost of sales.
(c) Property, Plant and Equipment
Investments in land, buildings, and machinery and equipment are
recorded at cost. Improvements are capitalized, while repair
and maintenance costs are charged to expense as incurred. When
assets are retired or disposed of, the related cost and
accumulated depreciation are removed from the accounts; gains or
losses are included in operating results.
Depreciation is computed principally using accelerated methods over
estimated service lives. Service lives for principal assets are
30 to 40 years for buildings and 4 to 12 years for machinery and
equipment.
(d) Excess of Cost Over Net Assets of Businesses Acquired
Assets acquired and liabilities assumed relating to business
combinations accounted for as purchase transactions are recorded
at their respective fair values. Excess of cost over net assets
of businesses acquired is amortized on a straight-line basis
over 40 years.
(e) Noncompete Agreement
The noncompete agreement is being amortized on a straight-line
basis over the five-year term of the agreement.
(f) Debt Issuance Costs
Debt issuance costs are being amortized on a straight-line basis
which approximates the interest method over the terms of the
related debt agreements.
(g) Foreign Currency Translation
Chance Canada and Chance U.K. have foreign functional currencies.
Accordingly, their assets and liabilities are translated into
U.S. dollars at current exchange rates. Revenues and expenses
are translated at average exchange rates during the year. The
resulting net translation adjustment is included as a separate
component of stockholders' equity.
(h) Income Taxes
In February 1992, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (Statement)
109, "Accounting for Income Taxes." Under the asset and
liability method of Statement 109, deferred tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their
respective tax bases. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply
(Continued)
<PAGE> 12
2
A.B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under
Statement 109, the effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period
that includes the enactment date.
As discussed in Notes 4 and 6, the Company adopted Statement 109 as
of December 1, 1992 and has reported the cumulative effect of
that change in the method of accounting for income taxes in the
1993 consolidated statement of operations.
The Company previously used the asset and liability method under
Statement 96. Under the asset and liability method of Statement
96, deferred tax assets and liabilities were recognized for all
events that had been recognized in the consolidated financial
statements. Under Statement 96, the future tax consequences of
recovering assets or settling liabilities at their financial
statement carrying amounts were considered in calculating
deferred taxes. Generally, Statement 96 prohibited
consideration of any other future events in calculating deferred
taxes.
The foreign subsidiaries compute and pay their own taxes. No
provision is made for deferred income taxes on the undistributed
earnings of non-U.S. subsidiaries primarily because reinvestment
of these earnings is considered essential for their continuing
operations. In those cases where distributions have been made,
additional income taxes, if any, have been minimal due to
offsets by available foreign tax credits.
(i) Postretirement Benefits Other Than Pensions
In December 1990, FASB issued Statement 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions." Statement 106
requires the application of accrual accounting to postretirement
benefits rather than recognizing expense as claims are paid. As
discussed in Notes 4 and 10, the Company adopted Statement 106
as of December 1, 1992 and has reported the cumulative effect of
that change in the method of accounting for such benefits in the
1993 consolidated statement of operations.
(j) Warranty Costs
A reserve for estimated warranty costs is accrued when products are
sold and warranty costs, as incurred, are charged against the
reserve. The accrual is adjusted on an ongoing basis to the
current estimate of actual warranty costs to be incurred on all
previously recognized sales.
(k) Research and Development
Research and development costs, which are expensed as incurred,
amounted to approximately $4,274,000 and $4,326,000 in 1993 and
1992, respectively.
(l) Consolidated Statements of Cash Flows
Cash equivalents consist of cash in banks and highly liquid
investments with original maturities of three months or less.
The Company earned approximately $158,000 and $55,000 of
interest income in 1993 and 1992, respectively. Supplemental
disclosure of cash flow information is as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993 1992
---- ----
<S> <C> <C>
Income tax payments $ 2,954 1,078
Interest payments on borrowings 6,473 7,389
======= =======
</TABLE>
(Continued)
<PAGE> 13
3
A.B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Supplemental disclosure of noncash investing and financing
activities: During 1993 and 1992, the Company recognized an
additional minimum liability in accordance with Statement 87,
"Employers Accounting for Pensions." An intangible asset was
recognized to the extent of the unrecognized prior service cost
and the excess, approximately $1,824,000 and $339,000, was
reported as a separate component of stockholders' equity, net of
approximately $693,000 and $129,000 deferred tax benefit for
1993 and 1992, respectively.
As a result of the decision to terminate the Parkersburg Division
pension plan, the intangible asset of $158,000 and the component
of stockholders' equity of $422,000, net of deferred tax benefit
of $162,000, recognized in accordance with Statement 87 were
written off during fiscal year 1993.
(m) Preferred Stock
The redemption value of the preferred stock is being accreted up to
the redemption date using the interest method.
(n) Postemployment Benefits
In November 1992, the FASB issued Statement 112, "Employers'
Accounting for Postemployment Benefits." The Company has no
plans which meet the criteria of this statement.
(o) Reclassification
Certain prior year amounts have been reclassified to conform to the
current year presentation.
(2) Acquisition
On December 30, 1987, Industries was formed and acquired all issued
and outstanding capital stock of Chance and its subsidiaries and
the outstanding capital stock of Chance Canada and Chance U.K. from
Emerson Electric Co. (Emerson) under a Stock Purchase
Agreement among Emerson, Chance, and Industries. The acquisition
has been accounted for by the purchase method, with the purchase
price allocated to the assets acquired and liabilities assumed
based on their estimated fair values at the date of acquisition.
(3) Discontinued Operations
During fiscal 1993, the Company announced its intentions to offer
for sale the Parkersburg Division of Chance. The Company expects
to finalize the sale of Parkersburg during fiscal 1994 at a selling
price of approximately $2,000,000. In accordance with Accounting
Principles Board Opinion No. 30, the financial results for this
division are reported as "Discontinued Operations."
At November 30, 1993, the accrued expenses of the discontinued
operations include pension termination costs of approximately
$1,209,000 and other close-down costs of approximately $437,000.
Accounts payable of the discontinued operations at November 30,
1993 and 1992 are $485,000 and $393,000, respectively.
(4) Cumulative Effect of Accounting Change
The Company adopted Statement 106 as of December 1, 1992. The
Cumulative Effect of Accounting Change was a charge of
approximately $1,242,000, net of income tax benefit of
approximately $761,000. The Company also adopted Statement 109, as
of December 1, 1992. The Cumulative Effect of Accounting
Change was a benefit of approximately $425,000.
(Continued)
<PAGE> 14
4
A.B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(5) Other Expenses, Net
On October 17, 1988, the Company entered into an agreement in principle
to sell its former 51%-owned subsidiary, Ritz-Chance Industria
Comercio S.A. (Ritz-Chance), to the minority stockholder for
$2,000,000. Due to no payments being received in fiscal 1992 and
given past payment history, management chose to write-off $679,000,
the balance of the note receivable as reflected in the year ended
November 30, 1991 consolidated financial statements. During fiscal
1993, the Company received a payment of $80,000 on this note. Both
of these amounts are reflected in other expenses, net in the
consolidated financial statements.
(6) Income Taxes
As discussed in Notes 1(h) and 4, the Company adopted Statement 109 as
of December 1, 1992. Prior year consolidated financial statements
have not been restated to apply the provisions of Statement 109.
The domestic and foreign components of income before income tax expense
(benefit), discontinued operations, and cumulative effect of changes
in accounting principles for the years ended November 30, 1993 and
1992 consist of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993 1992
---- ----
<S> <C> <C>
Domestic $ 6,782 770
Foreign 332 202
----- ---
$ 7,114 972
===== ===
</TABLE>
Total income tax benefit for the years ended November 30, 1993 and 1992
was allocated as follows:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Income from continuing operations $ 3,056 (429)
Discontinued operations (3,732) (11)
Cumulative effect of changes in accounting principles (1,186) -
------ ----
$ (1,862) (440)
====== ====
</TABLE>
Income tax expense (benefit) attributable to income from continuing
operations for the years ended November 30, 1993 and 1992 consists
of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993 1992
---- ----
<S> <C> <C>
Current:
Federal $ 2,650 1,493
Foreign 314 121
State and local 528 194
----- ------
Total current 3,492 1,808
----- ------
Deferred:
Federal (343) (2,114)
Foreign (53) 9
State and local (40) (132)
----- ------
Total deferred (436) (2,237)
----- ------
Total income tax expense (benefit) $ 3,056 (429)
===== ======
</TABLE>
(Continued)
<PAGE> 15
5
A.B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended November 30, 1993 and 1992, the change in deferred
income taxes represents the effect of changes in the amounts of
temporary differences. The types of temporary differences that give
rise to significant portions of deferred income tax as of November
30, 1993 and 1992 and the tax effects of changes in those temporary
differences during 1993 and 1992 consist of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993 1992
---- ----
<S> <C> <C>
Excess book over tax depreciation $ (490) (691)
Change in accounting estimate for deferred
federal income taxes - (1,000)
Book over tax write-down of note receivable 22 (258)
Difference in accounting for accrued vacation for
federal income tax purposes (67) (196)
Book over tax provision for warranty expense - (91)
Other 99 (1)
---- ------
$ (436) (2,237)
---- ------
</TABLE>
The tax effects of temporary differences that give rise to the deferred
tax assets and liabilities are as follows:
<TABLE>
<S> <C>
Deferred tax assets:
Provisions for employee benefits $ 2,397,375
Provision for discontinued operations 2,618,168
Other 1,877,148
---------
Total gross deferred tax assets 6,892,691
Foreign tax credit carryforward 78,686
---------
Total net deferred tax assets 6,971,377
---------
Deferred tax liabilities:
Book versus tax depreciation 6,007,350
Other 85,222
---------
Total net deferred tax liabilities 6,092,572
---------
Net deferred tax asset $ 878,805
=========
</TABLE>
The net deferred tax assets are included in the consolidated balance
sheet as follows:
<TABLE>
<S> <C>
Current tax asset $ 4,899,211
Noncurrent tax liability (4,020,406)
----------
Net deferred taxes $ 878,805
==========
</TABLE>
(Continued)
<PAGE> 16
6
A.B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The total income tax expense (benefit) from continuing operations
differed from the amounts computed by applying the U.S. federal
income tax rate of 34% to income before income tax expense (benefit)
as a result of the following:
<TABLE>
<CAPTION>
1993 1992
---- ----
<S> <C> <C>
Income tax expense computed at the federal
statutory rate of 34% $ 2,419 330
Change in accounting estimate for deferred
federal income taxes - (1,000)
Nondeductible intangible assets 312 312
Foreign tax rate in excess of U.S. federal income tax rate 99 43
Foreign tax credit utilized (178) -
State income taxes 527 62
Statutory exclusion of foreign sales corporations (136) (50)
Utilization of alternative minimum tax credits - (112)
Other 13 (14)
----- ------
$ 3,056 (429)
===== ======
</TABLE>
The Company's federal income tax returns for the fiscal years ended
November 30, 1989 and 1988 were under audit by the Internal Revenue
Service (IRS). The IRS had issued a preliminary report which
included the reallocation of certain interest deductions among
members of the consolidated group. The effect of the preliminary
finding would have been to substantially reduce the income tax
refunds received for the years under examination, while allowing the
deductions on a carryforward basis. The Company had previously
established reserves for any settlement that might have arisen from
the IRS audit. In fiscal year 1992, the Company received a letter
from the IRS indicating the returns for the years under audit had
been accepted as originally filed. As the IRS accepted the returns
as originally filed, the Company changed its accounting estimate of
such reserves resulting in a decrease in deferred tax expense for
the year ended November 30, 1992 of $1,000,000.
(7) Long-Term Debt
Long-term debt as of November 30, 1993 and 1992 consists of the
following:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993 1992
---- ----
<S> <C> <C>
Revolving credit notes, prime plus 1% $ 2,900 3,500
Revolving credit notes, LIBOR plus 2% 15,000 12,000
Term loans, LIBOR plus 2-1/2%, due in varying amounts
through 1995 6,267 8,745
Tral & Co. senior notes, 11.25%, due December 1995 - 6,000
Teachers senior notes, 11.5%, due December 1995 12,000 16,000
Teachers senior subordinated notes, 13%, due December 1997 15,000 15,000
Junior subordinated note, 14%, due December 1998 16,301 14,646
Other - 462
------ ------
67,468 76,353
Less current maturities 6,601 6,940
------ ------
$ 60,867 69,413
====== ======
</TABLE>
(Continued)
<PAGE> 17
7
A.B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The aggregate amounts of long-term debt maturing subsequent to November
30, 1993 are as follows:
<TABLE>
<CAPTION>
(In thousands
of dollars)
<S> <C>
1994 $ 6,601
1995 25,566
1996 4,000
1997 -
1998 15,000
Thereafter 16,301
------
$ 67,468
======
</TABLE>
In December 1987, the Company entered into a revolving credit and term
loan agreement (Credit Agreement) with six banks enabling the
Company to borrow up to $71,400,000. The Credit Agreement provides
a maximum revolving credit of $36,000,000, subject to a qualified
borrowing base. The borrowing base is determined by the amounts of
certain receivables and inventories. At November 30, 1993, the
borrowing base was $31,075,000, of which $17,900,000 was borrowed.
Commitment fees are equal to 1/2% per year on the unused portion of
the available credit up to $24,000,000, plus 1/8% per year on the
remaining $12,000,000. The Company may prepay all or part of the
revolving amounts outstanding, except in the case of Eurodollar
loans which may only be prepaid at the end of the applicable
interest period. The Company is required to periodically reduce the
borrowings by an amount equal to 70% of the excess cash flow of the
Company for the next preceding semiannual period plus the amount of
proceeds received from disposition of certain assets. Such
reduction will be applied first to the term loans, as the term loans
must be repaid prior to the cancellation of the revolving credit.
As of November 30, 1993, the Company has remitted $3,300,000 against
the term loan balances which approximates the after-tax proceeds
from the sale of these assets. Loans under the revolving credit
will, at the Company's option, bear interest payable quarterly at
either prime plus 1% or LIBOR plus 2%. Borrowings under the term
loans will, at the Company's option, bear interest payable quarterly
at either prime plus 1-1/2% or LIBOR plus 2- 1/2%. At November 30,
1993, the prime and LIBOR interest rates were 5.5% and 3.19%,
respectively. The Credit Agreement will terminate and all amounts
will be due and payable on November 30, 1995, or upon repayment and
cancellation of the revolving credit.
On December 31, 1992, the Company paid $6,000,000 to repay the 11.25%
Tral Senior Notes. Funds used to retire the debt were obtained
through increased borrowings on the LIBOR plus 2% Revolving Credit
Notes. The prepayment penalty paid for early extinguishment of the
debt due subsequent to fiscal 1993 was approximately $148,000.
The Teachers Insurance and Annuity Association of America (Teachers)
Senior Notes may be prepaid on or after December 31, 1992, at a
premium over the principal amount that declines in equal annual
increments from 3.29% to zero at December 31, 1994. Payments in
excess of those specified by the Teachers Senior Subordinated Notes
may be made on or after December 31, 1992, at a premium over the
principal amount that declines in equal annual increments from 5.78%
to zero at December 31, 1996.
The Teachers Senior and Teachers Senior Subordinated Notes may be
prepaid, without premium, at any time from the proceeds from the
sale of common stock, merger, consolidation, or the sale of stock or
assets of the Company.
(Continued)
<PAGE> 18
8
A.B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Junior Subordinated Note accrues interest at a rate of 14% and is
payable semiannually at the rate of 3% through December 31, 1995 and
7% from January 1, 1996 through December 31, 1997. Interest which
is accrued but unpaid is added to the principal amount of the note
and bears interest at a rate of 14% compounded semiannually. The
principal and unpaid interest are due on December 31, 1998.
Obligations of the Company under the Junior Subordinated Note are
subordinated to senior indebtedness of the Company.
The financing arrangements contain certain covenants that, among other
things, require the Company to (a) maintain certain minimum levels
of (i) cumulative consolidated gross revenues from sales less (ii)
the sum of consolidated selling and general administrative expenses
and costs of sales for such period; (b) maintain certain minimum
ratios of the sum of consolidated earnings before interest, taxes,
and depreciation to interest expense; and (c) maintain certain
minimum ratios of operating cash flow to debt. Additional covenants
limit, among other things, the ability of the Company to (a) incur
indebtedness and certain other fixed obligations, (b) create certain
liens on their respective assets, (c) pay dividends on the Company's
capital stock, (d) make certain investments in or loans to entities,
(e) merge or consolidate with, or sell their assets to, other
entities, (f) make capital expenditures in excess of specified
amounts, and (g) engage in certain transactions with affiliates.
(8) Stockholders' Equity
The preferred stock, which is owned by Emerson, has no dividend
provisions and is nonvoting, except the Company cannot create or
issue any additional stock of any class senior to the preferred
stock without approval of at least 2/3 of the total number of
preferred shares outstanding. The Company is required to redeem,
for $100,000 per share, all of the outstanding shares on December
31, 1999, or prior to a merger or consolidation. In the event of
liquidation, dissolution, or winding up of the Company, subject to
the prior rights of the Company's creditors to its assets, the
holders of shares of preferred stock will be entitled to receive a
liquidation distribution of $100,000 per share.
The Classes A, B, and C common stocks have identical rights, terms, and
conditions except voting. Class A common stock is entitled to vote
on each matter on which stockholders of the Company shall be
entitled to vote, one vote for each share. Class B common stock
shall not have any voting rights except that such holders shall be
entitled to vote, as a separate class, on any amendment, repeal, or
modification of any provision of the certificate of incorporation,
one vote for each share. Class C common stock shall be entitled to
vote on each matter on which the stockholders of the Company shall
be entitled to vote, other than the election of directors, one vote
for each share. In addition, the holders of Class C common stock
shall be entitled to vote, as a separate class, on any amendment,
repeal, or modification of any provision of the certificate of
incorporation, one vote for each share. Holders of Class B common
stock and Class C common stock, under certain circumstances, are
entitled to convert their shares into Class A common stock on a
share-for-share basis.
(9) Stock Option Plan
Under the terms of the 1988 Stock Option Plan, 100,000 shares of Class A
common stock can be issued to key employees of Industries or its
subsidiaries at an exercise price of $11.50 per share. Options are
exercisable upon granting and must be exercised within 15 years from
the date of granting. At November 30, 1993 and 1992, 61,000 shares
had been granted. As of November 30, 1993 and 1992, respectively,
2,100 and 800 shares of Class A common stock had been issued
pursuant to options exercised.
(Continued)
<PAGE> 19
9
A.B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(10) Retirement Benefits
The Company has pension plans covering substantially all employees.
Benefits are provided to employees under defined benefit,
pay-related plans which are noncontributory. Contributions to the
plans equal or exceed the minimum funding requirements of the
Employee Retirement Income Security Act of 1974.
Net periodic pension cost for the years ended November 30, 1993 and 1992
consists of the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993 1992
---- ----
<S> <C> <C>
Defined benefit plans:
Service cost (benefits earned during year) $ 731 681
Interest cost 979 945
Actual return on plan assets (297) (1,003)
Net amortization and deferral (491) 325
---- ------
Net periodic pension cost $ 922 948
==== ======
</TABLE>
The actuarial present value of benefit obligations and the funded status
of the Company's plans as of November 30, 1993 and 1992 consist of
the following:
<TABLE>
<CAPTION>
(In thousands of dollars)
1993 1992
---- ----
<S> <C> <C>
Actuarial present value of:
Vested benefit obligation $ 13,465 12,068
====== ======
Accumulated benefit obligation $ 13,777 12,335
====== ======
Projected benefit obligation 15,271 13,467
Plan assets at fair value 10,401 10,336
------ ------
Projected benefit obligation in excess
of plan assets 4,870 3,131
Unrecognized net loss (3,359) (1,317)
Unrecognized prior service costs (1,352) (1,531)
Adjustment required to recognize minimum liability 3,217 1,716
------ ------
Pension liability recognized in
the consolidated balance sheet $ 3,376 1,999
====== ======
</TABLE>
The assumed discount rate, rate of increase in compensation levels, and
the expected long-term rate of return on plan assets used in the
actuarial calculations were 7.25%, 5.0%, and 9.75%, respectively,
for 1993 and 8.0%, 5.0%, and 9.75%, respectively, for 1992.
The Company has decided to terminate the pension plan for the
discontinued operations of the Parkersburg Division. The estimated
cost to terminate the pension plan of the employees was
approximately $1,209,000. Prior year consolidated financial
statements have not been restated to reflect this decision.
The Company has pension plans for its foreign subsidiaries. The
aggregate pension expense and liability are immaterial to the
consolidated financial statements.
(Continued)
<PAGE> 20
10
A.B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As discussed in Notes 1(i) and 4, the Company adopted Statement 106
effective December 1, 1992. The Company sponsors several defined
benefit postretirement plans that cover both salaried and
nonsalaried employees. These plans provide health care and life
insurance benefits. The health care plans are contributory with
deductibles and benefit levels adjusted periodically. The life
insurance plans are noncontributory. The Company has reserved the
right, subject to existing agreements, to modify or terminate these
benefits. The Company's postretirement health care and life
insurance plans are unfunded.
The following table sets forth the combined financial status of
postretirement benefits other than pensions in the Company's
consolidated balance sheet at November 30, 1993:
<TABLE>
<S> <C>
Accumulated postretirement benefit obligation:
Retirees and beneficiaries $ 876,423
Fully eligible active plan participants 262,867
Other active plan participants 1,431,875
---------
Total 2,571,165
Plan assets at fair value -
---------
Accrued postretirement benefit obligation $ 2,571,165
=========
</TABLE>
Net periodic postretirement benefit cost for the year ended November 30, 1993
includes the following components:
<TABLE>
<S> <C>
Service cost (benefits earned during the year) $ 83,390
Interest cost on the projected benefit obligation 172,913
-------
Net periodic postretirement benefit cost $ 256,303
=======
</TABLE>
For measurement purposes, a 12% annual rate of increase in the per
capita cost of covered health benefits for 1993 was assumed. The
rate was assumed to decline gradually to 5.25% by fiscal year 2008
and remain level thereafter. The health care cost trend rate
assumption has an effect on amounts reported. For example,
increasing the health care cost trend rate by one percentage point
in each year would increase the accumulated postretirement benefit
obligation as of November 30, 1993, by approximately $157,000 and
increase the service and interest cost components of the net
periodic postretirement benefits cost by approximately $22,000.
The assumed discount rate used in the actuarial calculations of the
accumulated postretirement benefit obligation was 7.25% at December
1, 1992 and November 30, 1993. The rate of compensation increase
varies by age of employee. The range of assumed increases in
compensation is from 4.5% for employees age 56 and above to 7.5% for
employees under age 25.
(11) Operating Leases
The Company leases computers, transportation equipment, and various
other property under operating lease agreements. Rent expense for
all such leases was $1,793,000 and $1,758,000 for the years ended
November 30, 1993 and 1992, respectively.
At November 30, 1993, future minimum lease payments under such
noncancellable operating leases are as follows:
<TABLE>
<CAPTION>
(In thousands of dollars)
<S> <C>
1994 $ 1,311
1995 639
1996 246
1997 78
1998 24
Thereafter 1
-----
$ 2,299
=====
</TABLE>
(Continued)
<PAGE> 21
11
A.B. CHANCE INDUSTRIES, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(12) Related-Party Transactions
The Company paid the Emerson Transportation Division approximately
$1,039,000 and $945,000 for freight costs during the years ended
November 30, 1993 and 1992, respectively.
(13) Commitments and Contingencies
The Company has contingent liabilities, which consist of guarantees and
various other claims occurring in the normal course of business.
These other contingent liabilities are not expected by management to
result in actual liabilities which will have a material effect on
the financial position of the Company.
<PAGE> 22
Item 7(b)
PRO FORMA FINANCIAL INFORMATION
Presented below are the unaudited pro forma combined balance sheet of Hubbell
Incorporated and A. B. Chance Industries, Inc. as of March 31, 1994 and
combined summary of operations as if the transaction had occured as of the
beginning of 1993 (in 000's except per share):
<TABLE>
<CAPTION>
A.B. CHANCE
HUBBELL INDUSTRIES, PRO FORMA
ASSETS INCORPORATED INC. ADJUSTMENTS COMBINED
- - ------------------------------------------- ------------ ----------- ----------- ---------
<S> <C> <C> <C> <C>
Accounts Receivable $ 117,019 $ 22,284 $ - $ 139,303
Inventories 183,566 26,539 0 210,105
Other Current Assets 80,416 2,549 (33,618) 9,347
Property, Plant & Equipment (Net) 153,049 29,593 - 182,642
Investments 249,556 - (30,000) 219,556
Goodwill 65,696 32,997 37,966 136,659
Other Assets 46,934 2,797 4,148 53,879
------------ ----------- ------------ ------------
TOTAL $ 896,236 $ 116,759 $ (21,504) $ 991,491
============ =========== ============ ============
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
- - -------------------------------------------
Notes Payable $ 99,200 $ - $ 45,000 $ 144,200
Other Current Liabilities 144,374 30,508 6,510 181,392
Long Term Debt 2,700 62,264 (62,264) 2,700
Other Liabilities & Deferred Taxes 80,146 6,736 6,500 93,382
Common Shareholders' Equity 569,816 17,251 (17,250) 569,817
------------ ----------- ------------ ------------
TOTAL $ 896,236 $ 116,759 $ (21,504) $ 991,491
============ =========== ============ ============
SUMMARY OF OPERATIONS
- - -------------------------------------------
Net Sales $ 832,423 $ 156,830 $ - $ 989,253
Income Before Income Taxes $ 81,494 $ 7,114 $ 2,664 $ 91,272
Net Income $ 66,306 $ 4,058 $ 1,063 $ 71,427
Earnings Per Share $ 2.10 - - $ 2.26
</TABLE>
In preparing the unaudited pro forma combined balance sheet and summary of
operations, adjustments were made to the historical financial statements to
reflect the reduction in the securities portfolio and investment income;
increase in short-term borrowing and interest expense; amortization of the
estimated goodwill of $71.0M over 40 years; the repayment of existing debt of
A.B. Chance Industries, Inc.; and other estimated purchase accounting entries.
The pro forma statements are not indicative of the results that would have been
obtained if the operations would have been combined during 1993, nor are they
necessarily indicative of the results that may occur in the future.
<PAGE> 23
EXHIBIT INDEX
Exhibits Page No.
(c)1. Stock Purchase Agreement, dated March 16, 1994 . . . . . . . . .
<PAGE> 1
EXHIBIT (c)1.
STOCK PURCHASE AGREEMENT
Dated March 16, 1994
By and Among
A. B. CHANCE INDUSTRIES, INC. (the "COMPANY"),
THE STOCKHOLDERS OF THE COMPANY (the "SELLERS")
and
HUBBELL INCORPORATED (the "BUYER")
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
-----------------
Section Page
- - ------- ----
<S> <C>
ARTICLE I
DEFINITIONS . . . . . . . . . . 2
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK . . . . . 5
2.1 Purchase and Sale of the Common Stock . . . . . . . 5
2.2 Payments . . . . . . . . . . . . . . . . . . . . . 5
2.3 Repayment of Indebtedness; Redemption of Preferred
Stock; Termination of Stock Options . . . . . . . . 5
2.4 Termination of Stockholders Agreements . . . . . . 6
2.5 Closing . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY 7
3.1 Ownership and Transfer of Shares . . . . . . . . . 7
3.2 No Violation; Conflicts . . . . . . . . . . . . . . 8
3.3 Approval of Agreement . . . . . . . . . . . . . . . 8
3.4 Cor porate Existence and Qualification of the Company 9
3.5 Capitalization of the Company . . . . . . . . . . . . 10
3.6 Subsidiaries of the Company . . . . . . . . . . . . . 11
3.7 Financial Statements . . . . . . . . . . . . . . . . 12
3.8 Absence of Undisclosed Liabilities . . . . . . . . . 13
3.9 Subsequent Events . . . . . . . . . . . . . . . . . . 13
3.10 Tangible Personal Property . . . . . . . . . . . . . 17
3.11 Title to Real Property; Encumbrances . . . . . . . . 18
3.12 Real Property Leases . . . . . . . . . . . . . . . . 20
3.13 Contracts and Commitments . . . . . . . . . . . . . . 23
3.14 No Violation; Conflicts . . . . . . . . . . . . . . . 28
3.15 Environmental Matters . . . . . . . . . . . . . . . . 29
3.16 Employee Benefit Plans . . . . . . . . . . . . . . . 33
3.17 Labor Controversies . . . . . . . . . . . . . . . . . 38
3.18 Litigation . . . . . . . . . . . . . . . . . . . . . 39
3.19 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 40
3.20 Intangible Property . . . . . . . . . . . . . . . . . 42
3.21 Approval of Agreement . . . . . . . . . . . . . . . . 43
3.22 Licenses, Permits, Authorizations, Etc. . . . . . . 44
3.23 Insurance . . . . . . . . . . . . . . . . . . . . . . 45
3.24 Books and Records . . . . . . . . . . . . . . . . . . 45
3.25 Accounts Receivable and Accounts Payable . . . . . . 45
3.26 Condition of Assets . . . . . . . . . . . . . . . . . 46
3.27 Inventory; Returns Policy . . . . . . . . . . . . . . 46
3.28 Transactions with Affiliates . . . . . . . . . . . . 47
3.29 Brokers and Finders . . . . . . . . . . . . . . . . . 47
3.30 Materials Previously Furnished to Buyer . . . . . . . 48
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
Section Page
- - ------- ----
<S> <C> <C>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER . . . . 49
4.1 Corporate Existence and Corporate Power . . . . . . 49
4.2 Approval of Agreement . . . . . . . . . . . . . . . 49
4.3 No Violation, Conflicts . . . . . . . . . . . . . . 50
4.4 Funds Available for Purchase . . . . . . . . . . . . 51
4.5 Purchase for Investment . . . . . . . . . . . . . . 51
ARTICLE V
COVENANTS PRIOR TO CLOSING . . . . . . . . 51
5.1 Covenants of the Company . . . . . . . . . . . . . . 51
5.2 No Shopping. . . . . . . . . . . . . . . . . . . . . 56
5.3 Covenants of Buyer . . . . . . . . . . . . . . . . . 57
5.4 Covenants of Buyer, Sellers and the Company . . . . 57
ARTICLE VI
CONDITIONS TO CLOSING . . . . . . . . . 59
6.1 Conditions to the Obligations of Each Party . . . . 59
6.2 Conditions to the Obligations of Sellers . . . . . . 60
6.3 Conditions to the Obligations of Buyer . . . . . . . 62
ARTICLE VII
COVENANTS FOLLOWING CLOSING . . . . . . . . 64
7.1 Access to Books and Records; Corporation . . . . . . 64
7.2 Directors and Officers Insurance and Indemnification 65
7.3 Cooperation . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VIII
INDEMNIFICATION . . . . . . . . . 67
8.1 Survival of Representations and Warranties . . . . . 67
8.2 Indemnification by Sellers . . . . . . . . . . . . . 67
ARTICLE IX
TERMINATION . . . . . . . . . . . 69
9.1 Termination of Agreement . . . . . . . . . . . . . . 69
9.2 Effect of Termination . . . . . . . . . . . . . . . 70
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
Section Page
- - ------- ----
<S> <C> <C>
ARTICLE X
MISCELLANEOUS . . . . . . . . . . . 70
10.1 Entire Agreement and Modification . . . . . . . . 70
10.2 Binding Agreement; Assignment . . . . . . . . . . 70
10.3 Counterparts . . . . . . . . . . . . . . . . . . . 71
10.4 Headings . . . . . . . . . . . . . . . . . . . . . 71
10.5 Governing Law . . . . . . . . . . . . . . . . . . 71
10.6 Payment of Fees and Expenses . . . . . . . . . . . 71
10.7 Parties . . . . . . . . . . . . . . . . . . . . . 72
10.8 Notice . . . . . . . . . . . . . . . . . . . . . . 72
</TABLE>
SCHEDULES
1.0 Stock Ownership
1.1 Knowledge of the Company
2.2 Purchase Price Allocation
2.3(a) Prepayment of Indebtedness
2.3(b) Termination of Stock Options
2.4 Stockholders Agreements
3.2 Conflicts
3.4 Charter and Bylaws
3.6 Subsidiaries
3.7 Financial Statements
3.9 Subsequent Events
3.10 Liens or Encumbrances
3.11 Real Property
3.13 Contracts and Commitments
3.14 Conflicts
3.15 Environmental Matters
3.16 Employee Benefit Plans
3.17 Labor Controversies
3.18 Litigation
3.19 Tax Matters
3.20 Claims of Infringement on Intangible Property
3.28 Transactions with Affiliates
10.8 Addresses of Sellers
EXHIBITS
A Opinion of Buyer's Counsel
B Opinion of Company Counsel
C Certificate of Sellers
-iii-
<PAGE> 5
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into this 16th day
of March, 1994 (the "Agreement") by and among THE SHAREHOLDERS OF THE COMPANY,
as set forth on Schedule 1.0 hereto (collectively referred to as "Sellers"), A.
B. CHANCE INDUSTRIES, INC., a Delaware corporation (the "Company"), and HUBBELL
INCORPORATED, a Connecticut corporation ("Buyer").
WITNESSETH THAT:
WHEREAS, Sellers collectively own all of the outstanding shares of
capital stock of the Company, consisting of 146,537 shares of Class A common
stock, par value $.01 per share, 197,632 shares of Class B common stock, par
value $.01 per share and 652,013 shares of Class C common stock, par value $.01
per share (collectively the "Common Stock"), and 100 shares of Preferred Stock,
par value $.01 per share (the "Preferred Stock"), as set forth on Schedule 1.0
hereto;
WHEREAS, the Preferred Stock will be redeemed, as provided in
Section 2.3 below, so that the Common Stock will constitute all of the
outstanding capital stock of the Company; and
WHEREAS, Sellers desire to sell to Buyer, and Buyer desires to
purchase from Sellers, the Common Stock upon the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereinafter expressed, it is hereby agreed as follows:
<PAGE> 6
2
ARTICLE I
DEFINITIONS
"Code" means the Internal Revenue Code of 1986, as amended.
"Company Property" means all real property in which the Company or
any Subsidiary has any legal interest, including without limitation a leasehold
interest, including the Parkersburg, West Virginia facility; and any equipment
or other property owned or leased by the Company or any Subsidiary at such real
property.
"Company's knowledge" refers to the actual knowledge of the
individuals listed on Schedule 1.1 hereto.
"Environmental Claim" means any claim, demand, action, suit,
complaint, proceeding or other written or oral notification by any person
alleging liability or potential liability (including without limitation
liability or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage, personal
injury, fines or penalties) or any violation or non-compliance arising out of,
relating to, 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 Laws.
<PAGE> 7
3
"Environmental Laws" means all foreign, federal, state and local
laws, statutes, rules, regulations, ordinances, orders, judgments, decrees,
common law and other requirements of law relating in any manner to
contamination, pollution or protection of human health or the environment,
including without limitation the Comprehensive Environmental Response,
Compensation and Liability Act, the Solid Waste Disposal Act (including,
without limitation, the Resource Conservation and Recovery Act), the Clean Air
Act, the Clean Water Act, the Toxic Substances Control Act, the Occupational
Safety and Health Act, the Emergency Planning and Community-Right-to-Know Act,
the Safe Drinking Water Act, all as amended, and similar laws of any
governmental authority.
"Environmental Permits" means all permits, licenses, registrations
and other governmental authorizations or exemptions required under any
Environmental Laws for the Company to conduct its operations.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"Foreign Plan" means a Plan that is established or maintained by a
Foreign Subsidiary, or with respect to which the Foreign Subsidiary has any
obligation or liability (whether primary or secondary).
"Foreign Subsidiary" means a subsidiary that is established outside
the United States.
"Former Company Property" means all real property in which the
Company or any Subsidiary formerly had any property
<PAGE> 8
4
interest, including without limitation a leasehold interest; and any equipment
or other property owned or leased by the Company or any Subsidiary at such real
property.
"Material Adverse Effect" means a material adverse effect on the
business, operations, assets, financial condition or results of operations of
the Company and its Subsidiaries, taken as a whole.
"Materials of Environmental Concern" refers to any waste, pollutant,
contaminant or other substance of any kind regulated by or under, or which may
otherwise give rise to liability under, any Environmental Laws.
"Sellers' Representative" shall mean Anna M. Fallon, or such
replacement or successor as shall be designated by Sellers owning an aggregate
of two-thirds or more of the Common Stock. Sellers' Representative shall be
entitled to take the actions specified in this Agreement with the concurrence
of Sellers owning an aggregate of two-thirds or more of the Common Stock, and
shall have no liability or obligation for any action taken with such
concurrence.
"Taxes" means any Federal, state, local, foreign and other income,
franchise, capital stock, employees' income withholding, back-up withholding,
social security, unemployment, disability, real property, personal property,
sales, use, excise, transfer, customs, and other taxes or governmental fees or
charges, including any interest, penalties or additions or to the foregoing,
whether disputed or not.
<PAGE> 9
5
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK
2.1 Purchase and Sale of the Common Stock. On the Closing Date
(as defined in Section 2.5), Sellers (severally and not jointly) will sell to
Buyer and Buyer will purchase from Sellers all of the Common Stock.
2.2 Payments.
In consideration of the sale to Buyer of the Common Stock:
(i) On the Closing Date Buyer shall pay the sum of $110,000,000.00
(the "Purchase Price"), minus the Indebtedness Payments (as defined in Section
2.3).
(ii) All payments to Sellers shall be allocated among Sellers as
specified on Schedule 2.2 and shall be made by wire transfer of immediately
available funds to accounts designated by J.P. Morgan Capital Corporation,
Teachers Insurance and Annuity Association of America and Emerson Electric Co.,
with respect to the amounts payable to them, and to an account designated by
Sellers' Representative with respect to the amounts payable to the remainder of
the Sellers.
2.3 Repayment of Indebtedness; Redemption of Preferred Stock;
Termination of Stock Options. On the Closing Date, (a) the indebtedness of the
Company described on Schedule 2.3(a) hereto shall be paid in full by the
Company, including all interest accrued through the Closing Date, (b) the
Company shall redeem all of the Preferred Stock for a redemption price of Ten
Million Dollars ($10,000,000), as provided in the Restated
<PAGE> 10
6
Certificate of Incorporation of the Company, and (c) the outstanding options
for purchase of Common Stock, described in Schedule 2.3(b) hereto (the
"Options"), shall be "cashed out" and terminated as provided in Schedule
2.3(b). The total amount of such payments (the "Indebtedness Payments") shall
be determined by the Company and it shall advise Sellers and Buyer of such
amount not later than two business days prior to the Closing Date. At Closing
Buyer shall loan to the Company, or otherwise arrange for provision to the
Company of, the Indebtedness Payments, and the Company shall immediately make
such payments and discharge such obligations in full.
2.4 Termination of Stockholders Agreements. Effective as of the
Closing (as defined in Section 2.5), the agreements between the Company and
various of the Sellers specified in Schedule 2.4 hereto (the "Stockholders
Agreements") shall be terminated and shall thereafter be of no further force
and effect.
2.5 Closing. The Closing ("Closing") of the transactions provided
for herein shall take place at the offices of Bryan Cave, One Metropolitan
Square, 211 North Broadway, St. Louis, Missouri, at 9:00 a.m. on April 19,
1994, or if all conditions to the Closing have not been satisfied or waived by
such date, on the date mutually designated by the Company and Buyer which shall
be within five days after the date on which all such conditions are satisfied
or waived, but in no event later than June 30, 1994 unless agreed to in writing
by the Company, Buyer and Sellers' Representative. The date of the Closing of
<PAGE> 11
7
the transactions provided for herein is referred to herein as the "Closing
Date."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS AND THE COMPANY
Sellers hereby make the representations and warranties set forth in
Sections 3.1 through 3.3 at the date hereof and as of the Closing Date. Such
representations and warranties are made by each Seller severally, and not
jointly, and only as to matters affecting such Seller. The Company hereby
makes the other representations and warranties contained in this Article III.
3.1 Ownership and Transfer of Shares. Each Seller has good and
marketable title to all of its shares of Common Stock free and clear of all
liens, pledges, charges, encumbrances, equities, claims and options of any
nature ("Liens"), security interests and restrictions, and each Seller has full
legal right and power to transfer and deliver all of its shares of Common Stock
to Buyer free and clear of any Liens, security interests or restrictions,
except in each case for Liens, security interests and restrictions as may be
contained in the Stockholders Agreements. There are no outstanding
subscriptions, warrants, options, contracts, calls, puts or other rights or
agreements of any kind with regard to any shares of the Common Stock or
Preferred Stock or any other capital security of the Company of any kind (i)
obligating any Seller to issue, sell or transfer any shares of capital stock of
the Company or any Subsidiary, any securities convertible into or exchangeable
for
<PAGE> 12
8
shares of capital stock of the Company or any Subsidiary, or any other rights
to acquire capital stock of the Company or any Subsidiary; (ii) obligating any
Seller to grant, offer or enter into any of the foregoing; or (iii) relating to
the voting or control of any shares of capital stock of the Company or any
Subsidiary, except as provided in the Stockholders Agreements.
3.2 No Violation; Conflicts. The execution and delivery of this
Agreement by each Seller does not, and the consummation by such Seller of the
transactions contemplated hereby in compliance with the provisions hereof will
not except as described in Schedule 3.2, (i) conflict with any provision of the
Certificate of Incorporation or By-laws of such Seller; (ii) violate any United
States Federal, state or foreign law, rule or regulation, or any judgment,
decree or order of any court or other governmental agency or instrumentality,
to which such Seller is subject; or (iii) conflict with, or result in a breach
or violation of, or accelerate the performance required by, the terms of any
material agreement, indenture or other instrument to which such Seller is a
party or to which any of their property is subject, or constitute a default or
loss of any right thereunder or an event which, with the lapse of time or
action by a third party, would result in a default or loss of any right
thereunder or the creation of any Lien upon any of the assets or properties of
such Seller.
3.3 Approval of Agreement. (a) Each Seller which is a
corporation is duly organized, validly existing and in good standing under the
laws of its respective jurisdiction of
<PAGE> 13
9
incorporation. The execution and delivery of this Agreement has been duly
authorized and approved by the requisite corporate action of each of the
corporate Sellers. Pursuant to such authorization and approval, each corporate
Seller has full and unrestricted legal right, power and authority to enter into
this Agreement, to perform its obligations hereunder and to carry out the
transactions contemplated hereby and to sell, assign, transfer and deliver the
Common Stock to Buyer free and clear of all Liens. All necessary or
appropriate action has been taken by each Seller with respect to the execution
and delivery of this Agreement and the performance of its respective
obligations hereunder. This Agreement constitutes a valid and binding
agreement of each Seller and, assuming this Agreement constitutes a valid and
binding obligation of Buyer, is enforceable against each of them in accordance
with its terms.
(b) Except with respect to expiration of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act") waiting period, no
authorization, order, consent, or approval of, or filing or registration with,
any third party or domestic or foreign governmental or regulatory authority is
necessary for or in connection with the execution and delivery by each Seller
of this Agreement or the consummation by such Seller of the transactions
contemplated by this Agreement.
3.4 Corporate Existence and Qualification of the Company. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has the requisite corporate power
and authority to
<PAGE> 14
10
duly own, lease and operate the properties now owned or leased by it and to
carry on its business as now conducted in all material respects. The Company
is duly qualified or licensed as a foreign corporation and is in good standing
in each jurisdiction in which the property owned, leased or operated by it or
the nature of the business conducted by it makes such qualification or
licensing necessary, except where its failure so to qualify or be licensed
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Certified copies of the Company's Restated
Certificate of Incorporation and Bylaws, including all amendments thereto, are
attached to Schedule 3.4 hereto.
3.5 Capitalization of the Company. The duly authorized capital
stock of the Company is 1,994,600 shares, consisting of 1,100,000 shares of
Class A Common Stock, 229,000 shares of Class B Common Stock and 665,500 shares
of Class C Common Stock and 100 shares of Preferred Stock. 146,537 shares of
Class A Common Stock, 197,632 shares of Class B Common Stock, 652,013 shares of
Class C Common Stock and 100 shares of Preferred Stock are issued and
outstanding, all of which are duly authorized, validly issued, fully paid and
non-assessable. There are no outstanding subscriptions, warrants, options,
contracts, calls, puts or other rights or agreements of any kind with regard to
any shares of the Common Stock or Preferred Stock or any other capital security
of the Company of any kind (i) obligating the Company or any of the
Subsidiaries to issue, sell or transfer any shares of capital stock of the
Company, any securities
<PAGE> 15
11
convertible into or exchangeable for shares of capital stock of the Company, or
any other rights to acquire capital stock of the Company; (ii) obligating the
Company to grant, offer or enter into any of the foregoing; or (iii) relating
to the voting or control of any shares of capital stock of the Company, except
(a) for the Options and (b) as provided in the Stockholders Agreements.
3.6 Subsidiaries of the Company. The Company's subsidiaries
consist of A. B. Chance Company (and its wholly owned subsidiary Chance Foreign
Sales Corporation), A. B. Chance U.K. Ltd., and A. B. Chance Company of Canada
Ltd. (collectively the "Subsidiaries"). The entire authorized and outstanding
capital stock of each of the Subsidiaries is as specified in Schedule 3.6
hereto, and all of the issued and outstanding shares of capital stock of each
of the Subsidiaries is duly authorized, validly issued, fully paid and
non-assessable and is owned by the Company free and clear of all Liens; and
there are no voting trusts, voting agreements or similar understandings
applicable to such shares. There are no outstanding subscriptions, options,
rights, warrants, puts, calls, registration or other agreements or commitments
of any type (i) obligating the Company or any of the Subsidiaries to issue,
sell or transfer any shares of capital stock of any Subsidiary, any securities
convertible into or exchangeable for shares of capital stock of any Subsidiary,
or any other rights to acquire capital stock of any Subsidiary; (ii) obligating
the Company to grant, offer or enter into any of the foregoing; or (iii)
relating to the voting or control of any
<PAGE> 16
12
shares of capital stock of any Subsidiary. The Subsidiaries are corporations
duly organized, validly existing and in good standing under the laws of the
jurisdictions specified in Schedule 3.6, and have the requisite corporate power
and authority to own, operate and lease their respective properties and to
carry on their businesses as now conducted in all material respects. The
Subsidiaries are duly qualified or licensed as foreign corporations and are in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where its failure so to qualify or
be licensed would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect. A certified copy of each Subsidiary's
document of incorporation and Bylaws, including all amendments thereto, are
attached to Schedule 3.6 hereto. Other than the Subsidiaries and except as set
forth in Schedule 3.6 hereto, the Company does not, directly or indirectly, own
any twenty-five percent or greater equity interest in any business,
corporation, partnership, joint venture or other business association or
entity.
3.7 Financial Statements. Attached hereto as Schedule 3.7 are the
consolidated balance sheets and related consolidated statements of income,
stockholders' equity and cash flows of the Company and the Subsidiaries as of
November 30, 1992 and 1993 and for the years then ended (the "Financial
Statements") as audited by KPMG Peat Marwick. The Financial Statements,
together with any notes thereto, were prepared in accordance with U.S.
<PAGE> 17
13
generally accepted accounting principles ("GAAP") consistently applied through
the periods involved, and present fairly in all material respects the
consolidated financial position and results of operations as of the respective
dates and for the respective periods indicated of the Company and its
Subsidiaries.
3.8 Absence of Undisclosed Liabilities. Neither the Company nor
any Subsidiary has any liabilities, whether currently due, accrued, contingent
or otherwise (collectively, "Liabilities") of a nature required under GAAP to
be reflected or reserved against on the Company's consolidated financial
statements or otherwise reflected or reserved against in the notes or schedules
thereto, other than the following:
(a) Liabilities fully and adequately reflected or reserved against
in the Financial Statements or otherwise specifically disclosed in the
Schedules;
(b) Liabilities incurred in the ordinary course and consistent
with past experience since November 30, 1993; or (c) Liabilities which,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.
3.9 Subsequent Events. Except as described on Schedule 3.9 hereto,
since November 30, 1993:
(a) there has been no Material Adverse Effect;
(b) the Company has not declared, set aside or paid any dividend
on, or made any distribution of property or cash in respect of, its
shares of capital stock;
<PAGE> 18
14
(c) the Company has not sold (other than pursuant to the exercise
of Options, if any), or directly or indirectly redeemed, purchased or
otherwise acquired, any of its shares of capital stock;
(d) neither the Company nor any Subsidiary has incurred any
obligation or liability (fixed or contingent) except normal trade or
business obligations incurred in the ordinary course of business, none of
which has a Material Adverse Effect;
(e) neither the Company nor any Subsidiary has discharged or
satisfied any Lien or encumbrance or paid any obligation or liability
(fixed or contingent), other than amounts due and payable (other than as
a result of acceleration or default) or payments made in the ordinary
course of business under the revolving credit facility with Morgan
Guaranty Trust Company of New York, as Agent (the "Revolver");
(f) neither the Company nor any Subsidiary has mortgaged, pledged
or subjected to Lien, charge, security interest or to any other
encumbrance any of its assets or properties (whether tangible or
intangible), other than in the ordinary course of business;
(g) neither the Company nor any Subsidiary has sold, assigned,
transferred, leased or otherwise disposed of, or agreed to sell, assign,
transfer, lease or otherwise disposed of, any of its assets, or acquired
or leased (other than by a renewal of an existing lease) any assets
(other
<PAGE> 19
15
than in the ordinary course of business), or made any capital
expenditures or committed to make any capital expenditures in excess of
$100,000;
(h) neither the Company nor any Subsidiary has cancelled or
compromised any debt or claim, other than in the ordinary course of
business;
(i) neither the Company nor any Subsidiary has waived or released
any claims or rights of value or modified any agreement other than in the
ordinary course of business;
(j) neither the Company nor any Subsidiary has made any change in,
or materially increased the persons covered by, any bonus, incentive
compensation, deferred compensation, profit-sharing, stock option, stock
purchase, stock award, severance pay, retirement, pension, group
insurance, disability, death benefit or other employee benefit plans,
trust agreements or arrangements, except for changes in such other
employee benefit plans or arrangements as are, in the aggregate,
immaterial;
(k) neither the Company nor any Subsidiary has conducted its
business or entered into any transaction, contract or commitment, except
this Agreement and the transactions contemplated hereby, other than in
the ordinary course of business, consistent with past management
practices (including, without limitation, management of inventory,
collection of accounts receivable, payment of accounts payable and timing
of receipts and disbursements of cash);
<PAGE> 20
16
(l) neither the Company nor any Subsidiary has suffered any
casualty loss or damage (whether or not such loss or damage shall have
been covered by insurance) which adversely affects the ability of the
Company or any Subsidiary to conduct its business;
(m) neither the Company nor any Subsidiary has terminated,
discontinued, closed or disposed of any plant, facility or business
operation;
(n) neither the Company nor any Subsidiary has introduced any
material change with respect to the operation of its business, including
its method or practice of accounting;
(o) neither the Company nor any Subsidiary has increased the
carrying value of any of its assets (whether tangible or intangible);
(p) neither the Company nor any Subsidiary has suffered any
extraordinary loss (as that term is defined in APB Opinion No. 30);
(q) neither the Company nor any Subsidiary has issued, sold or
otherwise disposed of any shares of its capital stock or any evidences of
indebtedness or other securities of the Company or any Subsidiary, except
pursuant to the Options and the debt instruments described on Schedule
2.3(a);
(r) neither the Company nor any Subsidiary has granted or made any
options, warrants, calls, rights, commitments or any other agreements of
any character obligating it to issue
<PAGE> 21
17
any shares of its capital stock or evidences of indebtedness or other
securities of the Company or any Subsidiary, except for Options for 5,000
shares granted on January 26, 1994;
(s) neither the Company nor any Subsidiary has had any customer or
customers terminate its or their relationship with it or suffered any
deterioration in its relationship with any customer or customers the
effect of which individually, or in the aggregate, has had, or may
reasonably be expected to have, a Material Adverse Effect;
(t) neither the Company nor any Subsidiary has made any loans or
advances to any person, firm or corporation including, without
limitation, to any of its officers, directors or shareholders or any
affiliate thereof, other than loans or advances by the Company to its
Subsidiaries and advances to employees for travel and other expenses in
the ordinary course of business; or
(u) neither the Company nor any Subsidiary has entered into any
agreement to do any of the foregoing.
3.10 Tangible Personal Property. (a) The Company and each
Subsidiary have good and marketable title to their respective tangible personal
properties, including, without limitation, the tangible personal properties
reflected in the Financial Statements (except properties since sold or otherwise
disposed of in the ordinary course of business) free and clear of all Liens,
except (i) as shown on the Financial Statements, (ii) Liens for current taxes
and assessments not yet delinquent or being contested in good faith by
appropriate proceedings, (iii)
<PAGE> 22
18
purchase money, materialmen's, mechanics' and similar liens incurred in the
ordinary course of business, (iv) the matters disclosed in Schedule 3.10, and
(v) such minor imperfections of title and encumbrances, if any, which
individually or in the aggregate do not detract from the value of or interfere
with the present use of the tangible personal properties subject thereto or
affected thereby or otherwise impair business operations conducted by the
Company or any Subsidiary.
(b) All leases pursuant to which the Company or any Subsidiary
leases as lessor or lessee any material tangible personal property are in good
standing and are valid and binding in accordance with their respective terms,
and there is not under any of such leases any existing default, event of
default or event which with notice or lapse of time or both would constitute a
default, on the part of the Company or any Subsidiary, or, to the best of the
knowledge of the Company, on the part of any other party to such leases. None
of the rights of the Company or any Subsidiary under any of such leases is
subject to termination or modification as the result of the transactions
contemplated by this Agreement.
3.11 Title to Real Property; Encumbrances. (a) The Company and
each Subsidiary have good and marketable title to their respective real
properties including, without limitation, the properties reflected in the
Financial Statements free and clear of all Liens except (i) as shown on such
Financial Statements, (ii) Liens for current taxes and assessments not yet
delinquent or being contested in good faith by appropriate
<PAGE> 23
19
proceedings, (iii) mechanics', materialmen's and similar Liens incurred in the
ordinary course of business, (iv) such imperfections of title and encumbrances,
if any, which individually or in the aggregate do not detract from the value of
or interfere with the present use of the real properties subject thereto or
affected thereby or otherwise impair business operations conducted by the
Company or any Subsidiary, (v) matters disclosed on Schedule 3.11 and (vi)
matters set forth in any title insurance policies or title commitments which
have previously been delivered to, or obtained by, Buyer.
(b) There is no condemnation proceeding or eminent domain
proceeding of any kind pending or, to the best knowledge of the Company,
threatened, against any such real properties except as described in Schedule
3.11.
(c) The Company does not lease any real properties to others.
(d) All such real properties are, to the extent required, occupied
under a valid and current occupancy permit or the like, and the transactions
contemplated by this Agreement will not require the issuance of any new or
amended certificate of occupancy; there are no facts which would prevent any
such real properties from being occupied after the Closing in substantially the
same manner as before.
(e) All such real properties are, and all improvements thereon
were, constructed in compliance with all applicable federal, state or local
statutes, laws, ordinances, regulations, rules, codes, orders or requirements
(including, but not limited
<PAGE> 24
20
to, any building or zoning laws or codes) affecting such premises.
(f) Such real properties and the present use and condition thereof
do not violate any applicable deed restrictions or other covenants,
restrictions, agreements, existing site plan approvals, zoning or subdivision
regulations or urban redevelopment plans applicable to such real properties as
modified by any duly issued variances, and no permits, licenses or certificates
pertaining to the ownership or operation of such real properties, other than
those which are transferable with such real properties, are required by any
governmental agency having jurisdiction over such real properties or their
operation.
(g) All improvements on such real properties are wholly within the
lot limits of the real properties and do not encroach on any adjoining
premises; and there are no encroachments on any such real properties by any
improvements located on any adjoining premises.
(h) There have been no improvements made to or construction on
such real properties within the period provided by law for the filing of
mechanics' liens, other than in the ordinary course of business.
(i) All buildings and improvements located on such real properties
are in good structural condition and no conditions exist which would make such
real property unsafe or hazardous in any material respect.
3.12 Real Property Leases. (a) The Company and each Subsidiary,
to the extent any of them leases as lessee (a
<PAGE> 25
21
"Lessee") any real property (the "Leased Premises") have good, valid and
insurable title to the leasehold estate under each lease, as Lessee, free and
clear of all Liens, except Liens for (i) current taxes not yet delinquent or
being contested in good faith by appropriate proceedings and (ii) such
encumbrances, if any, which individually or in the aggregate do not materially
detract from the value of or interfere with the present use of the Leased
Premises subject thereto or affected thereby or otherwise impact business
operations conducted by the Company or any Subsidiary. Each Lessee enjoys
peaceful and quiet possession of its Leased Premises, and there is not under
any Lease any default by the Lessee thereunder or any condition which with
notice or the passage of time or both would constitute such a default, and no
Lessee has received notice asserting the existence of any such default or
condition.
(b) The Company has heretofore made available to Buyer a true and
complete copy of each lease and all amendments thereto (a "Lease") pertaining
to any Leased Premises. Each Lease is valid and binding and in full force and
effect and the rental set forth in each Lease is the actual rental being paid,
and there are no separate agreements or understandings with respect to the
rental.
(c) There is no condemnation proceeding or eminent domain
proceeding of any kind pending or, to the best knowledge of the Company,
threatened, against any Leased Premises.
(d) Each Lessee has the full right to exercise the renewal options
contained in its respective Leases on the terms
<PAGE> 26
22
and conditions contained therein and upon due exercise would be entitled to
enjoy the use of each Leased Premises for the full term of such renewal
options.
(e) All Leased Premises are, to the extent required, occupied
under a valid and current occupancy permit or the like, and the transactions
contemplated by this Agreement will not require the issuance of any new or
amended certificate of occupancy; there are no facts which would prevent any
Leased Premises from being occupied after the Closing in substantially the same
manner as before.
(f) All Leased Premises are, and all leasehold improvements
thereon were, constructed in compliance with all applicable Federal, state or
other statutes, laws, ordinances, regulations, rules, codes, orders or
requirements (including, but not limited to, any building or zoning laws or
codes) affecting the occupancy of such premises. All contributions required to
have been paid by the lessor and the Lessee in connection with the construction
of any Leased Premises have been paid.
(g) The Leased Premises and the present use and condition thereof
do not violate any applicable deed restrictions or other covenants,
restrictions, agreements, existing site plan approvals, zoning or subdivision
regulations or urban redevelopment plans applicable to the occupancy of the
Leased Premises as modified by any duly issued variances, and no permits,
licenses or certificates pertaining to the occupancy by the lessee of the
Leased Premises, other than those which are
<PAGE> 27
23
held by the lessee, are required by any governmental agency having jurisdiction
over the Leased Premises or their operation.
(h) All improvements on the Leased Premises are wholly within the
lot limits of the Leased Premises and do not encroach on any adjoining premises;
and there are no encroachments on any Leased Premises by any improvements
located on any adjoining premises.
(i) All improvements located on any Leased Premises are in good
structural condition. There has been no damage to any Leased Premises which
would create any unsafe or hazardous condition at the Leased Premises in any
material respect.
3.13 Contracts and Commitments. Schedule 3.13 is a complete and
correct list setting forth the following information:
(i) all real property owned of record or beneficially by the
Company or any Subsidiary and all Leases of real property to which the
Company or any Subsidiary is a party, with the address of each such
property and an indication of whether such property is leased or owned;
(ii) all policies of liability, environmental, crime, fidelity,
life, fire, workers' compensation, health, director and officer liability
and any other forms of insurance in force insuring the personnel,
properties, buildings, machinery, equipment, fixtures or other assets of
the Company and any Subsidiary;
(iii) (a) all contracts or commitments, whether oral or written
(including, without limitation, mortgages, leases,
<PAGE> 28
24
indentures and loan agreements) to which the Company or any Subsidiary is
a party, or to which it or any of its assets or properties is subject,
except (y) such contracts, understandings and commitments which are
listed on other Schedules required by this Agreement and (z) contracts,
understandings and commitments entered into in the ordinary course of
business and which involve, or which may reasonably be expected to
involve, the payment by or to any one or more of the Company and the
Subsidiaries of less than $50,000 with respect to any one contract or
commitment or $100,000 with respect to any group of contracts or
commitments with the same entity or its subsidiaries or affiliates and
(b) any contracts, understandings or commitments, whether oral or
written, not in the ordinary course of business to which the Company or
any Subsidiary is a party in excess of $5,000 with respect to any one
contract or commitment;
(iv) all contracts containing any covenant restricting the freedom
of the Company or any Subsidiary to compete in any line of business or
with any person or to conduct business in any part of the world;
(v) all collective bargaining agreements, employment, consulting
and termination agreements, executive compensation plans, bonus plans or
other incentive compensation plans, deferred compensation agreements,
severance pay arrangements, pension plans, employee retirement plans
(whether funded or unfunded), employee
<PAGE> 29
25
stock purchase, stock ownership, stock option or profit sharing plans,
any other "employee benefit plan (as defined in Section 3(3) of ERISA),
group life insurance, hospitalization insurance or other material,
binding contracts, plans or arrangements (whether formal or informal)
providing for benefits for any employees and all trust agreements or
other agreements relating to any of the above, whether any of the above
are written or oral;
(vi) the name of each bank or other financial institution from
which loans, lines of credit or other credit commitments to the Company
or any Subsidiary are outstanding, and the names of all persons
authorized to borrow or to discount debt obligations or otherwise act on
behalf of the Company or any Subsidiary in any dealings with such banks;
(vii) the name of each bank or other financial institution in which
the Company or any Subsidiary has an account or safe deposit box, the
numbers of such accounts or boxes and the names of all persons authorized
to draw thereon or have access thereto;
(viii) the names of the ten largest suppliers to, and then ten
largest customers of, the Company for the twelve month period ended
November 30, 1993 together with the dollar volume by supplier and
customer and a general description of the goods or services provided by
each supplier, and whether any substantial change in such suppliers and
customers has occurred since November 30, 1993
<PAGE> 30
26
or, to the knowledge of the Company, is expected to occur after such date;
(ix) all arrangements respecting loans to, or guarantees of loans
to, employees of the Company or any Subsidiary made by the Company or any
Subsidiary, other than travel advances to employees and ordinary course
of business employee purchase programs;
(x) a summary of claims by line of insurance coverage for the
Company and the Subsidiaries for the years 1989 through the date of this
Agreement (other than workers compensation and product liability
insurance claims which have previously been made available to Buyer) and
a list of all open insurance contracts under which audit, retrospective
or experience adjustments can be made;
(xi) all outstanding commitments by the Company or any Subsidiary
to make a capital expenditure, capital addition or capital improvement
involving an amount in excess of $100,000, together with a description of
any proposal, submitted to the Board of Directors, by the Company or any
Subsidiary to make or commit to make any capital expenditure, capital
addition or capital improvement subsequent to the date hereof involving
an amount in excess of $100,000;
(xii) all registered service marks, registered trade names,
registered trademarks, registered brand names, registered copyrights,
registered designs, patents, and all pending registrations and
applications for any of the
<PAGE> 31
27
foregoing (collectively "Intellectual Property Rights"), owned or used
by, or licensed to, the Company or any Subsidiary; and
(xiii) all contracts, agreements or other arrangements under which
the Company or any Subsidiary has granted, or is obligated to grant,
rights to others to use, reproduce, market or exploit any Intellectual
Property Rights.
There is no organization of a type described in Section 501(c)(3)
of the Code that, to the best knowledge of the Company, receives more than
one-third of its support in any taxable year from grants, or contributions from
the Company and the Subsidiaries.
True and complete copies of all documents referred to in such list
(the "Contracts") were delivered or made available to Buyer and its counsel,
together with all amendments thereto. All of the Contracts set forth on
Schedule 3.13 are valid and binding in accordance with their terms and in full
force and effect, and no breach or default by the Company or any Subsidiary, or
event which, with notice or lapse of time or both, could constitute a breach or
default by the Company or any Subsidiary, exists with respect thereto, and no
party thereto has given notice or asserted to the Company or any Subsidiary
that the Company or any Subsidiary is in default thereunder. To the best of
the Company's knowledge, no party to any Contract has any intention to (a)
terminate such Contract or amend the terms thereof, (b) decrease significantly
the volume or nature of the business conducted with the Company and its
Subsidiaries under
<PAGE> 32
28
such Contract, (c) refuse to renew such Contract upon expiration thereof, or
(d) renew such Contract upon expiration thereof on terms and conditions which
are materially more onerous to the Company or its Subsidiaries than those
pertaining to such Contract.
3.14 No Violation; Conflicts.
(a) The Company and each Subsidiary has complied with, and is not in
default in any respect under, any laws, rules, regulations, orders or decrees
applicable to its businesses or properties where failure to so comply or any
such default would reasonably be expected either, individually or in the
aggregate, to have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received notice of any violation of any applicable Federal,
state, local or foreign law, rule, regulation, order or decree relating to its
property or the operation of its business which violation would reasonably be
expected either, individually or in the aggregate, to have a Material Adverse
Effect, and the Company is not aware of any threatened claim of such a
violation (including any investigations regarding the businesses or properties
of the Company or any Subsidiary). Since December 1, 1993 there has not been
any law, code, regulation or ordinance adopted, or, to the best knowledge of
the Company, pending before a legislative or administrative body in any
jurisdiction where the Company or any Subsidiary carries on business, that
would reasonably be expected either, individually or in the aggregate, to have
a Material Adverse Effect.
<PAGE> 33
29
(b) The execution and delivery of this Agreement by the Company do
not, and the consummation by the Company of the transactions contemplated
hereby in compliance with the provisions hereof will not except as described in
Schedule 3.14, (i) conflict with any provision of the Certificate of
Incorporation or By-laws of the Company or any Subsidiary; (ii) violate any
United States Federal, state or foreign law, rule or regulation, or any
judgment, decree or order of any court or other governmental agency or
instrumentality, to which the Company or any Subsidiary is subject; or (iii)
conflict with, or result in a breach or violation of, or accelerate the
performance required by, the terms of any agreement, indenture or other
instrument to which the Company or any Subsidiary is a party or to which any of
their property is subject, or constitute a default or loss of any right
thereunder or an event which, with the lapse of time or action by a third
party, would result in a default or loss of any right thereunder or the
creation of any Lien upon any of the assets or properties of the Company or any
Subsidiary. Neither the Company nor any Subsidiary is a party to, or subject
to or bound by, any judgment, injunction or decree of any court or governmental
authority which restricts or interferes with the performance of this Agreement.
3.15 Environmental Matters. (a) Except as set forth on Schedule
3.15:
(i) the Company and each Subsidiary is in compliance with all
applicable Environmental Laws, and for the past five years has been in
such compliance; and there are no
<PAGE> 34
30
circumstances that are reasonably likely to prevent or interfere with
such compliance in the future;
(ii) the Company and each Subsidiary holds all Environmental
Permits; Schedule 3.15(a)(ii) is a true and complete of all such
Environmental Permits and their expiration dates; the Company has no
reason to believe that such permits (A) will not be renewed, or (B) will
be renewed under terms that are reasonably likely to have a Material
Adverse Effect;
(iii) there are no Materials of Environmental Concern present at,
and no Materials of Environmental Concern are or have been in any way
released or threatened to be released from, any Company Property, Former
Company Property, or as a result of present or former operations of the
Company or any Subsidiary (including, without limitation, any
construction, renovation, maintenance or demolition work at any Company
Property or Former Company Property), that are reasonably likely to be in
violation of or otherwise to give rise to liability of the Company under
any Environmental Laws as now in effect;
(iv) no reports of any kind have made to or required by any
Governmental Authority pursuant to any Environmental Laws, other than
reports that, prior to the signing of this Agreement, true and complete
copies of which the Company has provided to the Buyer, concerning spills
or any other releases or threatened release of any kind at, or in way
from, any Company Property, Former Company
<PAGE> 35
31
Property, or present or former operations of the Company or any
Subsidiary, for which spills, releases or threatened releases, or reports
thereof the Company or any Subsidiary may be liable under any
Environmental Laws as now in effect;
(v) none of the following are on, under, in or at any Company
Property: (A) underground or aboveground storage tanks containing
Materials of Environmental Concern, (B) polychlorinated biphenyls, (C)
asbestos or asbestos-containing materials, (D) septic tanks, septic
fields, dry-wells, or similar structures, (E) lagoons, impoundments, or
other bodies of water to which Materials of Environmental Concern have
been discharged, or in which Materials of Environmental Concern otherwise
are present, (F) landfills, dumping areas, or similar locations where
Materials of Environmental Concern have been placed or where Materials of
Environmental Concern otherwise are present;
(vi) nothing enumerated in Section 3.15(a)(v)(A)-(F) has been on,
under, in, or at any Company Property in a manner that is reasonably
likely to give rise to liability of the Company under any Environmental
Laws as now in effect;
(vii) neither the Company nor any Subsidiary has received any
Environmental Claim as to which the Company's or its Subsidiaries'
liabilities or obligations, contingent or otherwise, have not been fully
and finally resolved, and, to the best of the Company's knowledge, no
such
<PAGE> 36
32
Environmental Claim against the Company or any Subsidiary has been
threatened by any Person;
(viii) neither the Company nor any Subsidiary has entered into,
agreed to, or is otherwise subject to any judgment, decree, order or
similar requirement under any Environmental Laws as to which the
Company's or its Subsidiaries' liabilities or obligations, contingent or
otherwise, have not been fully and finally discharged, nor is the Company
or any Subsidiary negotiating any such judgment, decree, order or
requirement;
(ix) neither the Company nor any Subsidiary has assumed or
retained, contractually or by operation of law, any liabilities or
obligations, contingent or otherwise, that is reasonably likely to give
rise to liability in connection with any Environmental Laws; and
(x) other than those matters identified on Schedule 3.15 as
exceptions to the foregoing representations Section 3.15(a)(i)-(ix), and
those matters identified in any reports provided to the Buyer referred to
in the foregoing Section 3.15(a)(iv) or in Section 3.15(b), there are no
past or present actions, activities, events, conditions or circumstances,
including without limitation the release, threatened release, emission,
discharge, generation, treatment, storage or disposal of Materials of
Environmental Concern, that are reasonably likely to give rise to any
liability or obligation of the Company or any Subsidiary under any
Environmental Laws.
<PAGE> 37
33
(b) Prior to the signing of this Agreement, the Company has
provided or made available to Buyer complete copies of all reports, studies,
assessments, audits, and other similar documents in the possession or control
of the Company, any Subsidiary, or any Seller (other than, in the case of the
Sellers, any reports, studies, assessments, audits, and other similar documents
prepared or furnished by the Company or any Subsidiary) that address any issues
of actual or potential noncompliance with, or actual or potential liability
under, any Environmental Laws that affects the Company or any Subsidiary.
(c) Except as set forth on Schedule 3.15(c), no Environmental Laws
require any permit, license, consent, or other authorization to be obtained
from, or any application, filing, or other notice to be given to, any Person in
connection with this Agreement or the transactions contemplated by this
Agreement.
3.16 Employee Benefit Plans.
(a) Schedule 3.16(A) sets forth an accurate and complete list of
(i)(A) all employee benefit plans (within the meaning of Section 3(3) of ERISA)
(including, retiree medical, dental, life insurance and severance plans), and
all bonus, stock option, stock purchase, restricted stock, incentive, deferred
compensation and supplemental retirement plans (whether or not subject to
ERISA), and all plans maintained for the benefit of employees outside the
United States, (B) all employment, termination and severance contracts or
agreements, whether formal or informal, which are legally binding, and (C) all
other plans, programs, contracts, agreements or arrangements under which the
<PAGE> 38
34
liabilities or obligations as to any employee or former employee exceed $5,000,
in each case, with respect to which the Company or any of its Subsidiaries has
any obligation (whether primary or secondary) or which are maintained,
contributed to or sponsored by the Company or any member of its controlled
group of organizations ("Commonly Controlled Entity") within the meaning of
Section 414 of the Code for the benefit of any current or former employee,
officer or director of the Company, any of its Subsidiaries, or any Commonly
Controlled Entity; and (ii) each employee benefit plan (whether or not subject
to ERISA) for which the Company, any of its Subsidiaries or any Commonly
Controlled Entity could incur liability under applicable law, including without
limitation, Section 4069 of ERISA in the event such plan were terminated, or
under Section 4212(c) of ERISA, or in respect of which the Company, any of its
Subsidiaries or any Commonly Controlled Entity remains secondarily liable under
Section 4204 of ERISA or other applicable law (collectively, the "Plans").
(b) With respect to each Plan, the Company has made available to
Buyer 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, annuity contract or other funding instrument; (ii) the
most recent Internal Revenue Service determination letter; (iii) any summary
plan description, or summary material modification and any other written
communications by the Company, any of its Subsidiaries, or any Commonly
Controlled Entity to its employees describing the features of a Plan to
employees in general or
<PAGE> 39
35
interpreting the terms of a Plan (other than interpretations in connection with
routine claims for benefits made in the ordinary course); and (iv) with respect
to each Plan for which the following is required to be compiled, for the two
most recent years (I) the Form 5500 and attached schedules; (II) audited
financial statements; (III) actuarial valuation reports; and (IV) attorney's
response to an auditor's request for information.
(c)(i) Each Plan has been established and administered in
accordance with its terms, and in compliance with the applicable provisions of
ERISA, the Code and other applicable laws, rules and regulations; (ii) with
respect to any Plan, no actions, suits or claims (other than routine claims for
benefits in the ordinary course) are pending or, to the best of the Company's
knowledge, threatened, and no facts or circumstances exist which could give
rise to any such actions, suits or claims; (iii) with respect to any Plan,
neither the Company nor any other party has engaged in a prohibited
transaction, as such term is defined under Code Section 4975 or ERISA Section
406, which subjects, or if discovered would subject, the Company, any of its
Subsidiaries or Buyer to any liability under the Code or ERISA; (iv) with
respect to any Plan, no event has occurred and no condition exists that
subjects, or if discovered would subject, the Company, either directly or by
reason of its affiliation with any Commonly Controlled Entity, to any liability
under ERISA, the Code or other applicable laws, rules and regulations; (v) all
contributions or premium payments required to be made prior to the Closing Date
under the terms of any Plan, the Code, ERISA or
<PAGE> 40
36
other applicable laws, rules and regulations have been or will be timely made
prior to the Closing Date or, to the extent not paid, adequate reserves have
been provided for on the Financial Statements for all benefits and
contributions relating to service on or prior to the date of the Financial
Statements; (vi) no Plan provides for an increase in benefits on or after the
Closing Date (other than incident to continued employment or the passage of
time) nor has any such increase been approved or communicated to any employee
of the Company, any Commonly Controlled Entity or any Subsidiary; and (vii) for
each Plan with respect to which a Form 5500 has been filed, no material change
has occurred with respect to the most recent Form 5500 since the date thereof.
(d) (i) No Plan has incurred any "accumulated funding deficiency"
as such term is defined in ERISA Section 302 and Code Section 412 (whether or
not waived); (ii) no event or condition exists which constitutes a reportable
event within the meaning of ERISA Section 4043 which would result in a
liability to the Company or any member of its Controlled Group and no condition
exists which subjects the Company or any member of its Controlled Group to a
fine under ERISA Section 4071; (iii) as of the Closing Date, the Company and
each member of its Controlled Group will have made all required premium
payments when due to the Pension Benefit Guaranty Corporation ("PBGC"); (iv)
neither the Company nor any member of its Controlled Group is subject to any
liability to the PBGC for any plan termination occurring on or prior to the
Closing Date; (v) no amendment has occurred which has required or could require
the Company or any member of its
<PAGE> 41
37
Controlled Group to provide security pursuant to Code Section 401(a)(29); and
(vi) neither the Company nor any member of its Controlled Group has engaged in
a transaction which subjects it, or if discovered would subject it, to
liability under ERISA Section 4069.
(e) Accrued liabilities in respect of Foreign Plans which provide
pension benefits are recognized and provided for in accordance with the law and
generally accepted accounting principles in the countries where such plans are
maintained.
(f) Neither the Company nor any Commonly Controlled Entity has,
during the past five years, had any obligation to contribute to, or incurred
any liability with respect to, any Plan that is a multiemployer plan within the
meaning of Section 4001(a)(3) of ERISA.
(g) Each Plan which is intended to meet the requirements for
tax-favored treatment under the Code or which is intended to be qualified
within the meaning of Code Section 401(a) meets such requirements or is so
qualified and has received a favorable determination letter from the Internal
Revenue Service with respect thereto; and nothing has occurred which would
cause the loss of any such tax-favored treatment or qualification.
(h) Schedule 3.16(A) sets forth, on a plan by plan basis, the
correct methodology for calculating benefits payable under each unfunded Plan
with respect to which the Company is required to record a liability and for
which no actuarial reports have been prepared.
<PAGE> 42
38
(i) No Plan exists which will result in the payment to any
employee, officer or director of the Company, any Commonly Controlled Entity or
any Subsidiary of any money or other property or rights or accelerate or
provide any other rights or benefits to any person 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 and
whether or not such payment would require subsequent termination of employment
or any other subsequent event before payment, except as contemplated by the
terms of Article II hereof.
3.17 Labor Controversies. Except as disclosed on Schedule 3.17,
(i) there is no unfair labor practice, charge or complaint pending or, to the
best knowledge of the Company, threatened against the Company or any
Subsidiary; (ii) there is no labor strike, slowdown, work stoppage, lockout,
material dispute or other material labor controversy in effect, or, to the best
knowledge of the Company, threatened against the Company or any Subsidiary, and
neither the Company nor any Subsidiary has experienced any such labor
controversy within the past five years; and (iii) neither the Company nor any
Subsidiary has closed any plant or facility, effectuated any layoffs of
employees or implemented any early retirement, separation or window program
within the past five years, nor has the Company or any Subsidiary planned or
announced any such action or program for the future. The Company and each of
its Subsidiaries have complied with all laws applicable to any of them relating
to the
<PAGE> 43
39
employment of labor, including any provisions thereof relating to wages, hours,
collective bargaining and the payment of social security and similar taxes, and
neither the Company nor any of its Subsidiaries is liable for any arrears of
wages or any taxes or penalties for failure to comply with any of the
foregoing. The Company and each of its Subsidiaries is in compliance with
their obligations with respect to employees pursuant to the Worker Adjustment
and Retraining Notification Act of 1988, and all other notification and
bargaining obligations arising under any collective bargaining agreement,
statute or otherwise. There are no collective bargaining agreements relating
to any employees with respect to their employment with the Company or any of
its Subsidiaries except as disclosed on Schedule 3.13.
3.18 Litigation. Except as set forth on Schedule 3.18 there are no
claims, actions, suits, inquiries, complaints, charges, arbitrations,
grievances, proceedings, or investigations pending, or, to the best knowledge
of the Company, threatened against or relating to the Company or any Subsidiary
or with respect to the transactions contemplated by this Agreement, before any
court or governmental or regulatory authority or body which, if decided
adversely, would reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect, nor does the Company know of any facts which
would provide a justifiable basis for any such claim, action, proceeding or
investigation. Neither the Company nor any Subsidiary nor any property of any
of them is subject to any order, judgment, injunction or decree entered by any
foreign or United States
<PAGE> 44
40
federal, state or local court or governmental agency and outstanding against
the Company or any of its Subsidiaries.
3.19 Taxes. (a) For all periods ending on or prior to the
Closing Date there have been or will be timely filed with respect to the Company
and all of its Subsidiaries, with the appropriate United States or foreign,
Federal, state and local governmental agencies, all tax returns including
estimated tax returns and other information returns and reports which are
required to be filed prior to the Closing Date by or with respect to them and
each such document is or will be complete, correct and in accordance with all
requirements of applicable law and regulations.
(b) Except as otherwise set forth on Schedule 3.19(b), the Company
and all of its Subsidiaries have paid or will pay or caused to be paid in full
all Taxes, assessments or deficiencies due prior to the Closing Date or which
may be claimed to be due prior to the Closing Date to any taxing authority or
otherwise required to be paid or deposited prior to the Closing Date by or with
respect to them for all periods ending on or prior to the Closing Date.
(c) Neither the Company nor any of its Subsidiaries is a party to
any pending action or proceeding, nor, to the best of the Company's knowledge,
has any action or proceeding been threatened by any governmental authority
(domestic or foreign), for assessment or collection of Taxes, and no claim for
assessment or collection of Taxes has been asserted relating in whole or in
part to the Company or any of its Subsidiaries.
<PAGE> 45
41
There are no outstanding agreements or waivers extending the statutory periods
of limitations for the assessment or collection of Taxes against the Company or
any of its Subsidiaries.
(d) Federal income tax returns of the Company and all of its
Subsidiaries have been examined by the Internal Revenue Service through
November 30, 1989. Income and franchise tax returns of the Company and all of
its Subsidiaries have been examined as shown on Schedule 3.19(d). True and
complete copies of all Federal and state income and franchise tax returns for
each past tax year (or portion thereof) which were required to have been filed
and for which the statute of limitations for assessment or collection of Taxes
has not run have been previously delivered or made available to Buyer.
(e) The liabilities and/or prepaid asset for Taxes reflected in
the Financial Statements are accurate and the amounts reflected for Taxes
therein are sufficient for the payment of all accrued, unpaid or deferred Taxes
of the Company and its Subsidiaries for all periods ended on or prior to
November 30, 1993 whether or not disputed.
(f) Neither the Company nor any of its Subsidiaries has filed any
consent with the Internal Revenue Service to have Section 341(f)(2) of the Code
apply, nor has any agreement under Section 341(f)(3) of the Code been filed in
respect of the Company or any of its Subsidiaries.
(g) Except for the group of which the Company and its Subsidiaries
are presently members, since December 31, 1987, neither the Company nor any of
its Subsidiaries has been a member
<PAGE> 46
42
of an affiliated group of corporations, within the meaning of Section 1504 of
the Code, except where the Company was the common parent corporation of such
affiliated group.
(h) None of the assets of the Company or any of its Subsidiaries
is property that is subject to the "safe harbor lease" provisions of former
Section 168(f)(8) of the Code.
(i) The Company is not and has not been a U.S. real property
holding corporation (as defined in Section 897(c)(2) of the Code) during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(j) The Company and its Subsidiaries file tax returns in the
jurisdictions set forth on Schedule 3.19.
(k) There are no Liens with respect to Taxes upon any of the
assets properties of the Company or any Subsidiary than with respect to Taxes
not yet due and payable).
(l) Neither the Company nor any Subsidiary is a party to, is bound
by, or has any obligation under, any Tax sharing agreement or similar contract,
except as between the Company and certain of its Subsidiaries.
(m) None of the Sellers is a "foreign person" within the meaning
of Section 1445(b)(2) of the Code.
3.20 Intangible Property. The of the transactions contemplated
hereby will not alter or impair rights of the Company or its Subsidiaries to
any United States and foreign trademarks, trade names, service marks, service
names, technology, and applications therefor (collectively "Intangible
Property") by or licensed to the
<PAGE> 47
43
Company or its Subsidiaries. Except as disclosed on Schedule 3.20, to the best
of the Company's knowledge neither the Company nor its Subsidiaries have
infringed, misappropriated or misused any Intangible Property owned by another,
and no claim has been asserted by any person alleging the invalidity, abuse,
misuse or unenforceability of any Intangible Property or that the Intangible
Property constitutes an infringement of another person's intellectual property,
or challenging or questioning the validity or effectiveness of any license or
agreement relating thereto to which the Company or any of its Subsidiaries is a
party. Except as disclosed on Schedule 3.20, the Company has not granted, or
obligated itself to grant, any outstanding licenses or other rights in or to
any of the Intangible Property by or licensed to the Company or its
Subsidiaries. All U.S. and foreign registrations of patents, copyrights,
designs and trademarks included in the Intangible Property are in full force
and effect and no pending applications therefor have been abandoned.
3.21 Approval of Agreement. (a) The execution and delivery of
this Agreement has been duly authorized and approved by the requisite vote of
the Board of Directors of the Company. Pursuant to such authorization and
approval, the Company has full and unrestricted legal right, power and
authority to enter into this Agreement, to perform its obligations hereunder
and to carry out the transactions contemplated hereby. This Agreement
constitutes a valid and binding agreement of the Company and, assuming this
Agreement constitutes a valid and binding
<PAGE> 48
44
obligation of Buyer, is enforceable against it in accordance with its terms.
(b) Except with respect to expiration of the Hart-Scott-Rodino
waiting period, no authorization, order, consent, or approval of, or filing or
registration with, any third party or domestic or foreign governmental or
regulatory authority is necessary for or in connection with the execution and
delivery by the Company of this Agreement or the consummation by the Company of
the transactions contemplated by this Agreement.
3.22 Licenses, Permits, Authorizations, Etc. The Company and each
Subsidiary have all approvals, authorizations, consents, licenses, orders,
franchises, certificates of public convenience, rights, registrations and
permits (collectively, "Permits") of all governmental agencies, whether
federal, state or local, United States or foreign, required to permit the
operation of their businesses as presently conducted. All of the Permits are
in full force and effect and the Company is not aware of any impediment to the
renewal of any Permit. Neither the Company nor any Subsidiary has engaged in
any activity which would cause revocation or suspension of any of such Permits,
and no action or proceeding looking to or contemplating the revocation or
suspension of any Permit is pending or, to the best knowledge of the Company,
threatened. The Company and each Subsidiary have made proper application for
(or, in the case of applications not yet eligible for filing, have used their
reasonable best efforts to make proper preparation for filing) all such Permits
as the Company or any such Subsidiary has deemed
<PAGE> 49
45
will be required to permit the Company and each Subsidiary to conduct their
businesses in accordance with present plans for expansion.
3.23 Insurance. All of the insurance policies listed on Schedule
3.13 are outstanding and in full force and effect and all premiums with respect
to such policies are currently paid or accrued. No notice of cancellation or
termination has been received with respect to any such policy and the insurance
policies to which the Company is a party provide adequate insurance coverage
for the assets and operations of the Company and its Subsidiaries in light of
the nature of the Company's business and the localities where such assets and
operations are located.
3.24 Books and Records. The books and records of the Company and
each Subsidiary are in all material respects complete and correct, have been
maintained in accordance with good business practices and accurately reflect
the basis for the financial condition and results of operations of the Company
and each Subsidiary set forth in the Financial Statements.
3.25 Accounts Receivable and Accounts Payable. The accounts
receivable of the Company and the Subsidiaries reflected on the Financial
Statements and all accounts receivable arising thereafter and prior to the date
hereof arose from bona fide transactions in the ordinary course of business and
are current and fully collectible, less the applicable allowance for doubtful
accounts. No counterclaims or offsetting claims in excess of $100,000, in the
aggregate, with respect to such accounts
<PAGE> 50
46
receivable are pending or, to the best knowledge of the Company, are
threatened. The accounts payable reflected on the Financial Statements are
complete and accurate and all accounts payable arising thereafter and prior to
the date hereof arose from bona fide transactions in the ordinary course of
business and have been paid or are not yet due and payable.
3.26 Condition of Assets. The assets and properties owned,
operated or leased by the Company and any Subsidiary and used in their
businesses are in a normal state of repair and operating condition, reasonable
wear and tear excepted, and suitable for the uses for which intended.
3.27 Inventory; Returns Policy. (a) The inventory (other than
obsolete or excess items) of the Company and the Subsidiaries as reflected on
the Financial Statements and any inventory acquired or produced after that
date, consisted of raw materials and supplies, manufactured and purchased
parts, goods in process and finished goods of a quantity and quality saleable
in the ordinary course of business, and such inventory is fit and sufficient
for the purpose for which it was procured or manufactured. All obsolete or
excess items in said inventory have been written down or written off or
otherwise provided for in accordance with GAAP. Since December 1, 1993,
inventories have been purchased or produced in the ordinary course of business
and consistent with the anticipated requirements of the Company and the
Subsidiaries.
(b) The Financial Statements reflect reserves, which are adequate
in accordance with GAAP, for all returns.
<PAGE> 51
47
3.28 Transactions with Affiliates. Except as disclosed in Schedule
3.28 hereto and except for intercompany transactions between the Company and
its Subsidiaries, neither the Company nor any Subsidiary is now, nor during the
past three years has been, a party, directly or indirectly, to any contract,
lease, arrangement or transaction, whether for the purchase, lease or sale of
property, for the rendition of services or otherwise, with any affiliate of the
Company or its Subsidiaries, or any officer, director, employee, proprietor,
partner, shareholder or any "associate" of the Company or any affiliate of the
Company or its Subsidiaries (as the term "associate" is defined in Rule 405 of
the Rules and Regulations promulgated under the Securities Act of 1933), other
than a contract, or arrangement by reason of, which relates to or is in
connection with the full or part time employment of an employee, nor are there
now, or for the past three years have there been, any loans outstanding to any
of such persons from the Company or any of its Subsidiaries.
3.29 Brokers and Finders. No broker, finder or investment banker
engaged by or on behalf of the Company or any Seller is entitled to any
brokerage, finder's or other fee or commission in connection with this
Agreement or the transactions contemplated hereunder, except for J.P. Morgan
Securities, Inc. ("JPM"). Except for such obligations to JPM, neither any
Seller, the Company nor its Subsidiaries have incurred any liability for
brokers' fees, finders' fees, agents' commissions or other
<PAGE> 52
48
similar forms of compensation in connection with this Agreement or the
transactions contemplated hereby.
3.30 Materials Previously Furnished to Buyer. (a) Except to the
extent previously disclosed in writing to Buyer, since December 1, 1993,
neither the Company nor any Subsidiary has made, agreed to make, or announced
any general change in wages, compensation or employee benefits or any change in
the wages, compensation or employee benefits of any employee whose total annual
compensation is in excess of $50,000, entered into any employment contract with
any officer or employee involving an annual rate of compensation in excess of
$50,000 or which is not terminable without liability by it on thirty days'
notice or less, or made any loan to, or entered into any transaction of any
other nature with, any officer, director or shareholder of the Company or any
Subsidiary, other than travel advances or any other transactions not exceeding
$5,000 per officer, director or shareholder.
(b) The Company has previously delivered in writing to Buyer the
following information:
(i) the names and current annual compensation rates of all
employees of the Company or any Subsidiary whose current annual rate of
compensation (including bonuses) is $50,000 or more;
(ii) the names of all retired officers and employees of the
Company or any Subsidiary who are receiving or are entitled to receive any
pension under any unfunded plan not qualified under Section 401 of the Internal
Revenue Code of 1954,
<PAGE> 53
49
as amended, their ages and their current annual unfunded pension rates; and
(iii) a summary of workers compensation and product liability
insurance claims for the Company and the Subsidiaries for the years 1989
through the date of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties.
4.1 Corporate Existence and Corporate Power. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Connecticut, and has the requisite corporate power and
authority to own, lease and operate the properties now owned or leased by it
and to carry on its business as now conducted.
4.2 Approval of Agreement. (a) The execution and delivery of this
Agreement has been duly authorized and approved by the requisite vote of the
Board of Directors of Buyer. Pursuant to such authorization and approval,
Buyer has full and unrestricted legal right, power and authority to enter into
this Agreement, to perform its obligations hereunder and to carry out the
transactions contemplated hereby. This Agreement constitutes a valid and
binding agreement of Buyer and, assuming this Agreement constitutes a valid and
binding obligation of Sellers, is enforceable against Buyer in accordance with
its terms.
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50
(b) Except with respect to expiration of the Hart-Scott-Rodino
waiting period, no authorization, order, consent, or approval of, or filing or
registration with, any third party or domestic or foreign governmental or
regulatory authority is necessary for or in connection with the execution and
delivery by Buyer of this Agreement or the consummation by Buyer of the
transactions contemplated by this Agreement.
4.3 No Violation, Conflicts. (a) Buyer has complied with, and is
not in default in any respect under, any laws, rules, regulations, orders or
decrees applicable to its businesses or properties where failure to so comply
or any such default would reasonably be expected to adversely affect its
ability to consummate the transactions contemplated hereby. Buyer has not
received notice of any violation of any applicable Federal, state, local or
foreign law, rule, regulation, order or decree relating to its property or the
operation of its business which violation would reasonably be expected to
adversely affect its ability to consummate the transactions contemplated
hereby.
(b) The execution and delivery of this Agreement by Buyer do not,
and the consummation by Buyer of the transactions contemplated hereby in
compliance with the provisions hereof will not, (i) conflict with any provision
of the Certificate of Incorporation or By-laws of Buyer; (ii) violate any
United States Federal, state or foreign law, rule or regulation, or any
judgment, decree or order of any court or other governmental agency or
instrumentality, to which Buyer is subject; or (iii) conflict with, or result
in a breach or violation of, or
<PAGE> 55
51
accelerate the performance required by, the terms of any agreement, indenture
or other instrument to which Buyer is a party or to which any of its property
is subject, or constitute a default or loss of any right thereunder or an event
which, with the lapse of time or action by a third party, would result in a
default or loss of any right thereunder or the creation of any Lien upon any of
the assets or properties of Buyer. Buyer is not a party to, or subject to or
bound by, any judgment, injunction or decree of any court or governmental
authority which may restrict or interfere with the performance of this
Agreement.
4.4 Funds Available for Purchase. Buyer has access to the
necessary funds to meet its obligations herein.
4.5 Purchase for Investment. Buyer is purchasing the Common Stock
for its own account for investment purposes and not with a view to, or for sale
in connection with, any distribution thereof within the meaning of the
Securities Act of 1933, as amended.
ARTICLE V
COVENANTS PRIOR TO CLOSING
5.1 Covenants of the Company. The Company covenants and agrees
with Buyer that from and after the date of this Agreement and until the Closing
Date, the Company and its Subsidiaries shall conduct their respective
businesses in the ordinary and usual course, consistent with past management
practices (including, without limitation, management of inventory, collection
of accounts receivable, payment of accounts
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payable and timing of receipts and disbursements of cash), subject to the
following provisions and limitations:
(a) Operation of Business. Except as otherwise provided by this
Agreement or as provided for by the terms of the contracts, commitments or
proposals described in the Schedules to this Agreement, without the prior
written consent of Buyer (which consent will not be unreasonably
withheld), the Company and its Subsidiaries shall not:
(i) Enter into any material contract or commitment or engage
in any material transaction which is not in the usual and ordinary
course of business or consistent with prior practices;
(ii) Sell or dispose of or encumber or agree to permit the
establishment of any Lien on any of the Company's or the
Subsidiaries' assets (whether tangible or intangible), other than in
the usual and ordinary course of business or as contemplated hereby;
(iii) Make any capital expenditure or enter into any lease of
capital equipment or real estate involving a capital commitment in
excess of $100,000;
(iv) Declare or pay any dividend (whether in cash, stock or
property or any contribution thereof) or make any sale of, or
distribution in respect of, the capital stock of the Company or
directly or indirectly redeem, purchase or otherwise acquire any of
the capital stock of the Company;
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53
(v) Make any amendments to or changes in the certificate or
articles of incorporation or bylaws or other governing instruments
of the Company or its Subsidiaries or the terms of any outstanding
security;
(vi) Issue or commit to issue any capital stock of any class or
series (other than pursuant to the exercise of any Options), or any
securities convertible into or exchangeable for shares of capital
stock of any class or series, or grant or issue any options,
warrants or other rights to acquire any shares of capital stock or
other ownership interest.
(vii) Enter into any employment agreement or bonus, stock
options, profit sharing, pension, retirement or other similar
arrangement or plan not in existence on the date hereof or grant any
increase in the rate of compensation or in the benefits payable or
to become payable to any officer or other employee over the levels
in effect on the date hereof, other than normal merit increases of
employees who are defined as non-exempt from the Fair Labor
Standards Act of 1938, as amended, or increases required by
applicable law;
(viii) Enter into any joint venture, partnership or other similar
arrangement for the conduct of their businesses; (ix) Purchase or
enter into any contract to purchase (i) the capital stock of any
company or (ii)
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the assets of any company purchased as part of the acquisition of a
business;
(x) Enter into any transaction with Sellers or any of their
affiliates (including, without limitation, the making of any loans
or advances of cash or property), other than in the ordinary course
of business incident to their employment by the Company or any
Subsidiary or as required by the terms of any arrangement disclosed
in any of the Schedules hereto;
(xi) Create, incur, assume or guarantee any indebtedness for
money borrowed, including obligations in respect of capital leases,
but excluding drawings in the ordinary course of business under the
Company's existing credit facilities upon written notice to Buyer;
(xii) Change the accounting methods, principles or practices
employed by the Company and its Subsidiaries, except as required by
GAAP; or
(xiii) Modify, change or terminate in any respect any existing
license, lease, contract or other similar document relating to its
business other than in the ordinary course of business.
Notwithstanding the foregoing or any other provisions contained herein,
Buyer acknowledges that from the date hereof up to and including the
Closing Date, the Company will make any scheduled or required payments of
principal and interest on its outstanding debt obligations as they
<PAGE> 59
55
become due and payable, including payments on indebtedness owed to certain
of the Sellers or their affiliates and may, in its discretion, make
payments in the ordinary course of business on the Revolver described on
Schedule 2.3(a). Any action or transaction to which Buyer consents shall
be deemed to be an exception to the representations, warranties and
covenants contained herein.
(b) Preservation of Business. The Company and the Subsidiaries
will use their respective reasonable best efforts to operate their
business in the ordinary course, keep their respective business
organizations intact, including their respective present employees and
present relationships with suppliers and customers and others having
business relations with them.
(c) Insurance and Maintenance of Property. The Company and the
Subsidiaries will use their respective reasonable best efforts to cause
all property and assets owned or leased by them to continue to be insured
in a manner comparable to that in which such property and assets are
presently insured, and to operate, maintain and repair their respective
property and assets in the ordinary course of business.
(d) Full Access. The Company shall use its reasonable best
efforts to (i) cause Buyer and its agents, consultants and representatives
to be given full access, during normal business hours throughout the
period after the date hereof and prior to the Closing Date, to the
buildings, offices,
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books, records, files and personnel of the Company and its Subsidiaries
and (ii) cause the Company and its Subsidiaries to have its and their
officers furnish Buyer with financial and operating data and other
information with respect to the business and properties of the Company and
its Subsidiaries, including, without limitation, unaudited financial
statements of the Company and its Subsidiaries on a monthly basis, within
15 days after the end of each month, and on a quarterly basis, within 30
days after the end of each quarter, prepared on a basis consistent with
the prior practices of the Company, which present fairly the consolidated
financial position of the Company and its Subsidiaries as of the dates
indicated and their consolidated results of operations for the periods
indicated. No investigation pursuant to this Section 5.1(d) shall affect
any representations or warranties or the conditions to the obligations of
the parties hereto to consummate the transactions contemplated hereby.
5.2 No Shopping.
Sellers shall not and shall each use their reasonable best efforts to not
permit any of their agents or representatives (including, without limitation,
investment bankers, attorneys and accountants) or any of the officers,
employees, agents, affiliates and representatives of the Company and its
Subsidiaries to, directly or indirectly (i) solicit, initiate or encourage the
submission of any inquiries, indications of interest, proposals or offers from
any corporation, partnership,
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person, entity or group, other than Buyer (collectively, "Third Parties"),
concerning the sale, repurchase or redemption of any shares of the Common Stock
or any other shares of capital stock of the Company, the sale of any stock of
any Subsidiary, the sale of any assets of the Company or its Subsidiaries
(other than sales in the ordinary course of business or any matters disclosed
in any of the Schedules hereto) or any merger, recapitalization or other
business combination transaction involving the Company or its Subsidiaries,
(ii) participate in any discussions or negotiations regarding, or enter into
any agreements or understandings relating to, any of the foregoing with, or
provide any information concerning the Company, its Subsidiaries or any of the
foregoing to, any Third Parties, or (iii) otherwise cooperate in any way with,
or assist or participate in, facilitate or encourage, any effort or attempt by
any Third Parties to do or seek any of the foregoing. The obligations of
Sellers under this Section shall be several and not joint.
5.3 Covenants of Buyer.
(a) Confidentiality. The terms of the Confidentiality Agreement
between Buyer and JPM, as agent for the Company, dated March 16, 1993,
shall apply to any information disclosed to Buyer in connection with this
Agreement and the transactions contemplated hereby.
5.4 Covenants of Buyer, Sellers and the Company.
(a) Governmental Filings. Buyer, each Seller and the Company
shall make promptly or cause to be made, all filings, notifications
and submissions with any
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58
governmental agency, whether federal, state or local, United States
or foreign, required to be made by each of them in connection with
the consummation of the transactions contemplated hereby, including
without limitation all filings required under the HSR Act, and each
shall cooperate with the other parties in the preparation of all
filings, submissions and notifications required by such other
parties and in seeking early termination of the applicable waiting
periods under the HSR Act.
(b) Cooperation. Buyer, the Company and each Seller will use
their respective best efforts to obtain all consents, waivers,
authorizations, orders or approvals from any governmental authority
or any Third Party necessary to bring about the satisfaction of the
conditions required to be performed, fulfilled or complied with by
them pursuant to this Agreement and to take or cause to be taken all
action, and to do or cause to be done all things, necessary, proper
or advisable under applicable laws to consummate and make effective
the transactions contemplated by this Agreement as expeditiously as
practicable.
(c) Public Announcements. Buyer, Sellers' Representative and
the Company will consult with each other before issuing any press
release or otherwise making any public statements with respect to
the transactions contemplated by this Agreement and shall
<PAGE> 63
59
not issue any such press release or make any such public statement
without the prior approval of the other parties hereto, except to
the extent that such party is advised by counsel, in good faith,
that such announcement or release is required as a matter of law (in
which event prior notice shall be given to the extent practicable).
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to the Obligations of Each Party. The obligations
of Buyer and Sellers to consummate the transactions provided for in this
Agreement shall be subject to the satisfaction of each of the following
conditions on or before the Closing Date.
(a) Hart-Scott-Rodino Compliance. Any waiting period and any
extension thereof under the HSR Act relating to the transactions
contemplated by this Agreement shall have expired or been terminated.
(b) No Injunction or Prohibition. No temporary restraining order
or preliminary or permanent injunction or other order, decree or ruling
shall have been issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, and no
statute, rule, regulation or executive order shall have been promulgated
or enacted by any governmental authority or shall be in effect, and no
action or proceeding before any court or governmental authority or other
regulatory or
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60
administrative agency or commission, domestic or foreign, by any
government or governmental authority, domestic or foreign, is pending or,
to the best knowledge of Sellers or Buyer, threatened which would make
the sale of the Common Stock to, or the holding of the Common Stock by,
Buyer illegal or which would otherwise prevent the consummation of the
transactions contemplated hereby.
6.2 Conditions to the Obligations of Sellers. The obligation of
Sellers to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction of each of the following conditions on or before
the Closing Date, subject to the right of Sellers to waive any one or more of
such conditions:
(a) Representations and Warranties of Buyer. The representations
and warranties of Buyer contained in this Agreement shall be true and
correct in all material respects on the Closing Date as though such
representations and warranties were made again on the Closing Date except
for those representations and warranties which address matters only as of
a particular date, which shall be true and correct as of such date.
(b) Performance of this Agreement. Buyer shall have duly
performed and complied in all material respects with all of its
obligations pursuant to this Agreement on or prior to the Closing Date.
(c) Certificate of Buyer. Sellers shall have received a
certificate or certificates signed by an executive officer
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61
of Buyer dated as of the Closing Date and certifying that the conditions
set forth in subsections 6.2(a) and 6.2(b) have been fully satisfied.
(d) Purchase Price. Sellers have received from Buyer the Purchase
Price minus the Indebtedness Payments (as contemplated by Section 2.3).
(e) Repayment of Indebtedness. The indebtedness referred to in
Section 2.3 shall have been repaid in full.
(f) Redemption of Preferred Stock. The Preferred Stock shall
have been redeemed in full as contemplated by Section 2.3.
(g) Termination of Options. The Options shall have been
terminated as contemplated by Section 2.3.
(h) Further Assurances. Sellers shall have received such further
instruments and documents as may reasonably be required in connection
with the transactions contemplated hereby and to evidence the fulfillment
of the agreements herein contained and the performance of all conditions
to the consummation of such transactions.
(i) Necessary Consents. All statutory requirements for the valid
consummation by Sellers of the transactions contemplated by this
Agreement shall have been fulfilled and all required authorizations,
consents, orders and approvals by any governmental authority which are
required for the consummation of the transactions contemplated by this
Agreement shall have been received and shall be in full force and effect.
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(j) Opinion of Counsel. Buyer shall have delivered to Sellers an
opinion of Richard W. Davies, counsel for Buyer, in the form attached as
Exhibit A to this Agreement.
6.3 Conditions to the Obligations of Buyer. The obligation of
Buyer to consummate the transactions provided for in this Agreement shall be
subject to the satisfaction of each of the following conditions on or before
the Closing Date, subject to the right of Buyer to waive any one or more of
such conditions:
(a) Representations and Warranties of Sellers and the Company.
The representations and warranties of Sellers and the Company contained
in this Agreement shall be true and correct in all material respects on
the Closing Date as though such representations and warranties were made
again on the Closing Date except for those representations and warranties
which address matters only as of a particular date, which shall be true
and correct as of such date.
(b) Performance of this Agreement. Sellers and the Company shall
have duly performed and complied in all material respects with all of
their respective obligations pursuant to the terms of this Agreement on
or prior to the Closing Date.
(c) Certificates of the Company. Buyer shall have received
certificates signed by the President and Chief Financial Officer of the
Company dated as of the Closing Date certifying that the conditions set
forth in
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subparagraphs 6.3(a), 6.3(b) and 6.3(f) have been fully satisfied.
(d) Stock Certificates. Buyer shall have received certificates
registered in the names of Sellers, endorsed to Buyer or in blank,
representing the Common Stock together with evidence of payment of any
applicable transfer taxes.
(e) Necessary Consents. All statutory requirements for the valid
consummation by Buyer of the transactions contemplated by this Agreement
shall have been fulfilled and all required authorizations, consents,
orders and approvals by any governmental authority or any third party
which are required for or in connection with the consummation of the
transactions contemplated by this Agreement shall have been received and
shall be in full force and effect, except for such third party
authorizations, consents, orders or approvals the absence of which,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect.
(f) No Adverse Changes. Except as contemplated by this Agreement,
there shall have been no Material Adverse Effect from the date of this
Agreement to the Closing Date.
(g) Opinion of Counsel. Sellers shall have delivered to Buyer an
opinion of Bryan Cave, counsel for the Company, in the form attached as
Exhibit B to this Agreement.
(h) Certificate of Sellers. Buyer shall have received a
certificate signed on behalf of Emerson Electric Co. and
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J.P. Morgan Capital Corporation in the form attached hereto as Exhibit C.
(i) Letters of Resignation. Buyer shall have received an executed
copy of the written resignation, effective as of the Closing Date, of
each director of the Company and its Subsidiaries from his or her
position as director.
(j) Release of Liens. Seller shall have obtained releases of all
Liens and security interests held by the creditors listed on Schedule
2.3(a) including executed Uniform Commercial Code termination statements
terminating such creditors' Liens on any and all of the Company's and the
Subsidiaries' assets and Buyer shall receive evidence of such releases.
(k) Further Assurances. Buyer shall have received such further
instruments and documents as may reasonably be required in connection
with the transactions contemplated hereby and to evidence the fulfillment
of the agreements herein contained and the performance of all conditions
to the consummation of such transactions.
ARTICLE VII
COVENANTS FOLLOWING CLOSING
7.1 Access to Books and Records; Corporation. Each of Buyer and
the Company agrees that following the Closing Date it shall not, and shall not
permit the Company or its Subsidiaries to, destroy or otherwise dispose of any
of those books, records and other documents held by the Company (relating to
the properties, liabilities or operations of the Company prior to the
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Closing Date) for a period of five years commencing on the Closing Date. Buyer
agrees that it shall, and it shall cause the Company to, make available to
Sellers and their representatives and agents all such books, records and
documents, and permit Sellers and their respective representatives and agents
to examine, make extracts from and, at Sellers' expense, copy such books,
records or documents at any time during normal business hours to reasonably
facilitate (i) the preparation by Sellers of any tax returns as they may be
required to file with respect to the operations of what was Sellers' or the
Company's business, the making of any election related to Taxes or in
connection with any audit, amended return, claim for refund or any suit or
proceeding with respect thereto, (ii) the investigation, litigation and final
disposition of any claims, suits or proceedings which may have been or may be
made against Sellers in connection with what was Sellers' or the Company's
business or (iii) otherwise reasonably relating to Sellers' ownership of
capital stock of the Company. Notwithstanding the foregoing, the Company shall
have the right to destroy all or part of such books, records and documents at
an earlier time by giving each party hereto 30 days' prior written notice of
such intended disposition and by offering to deliver to such party at its
expense, custody of such books, records and documents as the Company intends to
destroy.
7.2 Directors and Officers Insurance and Indemnification. Buyer
and the Company shall use their best efforts to secure a one year extended
reporting period for any
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directors and officers insurance policy which may be in effect on the Closing
Date, upon expiration thereof. The terms and conditions of such coverage shall
be no less advantageous to the directors and officers of the Company and the
Subsidiaries than that which is in effect as of the date hereof. For a period
of five years from the Closing Date, the Company and the Subsidiaries will
maintain, without any reduction in scope, and will fully comply with, the
indemnification provisions for present and former directors and officers
contained in the certificates or articles of incorporation and by-laws of the
Company and the Subsidiaries. Without limiting the generality of the
foregoing, during such five year period, the Company and the Subsidiaries will
(a) indemnify to the maximum extent permitted by law all present and former
directors and officers of the Company and the Subsidiaries against any claim,
liability or expenses arising out of or related to their services as such or
otherwise on behalf of the Company or any Subsidiary and (b) in the event of
any claim, investigation or proceeding, pay as incurred any such present or
former director's or officer's reasonable legal and other expenses upon receipt
of an undertaking to repay such amounts if it is finally determined that he or
she is not entitled to be indemnified.
7.3 Cooperation. Sellers and Buyer will use their reasonable best
efforts to cause all post-Closing transactions and events to occur as soon as
practical following Closing, and will cooperate with each other as reasonably
required for such purpose. From and after the Closing, Buyer and Sellers shall
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execute and deliver or use their reasonable best efforts to cause to be
executed and delivered to one another such further instruments, documents and
conveyances, and to make all filings with and to obtain all consents, approvals
or authorizations of any governmental or regulatory authority or any other
person under any permit, license, agreement, indenture or other instrument, and
shall take such other action as may be reasonably required to effectively carry
out the terms and provisions of this Agreement and the transactions
contemplated hereby.
ARTICLE VIII
INDEMNIFICATION
8.1 Survival of Representations and Warranties. The
representations and warranties of Sellers contained in Sections 3.1 and 3.3(a)
of this Agreement or in stock transfer powers delivered hereunder or pursuant
hereto shall survive the Closing and shall continue in effect indefinitely.
None of the other representations and warranties or certificates of any of the
Sellers, the Company or Buyer shall survive the Closing.
8.2 Indemnification by Sellers. (a) Sellers, severally and not
jointly, agree to indemnify and hold Buyer and each of its affiliates and their
directors, officers, employees and agents harmless against and in respect of
(i) any loss, claim, liability or damage incurred or sustained by any of Buyer,
its affiliates or their directors, officers, employees and agents, as a result
of any inaccuracy of or breach by such Seller of its representation and
warranty contained in Sections 3.1 and 3.3(a), or in stock transfer powers
delivered hereunder or
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pursuant hereto, and (ii) all reasonable costs and expenses (including
reasonable attorneys' fees) incurred by each of Buyer, its affiliates and their
directors, officers and employees, in connection with any action, suit,
proceeding, demand, assessment or judgment arising out of any such inaccuracy
or breach.
(b) Promptly after receipt by Buyer under this Section 8.2 of
notice of any claim or the commencement of any action, Buyer shall, if a claim
in respect thereof is to be made against a Seller under this Section 8.2,
notify such Seller in writing of the claim or the commencement of that action,
provided that the failure to notify such Seller shall not relieve it, him or
her from any liability which it, he or she may have to Buyer to the extent that
such Seller has not been prejudiced thereby. If any claim shall be brought
against Buyer, and it shall so notify a Seller, such Seller shall be entitled
to participate therein, and to assume the defense thereof with counsel
reasonably satisfactory to Buyer, and to settle and compromise any such claim
or action, provided, however, that, if such settlement provides for any
obligation on the part of Buyer, the Company or any Subsidiary, such settlement
or compromise shall be effected only with the consent of Buyer, which consent
shall not be unreasonably withheld. After notice from such Seller to Buyer of
its, his or her election to assume the defense of such claim or action, such
Seller shall not be liable for other expenses subsequently incurred by Buyer in
connection with the defense thereof other than reasonable out-of-pocket costs
of investigation, provided, however, that Buyer shall have the right
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to employ counsel to represent it if, in Buyer's reasonable judgment, it is
advisable for Buyer to be represented by separate counsel, and in such event
the fees and expenses of such separate counsel shall be paid by Buyer. Buyer
and Sellers each agree to render to each other such assistance as may
reasonably be requested in order to insure the proper and adequate defense of
any such claim or proceeding.
ARTICLE IX
TERMINATION
9.1 Termination of Agreement. This Agreement may be terminated at
any time prior to the Closing:
(a) By mutual written consent of Sellers' Representative and Buyer;
(b) By either Buyer or Sellers' Representative in the event that
the other party hereto shall, contrary to the terms of this Agreement,
intentionally fail or refuse to consummate the transactions contemplated
hereby or to take any other action referred to herein necessary to
consummate the transactions contemplated hereby, after affording such
defaulting party a five day period after notice in which to cure; or
(c) By either Sellers' Representative or Buyer in the event the
Closing does not take place (other than as a result of the failure of
such party to perform its obligations hereunder) on or prior to June 30,
1994, unless such date is extended by the mutual written consent of
Sellers' Representative and Buyer.
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9.2 Effect of Termination. If this Agreement is terminated
pursuant to Section 9.1, this Agreement shall become void and of no effect,
other than in the event of a termination pursuant to Section 9.1(b), with no
liability on the part of any party hereto, except for the provisions of
Sections 5.3(a) and 10.6 which shall survive the termination hereof. In the
event there is a breach of this Agreement prior to its termination pursuant to
Section 9.1 and such breach does not give rise to liability under Section
9.1(b), then the sole remedy of the parties hereunder for such breach shall be
termination of this Agreement.
ARTICLE X
MISCELLANEOUS
10.1 Entire Agreement and Modification. This Agreement, the
Schedules attached hereto and the documents delivered pursuant hereto, and the
Confidentiality Agreement constitute the entire agreement between the parties
and supersedes all other prior agreements and understandings, written and oral,
between the parties hereto, with respect to the subject matter hereof. No
changes of, modifications of, or additions of this Agreement shall be valid
unless the same shall be in writing and signed by the party to be charged
thereby.
10.2 Binding Agreement; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties named herein and to their
respective successors and assigns, provided that this Agreement shall not be
binding upon the Company or any of the Sellers until duly executed by the
Company
<PAGE> 75
71
and all of the Sellers. This Agreement shall not be assignable by any party
without the prior written consent of the other parties, except that this
Agreement may be assigned by Buyer to any wholly-owned subsidiary of Buyer (in
which event, however, Buyer shall remain fully liable hereunder). Any
attempted assignment of this Agreement in breach of this provision shall be
void and of no effect. There are no third party beneficiaries of this
Agreement, other than the parties hereto and their respective successors and
assigns and except as provided in Section 7.2 hereof.
10.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
10.4 Headings. The Article and Section headings contained in this
Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of the Agreement.
10.5 Governing Law. This Agreement shall be construed and
interpreted according to the laws of the State of Missouri, as applied to
contracts to be wholly performed within such state.
10.6 Payment of Fees and Expenses. Each party hereto shall pay all
fees and expenses of such party's respective counsel, accountants, bankers and
other experts and all other expenses incurred by such party incident to the
negotiation, preparation and execution of this Agreement and the consummation
of the transactions contemplated hereby. Buyer expressly
<PAGE> 76
72
acknowledges and agrees that JPM and Bryan Cave have been retained by and their
fees and expenses shall, upon presentation of customary statements therefor, be
paid by the Company, and agrees that any such fees and expenses not paid on or
before the Closing Date will be paid promptly upon presentation of such
statements; provided that in the event the aggregate of the fees and expenses
of JPM and Bryan Cave (including for such purpose all amounts paid in
connection with the transaction contemplated by this Agreement prior to the
date hereof) exceed $1,430,000, such excess shall be paid by Sellers. Other
than JPM, no party has retained any broker, finder or agent or agreed to pay
any brokerage fees, finder's fees and commissions with respect to the
transactions contemplated by this Agreement. Each of Buyer and Sellers
(severally and not jointly) agree to indemnify and hold the other harmless from
and against all loss, cost, damage, claims and expenses, including reasonable
attorneys' fees, which the other may sustain by reason of any claim for
brokerage commissions or finders' or similar fees arising by reason of any act
of the indemnifying party in connection with the transactions contemplated
hereby.
10.7 Parties. References herein to a "party" shall mean Buyer, on
the one hand, and Sellers, collectively, on the other, for purposes of notice
and communications. All representations, warranties and covenants of Sellers
hereunder are several and not joint.
10.8 Notice. All notices, requests, demands and other
communications hereunder shall be deemed to have been duly given
<PAGE> 77
73
if the same shall be in writing and shall be delivered personally or sent by
overnight courier or registered or certified mail, postage prepaid, and
addressed as set forth below and effective upon receipt at such addresses:
(a) If the Buyer:
Hubbell Incorporated
584 Derby Milford Road
Orange, CT 06477
Attention: Richard W. Davies, Esq.
with copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Attention: Joel S. Hoffman, Esq.
(b) If to the Company (prior to Closing)
or to Sellers:
c/o J. P. Morgan Securities, Inc.
60 Wall Street (31/60)
New York, New York 10260
Attention: Anna Marie Fallon
Vice President
and to:
Sellers at their addresses specified on Schedule
10.8 hereto, unless changed by notice in writing
to Buyer
with copy to:
Bryan Cave
211 North Broadway, Suite 3600
St. Louis, Missouri 63102
Attention: Don G. Lents, Esq.
Any party may change the address to which notices are to be
addressed by giving the other parties notice in the herein set forth.
<PAGE> 78
74
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed on the day and year first above written.
HUBBELL INCORPORATED
By: /s/ Harry B. Rowell
------------------------
A. B. CHANCE INDUSTRIES, INC.
By: /s/ Leif Lomo
------------------------
J.P. MORGAN CAPITAL CORPORATION
By: /s/ David M. Cromwell
------------------------
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
By: /s/ Loren S. Archibald
------------------------
EMERSON ELECTRIC CO.
By: /s/ James D. Switzer
------------------------
/s/ Arthur H. Allen
----------------------------
Arthur H. Allen
/s/ Arthur H. Allen,
attorney-in-fact for
Doris J. Allen
----------------------------
Doris J. Allen
/s/ Robert W. Harmon
----------------------------
Robert W. Harmon
/s/ Mary C. Harmon
----------------------------
Mary C. Harmon
<PAGE> 79
75
/s/ Harold L. Welborn
----------------------------
Harold L. Welborn
Harold L. Welborn,
attorney-in-fact for
Jane C. Welborn
----------------------------
Jane C. Welborn
/s/ Frank D. Myers
----------------------------
Frank D. Myers
/s/ Eileen L. Myers
----------------------------
Eileen L. Myers
/s/ Fred J. McCabe
----------------------------
Fred J. McCabe
/s/ Robert J. Tanner
----------------------------
Robert J. Tanner
/s/ Robert J. Tanner,
attorney-in-fact for
Peggy A. Tanner
----------------------------
Peggy A. Tanner
/s/ Richard L. Milhollin
----------------------------
Richard L. Milhollin
/s/ Joyce S. Milhollin
----------------------------
Joyce S. Milhollin
/s/ Charles A. Popeck
----------------------------
Charles A. Popeck
/s/ Karen A. Popeck
----------------------------
Karen H. Popeck
/s/ Hatim Taj
----------------------------
Hatim Taj
<PAGE> 80
76
/s/ Hatim Taj,
attorney-in-fact for
Ajab Taj
----------------------------
Ajab Taj
/s/ John A. Langenfeld
----------------------------
John A. Langenfeld
/s/ J.T. Odom
----------------------------
J.T. Odom
/s/ Marcia A. Odom
----------------------------
Marcia A. Odom
/s/ William R. Hooper
----------------------------
William R. Hooper
/s/ William R. Hooper,
attorney-in-fact for
Amelia L. Hooper
----------------------------
Amelia L. Hooper
/s/ Harry J. Young
----------------------------
Harry J. Young
/s/ Frances L. Young
----------------------------
Frances L. Young
*/
____________________________
First National Bank
& Trust Co., Custodian
/s/ Randi S. Emmer
----------------------------
Shearon Lehman Brothers,
Custodian [Smith Barney Shearson]
/s/ Russell Green
----------------------------
Russell Green
- - ---------------------------------_
*/ See supplemental signature pages.
<PAGE> 81
77
/s/ Russell Green,
attorney-in-fact for
Bernice Green
----------------------------
Berniece Green
/s/ Jack W. Enk
----------------------------
Jack W. Enk
/s/ Shirley R. Enk
----------------------------
Shirley R. Enk
/s/ Robert J. Moore
----------------------------
Robert J. Moore
/s/ Leif Lomo
----------------------------
Leif Lomo
/s/ James P. Mullen
----------------------------
James P. Mullen
/s/ Donald R. Miller
----------------------------
Donald R. Miller
/s/ Ronald J. Bulanda
----------------------------
Ronald J. Bulanda, Trustee
/s/ Barbara A. Bulanda
----------------------------
Barbara A. Bulanda, Trustee
/s/ Pauline R. Bosch
----------------------------
Pauline R. Bosch, Trustee
<PAGE> 82
DEFINITIONS Page Number
- - ----------- -----------
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Commonly Controlled Entity . . . . . . . . . . . . . . . . . . . 34
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Property . . . . . . . . . . . . . . . . . . . . . . . . 2
Company's Knowledge . . . . . . . . . . . . . . . . . . . . . . . 2
Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Environmental Claim . . . . . . . . . . . . . . . . . . . . . . . 2
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . 2
Environmental Permits . . . . . . . . . . . . . . . . . . . . . . 3
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Financial Statements . . . . . . . . . . . . . . . . . . . . . . 12
Foreign Plan . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Foreign Subsidiary . . . . . . . . . . . . . . . . . . . . . . . 3
Former Company Property . . . . . . . . . . . . . . . . . . . . . 3
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Indebtedness Payments . . . . . . . . . . . . . . . . . . . . . . 6
Intangible Property . . . . . . . . . . . . . . . . . . . . . . . 42
Intellectual Property Rights . . . . . . . . . . . . . . . . . . 27
JPM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Leased Premises . . . . . . . . . . . . . . . . . . . . . . . . . 21
Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . 4
Materials of Environmental Concern . . . . . . . . . . . . . . . 4
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
PBGC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 5
Revolver . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Sellers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sellers' Representative . . . . . . . . . . . . . . . . . . . . . 4
Stockholders Agreement . . . . . . . . . . . . . . . . . . . . . 6
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 57
