SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported) July 21, 1997
PENTAIR, INC.
(Exact Name of Registrant as specified in Its Charter)
MINNESOTA 001-11625 41-0907434
(State of Incorporation (Commission File (I.R.S. Employer
or Organization) Number) Identification No.)
1500 County Road B2 West, St. Paul, Minnesota 55113-3105
(Address of Principal Executive Offices) (Zip Code)
612.636.7920
(Registrant's Telephone Number, Including Area Code)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On July 21, 1997, Pentair, Inc. announced that it had entered into an
agreement to acquire the Pump Group of General Signal Corporation.
On August 25, 1997, Pentair, Inc. announced that it had completed the
acquisition of the General Signal Pump Group effective August 23, 1997. The
purchase price was approximately $200 million.
General Signal's Pump Group (GSPG) designs, manufactures, and markets
pumps for residential, commercial, and municipal applications. GSPG comprises
four brand-name pump businesses: Aurora, Hydromatic, Fairbanks Morse, and
Layne & Bowler. The Group employs approximately 1,000 people at three domestic
manufacturing locations -- Ashland, Ohio; North Aurora, Illinois; Kansas City,
Kansas -- and at an assembly plant in Thomasville, Georgia.
Pentair has owned the F.E. Myers pump business, located in Ashland, Ohio
since 1986. In early 1995, Pentair announced plans to expand its presence in
the water products markets and subsequently acquired water conditioning control
valve manufacturer Fleck Controls in November 1995. In January 1996, Pentair
acquired Aplex, a maker of industrial pumps, which was combined with the
Myers' organization. In December 1996, Pentair acquired SIATA, S.p.A., an
Italian manufacturer of water conditioning control equipment, and
folded it into Fleck Controls. When completed, the General Signal
Pump Group will be the eighth acquisition made by Pentair in the last
two years.
Pentair financed the acquisition through existing lines of credit.
The Company anticipates that the acquisition will be slightly dilutive to the
Company's 1997 earnings, but accretive to earnings within the first 12 months
after acquisition.
The acquisition of the General Signal Pump Group does not constitute a
"significant business combination" under Regulation S-X of the Securities and
Exchange Commission and, therefore, does not require the filing by the
Company of pro forma financial information under the Securities Exchange Act
of 1934, as amended.
Item 7. Financial Statements and Exhibits.
a. Not applicable
b. Not applicable
c. Exhibits
Exhibit 2.1 Purchase Agreement dated July 17, 1997
Exhibit 99.1 Press release dated July 21, 1997
Exhibit 99.2 Press release dated August 25, 1997
<PAGE>
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.
PENTAIR, INC.
By: /s/ Richard W. Ingman
Richard W. Ingman
Executive Vice President and
Chief Financial Officer
Dated: September 9, 1997
EXHIBIT 99.1
July 21, 1997
7:30 A.M. CDT
Evelyn Vida (612) 639-5229
PENTAIR TO ACQUIRE GENERAL SIGNAL PUMP GROUP
St. Paul, Minn. -- Pentair, Inc. (NYSE: PNR) today announced it
has entered into an agreement to acquire the Pump Group of
General Signal Corporation. The transaction is expected to close
by the end of the third quarter 1997. The purchase price is
approximately $200 million, an amount slightly less than one times
the Pump Group's annual revenues.
"The General Signal Pump Group, in combination with our
existing Myers pump business, will make Pentair a major player in
the worldwide water and wastewater pump markets," said Pentair
Chairman and Chief Executive Officer, Winslow H. Buxton. "This
transaction is part of our strategy of expanding Pentair's presence
in water products industries."
General Signal's Pump Group (GSPG) designs,
manufactures, and markets pumps for residential, commercial,
and municipal applications. GSPG comprises four brand-name
pump businesses: Aurora, Hydromatic, Fairbanks Morse, and
Layne & Bowler. The Group employs more than 1,000 people at
three domestic manufacturing locations -- Ashland, Ohio; North
Aurora, Illinois; and Kansas City, Kansas -- and at an assembly
plant in Thomasville, Georgia.
"GSPG's strengths in the municipal and commercial water
pump markets will dovetail nicely with our established position in
residential markets represented by our existing F.E. Myers
business," said Rick Cathcart, Pentair Executive Vice President.
"Pentair will benefit from an expanded product line, from
significant product synergies, from opportunities to improve the
performance of the acquired businesses, and from GSPG's
growing market presence in Asia."
Pentair has owned the F.E. Myers pump business, located
in Ashland, Ohio, since 1986. In early 1995, Pentair announced
plans to expand its presence in the water products markets and
subsequently acquired water conditioning control valve
manufacturer Fleck Controls in November 1995. In January 1996,
Pentair acquired Aplex, a maker of industrial pumps, which was
combined with the Myers' organization. In December 1996,
Pentair acquired SIATA, S.p.A., an Italian manufacturer of water
conditioning control equipment, and folded it into Fleck Controls.
When completed, the General Signal Pump Group will be the
eighth acquisition made by Pentair in the last two years.
Pentair, which will finance the acquisition through existing
lines of credit, anticipates that the acquisition will be slightly
dilutive to the Company's 1997 earnings, but accretive to earnings
within the first 12 months after acquisition.
With approximately 10,000 employees worldwide, Pentair
is a diversified manufacturer operating in three principal markets:
electrical and electronic enclosures; professional tools and
equipment; and water products. Headquartered in St. Paul,
Minnesota, Pentair operates from 50 manufacturing and
distribution locations in North America, Europe, and Asia.
EXHIBIT 99.2
August 25, 1997
7:30 A.M. CDT
Evelyn Vida (612) 639-5229
PENTAIR COMPLETES ACQUISITION OF GENERAL SIGNAL PUMP GROUP
St. Paul, Minn. -- Pentair, Inc. (NYSE: PNR) today announced it
completed the acquisition of the General Signal Pump Group. The
purchase price was approximately $200 million.
"The four brand-name pump businesses acquired from General
Signal -- Aurora, Hydromatic, Fairbanks Morse, and Layne & Bowler --
have been combined with our existing Myers pump business to form the
Pentair Pump Group," said Rick Cathcart, Pentair Executive Vice
President. "Our chief task now is to integrate the businesses, assess the
synergies that exist between them, and capitalize on opportunities for
improvement."
The Pentair Pump Group designs, manufactures, and markets
pumps for residential, commercial, and municipal applications. The Group
employs more than 1,500 people at manufacturing locations in Ashland,
Ohio; North Aurora, Illinois; and Kansas City, Kansas and at an assembly
plant in Thomasville, Georgia.
Pentair has owned the F.E. Myers pump business since 1986. In
early 1995, Pentair announced plans to expand its presence in the water
products markets and subsequently acquired water conditioning control
valve manufacturer Fleck Controls in November 1995. In January 1996,
Pentair acquired Aplex, a maker of industrial pumps, which became a
wholly owned subsidiary of Myers. In December 1996, Pentair acquired
SIATA, S.p.A., an Italian manufacturer of water conditioning control
equipment, and incorporated it into Fleck Controls. The General Signal
Pump Group is Pentair's fourth water-related acquisition since Pentair
launched its water products strategy.
"The Pentair Pump Group -- with its combined brands -- now
holds a leading market share in North American residential, commercial,
and municipal pump markets," Rick Cathcart explained. "And the added
strength of the acquired brands gives us the impetus we need to be a
significant player in the rapidly expanding global market."
With approximately 11,000 employees worldwide, Pentair is a
diversified manufacturer operating in three principal markets: electrical
and electronic enclosures; professional tools and equipment; and water
products. Headquartered in St. Paul, Minnesota, Pentair operates from
54 manufacturing and distribution locations in North America, Europe,
and Asia.
EXHIBIT 2.1
Draft of July 17, 1997
CONFIDENTIAL
PURCHASE AGREEMENT
by and among
GENERAL SIGNAL CORPORATION
GENERAL SIGNAL LIMITED
AURORA/HYDROMATIC PUMPS INC.
FAIRBANKS MORSE PUMP CORPORATION
and
PENTAIR, INC.
REGARDING THE PURCHASE AND SALE OF
GENERAL SIGNAL PUMP GROUP
Dated as of July 18, 1997
<PAGE>
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS 1
1.1. Sale and Transfer of Assets 1
1.2. Retained Assets 2
2. LIABILITIES 4
2.1. Assumption of Liabilities 4
2.2. Excluded Liabilities 4
3. PURCHASE PRICE 5
3.1. Purchase Price 5
3.2. Purchase Price Adjustment 5
4. CLOSING 7
4.1. Closing 7
4.2. Deliveries by Sellers 8
4.3. Deliveries by Buyer 9
5. REPRESENTATIONS AND WARRANTIES OF SELLERS 10
5.1. Organization and Existence 10
5.2. Authorization, Execution and Validity 10
5.3. Conflicts; Defaults 10
5.4. India JVs 11
5.5. Financial Statements 12
5.6. No Undisclosed or Contingent Liabilities 13
5.7. Absence of Certain Changes 13
5.8. Owned Equipment 14
5.9. Leases 14
5.10. Owned Real Property 14
5.11. Condition of Property 14
5.12. Intellectual Property 15
5.13. Contracts 16
5.14. Suppliers, Distributors and Customers 17
5.15. Litigation 17
5.16. Environmental Laws 18
5.17. Compliance with Other Laws 18
5.18. Employees 19
5.19. Employee Benefits 20
5.20. Taxes 22
5.21. Insurance 24
5.22 Transactions with Related Parties 24
5.23. Sufficiency of Assets 24
5.24. Brokers 25
6. REPRESENTATIONS AND WARRANTIES OF BUYER 25
6.1. Organization and Existence 25
6.2. Authorization, Execution and Validity 25
6.3. Conflicts; Defaults 25
6.4. Litigation 26
6.5. Sufficient Funds 26
6.6. Brokers 26
7. CERTAIN COVENANTS AND AGREEMENTS 27
7.1. Information and Access 27
7.2. Conduct of Business Pending Closing 27
7.3. Assignment of Confidentiality Agreements 29
7.4. No Solicitation 30
7.5. Consents; Non-Transferability 30
7.6. Governmental Filings 31
7.7. Trademarks, Etc. 32
7.8. Covenant Not-to-Compete 32
7.9. Release from Guarantees 34
7.10 Further Assurances 34
7.11. Intercompany Obligations 34
7.12. Supplements to Schedules 34
7.13. Cooperation 35
7.14. India JVs 35
7.15. Cancellation of Procurement Cards 36
7.16. Cooperation with Actions 36
8. CONDITIONS PRECEDENT TO CLOSING 37
8.1. Conditions Precedent to Sellers' Obligations 37
8.2. Conditions Precedent To Buyer's Obligations 38
8.3. If Conditions Not Satisfied 39
9. EMPLOYEE MATTERS 39
9.1. Nonbargaining Employees 39
9.2. Bargaining Employees 40
9.3. Employee Benefit Plans Generally 42
9.4 Pension Plans
9.5. Savings Plans 43
9.6. Welfare and Fringe Benefits Generally 44
10. TAXES 45
10.1. Allocation of Certain Taxes 45
10.2. Information to be Provided by Buyer 46
10.3. Cooperation 46
10.4. Books and Records 46
10.5. Confidentiality 47
10.6. Allocation of Purchase Price 47
11. TERMINATION OF AGREEMENT 48
11.1. Termination 48
11.2. Effect of Termination 48
12. SURVIVAL AND INDEMNIFICATION 49
12.1. Survival 49
12.2. Indemnification by GSC 49
12.3. Indemnification by Buyer 50
12.4. Notice and Resolution of Claims 50
12.5. Limits on Indemnification 51
12.6. Environmental Matters 53
12.7. Payment and Assignment of Claims 55
13. DEFINITIONS; INTERPRETATION 56
13.1. Definitions 56
13.2. Certain Interpretive Matters and Limitations 66
14. MISCELLANEOUS 67
14.1. Assignability and Binding Effect 67
14.2. Modification and Waivers 68
14.3. Notices 68
14.4. Section and Other Headings 69
14.5. Governing Law and Consent to Jurisdiction 69
14.6. Bulk Sales 69
14.7. Public Announcements 69
14.8. Expenses 69
14.9. Parties in Interest; No Third Party Beneficiaries 70
14.10. Return of Information 70
14.11. Counterparts 70
14.12. Arbitration of Disputes 70
14.13. Entire Agreement 71
Exhibits
Exhibit A Form of Bill of Sale and Assignment
Exhibit B Form of Intellectual Property Assignment
Exhibit C Form of Real Property Site Lease
Exhibit D Form of Transition Services Agreement
Exhibit E Form of Assumption Agreement
Schedules
Schedule 1.1.1 Certain Bank Accounts
Schedule 1.2.9 Seller Guarantees
Schedule 1.2.14 Certain Retained Assets
Schedule 2.2.4 Excluded Litigation
Schedule 3.2.1 Closing Net Equity Statement
Adjustments and Methodology
Schedule 5.3 Certain Conflicts and Consents of Sellers
Schedule 5.5 Financial Statements
Schedule 5.6 Certain Liabilities
Schedule 5.7 Certain Changes
Schedule 5.8 Exceptions to Personal Property Title
Schedule 5.9 Leases
Schedule 5.10 Owned Real Property
Schedule 5.12.1 Intellectual Property
Schedule 5.12.2 Intellectual Property Licenses
Schedule 5.12.5 Certain Invention Obligations
Schedule 5.13 Material Contracts
Schedule 5.14.1 Certain Suppliers
Schedule 5.14.2 Certain Customers
Schedule 5.15 Litigation
Schedule 5.16.1 Compliance with Environmental Laws
Schedule 5.16.2 Environmental Permits
Schedule 5.16.3 Environmental Litigation
Schedule 5.16.4 Hazardous Substances
Schedule 5.17 Compliance with Other Laws
Schedule 5.18.2 Collective Bargaining Agreements
Schedule 5.18.3 Labor Practices
Schedule 5.19.1 Employee Benefit Plans
Schedule 5.19.3 Employee Benefit Plan Funding
Schedule 5.19.4 Multiemployer Plans
Schedule 5.19.5 Acceleration of Benefits
Schedule 5.19.6 Certain Additional Benefits
Schedule 5.20 Taxes
Schedule 5.21 Insurance
Schedule 6.3 Certain Conflicts and Consents of Buyer
Schedule 7.9 Certain Guarantees and Other Instruments
Schedule 10.6 Purchase Price Allocation
Schedule 13.2 Sellers' Knowledge
PURCHASE AGREEMENT
This Purchase Agreement (this "Agreement") is made
and entered into as of July 18, 1997 by and
among General Signal Corporation, a New York corporation
("GSC"), General Signal Limited, a Canadian
corporation ("GS Limited"), Aurora/Hydromatic Pumps Inc.
("Aurora/ Hydromatic"), Fairbanks Morse
Pump Corporation ("Fairbanks Morse") (the foregoing being
collectively referred to herein as "Sellers"),
and Pentair, Inc., a Minnesota corporation ("Buyer"). Unless
otherwise defined herein, terms the first letter
of which are capitalized shall have the meanings ascribed to
them in Article 13.
WHEREAS, Sellers desire to sell and assign to Buyer
and Buyer desires to purchase and assume
from Sellers substantially all the assets and liabilities of the
Pump Group, as a going concern, as more
particularly described herein;
NOW, THEREFORE, Sellers and Buyer intending to
be legally bound, hereby agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1. Sale and Transfer of Assets. On the terms and subject
to the conditions of this Agreement,
each of Sellers shall sell and assign to Buyer all of its
respective right, title and interest in and to all of the
property and assets, real, personal or mixed, tangible and
intangible, of every kind and description,
wherever located (the "Assets") which are owned by Sellers
or any of them at the close of business on the
Closing Date and which are used in or relate primarily to the
business of the Aurora Pump division of GSC
or the Aurora/Hydromatic division of GS Limited (collectively,
the "Divisions") or of Aurora/Hydromatic
or Fairbanks Morse (collectively, the "Subsidiaries" and,
together with the Divisions, the "Pump Group"),
other than the Retained Assets, including without limitation
the following:
1.1.1. The bank accounts listed in Schedule 1.1.1.
1.2. Retained Assets. Notwithstanding anything contained
herein to the contrary, the following
(collectively, "Retained Assets") are not part of the sale and
purchase contemplated by this Agreement, are
excluded from the Assets being conveyed hereunder and
shall remain the properties and rights of the
Sellers:
1.2.1. The name "General Signal", the letters "GS", or the
"G S design" trademark, or
derivatives thereof and all related trade names and
trademarks, service marks and copyrights (collectively,
the "Marks").
1.2.2. Any and all insurance claims and rights under all
current and past insurance
policies and contracts of Sellers and proceeds thereof.
1.2.3. All tax records and litigation files related to any of the
Retained Assets or
Excluded Liabilities.
1.2.4. All rights and interests under or pursuant to all
warranties and guarantees of or
made by suppliers of the Pump Group in connection with
any of the Retained Assets or Excluded
Liabilities.
1.2.5. Any and all claims (including counterclaims, cross
claims and other claims in the
nature of indemnification or contribution), rights, refunds and
causes of action against third parties relating
to or arising out of any of the Retained Assets or Excluded
Liabilities.
1.2.6. All prepaid and similar items, including without
limitation all prepaid expenses,
deferred charges, deposits, rebates and advance payments
made or incurred in respect of any of the
Retained Assets or Excluded Liabilities.
1.2.7. Any prepaid expenses or other prepaid assets not
reflected on the Final Closing
Net Equity Statement.
1.2.8. Any cash or cash equivalents, such as bank deposits
and marketable securities,
except to the extent reflected as assets in the Final Closing
Net Equity Statement, bank accounts (other than
the bank accounts listed in Schedule 1.1.1), safe deposit
boxes and checking accounts of the Pump Group.
1.2.9. All rights and interests under any bank guarantees
and any other instruments and
proceeds thereof of a Seller or any Continuing Affiliate, as
listed in Schedule 1.2.9 (collectively, the "Seller
Guarantees").
1.2.10. Assets of or rights under any Employee Benefit Plan
identified as a Retained Asset
or Excluded Liability in Article 9.
1.2.11. Except as set forth in Article 10, any and all claims
of Sellers or any of the
Continuing Affiliates or either of the Subsidiaries for refunds,
credits, carrybacks or carryforwards in
connection with any Taxes for tax periods ending on or prior
to the Closing Date and proceeds thereof.
1.2.12. The land and structures (a) used by the Aurora
Pump division of GSC at 800
Airport Road, North Aurora, Illinois (the "Aurora Site"), (b)
used by Aurora/Hydromatic at 1840 Baney
Road, Ashland, Ohio (the "Ashland Site"), and (c) used by
Fairbanks Morse at 3601 Fairbanks Avenue,
Kansas City, Kansas ( the "Kansas City Site") (collectively
the "Real Property Sites"), including all
permanent improvements and non-trade fixtures (including
any above ground tanks with a capacity of more
than 500 gallons located on any Real Property Site at the
Closing Date), but excluding all furniture, trade
fixtures and equipment located thereon and non-permanent
improvements thereto, which constitute a part of
the Assets.
1.2.13. Any and all information technology and equipment
owned or licensed by any
Seller and all employees of Sellers located at GSC's
headquarters or at its North Wales data center who
may provide information technology services to the Pump
Group, including without limitation, one DEC
8200 Unix Computer.
1.2.14. The assets identified in Schedule 1.2.14.
1.2.15. The minute books, stock records, corporate seal
and capital stock of each Seller.
2. LIABILITIES
2.1. Assumption of Liabilities. Except as otherwise provided
in Section 2.2, Buyer shall
assume, and agrees to pay, perform or discharge all of the
debts, liabilities, contracts, commitments,
engagements, licenses and other obligations, accrued,
absolute, contingent or otherwise, whatsoever, of
Sellers or any of them which relate to or arise out of the
business of the Pump Group as of the Closing
Date, including without limitation all Assumed Environmental
Liabilities (collectively, the "Assumed
Liabilities").
2.2. Excluded Liabilities. Notwithstanding anything in this
Agreement to the contrary, Buyer
shall not assume and shall not be deemed to have
assumed, any of the following (collectively "Excluded
Liabilities"), except to the extent that any such liabilities or
obligations are reflected on the Final Closing
Net Equity Statement:
2.2.1. Any liability or obligation relating to employee matters
to the extent retained by
Sellers or any Continuing Affiliate pursuant to Article 9.
2.2.2. Any liability or obligation of Sellers, the Subsidiaries
or the Divisions for Taxes
as to which Sellers or any of the Continuing Affiliates
remains responsible pursuant to Article 10.
2.2.3. Any liability or obligation for the payment of workers'
compensation claims and
benefits to employees and former employees of the Pump
Group, to the extent arising out of any event
occurring prior to the Closing Date.
2.2.4. 50% of any liability or obligation arising under the
claim by Electrical and
mechanical Services (Israel) is a letter dated June 12, 1997
up to the first $100,000 and thereafter any
liability or obligation therefor.
2.2.5. Any Excluded Environmental Liability.
2.2.6. Any liability or obligation arising under the policy
disclosed on Schedule 5.12.5.
2.2.7. Except as otherwise provided in Article 9, any liability
or obligation relating to (a)
persons who were employees of the Pump Group but who
are not Active Employees on the Closing Date or
(b) the 9.1.1. Employees.
2.2.8. Any liability or obligation for Layne & Bowler Other
Post Employment Benefits
(FAS 112).
3. PURCHASE PRICE
3.1. Purchase Price. In consideration for the sale and
transfer of the Assets of the Pump
Group, Buyer shall on the Closing Date (a) assume the
Assumed Liabilities and (b) deliver or cause to be
delivered, by wire transfer of immediately available funds to
a bank account or bank accounts designated
by GSC, on behalf of Sellers, in writing at least one business
day prior to the Closing, an amount equal to
$190,500,000 (the "Purchase Price"), subject to adjustment
pursuant to Section 3.2.
3.2. Purchase Price Adjustment.
3.2.1. As soon as reasonably practicable, but not later than
60 calendar days after the
Closing Date, GSC shall deliver to Buyer (a) an audited
Combined Statement of Net Equity of the Pump
Group as of the Closing Date ("Closing Net Equity
Statement") and (b) a calculation of Closing Date Net
Equity based on the Closing Net Equity Statement, setting
forth in reasonable detail the computation of any
adjustment to the Purchase Price in accordance with
Section 3.2.4 and accompanied by a report of Ernst &
Young LLP in the form attached to Schedule 3.2.1. The
Closing Net Equity Statement shall be prepared
using the same accounting methods, policies , principles,
practices and procedures, with consistent
classification, judgments and estimation methodology as
used in the preparation of the 12/31 Net Equity
Statement, subject to any adjustments and using any
modifications to the methodology set forth in Schedule
3.2.1 with respect to the Closing Net Equity Statement. In
connection with the audit of the Closing Net
Equity Statement, Ernst & Young LLP shall observe a
physical inventory of the Divisions and the
Subsidiaries as of the close of business on the Closing Date.
Sellers shall cause Ernst & Young LLP to
permit Buyer and its auditors the opportunity to observe the
taking of such inventory.
3.2.2. In connection with the preparation of the Closing Net
Equity Statement, Buyer
shall afford Sellers and Ernst & Young LLP reasonable
access to personnel, books, records and facilities to
permit the preparation of the Closing Net Equity Statement.
Buyer shall also cooperate with Sellers and
Ernst & Young LLP to seek to cause the persons who were
financial officers and plant controllers of the
Pump Group immediately prior to the Closing to sign and
deliver to Ernst & Young LLP a standard
representation statement relating to the Closing Net Equity
Statement. Buyer and Sellers each shall make
available to the other (upon the request of the other) their
respective work papers generated in connection
with the preparation or review of the Closing Net Equity
Statement.
3.2.3. Within 30 calendar days after receipt of the Closing
Net Equity Statement, Buyer
shall either inform Sellers in writing that the Closing Net
Equity Statement is acceptable or object to the
Net Equity Statement in writing, setting forth a specific
description of each of its objections. If Buyer so
objects and the parties do not resolve such objections on a
mutually agreeable basis within 30 calendar
days after Sellers' receipt thereof, the disagreement shall be
resolved within an additional 60 calendar days
by an Independent Firm. The decision of the Independent
Firm shall be final and binding upon the parties.
Upon the agreement of the parties or the decision of the
Independent Firm, or if Buyer fails to deliver an
objection to Seller within the first 30-day period referred to
above, the Net Equity Statement (as adjusted, if
necessary) shall be deemed the Final Net Equity Statement
(the "Final Net Equity Statement") and the Net
Equity reflected in the Closing Net Equity Statement
calculated on the basis of such Final Net Equity
Statement shall be deemed final. Each party shall bear the
fees, costs and expenses of its own accountants
and each of Buyer and Sellers shall be responsible for
one-half of the fees, costs and expenses of the
Independent Firm, if any. In resolving any disputed item, the
Independent Firm (a) shall be bound by the
provisions of Section 3.2.1 and (b) may not assign a value to
any item greater than the greatest value
claims for such item by either Buyer or Sellers or less than
the smallest value for such item claimed by
either Buyer or Sellers.
3.2.4. Upon the determination of the Final Closing Net
Equity Statement and Net Equity
in accordance with Section 3.2.3, the Purchase Price shall
be adjusted, up or down, as follows: (a) if Net
Equity is greater than $120,100,000, the amount of such
difference shall be paid by Buyer to Sellers and
(b) if Net Equity is less than $120,100,000, the amount of
such difference shall be paid by Sellers. Such
payments, if any, shall be made by wire transfer of
immediately available funds within five business days
after the date that determination of Net Equity is deemed
final in accordance with Section 3.2.3, together
with interest thereon from the Closing Date to the date of
payment, calculated at the Specified Rate.
4. CLOSING
4.1. Closing. The closing of the purchase and sale of the
Shares and Assets (the "Closing")
shall take place at 10:00 a.m. Eastern time on the fifth
business day after the satisfaction or waiver of all of
the conditions set forth in Article 8 (other than those set forth
in Sections 8.1.5 and 8.2.5), or at such other
time and place as the parties may agree (the "Closing
Date"). The Closing shall be deemed effective at
11:59 p.m., Eastern time on the last day of the fiscal month
of the Pump Group on or preceding the Closing
Date.
4.2. Deliveries by Sellers. At the Closing, Sellers shall
deliver or cause to be delivered to
Buyer the following:
4.2.1. Duly executed bills of sale and assignments with
respect to the Assets, in
substantially the form of Exhibit A hereto.
4.2.2. A duly executed instrument of assignment in
recordable form sufficient to transfer
title in the Intellectual Property to Buyer, in substantially the
form of Exhibit B hereto and such other duly
executed individual instruments of assignment by country in
recordable form appropriate to transfer title in
Intellectual Property to Buyer in each foreign jurisdiction in
which such Intellectual Property is registered
or in which an application for registration is pending.
4.2.3. A certificate signed by an executive officer of GSC,
dated the Closing Date,
certifying that (a) each of Sellers' representations and
warranties contained in this Agreement is true and
correct as of the Closing Date in all material respects and (b)
all the terms, covenants and conditions of this
Agreement to be complied with and performed by Sellers on
or before the Closing Date have been complied
with and performed in all material respects.
4.2.4. A lease and/or sublease for each of the Real Property
Sites substantially in the
form of Exhibit C hereto.
4.2.5. The Transition Services Agreement in substantially
the form of Exhibit D hereto.
4.2.6. Consents and/or estoppel certificates regarding any
Material Leases received by
Sellers on or before the Closing Date and the consent to the
assignment required pursuant to Section 8.2.6,
in each case in form and substance reasonably satisfactory
to Buyer.
4.2.7. Such other documents, instruments and certificates
as Buyer may reasonably
request prior to the Closing Date in order to give effect to the
transactions contemplated by this Agreement.
4.3. Deliveries by Buyer. At the Closing, Buyer shall deliver
or cause to be delivered to
Sellers the following:
4.3.1. The payment of the Purchase Price in accordance
with Section 3.1.
4.3.2. Duly executed instruments of assumption, in
substantially the form of Exhibit E
hereto.
4.3.3. A certificate signed by an executive officer of Buyer,
dated the Closing Date,
certifying that (a) each of Buyer's representations and
warranties contained in this Agreement is true and
correct as of the Closing Date in all material respects and (b)
all the terms, covenants and conditions of this
Agreement to be complied with and performed by Buyer on
or before the Closing Date have been complied
with and performed in all material respects.
4.3.4. A lease and/or sublease for each of the Real Property
Sites substantially in the
form of Exhibit C hereto.
4.3.5. The Transition Services Agreement in substantially
the form of Exhibit D hereto.
4.3.6. Such other documents, instruments and certificates
as Sellers may reasonably
request prior to the Closing Date in order to give effect to the
transactions contemplated by this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF
SELLERS
On behalf of itself and each of the other Sellers, GSC
represents and warrants to Buyer as follows:
5.1. Organization and Existence. Each Seller is a
corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
incorporation. Each Seller has all requisite
corporate authority to own, lease and operate its properties
and to carry on its business as now being
conducted. Each Seller is duly qualified or licensed and in
good standing in each jurisdiction in which the
character or location of the properties owned or leased by
each of them or the nature of the business
conducted by each of them makes such qualification or
licensing necessary, except in such jurisdictions in
which applicable law does not provide for such qualification,
licensing or being in good standing and
except in such jurisdictions in which the failure to be so
qualified or licensed and in good standing would
not, in the aggregate, have a Material Adverse Effect.
5.2. Authorization, Execution and Validity. Each Seller has
the requisite corporate power and
authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby to
be performed by it. The execution and delivery by each
Seller of this Agreement and the consummation by
each Seller of the respective transactions contemplated
hereby to be performed by it have been duly
authorized by all requisite corporate action. This Agreement
has been duly executed and delivered by each
Seller and each instrument contemplated hereby that is to
be executed and delivered to Buyer by a Seller
will constitute, when executed and delivered to Buyer by
each such Seller, a valid and binding obligation of
each such Seller, enforceable against each such Seller in
accordance with its respective terms.
5.3. Conflicts; Defaults. Except as listed in Schedule 5.3 or
as may relate to the India JVs or
the India JV Agreements, neither the execution and delivery
of this Agreement by Sellers nor the
consummation by Sellers of the transactions contemplated
hereby will (a) conflict with or result in any
breach of any provision of the certificate of incorporation or
by-laws of any Seller, (b) without regard to
the provisions of Section 7.5 hereof, result in a violation or
breach of or constitute a default (or would so
constitute with notice or lapse of time) or result in the
acceleration of, create in any third party the right to
accelerate, terminate, modify or cancel or require any notice
under any note, bond, mortgage, indenture,
agreement, obligation or other instrument to which any
Seller is a party or by which any Seller or any of
the Assets (other than the Retained Assets) is bound, (c)
violate any Order, statute, treaty, rule or
regulation of any Governmental Authority applicable to any
Seller or any of the Assets (other than the
Retained Assets), except in the case of (b) or (c), for
violations, breaches or defaults which would not, in
the aggregate, constitute a Material Adverse Effect and
which would not prevent or delay the
consummation by any Seller of the transactions
contemplated by this Agreement. Except as set forth in
Schedule 5.3 and for consents, approvals or authorizations
required under the HSR Act, and, if required,
the Investment Canada Act and any applicable laws of India,
and any filings and approval requirements
under any applicable "bulk sales" laws, no filing with, and no
permit, authorization, consent or approval
by, any Governmental Authority is required in connection
with the execution and delivery by Sellers of this
Agreement or the consummation by Sellers of the
transactions contemplated hereby.
5.4. India JVs. (a) Fairbanks Morse is the holder of 4,500
equity shares of Rupees 100 per
share (the "FM India Shares") of the issued and outstanding
stock of Fairbanks Morse India Limited ("FM
India"), a company organized under the laws of India, the
transfer of which is subject to certain restrictions
provided for in the Memorandum and Articles of Association
of Fairbanks Morse India Limited and in a
Stockholders/Heads of Agreement, a copy of each of which
has been previously made available to Buyer
along with a copy of an Agreement dated as of December
10, 1970, between Flowmore Pvt. Ltd and
Fairbanks Morse relating to FM India (collectively, the "FM
India Agreements").
(b) Aurora/Hydromatic is a party to a Shareholders
Agreement ("Hydromatic India Shareholders
Agreement"), dated as of November 26, 1991 relating to a
joint venture to be formed under the laws of
India and to be called "Hydromatic Pumps (India) Private
Limited ("Hydromatic India"). Sellers have
previously furnished to Buyer a copy of the Hydromatic India
Shareholders Agreement, together with a
copy of the Memorandum and Articles of Association of
Hydromatic India, an Arbitration Agreement,
dated as of November 26, 1991, a Trademark Agreement,
dated as of January 14, 1992, a Technical
Collaboration Agreement, dated as of January 14, 1992 and
a Supplemental Agreement, dated as of March
30, 1992 (collectively, the "Hydromatic India Agreements").
(c) Notwithstanding any other provision of this
Agreement to the contrary, except as set forth in
this Section 5.4, no Seller makes any representation or
warranty concerning FM India or Hydromatic India
(collectively, the "India JVs"), the FM India Agreements or
the Hydromatic India Agreements (collectively,
the "India JV Agreements").
5.5. Financial Statements. Attached hereto as Schedule
5.5. are (a) the unaudited Combined
Statement of Operations for the Pump Group for the years
ended December 31, 1995 and 1996, (b) the
unaudited Combined Statement of Net Equity for the Pump
Group as of December 31, 1995 and 1996, (c)
the unaudited combined Rollforward of Net Equity for the
Pump Group for the years ended December 31,
1995 and 1996, (d) the notes accompanying the items
referred to in clauses (a) through (c) (the items
referred to in clauses (a) through (d) being herein collectively
referred to as the "Financial Statements"), (e)
the unaudited Combined Statement of Operations for the
Pump Group for the three months ended March
31, 1996 and 1997, (f) the unaudited Combined Statement
of Net Equity for the Pump Group as of March
31, 1997 (the "Interim Net Equity Statement"), (g) the
unaudited Combined Rollforward of Net Equity for
the Pump Group for the three months ended March 31,
1997, and (h) the notes accompanying the items
referred to in clauses (e) through (g) (the items referred to in
clauses (e) through (h) being herein
collectively referred to as the "Interim Financial
Statements"). The Financial Statements have been
prepared by GSC's management in accordance with the
books and records of the Pump Group which were
used in the preparation of GSC's audited consolidated
financial statements for the corresponding periods
and in conformity with GSC accounting policies and
procedures which in all material respects comply with
GAAP applied on a consistent basis, except where indicated
in the notes thereto or as otherwise provided in
Schedule 3.2.1 and include such estimates and adjustments
as deemed necessary to present fairly, in all
material respects, the financial positions and results of
operations of the Pump Group. The Interim
Financial Statements have been prepared by GSC's
management in conformity with GSC accounting
policies and procedures which in all material respects
comply with GAAP applied on a consistent basis
except where indicated in the notes thereto and include such
estimates and adjustments as deemed necessary
to present fairly, in all material respects, the financial
positions and results of operations of the Pump
Group as of the dates indicated therein, subject to normal
year-end adjustments.
5.6. No Undisclosed or Contingent Liabilities. Except as set
forth in Schedule 3.2.1 or in
Schedule 5.6, no Seller has any liabilities or obligations of
any nature (absolute, accrued, contingent or
otherwise) which are to be Assumed Liabilities other than (a)
liabilities or obligations which are reflected or
reserved against on the 12/31Net Equity Statement or which
are not required to be reflected or reserved
against on the 12/31 Net Equity Statement in accordance
with GSC accounting policies and procedures or
(b) liabilities or obligations incurred in the ordinary course of
business since December 31, 1996.
5.7. Absence of Certain Changes. Except as set forth in
Schedule 5.7 and except as relates to
the transactions contemplated by this Agreement, since
December 31, 1996, (a) there has been no event or
occurrence that has had a Material Adverse Effect, (b) no
Seller has taken or agreed to take any of the
actions set forth in Section 7.2.1 through 7.2.10 hereof with
respect to the Pump Group, and (c) no Seller
has entered into any transaction involving the Pump Group ,
including without limitation the incurrence of
any material liability or obligation, other than in the ordinary
course of business.
5.8. Owned Equipment. Except as set forth in Schedule
5.8. and except for Permitted Liens,
Sellers have good and merchantable title, free and clear of
all Liens, to all of the Equipment other than the
Equipment leased to a Seller for use in the Pump Group.
5.9. Leases. Schedule 5.9 contains a list of (a) all written
leases relating to real property,
whether as lessor or lessee, which is leased by a Seller for
use in the operations of the Pump Group and (b)
all written leases relating to personal property owned or
used by a Seller in the Pump Group requiring
payments in excess of $25,000 during any calendar year or
having an initial term of greater than 36
months, whether as lessor or lessee (collectively, the
"Material Leases"). All Material Leases are in full
force and effect and there has been no substantial breach of
any such Material Lease by any Seller or, to
Sellers' Knowledge, any other party thereto, that is
reasonably likely to have a Material Adverse Effect.
5.10. Owned Real Property. Schedule 5.10 contains a list
of the real property owned by a Seller
and used in the operations of the Pump Group (the "Owned
Real Property"). Except as set forth in
Schedule 5.10 and except for Permitted Liens, Sellers have
good and insurable fee simple title to the Owned
Real Property free and clear of all Liens. Except as set forth
in Schedule 5.10, to Sellers' Knowledge, no
Seller has received any written notice from any
Governmental Authority (a) of any pending or threatened
condemnation proceedings with respect to any of the Real
Property Sites and (b) that any of the
improvements on any of the Real Property Sites violate in
any material respect any use or occupancy
restriction, any covenant or record or any zoning or building
law, code or ordinance. Sellers have delivered
or made available to Buyer copies of all title insurance
policies, title reports and surveys, if any, for each
parcel of Owned Real Property which, to Sellers'
Knowledge, are in the possession of Sellers.
5.11. Condition of Property. The Equipment and the
improvements and structures located on the
Real Property sites and the fixtures and appurtenances
thereto are in good working order, reasonable wear
and tear excepted, are reasonably suitable for the uses for
which they are intended and conform to the
requirements of applicable law in all material respects.
Except as otherwise specifically set forth in this
Agreement, no Seller makes any express or implied
warranty of merchantability or fitness for a specific
purpose, or any other warranty as to the condition or
operation of any asset.
5.12. Intellectual Property.
5.12.1. Schedule 5.12.1 contains a list of all patents,
registered trademarks, registered
copyrights and registered service marks (and applications
for any of the foregoing) owned or used (other
than pursuant to license) by Sellers in the operation of the
Pump Group (collectively "Intellectual
Property"). Except as set forth in Schedule 5.12.1 and
except as may relate to the India JVs, (a) Sellers
own all right, title and interest in and to the Intellectual
Property, free and clear of any Liens other than (i)
Permitted Liens and (ii) limitations on assignment identified
in Schedule 5.3, and (b) to Sellers' Knowledge,
none of the Intellectual Property is the subject of any claim
of invalidity and no third party is infringing
upon any Intellectual Property.
5.12.2. Except as may relate to the India JVs, Schedule
5.12.2 contains a list of all
licenses to and from third parties for patents, trademarks,
copyrights or other intellectual properties which
are used by a Seller in the operations of the Pump Group.
All such listed licenses are valid and in full force
and effect and, except for the limitations identified in
Schedule 5.3, to Sellers' Knowledge, there exists no
circumstance which might entitle any licensor to terminate
any license, other than pursuant to the terms
thereof, or to prohibit the assignment of any license.
5.12.3. There is no pending or, to Sellers' Knowledge,
threatened, Action against any
Seller contesting its rights to or the validity of any Intellectual
Property that it owns or licenses. Sellers
have not received written notice that they, in the operation of
the Pump Group, are infringing upon
intellectual property rights of others and, to Sellers'
Knowledge, there exists no facts, events or conditions
upon which a valid claim for such infringement may be
made.
5.12.4. Except as set forth in one of the Schedules to this
Section 5.12, to Sellers'
Knowledge, there are no agreements relating to or affecting
Intellectual Property or the use or ownership of
any Intellectual Property by Sellers, including, but not limited
to, confidentiality and nondisclosure
agreements, assignments or agreements to assign,
development agreements and settlement agreements.
5.12.5. Except as set forth in Schedule 5.12.5, no Seller is
subject to any obligation to
compensation former or current employees for inventions
used in the business of the Pump Group.
5.12.6. Except as may be included in the information
contained in Schedule 5.20, all
charges, fees and taxes relating to the Intellectual Property
have been duly and timely paid.
5.13. Contracts. Except for (a) purchase orders, invoices,
confirmations and similar documents,
(b) leases, (c) licenses of intellectual property, and (d)
Employee Benefit Plans, Schedule 5.13 sets forth, as
of the date hereof, all of the following contracts, agreements,
instruments, licenses and commitments
("Contracts") to which any Seller is a party under which the
Pump Group has rights or obligations
(collectively, the "Material Contracts"): (i) Contracts
pertaining to the borrowing of money; (ii) Contracts
creating Liens other than Permitted Liens; (iii) Contracts
creating a guarantee of payment or otherwise to
assure a creditor against loss; (iv) Contracts relating to
material employment or consulting services; (v)
Contracts relating to material capital expenditures; (vi)
Contracts limiting the freedom of any Seller, to the
extent relating to the operations of the Pump Group, to
engage in or compete with any business; (vii)
Contracts for the purchase or sale of real property or any
business or line of business or for any merger or
consolidation; (viii) joint venture or partnership Contracts; (ix)
Contracts that individually require after the
date hereof the payment or receipt of $25,000 or more
during any 12-month period; (x) Contracts that are
not terminable by a Seller prior to December 31, 1997 and
(xi) Contracts for the purchase of raw materials
or supplies or the furnishing of services for the operations of
the Pump Group, (A) for which, to Sellers'
Knowledge, comparable goods or services are not readily
available in the ordinary course of business, or
(B) any required purchases under which are in excess of the
normal operating requirements of the business
of the Pump Group. All Material Contracts are valid and
binding and in full force and effect, except where
otherwise indicated on Schedule 5.13 or where the failure to
be valid or binding or in full force and effect is
not reasonably likely to have a Material Adverse Effect.
There has been no breach of any Material
Contract by any Seller or, to Sellers' Knowledge, any other
party thereto, that is reasonably likely to have a
Material Adverse Effect.
5.14. Suppliers, Distributors and Customers.
5.14.1. Schedule 5.14.1 sets forth the name of each
supplier which accounted for more
than $500,000 of the Pump Group's purchases for the year
ended December 31, 1996, together with the
approximate volume purchased from each during such
period. Except as set forth in Schedule 5.14.1,
Sellers have not been advised that the aggregate volumes
set forth therein will be reduced by an amount
that, were such reductions to occur, is reasonably likely to
have a Material Adverse Effect.
5.14.2. Schedule 5.14.2 sets forth the name and address of
each customer (including
dealers, distributors, brokers, agents and sales
representatives) of the Pump Group which accounted for
more than $$500,000of the Pump Group's sales for the year
ended December 31, 1996, together with the
approximate volume sold to each during such period.
Except as set forth in Schedule 5.14.2, Sellers have
not been advised that the aggregate volumes set forth
therein will be reduced by an amount that, were such
reductions to occur, is reasonably likely to have a Material
Adverse Effect.
5.15. Litigation. Except as set forth in Schedule 5.15, there
is no Action by or before any
Governmental Authority that is pending or, to Sellers'
Knowledge, threatened against any member of the
Pump Group or by which it or any of the Assets is bound
that would, if determined adversely, be
reasonably likely to have a Material Adverse Effect, or to
have a material adverse effect on Sellers' ability
to consummate the transactions contemplated by this
Agreement, nor is any Seller subject to any Order
which would be reasonably likely to have any such effect.
5.16. Environmental Laws.
5.16.1. Except as set forth in Schedule 5.16.1, to Sellers'
Knowledge, the Pump Group is
in compliance with (a) all Environmental Laws, (b) and
maintains in effect all material Permits required by
any Environmental Law and (c) all consent agreements and
Orders to which it is a party or by which it is
bound that relates to any Environmental Law, except, in
each case, for noncompliance that is not
reasonably likely to have a Material Adverse Effect.
5.16.2. Schedule 5.16.2 sets forth all of the material Permits
required for the Pump Group
under any Environmental Law and consent agreements and
Orders to which the Pump Group is a party or
by which it is bound that relate to any Environmental Law.
5.16.3. Except as set forth in Schedule 5.16.3, there are no
Actions relating to any
Environmental Law pending or, to Sellers' Knowledge,
threatened against the Pump Group or by which it
or any of the Assets is bound that would, if determined
adversely, be reasonably likely to have a Material
Adverse Effect.
5.16.4. Except as set forth in Schedule 5.16.4, to Sellers'
Knowledge, no Hazardous
Substances have been released by the Pump Group from
any Owned Real Property, except in substantial
compliance with applicable Environmental Laws, which
require Cleanup.
5.16.5. Except as set forth in this Section 5.16, Sellers
make no express or implied
representation or warranty in this Agreement relating to
environmental matters.
5.17. Compliance with Other Laws. Except as set forth in
Schedule 5.17 and except with
respect to any Environmental Law or any statute, rule,
regulation or ordinance relating to ERISA or Taxes,
to Sellers' Knowledge, no member of the Pump Group is in
violation of any statute, rule, regulation,
ordinance, Permit or Order pertaining to the operation or
conduct of the business of the Pump Group or the
ownership of the Assets, the violation of which would
reasonably be likely to have a Material Adverse
Effect.
5.18. Employees.
5.18.1. GSC has delivered to Buyer, on or prior to the date
hereof, a list of each person
who was an employee of the Pump Group who earned
more than $100,000 annually as of December 31,
1996, including each such person's (a) name, (b) total period
of employment, (c) current position or job
classification, and (d) employer. As soon as practicable
after the date hereof, GSC shall provide Buyer
with a separate, confidential list of wage or salary and bonus
information for each Employee.
5.18.2. Except as set forth in Schedule 5.18.2, there are no
collective bargaining or other
labor union agreements applicable to any Employees. No
material work stoppage or material labor dispute
against the Pump Group is pending or, to Sellers'
Knowledge, threatened, and, to Sellers' Knowledge, there
is no organizational activity currently underway with respect
to the Pump Group, except for any such
stoppage, dispute or activity which is not reasonably likely to
have a Material Adverse Effect.
5.18.3. Except as set forth in Schedule 5.18.3, none of
Sellers is engaged in, and has
received any written notice of any unfair labor practice
related to the Pump Group and no such complaints
are pending before the National Labor Relations Board or
any other Governmental Authority, except for
any such complaint or practice which is not reasonably likely
to have a Material Adverse Effect.
5.19. Employee Benefits.
5.19.1. Schedule 5.19.1 lists each written pension,
retirement, profit-sharing, deferred
compensation, bonus, incentive, performance, stock option,
stock appreciation, phantom stock, stock
purchase, restricted stock, medical, hospitalization, vision,
dental or other health, life, disability, severance,
termination or other employee benefit plan, program,
arrangement, agreement or policy (including each
ERISA Plan) which or to which any Seller, any sponsor or
any Continuing Affiliate contributes or is
obligated to contribute or under which any Seller, any
sponsor or any Continuing Affiliate may have any
liability and under which any Employee or former employee
of the Subsidiaries (or their respective
beneficiaries or dependents) is eligible to participate or to
accrue a benefit (each, an "Employee Benefit
Plan"). Except as set forth in Schedule 5.19.1, (a) each
Employee Benefit Plan complies in all material
respects, and has been operated and administered in all
material respects, in accordance with all applicable
requirements of all applicable laws and regulations of any
Governmental Authority, including ERISA and
the Code, (b) no "reportable event", or "prohibited
transaction" (as such terms are defined in ERISA and
the Code, as applicable) or full or partial termination has
occurred whether under Title IV of ERISA or
otherwise with respect to any Employee Benefit Plan. Each
ERISA Plan and related funding arrangement
intended to so qualify under Sections 401(a) and 501(a),
respectively of the Code has received a ruling or
determination letter concluding that such ERISA Plan so
qualifies, and, to Sellers' Knowledge, no event has
occurred, amendment been adopted or action been taken or
not taken that would cause such ERISA Plan to
lose its tax-qualified status.
5.19.2. GSC has delivered or made available to Buyer, on
or prior to the date hereof,
copies of each Employee Benefit Plan and any amendments
thereto and any related trust agreement,
funding agreement and insurance contract relating thereto
and, if applicable (a) the most recent actuarial
valuation reports for the last three years, (b) the last three
years' filed Form 5500 or 5500-C and Schedules
A and B thereto, (c) the summary plan description currently
in effect for each Employee Benefit Plan and
all material modifications thereto, (d) the last three years'
summary annual report issued to participants
with respect to each Employee Benefit Plan, (e) the last
three years' financial statements for each Employee
Benefit Plan and its related trust, if any, (f) if applicable, the
most recent determination letter issued with
respect to each Employee Benefit Plan, and (g) each form of
loan document under each ERISA Plan, and
(h) the most recent premium filings with the Pension Benefit
Guaranty Corporation covering or related to
an Employee Benefit Plan.
5.19.3. All contributions required under applicable law or an
Employee Benefit Plan to be
made on or prior to the date hereof by Sellers or any
Continuing Affiliate to an Employee Benefit Plan have
been made within the time prescribed by such law or
Employee Benefit Plan. There does not exist any
accumulated funding deficiency within the meaning of either
Section 412 of the Code or Section 302 of
ERISA as to any ERISA Plan, nor would there exist any
such deficiency but for the application of the
minimum funding standards imposed by the Code with
respect to any such ERISA Plan. Except as set
forth in Schedule 5.19.3, on the date hereof, the fair market
value of the assets of each ERISA Plan that is
a funded defined benefit pension plan equals or exceeds the
actuarial present value of all accrued benefits
under such ERISA Plan, including early retirement
subsidies, plant closing benefits and all other amounts
considered to be benefit liabilities upon a standard
termination of a defined benefit plan subject to Title IV
of ERISA with the said actuarial present value being
determined by application of the actuarial methods
and assumptions applied by such ERISA Plan's enrolled
actuary at the most recent annual valuation of
such ERISA Plan, plus all administrative expenses,
fiduciaries' fees and similar charges payable by such
ERISA Plan, plus all Taxes, if any, payable from plan assets.
5.19.4. Except as set forth in Schedule 5.19.4, (a) no
ERISA Plan is a "multiple
employer" plan within the meaning of Section 4063 or 4064
of ERISA, (b) no ERISA Plan is a
"multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA, (c) neither Sellers nor any
Continuing Affiliate has either primary or secondary liability
under the provisions of Section 4204 of
ERISA or any agreement entered into in accordance with
the provisions of such Section, and (d) neither
Sellers nor any Continuing Affiliate has (i) engaged in any
transaction that could result in the imposition of
any material liability pursuant to Section 4069 or 4212 of
ERISA or (ii) incurred any material liability
under or pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to
employee benefit plans.
5.19.5. Except as set forth in Schedule 5.19.5, the
consummation of the transactions
contemplated by this Agreement will not result in any
increase in the amount of compensation or benefits or
accelerate the vesting or timing of payment of any benefits
payable by the Pump Group to or in respect of
any Employee or former employee of the Pump Group or the
beneficiary or dependent of any Employee or
former employee of the Pump Group.
5.19.6. Except as described in Schedule 3.2.1 or in
Schedule 5.19.6, no Employee Benefit
Plan provides benefits, including without limitation death or
medical benefits (whether or not insured), with
respect to Active Employees beyond their retirement or other
termination of service (other than (a) coverage
mandated by applicable law, (b) death benefits or retirement
benefits under any ERISA Plan, (c) deferred
compensation accrued on the Financial Statements or the
Interim Financial Statements, or (d) benefits, the
full cost of which is borne by the Active Employee (or his or
her beneficiary)). No "leased employee," as
that term is defined in Section 414(n) of the code, performs
services for any member of the Pump Group.
5.20. Taxes. Except as set forth in Schedule 5.20 or as
reflected in the Financial Statements or
the Interim Financial Statements:
5.20.1. (a) All federal, state, local and foreign tax
information and other tax returns or
reports pertaining to Pump Group required to be filed before
the date hereof have been duly filed and as
filed, were correct and complete in all material respects, (b)
all Taxes shown to be due in such tax
information, returns and reports have been paid in full, (c) no
deficiencies for any Taxes with respect to
such tax information and returns have been asserted, and
(d) no agreements for the extension of the periods
for the assessment or collection of taxes and no waivers of
statutes of limitation have been entered into,
given or requested regarding any Taxes with respect to such
tax information, and returns and reports.
5.20.2. No unresolved issue has been raised in writing by
any Governmental Authority in
the course of any audit with respect to Taxes for which the
Divisions or the Subsidiaries would be held
liable and, to Sellers' Knowledge, no member of the Pump
Group has received any written notice that any
material claim has been made by any Governmental
Authority in a jurisdiction where a member of the
Pump Group does not currently file a tax return or report that
it is or may be subject to taxation by or in
that jurisdiction.
5.20.3. Neither the Divisions nor the Subsidiaries are parties
to or bound by any tax
sharing or similar Contract.
5.20.4. Since December 31, 1993, none of the members of
the Pump Group was a
member of an affiliated group (within the meaning of Section
1504 of the Code) filing a consolidated
federal tax return, other than a group the common parent of
which is GSC, except Fairbanks Morse, which
was acquired by GSC in 1994.
5.20.5. None of the members of the Pump Group has any
liability for the Taxes of any
person other than the members of the Pump Group and
other members of GSC's consolidated group (a)
under Treasury Regulation d1.1502-6 (or any similar
provision of state, local, or foreign law), (b) as a
transferee or successor, (c) by contract, or (d) otherwise.
5.20.6. None of the members of the Pump Group has filed a
consent under Section 341(f)
of the Code concerning collapsible corporations. None of
the members of the Pump Group has made any
payments, is obligated to make any payments, or is a party
to any agreement that under certain
circumstances or the circumstances or events contemplated
by this Agreement could obligate it to make any
payments that will not be deductible by reason of Section
280G of the Code. None of the members of the
Pump Group has been a United States real property holding
corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code.
5.21. Insurance. Schedule 5.21 sets forth a list of all
insurance policies owned or held by a
Subsidiary. All material insurance policies owned or held by
a Seller or a Subsidiary on the date hereof
which cover the Pump Group or the Assets are in full force
and effect, all premiums with respect thereto
have been paid to the extent due, no notice of cancellation
or termination has been received with respect to
any such policy (other than policies which a Seller or a
Subsidiary has replaced or intends to replace prior
to the expiration thereof by policies providing substantially
the same types and amounts of coverage).
5.22. Transactions with Related Parties. Except as set forth
on one or more of the Schedules
hereto, no member of the Pump Group is or was a party to
any transaction or proposed transaction,
including, without limitation, the leasing of real or personal
property, the purchase or sale of raw materials
or finished goods, or the furnishing of services, with Sellers
or any person related to or affiliated with
Sellers (other than another member of the Pump Group)
involving the payment or accrual of more than
$1,000,000 during fiscal years 1995 or 1996, or which will
amount to more than $1,000,000 during fiscal
year 1997.
5.23. Sufficiency of Assets. Except for the Retained Assets,
the Assets, together with Buyer's
rights under the Transition Services Agreement, constitute
all of the assets, rights and/or interests which are
used in, and are sufficient for, the operation of the business
of the Pump Group as it is currently being
conducted in all material respects.
5.24. Brokers. Other than Lazard, no person or entity is or
will become entitled to receive any
brokerage or finder's fee, advisory fee or other similar
payment for the transactions contemplated by this
Agreement by virtue of having been engaged by or acted on
behalf of Sellers.
6. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
6.1. Organization and Existence. Buyer is a corporation
duly organized, validly existing and in
good standing under the laws of Minnesota.
6.2. Authorization, Execution and Validity. Buyer has the
requisite corporate power and
authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby to
be performed by it. The execution and delivery by Buyer of
this Agreement and the consummation by
Buyer of the transactions contemplated hereby to be
performed by it have been duly authorized by all
requisite corporate action. This Agreement has been duly
executed and delivered by Buyer and each
instrument contemplated hereby that is to be executed and
delivered to a Seller by Buyer will constitute,
when executed and delivered to a Seller by Buyer, a valid
and binding obligation of Buyer, enforceable
against Buyer in accordance with its respective terms.
6.3. Conflicts; Defaults. Except as listed in Schedule 6.3 or
as may relate to the India JVs,
neither the execution and delivery of this Agreement by
Buyer nor the consummation by Buyer of the
transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the
certificate of incorporation or by-laws of Buyer, (b) without
regard to the provisions of Section 7.5 hereof,
result in a violation or breach of or constitute a default (or
would so constitute with notice or lapse of time)
or result in the acceleration of, create in any party the right
to accelerate, terminate, modify or cancel, or
require any notice under any note, bond, mortgage,
indenture, agreement, obligation or other instrument to
which Buyer is a party or by which any of Buyer's assets is
bound, (c) violate any Order, statute, treaty,
rule or regulation of any Governmental Authority applicable
to Buyer, except in all cases, for violations,
breaches or defaults which would not, in the aggregate,
prevent or delay the consummation by Buyer of the
transactions contemplated by this Agreement. Except for
consents, approvals or authorizations required
under the HSR Act, and, if required, the Investment Canada
Act and any applicable laws of India, and any
filings and approval requirements under any applicable "bulk
sales" laws, no filing with, and no permit,
authorization, consent or approval by, any Governmental
Authority is required in connection with the
execution and delivery by Buyer of this Agreement or the
consummation by Buyer of the transactions
contemplated hereby.
6.4. Litigation. There is no Action by or before any
Governmental Authority that is pending
or, to the knowledge of Buyer, threatened by or against or
affecting Buyer or any of its assets which would,
if adversely determined, be reasonably likely to have a
material adverse effect on Buyer's ability to
consummate the transactions contemplated by this
Agreement, nor is Buyer subject to any Order which
would be reasonably likely to have any such effect.
6.5. Sufficient Funds. Buyer has, on the date hereof, the
financial capability to purchase the
Assets and to assume the Liabilities on the terms and
subject to the conditions set forth in this Agreement,
and Buyer shall have such capability on the Closing Date.
6.6. Brokers. Other than Credit Suisse First Boston
Corporation, no person or entity is or will
become entitled to receive any brokerage or finder's fee,
advisory fee or other similar payment for the
transactions contemplated by this Agreement by virtue of
having been engaged by or acted on behalf of
Buyer.
7. CERTAIN COVENANTS AND AGREEMENTS
7.1. Information and Access.
7.1.1. From the date hereof to the Closing Date, Sellers
shall, subject to applicable
contractual obligations, afford to Buyer, its accountants,
counsel and other authorized representatives
reasonable access, upon reasonable notice, to all of the
Pump Group's assets, properties, books, records,
agreements and commitments, to the officers and
employees of the Pump Group and to representatives of
GSC's auditors; and furnish Buyer's representatives during
such period with all such information
concerning the Pump Group's affairs as Buyer may
reasonably request, including, without limitation, a so-
called Phase I (i.e., documentary review and walk-through
site inspection) preliminary environmental
evaluation; provided, however, that no environmental testing
shall be performed without GSC's written
consent, which may be given or withheld in GSC's sole
discretion and that Sellers shall have no obligation
to give Buyer access to information that (a) is subject to
attorney-client privilege or (b) is subject to
confidentiality restrictions with respect to which Sellers,
using all reasonable efforts, are unable to obtain
waivers.
7.1.2. All information provided or obtained pursuant to this
Section 7.1 shall be held by
Buyer in accordance with and subject to the terms of the
confidentiality agreement, dated February 27,
1997, between GSC and Buyer (the "Confidentiality
Agreement").
7.2. Conduct of Business Pending Closing. From the date
of this Agreement and until the
Closing Date, and except as otherwise expressly permitted
by this Agreement or consented to by Buyer in
writing, each Seller covenants and agrees that, with respect
to the operations of the Pump Group, it shall:
7.2.1. Operate its business only in the ordinary course
consistent with past practice and
to use reasonable efforts to preserve its properties and
business and relationship with suppliers, customers,
distributors and employees;
7.2.2. Not (a) change or amend its certificate of
incorporation or by-laws, (b) authorize,
issue or sell any shares of its capital stock, or authorize,
issue or sell any securities convertible into, or
options with respect to, or warrants to purchase or rights to
subscribe for, any shares of its capital stock or
enter into any agreement obligating it to do any of the
foregoing, or (c) merge or consolidate with any other
entity;
7.2.3. Not grant any increase in the compensation payable
to any of Pump Group's
officers, employees or agents, except for normal merit, cost
of living or promotional increases in
accordance with past practices;
7.2.4. Not fill any open employee requisition, except
pursuant to offers outstanding prior
to the date hereof;
7.2.5. Not decrease any insurance coverage on the Assets,
so long as such insurance is
available at commercially reasonable rates;
7.2.6. Not incur or guaranty any new debt which would
constitute an Assumed Liability,
except for (a) accounts payable incurred in the ordinary
course, and (b) intercompany debt;
7.2.7. Not make any capital expenditures or any additions to
Pump Group's premises
other than those which have been approved as of April 30,
1997 and those which are contained in the Pump
Group's 1997 capital budget, a copy of which has previously
been delivered or made available to Buyer;
provided, that, whether or not included in such capital
budget, it shall not make any capital expenditures
relating to information technology or equipment other than in
the ordinary course;
7.2.8. Not purchase any real property or real property
interest to be included as part of
the Assets or to sell or dispose of any of the material
property, plant or equipment shown on the Interim
Net Equity Statement;
7.2.9. Not permit to be incurred any Liens on any Assets,
except Permitted Liens;
7.2.10. Not accelerate or delay the sale of the products of
the Pump Group or the
collection of accounts receivable, other than in the ordinary
course of business; and
7.2.11. Not conduct its business in violation of any law,
ordinance or regulation of any
Governmental Authority, except for possible violations which
individually or in the aggregate do not and
are not reasonably likely to have a Material Adverse Effect.
7.2.12. Not make any change in accounting method or
principles.
7.3. Assignment of Confidentiality Agreements. GSC shall
not amend, modify or supplement
or grant any consent or waiver under or with respect to, any
confidentiality agreements entered into by
GSC (or its representatives or Affiliates) and each party to
whom confidential information was provided in
connection with the sale of the Pump Group (collectively, the
"Sale Confidentiality Agreements") without
Buyer's prior written consent. GSC shall as promptly as
reasonably practicable request each party to
whom confidential information was provided pursuant to a
Sale Confidentiality Agreement to return to
GSC or destroy such information, in each case as provided
in the applicable Sale Confidentiality
Agreement. At the Closing, GSC shall assign to Buyer all of
its right, title and interest in the Sale
Confidentiality Agreements (to the extent any thereof are
capable of being assigned). Prior to the Closing
and thereafter with respect to any rights under any Sale
Confidentiality Agreement which are not capable
of being assigned, upon request by Buyer, GSC shall use its
reasonable efforts to enforce such rights.
7.4. No Solicitation. Sellers shall immediately cease any
existing discussions or negotiations
with any third parties conducted prior to the date hereof with
respect to any sale, merger or other business
combination transaction involving the Pump Group. From
the date of this Agreement until the Closing
Date, Sellers shall not directly or indirectly (through a
representative or otherwise) solicit or furnish
information to any prospective buyer (other than Buyer) or
commence negotiations with any other party or
enter into any agreement with any other party concerning
the sale, merger or other business combination
transaction involving the Pump Group.
7.5. Consents; Non-Transferability.
7.5.1. Sellers shall use all reasonable efforts, and Buyer
shall cooperate with Sellers, to
obtain all consents and waivers of any third party (including
a Governmental Authority) necessary to effect
the transfer of all the Assets; provided, however, that neither
Buyer nor Sellers shall be obligated to pay
any consideration therefor to any person in order to obtain
any consent or waiver. Notwithstanding
anything in this Agreement to the contrary, with respect to
any asset to which Section 7.5.2 applies, no
Seller shall be obligated to sell, assign or otherwise transfer
and Buyer shall not be obligated to accept,
such asset without first having obtained all necessary
consents and waivers.
7.5.2. To the extent that any of the Assets is not capable of
being sold, assigned or
otherwise transferred without the consent or waiver of any
third party (including a Governmental
Authority) or if such sale, assignment or transfer would
constitute a breach thereof or a violation of any
Order, statute, treaty, rule or regulation, this Agreement shall
not constitute a sale, assignment or other
transfer thereof, or an attempted sale, assignment or other
transfer thereof.
7.5.3. To the extent that any of the consents or waivers
referred to in Section 7.5.2 are
not obtained by Sellers prior to the Closing, Sellers shall
cooperate with Buyer in any reasonable
arrangement, at Buyer's risk and expense, designed to
provide for Buyer the benefit and burden of any
asset not sold, assigned or transferred as a result thereof,
including, without limitation, enforcement for the
benefit of Buyer of any and all rights of Sellers against any
other person or entity arising out of any breach
of contract, and further including, if so requested by Buyer,
acting as agent on behalf of Buyer, or as Buyer
shall otherwise reasonably require (including the retention of
Buyer as a subcontractor). Notwithstanding
the foregoing, the risks and consequences of a failure to
obtain any required consent shall be borne by
Buyer.
7.5.4. To the extent that Buyer is provided the benefits of
any asset in accordance with
Section 7.5.3, Buyer shall perform at the direction of GSC
and for the benefit of any third party the
obligations of Sellers thereunder or in connection therewith;
provided, that if Buyer shall fail to perform to
the extent required herein, Buyer shall indemnify, defend
and hold Sellers harmless therefor and, in the
event of a failure of such indemnity, Sellers shall cease to be
obligated under this Section 7.5 in respect of
the asset which is the subject of such failure to perform.
7.6. Governmental Filings.
7.6.1. Promptly after the date hereof, Buyer and GSC shall
file with the Federal Trade
Commission and the United States Department of Justice
the notification required to be filed with respect to
the transactions contemplated by this Agreement. Without
limiting the provisions set forth in Section
11.1.4, each of Buyer and GSC shall use its reasonable best
efforts to take or cause to be taken all actions
necessary, proper or advisable to obtain any consent,
waiver, approval or authorization relating to the HSR
Act that is required for the consummation of the transactions
contemplated by this Agreement and each
shall share equally in any costs relating thereto, including
the statutory filing fee required by the HSR Act
and any fees and expenses of counsel or any consultants
who may be retained by mutual consent after the
filing of the notification.
7.6.2. Sellers and Buyer shall comply with the laws of any
country (including Canada)
which are applicable to the transactions contemplated by
this Agreement and pursuant to which government
notification or approval of such transactions is necessary.
Sellers and Buyer shall cooperate with the other
in any manner reasonably requested by the other in
providing any information which is required for this
purpose and in promptly filing, separately or jointly, any
applications for such governmental notification or
approval.
7.7. Trademarks, Etc. Buyer recognizes and acknowledges
that neither of the Subsidiaries has,
and as a result of the purchase of the Assets, neither Buyer
nor any of its Affiliates shall have, any right,
title or interest in or to the Marks; provided, however, that
Buyer shall be permitted to use finished goods,
supplies and sales literature transferred pursuant to this
Agreement carrying the Marks in conjunction with
the names "Aurora Pump", "Layne & Bowler",
"Aurora/Hydromatic", "Aurora", "Hydromatic", "Verti-
Line" and "Fairbanks Morse" until, in the case of finished
goods, the depletion of such finished goods and
in the case of supplies and sales literature the earlier to
occur of: (a) the depletion of such supplies and
sales literature or (b) 180 days following the Closing Date,
unless the Marks are used in castings, in which
case the time period shall be one year; and further provided,
however, that Buyer and its Affiliates shall not
in any way hold themselves out as doing business under the
Marks and shall not in any way discredit the
Marks.
7.8. Covenant Not-to-Compete.
7.8.1. Sellers acknowledge and agree that the value to
Buyer of the transactions
contemplated by this agreement would be substantially
diminished if Sellers or any of the Continuing
Affiliates were to enter into certain business activities, and
Sellers have agreed to the covenant in this
Section 7.8 as an inducement to Buyer to enter into this
Agreement. Sellers specifically acknowledge and
agree that the covenants in this Section 7.8 are
commercially reasonable and reasonably necessary to
protect the interests Buyer intends to acquire hereunder. If
any court of competent jurisdiction shall in any
proceedings refuse to enforce such covenant, in whole or in
part, because the time limit or geographical
extent applicable thereto is deemed unreasonable in the
jurisdiction, it is expressly understood and agreed
that such covenant shall not be void. Instead, for the
purpose of such proceedings, such temporal or
geographic limitations shall be deemed to be reduced to the
extent necessary to permit the enforcement of
such covenant in the particular jurisdiction.
7.8.2. For a period of five years following the Closing Date,
Sellers and the Continuing
Affiliates shall not engage directly or indirectly in the
business of manufacturing or selling vertical or
horizontal centrifugal and turbine water and sewage pumps
anywhere in the world; provided, however, that
Sellers and the Continuing Affiliates may:
(a) maintain and continue their operations
in accordance with current and past
practice;
(b) acquire securities and other interests in
any entity as investments of any
employee benefit plan of Sellers or any Continuing Affiliate;
(c) acquire up to 10% of the outstanding
securities and other interests in any
entity;
(d) acquire any securities and other
interests in any entity if the revenues of
such entity that are attributable to businesses that compete
directly with the current business of the Pump
Group does not exceed 10% of such entity's total annual
revenues; or
(e) perform any act or conduct any
business contemplated by this Agreement.
7.8.3. The parties agree that money Damages would be an
inadequate remedy for a
violation of the covenant set forth in this Section 7.8.
Accordingly, Buyer shall be entitled, in addition to
any other rights and remedies that it may have, to injunction
relief to enjoin any such breach.
7.9. Release from Guarantees. Buyer shall use reasonable
efforts and Seller shall cooperate
with Buyer to secure, effective as of the Closing Date, full
releases for Sellers and the Continuing Affiliates
under the letters of credit, bank guarantees, surety bonds,
foreign exchange contracts and other obligations
listed in Schedule 7.9. After the Closing Date, Buyer shall
indemnify, defend and hold Sellers and the
Continuing Affiliates harmless from and against all Damage
attributable to any Seller Guarantees and to
any of the obligations of the Pump Group listed in Schedule
7.9 which remain outstanding following such
date.
7.10. Further Assurances. At any time after the Closing
Date, Sellers and Buyer shall and cause
their respective Affiliates promptly to, execute, acknowledge
and deliver any other documents or
instruments reasonably requested by Sellers or Buyer, as
the case may be, to satisfy their respective
obligations hereunder or to obtain the benefits contemplated
hereby.
7.11. Intercompany Obligations. Immediately prior to the
Closing, all Intercompany Obligations
due and payable as of the Closing Date or attributable to
any period ending on or prior to the Closing Date
shall, for all purposes of this Agreement, be netted as
between the appropriate obligors and obligees and the
resulting balances shall be charged to the equity account of
the appropriate Continuing Affiliate or the
Pump Group, as the case may be, and shall be treated as
discharged as of the Closing, with the result that
as of and following the Closing, there shall be no further
obligation or liability with respect to any
Intercompany Obligations.
7.12. Supplements to Schedules. Each of Sellers and
Buyer shall notify the other of any
development(s) which might or shall constitute a breach of
any of the warranties and representations in
Article 5 which is reasonably likely to have a Material
Adverse Effect. Buyer shall have the right to
terminate this Agreement within the period of 5 business
days from the date such notice is given, or if less
than 5 business days remain prior to the Closing Date, such
shorter period. If within such period, Buyer
shall not have exercised its right to terminate this
Agreement, the written notice shall be deemed to have
amended this Agreement and the relevant Schedules
attached thereto, to have qualified the representations
and warranties contained in Article 5 above, or to have
cured any misrepresentation or breach of warranty
that otherwise might have existed hereunder by reason of
such development, including for purposes of
Article 12 hereof, and the party making the warranty or
representation shall continue to use its reasonable
best efforts to obtain fulfillment of all conditions to Closing
set forth in Article 8 hereto, including the cure
of the actual or potential breach to which reference is made
in the notice. The provisions hereof shall apply
mutatis mutandis if there is any development(s) which might
or shall constitute a breach of any of the
warranties and representations in Article 6 which could have
a material adverse effect on Buyer.
7.13. Cooperation. Subject to their respective rights under
Article 11, each of Sellers and
Buyer shall use, and shall cause their respective Affiliates to
use, all reasonable efforts to take all actions
and to do all things necessary or advisable to consummate
the transactions contemplated by this Agreement
and to obtain fulfillment of all conditions to Closing set forth
in Article 8 as soon as reasonably possible.
7.14. India JVs.
7.14.1. FM India. As soon as reasonably practicable,
Fairbanks Morse shall give notice
under the applicable FM India Agreements of its intent to
transfer the FM India Shares to Buyer and giving
the other party or its nominee the right to purchase/first
option of refusal pursuant thereto. Buyer and
Sellers shall cooperate and use their respective reasonable
efforts to effect a transfer of the FM India
Shares to Buyer or a sale thereof to a third party as soon as
reasonably practicable; provided, however, that
neither Buyer nor Sellers shall be obligated to pay any
consideration therefor to any person except as
otherwise provided herein. In the event that a sale or other
transfer to a third party of the FM India Shares
is effected, (a) promptly thereafter Sellers shall pay to Buyer
an amount equal to $156,000, representing
the book value of the FM India Shares on the 12/31 Net
Equity Statement, (b) Fairbanks Morse shall take
all action pursuant to the FM India Agreements to terminate
all license agreements, if any, relating to any
Intellectual Property, and (c) Sellers and Buyer shall
cooperate and use their respective reasonable efforts
to cause FM India to cease the use of any Intellectual
Property. In the event that Fairbanks Morse is able
to transfer the FM India Shares to Buyer, Sellers and Buyer
shall cooperate and make any filings and
obtain any approvals required to effect such transfer under
Indian law. In the event that on or before the
fifth anniversary of the Closing Date the FM India Shares
have not been transferred to Buyer or sold or
otherwise transferred to a third party, Sellers shall promptly
pay to Buyer an amount equal to $156,000,
representing the book value of the FM India Shares on the
12/31 Net Equity Statement.
7.14.2. Hydromatic India. As soon as reasonably
practicable, Aurora/Hydromatic shall
give notice of termination of all Hydromatic India
Agreements (other than the Arbitration Agreement
referred to in Section 5.4(b)) to which it is a party. Sellers
and Buyer shall cooperate and use their
respective reasonable efforts to cause all Hydromatic India
Agreements to which any Seller is a party to be
terminated; provided, however, that neither Buyer nor
Sellers shall be obligated to pay any consideration
therefor to any person.
7.15. Cancellation of Procurement Cards. Effective on or
prior to the Closing Date, Sellers shall
cancel any and all procurement cards issued to any Active
Employee pursuant to the Chase Visa
Purchasing Card Agreement dated July 2, 1997 between
The Chase Manhattan Bank (USA) and GSC.
7.16. Cooperation with Actions. If and for so long as any
Seller is contesting or defending
against any Action in connection with (a) any transaction
contemplated by this Agreement or (b) any
Action, circumstance, condition, conduct, event, fact, failure
to act, incident, occurrence or transaction on
or before the Closing Date involving the Pump Group or any
of Sellers, Buyer shall cooperate with Sellers
and their counsel in the contest or defense, make available
its personnel and provide any testimony and
access to its books and records in connection with such
contest or defense, with all actual out-of-pocket
costs to third parties at Sellers' expense unless Sellers are
entitled to indemnification therefor under Article
12.
8. CONDITIONS PRECEDENT TO CLOSING
8.1. Conditions Precedent to Sellers' Obligations. The
obligations of Sellers to consummate the
transactions contemplated by this Agreement shall be
subject to the satisfaction of the following conditions,
any of which may be waived by GSC on behalf of Sellers:
8.1.1. Representations and Warranties. Each of the
representations and warranties made
by Buyer in this Agreement shall be true and correct in all
material respects as of the date hereof and as of
the Closing Date.
8.1.2. Covenants. Buyer shall have performed and
complied in all material respects with
all covenants and agreements required by this Agreement to
be performed by it prior to or at the Closing.
8.1.3. HSR Act; Etc. All applicable waiting periods under
the HSR Act shall have
expired or been terminated and (to the extent required) any
required approval under the Investment Canada
Act shall have been obtained.
8.1.4. No Legal Action. No Order shall be in effect
forbidding or enjoining the
consummation of the transactions contemplated hereby and
no Action shall be pending or threatened which,
if adversely determined, would result in any such Order.
8.1.5. Deliveries. Buyer shall have made all of the
deliveries required of it by Section
4.3.
8.2. Conditions Precedent To Buyer's Obligations. The
obligations of Buyer to consummate
the transactions contemplated by this Agreement shall be
subject to the satisfaction of the following
conditions, any of which may be waived by Buyer:
8.2.1. Representations and Warranties. Each of the
representations and warranties made
by Sellers in this Agreement shall be true and correct in all
material respects as of the date hereof and as of
the Closing Date, except for (a) representations and
warranties made as of a specified date, which shall be
true and correct as of the specified date and (b) breaches
and inaccuracies that do not have a Material
Adverse Effect.
8.2.2. Covenants. Sellers shall have performed and
complied in all material respects
with all covenants and agreements required by this
Agreement to be performed by them prior to or at the
Closing.
8.2.3. HSR Act; Etc. All applicable waiting periods under
the HSR Act shall have
expired or been terminated and (to the extent required) any
required approval under the Investment Canada
Act shall have been obtained.
8.2.4. No Legal Action. No Order shall be in effect
forbidding or enjoining the
consummation of the transactions contemplated hereby and
no Action shall be pending or threatened which,
if adversely determined, would result in any such Order.
8.2.5. Deliveries. Sellers shall have made all of the
deliveries required of them by
Section 4.2.
8.2.6. Required Consent. Consent to the assignment to
Buyer of the Trademark License
Agreement dated August 21, 1985 between Colt Industries
Operating Corp., as licensor, and FMPD
Purchasing Corporation, as licensee shall have been
obtained.
8.3. If Conditions Not Satisfied. In the event that any of the
conditions set forth in this Article
8 are not satisfied and the parties hereto consummate the
transactions contemplated by this Agreement to
take place at the Closing despite such failure, the parties
shall be deemed to have waived any claim for
Damages or other relief arising from or in connection with
such failure.
9. EMPLOYEE MATTERS
9.1. Nonbargaining Employees.
9.1.1. Except as otherwise provided herein, Buyer or its
Affiliates shall offer
employment to each nonbargaining Active Employee, at the
same salary or wage and with other benefits
and conditions of employment which Buyer reasonably
believes to be substantially comparable in the
aggregate as in effect immediately prior to the Closing Date,
with such employment to commence as of the
Closing Date or such later date as shall be agreed by Buyer
or its Affiliates and any such Active Employee,
except for the 9.1.1 Employees, each of whom Sellers and
Buyer mutually agree shall be retained by
Sellers or a Continuing Affiliate (all such non-bargaining
Active Employees transferring to Buyer or its
Affiliates shall be referred to collectively as the "Business
Employees"). Such offer of employment does
not confer upon the Buyer or its Affiliates any obligation to
retain any Employee beyond his or her initial
hiring. With respect to any Active Employee on an individual
leave of absence as of the Closing Date,
Buyer shall promptly give GSC notice of the date
employment of such employee commences with Buyer or
any of its Affiliates.
9.1.2. Severance pay and other separation benefits under
Seller's plans for the 9.1.1
Employees shall be Retained Liabilities; provided, however,
that Buyer shall promptly reimburse Seller for
the amounts of such severance or other separation benefits
paid to any 9.1.1 Employees who are not
Designated 9.1.1 Employees. Any liability to any Business
Employee for severance pay and other
separation benefits under Buyer's plans that arises out of
transactions that occur on or after the Closing
Date and any liability or obligation that arises out of any
breach by Buyer of any of the provisions of this
Article 9 shall be an Assumed Liability.
9.2. Bargaining Employees.
9.2.1. Except as otherwise provided herein, Buyer or its
Affiliates shall offer
employment to each bargaining Active Employee, at
compensation rates and benefits competitive in the
respective hiring marketplace, with such employment to
commence as of the Closing Date or such later date
as shall be agreed by Buyer or its Affiliates and any such
employee. Buyer and Sellers agree that Sellers
shall have no obligation for severance, shutdown or
permanent job separation benefits to such bargaining
Active Employees, which shall be the sole responsibility of
Buyer or its Affiliates, under Buyer's severance
pay plans or under collective bargaining agreements
between Buyer or its Affiliates and bargaining
representatives of such employees, following the Closing
Date. Such offer of employment does not confer
upon the Buyer or its Affiliates any obligation to retain any
bargaining Active Employee beyond his or her
initial hiring.
9.2.2. Union Representation. Buyer agrees to recognize
those unions which represent
any of the Active Employees at the Closing Date as the
collective bargaining representatives of such
employees as of the Closing Date. Buyer does not agree to
assume the collective bargaining agreements in
effect as of the Closing. After the Closing Date, Buyer shall
set its own initial terms and conditions of
employment of the Active Employees represented by unions
and others it may hire, including without
limitation work rules, benefits and salary and wage structure,
all as permitted by law. Any bargaining
obligations of Buyer with unions shall be the sole
responsibility of Buyer and Buyer shall indemnify Sellers
with respect to any such obligations.
9.3. Employee Benefit Plans Generally.
9.3.1. Employee Benefit Plans for Business Employees.
Effective as of the Closing
Date, and soon as practicable, Buyer shall establish and
qualify or register with applicable regulatory
authorities employee benefit plans for, or shall extend
existing Buyer employee benefit plans to, the
Business Employees which provide benefits to such
Business Employees on terms and conditions which
Buyer reasonably believes to be substantially comparable in
the aggregate to those provided to such
Business Employees by Sellers or their Affiliates
immediately prior to the Closing Date. Except as
provided hereinafter in this Article 9 with respect to specific
types of benefits, Buyer shall, or shall cause
one or more of its Affiliates to, take into account each
Business Employee's period of service with Sellers
or their Affiliates prior to the Closing under any employee
benefit plans, programs or arrangements
sponsored by Buyer or its Affiliates after the Closing in which
any of the Business Employees are eligible
to participate. Buyer (or its Affiliates) reserves the right to
amend or terminate any employee benefit plans
as it may deem appropriate from time to time following the
Closing Date.
9.3.2. Termination of Coverage under Sellers' Employee
Benefit Plans. Effective as of
the Closing Date, each Active Employee who is an active
participant in any Employee Benefit Plans of any
Seller (including but not limited to all life insurance, health
insurance, welfare and health benefit plans,
pension, profit sharing and savings and stock ownership
plans, workers' compensation insurance and
payments into State Unemployment Compensation Funds)
shall cease to be an active participant and all of
such employees shall become eligible to participate in each
of Buyer's employee benefit plans in
accordance with the applicable provisions of this Agreement
and the terms and conditions of each such
plan. Sellers agree that they are responsible for
appropriately terminating all the active participation of
such employees in their respective Employee Benefit Plans,
if any, pursuant to applicable laws and will
seek any necessary approvals with respect to the
termination of any such active participation. Sellers agree
that Buyer shall have no responsibility for any issue dealing
with the termination of the active participation
of any Active Employee under any such Employee Benefit
Plans.
9.4. Pension Plans.
9.4.1. All assets and liabilities under the GSC Pension Plan
attributable to service prior
to the Closing Date for each U.S. Active Employee who is a
participant in GSC's Pension Plan
immediately prior to the Closing Date shall be Retained
Assets and Excluded Liabilities, respectively.
GSC agrees that nothing contained in this Section 9.4 shall
in any way otherwise affect each U. S. Active
Employee's right to his or her accrued benefits under the
GSC Pension Plan. Subject to the approval of the
appropriate pension plan administration committee of GSC,
GSC shall cause the GSC Pension Plan to vest
fully each U.S. Active Employee who is a participant in
GSC's Pension Plan immediately prior to the
Closing Date in his or her accrued benefits under the GSC
Pension Plan. Buyer shall grant to each U.S.
Business Employee credit for his or her period of
employment with GSC and its Affiliates (and their
predecessors) prior to the Closing Date, as if so employed
by Buyer, for the purpose of eligibility and
vesting under any pension benefit plan by which such U.S.
Business Employees become covered, but not
for the purpose of benefit accrual and early retirement
subsidies thereunder..
9.4.2. All assets and liabilities under GSC Hourly
Employees Pension Plan attributable
to service prior to the Closing Date for each Active
Employee participating therein shall be Retained Assets
and Excluded Liabilities, respectively. Buyer shall grant to
each U. S. bargaining Active Employee credit
for his or her period of employment with GSC and its
Affiliates (and their predecessors) prior to the
Closing Date, as if so employed by Buyer, for the purpose of
eligibility and vesting under any pension
benefit plan by which such U.S. bargaining Active
Employees become covered but not for the purpose of
benefit accrual and early retirement subsidies thereunder.
9.4.3. All assets and liabilities under the GS Limited
Pension Plan attributable to service
prior to the Closing Date for each Canadian Active
Employee shall be Retained Assets and Excluded
Liabilities, respectively. As of the Closing Date, GS Limited
shall cause each Canadian Active Employee
who is employed by GS Limited immediately prior to the
Closing Date to vest fully in his or her accrued
benefits under the GS Limited Pension Plan.
9.5. Savings Plans.
9.5.1. As soon as practicable after the Closing Date, Buyer
shall (a) establish a savings
plan or plans or use an existing savings plan or plans (the
"Buyer Savings Plan") providing competitive
benefits for U.S. Business Employees; (b) establish one or
more trusts or insurance arrangements or use
one or more existing trusts or insurance arrangements (the
"Buyer Savings Plan Trust") with respect to the
Buyer Savings Plan; and (c) apply for, and use its
reasonable best efforts to obtain, a determination of a
District Director of Internal Revenue Service having
jurisdiction over a new savings plan of Buyer to the
effect that such savings plan and any trust established
thereunder constitute a plan and trust meeting all
applicable requirements for qualification under Sections
401(a), 401(k) and 501(a) of the Code or provide
evidence to the satisfaction of Sellers that an existing plan
and existing trust arrangements of Buyer satisfy
such requirements.
9.5.2. Sellers shall allow Active Employees participating
therein to retain their account
balances in Sellers' existing applicable 401(k) plans. Sellers
shall encourage (and Buyer shall allow) such
participants to roll over cash balances to Buyer's (or its
Affiliate's) 401(k) plan to the extent provided by
law.
9.5.3. Fairbanks Morse shall allow bargaining Active
Employees covered by the
Fairbanks Morse Pump Corporation Union Employee 401(k)
Plan to retain their account balances in such
plan. Fairbanks Morse will encourage (and Buyer will allow)
participants thereunder employed by Buyer
or its Affiliates to roll over cash balances to Buyer's (or its
Affiliate's) 401(k) plan to the extent provided
by law.
9.5.4. Each of the parties shall be responsible for its
respective governmental filings,
including but not limited to Internal Revenue Service Form
5310.
9.6. Welfare and Fringe Benefits Generally. Except as
further provided herein, Buyer shall, or
shall cause one or more of its Affiliates to, (a) grant to each
Active Employee credit under any employee
welfare benefit plan covering such employee after the
Closing for any deductible and co-payments paid by
such employee under any corresponding Employee Benefit
Plan during the plan year which includes the
Closing Date, and (b) amend any employee welfare plan
covering Active Employees participating therein
from and after the Closing so that such plan does not
exclude from coverage any pre-existing conditions of
any of such employees or their dependents, which
pre-existing conditions were covered under any
Employee Benefit Plan immediately prior to the Closing,
provided, however, that nothing herein shall
require Buyer's (or any Affiliate's) employee welfare benefit
plan to cover any particular disease, condition
or other event or prevent any such plan from applying any
limits (other than a limit directed to such a pre-
existing condition) which affect coverage for the amount of
benefits covered thereunder.
9.6.1. Assets and Liabilities Regarding Non-Active
Employees. Sellers shall retain all
assets or reserves, if any, and all liabilities for benefits,
compensation and the like for Employees who are
not Active Employees on or as of the Closing Date, as
Retained Assets or Excluded Liabilities,
respectively.
9.6.2. Benefits of Non-Active Employees. Retirement and
welfare benefits, including
without limitation retiree medical benefits and medical
coverage rights under COBRA, for former
Employees of any of the Sellers or their predecessors who
shall have retired on or prior to the Closing Date
shall be Excluded Liabilities.
9.6.3. Business Employees. Retirement and welfare
benefits, including without
limitation retiree medical benefits and medical coverage
rights under COBRA, for Business Employees
shall be Assumed Liabilities.
9.6.4. Assignment of Contract Rights. Sellers shall assign,
to the extent possible, at
Closing all applicable ASO Agreements to Buyer for the
purpose of permitting Buyer to administer all self-
insured medical/dental plans, cafeteria plans and similar
arrangements for Business Employees. Sellers
shall assign, to the extent possible, at Closing all applicable
HMO/DMO contracts to Buyer for the
purpose of permitting Buyer to continue coverage of U. S.
Active Employees for the remainder of the
contract term. Incurred but not reported (IBNR) claims, and
related reserves and accruals, under Sellers'
medical/dental and similar plans shall be Assumed
Liabilities.
10. TAXES
10.1. Allocation of Certain Taxes. Sellers shall include the
income of the Pump Group
(including any deferred income whether arising from
deferred intercompany transactions or otherwise and
any excess loss accounts pursuant to relevant rules and
regulations of the Internal Revenue service) on the
respective consolidated federal Tax returns (or similar
returns for Canadian corporations) of Sellers for all
period s through the Closing Date and pay any federal
income taxes attributable to such income. The
income of the Pump Group shall be apportioned to period up
to and including the Closing Date and the
period after the Closing Date by closing the books of the
Pump Group as of the end of the Closing Date.
Any Taxes (such as real estate taxes) that are measured by
the passage of time (rather than by reference to
income, sales, profits or results of operations) shall be
apportioned for purposes of this Section 10.1.2
between Sellers and Buyer based on the respective number
of days during the taxable period that each owns
the relevant Assets.
10.2. Information to be Provided by Buyer. With respect to
the taxable year of GSC within
which the Closing Date occurs, Buyer shall promptly cause
to be prepared and provided to Sellers, at no
cost to Sellers, a package of tax information materials (the
"Tax Package"), which shall be completed in
accordance with past practice including past practice as to
providing the information, schedules and work
papers and as to the method of computation of separate
taxable income or other relevant measure of
income. Buyer shall cause the Tax Package for the portion
of the taxable period ending on the Closing
Date to be delivered to Sellers within 180 calendar days
after the Closing Date.
10.3. Cooperation. Buyer and Sellers and their respective
Affiliates shall cooperate in the
preparation of all Tax returns relating in whole or in part to
taxable periods ending on or before or
including the Closing Date that are required to be filed after
such date. Such cooperation shall include, but
not be limited to, furnishing prior years' returns or return
preparation packages illustrating previous
reporting practices or containing historical information
relevant to the preparation of such returns, and
furnishing such other information within such party's
possession requested by the party filing such returns
as is relevant to their preparation. In the case of any state,
local or foreign joint, consolidated, combined,
unitary or group relief system returns, such cooperation shall
also relate to any other taxable periods in
which one party could reasonably require the assistance of
the other party in obtaining any necessary
information.
10.4. Books and Records.
10.4.1. Access. For a period of ten years after the Closing,
each of Sellers and Buyer
shall provide the other with reasonable access during normal
business hours to its books and records and
the books and records of the Subsidiaries and Divisions to
the extent they relate to the condition or
operation of the Pump Group prior to the Closing and are
requested to prepare tax returns, to respond to
third party claims or for any other legitimate purpose
specified in writing. Each of Sellers and Buyer shall
have the right, at its own expense, to make copies of any
such books and records.
10.4.2. Destruction. Neither Sellers nor Buyer shall destroy
any books or records of the
Pump Group to the extent that they relate to the condition or
operation of the Subsidiaries or Divisions
prior to the Closing without first offering to turn over
possession to the other by written notice at least 30
calendar days prior to the proposed date of destruction.
10.5. Confidentiality. Each of Sellers and Buyer may take
such action as it deems reasonably
appropriate to separate or redact information unrelated to
the Subsidiaries or Divisions from documents
and other materials requested and made available pursuant
to this Section and to condition access to
materials that it deems confidential to the execution and
delivery of any agreement by the other party not to
disclose or misuse such information.
10.6. Allocation of Purchase Price. The Purchase Price and
the Assumed Liabilities shall be
allocated to the Assets for all purposes (including tax and
financial accounting purposes) in a manner
consistent with the Allocation Schedule attached hereto as
Schedule 10.6. After taking into account any
adjustment to the Purchase Price pursuant to Section 3.2,
Buyer and Sellers shall, and shall cause their
respective Affiliates to, file all tax returns (including amended
returns and claims for refund) and
information reports in a manner consistent with such values.
Buyer shall prepare and deliver to Sellers
within 45 days after the determination of the Final Closing
Net Equity Statement, three separate Forms
8594, required to be filed under section 1060 of the Code, to
reflect the sale by each U.S. member of the
Pump Group.
11. TERMINATION OF AGREEMENT
11.1. Termination. This Agreement and the transactions
contemplated hereby may be
terminated at any time prior to the Closing Date only as
follows:
11.1.1. By mutual written consent of Buyer and GSC;
11.1.2. By either Buyer or GSC, by giving written notice of
such termination to the other,
if (a) any condition to the terminating party's obligations
hereunder (other than those relating to deliveries
at the Closing) has not been satisfied or waived and (b) the
Closing shall not have occurred on or before
December 31, 1997; provided that the terminating party is
not in material breach of its obligations under
this Agreement;
11.1.3. By either Buyer or GSC, by giving written notice of
such termination to the other
within 10 days of receipt from the other of any notice of a
development that has a Material Adverse Effect
or a material adverse effect, as applicable, entitling it to
terminate this Agreement in accordance with
Section 7.12; or
11.1.4. By either Buyer or GSC, by giving written notice of
such termination to the other,
if consummation of the Closing would violate any
non-appealable, final Order.
11.2. Effect of Termination. In the event of termination of
this Agreement in accordance with
Section 11.1, this Agreement shall thereafter become void
and have no effect, and Sellers and Buyer shall
have no liability to the other or its respective Affiliates,
directors, officers or employees, except for the
obligations of the parties contained in this Section 11.2 and
in Sections 13.2.1, 14.5, 14.7, 14.8 and 14.10
hereof and pursuant to the Confidentiality Agreement, which
shall survive any termination hereof, and
except that nothing herein shall relieve any party from
liability for any breach of this Agreement prior to
termination.
12. SURVIVAL AND INDEMNIFICATION
12.1. Survival. Notwithstanding any otherwise applicable
statute of limitations, the
representations and warranties included or provided for
herein shall survive the Closing until the first
anniversary of the Closing Date; provided, however, that (a)
any representation or warranty contained in
Sections 5.19 and 5.20 shall survive the Closing until the
expiration of the applicable statute of limitations
(including any waivers or extensions thereof), and (b) any
representation or warranty contained in Sections
5.1, 5.2, 5.4, 6.1 and 6.2 shall survive the Closing and shall
remain in effect without limitation as to time.
12.2. Indemnification by GSC. GSC, on behalf of all
Sellers, shall indemnify, defend and hold
harmless Buyer from and against any and all Damages
suffered by Buyer arising out of:
(a) any claim for which GSC receives notice
from Buyer during the period
commencing on the Closing Date and ending, as the case
may be, upon the expiration of the period, if any,
specified in Section 12.1, relating to any breach of any
representation or warranty made by Sellers in this
Agreement; provided, however, that Buyer shall not be
entitled to any Damages for any breach of any
representation or warranty contained in Sections 5.5, 5.6 or
5.19.6 so long as the methodology used in the
preparation of the Final Net Equity Statement is consistent
with the methodology set forth therefor in
Schedule 3.2.1.
(b) any claim relating to any breach of any
covenant by Sellers in this Agreement;
(c) any claim under Treas. Reg. d1.1502 by
the Internal Revenue Service against any
member of the Pump Group as a member of GSC's
consolidated group prior to the Closing Date with
respect to any federal income tax liability of GSC for any
period ending on or prior to December 31, 1997;
and
(d) any failure by Sellers or any of the
Continuing Affiliates to pay or satisfy or cause
to be paid or satisfied any of the Excluded Liabilities.
12.3. Indemnification by Buyer. Buyer shall indemnify,
defend and hold harmless Sellers from
and against any and all Damages suffered by Sellers arising
out of:
(a) any claim for which Buyer receives
notice from Sellers during the period
commencing on the Closing Date and ending, as the case
may be, upon the expiration of the period, if any,
specified in Section 12.1, relating to any breach of any
representation or warranty made by Buyer in this
Agreement;
(b) any claim relating to any breach of any
covenant by Buyer in this Agreement; and
(c) any failure by Buyer or any Affiliate of
Buyer to pay or satisfy or cause to be paid
or satisfied any of the Assumed Liabilities.
(d) any breach of any obligation of or
relating to the Pump Group occurring on or
after the Closing Date for which any Seller has any
obligation or liability under any of the Seller
Guarantees.
12.4. Notice and Resolution of Claims.
12.4.1. Notice. Each party entitled to indemnification
pursuant to Section 12.2 or Section
12.3 (an "Indemnitee") shall promptly give written notice to
the party required to provide indemnification
respectively thereunder (an "Indemnifying Party") after
obtaining knowledge of any claim that it may have
pursuant to this Article 12. Such notice shall set forth in
reasonable detail the claim and the basis for
indemnification.
12.4.2. Right to Assume Defense. If such claim for
indemnity shall arise from a claim or
Action involving a third party (a "Third Party Claim"), the
Indemnitee shall permit the Indemnifying Party
to assume its defense. If the Indemnifying Party assumes
the defense of such Third party claim, it shall
take all steps reasonably necessary to investigate, defend or
settle diligently such Action and shall, subject
to Section 12.5, hold the Indemnitee harmless from and
against any and all Damages caused by or arising
out of any settlement approved by the Indemnifying Party or
any judgment in connection with such Third
Party Claim. Without the written consent of the Indemnitee,
the Indemnifying Party shall not consent to
entry of any judgment or enter into any settlement which
would result in the imposition of an Order which
would restrict the future activity or conduct of, or which
would otherwise have a material adverse effect on
the Indemnitee or any Affiliate thereof. The Indemnitee may
participate in such defense or settlement
through its own counsel, but at its own expense.
12.4.3. Failure to Assume Defense. Failure by the
Indemnifying Party to notify the
Indemnitee of its election to assume the defense of any
Third Party Claim within 30 calendar days after its
receipt of notice thereof shall be deemed a waiver by the
Indemnifying Party of its right to assume the
defense of such Third Party Claim. In such event, the
Indemnitee may defend against such Third Party
Claim in any manner it deems appropriate. The Indemnitee
may settle such Third Party Claim or consent
to the entry of any judgment with respect thereto, provided
that it acts reasonably and in good faith. The
Indemnifying Party shall promptly reimburse Indemnitee (a)
for the amount of all costs and expenses, legal
or otherwise, reasonably incurred by the Indemnitee in
connection with the defense against or settlement of
such claims or litigation, and (b) if no settlement of such
claim or litigation is made, for the amount of any
final judgment with respect to such claim or in such litigation,
to the extent that such amount has been
actually paid.
12.5. Limits on Indemnification.
12.5.1. Indemnification Threshold. Neither GSC nor Buyer
shall be liable to any
Indemnitee for any Damages that are indemnifiable pursuant
to Section 12.2(a) or Section 12.3(a), except
to the extent that the Damages for any breach exceed
$[100,000] [$50,000] (the "Indemnification
Threshold").
12.5.2. Deductible. If Damages exceed the Indemnification
Threshold, GSC shall be
liable to Buyer for Damages that are indemnifiable pursuant
to Section 12.2(a) and (b), and Buyer shall be
liable to Sellers for Damages that are indemnifiable pursuant
to Section 12.3(a) and (b), only to the extent
that the aggregate amount of Damages to Buyer or Sellers,
respectively, exceeds $[2,000,000]
[$1,000,000] (the "Deductible").
12.5.3. Limit of Liability. The total aggregate liability of GSC
to Buyer for Damages that
are indemnifiable pursuant to Section 12.2(a) and (b), and
the total liability of Buyer to Sellers for
Damages that are indemnifiable pursuant to Section 12.3(a)
and (b) shall not exceed the amount of the
Purchase Price, as adjusted.
12.5.4. Actual Knowledge. Neither Sellers nor Buyer shall
have any liability hereunder
for Damages arising from or relating to a breach of any
representation or warranty if the Indemnifying
Party can establish that the Indemnitee had actual
knowledge on or before the Closing Date of the condition
or event constituting such breach.
12.5.5. Consequential Damages; Mitigation. Neither Sellers
nor Buyer shall have any
obligation to indemnify any Indemnitee for any
Consequential Damages or for Damages that are (a)
caused,
contributed to or exacerbated by the actions of the other or
its directors, officers, employees or
representatives, (b) recovered or recoverable by the
Indemnitee from any third party (including any
insurer), or (c) offset by tax savings realized on account of
such Damages by the Indemnitee or any of its
Affiliates.
12.5.6. Exclusive Remedy. This Article 12 sets forth the
exclusive remedy for monetary
damages owing from Sellers to Buyer and from Buyer to
Sellers that arise from the matters described in
Sections 12.2, 12.3 and 12.6. Each of the parties hereby
waives any claim or cause of action for monetary
damages that it might assert against the other with respect
to the matters described in Sections 12.2, 12.3
and 12.6, whether under common law or under any
Environmental Law or securities, trade regulation or
other law, regulation or ordinance.
12.5.7. Effect of Materiality Qualifications. For purposes of
determining whether Buyer
or Sellers are entitled to indemnification under Section
12.2(a) or 12.3(a), and whether limitations on
claims or on recovery under Sections 12.5.1 through 12.5.3
above apply to any demand for
indemnification, qualifications as to materiality in individual
representations and warranties shall be
disregarded.
12.6. Environmental Matters.
12.6.1. Confidentiality. Buyer shall not and shall cause its
Affiliates and their respective
employees, officers, directors, representatives, agents,
contractors, consultants and attorneys (collectively,
its "Representatives"), successors and assigns (to any of the
foregoing such disclosure may be made but
shall be made subject to this Section 12.6.1) not to disclose
or permit to be disclosed prior to or after the
Closing Date to any third parties (including Governmental
Authorities) without the prior written consent of
GSC, which shall not be unreasonably withheld for matters
within the normal course of operations of the
Pump Group, any information regarding the environmental
condition of any Pump Group Property,
including any environmental audit reports, site assessments,
testing results, and evaluations (the
"Environmental Information") if such Environmental
Information could result in or form a basis of an
Environmental Claim for which Sellers are required to
indemnify Buyer pursuant to this Agreement or to
any lease entered into between Buyer and Sellers with
respect to any Pump Group Property, (a) unless and
to the extent (i) Buyer is required to disclose such
information to a Governmental Authority or other third
parties pursuant to an applicable Environmental Law or
other law or by subpoena or Order and (ii) to the
extent permitted by law, Buyer promptly notifies Sellers of
the reporting obligation or request for
disclosure and permits Sellers to make the disclosure or to
defend the request for the Environmental
Information, (b) except in connection with any proposed
transfer of any of the Real Property Sites or the
business or operations of all or a part of the Pump Group (of
which disclosure Buyer shall give prompt
notice to GSC and which shall be made subject to the
confidentiality restrictions set forth in this Section
12.6.1), or (c) except to the extent reasonably believed to be
required to be disclosed in an emergency.
12.6.2. Conduct of Cleanup. Sellers shall have the right to
perform and control any
Cleanup (including all communications with Governmental
Authorities) with respect to any Environmental
Claim for which Buyer is seeking indemnification pursuant to
this Agreement; provided, however, that such
Cleanups shall be designed to achieve compliance in all
material respects with Environmental Laws. All
Cleanups shall be effected in a manner that is designed to
minimize, to the greatest extent reasonably
possible, disruption to the normal operations of the Pump
Group. To the extent that any environmental
conditions requiring Cleanup has been materially
exacerbated or the costs thereof materially increased by
any acts or failures to act (excluding the mere passage of
time), of Buyer or its Affiliates following the
Closing Date, Buyer shall be responsible for, and shall
indemnify Sellers against, any increase in costs
attributable thereto.
12.6.3. Site Access. Buyer and Buyer's successors and
successors in interest shall
following the Closing and until the completion of Sellers'
obligations under this Agreement and any Orders
and Permits for which Seller is responsible:
(a) permit Sellers and Sellers' contractors,
consultants and representatives reasonable
access to and freedom of movement at the Pump Group
Property in order to perform all activities required
to be performed by Sellers after the Closing Date pursuant
to this Agreement, any Order or any Permit,
including without limitation to perform any Cleanup,
installation of ground water monitoring wells,
sampling of ground water, surface water, surface and
subsurface soil, air and other environmental media,
excavation of soil, installation of pollution control and/or
monitoring equipment, capping of and/or
restriction of access to contaminated areas, installation of
ground water collection, treatment, pumping and
conveyance systems, asbestos abatement, and such other
measures as may be reasonably necessary.
(b) permit any duly designated employee,
consultant, contractor, agent or
representative of a Governmental Authority access to the
Pump Group Property for purposes of inspection,
sampling and other activities necessary to effectuate the
oversight of Sellers' activities under this
Agreement, any Order or any Permit.
(c) cooperate with Sellers and Sellers'
contractors, consultants, and representatives
(with such cooperation including providing reasonable
access to utilities, piping and plumbing at each
Pump Group Property and providing space at such sites for
the mobilization of vehicles and equipment)
and not interfere, delay, increase the cost of, or require
modification or repetition of all or any part of the
activities Sellers are reasonably required to perform under
this Agreement, any Order or any Permit.
12.6.4. Site Testing. Buyer and Sellers have agreed that
Buyer shall not test, and Buyer
acknowledges that it has not performed testing of, any
environmental media at the Pump Group Property
prior to entering into this Agreement. Following the Closing,
Buyer shall not arrange for or conduct
investigations of any environmental conditions other than (a)
testing or Cleanups required to be performed
under applicable Environmental Laws, which GSC does not
perform in a timely fashion following timely
receipt of notice from Buyer, (b) in the exercise of good faith
business judgment (exercised without regard
to the availability of indemnification hereunder), or (c) in
connection with the investigation of a Third Party
Claim if Sellers shall have failed to perform an obligation
and/or to indemnify Buyer for such Third Party
Claim following receipt of timely notice thereof.
12.6.5. Emergency Actions. Notwithstanding the foregoing,
Buyer may take immediate
emergency action to the extent necessary to comply with
applicable Environmental Laws.
12.7. Payment and Assignment of Claims.
12.7.1. Payment. All payments made pursuant to this
Article 12 (other than any interest
payments) shall be treated by the parties hereto on all Tax
returns as an adjustment to the Purchase Price.
12.7.2. Assignment of Claims. If any of the Damages for
which an Indemnifying Party is
responsible or allegedly responsible under this Article 12 are
recoverable or potentially recoverable against
any third party at the time when payment is due hereunder,
the Indemnitee shall assign any and all rights
that it may have to recover such Damages to the
Indemnifying Party or, if such rights are not assignable,
shall use all reasonable efforts in good faith to collect any
Damages from such third party for the benefit of
the Indemnifying Party.
13. DEFINITIONS; INTERPRETATION
13.1. Definitions. As used in this Agreement, the following
terms shall have the meanings set
forth below:
13.1.1. "ACM" means, collectively, asbestos or
asbestos-containing materials.
13.1.2. "Action" means any action, suit, arbitration, inquiry,
proceeding or investigation
by or before any Governmental Authority.
13.1.3. "Active Employee" means any employee of a Seller
who is as of the Closing Date
(a) actively employed in the business of the Pump Group or
(b) on an individual leave of absence, with
respect to each employee employed in the business of the
Pump Group who is on vacation, workers'
compensation, short-term disability leave, military leave,
layoff with recall rights pursuant to the recall
provisions of the location in question or other approved
leave of absence.
13.1.4. "Affiliate" means, with respect to any entity, any
other entity directly or indirectly
controlling, controlled by, or under common control with such
other entity.
13.1.5. "Agreement" as defined in the first paragraph.
13.1.6. "Ashland Site" as defined in Section 1.2.11.
13.1.7. "Assets" as defined in Section 1.1.
13.1.8. "Assumed Environmental Liabilities" means (a) all
liabilities or obligations
relating to or arising out of (i) any investigation or
remediation of areas at any Pump Group Property after
a Cleanup has been completed by Sellers under an Order to
the satisfaction of the appropriate
Governmental Authorities, (ii) the release into the
environment of Hazardous Substances at, onto, under or
from any Real Property Site if a Third Party Claim regarding
such release is first made after the date that
Buyer or an Affiliate purchases such Real Property Site, (iii)
any remediation, encapsulation, treatment or
removal of any ACM on the currently sealed third floor at the
foundry of the Kansas City Site, which
action is attributable to any activity on the part of Buyer or its
Affiliates not required under applicable law,
(iv) any ACM or any ACM encapsulation material at the Real
Property Sites which becomes damaged or
friable after the Closing Date to the extent that such damage
results from the negligence or willful
misconduct of Buyer, its Affiliates or their respective
Representatives or invitees, (v) any environmental
condition to the extent arising from and after the Closing
Date, including any release into the environment
of Hazardous Substances at, onto, under or from any Pump
Group Property, but excluding any continuing
release first arising prior to the Closing Date [(A)] to the
extent Sellers shall not have been required to
remediate such condition prior to the date that Buyer or an
Affiliate purchases an affected Real Property
Site [or (B) which Sellers are in the process of remediation in
compliance with this Agreement to the extent
such environmental condition, including any release, is
ongoing and to the extent that the condition arises
after the date that Buyer or an Affiliate purchases an
affected Real Property Site], (vi) Damages or
Cleanup caused by or resulting from any breach by Buyer of
Section 12.6, and/or (vii) all business
operations at the Real Property Sites or elsewhere by Buyer
or any of its Affiliates from and after the
Closing Date, including without limitation any Damages
and/or Cleanup relating to any change after the
Closing Date in the nature of the business operations or
manufacturing processes employed at the Real
Property Sites, and (b) fifty percent (50%) of the first
$100,000 of costs incurred annually at each separate
Real Property Site by Sellers for each Third Party Claim
(including any claim or Action involving a
Governmental Authority) first made after the Closing Date
and prior to the purchase of such Real Property
Site seeking Cleanup or Damages arising out of (i) the
release into the environment prior to the Closing
Date of Hazardous Substances at, onto, under or from the
Pump Group Property or (ii) the failure of
Sellers to comply prior to the Closing Date with any
applicable Environmental Law in effect prior to the
Closing Date with respect to the business operations of the
Pump Group at any Pump Group Property.
13.1.9. "Assumed Liabilities" as defined in Section 2.1.
13.1.10. "Aurora Site" as defined in Section 1.2.11.
13.1.11. "Aurora/Hydromatic" as defined in the first
paragraph.
13.1.12. "Business Employees" as defined in Section 9.1.1.
13.1.13. "Buyer" as defined in the first paragraph.
13.1.14. "Buyer Savings Plan" as defined in Section 9.5.1.
13.1.15. "Buyer Savings Plan Trust" as defined in Section
9.5.1.
13.1.16. "Buyer's Canadian Pension Plan" as defined in
Section 9.4.4.
13.1.17. "CERCLA" means the Comprehensive
Environmental Response, Compensation
and Liability Act of 1980.
13.1.18. "Cleanup" means the containment, control,
removal, treatment, remediation,
mitigation, investigation or evaluation of any Hazardous
Substances, which are imposed by an affirmative
obligation of an Environmental Law.
13.1.19. "Closing" as defined in Section 4.1.
13.1.20. "Closing Net Equity Statement" as defined in
Section 3.2.1.
13.1.21. "Closing Date" as defined in Section 4.1.
13.1.22. "Code" means the Internal Revenue Code of 1986,
as amended.
13.1.23. "Confidentiality Agreement" as defined in Section
7.1.2.
13.1.24. "Consequential Damages" means Damages arising
out of any interruption of
business, loss of profits, loss of use of facilities, claims of
customers, loss of goodwill or other indirect
Damages.
13.1.25. "Continuing Affiliates" means any Affiliate of Sellers
following the Closing.
13.1.26. "Contracts" as defined in Section 5.13.
13.1.27. "Damages" means all loses, claims, damages,
costs, fines, penalties, obligations,
payments and liabilities, together with all reasonable and
actual costs and expenses (including, in the case
of Third Party Claims only, reasonable outside attorneys'
fees and expenses) incurred in connection with
the foregoing.
13.1.28. "Deductible" as defined in Section 12.5.2.
13.1.29. "Designated Employees" means up to fifteen 9.1.1
Employees designated by
Buyer to Sellers in writing on or before July 31, 1997.
13.1.30. "Divisions" as defined in Section 1.1.
13.1.31. "Employee Benefit Plan" as defined in Section
5.19.
13.1.32. "Environmental Information" as defined in Section
12.6.1
13.1.33. "Environmental Laws" means the Federal Water
Pollution Control Act, the Clean
Air Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act, the Solid Waste
Disposal Act, CERCLA, the Emergency Planning and
Community Right-To-Know Act, the Safe Drinking
Water Act and similar state and local laws, and the rules and
regulations thereunder, and any federal, state
and local law regulating public health and safety or worker
health and safety, as such laws may apply to
environmental matters and conditions, and the rules and
regulations thereunder.
13.1.34. "Equipment" means any and all machinery,
equipment, mechanical systems,
utilities serving the Real Property Sites, tools, dies and jigs,
patterns, computer, vehicles, trailers, furniture
and all other tangible personal property (other than inventory
and corporate books and records) owned or
leased by Sellers and used in the business of the Pump
Group, whether or not reflected on the Financial
Statements, but excluding any above ground tanks with a
capacity of more than 500 gallons located on any
Real Property Site at the Closing Date.
13.1.35. "ERISA" means the Employee Retirement Income
Security Act of 1974, as
amended.
13.1.36. "ERISA Plan" shall have the meaning set forth in
Section 3(3) of ERISA with
respect to any employee benefit plan maintained or
contributed to by a Seller or any of their Affiliates that
currently covers Employees and is subject to ERISA.
13.1.37. "Excluded Environmental Liabilities" means all
liabilities arising from any Third
Party Claim with respect to any environmental conditions to
the extent arising out or relating to the
operations of the Pump Group prior to the Closing Date,
other than Assumed Environmental Liabilities),
including without limitation any Third Party Claim (including
any claim or Action involving a
Governmental Authority) seeking Cleanup or Damages
arising out of (a) any environmental condition to the
extent arising prior to the Closing Date, including any
release into the environment of Hazardous
Substances at, onto, under or from any other real property
formerly owned, leased or operated by any
Seller for use in the Pump Group prior to the Closing Date,
excluding the Pump Group Property, (b) all
Cleanup or other Damages arising under each of the Actions
identified in Schedule 5.16.3, and (c) any
negligent acts or willful misconduct of any Seller and its
employees, agents, contractors, consultants or
invitees at the Pump Group Property after the Closing Date
to the extent they are a cause of a Cleanup
required to be performed pursuant to an applicable
Environmental Law in effect at the date of such act or
misconduct.
13.1.38. "Excluded Liabilities" as defined in Section 2.2.
13.1.39. "Fairbanks Morse" as defined in the first
paragraph.
13.1.40. "Final Net Equity Statement" as defined in Section
3.2.3.
13.1.41. "Financial Statements" as defined in Section 5.5.
13.1.42. "FM India" as defined in Section 5.4(a).
13.1.43. "FM India Agreements" as defined in Section
5.4(a).
13.1.44. "FM India Shares" as defined in Section 5.4(a).
13.1.45. "GAAP" means generally accepted accounting
principles in the United States.
13.1.46. "Governmental Authority" means any federal, state,
local or foreign government,
any of its subdivisions, agencies, authorities, commissions,
boards or bureaus or any federal, state, local or
foreign court of competent jurisdiction.
13.1.47. "GSC" as defined in the first paragraph.
13.1.48. "GSC Pension Plan" means, collectively, the
Corporate Retirement Plan of GSC
and the Pension Plan for Bargaining Unit Employees of
GSC.
13.1.49. "GS Limited" as defined in the first paragraph.
13.1.50. "GS Limited Pension Plan" means the Retirement
Plan for Salaried
Employees of General Signal Limited in Canada.
13.1.51. "Hazardous Substance" means any "hazardous
substance," as such term is
defined in CERCLA and the rules and regulations
thereunder promulgated in final form prior to the date
hereof as interpreted in accordance with public
announcements made prior to the date hereof.
13.1.52. "HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as
amended, including the rules and regulations promulgated
thereunder.
13.1.53. "Hydromatic India" as defined in Section 5.4(b).
13.1.54. "Hydromatic India Agreements" as defined in
Section 5.4(b).
13.1.55. "Hydromatic India Shareholders Agreement" as
defined in Section 5.4(b).
13.1.56. "Indemnifying Party" as defined in Section 12.4.1.
13.1.57. "Indemnification Threshold" as defined in Section
12.5.1.
13.1.58. "Indemnitee" as defined in Section 12.4.1.
13.1.59. "Independent Firm" means an accounting firm
jointly selected by Buyer and GSC
within two business days after the expiration of the period for
mutual resolution by the parties of any
disagreement under Section 3.2 or, absent such agreement,
Coopers & Lybrand L.L.P.
13.1.60. "India JV Agreements" as defined in Section 5.4(c).
13.1.61. "India JVs" as defined in Section 5.4(c).
13.1.62. "Intellectual Property" as defined in Section 5.12.1.
13.1.63. "Intercompany Obligation" means any
intercompany note, cash advance or
payable between GSC or any Continuing Affiliate, on the
one hand, and either Division or Subsidiary, on
the other hand, except for trade payables.
13.1.64. "Interim Net Equity Statement" as defined in
Section 5.5.
13.1.65. "Interim Financial Statements" as defined in
Section 5.5.
13.1.66. "Kansas City Site" as defined in Section 1.2.11.
13.1.67. "Lazard" means Lazard Freres & Co. LLC.
13.1.68. "Lien" means any lien, mortgage, deed of trust,
security interest, charge, pledge,
retention of title agreement, easement, encroachment,
condition, reservation, covenant or other
encumbrance affecting title.
13.1.69. "Marks" as defined in Section 1.2.1.
13.1.70. "Material Adverse Effect" means a material
adverse effect on the business,
financial condition or results of operation of the Pump
Group, taken as a whole.
13.1.71. "Material Contracts" as defined in Section 5.13.
13.1.72. "Material Leases" as defined in Section 5.9.
13.1.73. "Net Equity" means (a) total assets minus (b) total
current liabilities and minus
(c) other non-current liabilities, as shown on the Closing Net
Equity Statement or the Final Net Equity
Statement, as the case may be.
13.1.74. "9.1.1. Employees" means the Active Employees
identified on or before July 31,
1997 by Buyer to GSC to whom neither Buyer nor its
Affiliates shall be obligated to offer employment
pursuant to Section 9.1.1.
13.1.75. "Order" means any order, judgment, injunction,
decree or award of any
Governmental Authority.
13.1.76. "Owned Real Property" as defined in Section 5.10.
13.1.77. "Permits" means any permit, license, certificate,
registration, authorization or
approval issued by a Governmental Authority.
13.1.78. "Permitted Liens" means (a) Liens for Taxes that
are not yet due and payable or
that are being contested in good faith by appropriate
proceedings, (b) worker's, repairmen's and similar
Liens imposed by Law that have been incurred in the
ordinary course of business, (c) minor imperfections
of title and encumbrances which, individually or in the
aggregate, are not substantial in amount and do not
materially detract from the value of or impair the use of the
affected properties or assets to which they
relate, (d) retention of title agreements with suppliers
entered into in the ordinary course of business, (e)
Liens securing any liabilities or obligations disclosed in the
Interim Net Equity Statement, or (f) Liens listed
in Schedule 5.8.
13.1.79. "Pump Group" as defined in Section 1.1.
13.1.80. "Pump Group Property" means the Real Property
Sites and any other real
property currently leased by Sellers for use in the Pump
Group.
13.1.81. "Purchase Price" as defined in Section 3.1.
13.1.82. "Real Property Sites" as defined in Section 1.2.11.
13.1.83. "Retained Assets" as defined in Section 1.2.
13.1.84. " Reuters Screen LIBO Page" means the display
designated as page "LIBO" on
the Reuter Monitor Money Rates Service (or such other
page as may replace the LIBO Page on that service
for the purpose of displaying London interbank offered rates
of major banks for United States Dollar
deposits).
13.1.85. "Sale Confidentiality Agreements" as defined in
Section 7.3.
13.1.86. "Savings Plan" as defined in Section 9.5.1.
13.1.87. "Seller Guarantees" as defined in Section 1.2.9.
13.1.88. "Sellers" as defined in the first paragraph.
13.1.89. Specified Rate" means with respect to any day, (a)
the offered rate for deposits in
United States Dollars (rounded upwards, if necessary, to the
nearest 1/16 of 1%), for delivery of such
deposits on such day, for an interest period of one month,
which appears on the Reuters Screen LIBO Page
as of 4:00 p.m. Eastern time on such day, plus (b) 30 basis
points. If at least two rates appear on the
Reuters Screen LIBO Page, the rate used in clause (a)
above shall be the arithmetic mean of such rates
(rounded as provided above).
13.1.90. "Subsidiaries" as defined in Section 1.1.
13.1.91. "Tax" or "Taxes" means all income, profits,
franchise, gross receipts, capital,
sales, use, withholding, value added, ad valorem, transfer,
employment, social security, disability,
occupation, property, severance, production, excise and
other taxes, duties and similar governmental
charges and assessments imposed by or on behalf of any
Governmental Authority (including interest and
penalties thereon).
13.1.92. "Tax Package" as defined in Section 10.2.
13.1.93. "Third Party Claim" as defined in Section 12.4.2.
13.1.94. "12/31 Net Equity Statement" means the unaudited
combined Statement of Net
Equity for the Pump Group as of December 31, 1996,
together with the accompanying notes, included in
the Financial Statements.
13.2. Certain Interpretive Matters and Limitations.
13.2.1. Each of the parties hereto is a sophisticated legal
entity that was represented by
experienced counsel and, to the extent it deemed
necessary, other advisors in connection with the
Agreement. Accordingly, each of the parties hereto
expressly acknowledges that (a) no party has relied or
will rely in respect of this Agreement or the transactions
contemplated hereby upon any document or
written or oral information previously furnished to or
discovered by it or its representatives, other than this
Agreement (including the Schedules hereto) or such of the
foregoing as are delivered at the Closing, and (b)
there are no representations or warranties by or on behalf of
either Sellers or Buyer or any of their
respective Affiliates or representatives other than those
expressly set forth in this Agreement.
13.2.2. Any item disclosed in one Section or Schedule shall
be deemed to be disclosed in
any other Section or Schedule where such disclosure is
relevant, even if there is no express cross-reference,
provided that the relevance of the disclosure is reasonably
apparent. Disclosure of items that may or may
be required to be disclosed by this Agreement does not
mean that such items are material or create a
standard of materiality and shall not be deemed an
admission that any such disclosed matter is or may give
rise to a violation of any law, ordinance or regulation.
13.2.3. All references in this Agreement to "Sellers'
Knowledge" or phrases such as "to
the knowledge of Sellers" or "known to Sellers" and any
similar phrases shall mean that no person named
in Schedule 13.2 has any actual knowledge that such
representation and warranty is not true and correct to
the same extent as provided therein and that:
(a) such person has made reasonable
inquiry and investigation of the officers and
business records of Sellers to the extent considered
appropriate by such person.
(b) nothing has come to the attention of
such person in the course of such
investigation and review or otherwise which would
reasonably cause Sellers to believe that such
representation and warranty is not true and correct.
13.2.4. Unless the context otherwise requires, (a) all
references to Sections or Schedules
are to Sections or Schedules of or to this Agreement, (b) the
term "or" is disjunctive, not necessarily
exclusive, (c) words in the singular include the plural and
vice versa, (c) the term "person shall mean and
include any individual, corporation, partnership, association,
trust or other entity and shall include any
successor (by merger or otherwise) of such entity, (d) all
references to "business days" shall be to any day
other than a weekend or day which is a United States
federal holiday or a holiday in New York,
Connecticut or Minnesota, and (e) all references to "$" or
dollar amounts shall be to lawful currency of the
United States.
13.2.5. No provision of this Agreement shall be interpreted
in favor of, or against, either
Sellers or Buyer by reason of the extent to which either
Sellers or Buyer or their counsel participated in the
drafting thereof or by reason of the extent to which any such
provision is inconsistent with any prior draft
hereof or thereof.
14. MISCELLANEOUS
14.1. Assignability and Binding Effect. Neither this
Agreement nor any party's rights hereunder
shall be assignable by any party hereto without the prior
written consent of all other parties hereto;
provided that Buyer may assign this Agreement to a wholly
owned subsidiary; provided, however, that any
such assignment shall not relieve Buyer of any of its
obligations under this Agreement. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and
assigns.
14.2. Modification and Waivers. This Agreement may only
be amended or modified in a
writing, signed by Buyer and Sellers. Buyer and GSC, on
behalf of Sellers, may extend the time for or
waive the performance of any of the obligations of the others
or waive compliance by the others with any of
the covenants or conditions contained in this Agreement.
14.3. Notices. Any notice, request, instruction or other
documents to be given hereunder by any
party to another shall be in writing and delivered personally
or sent by telecopy or registered mail, postage
prepaid (return receipt requested):
If to Sellers, addressed to:
c/o General Signal Corporation
High Ridge Park
Stamford, Connecticut 06904
Attention: Terence D. Martin
Executive Vice President and
Chief Financial Officer
Fax: 203-329-4314
copy to: Joanne L. Bober, Senior Vice
President and General Counsel
General Signal Corporation
High Ridge Park
Stamford, Connecticut 06904
Fax: 203-329-4396
If to Buyer, addressed to:
Pentair, Inc.
Water's Edge Plaza
1500 County Road B2 West
Roseville, MN 55113-310
Attention: : Richard J. Cathcart
Executive Vice President
Fax: (612) 639-5209
Copy to: Louis L. Ainsworth, Senior Vice
President and General Counsel
Water's Edge Plaza
1500 County Road B2 West
Roseville, MN 55113-310
Fax: (612) 639-5203
or at such other address or addresses as may hereafter by
furnished by Buyer or GSC. Any notice given by
mail shall be effective when received. Any notice given by
telecopy shall be effective when the appropriate
answerback is received.
14.4. Section and Other Headings. The section and other
headings contained in this Agreement
are for reference purposes only and shall not in any way
affect the meaning or interpretation of this
Agreement.
14.5. Governing Law and Consent to Jurisdiction. This
Agreement shall be governed by the
laws of the State of New York applicable to contracts
entered into and to be performed therein. In the
event of a dispute or enforcement action hereunder the
parties hereto agree to submit to the venue and
jurisdiction of the New York federal and/or state courts,
which courts shall have exclusive jurisdiction over
any dispute or enforcement action arising hereunder.
14.6. Bulk Sales. Buyer waives compliance by Sellers with
the provisions of the bulk sales law
of any state.
14.7. Public Announcements. GSC and Buyer shall agree
on the terms of any press releases to
be issued upon the execution of this Agreement and shall
consult each other before issuing any other press
releases with respect to this Agreement and the transactions
contemplated hereby, including any termination
of this Agreement for any reason.
14.8. Expenses. Except as otherwise expressly provided
for herein or in any agreement entered
into on or after the date hereof, Buyer and Sellers shall each
pay their own fees and expenses incident to the
negotiation, preparation and execution of this Agreement,
including, without limitation, all of their
respective attorneys' and accounting fees. Buyer shall be
responsible for any sales or transfer taxes
payable in connection with the transactions contemplated by
this Agreement.
14.9. Parties in Interest; No Third Party Beneficiaries.
Nothing in this Agreement shall create
any third-party beneficiary rights in any person.
14.10. Return of Information. If for any reason the Closing
does not occur, Buyer shall promptly
return to GSC all books, records and documents of Sellers,
either Subsidiary or the Pump Group (including
all copies, if any, thereof) furnished by Sellers, the
Subsidiaries or any of their respective agents, employees
or representatives and shall not use or disclose the
information contained in such books, records or
documents for any purpose or make such information
available to any other person.
14.11. Counterparts. This Agreement may be executed in
counterparts, each of which when so
executed shall be deemed to be an original, and such
counterparts shall together constitute but one and the
same instrument.
14.12. Arbitration of Disputes.
14.12.1. Except as otherwise provided in Article 3 hereof,
any dispute arising out of or
in connection with this Agreement, including any question
regarding its existence, validity, interpretation or
termination, that cannot be resolved amicably by the parties
shall be referred to and finally resolved by
binding arbitration, under the auspices and the then
applicable Commercial Arbitration Rules of the
American Arbitration Association as herein modified or
supplemented or otherwise agreed to by the parties
hereto. At any time by express written agreement, the
parties may modify, limit the application of, add to,
or avoid the operation of one or more rules of such
association. The arbitrator or arbitrators shall be
selected in accordance with such rules. The number of
arbitrators when the amount in dispute is $500,000
or less shall be one, and the number of arbitrators when the
amount in dispute is more than $500,000 shall
be three. The location of the arbitration proceedings shall
be Chicago, Illinois. The American Arbitration
Association shall arrange for a prehearing conference as
soon as practicable after the appointment of the
arbitrators. At the prehearing conference, the arbitrators
shall set a hearing date, which shall commence
not later than 60 days after the prehearing conference.
14.12.2. The parties agree that the arbitrators may call
and question any witness,
including any expert witness, and may require a party to
produce any relevant documents or evidence prior
to or at any hearing. The parties and the arbitrators shall
proceed expeditiously so that the arbitral award
is issued as soon as practicable. The arbitrators shall be
empowered to grant injunctive relief in the form of
interim orders pending the outcome of the arbitration and in
the final arbitral award. The costs, expenses,
and fees of a party incurred in connection with any
arbitration proceeding shall be borne by that party.
Costs, expenses and fees of the arbitration panel shall be
borne equally by Buyer and Sellers, unless the
final arbitral award otherwise provides.
14.12.3. The arbitral award will be the exclusive remedy
for all claims, counterclaims,
issues, or accountings presented or pled to the arbitrators.
Any award may, in the discretion of the
arbitrators, include interest from the date of the breach or
other violation of the Agreement until the award
is fully paid. The parties hereto irrevocably submit to the
jurisdiction of the courts of, and United States
federal courts sitting in, the State of New York, for
enforcement of the arbitral award. Any additional
costs, fees or expenses incurred in enforcing the arbitral
award will be charged against the party that resists
enforcement.
14.13. Entire Agreement. This Agreement (including the
Schedules hereto) embodies the entire
agreement among the parties and supersedes without
limitation all prior agreements, representations or
warranties, whether written or oral, among Buyer and Sellers
and there have been and there are no
agreements, representations or warranties among the
parties other than those set forth herein; except for the
Confidentiality Agreement which shall remain in full force
and effect for the term provided for therei
IN WITNESS WHEREOF, the parties hereto have
executed this Agreement as of the date first
above written.
GENERAL SIGNAL CORPORATION
By:
Title:
GENERAL SIGNAL LIMITED
By:
Title:
AURORA/HYDROMATIC PUMPS INC.
By:
Title:
FAIRBANKS MORSE PUMP CORPORATION
By:
Title:
PENTAIR, INC.
By:
Title:
