<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 2, 1997
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(D)(1)
OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
---------------------
IMO INDUSTRIES INC.
(Name of Subject Company)
---------------------
UD DELAWARE CORP.
AND
UNITED DOMINION INDUSTRIES LIMITED
(Bidder)
---------------------
COMMON STOCK, $1.00 PAR VALUE
(Title of Class of Securities)
---------------------
452540107
(CUSIP Number of Class of Securities)
---------------------
RICHARD L. MAGEE, ESQ.
SECRETARY
UD DELAWARE CORP.
UNITED DOMINION INDUSTRIES LIMITED
2300 ONE FIRST UNION CENTER
301 SOUTH COLLEGE STREET
CHARLOTTE, NORTH CAROLINA 28202-6039
TELEPHONE: (704) 347-6800
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of Bidder)
COPY TO:
STEPHEN M. LYNCH, ESQ.
ROBINSON, BRADSHAW & HINSON, P.A.
1900 INDEPENDENCE CENTER
101 NORTH TRYON STREET
CHARLOTTE, NORTH CAROLINA 28246
TELEPHONE: (704) 377-2536
---------------------
CALCULATION OF FILING FEE
<TABLE>
<S> <C>
TRANSACTION VALUATION AMOUNT OF FILING FEE
$113,427,186* $22,686
</TABLE>
[ ] CHECK BOX IF ANY PART OF THE FEE IS OFFSET AS PROVIDED BY RULE 0-11(A)(2)
AND IDENTIFY THE FILING WITH WHICH THE OFFSETTING FEE WAS PREVIOUSLY PAID.
IDENTIFY THE PREVIOUS FILING BY REGISTRATION STATEMENT NUMBER, OR THE FORM
OR SCHEDULE AND THE DATE OF ITS FILING.
Amount Previously Paid:
---------------------------------------------------------------------------
Form or Registration No.:
---------------------------------------------------------------------------
Filing Party:
--------------------------------------------
Date Filed:
--------------------------------------------
================================================================================
*NOTE: THE TRANSACTION VALUE IS CALCULATED BY MULTIPLYING $6.00, THE PER SHARE
TENDER OFFER PRICE, BY 18,904,531, THE SUM OF 17,126,609, THE NUMBER OF
OUTSTANDING SHARES OF COMMON STOCK; AND 1,777,922 THE NUMBER OF SHARES OF
COMMON STOCK SUBJECT TO OUTSTANDING OPTIONS EXERCISABLE WITHIN 60 DAYS OF
THE DATE HEREOF.
<PAGE> 2
<TABLE>
<S> <C> <C>
- ------------------------------------
CUSIP No. 452540107 SCHEDULE 14D-1 and SCHEDULE 13D
- ------------------------------------
- ------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
UD Delaware Corp.
- ------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) []
(b) []
- ------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------
4 SOURCE OF FUNDS
BK, WC
- ------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(e) or 2(f) []
- ------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
0
- ------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES []
- ------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
- ------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- ------------------------------------------------------------------
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
- ------------------------------------
CUSIP No. 452540107 SCHEDULE 14D-1 and SCHEDULE 13D
- ------------------------------------
- ------------------------------------------------------------------
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
United Dominion Industries Limited
- ------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) []
(b) []
- ------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------
4 SOURCE OF FUNDS
BK, WC
- ------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEM 2(e) or 2(f) []
- ------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Canada
- ------------------------------------------------------------------
7 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH
REPORTING PERSON
0
- ------------------------------------------------------------------
8 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7)
EXCLUDES CERTAIN SHARES []
- ------------------------------------------------------------------
9 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7)
0.0%
- ------------------------------------------------------------------
10 TYPE OF REPORTING PERSON
CO
- ------------------------------------------------------------------
</TABLE>
<PAGE> 4
This Tender Offer Statement on Schedule 14D-1 (this "Statement") relates to
the offer by UD Delaware Corp., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of United Dominion Industries Limited, a
corporation organized under the laws of Canada ("Parent"), to purchase all
outstanding shares of Common Stock, par value $1.00 per share (the "Common
Stock"), of Imo Industries Inc., a Delaware corporation (the "Company"), and
each associated right to purchase shares of the Company's Series B Junior
Participating Preferred Stock (individually, the "Right" and collectively, the
"Rights") issued pursuant to the Rights Agreement, dated as of April 30, 1997,
between the Company and First Chicago Trust Company of New York (such shares of
Common Stock and the Rights collectively referred to as the "Shares"), at a
price of $6.00 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in Purchaser's Offer to
Purchase dated July 2, 1997 (the "Offer to Purchase") and in the related Letter
of Transmittal (which, as amended from time to time, together constitute the
"Offer"), copies of which are attached hereto as Exhibits (a)(1) and (a)(2),
respectively.
This Statement also constitutes a statement on Schedule 13D with respect to
the acquisition by Purchaser and Parent of beneficial ownership of the Shares.
The item numbers and responses thereto below are in accordance with the
requirements of Schedule 14D-1.
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Imo Industries Inc., a Delaware
corporation, which has its principal executive offices at 1009 Lenox Drive,
Building Four West, Lawrenceville, New Jersey 08648.
(b) The equity securities being sought are all the outstanding shares of
Common Stock, par value $1.00 per share, and each associated right to purchase
shares of the Company's Series B Junior Participating Preferred Stock issued
pursuant to the Rights Agreement, of the Company. The information set forth in
the Introduction and Section 1 ("Terms of the Offer; Expiration Date") of the
Offer to Purchase is incorporated herein by reference.
(c) The information concerning the principal market in which the Shares are
traded and certain high and low sales prices for the Shares in such principal
market set forth in Section 6 ("Price Range of Shares; Dividends") of the Offer
to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is filed by Purchaser and Parent. The
information concerning the name, state or other place of organization, principal
business and address of the principal office of each of Purchaser and Parent,
and the information concerning the name, residence or business address, present
principal occupation or employment and the name, principal business and address
of any corporation or other organization in which such employment or occupation
is conducted, material occupations, positions, offices or employments during the
last five years and citizenship of each of the executive officers and directors
of Purchaser and Parent are set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent") and Schedule I of the Offer to
Purchase and are incorporated herein by reference.
(e) and (f) During the last five years, none of Purchaser or Parent, and,
to the best knowledge of Purchaser and Parent, none of the persons listed in
Schedule I of the Offer to Purchase has been (i) convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
4
<PAGE> 5
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") and Section 10 ("Background of the Offer; Contacts with
the Company; the Merger Agreement") of the Offer to Purchase is incorporated
herein by reference.
(b) The information set forth in the Introduction, Section 7 ("Certain
Information Concerning the Company"), Section 8 ("Certain Information Concerning
Purchaser and Parent"), Section 10 ("Background of the Offer; Contacts with the
Company; the Merger Agreement") and Section 11 ("Purpose of the Offer; Plans for
the Company After the Offer and the Merger") of the Offer to Purchase is
incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(c) The information set forth in Section 9 ("Financing of the Offer and
the Merger") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a)-(e) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company; the Merger Agreement") and
Section 11 ("Purpose of the Offer; Plans for the Company After the Offer and the
Merger") of the Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 13 ("Effect of the Offer
on the Market for Shares, NYSE Listing and Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 8 ("Certain Information
Concerning Purchaser and Parent") of the Offer to Purchase is incorporated
herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 8 ("Certain
Information Concerning Purchaser and Parent"), Section 10 ("Background of the
Offer; Contacts with the Company; the Merger Agreement") and Section 11
("Purpose of the Offer; Plans for the Company After the Offer and the Merger")
of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 16 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 ("Certain Information Concerning
Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 10 ("Background of the Offer;
Contacts with the Company; the Merger Agreement") of the Offer to Purchase is
incorporated herein by reference.
(b)-(c) and (e) The information set forth in Section 15 ("Certain Legal
Matters and Regulatory Approvals") of the Offer to Purchase is incorporated
herein by reference.
5
<PAGE> 6
(d) The information set forth in Section 13 ("Effect of the Offer on the
Market for the Shares, NYSE Listing and Exchange Act Registration") of the Offer
to Purchase is incorporated herein by reference.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal and the Agreement and Plan of Merger, dated as of June 26, 1997,
among Parent, Purchaser and the Company, copies of which are attached hereto as
Exhibits (a)(1), (a)(2) and (c)(1), respectively, is incorporated herein by
reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S><C> <C>
(a)(1) Form of Offer to Purchase dated July 2, 1997.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter from Goldman, Sachs & Co. and Union Bancaire
Privee International, Inc. to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees to Clients.
(a)(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
(a)(7) Summary Advertisement as published in The Wall Street
Journal on July 2, 1997.
(a)(8) Press release issued by Parent on June 26, 1997.
(a)(9) Press release issued by the Company on June 26, 1997.
(a)(10) Form of Letter of Transmittal for Imo Industries Inc.
Employees Stock Savings Plan.
(b)(1) Commitment letter dated June 24, 1997 from Royal Bank of
Canada in favor of Parent and United Dominion Industries,
Inc.
(c)(1) Agreement and Plan of Merger dated as of June 26, 1997 among
Parent, Purchaser and the Company.
(c)(2) Confidentiality Agreement dated April 25, 1997 between the
Company and Parent.
(c)(3) Letter agreement dated June 16, 1997 between the Company and
Parent regarding exclusive time period for examination of
the Company by Parent.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
6
<PAGE> 7
After due inquiry and to the best of our knowledge and belief, we certify
that the information set forth in this statement is true, complete and correct.
UD DELAWARE CORP.
By: /s/ RICHARD A. BEARSE
------------------------------------
Name: Richard A. Bearse
Title: Senior Vice President
By: /s/ RICHARD L. MAGEE
------------------------------------
Name: Richard L. Magee
Title: Secretary
July 2, 1997
7
<PAGE> 8
After due inquiry and to the best of our knowledge and belief, we certify
that the information set forth in this statement is true, complete and correct.
UNITED DOMINION INDUSTRIES LIMITED
By: /s/ RICHARD A. BEARSE
------------------------------------
Name: Richard A. Bearse
Title: Senior Vice President
By: /s/ RICHARD L. MAGEE
------------------------------------
Name: Richard L. Magee
Title: Vice President, Law
July 2, 1997
8
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO.
- -------
<S><C> <C>
(a)(1) Form of Offer to Purchase dated July 2, 1997................
(a)(2) Form of Letter of Transmittal...............................
(a)(3) Form of Notice of Guaranteed Delivery.......................
(a)(4) Form of Letter from Goldman, Sachs & Co. and Union Bancaire
Privee International, Inc. to Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.........................
(a)(5) Form of Letter from Brokers, Dealers, Commercial Banks,
Trust Companies and Nominees to Clients.....................
(a)(6) Form of Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9................
(a)(7) Summary Advertisement as published in The Wall Street
Journal on July 2, 1997.....................................
(a)(8) Press release issued by Parent on June 26, 1997.............
(a)(9) Press release issued by the Company on June 26, 1997........
(a)(10) Form of Letter of Transmittal for Imo Industries Inc.
Employees Stock Savings Plan................................
(b)(1) Commitment letter dated June 24, 1997, from Royal Bank of
Canada in favor of Parent and United Dominion Industrie,
Inc.........................................................
(c)(1) Agreement and Plan of Merger dated as of June 26, 1997 among
Parent, Purchaser and the Company...........................
(c)(2) Confidentiality Agreement dated April 25, 1997 between the
Company and Parent..........................................
(c)(3) Letter agreement dated June 16, 1997 between the Company and
Parent regarding exclusive time period for examination of
the Company by Parent.......................................
</TABLE>
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND ASSOCIATED RIGHTS
OF
IMO INDUSTRIES INC.
AT
$6.00 NET PER SHARE
BY
UD DELAWARE CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED. THE OFFER
IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY TENDERED AND
NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER MORE THAN EIGHTY PERCENT
(80%) OF THE THEN OUTSTANDING SHARES, (II) THE RECEIPT OF CONSENTS FROM THE
HOLDERS OF A MAJORITY OF THE THEN OUTSTANDING PRINCIPAL AMOUNT OF THE 11 3/4%
SENIOR SUBORDINATED NOTES DUE MAY 1, 2006 OF THE COMPANY (THE "NOTES") TO AMEND
CERTAIN PROVISIONS OF THE INDENTURE GOVERNING THE NOTES SO THAT SUCH PROVISIONS
ARE NOT APPLICABLE TO THE MERGER OR FOLLOWING CONSUMMATION OF THE MERGER OR SUCH
OFFER FOR THE NOTES, AND (III) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE
ANTITRUST WAITING PERIODS.
The Board of Directors of Imo Industries Inc. (the "Company") has
unanimously determined that each of the Offer and the Merger is fair to and in
the best interests of the Company and its stockholders, and recommends that
stockholders accept the Offer and tender their shares pursuant to the Offer.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, par value $1.00 per share (the "Common Stock"), of the
Company, and associated rights to purchase shares of the Company's Series B
Junior Participating Preferred Stock (individually, a "Right" and collectively,
the "Rights") issued pursuant to the Rights Agreement, dated as of April 30,
1997, as amended, between the Company and First Chicago Trust Company of New
York (such shares of Common Stock and the Rights collectively referred to as the
"Shares"), should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it together with the certificate(s) evidencing
tendered Shares, and any other required documents, to the Depositary or tender
such Shares pursuant to the procedure for book-entry transfer set forth in
Section 3 or (2) request such stockholder's broker, dealer, commercial bank,
trust company or other nominee to effect the transaction for such stockholder.
Any stockholder whose Shares are registered in the name of a broker, dealer,
commercial bank, trust company or other nominee must contact such broker,
dealer, commercial bank, trust company or other nominee if such stockholder
desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedure for book-entry transfer on a timely basis, may tender such Shares
by following the procedure for guaranteed delivery set forth in Section 3.
Questions or requests for assistance may be directed to the Information
Agent or to the Dealer Managers at their respective addresses and telephone
numbers set forth on the back cover of this Offer to Purchase. Additional copies
of this Offer to Purchase, the Letter of Transmittal and the Notice of
Guaranteed Delivery may also be obtained from the Information Agent or from
brokers, dealers, commercial banks or trust companies.
THE DEALER MANAGERS FOR THE OFFER ARE:
GOLDMAN, SACHS & CO. UNION BANCAIRE PRIVEE
INTERNATIONAL, INC.
July 2, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
INTRODUCTION................................................ 1
1. Terms of the Offer; Expiration Date......................... 3
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedures for Tendering Shares............................. 5
4. Withdrawal Rights........................................... 7
5. Certain Federal Income Tax Consequences..................... 8
6. Price Range of Shares; Dividends............................ 9
7. Certain Information Concerning the Company.................. 9
8. Certain Information Concerning Purchaser and Parent......... 13
9. Financing of the Offer and the Merger....................... 16
10. Background of the Offer; Contacts with the Company; the
Merger Agreement............................................ 18
11. Purpose of the Offer; Plans for the Company After the Offer
and the Merger.............................................. 30
12. Dividends and Distributions................................. 31
13. Effect of the Offer on the Market for the Shares, NYSE
Listing and Exchange Act Registration....................... 32
14. Certain Conditions of the Offer and the Note Tender Offer... 33
15. Certain Legal Matters and Regulatory Approvals.............. 37
16. Fees and Expenses........................................... 40
17. Miscellaneous............................................... 40
Schedule I. Directors and Executive Officers of Parent and
Purchaser
</TABLE>
i
<PAGE> 3
To the Holders of Common Stock of
IMO INDUSTRIES INC.:
INTRODUCTION
UD Delaware Corp., a Delaware corporation ("Purchaser") and an indirect
wholly owned subsidiary of United Dominion Industries Limited, a corporation
organized under the laws of Canada ("Parent"), hereby offers to purchase all
outstanding shares of Common Stock, par value $1.00 per share (the "Common
Stock"), of Imo Industries Inc., a Delaware corporation (the "Company"), and
each associated right to purchase shares of the Company's Series B Junior
Participating Preferred Stock (individually, a "Right" and collectively, the
"Rights") issued pursuant to the Rights Agreement dated as of April 30, 1997, as
amended, between the Company and First Chicago Trust Company of New York (the
"Rights Agreement") (such shares of Common Stock and the Rights collectively
referred to as the "Shares"), at a price of $6.00 per Share, net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in this Offer to Purchase and in the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 6 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. Purchaser will pay all charges and expenses of
Goldman, Sachs & Co. ("Goldman Sachs") and Union Bancaire Privee International,
Inc. ("Union Bancaire"), who are acting as Dealer Managers for the Offer (in
such capacities, collectively, the "Dealer Managers"), First Chicago Trust
Company of New York (the "Depositary") and MacKenzie Partners, Inc. (the
"Information Agent") incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT EACH OF THE OFFER AND THE MERGER (AS DEFINED BELOW) IS FAIR TO
AND IN THE BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, AND RECOMMENDS
THAT STOCKHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
Credit Suisse First Boston Corporation ("Credit Suisse First Boston"), the
Company's financial advisor, has delivered to the Company's Board of Directors
its written opinion that, as of the date of such opinion, the consideration to
be received by the holders of Shares pursuant to each of the Offer and the
Merger is fair to such holders of Shares from a financial point of view. A copy
of the opinion of Credit Suisse First Boston is contained in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is being mailed to stockholders herewith.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THE
NUMBER OF SHARES THAT SHALL CONSTITUTE MORE THAN EIGHTY PERCENT (80%) OF THE
SHARES THEN OUTSTANDING (THE "MINIMUM CONDITION"), (II) THE RECEIPT OF CONSENTS
FROM THE HOLDERS OF A MAJORITY OF THE THEN OUTSTANDING PRINCIPAL AMOUNT OF THE
11 3/4% SENIOR SUBORDINATED NOTES DUE MAY 1, 2006 OF THE COMPANY (THE "NOTES")
TO AMEND CERTAIN PROVISIONS OF THE INDENTURE GOVERNING THE NOTES SO THAT SUCH
PROVISIONS ARE NOT APPLICABLE TO THE MERGER OR FOLLOWING CONSUMMATION OF THE
MERGER OR SUCH OFFER FOR THE NOTES, AND (III) THE EXPIRATION OR TERMINATION OF
ANY APPLICABLE ANTITRUST WAITING PERIODS. SEE SECTION 14, WHICH SETS FORTH IN
FULL THE CONDITIONS TO THE OFFER.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 26, 1997 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance
<PAGE> 4
with the relevant provisions of the General Corporation Law of the State of
Delaware ("Delaware Law"), Purchaser will be merged with and into the Company
(the "Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation (the "Surviving Corporation") as an indirect wholly
owned subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each Share (including the associated Right) issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Purchaser,
Parent, the Company or any wholly owned subsidiary of Parent or of the Company
and any Shares that are held by stockholders who have properly exercised their
rights for appraisal of such Shares in accordance with Delaware Law) will be
cancelled and converted automatically into the right to receive $6.00 in cash,
or any higher price that may be paid per Share in the Offer, without interest
(the "Merger Consideration"). The Merger Agreement is more fully described in
Section 10.
The Merger Agreement provides that, promptly upon the purchase by Purchaser
of Shares pursuant to the Offer and from time to time thereafter, Purchaser
shall be entitled to designate up to such number of directors, rounded up to the
next whole number, on the Board as will give Purchaser representation on the
Board equal to the product of the number of the total directors on the Board
(giving effect to the directors to be elected as described in this sentence)
multiplied by the percentage that the aggregate number of Shares then
beneficially owned by Purchaser and its affiliates following such purchase bears
to the total number of Shares then outstanding. In the Merger Agreement, the
Company has agreed to take all actions necessary to cause Purchaser's designees
to be elected as directors of the Company, including increasing the size of the
Board or securing the resignations of incumbent directors or both.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including, if required by Delaware Law, the approval and
adoption of the Merger Agreement by the requisite vote of the stockholders of
the Company. See Section 10. Under the Company's Certificate of Incorporation
and Delaware Law, the affirmative vote of the holders of a majority of the
outstanding Shares entitled to vote thereon is required to approve and adopt the
Merger Agreement and the Merger, provided, that if Purchaser purchases 90
percent of the Shares then outstanding, such affirmative vote of the holders of
the Shares is not required.
The Company has advised Purchaser that as of June 26, 1997, 17,126,609
Shares were issued and outstanding and that (i) no Shares were held by the
subsidiaries of the Company and (ii) 2,882,657 Shares were reserved for future
issuance to present or former employees or directors pursuant to employee and
director stock options granted pursuant to the Company's stock option plans. As
a result, as of the date of this Offer to Purchase, the Minimum Condition would
be satisfied if Purchaser acquired pursuant to the Offer 16,007,413 Shares
(assuming that all Shares reserved for issuance pursuant to the Company's stock
option plans are outstanding at the Expiration Date).
The Merger Agreement also provides that, as promptly as reasonably
practicable after the date of the Merger Agreement, but in no event later than
five business days after the first public announcement of the execution thereof,
and upon the terms and subject to the conditions of the Merger Agreement, Parent
or its designee shall make a cash tender offer (the "Note Offer to Purchase")
for any or all of the Notes. In connection with such Note Offer to Purchase,
Parent or its designee intends to solicit consents ("Consents") from the holders
of the Notes to amend certain provisions of the Indenture, dated as of April 15,
1996 (the "Indenture"), between the Company and IBJ Schroder Bank & Trust
Company, as trustee (the "Consent Solicitation" and together with the Note Offer
to Purchase, the "Note Tender Offer") so that such provisions are not applicable
to the Merger or following the consummation of the Note Tender Offer or the
Merger. The Note Tender Offer will be made at a price of 120% of the principal
amount of the Notes and is subject to the condition that Parent receive Consents
from the holders of a majority of the outstanding principal amount of the Notes
and to other conditions. See Section 14.
2
<PAGE> 5
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER; EXPIRATION DATE. Upon the terms and subject to the
conditions of the Offer (including, if the Offer is extended or amended, the
terms and conditions of such extension or amendment), Purchaser will accept for
payment and pay for all Shares validly tendered prior to the Expiration Date (as
hereinafter defined) and not withdrawn as permitted by Section 4. The term
"Expiration Date" means 12:00 midnight, New York City time, on Wednesday, July
30, 1997, unless and until Purchaser, in its sole discretion (but subject to the
terms and conditions of the Merger Agreement), shall have extended the period
during which the Offer is open, in which event the term "Expiration Date" shall
mean the latest time and date at which the Offer, as so extended by Purchaser,
shall expire.
Subject to the applicable regulations of the Securities and Exchange
Commission (the "Commission"), Purchaser also expressly reserves the right, in
its sole discretion (but subject to the terms and conditions of the Merger
Agreement), at any time and from time to time, (i) to delay acceptance for
payment of, or, regardless of whether such Shares were theretofore accepted for
payment, payment for, any Shares pending receipt of any regulatory approval
specified in Section 15, (ii) to terminate the Offer and not accept for payment
any Shares upon the occurrence of any of the conditions specified in Section 14
and (iii) to waive any condition or otherwise amend the Offer in any respect, by
giving oral or written notice of such delay, termination, waiver or amendment to
the Depositary and by making a public announcement thereof. The Merger Agreement
provides that, without the consent of the Company, Purchaser will not (i)
decrease the price per Share payable pursuant to the Offer, (ii) change the form
of consideration payable pursuant to the Offer, (iii) reduce the maximum number
of Shares sought pursuant to the Offer, (iv) extend the expiration date of the
Offer (except that Purchaser may extend the expiration date of the Offer (a) as
required to comply with any rule, regulation or interpretation of the Commission
or (b) for one or more times each for an aggregate period of up to 15 days (and
not to exceed 60 days from the commencement of the Offer) for any reason other
than those specified in the immediately preceding clause (a)) or (v) impose
conditions to the Offer in addition to those set forth in Section 14. During any
extension, all Shares previously tendered and not withdrawn will remain subject
to the Offer, subject to the rights of a tendering stockholder to withdraw his
or her Shares. See Section 4. Purchaser acknowledges that (i) Rule 14e-1(c)
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires Purchaser to pay the consideration offered or return the Shares
tendered promptly after the termination or withdrawal of the Offer and (ii)
Purchaser may not delay acceptance for payment of, or payment for (except as
provided in clause (i) of the first sentence of this paragraph), any Shares upon
the occurrence of the conditions specified in Section 14 without extending the
period of time during which the Offer is open.
Any such extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, such
announcement in the case of an extension to be made no later than 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date. Subject to applicable law (including Rules 14d-4(c) and
14d-6(d) under the Exchange Act, which require that material changes be promptly
disseminated to stockholders in a manner reasonably designed to inform them of
such changes) and without limiting the manner in which Purchaser may choose to
make any public announcement, Purchaser shall have no obligation to publish,
advertise or otherwise communicate any such public announcement other than by
issuing a press release to the Dow Jones News Service.
If Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer, Purchaser will extend the Offer to the extent
required by Rules 14d-4(c) and 14d-6(d) under the Exchange Act.
Subject to applicable law, if, prior to the Expiration Date, Purchaser
should decide to increase the consideration being offered in the Offer, such
increase in the consideration being offered will be applicable to all
stockholders whose Shares are accepted for payment pursuant to the Offer and,
if, at the
3
<PAGE> 6
time notice of any such increase in the consideration being offered is first
published, sent or given to holders of such Shares, the Offer is scheduled to
expire at any time earlier than the period ending on the tenth business day from
and including the date that such notice is first so published, sent or given,
the Offer will be extended at least until the expiration of such
ten-business-day period.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other related materials will be mailed to record holders of Shares whose names
appear on the Company's stockholder list and will be furnished, for subsequent
transmittal to beneficial owners of Shares, to brokers, dealers, commercial
banks, trust companies and similar persons whose names, or the names of whose
nominees, appear on the stockholder list or, if applicable, who are listed as
participants in a clearing agency's security position listing.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES. Upon the terms and
subject to the conditions of the Offer (including, if the Offer is extended or
amended, the terms and conditions of any such extension or amendment), Purchaser
will accept for payment all Shares validly tendered prior to the Expiration Date
and not withdrawn promptly after the latest to occur of (i) the Expiration Date,
(ii) the expiration or termination of any applicable waiting periods under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and (iii) the satisfaction or waiver of the other conditions to the Offer
set forth in Section 14, and will promptly pay for all Shares accepted for
payment subject to the expiration or termination of any applicable waiting
periods under the HSR Act. Subject to applicable rules of the Commission,
Purchaser expressly reserves the right to delay acceptance for payment of, or
payment for, Shares pending receipt of any regulatory approvals specified in
Section 15 or in order to comply in whole or in part with any other applicable
law.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company or the
Philadelphia Depository Trust Company (each, a "Book-Entry Transfer Facility"
and, collectively, the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in Section 3, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined below) in connection
with a book-entry transfer and (iii) any other documents required under the
Letter of Transmittal.
The term "Agent's Message" means a message, transmitted by a Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares, that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that the
Purchaser may enforce such agreement against such participant.
Parent anticipates filing with the Federal Trade Commission (the "FTC") and
the Antitrust Division of the Department of Justice (the "Antitrust Division"),
on July 7, 1997, a Premerger Notification and Report Form under the HSR Act in
connection with the purchase of Shares pursuant to the Offer. Accordingly, it is
anticipated that the waiting period under the HSR Act applicable to the Offer
will expire at 11:59 p.m., New York City time, on Tuesday, July 22, 1997. Prior
to the expiration or termination of such waiting period, the FTC or the
Antitrust Division may extend such waiting period by requesting additional
information or documentary material from Parent. If such a request is made with
respect to the purchase of Shares in the Offer, the waiting period will expire
at 11:59 p.m., New York City time, on the tenth calendar day after substantial
compliance by Parent with such a request. Thereafter, the waiting period may
only be extended by court order. The waiting period under the HSR Act may be
terminated prior to its expiration by the FTC and the Antitrust Division. Parent
will request early termination of the waiting period, although there can be no
assurance that this request will be granted. Pursuant to the Merger Agreement,
Purchaser may, but need not, extend the Offer until the applicable waiting
period
4
<PAGE> 7
under the HSR Act shall have expired or been terminated. See Section 15 for
additional information regarding the HSR Act.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to the Depositary of Purchaser's
acceptance for payment of such Shares pursuant to the Offer. Upon the terms and
subject to the conditions of the Offer, payment for Shares accepted for payment
pursuant to the Offer will be made by deposit of the purchase price therefor
with the Depositary, which will act as agent for tendering stockholders for the
purpose of receiving payments from Purchaser and transmitting such payments to
tendering stockholders whose Shares have been accepted for payment. Under no
circumstances will interest on the purchase price for Shares be paid, regardless
of any delay in making such payment.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered, Share Certificates evidencing
unpurchased Shares will be returned, without expense to the tendering
stockholder (or, in the case of Shares tendered by book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility pursuant to the procedure
set forth in Section 3, such Shares will be credited to an account maintained at
such Book-Entry Transfer Facility), as promptly as practicable following the
expiration or termination of the Offer.
3. PROCEDURES FOR TENDERING SHARES. In order for a holder of Shares
validly to tender Shares pursuant to the Offer, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase and either (i) the Share
Certificates evidencing tendered Shares must be received by the Depositary at
such address or such Shares must be tendered pursuant to the procedure for
book-entry transfer described below and a Book-Entry Confirmation must be
received by the Depositary, in each case prior to the Expiration Date, or (ii)
the tendering stockholder must comply with the guaranteed delivery procedures
described below.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES AND ALL OTHER REQUIRED
DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER FACILITY, IS AT
THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facilities for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing such Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at such
Book-Entry Transfer Facility in accordance with such Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at a Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other required documents,
must, in any case, be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase prior to the Expiration Date,
or the tendering stockholder must comply with the guaranteed delivery procedure
described below. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm that is a member of the New York Stock Exchange Medallion
Signature Guarantee Program, or by any other "eligible guarantor institution,"
as such term is defined in Rule 17Ad-15 under the Exchange Act (each of
5
<PAGE> 8
the foregoing being referred to as an "Eligible Institution"), except in cases
where Shares are tendered (i) by a registered holder of Shares who has not
completed either the box entitled "Special Payment Instructions" or the box
entitled "Special Delivery Instructions" on the Letter of Transmittal or (ii)
for the account of an Eligible Institution. If a Share Certificate is registered
in the name of a person other than the person who or which signs the Letter of
Transmittal, or if payment is to be made or a Share Certificate not accepted for
payment or not tendered is to be returned to a person other than the registered
holder(s), then the Share Certificate must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear on the Share Certificate, with the signature(s) on
such Share Certificate or stock powers guaranteed by an Eligible Institution.
See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates evidencing such Shares are
not immediately available or such stockholder cannot deliver the Share
Certificates and all other required documents to the Depositary prior to the
Expiration Date, or such stockholder cannot complete the procedure for delivery
by book-entry transfer on a timely basis, such Shares may nevertheless be
tendered, provided that all the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message), and any other documents
required by the Letter of Transmittal are received by the Depositary within
three trading days on the New York Stock Exchange after the date of
execution of such Notice of Guaranteed Delivery.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by facsimile transmission to the Depositary and must include a
guarantee, in the form set forth in the form of Notice of Guaranteed Delivery
made available by Purchaser, by a firm which is a member of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc. or which is a commercial bank or trust company having an office or
correspondent in the United States that is a member in good standing of the
Securities Transfer Agents Medallion Program, the New York Stock Exchange
Medallion Signature Guarantee Program or the Stock Exchange Medallion Program.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Purchaser also reserves the absolute right to waive any
condition of the Offer or any defect or irregularity in the tender of any Shares
of any particular stockholder, whether or not similar defects or irregularities
are waived in the case of other stockholders. No tender of Shares will be deemed
to have been validly made until all defects and irregularities have been cured
or waived. None of Purchaser, Parent, the Dealer Managers, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in
6
<PAGE> 9
tenders or incur any liability for failure to give any such notification.
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Other Requirements. By executing the Letter of Transmittal as set forth
above, a tendering stockholder irrevocably appoints designees of Purchaser as
such stockholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and with respect to any and all other dividends,
distributions, Shares and other securities declared, paid or distributed in
respect of such Shares on or after June 23, 1997). All such proxies shall be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, Purchaser accepts such
Shares for payment. Upon such acceptance for payment, all prior proxies given by
such stockholder with respect to such Shares (and such other dividends,
distributions, Shares and other securities) will be revoked without further
action, and no subsequent proxies may be given nor any subsequent written
consent executed by such stockholder (and, if given or executed, will not be
deemed to be effective) with respect thereto. The designees of Purchaser will,
with respect to the Shares for which the appointment is effective, be empowered
to exercise all voting and other rights of such stockholder as they in their
sole discretion may deem proper at any annual or special meeting of the
Company's stockholders or any adjournment or postponement thereof, by written
consent in lieu of any such meeting or otherwise. Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon Purchaser's payment for such Shares, Purchaser must be able to exercise
full voting rights with respect to such Shares (and such other Shares and
securities).
The acceptance for payment by Purchaser of Shares pursuant to any of the
procedures described above will constitute a binding agreement between the
tendering stockholder and Purchaser upon the terms and subject to the conditions
of the Offer.
UNDER THE FEDERAL INCOME TAX LAWS, THE DEPOSITARY WILL BE REQUIRED TO
WITHHOLD 31 PERCENT OF THE AMOUNT OF ANY PAYMENTS MADE TO CERTAIN STOCKHOLDERS
PURSUANT TO THE OFFER. TO PREVENT SUCH BACKUP FEDERAL INCOME TAX WITHHOLDING
WITH RESPECT TO PAYMENT TO CERTAIN STOCKHOLDERS OF THE PURCHASE PRICE OF SHARES
PURCHASED PURSUANT TO THE OFFER, EACH SUCH STOCKHOLDER MUST PROVIDE THE
DEPOSITARY WITH SUCH STOCKHOLDER'S CORRECT TAXPAYER IDENTIFICATION NUMBER AND
CERTIFY THAT SUCH STOCKHOLDER IS NOT SUBJECT TO BACKUP FEDERAL INCOME TAX
WITHHOLDING BY COMPLETING THE SUBSTITUTE FORM W-9 IN THE LETTER OF TRANSMITTAL.
SEE INSTRUCTION 9 OF THE LETTER OF TRANSMITTAL.
4. WITHDRAWAL RIGHTS. Tenders of Shares made pursuant to the Offer are
irrevocable except that such Shares may be withdrawn by the tendering
stockholder at any time prior to the Expiration Date and, unless theretofore
accepted for payment by Purchaser pursuant to the Offer, may also be withdrawn
by such stockholder at any time after August 30, 1997. If Purchaser extends the
Offer, is delayed in its acceptance for payment of Shares or is unable to accept
Shares for payment pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer, the Depositary may, nevertheless, on
behalf of Purchaser, retain tendered Shares, and such Shares may not be
withdrawn except to the extent that tendering stockholders are entitled to
withdrawal rights as described in this Section 4. Any such delay will be by an
extension of the Offer to the extent required by law.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Depositary at one of its
addresses set forth on the back cover page of this Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder of such Shares, if different from that of the person who
tendered such Shares. If Share Certificates evidencing Shares to be withdrawn
have been delivered or otherwise identified to the Depositary, then, prior to
the physical release of such Share Certificates, the serial numbers shown on
such Share Certificates must be
7
<PAGE> 10
submitted to the Depositary and the signature(s) on the notice of withdrawal
must be guaranteed by an Eligible Institution, unless such Shares have been
tendered for the account of an Eligible Institution. If Shares have been
tendered pursuant to the procedure for book-entry transfer as set forth in
Section 3, any notice of withdrawal must also specify the name and number of the
account of the Book-Entry Transfer Facility to be credited with the withdrawn
Shares, in which case a notice of withdrawal will be effective if delivered to
the Depositary by any method of delivery described in the first sentence of this
paragraph. Withdrawals of Shares may not be rescinded. Any Shares properly
withdrawn will thereafter be deemed not to have been validly tendered for
purposes of the Offer. However, withdrawn Shares may be re-tendered at any time
prior to the Expiration Date by following one of the procedures described in
Section 3.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
Parent, the Dealer Managers, the Depositary, the Information Agent or any other
person will be under any duty to give notification of any defects or
irregularities in any notice of withdrawal or incur any liability for failure to
give any such notification.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES. The receipt of cash for Shares
pursuant to the Offer or in the Merger (or pursuant to the exercise of
dissenter's rights) will be a taxable transaction for federal income tax
purposes and may also be a taxable transaction under applicable state, local or
foreign tax laws. In general, a stockholder will recognize gain or loss for
federal income tax purposes equal to the difference between the amount of cash
received in exchange for the Shares sold and such stockholder's adjusted tax
basis in such Shares. Gain or loss will be calculated separately for each
identifiable block of Shares sold. For federal income tax purposes, such gain or
loss will be capital gain or loss if the Shares are capital assets in the hands
of such stockholder, and will be long-term capital gain or loss if such Shares
have been held for more than one year. A stockholder's ability to deduct capital
losses may be limited.
Withholding. Unless a stockholder complies with certain reporting and/or
certification procedures or is an exempt recipient under applicable provisions
of the Internal Revenue Code of 1986, as amended, and Treasury Regulations
promulgated thereunder, such stockholder may be subject to backup withholding at
a rate of 31% with respect to any consideration received pursuant to the Offer
and the Merger. See Section 3. Stockholders should consult their brokers to
ensure compliance with such procedures. Foreign stockholders should consult with
their own tax advisors regarding withholding taxes.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE TO CERTAIN TYPES OF
STOCKHOLDERS, INCLUDING FINANCIAL INSTITUTIONS, BROKER-DEALERS, STOCKHOLDERS WHO
ACQUIRED SHARES PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE
AS COMPENSATION, INDIVIDUALS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED
STATES AND FOREIGN CORPORATIONS.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY AND IS BASED UPON PRESENT LAW. STOCKHOLDERS ARE URGED TO
CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE SPECIFIC TAX CONSEQUENCES OF THE
OFFER AND THE MERGER TO THEM, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL AND FOREIGN TAX LAWS.
8
<PAGE> 11
6. PRICE RANGE OF SHARES; DIVIDENDS. The Shares are listed and principally
traded on the New York Stock Exchange. The following table sets forth, for the
fiscal quarters indicated, the high and low sales prices per Share on the New
York Stock Exchange as reported by the Dow Jones News Service since January 1,
1995 and the cash dividends per share declared during such periods.
<TABLE>
<CAPTION>
QUARTERLY
CASH
HIGH LOW DIVIDENDS
---- --- ---------
<S> <C> <C> <C>
Fiscal 1995:
First Quarter............................................. $11 1/2 $ 6 1/4 --
Second Quarter............................................ 9 1/8 6 1/2 --
Third Quarter............................................. 9 7/8 8 1/4 --
Fourth Quarter............................................ 9 5 3/4 --
Fiscal 1996:
First Quarter............................................. 7 5/8 5 3/4 --
Second Quarter............................................ 8 1/8 5 3/8 --
Third Quarter............................................. 5 7/8 4 7/8 --
Fourth Quarter............................................ 5 1/2 2 3/4 --
Fiscal 1997:
First Quarter............................................. 3 7/8 3 1/8 --
Second Quarter............................................ 5 7/8 2 1/4 --
</TABLE>
On June 25, 1997, the last full trading day prior to the announcement of
the execution of the Merger Agreement and of Purchaser's intention to commence
the Offer, the closing price per Share as reported on the New York Stock
Exchange was $3 1/4. On June 30, 1997, the closing price per Share as reported
on the New York Stock Exchange was $5 7/8.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY. Except as otherwise set
forth herein, the information concerning the Company contained in this Offer to
Purchase, including financial information, has been furnished by the Company or
has been taken from or based upon publicly available documents and records on
file with the Commission and other public sources. Neither Purchaser, Parent nor
the Dealer Managers assume any responsibility for the accuracy or completeness
of the information concerning the Company furnished by the Company or contained
in such documents and records or for any failure by the Company to disclose
events that may have occurred or may affect the significance or accuracy of any
such information but that are unknown to Purchaser or Parent or the Dealer
Managers.
General. The Company is a Delaware corporation with its principal
executive offices located at 1009 Lenox Drive, Building Four West,
Lawrenceville, New Jersey 08648. The Company is an integrated multinational
industrial manufacturer of a broad range of industrial products through its five
core business segments -- Power Transmission, Pumps, Instrumentation, Morse
Controls and Roltra-Morse. The Company's products are designed to regulate and
control motion, transfer liquids and monitor fluids. The Company markets its
products on a worldwide basis to a diverse customer base. In November 1996, the
Company announced that it was withdrawing Roltra-Morse from divestiture because
threats made by an unsuccessful bidder made it impossible for the Company to
receive fair value for the business. As a result of this announcement,
Roltra-Morse has been reclassified as a continuing operation and the Company has
re-focused its operations on its five core business segments, as follows:
The Power Transmission business segment designs and produces electronic
adjustable-speed motor drives, gears and speed reducers.
The Pumps business segment designs and produces a broad range of rotary
pumps, including a proprietary line of two and three-screw pumps.
The Instrumentation business segment designs and produces transducers and
switches for sensing, measuring and controlling pressure, temperature and liquid
level and flow.
9
<PAGE> 12
The Morse Controls business segment designs and produces push-pull cable
and remote control systems.
The Roltra-Morse business segment designs and produces automotive products
including actuators, window controls, latches and door panels/assemblies.
Financial Information. Set forth below is certain selected consolidated
financial information relating to the Company and its subsidiaries which has
been excerpted or derived from the audited financial statements contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996 and
unaudited financial statements contained in the Company's Quarterly Reports on
Form 10-Q for the periods ended March 31, 1997 and 1996 (collectively, the
"Company's Reports"). More comprehensive financial information is included in
the Company's Reports and other documents filed by the Company with the
Commission. The financial information that follows is qualified in its entirety
by reference to such reports and other documents, including the financial
statements and related notes contained therein. Such reports and other documents
may be examined and copies may be obtained from the offices of the Commission in
the manner set forth below.
10
<PAGE> 13
IMO INDUSTRIES INC.
AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, MARCH 31,
------------------- -------------------
1996 1995(1) 1997 1996(2)
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Net sales......................................... $468,645 $472,367 $119,546 $121,415
Gross profit...................................... 132,628 131,898 35,459 35,558
Selling, general and administrative expenses...... 95,232 87,875 23,931 22,332
Research and development expenses................. 9,290 7,736 2,267 2,275
Unusual items..................................... 24,573 10,208 12,900 --
Interest expense.................................. 33,317 31,463 8,402 8,290
Income (loss) from continuing operations before
extraordinary item.............................. (41,773) 12,529 (12,842) 1,940
Discontinued operations net of taxes.............. (8,142) 21,625 -- --
Extraordinary item -- loss on extinguishment of
debt............................................ (8,455) (4,444) -- --
Net income (loss)................................. $(58,370) $ 29,710 $(12,842) $ 1,940
Earnings (loss) per share:
Continuing operations before extraordinary
item......................................... $ (2.44) $ .73 $ (.75) $ .11
Discontinued operations......................... (.48) 1.27 -- --
Extraordinary item.............................. (.49) (.26) -- --
Net income (loss)............................... (3.41) 1.74 (.75) .11
Weighted average number of shares outstanding..... 17,100 17,049 17,125 17,085
</TABLE>
- ---------------
(1) Restated to conform to 1996 presentation.
(2) Restated to conform to 1997 presentation.
<TABLE>
<CAPTION>
AT AT
--------------------------- ---------------------
DECEMBER 31, DECEMBER 31, MARCH 31, MARCH 31,
1996 1995(1) 1997(2) 1996(2)
------------ ------------ --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital............................. $ 44,125 $ 62,777 $ 33,839 $ 87,974
Total current assets........................ 202,507 205,015 212,409 169,852
Total assets................................ 411,614 434,922 407,957 387,805
Total current liabilities................... 158,382 142,238 178,570 81,878
Long-term debt.............................. 251,860 231,561 246,324 249,203
Total liabilities........................... 465,544 428,374 478,449 378,623
Total shareholders' equity (deficit)........ (54,884) 5,342 (71,328) 9,182
</TABLE>
- ---------------
(1) Restated to conform to 1996 presentation.
(2) The March 31, 1996 balance sheet data treat the Roltra-Morse business
segment of the Company as a discontinued operation, while the March 31, 1997
balance sheet data treat the Roltra-Morse business segment as a continuing
operation of the Company.
11
<PAGE> 14
In connection with Parent's review of the Company and in the course of the
negotiations between Parent and the Company described in Section 10, the Company
provided Parent with certain business and financial information, including
unaudited financial data for the five months ended May 31, 1997, including sales
of $203.7 million, earnings before interest and income taxes of $2.7 million and
net loss of $12.4 million.
The Company has advised Parent and Purchaser that it does not as a matter
of course make public forecasts as to future performance or earnings. However,
in connection with Parent's due diligence review of the Company described in
Section 10, the Company provided to Parent and Purchaser certain projections
relating to the Company's forecasted operating results for future periods,
including 1997, 1998 and 1999. Parent and Purchaser have been advised that such
information was prepared by the Company solely as part of the Company's annual
planning process, independent of the Company's potential sale to Parent or
Purchaser. Such projections included forecasts of sales of $485.9 million,
$521.0 million and $564.0 million, gross profit of $146.1 million, $163.9
million and $181.1 million, income from operations of $22.7 million, $41.3
million and $53.1 million and net income (loss) of $(13.6 million), $5.1 million
and $16.1 million for 1997, 1998 and 1999, respectively.
PROJECTED INFORMATION OF THIS TYPE IS BASED ON ESTIMATES AND ASSUMPTIONS
THAT ARE INHERENTLY SUBJECT TO SIGNIFICANT ECONOMIC AND COMPETITIVE
UNCERTAINTIES AND CONTINGENCIES, ALL OF WHICH ARE DIFFICULT TO PREDICT AND MANY
OF WHICH ARE BEYOND THE COMPANY'S CONTROL. THESE FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM THESE PROJECTIONS. THESE PROJECTIONS REFLECT NUMEROUS
ASSUMPTIONS, ALL MADE BY MANAGEMENT OF THE COMPANY, WITH RESPECT TO INDUSTRY
PERFORMANCE, GENERAL BUSINESS, ECONOMIC, MARKET AND FINANCIAL CONDITIONS AND
OTHER MATTERS INCLUDING ASSUMED INTEREST EXPENSE AND EFFECTIVE TAX RATES
CONSISTENT WITH HISTORICAL LEVELS FOR THE COMPANY, ALL OF WHICH ARE DIFFICULT TO
PREDICT, MANY OF WHICH ARE BEYOND THE COMPANY'S CONTROL AND NONE OF WHICH WERE
SUBJECT TO APPROVAL BY PARENT OR PURCHASER. ACCORDINGLY, THERE CAN BE NO
ASSURANCE THAT THE PROJECTED RESULTS WILL BE REALIZED OR THAT ACTUAL RESULTS
WILL NOT BE SIGNIFICANTLY HIGHER OR LOWER THAN THOSE SET FORTH ABOVE. IN
ADDITION, THESE PROJECTIONS WERE NOT PREPARED WITH A VIEW TO PUBLIC DISCLOSURE
OR COMPLIANCE WITH THE PUBLISHED GUIDELINES OF THE COMMISSION OR THE GUIDELINES
ESTABLISHED BY THE AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS REGARDING
PROJECTIONS AND FORECASTS AND ARE INCLUDED IN THIS OFFER TO PURCHASE ONLY
BECAUSE SUCH INFORMATION WAS MADE AVAILABLE TO PARENT BY THE COMPANY. NONE OF
PARENT, PURCHASER, THE COMPANY, THEIR FINANCIAL ADVISORS OR ANY OTHER ENTITY OR
PERSON ASSUMES ANY RESPONSIBILITY FOR THE ACCURACY OR VALIDITY OF THE FOREGOING
PROJECTIONS. NONE OF PARENT, PURCHASER, THE COMPANY OR ANY OF THEIR FINANCIAL
ADVISORS HAS MADE, OR MAKES, ANY REPRESENTATION TO ANY PERSON REGARDING THE
INFORMATION CONTAINED IN THESE PROJECTIONS AND NONE OF THEM INTENDS TO UPDATE OR
OTHERWISE REVISE THESE PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE
DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS EVEN IN THE EVENT
THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING THESE PROJECTIONS ARE SHOWN TO BE
IN ERROR.
The Shares are listed on the New York Stock Exchange and are registered
pursuant to Section 12(b) of the Exchange Act. Accordingly, the Company is
subject to the informational filing requirements of the Exchange Act and, in
accordance therewith, is required to file periodic reports, proxy statements and
other information with the Commission relating to its business, financial
condition and other matters. Information as to particular dates concerning the
Company's directors and officers, their remuneration, stock options granted to
them, the principal holders of the Company's securities and any material
interest of such persons in transactions with the Company is required to be
disclosed in proxy statements distributed to the Company's stockholders and
filed with the Commission. Such reports, proxy statements and other information
should be available for inspection at the public reference facilities
12
<PAGE> 15
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and also should be available for inspection at the
Commission's regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such materials may also be
obtained by mail, upon payment of the Commission's customary fees. Requests
should be directed to the Commission's Public Reference Branch, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. Such material may also be
accessed electronically by means of the Commission's home page on the Internet
(http://www.sec.gov). Such information may also be inspected and copied at the
offices of the New York Stock Exchange at 20 Broad Street, New York, New York
10005.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT. Purchaser is a
newly incorporated Delaware corporation organized in connection with the Offer
and the Merger and has not carried on any activities other than in connection
with the Offer and the Merger. The principal offices of Purchaser are located at
c/o United Dominion Industries Limited, 2300 One First Union Center, 301 South
College Street, Charlotte, North Carolina 28202. Purchaser is an indirect wholly
owned subsidiary of Parent.
Until immediately prior to the time that Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger. Because Purchaser is newly formed and has minimal
assets and capitalization, no meaningful financial information regarding
Purchaser is available. Notwithstanding any other provision contained in this
Offer to Purchase or the Letter of Transmittal, at any time prior to the payment
for Shares accepted for payment in the Offer, Purchaser may assign its right to
purchase Shares to Parent or any direct or indirect wholly owned subsidiary of
Parent.
All outstanding shares of Purchaser's capital stock are owned by United
Dominion Industries, Inc., a Delaware corporation and a direct wholly owned
subsidiary of Parent. Parent is a corporation organized under the laws of
Canada. The principal offices of Parent and United Dominion Industries, Inc. are
located at 2300 One First Union Center, 301 South College Street, Charlotte,
North Carolina 28202. As its principal business, Parent and United Dominion
Industries, Inc. manufacture diversified engineered products primarily for
industrial and commercial customers worldwide. Such business is organized in
five divisions: Industrial Products, Compaction, Flair, Door Products and
Specialty Products. Industrial Products serves selected markets with engineered
equipment and products for heating, cooling, fluid handling, heat exchange, food
processing and aerospace applications. Compaction manufactures rollers, landfill
compactors, tampers and pavement recyclers. Flair manufactures compressed air
filtration, purification and dehydration equipment. Door Products produces
side-hinged steel doors and frames. Specialty Products serves selected markets
with products ranging from loading dock and material handling equipment to
specialized air supply and heating equipment.
On June 25, 1997, Parent entered into an Agreement and Plan of Merger (the
"Core Merger Agreement") with UD Nevada Corp., a Nevada corporation and an
indirect wholly owned subsidiary of Parent ("UD Nevada"), and Core Industries
Inc, a Nevada corporation ("Core"), pursuant to which, among other things, UD
Nevada has agreed to make an offer to purchase all of the outstanding shares of
common stock of Core and, subject to the terms and conditions thereof, to merge
UD Nevada with and into Core. The Offer is not conditioned upon consummation of
any of the transactions contemplated by the Core Merger Agreement, and there is
no assurance that any of such transactions will be consummated.
The name, citizenship, residence or business address, principal occupation
or employment, and five-year employment history for each of the directors and
executive officers of Purchaser and Parent and certain other information are set
forth in Schedule I hereto.
The common shares (without par value) of Parent are listed on The Toronto
Stock Exchange, the Montreal Exchange and the New York Stock Exchange and are
registered pursuant to Section 12(b) of the Exchange Act. Parent is subject to
the information and reporting requirements of the Exchange Act and in accordance
therewith is required to file periodic reports and other information with the
Commission relating to its business, financial condition and other matters.
Certain information, as of particular dates,
13
<PAGE> 16
concerning Parent's business, principal physical properties, capital structure,
material pending legal proceedings, operating results, financial condition,
directors and officers, their remuneration, stock options granted to them, the
principal holders of Parent's securities, any material interests of such persons
in transactions with Parent and other matters is required to be disclosed in
reports distributed to Parent's shareholders and filed with the Commission. Such
reports and other information may be inspected and copied at the Commission's
public reference facilities in the same manner as set forth with respect to the
Company in Section 7, except that, in general, reports filed by Parent with the
Commission may not be accessed electronically. Such information is also
available for inspection at the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.
Except as described in this Offer to Purchase, including Schedule I hereto,
(i) none of Purchaser, Parent nor, to the best knowledge of Purchaser and
Parent, any of the persons listed in Schedule I to this Offer to Purchase, or
any associate or majority-owned subsidiary of Purchaser, Parent or any of the
persons so listed, beneficially owns or has any right to acquire, directly or
indirectly, any Shares and (ii) neither Purchaser nor Parent nor, to the best
knowledge of Purchaser and Parent, any of the persons or entities referred to
above, nor any director, executive officer or subsidiary of any of the
foregoing, has effected any transaction in the Shares during the past 60 days.
Except as provided in the Merger Agreement and as otherwise described in
this Offer to Purchase, none of Purchaser, Parent nor, to the best knowledge of
Purchaser and Parent, any of the persons listed in Schedule I to this Offer to
Purchase, has any contract, arrangement, understanding or relationship with any
other person with respect to any securities of the Company, including, but not
limited to, any contract, arrangement, understanding or relationship concerning
the transfer or voting of such securities, finder's fees, joint ventures, loan
or option arrangements, puts or calls, guaranties of loans, guaranties against
loss, guaranties of profits, division of profits or loss or the giving or
withholding of proxies. Except as set forth in this Offer to Purchase, since
January 1, 1994, neither Purchaser nor Parent nor, to the best knowledge of
Purchaser and Parent, any of the persons listed on Schedule I hereto, has had
any business relationship or transaction with the Company or any of its
executive officers, directors or affiliates that is required to be reported
under the rules and regulations of the Commission applicable to the Offer.
Except as set forth in this Offer to Purchase, since January 1, 1994, there have
been no contacts, negotiations or transactions between any of Purchaser, Parent,
or any of their respective subsidiaries or, to the best knowledge of Purchaser
and Parent, any of the persons listed in Schedule I to this Offer to Purchase,
on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.
Financial Information. Set forth below are certain selected consolidated
financial data relating to Parent and its subsidiaries (i) at or for the years
ended December 31, 1996 and 1995 that have been excerpted or derived from the
audited consolidated financial statements of Parent and its subsidiaries at such
dates and for the fiscal years then ended contained in the Parent's Annual
Report on Form 10-K for the year ended December 31, 1996 filed with the
Commission and (ii) at or for the three months ended March 31, 1997 and 1996
that have been excerpted or derived from the unaudited consolidated financial
statements of Parent and its subsidiaries at such dates and for the three-month
periods then ended contained in the Parent's Quarterly Reports on Form 10-Q for
the periods ended March 31, 1997 and 1996 filed with the Commission. More
comprehensive financial information is included in such reports and other
documents filed by Parent with the Commission. The following summary is
qualified in its entirety by reference to these reports and all financial
statements and the related notes therein.
The financial statements of Parent have been prepared in accordance with
generally accepted accounting principles applicable in Canada ("Canadian GAAP"),
which practices are described in the notes to such statements. Canadian GAAP
differs in certain significant respects from generally accepted accounting
principles applicable in the United States ("U.S. GAAP"). A summary of the
principal differences between U.S. GAAP and Canadian GAAP and the necessary
adjustments to reconcile Canadian GAAP net income to U.S. GAAP net income is set
forth below. Amounts reflected in the financial statements of Parent are stated
in United States dollars.
14
<PAGE> 17
UNITED DOMINION INDUSTRIES LIMITED
SELECTED CONSOLIDATED FINANCIAL DATA
(IN MILLIONS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
AT OR FOR THE AT OR FOR THE
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
-------------------- --------------------
1996 1995 1997 1996
-------- -------- -------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Sales..................................... $1,888.8 $1,805.0 $ 420.3 $ 422.1
Income from continuing operations......... 94.9 77.3 11.2 10.8
Income from discontinued operations....... -- 1.3 -- --
Net income................................ 94.9 78.5 11.2 10.8
Preferred share dividends................. -- (2.9) -- --
Earnings applicable to common shares...... 94.9 75.6 11.2 10.8
BALANCE SHEET DATA:
Total assets.............................. $1,618.3 $1,502.0 $1,569.9 $1,481.8
Working capital........................... 362.4 284.1 350.1 312.6
Total current assets...................... 754.8 678.5 694.7 660.0
Total current liabilities................. 392.4 394.5 344.7 347.4
Total liabilities......................... 797.0 884.1 751.9 738.8
Total shareholders' equity................ 821.3 617.9 818.0 743.0
EARNINGS PER COMMON SHARE:
Continuing operations..................... $ 2.13 $ 1.88 $ .25 $ .26
Discontinued operations................... -- .03 -- --
Net earnings.............................. 2.13 1.91 .25 .26
Weighted average number of shares
outstanding............................ 44,513 39,529 45,240 42,361
</TABLE>
Principal Differences Between Canadian and United States Generally Accepted
Accounting Principles. The financial information provided above was prepared in
accordance with Canadian GAAP, which differs in certain significant respects
from U.S. GAAP. These differences relate principally to the following items, and
the necessary adjustments are set out below.
Canadian GAAP allows for the reduction of stated capital of outstanding
common shares with a corresponding offset to deficit. This reclassification,
which Parent made in 1990, is not permitted by U.S. GAAP and would result in an
increase in capital stock and a reduction in retained earnings at December 31,
1996 and 1995 and at March 31, 1997 and 1996 of $128,093,000. Canadian GAAP also
permits expenses related to the issue of capital stock, net of income taxes, to
be deducted from retained earnings while U.S. GAAP requires such expenses to be
deducted from the proceeds of stock issuances credited to capital stock. This
reclassification would reduce capital stock and increase retained earnings by
$20,905,000 at March 31, 1997, December 31, 1996 and March 31, 1996 and
$17,427,000 at December 31, 1995.
Under Canadian GAAP, the discount rate used for computing the benefit
obligation and the service and interest cost components of net periodic pension
expense represents management's best estimate of the long-term rate of return on
pension fund assets; whereas, under U.S. GAAP the discount rate reflects the
rate at which pension benefits can be effectively settled at the date of the
financial statements.
U.S. GAAP requires accruing the cost of providing post-retirement benefits
other than pensions to employees and their beneficiaries (e.g., health care
benefits) during the years that the employee renders the necessary service.
Parent records expense on a "pay-as-you-go" basis for benefits paid on behalf of
15
<PAGE> 18
retired employees. At March 31, 1997, the accumulated benefit obligation not
recorded by Parent totaled approximately $9,000,000.
In 1996, Parent recognized certain tax benefits related to prior year
acquisitions that under U.S. GAAP would have reduced goodwill.
U.S. GAAP requires the use of an asset and liability approach to accounting
for income taxes; whereas, Canadian GAAP requires the use of the deferral
method.
The following table reflects the impact on Parent's net income and net
earnings per share of complying with U.S. GAAP as it pertains to the items noted
above.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------ ------------------
1996 1995 1997 1996
------- ------- ------- -------
(IN THOUSANDS(UNAUDITED)
EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net income:
Canadian GAAP................................ $94,920 $78,519 $11,171 $10,805
U.S. GAAP.................................... 84,319 75,672 10,727 10,093
Net earnings per share:
Canadian GAAP................................ 2.13 1.91 .25 .26
U.S. GAAP.................................... 1.89 1.84 .24 .24
</TABLE>
The following is a reconciliation of net income under Canadian GAAP to net
income under U.S. GAAP.
<TABLE>
<CAPTION>
YEAR ENDED THREE MONTHS
DECEMBER 31, ENDED MARCH 31,
------------------ ------------------
1996 1995 1997 1996
------- ------- ------- -------
(IN THOUSANDS(UNAUDITED)
<S> <C> <C> <C> <C>
Net income under Canadian GAAP................. $94,920 $78,519 $11,171 $10,805
Increased (decreased) by:
Gain on sale of business.................. (4,440) -- -- --
Pension expense........................... (1,198) (1,832) (300) (458)
Postretirement benefits................... (963) (1,015) (240) (254)
Income taxes.............................. (4,000) -- 96 --
------- ------- ------- -------
Net income under U.S. GAAP........... $84,319 $75,672 $10,727 $10,093
======= ======= ======= =======
</TABLE>
U.S. GAAP generally requires the use of the equity method of accounting for
investments in joint ventures. Accordingly, Parent's proportionate share of its
joint ventures' assets, liabilities, sales and expenses would not be reflected
in the above financial data under U.S. GAAP. This change in presentation would
not affect net income.
The application of U.S. GAAP discussed above would result in increases in
other (non-current) assets of approximately $17,000,000 and other liabilities of
approximately $36,000,000 and decreases in current assets of approximately
$23,000,000, current liabilities of approximately $16,000,000, long-term debt of
$8,000,000 and total shareholders' equity of approximately $18,000,000 as of
March 31, 1997.
9. FINANCING OF THE OFFER AND THE MERGER. The total amount of funds
required by Purchaser to consummate the Offer, the Merger and the Note Tender
Offer, to refinance the Company's obligations under the Credit Agreement, dated
as of April 29, 1996 (as amended, the "Company Credit Agreement"), among the
Company, Varo Inc., Warren Pumps Inc., the lenders from time to time party
thereto, the issuing banks from time to time party thereto and Citicorp USA,
Inc., as Agent, and to satisfy certain obligations of the Company under the
Indenture and to pay related fees and expenses is estimated to be approximately
$460 million. Purchaser will obtain all of such funds from Parent and its
affiliates. Affiliates of Parent currently intend to provide such funds from
cash on hand and funds available pursuant to new credit facilities (the "New
Credit Facilities") in the aggregate amount of $800 million for which Parent
16
<PAGE> 19
and United Dominion Industries, Inc. (together, the "Borrower") have received a
commitment (the "Commitment") from the Royal Bank of Canada (New York Branch)
("RBC"). It is anticipated that the initial borrowings under the New Credit
Facilities will be used, among other things, to provide a portion of the funds
required to consummate the Offer, the Merger and the Note Tender Offer, to
provide a portion of the funds necessary to consummate the transactions
contemplated by the Core Merger Agreement, to pay related fees and expenses and
to repay outstanding balances under existing credit facilities of Parent and its
affiliates (the "Existing Credit Facilities") established pursuant to a
$300,000,000 Amendment and Restatement of the Credit Agreement and Guaranty
dated as of June 20, 1996 among Parent and United Dominion Industries, Inc., as
obligors, RBC, as agent, and certain financial institutions signatory thereto,
as lenders, as amended, and to provide the Company with sufficient funds to
refinance the Company Credit Agreement and satisfy certain of the Company's
obligations under the Indenture. At June 30, 1997, the aggregate outstanding
principal balance under the Existing Credit Facilities was approximately $19
million.
The New Credit Facilities will consist of two components: a $650 million
five-year revolving credit facility, including a $75 million sub-limit for the
issuance of standby letters of credit (the "Five-Year Facility"), and a $150
million 364-day revolving credit facility (the "Bridge Facility"). Borrowings
under the New Credit Facilities will be available in all freely available
currencies, including U.S. Dollars and German Deutsche Marks, subject to certain
limitations. Interest will be payable, at the Borrower's option, at (i) the
higher of a U.S. reference lender's prime interest rate or the federal funds
rate plus 0.50% per annum, (ii) the interbank offered rate for Eurodollar
deposits of 1, 2, 3, 6, 9 or 12 months plus a margin, or (iii) the interbank
offered rate for Euro-Deutsche Mark deposits of 1, 2, 3, 6, 9 or 12 months plus
a margin. The New Credit Facilities will require the payment of a quarterly
facility fee ranging from 0.08% to 0.125% per annum on the aggregate commitments
under the Five-Year Facility and from 0.06% to 0.10% per annum on the aggregate
commitments under the Bridge Facility, and will also require payment of a
utilization fee of 0.05% per annum on the daily average of all outstanding
balances if utilization exceeds 50% of the aggregate commitments, if the
Parent's public debt is not rated at or above certain rating levels and if the
highest pricing margin then applies. The New Credit Facilities will not be
secured by collateral. RBC has the right to syndicate all or a portion of the
New Credit Facilities.
The definitive credit agreement for the New Credit Facilities is expected
to provide for various representations, warranties and covenants of Parent. The
covenants are expected to be typical for a facility of this type, to include,
without limitation, customary affirmative covenants designed to ensure the
continued existence of Parent, the sound operation of its businesses and the
businesses of its subsidiaries, the proper maintenance and insurance of
properties, the provision of financial statements, the payment of debts and
taxes and continued compliance with applicable law, and customary negative
covenants regarding, on a consolidated basis, (i) additional indebtedness, (ii)
asset dispositions and expenditures, (iii) financial ratios, (iv) contingent
liabilities, (v) loans and advances, (vi) liens and security interests, (vii)
dividends and purchases of stock and (viii) transactions with affiliates. Such
negative covenants with respect to asset dispositions and liens are expected to
expressly except from their coverage the sale, disposition, pledge or
encumbrance by Parent or any of its subsidiaries of "margin stock" as defined in
Regulation U of the Federal Reserve Board to the extent the fair market value of
margin stock exceeds 25% of the fair market value of the property and assets
(including the margin stock) of Parent or such subsidiary.
Under the definitive credit agreement, Parent will agree to hold the agent
and each of the lenders harmless against any and all losses, liabilities,
claims, damages and expenses incurred or suffered by it arising out of or by
reason of any transaction financed with the proceeds of any borrowing and any
investigation, litigation or proceeding relating to the transactions
contemplated thereby.
The funding of the New Credit Facilities will be subject to customary
conditions, including, among other things, the execution of satisfactory
documentation and the receipt of all necessary governmental approvals, and in
addition will be subject to the satisfaction of the Minimum Condition. Although
Parent expects that the New Credit Facilities will be available to provide funds
for the consummation of the Offer
17
<PAGE> 20
and the Merger in accordance with their respective terms, there can be no
assurance that the New Credit Facilities will be consummated.
The foregoing summary is subject to the preparation and completion of a
definitive credit agreement for the New Credit Facilities and is qualified in
its entirety by reference to the Commitment, a copy of which has been filed as
an exhibit to the Tender Offer Statement on Schedule 14D-1/13D (the "Schedule
14D-1") filed by Purchaser and Parent with the Commission in connection with the
Offer.
Parent anticipates that indebtedness incurred through borrowings under the
New Credit Facilities will be repaid from a variety of sources, which may
include, but may not be limited to, funds generated internally by Parent and its
subsidiaries (including, following the Merger, funds generated by the Surviving
Corporation), bank financing, and the public or private sale of debt or equity
securities. No decision has been made concerning the method Parent will employ
to repay such indebtedness. Such decision will be made based on Parent's review
from time to time of the advisability of particular actions, as well as on
prevailing interest rates and financial and other economic conditions and such
other factors as Parent may deem appropriate.
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY; THE MERGER
AGREEMENT.
Background of the Offer; Contacts with the Company. During the summer and
fall of 1996, Parent was approached by a number of investment banking firms
identifying the Company as a possible acquisition candidate. In November 1996,
Richard A. Bearse, Senior Vice President of Parent, through an investment
banking firm, contacted the Company to express Parent's interest in discussing a
possible business combination transaction with the Company.
On March 21, 1997, the Company announced that it had engaged Credit Suisse
First Boston to assist it in evaluating strategic alternatives for enhancing
stockholder value and reducing leverage, including the possible merger or sale
of the Company. Following this announcement, financial advisors of Parent
arranged a meeting, held on April 8, 1997, between Mr. Bearse and William M.
Brown, the Company's Chief Financial Officer. At this meeting, Mr. Bearse
expressed Parent's interest in a possible business combination with the Company,
and Messrs. Bearse and Brown discussed the businesses of both Parent and the
Company. Following this meeting, the Company requested that Parent enter into a
confidentiality agreement as a condition to continuing discussions. On April 25,
1997, Parent entered into a confidentiality agreement with the Company agreeing
to keep certain information confidential and not to take certain action to
obtain control of the Company. See "Confidentiality Agreement" in this Section
10.
On April 29, 1997, Jan K. Ver Hagen, Parent's President and Chief Operating
Officer, and Mr. Bearse, met with Donald K. Farrar, the Company's Chairman and
Chief Executive Officer, Mr. Brown and representatives of Credit Suisse First
Boston to discuss Company's operations, financial condition and prospects.
Following the meeting, Parent received a confidential information memorandum
prepared by Credit Suisse First Boston containing information concerning the
Company.
On May 1, 1997, Mr. Bearse, through Parent's financial advisors, submitted
to Credit Suisse First Boston an oral expression of interest by Parent to
acquire the Company. Mr. Bearse discussed Parent's desire to preempt any attempt
to sell the Company through a process that sought bids from several interested
parties. Representatives of Credit Suisse First Boston informed Mr. Bearse that
the Company planned to proceed with discussions with other parties. As part of
this process, Credit Suisse First Boston requested that Parent submit an
expression of interest specifying a tentative price by June 2, at which time the
Company would evaluate all proposals and proceed with discussions among a
smaller group of potential candidates. On June 2, 1997, Parent submitted to
Credit Suisse First Boston its expression of interest to acquire the Company at
a price of $4.50 per Share. Credit Suisse First Boston informed representatives
of Parent that the tentative price specified in Parent's expression of interest
would not be sufficient to include it in the smaller group of potential
acquirors with whom further discussions would be held. On June 4, 1997, Parent
amended its expression of interest to indicate a range of tentative prices
between $4.50 and $6.00 per Share and was invited to continue discussions
regarding a potential acquisition.
18
<PAGE> 21
On June 12, 1997, J. Milton Childress, II, a Vice President of Parent,
notified Credit Suisse First Boston that Parent was withdrawing its expression
of interest because it did not wish to participate in a process involving other
potential bidders. On June 13, 1997, Mr. Bearse contacted Mr. Farrar to discuss
the reasons for Parent's withdrawal of its expression of interest. In subsequent
conversations that day among Mr. Bearse, Mr. Farrar and representatives of
Credit Suisse First Boston, the Company expressed its desire that Parent
continue to participate in the process being conducted by Credit Suisse First
Boston. Mr. Bearse reiterated Parent's position that it did not want to continue
in a process involving other bidders and that it would proceed with discussions
only if it was granted an exclusive period to examine the Company and negotiate
a definitive agreement. Later that day, following discussions involving William
R. Holland, Parent's Chairman and Chief Executive Officer, Parent and the
Company orally agreed that Parent would continue discussions and, upon Parent's
tentative agreement to increase its proposed price to $7.00 per Share, the
Company would provide Parent an exclusive period to examine the Company and
negotiate a definitive agreement. On June 16, 1997, Parent and the Company
entered into a letter agreement pursuant to which Parent and the Company agreed
to work diligently in good faith towards the preparation of a definitive merger
agreement, the execution of which would be subject to Parent's satisfactory
completion of due diligence, and the Company agreed that it would not negotiate
or solicit proposals for the sale or other disposition of the Company or its
assets until June 30, 1997 (or June 25, 1997, if Parent's Board of Directors did
not determine to proceed with the transaction by that date). See "Exclusivity
Agreement" in this Section 10.
On June 16, 1997, members of senior management of Parent met with members
of the Company's senior management, business unit managers and corporate staff
to review the Company's businesses. During the next week and a half, Parent,
Purchaser, the Company, their financial advisors and legal counsel negotiated
the terms of a potential acquisition. In addition, during a portion of that
period Parent and its financial advisors and legal counsel conducted a business
review and due diligence investigation at various Company sites. In connection
with its due diligence review of the Company, Parent determined that certain
provisions of the indenture governing the Notes must be amended to permit the
Merger, and on June 23, 1997, representatives of Parent discussed with
representatives of the Company and Credit Suisse First Boston the feasibility of
a successful Note Tender Offer. On June 24, 1997, Mr. Holland informed Mr.
Farrar that as a result of its due diligence investigation (including Parent's
assessment of the magnitude of the Company's potential trailing liabilities with
respect to disposed business units and potential environmental liabilities) and
the substantial premium necessary to complete a successful Note Tender Offer,
Parent could not proceed with a transaction at $7.00 per Share and that Parent
proposed to acquire the Company for $5.00 per Share. On June 25, 1997, Mr.
Farrar informed Mr. Holland that the Company's Board of Directors had rejected
Parent's $5.00 per Share proposal, but that he would recommend that the
Company's Board of Directors approve a $6.00 per Share proposal if Parent not
condition the Offer on the successful completion of the Note Tender Offer. Mr.
Holland advised Mr. Farrar that Parent would proceed with a $6.00 per Share
proposal, but only if the Offer was conditioned on the successful completion of
the Note Tender Offer. Mr. Farrar advised Mr. Holland that he would present such
proposal to the Company's Board of Directors.
Later on June 25, 1997, upon being advised that the Company's Board of
Directors had approved the Merger, Parent's Board of Directors approved the
Merger, the Offer, the Note Tender Offer and the other transactions contemplated
by the Merger Agreement. The Merger Agreement was executed by representatives of
Parent, Purchaser and the Company early in the morning of June 26, 1997, and
Parent and the Company announced the execution of the Merger Agreement later
that morning.
The Merger Agreement. The following is a summary of the Merger Agreement,
a copy of which has been filed as an Exhibit to the Schedule 14D-1 filed by
Purchaser and Parent with the Commission in connection with the Offer. Such
summary is qualified in its entirety by reference to the Merger Agreement.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed thereto in the Merger Agreement.
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as reasonably practicable, but in no event later than five business
days after the first public announcement
19
<PAGE> 22
of the execution of the Merger Agreement. The obligation of Purchaser to accept
for payment Shares tendered pursuant to the Offer is subject to the satisfaction
of the Minimum Condition and certain other conditions that are described in
Section 14 hereof. Purchaser has expressly reserved the right to waive any such
condition, to increase the price per Share payable in the Offer, and to make any
other changes in the terms and conditions of the Offer; provided, however, that
Purchaser and Parent have agreed with the Company that, without the prior
consent of the Company, no change in the Offer may be made that decreases the
price per Share payable in the Offer, that changes the form of consideration
payable in the Offer, that reduces the maximum number of Shares sought pursuant
to the Offer, that extends the expiration date of the Offer (except that
Purchaser may extend the expiration date of the offer (a) as required to comply
with any rule, regulation or interpretation of the Commission or (b) for one or
more times each for an aggregate period of up to 15 days (and not to exceed 60
days from the date of commencement) for any reason other than those specified in
the immediately preceding clause (a)), or that imposes conditions to the Offer
in addition to those set forth in Section 14 hereof.
The Merger. The Merger Agreement provides that, upon the terms and subject
to the conditions thereof, and in accordance with Delaware Law, at the Effective
Time, Purchaser shall be merged with and into the Company. As a result of the
Merger, the separate corporate existence of Purchaser will cease and the Company
will continue as the Surviving Corporation and as an indirect wholly owned
subsidiary of Parent. Upon consummation of the Merger, each issued and then
outstanding Share (other than any Shares owned by Purchaser, Parent, the Company
or any wholly owned subsidiary of Parent or of the Company and any Shares that
are held by stockholders who have properly exercised their rights for appraisal
of such Shares in accordance with Delaware Law) shall be cancelled and converted
automatically into the right to receive the Merger Consideration.
Pursuant to the Merger Agreement, each share of common stock, par value
$.01 per share, of Purchaser issued and outstanding immediately prior to the
Effective Time shall be converted into and exchanged for one share of common
stock, par value $1.00 per share, of the Surviving Corporation.
The Merger Agreement provides that the directors of Purchaser immediately
prior to the Effective Time will be the initial directors of the Surviving
Corporation and that the officers of the Company immediately prior to the
Effective Time will be the initial officers of the Surviving Corporation. The
Merger Agreement also provides that, at the Effective Time, the Certificate of
Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by applicable law and such Certificate of
Incorporation. The Merger Agreement also provides that the Bylaws of the
Company, as in effect immediately prior to the Effective Time, will be the
Bylaws of the Surviving Corporation.
Note Tender Offer. Pursuant to the Merger Agreement, as promptly as
reasonably practicable after the date of the Merger Agreement, but in no event
later than five business days after the first public announcement of the
execution thereof, and upon the terms and subject to the conditions of the
Merger Agreement, Parent or its designee shall make the Note Offer to Purchase.
In connection with such Note Offer to Purchase, Parent or its designee intends
to solicit Consents from the holders of the Notes to amend the Indenture. The
proposed amendments to the Indenture would: (i) delete the covenants in the
Indenture entitled "Limitation on Restricted Payments," "Limitation on
Restrictions on Distributions from Restricted Subsidiaries," "Limitation on
Sales of Assets and Subsidiary Stock," "Limitation on Affiliate Transactions,"
"Limitation on the Sale or Issuance of Capital Stock of Restricted
Subsidiaries," "Limitation on Liens," "Limitation on Sale/Leaseback
Transactions" and "Specified Subsidiaries"; (ii) amend the section of the
Indenture entitled "When the Company may Merge or Transfer Assets" to eliminate
the requirement in connection with any such merger or sale that the Successor
Company (as defined therein) be able to incur an additional $1.00 of
indebtedness pursuant to the Indenture's restriction on indebtedness; (iii)
amend the section of the Indenture entitled "SEC Reports" to eliminate the
requirement that the Company provide the trustee under the Indenture and the
holders of the Notes with information and reports specified in Sections 13 and
15(d) of the Exchange Act notwithstanding that the Company may not then be
subject to the reporting requirements under such sections of the Exchange Act;
(iv) amend the section of the Indenture entitled "Limitation on Indebtedness" to
permit
20
<PAGE> 23
the Company to incur indebtedness to an affiliate of the Company; and (v) amend
the section of the Indenture entitled "Limitation on Indebtedness and Preferred
Stock of Restricted Subsidiaries" to remove any limitation on a foreign
subsidiary's ability to incur indebtedness. Parent's obligation to accept for
payment and pay for the Notes and related Consents tendered pursuant to the Note
Tender Offer is subject to the condition that Parent receive Consents from the
holders of a majority of the outstanding principal amount of the Notes (the
"Requisite Consent Condition") and to other conditions. See Section 14. The Note
Tender Offer shall be made at a price of 120% of the principal amount of the
Notes, upon the terms and subject to the conditions of the Merger Agreement and
the Note Tender Offer. In the Merger Agreement, Parent expressly reserved the
right to waive any condition, to increase the price payable for each Note and
related Consent tendered in the Note Tender Offer, and to make any other changes
in the terms and conditions of the Note Tender Offer; provided, however, that,
without the consent of the Company, no change may be made which decreases the
price payable for each Note and related Consent tendered in the Note Tender
Offer, which changes the form of consideration to be paid in the Note Tender
Offer, which reduces the maximum number of Notes to be purchased in the Note
Tender Offer or which imposes additional conditions to the Note Tender Offer.
Subject to the terms and conditions of the Note Tender Offer (including, without
limitation, the Requisite Consent Condition), Parent has agreed in the Merger
Agreement to pay, as promptly as practicable after expiration of the Note Tender
Offer, for all Notes and related Consents validly tendered and not withdrawn.
Assuming the Requisite Consent Condition is satisfied and all other conditions
to the Note Tender Offer have been satisfied or waived by Parent, the Company
has agreed to execute, and to use all reasonable efforts to cause the trustee
under the Indenture to execute, a supplemental indenture (the "Supplemental
Indenture") in order to give effect to the amendments of the Indenture
contemplated in the Note Tender Offer immediately following the expiration date
of the Note Tender Offer; provided, however, that the proposed amendments set
forth in the Supplemental Indenture (the "Proposed Amendments") will not become
operative until the date Parent accepts all Notes (and related Consents) validly
tendered for purchase and payment pursuant to the Note Tender Offer. In such
event, the parties to the Merger Agreement have agreed that the Proposed
Amendments will be deemed effective as of the date immediately prior to such
acceptance for payment, and Parent will thereafter be obligated to make all
payments for the Notes (and related Consents) so tendered.
Company Stockholders' Meeting; Proxy Statement. Pursuant to the Merger
Agreement, in the event that the affirmative vote of the holders of Shares is
required to approve the Merger under Delaware Law, the Company shall duly call,
give notice of, convene and hold a special meeting of its stockholders as soon
as practicable following consummation of the Offer for the purpose of
considering and taking action on the Merger Agreement and the transactions
contemplated thereby (the "Stockholders' Meeting"). The Merger Agreement
provides that, in the event that the affirmative vote of holders of Shares is
required to approve the Merger, the Company shall, as soon as practicable
following consummation of the Offer, file with the Commission under the Exchange
Act, and use its best efforts to have cleared by the Commission, a proxy
statement and related proxy materials (the "Proxy Statement") with respect to
the Stockholders' Meeting and shall cause the Proxy Statement to be mailed to
stockholders of the Company at the earliest practicable time. The Company has
also agreed, subject to the fiduciary duties of the Board under applicable law
as advised by independent counsel, to include in the Proxy Statement the
unanimous recommendation of the Board that the stockholders of the Company
approve and adopt the Merger Agreement and the transactions contemplated thereby
and to use all reasonable efforts to obtain such approval and adoption. Parent
and Purchaser have each agreed to vote all Shares beneficially owned by them in
favor of the Merger.
Conduct of Business. Pursuant to the Merger Agreement, the Company has
covenanted and agreed that, between the date of the Merger Agreement and the
election or appointment of Purchaser's designees to serve on the Company's Board
of Directors (the "Purchaser's Election Date"), unless Parent shall otherwise
agree in writing, each of the Company and its Subsidiaries shall conduct its
business only in, and the Company and the Subsidiaries shall not take any action
except in, the ordinary course of business consistent with past practice; and
the Company shall use all reasonable efforts to preserve substantially intact
the business organization of the Company and its Subsidiaries, to keep
21
<PAGE> 24
available the services of the current officers, employees and consultants of the
Company and its Subsidiaries and to preserve the current relationships of the
Company and its Subsidiaries with customers, suppliers and other persons with
which the Company or any Subsidiary has significant business relations. The
Merger Agreement also provides that, except with the prior written consent of
Parent or as contemplated by the Merger Agreement, the Company agrees that
neither the Company nor any Subsidiary shall, between the date of the Merger
Agreement and the Purchaser's Election Date, directly or indirectly do, or
propose to do, any of the following: (a) amend or otherwise change its
Certificate of Incorporation or Bylaws or equivalent organizational documents,
each as amended to date (the "Constituent Documents"); (b) issue, sell, pledge,
dispose of, grant, encumber, or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of (i) any shares of capital stock of any
class of the Company or any Subsidiary, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such capital
stock, or any other ownership interest (including, without limitation, any
phantom interest), of the Company or any Subsidiary (except for the issuance of
a maximum of 2,000,000 Shares issuable pursuant to Stock Option Plans
outstanding on the date thereof) or (ii) any assets of the Company or any
Subsidiary, except for sales in the ordinary course of business and in a manner
consistent with past practice; (c) declare, set aside, make or pay any dividend
or other distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except for such declarations, set asides,
dividends and other distributions made by any Subsidiary to the Company; (d)
reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire,
directly or indirectly, any of its capital stock; (e) (i) acquire (including,
without limitation, by merger, consolidation, or acquisition of stock or assets
or any other business combination) any corporation, partnership, other business
organization or any division thereof or any material amount of assets other than
in the ordinary course of business consistent with past practice; (ii) incur any
indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, pledge in respect of or otherwise as an accommodation
become responsible for the obligations of any person, or make any loans or
advances, except in the ordinary course of business and consistent with past
practice; (iii) enter into any contract or agreement, other than any contract or
agreement entered into in the ordinary course of business consistent with past
practice and which requires payments by the Company or its Subsidiaries in an
aggregate amount of less than U.S. $250,000; (iv) terminate, cancel or request
any material change in, or agree to any material change in, any Material
Contract, except in the ordinary course of business consistent with past
practice; or (v) authorize any single capital expenditure (excluding software
development activity) which is in excess of U.S. $500,000 or capital
expenditures which are, in the aggregate, in excess of U.S. $2,500,000 for the
Company and its Subsidiaries taken as a whole; (f) increase the compensation
payable or to become payable to its officers or employees, except for increases
in accordance with past practices in salaries or wages of employees of the
Company or any Subsidiary who are not officers of the Company, or grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of the Company or any
Subsidiary (other than in connection with hiring and terminating employees in
the ordinary course of the Company's business), or establish, adopt, enter into
or amend any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination or severance plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee or circulate to
any employee any details of any proposal to adopt or amend any such plan; (g)
take any action, other than reasonable and usual actions in the ordinary course
of business consistent with past practice, with respect to accounting policies
or procedures (including, without limitation, procedures with respect to the
payment of accounts payable and collection of accounts receivable); (h) make any
material tax election or settle or compromise any material federal, state, local
or foreign income tax liability; (i) pay, discharge or satisfy any claim,
liability or obligation (absolute, accrued, asserted or unasserted, contingent
or otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice, of liabilities
reflected or reserved against on the Company's consolidated balance sheet
included in its Quarterly Report on Form 10-Q for the quarter ended March 31,
1997 or subsequently incurred in the ordinary course of business and consistent
with past practice; or (j) settle or comprise any pending or threatened suit,
action or claim that is material or which relates to any of the transactions
22
<PAGE> 25
contemplated by the Merger Agreement; or (k) announce an intention, enter into
any formal or informal agreement, or otherwise make a commitment, to do any of
the foregoing.
Designation of Directors. The Merger Agreement provides that, promptly
upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to
time thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as shall give
Purchaser representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser at such time bears
to the total number of Shares then outstanding. Pursuant to the Merger
Agreement, the Company agrees, at such time of purchase, to promptly take all
actions necessary to cause Purchaser's designees to be elected as directors of
the Company, including increasing the size of the Board or securing the
resignations of incumbent directors or both. The Merger Agreement also provides
that, at such times, the Company shall use all reasonable efforts to cause
persons designated by Purchaser to constitute the same percentage as persons
designated by Purchaser shall constitute of the Board with respect to (a) each
committee of the Board (some of whom may be required to be independent as
required by applicable law or requirements of the New York Stock Exchange, Inc.
(the "New York Stock Exchange")), (b) each board of directors of each Subsidiary
and (c) each committee of each such board, in each case only to the extent
permitted by applicable law. Notwithstanding the foregoing, the Merger Agreement
provides that until the time Purchaser acquires a majority of the then
outstanding Shares on a fully diluted basis, the Company shall use all
reasonable efforts to ensure that all the members of the Board and each
committee of the Board and such boards and committees of the Subsidiaries as of
the date thereof who are not employees of the Company shall remain members of
the Board and of such boards and committees.
Amendments. The Merger Agreement provides that following the election or
appointment of Parent's designees in accordance with the immediately preceding
paragraph and prior to the Effective Time, any amendment of the Merger Agreement
or the Constituent Documents of the Company, any termination of the Merger
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser or
any waiver of any of the Company's rights thereunder will require the
concurrence of a majority of those directors of the Company then in office other
than directors designated by Parent or directors who are employees of the
Company or, if no such directors are then in office, no such amendment,
termination, extension or waiver shall be effected which is materially adverse
to the holders of Shares (other than Parent and its Subsidiaries).
Access to Information; Confidentiality. Pursuant to the Merger Agreement,
from the date of the Merger Agreement to the consummation of the Offer, the
Company agreed to, and to cause its Subsidiaries to, afford the officers,
employees and agents of Parent and Purchaser and persons providing or committing
to provide Parent or Purchaser with financing for the transactions contemplated
by the Merger Agreement (the "Transactions") complete access at all reasonable
times to the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and each Subsidiary and to furnish
Parent and Purchaser and persons providing or committing to provide Parent or
Purchaser with financing for the Transactions with all financial, operating and
other data and information as Parent or Purchaser, through its officers,
employees or agents, may reasonably request. Parent and Purchaser agreed in the
Merger Agreement to keep all such information obtained in connection with
entering into the Merger Agreement confidential in accordance with the
confidentiality agreement, dated April 25, 1997 (the "Confidentiality
Agreement"), between Parent and the Company.
No Solicitation of Transactions. The Company has agreed that neither the
Company nor any Subsidiary shall, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage the submission of
any proposal or offer from any person relating to any acquisition or purchase of
all or any material portion of the assets of, or any equity interest in, the
Company or any Material Subsidiary or any business combination with the Company
or any Material Subsidiary or participate in any negotiations regarding, or
furnish to any other person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in, facilitate or encourage,
any effort or attempt by any other person to do or seek any of the foregoing and
the Company has agreed to immediately cease and
23
<PAGE> 26
cause to be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. Notwithstanding the
foregoing, the Merger Agreement permits the Board to furnish information to, or
enter into discussions or negotiations with, any person in connection with an
unsolicited (from the date of the Merger Agreement) proposal in writing by such
person to acquire the Company pursuant to a merger, consolidation, share
exchange, business combination or other similar transaction or to acquire all or
substantially all of the assets of the Company or any of its Subsidiaries, if,
and only to the extent that, (a) the Board, after consultation with independent
legal counsel (which may include its regularly engaged independent legal
counsel), determines in good faith that such action is required for the Board to
comply with its fiduciary duties to stockholders imposed by Delaware Law and (b)
prior to furnishing such information to, or entering into discussions or
negotiations with, such person, the Company uses its reasonable efforts to
obtain from such person an executed confidentiality agreement on terms no less
favorable to the Company than those contained in the Confidentiality Agreement.
Moreover, the Company agreed (x) to notify Parent promptly if any such proposal
or offer, or any inquiry or contact with any person with respect thereto, is
made and (y) not to release any third party from, or waive any provision of, any
confidentiality or, subject to the fiduciary duties of the Board, standstill
agreement to which the Company is or may become a party.
Treatment of Stock Options; Deferred Director Fees. The Merger Agreement
provides that, in accordance with the terms of the Company's Amended and
Restated Equity Incentive Plan for Key Employees, the Company's Amended and
Restated 1988 Equity Incentive Plan for Outside Directors or the Company's 1995
Equity Incentive Plan for Outside Directors (collectively, the "Stock Option
Plans"), each outstanding option to purchase Shares granted under the Company's
Stock Option Plans shall, immediately prior to the Effective Time, become
exercisable regardless of the vesting schedule contained in any stock option
agreement or in any of the Stock Option Plans and shall be canceled at the
Effective Time. In the event that any unexercised option is canceled by the
Company, each holder of a canceled option shall be entitled to receive, at the
Effective Time or as soon as practicable thereafter, from the Company, in
consideration for the cancellation of such option, an amount (subject to any
applicable withholding tax) in cash equal to the product of (a) the number of
Shares previously subject to such option and (b) the excess, if any, of the
Merger Consideration over the exercise price per Share previously subject to
such option. The Merger Agreement also provides that, at the Effective Time, the
Company shall pay to each individual who served as a director of the Company
prior to the Effective Time any and all deferred director fees owed to such
individual.
Indemnification and Insurance. Pursuant to the Merger Agreement, the
Certificate of Incorporation and Bylaws of the Surviving Corporation are
required to contain provisions no less favorable with respect to indemnification
than are set forth in Article XIII of the Bylaws of the Company, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years from the Effective Time in any manner that would affect adversely the
rights thereunder of individuals who at any time from and after the date of the
Merger Agreement to and including the Effective Time were directors, officers,
employees, fiduciaries or agents (collectively "Representatives") of the Company
in respect of acts or omissions occurring at or prior to the Effective Time
(including, without limitation, the matters contemplated by the Merger
Agreement), unless such modification shall be required by law. Moreover, from
and after the Purchaser's Election Date, the Merger Agreement prohibits the
amendment, repeal or other modification of the indemnification and advancement
of expenses provisions of Article XIII of the Bylaws of the Company or the
Constituent Documents of any of its Subsidiaries in any manner that would
adversely affect the rights thereunder of individuals who at any time from and
after the date of this Agreement and to and including the Effective Time were
Representatives of the Company or any of its Subsidiaries in respect of acts or
omissions occurring at or prior to the Effective Time (including, without
limitation, the matters contemplated by the Merger Agreement), unless such
modification is required by law.
The Merger Agreement also provides that prior to the Effective Time, the
Company shall and after the Effective Time, Parent and the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former Representative of the Company and each
Subsidiary (collectively, the "Indemnified Parties") against all costs and
expenses (including reasonable
24
<PAGE> 27
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or after the Effective Time), whether
civil, criminal, administrative or investigative, arising out of or pertaining
to any action or omission in their capacity as a Representative, whether
occurring before or after the Effective Time, for a period of six years after
the date of the Merger Agreement (and shall pay any expenses in advance of the
final disposition of any such action or proceeding to each Indemnified Party to
the fullest extent permitted under Delaware Law, and, with respect to
Indemnified Parties who are or were directors or officers of the Company, upon
receipt from the Indemnified Party to whom expenses are advanced of any
undertaking to repay such advances required under Delaware Law).
Pursuant to the Merger Agreement, the Company, from and after the date of
the Merger Agreement and to and including the Effective Time, and the Surviving
Corporation, from the Effective Time until six years thereafter, each agreed to
maintain in effect, insurance coverage, if available, equivalent to that
provided by the directors' and officers' liability insurance policies currently
maintained by the Company (provided that the Surviving Corporation may
substitute therefor policies of at least the same coverage containing terms and
conditions which are not materially less favorable) with respect to matters
occurring on or prior to the Effective Time; provided, however, that in no event
shall the Surviving Corporation be required to expend more than an amount per
year equal to 250% of current annual premiums paid by the Company for such
insurance (which annual premiums the Company has represented in the Merger
Agreement to be approximately $300,000).
The Merger Agreement provides that in the event the Company, Parent or the
Surviving Corporation or any of their respective successors or assigns (a)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(b) transfers all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Company, Parent or the Surviving Corporation, as
the case may be, shall assume the obligations described above. The Merger
Agreement provides that the obligations described above shall survive the
Effective Time.
Employee Benefits. Pursuant to the Merger Agreement, for a period of one
year from the Effective Time, Parent has agreed to, or to cause the Company or
the Surviving Corporation to, maintain the employee benefit plans (other than
the Stock Option Plans) which the Company maintains for the benefit of, or which
are open to, a majority of the employees of the Company on the terms in effect
on the date of the Merger Agreement, or such other plans, arrangements or
programs as will provide employees with benefits that in the aggregate are
substantially equivalent to, and no less favorable than, those provided under
the employee benefit plans (other than the Stock Option Plans) as in effect on
the date of the Merger Agreement. In addition, Parent shall, or shall cause the
Surviving Corporation to, assume and agree to perform specified "Change of
Control Agreements" in the same manner and to the same extent that the Company
is required to perform such agreements. Such Change of Control Agreements
provide for payments to certain officers and other employees of the Company upon
termination of employment, diminution of responsibility or salary or other
circumstances following a change of control of the Company. If Purchaser
consummates the Offer, a change in control will occur under the Change of
Control Agreements.
Provision of Funds. Pursuant to the Merger Agreement Parent has agreed
that (a) Parent will cause the Company to be provided with sufficient funds
immediately prior to the Purchaser's Election Date, to refinance the Company's
obligations under the Company Credit Agreement, (b) from and after the
Purchaser's Election Date, Parent will cause the Company to be provided with
sufficient funds, on terms that comply with the Indenture with respect to the
Notes to satisfy the Company's obligations under Section 4.10 of the Indenture
and (c) that such funds will be provided to the Company on terms no less
favorable to the Company than those contained in the Company Credit Agreement.
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties thereto, including representations
by the Company as to the Company's filings with the Commission, consolidated
financial statements of the Company and its Subsidiaries, the
25
<PAGE> 28
absence of certain changes or events concerning the Company's business,
compliance with law and certain contracts, litigation, insurance, licenses and
permits, employee benefit plans, labor matters, ownership of assets, trademarks,
patents and copyrights, environmental matters, brokers, taxes, absence of
certain business practices and letters of credit, surety bonds and guarantees.
The Company also represented in the Merger Agreement that (a) the Board, at
a meeting duly called and held on June 25, 1997, has unanimously (i) determined
that the Merger Agreement and the transactions contemplated thereby, including
each of the Offer and the Merger, are fair to and in the best interests of the
stockholders of the Company, (ii) approved and adopted the Merger Agreement and
the transactions contemplated thereby, including, without limitation, the
Merger, and such approval constitutes approval of the foregoing for purposes of
Section 203 of Delaware Law, (iii) taken all action to avoid the occurrence of a
"Distribution Date" or a "Triggering Event" (each as defined in the Rights
Agreement) with respect to the Rights and (D) recommended that the stockholders
of the Company accept the Offer and approve and adopt the Merger Agreement and
the transactions contemplated thereby, including, without limitation, the
Merger.
Parent represented and warranted to the Company in the Merger Agreement,
among other things, that Parent has, or has commitments to obtain, sufficient
funds to permit Purchaser (i) to acquire all the outstanding Shares in the Offer
and the Merger and (ii) to acquire all of the Notes (and obtain all of the
related Consents) in the Note Tender Offer, written evidence of which has been
provided to the Company.
Conditions to the Merger. Under the Merger Agreement, the respective
obligations of each party to effect the Merger are subject to the satisfaction
at or prior to the Effective Time of the following conditions and only the
following conditions: (a) the Merger Agreement and the transactions contemplated
by the Merger Agreement shall have been approved and adopted by the affirmative
vote of the stockholders of the Company (unless the vote of the stockholders is
not required by Delaware Law); (b) any waiting period (and any extension
thereof) applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated; (c) no foreign, United States or state
governmental authority or other agency or commission or foreign, United States
or state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making the acquisition of Shares
by Parent or Purchaser or any affiliate of either of them or the consummation of
the Merger illegal under applicable law or otherwise restricting, preventing or
prohibiting under applicable law the consummation of the transactions
contemplated by the Merger Agreement; (d) Purchaser or its permitted assignee
shall have purchased all Shares validly tendered and not withdrawn pursuant to
the Offer; provided, however, that neither Parent nor Purchaser shall be
entitled to assert the failure of this condition if, in breach of the Merger
Agreement or the terms of the Offer, Purchaser fails to purchase any Shares
validly tendered and not withdrawn pursuant to the Offer and (e) the
Supplemental Indenture shall have been entered into and Parent or its permitted
assignee shall have purchased all Notes validly tendered and not withdrawn
pursuant to the Note Tender Offer; provided, however, that Parent shall not be
entitled to assert the failure of this condition if, in breach of the Merger
Agreement or the terms of the Note Tender Offer, Parent fails to purchase any
Notes validly tendered and not withdrawn pursuant to the Note Tender Offer.
Termination. The Merger Agreement may be terminated and the Merger and the
other transactions contemplated by the Merger Agreement may be abandoned at any
time prior to the Effective Time, notwithstanding any requisite approval and
adoption of the Merger Agreement and the transactions contemplated thereby by
the stockholders of the Company: (a) by mutual written consent duly authorized
by the Boards of Directors of Parent, Purchaser and the Company prior to
Purchaser's Election Date; (b) by Parent, Purchaser or the Company if (i) the
Effective Time shall not have occurred on or before December 31, 1997 (so long
as the party seeking such termination has not failed to fulfill any obligation
under the Merger Agreement, which failure has been the cause of, or resulted in,
the failure of the Effective Time to occur on or before such date) or (ii) any
court of competent jurisdiction in the United States or other governmental
authority shall have issued an order, decree, ruling or taken any
26
<PAGE> 29
other action restraining, enjoining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable;
(c) by Parent if (i) due to an occurrence or circumstance that would result in a
failure to satisfy any condition to the Offer or the Note Tender Offer, as
applicable, Purchaser shall have (A) failed to commence the Offer within five
business days following the date of public announcement of the execution of the
Merger Agreement, (B) failed to commence the Note Tender Offer within 10
business days following the date of public announcement of the execution of the
Merger Agreement, (C) terminated the Offer or the Note Tender Offer without
having accepted any Shares or Notes (and without having obtained related
Consents), as the case may be, for payment thereunder or (D) failed to pay for
Shares or Notes (and obtain related Consents) pursuant to the Offer or the Note
Tender Offer, as the case may be, within 90 days following the commencement
thereof; unless such action or inaction under (A), (B), (C) or (D) shall have
been caused by or resulted from the failure of Parent or Purchaser to perform in
any material respect any material covenant or agreement of either of them
contained in the Merger Agreement or the material breach by Parent or Purchaser
of any material representation or warranty of either of them contained in the
Merger Agreement or (ii) prior to the purchase of Shares pursuant to the Offer
or the Notes pursuant to the Note Tender Offer, the Board or any committee
thereof shall have withdrawn or modified in a manner adverse to Purchaser or
Parent its approval or recommendation of the Offer, the Merger Agreement, the
Merger or any other Transaction or shall have recommended another merger,
consolidation, business combination with, or acquisition of, the Company or its
assets or another tender offer or exchange offer for Shares, or shall have
resolved to do any of the foregoing; or (d) by the Company, upon approval of the
Board if (i) Purchaser shall have (A) failed to commence the Offer within five
business days following the date of public announcement of the execution of the
Merger Agreement, (B) failed to commence the Note Tender Offer within 10
business days following the date of public announcement of the execution of the
Merger Agreement, (C) terminated the Offer or the Note Tender Offer without
having accepted any Shares or Notes (and without having obtained related
Consents), as the case may be, for payment thereunder or (D) failed to pay for
Shares pursuant to the Offer or the Notes (and obtain related Consents) pursuant
to the Note Tender Offer within 90 days following the commencement thereof,
unless such action or inaction under (A), (B), (C) or (D) shall have been caused
by or resulted from the failure of the Company to perform in any material
respect any material covenant or agreement of it contained in the Merger
Agreement or the material breach by the Company of any material representation
or warranty of it contained in the Merger Agreement or (ii) prior to the
purchase of Shares pursuant to the Offer or the Notes pursuant to the Note
Tender Offer, the Board shall have withdrawn or modified in a manner adverse to
Purchaser or Parent its approval or recommendation of the Offer, the Merger
Agreement, the Merger or any other Transaction in order to approve the execution
by the Company of a definitive agreement providing for the acquisition of the
Company or any of its assets by a sale, merger or other business combination or
in order to approve a tender offer or exchange offer for Shares by a third
party, in either case, as the Board determines in good faith that such action is
required for the Board to comply with its fiduciary duties to stockholders,
after consultation with its independent legal counsel and financial advisers,
and is on terms more favorable to the Company's stockholders than the Offer and
the Merger taken together (this provision of the Merger Agreement, together with
the provision described in clause (c)(ii) of this sentence, are collectively
referred to as the "Fiduciary Out Clause"); provided, however, that such
termination under this clause (ii) shall not be effective until the Company has
made payment to Parent of the Fee (as hereinafter defined) required to be paid
pursuant to the Merger Agreement and has deposited with a mutually acceptable
escrow agent $2.0 million for reimbursement of Expenses (as hereinafter
defined).
In the event of the termination of the Merger Agreement, the Merger
Agreement provides that it shall forthwith become void, and there shall be no
liability on the part of any party hereto, except under the provisions of the
Merger Agreement related to fees and expenses described below and
confidentiality and except for liability of any party for breach of the Merger
Agreement prior to its termination.
Fees and Expenses. The Merger Agreement provides that in the event that
(a) any person (including, without limitation, the Company or any affiliate
thereof), other than Parent or any affiliate of Parent, shall have become the
beneficial owner of more than 20% of the then outstanding Shares, the
27
<PAGE> 30
Merger Agreement shall have been terminated (other than pursuant to the
Fiduciary Out Clause) and within 12 months of such termination a Third Party
Acquisition (as defined hereinafter) shall occur; or (b) any person shall have
commenced, publicly proposed or communicated to the Company a proposal that is
publicly disclosed for a tender or exchange offer for 25% or more of the then
outstanding shares (or which, assuming the maximum amount of securities that
could be purchased, would result in any person beneficially owning 25% or more
of the then outstanding Shares) or otherwise for the direct or indirect
acquisition of the Company or all or substantially all of its assets for per
Share consideration having a value greater than the Per Share Amount and (i) the
Offer shall have remained open for at least 20 business days, (ii) the Minimum
Condition shall not have been satisfied and (iii) the Merger Agreement shall
have been terminated (other than pursuant to the Fiduciary Out Clause) and (iv)
within 12 months of such termination a Third Party Acquisition shall occur; or
(c) if the Minimum Condition or the Requisite Consent Condition shall not have
been satisfied on or prior to the date that is 60 days from the date of
commencement of the Offer, Parent desires to extend the Offer beyond such 60 day
period but the Company declines to consent to such extension, the Merger
Agreement is terminated (other than pursuant to the Fiduciary Out Clause) and
within 12 months of such termination a Third Party Acquisition shall occur; or
(d) the Merger Agreement is terminated pursuant to the Fiduciary Out Clause,
then, in any such event, provided that neither Parent nor Purchaser is in
material breach of its obligations under the Merger Agreement, the Company shall
pay Parent promptly (but in no event later than one business day after (i) the
consummation of the Third Party Acquisition, with respect to the events
described in clauses (a), (b) or (c), or (ii) such termination with respect to
clause (d)) a fee of U.S. $8 million (the "Fee"), plus "Expenses" (as defined
below).
The Merger Agreement also provides that so long as neither Parent nor
Purchaser is in material breach of its obligations under the Merger Agreement
and Parent is not entitled to the Fee pursuant to the preceding paragraph, if
(a) the Merger Agreement is terminated as described in clause (c) of the third
preceding paragraph due to the material breach of the Company's obligations
under the Merger Agreement or (b) the Merger Agreement is terminated as
described in clause (c) of the third preceding paragraph because of the
occurrence of the condition set forth in paragraph (f) under Section 14 set
forth below and such occurrence results from the failure of representations and
warranties of the Company to be true and correct in accordance with its terms,
then, in either case (a) or (b), the Company shall promptly reimburse Parent and
Purchaser for all Expenses.
"Expenses" is defined in the Merger Agreement to mean all reasonable
out-of-pocket expenses and fees up to U.S. $2.0 million in the aggregate
(including, without limitation, reasonable fees and expenses payable to all
banks, investment banking firms, other financial institutions and other persons
and their respective agents and counsel for arranging, committing to provide or
providing any financing for the transactions contemplated by the Merger
Agreement or structuring such transactions and all reasonable fees of counsel,
accountants, experts and consultants to Parent and Purchaser, and all printing
and advertising expenses) actually incurred by either of them or on their behalf
in connection with the transactions contemplated by the Merger Agreement,
including, without limitation, the financing thereof, and actually incurred by
banks, investment banking firms, other financial institutions and other persons
and assumed by Parent and Purchaser in connection with the negotiation,
preparation, execution and performance of the Merger Agreement, the structuring
and financing of the transactions contemplated by the Merger Agreement and any
financing commitments or agreements relating thereto. In the event that the
Company shall fail to pay the Fee or any Expenses when due, the term "Expenses"
is deemed to include the reasonable costs and expenses actually incurred or
accrued by Parent and Purchaser (including, without limitation, fees and
expenses of counsel) in connection with the collection under and enforcement of
the fees and expenses provision of the Merger Agreement, together with interest
on such unpaid Fee and Expenses, commencing on the date that the Fee or such
Expenses became due, at a per annum rate equal to the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York, from time to time, in
the City of New York, as such bank's prime rate plus 1%.
"Third Party Acquisition" is defined in the Merger Agreement to mean the
occurrence of any of the following events: (i) the acquisition of the Company by
merger, consolidation or other business
28
<PAGE> 31
combination transaction by any person other than Parent, Purchaser or any
affiliate thereof (a "Third Party"); (ii) the acquisition by any Third Party of
all or substantially all of the assets of the Company and its Subsidiaries,
taken as a whole; (iii) the acquisition by a Third Party of 50% or more of the
outstanding Shares whether by tender offer, exchange offer or otherwise; (iv)
the adoption by the Company of a plan of liquidation or the declaration or
payment of an extraordinary dividend; or (v) the repurchase by the Company or
any of its Subsidiaries of 50% or more of the outstanding Shares.
Except as set forth above, all costs and expenses incurred by Parent,
Purchaser and the Company in connection with the Merger Agreement and the
transactions contemplated by the Merger Agreement shall be paid by the party
incurring such expenses, whether or not any such transaction is consummated.
Confidentiality Agreement. On April 25, 1997, Parent entered into a
Confidentiality Agreement with the Company. The following is a summary of the
Confidentiality Agreement, a copy of which has been filed as an Exhibit to the
Schedule 14D-1 filed by Purchaser and Parent with the Commission in connection
with the Offer. Such summary is qualified in its entirety by reference to the
Confidentiality Agreement. Under the Confidentiality Agreement, Parent agreed to
use information furnished by the Company or its representatives, compiled by
Parent or its representatives from such furnished information, or gathered by
Parent by inspection of the Company and its Subsidiaries, that is not otherwise
generally available to the public (other than as a result of disclosure by
Parent or its representatives) (the "Evaluation Materials") exclusively for the
purpose of evaluating an acquisition transaction with the Company. In addition,
Parent agreed not to disclose any of the Evaluation Materials other than under
certain circumstances. Under the Confidentiality Agreement, Parent agreed that
without the prior written consent of the Company (i) for a period of two years
from the date of the Confidentiality Agreement it would not solicit for
employment any person employed by the Company on April 25, 1997 as a key
employee and (ii) for a period of one year from the date of the Confidentiality
Agreement it would not, (A) acquire or make any proposal to acquire any
securities or property of the Company, (B) propose to enter into any merger or
business combination involving the Company or purchase a material portion of the
assets of the Company, (C) make or participate in any solicitation of proxies to
vote, or seek to advise or influence any person with respect to the voting of
any securities of the Company, (D) form, join or participate in a "group"
(within the meaning of Section 13(d)(3) of the Exchange Act) with respect to any
voting securities of the Company, (E) otherwise act to seek to control or
influence the management, the Board of policies of the Company, (F) disclose any
intention, plan or arrangement inconsistent with the foregoing, or (G) take any
action which might require the Company to make a public announcement regarding
the possibility of a business combination or merger. Assuming the Minimum
Condition has been satisfied, upon acceptance for payment of Shares pursuant to
the Offer, the Confidentiality Agreement shall be deemed to have been terminated
without further action by the parties thereunder.
Exclusivity Agreement. The following is a summary of the Exclusivity
Agreement, dated as of June 16, 1997, between Parent and the Company (the
"Exclusivity Agreement"), a copy of which has been filed as an Exhibit to the
Schedule 14D-1 filed by Purchaser and Parent with the Commission in connection
with the Offer. Such summary is qualified in its entirety by reference to the
Exclusivity Agreement. The Exclusivity Agreement provided that, from June 16,
1997 through June 30, 1997 (the "Due Diligence Period"), the Company would
provide Parent access for a due diligence review of the Company and Parent and
the Company would work diligently in good faith towards the preparation and
execution of a definitive merger agreement (subject to Parent's satisfactory
completion of its due diligence review).
In the Exclusivity Agreement, the Company also agreed that it would not,
and no director, officer, stockholder, employee, agent or other representative
of the Company would be authorized by the Company to, negotiate or solicit
proposals for the sale or other disposition of the Company or its assets
(whether by means of a negotiated sale of securities or assets, tender or
exchange offer, merger or other business combination, recapitalization,
restructuring or other transaction (any such transaction being referred to as a
"Sale")) with or from any other party during the Due Diligence Period; provided,
however that the obligation described above would have terminated at 5:00 p.m.,
New York time on June 25,
29
<PAGE> 32
1997, if Parent had not notified the Company by that time that its board of
directors had determined to proceed with a business combination transaction. In
addition, the Company agreed that it would immediately cease and cause to be
terminated during such Due Diligence Period any existing activities, discussions
or negotiations with any person other than Parent or its affiliates in respect
of a Sale. In the event the Company received an unsolicited offer (an "Other
Offer") during the Due Diligence Period and was advised in writing by its legal
counsel that its board of directors had a fiduciary obligation to consider and
respond to such Other Offer prior to the expiration of the Due Diligence Period,
the Exclusivity Agreement permitted the Company to do so provided it advised
Parent of the receipt of such Other Offer and allowed Parent to submit a
competing offer for consideration by the Board at the same meeting at which such
Other Offer was to be considered. In consideration of the Company's agreement
described in this paragraph, Parent agreed to diligently pursue its review of
the Company during the Due Diligence Period and agreed further to notify the
Company within twenty-four (24) hours of any determination to not proceed with a
business combination transaction as contemplated by the parties, whereupon the
provisions described in this paragraph would terminate.
In the Exclusivity Agreement, the Company and Parent also agreed to keep
confidential all matters related to a proposed transaction with the Company
(except as required by law) and the Company expressed its intent to call a
meeting of its Board to consider a proposed transaction with Parent prior to the
end of the Due Diligence Period. The terms of the Exclusivity Agreement were
superseded by the Merger Agreement.
11. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY AFTER THE OFFER AND THE
MERGER.
Purpose of the Offer. The purpose of the Offer and the Merger is for
Parent to acquire control of, and the entire equity interest in, the Company.
Upon consummation of the Merger, the Company will become an indirect wholly
owned subsidiary of Parent. The Offer is being made pursuant to the Merger
Agreement.
In the Merger Agreement, the Company has agreed, in the event the
affirmative vote of the holders of Shares is required to approve the Merger
under Delaware Law or the Company's Certificate of Incorporation, to take all
action necessary to convene a meeting of its stockholders as soon as practicable
after the consummation of the Offer for the purpose of considering and taking
action on the Merger Agreement and the transactions contemplated thereby. Parent
and Purchaser have agreed that all Shares owned by them and their subsidiaries
will be voted in favor of the Merger Agreement and the transactions contemplated
thereby.
If Purchaser purchases Shares pursuant to the Offer, the Merger Agreement
provides that Parent shall be entitled to designate representatives to serve on
the Company's Board of Directors in proportion to Purchaser's ownership of
Shares following such purchase. See Section 10. Purchaser expects that such
representation would permit Purchaser to exert substantial influence over the
Company's conduct of its business and operations.
Appraisal Rights; Going Private Transactions. No appraisal rights are
available in connection with the Offer. However, if the Merger is consummated,
stockholders will have certain rights under Delaware Law to dissent and demand
appraisal of, and to receive payment in cash of the fair value of, their Shares.
Such rights to dissent, if the statutory procedures are complied with, could
lead to a judicial determination of the fair value of the Shares, as of the
Effective Time (excluding any element of value arising from the accomplishment
or expectation of the Merger), required to be paid in cash to such dissenting
holders for their Shares. In addition, such dissenting stockholders could be
entitled to receive payment of a fair rate of interest from the date of
consummation of the Merger on the amount determined to be the fair value of
their Shares. In determining the fair value of the Shares, the court is required
to take into account all relevant factors. Accordingly, such determination could
be based upon considerations other than, or in addition to, the market value of
the Shares, including, among other things, asset values and earnings capacity.
In Weinberger v. UOP, Inc., the Delaware Court stated among other things, that
"proof of value by any techniques or methods which are generally considered
acceptable in the financial community and otherwise admissable in court" should
be considered in an appraisal proceeding. Therefore, the value so
30
<PAGE> 33
determined in any appraisal proceeding could be the same, more or less than the
purchase price per Share in the Offer or the Merger Consideration.
In addition, several decisions by Delaware courts have held that, in
certain circumstances, a controlling stockholder of a company involved in a
merger has a fiduciary duty to other stockholders which requires that the merger
be fair to such other stockholders. In determining whether a merger is fair to
minority stockholders, Delaware courts have considered, among other things, the
type and amount of consideration to be received by the stockholders and whether
there was fair dealing among the parties. The Delaware Supreme Court stated in
Weinberger v. Philip A. Hunt Chemical Corp. that the remedy ordinarily available
to minority stockholders in a cash-out merger is the right to appraisal
described above. However, a damage remedy or injunctive relief may be available
if a merger is found to be the product of unfairness, including fraud,
misrepresentation or other misconduct.
The Commission has adopted Rule 13e-3 under the Exchange Act, which is
applicable to certain "going private" transactions and which may under certain
circumstances be applicable to the Merger or another business combination
following the purchase of Shares pursuant to the Offer in which Purchaser seeks
to acquire the remaining Shares not held by it. Purchaser believes, however,
that if the Merger is consummated within one year of the purchase of Shares
pursuant to the Offer, Rule 13e-3 will not be applicable to the Merger.
Purchaser believes that if the Merger is not consummated within one year of its
purchase of Shares pursuant to the Offer, Rule 13e-3 may be applicable to the
Merger. Rule 13e-3 requires, among other things, that certain financial
information concerning the Company and certain information relating to the
fairness of the proposed transaction and the consideration offered to minority
stockholders in such transaction be filed with the Commission and disclosed to
stockholders prior to consummation of the transaction.
Plans for the Company. It is currently expected that, following
consummation of the Offer, initially the business and operations of the Company
will, except as set forth in this Offer to Purchase, be continued by the Company
substantially as they are currently being conducted. Parent will continue to
evaluate the business and operations of the Company during the pendency of the
Offer and after the consummation of the Offer and the Merger, and will take such
actions as it deems appropriate under the circumstances then existing. Parent
intends to seek additional information about the Company during this period.
Thereafter, Parent intends to review such information as part of a comprehensive
review of the Company's business, operations, capitalization and management with
a view to maximizing the Company's potential in conjunction with Parent's
businesses. It is expected that the business and operations of the Company would
form an important part of Parent's future business plans.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals that relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any Subsidiary, a sale or transfer of a material amount
of assets of the Company or any Subsidiary or any material change in the
Company's capitalization or dividend policy or any other material changes in the
Company's corporate structure or business, or the composition of the Board or
the Company's management.
12. DIVIDENDS AND DISTRIBUTIONS. The Merger Agreement provides that the
Company shall not, between the date of the Merger Agreement and the Effective
Time, without the prior written consent of Parent, (a) issue, sell, pledge,
dispose of, grant, encumber, or authorize the issuance, sale, pledge,
disposition, grant or encumbrance of any shares of capital stock of any class of
the Company or any Subsidiary, or any options, warrants, convertible securities
or other rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom interest),
of the Company or any Subsidiary (except for the issuance of a maximum of
2,000,000 Shares issuable pursuant to employee stock options outstanding on the
date of the Merger Agreement and including up to 1,250 restricted Shares per
quarter issuable to outside directors in accordance with past practice pursuant
to the Stock Option Plans), (b) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except for such declarations, set asides, dividends
and other distributions made by any Subsidiary to the Company or (c) reclassify,
combine, split, subdivide or redeem, purchase or otherwise acquire, directly
31
<PAGE> 34
or indirectly, any of its capital stock. See Section 10. If, however, the
Company should, during the pendency of the Offer, (i) split, combine or
otherwise change the Shares or its capitalization, (ii) acquire or otherwise
cause a reduction in the number of outstanding Shares or (iii) issue or sell any
additional Shares (other than pursuant to outstanding employee and director
options, shares of any other class or series of capital stock, other voting
securities or any securities convertible into, or options, rights, or warrants,
conditional or otherwise, to acquire, any of the foregoing, then, without
prejudice to Purchaser's rights under Section 14, Purchaser may (subject to the
provisions of the Merger Agreement) make such adjustments to the purchase price
and other terms of the Offer (including the number and type of securities to be
purchased) as it deems appropriate to reflect such split, combination or other
change, acquisition, reduction, issuance or sale.
If, on or after June 23, 1997, the Company should declare or pay any
dividend on the Shares or make any other distribution (including the issuance of
additional shares of capital stock pursuant to a stock dividend or stock split,
the issuance of other securities or the issuance of rights for the purchase of
any securities) with respect to the Shares that is payable or distributable to
stockholders of record on a date prior to the transfer to the name of Purchaser
or its nominee or transferee on the Company's stock transfer records of the
Shares purchased pursuant to the Offer then, without prejudice to Purchaser's
rights under Section 14, (i) the purchase price per Share payable by Purchaser
pursuant to the Offer will be reduced (subject to the Merger Agreement) to the
extent any such dividend or distribution is payable in cash and (ii) any
non-cash dividend, distribution or right shall be received and held by the
tendering stockholder for the account of Purchaser and will be required to be
promptly remitted and transferred by each tendering stockholder to the
Depositary for the account of Purchaser, accompanied by appropriate
documentation of transfer. Pending such remittance and subject to applicable
law, Purchaser will be entitled to all the rights and privileges as owner of any
such non-cash dividend, distribution or right and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof, as
determined by Purchaser in its sole discretion.
13. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES, NYSE LISTING AND
EXCHANGE ACT REGISTRATION. The purchase of Shares by Purchaser pursuant to the
Offer will reduce the number of Shares that might otherwise trade publicly and
will reduce the number of holders of Shares, which could adversely affect the
liquidity and market value of the remaining Shares held by the public.
Depending upon the number of Shares purchased pursuant to the Offer, the
Shares may no longer meet the requirements of the New York Stock Exchange for
continued listing and may be delisted from the New York Stock Exchange and
deregistered under Section 12(b) of the Exchange Act. Parent intends to cause
the delisting by the New York Stock Exchange and deregistration of the Shares
following consummation of the Offer.
According to published guidelines, the New York Stock Exchange would
consider delisting the Shares if, among other things, the number of holders of
Shares should fall below 400 (or below 1,200, if trading volume falls below
100,000 Shares for the most recent 12 months), the number of publicly held
Shares (exclusive of holdings of officers, directors and their families and
other concentrated holdings of 10 percent or more ("NYSE Excluded Holdings"))
should fall below 600,000 or the aggregate market value of publicly held Shares
(exclusive of NYSE Excluded Holdings) should fall below $8,000,000. The Company
has advised Purchaser that, as of June 24, 1997, there were 17,126,609 Shares
outstanding, held by approximately 18,000 holders of record. If, as a result of
the purchase of Shares pursuant to the Offer or otherwise, the Shares no longer
meet the requirements of the New York Stock Exchange for continued listing and
the listing of the Shares is discontinued, the market for the Shares could be
adversely affected.
If the New York Stock Exchange were to delist the Shares, it is possible
that the Shares would continue to trade on another securities exchange or in the
over-the-counter market and that price or other quotations would be reported by
such exchange or through the Nasdaq Stock Market ("Nasdaq") or other sources.
The extent of the public market therefor and the availability of such quotations
would depend, however, upon such factors as the number of stockholders and/or
the aggregate market value of such securities remaining at such time, the
interest in maintaining a market in the Shares on the part of
32
<PAGE> 35
securities firms, the possible termination of registration under the Exchange
Act as described below, and other factors. Purchaser cannot predict whether the
reduction in the number of Shares that might otherwise trade publicly would have
an adverse or beneficial effect on the market price for or marketability of the
Shares or whether it would cause future market prices to be greater or less than
the Merger Consideration.
The Shares are currently "margin securities," as such term is defined under
the rules of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), which has the effect, among other things, of allowing banks to
extend credit on the collateral of such securities. Depending upon factors
similar to those described above regarding listing and market quotations,
following the Offer it is possible that the Shares might no longer constitute
"margin securities" for purposes of the margin regulations of the Federal
Reserve Board, in which event such Shares might no longer be eligible as
collateral for loans made by banks.
The Shares are currently registered under the Exchange Act. Registration of
the Shares under the Exchange Act may be terminated upon application of the
Company to the Commission if the Shares are not listed on a national securities
exchange and there are fewer than 300 record holders of the Shares. Termination
of registration of the Shares under the Exchange Act, assuming there are no
other securities of the Company subject to registration, would substantially
reduce the information required to be furnished by the Company to its
stockholders and to the Commission and would make certain provisions of the
Exchange Act, such as the short-swing profit recovery provisions of Section
16(b), the requirement of furnishing a proxy statement in connection with
stockholders' meetings pursuant to Section 14(a), and the requirements of Rule
13e-3 under the Exchange Act with respect to "going private" transactions, no
longer applicable to the Company. Furthermore, if the Purchaser acquires a
substantial number of Shares, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. If registration of the Shares
under the Exchange Act were terminated, the Shares would no longer be "margin
securities" or be eligible for NASDAQ reporting.
It is the present intention of the Parent to seek to cause the Company to
make an application for termination of registration of the Shares under the
Exchange Act as soon as possible following the Offer if the requirements for
termination of registration are met. If registration of the Shares under the
Exchange Act is not terminated prior to the Merger, registration of the Shares
under the Exchange Act will be terminated following the consummation of the
Merger.
14. CERTAIN CONDITIONS OF THE OFFER AND THE NOTE TENDER
OFFER. Notwithstanding any other provision of the Offer, Purchaser shall not be
required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) the Note Tender Offer shall have been terminated
in accordance with the conditions of the Note Tender Offer described below,
(iii) any applicable waiting period under the HSR Act shall not have expired or
been terminated prior to the expiration of the Offer or (iv) at any time on or
after the date of the Merger Agreement, and prior to the acceptance for payment
of Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding brought by any governmental, administrative or regulatory
authority or agency, domestic or foreign, before any court or governmental,
administrative or regulatory authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit or make materially more costly
the making of the Offer, the acceptance for payment of, or payment for, any
Shares by Parent, Purchaser or any other affiliate of Parent pursuant to
the Offer, or the consummation of any other transaction contemplated by the
Merger Agreement (collectively, the "Transactions"), or seeking to obtain
material damages in connection with any such Transaction; (ii) seeking to
prohibit or limit materially the ownership or operation by the Company or
Parent of all or any material portion of its business, or to compel the
Company or Parent to dispose of or hold
33
<PAGE> 36
separate all or any material portion of its business as a result of the
Transactions; (iii) seeking to impose or confirm limitations on the ability
of Parent, Purchaser or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer, or otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption of
the Merger Agreement and the Transactions contemplated thereby; or (iv)
seeking to require divestiture by Parent, Purchaser or any other affiliate
of Parent of any Shares; provided that Parent shall have used all
reasonable efforts to cause any such action or proceeding described in this
paragraph (a) to be dismissed or withdrawn;
(b) there shall have been issued any injunction, order or decree by
any court or governmental, administrative or regulatory authority or
agency, domestic or foreign, resulting from any action or proceeding
brought by any person other than any governmental, administrative or
regulatory authority or agency, domestic or foreign, that (i) restrains or
prohibits the making of the Offer or the consummation of any other
Transaction; (ii) prohibits or limits ownership or operation by the Company
or Parent of all or any material portion of its business or assets, or
compels the Company or Parent to dispose of or hold separate all or any
material portion of its business or assets, in each case as a result of the
Transactions; (iii) imposes limitations on the ability of Parent or
Purchaser to exercise effectively full rights of ownership of any Shares,
including, without limitation, the right to vote any Shares acquired by
Purchaser pursuant to the Offer, or otherwise on all matters properly
presented to the Company's stockholders, including, without limitation, the
approval and adoption of the Merger Agreement and the Transactions; (iv)
requires divestiture by Parent or Purchaser of any Shares; provided that
Parent shall have used all reasonable efforts to cause any such injunction,
order or decree described in this paragraph (b) to be vacated or lifted;
(c) there shall have been any action taken, or any statute, rule,
regulation, order or injunction enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to (i) Parent, the Company or any
subsidiary or affiliate of Parent or the Company or (ii) any Transaction,
by any legislative body, court, government or governmental, administrative
or regulatory authority or agency, domestic or foreign, in the case of both
(i) and (ii) other than the routine application of the waiting period
provisions of the HSR Act to the Offer or the Merger, in each case that
results in any of the consequences referred to in clauses (i) through (iv)
of paragraph (b) above; provided that Parent shall have used all reasonable
efforts to cause any such action, order or injunction described in this
paragraph (c) to be vacated or lifted;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities of (x) the Company on the
New York Stock Exchange or (y) Parent on any of The Toronto Stock Exchange,
The Montreal Exchange or the New York Stock Exchange, (ii) any decline,
measured from the date hereof, in the Standard & Poor's 500 Index by an
amount in excess of 30%, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or Canada,
(iv) any limitation (whether or not mandatory) by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, on the extension of credit by banks or other lending institutions,
(v) a commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or (vii) in the case of any of the foregoing existing on the date hereof, a
material acceleration or worsening thereof;
(e) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of the then outstanding Shares has been acquired by any
person, other than Parent or any of its affiliates or (ii) (A) the Board or
any committee thereof shall have withdrawn or modified in a manner adverse
to Parent or Purchaser the approval or recommendation of the Offer, the
Merger or the Agreement or approved or recommended any takeover proposal or
any other acquisition of Shares other than the Offer and the Merger or (B)
the Board or any committee thereof shall have resolved to do any of the
foregoing;
34
<PAGE> 37
(f) (i) any representation or warranty of the Company in the Merger
Agreement shall not be true and correct; or
(ii) there shall have occurred, since the date of the Merger
Agreement, a change in the business, operations, financial condition,
assets or liabilities of the Company or any Subsidiary
with the effect that such failure of any such representation or warranty to
be true and correct or such change, when taken together with all other such
failures of such representations and warranties to be true and correct
(both favorable and adverse) and all other such changes (both favorable and
adverse), in the aggregate would have, a Material Adverse Effect; provided,
however that, for the purpose of the foregoing condition, in determining
whether any such representation or warranty is true or correct, any
qualification as to materiality or Material Adverse Effect contained in any
such representation and warranty shall be deemed not to apply;
(g) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Merger Agreement;
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Offer or postpone the acceptance for payment of or payment
for Shares thereunder; which, in the sole judgment of Purchaser, in any
such case, and regardless of the circumstances (including any action or
inaction by Parent or any of its affiliates) giving rise to any such
condition, makes it inadvisable to proceed with such acceptance for payment
or payment.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser or Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
Notwithstanding any other provision of the Note Tender Offer, Parent shall
not be required to accept for payment or pay for any Notes or related Consents
tendered pursuant to the Note Tender Offer and may terminate or amend the Note
Tender Offer and may postpone the acceptance for payment of and payment for
Notes and related Consents tendered, if (i) the Requisite Consent Condition
shall not have been satisfied, (ii) the Offer shall have been terminated in
accordance with the conditions described above or (iii) at any time on or after
the date of the Merger Agreement, and prior to the acceptance for payment of
Notes and related Consents, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding brought by any governmental, administrative or regulatory
authority or agency, domestic or foreign, before any court or governmental,
administrative or regulatory authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, materially delay or otherwise
directly or indirectly restrain or prohibit or make materially more costly
the making of the Note Tender Offer, the acceptance for payment of, or
payment for, any Notes or related Consents by Parent or any other affiliate
of Parent pursuant to the Note Tender Offer or the consummation of any
other Transaction, or seeking to obtain material damages in connection with
any Transaction; (ii) seeking to prohibit or limit materially the ownership
or operation by the Company or Parent of all or any material portion of its
business or to compel the Company or Parent to dispose of or hold separate
all or any material portion of its business as a result of the
Transactions; (iii) seeking to impose or confirm limitations on the ability
of Parent or any affiliate of Parent to exercise effectively full rights of
ownership of any Notes or related Consents, or (iv) seeking to require
divestiture by Parent or any affiliate of Parent of any Notes; provided
that Parent shall have used all reasonable efforts to cause any such action
or proceeding described in this paragraph (a) to be dismissed or withdrawn;
35
<PAGE> 38
(b) there shall have been issued any injunction, order or decree by
any court or governmental, administrative or regulatory authority or
agency, domestic or foreign, resulting from any action or proceeding
brought by any person other than any governmental, administrative or
regulatory authority or agency, domestic or foreign, that (i) restrains or
prohibits the making of the Note Tender Offer or the consummation of any
other Transaction; (ii) prohibits or limits ownership or operation by the
Company or Parent of all or any material portion of its business or assets
or compels the Company or Parent to dispose of or hold separate all or any
material portion of its business or assets, in each case as a result of the
Transactions; (iii) imposes limitations on the ability of Parent or
Purchaser to exercise effectively full rights of ownership of any Notes; or
(iv) requires divestiture by Parent of any Notes; provided that Parent
shall have used all reasonable efforts to cause any such injunction, order
or decree described in this paragraph (b) to be vacated or lifted;
(c) there shall have been any action taken, or any statute, rule,
regulation, order or injunction enacted, entered, enforced, promulgated,
amended, issued or deemed applicable to (i) Parent, the Company or any
subsidiary or affiliate of Parent or the Company or (ii) any Transaction,
by any legislative body, court, government or governmental, administrative
or regulatory authority or agency, domestic or foreign, in the case of both
(i) and (ii) other than the routine application of the waiting period
provisions of the HSR Act to the Offer or the Merger, in each case that
results in any of the consequences referred to in clauses (i) through (iv)
of paragraph (b) above; provided that Parent shall have used all reasonable
efforts to cause any such action, order or injunction described in this
paragraph (c) to be vacated or lifted;
(d) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities of (x) the Company on the
New York Stock Exchange or (y) Parent on any of The Toronto Stock Exchange,
the Montreal Exchange or the New York Stock Exchange, (ii) any decline,
measured from the date hereof, in the Standard & Poor's 500 Index by an
amount in excess of 30%, (iii) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States or Canada,
(iv) any limitation (whether or not mandatory) by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, on the extension of credit by banks or other lending institutions,
(v) a commencement of a war or armed hostilities or other national or
international calamity directly or indirectly involving the United States
or (vii) in the case of any of the foregoing existing on the date hereof, a
material acceleration or worsening thereof;
(e) (i) it shall have been publicly disclosed or Purchaser shall have
otherwise learned that beneficial ownership (determined for the purposes of
this paragraph as set forth in Rule 13d-3 promulgated under the Exchange
Act) of 20% or more of the then outstanding Shares has been acquired by any
person, other than Parent or any of its affiliates or (ii) (A) the Board or
any committee thereof shall have withdrawn or modified in a manner adverse
to Parent or Purchaser the approval or recommendation of the Offer, the
Merger or the Agreement or approved or recommended any takeover proposal or
any other acquisition of Shares other than the Offer and the Merger or (B)
the Board or any committee thereof shall have resolved to do any of the
foregoing;
(f) (i) any representation or warranty of the Company in the Merger
Agreement shall not be true and correct; or
(ii) there shall have occurred, since the date of the Merger
Agreement, a change in the business, operations, financial condition,
assets or liabilities of the Company or any Subsidiary
with the effect that such failure of any such representation or warranty to
be true and correct or such change, when taken together with all other such
failures of such representations and warranties to be true and correct
(both favorable and adverse) and all other such changes (both favorable and
adverse), in the aggregate would have, a Material Adverse Effect; provided,
however that, for the purpose of the foregoing condition, in determining
whether any such representation or warranty is true or correct, any
qualification as to materiality or Material Adverse Effect contained in any
such representation and warranty shall be deemed not to apply;
36
<PAGE> 39
(g) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Agreement;
(h) the Merger Agreement shall have been terminated in accordance with
its terms; or
(i) Purchaser and the Company shall have agreed that Purchaser shall
terminate the Note Tender Offer or postpone the acceptance for payment of
or payment for Notes and related Consents thereunder; which, in the sole
judgment of Purchaser, in any such case, and regardless of the
circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to
proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to any such condition or may be waived by Purchaser or Parent in
whole or in part at any time and from time to time in their sole discretion. The
failure by Parent or Purchaser at any time to exercise any of the foregoing
rights shall not be deemed a waiver of any such right; the waiver of any such
right with respect to particular facts and other circumstances shall not be
deemed a waiver with respect to any other facts and circumstances; and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Based upon its examination of publicly available information with
respect to the Company and the review of certain information furnished by the
Company to Parent and discussions of representatives of Parent with
representatives of the Company during Parent's investigation of the Company (see
Section 10), neither Purchaser nor Parent is aware of any license or other
regulatory permit that appears to be material to the business of the Company and
the Subsidiaries, taken as a whole, that might be adversely affected by the
acquisition of Shares by Purchaser pursuant to the Offer or, except as set forth
below, of any approval or other action by any domestic (federal or state) or
foreign governmental, administrative or regulatory authority or agency that
would be required prior to the acquisition of Shares by Purchaser pursuant to
the Offer. Should any such approval or other action be required, it is
Purchaser's present intention to seek such approval or action. Purchaser does
not currently intend, however, to delay the purchase of Shares tendered pursuant
to the Offer pending the outcome of any such action or the receipt of any such
approval (subject to Purchaser's right to decline to purchase Shares if any of
the conditions in Section 14 shall have occurred). There can be no assurance
that any such approval or other action, if needed, would be obtained without
substantial conditions or that adverse consequences might not result to the
business of the Company, Purchaser or Parent (or that certain parts of the
businesses of the Company, Purchaser or Parent might not have to be disposed of
or held separate, or other substantial conditions complied with) in order to
obtain such approval or other action or in the event that such approval was not
obtained or such other action was not taken. Purchaser's obligation under the
Offer to accept for payment and pay for Shares is subject to certain conditions,
including conditions relating to the legal matters discussed in this Section 15.
See Section 14.
State Takeover Laws; Antitakeover Provisions in Certificate of
Incorporation. Under Delaware law, the approval of the Board and the
affirmative vote of the holders of a majority of the outstanding Shares are
required to approve and adopt the Merger, except that the affirmative vote of
the holders of Shares will not be required if immediately prior to the Effective
Time Purchaser holds 90 percent or more of the outstanding Shares. The Company
has represented to Parent and Purchaser in the Merger Agreement that prior to
the execution and delivery of the Merger Agreement and the Stockholders
Agreement by the parties thereto, the Company's Board approved the transactions
contemplated thereby such that the Merger shall not be subject to restrictions
under Section 203 of Delaware Law.
A number of other states have adopted laws and regulations applicable to
attempts to acquire securities of corporations that are incorporated, or have
substantial assets, stockholders, principal executive offices or principal
places of business, or whose business operations otherwise have substantial
economic effects, in such states. In Edgar v. MITE Corp., the Supreme Court of
the United States
37
<PAGE> 40
invalidated on constitutional grounds the Illinois Business Takeover Statute,
which, as a matter of state securities law, made takeovers of corporations
meeting certain requirements more difficult. However, in 1987 in CTS Corp. v.
Dynamics Corp. of America, the Supreme Court held that the State of Indiana
could, as a matter of corporate law and, in particular, with respect to those
aspects of corporate law concerning corporate governance, constitutionally
disqualify a potential acquiror from voting on the affairs of a target
corporation without the prior approval of the remaining stockholders. The state
law before the Supreme Court was by its terms applicable only to corporations
that had a substantial number of stockholders in the state and were incorporated
there. Subsequently, in TLX Acquisition Corp. v. Telex Corp., a federal district
court in Oklahoma ruled that certain Oklahoma corporate governance statutes were
unconstitutional insofar as they applied to corporations incorporated outside
Oklahoma because they could subject such corporations to inconsistent
regulations. Similarly, in Tyson Foods, Inc. v. McReynolds, a federal district
court in Tennessee ruled that four Tennessee takeover statutes were
unconstitutional as applied to corporations incorporated outside Tennessee. This
decision was affirmed by the United States Court of Appeals for the Sixth
Circuit. In December 1988, a federal district court in Florida held in Grand
Metropolitan PLC v. Butterworth that the provisions of the Florida Affiliated
Transactions Act and the Florida Control Share Acquisition Act were
unconstitutional as applied to corporations incorporated outside of Florida.
The Company, directly or through subsidiaries, conducts business in a
number of states throughout the United States, some of which have enacted
takeover laws such as those described above. Purchaser does not know whether any
of these laws will, by their terms, apply to the Offer or the Merger and has not
necessarily complied with any such laws. Should any person seek to apply any
state takeover law, Purchaser will take such action as then appears desirable,
which may include challenging the validity or applicability of any such statute
in appropriate court proceedings. In the event it is asserted that one or more
state takeover laws are applicable to the Offer or the Merger, and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer, Purchaser might be required to file certain information
with, or receive approvals from, the relevant state authorities. In addition, if
enjoined, Purchaser might be unable to accept for payment any Shares tendered
pursuant to the Offer, or be delayed in continuing or consummating the Offer and
the Merger. In such case, Purchaser may not be obligated to accept for payment
any Shares tendered. See Section 14.
Section 203 of Delaware Law limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined as any
beneficial owner of 15% or more of outstanding voting stock of the corporation)
unless, among other things, the corporation's board of directors has given its
prior approval to either the business combination or the transaction which
resulted in the stockholder becoming an "interested stockholder." The Company
has approved, among other things, the Offer and the Merger for purposes of
Section 203 of Delaware Law.
Article Ten of the Company's Certificate of Incorporation provides that,
except as described below, the affirmative vote of not less than a majority of
the votes entitled to be cast by the holders of all the then outstanding shares
of voting stock of the Company, excluding voting stock beneficially owned by any
entity who has announced or publicly disclosed a plan to become the beneficial
owner of twenty percent of the voting stock of the Company (an "Interested
Stockholder"), is required to approve a "Business Combination" (defined to
include, among other things, any merger of the Company with any Interested
Stockholder or any agreement providing for such a merger). However, the vote
requirement does not apply if either (a) the merger is approved by a majority of
the "Continuing Directors" then in office or (2) certain price and procedural
requirements are met. The term "Continuing Directors" is defined to include any
director of the Company who is not an affiliate, associate or representative of
the Interested Stockholder and who was a member of the Board prior to the time
that the Interested Stockholder became an Interested Stockholder, and any
successor who is not an affiliate, associate or representative of the Interested
Stockholder and is recommended or elected to succeed a Continuing Director by a
majority of the Continuing Directors then in office. The Company has represented
in the Merger Agreement that the Board, at a meeting duly called and held on
June 25, 1997, has unanimously
38
<PAGE> 41
approved and adopted the Merger Agreement and the transactions contemplated
thereby. Such approval satisfies the requirements of Article Ten of the
Company's Certificate of Incorporation.
Antitrust. Under the HSR Act and the rules that have been promulgated
thereunder by the FTC, certain acquisition transactions may not be consummated
unless certain information has been furnished to the Antitrust Division and the
FTC and certain waiting period requirements have been satisfied. The acquisition
of Shares by Purchaser pursuant to the Offer is subject to such requirements.
See Section 2.
Pursuant to the HSR Act, on July 7, 1997, Parent anticipates filing a
Premerger Notification and Report Form in connection with the purchase of Shares
pursuant to the Offer with the Antitrust Division and the FTC. Under the
provisions of the HSR Act applicable to the Offer, the purchase of Shares
pursuant to the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing by Parent. Accordingly, it
is anticipated that the waiting period under the HSR Act applicable to the
purchase of Shares pursuant to the Offer will expire at 11:59 p.m., New York
City time, on July 22, 1997, unless such waiting period is earlier terminated by
the FTC and the Antitrust Division or extended by a request from the FTC or the
Antitrust Division for additional information or documentary material prior to
the expiration of the waiting period. Pursuant to the HSR Act, Parent will
request early termination of the waiting period applicable to the Offer. There
can be no assurance, however, that the 15-day HSR Act waiting period will be
terminated early. If either the FTC or the Antitrust Division were to request
additional information or documentary material from Parent with respect to the
Offer, the waiting period with respect to the Offer would expire at 11:59 p.m.,
New York City time, on the tenth calendar day after the date of substantial
compliance by Parent with such request. Thereafter, the waiting period could be
extended only by court order. If the acquisition of Shares is delayed pursuant
to a request by the FTC or the Antitrust Division for additional information or
documentary material pursuant to the HSR Act, the Offer, subject to the terms of
the Merger Agreement, may, but need not, be extended and, in any event, the
purchase of and payment for Shares will be deferred until 10 days after the
request is substantially complied with, unless the extended period expires on or
before the date when the initial 15-day period would otherwise have expired, or
unless the waiting period is sooner terminated by the FTC and the Antitrust
Division. Only one extension of such waiting period pursuant to a request for
additional information is authorized by the HSR Act and the rules promulgated
thereunder, except by court order. It is a condition to the Offer that the
waiting period applicable under the HSR Act to the Offer expire or be
terminated. See Section 2 and Section 14.
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the proposed acquisition of Shares by
Purchaser pursuant to the Offer. At any time before or after the purchase of
Shares pursuant to the Offer by Purchaser, the FTC or the Antitrust Division
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the purchase of
Shares pursuant to the Offer or seeking the divestiture of Shares purchased by
Purchaser or the divestiture of substantial assets of Parent, the Company or
their respective subsidiaries. Private parties and state attorneys general may
also bring legal action under federal or state antitrust laws under certain
circumstances. Based upon an examination of information available to Parent
relating to the businesses in which Parent, the Company and their respective
subsidiaries are engaged, Parent and Purchaser believe that the Offer will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, what the result would be. See Section 14 for certain
conditions to the Offer, including conditions with respect to litigation.
Federal Reserve Board Regulations. The margin regulations promulgated by
the Federal Reserve Board place restrictions on the amount of credit that may be
extended for the purpose of purchasing margin stock (including the Shares) if
such credit is secured directly or indirectly by margin stock. Parent and
Purchaser believe that the financing of the acquisition of the Shares will be in
full compliance with or not subject to the margin regulations.
Other Foreign Approvals. The Company owns property and conducts business
in a number of foreign countries and jurisdictions. In connection with the
acquisition of the Shares pursuant to the Offer,
39
<PAGE> 42
the laws of certain of those foreign countries and jurisdictions may require the
filing of information with, or the obtaining of the approval of, governmental
authorities in such countries and jurisdictions. The governments in such
countries and jurisdictions might attempt to impose additional conditions on the
Company's operations conducted in such countries and jurisdictions as a result
of the acquisition of the Shares pursuant to the Offer or the Merger. There can
be no assurance that Purchaser will be able to cause the Company or its
subsidiaries to satisfy or comply with such laws or that compliance or non-
compliance will not have adverse consequences for the Company or any subsidiary
after purchase of the Shares pursuant to the Offer or the Merger.
16. FEES AND EXPENSES. Neither Purchaser nor Parent, nor any officer,
director, stockholder, agent or other representative of Purchaser or Parent will
pay any fees or commissions to any broker, dealer or other person (other than
the Dealer Managers, the Information Agent and the Depositary) for soliciting
tenders of Shares pursuant to the Offer. Brokers, dealers, commercial banks and
trust companies and other nominees will, upon request, be reimbursed by
Purchaser for customary mailing and handling expenses incurred by them in
forwarding materials to their customers.
Goldman Sachs and Union Bancaire are acting as Dealer Managers in
connection with the Offer and Union Bancaire has provided certain financial
advisory services to Parent and Purchaser in connection with the Offer. Parent
has agreed to pay Goldman Sachs and Union Bancaire reasonable and customary
compensation for such services. In addition, Parent has agreed to reimburse
Goldman Sachs and Union Bancaire for reasonable out-of-pocket expenses related
to their engagement, including the reasonable fees and expenses of a single
counsel, and has agreed to indemnify each of Goldman Sachs and Union Bancaire
and certain affiliated persons against certain liabilities and expenses in
connection with its services, including, without limitation, certain liabilities
under the federal securities laws.
Purchaser and Parent have retained MacKenzie Partners, Inc. as the
Information Agent and First Chicago Trust Company of New York as the Depositary
in connection with the Offer. The Information Agent may contact holders of
Shares by mail, telephone, telex, telecopy, telegraph and personal interview and
may request banks, brokers, dealers and other nominee stockholders to forward
materials relating to the Offer to beneficial owners.
As compensation for acting as Information Agent in connection with the
Offer, MacKenzie Partners, Inc. will be paid reasonable and customary
compensation for its services, and will also be reimbursed for certain
out-of-pocket expenses and will be indemnified against certain liabilities and
expenses in connection with the Offer, including certain liabilities under the
federal securities laws. Purchaser will pay the Depositary reasonable and
customary compensation for its services in connection with the Offer, plus
reimbursement for out-of-pocket expenses, and will indemnify the Depositary
against certain liabilities and expenses in connection therewith, including
under the federal securities laws.
17. MISCELLANEOUS. The Offer is made only by this Offer to Purchase and
the related Letter of Transmittal and is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares in any jurisdiction in which
the Offer or the acceptance thereof would not be in compliance with the
securities, blue sky or other laws of such jurisdiction. However, Purchaser may,
in its discretion, take such action as it may deem necessary to make the Offer
in any jurisdiction and extend the Offer to holders of Shares in such
jurisdiction. In those jurisdictions where securities laws require the Offer to
be made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of Purchaser by Goldman Sachs, Union Bancaire or one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER, PARENT OR THE COMPANY NOT CONTAINED IN
THIS OFFER TO PURCHASE OR IN THE LETTER OF TRANSMITTAL AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
40
<PAGE> 43
Pursuant to Rule 14d-3 of the General Rules and Regulations under the
Exchange Act, Parent and Purchaser have filed with the Commission the Schedule
14D-1, together with exhibits, furnishing certain additional information with
respect to the Offer. The Schedule 14D-1 and any amendments thereto, including
exhibits, may be inspected at, and copies may be obtained from, the same places
and in the same manner as set forth in Section 7 (except that they will not be
available at the regional offices of the Commission).
UD DELAWARE CORP.
July 2, 1997
41
<PAGE> 44
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND PURCHASER
The following table sets forth the name, business or residence address,
principal occupation or employment at the present time and during the last five
years, and the name, principal business and address of any corporation or other
organization in which such employment is conducted or was conducted of each
director and executive officer of Parent. Except for Messrs. Crossgrove, Grant,
McDonald, Stinson, Allan Taylor and George Taylor, who are citizens of Canada,
each of Parent's directors and executive officers is a citizen or permanent
resident of the United States. The business address of each executive officer of
Parent is 2300 One First Union Center, Charlotte, North Carolina 28202. Each
occupation set forth opposite a person's name, unless otherwise indicated,
refers to employment with Parent. Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST FIVE YEARS,
BUSINESS (B) OR RESIDENCE (R) NAME, PRINCIPAL BUSINESS AND ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
---- --------------------------------------- -----------------------------------------
<S> <C> <C>
Donald N. Boyce*............... (b) IDEX Corporation Chairman of the Board, President and
630 Dundee Rd., Ste. 400 Chief Executive Officer of IDEX
Northbrook, Illinois 60065 Corporation, a diversified manufacturing
company, from 1988 to present.
Hermann Buerger*............... (b) Commerzbank AG Executive Vice President of Commerzbank
2 World Financial Center AG, a commercial bank, from 1989 to
New York, New York 10281 present.
James E. Courtney*............. (r) 1779 Venus Drive Chairman of the Board, First Independence
Sanibel, Florida 33957 Bank of Fort Myers, a commercial bank,
16740 San Carlos Blvd., Fort Myers,
Florida 33908-3954, from January 1, 1996
to present. President, The Mariner Group,
Inc., a real estate management and
development company, 12800 University
Drive, Suite 350, Fort Myers, Florida
33907, 1992-1995.
</TABLE>
42
<PAGE> 45
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST FIVE YEARS,
BUSINESS (B) OR RESIDENCE (R) NAME, PRINCIPAL BUSINESS AND ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
---- --------------------------------------- -----------------------------------------
<S> <C> <C>
Peter A. Crossgrove*........... (b) Southern Africa Minerals President and CEO, Southern Africa
Corporation Minerals Corporation, a diamond
141 Adelaide Street West exploration company, from 1994 to
Suite 1703 present. Chairman and Chief Executive
Toronto, Ontario M5H 3L5 Officer of Brush Creek Corporation, an
Canada investment holding company, 250 Yonge
Street, Toronto, Ontario M5B 1C8, Canada,
from 1993 to present. Acting CEO, Placer
Dome Inc., an international mining
company, Suite 3500, IBM Tower,
Toronto-Dominion Ctr., Toronto, Ontario
M5K 1N3, Canada, 1992-1993. President and
Chief Executive Officer of Itco
Properties Ltd., a wholly owned
subsidiary of Starlaw Holdings Limited, a
company that develops, purchases and
holds real estate in Canada and the U.S.,
Royal Bank Plaza Suite 1525, Toronto,
Ontario M5J 2J2, Canada, 1982-1992.
R. Stuart Dickson*............. (b) Ruddick Corporation Chairman of the Executive Committee,
2000 Two First Union Center Ruddick Corporation, an industrial
Charlotte, NC 28282 thread, regional supermarket and venture
capital holding company, 2000 Two First
Union Center, Charlotte, NC 28282, from
1994 to present. Chairman, Ruddick
Corporation, 1968-1994.
The Honorable James A. Grant, (b) Stikeman, Elliott Partner of Stikeman, Elliot, a law firm,
P.C., Q.C.*.................. Suite 3900 from 1970 to present.
1155 Rene Levesque
Blvd., West
Montreal, Quebec H3B 3V2 Canada
William R. Holland*............ Chairman since 1987, and Chief Executive
Officer since 1986.
Russell C. King, Jr.*.......... (r) 2376E Dunwoody Crossing Retired since May 30, 1994. President and
Atlanta, Georgia 30338 Chief Operating Officer, Sonoco Products
Company, an international manufacturer of
packaging products, 1 North Second
Street, P.O. Box 160, Hartsville, SC
29551, 1990-1994.
H. John McDonald*.............. (b) Black & McDonald Limited Chairman, Black & McDonald Limited, an
Suite 2800, 2 Bloor St. East international mechanical and electrical
Toronto, Ontario M4W 1A8 contracting company, since 1984.
Canada
</TABLE>
43
<PAGE> 46
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST FIVE YEARS,
BUSINESS (B) OR RESIDENCE (R) NAME, PRINCIPAL BUSINESS AND ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
---- --------------------------------------- -----------------------------------------
<S> <C> <C>
Dalton D. Ruffin*.............. (r) 2871 Galsworthy Dr. Retired since January 1, 1989.
Winston-Salem, NC 27106
William W. Stinson*............ (r) 1001 13th Avenue, SW Retired since May 1, 1996. Chairman of
Suite 750 Canadian Pacific Limited, a
Calgary, Alberta T2R 0L5 transportation, energy, real estate and
Canada hotel company, Suite 800, Place du
Canada, P.O. Box 6042, Station
Centre-ville, Montreal, Quebec H3C 3E4,
Canada, 1989-1996. Chief Executive
Officer, Canadian Pacific Limited,
1985-1996.
Allan R. Taylor*............... (r) The Chedington Manor Retired since January 31, 1995. Chairman,
1 Chedington Place, Suite 2A Royal Bank of Canada, a financial
North York, Ontario M4N 3R4 institution, Royal Bank Plaza, Toronto,
Canada Ontario M5J 2J5, Canada, 1986-1995. Chief
Executive Officer, Royal Bank of Canada,
1986-1994.
George S. Taylor*.............. (r) R.R. #3 Retired since December 31, 1995.
4675 Line 3 President and Chief Executive Officer,
St. Mary's, Ontario John Labatt Limited, a brewing company,
N4X 1C6 Canada Labatt House BCE Place, P.O. Box 811,
Suite 200-181 Bay St., Toronto, Ontario
M5J 2T3 Canada, 1992-1995. Executive Vice
President, John Labatt Limited,
1985-1992.
Jan K. Ver Hagen*.............. President and Chief Operating Officer
since 1994. Vice Chairman, Emerson
Electric Co., a manufacturer of a broad
range of electrical and electronic
products, 8000 W. Florissant Ave., St.
Louis, Missouri 63136, 1988-1994.
Robert E. Drury................ Executive Vice President and Chief
Administrative Officer since 1995. Chief
Financial Officer, 1992-1995, and Senior
Vice President, 1993-1995. Vice
President, 1987-1993.
B. Bernard Burns, Jr........... President of Door Products division since
1997. President of Building Products
segment, 1996-1997. General Counsel and
Secretary since 1992, and Senior Vice
President since 1993. Vice President,
1989-1993.
</TABLE>
44
<PAGE> 47
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST FIVE YEARS,
BUSINESS (B) OR RESIDENCE (R) NAME, PRINCIPAL BUSINESS AND ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
---- --------------------------------------- -----------------------------------------
<S> <C> <C>
Richard A. Bearse.............. Senior Vice President, Planning and
Development since 1996. President of
Building Products segment, 1995- 1996.
President and Chief Executive Officer of
Flair Corporation, a manufacturer of air
and water filtration systems (and a
subsidiary of Parent), 4647 Southwest
40th Avenue, Ocala, Florida 34474-5799,
1991-1995.
Glenn A. Eisenberg............. Senior Vice President and Chief Financial
Officer since 1995. Vice President of
Planning and Development, 1992-1995.
Director of Corporate Finance and
Investor Relations, 1991-1992.
John G. MacKay................. Executive Vice President -- Europe since
1996. Senior Vice President since 1995.
President and Chief Executive Officer,
The Marley Cooling Tower Company, a
manufacturer of cooling towers for power
generation, industrial, refrigeration and
HVAC applications (and a subsidiary of
Parent), 7401 West 129th Street, Overland
Park, Kansas 66213, 1995-1996. President
of Industrial Products segment,
1993-1995.
Irvin B. Prude................. Senior Vice President since 1995.
President, Building Products segment,
1993-1995. Senior Vice President,
1992-1993.
William Dries.................. Vice President since 1990. Controller
since 1988.
J. Milton Childress, II........ Vice President since 1996. Director of
Corporate Development, 1992-1996.
June P. Hassett................ Vice President since 1996. Director of
Taxes, 1991-1996.
Richard L. Magee............... Vice President since 1996. Associate
General Counsel since 1993. Assistant
General Counsel, 1989-1993.
Thomas J. Snyder............... Vice President since 1993. Treasurer
since 1991.
</TABLE>
45
<PAGE> 48
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION OR EMPLOYMENT AND
MATERIAL OCCUPATIONS FOR PAST FIVE YEARS,
BUSINESS (B) OR RESIDENCE (R) NAME, PRINCIPAL BUSINESS AND ADDRESS OF
NAME ADDRESS PRINCIPAL OFFICE OF EMPLOYER
---- --------------------------------------- -----------------------------------------
<S> <C> <C>
Timothy J. Verhagen............ Vice President since 1993. Vice President
and Associate General Counsel, The Marley
Company, a manufacturer of engineered
equipment for heating, fluid handling and
heat exchange applications (and a
subsidiary of Parent), 1900 Shawnee
Mission Parkway, Mission, Kansas 66205,
1985-1993.
C. Theodore Leinbach III....... Assistant Vice President since 1996.
Director -- Accounting, 1993-1996.
Manager -- Accounting, 1989-1993.
</TABLE>
The directors of Purchaser are Messrs. Holland, Drury and Bearse. The
officers of Purchaser are as follows: William R. Holland, Chairman and Chief
Executive Officer; Robert E. Drury, Senior Vice President; Richard A. Bearse,
Senior Vice President; Richard L. Magee, Vice President and Secretary; Glenn A.
Eisenberg, Vice President and Treasurer; and J. Milton Childress, II, Vice
President.
46
<PAGE> 49
Facsimiles of the Letter of Transmittal will be accepted. The Letter of
Transmittal and certificates evidencing Shares and any other required documents
should be sent or delivered by each stockholder or his broker, dealer,
commercial bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
First Chicago Trust Company (201) 222-4720 First Chicago Trust Company
of New York or of New York
Attention: Tenders & Exchanges (201) 222-4721 Attention: Tenders & Exchanges
P.O. Box 2569, Suite 4660 c/o THE DEPOSITORY
Jersey City, NJ 07303-2569 TRUST COMPANY
55 Water Street, DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
By Overnight Courier: To Confirm Receipt
of Notice of
Guaranteed Delivery:
First Chicago Trust Company (201) 222-4707
of New York
Attention: Tenders & Exchanges
Suite 4680-IMO
14 Wall Street, 8th Floor
New York, NY 10005
</TABLE>
Questions or requests for assistance may be directed to the Information
Agent or the Dealer Managers at their respective addresses and telephone numbers
listed below. Additional copies of this Offer to Purchase, the Letter of
Transmittal and the Notice of Guaranteed Delivery may be obtained from the
Information Agent. A stockholder may also contact brokers, dealers, commercial
banks or trust companies for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC. LOGO
156 FIFTH AVENUE
NEW YORK, NEW YORK 10010
(212) 929-5500 (CALL COLLECT)
CALL TOLL FREE: (800) 322-2885
The Dealer Managers for the Offer are:
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. UNION BANCAIRE PRIVEE
85 Broad Street INTERNATIONAL, INC.
New York, New York 10004 1330 Avenue of the Americas
(212) 902-1000 (Call Collect) New York, New York 10019
(800) 323-5678 (Toll Free) (212) 841-1275 (Call Collect)
</TABLE>
July 2, 1997
<PAGE> 1
LETTER OF TRANSMITTAL
To Tender Shares of Common Stock
and associated Rights
OF
IMO INDUSTRIES INC.
PURSUANT TO THE OFFER TO PURCHASE DATED JULY 2, 1997
OF
UD DELAWARE CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON
WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Overnight Courier: By Hand:
First Chicago Trust Company First Chicago Trust Company First Chicago Trust Company
of New York of New York of New York
Attention: Tenders & Exchanges Attention: Tenders & Exchanges Attention: Tenders & Exchanges
P.O. Box 2565, Suite 4660 Suite 4680-IMO c/o THE DEPOSITORY
Jersey City, NJ 07303-2565 14 Wall Street, 8th Floor TRUST COMPANY
New York, NY 10005 55 Water Street, DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or, unless an Agent's Message (as defined in Section 2 of the Offer to Purchase
(as defined below)) is utilized, if delivery of Shares is to be made by
book-entry transfer to the Depositary's account at The Depository Trust Company
("DTC") or the Philadelphia Depository Trust Company ("PDTC") (each a
"Book-Entry Transfer Facility" and collectively, the "Book-Entry Transfer
Facilities") pursuant to the book-entry transfer procedure described in Section
3 of the Offer to Purchase. DELIVERY OF DOCUMENTS TO A BOOK-ENTRY TRANSFER
FACILITY DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
Stockholders whose certificates evidencing Shares ("Share Certificates") are
not immediately available or who cannot deliver their Share Certificates and all
other documents required hereby to the Depositary prior to the Expiration Date
(as defined in Section 1 of the Offer to Purchase) or who cannot complete the
procedure for delivery by book-entry transfer on a timely basis and who wish to
tender their Shares must do so pursuant to the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase. See Instruction 2.
<PAGE> 2
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT ONE OF THE BOOK-ENTRY TRANSFER FACILITIES AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
Check Box of Applicable Book-Entry Transfer Facility:
(CHECK ONE) [ ] DTC [ ] PDTC
Account Number: Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Holder(s):
Window Ticket No. (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEARS(S) ON SHARE CERTIFICATE(S) AND SHARE(S) TENDERED
SHARE CERTIFICATE(S) AND SHARE(S) TENDERED (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED BY
CERTIFICATE SHARE NUMBER OF SHARES
NUMBER(S) CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
TOTAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
* Need not be completed by stockholders delivering Shares by book-entry transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by each Share Certificate delivered to the
Depositary are being tendered hereby. See Instruction 4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF YOU ARE A PARTICIPANT IN THE COMPANY'S DIVIDEND REINVESTMENT
PLAN (THE "DRP") AND WISH TO TENDER SHARES HELD IN YOUR ACCOUNT UNDER THE
DRP ("DRP SHARES") AND COMPLETE THE FOLLOWING:
[ ] Tender all DRP Shares; or
[ ] Number of whole shares tendered from DRP (if less than all):
----------------------------------.
A tender of all DRP Shares will include fractional Shares and any Shares
credited to the participant's account after the date hereof and prior to the
Expiration Date.
IF THE PARTICIPANT AUTHORIZES THE TENDER OF HIS OR HER DRP SHARES, BUT DOES NOT
INDICATE THE NUMBER OF SHARES TO BE TENDERED, THE PARTICIPANT WILL BE DEEMED TO
HAVE TENDERED ALL DRP SHARES OWNED BY SUCH PARTICIPANT, PURSUANT TO THE DRP.
NOTE: SIGNATURE(S) MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS LETTER OF TRANSMITTAL CAREFULLY.
<PAGE> 3
LADIES AND GENTLEMEN:
The undersigned hereby tenders to UD Delaware Corp., a Delaware corporation
("Purchaser") and an indirect wholly owned subsidiary of United Dominion
Industries Limited, a company organized under the laws of Canada, the
above-described shares of common stock, par value $1.00 per share (the "Common
Stock"), of Imo Industries Inc., a Delaware corporation (the "Company"), and
each associated right to purchase shares of the Company's Series B Junior
Participating Preferred Stock (individually, the "Right" and collectively, the
"Rights") issued pursuant to the Rights Agreement dated as of April 30, 1997, as
amended, between the Company and First Chicago Trust Company of New York (such
shares of Common Stock and the Rights collectively referred to as the "Shares"),
pursuant to Purchaser's offer to purchase all Shares at $6.00 per Share, net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated July 2, 1997 (the "Offer to
Purchase"), receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all the Shares that are being tendered
hereby and all dividends, distributions (including, without limitation,
distributions of additional Shares) and rights declared, paid or distributed in
respect of such Shares on or after June 23, 1997 (collectively,
"Distributions"), and irrevocably appoints the Depositary the true and lawful
agent and attorney-in-fact of the undersigned with respect to such Shares and
all Distributions, with full power of substitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest), to (i) deliver
Share Certificates evidencing such Shares and all Distributions, or transfer
ownership of such Shares and all Distributions on the account books maintained
by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
The undersigned hereby irrevocably appoints Richard A. Bearse and Richard L.
Magee, and each of them, as the attorneys and proxies of the undersigned, each
with full power of substitution, to vote in such manner as each such attorney
and proxy or his substitute shall, in his or her sole discretion, deem proper
and otherwise act (by written consent or otherwise) with respect to all the
Shares tendered hereby which have been accepted for payment by Purchaser prior
to the time of such vote or other action and all Shares and other securities
issued in Distributions in respect of such Shares, which the undersigned is
entitled to vote at any meeting of stockholders of the Company (whether annual
or special and whether or not an adjourned or postponed meeting) or consent in
lieu of any such meeting or otherwise. This proxy and power of attorney is
coupled with an interest in the Shares tendered hereby, is irrevocable and is
granted in consideration of, and is effective upon, the acceptance for payment
of such Shares by Purchaser in accordance with the terms of the Offer. Such
acceptance for payment shall revoke all other proxies and powers of attorney
granted by the undersigned at any time with respect to such Shares (and all
Shares and other securities issued in Distributions in respect of such Shares),
and no subsequent proxy or power of attorney shall be given or written consent
executed (and if given or executed, shall not be effective) by the undersigned
with respect thereto. The undersigned understands that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's acceptance of such
Shares for payment, Purchaser must be able to exercise full voting and other
rights with respect to such Shares and all Distributions, including, without
limitation, voting at any meeting of the Company's stockholders then scheduled.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, sell, assign and transfer the Shares tendered
hereby and all Distributions, and that when such Shares are accepted for payment
by Purchaser, Purchaser will acquire good, marketable and unencumbered title
thereto and to all Distributions, free and clear of all liens, restrictions,
charges and encumbrances, and that none of such Shares and Distributions will be
subject to any adverse claim. The undersigned, upon request, shall execute and
deliver all additional documents deemed by the Depositary or Purchaser to be
necessary or desirable to complete the sale, assignment and transfer of the
Shares tendered hereby and all Distributions. In addition, the undersigned shall
remit and transfer promptly to the Depositary for the account of Purchaser all
Distributions in respect of the Shares tendered hereby, accompanied by
appropriate documentation of transfer, and, pending such remittance and transfer
or appropriate assurance thereof, Purchaser shall be entitled to all rights and
privileges as owner of each such Distribution and may withhold the entire
purchase price of the Shares tendered hereby, or deduct from such purchase price
the amount or value of such Distribution as determined by Purchaser in its sole
discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. Purchaser's acceptance of such Shares for payment
will constitute a binding agreement between the undersigned and Purchaser upon
the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. The undersigned recognizes that Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if Purchaser does not purchase
any of the Shares tendered hereby.
<PAGE> 4
-------------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares purchased or Share
Certificates evidencing Shares not tendered or not purchased are to be
issued in the name of someone other than the undersigned.
Issue [ ] check [ ] certificates to:
Name
---------------------------------------------------------
-------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
-----------------------------------------------------
-------------------------------------------------------------
(INCLUDE ZIP CODE)
-------------------------------------------------------------
(TAXPAYER IDENTIFICATION OR SOCIAL SECURITY NO.)
SEE SUBSTITUTE FORM W-9 ON REVERSE SIDE
=============================================================
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not
purchased are to be mailed to someone other than the undersigned, or to
the undersigned at an address other than that shown under "Description of
Shares Tendered."
Mail [ ] check [ ] certificates to:
Name
---------------------------------------------------------
-------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Address
-----------------------------------------------------
-------------------------------------------------------------
(INCLUDE ZIP CODE)
-------------------------------------------------------------
<PAGE> 5
IMPORTANT
STOCKHOLDERS: SIGN HERE
(PLEASE COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF STOCKHOLDER(S)
Dated: ___________ , 1997
(Must be signed by registered holder(s) exactly as such registered
holder(s) name(s) appear(s) on Share Certificates or on a security position
listing or by a person(s) authorized to become registered holder(s) by
certificates and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
other person acting in a fiduciary or representative capacity, please provide
the following information and see Instruction 5.)
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Capacity (Full Title):
- --------------------------------------------------------------------------------
(SEE INSTRUCTION 5)
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Codes and Telephone Numbers:
- ---------------------------------------------------------------------------
HOME
---------------------------------------------------
BUSINESS
Taxpayer Identification or Social Security No.:
- -------------------------------------------------------------
(COMPLETE SUBSTITUTE FORM W-9 ON REVERSE)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
- --------------------------------------------------------------------------------
Name:
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Title:
- --------------------------------------------------------------------------------
Name of Firm:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
(Area Code and Tel. No.) Dated:
------------------------------ ----------------
- --------------------------------------------------------------------------------
SPACE BELOW IS FOR USE BY FINANCIAL INSTITUTIONS ONLY.
FINANCIAL INSTITUTIONS: PLACE MEDALLION GUARANTEE IN SPACE BELOW
<PAGE> 6
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be medallion guaranteed by a firm that is a member of the New York Stock
Exchange Medallion Signature Guarantee Program, or by any other "eligible
guarantor institution", as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (each of the foregoing being
referred to as an "Eligible Institution"), unless (i) this Letter of Transmittal
is signed by the registered holder(s) of the Shares (which term, for purposes of
this document, shall include any participant in a Book-Entry Transfer Facility
whose name appears on a security position listing as the owner of Shares)
tendered hereby and such holder(s) has (have) completed neither the box entitled
"Special Payment Instructions" nor the box entitled "Special Delivery
Instructions" on the reverse hereof or (ii) such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used either if Share Certificates are to be forwarded
herewith or, unless an Agent's Message is utilized, if Shares are to be
delivered by book-entry transfer pursuant to the procedure set forth in Section
3 of the Offer to Purchase. Share Certificates evidencing all physically
tendered Shares, or a confirmation of a book-entry transfer into the
Depositary's account at a Book-Entry Transfer Facility of all Shares delivered
by book-entry transfer, as well as a properly completed and duly executed Letter
of Transmittal (or facsimile thereof), with any required signature guarantees,
or an Agent's Message in the case of a book-entry delivery, and any other
documents required by this Letter of Transmittal, must be received by the
Depositary at one of its addresses set forth on the reverse hereof prior to the
Expiration Date (as defined in Section 1 of the Offer to Purchase). If Share
Certificates are forwarded to the Depositary in multiple deliveries, a properly
completed and duly executed Letter of Transmittal must accompany each such
delivery. Stockholders whose Share Certificates are not immediately available,
who cannot deliver their Share Certificates and all other required documents to
the Depositary prior to the Expiration Date or who cannot complete the procedure
for delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates evidencing all physically delivered Shares in
proper form for transfer by delivery, or a confirmation of a book-entry transfer
into the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, in each case together with a Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed, with
any required signature guarantees (or, in the case of a book-entry delivery, an
Agent's Message), and any other documents required by this Letter of
Transmittal, must be received by the Depositary within three New York Stock
Exchange trading days after the date of execution of such Notice of Guaranteed
Delivery, all as described in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER, AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY.
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a facsimile hereof), all tendering stockholders waive any right to receive
any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER). If fewer than all of the Shares evidenced by any Share
Certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares that are to be tendered in the box entitled "Number of
Shares Tendered." In such cases, new Share Certificate(s) evidencing the
remainder of the Shares that were evidenced by the Share Certificates delivered
to the Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
<PAGE> 7
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Shares.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing Shares not tendered or not purchased are to be issued in the name of,
a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, the Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Purchaser of such person's authority so to act must be
submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to Purchaser of the payment of such taxes, or exemption
therefrom, is submitted. Except as provided in this Instruction 6, it will not
be necessary for transfer tax stamps to be affixed to the Share Certificates
evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" on the reverse hereof, the appropriate
boxes on the reverse of this Letter of Transmittal must be completed.
8. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent or the
Dealer Managers at their respective addresses or telephone numbers set forth
below. Additional copies of the Offer to Purchase, this Letter of Transmittal
and the Notice of Guaranteed Delivery may be obtained from the Information Agent
or from brokers, dealers, commercial banks or trust companies.
9. SUBSTITUTE FORM W-9. Each tendering stockholder is required to provide
the Depositary with a correct Taxpayer Identification Number ("TIN") on the
Substitute Form W-9 which is provided under "Important Tax Information" below,
and to certify, under penalties of perjury, that such number is correct and that
such stockholder is not subject to backup withholding of federal income tax. If
a tendering stockholder has been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding, such stockholder must cross
out item (2) of the Certification box of the Substitute Form W-9, unless such
stockholder has since been notified by the Internal Revenue Service that such
stockholder is no longer subject to backup withholding. Failure to provide the
information on the Substitute Form W-9 may subject the tendering stockholder to
31 percent federal income tax withholding on the payment of the purchase price
of all Shares purchased from such stockholder. If the tendering
<PAGE> 8
stockholder has not been issued a TIN and has applied for one or intends to
apply for one in the near future, such stockholder should write "Applied For" in
the space provided for the TIN in Part I of the Substitute Form W-9, and sign
and date the Substitute Form W-9. If "Applied For" is written in Part I and the
Depositary is not provided with a TIN within 60 days, the Depositary will
withhold 31 percent on all payments of the purchase price to such stockholder
until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR FACSIMILE HEREOF), PROPERLY
COMPLETED AND DULY EXECUTED, OR AN AGENT'S MESSAGE IN THE CASE OF A BOOK-ENTRY
DELIVERY (TOGETHER WITH ANY REQUIRED SIGNATURE GUARANTEES AND SHARE CERTIFICATES
OR CONFIRMATION OF BOOK-ENTRY TRANSFER AND ALL OTHER REQUIRED DOCUMENTS), OR A
PROPERLY COMPLETED AND DULY EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE
RECEIVED BY THE DEPOSITARY PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER
TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required to provide the Depositary (as payer) with such
stockholder's correct TIN on Substitute Form W-9 below. If such stockholder is
an individual, the TIN is such stockholder's social security number. If the
Depositary is not provided with the correct TIN, the stockholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition, payments
that are made to such stockholder with respect to Shares purchased pursuant to
the Offer may be subject to backup withholding of 31 percent (as described
below).
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit an Internal Revenue Service Form W-8,
signed under penalties of perjury, attesting to such individual's exempt status.
A Form W-8 may be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Depositary is required to withhold 31
percent of any payments made to the stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained from the Internal
Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (a) that the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (b) that
(i) such stockholder is exempt from backup withholding, (ii) such stockholder
has not been notified by the Internal Revenue Service that such stockholder is
subject to backup withholding as a result of a failure to report all interest or
dividends or (iii) the Internal Revenue Service has notified such stockholder
that such stockholder is no longer subject to backup withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31 percent of all payments of the purchase price to
such stockholder until a TIN is provided to the Depositary.
<PAGE> 9
PAYER'S NAME: FIRST CHICAGO TRUST COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C>
SUBSTITUTE PART I -- Taxpayer Identification Social Security Number
FORM W-9 Number -- For all accounts, enter taxpayer OR ------------------------
identification number in the box at right. Employer Identification Number
(For most individuals, this is your social
security number. If you do not have a (If awaiting TIN, write
number, see "Obtaining a Number" in the "Applied For")
enclosed Guidelines.) Certify by signing
and dating below. Note: If the account is
in more than one name, see the chart in the
enclosed Guidelines to determine which
number to give the payer.
---------------------------------------------------------------------------------------
DEPARTMENT OF THE TREASURY PART II --
INTERNAL REVENUE SERVICE For Payees Exempt From Backup Withholding, see the enclosed Guidelines and
complete as instructed therein.
---------------------------------------------------------------------------------------
PAYER'S REQUEST FOR TAXPAYER CERTIFICATION -- Under penalties of perjury, I certify that:
IDENTIFICATION NUMBER ("TIN")
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me), and
(2) I am not subject to backup withholding either because (a) I am exempt from
backup withholding, (b) I have not been notified by the Internal Revenue Service
(the "IRS") that I am subject to backup withholding as a result of failure to
report all interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are subject to backup withholding because of
underreporting interest or dividends on your tax return.
However, if after being notified by the IRS that you were subject to backup
withholding you received another notification from the IRS that you are no longer
subject to backup withholding, do not cross out item (2). (See also instructions
in the enclosed Guidelines.)
Signature Date
-------------------------------------- -----------------------------
- ----------------------------------------------------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31 PERCENT OF ANY PAYMENT MADE TO
YOU PURSUANT TO THE OFFER. FOR ADDITIONAL DETAILS, PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9.
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC. LOGO
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
CALL TOLL FREE: (800) 322-2885
The Dealer Managers for the Offer are:
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. UNION BANCAIRE PRIVEE
85 Broad Street INTERNATIONAL, INC.
New York, New York 10004 1330 Avenue of the Americas
(212) 902-1000 (Call Collect) New York, New York 10019
(800) 323-5678 (Toll Free) (212) 841-1275 (Call Collect)
</TABLE>
July 2, 1997
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
AND ASSOCIATED RIGHTS
OF
IMO INDUSTRIES INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) (i) if certificates
("Share Certificates") evidencing shares of common stock, par value $1.00 per
share (the "Common Stock"), and associated rights to purchase shares of Series B
Junior Participating Preferred Stock ("Rights") issued pursuant to the Rights
Agreement dated as of April 30, 1997, as amended, between Imo Industries Inc., a
Delaware corporation (the "Company"), and First Chicago Trust Company of New
York (such shares of Common Stock and the Rights collectively referred to as the
"Shares"), of the Company, are not immediately available, (ii) if Share
Certificates and all other required documents cannot be delivered to First
Chicago Trust Company of New York, as Depositary (the "Depositary"), prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase (as
defined below)) or (iii) if the procedure for delivery by book-entry transfer
cannot be completed on a timely basis. This Notice of Guaranteed Delivery may be
delivered by hand or mail or transmitted by facsimile transmission to the
Depositary. See Section 3 of the Offer to Purchase.
The Depositary for the Offer is:
FIRST CHICAGO TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand:
First Chicago Trust Company (201) 222-4720 First Chicago Trust Company
of New York or of New York
Attention: Tenders & Exchanges (201) 222-4721 Attention: Tenders & Exchanges
P.O. Box 2569, Suite 4660 c/o THE DEPOSITORY
Jersey City, NJ 07303-2569 TRUST COMPANY
55 Water Street, DTC TAD
Vietnam Veterans Memorial Plaza
New York, NY 10041
By Overnight Courier: To Confirm Receipt of Notice of
Guaranteed Delivery:
First Chicago Trust Company (201) 222-4707
of New York
Attention: Tenders & Exchanges
Suite 4680-IMO
14 Wall Street, 8th Floor
New York, NY 10005
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to UD Delaware Corp., a Delaware corporation
and an indirect wholly owned subsidiary of United Dominion Industries Limited, a
corporation organized under the laws of Canada, upon the terms and subject to
the conditions set forth in the Offer to Purchase, dated July 2, 1997 (the
"Offer to Purchase"), and the related Letter of Transmittal (which, amended from
time to time, together constitute the "Offer"), receipt of each of which is
hereby acknowledged, the number of Shares (including the associated Rights)
specified below pursuant to the guaranteed delivery procedure described in
Section 3 of the Offer to Purchase.
Number of Shares:
- ----------------------------------
Certificate Nos. (If Available):
- ------------------------------------------------------
Check one box if Shares will be delivered
by book-entry transfer:
[ ] The Depository Trust Company
[ ] Philadelphia Depository Trust Company
- ------------------------------------------------------
Name of Tendering Institution
Account No.
- ----------------------------------------
Signature(s) of Holder(s):
- ------------------------------------------------------
- ------------------------------------------------------
Dated: , 1997
------------------------------------
Name(s) of Holders:
- ------------------------------------------------------
- ------------------------------------------------------
Please Type or Print
- ------------------------------------------------------
Address
- ------------------------------------------------------
Zip Code
- ------------------------------------------------------
Area Code and Telephone No.
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.
or which is a commercial bank or trust company having an office or correspondent
in the United States that is a member in good standing of the Securities
Transfer Agents Medallion Program, the New York Stock Exchange Medallion
Signature Guarantee Program or the Stock Exchange Medallion Program, guarantees
to deliver to the Depositary, at one of its addresses set forth above, Share
Certificates evidencing the Shares tendered hereby, in proper form for transfer,
or confirmation of book-entry transfer of such Shares into the Depositary's
account at The Depository Trust Company or the Philadelphia Depository Trust
Company, in each case with delivery of a Letter of Transmittal (or facsimile
thereof) properly completed and duly executed, with any required signature
guarantees or an Agent's Message (as defined in the Offer to Purchase) in the
case of a book-entry delivery, and any other required documents, all within
three New York Stock Exchange trading days of the date hereof.
<TABLE>
<S> <C>
- ----------------------------------------------------- -----------------------------------------------------
Name of Firm Authorized Signature
- ----------------------------------------------------- -----------------------------------------------------
Address Title
Name:
- ----------------------------------------------------- -----------------------------------------------
Zip Code Please Type or Print
Dated:
- ----------------------------------------------------- -----------------------------------------, 1997
Area Code and Telephone No.
</TABLE>
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. UNION BANCAIRE PRIVEE
85 Broad Street INTERNATIONAL, INC.
New York, New York 10004 1330 Avenue of the Americas
(212) 902-1000 (Call Collect) New York, New York 10019
(800) 323-5678 (Toll Free) (212) 841-1275 (Call Collect)
</TABLE>
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND ASSOCIATED RIGHTS
OF
IMO INDUSTRIES INC.
AT
$6.00 NET PER SHARE
BY
UD DELAWARE CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
July 2, 1997
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by UD Delaware Corp., a Delaware corporation
("Purchaser") and an indirect wholly owned subsidiary of United Dominion
Industries Limited, a corporation organized under the laws of Canada ("Parent"),
to act as Dealer Managers in connection with Purchaser's offer to purchase all
outstanding shares of common stock, par value $1.00 per share (the "Common
Stock"), of Imo Industries Inc., a Delaware corporation (the "Company"), and
each associated right to purchase shares of the Company's Series B Junior
Participating Preferred Stock (individually, a "Right" and collectively, the
"Rights") issued pursuant to the Rights Agreement dated as of April 30, 1997, as
amended, between the Company and First Chicago Trust Company of New York (such
shares of Common Stock and the Rights collectively referred to as the "Shares"),
at a price of $6.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in Purchaser's
Offer to Purchase, dated July 2, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer") enclosed herewith. Please furnish copies of the enclosed materials
to those of your clients for whose accounts you hold Shares registered in your
name or in the name of your nominee.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THE
NUMBER OF SHARES THAT SHALL CONSTITUTE MORE THAN EIGHTY PERCENT (80%) OF THE
THEN OUTSTANDING SHARES, (II) THE RECEIPT OF CONSENTS FROM THE HOLDERS OF A
MAJORITY OF THE THEN OUTSTANDING PRINCIPAL AMOUNT OF THE 11 3/4% SENIOR SUBORDI-
<PAGE> 2
NATED NOTES DUE MAY 1, 2006 OF THE COMPANY (THE "NOTES") TO AMEND CERTAIN
PROVISIONS OF THE INDENTURE GOVERNING THE NOTES SO THAT SUCH PROVISIONS ARE NOT
APPLICABLE TO THE MERGER OR SUCH OFFER FOR THE NOTES, AND (III) THE EXPIRATION
OR TERMINATION OF ANY APPLICABLE ANTITRUST WAITING PERIODS.
Enclosed for your information and use are copies of the following
documents:
1. Offer to Purchase, dated July 2, 1997;
2. Letter of Transmittal to be used by holders of Shares in accepting
the Offer and tendering Shares;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Shares and all other required documents are not immediately available or
cannot be delivered to First Chicago Trust Company of New York (the
"Depositary") by the Expiration Date (as defined in the Offer to Purchase)
or if the procedure for book-entry transfer cannot be completed by the
Expiration Date;
4. A letter to stockholders of the Company from Donald K. Farrar,
Chairman, President and Chief Executive Officer of the Company, together
with a Solicitation/Recommendation Statement on Schedule 14D-9 filed with
the Securities and Exchange Commission by the Company;
5. A letter which may be sent to your clients for whose accounts you
hold Shares registered in your name or in the name of your nominee, with
space provided for obtaining such clients' instructions with regard to the
Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE. PLEASE NOTE
THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (i) certificates
evidencing such Shares (or a confirmation of a book-entry transfer of such
Shares into the Depositary's account at one of the Book-Entry Transfer
Facilities (as defined in the Offer to Purchase)), (ii) a Letter of Transmittal
(or facsimile thereof) properly completed and duly executed or an Agent's
Message (as defined in the Offer to Purchase) in the case of a book-entry
delivery and (iii) any other required documents in accordance with the
instructions contained in the Letter of Transmittal.
If a holder of Shares wishes to tender Shares, but cannot deliver such
holder's certificates or other required documents, or cannot comply with the
procedure for book-entry transfer, prior to the expiration of the Offer, a
tender of Shares may be effected by following the guaranteed delivery procedure
described in Section 3 of the Offer to Purchase.
Purchaser will not pay any fees or commissions to any broker, dealer or
other person (other than the Dealer Managers, the Depositary and the Information
Agent as described in the Offer) in connection with the solicitation of tenders
of Shares pursuant to the Offer. However, Purchaser will reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. Purchaser will pay or cause to be paid any
stock transfer taxes payable with respect to the transfer of Shares to it,
except as otherwise provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
Goldman, Sachs & Co., Union Bancaire Privee International, Inc. or MacKenzie
Partners, Inc. (the "Information Agent") at their respective addresses and
telephone numbers set forth on the back cover page of the Offer to Purchase.
<PAGE> 3
Additional copies of the enclosed material may be obtained from the
Information Agent, at the address and telephone numbers set forth on the back
cover page of the Offer to Purchase.
Very truly yours,
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. UNION BANCAIRE PRIVEE
INTERNATIONAL, INC.
</TABLE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL AUTHORIZE YOU
OR ANY OTHER PERSON TO ACT ON BEHALF OF OR AS THE AGENT OF PARENT, PURCHASER,
THE COMPANY, THE DEALER MANAGERS, THE INFORMATION AGENT OR THE DEPOSITARY, OR OF
ANY AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO USE ANY
DOCUMENT OR TO MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH
THE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED
THEREIN.
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND ASSOCIATED RIGHTS
OF
IMO INDUSTRIES INC.
AT
$6.00 NET PER SHARE
BY
UD DELAWARE CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK
CITY TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration are an Offer to Purchase, dated July 2,
1997 (the "Offer to Purchase"), and a related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") in connection with
the offer by UD Delaware Corp., a Delaware corporation ("Purchaser") and an
indirect wholly owned subsidiary of United Dominion Industries Limited, a
corporation organized under the laws of Canada ("Parent"), to purchase all
outstanding shares of common stock, par value $1.00 per share (the "Common
Stock"), of Imo Industries Inc., a Delaware corporation (the "Company"), and
each associated right to purchase shares of the Company's Series B Junior
Participating Preferred Stock (individually, a "Right" and collectively, the
"Rights") issued pursuant to the Rights Agreement dated as of April 30, 1997, as
amended, between the Company and First Chicago Trust Company of New York (such
shares of Common Stock and the Rights collectively referred to as the "Shares"),
at a price of $6.00 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer.
WE ARE (OR OUR NOMINEE IS) THE HOLDER OF RECORD OF SHARES HELD BY US FOR
YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD
BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, upon the terms and
subject to the conditions set forth in the Offer.
Your attention is invited to the following:
1. The tender price is $6.00 per Share, net to the seller in cash
without interest thereon.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously determined
that each of the Offer and the Merger (as defined in the Offer to Purchase)
is fair to and in the best interests of the Company and its stockholders,
and recommends that stockholders accept the Offer and tender their Shares
pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Wednesday, July 30, 1997, unless the Offer is extended.
<PAGE> 2
5. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer at
least the number of Shares that shall constitute more than eighty percent
(80%) of the then outstanding Shares, (ii) the receipt of consents from the
holders of a majority of the then outstanding principal amount of the
11 3/4% Senior Subordinated Notes due May 1, 2006 of the Company (the
"Notes") to amend certain provisions of the indenture governing the Notes
so that such provisions are not applicable to the Merger or following
consummation of the Merger or such offer for the Notes, and (iii) the
expiration or termination of any applicable antitrust waiting periods.
6. Tendering stockholders will not be obligated to pay brokerage fees
or commissions or, except as otherwise provided in Instruction 6 of the
Letter of Transmittal, stock transfer taxes with respect to the purchase of
Shares by Purchaser pursuant to the Offer.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified in your instructions. YOUR INSTRUCTIONS
SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US TO SUBMIT A TENDER ON YOUR
BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made only by the Offer to Purchase and the related Letter of
Transmittal and is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the Offer or the
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. However, Purchaser may, in its discretion, take
such action as it may deem necessary to make the Offer in any jurisdiction and
extend the Offer to holders of Shares in such jurisdiction. In those
jurisdictions where the securities laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by Goldman, Sachs & Co., Union Bancaire Privee International, Inc. or
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
FOR CASH ALL OUTSTANDING SHARES OF COMMON STOCK
AND ASSOCIATED RIGHTS
OF
IMO INDUSTRIES INC.
BY
UD DELAWARE CORP.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated July 2, 1997, and the related Letter of Transmittal
(which, as amended from time to time, together constitute the "Offer"), in
connection with the offer by UD Delaware Corp., a Delaware corporation and an
indirect wholly owned subsidiary of United Dominion Industries Limited, a
corporation organized under the laws of Canada, to purchase all outstanding
shares of common stock, par value $1.00 per share (the "Common Stock"), of Imo
Industries Inc., a Delaware corporation (the "Company"), and each associated
right to purchase shares of the Company's Series B Junior Participating
Preferred Stock (individually, a "Right" and collectively, the "Rights") issued
pursuant to the Rights Agreement dated as of April 30, 1997, as amended, between
the Company and First Chicago Trust Company of New York (such shares of Common
Stock and the Rights collectively referred to as the "Shares").
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) that are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer.
Number of Shares to Be Tendered* Shares
---------------------------------
Date:
- ---------------------------------------
SIGN HERE
Signature(s)
- --------------------------------------------------------------------------------
(Print Name(s))
- --------------------------------------------------------------------------------
(Print Address(es))
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Area Code and
Telephone Number(s))
- --------------------------------------------------------------------------------
(Taxpayer Identification or
Social Security Number(s))
- --------------------------------------------------------------------------------
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security numbers have nine digits separated by two hyphens: e.g.,
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: e.g., 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, any
one of the
individuals(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF--
- ------------------------------------------------------------
<C> <S> <C>
8. Sole proprietorship account The owner(4)
9. A valid trust, estate, or pension Legal entity (Do
trust not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title.)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. You may also enter your business or "doing
business as" name. Furnish the owner's social security number or the
employer identification number of the sole proprietorship.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you do not know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at an office of the Social Security
Administration or the Internal Revenue Service.
To complete Substitute Form W-9, if you do not have a taxpayer identification
number, write "Applied For" in the space for the taxpayer identification number
in Part 1, sign and date the Form, and give it to the requester. Generally, you
will then have 60 days to obtain a taxpayer identification number and furnish it
to the requester. If the requester does not receive your taxpayer identification
number within 60 days, backup withholding, if applicable, will begin and will
continue until you furnish your taxpayer identification number to the requester.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan, or a custodial account under section 403(b)(7).
- The United States or any agency or instrumentality thereof.
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- A foreign government or a political subdivision, agency or instrumentality
thereof.
- An international organization or any agency or instrumentality thereof.
- A registered dealer in securities or commodities registered in the United
States or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and which have at least one nonresident partner.
- Payments of patronage dividends where the amount received is not paid in
money.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if (i) this interest is $600 or more, (ii) the
interest is paid in the course of the payer's trade or business and (iii)
you have not provided your correct taxpayer identification number to the
payer.
- Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
EXEMPT PAYEES DESCRIBED ABOVE SHOULD FILE A SUBSTITUTE FORM W-9 TO AVOID
POSSIBLE ERRONEOUS BACKUP WITHHOLDING. FILE THIS FORM WITH THE PAYER, FURNISH
YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM,
SIGN AND DATE THE FORM AND RETURN IT TO THE PAYER.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under sections 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE.--Section 6109 requires most recipients of dividends,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. The IRS uses the numbers for identification
purposes and to help verify the accuracy of your tax return. Payers must be
given the numbers whether or not recipients are required to file tax returns.
Payers must generally withhold 31% of taxable interest, dividends, and certain
other payments to a payee who does not furnish a taxpayer identification number
to a payer. Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER.--If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE STATEMENTS WITH RESPECT TO WITHHOLDING.--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION.--If you falsify certifications
or affirmations, you are subject to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
Unless otherwise noted herein, all references to section numbers or to
regulations are references to the Internal Revenue Code of 1986, as amended, and
the regulations promulgated thereunder.
<PAGE> 1
- --------------------------------------------------------------------------------
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made only by the Offer to Purchase dated July 2,
1997, and the related Letter of Transmittal and any amendments or supplements
thereto and is not being made to (nor will tenders be accepted from or on behalf
of) holders of Shares in any jurisdiction in which the Offer or the acceptance
thereof would not be in compliance with the securities, blue sky or other laws
of such jurisdiction. However, Purchaser may, in its discretion, take such
action as it may deem necessary to make the Offer in any jurisdiction and extend
the Offer to holders of Shares in such jurisdiction. In those jurisdictions
where securities laws require the Offer to be made by a licensed broker or
dealer, the Offer shall be deemed to be made on behalf of Purchaser by Goldman,
Sachs & Co., Union Bancaire Privee International, Inc. (the "Dealer Managers")
or one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND ASSOCIATED RIGHTS
OF
IMO INDUSTRIES INC.
AT
$6.00 NET PER SHARE
BY
UD DELAWARE CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES
LIMITED
UD Delaware Corp., a Delaware corporation ("Purchaser") and an indirect
wholly owned subsidiary of United Dominion Industries Limited, a corporation
organized under the laws of Canada ("Parent"), is offering to purchase all
outstanding shares of common stock, par value $1.00 per share (the "Common
Stock"), of Imo Industries Inc., a Delaware corporation (the "Company"), and
each associated right to purchase shares of the Company's Series B Junior
Participating Preferred Stock (individually, a "Right" and collectively, the
"Rights") issued pursuant to the Rights Agreement dated as of April 30, 1997, as
amended, between the Company and First Chicago Trust Company of New York (such
shares of Common Stock and the Rights are collectively referred to as the
"Shares"), at a price of $6.00 per Share, net to the seller in cash, without
interest thereon, upon the terms and subject to the conditions set forth in the
Offer to Purchase, dated July 2, 1997 (the "Offer to Purchase"), and in the
related Letter of Transmittal (which, as amended from time to time, together
constitute the "Offer"). Following the Offer, Purchaser intends to effect the
Merger described below.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (I) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER AT LEAST THE
NUMBER OF SHARES THAT SHALL CONSTITUTE MORE THAN EIGHTY PERCENT (80%) OF THE
THEN OUTSTANDING SHARES, (II) THE RECEIPT OF CONSENTS FROM THE HOLDERS OF A
MAJORITY OF THE THEN OUTSTANDING PRINCIPAL AMOUNT OF THE 11 3/4% SENIOR
SUBORDINATED NOTES DUE MAY 1, 2006 OF THE COMPANY (THE "NOTES") TO AMEND CERTAIN
PROVISIONS OF THE INDENTURE GOVERNING THE NOTES SO THAT SUCH PROVISIONS ARE NOT
APPLICABLE TO THE MERGER OR FOLLOWING CONSUMMATION OF THE MERGER OR SUCH OFFER
FOR THE NOTES, AND (III) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE
ANTITRUST WAITING PERIODS.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of June 26, 1997 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement and in
accordance with relevant provisions of the General Corporation Law of the State
of Delaware ("Delaware Law"), Purchaser will be merged with and into the Company
(the "Merger"). Following consummation of the Merger, the Company will continue
as the surviving corporation as an indirect wholly owned subsidiary of Parent.
At the effective time of the Merger (the "Effective Time"), each Share
(including the associated Right), issued and outstanding immediately prior to
the Effective Time (other than Shares owned by Purchaser, Parent, the Company or
any wholly owned subsidiary of Parent or the Company and any Shares held by
stockholders who shall have properly exercised their rights for appraisal of
such Shares in accordance with Delaware Law) will be cancelled and converted
automatically into the right to receive $6.00 in cash, or any higher price that
may be paid per Share in the Offer, without interest.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
DETERMINED THAT EACH OF THE OFFER AND THE MERGER IS FAIR TO AND IN THE BEST
INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS, AND RECOMMENDS THAT STOCKHOLDERS
ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE OFFER.
Under the Company's Certificate of Incorporation and Delaware Law, the
affirmative vote of the holders of a majority of the outstanding Shares entitled
to vote thereon is required to approve and adopt the Merger Agreement and the
Merger, provided that if Purchaser purchases 90 percent of the Shares then
outstanding, such affirmative vote of the holders of the Shares is not required.
<PAGE> 2
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not withdrawn as, if
and when Purchaser gives oral or written notice to First Chicago Trust Company
of New York (the "Depositary") of Purchaser's acceptance for payment of such
Shares pursuant to the Offer. Upon the terms and subject to the conditions of
the Offer, payment for Shares accepted for payment pursuant to the Offer will be
made by deposit of the purchase price therefor with the Depositary, which will
act as agent for tendering stockholders for the purpose of receiving payments
from Purchaser and transmitting such payments to tendering stockholders whose
Shares have been accepted for payment. Under no circumstances will interest on
the purchase price for Shares be paid, regardless of any delay in making such
payment. In all cases, payment for Shares tendered and accepted for payment
pursuant to the Offer will be made only after timely receipt by the Depositary
of (i) the certificates evidencing such Shares (the "Share Certificates") or
timely confirmation of a book-entry transfer of such Shares into the
Depositary's account at one of the Book-Entry Transfer Facilities (as defined in
Section 2 of the Offer to Purchase) pursuant to the procedures set forth in
Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, with any required
signature guarantees, or an Agent's Message (as defined in Section 2 of the
Offer to Purchase) in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal.
Pursuant to the Merger Agreement, Parent and Purchaser have agreed that,
without the consent of the Company, they will not extend the expiration date of
the Offer (except that Purchaser may extend the expiration date of the Offer (a)
as required to comply with any rule, regulation or interpretation of the
Securities and Exchange Commission or (b) for one or more times each for an
aggregate period of up to 15 days (and not to exceed 60 days from the date of
commencement) for any reason other than those specified in the immediately
preceding clause (a)). Any such extension will be followed as promptly as
practicable by public announcement thereof, such announcement to be made no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled expiration date of the Offer. During any such extension,
all Shares previously tendered and not withdrawn will remain subject to the
Offer, subject to the rights of a tendering stockholder to withdraw such
stockholder's Shares.
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to 12:00 Midnight, New York City
time, on Wednesday, July 30, 1997 (or the latest time and date at which the
Offer, if extended by Purchaser, shall expire) and, unless theretofore accepted
for payment by Purchaser pursuant to the Offer, may also be withdrawn at any
time after August 30, 1997. For the withdrawal to be effective, a written or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover page of the Offer
to Purchase. Any such notice of withdrawal must specify the name of the person
who tendered the Shares to be withdrawn, the number of Shares to be withdrawn
and the name of the registered holder of such Shares, if different from that of
the person who tendered such Shares. If Share Certificates evidencing Shares to
be withdrawn have been delivered or otherwise identified to the Depositary,
then, prior to the physical release of such Share Certificates, the serial
numbers shown on such Share Certificates must be submitted to the Depositary and
the signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution (as defined in Section 3 of the Offer to Purchase), unless such
Shares have been tendered for the account of an Eligible Institution. If Shares
have been tendered pursuant to the procedure for book-entry transfer as set
forth in Section 3 of the Offer to Purchase, any notice of withdrawal must also
specify the name and number of the account of the Book-Entry Transfer Facility
to be credited with the withdrawn Shares, in which case a notice of withdrawal
will be effective if delivered to the Depositary by any method of delivery
described in Section 4 of the Offer to Purchase. Withdrawals of Shares may not
be rescinded. All questions as to the form and validity (including the time of
receipt) of any notice of withdrawal will be determined by Purchaser, in its
sole discretion, whose determination will be final and binding.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. The Offer to Purchase and the related Letter of Transmittal and other
related materials will be mailed to record holders of Shares whose names appear
on the Company's stockholder list and will be furnished to brokers, dealers,
commercial banks, trust companies and similar persons whose names, or the names
of whose nominees, appear on the stockholder list or, if applicable, who are
listed as participants in a clearing agency's security position listing for
subsequent transmittal to beneficial owners of Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance or for additional copies of the Offer
to Purchase and the related Letter of Transmittal and other tender offer
materials may be directed to the Information Agent or the Dealer Managers as set
forth below, and copies will be furnished promptly at Purchaser's expense. No
fees or commissions will be paid to brokers, dealers or other persons (other
than the Information Agent, the Dealer Managers and the Depositary) for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect) or
CALL TOLL FREE (800) 322-2885
The Dealer Managers for the Offer are:
<TABLE>
<S> <C>
GOLDMAN, SACHS & CO. UNION BANCAIRE PRIVEE
85 Broad Street INTERNATIONAL, INC.
New York, New York 10004 1330 Avenue of the Americas
(212) 902-1000 (Call Collect) New York, New York 10019
(800) 323-5678 (Toll Free) (212) 841-1275 (Call Collect)
</TABLE>
July 2, 1997
- --------------------------------------------------------------------------------
<PAGE> 1
EXHIBIT (a)(8)
[United Dominion Letterhead]
CONTACT--
Media - Nancy Spurlock (704) 347-6838 FOR IMMEDIATE RELEASE
Analysts - Michael Morgan (704) 347-6529
UNITED DOMINION TO ACQUIRE TWO
LEADING INDUSTRIAL MANUFACTURERS FOR $770 MILLION
CHARLOTTE, NC (June 26, 1997) -- United Dominion Industries Ltd. (NYSE,
TSE: UDI) today announced definitive agreements to acquire all the outstanding
stock of Core Industries, Inc. (NYSE: CRI) and Imo Industries Inc. (NYSE: IMD).
The consideration for the two transactions totals approximately $770 million,
and both transactions have the approval of the respective boards of directors.
William R. Holland, chairman and chief executive officer of United
Dominion, said these acquisitions complete United Dominion's transformation to
a top-tier company focused solely on the manufacture of proprietary engineered
products for worldwide industrial markets.
"The two transactions represent a milestone in our efforts to reshape
United Dominion's business mix and enhance margins and profitability,"
Mr. Holland said. "Both acquisitions meet our criteria in all respects. They
add leading industrial products to our business mix, vastly expand our current
product offerings and provide us with numerous opportunities for expansion
domestically and internationally."
Recently, United Dominion announced the divestiture of business units in
its Building Products Segment, including Varco-Pruden, Windsor Door, and its 50
percent interest in Centria. These
...more
<PAGE> 2
-2-
divestitures accounted for approximately $455 million of United Dominion's 1996
sales. The new acquisitions are expected to provide additional annual revenues
of approximately $750 million on a pro forma basis.
"Together with the expenditures for Flair Corporation in 1995, product
line acquisitions and these two transactions, we will have invested roughly the
$1 billion in engineered, manufactured products that we anticipated during our
Vision '99 strategic planning period," Mr. Holland said.
Core Industries produces specialized industrial products in three
segments; fluid control; test, measurement and control; and farm equipment.
Its products include Mueller strainers and check valves, FEBCO water backflow
prevention valves, Amprobe electrical test and refrigerant recovery
instruments, GSE/Air Gage fastening tools and gauging systems, and Sunflower
and Feterl/Richardton farm equipment. Headquartered in Bloomfield Hills, Mich.,
the company has 1,800 employees at 18 locations.
Imo Industries is a global manufacturer of pumps, power transmission
equipment, fluid sensors, motion control products and automotive components for
niche industrial markets. The company derives approximately 45 percent of its
revenues from international operations. Imo's businesses include Boston Gear, a
leading manufacturer of speed reducers and gears for the power transmission
industry; Imo Pump, the largest worldwide manufacturer of rotary screw pumps;
and Gems sensors, a leading manufacturer of liquid sensing, measurement and
control instruments; Morse Controls, a leading producer of remote control
systems for marine and industrial vehicle applications; and Roltra-Morse, a
manufacturer of automobile components, primarily in the Italian market.
Headquartered in Lawrenceville, N.J., the company has 3,700 employees worldwide
at 30 locations in the U.S., Europe and Asia.
...more
<PAGE> 3
-3-
Through a newly formed subsidiary, United Dominion will begin a tender
offer on or before July 3 for Imo's approximately 17.4 million common shares
(fully diluted) at a price of $6 per share. Simultaneously, United Dominion
will tender Imo's $155 million 11 3/4 percent subordinated debentures due 2006
at 120 percent of outstanding principal. Including the assumption of Imo's
other debt and closing expenses, total value of the transaction will be
approximately $440 million.
Similar arrangements will be made through another newly formed United
Dominion subsidiary to purchase Core Industries' 11.1 million common shares
(fully diluted) at a price of $25 per share. This transaction will total
approximately $330 million including assumed debt and closing expenses.
United Dominion also said that Core has agreed to pay United Dominion a
$10 million termination fee and that Imo has agreed to pay United Dominion an
$8 million termination fee, both subject to certain circumstances.
The Core offer is subject to the tender of a majority of the outstanding
shares and certain other conditions including the expiration or termination of
the waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act of
1976. In the case of Imo, the offer is subject to the tender of a majority
of the principal amount of $155 million of subordinated debentures and more
than 80 percent of the outstanding shares and certain other conditions
including the expiration or termination of the waiting periods under the
Hart-Scott-Rodino Antitrust Improvement Act of 1976. The tender offers will be
followed by a merger in which each remaining share will be converted into the
right to receive the cash price per share paid in the offer. The stock tender
offers will be made only through offering documents, which will be filed
promptly with the Securities and Exchange Commission and mailed to Core and Imo
stockholders respectively.
...more
<PAGE> 4
-4-
After completing these transactions, United Dominion, a diversified
manufacturer of industrial and commercial products will have revenues of
approximately $2.4 billion and employ approximately 14,100 people at 92
locations in 18 countries.
# # #
NOTE TO EDITORS: IMO Industries has locations in Stockholm, Sweden; Monroe,
Louisburg, and Charlotte, N.C.; Columbia, Ky.; Warren, Mass.; Florence, Ky.;
Trenton, N.J.; Quincy, Mass.; York, Pa.; Plainville, Conn.; Basingstoke and
Basildon, England; Wetzikon, Switzerland; Hudson, Ohio; New Orleans, La.;
Sydney, Australia; Sarasota, Fla.; Heiligenhaus, Germany; Yokohama, Japan;
Singapore; Paris, France; Turin, Pisa, Altare, Isernia and Cassino, Italy; and
Sosnowiec, Poland.
Core Industries has locations in St. Pauls and Lumberton, N.C.; Fresno, Calif.;
Houston, Tex.; Singapore; Lynbrook, N.Y.; Farmington Hills, Bridgeport and
Livonia, Mich.; Denver, Colo.; Salem, S.D.; Richardton, N.D.; and Beloit and
Cawker City, Kan.
<PAGE> 1
EXHIBIT (a)(9)
Imo Industries Inc.
For further information, contact: 1009 Lenox Drive
Lawrenceville, NJ
R. A. Derr II, V.P. and Treasurer 08648.0550
Director of Investor Relations [IMO LOGO]
(609) 896-7632 tel 609.896.7600
fax 609.896.7688
NEWS RELEASE
FOR IMMEDIATE RELEASE
IMO INDUSTRIES ANNOUNCES SALE TO UNITED DOMINION INDUSTRIES
LAWRENCEVILLE, NJ (June 26, 1997) -- Imo Industries Inc. (NYSE: IMD) announced
today that Imo and United Dominion Industries Limited (NYSE, TSE, [MTLE]: UDI)
have executed a definitive merger agreement providing for the acquisition of
Imo by United Dominion. Under the terms of the merger agreement, United
Dominion will commence a cash tender offer for all outstanding shares of Imo
common stock at a price of $6 per share, net in cash. The purchase price
represents a premium of approximately 89% over the average trading price of the
last 90 days.
Simultaneously with the tender offer for the shares of Imo common stock, United
Dominion also will commence an offer to purchase for cash at 120% of the
principal amount thereof all of Imo's 11 3/4% Senior Subordinated Notes due
2006 (of which $155 million are outstanding) and solicit consents from the
holders of the notes to obtain certain amendments to the indenture in
connection with the merger. The tender offer for the shares of Imo common stock
is conditioned on the receipt of 80% of the shares and the tender offer for the
notes is conditioned on receipt of a majority of the principal amount of the
notes. Each offer is conditioned on the successful completion of the other and
certain other customary conditions. Any shares not purchased in the tender
offer will be acquired in a subsequent merger at the same $6 per share net cash
price, to be effected as soon as practicable after the completion of the tender
offer and the offer to purchase. Any notes not purchased in the offer to
purchase will remain outstanding.
The Board of Directors of Imo has approved the merger agreement, the tender
offer for the shares, the offer to purchase for the notes and the merger,
determined that the tender offer and the merger are fair to, and in the best
interests of Imo's stockholders and recommended that Imo's stockholders accept
the tender offer and approve and adopt the merger agreement. The Board of
Directors was advised by Credit Suisse First Boston Corporation, financial
advisor to the Board of Directors, that the consideration to be received by
holders of Imo common stock was fair to such holders from a financial point of
view.
<PAGE> 2
2
Donald K. Farrar, Imo chairman and chief executive officer, said, "In March of
this year we announced our intention to evaluate our strategic alternatives in
order to enhance shareholder value. We believe the acquisition of Imo by United
Dominion at the significant premium to market will provide our shareholders with
excellent value, and the strong balance sheet and operating history of United
Dominion will allow us to improve our operations and continue to deliver
superior products to our customers."
United Dominion is expected to commence its tender offer for all the common
stock of Imo and its offer to purchase all of the notes on or before July 3,
1997.
Imo Industries, with 1996 sales of $469 million, is a diversified manufacturer
of pumps, fluid sensors, motion control products, remote control systems, and
automotive components, with operations worldwide.
# # #
<PAGE> 1
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
ASSOCIATED RIGHTS
OF
IMO INDUSTRIES INC.
AT
$6.00 NET PER SHARE
BY
UD DELAWARE CORP.,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
UNITED DOMINION INDUSTRIES LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME ON WEDNESDAY, JULY 30, 1997, UNLESS THE OFFER IS EXTENDED.
July 2, 1997
To Participants in the Imo Industries Inc. Employees Stock Savings Plan:
Enclosed for your consideration are the Offer to Purchase, dated July 2,
1997 (the "Offer to Purchase"), and the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"), relating to an
offer by UD Delaware Corp., a Delaware corporation ("Purchaser") and an indirect
wholly owned subsidiary of United Dominion Industries Limited, a corporation
organized under the laws of Canada ("Parent"), to purchase all outstanding
shares of common stock, par value $1.00 per share (the "Common Stock"), of Imo
Industries Inc., a Delaware corporation (the "Company"), and each associated
right to purchase shares of the Company's Series B Junior Participating
Preferred Stock (individually, a "Right" and collectively, the "Rights") issued
pursuant to the Rights Agreement dated as of April 30, 1997, as amended, between
the Company and First Chicago Trust Company of New York (such shares of Common
Stock and the Rights collectively referred to as the "Shares"), of the Company
at a purchase price of $6.00 per Share, net to the seller in cash, without
interest thereon; upon the terms and subject to the conditions set forth in the
Offer. The Offer is being made in connection with the Agreement and Plan of
Merger, dated as of June 26, 1997, among Parent, Purchaser and the Company (the
"Merger Agreement").
WE ARE THE HOLDER OF RECORD OF SHARES HELD FOR YOUR ACCOUNT AS A
PARTICIPANT IN THE COMPANY'S EMPLOYEES STOCK SAVINGS PLAN (THE "PLAN"). A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD IN ACCORDANCE WITH
THE TERMS OF THE PLAN, TO THE EXTENT CONSISTENT WITH APPLICABLE LAWS. THE LETTER
OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED
BY YOU TO TENDER SHARES HELD IN YOUR PLAN ACCOUNT.
Accordingly, we request information as to whether you wish to have us
tender any or all of the Shares held in your Plan account, upon the terms and
conditions set forth in the Offer.
<PAGE> 2
Please note the following:
1. The tender price is $6.00 per Share, net to the seller in cash,
without interest thereon.
2. The Offer is being made for all of the outstanding Shares.
3. The Board of Directors of the Company has unanimously determined
that each of the Offer and the Merger (as defined in the Offer to Purchase)
is fair to and in the best interests of the Company and its stockholders,
and recommends that stockholders accept the Offer and tender their Shares
pursuant to the Offer.
4. The Offer and withdrawal rights will expire at 12:00 Midnight, New
York City time, on Wednesday, July 30, 1997, unless the Offer is extended.
5. The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration of the Offer at
least the number of Shares that shall constitute more than eighty percent
(80%) of the Shares then outstanding, (ii) the receipt of consents from the
holders of a majority of the then outstanding principal amount of the
11 3/4% Senior Subordinated Notes due May 1, 2006 of the Company (the
"Notes") to amend certain provisions of the indenture governing the Notes
so that such provisions are not applicable to the Merger or following
consummation of the Merger or such offer for the Notes, and (iii) the
expiration or termination of any applicable antitrust waiting periods. The
Offer is also subject to the other terms and conditions in the Offer.
Purchaser reserves the right (but shall not be obligated), in accordance
with applicable rules and regulations of the United States Securities and
Exchange Commission, subject to the limitations set forth in the Merger
Agreement, to waive any of the conditions to the Offer.
6. Shares in Plan accounts as to which we have not received
instructions from Participants will not be tendered in the Offer.
If you wish to have us tender any or all of the Shares held in your Plan
account, please so instruct us by completing, executing, detaching and returning
to us the instruction form contained in this letter. An envelope to return your
instruction to us is enclosed. If you authorize tender of your Shares, all such
Shares will be tendered unless otherwise indicated in such instruction form.
PLEASE FORWARD YOUR INSTRUCTIONS TO US SO THAT THEY ARE RECEIVED BY US NO LATER
THAN 5:00 P.M., NEW YORK TIME, ON MONDAY, JULY 21, 1997, TO ALLOW US AMPLE TIME
TO TENDER YOUR SHARES ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER.
The Offer is made only by the Offer to Purchase and the related Letter of
Transmittal and is not being made to (nor will tenders be accepted from or on
behalf of) holders of Shares in any jurisdiction in which the Offer or the
acceptance thereof would not be in compliance with the securities, blue sky or
other laws of such jurisdiction. However, Purchaser may, in its discretion, take
such action as it may deem necessary to make the Offer in any jurisdiction and
extend the Offer to holders of Shares in such jurisdiction. In those
jurisdictions where the securities laws require the Offer to be made by a
licensed broker or dealer, the Offer shall be deemed to be made on behalf of
Purchaser by Goldman, Sachs & Co., Union Bancaire Privee International, Inc. or
one or more registered brokers or dealers licensed under the laws of such
jurisdiction.
Very truly yours,
Eagle Trust Company
2
<PAGE> 3
INSTRUCTION WITH RESPECT TO
THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
AND
ASSOCIATED RIGHTS
OF
IMO INDUSTRIES INC.
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase dated July 2, 1997 (the "Offer to Purchase"), and the related
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer"), in connection with the offer by UD Delaware Corp., a Delaware
corporation (the "Purchaser") and an indirect wholly owned subsidiary of United
Dominion Industries Limited, a corporation organized under the laws of Canada,
to purchase all outstanding shares of common stock, par value $1.00 per share
(the "Common Stock"), of Imo Industries Inc., a Delaware corporation (the
"Company"), and each associated right to purchase shares of the Company's Series
B Junior Participating Preferred Stock (individually, a "Right" and
collectively, the "Rights") issued pursuant to the Rights Agreement dated as of
April 30, 1997, as amended, between the Company and First Chicago Trust Company
of New York (such shares of Common Stock and the Rights collectively referred to
as the "Shares").
This will instruct you to tender the Purchaser the number of Shares
indicated below (or if no number is indicated below, all Shares) which are held
by you for the account of the undersigned, upon the terms and subject to the
conditions set forth in the Offer.
NOTE: Shares in Plan accounts as to which we have not received instructions
will not be tendered in the Offer.
Number of Shares to be Tendered:(1) SIGN HERE
--------------------------------------
--------------------------------------
Signature(s)
--------------------------------------
--------------------------------------
Print Name(s)
--------------------------------------
Area Code and Telephone Number(s)
--------------------------------------
Taxpayer Identification or
Social Security Number(s)
- ---------------
1Unless otherwise indicated, it will be assumed that all Shares held by us
for your account are to be tendered.
3
<PAGE> 1
EXHIBIT (B)(1)
June 24, 1997
Mr. Glenn A. Eisenberg
Senior Vice President and Chief Financial Officer
United Dominion Industries
2300 One First Union Center
301 South College Street
Charlotte, NC 28202-6039
Dear Glenn:
I am glad that we finally made it on Friday to meet with you and the rest
of the UDI team to review the proposed acquisitions of "Apple" and "Orange".
Following our discussions on Friday and this morning, we are pleased to submit
Royal Bank's firm offer to arrange a US$650 million five year revolving credit
facility and a US$150 million 364 day revolving credit facility. It is our
understanding that these facilities will be used to demonstrate UDI's ability to
finance a controlling interest in the shares of both "Apple" and "Orange".
The Royal Bank of Canada has fully underwritten both facilities, subject
only to satisfactory documentation which we expect would essentially mirror the
terms and conditions attached as well as those contained in your June 20, 1996
revolving credit facility (as amended). Pricing on the various facilities has
been significantly reduced however in order to bring the transaction in line
with current market conditions.
As was briefly discussed with you, we believe that the new facilities can
be syndicated to your existing bank group plus a select group of new lenders if
necessary to hedge the possibility that either some lenders are unable to commit
either at a higher level or due to potential conflicts. In any event, we feel
comfortable that the facility will be comfortably subscribed.
The fees that we propose to charge UDI in connection with the transaction
are contained in the attached fee letter. If you are in agreement with these
terms and conditions, please sign and return one copy of the summary term sheet
and fee letter. The second copies are for your records.
Thank you for your continued confidence in RBC and I very much look forward
to working with you and Tom on this and other deals over the next few years.
Please let me know should you have any questions or concerns.
Sincerely,
/s/ JOHN M. CRAWFORD
--------------------------------------
Senior Manager
<PAGE> 2
SUMMARY OF TERMS & CONDITIONS
FOR
UNITED DOMINION INDUSTRIES
BORROWERS: United Dominion Industries Limited., a Canadian
corporation and/or United Dominion Industries,
Inc., a Delaware corporation.
GUARANTOR-OBLIGOR: The obligations of each of the two Borrowers are
guaranteed by the other as well as by United
Dominion Holdings, Inc.
AGENT & ARRANGER: Royal Bank of Canada ("RBC").
FACILITY & AMOUNT: Syndicated Loan Facility and a Bridge Facility,
collectively the "Credit Facilities", up to an
aggregate of US $800 million.
Syndicated Loan Facility
Tranche 1: US$650 million, five year Revolving
Credit Facility
The Syndicated Loan Facility will be provided by
the Agent and a syndicate of Banks for the purpose
of acquiring "Apple" and "Orange", refinancing
certain existing "Apple" and "Orange" debt
including US$155mm of Senior Subordinated Debt and
all outstandings under UDI's existing US$300
million Revolving Credit Facility dated June 20,
1996, as amended, and for general corporate
purposes.
Bridge Facility
Tranche 2: US$150 million, 364 day Revolving Credit
Facility, provided by Royal Bank of Canada and a
select group of UDI lenders for general corporate
purposes.
AGENT'S INITIAL COMMITMENT: US$800 million.
BANKS: Syndicate of banks acceptable to the Borrowers and
the Agent.
CURRENCY AVAILABILITY: The Borrower will have the option to obtain funding
in all freely available currencies, including, but
not limited to, US Dollars and Deutschemarks.
Deutschemark loans shall not exceed the equivalent
of US$60 million.
BORROWING OPTIONS: At the Borrowers' option:
(i) Eurodollar Loans for 1, 2, 3, 6, 9 or 12
months,
(ii) Euro-Deutschemarks 1, 2, 3, 6, 9 or 12 months,
and
(iii) Base Rate Loans (higher of Prime or Fed Funds
plus 0.50%).
Each Bank will participate according to its
pro-rata share of allocated commitments of the
Syndicate Loan Facility.
APPLICABLE MARGIN: Refer to Exhibit I.
FACILITY FEE: Payable quarterly in arrears in accordance with
Exhibit I.
UTILIZATION FEE: Payable quarterly in arrears on daily average
outstandings, during the preceding three month
period, if the average outstandings are greater
than 50% of the Commitments in Level III only, in
accordance with Exhibit I.
<PAGE> 3
INTEREST PAYMENT DATE: Eurodollar/Euro-deutschemark Loans: interest is
payable at the end of each Interest Period and, if
any Interest Period is longer than three months,
every three months (360 day basis).
Base Rate Loans: interest is payable at the last
day of each calendar month (365/366 day basis).
COMPETITIVE BID OPTION: As per existing Credit Agreement dated June 20,
1996 as amended.
CONVERSION OPTION: At the Borrowers' option, any type of loan may be
converted to another type of loan with at least
three business days notice (or four days in the
case of Deutschemarks) prior to the requested
conversion date.
LETTER OF CREDIT OPTION: Up to $75 million availability under the facility
for issuance of Standby Letters of Credit. Letters
of Credit shall have an initial maturity of no more
than two years or the Termination Date, whichever
comes first. Issuing Bank shall be the Agent (or
other such Bank as may be agreed from time to time
by the Agent and the Borrowers). Upon issuance,
Letter of Credit obligations shall be shared
pro-rata by the Banks.
LETTER OF CREDIT FEE: As per existing Credit Agreement, as amended by
Exhibit I.
LETTER OF CREDIT ISSUING
FEE: The Agent agrees to act as Issuing Bank for a fee
of 0.10% per annum, payable quarterly in arrears on
the aggregate daily amount available for drawing
under such Letters of Credit.
DOCUMENTATION: Documentation will consist of an agreement, based
upon the Credit Agreement and Guaranty dated as of
June 20, 1996, as amended. Subject to negotiation
between the Agent and the Borrowers, and subject to
the approval of the Banks, the agreement will
contain cross-guarantees, representations and
warranties, conditions precedent, affirmative and
negative covenants including limitations on liens,
mergers and asset sales, events of default
including cross-default, yield protection and other
clauses customary to this type of facility.
CONDITIONS PRECEDENT: The following are conditions to the Effectiveness
of the Credit Facilities:
1. The Board of Directors of both Apple and Orange
have each approved the proposed acquisition;
2. The Board of Directors of UDI have approved both
proposed acquisitions.
3. Execution and delivery of satisfactory credit
agreement and other related documentation
embodying the structure, terms and conditions
contained herein.
4. Receipt of closing certificates, opinions of
counsel, and related documentation customary for
the type of transaction proposed.
The following are conditions to the initial
borrowing:
1. In the case of "Apple" only , the Borrower has
received sufficient acceptances of its tender
offer with respect to shares of "Apple" to
constitute legal control of the company.
2
<PAGE> 4
2. In the case of "Orange" only, the Borrower has
received sufficient acceptances of its tender
offer with respect to shares of "Orange" to
constitute legal control of the company.
3. Repayment and cancellation of UDI's existing
US$300 million Revolving Credit Facility.
4. Receipt by the Agent of all fees and
reimbursable expenses payable to the Lenders
when due.
5. No material change in the financial condition of
the Borrowers.
6. Receipt by the Agent of those certain fees and
expenses as detailed in the Fee Letter addressed
to the Borrowers, of even date.
The following are conditions of each borrowing
(including the initial borrowing):
1. No event of default or condition with which, the
giving of notice or the passage of time (or
both) would constitute an event of default shall
have occurred and be continuing;
2. Representations and warranties, as stated in
Article V of the Existing Credit Agreement and
incorporated herein by reference, are true and
correct in all material respects as of the date
of such borrowing.
FINANCIAL COVENANTS: The Credit Agreement will include, inter alia, the
following covenants:
(i) Fixed Charge Coverage Ratio shall not be less
than 2.5:1 at any time.
(ii) Consolidated Funded Debt shall not exceed 55%
of Consolidated Total Capitalization.
ASSIGNMENTS/PARTICIPATIONS: With consent of the Borrower (which shall not be
unreasonably withheld), Banks are permitted to sell
assignments or participations. Assignments shall be
in minimum amounts of $10 million; however if the
seller is not reducing commitments to zero said
commitment may not be reduced below $10 million.
Consent is not required for assignments to Federal
Reserve Banks.
EXPENSES: Borrower agrees to pay all reasonable out-of-pocket
expenses of the Agent, including fees and
disbursements of legal counsel, related to this
transaction.
REQUIRED BANKS: 67% of total commitments.
GOVERNING LAW: State of New York.
AGENT'S COUNSEL: Simpson Thacher & Bartlett
CLEAR MARKET: This offer is subject to there being no commercial
market borrowing or other transaction of a similar
nature for UDI or its consolidated subsidiaries
being syndicated among two or more financial
institutions from the date of acceptance of this
Summary until the execution of the Credit
Agreement.
CHANGE IN CIRCUMSTANCES: In the instance of a material adverse change in the
financial markets or the financial condition of the
Borrowers, this offer is subject to
3
<PAGE> 5
RBC's ability, in its sole discretion, to reprice
and restructure the Facility in accordance with the
then market conditions.
ACCEPTANCE: This offer will remain open for acceptance until
the close of business on June 25, 1997, at which
time it will be deemed to have expired unless
accepted by UDI or otherwise extended by the Agent
at its sole discretion.
This Summary of Terms and Conditions ("Summary") is for convenience of reference
only and shall not be considered to be exhaustive as to the final terms and
conditions which govern the financing. In the event of a conflict between the
provisions of this Summary and the Credit Agreement, the latter shall govern.
ROYAL BANK OF CANADA
/s/ JOHN CRAWFORD
--------------------------------------
By: John Crawford
Title: Senior Manager
We acknowledge and accept the terms and conditions outlined in this Summary
this 25th day of June, 1997.
UNITED DOMINION INDUSTRIES
/s/ Glenn Eisenberg /s/ Thomas J. Snyder
- --------------------------------- ------------------------------------
By: Glenn Eisenberg By: Thomas J. Snyder
Title: Senior Vice President and Title: Vice President and Treasurer
Chief Financial Officer
4
<PAGE> 6
EXHIBIT I
UNITED DOMINION INDUSTRIES
PRICING FOR THE 364 DAY BRIDGE FACILITY
<TABLE>
<CAPTION>
LEVEL I LEVEL II LEVEL III
------- -------- ---------
(ALL AMOUNTS IN BASIS POINTS)
<S> <C> <C> <C>
Consolidated Funded Debt to Capitalization <40% or $40% & #50% <50% or
Ratio........................................ A- or A3 or BBB or Baa2 BBB- or Baa3
Facility Fee................................... 6.00 8.00 10.00
Applicable Margin.............................. 19.00 27.00 35.00
Undrawn Cost................................... 6.00 8.00 10.00
(Facility Fee only):
Drawn Cost..................................... 25.00 35.00 45.00
</TABLE>
PRICING GRID FOR: 5 YEAR REVOLVING CREDIT FACILITY
<TABLE>
<CAPTION>
LEVEL I LEVEL II LEVEL III
------- -------- ---------
(ALL AMOUNTS IN BASIS POINTS)
<S> <C> <C> <C>
Consolidated Funded Debt to Capitalization <40% or $40% & #50% <50% or
Ratio........................................ A- or A3 or BBB or Baa2 BBB- or Baa3
Facility Fee................................... 8.00 10.00 12.50
Applicable Margin.............................. 17.00 25.00 32.50
Undrawn Cost................................... 8.00 10.00 12.50
(Facility Fee only):
Drawn Cost..................................... 25.00 35.00 45.00
</TABLE>
Note (1): In LEVEL III only, at all times when utilization of the Syndicated
Loan Facilities is greater than 50% and the Borrower is not rated by
either S&P (at BBB- or better) or Moody's (at Baa3 or better), an
additional 5.0 basis points will be added to the Drawn cost, resulting
in an adjusted Drawn cost of 50 basis points per annum.
<PAGE> 1
EXHIBIT (c)(1)
================================================================================
AGREEMENT AND PLAN OF MERGER
among
UNITED DOMINION INDUSTRIES LIMITED,
UD DELAWARE CORP.
and
IMO INDUSTRIES INC.
Dated as of June 26, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I. THE OFFER............................................................. 2
SECTION 1.01 The Offer................................................... 2
SECTION 1.02 Note Tender Offer........................................... 3
SECTION 1.03 Company Action.............................................. 5
SECTION 1.04 Parent Action............................................... 6
ARTICLE II. THE MERGER............................................................ 6
SECTION 2.01 The Merger.................................................. 6
SECTION 2.02 Effective Time; Closing..................................... 6
SECTION 2.03 Effect of the Merger........................................ 7
SECTION 2.04 Certificate of Incorporation; Bylaws........................ 7
SECTION 2.05 Directors and Officers...................................... 7
SECTION 2.06 Conversion of Securities.................................... 7
SECTION 2.07 Employee and Director Stock Options;
Deferred Director Fees..................................... 8
SECTION 2.08 Surrender of Shares: Stock Transfer Books................... 8
SECTION 2.09 Dissenting Shares............................................10
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................10
SECTION 3.01 Organization and Qualification; Subsidiaries................10
SECTION 3.02 Certificate of Incorporation and Bylaws.....................11
SECTION 3.03 Capitalization..............................................11
SECTION 3.04 Authority Relative to this Agreement........................12
SECTION 3.05 No Conflict; Required Filings and Consents..................12
SECTION 3.06 Compliance..................................................13
SECTION 3.07 SEC Filings; Financial Statements...........................13
SECTION 3.08 Absence of Certain Changes or Events........................14
SECTION 3.09 Absence of Litigation.......................................15
SECTION 3.10 Employee Benefit Plans......................................15
SECTION 3.11 Labor Matters...............................................17
SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement............18
SECTION 3.13 Tangible Property; Real Property and Leases.................18
SECTION 3.14 Trademarks, Patents and Copyrights..........................19
SECTION 3.15 Taxes.......................................................19
SECTION 3.16 Environmental Matters.......................................21
SECTION 3.17 Material Contracts..........................................22
SECTION 3.18 Insurance; Workers' Compensation............................22
SECTION 3.19 Certain Payments; Absence of
Certain Business Practices.................................23
SECTION 3.20 Licenses and Permits........................................23
SECTION 3.21 Letters of Credit, Surety Bonds, Guarantees.................23
SECTION 3.22 Brokers.....................................................23
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND
PURCHASER..............................................................24
SECTION 4.01 Corporate Organization......................................24
SECTION 4.02 Authority Relative to This Agreement........................24
SECTION 4.03 No Conflict; Required Filings and Consents..................24
SECTION 4.04 Financing...................................................25
SECTION 4.05 Offer Documents; Proxy Statement............................25
ARTICLE V. CONDUCT OF BUSINESS PENDING THE MERGER.................................26
SECTION 5.01 Conduct of Business by the
Company Pending the Merger.................................26
ARTICLE VI. ADDITIONAL AGREEMENTS.................................................28
SECTION 6.01 Special Stockholders' Meeting...............................28
SECTION 6.02 Proxy Statement.............................................28
SECTION 6.03 Company Board Representation; Section 14(f).................29
SECTION 6.04 Access to Information; Confidentiality......................30
SECTION 6.05 No Solicitation of Transactions.............................30
SECTION 6.06 Employee Benefits Matters; Employment Agreements............31
SECTION 6.07 Directors' and Officers' Indemnification and Insurance......31
SECTION 6.08 Notification of Certain Matters.............................32
SECTION 6.09 Further Action; Reasonable Efforts..........................33
SECTION 6.10 Public Announcements........................................33
SECTION 6.11 Confidentiality Agreement...................................33
ARTICLE VII. CONDITIONS TO THE MERGER.............................................34
SECTION 7.01 Conditions to the Merger....................................34
ARTICLE VIII. TERMINATION, AMENDMENT AND WAIVER...................................35
SECTION 8.01 Termination.................................................35
SECTION 8.02 Effect of Termination.......................................36
SECTION 8.03 Fees and Expenses...........................................36
SECTION 8.04 Amendment...................................................38
SECTION 8.05 Waiver......................................................38
ARTICLE IX. GENERAL PROVISIONS....................................................39
SECTION 9.01 Non-Survival of Representations,
Warranties and Agreements..................................39
SECTION 9.02 Notices.....................................................39
SECTION 9.03 Certain Definitions.........................................40
SECTION 9.04 Severability................................................41
SECTION 9.05 Entire Agreement, Assignment................................41
SECTION 9.06 Parties in Interest.........................................41
SECTION 9.07 Specific Performance........................................42
SECTION 9.08 Governing Law...............................................42
SECTION 9.09 Headings....................................................42
SECTION 9.10 Counterparts................................................42
</TABLE>
ii
<PAGE> 4
GLOSSARY OF DEFINED TERMS
<TABLE>
<CAPTION>
Location of
Definitions
-----------
<S> <C>
affiliate.................................................... ss. 9.03(a)
Agreement.................................................... Preamble
beneficial owner............................................. ss. 9.03(b)
Blue Sky Laws................................................ ss. 3.05(b)
Board........................................................ Recitals
business day................................................. ss. 9.03(c)
Certificate of Merger........................................ ss. 2.02
Certificates................................................. ss. 2.08(b)
Code......................................................... ss. 3.10(b)
Company...................................................... Preamble
Confidentiality Agreement.................................... ss. 6.04(b)
Consents..................................................... Preamble
Consent Solicitation......................................... Preamble
Constituent Documents........................................ ss. 3.02
control...................................................... ss. 9.03(d)
controlled by................................................ ss. 9.03(d)
Credit Agreement............................................. ss. 1.04
Credit Suisse First Boston................................... ss. 1.03
Delaware Law................................................. Preamble
Disclosure Schedule.......................................... ss. 3.01
Dissenting Shares............................................ ss. 2.09
Effective Time............................................... ss. 2.02
Environmental Law............................................ ss. 3.16(a)
ERISA........................................................ ss. 3.10(a)
ERISA Affiliate.............................................. ss. 3.10(c)
ERISA Plan................................................... ss. 3.10(b)
Exchange Act................................................. ss. 1.03(b)
Expenses..................................................... ss. 8.03(c)
Fee.......................................................... ss. 8.03(a)
GAAP......................................................... ss. 3.07(b)
Hazardous Substances......................................... ss. 3.16(a)
HSR Act...................................................... ss. 3.05(b)
Indemnified Parties.......................................... ss. 6.07(b)
Indenture.................................................... ss. 1.04
Information Statement........................................ ss. 3.12
IRS.......................................................... ss. 3.10(a)
Material Adverse Effect...................................... ss. 3.01
Material Contracts........................................... ss. 3.17
Material Subsidiaries........................................ ss. 3.01
Merger....................................................... Recitals
Merger Consideration......................................... ss. 2.06(a)
Minimum Condition............................................ ss. 1.01(a)
Multiemployer Plan........................................... ss. 3.10(b)
1996 Balance Sheet........................................... ss. 3.07(c)
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C>
Noteholders.................................................. ss. 1.02(b)
Notes........................................................ Preamble
Note Tender Offer............................................ Preamble
Note Tender Offer Documents.................................. ss. 1.02(b)
Offer........................................................ Recitals
Offer Documents.............................................. ss. 1.01(b)
Offer to Purchase............................................ ss. 1.01(b)
Parent....................................................... Preamble
Paying Agent................................................. ss. 2.08(a)
Pension Plan................................................. ss. 3.10(b)
Per Share Amount............................................. Recitals
person....................................................... ss. 9.03(e)
Plans........................................................ ss. 3.10(a)
Proposed Amendments.......................................... ss. 1.02(c)
Proxy Statement.............................................. ss. 3.12
Purchaser.................................................... Preamble
Purchaser's Election Date.................................... ss. 5.01
Requisite Consent Condition.................................. ss. 1.02(a)
Rights....................................................... ss. 2.06(a)
Rights Agreement............................................. ss. 2.06(a)
Schedule 14D-1............................................... ss. 1.01(b)
Schedule 14D-9............................................... ss. 1.03(b)
SEC.......................................................... ss. 1.01(a)
SEC Reports.................................................. ss. 3.07(a)
Securities Act............................................... ss. 3.07(a)
Shares....................................................... Recitals
Special Stockholders' Meeting................................ ss. 6.01
Stock Option Plans........................................... ss. 2.07(a)
Subsidiary................................................... ss. 3.01
subsidiary................................................... ss. 9.03(f)
Supplemental Indenture....................................... ss. 1.02(c)
Surviving Corporation........................................ ss. 2.01
Tax or Taxes................................................. ss. 3.15(n)
Third Party.................................................. ss. 8.03(f)
Third Party Acquisition...................................... ss. 8.03(f)
Transactions................................................. ss. 3.04
</TABLE>
iv
<PAGE> 6
AGREEMENT AND PLAN OF MERGER, dated as of June 26, 1997 (this
"Agreement"), among UNITED DOMINION INDUSTRIES LIMITED, a corporation organized
under the laws of Canada ("Parent"), UD DELAWARE CORP., a Delaware corporation
and an indirect wholly owned subsidiary of Parent ("Purchaser"), and IMO
INDUSTRIES INC., a Delaware corporation (the "Company").
WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein; and
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all the issued
and outstanding shares of common stock, par value U.S. $1.00 per share, of the
Company (the "Shares"), together with the associated Rights (as hereinafter
defined), for U.S. $6.00 per Share (such amount, or any greater amount per Share
paid pursuant to the Offer, being hereinafter referred to as the "Per Share
Amount") net to the seller in cash, subject to withholding of taxes, if
applicable, upon the terms and subject to the conditions of this Agreement and
the Offer; and
WHEREAS, also in furtherance of such acquisition, it is proposed that,
simultaneously with the Offer, Parent shall make an offer to purchase for cash
(the "Note Offer to Purchase") all of the Company's 11 3/4% Senior Subordinated
Notes due 2006 (the "Notes") and solicit consents ("Consents") from the holders
of the Notes to amend the Indenture (as defined herein) as herein provided (the
"Consent Solicitation" and collectively with the Note Offer to Purchase, the
"Note Tender Offer") at a price of 120% of the principal amount of the Notes,
upon the terms and subject to the conditions of this Agreement and the Note
Tender Offer; and
WHEREAS, the Board of Directors of the Company (the "Board"), including
all the disinterested directors on the Board, has unanimously approved the
making of the Offer and the Note Tender Offer and resolved and agreed to
recommend that holders of Shares tender their Shares pursuant to the Offer; and
WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each approved the merger (the "Merger") of Purchaser with and into the
Company in accordance with the General Corporation Law of the State of Delaware
("Delaware Law") following the consummation of the Offer and the Note Tender
Offer and upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
<PAGE> 7
ARTICLE I.
THE OFFER
SECTION 1.01 The Offer. (a) Provided that this Agreement shall
not have been terminated in accordance with Section 8.01 and none of the events
or circumstances set forth in Annex A hereto shall have occurred or be existing,
Purchaser agrees to, and Parent agrees to cause Purchaser to, commence the Offer
as promptly as reasonably practicable after the date hereof, but in no event
later than five business days after the first public announcement of the
execution hereof. Parent and Purchaser agree that the obligation of Purchaser to
accept for payment and pay for Shares tendered pursuant to the Offer shall be
subject to the condition (the "Minimum Condition") that the number of Shares
validly tendered and not withdrawn prior to the expiration of the Offer,
combined with the Shares already owned by Parent, Purchaser or any of their
affiliates, constitute more than 80% of the outstanding Shares at the expiration
of the Offer and also shall be subject to the satisfaction of the other
conditions set forth in Annex A. Purchaser expressly reserves the right to waive
any such condition, to increase the price per Share payable in the Offer, and to
make any other changes in the terms and conditions of the Offer; provided,
however, that Parent and Purchaser agree that no change may be made without the
consent of the Company which decreases the price per Share payable in the Offer,
which changes the form of consideration to be paid in the Offer, which reduces
the maximum number of Shares to be purchased in the Offer, which extends the
expiration date of the Offer (except that Purchaser may extend the expiration
date of the Offer (a) as required to comply with any rule, regulation or
interpretation of the Securities and Exchange Commission (the "SEC") or (b) for
one or more times each for an aggregate period of up to 15 days (and not to
exceed 60 days from the date of commencement) for any reason other than those
specified in the immediately preceding clause (a)) or which imposes conditions
to the Offer in addition to those set forth in Annex A hereto. The Per Share
Amount shall, subject to applicable withholding of taxes, be net to the seller
in cash, upon the terms and subject to the conditions of the Offer. Subject to
the terms and conditions of the Offer (including, without limitation, the
Minimum Condition), Purchaser agrees to, and Parent agrees to cause Purchaser
to, pay, as promptly as practicable after expiration of the Offer, for all
Shares validly tendered and not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Parent and Purchaser agree that Purchaser will file with the SEC a
Tender Offer Statement on Schedule 14D-1 (together with all amendments and
supplements thereto, the "Schedule 14D-1") with respect to the Offer and the
other Transactions (as hereinafter defined), which shall have been provided to
the Company and to which the Company shall not have reasonably objected. Parent
and Purchaser agree that the Schedule 14D-1 will contain or will incorporate by
reference an offer to purchase (the "Offer to Purchase") and forms of the
related letter of transmittal and any related summary advertisement (the
Schedule 14D-1, the Offer to Purchase
2
<PAGE> 8
and such other documents, together with all supplements and amendments thereto,
being referred to herein collectively as the "Offer Documents"). Parent,
Purchaser and the Company agree to correct promptly any information provided by
any of them for use in the Offer Documents which shall have become false or
misleading, and Parent and Purchaser further agree to take all steps necessary
to cause the Schedule 14D-1 as so corrected to be filed with the SEC and the
other Offer Documents as so corrected to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws.
SECTION 1.02 Note Tender Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 8.01 and none of the events or circumstances set forth
in Annex B hereto shall have occurred or be existing, Parent agrees that it or
its designee will commence the Note Offer to Purchase as promptly as reasonably
practicable after the date hereof, but in no event later than five business days
after the first public announcement of the execution hereof. In connection with
the Note Offer to Purchase, Parent intends to solicit Consents to amend Sections
4.02 (other than the first and last sentences thereof), 4.03(a) (in order to
permit loans to be made to the Company by its affiliates), 4.04 (in order to
eliminate the restrictions on indebtedness of the Company's foreign
subsidiaries), 4.05, 4.06, 4.07, 4.08, 4.09, 4.11, 4.12, 4.16 and 5.01(a)(iii)
of the Indenture and any other sections thereof agreed to by the Company, so
that such Sections are not applicable to the Merger or following the
consummation of the Note Tender Offer or the Merger. Parent agrees that its
obligation to accept for payment and pay for the Notes and related Consents
tendered pursuant to the Note Tender Offer shall be subject to the condition
that Parent receive Consents from a majority of the outstanding principal amount
of the Notes (the "Requisite Consent Condition") and also shall be subject to
the satisfaction of the other conditions set forth in Annex B hereto. Parent
expressly reserves the right to waive any such condition, to increase the price
payable for each Note and related Consent tendered in the Note Tender Offer, and
to make any other changes in the terms and conditions of the Note Tender Offer;
provided, however, that Parent agrees that no change may be made without the
consent of the Company which decreases the price payable for each Note and
related Consent tendered in the Note Tender Offer, which changes the form of
consideration to be paid in the Note Tender Offer, which reduces the maximum
number of Notes to be purchased in the Note Tender Offer or which imposes
conditions to the Note Tender Offer in addition to those set forth in Annex B
hereto. Subject to the terms and conditions of the Note Tender Offer (including,
without limitation, the Requisite Consent Condition), Parent agrees to pay, as
promptly as practicable after expiration of the Note Tender Offer, for all Notes
and related Consents validly tendered and not withdrawn.
(b) Parent agrees to disseminate to the record holders of the Notes,
and to the extent disclosed to Parent by the Company, the beneficial owners of
the Notes (collectively, the "Noteholders"), the Note Tender Offer pursuant to
the terms of an offer to purchase and consent solicitation statement, together
with related letters of transmittal and similar ancillary agreements (such
documents, together with all supplements and amendments thereto, being referred
to herein collectively as the "Note Tender Offer Documents"), which shall have
been
3
<PAGE> 9
provided to the Company and to which the Company shall not have reasonably
objected. Parent, Purchaser and the Company agree to correct promptly any
information provided by any of them for use in the Note Tender Offer Documents
which shall have become false or misleading, and Parent further agrees to take
all steps necessary to cause the Note Tender Offer Documents as so corrected to
be disseminated to holders of Notes, in each case as and to the extent required
by applicable federal securities laws.
(c) Assuming the Requisite Consent Condition is satisfied and all other
conditions to the Note Tender Offer set forth on Annex B have been satisfied or
waived by Parent, the Company agrees to execute, and will use all reasonable
efforts to cause the trustee under the Indenture to execute, a supplemental
indenture (the "Supplemental Indenture") in order to give effect to the
amendments of the Indenture contemplated in the Note Tender Offer Documents
immediately following the expiration date of the Note Tender Offer; provided,
however, that the proposed amendments set forth in the Supplemental Indenture
(the "Proposed Amendments") will not become operative until the date Parent
accepts all Notes (and related Consents) validly tendered for purchase and
payment pursuant to the Note Tender Offer. In such event, the parties hereto
agree that the Proposed Amendments will be deemed effective as of immediately
prior to such acceptance for payment, and Parent will thereafter be obligated to
make all payments for the Notes (and related Consents) so tendered.
(d) The Company agrees to promptly furnish Parent with mailing labels
containing the names and addresses of all record holders of Notes and with
security position listings of the Notes held in depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of Noteholders. The
Company agrees to furnish Parent with such additional information, including,
without limitation, updated listings and computer files of Noteholders, mailing
labels and security position listings, and such other assistance as Parent or
its agents may reasonably request. Subject to the requirements of applicable
law, and except for such steps as are necessary to disseminate the Note Tender
Offer Documents and any other documents necessary to consummate the transactions
contemplated thereby, Parent shall hold in confidence the information contained
in such labels, listings and files, shall use such information only in
connection with the Note Tender Offer and, if this Agreement shall be terminated
in accordance with Section 8.01, shall deliver to the Company all copies of such
information then in its possession.
4
<PAGE> 10
SECTION 1.03 Company Action. (a) The Company hereby approves of and
consents to the Offer and the Note Tender Offer and represents that (i) the
Board, at a meeting duly called and held on June 25, 1997, has unanimously (A)
determined that this Agreement and the transactions contemplated hereby,
including each of the Offer and the Merger, are fair to and in the best
interests of the stockholders of the Company, (B) approved and adopted this
Agreement and the transactions contemplated hereby, including, without
limitation, the Merger, and such approval constitutes approval of the foregoing
for purposes of Section 203 of Delaware Law, (C) taken all action to avoid the
occurrence of a "Distribution Date" or a "Triggering Event" (each as defined in
the Rights Agreement referred to in Section 2.06) with respect to the Rights and
(D) recommended that the stockholders of the Company accept the Offer and
approve and adopt this Agreement and the transactions contemplated hereby,
including, without limitation, the Merger, and (ii) Credit Suisse First Boston
Corporation ("Credit Suisse First Boston") has delivered to the Board a written
opinion to the effect that, as of the date of such opinion, the consideration to
be received by the holders of Shares (other than Parent, Purchaser and their
affiliates) pursuant to each of the Offer and the Merger is fair to such holders
of Shares from a financial point of view. Subject only to the fiduciary duties
of the Board under applicable law as advised by the Company's counsel, the
Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board described in the immediately preceding sentence. The
Company represents to Purchaser that the Company has been advised by each of its
directors and executive officers that they intend either to tender or cause to
be tendered all Shares beneficially owned by them to Purchaser pursuant to the
Offer or to vote such Shares in favor of the approval and adoption by the
stockholders of the Company of this Agreement and the transactions contemplated
hereby.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company agrees that it will file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing, subject
only to the fiduciary duties of the Board under applicable law as advised by the
Company's counsel, the recommendation of the Board described in Section 1.03(a)
and shall disseminate the Schedule 14D-9 to the extent required by Rule 14d-9
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any other applicable federal securities laws. The Company, Parent and
Purchaser agree to correct promptly any information provided by any of them for
use in the Schedule 14D-9 which shall have become false or misleading, and the
Company further agrees to take all steps necessary to cause the Schedule 14D-9
as so corrected to be filed with the SEC and disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws.
(c) The Company agrees to promptly furnish Purchaser with mailing
labels containing the names and addresses of all record holders of Shares and
with security position listings of Shares held in stock depositories, each as of
a recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company agrees to furnish Purchaser with such
additional information, including, without limitation, updated listings and
computer
5
<PAGE> 11
files of stockholders, mailing labels and security position listings, and such
other assistance as Parent, Purchaser or their agents may reasonably request.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer or the Merger, Parent and Purchaser shall hold in
confidence the information contained in such labels, listings and files, shall
use such information only in connection with the Offer and the Merger and, if
this Agreement shall be terminated in accordance with Section 8.01, shall
deliver to the Company all copies of such information then in their possession.
SECTION 1.04 Parent Action. Parent agrees that (a) Parent will cause
the Company to be provided with sufficient funds immediately prior to the
Purchaser's Election Date, to refinance the Company's obligations under the
Credit Agreement, dated as of April 29, 1996 (the "Credit Agreement"), among the
Company, Varo Inc., Warren Pumps Inc., the lenders from time to time party
thereto, the issuing banks from time to time party thereto and Citicorp USA,
Inc., as Agent, as amended, (b) from and after the Purchaser's Election Date,
Parent will cause the Company to be provided with sufficient funds, on terms
that comply with the Indenture dated as of April 15, 1996 (the "Indenture"),
between the Company and IBJ Schroder Bank & Trust Company, as Trustee, with
respect to the Notes to satisfy the Company's obligations under Section 4.10 of
the Indenture and (c) that such funds will be provided to the Company on terms
no less favorable to the Company than those contained in the Credit Agreement.
ARTICLE II.
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the conditions
set forth in Article VII, and in accordance with Delaware Law, at the Effective
Time (as hereinafter defined), Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation"), and shall continue to
be governed by the laws of the State of Delaware.
SECTION 2.02 Effective Time; Closing. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing a certificate of merger (the "Certificate of Merger") with the Secretary
of State of the State of Delaware, in such form as is required by, and executed
in accordance with the relevant provisions of, Delaware Law. The Merger shall
become effective upon such filing or at such time thereafter as is provided in
the Certificate of Merger as the Company and Purchaser shall agree (the
"Effective Time"). Prior to such filing, a closing shall be held at the offices
of Robinson, Bradshaw & Hinson, P.A., 1900 Independence Center, Charlotte,
North Carolina 28246, or such other place as the
6
<PAGE> 12
parties shall agree, for the purpose of confirming the satisfaction or waiver,
as the case may be, of the conditions set forth in Article VII.
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, all the property, rights, privileges, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04 Certificate of Incorporation; Bylaws. (a) The Certificate
of Incorporation of the Company, as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation
until thereafter amended as provided by applicable law and such Certificate of
Incorporation.
(b) The Bylaws of the Company, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by law, the Certificate of Incorporation of the
Surviving Corporation and such Bylaws.
SECTION 2.05 Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 2.06 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the Shares:
(a) Each Share, together with the associated right to purchase
shares of Series B Junior Participating Preferred Stock, par value
$1.00 (individually, the "Right" and collectively, the "Rights"),
issued pursuant to the Rights Agreement dated as of April 30, 1997,
between the Company and First Chicago Trust Company of New York, as
Rights Agent (the "Rights Agreement"), issued and outstanding
immediately prior to the Effective Time (other than any Shares to be
canceled pursuant to Section 2.06(b) and Dissenting Shares (as defined
in Section 2.09)) shall be canceled and shall be converted
automatically into the right to receive an amount equal to the Per
Share Amount in cash (the "Merger Consideration"), payable, without
interest, to the holder of such Share, upon surrender, in the manner
provided in Section 2.08, of the certificate that formerly evidenced
such Share;
7
<PAGE> 13
(b) Each Share, together with the associated Right, owned by
Purchaser, Parent, the Company or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the
Effective Time shall be canceled and retired without any conversion
thereof and no payment or distribution shall be made with respect
thereto; and
(c) Each share of common stock of Purchaser issued and
outstanding immediately prior to the Effective Time shall be converted
into and exchanged for one validly issued, fully paid and nonassessable
share of common stock, par value U.S. $1.00 per share, of the Surviving
Corporation.
SECTION 2.07 Employee and Director Stock Options; Deferred Director
Fees.
(a) In accordance with the terms of the Company's Amended and
Restated Equity Incentive Plan for Key Employees, the Company's Amended
and Restated 1988 Equity Incentive Plan for Outside Directors or the
Company's 1995 Equity Incentive Plan for Outside Directors
(collectively, the "Stock Option Plans"), each outstanding option to
purchase Shares granted under the Stock Option Plans shall, immediately
prior to the Effective Time, become exercisable regardless of the
vesting schedule contained in any stock option agreement or in any of
the Stock Option Plans and shall be canceled at the Effective Time. In
the event that any unexercised option is canceled by the Company, each
holder of a canceled option shall be entitled to receive, at the
Effective Time or as soon as practicable thereafter, from the Company,
in consideration for the cancellation of such option, an amount
(subject to any applicable withholding tax) in cash equal to the
product of (i) the number of Shares previously subject to such option
and (ii) the excess, if any, of the Merger Consideration over the
exercise price per Share previously subject to such option.
(b) At the Effective Time, the Company shall pay to each
individual who served as a Director of the Company prior to the
Effective Time any and all deferred director fees owed to such
individual.
SECTION 2.08 Surrender of Shares: Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company to act as
agent (the "Paying Agent") for the holders of Shares in connection with the
Merger to receive the funds to which holders of Shares shall become entitled
pursuant to Section 2.06(a), and Parent shall cause the Purchaser to deposit
with such Paying Agent an amount sufficient to pay the aggregate Merger
Consideration. Such funds shall be invested by the Paying Agent as directed by
the Surviving Corporation, provided that such investments shall be in
obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America
or in commercial paper obligations rated A-1 or P-1 or better by Moody's
Investors Service, Inc. or Standard & Poor's Ratings Group, respectively.
8
<PAGE> 14
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of Shares entitled to receive the Merger Consideration pursuant to
Section 2.06(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal (or, if such Shares are uncertificated, such other form of evidence
of record ownership as is required by the Paying Agent). Upon surrender to the
Paying Agent of a Certificate (or, with respect to uncertificated Shares, such
other evidence of record ownership as is required by the Paying Agent), together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such Certificate (or
uncertificated Share, as the case may be) shall be entitled to receive in
exchange therefor the Merger Consideration for each Share formerly evidenced by
such Certificate (or uncertificated Share, as the case may be), and such
Certificate (or uncertificated Share, as the case may be) shall then be
canceled. No interest shall accrue or be paid on the Merger Consideration
payable upon the surrender of any Certificate (or uncertificated Share, as the
case may be) for the benefit of the holder of such Certificate (or
uncertificated Share, as the case may be). If payment of the Merger
Consideration is to be made to a person other than the person in whose name the
surrendered Certificate (or uncertificated Share, as the case may be) is
registered on the stock transfer books of the Company, it shall be a condition
of payment to the holder of a Certificate that it be endorsed properly or, with
respect to Certificates and uncertificated Shares, otherwise be in proper form
for transfer and that, with respect to Certificates and uncertificated Shares,
the person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person other
than the registered holder thereof or shall have established to the satisfaction
of the Surviving Corporation that such taxes either have been paid or are not
applicable.
(c) At any time following the sixth month after the Effective Time, the
Surviving Corporation shall be entitled to require the Paying Agent to deliver
to it any funds which had been made available to the Paying Agent and not
disbursed to holders of Shares (including, without limitation, all interest and
other income received by the Paying Agent in respect of all funds made available
to it) and, thereafter, such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat and other similar laws) only
as general creditors thereof with respect to any Merger Consideration that may
be payable upon due surrender of the Certificates held by them (or, if such
Shares are uncertificated, such other form of evidence of record ownership as is
required by the Paying Agent). Notwithstanding the foregoing, neither the
Surviving Corporation nor the Paying Agent shall be liable to any holder of a
Share for any Merger Consideration delivered in respect of such Share to a
public official pursuant to any abandoned property, escheat or other similar
law.
9
<PAGE> 15
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and, thereafter, there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
SECTION 2.09 Dissenting Shares. Notwithstanding any other provision of
this Agreement to the contrary, Shares that are outstanding immediately prior to
the Effective Time and which are held by stockholders who shall have not voted
in favor of the Merger or consented thereto in writing and who properly shall
have demanded appraisal for such shares in accordance with Delaware Law
(collectively, the "Dissenting Shares") shall not be converted into or represent
the right to receive the Merger Consideration. Such stockholders instead shall
be entitled to receive payment of the appraised value of such Shares held by
them in accordance with the provisions of Delaware Law, except that all
Dissenting Shares held by stockholders who shall have failed to perfect or who
effectively shall have withdrawn or otherwise lost their rights to appraisal of
such Shares under Delaware Law shall thereupon be deemed to have been converted
into and to have become exchangeable, as of the Effective Time, for the right to
receive, without any interest thereon, the Merger Consideration upon surrender
in the manner provided in Section 2.08, of the Certificate or Certificates (or,
if such Shares are uncertificated, such other form of evidence of record
ownership as is required by the Paying Agent) that, immediately prior to the
Effective Time, evidenced such Shares.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 3.01 Organization and Qualification; Subsidiaries. Each of the
Company and each subsidiary of the Company (a "Subsidiary") is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties
and to carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such power,
authority and governmental approvals would not, individually or in the
aggregate, have a Material Adverse Effect (as defined below). The Company and
each Subsidiary is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary, except for such failures to be
so qualified or licensed and in good standing that would not, individually or in
the aggregate, have a Material Adverse Effect. When used in connection with the
Company or any Subsidiary, the term "Material Adverse Effect" means any effect
that is or is reasonably likely
10
<PAGE> 16
to be materially adverse to the business, operations, financial condition,
assets or liabilities (including, without limitation, contingent liabilities) of
the Company and the Subsidiaries taken as a whole. A true and complete list of
all the Subsidiaries, together with the jurisdiction of incorporation of each
Subsidiary and the percentage of the outstanding capital stock of each
Subsidiary owned by the Company and each other Subsidiary, is set forth in
Section 3.01 of the Disclosure Schedule, which has been delivered prior to the
date of this Agreement by the Company to Parent (the "Disclosure Schedule").
Except as disclosed in such Section 3.01, the Company does not directly or
indirectly own any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business association or entity. The term "Material Subsidiaries" means the
Subsidiaries identified as Material Subsidiaries in Section 3.01 of the
Disclosure Schedule. The Subsidiaries that are not Material Subsidiaries are
not, individually and in the aggregate, material to the business, operations or
financial condition of the Company and all of the Subsidiaries taken as a whole
and do not, individually and in the aggregate, have any material assets or
liabilities (including contingent liabilities) when considered in relation to
the Company and all of the Subsidiaries taken as a whole.
SECTION 3.02 Certificate of Incorporation and Bylaws. The Company has
heretofore furnished or made available to Parent a complete and correct copy of
the Certificate of Incorporation and the Bylaws or equivalent organizational
documents, each as amended to date (the "Constituent Documents"), of the Company
and each Material Subsidiary. The Constituent Documents of the Company and its
Material Subsidiaries are in full force and effect. Neither the Company nor any
Material Subsidiary is in violation of any provision of its Constituent
Documents.
SECTION 3.03 Capitalization. The authorized capital stock of the
Company consists of 5,000,000 shares of preferred stock (none of which is issued
and outstanding) and 25,000,000 Shares. As of June 24, 1997, (i) 17,126,609
Shares are issued and outstanding, all of which are validly issued, fully paid
and nonassessable, (ii) no Shares are held by the Subsidiaries, and (iii)
2,882,657 Shares are reserved for issuance pursuant to grants or awards under
the Stock Option Plans. Except as set forth in this Section 3.03 or Section 3.03
of the Disclosure Schedule, there are no options, warrants or other rights,
agreements, arrangements or commitments of any character obligating the Company
or any Material Subsidiary to issue or sell any shares of capital stock of, or
other equity interests in, the Company or any Material Subsidiary. Section 3.03
of the Disclosure Schedule sets forth a list, as of the date hereof, of the
names of each person holding options under the Stock Option Plans, and the
number of shares purchasable under, the exercise price of such options and date
such options were granted. All Shares subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to
which they are issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as set forth in Section 3.03 of the Disclosure Schedule,
there are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital
stock of
11
<PAGE> 17
any Subsidiary or to provide funds to, or make any investment (in the form of a
loan, capital contribution or otherwise) in, any Subsidiary or any other person.
Each outstanding share of capital stock of each Material Subsidiary is duly
authorized, validly issued, fully paid and nonassessable, and, except as set
forth in Section 3.03 of the Disclosure Schedule, each such share owned by the
Company or another Subsidiary is owned free and clear of all security interests,
liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or such other Subsidiary's voting rights, charges
and other encumbrances of any nature whatsoever.
SECTION 3.04 Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby, including, without limitation, the Merger, the Offer and
the Note Tender Offer (the "Transactions"). The execution and delivery of this
Agreement by the Company and the consummation by the Company of the Transactions
have been duly and validly authorized by all necessary corporate action and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the approval and adoption of this Agreement by the
affirmative vote of the stockholders of the Company to the extent required by
Delaware Law, the filing of the Certificate of Merger and, with respect to the
execution of the Supplemental Indenture, the satisfaction of the Requisite
Consent Condition). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Purchaser, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms.
SECTION 3.05 No Conflict; Required Filings and Consents. (a) Except as
set forth in Section 3.05(a) of the Disclosure Schedule, the execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, (i) conflict with or violate the Constituent
Documents of the Company or any Material Subsidiary, (ii) assuming that required
filings under the HSR Act (as hereinafter defined) are made by the appropriate
parties, conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to the Company or any Subsidiary or by which any property or
asset of the Company or any Subsidiary is bound or affected or (iii) result in
any breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance of any nature on any property or asset
of the Company or any Material Subsidiary pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Material Subsidiary is a
party or by which the Company or any Material Subsidiary or any property or
asset of the Company or any Material Subsidiary is bound or affected, except, in
cases of (ii) and (iii), for any such conflicts, violations, breaches, defaults
or other occurrences which would not, individually or in the aggregate, have a
Material Adverse Effect.
12
<PAGE> 18
(b) Except as set forth in Section 3.05(b) of the Disclosure Schedule,
the execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, require any consent,
approval, authorization or permit of, or filing with, or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Exchange Act, state securities or "blue
sky" laws ("Blue Sky Laws") and state takeover laws, the pre-merger notification
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations promulgated thereunder (the "HSR Act"),
the Foreign Ownership, Control and Influence regulations of the U.S. Department
of Defense and filing of the Certificate of Merger pursuant to Delaware Law, and
(ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Offer or the Merger, or otherwise prevent the Company from
performing its obligations under this Agreement, and would not, individually or
in the aggregate, have a Material Adverse Effect.
SECTION 3.06 Compliance. Except as set forth in Section 3.06 of the
Disclosure Schedule, neither the Company nor any Subsidiary is in default or
violation of (i) any law, rule, regulation, order, judgment or decree applicable
to the Company or any Subsidiary or by which any property or asset of the
Company or any Subsidiary is bound or subject or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary is a party or by
which the Company or any Subsidiary or any property or asset of the Company or
any Subsidiary is bound or affected, except for any such defaults or violations
that would not, individually or in the aggregate, have a Material Adverse
Effect.
SECTION 3.07 SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since December 31, 1994, and has heretofore delivered or made available to
Parent, in the form filed with the SEC, (i) its Annual Reports on Form 10-K for
the fiscal years ended December 31, 1994, 1995 and 1996, respectively, (ii) its
Quarterly Report on Form 10-Q for the period ended March 31, 1997, (iii) all
proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since December 31, 1994 and (iv) all other forms,
reports and other registration statements (other than Quarterly Reports on Form
10-Q not referred to in clause (ii) above) filed by the Company with the SEC
since December 31, 1994 (the forms, reports and other documents referred to in
clauses (i), (ii), (iii) and (iv) above being referred to herein, collectively,
as the "SEC Reports"). The SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Exchange Act, as the case may be, and the rules and regulations
promulgated thereunder and (ii) did not, at the time they were filed (or at the
effective date thereof with respect to registration statements under the
Securities Act), contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements made therein, in the light of the circumstances under which
they were made, not
13
<PAGE> 19
misleading. No Subsidiary is required to file any form, report or other document
with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SEC Reports was prepared in accordance
with United States generally accepted accounting principles applied on a
consistent basis ("GAAP") throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presents the consolidated
financial position, results of operations and changes in stockholders equity and
cash flows of the Company and the consolidated Subsidiaries as at the respective
dates thereof and for the respective periods indicated therein (subject, in the
case of unaudited statements, to normal and recurring year-end adjustments which
were not and are not expected, individually or in the aggregate, to have a
Material Adverse Effect).
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at December 31, 1996
including the notes thereto (the "1996 Balance Sheet"), in Section 3.07 of the
Disclosure Schedule or in any SEC Report filed by the Company after December 31,
1996, neither the Company nor any Subsidiary has any liability or obligation of
any nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on a balance sheet, or in the notes thereto, prepared
in accordance with GAAP, except for liabilities and obligations incurred in the
ordinary course of business consistent with past practice since December 31,
1996.
(d) The Company has heretofore furnished or made available to Parent
complete and correct copies of all amendments and modifications (if any) that
have not been filed by the Company with the SEC to all agreements, documents and
other instruments that previously had been filed by the Company with the SEC and
are currently in effect.
SECTION 3.08 Absence of Certain Changes or Events. Since December 31,
1996, except as set forth in Section 3.08 of the Disclosure Schedule or as
contemplated by this Agreement or disclosed in any SEC Report filed since
December 31, 1996 and prior to the date of this Agreement, the Company and the
Subsidiaries have conducted their businesses only in the ordinary course and in
a manner consistent with past practice and, since December 31, 1996, there has
not been (i) any change in the business, operations, properties, financial
condition, assets or liabilities (including, without limitation, contingent
liabilities) of the Company or any Subsidiary having, individually or in the
aggregate, a Material Adverse Effect, (ii) any damage, destruction or loss
(whether or not covered by insurance) with respect to any property or asset of
the Company or any Subsidiary having, individually or in the aggregate, a
Material Adverse Effect, (iii) any material change by the Company in its
accounting methods, principles or practices, (iv) any material revaluation by
the Company of any asset (including, without limitation, any writing down of the
value of inventory or writing off of notes or accounts receivable), (v) any
failure by the Company to revalue any asset in accordance with GAAP, (vi) any
entry by the Company or any Subsidiary into any commitment or transaction
material to the Company and the Subsidiaries taken as a whole,
14
<PAGE> 20
(vii) any declaration, setting aside or payment of any dividend or distribution
in respect of any capital stock of the Company or any redemption, purchase or
other acquisition of any of its securities, (viii) any increase in or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including, without
limitation, the granting of stock options, stock appreciation rights,
performance awards or restricted stock awards), stock purchase or other employee
benefit plan, or any other increase in the compensation payable or to become
payable to any officers or key employees of the Company or any Subsidiary,
except in the ordinary course of business consistent with past practice, or (ix)
any entering into, renewal, modification or extension of, any contract,
arrangement or agreement with any other party having, individually or in the
aggregate, a Material Adverse Effect.
SECTION 3.09 Absence of Litigation. Except as set forth in Section 3.09
of the Disclosure Schedule or as disclosed in the SEC Reports filed prior to the
date of this Agreement, (a) there is no claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company or any Subsidiary, or any property or asset of the Company or any
Subsidiary, before any court, arbitrator or administrative, governmental or
regulatory authority or body, domestic or foreign, which (i) individually or in
the aggregate, would have a Material Adverse Effect or (ii) seeks to, or is
reasonably likely to, delay or prevent the consummation of any Transaction and
(b) as of the date hereof, neither the Company nor any Subsidiary nor any
property or asset of the Company or any Subsidiary is subject to any order,
writ, judgment, injunction, decree, determination or award having, individually
or in the aggregate, a Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans. (a) Section 3.10(a) of the
Disclosure Schedule contains a true and complete list of (i) all employee
benefit plans (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement or severance plans, programs
or policies, and all employment, termination or severance contracts to which the
Company or any Subsidiary is a party, with respect to which the Company or any
Subsidiary has any obligation or which are maintained, contributed to or
sponsored by the Company or any Subsidiary for the benefit of any current or
former employee, officer or director of the Company or any Subsidiary
(collectively, the "Plans") and (ii) each employee benefit plan for which the
Company or any Subsidiary could incur liability under Section 4069 of ERISA in
the event such plan were terminated, or under Section 4212(c) of ERISA, or in
respect of which the Company or any Subsidiary remains secondarily liable under
Section 4204 of ERISA. Except as set forth in Section 3.10(a) of the Disclosure
Schedule, no Plan is a "defined benefit plan" within the meaning of Section
3(35) of ERISA and no Plan is subject to Part IV of ERISA. The Company has
previously furnished or made available to Parent a true and complete copy of
each Plan and a true and complete copy of each material document prepared in
connection with each Plan, including, without limitation, to the extent
applicable (i) a copy of each trust or other funding arrangement, (ii) each
summary plan description and summary
15
<PAGE> 21
of material modifications, (iii) the most recently filed Internal Revenue
Service ("IRS") Form 5500, (iv) the most recently received IRS determination
letter for each such Plan, and (v) the most recently prepared financial
statement in connection with each such Plan. Except as set forth in Section
3.10(a) of the Disclosure Schedule, neither the Company nor any Subsidiary has
made a general written announcement or entered into an agreement (i) to create
or adopt a new benefit plan or (ii) except in the ordinary course of business
consistent with past practice or as required by applicable law, to amend any
Plan.
(b) All Plans subject to Parts 2, 3 and 4 of Subtitle A, Title I of
ERISA, other than "multiemployer plans" ("Multiemployer Plans"), within the
meaning of Section 3(37) of ERISA (the "ERISA Plans"), are in compliance with
ERISA, except for such non-compliance which would not have, individually or in
the aggregate, a Material Adverse Effect. Except as set forth in Section 3.10 of
the Disclosure Schedule, each ERISA Plan which is an "employee pension benefit
plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code") has received a favorable determination letter from
the IRS, and there are no circumstances likely to result in revocation of any
such favorable determination letter which would have, individually or in the
aggregate, a Material Adverse Effect. There is no litigation pending or, to the
knowledge of the Company, threatened relating to the ERISA Plans which would
have, individually or in the aggregate, a Material Adverse Effect. Neither the
Company nor any of the Subsidiaries has engaged in a transaction with respect to
any ERISA Plan that, assuming the taxable period of such transaction expired as
of the date thereof, insofar as may be reasonably foreseen, is likely to subject
the Company or any of the Subsidiaries to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA in an amount which would
have, individually or in the aggregate, a Material Adverse Effect.
(c) Neither the Company nor any of the Subsidiaries has any outstanding
liability under Subtitle C or D of Title IV of ERISA with respect to any
ongoing, frozen or terminated "single-employer plan", within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them,
or the single-employer plan of any entity which is considered one employer with
the Company under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"). Neither the Company nor any of the Subsidiaries presently
contributes to a Multiemployer Plan, nor has it contributed to a Multiemployer
Plan within the past five calendar years. No notice of a "reportable event",
within the meaning of Section 4043 of ERISA for which the 30 day reporting
requirement has not been waived, has been required to be filed for any Pension
Plan within the 12-month period ending on the date hereof.
(d) All contributions required to be made under the terms of any ERISA
Plan have been timely made, except for such failures which, individually or in
the aggregate, would not have a Material Adverse Effect. No Pension Plan has an
"accumulated funding deficiency" (whether or not waived) within the meaning of
Section 412 of the Code or Section 302 of
16
<PAGE> 22
ERISA. Neither the Company nor any of the Subsidiaries has provided, or is
required to provide, security to any Pension Plan or to any single-employer plan
of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.
(e) Under each Pension Plan which is a single-employer plan, as of the
last day of the most recent plan year ended prior to the date hereof, the
present value of all accrued "benefit liabilities", within the meaning of
Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial
assumptions and methods contained in the Plan's most recent actuarial
valuation), did not exceed the then current value of the assets of such Plan.
(f) Except as set forth in Section 3.10(f) of the Disclosure Schedule,
neither the Company nor any of the Subsidiaries has any obligation for retiree
health and life benefits under any ERISA Plan.
(g) Except as set forth in Section 3.10(g) of the Disclosure Schedule,
neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in any payment of severance or
unemployment compensation becoming due to any director or any employee of the
Company or any of the Subsidiaries under any Plan or otherwise from the Company
or any of the Subsidiaries, (ii) increase any benefits otherwise payable under
any Plan, or (iii) result in any acceleration of the time of payment or vesting
of any such benefit.
(h) Except as disclosed in Section 3.10(h) of the Disclosure Schedule,
the Company and the Material Subsidiaries do not have any unfunded liabilities
under pension, retirement or other employee benefit plans, programs or
arrangements maintained outside the United States by the Company or any of the
Material Subsidiaries for the employees thereof, the payment of which by the
Company or such Material Subsidiary, individually or in the aggregate, would
have a Material Adverse Effect.
SECTION 3.11 Labor Matters. Except as set forth in Section 3.11(a) of
the Disclosure Schedule and except for those matters that, individually or in
the aggregate, would not have a Material Adverse Effect, (i) there are no
controversies pending or, to the knowledge of the Company, threatened between
the Company or any Subsidiary and any of their respective employees; (ii)
neither the Company nor any Subsidiary has breached or otherwise failed to
comply with any provision of any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company or any Subsidiary
and there are no grievances outstanding against the Company or any Subsidiary
under any such agreement or contract; (iii) there are no unfair labor practice
complaints pending against the Company or any Subsidiary before the National
Labor Relations Board or any current union representation questions involving
employees of the Company or any Subsidiary; and (iv) there is no strike,
slowdown, work stoppage or lockout, or, to the knowledge of the Company, threat
thereof, by or with respect to any employees of the Company or any Subsidiary.
Section 3.11(b) of the Disclosure Schedule sets forth each collective bargaining
agreement or other labor union
17
<PAGE> 23
contract applicable to persons employed by the Company or any domestic
Subsidiary and any other material collective bargaining agreement or labor
contract applicable to persons employed by any foreign Subsidiary. To the
knowledge of the Company, there are no activities or proceedings of any labor
union to organize any employees of the Company or any Subsidiary.
SECTION 3.12 Offer Documents; Schedule 14D-9; Proxy Statement. None of
the Schedule 14D-9, the information supplied by the Company for inclusion in the
Offer Documents or the Note Tender Offer Documents or the information to be
filed by the Company in connection with the Offer pursuant to Rule 14f-1
promulgated under the Exchange Act (the "Information Statement") shall, at the
respective times the Schedule 14D-9, the Offer Documents, the Note Tender Offer
Documents, the Information Statement or any amendments or supplements thereto
are filed with the SEC or are first published, sent or given to stockholders of
the Company, as the case may be, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. The proxy statement to be sent to the
stockholders of the Company in connection with the Special Stockholders' Meeting
(as defined in Section 6.01 hereof) (such proxy statement, as amended or
supplemented, being referred to herein as the "Proxy Statement") shall not, at
the date the Proxy Statement is first mailed to stockholders of the Company or
at the time of the Special Stockholders' Meeting and the Effective Time, and,
with respect to the Information Statement at the time Shares are accepted for
payment in the Offer and with respect to the Note Tender Offer at the time the
Notes (and related Consents) are accepted for payment in the Note Tender Offer,
be false or misleading with respect to any material fact, or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which they are
made, not misleading or, with respect to the Proxy Statement, necessary to
correct any statement in any earlier communication with respect to the
solicitation of proxies for the Special Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent,
Purchaser or any of their representatives which is contained in any of the
foregoing documents or the Offer Documents or the Note Tender Offer Documents.
The Schedule 14D-9, the Information Statement and the Proxy Statement shall
comply in all material respects as to form with the requirements of the Exchange
Act and the rules and regulations thereunder.
SECTION 3.13 Tangible Property; Real Property and Leases. (a) The
Company and the Subsidiaries have sufficient title to all their tangible
properties and assets to conduct their respective businesses as currently
conducted or as contemplated to be conducted, with only such exceptions as,
individually or in the aggregate, would not have a Material Adverse Effect.
(b) No parcel of real property owned or leased by the Company is
subject to any governmental decree or order to be sold nor is being condemned,
expropriated or otherwise taken by any public authority with or without payment
of compensation therefor, nor, to the
18
<PAGE> 24
knowledge of the Company, has any such condemnation, expropriation or taking
been proposed.
(c) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring rental payments in excess of U.S. $100,000 during the period of the
lease and all amendments and modifications thereto are in full force and effect
and have not been modified or amended, and there exists no default under
any such lease by the Company or any Subsidiary, nor any event which with notice
or lapse of time or both would constitute a default thereunder by the Company or
any Subsidiary, except as, individually or in the aggregate, would not have a
Material Adverse Effect or as set forth in Section 3.13 of the Disclosure
Schedule.
SECTION 3.14 Trademarks, Patents and Copyrights. Except as set forth in
Section 3.14(a) of the Disclosure Schedule, the Company and the Subsidiaries own
or possess adequate licenses or other valid rights to use all patents, patent
rights, trademarks, trademark rights, trade names, trade dress, trade name
rights, copyrights, servicemarks, trade secrets, applications for trademarks and
for servicemarks, mask works, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and the Subsidiaries as conducted since December 31, 1996, as currently
conducted or as contemplated to be conducted, and the Company is unaware of any
assertion or claim challenging the validity of any of the foregoing which,
individually or in the aggregate, would have a Material Adverse Effect. Section
3.14(b) of the Disclosure Schedule lists each material patent owned by the
Company or any Subsidiary and specifies the number and date of each such patent.
Section 3.14(c) of the Disclosure Schedule lists each agreement pursuant to
which a material patent is licensed to the Company or any Material Subsidiary as
licensee for use in the business of the Company and the Subsidiaries as
currently conducted. The conduct of the business of the Company and the
Subsidiaries as conducted since December 31, 1996, as currently conducted and as
contemplated to be conducted did not, does not and will not conflict in any way
with any patent, patent right, license, trademark, trademark right, trade dress,
trade name, trade name right, service mark, mask work or copyright of any third
party except for conflicts that, individually or in the aggregate, would not
have a Material Adverse Effect.
SECTION 3.15 Taxes. Except as set forth in Section 3.15 of the
Disclosure Schedule or as otherwise previously disclosed to Parent:
(a) The Company and the Subsidiaries, and each affiliated group (within
the meaning of Section 1504 of the Internal Revenue Code of 1986, as amended
(the "Code")) or combined or unitary group of which the Company or any
Subsidiary is or has been a member, has timely filed all federal income Tax
Returns (as defined below), and all other material Tax Returns required to be
filed by them. All such Tax Returns are true and correct in all material
respects. Except to the extent adequately reserved for in accordance with GAAP,
all material Taxes (as defined below) due and payable by the Company and the
Subsidiaries have been timely paid. The most recent consolidated financial
statements contained in the SEC Reports
19
<PAGE> 25
reflect an adequate reserve in accordance with GAAP for all Taxes payable by the
Company and its Subsidiaries for all taxable periods and portions thereof
through the date of such financial statements.
(b) No material deficiencies for any Taxes have been proposed, asserted
or assessed against the Company or any of the Subsidiaries that have not been
fully paid or adequately provided for in the appropriate financial statements of
the Company and its Subsidiaries, no waivers of the time to assess any Taxes are
outstanding, and no power of attorney granted by the Company or any Subsidiary
with respect to any Taxes is currently in force. No material issues relating to
Taxes have been raised in writing (or, in the case of the presently pending
Federal income tax audit of the Company and the Subsidiaries, verbally to the
knowledge of the Company's Vice President of Taxes) by any governmental
authority during any presently pending audit or examination.
(c) There are no material liens or encumbrances for Taxes on any of the
assets of the Company or the Subsidiaries (other than for current taxes not yet
due and payable).
(d) The Company and the Subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes.
(e) None of the Company or the Subsidiaries has filed a consent under
Section 341(f) of the Code.
(f) None of the Company or the Subsidiaries is a party to any agreement
that could obligate it to make any payments that would not be deductible by
reason of Section 280G of the Code.
(g) Neither the Company nor, since the date of its acquisition by the
Company, any Material Subsidiary is a party to any tax allocation, tax sharing
agreement, any closing agreement or similar agreement relating to Taxes with any
taxing authority of the Company.
(h) No federal, state, local or foreign audits or other administrative
proceedings or court proceedings are presently pending with regard to any
federal income or material state, local or foreign Taxes or Tax Returns of the
Company or any of the Subsidiaries and neither the Company nor any of the
Subsidiaries has received a written notice of any pending audit or proceeding.
(i) Neither the Company nor, since the date of its acquisition by the
Company, any Material Subsidiary has agreed to or is required to make any
material adjustment under Section 481(a) of the Code.
(j) To the knowledge of the Company, no property owned by the Company
or any Subsidiary (i) is property required to be treated as being owned by
another person pursuant to
20
<PAGE> 26
the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately prior to the enactment of the Tax Reform Act
of 1986; or (ii) constitutes "tax exempt use property" within the meaning of
Section 168(h)(1) of the Code.
(k) The Company has not been (and will not be) a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the 5-year period ending on the consummation of the Offer.
(l) To the knowledge of the Company, neither the Company nor any
Subsidiary has participated in or cooperated with an international boycott
within the meaning of Section 999 of the Code.
(m) The Company estimates that, to its knowledge, the fair market value
of the assets of the Company and the Subsidiaries, in the aggregate, is more
than the aggregate adjusted basis of such assets, determined as of the date of
this Agreement.
(n) For purpose of this Agreement, (A) the terms "Tax" or "Taxes" shall
mean all taxes, fees, duties, tariffs, levies, imposts, or other charges of any
kind (together with any interest, penalties, additions to tax or additional
amounts imposed by any taxing authority with respect thereto), including,
without limitation, taxes or other charges on or with respect to income,
franchise, gross receipts, property, sales, use, profits, capital stock,
payroll, employment, social security, workers compensation, unemployment
compensation or net worth, taxes or charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added or gains taxes; license
registration and documentation fees; and customs duties, tariffs and similar
charges of any kind whatsoever, and (B) the term "Tax Return" shall mean any
report, return, document, declaration or any other information or filing
required to be supplied to any taxing authority with respect to Taxes.
SECTION 3.16 Environmental Matters. (a) For purposes of this Agreement,
the following terms shall have the following meanings: (i) "Hazardous
Substances" means (A) those substances defined as hazardous in or regulated as
hazardous under the following federal statutes and their state counterparts, as
each may be amended from time to time, and all regulations thereunder: the
Hazardous Materials Transportation Act, the Resource Conservation and Recovery
Act, the Comprehensive Environmental Response, Compensation, and Liability Act,
the Clean Water Act, the Safe Drinking Water Act, the Federal Insecticide,
Fungicide, and Rodenticide Act and the Clean Air Act; (B) any asbestos or
asbestos-containing material, petroleum and petroleum products, including crude
oil and any fractions thereof, natural gas, natural gas liquids, synthetic gas,
polychlorinated biphenyls or radon; or (C) any substance with respect to which a
federal, state or local environmental agency requires environmental
investigation, monitoring, reporting or remediation; and (ii) "Environmental
Law" means any applicable federal, state or local law relating to (A) releases
or threatened releases of Hazardous Substances or materials containing Hazardous
Substances; (B) the manufacture,
21
<PAGE> 27
handling, transport, use, treatment, storage or disposal of Hazardous Substances
or materials containing Hazardous Substances; or (C) otherwise relating to
pollution of the environment.
(b) Except as described in Section 3.16 of the Disclosure Schedule: (i)
the Company and each Subsidiary is in compliance with all applicable
Environmental Laws, except for noncompliances that individually or in the
aggregate would not have a Material Adverse Effect; (ii) the Company and each
Subsidiary have obtained all permits, licenses and other material governmental
authorizations required under applicable Environmental Laws, and are in
compliance with the terms and conditions thereof, except for failures to obtain
or noncompliance that individually or in the aggregate would not have a Material
Adverse Effect; (iii) neither the Company nor any of its Subsidiaries has
received written notice of, or, to the knowledge of the Company, is the subject
of, any action, cause of action, claim, investigation, demand or notice by any
person or entity alleging liability under or noncompliance with any
Environmental Law that individually or in the aggregate would have a Material
Adverse Effect; and (iv) there is no environmental condition on any of the
properties currently or, to the knowledge of the Company, formerly owned or
leased by the Company or any Subsidiary that individually or in the aggregate
would have a Material Adverse Effect.
SECTION 3.17 Material Contracts. The SEC Reports reflect each contract
or agreement to which the Company or any of the Material Subsidiaries is a party
not made in the ordinary course of business which is material to the Company and
its Subsidiaries, taken as a whole, and that is to be performed in whole or part
after the date hereof (a "Material Contract"). No condition or state of facts
exists that, with notice or the passage of time, or both, would constitute a
material default by the Company or any Material Subsidiary or to the knowledge
of the Company, any third party under such Material Contracts. The Company or
the applicable Material Subsidiary has duly complied in all material respects
with the provision of each Material Contract to which it is a party.
SECTION 3.18 Insurance; Workers' Compensation.
(a) Section 3.18 of the Disclosure Schedule sets forth a true, complete
and accurate list of each currently effective material insurance policy issued
in favor of the Company and each Material Subsidiary, setting forth the identity
of the respective insurance carriers and a description of the policy. All
premiums due and payable in respect of such policies have been paid, such
policies are in full force and effect and free from any right granted by Company
of termination on the part of the insurance carriers, except as provided in the
respective policies. Schedule 3.18 of the Disclosure Schedule sets forth a
description, indicating dates and nature of claims, of the workers' compensation
experience as of March 31, 1997 of the Company and each domestic Material
Subsidiary since December 31, 1994, or since the dates of their respective
acquisition if later than December 31, 1994 in the case of the Material
Subsidiaries.
(b) Neither the Company nor any Material Subsidiary has received any
notice of cancellation with respect to any of its insurance policies, and,
within the three years preceding
22
<PAGE> 28
the date hereof, neither the Company nor any Material Subsidiary has been
refused any insurance coverage sought or applied for, in each case where such
cancellation or refusal, individually or in the aggregate, would have a Material
Adverse Effect.
SECTION 3.19 Certain Payments; Absence of Certain Business Practices.
To the knowledge of the Company, except as set forth in Section 3.19 of the
Disclosure Schedule, no employee or agent of the Company or any Subsidiary, nor
any other person acting on behalf of Company or any Subsidiary, has within the
past five years violated the Foreign Corrupt Practices Act or made or caused to
be made any payments to government officials in violation of the laws of the
United States or any other jurisdiction and, as of the date hereof, neither the
IRS nor any other federal, state, local or foreign government agency or entity
has notified the Company or any Subsidiary of any pending or threatened
investigation of any payment made by or on behalf of the Company or any
Subsidiary of, or alleged to be of, the type described in the immediately
preceding sentence.
SECTION 3.20 Licenses and Permits. The Company and each Material
Subsidiary have obtained all governmental licenses and permits necessary to
conduct their respective businesses in accordance with past practice, except for
failures that, individually or in the aggregate, would not have a Material
Adverse Effect. Such licenses and permits are valid and in full force and
effect, and no such licenses or permits will be terminated or materially
impaired or become terminable as a result of the Transactions, except for those
that, individually or in the aggregate, would not have a Material Adverse
Effect.
SECTION 3.21 Letters of Credit, Surety Bonds, Guarantees. Section 3.21
of the Disclosure Schedule lists, as of the date hereof, all letters of credit,
performance or payment bonds, guaranty arrangements and surety bonds of any
nature involving amounts in excess of $100,000 relating to the Company or any
Subsidiary.
SECTION 3.22 Brokers. No broker, finder or investment banker (other
than Credit Suisse First Boston) is entitled to any brokerage, finder's or other
fee or commission in connection with the Transactions based upon arrangements
made by or on behalf of the Company. The Company has heretofore furnished to
Parent a complete and correct copy of all agreements between the Company and
Credit Suisse First Boston pursuant to which such firm would be entitled to any
payment relating to the Transactions.
23
<PAGE> 29
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.01 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a material adverse effect on the business, operations,
financial condition, assets or liabilities (including, without limitation,
contingent liabilities) of Parent and Purchaser and their respective
subsidiaries, taken as a whole.
SECTION 4.02 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than with
respect to the Merger, the filing of the Certificate of Merger). This Agreement
has been duly and validly executed and delivered by Parent and Purchaser and,
assuming the due authorization, execution and delivery by the Company,
constitutes a legal, valid and binding obligation of each of Parent and
Purchaser enforceable against each of Parent and Purchaser in accordance with
its terms.
SECTION 4.03 No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Articles of Incorporation or Bylaws (or equivalent
documents) of either Parent or Purchaser, (ii) assuming that required filings
under the HSR Act are made by the appropriate parties, conflict with or violate
any law, rule, regulation, order, judgment or decree applicable to Parent or
Purchaser or by which any property or asset of either of them is bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of Parent or Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or Purchaser is a party or by which
Parent or Purchaser or any property or asset of either of
24
<PAGE> 30
them is bound or affected, except, in cases of (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, have a material adverse effect on the
business, operations, financial condition, assets or liabilities (including,
without limitation, contingent liabilities) of Parent or Purchaser and their
respective subsidiaries, taken as a whole.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, domestic or
foreign, except (i) for applicable requirements, if any, of the Exchange Act,
Blue Sky Laws and state takeover laws, the HSR Act, and the filing of the
Certificate of Merger as required by Delaware Law and (ii) where failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay consummation of the Offer
or the Merger, or otherwise prevent Parent or Purchaser from performing their
respective obligations under this Agreement.
SECTION 4.04 Financing. Parent has, or has commitments to obtain,
sufficient funds to permit Purchaser (i) to acquire all the outstanding Shares
in the Offer and the Merger and (ii) to acquire all of the Notes (and obtain all
of the related Consents) in the Note Tender Offer, written evidence of which has
been provided to the Company.
SECTION 4.05 Offer Documents; Proxy Statement. Neither the Offer
Documents nor the Note Tender Offer Documents will, at the time such documents
are filed with the SEC or are first published, sent or given to stockholders of
the Company, as the case may be, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. The information supplied by Parent
for inclusion in the Schedule 14D-9, the Information Statement or the Proxy
Statement will not, on the date such document (or any amendment or supplement
thereto) is first mailed to stockholders of the Company, with respect to the
Information Statement, at the time Shares are accepted for payment in the Offer
and with respect to the Note Tender Offer Documents, at the time the Notes (and
related Consents) are accepted for payment in the Note Tender Offer, and with
respect to the Proxy Statement at the time of the Special Stockholders' Meeting
and at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it is made, is false or misleading with
respect to any material fact, or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein not false or
misleading or necessary to correct any statement in any earlier communication
with respect to the solicitation of proxies for the Special Stockholders'
Meeting which shall have become false or misleading. Notwithstanding the
foregoing, Parent and Purchaser make no representation or warranty with respect
to any information supplied by the Company or any of its representatives which
is contained in any of the foregoing documents or the Offer Documents or the
Note Tender Offer Documents. The Offer Documents and the Note Tender Offer
Documents shall comply in all material respects as to form with the
25
<PAGE> 31
requirements of the Exchange Act, the Trust Indenture Act of 1939, as amended,
and the rules and regulations thereunder.
ARTICLE V.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, between the date of this Agreement and the
election or appointment of Purchaser's designees to the Board pursuant to
Section 6.03 upon the purchase by Purchaser of any Shares pursuant to the Offer
(the "Purchaser's Election Date"), unless Parent shall otherwise agree in
writing, the businesses of the Company and the Subsidiaries shall be conducted
only in, and the Company and the Subsidiaries shall not take any action except
in, the ordinary course of business consistent with past practice and the
Company shall use all reasonable efforts to preserve substantially intact the
business organization of the Company and the Subsidiaries, to keep available the
services of the current officers, employees and consultants of the Company and
the Subsidiaries and to preserve the current relationships of the Company and
the Subsidiaries with customers, suppliers and other persons with which the
Company or any Subsidiary has significant business relations. By way of
amplification and not limitation, except as contemplated by this Agreement or by
Section 5.01 of the Disclosure Schedule, the Company agrees that neither the
Company nor any Subsidiary shall, between the date of this Agreement and the
Purchaser's Election Date, directly or indirectly do, or propose to do, any of
the following without the prior written consent of Parent:
(a) amend or otherwise change its Constituent Documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance
of (i) any shares of capital stock of any class of the Company or any
Subsidiary, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock, or any
other ownership interest (including, without limitation, any phantom
interest), of the Company or any Subsidiary (except for the issuance of
a maximum of 2,000,000 Shares issuable pursuant to employee stock
options outstanding on the date hereof and including up to 1,250
restricted Shares per quarter issuable to outside directors in
accordance with past practice pursuant to the Stock Option Plans) or
(ii) any assets of the Company or any Subsidiary, except for sales in
the ordinary course of business and in a manner consistent with past
practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except for such declarations, set
asides dividends and other distributions made by any Subsidiary to the
Company;
26
<PAGE> 32
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization
or any division thereof or any material amount of assets other than in
the ordinary course of business consistent with past practice; (ii)
incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee or endorse, pledge in respect of or otherwise as
an accommodation become responsible for the obligations of any person,
or make any loans or advances, except in the ordinary course of
business consistent with past practice; (iii) enter into any contract
or agreement, other than any contract or agreement entered into in the
ordinary course of business consistent with past practice and which
requires payments by the Company or the Subsidiaries in an aggregate
amount of less than U.S. $250,000; (iv) terminate, cancel or request
any material change in, or agree to any material change in, any
Material Contract, except in the ordinary course of business consistent
with past practice; or (v) authorize any single capital expenditure
(excluding software development activity) which is in excess of U.S.
$500,000 or capital expenditures which are, in the aggregate, in excess
of U.S. $2,500,000 for the Company and the Subsidiaries taken as a
whole;
(f) increase the compensation payable or to become payable to
its officers or employees, except for increases in accordance with past
practices in salaries or wages of employees of the Company or any
Subsidiary who are not officers of the Company, or grant any severance
or termination pay to, or enter into any employment or severance
agreement with, any director, officer or other employee of the Company
or any Subsidiary (other than in connection with hiring and terminating
employees in the ordinary course of the Company's business), or
establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination
or severance plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee or circulate to any
employee any details of any proposal to adopt or amend any such plan;
(g) take any action, other than reasonable and usual actions
in the ordinary course of business consistent with past practice, with
respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable
and collection of accounts receivable);
(h) make any material tax election or settle or compromise any
material federal, state, local or foreign income tax liability;
27
<PAGE> 33
(i) pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice, of
liabilities reflected or reserved against in the Balance Sheet included
in the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997 or subsequently incurred in the ordinary course of
business consistent with past practice; or
(j) settle or comprise any pending or threatened suit, action
or claim that is material or which relates to any of the Transactions;
or
(k) announce an intention, enter into any formal or informal
agreement, or otherwise make a commitment, to do any of the foregoing.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.01 Special Stockholders' Meeting. The Company, acting through
the Board, shall, in accordance with applicable law and its Constituent
Documents, unless not required under applicable "short-form" merger provisions
of Delaware Law, (i) duly call, give notice of, convene and hold a special
meeting of its stockholders as soon as practicable following consummation of the
Offer for the purpose of considering and taking action on this Agreement and the
transactions contemplated hereby (the "Special Stockholders' Meeting") and (ii)
subject to its fiduciary duties under applicable law as advised by independent
counsel, (A) include in the Proxy Statement the unanimous recommendation of the
Board that the stockholders of the Company approve and adopt this Agreement and
the Transactions, including, without limitation, the Merger and (B) use all
reasonable efforts to obtain such approval and adoption. At the Special
Stockholders' Meeting (or by consent if a stockholders meeting is not required),
Parent and Purchaser shall cause all Shares then owned by them and their
subsidiaries to be voted in favor of the approval and adoption of this Agreement
and the Transactions, including, without limitation, the Merger.
SECTION 6.02 Proxy Statement. As soon as practicable following
consummation of the Offer, the Company shall file the Proxy Statement with the
SEC under the Exchange Act, unless the Special Stockholders' Meeting is not
required under applicable "short-form" merger provisions of Delaware Law, and
shall use its best efforts to have the Proxy Statement cleared by the SEC.
Parent, Purchaser and the Company shall cooperate with each other in the
preparation of the Proxy Statement, and the Company shall notify Parent of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the
28
<PAGE> 34
Company and the SEC. The Company shall give Parent and its counsel the
opportunity to review the Proxy Statement prior to its being filed with the SEC
and shall give Parent and its counsel the opportunity to review all amendments
and supplements to the Proxy Statement and all responses to requests for
additional information and replies to comments prior to their being filed with,
or sent to, the SEC. Each of the Company, Parent and Purchaser agrees to use all
reasonable efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC and to cause the Proxy
Statement and all required amendments and supplements thereto to be mailed to
the holders of Shares entitled to vote at the Special Stockholders' Meeting at
the earliest practicable time.
SECTION 6.03 Company Board Representation; Section 14(f). (a) Promptly
upon the purchase by Purchaser of Shares pursuant to the Offer, and from time to
time thereafter, Purchaser shall be entitled to designate up to such number of
directors, rounded up to the next whole number, on the Board as shall give
Purchaser representation on the Board equal to the product of the total number
of directors on the Board (giving effect to the directors elected pursuant to
this sentence) multiplied by the percentage that the aggregate number of Shares
beneficially owned by Purchaser or any affiliate of Purchaser at such time bears
to the total number of Shares then outstanding, and the Company shall, at such
time, promptly take all actions necessary to cause Purchaser's designees to be
elected as directors of the Company, including increasing the size of the Board
or securing the resignations of incumbent directors or both. At such times, the
Company shall use all reasonable efforts to cause persons designated by
Purchaser to constitute the same percentage as persons designated by Purchaser
shall constitute of the Board with respect to (i) each committee of the Board
(some of whom may be required to be independent as required by applicable law or
requirements of the New York Stock Exchange), (ii) each board of directors of
each Subsidiary and (iii) each committee of each such board, in each case only
to the extent permitted by applicable law. Notwithstanding the foregoing, until
the time Purchaser acquires a majority of the then outstanding Shares on a fully
diluted basis, the Company shall use all reasonable efforts to ensure that all
the members of the Board and each committee of the Board and such boards and
committees of the Subsidiaries as of the date hereof who are not employees of
the Company shall remain members of the Board and of such boards and committees.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03 and shall include the
Information Statement containing such information with respect to the Company
and its officers and directors as is required under Section 14(f) and Rule 14f-1
as an annex to the Schedule 14D-9 to fulfill such obligations. Parent or
Purchaser shall supply to the Company and be solely responsible for any
information with respect to either of them and their nominees, officers,
directors and affiliates required by such Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of designees of Purchaser
pursuant to this Section 6.03, prior to the Effective Time, any amendment of
this Agreement or the Constituent
29
<PAGE> 35
Documents of the Company, any termination of this Agreement by the Company, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser or waiver of any of the
Company's rights hereunder shall require the concurrence of a majority of the
directors of the Company then in office who neither were designated by Purchaser
nor are employees of the Company or if no such directors are then in office, no
such amendment, termination, extension or waiver shall be effected which is
materially adverse to the holders of Shares (other than Parent and its
subsidiaries).
SECTION 6.04 Access to Information; Confidentiality. (a) From the date
hereof to the consummation of the Offer, the Company shall, and shall cause the
Subsidiaries to, afford the officers, employees and agents of Parent and
Purchaser and persons providing or committing to provide Parent or Purchaser
with financing for the Transactions complete access at all reasonable times to
the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and each Subsidiary, and shall
furnish Parent and Purchaser and persons providing or committing to provide
Parent or Purchaser with financing for the Transactions with all financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request.
(b) Parent agrees that all information obtained by Parent or Purchaser
pursuant to this Section 6.04 shall be kept confidential, by Purchaser, by
Parent and by any other party which is to be afforded access pursuant to Section
6.04(a), in accordance with the confidentiality agreement, dated April 25, 1997
(the "Confidentiality Agreement"), between Parent and the Company.
SECTION 6.05 No Solicitation of Transactions. Neither the Company nor
any Subsidiary shall, directly or indirectly, through any officer, director,
agent or otherwise, solicit, initiate or encourage the submission of any
proposal or offer from any person relating to any acquisition or purchase of all
or any material portion of the assets of, or any equity interest in, the Company
or any Material Subsidiary or any business combination with the Company or any
Material Subsidiary or participate in any negotiations regarding, or furnish to
any other person any information with respect to, or otherwise cooperate in any
way with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person to do or seek any of the foregoing and the Company
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. Notwithstanding the foregoing or any other provision hereof, nothing
shall prohibit the Board from furnishing information to, or entering into
discussions or negotiations with, any person in connection with an unsolicited
(from the date of this Agreement) proposal in writing by such person to acquire
the Company pursuant to a merger, consolidation, share exchange, business
combination or other similar transaction or to acquire all or substantially all
of the assets of the Company or any of its Subsidiaries, if, and only to the
extent that, (i) the Board, after consultation with independent legal counsel
(which may include its regularly engaged independent legal counsel), determines
in good faith that such action is required for the Board to comply with its
fiduciary duties to stockholders imposed by
30
<PAGE> 36
Delaware Law and (ii) prior to furnishing such information to, or entering into
discussions or negotiations with, such person the Company uses its reasonable
efforts to obtain from such person an executed confidentiality agreement on
terms no less favorable to the Company than those contained in the
Confidentiality Agreement. The Company shall notify Parent promptly if any such
proposal or offer, or any inquiry or contact with any person with respect
thereto, is made. The Company agrees not to release any third party from, or
waive any provision of, any confidentiality or, subject to the fiduciary duties
of the Board, standstill agreement to which the Company is or may become a
party.
SECTION 6.06 Employee Benefits Matters; Employment Agreements. Annex C
hereto sets forth certain agreements among the parties hereto with respect to
the Plans and other employee benefits matters.
SECTION 6.07 Directors' and Officers' Indemnification and Insurance.
(a) The Certificate of Incorporation and Bylaws of the Surviving Corporation
shall contain provisions no less favorable with respect to indemnification than
are set forth in Article XIII of the Bylaws of the Company, which provisions
shall not be amended, repealed or otherwise modified for a period of six years
from the Effective Time in any manner that would affect adversely the rights
thereunder of individuals who at any time from and after the date of this
Agreement and to and including the Effective Time were directors, officers,
employees, fiduciaries or agents of the Company in respect of acts or omissions
occurring at or prior to the Effective Time (including, without limitation, the
matters contemplated by this Agreement), unless such modification shall be
required by law. From and after the Purchaser's Election Date, the Company
shall not amend, repeal or otherwise modify the indemnification and advancement
of expenses provisions of Article XIII of the Bylaws of the Company or the
indemnification or advancement of expenses provisions in the Constituent
Documents of any of the Subsidiaries in any manner that would adversely affect
the rights thereunder of individuals who at any time from and after the date of
this Agreement and to and including the Effective Time were directors,
officers, employees, fiduciaries or agents of the Company or any of the
Subsidiaries in respect of acts or omissions occurring at or prior to the
Effective Time (including, without limitation, the matters contemplated by this
Agreement), unless such modification is required by law.
(b) The Company shall, to the fullest extent permitted under applicable
law, indemnify and hold harmless, and, after the Effective Time, Parent and the
Surviving Corporation shall, to the fullest extent permitted under applicable
law, indemnify and hold harmless, each present and former director, officer,
employee, fiduciary and agent of the Company and each Subsidiary (collectively,
the "Indemnified Parties") against all costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit, proceeding
or investigation (whether arising before or
31
<PAGE> 37
after the Effective Time), whether civil, criminal, administrative or
investigative, arising out of or pertaining to any act or omission in their
capacity as an officer, director, employee, fiduciary or agent, whether
occurring before or after the Effective Time, for a period of six years after
the date hereof (and shall pay any expenses in advance of the final disposition
of any such action or proceeding to each Indemnified Party to the fullest
extent permitted under Delaware Law, and, with respect to Indemnified Parties
who are or were directors or officers of the Company, upon receipt from the
Indemnified Party to whom expenses are advanced of any undertaking to repay
such advances required under Delaware Law). In the event of any such claim,
action, suit, proceeding or investigation, (i) the Company, Parent or the
Surviving Corporation, as the case may be, shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to the Company, Parent or the Surviving Corporation,
promptly after statements therefor are received (subject to the provision of an
undertaking as set forth in the prior sentence, if applicable) and (ii) the
Company, Parent and the Surviving Corporation shall cooperate in the defense of
any such matter; provided, however, that neither the Company, Parent nor the
Surviving Corporation (i) shall be liable for any settlement effected without
its written consent (which consent shall not be unreasonably withheld); or (ii)
shall be obligated pursuant to this Section 6.07(b) to pay the fees and
expenses of more than one counsel for all Indemnified Parties in any single
action except to the extent that two or more of such Indemnified Parties shall
have conflicting interests in the outcome of such action; and provided further
that, in the event that any claim for indemnification is asserted or made
within such six-year period, all rights to indemnification in respect of such
claim shall continue until the disposition of such claim.
(c) The Company shall maintain in effect from and after the date of
this Agreement and to and including the Effective Time, and Parent shall cause
the Surviving Corporation from the Effective Time until six years thereafter to
maintain in effect, insurance coverage, if available, equivalent to that
provided by the directors' and officers' liability insurance policies currently
maintained by the Company with respect to matters occurring on or prior to the
Effective Time; provided, however, that the Surviving Corporation may substitute
therefor policies of at least the same coverage containing terms and conditions
which are not materially less favorable; and provided further that, in no event
shall the Surviving Corporation be required to expend pursuant to this Section
6.07(c) more than an amount per year equal to 250% of current annual premiums
paid by the Company for such insurance (which annual premiums the Company
represents to be approximately $300,000).
(d) In the event the Company, Parent or the Surviving Corporation or
any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Company, Parent or the Surviving Corporation, as the case may be, shall assume
the obligations set forth in this Section 6.07.
SECTION 6.08 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or
32
<PAGE> 38
non-occurrence of any event the occurrence or non-occurrence of which causes
any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect and (ii) any failure of the Company, Parent
or Purchaser, as the case may be, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder;
provided, however, that the delivery of any notice pursuant to this Section
6.08 shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
SECTION 6.09 Further Action; Reasonable Efforts. Upon the terms and
subject to the conditions hereof, each of the parties hereto shall (i) make
promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the Transactions and (ii) use all
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
Transactions, including, without limitation, using all reasonable efforts to
obtain all licenses, permits (including, without limitation, environmental
permits), consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company and the
Subsidiaries as are necessary for the consummation of the Transactions and to
fulfill the conditions to the Offer, the Note Tender Offer and the Merger and
(iii) except as contemplated by this Agreement, use all reasonable efforts not
to take any action, or enter into any transaction, which would cause any of its
representations or warranties contained in this Agreement to be untrue or result
in a breach of any covenant made by it in this Agreement. In case at any time
after the Effective Time any further action is necessary or desirable to carry
out the purposes of this Agreement, the proper officers and directors of Parent
and the Company shall use all reasonable efforts to take all such action.
SECTION 6.10 Public Announcements. Parent and the Company shall consult
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or any Transaction and shall not issue
any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange or foreign securities exchange to which Parent or
the Company is a party.
SECTION 6.11 Confidentiality Agreement. Assuming the Minimum Condition
has been satisfied, upon the acceptance for payment of Shares pursuant to the
Offer, the Confidentiality Agreement shall be deemed to have terminated without
further action by the parties thereto.
33
<PAGE> 39
ARTICLE VII.
CONDITIONS TO THE MERGER
SECTION 7.01 Conditions to the Merger. The respective obligations of
each party to effect the Merger shall be subject to the satisfaction at or prior
to the Effective Time of the following conditions:
(a) Stockholder Approval. This Agreement and the Transactions,
including, without limitation, the Merger, shall have been approved and
adopted by the affirmative vote of the stockholders of the Company
(unless the vote of the stockholders is not required by Delaware Law);
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or been terminated;
(c) No Order. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or
state court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any law, rule, regulation, executive
order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is then in effect and has the effect of
making the acquisition of Shares by Parent or Purchaser or any
affiliate of either of them or the consummation of the Merger illegal
under applicable law or otherwise restricting, preventing or
prohibiting under applicable law consummation of the Transactions;
(d) Offer. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; provided, however, that neither Parent nor Purchaser shall be
entitled to assert the failure of this condition if, in breach of this
Agreement or the terms of the Offer, Purchaser fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer; and
(e) Note Tender Offer. The Supplemental Indenture shall have
been entered into and Parent or its permitted assignee shall have
purchased all Notes validly tendered and not withdrawn pursuant to the
Note Tender Offer; provided, however, that Parent shall not be entitled
to assert the failure of this condition if, in breach of this Agreement
or the terms of the Note Tender Offer, Parent fails to purchase any
Notes validly tendered and not withdrawn pursuant to the Note Tender
Offer.
34
<PAGE> 40
ARTICLE VIII.
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company prior to Purchaser's
Election Date; or
(b) By Parent, Purchaser or the Company if (i) the Effective
Time shall not have occurred on or before December 31, 1997; provided,
however, that the right to terminate this Agreement under this Section
8.01(b) shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or resulted
in, the failure of the Effective Time to occur on or before such date
or (ii) any court of competent jurisdiction in the United States or
other governmental authority shall have issued an order, decree, ruling
or taken any other action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action
shall have become final and nonappealable; or
(c) By Parent if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex A
or Annex B hereto, as applicable, Purchaser shall have (A) failed to
commence the Offer within five business days following the date of
public announcement of the execution of this Agreement, (B) failed to
commence the Note Tender Offer within 10 business days following the
date of public announcement of the execution of this Agreement, (C)
terminated the Offer or the Note Tender Offer without having accepted
any Shares or Notes (and without having obtained related Consents), as
the case may be, for payment thereunder or (D) failed to pay for Shares
or Notes (and obtain related Consents) pursuant to the Offer or the
Note Tender Offer, as the case may be, within 90 days following the
commencement thereof; unless such action or inaction under (A), (B),
(C) or (D) shall have been caused by or resulted from the failure of
Parent or Purchaser to perform in any material respect any material
covenant or agreement of either of them contained in this Agreement or
the material breach by Parent or Purchaser of any material
representation or warranty of either of them contained in this
Agreement or (ii) prior to the purchase of Shares pursuant to the Offer
or the Notes pursuant to the Note Tender Offer, the Board or any
committee thereof shall have withdrawn or modified in a manner adverse
to Purchaser or Parent its approval or recommendation of the Offer,
this Agreement, the Merger or any other Transaction or shall have
recommended another merger, consolidation, business combination with,
or acquisition of, the
35
<PAGE> 41
Company or its assets or another tender offer or exchange offer for
Shares, or shall have resolved to do any of the foregoing; or
(d) By the Company, upon approval of the Board if (i)
Purchaser shall have (A) failed to commence the Offer within five
business days following the date of public announcement of the
execution of this Agreement, (B) failed to commence the Note Tender
Offer within 10 business days following the date of public announcement
of the execution of this Agreement, (C) terminated the Offer or the
Note Tender Offer without having accepted any Shares or Notes (and
without having obtained related Consents), as the case may be, for
payment thereunder or (D) failed to pay for Shares pursuant to the
Offer or the Notes (and obtain related Consents) pursuant to the Note
Tender Offer within 90 days following the commencement thereof, unless
such action or inaction under (A), (B), (C) or (D) shall have been
caused by or resulted from the failure of the Company to perform in any
material respect any material covenant or agreement of it contained in
this Agreement or the material breach by the Company of any material
representation or warranty of it contained in this Agreement or (ii)
prior to the purchase of Shares pursuant to the Offer or the Notes
pursuant to the Note Tender Offer, the Board shall have withdrawn or
modified in a manner adverse to Purchaser or Parent its approval or
recommendation of the Offer, this Agreement, the Merger or any other
Transaction in order to approve the execution by the Company
of a definitive agreement providing for the acquisition of the Company
or any of its assets by a sale, merger or other business combination
or in order to approve a tender offer or exchange offer for Shares by
a third party, in either case, as the Board determines in good faith
that such action is required for the Board to comply with its
fiduciary duties to stockholders, after consultation with its
independent legal counsel and financial advisers, and is on terms more
favorable to the Company's stockholders than the Offer and the Merger
taken together; provided, however, that such termination under this
clause (ii) shall not be effective until the Company has made payment
to Parent of the Fee (as hereinafter defined) required to be paid
pursuant to Section 8.03(a)(iv) and has deposited with a mutually
acceptable escrow agent $2.0 million for reimbursement of Expenses (as
hereinafter defined).
SECTION 8.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 8.01, this Agreement shall forthwith become
void, and there shall be no liability on the part of any party hereto, except as
set forth in Sections 8.03 and 9.01, and nothing herein shall relieve any party
from liability for any breach hereof.
SECTION 8.03 Fees and Expenses. (a) In the event that
(i) any person (including, without limitation, the
Company or any affiliate thereof), other than Parent or any affiliate
of Parent, shall have become the beneficial owner of more than 20% of
the then outstanding Shares, this Agreement shall have been terminated
pursuant to Section 8.01 (other than pursuant to Section 8.01(c)(ii) or
36
<PAGE> 42
8.01(d)(ii)) and within 12 months of such termination a Third Party
Acquisition (as defined hereinafter) shall occur; or
(ii) any person shall have commenced, publicly proposed or
communicated to the Company a proposal that is publicly disclosed for a
tender or exchange offer for 25% or more of the then outstanding Shares
(or which, assuming the maximum amount of securities that could be
purchased, would result in any person beneficially owning 25% or more
of the then outstanding Shares) or otherwise for the direct or indirect
acquisition of the Company or all or substantially all of its assets
for per Share consideration having a value greater than the Per Share
Amount and (w) the Offer shall have remained open for at least 20
business days, (x) the Minimum Condition shall not have been satisfied,
(y) this Agreement shall have been terminated pursuant to Section 8.01
(and other than pursuant to Section 8.01(c)(ii) or 8.01(d)(ii)) and (z)
within 12 months of such termination a Third Party Acquisition shall
occur; or
(iii) if the Minimum Condition or the Requisite Consent
Condition shall not have been satisfied on or prior to the date that is
60 days from the date of commencment of the Offer, Parent desires to
extend the Offer beyond such 60 day period but the Company declines to
consent to such extension pursuant to Section 1.01, this Agreement is
terminated pursuant to Section 8.01 (and other than pursuant to Section
8.01(c)(ii) or 8.01(d)(ii)) and within 12 months of such termination a
Third Party Acquisition shall occur; or
(iv) this Agreement is terminated pursuant to Section
8.01(c)(ii) or 8.01(d)(ii)
then, in any such event, provided that neither Parent nor Purchaser is in
material breach of its obligations under this Agreement, the Company shall pay
Parent promptly (but in no event later than one business day after (a) the
consummation of the Third Party Acquisition, with respect to the events
described in clauses (i), (ii) or (iii), or (b) such termination with
respect to clause (iv)) a fee of U.S. $8 million (the "Fee"), which amount shall
be payable in immediately available funds, plus all Expenses.
(b) Provided that neither Parent nor Purchaser is in material breach of
its obligations under this Agreement and Parent is not entitled to the Fee
pursuant to Section 8.03(a), if (i) this Agreement is terminated pursuant to
Section 8.01(c) due to the occurrence of the condition set forth in paragraph
(g) of Annex A or (ii) this Agreement is terminated pursuant to Section 8.01(c)
because of the occurrence of the condition set forth in paragraph (f) of Annex A
and such occurrence results from the failure of the representations and
warranties of the Company in this Agreement to be true and correct in accordance
with their respective terms, then, in either case (i) or (ii), the Company shall
promptly reimburse Parent and Purchaser for all Expenses.
37
<PAGE> 43
(c) "Expenses" means all reasonable out-of-pocket expenses and fees up
to U.S. $2 million in the aggregate (including, without limitation, reasonable
fees and expenses payable to all banks, investment banking firms, other
financial institutions and other persons and their respective agents and counsel
for arranging, committing to provide or providing any financing for the
Transactions or structuring the Transactions and all reasonable fees of counsel,
accountants, experts and consultants to Parent and Purchaser, and all printing
and advertising expenses) actually incurred by either of them or on their behalf
in connection with the Transactions, including, without limitation, the
financing thereof, and actually incurred by banks, investment banking firms,
other financial institutions and other persons and assumed by Parent and
Purchaser in connection with the negotiation, preparation, execution and
performance of this Agreement, the structuring and financing of the Transactions
and any financing commitments or agreements relating thereto.
(d) Except as set forth in this Section 8.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.
(e) In the event that the Company shall fail to pay the Fee or any
Expenses when due, the term "Expenses" shall be deemed to include the reasonable
costs and expenses actually incurred by Parent and Purchaser (including, without
limitation, reasonable fees and expenses of counsel) in connection with the
collection under and enforcement of this Section 8.03, together with interest on
such unpaid Fee and Expenses, commencing on the date that the Fee or such
Expenses became due, at a per annum rate equal to the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York, from time to time, in
the City of New York, as such bank's prime rate plus 1%.
(f) "Third Party Acquisition" means the occurrence of any of the
following events: (i) the acquisition of the Company by merger, consolidation or
other business combination transaction by any person other than Parent,
Purchaser or any affiliate thereof (a "Third Party"); (ii) the acquisition by
any Third Party of all or substantially all of the assets of the Company and its
Subsidiaries, taken as a whole; (iii) the acquisition by a Third Party of 50% or
more of the outstanding Shares whether by tender offer, exchange offer or
otherwise; (iv) the adoption by the Company of a plan of liquidation or the
declaration or payment of an extraordinary dividend; or (v) the repurchase by
the Company or any of its Subsidiaries of 50% or more of the outstanding Shares.
SECTION 8.04 Amendment. Subject to the limitations set forth in Section
6.03(c), this Agreement may be amended by the parties hereto by action taken by
or on behalf of their respective Boards of Directors at any time prior to the
Effective Time; provided, however, that, after the approval and adoption of
this Agreement and the transactions contemplated hereby by the stockholders of
the Company, no amendment may be made which would reduce the amount or change
the type of consideration into which each Share shall be converted upon
38
<PAGE> 44
consummation of the Merger. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
SECTION 8.05 Waiver. Subject to the limitations set forth in Section
6.03(c), at any time prior to the Effective Time, any party hereto may (i)
extend the time for the performance of any obligation or other act of any other
party hereto, (ii) waive any inaccuracy in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any agreement or condition contained herein. Any such extension
or waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.
ARTICLE IX.
GENERAL PROVISIONS
SECTION 9.01 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Articles II and IX and Section 6.07 shall survive the Effective Time
indefinitely and those set forth in Sections 6.04(b), 8.03 and Article IX shall
survive termination indefinitely.
SECTION 9.02 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by telecopy
or by registered or certified mail (postage prepaid, return receipt requested)
to the respective parties at the following addresses (or at such other address
for a party as shall be specified in a notice given in accordance with this
Section 9.02):
if to Parent or Purchaser:
United Dominion Industries Limited
2300 One First Union Center
301 South College Street
Charlotte, North Carolina 28202-6039
Telecopy No.: 704-347-6915
Attn: Richard L. Magee, Esq.
39
<PAGE> 45
with a copy to:
Robinson, Bradshaw & Hinson, P.A.
1900 Independence Center
Charlotte, North Carolina 28246
Telecopy No.: 704-378-4000
Attn: Stephen M. Lynch, Esq.
if to the Company:
Imo Industries Inc.
1009 Lenox Drive
Lawrenceville, New Jersey 08648-0550
Telecopy No.: 609-896-7633
Attn: Thomas J. Bird, Esq.
with a copy to:
Weil, Gotshal and Manges LLP
767 Fifth Avenue
New York, New York 10153
Telecopy No.: 212-310-8007
Attn: Ronald F. Daitz, Esq.
SECTION 9.03 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a specified person means a person who directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) that such person
or any of its affiliates or associates (as such term is defined in Rule 12b-2
promulgated under the Exchange Act) beneficially owns, directly or indirectly,
(ii) that such person or any of its affiliates or associates has, directly or
indirectly, (A) the right to acquire (whether such right is exercisable
immediately or subject only to the passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of consideration rights,
exchange rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding or (iii) that are
beneficially owned, directly or indirectly, by any other persons with whom such
person or any of its affiliates or associates or person with whom such person or
any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of any
Shares;
40
<PAGE> 46
(c) "business day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York;
(d) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management and
policies of a person, whether through the ownership of voting securities, as
trustee or executor, by contract or credit arrangement or otherwise;
(e) "person" means an individual, corporation, partnership, limited
partnership, syndicate, person (including, without limitation, a "person" as
defined in Section 13(d)(3) of the Exchange Act), trust, association or entity
or government, political subdivision, agency or instrumentality of a government;
and
MARQUIS
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by such
person, directly or indirectly, through one or more intermediaries.
SECTION 9.04 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05 Entire Agreement, Assignment. This Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes, except as set forth in Section 6.04(b), all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof. This Agreement shall not be assigned by
operation of law or otherwise, except that Purchaser may assign all or any of
its rights and obligations hereunder to any affiliate of Parent provided that no
such assignment shall relieve the assigning party of its obligations hereunder
if such assignee does not perform such obligations.
SECTION 9.06 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any right, benefit or remedy of any nature
41
<PAGE> 47
whatsoever under or by reason of this Agreement, other than Section 6.07 (which
is intended to be for the benefit of the persons covered thereby and may be
enforced by such persons).
SECTION 9.07 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 9.08 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
SECTION 9.09 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.10 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
42
<PAGE> 48
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
UNITED DOMINION INDUSTRIES LIMITED
By: /s/ Richard A. Bearse
---------------------------------------
Name: Richard A. Bearse
Title: Senior Vice President
By: /s/ Richard L. Magee
---------------------------------------
Name: Richard L. Magee
Title: Secretary
UD DELAWARE CORP.
By: /s/ Richard A. Bearse
---------------------------------------
Name: Richard A. Bearse
Title: Senior Vice President
By: /s/ Richard L. Magee
---------------------------------------
Name: Richard L. Magee
Title: Secretary
IMO INDUSTRIES INC.
By: /s/ D. K. Farrar
---------------------------------------
Name: Donald K. Farrar
Title: Chairman of the Board, President
and Chief Executive Officer
43
<PAGE> 49
ANNEX A
CONDITIONS TO THE OFFER
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) the Note Tender Offer shall have been terminated
in accordance with the terms of Annex B hereto, (iii) any applicable waiting
period under the HSR Act shall not have expired or been terminated prior to the
expiration of the Offer or (iv) at any time on or after the date of this
Agreement, and prior to the acceptance for payment of Shares, any of the
following conditions shall exist:
(a) there shall have been instituted or be pending any action
or proceeding brought by any governmental, administrative or regulatory
authority or agency, domestic or foreign, before any court or
governmental, administrative or regulatory authority or agency,
domestic or foreign, (i) challenging or seeking to make illegal,
materially delay or otherwise directly or indirectly restrain or
prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent,
Purchaser or any other affiliate of Parent pursuant to the Offer or the
consummation of any other Transaction, or seeking to obtain material
damages in connection with any Transaction; (ii) seeking to prohibit or
limit materially the ownership or operation by the Company or Parent of
all or any material portion of its business or to compel the Company or
Parent to dispose of or hold separate all or any material portion of
its business as a result of the Transactions; (iii) seeking to impose
or confirm limitations on the ability of Parent, Purchaser or any other
affiliate of Parent to exercise effectively full rights of ownership of
any Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer, or otherwise on all
matters properly presented to the Company's stockholders, including,
without limitation, the approval and adoption of this Agreement and the
transactions contemplated hereby; or (iv) seeking to require
divestiture by Parent, Purchaser or any other affiliate of Parent of
any Shares; provided that Parent shall have used all reasonable efforts
to cause any such action or proceeding described in this paragraph (a)
to be dismissed or withdrawn;
(b) there shall have been issued any injunction, order or
decree by any court or governmental, administrative or regulatory
authority or agency, domestic or foreign, resulting from any action or
proceeding brought by any person other than any governmental,
administrative or regulatory authority or agency, domestic or foreign,
that (i) restrains or prohibits the making of the Offer or the
consummation of any other Transaction; (ii) prohibits or limits
ownership or operation by the Company or Parent
A-1
<PAGE> 50
of all or any material portion of its business or assets or
compels the Company or Parent to dispose of or hold separate all or
any material portion of its business or assets, in each case as a
result of the Transactions; (iii) imposes limitations on the ability
of Parent or Purchaser to exercise effectively full rights of
ownership of any Shares, including, without limitation, the right to
vote any Shares acquired by Purchaser pursuant to the Offer, or
otherwise on all matters properly presented to the Company's
stockholders, including, without limitation, the approval and adoption
of this Agreement and the Transactions or (iv) requires
divestiture by Parent or Purchaser of any Shares; provided that Parent
shall have used all reasonable efforts to cause any such injunction,
order or decree described in this paragraph (b) to be vacated or
lifted;
(c) there shall have been any action taken, or any statute,
rule, regulation, order or injunction enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to (i) Parent, the
Company or any subsidiary or affiliate of Parent or the Company or (ii)
any Transaction, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency,
domestic or foreign, in the case of both (i) and (ii) other than the
routine application of the waiting period provisions of the HSR Act to
the Offer or the Merger, in each case that results in any of the
consequences referred to in clauses (i) through (iv) of paragraph (b)
above; provided that Parent shall have used all reasonable efforts to
cause any such action, order or injunction described in this paragraph
(c) to be vacated or lifted;
(d) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities of (x) the Company
on the New York Stock Exchange or (y) Parent on any of The Toronto
Stock Exchange, The Montreal Exchange or the New York Stock Exchange,
(ii) any decline, measured from the date hereof, in the Standard &
Poor's 500 Index by an amount in excess of 30%, (iii) a declaration of
a banking moratorium or any suspension of payments in respect of banks
in the United States or Canada, (iv) any limitation (whether or not
mandatory) by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, on the extension
of credit by banks or other lending institutions, (v) a commencement of
a war or armed hostilities or other national or international calamity
directly or indirectly involving the United States or (vii) in the case
of any of the foregoing existing on the date hereof, a material
acceleration or worsening thereof;
(e) (i) it shall have been publicly disclosed or Purchaser
shall have otherwise learned that beneficial ownership (determined for
the purposes of this paragraph as set forth in Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of the then outstanding Shares
has been acquired by any person, other than Parent or any of its
affiliates or (ii) (A) the Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Parent or Purchaser the
approval or recommendation of the Offer, the Merger or the Agreement or
approved or recommended any takeover
A-2
<PAGE> 51
proposal or any other acquisition of Shares other than the
Offer and the Merger or (B) the Board or any committee thereof shall
have resolved to do any of the foregoing;
(f) (i) any representation or warranty of the Company in the
Agreement shall not be true and correct; or
(ii) there shall have occurred, since the date of the
Agreement, a change in the business, operations, financial condition,
assets or liabilities of the Company or any Subsidiary
with the effect that such failure of any such representation or
warranty to be true and correct or such change, when taken together
with all other such failures of such representations and warranties to
be true and correct (both favorable and adverse) and all other such
changes (both favorable and adverse), in the aggregate would have, a
Material Adverse Effect; provided, however that, for the purpose of the
foregoing condition, in determining whether any such representation or
warranty is true or correct, any qualification as to materiality or
Material Adverse Effect contained in any such representation and
warranty shall be deemed not to apply;
(g) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be
performed or complied with by it under the Agreement;
(h) the Agreement shall have been terminated in accordance
with its terms; or
(i) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder; which, in the sole judgment of
Purchaser, in any such case, and regardless of the circumstances
(including any action or inaction by Parent or any of its affiliates)
giving rise to any such condition, makes it inadvisable to proceed with
such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
A-3
<PAGE> 52
ANNEX B
CONDITIONS TO THE NOTE TENDER OFFER
Notwithstanding any other provision of the Note Tender Offer, Parent
shall not be required to accept for payment or pay for any Notes or related
Consents tendered pursuant to the Note Tender Offer and may terminate or amend
the Note Tender Offer and may postpone the acceptance for payment of and payment
for Notes and related Consents tendered, if (i) the Requisite Consent Condition
shall not have been satisfied, (ii) the Offer shall have been terminated in
accordance with the terms of Annex A hereto or (iii) at any time on or after the
date of this Agreement, and prior to the acceptance for payment of Notes and
related Consents, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action
or proceeding brought by any governmental, administrative or regulatory
authority or agency, domestic or foreign, before any court or
governmental, administrative or regulatory authority or agency,
domestic or foreign, (i) challenging or seeking to make illegal,
materially delay or otherwise directly or indirectly restrain or
prohibit or make materially more costly the making of the Note Tender
Offer, the acceptance for payment of, or payment for, any Notes or
related Consents by Parent or any other affiliate of Parent pursuant to
the Note Tender Offer or the consummation of any other Transaction, or
seeking to obtain material damages in connection with any Transaction;
(ii) seeking to prohibit or limit materially the ownership or operation
by the Company or Parent of all or any material portion of its business
or to compel the Company or Parent to dispose of or hold separate all
or any material portion of its business as a result of the
Transactions; (iii) seeking to impose or confirm limitations on the
ability of Parent or any affiliate of Parent to exercise effectively
full rights of ownership of any Notes or related Consents, or (iv)
seeking to require divestiture by Parent or any affiliate of Parent of
any Notes; provided that Parent shall have used all reasonable efforts
to cause any such action or proceeding described in this paragraph (a)
to be dismissed or withdrawn;
(b) there shall have been issued any injunction, order or
decree by any court or governmental, administrative or regulatory
authority or agency, domestic or foreign, resulting from any action or
proceeding brought by any person other than any governmental,
administrative or regulatory authority or agency, domestic or foreign,
that (i) restrains or prohibits the making of the Note Tender Offer or
the consummation of any other Transaction; (ii) prohibits or limits
ownership or operation by the Company or Parent of all or any material
portion of its business or assets or compels the Company or Parent to
dispose of or hold separate all or any material portion of its business
or assets, in each case as a result of the Transactions; (iii) imposes
limitations
B-1
<PAGE> 53
on the ability of Parent or Purchaser to exercise effectively
full rights of ownership of any Notes; or (iv) requires divestiture by
Parent of any Notes; provided that Parent shall have used all
reasonable efforts to cause any such injunction, order or decree
described in this paragraph (b) to be vacated or lifted;
(c) there shall have been any action taken, or any statute,
rule, regulation, order or injunction enacted, entered, enforced,
promulgated, amended, issued or deemed applicable to (i) Parent, the
Company or any subsidiary or affiliate of Parent or the Company or (ii)
any Transaction, by any legislative body, court, government or
governmental, administrative or regulatory authority or agency,
domestic or foreign, in the case of both (i) and (ii) other than the
routine application of the waiting period provisions of the HSR Act to
the Offer or the Merger, in each case that results in any of the
consequences referred to in clauses (i) through (iv) of paragraph (b)
above; provided that Parent shall have used all reasonable efforts to
cause any such action, order or injunction described in this paragraph
(c) to be vacated or lifted;
(d) there shall have occurred (i) any general suspension of,
or limitation on prices for, trading in securities of (x) the Company
on the New York Stock Exchange or (y) Parent on any of The Toronto
Stock Exchange, The Montreal Exchange or the New York Stock Exchange,
(ii) any decline, measured from the date hereof, in the Standard &
Poor's 500 Index by an amount in excess of 30%, (iii) a declaration of
a banking moratorium or any suspension of payments in respect of banks
in the United States or Canada, (iv) any limitation (whether or not
mandatory) by any government or governmental, administrative or
regulatory authority or agency, domestic or foreign, on the extension
of credit by banks or other lending institutions, (v) a commencement of
a war or armed hostilities or other national or international calamity
directly or indirectly involving the United States or (vii) in the case
of any of the foregoing existing on the date hereof, a material
acceleration or worsening thereof;
(e) (i) it shall have been publicly disclosed or Purchaser
shall have otherwise learned that beneficial ownership (determined for
the purposes of this paragraph as set forth in Rule 13d-3 promulgated
under the Exchange Act) of 20% or more of the then outstanding Shares
has been acquired by any person, other than Parent or any of its
affiliates or (ii) (A) the Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Parent or Purchaser the
approval or recommendation of the Offer, the Merger or the Agreement or
approved or recommended any takeover proposal or any other acquisition
of Shares other than the Offer and the Merger or (B) the Board or any
committee thereof shall have resolved to do any of the foregoing;
(f) (i) any representation or warranty of the Company in
the Agreement shall not be true and correct; or
B-2
<PAGE> 54
(ii) there shall have occurred, since the date of the
Agreement, a change in the business, operations, financial condition,
assets or liabilities of the Company or any Subsidiary
with the effect that such failure of any such representation or
warranty to be true and correct or such change, when taken together
with all other such failures of such representations and warranties to
be true and correct (both favorable and adverse) and all other such
changes (both favorable and adverse), in the aggregate would have, a
Material Adverse Effect; provided, however that, for the purpose of the
foregoing condition, in determining whether any such representation or
warranty is true or correct, any qualification as to materiality or
Material Adverse Effect contained in any such representation and
warranty shall be deemed not to apply;
(g) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or material covenant of the Company to be
performed or complied with by it under the Agreement;
(h) the Agreement shall have been terminated in accordance
with its terms; or
(i) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Note Tender Offer or postpone the acceptance for
payment of or payment for Notes and related Consents thereunder; which,
in the sole judgment of Purchaser, in any such case, and regardless of
the circumstances (including any action or inaction by Parent or any of
its affiliates) giving rise to any such condition, makes it inadvisable
to proceed with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
B-3
<PAGE> 55
ANNEX C
For a period of one year from the Effective Time, Parent shall, or shall cause
the Company or the Surviving Corporation to, maintain the Plans (other than the
Stock Option Plans) which the Company maintains for the benefit of, or which are
open to, a majority of the employees of the Company on the terms in effect on
the date hereof, or such other plans, arrangements or programs as will provide
employees with benefits that in the aggregate are substantially equivalent to,
and no less favorable than, those provided under the Plans (other than the Stock
Option Plans) as in effect on the date hereof. In addition, Parent shall, or
shall cause the Surviving Corporation to, assume and agree to perform those
Change of Control Agreements listed in Schedule 6.06 of the Disclosure Schedule
in the same manner and to the same extent that the Company is required to
perform such agreements.
C-1
<PAGE> 1
EXHIBIT (C)(2)
April 25, 1997
Richard A. Bearse
Senior Vice President, Planning and Development
United Dominion Industries
2300 One First Union Center
301 South College Street
Charlotte, NC 28202-6039
Dear Mr. Bearse:
You have requested information regarding lmo Industries Inc. (the
"Company", "us" or "we") in connection with your consideration of a possible
negotiated transaction with the Company (a "Possible Transaction"). In
consideration of our furnishing you with the Evaluation Materials (as defined
below) you agree as follows:
CONFIDENTIALITY OF EVALUATION MATERIALS
You and your representatives (as defined herein) will treat confidentially
any information (whether written or oral) that either we or our financial
advisor, Credit Suisse First Boston Corporation ("CSFB"), or our other
representatives furnish to you in connection with a Possible Transaction
involving the Company, together with analyses, compilations, studies or other
documents prepared by you, or by your representatives which contain or otherwise
reflect such information or your review of, or interest in, the Company
(collectively, the "Evaluation Materials"). You recognize and acknowledge the
competitive value of the Evaluation Materials and the damage that could result
to the Company if the Evaluation Materials were used or disclosed except as
authorized by this Agreement.
The term "Evaluation Materials" includes information furnished to you
orally or in writing (whatever the form or storage medium) or gathered by
inspection, and regardless of whether such information is specifically
identified as "confidential". The term "Evaluation Materials" does not include
information which (i) is or becomes generally available to the public other than
as a result of a disclosure by you or your representatives, (ii) was or becomes
available to you or your representatives on a non-confidential basis from a
source other than the Company or its representatives, provided that such source
is not to your knowledge prohibited from disclosing such information to you by a
contractual, legal or fiduciary obligation to the Company or its
representatives, or (iii) is independently developed by you.
USE OF EVALUATION MATERIALS
You and your representatives will not use any of the Evaluation Materials
for any purpose other than the exclusive purpose of evaluating a Possible
Transaction. You and your representatives will keep the Evaluation Materials
completely confidential and will not disclose the Evaluation Materials, in any
manner, in whole or in part; provided, however, that (i) any of such information
may only be disclosed to those of your directors, officers, employees, agents,
representatives (including attorneys, accountants and financial advisors),
lenders and other sources of financing (collectively, "your representatives")
who need to know such information for the purpose of evaluating a Possible
Transaction between you and the Company (it being understood that your
representatives shall be informed by you of the confidential nature of such
information and shall be directed by you and shall agree to treat such
information confidentially in accordance with this Agreement) and (ii) any other
disclosure of such information may only be made if the Company consents in
writing prior to any such disclosure. Without limiting the generality of the
foregoing, in the event that a Possible Transaction is not consummated neither
you nor your representatives shall use any of the Evaluation Materials for any
purpose. You will be responsible for any breach of this Agreement by your
representatives.
In the event that you or any of your representatives receive a request or
are required (by deposition, interrogatory, request for documents, subpoena,
civil investigative demand or similar process) to
<PAGE> 2
disclose all or any part of the Evaluation Materials, you or your
representatives, as the case may be, agree to (i) immediately notify the Company
of the existence, terms and circumstances surrounding such a request, (ii)
consult with the Company on the advisability of taking legally available steps
to resist or narrow such request and (iii) assist the Company (at the Company's
expense) in seeking a protective order or other appropriate remedy. In the event
that such protective order or other remedy is not obtained or that the Company
waives compliance with the provisions hereof, (i) you or your representatives,
as the case may be, may disclose to any tribunal only that portion of the
Evaluation Materials which you are advised by counsel is legally required to be
disclosed, and shall exercise your best efforts to obtain assurance that
confidential treatment will be accorded such Evaluation Materials and (ii) you
shall not be liable for such disclosure unless disclosure to any such tribunal
was caused by or resulted from a previous disclosure by you or your
representatives not permitted by this Agreement.
NON-DISCLOSURE
The disclosure of your possible interest in negotiating a transaction with
the Company could have a material adverse effect on the Company's business if
for any reason an agreement is not consummated. Accordingly, unless required by
applicable law, you agree that prior to the closing of a Possible Transaction,
without the prior written consent of the Company, you will not, and you will
direct your representatives not to, disclose to any person either the fact that
you have entered into this Agreement, that Evaluation Materials have been made
available or that discussions or negotiations are taking place concerning a
Possible Transaction between you and the Company or any of the terms, conditions
or other facts with respect to any such Possible Transaction, including the
status thereof. The term "person" as used in this letter shall be broadly
interpreted to include, without limitation, any corporation, the Company,
governmental agency or body, stock exchange, partnership, association or
individual.
RETURN OF DOCUMENTS
Upon the Company's request, you shall promptly deliver to the Company or
destroy all written Evaluation Materials and any other written materials without
retaining, in whole or in part, any copies, extracts or other reproductions
(whatever the form or storage medium) of such materials, and shall certify the
destruction of such materials in writing to the Company. Notwithstanding the
return or destruction of the Evaluation Materials, you and your representatives
will continue to be bound by your obligations pursuant to this Agreement.
NO UNAUTHORIZED CONTACT OR SOLICITATION
During the course of your evaluation, you agree that all inquiries and
other communications are to be made directly to CSFB or employees or
representatives of the Company specified by CSFB.
Without the Company's prior written consent, the persons who are involved
in the possible transaction will not for a period of two years from the date of
this Agreement directly or indirectly solicit for employment any person who is
now employed by the Company (or whose activities are dedicated to the Company)
in an executive or management level position or otherwise considered by the
Company to be a key employee.
STANDSTILL
You agree that until one year from the date of this Agreement, you will not
without the prior approval of the Board of Directors of the Company (i) acquire
or make any proposal to acquire any securities or property of the Company, (ii)
propose to enter into any merger or business combination involving the Company
or purchase a material portion of the assets of the Company, (iii) make or
participate in any solicitation of proxies to vote, or seek to advise or
influence any person with respect to the voting of any securities of the
Company, (iv) form, join or participate in a "group" (within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934) with respect to any
voting securities of the Company, (v) otherwise act or seek to control or
influence the management, Board of Directors or
2
<PAGE> 3
policies of the Company, (vi) disclose any intention, plan or arrangement
inconsistent with the foregoing or (vii) take any action which might require the
Company to make a public announcement regarding the possibility of a business
combination or merger. Except as provided above, you also agree during such
period not to request the Company (or its directors, officers, employees, agents
or representatives) to amend or waive any provision of this paragraph.
NO REPRESENTATION OR WARRANTY
Although the Company and CSFB have endeavored to include in the Evaluation
Materials information known to them which they believe to be relevant for the
purpose of your investigation, you acknowledge and agree that none of the
Company, CSFB or any of the Company's other representatives or agents is making
any representation or warranty, expressed or implied, as to the accuracy or
completeness of the Evaluation Materials, and none of the Company, CSFB or any
of the Company's other representatives or agents, nor any of their respective
officers, directors, employees, representatives, stockholders, owners,
affiliates, advisors or agents, will have any liability to you or any other
person resulting from the use of Evaluation Materials by you or any of your
representatives, except as may be set forth in a definitive sale agreement. Only
those representations or warranties that are made in a definitive agreement
relating to the Company ("Sale Agreement") when, as, and if it is executed, and
subject to such limitations and restrictions as may be specified in such Sale
Agreement, will have any legal effect.
You also acknowledge and agree that no contract or agreement providing for
a Possible Transaction shall be deemed to exist between you and the Company
unless and until a Sale Agreement has been executed and delivered by you and
each of the other parties thereto. You also agree that unless and until a Sale
Agreement between the Company and you with respect to a Possible Transaction has
been executed and delivered by you and each of the other parties thereto, there
shall not be any legal obligation of any kind whatsoever with respect to any
such transaction by virtue of this agreement or any other written or oral
expression with respect to such transaction except, in the case of this
Agreement, for the matters specifically agreed to herein. For purposes of this
Agreement, the term "Sale Agreement" does not include an executed letter of
intent or any other preliminary written agreement, nor does it include any oral
acceptance of an offer or bid by you.
You further understand and agree that (i) the Company and CSFB shall be
free to conduct the process regarding a transaction involving the Company as
they in their sole discretion shall determine (including, without limitation,
negotiating with any other interested parties and entering into a Sale Agreement
without prior notice to you or to any other person), (ii) any procedures
relating to such sale may be changed at any time without notice to you or any
other person and (iii) you shall not have any claims whatsoever against the
Company, CSFB or any of their respective directors, officers, employees,
stockholders, owners, affiliates, agents or representatives arising out of or
relating to a transaction involving the Company (other than those as against the
parties to a Sale Agreement with you in accordance with the terms thereof).
LEGAL REMEDY
You understand and agree that the Company would be irreparably injured and
that money damages would not be a sufficient remedy for any breach of this
Agreement by you or your representatives and that the Company will be entitled
to seek specific performance and injunctive relief as remedies for any such
breach. Such remedies shall not be deemed to be the exclusive remedies for a
breach of this Agreement by you or your representatives but shall be in addition
to all other remedies available at law or equity.
OTHER
This Agreement constitutes the entire agreement between the parties hereto
regarding the subject matter hereof. This Agreement may be changed only by a
written agreement signed by the parties hereto or their authorized
representatives.
3
<PAGE> 4
You hereby irrevocably and unconditionally consent to submit to the
exclusive jurisdiction of the courts of the United States of America located in
the State of New York for any actions, suits or proceedings arising out of or
relating to this Agreement and the transactions contemplated hereby (and you
agree not to commence any action, suit or proceeding relating thereto except in
such courts), and further agree that service of any process, summons, notice or
document by U.S. registered mail to your address set forth above shall be
effective service of process for any action, suit or proceeding brought against
you in any such court. You hereby irrevocably and unconditionally waive any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or the transactions contemplated hereby, in the courts of the
United States of America located in the State of New York, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
It is understood and agreed that no failure or delay by the Company in
exercising any right, power or privilege under this Agreement shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege hereunder.
This Agreement shall be governed and construed in accordance with the laws
of the State of New York, without regard to the conflicts of law principles
thereof.
This Agreement and all of your obligations hereunder shall expire five
years after the date hereof.
If you are in agreement with the foregoing, please sign and return one copy
of this letter, it being understood that all counterpart copies will constitute
but one agreement with respect to the subject matter of this letter.
Very truly yours,
IMO INDUSTRIES INC.
By Credit Suisse First Boston
Corporation,
solely as Company's representative
By: /s/ JONATHAN ROUNER
------------------------------------
Jonathan Rouner
Director
Accepted and agreed to as of the date
hereof:
UNITED DOMINION INDUSTRIES
By: /s/ RICHARD A. BEARSE
------------------------------------
Richard A. Bearse
Senior Vice President, Planning and
Development
4
<PAGE> 1
EXHIBIT (c)(3)
June 16, 1997
Board of Directors
Imo Industries Inc.
1009 Lenox Drive
Lawrenceville, New Jersey 08648
Attention: Donald K. Farrar
Chairman of the Board
Dear Mr. Farrar:
This letter expresses the intention of United Dominion Industries Limited
or its designee (the "Purchaser") and Imo Industries Inc. (the "Company") with
respect to proceeding with negotiations towards the potential acquisition of
the company (the "Proposed Transaction") by the Purchaser:
1. Purchaser and the Company agree that Purchaser will be provided
access to the Company's financial, legal, tax, human resources, environmental,
health and safety, and other records, its personnel, its operations and its
facilities for the conduct of a due diligence review from the date hereof
through and until June 30, 1997 (the "Due Diligence Period").
2. During the Due Diligence Period, the Purchaser and the Company
agree to work diligently in good faith towards the preparation and execution of
a definitive Agreement and Plan of Merger (the "Merger Agreement") covering,
among other things, the terms of the Proposed Transaction and containing
representations and warranties, covenants, indemnities, provision for a
break-up fee, a fiduciary out and conditions typical of a transaction of this
type. The execution and delivery of the Merger Agreement by the Purchaser shall
be subject to the Purchaser's satisfactory completion of its due diligence
review.
<PAGE> 2
Imo Industries Inc.
June 16, 1997
Page 2
3. In order to cause Purchaser to be willing to spend the time and
incur the expense necessary to conduct due diligence and negotiate a Merger
Agreement, the Company agrees that it will not, and no director, officer,
stockholder, employee, agent or other representative of the company shall be
authorized by the Company to, negotiate or solicit proposals for the sale or
other disposition of the Company or its assets (whether by means of a negotiated
sale of securities or assets, tender or exchange offer, merger or other
business combination, recapitalization, restructuring or other transaction (any
such transaction being referred to herein as a "Sale")) with or from any other
party during the Due Diligence Period; provided, however that this obligation
shall terminate at 5:00 p.m., New York time on June 25, 1997, if the Purchaser
has not notified the Company by that time that its board of directors has
determined to proceed with the transaction. In addition, the Company agrees
that it will immediately cease and cause to be terminated during such period any
existing activities, discussions or negotiations with any person other than the
Purchaser or its affiliates in respect of a Sale. In the event the company
receives an unsolicited offer (an "Other Offer") during the Due Diligence
Period and is advised in writing by its legal counsel that its board of
directors has a fiduciary obligation to consider and respond to such Other
Offer prior to the expiration of the Due Diligence Period, it may do so
provided it advises Purchaser of the receipt of such Other Offer and allows
Purchaser to submit a competing offer for consideration by the Company's board
at the same meeting at which such Other Offer is to be considered. In
consideration of the Company's agreement hereto, Purchaser agrees to diligently
pursue its review during the Due Diligence Period and agrees further to notify
the Company within twenty-four (24) hours of any determination to not proceed
with a transaction as contemplated by the parties, whereupon the provisions of
this paragraph will terminate.
4. The parties hereto agree, until entry into the Merger Agreement, to
keep confidential, and to cause their respective affiliates and representatives
to keep confidential, all discussions, communications and evaluation materials
relating to the
<PAGE> 3
Imo Industries Inc.
June 16, 1997
Page 3
Proposed Transaction, including (i) the existence of this letter, (ii) the fact
that negotiations are taking place concerning the Proposed Transaction and
(iii) the terms, conditions and other facts with respect to the Proposed
Transaction, except and only to the extent that, in the opinion of counsel,
disclosure is advisable in connection with or pursuant to any governmental or
court proceeding, law or regulation. The Purchaser further agrees that the
terms of this paragraph 4 are in addition to the Purchaser's obligations under
that certain Confidentiality Agreement, dated as of April 25, 1997, between the
Purchaser and the Company.
5. It is the intention of the Company to call and hold a meeting of
its board of directors to consider a transaction with Purchaser prior to the
end of the Due Diligence Period. In the event it is not able to do so, the
provisions of paragraph 3 above shall be automatically extended until such time
as such a meeting is held unless the Purchaser has advised the Company that it
no longer is pursuing a transaction with the Company.
If the foregoing correctly sets forth our agreement with respect to the
matters set forth herein, please so indicate by executing in the appropriate
space provided below.
UNITED DOMINION INDUSTRIES LIMITED
By: /s/ William R. Holland
---------------------------------
Its: Chairman & CEO
---------------------------------
The foregoing is hereby agreed to and accepted as of the date first written
above:
IMO INDUSTRIES INC.
By: /s/ Donald K. Farrar
-----------------------------------------------
Its: Chairman, Chief Executive Officer and President
-----------------------------------------------
