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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(d)(4) OF THE
SECURITIES EXCHANGE ACT OF 1934
ELSAG BAILEY PROCESS AUTOMATION N.V.
(NAME OF SUBJECT COMPANY)
ELSAG BAILEY PROCESS AUTOMATION N.V.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON SHARES, PAR VALUE NLG1.00 PER SHARE
5 1/2% CONVERTIBLE TRUST ORIGINATED PREFERRED SECURITIES
(TITLE OF CLASS OF SECURITIES)
<TABLE>
<S> <C>
Common Shares: N2925S101
Preferred Securities: 290205301
290205103
U28430202
</TABLE>
(CUSIP NUMBER OF CLASS OF SECURITIES)
MARK V. SANTO, ESQ.
GROUP VICE PRESIDENT AND GENERAL COUNSEL
ELSAG BAILEY PROCESS AUTOMATION N.V.
C/O ELSAG BAILEY, INC.
29801 EUCLID AVENUE
WICKLIFFE, OHIO 44092-1898
(440) 585-8500
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICE AND COMMUNICATIONS
ON BEHALF OF THE PERSON(S) FILING STATEMENT)
with a copy to:
W. PRESTON TOLLINGER, ESQ.
MORGAN, LEWIS & BOCKIUS LLP
101 PARK AVENUE
NEW YORK, NEW YORK 10178
(212) 309-6915
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Elsag Bailey Process Automation N.V., a
corporation organized under the laws of The Netherlands with its statutory
seat in Amsterdam (the "Company"). The address of the Company's principal
executive offices is World Trade Center, Schiphol Boulevard 157, 1118 BG
Luchthaven Schiphol, The Netherlands. The titles of the classes of equity
securities to which this statement relates are (i) the common shares, par
value NLG1.00 per share, of the Company (the "Company Shares") and (ii) the 5
1/2% Convertible Trust Originated Preferred Securities guaranteed by the
Company and convertible into Company Shares (the "Preferred Securities" and,
together with the Company Shares, the "Shares") of Elsag Bailey Financing
Trust (the "Financing Trust"). The Company is also the subject company with
respect to the Preferred Securities, for the following reasons. The Financing
Trust is a wholly owned finance subsidiary of the Company and has no
independent operations. The sole purpose of the Financing Trust is and was the
issuance of the Preferred Securities and the investment of the gross proceeds
from such issuance in convertible debentures of the Company. The Company has
fully and unconditionally guaranteed the obligations of the Financing Trust to
make distribution, redemption and liquidation payments to the holders of the
Preferred Securities, and holders of the Preferred Securities may proceed
directly against the Company to enforce such undertakings. The guarantee
obligations of the Company are senior to any rights of the holders of Company
Shares with respect to payment of dividends and upon liquidation of the
Company. The holders of Preferred Securities may, at their sole option,
convert Preferred Securities into Company Shares at the conversion rate of
1.5576 Company Shares for each Preferred Security, subject to adjustment in
certain circumstances.
ITEM 2. TENDER OFFER OF THE BIDDER
This statement relates to a tender offer disclosed in a Tender Offer
Statement on Schedule 14D-1, dated October 20, 1998 (the "Schedule 14D-1")
filed by ABB Transportation Participations B.V., a company with limited
liability organized under the laws of The Netherlands with its statutory seat
in Amsterdam (the "Purchaser") and a direct wholly owned subsidiary of ABB
Asea Brown Boveri Ltd., a corporation organized under the Laws of Switzerland
(the "Parent"), to purchase all of the issued and outstanding Company Shares
at a price of $39.30 per Company Share (the "Share Offer Price"), net to the
seller in cash, and all of the issued and outstanding Preferred Securities at
a price of $61.21 per Preferred Security (the "Preferred Securities Offer
Price" and, collectively with the Share Offer Price, the "Offer
Consideration"), net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated October 20, 1998
contained in the Schedule 14D-1 (the "Offer to Purchase"), and the related
letter of transmittal (which, as amended from time to time, together
constitute the "Offer").
The Offer is being made pursuant to an Acquisition Agreement, dated as of
October 14, 1998 (the "Acquisition Agreement"), by and between the Purchaser
and the Company. The Acquisition Agreement provides, among other things, that
following satisfaction or waiver of all the conditions to the Offer, the
Purchaser will acquire (i) each Company Share validly tendered and not
properly withdrawn for the Share Offer Price and (ii) each of the Preferred
Securities validly tendered for the Preferred Securities Offer Price. A copy
of the Acquisition Agreement has been filed as Exhibit 1 hereto and is
incorporated herein by reference.
Based on the information contained in the Schedule 14D-1, the principal
executive offices of the Purchaser are located at Burgemeester Haspelslaan 45,
5HG, NL-1181 NB Amstelveen, The Netherlands, and the address of the principal
executive offices of the Parent is P.O. Box 8131, Affolternstrasse 44 CH-8050
Zurich, Switzerland.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and address of the Company, which is the person filing this
statement, are set forth in Item 1 above.
(b) Except as described herein, to the knowledge of the Company, as of the
date hereof there are no material contracts, agreements, arrangements or
understandings or any actual or potential conflicts-of-interest between the
Company or its affiliates and (i) the Company's executive officers, directors
or affiliates, (ii) the Purchaser, the Parent or their respective executive
officers, directors or affiliates.
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CERTAIN CONTRACTS, AGREEMENTS, ARRANGEMENTS OR UNDERSTANDINGS BETWEEN THE
COMPANY AND ITS EXECUTIVE OFFICERS AND DIRECTORS
Information regarding contracts, agreements, arrangements or understandings
between the Company, its executive officers and directors are described in
Item 11, captioned "Compensation of Directors and Officers," Item 12,
captioned "Options to Purchase Securities from Registrant or Subsidiaries,"
and Item 13, captioned "Interest of Management in Certain Transactions," of
the Company's Annual Report for the fiscal year ended December 31, 1997 on
Form 20-F (the "Form 20-F") filed with the Securities and Exchange Commission
(the "Commission") on May 19, 1998 (File No. 1-12398). Excerpts from Item 11,
Item 12 and Item 13 of the Form 20-F are filed as Exhibit 2 hereto and are
incorporated herein by reference.
ACQUISITION AGREEMENT
The following is a summary of the material terms of the Acquisition
Agreement. The summary is qualified in its entirety by reference to the
Acquisition Agreement which is incorporated herein by reference.
The Offer. The Acquisition Agreement provides that, provided that none of
the events set forth in Annex A to the Acquisition Agreement (the "Offer
Conditions") shall have occurred, as promptly as practicable following the
execution of the Acquisition Agreement, the Purchaser shall make a public
announcement pursuant to Rule 14d-2(b) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and that promptly thereafter, but in no
event later than the fifth business day following such announcement, the
Purchaser shall commence the Offer. The obligation of the Purchaser to accept
for payment Company Shares and Preferred Securities validly tendered pursuant
to the Offer and not withdrawn (the "Tendered Shares") is subject only to the
satisfaction or waiver by the Purchaser of the Offer Conditions. Subject to
the provisions of the Acquisition Agreement, the Purchaser shall keep the
Offer open until at least midnight, New York City time, on the date twenty
(20) days from the date of its commencement. The Offer shall be made by means
of an offer to purchase containing the Offer Conditions. Without the written
consent of the Company, the Purchaser shall not (i) decrease the Offer
Consideration; (ii) change the form of Offer Consideration (other than by
increasing it); (iii) decrease the number of Company Shares and Preferred
Securities sought pursuant to the Offer; (iv) extend the Offer, beyond any
scheduled expiration date; or (v) amend the Offer Conditions in a manner which
is materially adverse to the holders of Company Shares or holders of Preferred
Securities (including imposing any additional conditions); provided, however,
that if on the scheduled expiration date of the Offer (as it may be extended)
(x) all Offer Conditions shall not have been satisfied or waived or (y) any
Person has made an Acquisition Proposal (as defined under "No Solicitation"
below), the Offer may be extended by the Purchaser from time to time. The
Purchaser agrees that, if on the initial scheduled date on which the Offer
expires (the "Termination Date") there is a failure of the Offer Conditions
set forth in clause (i) or (ii) of the first sentence of the Offer Conditions
or paragraph (f) of the second sentence thereof to be satisfied, it shall,
unless the Acquisition Agreement is terminated pursuant to the provisions set
forth under "Termination of the Acquisition Agreement" below, extend the Offer
and set a subsequent scheduled Termination Date, and shall continue to so
extend the Offer and set subsequent scheduled Termination Dates until April
15, 1999 or, if the only Offer Conditions remaining to be fulfilled are those
set forth in clause (i) or (ii) of the first sentence of the Offer Conditions,
May 31, 1999. In addition, the Purchaser may, without the consent of the
Company, increase the Offer Consideration and in connection therewith extend
the Offer to the extent required by law. Upon the terms of the Acquisition
Agreement and subject to the Offer Conditions, the Offer shall commit the
Purchaser to acquire (i) each Company Share validly tendered and not withdrawn
for the Share Offer Price and (ii) each Preferred Security validly tendered
for the Preferred Securities Offer Price.
Recommendation. In the Acquisition Agreement, the Company consents to the
Offer and represents that each of its Management Board and its Supervisory
Board, in each case in accordance with the Company's articles of association
and applicable law, has (i) determined that the Offer, upon the terms and
subject to the conditions set forth in the Acquisition Agreement, is fair to,
and in the best interests of, the Company's shareholders, the holders of the
Preferred Securities and other relevant constituencies, its subsidiaries and
the enterprises carried on by the Company and its subsidiaries, (ii) approved
the Acquisition Agreement and transactions contemplated
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thereby, including the Offer and (iii) resolved to recommend that the
shareholders of the Company and the holders of the Preferred Securities accept
the Offer and tender their Company Shares and Preferred Securities thereunder
to the Purchaser. Merrill Lynch International ("Merrill Lynch") delivered to
the Management Board and the Supervisory Board of the Company its opinion that
the Share Offer Price to be received by the holders of Company Shares pursuant
to the Offer is fair to such holders from a financial point of view.
Conditions of the Offer. Offer Conditions. Notwithstanding any other
provisions of the Offer, the Purchaser shall not be required to accept for
payment, purchase or, subject to any applicable rules and regulations of the
Commission including Rule 14e-1(c) under the Exchange Act, pay for any
Tendered Securities and may postpone the acceptance for payment or, subject to
the restrictions referred to above, the payment for, any Tendered Securities,
if (i) any applicable waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), Competition Act (Canada)
or Section 721 of the Defense Production Act of 1950, as amended ("Exon-
Florio") has not expired or been terminated prior to the expiration of the
Offer or (ii) a decision of the Commission of the European Communities that
the purchase of the Company Shares and Preferred Securities contemplated by
the Offer are compatible with the common market has not been received prior to
the expiration of the Offer. In addition to and not limiting the foregoing,
notwithstanding any other provision of the Offer, the Purchaser shall not be
required to accept for payment or, subject to applicable rules and regulations
of the Commission, including Rule 14e-1(c) under the Exchange Act, pay for any
Tendered Securities and may terminate or amend the Offer and may postpone the
acceptance of, and payment for, Tendered Securities if there shall not have
been validly tendered and not validly withdrawn pursuant to the Offer a number
of Company Shares and Preferred Securities which, when added to the Company
Shares and Preferred Securities, if any, previously acquired by the Purchaser,
constitute at least 75% of the fully diluted share capital of the Company (the
"Minimum Condition") or at any time at or before the time of acceptance of
Tendered Securities for payment pursuant to the Offer or payment therefor
(whether or not any Tendered Securities have been accepted for payment or paid
for), any of the following events shall occur:
(a) there shall have occurred any event or circumstance that has a
Company Material Adverse Effect (as defined below);
(b) any Governmental Entity or court of competent jurisdiction shall have
taken any action or enacted, issued, promulgated, enforced, amended or
entered any statute, rule, regulation, executive order, decree,
interpretation, injunction or other order (whether temporary, preliminary
or permanent) which is in effect and which would reasonably be expected to
(1) make the acceptance for payment of, or the payment for, the Tendered
Securities illegal or otherwise prohibit or restrict consummation of the
Offer, (2) impose material limitations on the ability of the Purchaser to
acquire or hold or to exercise any rights of ownership of the Tendered
Securities, or effectively to manage or control or operate the Company and
its business, assets and properties or (3) have a Company Material Adverse
Effect;
(c) any of the representations and warranties of the Company set forth in
the Acquisition Agreement that are qualified by reference to a Company
Material Adverse Effect shall not be true and correct, or any such
representation and warranty that is not so qualified shall not be true and
correct in any respect which would be reasonably likely to have a Company
Material Adverse Effect, in each case as if such representation and
warranty were made at the time of determination (except to the extent any
such representation and warranty speaks as of an earlier date) or the
Company shall have failed to perform or comply with, in any material
respect, any covenant, agreement or obligation to be performed or complied
with by it under the Acquisition Agreement;
(d) the Acquisition Agreement shall have been terminated in accordance
with its terms;
(e) the Supervisory Board of the Company or the Management Board of the
Company shall have withdrawn or modified in a manner adverse to the
Purchaser its approval or recommendation of the Offer, or shall have
approved or recommended to the Company's shareholders or holders of
Preferred Securities another offer or Acquisition Proposal (as defined
below) or shall have adopted a resolution to effect either of the foregoing
or any corporation, partnership, person or other entity or group shall have
entered into a
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definitive agreement or an agreement in principle with the Company with
respect to a tender offer or exchange offer for any Company Shares or
Preferred Securities or a merger, consolidation or other business
combination or Acquisition Proposal with or involving the Company or any of
its subsidiaries;
(f) any of the material consents, approvals, authorizations, orders or
permits required to be obtained by the Company, the Purchaser, or their
respective subsidiaries in connection with the Offer or Acquisition
Agreement from, or filings or registrations required to be made by any of
the same prior to the Closing Date with, any Governmental Entity in
connection with the consummation of the transactions contemplated by the
Acquisition Agreement or the Offer shall not have been obtained or made or
can only be obtained or made subject to conditions or requirements which
the Purchaser and the Company are not required to meet pursuant to the
"Further Actions" section below;
(g) there shall have occurred (1) any general suspension for at least
three business days of trading in, or limitation on prices for, securities
on the New York Stock Exchange, Inc., (2) the declaration of a banking
moratorium or any suspension of payments in respect of banks in the United
States, The Netherlands, or Switzerland (whether or not mandatory), (3) the
commencement or material escalation of a war or armed hostilities having
had or being reasonably likely to have a material adverse effect on the
condition, business, assets, liabilities or results of operations of the
Company and its subsidiaries taken as a whole or (4) any limitation or
proposed limitation (whether or not mandatory) by any Governmental Entity,
or any other event, that materially adversely affects generally the
extension of credit by banks or other financial institutions; or
(h) any of the representation and warranties of the Selling Shareholder
(as defined below) in the Shareholder's Agreement that are qualified by
reference to materiality shall not be true and correct or any such
representation or warranty that is not qualified shall not be true and
correct in any respect which would be reasonably likely to have a Company
Material Adverse Effect, in each case as if such representation and
warranty were made at the time of determination (except to the extent any
such representation and warranty speaks as of an earlier date) or the
Selling Shareholder shall have failed in any material respect to perform,
or comply with, any covenant, agreement or obligation to be performed or
complied with by it under the Shareholder's Agreement.
The foregoing conditions are for the sole benefit of the Purchaser and may
be asserted by the Purchaser or may be waived by the Purchaser, in whole or in
part, at any time and from time to time in its sole discretion (subject to the
terms of the Acquisition Agreement). Failure by the Purchaser at any time to
exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
Termination of the Acquisition Agreement. The Acquisition Agreement may be
terminated and the Offer may be abandoned at any time prior to the date on
which the Purchaser shall acquire the Tendered Securities (the "Closing
Date"), (a) by mutual consent of the Purchaser and the Company; (b) by action
of either the Supervisory Board or Management Board of the Purchaser or the
Supervisory Board and Management Board of the Company if (i) the Closing Date
shall not have occurred on or before April 15, 1999 or, if the only condition
remaining to be satisfied as of such date shall be a condition set forth in
either clause (i) or clause (ii) of the first sentence of the Offer Conditions
above, May 31, 1999; provided that the right to terminate the Acquisition
Agreement under this clause shall not be available to (A) the Purchaser, if
(i) the failure of the Purchaser to perform its obligations under the
Acquisition Agreement or (ii) the failure of the representations and
warranties contained in Article III of the Acquisition Agreement to be true
and correct has to any material extent been the cause of, or resulted in, the
failure of the consummation of the Offer and acquisition of all Tendered
Securities properly tendered and not withdrawn (the "Closing") to occur on or
before such date or (B) the Company, if (i) the failure of the Company to
perform its obligations hereunder or (ii) the failure of the representations
and warranties contained in Article II of the Acquisition Agreement to be true
and correct has to any material extent been the cause of, or resulted in, the
failure of the Closing to occur on or before such date; or (ii) a Governmental
Entity (A) shall have issued an order, decree or ruling or taken any other
action (which the parties shall have used all commercially reasonable efforts
to resist, resolve or lift, as applicable, in accordance with the "Further
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Actions" section below) permanently restraining, enjoining or otherwise
prohibiting the transactions contemplated by the Acquisition Agreement and
such order, decree, ruling or other action shall have become final and non-
appealable or (B) shall have failed to issue an order, decree or ruling or to
take any other action (which order, decree, ruling or other action the parties
shall have used all commercially reasonable efforts to obtain, in accordance
with the "Further Actions" section below), which is necessary to fulfill the
Offer Conditions and such denial of a request to issue such order, decree or
ruling or take such other action shall have become final and nonappealable;
provided, however, that the right to terminate the Acquisition Agreement under
this clause shall not be available to any party whose failure to comply with
the "Further Actions" section below has to any material extent been the cause
of such action or inaction; (c) by action of the Supervisory Board of the
Company on five days' prior written notice to the Purchaser if the Supervisory
Board of the Company, without violation of the obligations as described below
under "No Solicitation," withdraws its approval or recommendation of the Offer
or the Acquisition Agreement and the Company pays to the Purchaser all
expenses and other amounts as provided below in "Effects of Termination"; (d)
by action of the Supervisory Board or Management Board of the Purchaser, if
the Supervisory Board or Management Board of the Company shall have determined
that an Acquisition Proposal is a Superior Proposal (as defined under "No
Solicitation" below) or shall not have issued, or shall have withdrawn or
modified (including by amendment of the Schedule 14D-9) in a manner adverse to
the Purchaser, its approval or recommendation of the Offer or the Acquisition
Agreement or shall have recommended an alternative transaction proposal to the
shareholders of the Company, or shall have adopted any resolution to effect
any of the foregoing; or any corporation, partnership, person or other entity
or group shall have entered into a definitive agreement or an agreement in
principle with the Company with respect to a tender offer or exchange offer
for any Company Shares or Preferred Securities or an Acquisition Proposal; (e)
by the Purchaser, if the Offer is terminated (or expires in accordance with
its terms) without the Purchaser having purchased any Company Shares or
Preferred Securities thereunder due to an occurrence which would result in a
failure to satisfy any of the Offer Conditions, unless any such failure shall
have been caused by or resulted from a failure of the Purchaser to perform in
any material respect any covenant or agreement contained in the Acquisition
Agreement or the failure of any representations or warranties contained in
Article III of the Acquisition Agreement to be true and correct in any
material respect; (f) by the Purchaser, if any of the representations and
warranties of the Company contained in Article II of the Acquisition Agreement
is or becomes untrue or incorrect or the Company breaches any of its
obligations under the Acquisition Agreement which (A) in either case would
give rise to the failure of a condition set forth in clause (c) of the Offer
Conditions to be met and (B) cannot or has not been cured prior to the earlier
of (i) 15 days after the giving of written notice to the Company of such
untruth, incorrectness or, as the case may be, breach and (ii) two business
days prior to the date on which the Offer expires; (g) by the Purchaser, if
(i) any of the representations and warranties of the Selling Shareholder
contained in the Shareholder's Agreement that are qualified by reference to
any effect that, individually or in aggregate, is materially adverse to the
condition, business, assets, liabilities or results of operations of the
Company and its subsidiaries taken as a whole, other than any effect resulting
from (i) changes in general economic conditions, (ii) the announcement and
performance of the Acquisition Agreement and the transactions contemplated
thereby and compliance with the covenants set forth in the Acquisition
Agreement and (iii) changes or developments in the industrial process control
industry generally or its markets and (iv), subject to Section 4.5 of the
Acquisition Agreement, any actions required under the Acquisition Agreement to
obtain any approval or authorization under any Antitrust Law (as defined under
"Further Actions" below) or from the Australian Foreign Investment Review
Board for the consummation of the Offer ( a "Company Material Adverse Effect")
is or becomes untrue or incorrect or any such representation and warranty that
is not so qualified is or becomes untrue or incorrect in any respect that
would be reasonably likely to have a Company Material Adverse Effect or to
prevent Selling Shareholder from consummating the transactions contemplated by
the Shareholder's Agreement, or (ii) the Selling Shareholder breaches any of
its obligations under the Shareholder's Agreement; or (h) by the Company, if
the Offer has been terminated by the Purchaser and if (i) any of the
representations and warranties of the Purchaser contained in Article III of
the Acquisition Agreement or in the Shareholder's Agreement is or becomes, and
at the time of termination remains, untrue or incorrect in any material
respect or (ii) the Purchaser shall have breached or failed to comply in any
material respect with any of its obligations under the Acquisition Agreement
or in the Shareholder's Agreement which breach shall not have been cured
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within 15 days following notice from the Company to the Purchaser of such
breach and the Company's intent to terminate pursuant to this provision.
Interim Operations. The Acquisition Agreement provides that from the date of
the Acquisition Agreement until the Closing Date, except as set forth in
Section 4.1 of the Company Disclosure Schedule to the Acquisition Agreement or
as expressly contemplated by any other provision of the Acquisition Agreement,
unless the Purchaser has consented thereto, the Company shall, and shall cause
each of its subsidiaries to, (a) conduct its business and operations only in
the ordinary course of business consistent with past practices; (b) use
reasonable efforts to preserve intact the business organizations, rights,
licenses, permits and franchises of the Company and its subsidiaries maintain
their existing relationships with customers, suppliers and other natural
persons, corporations, limited liability companies, partnerships,
associations, trusts, unincorporated organizations, unions or other employee
groups, governmental entities, or other entities or groups (as such latter
term is defined in the Exchange Act) (each, a "Person") having business
dealings with them and keep available the services of its officers and
employees; (c) use reasonable efforts to keep in full force and effect
adequate insurance coverages and maintain and keep its properties and assets
in good repair, working order and condition, normal wear and tear excepted;
(d) not amend or modify its articles of association, certificate of
incorporation, by-laws or comparable governing documents; (e) not authorize
for issuance, issue, sell, grant, deliver, pledge or encumber or agree or
commit to issue, sell, grant, deliver, pledge or encumber (to or with any
party other than the Company and any of its wholly-owned subsidiaries) any
shares of any class or series of capital stock of the Company or any of its
subsidiaries or any other equity or voting security or equity or voting
interest of the Company or any of its subsidiaries, any securities convertible
into or exercisable or exchangeable for any such shares, securities or
interests, or any options, warrants, calls, commitments, subscriptions or
rights to purchase or acquire any such shares, securities or interests (other
than issuances of Company Shares (i) upon exercise of outstanding Stock
Options (as such term is defined below under "Stock Options") granted to
directors, officers, employees and consultants of the Company in accordance
with the Option Plans (as such term is defined below under "Stock Options") as
currently in effect (ii) pursuant to conversion of the Preferred Securities);
(f) not, except for conversion of the Preferred Securities in accordance with
their terms, (i) split, combine or reclassify any shares of its capital stock
or issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of its capital stock,
(ii) in the case of the Company or any subsidiary of the Company that is not
wholly-owned by the Company, declare, set aside or pay any dividends on, or
make other distributions in respect of, any capital stock or (iii) repurchase,
redeem or otherwise acquire, or agree or commit to repurchase, redeem or
otherwise acquire, any shares of capital stock or other equity or debt
securities or equity interests of the Company or any of its subsidiaries
(other than to fulfill its obligations under the Option Plans as currently in
effect); (g) except as otherwise provided in the Acquisition Agreement, not
amend or otherwise modify the terms of any Stock Options or any Option Plan
the effect of which would be to make such terms more favorable to the holders
thereof or Persons eligible for participation therein; or reserve any
additional Company Shares for issuance under any such Plan; (h) except as
required by law or existing written agreements, enter into, adopt or
materially amend any incentive, compensation, option or severance plan or
arrangement (including, without limitation, any employee benefit plan,
agreement or program, or management employment agreement (including any
employee benefit plan within the meaning of Section 33 of the Employee
Retirement Income Security Act of 1974, as amended) (each, a "Benefit Plan"))
for the benefit or welfare of any current or former director, officer or
employee of the Company or any of its subsidiaries, or (except for normal
increases in the ordinary course of business that are consistent with past
practices) increase the compensation or benefits of any persons or pay any
benefit not required by any existing plan and arrangement; (i) not acquire or
agree to acquire (by merger, consolidation, acquisition of stock or assets or
otherwise) from any Person, any corporation, partnership, joint venture,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets of another Person other than the
purchase of assets in the ordinary course of business consistent with past
practice or in an aggregate amount of less than $5,000,000; (j) not, except as
an intercompany transaction between the Company and any of its wholly-owned
subsidiaries, incur, assume, prepay or become liable for or guarantee any long
term, or material short term, indebtedness (including draw-downs on letters or
lines of credit, other than letters of credit in support of ordinary course
transactions with trade creditors), refinance any such indebtedness or issue
or sell any notes, bonds, debentures, debt instruments,
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evidences of indebtedness or other debt securities of the Company or any of
its subsidiaries or any options, warrants or rights to purchase or acquire any
of the same, except for (i) advances, loans or other financial indebtedness
including refinancing of its existing lines of credit, in an aggregate amount
(together with all other such financial indebtedness of the Company and its
subsidiaries outstanding) of net financial indebtedness at any time
outstanding not exceeding a specified amount; provided, however that any
refinancing permitted above shall be (A) on commercially reasonable terms and
(B) prepayable without penalty on no more than 90 days advance written notice
and (ii) obtaining, extending or renewing existing guarantees, bonds and
letters of credit issued by financial institutions in the ordinary course of
business in an aggregate amount (together with all other such items
outstanding) at any time outstanding not exceeding 1.25 times the aggregate of
such guarantees, bonds and letters of credit outstanding as of June 25, 1998
which the Company represents to be $426.2 million; (k) not sell, lease,
license, encumber or otherwise dispose of, or agree to sell, lease, license,
encumber or otherwise dispose of, any properties or assets of the Company or
any of its subsidiaries, except as intercompany transactions between the
Company and any of its wholly-owned subsidiaries or in transactions with any
other Person in the ordinary course of business, consistent with past practice
and in an aggregate amount of less than $5,000,000; (l) not authorize or make
any capital expenditures, other than capital expenditures (i) authorized or
incurred in the ordinary course of business consistent with past practice
during the period up to and including December 31, 1998 not exceeding, in the
aggregate for the Company and all of its subsidiaries, a specified amount and
(ii) if the Closing Date has not occurred prior to January 1, 1999, authorized
or incurred in the ordinary course of business consistent with past practice
during any subsequent fiscal quarter of the Company, in each case not
exceeding, in the aggregate for the Company and all of its subsidiaries, a
specified amount; (m) not make any material change in any of its accounting or
financial reporting methods, principles or practices, except as may be
required by GAAP; (n) except in the ordinary course of business consistent
with past practices, not amend, modify or terminate any material contract or
waive, release or assign any material rights or claims thereunder or
authorize, execute or deliver any material agreement, arrangement or
understanding; (o) not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its subsidiaries; (p) not take any
action that would, or would be reasonably likely to, result in any of the
Offer Conditions not being satisfied or the satisfaction of any of the Offer
Conditions being delayed beyond the Expiration Date; and (q) not make any
loans, advances or capital contributions to any Person other than as required
by existing agreements or in the ordinary course of business consistent with
past practice; (r) not agree or commit in writing or otherwise to do or, in
the case of clauses (a) through (c), to do anything inconsistent with, any of
the foregoing. For purposes of this section "Interim Operations," the term
"wholly-owned subsidiary" shall be deemed to include any subsidiary of which
the Company or any such subsidiary owns at least 99% of the outstanding
capital stock or other equity interests.
No Solicitation. Prior to the Closing Date, the Company agrees that neither
it nor any of its subsidiaries shall, nor shall the Company nor any of its
subsidiaries authorize or permit any of their respective officers, directors,
managing directors, employees or agents, including any investment bankers,
financial advisors, attorneys, accountants, consultants or other advisors,
agent, representatives or experts (such persons, "Representatives") or
affiliates to, directly or indirectly, (a) solicit, initiate, encourage, or
take any other action to facilitate, any inquiry or the making of any proposal
or offer (i) with respect to or that could reasonably be expected to result in
any acquisition or sale of all or any significant portion of the assets of, or
any equity interest in (whether newly-issued equity interests or outstanding
equity interests), the Company or any of its subsidiaries or any tender offer
(including a self tender offer) or exchange offer, merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of the Company"s subsidiaries (each
such proposal or offer, an "Acquisition Proposal") or (ii) which could
reasonably be expected to impede, frustrate, prevent, delay or nullify any of
the transactions contemplated by the Acquisition Agreement or to materially
diminish the benefits to the Purchaser of the transactions contemplated by the
Acquisition Agreement, (b) take any action to enter into an agreement for the
sale or other disposition by the Company or any of its subsidiaries of any
significant portion of the assets of or a sale of shares of capital stock
whether by merger or other business combination or tender or exchange offer or
(c) enter into or participate in any discussions or negotiations regarding any
of the foregoing, or in the furtherance of any inquiries regarding any of the
foregoing, or furnish to any other Person (other than the Purchaser and its
Representatives) any
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information with respect to its business, properties or assets or any of the
foregoing; provided that the foregoing clauses (a), (b) and (c) shall not
prohibit the Company's Supervisory Board or Management Board from (i)
furnishing information concerning the Company and its business, properties or
assets to a third party who has made a bona fide written transaction proposal
to acquire all of the outstanding Company Shares and Preferred Securities or
all of the assets of the Company and its subsidiaries, which is not subject to
any material contingencies relating to financing (it being acknowledged that a
highly confident letter or commitment shall not be deemed to have resolved any
such material contingency), in response to a request for such information,
pursuant to a confidentiality agreement on terms no less favorable to the
Company than the Confidentiality Agreement dated July 2, 1998 between the
Purchaser and the Company (the "Confidentiality Agreement"), so long as
neither such request for information nor such transaction proposal was
solicited, initiated, encouraged or facilitated in violation of clause (a)
above, (ii) engaging in discussions or negotiations with such a third party
who has made such a transaction proposal or (iii) following receipt of such a
transaction proposal, taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or disclosing to its
shareholders information required by Schedule 14D-9; provided, further, that
any such action referred to in the foregoing clauses (i), (ii) and (iii) may
be taken by the Company only if its Management Board or Supervisory Board, as
applicable, shall have concluded in good faith and on the basis of advice (x)
from the Company's financial advisors, that such transaction proposal involves
consideration to the holders of Company Shares and Preferred Securities that
is superior to the Offer Consideration and is otherwise superior to the Offer
("Superior Proposal") and (y) from independent outside counsel that failure to
take such action would constitute a breach of the fiduciary duties of such
Boards under Dutch Law; and provided, further, that the Company shall not, and
shall not authorize or permit any other such Persons to take any of the
foregoing actions referred to in clauses (i) through (iii) until after
providing prior written notice to the Purchaser. If the Company or its
Representatives or affiliates or the Company's Supervisory Board or Management
Board receives any request for information or an inquiry, proposal or offer
relating to any of the foregoing, then the Company shall orally (as promptly
as practicable and no later than one day) and in writing (as promptly as
practicable) inform the Purchaser of the terms and conditions of such
proposal, inquiry or offer and the identity of the Person making it. The
Company agrees that it will and will cause its affiliates and their respective
Representatives to immediately cease and cause to be terminated any
activities, discussions or negotiations existing at the date of the
Acquisition Agreement with any parties conducted heretofore with respect to
any of the foregoing. The Company agrees that it will take the necessary steps
to promptly inform its Representatives of the obligations undertaken in this
Section. Immediately following the execution of the Acquisition Agreement, the
Company shall request each Person which has heretofore executed a
confidentiality agreement in connection with its consideration of acquiring
the Company or any portion thereof to return all confidential information
heretofore furnished to such Person by or on behalf of the Company. Neither
the Management Board nor the Supervisory Board of the Company shall, except as
expressly permitted by the Acquisition Agreement (A) withdraw or modify, in
any manner adverse to the Purchaser, or take any public position inconsistent
with, their approval and recommendation of the Offer or the Acquisition
Agreement or (B) approve or recommend any Acquisition Proposal and shall not
resolve to do any of the foregoing.
Expenses. Whether or not the transactions contemplated by the Acquisition
Agreement are consummated, subject to the "Effect of Termination" section
below, all costs and expenses incurred in connection with the Acquisition
Agreement, including fees and disbursements of Representatives, shall be borne
by the party which incurs such cost or expense; provided, however, that all
out-of-pocket costs and expenses related to the printing, filing and mailing
of the Offer Documents shall be borne by the Purchaser.
Effect of Termination. In the event that any Person shall have made an
Acquisition Proposal and the Acquisition Agreement is terminated by either
Party, or in the event the Acquisition Agreement is otherwise terminated
pursuant to Section (c), (d), (f) or (g) of "Termination of the Acquisition
Agreement" above, the Company shall, within two days after termination has
occurred, pay to the Purchaser in same day funds all of the Purchaser's
reasonably documented out-of-pocket expenses (including the fees and expenses
of counsel and other advisors). In the event that the Acquisition Agreement is
terminated by the Company pursuant to Section (c) of "Termination of the
Acquisition Agreement" or by the Purchaser pursuant to either Section (d) or
(e) of
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"Termination of the Acquisition Agreement" because of an event described in
paragraph (e) of Offer Conditions, the Company shall, within two days after
termination has occurred, pay to the Purchaser in same day funds an amount
equal to the sum of (i) $1.57 for each Company Share outstanding as of the
date of the Acquisition Agreement and (ii) $2.45 for each Preferred Security
outstanding as of such date. Any payment pursuant to this sentence shall be in
addition to any reimbursement pursuant to the first sentence of this Section.
In the event the Acquisition Agreement is terminated pursuant to the
provisions contained in "Termination of the Acquisition Agreement", all future
obligations and liabilities of the parties to the Acquisition Agreement shall
terminate, except the obligations of the parties to brokers, finders or
investment bankers, those described under "Expenses" above and those described
in this Section. Nothing in this Section shall relieve any party to the
Acquisition Agreement of liability for breach of the Acquisition Agreement.
Post-Closing Restructuring. The Purchaser may, simultaneous with or as soon
as possible after the Closing, consummate a corporate reorganization of the
Company and its subsidiaries which may include, without limitation, (i) the
sale and transfer by the Company or any of its subsidiaries of all or part of
the assets of the Company or any of its subsidiaries to the Purchaser or any
affiliates of the Purchaser, (ii) the consummation by the Company and one or
more Dutch subsidiaries of the Purchaser of a legal merger within the meaning
of Section 2:309 of the Dutch Civil Code and (iii) the commencement of the
compulsory acquisition by the Purchaser of Company Shares from any remaining
minority shareholder, in accordance with Section 2:92a of the Dutch Civil
Code. The Company has agreed with the Purchaser that, at the Purchaser's
request and to the extent permitted by law, it shall take all actions
reasonably necessary or desirable to accomplish the corporate reorganizations
referred to in this Section including, without limitation, (i) the convening
of the necessary meetings of the holders of Company Shares and holders of
Preferred Securities, the Management Board and the Supervisory Board of the
Company, (ii) the consideration of any and all necessary or desirable
resolutions by the Management Board or the Supervisory Board of the Company
for the purpose of consummating such corporate reorganizations and (iii) the
execution of any and all reasonably requested documents, agreements or deeds
that are necessary or desirable to consummate any of such corporate
reorganizations and the filing or registration of any or all of such
documents, agreements or deeds with the appropriate authorities or agencies.
Stock Options. Upon the consummation of the Offer, all outstanding options
and other rights to acquire shares under the Company's 1993 Long-Term Stock
Incentive Plan and the Company's Global Employee Stock Purchase Plan (the
"Option Plans" and such options and rights, "Stock Options") whether or not
such Stock Options are then exercisable or vested, shall vest in full, and as
soon as practicable after the Closing Date, but in any event within 5 business
days thereafter, the Purchaser shall pay to the holder of each outstanding
Stock Option an amount in cash equal to the difference between the Share Offer
Price and the exercise price per share of each Stock Option, less applicable
withholding taxes; except in the case of certain Italian and German executives
identified by the Company in writing to the Purchaser prior to the date of the
Acquisition Agreement with respect to whom arrangements shall be made (subject
to applicable law) as described on Schedule 1.2 of the Acquisition Agreement.
If and to the extent required by the terms of the Option Plans or the terms of
any Stock Option granted thereunder, the Company shall use its best efforts to
obtain the consent of each holder of outstanding Stock Options to the
foregoing treatment of such Stock Options and to take any other action
necessary to effectuate the foregoing provisions. Except as provided in the
first sentence of this paragraph the Option Plans shall terminate as of the
Closing Date and any rights under any provisions in any other plan, program or
arrangement (other than the option agreement (the "Option Agreement") dated as
of November 15, 1993 between the Selling Shareholder (or the Purchaser as
assignee of the Option Agreement) and the Company giving the Selling
Shareholder (or the Purchaser as assignee of the Option Agreement) an option,
subject to the fulfillment of certain conditions, to purchase all of the 1,000
priority shares, par value NLG 1.00 per share, of the Company (the "Priority
Shares")) providing for the issuance or grant by the Company of any interest
in respect of the capital stock of the Company shall be canceled as of the
Closing Date. The Company has consented and agreed to the assignment and
transfer by the Selling Shareholder to the Purchaser, at the Closing, of all
rights and obligations of the Selling Shareholder under the Option Agreement.
Notwithstanding the provisions of Section 9--"Source and Amount of Funds" of
the Option Agreement, the Company has
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acknowledged and agreed that the Option Agreement shall remain in full force
and effect and be unaffected by the transactions contemplated by the
Acquisition Agreement and the Shareholder's Agreement.
Directors and Officers Indemnification Insurance. For a period of six years
from and after the Closing Date, the Purchaser shall, or shall cause the
Company to, exculpate, indemnify and hold harmless certain officers and
directors of the Company to the same extent as such persons are currently
exculpated and indemnified by the Company pursuant to those certain indemnity
agreements identified in Section 4.8(a) of the Company Disclosure Schedule to
the Acquisition Agreement (the "Indemnified Parties") for acts or omissions
occurring prior to the Closing Date. For six years from the Closing Date, the
Purchaser shall either (x) cause the Company to maintain in effect the
Company's current directors' and officers' liability insurance covering those
persons who are currently covered on the date of the Acquisition Agreement by
the Company's directors' and officers' liability insurance policy (the
"Insured Parties"); provided, however, that in no event shall the Purchaser or
the Company be required to expend in any one year an amount in excess of 150%
of the annual premiums currently paid by the Company for such insurance which
the Company represents to be $395,000 for the twelve month period ending on
November 19, 1998; and provided further that if the annual premiums of such
insurance coverage exceed such amount, the Purchaser shall cause the Company
to obtain a policy with the greatest coverage available for a cost not
exceeding such amount; provided further that the Purchaser may substitute for
such Company policies, policies with at least the same coverage containing
terms and conditions which are no less advantageous and provided that said
substitution does not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Closing Date or (y) cause the Purchaser's
directors' and officers' liability insurance then in effect to cover those
persons who are covered on the date of the Acquisition Agreement by the
Company's directors' and officers' liability insurance policy with respect to
those matters covered by the Company's directors' and officers' liability
policy. The covenants set forth in this Section shall survive the Closing
Date, shall be binding on the Purchaser and all its successors and assigns,
and are intended for the benefit of, and shall be enforceable by, each of the
Company, the Indemnified Parties and the Insured Parties, and their respective
heirs and legal representatives.
Waiver of Personal Liability. The parties to the Acquisition Agreement have
acknowledged and agreed that the representations and warranties contained in
the Acquisition Agreement are made on behalf of the parties to the Acquisition
Agreement and are not made by the officers or members of the Management Board
or Supervisory Board of Purchaser or any Indemnified Party or Insured Party.
The parties to the Acquisition Agreement have acknowledged and agreed that no
such Person shall have any personal liability, in law or in equity, of any
kind with regard to the representations and warranties of Purchaser or the
Company, as applicable, contained in the Acquisition Agreement or in any
agreement, document or certificate contemplated by the Acquisition Agreement,
and each party to the Acquisition Agreement irrevocably waives any such claim
regarding the validity or enforceability of this Section, and agree not to
challenge or otherwise reject the terms of described in this Section. The
parties also waive any claim regarding the validity or enforceability of the
provisions of this Section and agree not to challenge or otherwise reject the
terms hereof. The Persons designated in the first sentence of this Section are
intended, and shall be deemed, to be third-party beneficiaries of the
provisions described in this Section, and shall be entitled to directly claim
and enforce the rights and benefits described in this Section.
Further Actions. Each of the parties to the Acquisition Agreement shall use
all commercially reasonable efforts to take, or cause to be taken, all
actions, do or cause to be done all things necessary, proper or advisable
under applicable laws and regulations, and fully cooperate with and provide
reasonable assistance to the other and its Representatives, as may be required
to consummate the transactions contemplated by the Acquisition Agreement as
promptly as practicable, including (a) making all filings, applications,
notifications, reports, submissions and registrations with, and obtaining all
consents, approvals, authorizations or permits of any supranational, national,
provincial, state, municipal or local government, any instrumentality,
subdivision, court, arbitrator, administrative agency, or commission or other
authority thereof, or any quasi-governmental or private body exercising any
regulatory, taxing, importing or other governmental or quasi-governmental
authority (any such entity, a "Governmental Entity") or other Persons or
entities necessary for the consummation of the
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transactions contemplated by the Acquisition Agreement, including pursuant to
the (i) pre-merger notification and reporting requirements of the HSR Act,
(ii) prior notification and reporting requirements of the European Community
pursuant to Council Regulation 4064/89, as amended as well as any other
antitrust filings/notifications which must or may be effected at the national
level in countries having jurisdiction and (iii) the notification requirements
under the Competition Act (Canada) (the laws, statues and regulations
described in clauses (i), (ii) and (iii), collectively the "Antitrust Laws"),
the voluntary notification under Exon-Florio, the Exchange Act, securities or
blue sky laws of the states of the United States ("Blue Sky Laws"), labor laws
and regulations, foreign investment laws and regulations and other applicable
laws and regulations in effect in the United States, the European Community,
The Netherlands or any other jurisdiction and (b) taking such actions and
doing such things as the other party to the Acquisition Agreement may
reasonably request in order to cause any of the Offer Conditions to be fully
satisfied. Prior to making any application to or filing with any Governmental
Entity or other Person or entity in connection with the Acquisition Agreement,
the Company, on the one hand, and the Purchaser, on the other hand, shall
provide the other with drafts thereof and afford the other a reasonable
opportunity to comment on such drafts. Without limiting the generality of the
foregoing, each of the Purchaser and the Company agrees to cooperate and use
all commercially reasonable efforts vigorously to contest and resist any
action, suit, proceeding or claim, and to have vacated, lifted, reversed or
overturned any injunction, order, judgment or decree (whether temporary,
preliminary or permanent), that delays, prevents or otherwise restricts the
consummation of the transactions contemplated by the Acquisition Agreement,
and to take any and all actions (including the disposition of assets,
divestiture of businesses, or the withdrawal from doing business in particular
jurisdictions) and to enter into such agreements and undertakings (including
with respect to the conduct of the business of the Company and its
subsidiaries after the Closing as may be required by foreign investment laws
and labor laws and regulations), as may be required by Governmental Entities
or other Persons as a condition to the granting of any such necessary
approvals or as may be required to avoid, vacate, lift, reverse or overturn
any injunction, order, judgment, decree or regulatory action; provided,
however, that in no event shall any party to the Acquisition Agreement be
required to take any action that would be reasonably likely to have a Company
Material Adverse Effect or any effect that, individually or in aggregate, is
materially adverse to the condition, business, assets, liabilities or results
of operations of the Purchaser and its subsidiaries taken as a whole, other
than any effect resulting from (i) changes in general economic conditions,
(ii) the announcement and performance of the Acquisition Agreement and the
transactions contemplated thereby and compliance with the covenants set forth
in the Acquisition Agreement and (iii) changes or developments in the
industrial process control industry generally or its markets and (iv), subject
to Section 4.5 of the Acquisition Agreement, any actions required under the
Acquisition Agreement to obtain any approval or authorization under any
Antitrust Law or from the Australian Foreign Investment Review Board for the
consummation of the Offer ( a "Purchaser Material Adverse Effect") or that
would not be required in accordance with the following sentence.
Notwithstanding anything to the contrary contained in the Acquisition
Agreement, the Company shall not and shall cause its affiliates not to, and
neither the Purchaser nor any of its affiliates shall be required to divest
any assets or business of the Purchaser or any of its affiliates or of the
Company or its subsidiaries or hold separate or otherwise take or commit to
take any action that materially limits its freedom of action with respect to
any of their respective assets or businesses, if in the aggregate such assets
and/or businesses are material to the condition, business, assets, liabilities
or results of operations of in the case of the Purchaser, the process control
and instrumentation operations of the Purchaser and affiliates, taken as a
whole (with estimated annual revenues of $3 billion), or in the case of the
Company, to the Company and its subsidiaries taken as a whole, respectively.
Notice of Certain Matters. The Company shall give prompt notice to the
Purchaser, and the Purchaser shall give prompt notice to the Company, of (a)
the occurrence or non-occurrence of any event which would cause (i) any
representation or warranty contained in the Acquisition Agreement to be untrue
or inaccurate in any material respect or (ii) any covenant, condition or
agreement contained in the Acquisition Agreement or any Offer Condition not to
be complied with or satisfied in any material respect, (b) any failure of the
Company or of the Purchaser, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it under
the Acquisition Agreement in any material respect and (c) any notice or other
communication from any third party alleging that the consent of such third
party is or may be required in connection with the transactions contemplated
by the Acquisition Agreement; provided that the delivery of any
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such notice shall not limit or otherwise affect any representations and
warranties contained in the Acquisition Agreement or the remedies available
under the Acquisition Agreement to the party receiving such notice.
Representations and Warranties. In the Acquisition Agreement, the Company
has made customary representations and warranties to the Purchaser with
respect to, among other things, its due organization, capitalization,
subsidiaries, corporate authority, absence of conflicts with other
obligations, consents and approvals, financial statements, filings with the
Commission, absence of certain changes concerning the Company's business since
December 31, 1997, litigation, compliance with laws, employee benefit plans,
labor matters, tax matters, property, environmental matters, material
contracts and commitments, intellectual property, opinion of the Company's
financial advisor, brokers and guarantees.
Extension; Waiver. At any time prior to the Closing Date, any party to the
Acquisition Agreement, by action taken by the Supervisory Board of the Company
or the Supervisory Board or Management Board of the Purchaser, may, to the
extent permitted by law, (a) extend the time for the performance of any of the
obligations or other acts of the other party to the Acquisition Agreement, (b)
waive any inaccuracies in the representations and warranties made to such
party contained in the Acquisition Agreement or in any document delivered
pursuant to the Acquisition Agreement and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained in the
Acquisition Agreement. Any such extension or waiver shall be valid only if set
forth in an instrument in writing signed by or on behalf of the party or
parties to be bound thereby.
Guaranty of the Parent. Pursuant to the Acquisition Agreement, the Parent
undertakes to insure that the Purchaser will duly perform its obligations
thereunder and guarantees any and all liabilities and amounts which become
payable by the Purchaser thereunder.
THE SHAREHOLDER'S AGREEMENT
The following is a summary of the material terms of the Shareholder's
Agreement. The summary is qualified in its entirety by reference to the
Shareholder's Agreement which is incorporated herein by reference and a copy
of which has been filed as Exhibit 3 hereto.
As an inducement and a condition to entering into the Acquisition Agreement,
the Purchaser required that Finmeccania S.p.A., a corporation organized under
the laws of Italy with its statutory seat in Rome who is the beneficial owner
of 17,813,527 Company Shares on October 14, 1998 and 1,600,000 Preferred
Securities on October 14, 1998 (the "Selling Shareholder") enter into a
Shareholder's Agreement by and between the Selling Shareholder and the
Purchaser (the "Shareholder's Agreement").
Tender. Pursuant to the Shareholder's Agreement, the Selling Shareholder has
agreed to validly and irrevocably tender in accordance with the terms thereof
(or to cause the record owner to so validly tender), pursuant to Rule 14d-2
under the Exchange Act, and in accordance with the terms of the Offer, not
later than, (i) in the case of Company Shares and Preferred Securities owned
by the Selling Shareholder on the date of the Shareholder's Agreement (such
securities, the "Existing Securities"), the fifth business day following the
commencement of the Offer and (ii) in the case of the Company Shares and
Preferred Securities acquired after the date of the Shareholder's Agreement
and prior to the termination of the Shareholder's Agreement, whether upon the
exercise of options, warrants or rights, the conversion or exchange of
convertible or exchangeable securities, or by means of purchase, dividend
distribution or otherwise (such securities, together with the Existing
Securities, the "Securities"), the next succeeding business day after
acquisition thereof, any and all of the Securities beneficially owned (as
determined pursuant to Rule 13d-3 of the Exchange Act), including pursuant to
any agreement or understanding, whether or not in writing, including
securities beneficially owned by all Persons with whom such Person would
constitute a group for purposes of Section 13d-3 of the Exchange Act (any such
ownership, "Beneficially Owned") by the Selling Shareholder at any time during
such period, and shall not withdraw any such tender before consummation of the
Offer or the Expiration Date. The Selling Shareholder has acknowledged and
agreed that the obligation of the Purchaser to accept for payment Company
Shares and Preferred Securities tendered pursuant to the Offer, including any
Company Shares and Preferred Securities
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tendered by the Selling Shareholder and its affiliates, shall be subject to
the terms and conditions of the Offer. The parties agree that the Selling
Shareholder will, for all Company Shares and Preferred Securities tendered by
the Selling Shareholder in the Offer and accepted for payment and paid for by
the Purchaser, receive the same amount per Company Share or Preferred
Securities as is paid to other holders of such securities who have tendered
into, and whose securities are accepted for payment in, the Offer.
Voting. (a) The Selling Shareholder has agreed that during the period
commencing on the date of the Shareholder's Agreement and continuing until the
Expiration Date (such period being referred to as the "Voting Period"), at any
meeting (whether annual or special, and whether or not an adjourned or
postponed meeting) of the Company's shareholders or holders of Preferred
Securities, however called, or in connection with any written consent of the
Company's shareholders or holders of Preferred Securities, unless there shall
be in effect at such time a preliminary or permanent injunction or other final
order by any court of competent jurisdiction barring such action, the Selling
Shareholder shall vote (or cause to be voted) (i) all Securities and (ii) all
other securities of the Company then Beneficially Owned by the Selling
Shareholder and entitled to vote generally in the election of directors of the
Company or otherwise entitled to vote with respect to any matter or proposal
submitted for vote or consent of the Selling Shareholders of the Company or
holders of Preferred Securities (a) in favor of the Offer, the execution,
delivery and performance by the Company of the Acquisition Agreement and the
approval and acceptance of the Offer and the terms thereof; and (b) against
any action or agreement that would (1) result in a breach of any covenant,
representation or warranty or any other obligation or agreement of the Selling
Shareholder under this Shareholder's Agreement or of the Company under the
Acquisition Agreement or (2) prevent, impede, interfere with, delay, postpone
or attempt to discourage the Offer or the transactions contemplated by the
Acquisition Agreement including without limitation: (u) any extraordinary
corporate transaction (other than with the Purchaser as contemplated by the
Acquisition Agreement), such as a merger, other business combination,
reorganization or liquidation involving the Company or any of its
subsidiaries; (v) a sale or transfer of material assets of the Company or any
of its subsidiaries; (w) any change in the membership of the Supervisory Board
or the Management Board of the Company, except as otherwise agreed to or
requested in writing by the Purchaser in accordance with the terms of the
Shareholder's Agreement; (x) any change in the present capitalization or
dividend policy of the Company or any of its subsidiaries or (y) any other
change in the Company's corporate structure or business or operations. The
Selling Shareholder shall not enter into any agreement with any Person which
would violate the provisions of this Section, "Voting". As soon as practicable
after commencement of the Offer, the Purchaser shall provide the Company and
Selling Shareholder with the names of the individuals the Purchaser wishes to
be appointed to the Supervisory Board and the Management Board of the Company
effective as of the Closing. Following receipt by Selling Shareholder and the
Company of the names of such individuals (and any further information
regarding these individuals as reasonably requested by Selling Shareholder and
the Company), at a general meeting of shareholders convened by the Company for
the purpose of appointing such individuals to the Supervisory Board and the
Management Board of the Company, as the case may be, Selling Shareholder will
cause such appointments to take place effective as of, and conditional upon
the occurrence of, the Closing.
Restrictions During the Voting Period. The Selling Shareholder shall not,
until the termination of the Voting Period exercise or Transfer the option
granted to it by the Option Agreement unless requested in writing by the
Purchaser and then, in accordance with the terms of the Option Agreement.
Subject to the required consent of the Company, the Selling Shareholder has
assigned, transferred and conveyed to the Purchaser, effective upon the
consummation of the transactions contemplated by the Acquisition Agreement,
all of its rights and entitlements under the Option Agreement, and the
Purchaser has assumed, effective upon the consummation of the transactions
contemplated by the Acquisition Agreement, all of the rights and obligations
of the Selling Shareholder thereunder. In the Acquisition Agreement, the
Company has consented to such assignment and has acknowledged and agreed that,
notwithstanding the provisions of the Option Agreement, the Option Agreement
shall remain in full force and effect and be unaffected by the transactions
contemplated by the Acquisition Agreement and the Shareholder's Agreement. The
Selling Shareholder shall not, until the termination of the Voting Period,
directly or indirectly: (i) except as otherwise provided under "Tender" above,
Transfer any securities of an affiliate (whether by merger, consolidation or
similar change of control transaction) which is then
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a record or beneficial holder of Company Shares or Preferred Securities if, as
the result of such Transfer, such Person would cease to be an affiliate of the
Selling Shareholder; (ii) Transfer to any Person any Securities; (iii) grant
any proxies or powers of attorney in respect of any Securities, deposit any
Securities into a voting trust or enter into a voting agreement, understanding
or arrangement (except, to the extent applicable, the Financing Trust, as may
be required by the terms pursuant to which the Preferred Securities have been
issued) with respect thereto; (iv) take any action that would make any
representation or warranty of the Selling Shareholder contained in the
Shareholder's Agreement untrue or incorrect or would result in a breach by the
Selling Shareholder of its obligations under the Shareholder's Agreement; or
(v) vote any of the Securities in a manner which would make any representation
or warranty of the Company in the Acquisition Agreement untrue or incorrect or
would result in a breach by the Company of its obligation under the
Acquisition Agreement. Until the termination of the Voting Period, the Selling
Shareholder shall not, and will cause its Representatives and affiliates not
to, directly or indirectly, (x) solicit, initiate, encourage, or take any
other action (i) to facilitate any inquiry or the making of any Acquisition
Proposal or (ii) which could reasonably be expected to impede, frustrate,
prevent, delay or nullify any of the transactions contemplated by the
Shareholder's Agreement or the Acquisition Agreement or to materially diminish
the benefits to the Purchaser of the transactions contemplated by the
Shareholder's Agreement or the Acquisition Agreement, (y) take any action to
enter into an agreement for the sale or other disposition by the Company or
any of its subsidiaries of any significant portion of the assets of or a sale
by the Company or any of its subsidiaries or by the Selling Shareholder of
shares of capital stock of the Company or any of its subsidiaries whether by
merger or other business combination or tender or exchange offer or (z) enter
into or participate in any discussions or negotiations regarding any of the
foregoing, or in furtherance of any inquiries regarding any of the foregoing,
or furnish to any other Person (other than the Purchaser and its
Representatives) any information with respect to the business, properties or
assets of the Company or any of its subsidiaries or any of the foregoing. If
the Selling Shareholder or any of its affiliates or Representatives receives
any request for information or an inquiry, proposal or offer relating to any
of the foregoing, then the Selling Shareholder shall orally (as promptly as
practicable and no later than one day) and in writing (as promptly as
practicable) inform the Purchaser of the terms and the conditions of such
proposal, inquiry or offer and the identity of the Person making it. The
Selling Shareholder agrees that it will and will cause its affiliates and
their respective Representatives to immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
parties conducted heretofore with respect to any of the foregoing. The Selling
Shareholder agrees that it will take the necessary steps to promptly inform
its Representatives and affiliates of the obligations undertaken in this
section.
Representations, Warranties and Other Agreements of the Selling
Shareholder. The Selling Shareholder has made certain customary
representations and warranties, including with respect to, among other things,
(i) its organization, (ii) its corporate authority, (iii) ownership of the
Shares to be tendered by it, (iv) the absence of conflicts with other
obligations.
Expiration. The Shareholder's Agreement and the Selling Shareholder's
obligation to tender, and not withdraw, pursuant to the Shareholder's
Agreement and any obligation of the Parent and the Purchaser under the
Shareholder's Agreement shall terminate on the Expiration Date. As used
therein, the term "Expiration Date" means the date on which the Acquisition
Agreement is terminated by the Purchaser in accordance with its terms. In the
event of termination of the Shareholder's Agreement, the Shareholder's
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of the Purchaser or the Selling Shareholder or their
respective officers or directors; provided, however, the foregoing will not
relieve either party for any breach of any representation, warranty, covenant
or agreement in the Shareholder's Agreement. The Purchaser has acknowledged
that, in the event of termination of the Shareholder's Agreement in accordance
with its terms, the Selling Shareholder shall no longer have the obligation to
tender, and may withdraw, the Securities; provided, that if the Company
terminates the Acquisition Agreement in accordance with Section 5.1(c), the
Purchaser shall, within five business days, either (i) terminate the Offer or
(ii) waive the Minimum Condition and the condition set forth in Paragraph (C)
of the Offer Conditions set forth in Annex A of the Acquisition Agreement
(except that the portion of such condition related to performance or
compliance as to covenants and agreements shall only be waived as to breaches
actually known by the Purchaser as of the date of such election) and, to the
extent
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all other Offer Conditions are satisfied, shall accept for payment and pay for
at the next scheduled Expiration Date of the Offer (subject to applicable law)
all Company Shares and Preferred Securities then validly tendered and not
withdrawn in the Offer.
Guaranty of the Parent; Other Provisions. Pursuant to the Shareholder's
Agreement, the Parent undertakes to insure that the Purchaser will duly
perform its obligations thereunder and guarantees any and all liabilities and
amounts which become payable by the Purchaser thereunder. The Purchaser has
agreed, as of the Closing, to indemnify and hold harmless the Selling
Shareholder and its affiliates from damages, losses, costs and expenses
arising from, and to as promptly as possible following the Closing use its
commercially reasonable efforts to cause the Selling Shareholder and its
affiliates to be released from their obligations under performance bonds,
guarantees, indemnities or other obligations of the Selling Shareholder and
any affiliate outstanding on behalf of the Company or any of its subsidiaries,
as previously disclosed to or subsequently agreed in writing by the Purchaser.
Neither the Selling Shareholder nor any of its affiliates will be entitled to
receive any fees or other compensation in connection with such performance
bonds, guarantees, indemnities or other obligations accrued for any period
after the later of the Closing and the effectiveness of any such release or
counter indemnity. Effective upon the Closing, the Purchaser has also
undertaken for a period of no less than 36 months from the Closing, except for
good cause, not to terminate or lay off employees of the Company's Italian
affiliates, unless an appropriate agreement has been entered into with the
relevant unions in Italy. In addition, the Purchaser has agreed to endeavor to
capitalize on the opportunities and resources available within the Company's
Italian affiliates.
CONFIDENTIALITY AGREEMENT
The following is a summary of the material terms of the Confidentiality
Agreement dated July 2, 1998 between the Parent and the Company (the
"Confidentiality Agreement"). The summary is qualified in its entirety by
reference to the Confidentiality Agreement which is incorporated herein by
reference and a copy of which is attached as Exhibit 4 hereto.
Pursuant to the Confidentiality Agreement, the Parent agreed, among other
things, to keep confidential and not disclose or reveal (other than to any
person or affiliate of such person and any director, officer, employee, agent,
advisor (including, without limitation, any financial advisor, counsel or
accountant) or controlling person of such person or such person's affiliate)
certain information and documents concerning the Company provided to the
Parent in connection with the transactions contemplated by the Acquisition
Agreement and not to use such information for any purpose other than in
connection with the Parent's evaluation of the proposed acquisition. The
Parent also agreed that for a period of one year from the date of the
Confidentiality Agreement, neither it nor its Representatives would, without
the prior consent of the Company, (i) acquire, offer to acquire, or agree to
acquire, directly or indirectly, by purchase or otherwise, any voting
securities or direct or indirect rights to acquire any voting securities of
the Company or any subsidiary thereof, or of any successor to or person in
control of the Company, or any assets of the Company or any subsidiary or
division thereof or of any such successor or controlling person, except that
the provisions of this item (i) shall not apply to a financial advisor engaged
by the Parent, any part of which is acting in the ordinary course of business,
(ii) make, or in any way participate, directly or indirectly, in any
solicitation of proxies to vote, or seek to advise or influence any person or
entity with respect to the voting of any voting securities of the Company,
(iii) make any public announcement with respect to, or submit a proposal for,
or offer of (with or without conditions) any extraordinary transaction
involving the Company or any of its securities or assets, (iv) form, join or
in any way participate in a "group", as defined in Section 13(d)(3) of the
Exchange Act, in connection with any of the foregoing, or (v) request the
Company or any of our Representatives, directly or indirectly, to amend or
waive any provision of this paragraph. The Parent has also agreed to promptly
advise the Company of any inquiry or proposal made to the Parent with respect
to any of the foregoing. In addition, the Parent agreed that, without prior
written consent of the Company, it would not for a period of two years from
the date of the Confidentiality Agreement directly or indirectly solicit for
employment or employ any person employed by the Company or its subsidiaries
(i) in an executive or management position, (ii) in sales or marketing, or
(iii) with access to certain technology. As used in the
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Confidentiality Agreement, "Representatives" means, as to any person, such
person's affiliates and its and their directors, officers, employees, agents,
advisors and controlling persons.
CHANGE OF CONTROL AGREEMENTS WITH MANAGEMENT
On various dates in November and December 1997, the Company and each of ten
current senior executives entered into Change of Control Agreements, which
agreements were amended in September, 1998 (such agreements, as amended, the
"Change of Control Agreements"). The Change of Control Agreements provide
certain payments and benefits determined by reference to specified severance
periods in connection with certain terminations of employment occurring
following a "Change of Control". The Change of Control Agreements are
substantially identical among the executives, except that (i) the specified
severance periods vary among the executives (i.e., 1.5 years (two executives),
2 years (six executives) and 2.5 years (two executives)), and (ii) three U.S.
executives are entitled to gross-up payments to eliminate the effect of any
excise taxes imposed under Section 280G of the U.S. Internal Revenue Code, as
well as reimbursement of legal fees incurred in connection with the
enforcement of their rights under the Change of Control Agreements. A copy of
a form of the Change of Control Agreements is filed as Exhibit 5a hereto and
incorporated herein by reference.
The consummation of the Offer will constitute a "Change of Control" within
the meaning of the Change of Control Agreements, and a termination of an
executive's employment without "just cause" or by reason of "constructive
dismissal" within 18 months following such consummation will trigger the
specified payments and benefits, including: (i) a lump sum payment equal to
the sum of annual base salary and highest annual bonus in the past three years
(including the current year), multiplied by the relevant severance period,
(ii) continuation of certain welfare benefits and perquisites during the
relevant severance period, (iii) in lieu of continued participation in Company
retirement programs, a lump sum payment equal to approximately 10% of the
amount determined pursuant to (i) above, or in the case of non-U.S.
executives, additional service credit for the relevant severance period, and
(iv) in lieu of continued participation in the Company's stock option program,
a lump sum payment equal to the product of (a) the executive's average annual
option grant over the past three years (exclusive of grants made in May 1998
or thereafter, including the special grants made to motivate executives to
maximize shareholder value in the sale process), (b) the Share Offer Price,
(c) the Black-Scholes value of a Company stock option as a percentage of
market price, which was agreed to be 61.642%, and (d) the severance period.
The executive may be subject to a 12-month restriction on engaging in
competitive activities if his severance entitlement is triggered by certain
constructive dismissals.
The aggregate of the lump sum amounts payable under the Change of Control
Agreements, assuming all ten executives are terminated within 18 months of the
Closing Date, would be approximately $10,650,000 (exclusive of welfare,
retirement and fringe benefits for the relevant severance period and Section
280G tax gross-ups.)
Although the Managing Director of the Company is not a party to a Change of
Control Agreement, he is a party to an employment agreement entered into as of
April 1, 1996 and amended and restated in January 1998 (as amended and
restated, the "Employment Agreement"), which provides for certain enhanced
payments and benefits upon certain terminations of employment following a
"Change-in-Control." Consummation of the Offer would constitute a Change-in-
Control under the Employment Agreement, and therefore a termination of
employment without "cause" or by reason of "constructive dismissal" prior to
expiration of the term of the Employment Agreement (the later of April 1, 2002
or the second anniversary of the consummation of the Offer) may entitle the
Managing Director to continued base pay and health, medical and life insurance
benefits for a period as long as 18 months following expiration of such term.
The Managing Director's current rate of base pay is $493,500. In addition, the
Managing Director would be entitled to a cash payment equal to the highest
short term incentive bonus paid and stock option granted under the term of the
Employment Agreement multiplied by the years and partial years of continued
base pay. His 1997 bonus was $150,000, and his target 1998 bonus is 60% of
base pay. His highest regular stock option grant was for 45,000 shares in
1997, and in 1998 he has been granted a special option for 80,000 shares that
vests upon consummation of the Offer to motivate him to maximize shareholder
value in the sale process. The Employment Agreement sets forth no method by
which such stock option grant is to be converted into a cash payment. The
Managing Director is
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restricted from engaging in competitive activity during the period of
continued base pay. A copy of the Employment Agreement is filed as Exhibit
5(b) hereto and incorporated herein by reference.
In addition to payments and benefits provided under the foregoing
arrangements, pursuant to the terms of the Company's 1993 Long-Term Stock
Incentive Plan (the "Plan"), all outstanding stock options thereunder that are
otherwise not already vested will become vested immediately prior to a "Change
in Control". Consummation of the Offer would constitute a Change in Control
under the Plan. There are a total of approximately 1,000,000 shares subject to
options outstanding under the Plan (approximately 850,000 of which are held by
the Managing Director and the ten executives with Change of Control
Agreements) at an average exercise price per share of approximately $16.15,
including 291,750 shares subject to special options granted at an exercise
price per share of $16.25625 to motivate executives to use their best efforts
to maximize shareholder value in the sale process. Of the total outstanding,
options for 241,900 shares are currently vested, and another 85,600 shares
would become vested by December 31, 1998 without regard to any Change in
Control.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) Recommendation of the Board of Directors.
The Management Board and the Supervisory Board of the Company unanimously
(i) have determined that the Offer, upon the terms and subject to the
conditions set forth in the Acquisition Agreement, is fair to, and in the best
interests of, the holders of the Company Shares, the holders of the Preferred
Securities and other relevant constituencies, its subsidiaries and the
enterprises carried on by the Company and its subsidiaries, (ii) have approved
the Acquisition Agreement and the transactions contemplated thereby, including
the Offer, and (iii) recommend that the holders of the Company Shares and the
holders of the Preferred Securities accept the Offer and tender their Company
Shares and Preferred Securities thereunder to the Purchaser.
(b) (1) Background.
On January 15, 1998 the Selling Shareholder retained Merrill Lynch to advise
it as to the possible disposition of various interests it held, including
those in the Company. Merrill Lynch performed a review and analysis of such
interests and presented the results of such review, together with its
recommendations, to the Board of Directors of the Selling Shareholder at a
meeting held in Rome on May 28, 1998. At that meeting, the Board of Directors
determined to dispose of the Shares of the Selling Shareholder and accepted
the recommendation of Merrill Lynch to offer such Shares independently of any
other assets held by the Selling Shareholder. The Selling Shareholder also
determined that it was willing to dispose of its Shares in a transaction which
would include the participation of the public holders of the Company Shares.
The Selling Shareholder immediately informed the Company of its decision and
filed an amendment to its Schedule 13D with the Commission. The Selling
Shareholder also informed the Company that it should conduct the sale of the
Company so as to maximize the value for all shareholders, as the Selling
Shareholder would sell its Shares at the same price as that paid to all other
shareholders.
The Supervisory Board of the Company also met in Rome on May 28, 1998 and
determined to evaluate all strategic options available to the Company. The
Supervisory Board also authorized the grant to certain key executives of the
Company of options to purchase an additional 291,750 Company Shares at
$16.25625 per Company Share, to motivate such executives to use their best
efforts to maximize shareholder value in the sale process. The Company then
scheduled a meeting of the Supervisory Board in Rome for June 4, 1998. The
Company invited Merrill Lynch to make a presentation at that meeting, as
Merrill Lynch had been the Company's lead underwriter in its initial public
offering in 1993 and had advised the Company in subsequent transactions,
including the acquisitions of Fischer & Porter in 1994 and of Hartmann & Braun
in 1996.
At the June 4, 1998 meeting, Merrill Lynch made a presentation regarding a
sale of the entire Company and recommended that if the Supervisory Board
determined a buyer should be sought for the entire Company, it should be done
through an auction process. The Supervisory Board determined to seek a buyer
for the entire
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Company and accepted Merrill Lynch's recommendation regarding the process to
be employed. The process was divided into three phases: first, initial contact
with and screening of potential acquirors based on solicited preliminary
indications of interest; second, a preliminary round of bids for the Company;
and third, following the customary due diligence investigation of the Company
by selected potential acquirors, a final round of bids. The Supervisory Board
noted the substantial past involvement of Merrill Lynch with the Company and
Merrill Lynch's recent work evaluating the Company, which the Supervisory
Board believed would reduce the time necessary to complete the process. Based
on such considerations, among others, the Supervisory Board resolved to retain
Merrill Lynch as its adviser. Subsequently, on July 15, 1998, the Company
entered into a letter agreement with Merrill Lynch (the "Engagement Letter"),
pursuant to which it formally appointed Merrill Lynch to act as exclusive
financial advisor for any business combination involving the Company and
another party.
At its June 4, 1998 meeting, the Supervisory Board also authorized the
formation of a Transaction Advisory Committee ("TAC") consisting of two
members of the Supervisory Board, Mr. Alberto Rosania, First Vice President,
Strategic Planning of the Selling Shareholder, and Mr. Kevin Dunnigan, an
independent director who had recently participated as a member of the board of
directors of a public company which had been involved in a similar auction
process. Mr. de Benedictis, Senior Vice President, Strategic Finance of the
Selling Shareholder and a former member of the Company's Supervisory Board,
was also appointed to the TAC to provide coordination with the Selling
Shareholder in the event a transaction involving sale of the entire Company
was ultimately negotiated. No authority was delegated to the TAC to make any
decisions regarding the proposed transaction, as such authority remained with
the whole Supervisory Board, but the TAC was instructed to advise the
Supervisory Board and keep it informed of the efforts of the Company and its
advisers throughout the process. The Supervisory Board also authorized its
independent committee of two Supervisory Board members unaffiliated with the
Selling Shareholder, Messrs. Dunnigan and Felder, to consider any issues which
might arise which involved a potential conflict of interest between the
Selling Shareholder and the minority shareholders of the Company.
During the first two weeks of June, Merrill Lynch contacted more than thirty
potential bidders in order to solicit non-binding preliminary indications of
interest in an acquisition of the Company. By June 25, 1998 approximately
twenty such indications of interest had been received by Merrill Lynch.
Confidentiality agreements were subsequently negotiated and executed with
twenty bidders. The Parent entered into the Confidentiality Agreement on July
2, 1998 (see "Confidentiality Agreement" above).
Beginning on July 17, 1998, Merrill Lynch forwarded copies of a confidential
offering memorandum regarding the Company to those bidders which had executed
confidentiality agreements with the Company. Merrill Lynch invited each bidder
to submit on Friday, August 7, 1998 a non-binding preliminary offer for the
acquisition of all of the outstanding Shares, based on the information
presented in the confidential offering memorandum. On August 10, 1998, Merrill
Lynch completed its review of the bids which had been received and, on the
following day, presented to the TAC the results of its review.
On August 12, 1998, the Supervisory Board of the Company met at the offices
of Merrill Lynch in London. Merrill Lynch reviewed all the bids with the
Supervisory Board and the Supervisory Board adopted the recommendation of
Merrill Lynch and of the TAC to invite a limited number of bidders to conduct
further due diligence prior to commencement of the final round of bidding.
During late August and early September, each bidder invited to conduct further
due diligence was offered a full day of management presentations by the
Company. The Parent attended such presentations on September 1, 1998 in
London, during which the Parent's representatives engaged in discussions with
the Company's representatives concerning the Company and its activities. In
addition, the Company established data rooms in Philadelphia and Frankfurt to
accommodate U.S.-based and Europe-based bidders. Bidders were given one week
in the data room during the period from September 7, 1998 to October 2, 1998.
The Parent reviewed the materials in the data room in Frankfurt from September
14, 1998 to September 18, 1998. Bidders were also given the opportunity to
participate in "break-out" sessions with management personnel of the Company
on specific due diligence issues. Some of these
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sessions were held in meetings and others were conducted by conference
telephone call. Bidders were also given the opportunity to visit selected
facilities of the Company. Drafts of the Acquisition Agreement and
Shareholder's Agreement were also provided by the Company and the Selling
Shareholder to the bidders.
On September 29, 1998, Merrill Lynch delivered letters inviting the final
bidders to submit a firm offer for acquisition of all of the outstanding
Company Shares and Preferred Securities by 5:00 pm London time on Friday,
October 9, 1998. Merrill Lynch subsequently agreed on behalf of the Company
that Merrill Lynch would recommend to the Company the best bid received and
for a short period of time, the Company would negotiate only with the bidder
submitting such bid. During the week of October 5, 1998, representatives of
the Parent's legal advisers had two telephone calls with representatives of
the Company's legal advisers regarding certain regulatory approvals that might
be involved in any acquisition of the Company. The Parent's firm offer was
timely submitted on October 9, 1998. The Parent also submitted forms of the
Acquisition Agreement and the Shareholder's Agreement including required
changes to the drafts of the Acquisition Agreement and Shareholder's Agreement
prepared by the Company and the Selling Shareholder, respectively.
After discussions with the TAC and the Supervisory Board during October 10
and 11, 1998, pursuant to the recently agreed procedures representatives of
the Company and the Selling Shareholder and their legal and financial advisors
met with representatives of the Parent and its legal and financial advisors to
negotiate the final terms of the Acquisition Agreement, the Shareholder's
Agreement and the final terms of the Offer. These negotiations began on the
evening of October 11, 1998 and concluded early in the morning on October 14,
1998. The Parent subsequently delivered to the Company an amended final bid
letter on October 14, 1998, referencing the Acquisition Agreement and the
Shareholder's Agreement in their final agreed form. These documents were then
initialed by senior counsel for the Company and the Parent and distributed to
the Supervisory Board and Management Board of the Company and to the Board of
Directors of the Selling Shareholder, for review.
At approximately 4:00 pm Continental European time on October 14, 1998 the
Management Board and the Supervisory Board of the Company met jointly in Rome.
The amended final bid letter and initialed agreements were discussed at this
meeting. Merrill Lynch then presented its analysis of the bid to the meeting,
and delivered its opinion to the Management Board and the Supervisory Board as
to the fairness to the Company's shareholders from a financial point of view
of the consideration to be received by holders of the Company Shares pursuant
to the Purchaser's tender offer therefor. Counsel to the Company then reviewed
for the Management Board and the Supervisory Board the principal terms of the
proposed Acquisition Agreement and summarized the terms of the proposed
Shareholder's Agreement. The Management Board and the Supervisory Board
unanimously resolved that the transaction reflected in the Parent's amended
final bid letter and in the Acquisition Agreement and the Shareholder's
Agreement was in the best interests of the Company's shareholders, the holders
of its Preferred Securities and other relevant constituencies, and that the
Company should enter into the Acquisition Agreement and take all further steps
necessary to conclude the proposed transaction.
At approximately 6:00 pm Continental European time, a meeting of the Board
of Directors of the Selling Shareholder was convened in Rome to consider the
advisability of its entering into the Shareholder's Agreement. Merrill Lynch
presented its analysis of the transaction proposed by the Parent on which
basis the Company had taken its favorable action. The Board of Directors of
the Selling Shareholder resolved that it should enter into the Shareholder's
Agreement with the Purchaser.
The Company, the Selling Shareholder, the Purchaser and the Parent thereupon
executed the Acquisition Agreement and the Shareholder's Agreement, as
relevant, and delivered such executed documents through their respective
financial advisors.
(b) (2) Reasons for the Recommendation. In approving the Acquisition
Agreement and the transactions contemplated thereby and recommending that all
holders of Shares accept the Offer and tender their Shares in the Offer and
that all holders of the Preferred Securities accept the Offer and tender their
Preferred Securities in the Offer, the Supervisory Board and the Management
Board considered a number of factors, including:
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(A) the familiarity of the Supervisory Board and the Management Board
with the Company's business, financial condition, results of operations,
properties and prospects as an independent entity, and the nature of the
industry in which it operates, based in part upon presentations by the
Company's management and Merrill Lynch;
(B) the decision of the Selling Shareholder to seek a buyer for its
Shares and the fact that the Offer and the Acquisition Agreement present an
opportunity for all holders of Shares to receive for their interests
consideration equal to that received by the Selling Shareholder despite the
ability which the Selling Shareholder had to transfer voting control of the
Company in a private transaction;
(C) the fact that an active auction was conducted with the assistance of
the Company's financial and legal advisors in a manner which the
Supervisory Board and the Management Board believed was best calculated to
result in the highest offer for the Shares, including the active search by
Merrill Lynch which resulted in twenty potential purchasers signing
confidentiality agreements and receiving non-public information about the
Company;
(D) the trading range for the Company Shares during the period from 1996
to the present, the fact that the price of $39.30 per Company Share
proposed by the Purchaser represents a significant premium over the sale
prices for the Company Shares over the past three years, and the fact that
the price of $61.21 per Preferred Security proposed by the Purchaser
represents a significant premium over the sale prices for the Preferred
Securities since their issuance in December 1995, which proposals, taken
together, present the most attractive alternative available to the holders
of Shares;
(E) the financial strength of the Purchaser and the fact that the Offer
is not conditioned upon the availability of financing;
(F) the presentation of Merrill Lynch to the Supervisory Board and the
Management Board at their joint meeting on October 14, 1998 as to various
financial matters deemed relevant to the Boards' consideration, including,
among other things, (a) an analysis of values of publicly traded companies
in lines of business which Merrill Lynch believed to be generally
comparable to the business of the Company, (b) an analysis of acquisition
values of comparable companies and (c) a review of the historical stock
prices and trading volumes of the Company Shares;
(G) the written opinion dated October 14, 1998 of Merrill Lynch to the
Boards concluding that, based upon and subject to various considerations
and assumptions set forth therein, the consideration to be received by the
holders of Company Shares in connection with the Offer and the Acquisition
Agreement is fair from a financial point of view to the holders of the
Company Shares. A copy of the opinion rendered by Merrill Lynch to the
Boards, setting forth the procedures followed, the matters considered, the
scope of the review undertaken and the assumptions made by Merrill Lynch in
arriving at its opinion, is attached hereto as Annex A and is incorporated
herein by reference. THE HOLDERS OF COMPANY SHARES ARE URGED TO READ THIS
OPINION CAREFULLY AND IN ITS ENTIRETY;
(H) the financial and other terms and conditions of the Offer and the
Acquisition Agreement, including the fact that the Offer is structured as
an immediate cash tender offer for all outstanding Shares, thereby enabling
the holders of the Shares to obtain cash for their Shares and at the
earliest possible time;
(I) although the Boards believe that the Offer presents the most
attractive alternative available to the holders of Shares, the Acquisition
Agreement permits the Supervisory Board, in the exercise of its fiduciary
duties, to terminate the Acquisition Agreement and recommend a Superior
Proposal in certain circumstances, subject to the payment of certain fees
and expenses and the other terms of the Acquisition Agreement (See Item 3.
Identity and Background--Termination of the Acquisition Agreement).
The Boards did not assign relative weights to the factors or determine that
any factor was of particular importance. Rather, the Boards viewed their
position and recommendation as being based on the totality of the information
presented to and considered by them.
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ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company has retained Merrill Lynch to act as its exclusive financial
advisor in connection with any proposed business combination transaction
between the Company and another party, including among others the acquisition
directly or indirectly by one or more purchasers of more than 10% of the then
outstanding voting stock of the Company by way of a tender offer. The Company
agreed that if the price per share in such transaction exceeded $30, it would
pay to Merrill Lynch a fee equal to $7 million plus 3% of the portion of the
purchase price paid above $30 per share. Assuming that all outstanding Shares
are tendered and purchased in the Offer (and any subsequent transaction
subject to the Engagement Letter), the amount of the fees payable to Merrill
Lynch under the Engagement Letter would be $17.6 million. In addition to any
fees payable to Merrill Lynch under the Engagement Letter, the Company agreed
to reimburse Merrill Lynch, upon request and from time to time, for its
reasonable out-of-pocket expenses incurred in connection with Merrill Lynch's
activities under the Engagement Letter, including without limitation the
reasonable fees and disbursements of its legal counsel. In addition, the
Company agreed to indemnify Merrill Lynch against certain liabilities,
including liabilities arising under federal securities laws.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any other person to make solicitations or
recommendations to security holders on its behalf concerning the Offer.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) No transactions in the Shares have been effected during the past 60 days
by the Company or, to the best of the Company's knowledge, by any executive
officer, director, affiliate or subsidiary of the Company, other than credits
of Company Shares to the accounts of the following executive officers of the
Company pursuant to the automatic payroll deduction procedures of the
Company's Global Employee Stock Purchase Plan: V. Cannatelli, 146.42; M.
Zaharna 48.55; and D. Norgard 29.34.
(b) To the best of the Company's knowledge each executive officer, director
and affiliate of the Company currently intends to tender all Shares over which
he or she has sole dispositive power in the Offer.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as set forth above in Items 3(b) and 4(b), no negotiation is
being undertaken or is underway by the Company in response to the Offer which
relates to or would result in (i) an extraordinary transaction, such as a
merger or reorganization, involving the Company or any subsidiary of the
Company; (ii) a purchase, sale or transfer of a material amount of assets by
the Company or any subsidiary of the Company; (iii) a tender offer for or
other acquisition of securities by or of the Company; or (iv) any material
change in the present capitalization or dividend policy of the Company.
(b) Except as set forth above or in Items 3(b) or 4(b) above, there are no
transactions, Board resolutions, agreements in principle or signed contracts
in response to the Offer that relate to or would result in one or more of the
events referred to in Item 7(a) above.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Exhibit 1. Acquisition Agreement, dated as of October 14, 1998, by and
between Elsag Bailey Process Automation N.V. and ABB
Transportation Participations B.V.
Exhibit 2. Pages 33 through 36 of the Company's Form 20-F for the fiscal
year ended December 31, 1997.
Exhibit 3. Shareholder's Agreement, dated as of October 14, 1998, by and
between ABB Transportation Participations B.V. and Finmeccanica
S.p.A.
22
<PAGE>
Exhibit 4. Confidentiality Agreement, dated July 2, 1998, between Elsag
Bailey Process Automation N.V. and ABB Asea Brown Boveri Ltd.
Exhibit 5. (a) Form of Change of Control Agreements.
(b) Agreement with Managing Director.
Exhibit 6. Letter of the Supervisory Board and the Management Board of Elsag
Bailey Process Automation N.V. addressed to the holders of common
shares of Elsag Bailey Process Automation N.V., dated October 20,
1998.
Exhibit 7. Press release, dated October 14, 1998 issued by Elsag Bailey
Process Automation N.V.
Exhibit 8. Opinion of Merrill Lynch International to the Supervisory Board
and the Management Board of Elsag Bailey Process Automation N.V.,
dated October 14, 1998 (included as Annex A).
23
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
ELSAG BAILEY PROCESS AUTOMATION N.V.
By: /s/ Vincenzo Cannatelli
___________________________________
Name: Vincenzo Cannatelli
Title: Managing Director
Dated: October 20, 1998
24
<PAGE>
ANNEX A TO SCHEDULE 14D-9
14 October 1998
Management Board and Supervisory Board
Elsag Bailey Process Automation N. V.
World Trade Center
Schipol Boulevard 157
The Netherlands
Members of the Management Board and Supervisory Board:
Elsag Bailey Process Automation N. V. (the "Company") and ABB Transportation
Participations B. V. (the "Acquiror") propose to enter into an Acquisition
Agreement by and between the Company and the Acquiror, dated as of October 14,
1998 (the "Agreement") pursuant to which (i) the Acquiror would commence a
tender offer (the "Transaction") for all outstanding shares of the Company's
common stock, par value NLG 1.00 per share (the "Company Shares") for $39.30
per share, net to the seller in cash (the "Consideration") and (ii) the
Acquiror would commence a tender offer for all of the issued and outstanding 5
1/2% Trust Originated Preferred Securities guaranteed by the Company and
convertible into Company Shares (the "TOPrS") of Elsag Bailey Financing Trust
for $61.215 for each of the TOPrS, net to the seller in cash.
You have asked us whether, in our opinion, the Consideration to be received
by the holders of the Company Shares, other than the Acquiror and its
affiliates, pursuant to the Transaction is fair from a financial point of view
to such holders.
In arriving at the opinion set forth below, we have, among other things:
(1) Reviewed certain publicly available business and financial information
relating to the Company that we deemed to be relevant;
(2) Reviewed certain information, including financial forecasts, relating
to the business, earnings, cash flow, assets, liabilities and prospects
of the Company furnished to us by the Company;
(3) Conducted discussions with members of senior management of the Company
concerning the matters described in clauses 1 and 2 above;
(4) Reviewed the market prices, valuation multiples and trading activity
for the Company Shares and compared them with those of certain publicly
traded companies that we deemed to be relevant;
(5) Reviewed the results of operations of the Company and compared them
with those of certain publicly traded companies that we deemed to be
relevant;
(6) Compared the proposed financial terms of the Transaction with the
financial terms of certain other transactions that we deemed to be
relevant;
(7) Participated in certain discussions and negotiations among
representatives of the Company and the Acquiror and their financial and
legal advisors;
(8) Reviewed a draft of the Agreement dated October 13, 1998;
(9) Reviewed a draft of the Shareholders Agreement, dated October 13, 1998
between Finmeccanica S.p.A. and the Acquiror (the "Shareholders
Agreement"); and
(10) Reviewed such financial studies and analyses and took into account such
other matters as we deemed necessary.
In preparing our opinion, we have assumed and relied on the accuracy and
completeness of all information supplied or otherwise made available to us,
discussed with or reviewed by or for us, or publicly available, and
25
<PAGE>
we have not assumed any responsibility for independently verifying such
information or undertaken an independent evaluation or appraisal of any of the
assets or liabilities of the Company. In addition, we have not assumed any
obligation to conduct any physical inspection of the properties or facilities
of the Company. With respect to the financial forecast information furnished
to or discussed with us by the Company, we have assumed that they have been
reasonably prepared and reflect the best currently available estimates and
judgement of the Company's management as to the expected future financial
performance of the Company. We have also assumed that the final form of each
of the Agreement and Shareholders Agreement will be substantially similar to
the last drafts reviewed by us.
Our opinion is necessarily based upon market, economic and other conditions
as they exist and can be evaluated on, and on the information made available
to us as of the date hereof.
We are acting as financial advisor to the Company in connection with the
Transaction and will receive a fee from the Company for our services, a
significant portion of which is contingent upon the consummation of the
Transaction. In addition, the Company has agreed to indemnify us for certain
liabilities arising out of our engagement. We have, in the past, provided
financial advisory and financing services to the Company and the Acquiror and
may continue to do so and have received, and may receive, fees for the
rendering of such services. In addition, in the ordinary course of our
business, we may actively trade the Company Shares and other securities of the
Company, as well as securities of the Acquiror, for our own account and for
the accounts of customers, and, accordingly, may at any time hold a long or
short position in such securities.
This opinion is for the use and benefit of the Management Board and
Supervisory Board of the Company. Our opinion does not address the merits of
the underlying decision by the Company to engage in the Transaction and does
not constitute a recommendation to any shareholder as to whether such
shareholder should tender any Company Shares pursuant to the Transaction.
On the basis of and subject to the foregoing, we are of the opinion that, as
of the date hereof, the Consideration to be received by the holders of the
Company Shares pursuant to the Transaction is fair from a financial point of
view to the holders of such shares.
Very truly yours,
For and on behalf of
MERRILL LYNCH INTERNATIONAL
Philip Yates
Managing Director
Investment Banking
26
<PAGE>
EXHIBIT 1
<PAGE>
ACQUISITION AGREEMENT
BY AND BETWEEN
ELSAG BAILEY PROCESS AUTOMATION N.V.
AND
ABB TRANSPORTATION PARTICIPATIONS B.V.
DATED AS OF OCTOBER 14, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. THE OFFER....................................................... 1
Section 1.1 The Offer.................................................... 1
Section 1.2 Company Stock Options........................................ 3
Section 1.3 Company Actions.............................................. 3
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 4
Section 2.1 Organization and Qualification............................... 4
Section 2.2 Capitalization............................................... 4
Section 2.3 Subsidiaries................................................. 5
Section 2.4 Authorization, Validity and Enforceability................... 6
Section 2.5 No Conflict or Violation..................................... 6
Section 2.6 Consents and Approvals....................................... 6
Section 2.7 SEC Documents and Financial Statements....................... 7
Section 2.8 Absence of Certain Changes................................... 7
Section 2.9 Litigation................................................... 9
Section 2.10 Compliance.................................................. 9
Section 2.11 Employee Benefit Plans...................................... 9
Section 2.12 Labor Matters............................................... 10
Section 2.13 Tax Matters................................................. 10
Section 2.14 Properties.................................................. 10
Section 2.15 Environmental Matters....................................... 11
Section 2.16 Material Contracts and Commitments.......................... 11
Section 2.17 Intellectual Property....................................... 12
Section 2.18 Opinion of Financial Advisor................................ 13
Section 2.19 Brokers..................................................... 13
Section 2.20 Guarantees.................................................. 13
Section 2.21 Schedule 14D-9 and Schedule 14D-1........................... 13
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF PURCHASER................... 14
Section 3.1 Organization and Qualification............................... 14
Section 3.2 Authorization, Validity and Enforceability................... 14
Section 3.3 No Conflict or Violation..................................... 14
Section 3.4 Consents and Approvals....................................... 14
Section 3.5 Brokers...................................................... 15
Section 3.6 Financing.................................................... 15
ARTICLE IV. COVENANTS...................................................... 15
Section 4.1 Interim Operations........................................... 15
Section 4.2 No Solicitation.............................................. 17
Section 4.3 Access to Information........................................ 18
Section 4.4 Notice of Certain Matters.................................... 18
Section 4.5 Further Actions.............................................. 18
Section 4.6 Public Announcements......................................... 19
Section 4.7 Expenses..................................................... 19
Section 4.8 Directors and Officers Indemnification Insurance............. 19
Section 4.9 Post-Closing Restructuring................................... 20
ARTICLE V. TERMINATION..................................................... 20
Section 5.1 Termination.................................................. 20
Section 5.2 Effect of Termination........................................ 22
Section 5.3 Extention; Waiver............................................ 22
ARTICLE VI. MISCELLANEOUS.................................................. 22
Section 6.1 Certain Definitions.......................................... 22
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 6.2 Nonsurvival of Representations and Warranties................ 23
Section 6.3 Entire Agreement............................................. 23
Section 6.4 Waiver....................................................... 23
Section 6.5 Assignment; Binding Effect................................... 23
Section 6.6 Notices...................................................... 24
Section 6.7 Severability................................................. 25
Section 6.8 Enforcement of Agreement..................................... 25
Section 6.9 Governing Law................................................ 25
Section 6.10 Waiver of Personal Liability................................ 26
Section 6.11 Interpretation.............................................. 26
Section 6.12 Counterparts................................................ 26
Section 6.13 Confidentiality............................................. 26
Section 6.14 Exchange Rates.............................................. 26
</TABLE>
ii
<PAGE>
ACQUISITION AGREEMENT
This ACQUISITION AGREEMENT is made and entered into as of October 14, 1998
(this "Agreement"), by ABB Transportation Participations B.V., a corporation
organized under the laws of The Netherlands with its statutory seat in
Amsterdam ("Purchaser"), and Elsag Bailey Process Automation N.V., a
corporation organized under the laws of The Netherlands with its statutory
seat in Amsterdam (the "Company").
WHEREAS, the Supervisory Board of the Company and the Management Board of
the Company each has determined that the acquisition of the Company by
Purchaser, upon the terms and subject to the conditions set forth herein, is
fair to, and in the best interests of, the Company's shareholders and other
relevant constituencies, its Subsidiaries (as defined in Section 6.1(h)) and
the enterprises carried on by the Company and its Subsidiaries;
WHEREAS, Finmeccanica S.p.A., a company organized under the laws of Italy
("Shareholder"), together with certain of its Subsidiaries, is the record and
beneficial owner of (i) a majority of the issued and outstanding Company
Shares (as defined below)(together with any other Company Shares acquired by
Shareholder or its Subsidiaries after the date hereof and during the term of
the Shareholder's Agreement (as defined below), the "Shareholder Shares") and
(ii) certain TOPrS (as defined below);
WHEREAS, the Board of Directors of Shareholder has approved the sale of the
Shareholder Shares and the TOPrS held by Shareholder or its Affiliates to
Purchaser pursuant to the Offer (as defined below);
WHEREAS, upon the terms and subject to the conditions set forth herein, the
parties hereto desire that Purchaser prepare and commence an offer which may
be structured as separate offers (the "Offer") to purchase all of the issued
and outstanding common shares, par value NLG 1.00 per share, of the Company
(the "Company Shares") and all of the issued and outstanding 5 1/2% Trust
Originated Preferred Securities guaranteed by the Company and convertible into
Company Shares (the "TOPrS") of Elsag Bailey Financing Trust (the "Financing
Trust"); and
WHEREAS, as a condition to its willingness to enter into this Agreement,
Purchaser has required Shareholder to enter into a shareholder's agreement,
dated as of the date hereof (the "Shareholder's Agreement"), pursuant to which
Shareholder has agreed, among other things, to tender, or cause its
Subsidiaries to tender, all of the Shareholder Shares and TOPrS held by
Shareholder and such Subsidiaries, into the Offer.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
THE OFFER
Section 1.1 The Offer. (a) Provided that none of the events set forth in
Annex A hereto (the "Offer Conditions") shall have occurred, as promptly as
practicable following the execution hereof, Purchaser shall
<PAGE>
make a public announcement pursuant to Rule 14d-2(b) under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, promptly
thereafter but in no event later than the fifth Business Day following the
date of such announcement, Purchaser shall commence the Offer. The obligation
of Purchaser to accept for payment Company Shares and TOPrS validly tendered
pursuant to the Offer and not withdrawn (the "Tendered Securities") shall be
subject only to the satisfaction or waiver by Purchaser of the Offer
Conditions. Subject to the provisions of this Agreement, Purchaser shall keep
the Offer open until at least midnight, New York City time, on the date twenty
(20) days from the date of its commencement. The Offer shall be made by means
of an offer to purchase (the "Offer to Purchase") containing the Offer
Conditions. Without the written consent of the Company, Purchaser shall not
(i) decrease the Offer Consideration (as defined below); (ii) change the form
of Offer Consideration (other than by increasing it); (iii) decrease the
number of Company Shares and TOPrS sought pursuant to the Offer; (iv) extend
the Offer, beyond any scheduled expiration date; or (v) amend the Offer
Conditions in a manner which is materially adverse to the holders of Company
Shares or holders of TOPrS (including imposing any additional conditions);
provided, however, that if on the scheduled expiration date of the Offer (as
it may be extended) (x) all Offer Conditions shall not have been satisfied or
waived or (y) any Person has made an Acquisition Proposal (as defined in
Section 4.2), the Offer may be extended by Purchaser from time to time.
Purchaser agrees that, if on the initial scheduled Termination Date of the
Offer there is a failure of the Offer Conditions set forth in clause (i) or
(ii) of the second sentence of Annex A or paragraph (F) of the third sentence
thereof to be satisfied, it shall, unless this Agreement is terminated
pursuant to Section 5.1, extend the Offer and set a subsequent scheduled
Termination Date, and shall continue to so extend the Offer and set subsequent
scheduled Termination Dates until the Expiration Date (as defined in Section
6.1(c)). In addition, Purchaser may, without the consent of the Company,
increase the Offer Consideration and in connection therewith extend the Offer
to the extent required by law.
(b) Upon the terms and subject to the Offer Conditions, the Offer shall
commit Purchaser to acquire (i) each Company Share validly tendered and not
withdrawn for $39.30, net to the seller in cash (the "Share Offer Price"), and
(ii) each of the TOPrS validly tendered for $61.21, net to the seller in cash
(the "TOPrS Offer Price" and collectively with the Share Offer Price, the
"Offer Consideration").
(c) Provided that none of the events set forth in the Offer Conditions shall
have occurred, as soon as practicable on the date the Offer is commenced,
Purchaser shall file with the United States Securities and Exchange Commission
(the "Commission") a Tender Offer Statement on Schedule 14D-1 with respect to
the Offer (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-1") which will include, as exhibits,
the Offer to Purchase and a form of letter of transmittal with respect to the
Offer (collectively, together with any amendments and supplements thereto, the
"Offer Documents"). Purchaser represents that the Offer Documents will comply
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder, and all other applicable United States federal
securities laws and, on the date filed with the Commission and on the date
first published, sent or given to the Company's shareholders, will not contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by Purchaser with respect to
information supplied by the Company for inclusion in the Schedule 14D-1 or
Offer Documents. Purchaser further agrees to take all steps necessary to cause
the Offer Documents to be filed with the Commission and to be disseminated to
all holders of Company Shares and TOPrS, in each case as and to the extent
required by applicable United States federal securities laws and any other
applicable laws. Each of Purchaser, on the one hand, and the Company, on the
other hand, agrees promptly to correct any information provided by it for use
in the Offer Documents if and to the extent that it shall have become false
and misleading in any material respect, and Purchaser further agrees to take
all steps necessary to cause the Offer Documents, as so corrected, to be filed
with the Commission and to be disseminated to holders of Company Shares and
TOPrS, in each case as and to the extent required by applicable United States
federal securities laws and any other applicable laws. The Company and its
counsel shall be given the opportunity to review and comment on the Offer
Documents before they are filed with the Commission. In addition, Purchaser
agrees to provide the Company and its counsel in writing any comments
Purchaser or its counsel may receive from time to time from the Commission or
its staff with respect to the Offer Documents promptly after receipt of such
comments.
2
<PAGE>
(d) Upon the terms of the Offer and subject to the Offer Conditions,
Purchaser shall consummate the Offer and acquire all Tendered Securities
properly tendered and not withdrawn (the "Closing") at the earliest time
permitted under the Exchange Act and other applicable laws and as of which all
of the Offer Conditions shall have been satisfied or waived by Purchaser. For
purposes of this Agreement, the "Closing Date" shall be the date on which
Purchaser shall acquire the Tendered Securities by means of the Offer. The
Closing shall occur on the Closing Date at a place or places to be mutually
agreed by the parties.
Section 1.2 Company Stock Options. (a) As of the Closing, all outstanding
options and other rights to acquire shares under the Company's 1993 Long-Term
Stock Incentive Plan and the Company's Global Employee Stock Purchase Plan
(each, as amended, an "Option Plan," together, the "Option Plans" and such
options and other rights, "Stock Options") whether or not such Stock Options
are then exercisable or vested, shall vest in full, and as soon as practicable
after the Closing Date, but in any event within 5 Business Days thereafter,
Purchaser shall pay to the holder of each outstanding Stock Option an amount
in cash equal to the difference between the Share Offer Price and the exercise
price per share of each such Stock Option, less applicable withholding taxes;
except in the case of certain Italian and German executives identified by the
Company in writing to Purchaser prior to the date hereof with respect to whom
arrangements shall be made (subject to applicable law) as described on
Schedule 1.2 attached hereto. If and to the extent required by the terms of
the Option Plans or the terms of any Stock Option granted thereunder, the
Company shall use its best efforts to obtain the consent of each holder of
outstanding Stock Options to the foregoing treatment of such Stock Options and
to take any other action necessary to effectuate the foregoing provisions.
(b) Except as provided in Section 1.2(a), the Option Plans shall terminate
as of the Closing Date and any rights under any provisions in any other plan,
program or arrangement (other than the option agreement (the "Option
Agreement") dated as of November 15, 1993 between the Shareholder (or
Purchaser as assignee of the Option Agreement) and the Company giving the
Shareholder (or Purchaser as assignee of the Option Agreement) an option,
subject to the fulfillment of certain conditions, to purchase all of the
Priority Shares) providing for the issuance or grant by the Company of any
interest in respect of the capital stock of the Company shall be canceled as
of the Closing Date.
(c) The Company hereby consents and agrees to the assignment and transfer by
the Shareholder to Purchaser, at the Closing, of all rights and obligations of
the Shareholder under the Option Agreement. Notwithstanding the provisions of
Section 9 of the Option Agreement, the Company acknowledges and agrees that
the Option Agreement shall remain in full force and effect and be unaffected
by the transactions contemplated by this Agreement and the Shareholders
Agreement.
Section 1.3 Company Actions. (a) The Company hereby consents to the Offer
and represents that each of its Management Board and its Supervisory Board, in
each case in accordance with the Company's articles of association and
applicable law, has (i) determined that the Offer, upon the terms and subject
to the conditions set forth herein, is fair to, and in the best interests of,
the Company's shareholders, the holders of the TOPrS and other relevant
constituencies, its Subsidiaries, and the enterprises carried on by the
Company and its Subsidiaries, (ii) approved this Agreement and the
transactions contemplated hereby, including the Offer, and (iii) resolved to
recommend that the shareholders of the Company and the holders of the TOPrS
accept the Offer and tender their Company Shares and TOPrS thereunder to
Purchaser. Merrill Lynch International ("Merrill Lynch") has delivered to the
Management Board and Supervisory Board of the Company its opinion that the
Share Offer Price to be received by the holders of Company Shares pursuant to
the Offer is fair to such holders from a financial point of view.
(b) On the date the Offer is commenced, the Company shall promptly file with
the Commission a Solicitation/Recommendation Statement on Schedule 14D-9
(together with all amendments and supplements thereto and including the
exhibits thereto, the "Schedule 14D-9") which shall contain the recommendation
referred to in clause (iii) of Section 1.3(a) hereof. The Company further
agrees to take all steps necessary to cause the Schedule 14D-9 to be filed
with the Commission and to be disseminated to holders of Company Shares and
TOPrS, in each case as and to the extent required by applicable United States
federal securities laws and any
3
<PAGE>
other applicable laws. Each of the Company, on the one hand, and Purchaser, on
the other hand, agrees promptly to correct any information provided by it for
use in the Schedule 14D-9 if and to the extent that it shall have become false
and misleading in any material respect and the Company further agrees to take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the Commission and to be disseminated to holders of the Company Shares
and TOPrS to the extent required by applicable United States federal
securities laws. Purchaser and its counsel shall be given the opportunity to
review the Schedule 14D-9 before it is filed with the Commission. In addition,
the Company agrees to provide Purchaser and its counsel with any comments the
Company or its counsel may receive from time to time from the Commission or
its staff with respect to the Schedule 14D-9 promptly after the receipt of
such comments and shall provide Purchaser and its counsel an opportunity to
participate, including by way of discussions with the Commission or its staff,
in the response of the Company to such comments.
(c) In connection with the Offer, the Company will promptly furnish or cause
to be furnished to Purchaser mailing labels, security position listings and
any available listing or computer file containing the names and addresses of
the record holders of the Company Shares and of the TOPrS as of a recent date,
and shall furnish Purchaser with such information and assistance as Purchaser
or its agents may reasonably request in communicating the Offer to the holders
of the Company Shares and of the TOPrS (including updates thereof). Except as
is necessary to disseminate the Offer Documents and any other offering
materials required to consummate the Offer, Purchaser agrees to hold in
confidence the information contained in any such labels, lists and files, and
to use the information contained in any such labels, lists and files only in
connection with the Offer and, if this Agreement shall be terminated pursuant
to Article V hereof, shall promptly return to the Company all copies and
extracts of such information then in its possession or under its control, or
the possession or control of its agents or representatives.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Purchaser as follows:
Section 2.1 Organization and Qualification. The Company is a limited
liability company in the form of a "naamloze vennootschap" duly organized and
validly existing under the laws of The Netherlands and has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. The Company is duly
qualified or licensed to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except where
the failure to be so qualified or licensed would not have a Material Adverse
Effect (as defined in Section 6.1(e)) with respect to the Company and its
Subsidiaries, taken as a whole (a "Company Material Adverse Effect"). The
Company has heretofore delivered to Purchaser true and complete copies of the
articles of association, as amended to date, of the Company.
Section 2.2 Capitalization. (a) (i) The authorized capital stock of the
Company consists of (A) 75,000,000 shares, par value NLG 1.00 per share, of
which 29,201,981 common shares are issued and outstanding and (B) 1,000
priority shares, par value NLG 1.00 per share, of which none are outstanding
and (ii) the Financing Trust has 5,740,000 TOPrS issued and outstanding. The
Company Shares set forth in Section 2.2 of the disclosure schedule provided by
the Company and attached hereto and made a part hereof (the "Company
Disclosure Schedule") and (i) identified thereon as "Company Option Shares"
are reserved for issuance upon exercise of outstanding Stock Options granted
to directors, officers and employees of the Company and its Subsidiaries
pursuant to the Option Plans and (ii) identified thereon as "Company
Conversion Shares", are reserved for future issuance upon conversion of
outstanding TOPrS. No Company Shares are held in the treasury of the Company.
No additional shares of capital stock of the Company are issued or outstanding
or reserved for issuance (except for Company Shares issued upon exercise of
Stock Options granted as aforesaid and Company Shares reserved for issuance
upon conversion of TOPrS), and except as set forth in Section 2.2 of the
Company
4
<PAGE>
Disclosure Schedule, no options or other rights to purchase or otherwise
acquire shares of capital stock of the Company have been issued or granted.
Except as set forth above in this paragraph, no shares of capital stock or
other equity or voting securities or equivalents of the Company are issued,
reserved for issuance or outstanding. All of the outstanding shares of capital
stock of the Company are, and all shares thereof which may be issued upon
exercise of Stock Options will upon issuance be, duly authorized, validly
issued and fully paid, and free of any preemptive rights except to the extent
provided in the Company's articles of association.
(b) Except as set forth in Section 2.2 of the Company Disclosure Schedule,
(i) no bonds, debentures, notes or other indebtedness or obligations of the
Company or any of its Subsidiaries entitling the holders thereof to vote (or
which are convertible into, or exercisable or exchangeable for, securities
entitling the holders thereof to vote) with the shareholders of the Company or
any of its Subsidiaries on any matter are authorized, issued, reserved for
issuance or outstanding, (ii) there are no options, warrants, calls,
subscriptions, convertible or exchangeable securities, or other rights,
agreements or commitments of any character obligating the Company or any of
its Subsidiaries to grant, issue, transfer or sell, or cause to be granted,
issued, transferred or sold, any shares of capital stock or any other equity
or voting security or equity or voting interest (or any securities convertible
into, exchangeable for, or evidencing the right to subscribe for, any of the
foregoing securities or interests), of the Company or any of its Subsidiaries
or obligating the Company or any of its Subsidiaries to grant, issue, extend
or enter into any right, agreement or commitment with respect to the
foregoing, (iii) there are no obligations (absolute, contingent or otherwise)
of the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any shares of capital stock, or other equity or voting security or
equity or voting interest, of the Company or any of its Subsidiaries and (iv)
other than this Agreement, there are no voting trusts, proxies or other
agreements or understandings to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries is bound with
respect to the voting of any shares of capital stock, or any other equity or
voting security or interest, of the Company or any of its Subsidiaries.
Section 2.3 Subsidiaries. (a) Each of the Subsidiaries of the Company is
duly formed and validly existing and, to the extent applicable, in good
standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Each Subsidiary of the
Company is duly qualified or licensed to do business and, to the extent
applicable, is in good standing in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification or licensing necessary, except where the failure to
be so qualified, licensed or in good standing would not be reasonably likely
to have a Company Material Adverse Effect. Except as set forth in Section 2.3
of the Company Disclosure Schedule, the respective certificates of
incorporation and by-laws and other organizational documents of the
Subsidiaries of the Company do not contain any provision limiting or otherwise
restricting the ability of the Company to control such Subsidiaries. The
Company has heretofore made available to Purchaser true and complete copies of
the respective certificates of incorporation and by-laws or other
organizational documents of the Subsidiaries of the Company.
(b) Section 2.3 of the Company Disclosure Schedule lists all of the
Subsidiaries of the Company. All of the outstanding shares of capital stock
of, or other equity interests in, each of the Subsidiaries of the Company are
duly authorized and validly issued and, in the case of shares of capital
stock, are fully paid and, to the extent applicable, nonassessable and free of
any preemptive rights, and, except as set forth in Section 2.3 of the Company
Disclosure Schedule, all such shares or other equity interests are owned
directly or indirectly by the Company free and clear of all liens, security
interests, claims, pledges, rights of first refusal, limitations on voting
rights, charges or other encumbrances of any nature whatsoever. No shares of
capital stock of any of Company's Subsidiaries are reserved for issuance,
except to the Company or another wholly-owned Subsidiary of the Company. There
are no outstanding options, warrants, rights, subscriptions, claims of any
character, agreements, obligations, convertible or exchangeable securities, or
other commitments contingent or otherwise relating to the capital stock of any
Subsidiary of the Company pursuant to which such Subsidiary is or may become
obliged to issue any shares of capital stock of such Subsidiary or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of such Subsidiary, other than such rights granted
to the
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Company or a wholly-owned Subsidiary of the Company. There are no material
restrictions of any kind which prevent the payment of dividends or the making
of distributions by any of the Company's Subsidiaries.
Section 2.4 Authorization, Validity and Enforceability. The Company has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement, the performance by the Company of its obligations hereunder
and the consummation by the Company of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the Company
and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors generally, and by general principles of equity, regardless of
whether such enforceability is considered in a proceeding at law or in equity.
Section 2.5 No Conflict or Violation. Subject to making the filings and
obtaining the approvals identified in Section 2.6, except as set forth in
Section 2.5 of the Company Disclosure Schedule, the execution and delivery of
this Agreement by the Company do not, and the performance by the Company of
its obligations hereunder and the consummation by the Company of the
transactions contemplated hereby will not (a) conflict with or violate the
articles of association, certificate of incorporation, bylaws, partnership
agreement or other charter or organization document of the Company or any of
its Subsidiaries, (b) conflict with or violate any law, statute, rule,
regulation, order, judgment, writ, injunction or decree applicable to the
Company or any of its Subsidiaries or any of their respective properties or
assets or (c) result in a violation or breach of or constitute a default under
(or an event which with the giving of notice or the lapse of time or both
would constitute a default under), require any consent, approval or
authorization under, result in the loss of a benefit or result in any
provision becoming applicable or effective under, or give rise to any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the
Company or any of its Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries or any property or
asset of the Company or any of its Subsidiaries may be bound or affected,
except in the case of each of clauses (b) and (c) for any such filings,
permits, consents or approvals or conflicts, violations, breaches, defaults or
other occurrences which would not be reasonably likely to have a Company
Material Adverse Effect, prevent or delay beyond the Expiration Date the
Company from consummating the transactions contemplated hereby.
Section 2.6 Consents and Approvals. The execution and delivery of this
Agreement by the Company do not, and the performance by the Company of its
obligations hereunder and the consummation by the Company of the transactions
contemplated hereby will not, require the Company to obtain any consent,
approval, authorization or permit of, or to make any filing with or
notification to, any Governmental Entity, except (a) as more specifically
described in Section 2.6 of the Company Disclosure Schedule for (i) applicable
requirements, if any, of the Exchange Act and securities or "blue sky" laws of
the states of the United States ("Blue Sky Laws"), (ii) the pre-merger
notification and reporting requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder
(the "HSR Act"), (iii) the prior notification and reporting requirements of
the European Community pursuant to Council Regulation 4064/89, as amended as
well as any other anti-trust filings/notifications which must or may be
effected at the national level in countries having jurisdiction, (iv) the
notification requirements under the Competition Act (Canada) (the laws,
statutes or regulations described in clauses (ii), (iii) and (iv),
collectively, the "Antitrust Laws"), (v) the voluntary notification under
Section 721 of the Defense Production Act of 1950, as amended ("Exon-Florio")
and (vi) any filing required to be made with the Australian Foreign Investment
Review Board and (b) where the failure to obtain such consents, approvals,
authorizations and permits, or to make such filings or notifications, would
not be reasonably likely to have a Company Material Adverse Effect or prevent
or delay beyond the Expiration Date the Company from consummating the
transactions contemplated hereby.
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Section 2.7 SEC Documents and Financial Statements. (a) Since January 1,
1996, the Company has filed all forms, reports, statements and other documents
required to be filed by it with the Commission pursuant to the Securities Act
of 1933, as amended (the "Securities Act") and the Exchange Act (such forms,
reports, statements and other documents are hereinafter referred to as the
"Company SEC Documents"). None of the Company SEC Documents, (if amended or
superseded by a filing prior to the date of this Agreement, then as so
amended), contains, and no Company SEC Documents filed with the Commission on
or subsequent to the date of this Agreement will contain, any untrue statement
of a material fact or omits or will omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. All of
the Company SEC Documents have complied and each Company SEC Document filed
with the Commission on or subsequent to the date of this Agreement will comply
in each case in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, and the rules and regulations promulgated
thereunder.
(b) The financial statements of the Company (including, in each case, any
related notes or schedules thereto) contained or incorporated by reference in
the Company SEC Documents filed prior to the date of this Agreement (i) have
been prepared in accordance with the published rules and regulations of the
Commission and United States generally accepted accounting principles,
consistently applied ("GAAP") except as indicated in the notes thereto and
(ii) present fairly in all material respects the consolidated financial
position and the consolidated results of operations and cash flows of the
Company and its Subsidiaries as of the respective dates or for the respective
periods set forth therein (subject, in the case of unaudited interim financial
statements, to normal year-end audit adjustments).
(c) Except as set forth in Section 2.7 of the Company Disclosure Schedule,
as of the date hereof, neither the Company nor any of its Subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise), except liabilities
(i) reserved on, or disclosed or reflected in, the Company's audited balance
sheet (including any related notes and schedules thereto) for the fiscal year
ended December 31, 1997 included in the Company's annual report on Form 20-F
for such fiscal year, (ii) incurred in the ordinary course of business since
December 31, 1997, (iii) incurred in accordance with this Agreement or the
transactions contemplated hereby or (iv) which would not be reasonably likely
to have a Company Material Adverse Effect.
Section 2.8 Absence of Certain Changes. From December 31, 1997 until the
date hereof, (a) there has not occurred any event, change or development which
has had or would be reasonably likely to have a Company Material Adverse
Effect and (b) except as disclosed in the Company SEC Documents or Section 2.8
of the Company Disclosure Schedule, and except for the performance of this
Agreement and the transactions contemplated hereby, the Company and its
Subsidiaries have:
(i) conducted its business and operations only in the ordinary course of
business consistent with past practices;
(ii) used reasonable efforts to preserve intact the business organizations,
rights, licenses, permits and franchises of the Company and its Subsidiaries,
maintain their existing relationships with customers, suppliers and other
Persons having business dealings with them and keep available the services of
its officers and employees;
(iii) used reasonable efforts to keep in full force and effect adequate
insurance coverages and maintain and keep its properties and assets in good
repair, working order and condition, normal wear and tear excepted;
(iv) not amended or modified its articles of association, certificate of
incorporation, by-laws or comparable governing documents;
(v) not authorized for issuance, issued, sold, granted, delivered, pledged
or encumbered or agreed or committed to issue, sell, grant, deliver, pledge or
encumber (to or with any party other than the Company and
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any of its wholly-owned Subsidiaries) any shares of any class or series of
capital stock of the Company or any of its Subsidiaries or any other equity or
voting security or equity or voting interest of the Company or any of its
Subsidiaries, any securities convertible into or exercisable or exchangeable
for any such shares, securities or interests, or any options, warrants, calls,
commitments, subscriptions or rights to purchase or acquire any such shares,
securities or interests (other than issuances of Company Shares (i) upon
exercise of outstanding Stock Options granted to directors, officers,
employees and consultants of the Company in accordance with the Option Plans
as currently in effect and (ii) pursuant to conversion of the TOPrS);
(vi) except for conversion of the TOPrS in accordance with their terms, (i)
split, combined or reclassified any shares of its capital stock or issued or
authorized or proposed the issuance of any other securities in respect of, in
lieu of, or in substitution for, shares of its capital stock, (ii) in the case
of the Company or any Subsidiary of the Company that is not wholly-owned by
the Company, declared, set aside or paid any dividends on, or made other
distributions in respect of, any capital stock or (iii) repurchased, redeemed
or otherwise acquired, or agreed or committed to repurchase, redeem or
otherwise acquire, any shares of capital stock or other equity or debt
securities or equity interests of the Company or any of its Subsidiaries
(other than to fulfill its obligations under the Option Plans as currently in
effect);
(vii) not amended or otherwise modified the terms of any Stock Options or
any Option Plan the effect of which was to make such terms more favorable to
the holders thereof or Persons eligible for participation therein, or reserved
any additional Company Shares for issuance under any such Plan;
(viii) except as required by law or existing written agreements, entered
into, adopted or materially amended any incentive, compensation, option or
severance plan or arrangement (including, without limitation, any Benefit
Plan) for the benefit or welfare of any current or former director, officer or
employee of the Company or any of its Subsidiaries, or (except for normal
increases in the ordinary course of business that are consistent with past
practices) increased the compensation or benefits of any persons or pay any
benefit not required by any existing plan and arrangement;
(ix) not acquired or agreed to acquire (by merger, consolidation,
acquisition of stock or assets or otherwise) from any Person, any corporation,
partnership, joint venture, association or other business organization or
division thereof or otherwise acquired or agreed to acquire any assets of
another Person other than the purchase of assets in the ordinary course of
business consistent with past practice or in an aggregate amount of less than
$5,000,000;
(x) not sold, leased, licensed, encumbered or otherwise disposed of, or
agreed to sell, lease, license, encumber or otherwise dispose of, any material
properties or assets of the Company or any of its Subsidiaries, except as
intercompany transactions between the Company and any of its wholly-owned
Subsidiaries or in transactions with any other Person in the ordinary course
of business, consistent with past practice and in an aggregate amount of less
than $5,000,000.
(xi) not made any material change in any of its accounting or financial
reporting methods, principles or practices, except as may be required by GAAP;
(xii) except in the ordinary course of business consistent with past
practices, not amended, modified or terminated any Material Contract required
to be listed in Section 2.16 of the Company Disclosure Schedule (other than in
response to Section 2.16(a)(iii) thereof) or waived, released or assigned any
material rights or claims thereunder;
(xiii) not adopted a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company or any of its Subsidiaries;
(xiv) not made any loans, advances or capital contributions to any Person
other than as required by existing agreements or in the ordinary course of
business consistent with past practice; or
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(xv) not agreed or committed in writing or otherwise to do or, in the case
of clauses (i) through (iii), to do anything inconsistent with, any of the
foregoing.
(c) For purposes of this Section 2.8 and Section 4.1, the term "wholly-owned
Subsidiary" shall be deemed to include Subsidiaries of the Company of which
the Company owns at least 99% of the outstanding capital stock or other equity
interests.
Section 2.9 Litigation. Except as disclosed in Section 2.9 of the Company
Disclosure Schedule, as of the date hereof there is no action, suit, claim,
proceeding or investigation pending or, to the knowledge of the Company,
threatened against the Company or any of its Subsidiaries by or before any
court, other Governmental Entity or arbitrator which, if determined adversely
to the Company and its Subsidiaries would be reasonably likely to have a
Company Material Adverse Effect or prevent or delay beyond the Expiration Date
consummation of the transactions contemplated hereby. Except as disclosed in
the Company SEC Documents, the Company is not subject to any order, writ,
injunction, judgment, decree or award which would be reasonably expected to
have a Company Material Adverse Effect or to prevent or delay beyond the
Expiration Date consummation of the transactions contemplated hereby.
Section 2.10 Compliance. Except as set forth in Section 2.10 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is in
conflict with, or in default or in violation under, (a) its respective
articles of association, certificate of incorporation, bylaws, or other
charter or organization documents, (b) any law, statute, rule or regulation
applicable to it or any of its respective properties or assets or (c) as of
the date hereof, any loan or credit agreement, note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which it is a party or by which its assets may be
bound, except for any such conflicts, defaults or violations which (i) would
not be reasonably expected to prevent or delay beyond the Expiration Date the
consummation of the transactions contemplated hereby and (ii) would not be
reasonably likely to have a Company Material Adverse Effect. The Company and
its Subsidiaries hold all licenses, permits, approvals and other
authorizations of Governmental Entities, and are in substantial compliance
with all applicable laws and governmental regulations in connection with their
businesses as now being conducted, except for such matters as would not be
reasonably likely to have a Company Material Adverse Effect.
Section 2.11 Employee Benefit Plans. (a) For purposes of this Agreement,
"Benefit Plans" shall mean all employee benefit plans, agreements and
programs, and management employment agreements (including any "employee
benefit plan" within the meaning of Section 3(3) of ERISA) maintained or
contributed to by (or with respect to which there is an obligation to
contribute by) the Company or any of its Subsidiaries or any organization
which, together with the Company and/or any such Subsidiary, would be treated
as a "single employer" within the meaning of Section 414(b) or (c) of the
Internal Revenue Code of 1986, as amended (the "Code"), for the benefit of any
employee or former employee of the Company or any of its Subsidiaries or to
which the Company or any such Subsidiary or organization is a party. Section
2.11(a) of the Company Disclosure Schedule sets forth a list of each material
Benefit Plan. No Benefit Plan is a multiemployer plan as defined in Section
4001(a)(3) or 3(37) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") and subject thereto.
(b) With respect to each material Benefit Plan, the Company has made
available to Purchaser (i) true and complete copies of any written plan
document relating thereto and any description thereof, (ii) the most recent
determination or opinion issued by the U.S. Internal Revenue Service, if
applicable, and (ii) the most recent U.S. Internal Revenue Service Form 5500
filings, if applicable.
(c) Except as set forth in Section 2.11(c) of the Company Disclosure
Schedule, and except where a failure to do so would not be reasonably likely
to have a Company Material Adverse Effect, (i) each Benefit Plan has been
established and administered in accordance with its terms and in compliance
with the applicable provisions of ERISA, the Code and other applicable laws,
(ii) each Benefit Plan intended to qualify under Section 401(a) of the Code is
the subject of a favorable determination from the U.S. Internal Revenue
Service as to its qualified status and, to the knowledge of the Company, no
event has occurred and no condition exists which would be
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reasonably likely to result in the revocation of any such determination, and
(iii) no Benefit Plan covered by Title IV of ERISA has been terminated and no
proceedings have been instituted to terminate or appoint a trustee to
administer any such plan. Solely for purposes of this Section 2.11(c), the
term "Benefit Plan" shall include Benefit Plans no longer in effect, but which
were in effect at any time after January 1, 1992, or, as to any Subsidiary
acquired after such date, after the date such Subsidiary was acquired.
Section 2.12 Labor Matters. Except as set forth in Section 2.12 of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries
is a party to any collective bargaining or other labor union contracts
applicable to any Person employed by the Company or any of its Subsidiaries.
As of the date hereof, there is no pending or, to the knowledge of the
Company, threatened material labor dispute, strike or work stoppage against
the Company or any of its Subsidiaries which would be reasonably likely to
have a Company Material Adverse Effect. Neither the Company nor its
Subsidiaries, nor their respective representatives or employees, has committed
any unfair labor practices in connection with the operation of the respective
businesses of the Company or its Subsidiaries which would be reasonably likely
to have a Company Material Adverse Effect. As of the date hereof, there is no
pending or, to the knowledge of the Company, threatened charge or complaint
against the Company or its Subsidiaries by the National Labor Relations Board
or any comparable state or foreign governmental agency which, if adversely
determined, would be reasonably likely to have a Company Material Adverse
Effect. The Company and its Subsidiaries are in compliance in all material
respects with all applicable laws and regulations respecting employment,
employment practices, labor relations, employment discrimination, sexual
harassment, employment termination, safety and health, wages, hours and terms
and conditions of employment. As of the date hereof, there is no pending or,
to the knowledge of the Company, threatened grievance alleging a violation of
any collective bargaining agreement or other labor union contract which, if
adversely determined, would be reasonably likely to have a Company Material
Adverse Effect. To the knowledge of the Company, the Company and its
Subsidiaries have complied and are complying in all material respects with the
terms and conditions of any collective bargaining or other labor union
contracts applicable to it or them.
Section 2.13 Tax Matters. (a) For purposes of this Agreement: (i) "Taxes"
means any taxes, charges, fees, levies, or other assessments imposed by any
Governmental Entity, including all net income, gross income, sales and use,
value added, ad valorem, transfer, gains, profits, excise, franchise, real and
personal property, gross receipts, capital stock, business and occupation,
disability, employment, payroll, license, estimated or withholding taxes or
charges imposed by any Governmental Entity, and includes any interest and
penalties on or additions to any such taxes; and (ii) "Tax Return" means a
report, return or other statement required to be supplied to a Governmental
Entity with respect to Taxes.
(b) Except as set forth in Section 2.13(b) of the Company Disclosure
Schedule, the Company and each of its Subsidiaries has, or has caused to be,
timely filed or will timely file on or prior to the Closing Date all Tax
Returns required to be filed by, or which include, the Company and its
Subsidiaries, that are due on or prior to the Closing Date and except as
provided in Section 2.13(c), has, or has caused to be, paid, or will pay on or
prior to the Closing Date, all taxes owed by the Company and its Subsidiaries
for periods ending on or prior to the Closing Date, in each case except where
failure to so file or so to pay would not be reasonably likely to have a
Company Material Adverse Effect.
(c) Each of the Company and, where applicable, its Subsidiaries has
established on its books and records reserves adequate to pay all unpaid Taxes
of the Company or such Subsidiary, as the case may be, in accordance with and
to the extent required by GAAP, which reserves are reflected on the most
recent consolidated financial statements of the Company and its Subsidiaries
contained in the Company SEC Documents.
Section 2.14 Properties. Section 2.14 of the Company Disclosure Schedule
contains a true and complete list of all real properties owned and all real
properties leased by the Company or any of its Subsidiaries, and identifies
the relevant owner or lessee thereof, as the case may be. Each of the Company
and its Subsidiaries has good and marketable title to all real properties
owned by it or a valid and subsisting leasehold interest in all real
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properties not owned but used or occupied by it (collectively, the "Company
Properties"), in each case free and clear of any mortgage, security interest,
deed of trust, encumbrance or other lien, except (a) as reflected in the
consolidated financial statements of the Company and its Subsidiaries
contained in the Company SEC Documents, (b) for any mortgage, security
interest, deed of trust, encumbrance or other lien arising by reason of (i)
Taxes, not yet delinquent or which are being contested in good faith, (ii)
deposits to secure public or statutory obligations in lieu of surety or appeal
bonds entered into in the ordinary course of business and (iii) operation of
law in favor of carriers, warehousemen, landlords, mechanics, materialmen,
laborers, employees or suppliers, incurred in the ordinary course of business
for sums which are not yet delinquent or are being contested in good faith by
negotiations or by appropriate proceedings which suspend the collection
thereof (collectively, "Permitted Liens"), (c) for any mortgage, security
interest, deed of trust, encumbrance or other lien as would not be reasonably
likely to have a Company Material Adverse Effect or (d) as set forth in
Section 2.14 of the Company Disclosure Schedule. Except as set forth in
Section 2.14 of the Company Disclosure Schedule, there are no pending or, to
the knowledge of the Company, threatened condemnation proceedings against or
affecting any material Company Properties, and none of the material Company
Properties is subject to any commitment or other arrangement for its sale to a
third party other than in the ordinary course of business.
Section 2.15 Environmental Matters. (a) For purposes of this Agreement, the
following terms shall have the following meanings: (i) "Hazardous Substances"
means petroleum, petroleum by-products, polychlorinated biphenyls and any
other chemicals, materials, substances or wastes which are currently defined
or regulated as "hazardous substances," "hazardous materials," "hazardous
wastes," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "toxic air pollutants," "pollutants," or
"contaminants" or words of similar meaning in any language under any
Environmental Law; and (ii) "Environmental Law" means any law, order,
regulation, decree, permit, license, ordinance, or other foreign, federal,
state or local governmental requirement relating to pollution, the protection
of human health and the environment, the discharge or release of Hazardous
Substances into the environment, or the exposure to Hazardous Substances in
the work place which regulates the conduct of the Company and its Affiliates.
(b) Except as described in Section 2.15 of the Company Disclosure Schedule
or as would not be reasonably likely to have a Company Material Adverse
Effect: (i) neither the Company nor any of its Subsidiaries is in violation
of, or subject to any claim, order, judgment or consent decree under, any
applicable Environmental Law; (ii) since 1993 and, with respect to periods
prior thereto to the best of the Company's knowledge, there have been no
releases of material quantities of Hazardous Substances or other conditions or
occurrences at any of the properties currently owned or leased by the Company
or any of its Subsidiaries, or in connection with the business or operations
of the Company and its Subsidiaries, that would be reasonably likely to give
rise to liability under any applicable Environmental Law; (iii) neither the
Company nor any of its Subsidiaries has been notified by a Governmental Entity
that it is liable under applicable Environmental Laws for releases of
Hazardous Substances at any off-site location to which the Company or any of
its Subsidiaries sent Hazardous Substances for disposal; and (iv) the Company
and each of its Subsidiaries holds, and is in compliance with, all permits,
licenses and other authorizations required under any applicable Environmental
Law.
Section 2.16 Material Contracts and Commitments. (a) Section 2.16 of the
Company Disclosure Schedule contains a true and complete list of the following
contracts or agreements of the Company or any of its Subsidiaries (such
contracts or agreements, "Material Contracts"), each as of the date hereof:
(i) agreements with respect to joint ventures, consortiums or joint
development arrangements having annual revenues in excess of $5,000,000;
(ii) loan agreements, notes, bonds, debentures, debt instruments, evidences
of indebtedness, debt securities, or other contracts relating to any financial
indebtedness of the Company or any of its Subsidiaries in an amount in excess
of $5,000,000, or that obligate the Company or any of its Subsidiaries to
pledge, encumber or restrict assets in an amount in excess of $5,000,000, or
that provide the direct or indirect guaranty or suretyship by the Company or
any of its Subsidiaries of any indebtedness of a third party;
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(iii) contracts by which the Company or any of its Subsidiaries has
committed to extend credit to third parties (other than pursuant to ordinary
course trade payment terms);
(iv) contracts that limit or restrict the ability of the Company or any of
its Subsidiaries to compete or otherwise to conduct business in any material
manner or place;
(v) contracts with Shareholder or its Affiliates requiring aggregate
payments still to be made in excess of $5,000,000, or that have been entered
into other than in the ordinary course of business or on other than arm's
length terms;
(vi) any guaranty, surety bond or letter of credit with a face value in
excess of $5,000,000, guaranteeing a performance or payment obligation of the
Company or a Subsidiary; and
(vii) contracts with directors and officers of the Company and its
Subsidiaries and any of their Affiliates (other than contracts with the
Shareholders and its Affiliates).
(b) The Company has heretofore made available to Purchaser true and complete
copies of the contracts required to be set forth in Section 2.16 of the
Company Disclosure Schedule. Except as set forth in Section 2.16 of the
Company Disclosure Schedule, as of the date hereof, each such contract is
valid and binding in accordance with its terms, and is in full force and
effect, neither the Company nor any of its Subsidiaries is in default in any
material respect with respect to any such contract, nor, to the knowledge of
the Company, does any condition exist that with notice or lapse of time or
both would constitute such a material default thereunder or permit any other
party thereto to terminate such contract. Except as set forth in Section 2.16
of the Company Disclosure Schedule, as of the date hereof, no party has given
any written notice of termination or cancellation of any such contract or that
it intends to assert a breach of, or seek to terminate or cancel, any such
contract, whether as a result of the transactions contemplated by this
Agreement or otherwise.
Section 2.17 Intellectual Property. (a) As used herein "Intellectual
Property" means inventions, patents, patent applications (pending or
otherwise), copyrights, service marks, trademarks, trade names, brand names,
and registrations or applications for registration of any of the foregoing;
and trade secrets, know-how, and the intellectual property rights subsisting
in computer software and databases.
(b) Section 2.17(b) of the Company Disclosure Schedule contains a list of
the material patents and registered trademarks, and pending applications
therefor, owned by the Company and its Subsidiaries as of the date hereof.
Section 2.17(b) of the Company Disclosure Schedule contains a list of all
material Intellectual Property licensed by the Company or any of its
Subsidiaries from any Person as of such date and a list of all material
Intellectual Property licensed by any Person from the Company or any of its
Subsidiaries as of such date. Except as set forth in Section 2.17(b) of the
Company Disclosure Schedule and except as would not be reasonably likely to
have a Company Material Adverse Effect, the Company or its Subsidiaries have
(i) good and marketable title (free and clear of liens or encumbrances of any
kind) to and (ii) the exclusive right to sell, transfer, assign and license
all right, title and interest in and to the Intellectual Property listed as
being owned by the Company and its Subsidiaries in Section 2.17(b) of the
Company Disclosure Schedule. Except as set forth in Section 2.17(b) of the
Company Disclosure Schedule and except as would not be reasonably likely to
have a Company Material Adverse Effect, the Intellectual Property listed as
being owned by the Company and its Subsidiaries in Section 2.17(b) of the
Company Disclosure Schedule has been duly registered to the extent applicable
with, filed in, or issued by the appropriate governmental agency in each
appropriate jurisdiction, such registration, filing and issuance remains in
full force and effect and to the knowledge of the Company no claim adverse to
the interests of the Company or its Subsidiaries has been asserted, in
litigation or otherwise with respect to such Intellectual Property. Except as
set forth in Section 2.17(b) of the Company Disclosure Schedule and except as
would not be reasonably likely to have a Company Material Adverse Effect, the
Company and its Subsidiaries have performed all material obligations required
to be performed by them, and are not in default under any license or other
agreement granting them the right to use, or otherwise relating to, material
Intellectual Property.
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(c) Except as set forth in Section 2.17(c) of the Company Disclosure
Schedule and except as would not be reasonably likely to have a Company
Material Adverse Effect, (i) neither the Company nor any of its Subsidiaries
has received, as of the date hereof, any notice to the effect, or has
knowledge, that any of its Intellectual Property or the use thereof by the
Company or any of its Subsidiaries or the products or conduct of the business
of the Company or its Subsidiaries infringes the intellectual property rights
of any Person; (ii) to the best of the Company's knowledge, no source code
relating to computer software owned by the Company or any of its Subsidiaries
has been made available to any Person other than pursuant to escrow or similar
arrangements identified in Section 2.17(c) of the Company Disclosure Schedule;
(iii) with respect to Intellectual Property comprising trade secrets, know-how
and other confidential information, neither the Company nor any of its
Subsidiaries has disclosed any such information to any Person, other than
pursuant to the terms and conditions of written confidentiality agreements
which, to the knowledge of the Company, are valid and enforceable in
accordance with their respective terms; and (iv) the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby will not breach, violate or conflict with any agreements
of the Company or its subsidiaries regarding Intellectual Property.
(d) Except as set forth in Section 2.17(d) of the Company Disclosure
Schedule and except as could not reasonably be expected to have a Company
Material Adverse Effect, the operation of the Company and its Subsidiaries as
presently conducted requires no rights under Intellectual Property other than
rights under Intellectual Property owned by or licensed to the Company or its
Subsidiaries.
Section 2.18 Opinion of Financial Advisor. The Company has received the
opinion of Merrill Lynch to the effect that, as of the date hereof, the Share
Offer Price to be received by the holders of Company Shares pursuant to the
Offer is fair to such holders from a financial point of view, and a complete
and correct executed copy of such opinion has been, or promptly upon receipt
thereof will be, delivered to Purchaser.
Section 2.19 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any of its Affiliates, other than Merrill Lynch,
the fees and expenses of which shall be paid in full by the Company. The
Company has heretofore furnished to Purchaser a true and complete description
of the agreement between the Company and Merrill Lynch relating to the
transactions contemplated hereby, including the terms regarding payment and
all amounts payable by the Company thereunder.
Section 2.20 Guarantees. Set forth in Section 2.20 of the Company Disclosure
Schedule is a list of all guarantees, performance bonds, indemnities and other
obligations (collectively, the "Guarantees") provided, or caused to be
provided, by Shareholder or any of its Affiliates to or on behalf of the
Company or any of its Subsidiaries as of the date hereof.
Section 2.21 Schedule 14D-9 and Schedule 14D-1. None of the information
supplied by the Company or its Subsidiaries for inclusion or incorporation by
reference in the documents pursuant to which the Offer will be made, including
the Schedule 14D-1 and the Offer to Purchase will, at the time the Offer to
Purchase is filed with the Commission, contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements made, in light of the circumstance under which they are made,
not misleading. None of the information in the Schedule 14D-9, at the time the
Schedule 14D-9 is filed with the Commission, will contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which they are made, not
misleading. Notwithstanding the foregoing, no representation or warranty is
made with respect to any information with respect to the Purchaser or its
officers, directors or Affiliates, provided to the Company by Purchaser in
writing for inclusion in Schedule 14D-9. The Schedule 14D-9 will comply in all
material respects with the Exchange Act and the rules and regulations
thereunder and any other applicable laws.
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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company as follows:
Section 3.1 Organization and Qualification. Purchaser is a corporation duly
organized and validly existing under the laws of the Netherlands and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted.
Purchaser is duly qualified or licensed to do business in each jurisdiction in
which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary,
except where the failure to be so qualified or licensed would not have a
Material Adverse Effect with respect to Purchaser and its Subsidiaries, taken
as a whole (a "Purchaser Material Adverse Effect").
Section 3.2 Authorization, Validity and Enforceability. Purchaser has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement, the performance by Purchaser of its respective obligations
hereunder and the consummation by Purchaser of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Purchaser. This Agreement has been duly executed and delivered by Purchaser
and constitutes the legal, valid and binding obligation of Purchaser,
enforceable against Purchaser in accordance with its terms, except as such
enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting
creditors generally, and by general principles of equity, regardless of
whether such equitable principles are applied in a proceeding at law or in
equity.
Section 3.3 No Conflict or Violation. Subject to making the filings and
obtaining the approvals identified in Section 3.4, the execution and delivery
of this Agreement by Purchaser does not, and the performance by Purchaser of
its obligations hereunder and the consummation by Purchaser of the
transactions contemplated hereby will not (a) conflict with or violate the
articles of association, certificate of incorporation, by-laws, partnership
agreement or other charter or organization document of Purchaser or any of its
material Subsidiaries, (b) conflict with or violate any law, statute, rule,
regulation, order, judgment, writ, injunction or decree applicable to
Purchaser or any of its Subsidiaries or any of its properties or assets or (c)
result in a violation or breach of or constitute a default under (or an event
which with the giving of notice or the lapse of time or both would constitute
a default under), require any consent, approval or authorization under, result
in the loss of a material benefit or result in any provision becoming
applicable or effective under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a
lien or other encumbrance on any property or asset of its or any of its
Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Purchaser or any of its Subsidiaries is a party or by which Purchaser
or any of its Subsidiaries or any material property or asset of Purchaser or
any of its Subsidiaries may be bound or affected, except in the case of each
of clauses (b) and (c) for any such conflicts, violations, breaches, defaults
or other occurrences which would not be reasonably likely to result in a
Purchaser Material Adverse Effect or prevent or delay beyond the Expiration
Date Purchaser from consummating the transactions contemplated hereby.
Section 3.4 Consents and Approvals. The execution and delivery of this
Agreement by Purchaser does not, and the performance by Purchaser of its
obligations hereunder and the consummation by Purchaser of the transactions
contemplated hereby will not require Purchaser to obtain any consent,
approval, authorization or permit of, or to make any filing with or
notification to, any Governmental Entity, except (a) as more specifically
described in Section 3.4 of the disclosure schedule provided by Purchaser and
attached hereto and made a part hereof (the "Purchaser Disclosure Schedule"),
for (i) applicable requirements, if any, of the Exchange Act and Blue Sky
Laws, (ii) the prior notification and reporting requirements under Antitrust
Laws, (iii) the voluntary notification under Exon-Florio, and (iv) any filing
required to be made with the Australian Foreign Investment Review Board; and
(b) where the failure to obtain such consents, approvals, authorizations and
permits, or to make such filings or notifications, would not be reasonably
expected to constitute a Purchaser Material Adverse
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Effect or prevent or delay beyond the Expiration Date Purchaser from
consummating the transactions contemplated hereby.
Section 3.5 Brokers. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Purchaser, other than Credit Suisse First Boston, the fees and
expenses of which shall be paid in full by Purchaser.
Section 3.6 Financing. Purchaser has adequate cash resources available to
consummate the Offer.
ARTICLE IV.
COVENANTS
Section 4.1 Interim Operations. From the date of this Agreement until the
Closing Date, except as set forth in Section 4.1 of the Company Disclosure
Schedule or as expressly contemplated by any other provision of this
Agreement, unless Purchaser has consented thereto, the Company shall, and
shall cause each of its Subsidiaries to:
(a) conduct its business and operations only in the ordinary course of
business consistent with past practices;
(b) use reasonable efforts to preserve intact the business organizations,
rights, licenses, permits and franchises of the Company and its
Subsidiaries, maintain their existing relationships with customers,
suppliers and other Persons having business dealings with them and keep
available the services of its officers and employees;
(c) use reasonable efforts to keep in full force and effect adequate
insurance coverages and maintain and keep its properties and assets in good
repair, working order and condition, normal wear and tear excepted;
(d) not amend or modify its articles of association, certificate of
incorporation, by-laws or comparable governing documents;
(e) not authorize for issuance, issue, sell, grant, deliver, pledge or
encumber or agree or commit to issue, sell, grant, deliver, pledge or
encumber (to or with any party other than the Company and any of its
wholly-owned Subsidiaries) any shares of any class or series of capital
stock of the Company or any of its Subsidiaries or any other equity or
voting security or equity or voting interest of the Company or any of its
Subsidiaries, any securities convertible into or exercisable or
exchangeable for any such shares, securities or interests, or any options,
warrants, calls, commitments, subscriptions or rights to purchase or
acquire any such shares, securities or interests (other than issuances of
Company Shares (i) upon exercise of outstanding Stock Options granted to
directors, officers, employees and consultants of the Company in accordance
with the Option Plans as currently in effect (ii) pursuant to conversion of
the TOPrS);
(f) not, except for conversion of the TOPrS in accordance with their
terms, (i) split, combine or reclassify any shares of its capital stock or
issue or authorize or propose the issuance of any other securities in
respect of, in lieu of, or in substitution for, shares of its capital
stock, (ii) in the case of the Company or any Subsidiary of the Company
that is not wholly-owned by the Company, declare, set aside or pay any
dividends on, or make other distributions in respect of, any capital stock
or (iii) repurchase, redeem or otherwise acquire, or agree or commit to
repurchase, redeem or otherwise acquire, any shares of capital stock or
other equity or debt securities or equity interests of the Company or any
of its Subsidiaries (other than to fulfill its obligations under the Option
Plans as currently in effect);
(g) except as otherwise provided in this Agreement, not amend or
otherwise modify the terms of any Stock Options or any Option Plan the
effect of which would be to make such terms more favorable to the holders
thereof or Persons eligible for participation therein; or reserve any
additional Company Shares for issuance under any such Plan;
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(h) except as required by law or existing written agreements, enter into,
adopt or materially amend any incentive, compensation, option or severance
plan or arrangement (including, without limitation, any Benefit Plan) for
the benefit or welfare of any current or former director, officer or
employee of the Company or any of its Subsidiaries, or (except for normal
increases in the ordinary course of business that are consistent with past
practices) increase the compensation or benefits of any persons or pay any
benefit not required by any existing plan and arrangement;
(i) not acquire or agree to acquire (by merger, consolidation,
acquisition of stock or assets or otherwise) from any Person, any
corporation, partnership, joint venture, association or other business
organization or division thereof or otherwise acquire or agree to acquire
any assets of another Person other than the purchase of assets in the
ordinary course of business consistent with past practice or in an
aggregate amount of less than $5,000,000;
(j) not, except as an intercompany transaction between the Company and
any of its wholly-owned Subsidiaries, incur, assume, prepay or become
liable for or guarantee any long term, or material short term, indebtedness
(including draw-downs on letters or lines of credit, other than letters of
credit in support of ordinary course transactions with trade creditors),
refinance any such indebtedness or issue or sell any notes, bonds,
debentures, debt instruments, evidences of indebtedness or other debt
securities of the Company or any of its Subsidiaries or any options,
warrants or rights to purchase or acquire any of the same, except for (i)
advances, loans or other financial indebtedness, including refinancing of
its existing lines of credit, in an aggregate amount (together with all
other such financial indebtedness of the Company and its Subsidiaries
outstanding) of net financial indebtedness at any time outstanding not
exceeding $700,000,000; provided, however that any refinancing permitted
above shall be (A) on commercially reasonable terms and (B) prepayable
without penalty on no more than 90 days advance written notice and (ii)
obtaining, extending or renewing existing guarantees, bonds and letters of
credit issued by financial institutions in the ordinary course of business
in an aggregate amount (together with all other such items outstanding) at
any time outstanding not exceeding 1.25 times the aggregate amount of such
guarantees, bonds and letters of credit outstanding as of June 25, 1998,
which amount the Company represents to be $ 426.2 million.
(k) not sell, lease, license, encumber or otherwise dispose of, or agree
to sell, lease, license, encumber or otherwise dispose of, any properties
or assets of the Company or any of its Subsidiaries, except as intercompany
transactions between the Company and any of its wholly-owned Subsidiaries
or in transactions with any other Person in the ordinary course of
business, consistent with past practice and in an aggregate amount of less
than $5,000,000.
(l) not authorize or make any capital expenditures, other than capital
expenditures (i) authorized or incurred in the ordinary course of business
consistent with past practice during the period up to and including
December 31, 1998 not exceeding, in the aggregate for the Company and all
of its Subsidiaries, $15,000,000 and (ii) if the Closing Date has not
occurred prior to January 1, 1999, authorized or incurred in the ordinary
course of business consistent with past practice during any subsequent
fiscal quarter of the Company, in each case not exceeding, in the aggregate
for the Company and all of its Subsidiaries, $15,000,000;
(m) not make any material change in any of its accounting or financial
reporting methods, principles or practices, except as may be required by
GAAP;
(n) except in the ordinary course of business consistent with past
practices, not amend, modify or terminate any Material Contract required to
be listed in Section 2.16 of the Company Disclosure Schedule or waive,
release or assign any material rights or claims thereunder or authorize,
execute or deliver any agreement, arrangement or understanding that, if
existing on the date hereof, would be included in Section 2.16 of the
Company Disclosure Schedule (other than in response to Section 2.16(a)(iii)
thereof);
(o) not adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries;
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(p) not take any action that would, or would be reasonably likely to,
result in any of the Offer Conditions not being satisfied or the
satisfaction of any of the Offer Conditions being delayed beyond the
Expiration Date; and
(q) not make any loans, advances or capital contributions to any Person
other than as required by existing agreements or in the ordinary course of
business consistent with past practice;
(r) not agree or commit in writing or otherwise to do or, in the case of
clauses (a) through (c), to do anything inconsistent with, any of the
foregoing.
For purposes of this Section 4.1, the term "wholly-owned Subsidiary" shall
be deemed to include any Subsidiary of which the Company or any such
Subsidiary owns at least 99% of the outstanding capital stock or other equity
interests.
Section 4.2 No Solicitation. (a) Prior to the Closing Date, the Company
agrees that neither it nor any of its Subsidiaries shall, nor shall the
Company nor any of its Subsidiaries authorize or permit any of their
respective Representatives (as defined below) or Affiliates to, directly or
indirectly, (a) solicit, initiate, encourage, or take any other action to
facilitate, any inquiry or the making of any proposal or offer (i) with
respect to or that could reasonably be expected to result in any acquisition
or sale of all or any significant portion of the assets of, or any equity
interest in (whether newly-issued equity interests or outstanding equity
interests), the Company or any of its Subsidiaries or any tender offer
(including a self tender offer) or exchange offer, merger, consolidation,
business combination, recapitalization, liquidation, dissolution or similar
transaction involving the Company or any of the Company's Subsidiaries (each
such proposal or offer, an "Acquisition Proposal") or (ii) which could
reasonably be expected to impede, frustrate, prevent, delay or nullify any of
the transactions contemplated by this Agreement or to materially diminish the
benefits to Purchaser of the transactions contemplated by this Agreement, (b)
take any action to enter into an agreement for the sale or other disposition
by the Company or any of its Subsidiaries of any significant portion of the
assets of or a sale of shares of capital stock whether by merger or other
business combination or tender or exchange offer or (c) enter into or
participate in any discussions or negotiations regarding any of the foregoing,
or in the furtherance of any inquiries regarding any of the foregoing, or
furnish to any other Person (other than Purchaser and its Representatives) any
information with respect to its business, properties or assets or any of the
foregoing; provided that the foregoing clauses (a), (b) and (c) shall not
prohibit the Company's Supervisory Board or Management Board from (i)
furnishing information concerning the Company and its business, properties or
assets to a third party who has made a bona fide written transaction proposal
to acquire all of the outstanding Company Shares and TOPrS or all of the
assets of the Company and its Subsidiaries, which is not subject to any
material contingencies relating to financing (it being acknowledged that a
highly confident letter or commitment letter shall not be deemed to have
resolved any such material contingency), in response to a request for such
information, pursuant to a confidentiality agreement on terms no less
favorable to the Company than the Confidentiality Agreement dated July 2, 1998
between Purchaser and the Company (the "Confidentiality Agreement"), so long
as neither such request for information nor such transaction proposal was
solicited, initiated, encouraged or facilitated in violation of clause (a)
above, (ii) engaging in discussions or negotiations with such a third party
who has made such a transaction proposal or (iii) following receipt of such a
transaction proposal, taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) under the Exchange Act or disclosing to its
shareholders information required by Schedule 14D-9; provided, further, that
any such action referred to in the foregoing clauses (i), (ii) and (iii) may
be taken by the Company only if its Management Board or Supervisory Board, as
applicable, shall have concluded in good faith and on the basis of advice (x)
from the Company's financial advisors, that such transaction proposal involves
consideration to the holders of Company Shares and TOPrS that is superior to
the Offer Consideration and is otherwise superior to the Offer ("Superior
Proposal"), and (y) from independent outside counsel that failure to take such
action would constitute a breach of the fiduciary duties of such Boards under
Dutch Law; and provided, further, that the Company shall not, and shall not
authorize or permit any other such Persons to, take any of the foregoing
actions referred to in clauses (i) through (iii) until after providing prior
written notice to Purchaser. If the Company or its Representatives or
Affiliates or the Company's Supervisory Board or Management Board receives any
request for information or an inquiry, proposal or offer
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relating to any of the foregoing, then the Company shall orally (as promptly
as practicable and no later than one day) and in writing (as promptly as
practicable) inform Purchaser of the terms and conditions of such proposal,
inquiry or offer and the identity of the Person making it. The Company agrees
that it will and will cause its Affiliates and their respective
Representatives to immediately cease and cause to be terminated any
activities, discussions or negotiations existing at the date hereof with any
parties conducted heretofore with respect to any of the foregoing. The Company
agrees that it will take the necessary steps to promptly inform its
Representatives of the obligations undertaken in this Section.
(b) Immediately following the execution of this Agreement, the Company shall
request each Person which has heretofore executed a confidentiality agreement
in connection with its consideration of acquiring the Company or any portion
thereof to return all confidential information heretofore furnished to such
Person by or on behalf of the Company. Neither the Management Board nor the
Supervisory Board of the Company shall, except as expressly permitted by this
Agreement (A) withdraw or modify, in any manner adverse to Purchaser, or take
any public position inconsistent with, their approval and recommendation of
the Offer or the Acquisition Agreement or (B) approve or recommend any
Acquisition Proposal and shall not resolve to do any of the foregoing.
Section 4.3 Access to Information. From the date of this Agreement until the
Closing Date, upon reasonable prior notice, the Company shall, and shall cause
each of its Subsidiaries, Affiliates and Representatives to, give Purchaser
and its Representatives reasonable access, during normal business hours, to
the executive officers and employees and the books, records, contracts,
commitments, properties, offices, plants and other facilities of the Company
and its Subsidiaries; provided that the requirements of this section shall not
apply to, and the Company shall not be required to provide access to, books,
records, contracts, commitments or other information in the possession or
control of the Company or any of its Subsidiaries which pertains solely to
business operations of the Shareholder or any of its Affiliates. Any
investigation of the Company and its Subsidiaries by Purchaser and its
Representatives shall not affect the representations and warranties made by
the Company in this Agreement or limit or discharge the obligations of the
Company pursuant to Section 4.4 of this Agreement. The Company shall furnish
promptly to Purchaser (a) a copy of each report, schedule, registration
statement and other document filed by it or its Subsidiaries during such
period pursuant to the requirements of the Securities Act, Exchange Act and
Blue Sky Laws and (b) all other information concerning its or its
Subsidiaries' business, properties, and personnel as Purchaser may reasonably
request.
Section 4.4 Notice of Certain Matters. The Company shall give prompt notice
to Purchaser, and Purchaser shall give prompt notice to the Company, of (a)
the occurrence or non-occurrence of any event which would cause (i) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect or (ii) any covenant, condition or
agreement contained in this Agreement or any Offer Condition not to be
complied with or satisfied in any material respect, (b) any failure of the
Company or of 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 in any material respect, and (c) any notice or other communication
from any third party alleging that the consent of such third party is or may
be required in connection with the transactions contemplated by this
Agreement; provided that the delivery of any such notice shall not limit or
otherwise affect any representations and warranties contained herein or the
remedies available hereunder to the party receiving such notice.
Section 4.5 Further Actions. (a) Each of the parties hereto shall use all
commercially reasonable efforts to take, or cause to be taken, all actions, do
or cause to be done all things necessary, proper or advisable under applicable
laws and regulations, and fully cooperate with and provide reasonable
assistance to the other and its Representatives, as may be required to
consummate the transactions contemplated hereby as promptly as practicable,
including (i) making all filings, applications, notifications, reports,
submissions and registrations with, and obtaining all consents, approvals,
authorizations or permits of, Governmental Entities or other Persons or
entities necessary for the consummation of the transactions contemplated
hereby, including pursuant to Antitrust Laws, Exon-Florio, the Exchange Act,
Blue Sky Laws, labor laws and regulations, foreign investment laws and
regulations and other applicable laws and regulations in effect in the United
States, the European
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Community, The Netherlands or any other jurisdiction, and (ii) taking such
actions and doing such things as the other party hereto may reasonably request
in order to cause any of the Offer Conditions to be fully satisfied. Prior to
making any application to or filing with any Governmental Entity or other
Person or entity in connection with this Agreement, the Company, on the one
hand, and Purchaser, on the other hand, shall provide the other with drafts
thereof and afford the other a reasonable opportunity to comment on such
drafts.
(b) Without limiting the generality of the foregoing, each of Purchaser and
the Company agrees to cooperate and use all commercially reasonable efforts
vigorously to contest and resist any action, suit, proceeding or claim, and to
have vacated, lifted, reversed or overturned any injunction, order, judgment
or decree (whether temporary, preliminary or permanent), that delays, prevents
or otherwise restricts the consummation of the transactions contemplated
hereby, and to take any and all actions (including the disposition of assets,
divestiture of businesses, or the withdrawal from doing business in particular
jurisdictions) and to enter into such agreements and undertakings (including
with respect to the conduct of the business of the Company and its
Subsidiaries after the Closing as may be required by foreign investment laws
and labor laws and regulations), as may be required by Governmental Entities
or other Persons as a condition to the granting of any such necessary
approvals or as may be required to avoid, vacate, lift, reverse or overturn
any injunction, order, judgment, decree or regulatory action; provided,
however, that in no event shall any party hereto be required to take any
action that would be reasonably likely to have a Company Material Adverse
Effect or a Purchaser Material Adverse Effect or that would not be required in
accordance with paragraph (c) below.
(c) Notwithstanding anything to the contrary contained in this Agreement,
the Company shall not and shall cause its Affiliates not to, and neither
Purchaser nor any of its Affiliates shall be required to divest any assets or
business of Purchaser or any of its Affiliates or of the Company or its
Subsidiaries or hold separate or otherwise take or commit to take any action
that materially limits its freedom of action with respect to any of their
respective assets or businesses, if in the aggregate such assets and/or
businesses are material to the condition, business, assets, liabilities or
results of operations of, in the case of Purchaser, the process control and
instrumentation operations of Purchaser and its Affiliates, taken as a whole
(with estimated annual revenues of $3 billion), or in the case of the Company,
to the Company and its Subsidiaries taken as a whole, respectively.
Section 4.6 Public Announcements. Unless otherwise required by applicable
law or requirements of the NYSE, at all times prior to the earlier of the
Closing Date or the termination of this Agreement, no party hereto shall or
shall permit any of its Subsidiaries to (and each party shall use its
reasonable best efforts to cause its Affiliates and Representatives not to)
issue any press release concerning this Agreement, or any of the transactions
contemplated hereby, without prior consultation with the other parties hereto.
Section 4.7 Expenses. Whether or not the transactions contemplated hereby
are consummated, subject to Section 5.2 hereof, all costs and expenses
incurred in connection with this Agreement, including fees and disbursements
of Representatives, shall be borne by the party which incurs such cost or
expense; provided, however, that all out-of-pocket costs and expenses related
to the printing, filing and mailing of the Offer Documents shall be borne by
Purchaser.
Section 4.8 Directors and Officers Indemnification Insurance. (a) For a
period of six years from and after the Closing Date, Purchaser shall, or shall
cause the Company to, exculpate, indemnify and hold harmless certain officers
and directors of the Company to the same extent as such persons are currently
exculpated and indemnified by the Company pursuant to those certain indemnity
agreements identified in Section 4.8(a) of the Company Disclosure Schedule
(the "Indemnified Parties") for acts or omissions occurring prior to the
Closing Date.
(b) For six years from the Closing Date, the Purchaser shall either (x)
cause the Company to maintain in effect the Company's current directors' and
officers' liability insurance covering those persons who are currently covered
on the date of this Agreement by the Company's directors' and officers'
liability insurance policy (a copy of which has been heretofore delivered to
Purchaser) (the "Insured Parties"); provided, however, that in no event shall
Purchaser or the Company be required to expend in any one year an amount in
excess of 150% of
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the annual premiums currently paid by the Company for such insurance which the
Company represents to be $395,000 for the twelve month period ending on
November 19,1998; and provided further that if the annual premiums of such
insurance coverage exceed such amount, the Purchaser shall cause the Company
to obtain a policy with the greatest coverage available for a cost not
exceeding such amount; provided further that the Purchaser may substitute for
such Company policies, policies with at least the same coverage containing
terms and conditions which are no less advantageous and provided that said
substitution does not result in any gaps or lapses in coverage with respect to
matters occurring prior to the Closing Date or (y) cause the Purchaser's
directors' and officers' liability insurance then in effect to cover those
persons who are covered on the date of this Agreement by the Company's
directors' and officers' liability insurance policy with respect to those
matters covered by the Company's directors' and officers' liability policy.
(c) The covenants set forth in this Section 4.8 shall survive the Closing
Date, shall be binding on Purchaser and all its successors and assigns, and
are intended for the benefit of, and shall be enforceable by, each of the
Company, the Indemnified Parties and the Insured Parties, and their respective
heirs and legal representatives.
Section 4.9 Post-Closing Restructuring. (a) Purchaser may, simultaneous with
or as soon as possible after the Closing, consummate a corporate
reorganization of the Company and its Subsidiaries which may include, without
limitation, (i) the sale and transfer by the Company or any of its
Subsidiaries of all or part of the assets of the Company or any of its
Subsidiaries to Purchaser or any Affiliates of Purchaser, (ii) the
consummation by the Company and one or more Dutch Subsidiaries of Purchaser of
a legal merger within the meaning of Section 2:309 of the Dutch Civil Code and
(iii) the commencement of the compulsory acquisition by Purchaser of Company
Shares from any remaining minority shareholder, in accordance with Section
2:92a of the Dutch Civil Code.
(b) The Company hereby agrees with Purchaser that, at Purchaser's request
and to the extent permitted by law, it shall take all actions reasonably
necessary or desirable to accomplish the corporate reorganizations referred to
in Section 4.9(a) including, without limitation, (i) the convening of the
necessary meetings of the holders of Company Shares and holders of TOPrS, the
Management Board and the Supervisory Board of the Company, (ii) the
consideration of any and all necessary or desirable resolutions by the
Management Board or the Supervisory Board of the Company for the purpose of
consummating such corporate reorganizations and (iii) the execution of any and
all reasonably requested documents, agreements or deeds that are necessary or
desirable to consummate any of such corporate reorganizations and the filing
or registration of any or all of such documents, agreements or deeds with the
appropriate authorities or agencies.
ARTICLE V.
TERMINATION
Section 5.1 Termination. This Agreement may be terminated and the Offer may
be abandoned at any time prior to the Closing Date:
(a) by mutual consent of Purchaser and the Company; or
(b) by action of either the Supervisory Board or Management Board of
Purchaser or the Supervisory Board and Management Board of the Company if:
(i) the Closing Date shall not have occurred on or before April 15,
1999 or, if the only condition remaining to be satisfied as of such
date shall be a condition set forth in either clause (i) or clause (ii)
of Annex A, May 31, 1999; provided that the right to terminate this
Agreement under this clause shall not be available to (A) Purchaser, if
(i) the failure of Purchaser to perform its obligations hereunder or
(ii) the failure of the representations and warranties contained in
Article III to be true and correct has to any material extent been the
cause of, or resulted in, the failure of the Closing to occur on or
before such date or (B) the Company, if (i) the failure of the Company
to perform its obligations
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hereunder or (ii) the failure of the representations and warranties
contained in Article II to be true and correct has to any material
extent been the cause of, or resulted in, the failure of the Closing to
occur on or before such date; or
(ii) a Governmental Entity (A) shall have issued an order, decree or
ruling or taken any other action (which the parties shall have used all
commercially reasonable efforts to resist, resolve or lift, as
applicable, in accordance with Section 4.5) permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by
this Agreement and such order, decree, ruling or other action shall
have become final and non-appealable or (B) shall have failed to issue
an order, decree or ruling or to take any other action (which order,
decree, ruling or other action the parties shall have used all
commercially reasonable efforts to obtain, in accordance with Section
4.5), which is necessary to fulfill the Offer Conditions and such
denial of a request to issue such order, decree or ruling or take such
other action shall have become final and nonappealable; provided,
however, that the right to terminate this Agreement under this Section
shall not be available to any party whose failure to comply with
Section 4.5 has to any material extent been the cause of such action or
inaction; or
(c) by action of the Supervisory Board of the Company on five days' prior
written notice to Purchaser if the Supervisory Board of the Company,
without violation of the obligations set forth in Section 4.2, withdraws
its approval or recommendation of the Offer or this Agreement and the
Company pays to Purchaser all expenses and other amounts as provided in
Section 5.2; or
(d) by action of the Supervisory Board or Management Board of Purchaser,
if the Supervisory Board or Management Board of the Company shall have
determined that an Acquisition Proposal is a Superior Proposal or shall not
have issued, or shall have withdrawn or modified (including by amendment of
the Schedule 14D-9) in a manner adverse to Purchaser, its approval or
recommendation of the Offer or this Agreement or shall have recommended an
alternative transaction proposal to the shareholders of the Company, or
shall have adopted any resolution to effect any of the foregoing; or any
corporation, partnership, person or other entity or group shall have
entered into a definitive agreement or an agreement in principle with the
Company with respect to a tender offer or exchange offer for any Company
Shares or TOPrS or an Acquisition Proposal;
(e) by Purchaser, if the Offer is terminated (or expires in accordance
with its terms) without Purchaser having purchased any Company Shares or
TOPrS thereunder due to an occurrence which would result in a failure to
satisfy any of the Offer Conditions, unless any such failure shall have
been caused by or resulted from a failure of Purchaser to perform in any
material respect any covenant or agreement contained in this Agreement or
the failure of any representations or warranties contained in Article III
hereof to be true and correct in any material respect; or
(f) by Purchaser, if any of the representations and warranties of the
Company contained in Article II of this Agreement is or becomes untrue or
incorrect or the Company breaches any of its obligations under this
Agreement which (A) in either case would give rise to the failure of a
condition set forth in clause (C) of the Offer Conditions to be met and (B)
cannot or has not been cured prior to the earlier of (i) 15 days after the
giving of written notice to the Company of such untruth, incorrectness or,
as the case may be, breach and (ii) two Business Days prior to the date on
which the Offer expires; or
(g) by Purchaser, if (i) any of the representations and warranties of the
Shareholder contained in the Shareholder's Agreement that are qualified by
reference to a Company Material Adverse Effect is or becomes untrue or
incorrect or any such representation and warranty that is not so qualified
is or becomes untrue or incorrect in any respect that would be reasonably
likely to have a Company Material Adverse Effect or to prevent Shareholder
from consummating the transactions contemplated by the Shareholder's
Agreement, or (ii) the Shareholder breaches any of its obligations under
the Shareholder's Agreement; or
(h) by the Company, if the Offer has been terminated by Purchaser and if
(i) any of the representations and warranties of Purchaser contained in
Article III of this Agreement or in the Shareholder's Agreement is or
becomes, and at the time of termination remains, untrue or incorrect in any
material respect or (ii) Purchaser shall have breached or failed to comply
in any material respect with any of its obligations under this Agreement or
in the Shareholder's Agreement which breach shall not have been cured
within 15 days
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<PAGE>
following notice from the Company to Purchaser of such breach and the
Company's intent to terminate pursuant to this provision.
Section 5.2 Effect of Termination. (a) In the event that any Person shall
have made an Acquisition Proposal and this Agreement is terminated by either
Party, or in the event this Agreement is otherwise terminated pursuant to
Section 5.1(c), (d), (f) or (g), the Company shall, within two days after
termination has occurred, pay to Purchaser in same day funds all of
Purchaser's reasonably documented out-of-pocket expenses (including the fees
and expenses of counsel and other advisors).
(b) In the event that this Agreement is terminated by the Company pursuant
to Section 5.1(c) or by Purchaser pursuant to either (i) Section 5.1(d) or
(ii) 5.1(e) because of an event described in paragraph (E) of Annex A, the
Company shall, within two days after termination has occurred, pay to
Purchaser in same day funds an amount equal to the sum of (i) $1.57 for each
Company Share outstanding as of the date hereof, and (ii) $2.45 for each TOPrS
outstanding as of such date. Any payment pursuant to this paragraph (b) shall
be in addition to any reimbursement pursuant to Section 5.2(a).
(c) In the event this Agreement is terminated pursuant to this Article V,
all future obligations and liabilities of the parties hereto shall terminate,
except the obligations of the parties described in Sections 2.19, 4.7 and this
Section 5.2. Nothing in this Section 5.2 shall relieve any party to this
Agreement of liability for breach of this Agreement.
Section 5.3 Extension; Waiver. At any time prior to the Closing Date, any
party hereto, by action taken by the Supervisory Board of the Company or the
Supervisory Board or Management Board of Purchaser, may, to the extent
permitted by law, (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any such extension or waiver shall be valid only if
set forth in an instrument in writing signed by or on behalf of the party or
parties to be bound thereby.
ARTICLE VI.
MISCELLANEOUS
Section 6.1 Certain Definitions. The following terms shall, when used in
this Agreement, have the following respective meanings:
(a) "Affiliate" shall have the meaning assigned to such term in Section
12(b)-2 of the Exchange Act; provided that with respect to the Shareholder,
"Affiliate" shall not include the Company or any of its Subsidiaries.
(b) "Business Day" shall have the meaning set forth in Rule 14d-l(c)(6)
under the Exchange Act.
(c) "Expiration Date" means whichever date set forth in Section 5.1(b)(i)
shall apply in the circumstances, at the time of determination.
(d) "Governmental Entity" means any supranational, national, provincial,
state, municipal or local government, any instrumentality, subdivision,
court, arbitrator, administrative agency or commission or other authority
thereof, or any quasi-governmental or private body exercising any
regulatory, taxing, importing or other governmental or quasi-governmental
authority.
(e) "Material Adverse Effect" means any effect that, individually or in
aggregate, is materially adverse to the condition, business, assets,
liabilities or results of operations of a party and its Subsidiaries taken
as a whole, other than any effect resulting from (i) changes in general
economic conditions, (ii) the announcement and performance of this
Agreement and the transactions contemplated hereby and
22
<PAGE>
compliance with the covenants set forth in this Agreement, and (iii)
changes or developments in the industrial process control industry
generally or its markets and (iv), subject to Section 4.5, any actions
required under this Agreement to obtain any approval or authorization under
any Antitrust Law or from the Australian Foreign Investment Review Board
for the consummation of the Offer.
(f) "Person" means a natural person, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
union or other employee group, Governmental Entity, or other entity or
group (as defined in the Exchange Act).
(g) "Representatives" when used with respect to any Person, means any
officer, director, managing director, employee or agent of such Person or
any of its Affiliates, including any investment banker, financial advisor,
attorney, accountant, consultant or other advisor, agent, representative or
expert retained by or acting on behalf of such Person or such Affiliate.
(h) "Subsidiary" when used with respect to any entity means any
corporation or other organization, whether incorporated or unincorporated,
(i) of which such entity or any other Subsidiary of such entity is a
general partner (excluding partnerships, the general partnership interests
of which held by such entity or any Subsidiary of such entity do not have a
majority of the voting interests in such partnership) or (ii) at least a
majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the management board,
supervisory board, board of directors or others performing similar
functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such entity or by any one or
more of its Subsidiaries; provided, however, that the term "Subsidiary"
when used with respect to Shareholder shall not include the Company or any
of its Subsidiaries.
(i) "Termination Date" means the date on which the Offer expires.
Section 6.2 Nonsurvival of Representations and Warranties. All
representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall be deemed to the extent expressly
provided herein to be conditions to the Offer and shall not survive
consummation thereof and thereafter neither Purchaser, the Company, nor any
Affiliate, officer, director, employee or shareholder of Purchaser, the
Company or their respective Subsidiaries shall have any liability with respect
thereto.
Section 6.3 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings other than the
Confidentiality Agreement among the parties with respect thereto. No addition
to or modification of any provision of this Agreement shall be binding upon
any party hereto unless made in writing and signed by each of the parties
hereto.
Section 6.4 Waiver. Any term or condition of this Agreement may be waived at
any time by the party that is entitled to the benefit thereof, but no such
waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be a waiver of the same or any other term
or condition of this Agreement on any future occasion.
Section 6.5 Assignment; Binding Effect. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by either of
the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other party, provided, however, that Purchaser
may assign its rights and delegate its obligations hereunder to an Affiliate
of Purchaser and provided further, that such assignment and delegation shall
not relieve Purchaser of its obligations hereunder. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except
for the provisions of Sections 4.8 and 6.10, nothing in this Agreement,
expressed or implied, is intended to confer on any Person and the parties
hereto or their respective heirs, successors, executors, administrators and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
23
<PAGE>
Section 6.6 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed duly given (a) on the date of delivery if
delivered personally, or by facsimile, upon confirmation of receipt, (b) on
the first Business Day following the date of dispatch if delivered by a
recognized next-day courier service, or (c) on the fifth Business Day
following the date of mailing if delivered by registered or certified mail
(airmail if international), return receipt requested, postage prepaid. All
notices hereunder shall be delivered as set forth below, or pursuant to such
other instructions as may be designated in writing by the party to receive
such notice:
(a) if to Purchaser, to
ABB Transportation Participations B.V.
PO Box 74690
NL-1070BR Amsterdam
The Netherlands
Fax: 31-20-445-9844
Attention: Managing Director
with a copy to:
ABB Asea Brown Boveri Ltd.
PO Box 8131
CH-8050 Zurich
Switzerland
Fax: 411-317-7992
Attention: CS-LE
and to:
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Attention: Gregory Pryor, Esq.
Telephone: (212) 819-8200
Facsimile: (212) 354-8113
(b) if to the Company, to
Elsag Bailey Process Automation N.V.
World Trade Center
Schipol Boulevard 157
1118 B6 Luchthaven Schipol
The Netherlands
Attention: Managing Director: V. Cannatelli
Telephone: 011-31-20-
Facsimile: 011-31-20-
24
<PAGE>
with a copy to:
Elsag Bailey Process Automation NV
c/o Elsag Bailey, Inc.
29801 Euclid Avenue
Wickliffe, Ohio 44092-1898
Attention: General Counsel: Mark V. Santo
Telephone: (440) 585-5855
Facsimile: (440) 585-8821
and to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, New York 10178
Attention: W. Preston Tollinger
Facsimile: (212) 309-6273
or to such other address as any party shall specify by written notice so
given, and such notice shall be deemed to have been delivered as of the date
so telecommunicated or personally delivered or on the fifth Business Day after
being deposited in the United States mail, if mailed.
Section 6.7 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (d) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a
part of this Agreement a legal, valid and enforceable provision as similar in
terms to such illegal, invalid or unenforceable provision as may be possible.
Section 6.8 Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions hereof in any New York
Court, this being in addition to any other remedy to which they are entitled
at law or in equity. All rights, powers and remedies provided under this
Agreement or otherwise available in respect hereof at law or in equity shall
be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or otherwise
available in respect hereof at law or in equity, or to insist upon compliance
by any other party hereto with its obligations hereunder, and any custom or
practice of the parties at variance with the terms hereof, shall not
constitute a waiver by such party of its right to exercise any such or other
right, power or remedy or to demand such compliance.
Section 6.9 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to its
rules of conflict of laws. Each of the parties hereto hereby irrevocably and
unconditionally consents to submit to the non-exclusive jurisdiction of the
courts of the State of New York and of the United States of America located in
the State of New York (the "New York Courts") for any litigation arising out
of or relating to this Agreement and the transactions contemplated hereby,
waives any objection to the laying of venue of any such litigation in the New
York Courts and agrees not to plead or claim in any New York Court that such
litigation brought therein has been brought in an inconvenient forum.
25
<PAGE>
Section 6.10 Waiver of Personal Liability. The parties hereto acknowledge
and agree that the representations and warranties contained in this Agreement
are made on behalf of the parties hereto and are not made by the officers or
members of the Management Board or Supervisory Board of Purchaser or any
Indemnified Party or Insured Party. The parties hereto acknowledge and agree
that no such Person shall have any personal liability, in law or in equity, of
any kind with regard to the representations and warranties of Purchaser or the
Company, as applicable, contained in this Agreement or in any other agreement,
document or certificate contemplated by this Agreement, and each party hereto
irrevocably waives any such claim regarding the validity or enforceability of
this Section 6.10, and agrees not to challenge or otherwise reject the terms
hereof. The parties hereto also waive any claim regarding the validity or
enforceability of the provisions of this Section 6.10, and agree not to
challenge or otherwise reject the terms hereof. The Persons designated in the
first sentence of this Section 6.10 are intended, and shall be deemed, to be
third-party beneficiaries of the provisions of this Section 6.10, and shall be
entitled to directly claim and enforce the rights and benefits provided
herein.
Section 6.11 Interpretation. As used in this Agreement, the word "including"
means without limitation; the word "or" is not exclusive; and the words
"herein", "hereof", "hereby", "hereto" and "hereunder" refer to this Agreement
as a whole. Any reference to any applicable law shall be deemed also to refer
to all rules and regulations promulgated thereunder unless the context
otherwise requires. Whenever required by the context, any gender shall include
any other gender, the singular shall include the plural and the plural shall
include the singular. Unless the context otherwise requires, references
herein: (i) to Sections and Annexes mean the Sections of, and the Annexes
attached to, this Agreement; and (ii) to an agreement, instrument or other
document means such agreement, instrument or other document as amended,
supplemented and modified through the date hereof, unless the context
otherwise requires, and thereafter from time to time to the extent permitted
by this Agreement. The Annexes referred to herein, including the Company
Disclosure Schedule and Purchaser Disclosure Schedule, shall be construed with
and as an integral part of this Agreement to the same extent as if they were
set forth verbatim herein. The headings of Sections are inserted for
convenience of reference only and shall not be deemed a part of, or affect in
any way the meaning or interpretation of, this Agreement.
Section 6.12 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
Section 6.13 Confidentiality. All information obtained by Purchaser pursuant
to this Agreement shall be kept confidential as provided in the
Confidentiality Agreement.
Section 6.14 Exchange Rates. Any reference to U.S. dollars in Articles 2 and
4 of the Agreement shall include reference to any other currency based upon
the mid-rate of exchange in effect at the close of business on June 25, 1998.
26
<PAGE>
IN WITNESS WHEREOF, Purchaser and the Company have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the
date first set forth above.
Elsag Bailey Process Automation N.V.
/s/ Vincenzo Cannatelli
By: ___________________________________
Name: Vincenzo Cannatelli
Title: Managing Director
ABB Transportation Participations B.V.
/s/ Mats Sacklen
By: ___________________________________
Name: Mats Sacklen
Title: PP
/s/ Eric Elzvik
By: __________________________________
Name: Eric Elzvik
Title:
The undersigned, being the sole share-
holder of the Purchaser, hereby under-
takes to insure that the Purchaser
will duly perform its obligations un-
der this Agreement and hereby guaran-
tees any and all liabilities and
amounts which become payable by Pur-
chaser hereunder.
ABB Asea Brown Boveri Ltd.
/s/ Mats Sacklen
By: __________________________________
Name: Mats Sacklen
Title: VP
/s/ Eric Elzvik
By: ___________________________________
Name: Eric Elzvik
Title: VP
27
<PAGE>
ANNEX A
CONDITIONS TO THE OFFER
The capitalized terms used in this Annex A shall have the meanings set forth
in the Acquisition Agreement to which this Annex A is attached.
Notwithstanding any other provisions of the Offer, Purchaser shall not be
required to accept for payment, purchase or, subject to any applicable rules
and regulations of the Commission including Rule 14e-l(c) under the Exchange
Act, pay for any Tendered Securities and may postpone the acceptance for
payment or, subject to the restrictions referred to above, the payment for,
any Tendered Securities, if (i) any applicable waiting period under the HSR
Act, Competition Act (Canada) or Exon-Florio has not expired or been
terminated prior to the expiration of the Offer, or (ii) a decision of the
Commission of the European Communities that the purchase of the Company Shares
and TOPrS contemplated by the Offer are compatible with the common market has
not been received prior to the expiration of the Offer. In addition to and not
limiting the foregoing, notwithstanding any other provision of the Offer,
Purchaser shall not be required to accept for payment or, subject to
applicable rules and regulations of the Commission, including Rule 14e-1(c)
under the Exchange Act, pay for any Tendered Securities and may terminate or
amend the Offer and may postpone the acceptance of, and payment for, Tendered
Securities if there shall not have been validly tendered and not validly
withdrawn pursuant to the Offer a number of Company Shares and TOPrS which,
when added to the Company Shares and TOPrS, if any, previously acquired by
Purchaser, constitute at least 75% of the fully diluted share capital of the
Company (the "Minimum Condition") or at any time on or after this date and at
or before the time of acceptance of Tendered Securities for payment pursuant
to the Offer or payment therefor (whether or not any Tendered Securities have
been accepted for payment or paid for), any of the following events shall
occur:
(A) there shall have occurred any event or circumstance that has a Company
Material Adverse Effect;
(B) any Governmental Entity or court of competent jurisdiction shall have
taken any action or enacted, issued, promulgated, enforced, amended or entered
any statute, rule, regulation, executive order, decree, interpretation,
injunction or other order (whether temporary, preliminary or permanent) which
is in effect and which would reasonably be expected to (1) make the acceptance
for payment of, or the payment for, the Tendered Securities illegal or
otherwise prohibit or restrict consummation of the Offer, (2) impose material
limitations on the ability of the Purchaser to acquire or hold or to exercise
any rights of ownership of the Tendered Securities, or effectively to manage
or control or operate the Company and its business, assets and properties or
(3) have a Company Material Adverse Effect;
(C) any of the representations and warranties of the Company set forth in
the Acquisition Agreement that are qualified by reference to a Company
Material Adverse Effect shall not be true and correct, or any such
representation and warranty that is not so qualified shall not be true and
correct in any respect which would be reasonably likely to have a Company
Material Adverse Effect, in each case as if such representation and warranty
were made at the time of determination (except to the extent any such
representation and warranty speaks as of an earlier date) or the Company shall
have failed to perform or comply with, in any material respect, any covenant,
agreement or obligation to be performed or complied with by it under the
Acquisition Agreement;
(D) the Acquisition Agreement shall have been terminated in accordance with
its terms;
(E) the Supervisory Board of the Company or the Management Board of the
Company shall have withdrawn or modified in a manner adverse to Purchaser its
approval or recommendation of the Offer, or shall have approved or recommended
to the Company's shareholders or holders of TOPrS another offer or Acquisition
Proposal or shall have adopted a resolution to effect either of the foregoing
or any corporation, partnership, person or other entity or group shall have
entered into a definitive agreement or an agreement in principle with the
Company with respect to a tender offer or exchange offer for any Company
Shares or TOPrS or a merger, consolidation or other business combination or
Acquisition Proposal with or involving the Company or any of its Subsidiaries;
A-1
<PAGE>
(F) any of the material consents, approvals, authorizations, orders or
permits required to be obtained by the Company, Purchaser, or their respective
Subsidiaries in connection with the Offer or Acquisition Agreement from, or
filings or registrations required to be made by any of the same prior to the
Closing Date with, any Governmental Entity in connection with the consummation
of the transactions contemplated by the Acquisition Agreement or the Offer
shall not have been obtained or made or can only be obtained or made subject
to conditions or requirements which Purchaser and the Company are not required
to meet pursuant to Section 4.5;
(G) there shall have occurred (1) any general suspension for at least three
Business Days of trading in, or limitation on prices for, securities on the
New York Stock Exchange, Inc., (2) the declaration of a banking moratorium or
any suspension of payments in respect of banks in the United States,
Netherlands, or Switzerland (whether or not mandatory), (3) the commencement
or material escalation of a war or armed hostilities having had or being
reasonably likely to have a material adverse effect on the condition,
business, assets, liabilities or results of operations of the Company and its
Subsidiaries taken as a whole, or (4) any limitation or proposed limitation
(whether or not mandatory) by any Governmental Entity, or any other event,
that materially adversely affects generally the extension of credit by banks
or other financial institutions; or
(H) any of the representations and warranties of the Shareholder in the
Shareholder's Agreement that are qualified by reference to materiality shall
not be true and correct or any such representation and warranty that is not so
qualified shall not be true and correct in any respect which would be
reasonably likely to have a Company Material Adverse Effect, in each case as
if such representation and warranty were made at the time of determination
(except to the extent any such representation and warranty speaks as of an
earlier date) or the Shareholder shall have failed in any material respect, to
perform, or comply with, any covenant, agreement or obligation to be performed
or complied with by it under the Shareholder's Agreement.
The foregoing conditions are for the sole benefit of Purchaser and may be
asserted by Purchaser or may be waived by Purchaser, in whole or part, at any
time and from time to time in its sole discretion (subject to the terms of the
Acquisition Agreement). Failure by Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right which may be asserted at any time
and from time to time.
A-2
<PAGE>
INDEX OF DEFINED TERMS
(NOT PART OF AGREEMENT)
<TABLE>
<CAPTION>
TERM SECTION
- ---- --------
<S> <C>
Affiliate............................................................. 6.1(a)
Agreement............................................................. RECITALS
Acquisition Proposal.................................................. 4.2
Benefit Plans......................................................... 2.11(a)
Blue Sky Laws......................................................... 2.6
Business Day.......................................................... 6.1(b)
Closing............................................................... 1.1(d)
Closing Date.......................................................... 1.1(d)
Code.................................................................. 2.11(c)
Commission............................................................ 1.1(c)
Company............................................................... RECITALS
Company Disclosure Schedule........................................... 2.2(a)
Company Material Adverse Effect....................................... 2.1
Company Properties.................................................... 2.14
Company SEC Documents................................................. 2.7(a)
Company Shares........................................................ RECITALS
Confidentiality Agreement............................................. 4.2
Environmental Law..................................................... 2.15(a)
ERISA................................................................. 2.11(a)
Exchange Act.......................................................... 1.1(a)
Exon--Florio.......................................................... 2.6
Financing Trust....................................................... RECITALS
GAAP.................................................................. 2.7(b)
Governmental Entity................................................... 6.1(c)
Guarantees............................................................ 2.20
Hazardous Substances.................................................. 2.15(a)
HSR Act............................................................... 2.6
Indemnified Parties................................................... 4.8
Insured Parties....................................................... 4.8(b)
Intellectual Property................................................. 2.17(a)
Material Adverse Effect............................................... 6.1(d)
Material Contracts.................................................... 2.16(a)
Merrill Lynch......................................................... 1.3(a)
New York Courts....................................................... 6.9
Offer................................................................. RECITALS
Offer Conditions...................................................... 1.1(a)
Offer Consideration................................................... 1.1(b)
Offer Documents....................................................... 1.1(c)
Offer to Purchase..................................................... 1.1(a)
Option Agreement...................................................... 1.2(b)
Option Plan........................................................... 1.2(a)
Permitted Liens....................................................... 2.14
Person................................................................ 6.1(e)
Purchaser............................................................. RECITALS
Purchaser Disclosure Schedule......................................... 3.4
Purchaser Material Adverse Effect..................................... 3.1
Representatives....................................................... 6.1(f)
Schedule 14D-1........................................................ 1.1(c)
</TABLE>
A-3
<PAGE>
<TABLE>
<CAPTION>
TERM SECTION
- ---- --------
<S> <C>
Schedule 14D-9........................................................ 1.3(b)
Securities Act........................................................ 2.7(a)
Share Offer Price..................................................... 1.1(b)
Shareholder........................................................... RECITALS
Shareholder's Agreement............................................... RECITALS
Shareholder Shares.................................................... RECITALS
Stock Options......................................................... 1.2(a)
Subsidiary............................................................ 6.1(g)
Superior Proposal..................................................... 4.2
Tax Return............................................................ 2.13(a)
Taxes................................................................. 2.13(a)
Tendered Securities................................................... 1.1(a)
TOPrS................................................................. RECITALS
TOPrS Offer Price..................................................... 1.1(b)
</TABLE>
A-4
<PAGE>
EXHIBIT 2
<PAGE>
EXHIBIT 2 TO SCHEDULE 14D-9
COMPANY FORM 20-F EXCERPT
ITEM 11. COMPENSATION OF DIRECTORS AND OFFICERS
Members of the Supervisory Board who are affiliated with Finmeccanica are
compensated by Finmeccanica. Members of the Supervisory Board who are not
affiliated with Finmeccanica are paid an annual remuneration of $20,000 for
their services (plus an additional $1,000 per meeting for a member's service
on the Audit Committee) and reimbursement of reasonable expenses in connection
with such services.
In 1997, the aggregate cash compensation of the Managing Director, members
of the Executive Committee and the other group staff identified above, as a
group, paid or accrued by the Company and its subsidiaries, was $3,012,259. Of
this amount, $485,088 was paid or accrued as bonuses under the Executive
Incentive Plan which provides for the payment of short-term and long-term
bonuses based upon incentive targets established by the Management Board on an
annual basis.
The Company has implemented a discounted employee stock purchase plan
("Stock Purchase Plan") which enables employees to purchase Common Shares of
the Company through a payroll deduction. As a result of employer
contributions, cost of the stock to the employee is at a 10% discount from the
trading price of the stock on the day it is purchased (expected to be the last
day of the month). Employees who hold the stock for two years are given
additional shares equal to 5% of the shares held for such two-year period.
Shares held in the Stock Purchase Plan are subject to a voting proxy in favor
of an officer of the Company while such shares remain in the plan.
Elsag Bailey, Inc. has a tax-qualified retirement savings plan (the "401(k)
Plan") covering all of the salaried employees of Elsag Bailey, Inc. and its
subsidiaries. Participating employees may elect to reduce their current
compensation on a pretax basis by up to the statutorily prescribed annual
limit ($9,500 in 1997; $10,000 in 1998) and have the amount of such reduction
contributed to the 401(k) Plan. Participating employees may also make after-
tax contributions. The Company makes matching contributions up to 6% of each
participating employee's compensation for the year. In addition, the Company
in its discretion may each year make a "performance incentive contribution"
with respect to all or any group of participating employees as are designated
by the Company, which it will determine on the basis of the Company's or
specific operating unit's financial performance and success in meeting its
business commitments for the year. A special contribution also may be made by
the Company with respect to each participating employee who, on January 1,
1990, was age 45, had completed ten years of service and became a
participating employee in the 401(k) Plan. The special contribution is 1% of
the participating employee's annual compensation and is expected to be made by
the Company each year, commencing with 1990, until the number of years that
the contribution has been made is equal to the participating employee's years
of prior service with the Company as of January 1, 1990. In 1997, Elsag
Bailey, Inc. made matching and discretionary contributions to the accounts of
five members of the Executive Committee and the other group staff identified
above in the aggregate amount of $45,400.
In addition to the 401(k) Plan, the Company maintains an excess defined
contribution plan (the "Supplemental Plan") for certain select executives of
the Company who are participants in the 401(k) Plan and the Company's deferred
compensation plan contributing at least 6% and 2% of their compensation,
respectively, and whose annual compensation is in excess of a statutorily
prescribed annual amount.
Under the Supplemental Plan, the Company makes a contribution in an amount
equal to the participating executive's contribution up to a maximum of 6% of
such individual's base pay in excess of the statutorily prescribed limit
referred to in the previous sentence. Amounts contributed by the Company vest
to the participant in accordance with the vesting schedule provided in the
401(k) Plan. In 1997, the Company made contributions to the Supplemental Plan
to the accounts of two members of the Board of Management, the Executive
Committee and the other group staff identified above in the aggregate amount
of $34,065.
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<PAGE>
The Managing Director, the members of the Executive Committee and the other
group staff identified above were also covered in 1997 under certain group
life and medical insurance programs provided by the particular company by
which they were employed. The aggregate additional amount set aside by the
Company in 1997 to provide pension, retirement or similar benefits (excluding
statutory social security programs) for the Managing Director, the members of
the Executive Committee and the other group staff identified above as a group
was approximately $193,849. As of March 31, 1998, the Managing Director, the
members of the Executive Committee and the other group staff identified above
have been granted options to purchase 588,250 Common Shares under the
Company's Stock Incentive Plan, of which options for 106,650 Common Shares are
currently exercisable. Options granted in 1993 and certain options granted in
1994 are exercisable over five years. The remaining options vest at the end of
ten years; however, they may become exercisable upon attainment of specific
performance goals. In December 1997, approximately 239,000 options granted to
such officers in 1996, 1995 and 1994 at prices ranging from $23.68 to $27.50
were canceled and 179,250 options granted in their place at the then fair
market value of $14.81. The date of grant, purchase price and expiration dates
of the options granted to such officers to date and outstanding are summarized
in the table below:
<TABLE>
<CAPTION>
GRANT DATE NUMBER OF OPTIONS EXERCISE PRICE EXPIRATION DATE
- ---------- ----------------- -------------- -----------------
<S> <C> <C> <C>
November 18, 1993........ 90,000 $ 19.00 November 18, 2003
March 14, 1994........... 22,500 $14.8125 March 14, 2004
July 20, 1994............ 35,250 $14.8125 July 20, 2004
December 8, 1994......... 37,500 $14.8125 December 8, 2004
December 21, 1995........ 75,000 $14.8125 December 21, 2005
January 4, 1996.......... 9,000 $14.8125 January 4, 2006
December 17, 1996........ 162,000 $ 17.25 December 17, 2006
December 18, 1997........ 157,000 $14.8125 December 17, 2007
</TABLE>
ITEM 12. OPTIONS TO PURCHASE SECURITIES FROM REGISTRANT OR SUBSIDIARIES
As of March 31, 1998, the Company has reserved 1,000,000 Common Shares for
issuance under stock options which may be granted under its Stock Incentive
Plan, of which 726,250 Common Shares are subject to currently outstanding
options granted under such plan. The Company has filed a registration
statement on Form S-8 with regard to the Common Shares issuable under its
Stock Incentive Plan, by virtue of which Common Shares issued thereunder
generally will be transferable without restriction. For further discussion
concerning the grant dates, exercise prices and expiration dates of such
options, see Item 11 above.
ITEM 13. INTEREST OF MANAGEMENT IN CERTAIN TRANSACTIONS
In the ordinary course of business, the Company and Finmeccanica or
affiliates of Finmeccanica have from time to time entered into various
business transactions and agreements, and the Company and Finmeccanica or
affiliates of Finmeccanica may from time to time enter into additional
transactions and agreements in the future. See Note 17 of the Notes to the
Consolidated Financial Statements of the Company incorporated by reference
from the Company's 1997 Annual Report to Shareholders. Since January 1, 1995,
the Company has used Finmeccanica facilities and personnel for certain
administrative functions, for which the Company reimbursed Finmeccanica. These
transactions, agreements and arrangements have been and are expected to be
continued on terms which in the aggregate are not materially different from
those which generally could be obtained from unrelated third parties through
negotiations on an arm's-length basis. It is possible that potential conflicts
of interest could arise between the Company and Finmeccanica in the future.
The following is a summary of the material agreements, arrangements and
transactions between the Company and Finmeccanica or its affiliates.
Acquisition of Italian Licensee; Prior Relationship. On December 30, 1996
the Company acquired from Finmeccanica the assets of the Italian Licensee, a
division of Finmeccanica which operated as a licensee of the Company in Italy.
The Company issued to Finmeccanica 1.3 million Common Shares and assumed $13
million of debt as part of such acquisition. Prior to the acquisition, the
Italian Licensee paid the Company royalties of
2
<PAGE>
$7.1 million and $6.5 million in 1996 and 1995, respectively, related to the
license of certain technology of the Company. The Italian Licensee was charged
by the Company an aggregate of $585,000 and $739,000 in 1996 and 1995,
respectively, as its allocable share for certain management and sale and
administrative services performed on its behalf. There were also purchases and
sales of products between the Italian Licensee and the Company.
Purchases and Sales
In 1997, 1996 and 1995, the Company made sales to certain Finmeccanica
operating subsidiaries of $50.1 million, $42.5 million and $19.8 million,
respectively. The Company's purchases from Finmeccanica's operating
subsidiaries were $0.9 million, $8.5 million and $9.8 million in 1997, 1996
and 1995, respectively.
Cofiri Credit
The Company entered into a credit facility dated February 19, 1998 with
Compagnia Finanziamenti e Rifinanziamenti--Cofiri S.p.A. ("Cofiri") providing
for a line of credit in the amount of $150 million (or the equivalent in
Deutsche Marks or Yen) which expires April 30, 1999, at which time all amounts
then outstanding thereunder become due and payable ("Cofiri Credit"). Cofiri
is a wholly-owned subsidiary of IRI. The Cofiri Credit, which the Company drew
down in full on February 27, 1998, provides for interest at 1.15% in excess of
the London Interbank Offered Rate (LIBOR). The Cofiri Credit is terminable,
and all amounts outstanding thereunder payable on demand, upon the occurrence
of certain events including payment or other performance defaults, a cross
default for non-payment of at least $10 million, the Company experiencing a
material adverse change or Finmeccanica ceasing to own at least 51% of the
Company's share capital. Reference is made to Exhibit 3 to the Company's
filing on Form 6-K dated March 4, 1998 for the full text of the agreement
governing the Cofiri Credit.
Credit Support
Finmeccanica has historically guaranteed certain obligations of the Company
and its operating units in the form of letters of credit or guarantees, or
provided comfort letters, in respect of certain short-term and long-term
credit facilities. Since January 1, 1995, Finmeccanica's only support for the
Company's borrowings and letters of credit has been a comfort letter to
support the Cofiri Credit. Finmeccanica has no obligation to continue to
provide credit support to the Company and no assurance can be given that the
Company would be able to refinance the B of A Credit maturing in January 1999
or the Cofiri Credit maturing in April 1999 without such support. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" incorporated by reference from
the Company's 1997 Annual Report to Shareholders.
Bonding Support
Since January 1, 1995, the utilization of Finmeccanica's resources to
support the Company's bonding requirements has been limited to guaranteeing
performance bonds related to one large system contract of the Company with an
initial contract value of $134 million and certain other bonds currently
totaling $94 million. Finmeccanica has no obligation to continue to provide
such support to the Company. No assurances can be given that the Company would
be able to satisfy its bonding requirements on terms substantially as
favorable as those previously obtained with the assistance provided by
Finmeccanica if Finmeccanica discontinued providing such assistance. The
Company incurred an expense of $1,025,000, $929,000 and $860,000, payable to
Finmeccanica in 1997, 1996 and 1995, respectively, for such bonding support.
Insurance
The Company purchases certain insurance coverage in conjunction with other
affiliates of Finmeccanica on a pooled risk basis (whereby claims of the
participating companies are aggregated for purposes of determining
3
<PAGE>
covered amounts), at rates and on terms which the Company believes are
generally comparable to those which it would otherwise have been able to
obtain. None of Finmeccanica, any insured or the relevant insurer is under any
obligation to continue to participate in such arrangement.
Supervisory Board
Four of the six current members of the Company's Supervisory Board are
officers of Finmeccanica.
Registration Rights Agreement
Under a Registration Rights Agreement between the Company and Finmeccanica,
the Company has agreed to file, upon the request of Finmeccanica, up to three
more registration statements under the U.S. Securities Act of 1933, to permit
Finmeccanica to offer and sell any Common Shares that Finmeccanica may hold.
Subject to certain conditions, the Company has also granted Finmeccanica the
right to include its Common Shares in any registration statements covering
offerings of Common Shares by the Company. In either case, the Company will
pay all costs of any such registered offering other than underwriting
commissions, discounts and expenses and transfer taxes attributable to the
shares sold on behalf of Finmeccanica. The Company will indemnify
Finmeccanica, and Finmeccanica will indemnify the Company, against certain
liabilities in respect of any registration statement or offering covered by
such Registration Rights Agreement. The rights of Finmeccanica under such
Registration Rights Agreement are transferable to entities included within the
Finmeccanica consolidated group.
4
<PAGE>
EXHIBIT 3
<PAGE>
SHAREHOLDER'S AGREEMENT
BY AND BETWEEN
ABB TRANSPORTATION PARTICIPATIONS B.V.
AND
FINMECCANICA S.P.A.
DATED AS OF OCTOBER 14, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 1. Certain Definitions.......................................... 1
Section 2. Tender....................................................... 2
Section 3. Voting....................................................... 2
Section 4. Restrictions During the Voting Period........................ 2
Section 5. Additional Shares............................................ 3
Section 6. Covenants of Purchaser....................................... 3
Section 7. Representations and Warranties of the Shareholder............ 4
Section 8. Representations and Warranties of Purchaser.................. 5
Section 9. Confidentiality.............................................. 6
Section 10. Further Assurances........................................... 6
Section 11. Expiration................................................... 6
Section 12. Survival..................................................... 7
Section 13. Miscellaneous................................................ 7
</TABLE>
i
<PAGE>
SHAREHOLDER'S AGREEMENT
This SHAREHOLDER'S AGREEMENT is made and entered into as of October 14, 1998
(this "Agreement"), by and between ABB Transportation Participations B.V., a
corporation organized under the laws of The Netherlands with its statutory
seat in Amsterdam ("Purchaser"), and Finmeccanica S.p.A., a corporation
organized under the laws of Italy with its statutory seat in Rome (the
"Shareholder").
WHEREAS, concurrently herewith, Purchaser and Elsag Bailey Process
Automation N.V., a corporation organized under the laws of the Netherlands
with its statutory seat in Amsterdam (the "Company"), are entering into an
acquisition agreement (the "Acquisition Agreement"), pursuant to which
Purchaser has agreed, among other things, to commence a cash tender offer (the
"Offer") to purchase all of the issued and outstanding common shares, par
value NLG 1.00 per share, of the Company (the "Company Shares"), and all of
the issued and outstanding 5 1/2% Convertible Trust Originated Preferred
Securities convertible into Company Shares and guaranteed by the Company (the
"TOPrS");
WHEREAS, as of the date hereof, the Shareholder, directly and indirectly
through subsidiaries, is the record and beneficial owner of, and has the sole
right to vote and dispose of, 17,813,527 Company Shares and 1,600,000 TOPrS;
WHEREAS, as an inducement and a condition to entering into the Acquisition
Agreement and incurring the obligations set forth therein, including the
Offer, Purchaser has required that the Shareholder enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
Section 1. Certain Definitions. Capitalized terms used and not defined
herein shall have the respective meanings set forth in the Acquisition
Agreement. In addition, the following terms shall, when used in this
Agreement, have the following respective meanings:
(a) "Affiliate" shall have the meaning assigned to such term in Section
12(b)-2 of the Exchange Act; provided that with respect to the Shareholder,
"Affiliate" shall not include the Company or any of its Subsidiaries.
(b) "Beneficially Owned" or "Beneficial Ownership" with respect to any
securities shall mean having beneficial ownership of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing. Without duplicative counting of the same securities by the same
holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would
constitute a "group" for purposes of Section 13d-3 of the Exchange Act.
(c) "Option Agreement" shall mean the option agreement dated as of
November 15, 1993 between the Shareholder and the Company giving the
Shareholder an option under certain conditions to purchase all of the
Priority Shares.
(d) "Person" shall mean a natural person, corporation, limited liability
company, partnership, association, trust, unincorporated organization,
union or other employee group, Governmental Entity, or other entity or
group (as defined in the Exchange Act).
(e) "Priority Shares" shall mean the priority shares, par value NLG 1.00
per share, of the Company, authorized under Article 3 of the Company's
articles of association.
(f) "Transfer" shall mean, with respect to a security or option, the
sale, transfer, pledge, hypothecation, encumbrance, assignment or
disposition of or granting of rights with respect to such security or
option or the Beneficial Ownership thereof, the offer to make such a sale,
transfer or other disposition, and each option, agreement, arrangement or
understanding, whether or not in writing, to effect any of the foregoing.
1
<PAGE>
Section 2. Tender. The Shareholder hereby agrees to validly and irrevocably
tender in accordance with the terms hereof (or to cause the record owner
thereof to so validly tender), pursuant to Rule 14d-2 under the Exchange Act,
and in accordance with the terms of the Offer, not later than, (i) in the case
of Company Shares and TOPrS owned by the Shareholder on the date hereof (such
securities, the "Existing Securities"), the fifth Business Day following the
commencement of the Offer and (ii) in the case of Company Shares and TOPrS
acquired after the date hereof and prior to the termination of this Agreement,
whether upon the exercise of options, warrants or rights, the conversion or
exchange of convertible or exchangeable securities, or by means of purchase,
dividend distribution or otherwise (such securities, together with the
Existing Securities, the "Securities"), the next succeeding Business Day after
acquisition thereof, any and all of the Securities Beneficially Owned by the
Shareholder at any time during such period, and shall not withdraw any such
tender before consummation of the Offer or the Expiration Date. The
Shareholder hereby acknowledges and agrees that the obligation of Purchaser to
accept for payment Company Shares and TOPrS tendered pursuant to the Offer,
including any Company Shares and TOPrS tendered by the Shareholder and its
Affiliates, shall be subject to the terms and conditions of the Offer. The
parties agree that the Shareholder will, for all Company Shares and TOPrS
tendered by the Shareholder in the Offer and accepted for payment and paid for
by Purchaser, receive the same amount per Company Share or TOPrS as is paid to
other holders of such securities who have tendered into, and whose securities
are accepted for payment in, the Offer.
Section 3. Voting. (a) The Shareholder hereby agrees that during the period
commencing on the date hereof and continuing until the Expiration Date (such
period being referred to as the "Voting Period"), at any meeting (whether
annual or special, and whether or not an adjourned or postponed meeting) of
the Company's shareholders or holders of TOPrS, however called, or in
connection with any written consent of the Company's shareholders or holders
of TOPrS, unless there shall be in effect at such time a preliminary or
permanent injunction or other final order by any court of competent
jurisdiction barring such action, the Shareholder shall vote (or cause to be
voted) (i) all Securities and (ii) all other securities of the Company then
Beneficially Owned by the Shareholder and entitled to vote generally in the
election of directors of the Company or otherwise entitled to vote with
respect to any matter or proposal submitted for the vote or consent of the
shareholders of the Company or holders of TOPrS: (i) in favor of the Offer,
the execution, delivery and performance by the Company of the Acquisition
Agreement and the approval and acceptance of the Offer and the terms thereof;
and (ii) against any action or agreement that would (A) result in a breach of
any covenant, representation or warranty or any other obligation or agreement
of the Shareholder under this Agreement or of the Company under the
Acquisition Agreement or (B) prevent, impede, interfere with, delay, postpone
or attempt to discourage the Offer or the transactions contemplated by the
Acquisition Agreement including without limitation: (1) any extraordinary
corporation transaction (other than with Purchaser as contemplated by the
Acquisition Agreement), such as a merger, other business combination,
reorganization or liquidation involving the Company or any of its
Subsidiaries; (2) a sale or transfer of material assets of the Company or any
of its Subsidiaries; (3) any change in the membership of the Supervisory Board
of [sic] Management Board of the Company, except as otherwise agreed to or
requested in writing by Purchaser in accordance with the terms hereof; (4) any
change in the present capitalization or dividend policy of the Company or any
of its Subsidiaries or (5) any other change in the Company's corporate
structure or business or operations. The Shareholder shall not enter into any
agreement with any Person which would violate the provisions contained in this
Section 3.
(b) As soon as practicable after commencement of the Offer, Purchaser shall
provide the Company and Shareholder with the names of the individuals
Purchaser wishes to be appointed to the Supervisory Board and the Management
Board of the Company effective as of the Closing. Following receipt by
Shareholder and the Company of the names of such individuals (and any further
information regarding these individuals as reasonably requested by Shareholder
and the Company), at a general meeting of shareholders convened by the Company
for the purpose of appointing such individuals to the Supervisory Board and
the Management Board of the Company, as the case may be, Shareholder shall
cause such appointments to take place effective as of, and conditional upon
the occurrence of, the Closing.
Section 4. Restrictions During the Voting Period. (a) The Shareholder shall
not, until the termination of the Voting Period, exercise or Transfer the
option granted to it by the Option Agreement unless requested in
2
<PAGE>
writing by Purchaser and then, in accordance with the terms of the Option
Agreement. Subject to the required consent of the Company, the Shareholder
hereby assigns, transfers and conveys to Purchaser, effective upon the
consummation of the transactions contemplated by the Acquisition Agreement,
all of its rights and entitlement under the Option Agreement, and Purchaser
hereby assumes, effective upon the consummation of the transactions
contemplated by the Acquisition Agreement, all of the rights and obligations
of the Shareholder thereunder.
(b) The Shareholder shall not, until the termination of the Voting Period,
directly or indirectly: (i) except as provided in Section 2 hereof, Transfer
any securities of an Affiliate (whether by merger, consolidation or similar
change of control transaction) which is then a record or beneficial holder of
Company Shares or TOPrS if, as the result of such Transfer, such Person would
cease to be an Affiliate of the Shareholder (ii) Transfer to any Person any
Securities; (iii) grant any proxies or powers of attorney in respect of any
Securities, deposit any Securities into a voting trust or enter into a voting
agreement, understanding or arrangement (except, to the extent applicable, the
Financing Trust, as may be required by the terms pursuant to which the TOPrS
have been issued) with respect thereto; (iv) take any action that would make
any representation or warranty of the Shareholder contained herein untrue or
incorrect or would result in a breach by the Shareholder of its obligations
under this Agreement; or (v) vote any of the Securities in a manner which
would make any representation and warranty of the Company in the Acquisition
Agreement untrue or incorrect or would result in a breach by the Company of
its obligations under the Acquisition Agreement.
(c) Until the termination of the Voting Period, the Shareholder shall not,
and shall cause its Representatives and Affiliates not to, directly or
indirectly, (x) solicit, initiate, encourage, or take any other action (i) to
facilitate, any inquiry or the making of any Acquisition Proposal or (ii)
which could reasonably be expected to impede, frustrate, prevent, delay or
nullify any of the transactions contemplated by this Agreement or the
Acquisition Agreement or to materially diminish the benefits to Purchaser of
the transactions contemplated by this Agreement or the Acquisition Agreement,
(y) take any action to enter into an agreement for the sale or other
disposition by the Company or any of its Subsidiaries of any significant
portion of the assets of or a sale by the Company or any of its Subsidiaries
or by the Shareholder of shares of capital stock of the Company or any of its
Subsidiaries whether by merger or other business combination or tender or
exchange offer or (z) enter into or participate in any discussions or
negotiations regarding any of the foregoing, or in furtherance of any
inquiries regarding any of the foregoing, or furnish to any other Person
(other than Purchaser and its Representatives) any information with respect to
the business, properties or assets of the Company or any of its Subsidiaries
or any of the foregoing. If the Shareholder or any of its Affiliates or
Representatives receives any request for information or an inquiry, proposal
or offer relating to any of the foregoing, then the Shareholder shall orally
(as promptly as practicable and no later than one day) and in writing (as
promptly as practicable) inform Purchaser of the terms and the conditions of
such proposal, inquiry or offer and the identity of the Person making it. The
Shareholder agrees that it will and will cause its Affiliates and their
respective Representatives to immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. The Shareholder agrees that
it will take the necessary steps to promptly inform its Representatives and
Affiliates of the obligations undertaken in this section.
Section 5. Additional Shares. The Shareholder hereby agrees, while this
Agreement is in effect, to promptly notify Purchaser of the number of Company
Shares and TOPrS acquired beneficially or of record by the Shareholder, if
any, after the date hereof. In the event that, between the date of this
Agreement and the Closing Date, Company Shares and TOPrS shall have been
affected or changed into a different number of shares or a different class of
shares as a result of a share split, reverse share split, share distribution,
spin-off, recapitalization, reclassification (other than a change in par
value), or other similar transaction, the term Securities or other securities
shall be deemed to refer to and include any shares or other securities into
which or for which any or all of the Securities may be changed or exchanged
and all such share distributions.
Section 6. Covenants of Purchaser.
(a) Purchaser shall, with effect as of the Closing, indemnify and hold
harmless the Shareholder and its Affiliates from and against all damages,
losses, costs and expenses incurred solely as a result of or arising solely
from, and as promptly as possible following the Closing shall use its
commercially reasonable efforts
3
<PAGE>
to cause the Shareholder and its Affiliates to be released from
Shareholder's and such Affiliates' obligations under performance bonds,
guarantees, indemnities or other obligations of the Shareholder and any of
its Affiliates outstanding on behalf of the Company and its Subsidiaries as
set forth in Section 2.20 of the Company Disclosure Schedule and as
otherwise agreed by Purchaser in writing. Shareholder agrees that neither
it nor its Affiliates shall be entitled to receive any fees or other
compensation in connection with such performance bonds, guarantees,
indemnities or other obligations accrued for any period after the later of
the Closing and the effectiveness of such release or counter-
indemnification.
(b) In the event any claim, liability, demand, assessment, action, suit
or proceeding shall be asserted against the Shareholder or any of its
Affiliates in respect of which the Shareholder proposes to demand
indemnification pursuant to Section 6(a) (a "Claim"), the Shareholder shall
promptly notify Purchaser thereof (including, without limitation, the
notification and delivery of any information pertaining to such Claim, as
and when received by the Shareholder or any of its Affiliates); provided,
however, that the failure to so notify or deliver such information to
Purchaser shall not discharge Purchaser or otherwise affect Purchaser's
obligations pursuant to Section 6(a) except to the extent that Purchaser is
prejudiced thereby. Purchaser shall have the right, promptly upon receipt
of any notice of any Claim, to assume the control of the defense,
compromise or settlement of such Claim including, at its own expense, the
employment of counsel. The Shareholder shall not settle or compromise any
such Claim without express the written consent of Purchaser.
(c) Effective upon the Closing, Purchaser undertakes for a period of no
less than 36 months from the Closing, that Purchaser, except for good
cause, will not terminate or lay-off any employees of the Company's Italian
Affiliates, unless an appropriate agreement has been entered into with the
relevant unions in Italy. In addition, Purchaser will endeavor to
capitalize on the opportunities and resources available within the
Company's Italian Affiliates.
Section 7. Representations and Warranties of the Shareholder. The
Shareholder hereby represents and warrants to Purchaser as follows:
(a) The Shareholder is a corporation duly organized and validly existing
under the laws of Italy. The Shareholder has all requisite corporate power
and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement, the performance by the Shareholder of its obligations hereunder
and the consummation by the Shareholder of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
action on the part of the Shareholder. This Agreement has been duly
executed and delivered by the Shareholder and constitutes the legal, valid
and binding obligation of the Shareholder, enforceable against the
Shareholder in accordance with its terms except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws relating to or affecting creditors generally and by
the general principles of equity, regardless of whether such enforceability
is considered in a proceeding at law or in equity.
(b) The Shareholder, directly and indirectly through Subsidiaries, is the
record holder and Beneficial Owner of 17,813,527 Company Shares (the "Owned
Shares") and 1,600,000 TOPrS convertible into 2,492,212 Company Shares
(collectively, the "Shareholder Securities"), and has good and marketable
title to all of such securities, free and clear of all liens, claims,
options, proxies, voting agreements, security interests, charges, and
encumbrances and preemptive rights. The Shareholder Securities constitute
all of the issued and outstanding capital stock of the Company and its
Subsidiaries and TOPrS Beneficially Owned by the Shareholder and, except
for the TOPrS owned by the Shareholder and as provided thereby and in the
Option Agreement, the Shareholder does not Beneficially Own or have any
right to acquire (whether currently, upon lapse of time, following the
satisfaction of any conditions, upon the occurrence of any event or any
combination of the foregoing) any Company Shares or TOPrS or any securities
convertible into Company Shares or TOPrS. The Shareholder has sole power to
vote and to dispose of the Shareholder Securities, to issue instructions
with respect to the Shareholder Securities to the extent appropriate in
respect of the matters set forth in this Agreement and to agree to all of
the matters set forth in this Agreement, in each case with respect to all
of the Shareholder Securities, with no limitations, qualifications or
restrictions
4
<PAGE>
on such rights, subject to applicable securities laws and the terms of this
Agreement. The delivery to Purchaser of any Securities pursuant to the
provisions of this Agreement will transfer to Purchaser good and marketable
title thereto, free and clear of all liens, encumbrances, restrictions and
claims of every kind.
(c) The execution and delivery of this Agreement by the Shareholder do
not, and the performance by the Shareholder of its obligations hereunder
and the consummation by the Shareholder of the transactions contemplated
hereby will not, (i) (A) conflict with or violate the articles of
incorporation or by-laws or other organizational documents of the
Shareholder, (B) conflict with or violate any material law, statute, rule,
regulation order, judgment, writ, injunction or decree applicable to the
Shareholder or any of its properties or assets, (C) result in a violation
or breach of or constitute a default under (or an event which with the
giving of notice or the lapse of time or both would constitute a default
under), require any consent, approval or authorization under, result in the
loss of a benefit or result in any provision becoming applicable or
effective under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
other encumbrance on any property or asset of the Shareholder pursuant to,
any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which the
Shareholder is a party or by which the Shareholder or any property or asset
(including the Shareholder Securities) of the Shareholder may be bound or
affected, except that an Affiliate of the Shareholder is required to prepay
its bank financing upon the sale of the Company Shares and TOPrS owned by
it; or (ii) require the Shareholder to obtain any consent, approval,
authorization or permit of, or to make any filing with or notification to,
any Governmental Entity, except (A) for (1) applicable requirements, if
any, of the Exchange Act, securities or "blue sky" laws of the states of
the United States ("Blue Sky Laws"), and securities laws of Italy, (2) the
prior notification and reporting requirements under the Antitrust Laws (3)
the voluntary notification under Exon-Florio; and (4) any filing required
to be made with the Australian Foreign Investment Review Board; and (B)
where the failure to obtain such consents, approvals, authorizations and
permits, or to make such filings or notifications, would not be reasonably
likely to have a Company Material Adverse Effect and would not prevent or
materially delay the Shareholder from consummating the transactions
contemplated hereby.
(d) The Shareholder understands and acknowledges that Purchaser is
entering into the Acquisition Agreement and incurring the obligations set
forth therein, in reliance upon the Shareholder's execution and delivery of
this Agreement.
Section 8. Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to the Shareholder as follows:
(a) Purchaser is a corporation duly organized and validly existing under
the laws of the jurisdiction of The Netherlands and has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby and by the Acquisition
Agreement. The execution and delivery of this Agreement and the Acquisition
Agreement, the performance by Purchaser of its obligations hereunder and
thereunder and the consummation by Purchaser of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement has been duly
executed and delivered by Purchaser and constitutes the legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting creditors generally and by general
principles of equity, regardless of whether such equitable principles are
applied in a proceeding at law or in equity.
(b) Subject to making the filings and obtaining the approvals identified
in Section 3.4 of the Acquisition Agreement, the execution and delivery of
this Agreement and the Acquisition Agreement by Purchaser do not, and the
performance by Purchaser of its obligations hereunder and thereunder and
the consummation by Purchaser of the transactions contemplated hereby and
thereby will not (i) (A) conflict with or violate the articles of
association, certificate of incorporation, by-laws, partnership agreement
or other charter or organization document of Purchaser or any of its
material Subsidiaries, (B) conflict with or violate any material law,
statute, rule, regulation, order, judgment, writ, injunction or decree
applicable to Purchaser or any of its Subsidiaries or any of their
respective properties or assets or (C) result in a violation
5
<PAGE>
or breach of or constitute a default under (or an event which with the
giving of notice or the lapse of time or both would constitute a default
under), require any consent, approval or authorization under, result in the
loss of a material benefit or result in any provision becoming applicable
or effective under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
other encumbrance on any property or asset of Purchaser or any of its
Subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which Purchaser or any of its Subsidiaries is a party or
by which Purchaser or any of its Subsidiaries or any material property or
asset of Purchaser or any of its Subsidiaries may be bound or affected,
except in the case of each of clauses (B) and (C) for any such conflicts,
violations, breaches, defaults or other occurrences which would not be
reasonably likely to result in a Purchaser Material Adverse Effect or
prevent or materially delay Purchaser from consummating the transactions
contemplated hereby and thereby; or (ii) require Purchaser to obtain any
consent, approval, authorization or permit of, or to make any filing with
or notification to, any Governmental Entity, except (A) for (1) applicable
requirements, if any, of the Exchange Act and Blue Sky Laws, (2) the prior
notification and reporting requirements under the Antitrust Laws, (3) the
voluntary notification under Exon-Florio, and (4) any filing required to be
made with the Australian Foreign Investment Review Board; and (B) where the
failure to obtain such consents, approvals, authorizations and permits, or
to make such filings or notifications, would not be reasonably likely to
have a Purchaser Material Adverse Effect or prevent Purchaser from
consummating the transactions contemplated hereby and thereby.
(c) Purchaser understands and acknowledges that the Shareholder is
entering into this Agreement and incurring the obligations set forth
herein, in reliance upon Purchaser's execution and delivery of the
Acquisition Agreement as well as this Agreement.
Section 9. Confidentiality. The Shareholder shall not disclose and will keep
confidential for a period of five years from the Closing Date any information
not otherwise publicly available relating to the Company, any of the
Subsidiaries or the business conducted by any of them that was provided to the
Shareholder by the Company or any of its Subsidiaries and will not use any
such information in any manner detrimental to the Company or its Subsidiaries,
except that Shareholder may disseminate such information to Representatives
who need to know such information for the purpose of analyzing the
transactions contemplated hereby, provided that such Representatives shall be
informed of the confidential nature of such information and Shareholder shall
cause them to treat it confidentially, and otherwise may disclose such
information as required by law.
Section 10. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful action as
may be necessary or desirable to consummate and make effective, in the most
expeditious manner practicable, the transactions contemplated by this
Agreement.
Section 11. Expiration. This Agreement and the Shareholder's obligation to
tender, and not withdraw, pursuant hereto and any obligations of Parent and
Purchaser hereunder shall terminate on the Expiration Date. As used herein,
the term "Expiration Date" means the date on which the Acquisition Agreement
is terminated by the Purchaser in accordance with its terms. In the event of
termination of this Agreement, this Agreement shall forthwith become void and
there shall be no liability or obligation on the part of Purchaser or the
Shareholder or their respective officers or directors; provided, however, the
foregoing shall not relieve either party for any breach of any representation,
warranty, covenant or agreement in this Agreement. Parent and Purchaser each
acknowledges that, in the event of termination of this Agreement in accordance
with its terms, the Shareholder shall no longer have the obligation to tender,
and may withdraw, the Shareholder Securities; provided, that if the Company
terminates the Acquisition Agreement in accordance with Section 5.1(c), the
Purchaser shall, within five Business Days, either (i) terminate the Offer or
(ii) waive the Minimum Condition and the condition set forth in Paragraph (C)
of the Offer Conditions set forth in Annex A of the Acquisition Agreement
(except that the portion of such condition related to performance or
compliance as to covenants and agreements shall only be waived as to breaches
actually known by Purchaser as of the date of such election) and, to the
extent all other Offer Conditions are satisfied, shall accept for payment and
pay for at the next scheduled expiration date of the Offer (subject to
applicable law) all Company Shares and TOPrS then validly tendered and not
withdrawn in the Offer.
6
<PAGE>
Section 12. Survival. The representations and warranties contained in
Sections 7(a) and 7(b) and in Section 8 shall survive the consummation of the
Offer indefinitely and the representations and warranties contained in Section
7(c) shall survive until the second anniversary of the Closing Date.
Section 13. Miscellaneous.
(a) This Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings between the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon either
party hereto unless made in writing and signed by both parties hereto. Any
term or condition of this Agreement may be waived at any time by the party
that is entitled to the benefit thereof, but no such waiver shall be effective
unless set forth in a written instrument duly executed by or on behalf of the
party waiving such term or condition. No waiver by any party of any term or
condition of this Agreement, in any one or more instances, shall be deemed to
be a waiver of the same or any other term or condition of this Agreement on
any future occasion.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by either of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party, provided, however, that Purchaser may assign its rights and delegate
its obligations hereunder to a wholly-owned subsidiary of Purchaser and
provided, further, that such assignment and delegation shall not relieve
Purchaser of its obligations hereunder. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this
Agreement, expressed or implied, is intended to confer on any Person other
than the parties hereto or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
(c) All notices and other communications hereunder shall be in writing and
shall be deemed duly given (i) on the date of delivery if delivered
personally, or by facsimile, upon confirmation of receipt, (ii) on the first
Business Day following the date of dispatch if delivered by a recognized next-
day courier service, or (iii) on the fifth Business Day following the date of
mailing if delivered by registered or certified mail (airmail if
international), return receipt requested, postage prepaid. All notices
hereunder shall be delivered as set forth below, or pursuant to such other
instructions as may be designated in writing by the party to receive such
notice:
If to the Shareholder, to:
Piazza Monte Grappa 4
00195 Rome, Italy
Attention: Secretary
Facsimile: 39-06-32657-164
with a copy to:
Morgan, Lewis & Bockius LLP
101 Park Avenue
New York, NY 10178
Attention: W. Preston Tollinger
Facsimile: (212) 309-6273
If to Purchaser, to:
ABB Transportation Participations B.V.
PO Box 74690
NL-1070BR Amsterdam
The Netherlands
Fax: 31-20-445-9844
Attention: Managing Director
7
<PAGE>
With a copy to:
ABB Asea Brown Boveri Ltd.
PO Box 8131
CH-8050 Zurich
Switzerland
Fax: 011-411-317-7992
Attention: CS-LE
With a further copy to:
White & Case LLP
1155 Avenue of the Americas
New York, NY 10036
Attention: Gregory Pryor, Esq.
Telephone: (212) 819-8200
Facsimile: (212) 354-8113
(d) If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future law, and if the rights or
obligations of any party hereto under this Agreement will not be materially
and adversely affected thereby, (i) such provision will be fully severable,
(ii) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof, (iii)
the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom and (iv) in lieu of such illegal,
invalid or unenforceable provision, there will be added automatically as a
part of this Agreement a legal, valid and enforceable provision as similar
in terms to such illegal, invalid or unenforceable provision as may be
possible.
(e) The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with its specific terms or was otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any New York Court, this
being in addition to any other remedy to which they are entitled at law or
in equity.
(f) All rights, powers and remedies provided under this Agreement or
otherwise available in respect hereof at law or in equity shall be
cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party. The failure of any party hereto
to exercise any right, power or remedy provided under this Agreement or
otherwise available in respect hereof at law or in equity, or to insist
upon compliance by any other party hereto with its obligations hereunder,
and any custom or practice of the parties at variance with the terms
hereof, shall not constitute a waiver by such party of its right to
exercise any such or other right, power or remedy or to demand such
compliance.
(g) This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to its rules of conflict
of laws. Each of the parties hereto hereby irrevocably and unconditionally
consents to submit to the non-exclusive jurisdiction of the courts of the
State of New York and of the United States of America located in the State
of New York (the "New York Courts") for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby waives
any objection to the laying of venue of any such litigation in the New York
Courts and agrees not to plead or claim in any New York Court that such
litigation brought therein has been brought in an inconvenient forum.
(h) As used in this Agreement, the word "including" means without
limitation; the word "or" is not exclusive; and the words "herein",
"hereof", "hereby", "hereto" and "hereunder" refer to this Agreement as a
whole. Any reference to any applicable law shall be deemed also to refer to
all rules and regulations promulgated thereunder unless the context
otherwise requires. Whenever required by the
8
<PAGE>
context, any gender shall include any other gender, the singular shall
include the plural and the plural shall include the singular. Unless the
context otherwise requires, references herein: (i) to Sections mean the
Sections of this Agreement; and (ii) to an agreement, instrument or other
document means such agreement, instrument or other document as amended,
supplemented and modified through the date hereof, unless the context
otherwise requires, and thereafter from time to time to the extent
permitted by this Agreement. The headings of Sections are inserted for
convenience of reference only and shall not be deemed a part of, or affect
in any way the meaning or interpretation of, this Agreement.
9
<PAGE>
IN WITNESS WHEREOF, Purchaser and the Shareholder have caused this Agreement
to be duly executed as of the day and year first above written.
Shareholder:
Finmeccanica S.p.A.
/s/ Alberto Lina
By: _________________________________
Name: Alberto Lina
Title: Vice-Chairman and
Chief Executive Officer
Purchaser:
ABB Transportation Participations
B.V.
/s/ Mats Sacklen
By: _________________________________
Name: Mats Sacklen
Title: PP
/s/ Eric Elzvik
By: _________________________________
Name: Eric Elzvik
Title:
The undersigned, being the sole Shareholder of the Purchaser, hereby
undertakes to insure that the Purchaser will duly perform its obligations
under this Agreement and hereby guarantees any and all liabilities and amounts
which become payable by Purchaser hereunder.
ABB Asea Brown Boveri Ltd.
/s/ Mats Sacklen
By: _________________________________
Name: Mats Sacklen
Title: VP
/s/ Eric Elzvik
By: _________________________________
Name: Eric Elzvik
Title: VP
10
<PAGE>
INDEX OF DEFINED TERMS
(NOT PART OF AGREEMENT)
<TABLE>
<CAPTION>
TERM SECTION
- ---- --------
<S> <C>
Acquisition Agreement................................................. RECITALS
Affiliate............................................................. 1(a)
Agreement............................................................. RECITALS
Beneficial Ownership.................................................. 1(b)
Blue Sky Laws......................................................... 7(c)
Company............................................................... RECITALS
Company Shares........................................................ RECITALS
Expiration Date....................................................... 11
New York Courts....................................................... 13(g)
Offer................................................................. RECITALS
Option Agreement...................................................... 1(c)
Owned Shares.......................................................... 7(b)
Person................................................................ 1(d)
Priority Shares....................................................... 1(e)
Purchaser............................................................. RECITALS
Shareholder........................................................... RECITALS
Shareholder Securities................................................ 7(b)
TOPrS................................................................. RECITALS
Transfer.............................................................. 1(f)
Voting Period......................................................... 3
</TABLE>
<PAGE>
EXHIBIT 4
<PAGE>
[LETTERHEAD OF ELSAG BAILEY PROCESS AUTOMATION]
July 2, 1998
ABB Asea Brown Boveri Ltd.
P.O. Box 8131, CH-8050
Zurich, Switzerland
Attention: Mr. Eric Elzvik, Vice President, Corporate Development
Dear Mr. Elzvik,
In order to allow you to evaluate the possible acquisition (the "Proposed
Acquisition") of Elsag Bailey Process Automation N.V. (the "Company"), we will
deliver to you, upon your execution and delivery to us of this letter
agreement, certain information about the properties and operations of the
Company. All information about the Company furnished by us or our
Representatives, whether furnished before or after the date hereof, whether
oral or written, and regardless of the manner in which it is furnished or
gathered by you by inspection, and regardless of whether identified
"confidential" or "proprietary", is referred to in this letter agreement as
"Proprietary Information". Proprietary Information does not include, however,
information which (a) is or becomes generally available to the public other
than as a result of a disclosure by you or your Representatives, (b) was
available to you on a nonconfidential basis prior to its disclosure by us or
our Representatives, (c) becomes available to you on a nonconfidential basis
from a person other than us or our Representatives who is not otherwise bound
by a confidentiality agreement with us or any Representative of ours, or is
otherwise not under an obligation to us or any Representative of ours not to
transmit the information to you or (d) is independently developed by you. As
used in this letter agreement, the term "Representative" means, as to any
person, such person's affiliates and its and their directors, officers,
employees, agents, advisors (including, without limitation, financial
advisors, counsel and accountants) and controlling persons. As used in this
letter agreement, the term "person" shall be broadly interpreted to include,
without limitation, any corporation, company, partnership, other entity or
individual.
Except as required by law, unless otherwise agreed to in writing by us, you
agree (a) to keep all Proprietary Information confidential and not to disclose
or reveal any Proprietary Information to any person other than your
Representatives who are actively and directly participating in your evaluation
of the Proposed Acquisition or who otherwise need to know the Proprietary
Information for the purpose of evaluating the Proposed Acquisition and to
cause those persons to observe the terms of this letter agreement, (b) not to
use Proprietary Information for any purpose other than in connection with your
evaluation of the Proposed Acquisition or the consummation of the Proposed
Acquisition in a manner that we have approved and (c) not to disclose to any
person (other than those of your Representatives who are actively and directly
participating in your evaluation of the Proposed Acquisition or who otherwise
need to know for the purpose of evaluating the Proposed Acquisition and, in
the case of your Representatives, whom you will cause to observe the terms of
this letter agreement) any information about the Proposed Acquisition, or the
terms or conditions or any other facts relating thereto, including, without
limitation, the fact that discussions are taking place with respect thereto or
the status thereof, or the fact that Proprietary Information has been made
available to you or your Representatives. If you are not selected as the
acquirer, you and your Representatives shall make no further use of the
Proprietary Information for any purposes. You will be responsible for any
breach of the terms of this letter agreement by you or your Representatives.
In the event that you are requested pursuant to, or required by, applicable
law or regulation or by legal process to disclose any Proprietary Information
or any other information concerning the Company or the Proposed Acquisition,
you agree that you will provide us with prompt notice of such request or
requirement in
1
<PAGE>
order to enable us to seek an appropriate protective order or other remedy, to
consult with you with respect to our taking steps to resist or narrow the
scope of such request or legal process, or to waive compliance, in whole or in
part, with the terms of this letter agreement. In any such event you will use
your reasonable best efforts to ensure that all Proprietary Information and
other information that is so disclosed will be accorded confidential
treatment.
You acknowledge that you are aware, and that you will advise your directors,
officers, employees, agents, representatives, lenders and other sources of
financing who are informed as to the matters which are the subject of this
letter, that the United States securities laws prohibit any person who has
received from an issuer any material, non-public information from purchasing
or selling securities of such issuer or from communicating such information to
any other person under circumstances in which it is reasonably foreseeable
that such person is likely to purchase or sell such securities.
You also agree that for a period of one year from the date of this letter
agreement, neither you nor any of your Representatives will, without the prior
written consent of the Company:
(a) acquire, offer to acquire, or agree to acquire, directly or
indirectly, by purchase or otherwise, any voting securities or direct or
indirect rights to acquire any voting securities of the Company or any
subsidiary thereof, or of any successor to or person in control of the
Company, or any assets of the Company or any subsidiary or division thereof
or of any such successor or controlling person, except that the provisions
of this item (a) shall not apply to a financial advisor engaged by you, any
part of which is acting in the ordinary course of its business;
(b) make, or in any way participate, directly or indirectly, in any
"solicitation" of "proxies" to vote (as such terms are used in the rules of
the Securities and Exchange Commission), or seek to advise or influence any
person or entity with respect to the voting of any voting securities of the
Company;
(c) make any public announcement with respect to, or submit a proposal
for, or offer of (with or without conditions) any extraordinary transaction
involving the Company or any of its securities or assets;
(d) form, join or in any way participate in a "group" as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, in
connection with any of the foregoing; or
(e) request the Company or any of our Representatives, directly or
indirectly, to amend or waive any provision of this paragraph.
You will promptly advise the Company of any inquiry or proposal made to you
with respect to any of the foregoing.
If you determine that you do not wish to proceed with the Proposed
Acquisition, you will promptly advise us of that decision. In that case, or in
the event that we, in our sole discretion, so request or the Proposed
Acquisition is not consummated by you, you will, upon our request, promptly
deliver to us all Proprietary Information, including all copies,
reproductions, summaries, analyses or extracts thereof or based thereon in
your possession or in the possession of any Representative of yours.
You acknowledge that none of the Company, Merrill Lynch International
("Merrill Lynch") or our other Representatives and none of the respective
officers, directors, employees, agents or controlling persons of Merrill Lynch
or such other Representatives makes any express or implied representation or
warranty as to the accuracy or completeness of any Proprietary Information,
and you agree that none of such persons shall have any liability to you or any
of your Representatives relating to or arising from your or their use of any
Proprietary Information or for any errors therein or omissions therefrom. You
also agree that you are not entitled to rely on the accuracy or completeness
of any Proprietary Information and that you shall be entitled to rely solely
on such representations and warranties regarding Proprietary Information as
may be made to you in any final acquisition agreement relating to the Proposed
Acquisition, subject to the terms and conditions of such agreement.
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You agree that, without our prior written consent, you will not for a period
of two years from the date hereof directly or indirectly solicit for
employment or employ any person who is now employed by us or any of our
subsidiaries in an executive or management position or who has access to new
product development information or technology or who is involved in sales or
marketing.
You agree that until a final acquisition agreement regarding the Proposed
Acquisition has been executed by you and us, neither we nor any of our
Representatives are under any legal obligation and shall have no liability to
you of any nature whatsoever with respect to the Proposed Acquisition by
virtue of this letter agreement or otherwise. You also acknowledge and agree
that (i) we and our Representatives may conduct the process that may or may
not result in the Proposed Acquisition in such manner as we, in our sole
discretion, may determine (including, without limitation, negotiating and
entering into a final acquisition agreement with any third party without
notice to you) and (ii) we reserve the right to change (in our sole
discretion, at any time and without notice to you) the procedures relating to
our and your consideration of the Proposed Acquisition (including, without
limitation, terminating all further discussions with you and requesting that
you return all Proprietary Information to us).
This letter agreement shall be governed by and interpreted in accordance
with the laws of the State of New York. You hereby irrevocably consent that
any legal action or proceeding against you arising out of or in any way
connected with this letter agreement may be instituted in any New York state
or United States federal court located in New York City, and by execution and
delivery of this letter agreement you hereby irrevocably submit to the non-
exclusive jurisdiction of the aforesaid courts in any such legal action or
proceeding.
Without prejudice to the rights and remedies otherwise available to us, you
agree we shall be entitled to equitable relief by way of injunction or
otherwise if you or any of your Representatives breach or threaten to breach
any of the provisions of this letter agreement.
It is further understood and agreed that no failure or delay by us in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any right, power or privilege
hereunder.
Unless otherwise expressed herein, the obligations undertaken by you
pursuant to this letter agreement should survive for a period of three (3)
years from the date of your acceptance of this proposal.
This letter agreement shall be governed by and construed in accordance with
the laws of the State of New York applicable to contracts executed in and to
be performed in that state.
Any assignment of this letter agreement by you without our prior written
consent shall be void.
This letter agreement contains the entire agreement between you and us
concerning confidentiality of the Proprietary Information, and no modification
of this letter agreement or waiver of the terms and conditions hereof shall be
binding upon you or us, unless approved in writing by each of you and us.
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Please confirm your agreement with the foregoing by signing and returning to
the undersigned the duplicate copy of this letter enclosed herewith.
ELSAG BAILEY PROCESS AUTOMATION N.V.
/s/ Vincenzo Cannatelli
By __________________________________
Name: Vincenzo Cannatelli
Title: Chief Executive Officer
Accepted and Agreed as of the date
first written above:
ABB ASEA BROWN BOVERI LTD.
/s/ Mats Sacklen
By __________________________________
Name: Mats Sacklen
Title: Vice President
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EXHIBIT 5
<PAGE>
EXHIBIT 5(A) TO SCHEDULE 14D-9
FORM OF CHANGE OF CONTROL AGREEMENT
(INCLUDING AMENDMENT)
[date]
[Name of executive]
Dear [executive]:
NOTE: FOR THIS AGREEMENT TO BECOME EFFECTIVE ONE COPY, DULY SIGNED, MUST BE
REQUIRED TO DAVID NORGARD WITHIN SEVEN (7) DAYS OF THE DATE HEREOF.
CHANGE OF CONTROL AGREEMENT
WHEREAS, Elsag Bailey Process Automation, either directly or through its
subsidiary by which the Executive designated herein is employed, (hereinafter,
"the Company") desires to retain the services of [name of executive]
(hereinafter the "Executive") and the Executive desires to continue to provide
such services as [executive's title]; and
WHEREAS, a transaction which causes a "Change of Control" in the ownership
of the Company could result in a change in the status of the Executive which
could be contrary to the interest of the Executive; and
WHEREAS, the Company desires to encourage the Executive to remain fully
attentive and committed to his duties with the corporation;
NOW, THEREFORE, in consideration of the promises and the mutual agreements
contained herein and intending to be legally bound, the company and the
Executive agree to the following special Change of Control provisions:
A "Change-of-Control" shall be deemed to have occurred (i) if any person or
group of persons acting in concert (but excluding Finmeccanica or persons who
control or are controlled by or under common control of Finmeccanica) becoming
the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934), directly or indirectly, of any or all of the Priority Shares of
the Company, or securities of the Company representing shares representing 50%
or more of the total voting power represented by the Company's then
outstanding voting securities (including in the determination of such
outstanding voting securities, all securities, beneficially owned by such
person or group); (ii) a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation that would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) of at least 50% of the total
voting power represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;
(iii) a sale of all or substantially all the assets of the Company.
1. If, during the period eighteen (18) months immediately following any
event constituting a Change-in-Control, the Executive should be terminated
from his employment with the Company or any successor Company (except for
"just cause"), then the Executive shall be entitled to a notice period (or
payment in lieu of) of six (6) months prior to such termination. In addition,
a severance payment equal to [12, 18 or 24] months salary shall be paid
immediately upon such termination. If such termination occurs within six (6)
months immediately preceding a Change-of-Control (unless such termination is
for "just cause") then, it shall be considered a termination in anticipation
of a Change-of-Control and the Executive shall be entitled to receive at least
the minimum notice, severance and bonus pay provided under this paragraph. The
severance payment under this section shall be based on the higher of his base
compensation in effect as of the date of the termination of employment or his
base compensation in effect as of the date of the Change-in-Control. In
addition, the Executive shall receive a cash payment equal to the highest
short term incentive bonus paid during the last three years immediately prior
to the termination times the number of years and partial years for which the
Executive is entitled to Notice Period and Severance Pay. (For example, if the
Executive receives 1 1/2 year of Notice and
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Severance Pay, he shall receive 12 incentive pay; if he receives 2 years
Notice and Severance Pay, he shall receive 2 years incentive pay). This
provision shall constitute the full amount of Severance due the Executive in
the event of Change-of-Control as defined herein.
2. In addition, the employee and executive benefits which the Executive
enjoys as of the date of the Change-in-Control or upon termination in the
event of a termination "in anticipation of' a Change-of-Control, (or any
changes thereto which are more favorable to the Executive) shall be provided
for the period of time equivalent to the maximum severance and notice period
to which the Executive is entitled (but only to the extent the Executive and
his eligible dependents are not eligible to receive reasonably comparable
benefits in connection with the Executive's or his eligible dependents'
subsequent employment) as defined in this Agreement. This provision shall
include any and all insured benefits, qualified or non-qualified benefit
plans, executive insurances, executive automobile and mobile telephone,
Retirement or Stock Option Plans, or any other perquisite made available to
the Executive. Should, by operation of law or regulation, the Company be
unable to continue the Executive's participation in any benefit plan(s)
required hereunder following termination of his services hereunder, then the
Company shall arrange a comparable benefit or provide a cash payment of
equivalent total value to the Executive.
3. A "constructive dismissal" entitling the Executive, at this election made
within ninety (90) days thereafter, to the provisions of paragraphs 1 and 2 of
this Agreement under following circumstances: (i) if the Executive is not
offered a position substantially similar in scope of responsibilities which
offers a total compensation, benefit and perquisite package which is
comparable to that enjoyed as of the date of the Change-of-Control; (ii) if
the Executive is required to change his principal residence outside of his
home country; or, (iii) the failure of the Company to obtain an assumption of
the obligations of the Company to perform this Agreement by any successor to
the Company.
4. The Executive, following his termination of services for whatever reason,
shall not, for a period of twenty four (24) months, directly or indirectly
employ or solicit (or cause or assist any other person to employ or solicit)
for employment, any employee of the Company (or any of its affiliates),
wheresoever situated, who was employed by the Company (or any of its
affiliates) as of the date of the Executive's termination. Nor, during the
employment of the Executive, the period for which the Executive is entitled to
receive Severance Pay hereunder, or for eighteen (18) months in the event of a
termination for "just cause", shall the Executive directly or indirectly
engage, participate or be interested in as owner, officer, director, manager,
employee, consultant or otherwise or have any financial interest in, or aid or
assist anyone else in the conduct of any business or activity in any
jurisdiction which is at the time competitive with the business of the Company
or its affiliate as carried on as of such date of termination or is actively
being considered (and known to the Executive) as an additional business of the
Company or its affiliates on such date of termination; provided, however, that
the Executive's ownership of not more than 5% of the securities of any
corporation or other entity which are traded on any securities exchange or in
the over-the-counter market shall not constitute a violation of this Section.
5. "Just cause" is defined as:
a. the willful failure of the Executive to comply with any reasonable
lawful directive of Management Board of the Company;
b. dishonesty, gross negligence or malfeasance by the Executive in the
performance of his assigned duties;
c. deliberate breach of any fiduciary duties related to the Executive's
position, and if applicable, as an officer of the Company;
d. material failure or inability of the executive to perform the normal
scope of his duties hereunder.
6. The provisions of paragraphs 1, 2, and 3 of this agreement shall be valid
for a three (3) year period commencing from the date of this letter, unless
extended or modified by mutual agreement.
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7. In the event that termination protections (including notice/severance
pay, executive benefit privileges, etc.) are more generous for the executive
under terms of his local (meaning home country) contract or other personal
employment agreement, then those benefits shall prevail over the benefits
specified herein. Nothing in this Agreement is intended to diminish the
protections contained in prior written agreements, which remain in effect as
of the date of a Change of Control. However, in no case shall the benefits
specified herein be construed to be cumulative with similar benefits contained
in other agreements.
8. Upon termination of employment under either Paragraph 1 or 3 of this
Agreement, the Executive will immediately resign from any and all positions
with the Company or any of its affiliates.
Sincerely,
Vincenzo Cannatelli
ACCEPTED: ___________________________
WITNESS: ____________________________
3
<PAGE>
[date]
[name of executive]
Dear [executive]:
NOTE: FOR THIS AMENDMENT TO BECOME EFFECTIVE ONE COPY, DULY SIGNED, MUST BE
RETURNED TO DAVID NORGARD WITHIN SEVEN (7) DAYS OF THE DATE HEREOF.
AMENDMENT TO CHANGE OF CONTROL AGREEMENT
WHEREAS, Elsag Bailey Process Automation, N.V., either directly or through a
subsidiary by which the Executive designated herein is employed (hereinafter
the "Company") desires to retain the services of [name of executive]
(hereinafter the "Executive") and the Executive desires to continue to provide
such services as [executive's title]; and
WHEREAS, the Company has previously entered into a Change of Control
Agreement with the Executive dated , 1997 (the "Agreement") to
encourage the Executive to remain fully attentive and committed to his duties
with the Company;
WHEREAS, the Company desires to ensure that its executives resident in
various countries who are subject to different contractual and legal
protection relevant to a change of control or termination of employment shall
be treated fairly and equitably; and
WHEREAS, the Company and the Executive desire to clarify various provisions
of the Agreement and amend in certain respects such Agreement;
NOW, THEREFORE, in consideration of the promises and the mutual agreements
contained herein and intending to be legally bound, the Company and the
Executive agree as follows:
1. The six (6) month notice period referred to in paragraph 1 and
elsewhere in the Agreement is hereby incorporated in the Executive's
severance pay period used for computing severance entitlements under the
Agreement, with such notice period, therefore, being eliminated and the
severance period being increased by six (6) months (as so increased the
"Severance Period").
2. Paragraph 1 of the Agreement is hereby clarified to make it clear that
all payments made pursuant thereto shall be made in a lump sum distribution
within five (5) days of the termination of employment (or, if later, within
five (5) days of the date of a Change in Control), and is further clarified
to make it clear that the reference to the "last three years" means the
"most recent year (whether or not completed) for which a bonus has been
paid or accrued (annualized as appropriate) and the two preceding years".
3. To clarify and/or quantify the Executive's entitlements pursuant to
paragraph 2 of the Agreement (relating to continued employee and executive
benefits during the Severance Period), the Executive's entitlements
pursuant to paragraph 2 of the Agreement shall be as follows (which
entitlements shall be paid or commence within five (5) days of the
termination of employment or, if later, within five (5) days of the date of
a Change in Control):
(a) for the Severance Period, health, life and disability coverage
and use of a vehicle and mobile phone, in each case on a basis no less
favorable to the Executive than the most favorable coverage or policy
in effect immediately prior to (i) the date of his termination, (ii)
the Change of Control, or (iii) in the case of a constructive
dismissal, the occurrence of the event or circumstance giving rise to
such constructive dismissal;
(b) in lieu of continued participation in the Company's qualified
(Retirement Savings Plan) and nonqualified (Excess Savings Plan)
retirement program as in effect on the date hereof for the Severance
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Period, a lump sum payment, in cash, that on an after-tax basis
(including federal income and social security taxes, and state and
local income taxes, each at the highest marginal rate), equals 6% of
the total amount payable pursuant to paragraph 1 of the Agreement, or,
if the Executive was not participating in such retirement program, the
Executive shall be entitled to additional benefit service for a period
equal to the Severance Period under any Company-sponsored pension
scheme or arrangement in which the Executive was participating (or if
such additional benefit service is not permissible by operation of law,
an equivalent payment in lieu thereof);
(c) in lieu of continued participation in the Company's 1993 Long-
Term Stock Incentive Plan as in effect on the date hereof for the
Severance Period, a lump sum payment, in cash equal to the product of
(i) the Severance Period (expressed in years and fractions thereof),
(ii) the value, immediately prior to a Change of Control, of a fully
vested and immediately exercisable option to purchase one share of
Company common stock at a strike price equal to the fair market value
of such share at such time, which value shall be determined by
multiplying the last closing price of such share prior to the Change of
Control by 61.642% (determined by William M. Mercer, Inc. to be the
Black-Scholes value of such an option, expressed as a percentage of
market price), and (iii) (representing the average number of
shares subject to options granted to the Executive during the three
most recent calendar years (whether or not completed) in which such
grants were actually made to the Executive, excluding grants made in
May, 1998 or thereafter (option grants made in a year prior to 1997
that were cancelled and reissued in 1997 in connection with a repricing
are counted as grants made during such prior year, but are based on the
number of shares subject to the options reissued in 1997, and such
reissued options are not treated as options granted with respect to
1997));
(d) a lump sum payment, in cash, equal to the sum of (i) any
incentive bonus which has been allocated or awarded to the Executive
for a completed fiscal year or other measuring period preceding the
Executive's date of termination but has not yet been paid, and (ii) for
terminations occurring after December 31, 1998, a pro rata portion to
such date of termination of the aggregate value of all contingent
incentive compensation awards to the Executive for all uncompleted
periods calculated as to each such award by assuming the achievement of
the maximum performance level within the performance range established
with respect to such award (or, where such maximum is incalculable, the
highest such award paid to the Executive within the prior three years)
and basing such pro-rata portion upon the portion of the award period
that has elapsed as of the date of termination; and
(e) a credit to the Executive's account balances under any retirement
or salary deferral program of all amounts attributable to the
Executive's deferrals thereunder (including matching contributions),
and the full vesting of such account balances (or, where such vesting
is not possible by operation of law, payment of an equivalent cash
amount).
4. The Executive shall also be entitled to reimbursement for expenses
incurred by the Executive during the first six (6) months of the Severance
Period in seeking employment with another employer, including the fees of a
reputable outplacement organization that provides placement services for
positions commensurate with the position the Executive held with the
Company.
5. [FOR U.S. EXECUTIVES ONLY:] The Company will pay to the Executive an
amount that, on an after-tax basis (including federal income, excise and
social security taxes, and state and local income taxes), equals any excise
tax that is determined to be payable by the Executive pursuant to Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code") (and any
interest or penalties related to the imposition of such excise tax), by
reason of entitlements under the Agreement (including under paragraph 5 of
this Amendment), as well as entitlements outside of the Agreement that are
described in Section 280G(b)(2)(A)(i) of the Code. For purposes of this
paragraph 5, the Executive shall be deemed to pay federal, state and local
income taxes at the highest marginal rate of taxation. The determination as
to the amount payable pursuant to this paragraph 5 shall be made by William
M. Mercer, Inc., or such other nationally recognized consulting or
accounting firm as may be agreed to by the parties.
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6. [FOR U.S. EXECUTIVES ONLY:] The Company shall pay to the Executive all
legal fees and expenses incurred in good faith by the Executive (regardless
of the outcome of any legal proceeding or other contest) (i) as a result of
a termination of the Executive's employment during the six (6) month period
before, or the eighteen (18) month period after, a Change of Control
(including all such fees and expenses, if any, incurred in disputing in
good faith any such termination), or (ii) in seeking in good faith to
obtain or enforce any benefit or right provided by the Agreement. For
purposes of this paragraph, an Executive shall be deemed to have acted in
good faith unless a court finds that the Executive's action resulting in
such legal fees and expenses was frivolous. Such payments shall be made
within five (5) business days after delivery of the Executive's written
requests for payment accompanied with evidence of such fees and expenses.
7. For purposes of determining whether a constructive dismissal has
occurred under clause (i) of paragraph 3 of the Agreement, a position will
not be treated as "substantially similar in scope of responsibilities" if
such position will result in a diminution in, or assignment to the
Executive of any duties inconsistent with, the nature or status of the
Executive's duties, responsibilities or functions. In addition, clause (ii)
of paragraph 3 of the Agreement is hereby amended to include as
circumstances constituting constructive dismissal (i) any relocation that
exceeds 500 city to city air miles, and (ii) any relocation that is not
accompanied by a relocation package (including cost of living adjustments)
reasonably acceptable to the Executive.
8. Paragraph 4 of the Agreement is amended in its entirety to read as
follows: "If there is a constructive dismissal of the Executive's
employment pursuant to paragraph 3 of the Agreement entitling the Executive
to the provisions of paragraphs 1 and 2 of the Agreement (other a
constructive dismissal on account of a material reduction in the
Executive's base salary), the Executive agrees that he shall not, for a
period of 12 months following the date of his termination (i) solicit (or
cause or assist any other person to solicit) for employment, any employee
of the Company (or any of its affiliates), wheresoever situated, who was
employed by the Company (or any of its affiliates) on the commencement of
such 12 month period; or (ii) engage as a stockholder, employee, director,
officer, consultant or otherwise in any enterprise anywhere in the world
which is a substantial competitor of the Company, such as those competitors
named in the Company's Form 20-F. This paragraph shall not bar the
Executive from owning up to 5% of the outstanding securities of a publicly-
held company, or from being engaged by a substantial competitor if such
engagement does not involve a business activity which competes with the
Company."
9. Paragraph 5 of the Agreement is hereby amended by adding the following
to the end thereof: "Prior to any termination of the Executive for just
cause, the Executive must have a reasonable opportunity to cure the conduct
described above after a written notice is delivered to the Executive by the
Management Board, which notice specifically identifies the manner in which
the Management Board believes that it has grounds to terminate the
Executive for just cause. In addition, if any inability of the Executive to
perform his duties is on account of a mental or physical illness or
disability, the Executive shall be given at least a six month period to
recover from such disability."
10. Paragraph 6 of the Agreement is hereby clarified to make clear that
the provisions of the Agreement shall remain valid so long as a Change of
Control occurs within the three (3) year period commencing on the original
date of the Agreement.
11. Paragraph 7 of the Agreement shall be restated in its entirety to
read as follows: "In the event that the Executive is entitled to
termination protections (including cash and non-cash severance benefits)
under the terms of his local (meaning home country) contract (including
legally mandated benefits) or other personal employment agreement, and the
Executive desires to receive such termination protections in lieu of the
amounts and benefits provided under paragraphs 1 and 2, he shall notify the
Company prior to the time any such amount or benefit is provided. If such
notice is provided, the provisions of this Agreement shall become null and
void in their entirety, and the termination protections under such local
contract (including legally mandated benefits) or other personal employment
agreement shall apply. If such notice is
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not provided, the Executive shall be entitled to the amounts and benefits
provided under paragraphs 1 and 2 hereunder, and shall not be entitled to
the termination protections under such local contract (including legally
mandated benefits) or other personal employment agreement; provided,
however, that where legally mandated benefits cannot be waived under
applicable law but must be paid, the amounts and benefits provided under
paragraphs 1 and 2 hereunder shall be reduced by such legally mandated
benefits."
12. The Company agrees that, if the Executive is entitled to payments
under the Agreement, the Executive is not required to seek other
employment, or to attempt in any way to reduce any amounts payable to the
Executive by the Company. Further, except as specifically provided in
paragraph 2 of the Agreement, the amount of any payment or benefit provided
for in the Agreement shall not be reduced by any compensation or benefits
earned by the Executive as the result of employment by another employer, by
retirement benefits, by offset against any amount claimed to be owed by the
Executive to the Company, for any breach or alleged breach of paragraph 4
of the Agreement, or otherwise. If the Executive has entered into any
Proprietary Information and Conflict of Interest Agreement, the Executive's
obligations thereunder not to compete shall cease upon any termination of
the Executive's employment for any reason during the during the six (6)
month period before, or the eighteen (18) month period after, a Change of
Control.
13. For purposes of the Agreement, a "successor" to the Company shall
include any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or a significant portion (i.e., greater
than 50%) of the business or assets of the Company. The term "Company" as
in the Agreement shall include any successor to the Company's business or
assets which assumes and agrees to perform the Agreement by operation of
law, or otherwise (except in determining whether or not any Change of
Control of the Company has occurred in connection with such succession) and
the term "Management Board" shall include the governing body of such
successor.
14. The validity, interpretation, construction and performance of the
Agreement shall be governed by the laws of . The Company hereby
consents to the jurisdiction of the courts which have jurisdiction over the
place of principal employment of the Executive in any action related to the
Agreement. All references to sections of law shall be deemed also to refer
to any successor provisions to such sections. Any payments provided for
under the Agreement shall be subject to any applicable withholding required
under applicable law and any additional withholding to which the Executive
has agreed.
Sincerely,
Vincenzo Cannatelli
ACCEPTED: ___________________________
"THE EXECUTIVE"
WITNESS: ____________________________
7
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EXHIBIT 5(B) TO SCHEDULE 14D-9
[MANAGING DIRECTOR EMPLOYMENT AGREEMENT, SHOWING THE PROVISIONS OF THE
AMENDMENT DATED JANUARY 30, 1998, WITH DELETED TEXT IN BRACKETS [ ] AND NEW
TEXT BETWEEN ASTERISKS **]
AGREEMENT
THIS AGREEMENT, entered into as of this 1st day of April 1996, by and
between Elsag Bailey Process Automation, NV, a corporation organized under the
laws of The Netherlands (hereinafter the "Company") and Vincenzo Cannatelli
(hereinafter the "Managing Director").
WITNESSETH :
WHEREAS, the Company desires to continue to retain the services of the
Managing Director and the Managing Director desires to continue to provide
such services to the Company pursuant to the terms of this Agreement; and
WHEREAS, the Company and the Managing Director desire that this Agreement
supersede all prior terms of agreements and understandings related to the
Managing Director's provision of services to the Company;
NOW, THEREFORE, in consideration of the promises and the mutual agreements
contained herein and intending to be legally bound, the Company and the
Managing Director agree as follows:
SECTION 1. EMPLOYMENT
A. The Managing Director is offered and does hereby accept the position of
Managing Director and Chief Executive Officer of the Company. In such
capacities, the Managing Director shall be responsible for the management of
the Company along with the overall responsibility for the operations of the
companies in the Elsag Bailey Group.
B. The Managing Director shall execute his duties to the Company
effectively, faithfully, on a full-time basis and with good conduct and shall
comply with all reasonable regulations of the Company including, but not
limited to, the provisions of the Proprietary Information and Conflict of
Interest Agreement of the Company (a current version thereof being attached
hereto and incorporated herein), as amended from time-to-time, except as the
provisions thereof conflict with any provisions of this Agreement.
SECTION 2. TERM OF AGREEMENT
A. The Managing Director shall be retained by the Company for an initial
term of three (3) years from April 1, 1996. Upon expiration of the initial
term, this Agreement shall be automatically *renewed for an additional three
(3) year term unless terminated by the Company with written notice at least 15
months before the expiration date and* continued until terminated by either
party as hereinafter provided. Such continuation shall be at the Managing
Director's last aggregate base salary in effect at the time of expiration of
the initial term of the Agreement, unless increased pursuant to Section 3
Paragraph A. Should either party desire not to continue the Agreement at the
end of the [initial] *additional three year* term, such party must give
written notice to the other party not less than six (6) months prior to the
expiration of the initial term of the Agreement.
B. This Agreement may be terminated by the Managing Director upon six months
written notice to the Company. This Agreement shall also automatically be
terminated upon the death of the Managing Director. This Agreement may also be
terminated by the Company at any time as follows:
(i) Written notice to the Managing Director of six (6) months (or by
payment of salary in lieu of such notice); or
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(ii) Disability of the Managing Director as determined by the Supervisory
Board in its sole discretion; or
(iii) For just cause, defined as:
(a) any material breach of this Agreement by the Managing Director or
the willful failure of the Managing Director to comply with any
reasonable lawful directive of the Supervisory Board or its Designated
Officers;
(b) dishonesty, *gross* negligence or malfeasance by the Managing
Director in the performance of his duties hereunder;
(c) *deliberate* breach of any fiduciary duties related to the
Managing Director's position, and if applicable, as an officer of the
Company;
(d) material failure or inability of the Managing Director to perform
the normal scope of his duties hereunder.
C. The Company shall also have all rights under Dutch law to remove the
Managing Director from his position with the Company as a Managing Director at
any time, provided, however, that the Managing Director shall be paid any
amounts to which he is entitled under Section 4.
SECTION 3. COMPENSATION
A. The Managing Director's salary effective April 1, 1996 shall be the
equivalent of US$440,000.00 (four hundred forty thousand dollars) per year
(payable in such currency as the Managing Director and the Company may agree),
which amount may be increased from time-to-time at the sole discretion of the
Company. The salary paid the Managing Director is subject to withholdings
required by law and other deductions agreed to by the Managing Director. The
Managing Director shall be paid in accordance with procedures which will be
agreed upon between the Company and the Managing Director based on where the
Managing Director has established his residence, his principal work location,
relevant regulations and related considerations. The Managing Director's
salary shall not be subject to reduction without the Managing Director's
agreement during the term defined herein.
B. In order to provide the Managing Director financial incentive to achieve
and/or exceed the goals of the Company and to encourage the Managing Director
to continue his services to the Company well into the future, the Managing
Director shall be eligible to participate in Management Incentive Plans
established by the Company which shall provide the Managing Director with the
opportunity to earn additional compensation based upon the financial results
of the Company and upon the Managing Director's individual performance. Such
plans shall be comprised of the following:
(i) a short term portion with a target amount of incentive pay of not more
than 50% of the Managing Director's aggregate base annual salary
effective as of January 1 of each year to which this Agreement applies
(or as of April 1, 1996 with respect to the year commencing on such
date), which amount may be increased from time to time at the sole
discretion of the Company. The short term incentive award will be
payable annually following the close of the Company's fiscal year and
upon final approval of the Supervisory Board of the Company.
(ii) a long term portion which shall be based upon participation in the
Company's Long Term Incentive Plan, which currently provides
incentives based solely upon Stock Options granted from time-to-time
by the Company in its sole discretion.
It is understood that there is no guaranty of payment of any management
incentive compensation and the determination of any such award is at the
exclusive right of the Company in conformance with management incentive plans.
Participation in such plans is in accordance with plan provisions, which are
subject to amendment or modification in the exclusive discretion of the
Company.
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C. BENEFITS
1) The Managing Director is currently participating in the following benefit
plans which are maintained by the Company's United States subsidiary:
Health Plan (medical, hospitalization, dental and vision) with Executive
Medical Expense Reimbursement
Life Insurance with Optional coverage
Retirement Savings and Excess Retirement Savings Plan
Mandated social security and related programs
Disability Plan (company sponsored and optional)
The Managing Director shall be entitled to continue participation in said
programs according to plan provisions (as amended from time to time by the
Company in its sole discretion) so long as such programs are in effect and the
Managing Director is resident in the United States and continues to provide
services to the Company and shall be provided comparable local benefits made
available to senior executives at the relevant local expense to him in the
event that his residence in connection with the services to be provided to the
Company hereunder (or an affiliate of the Company) should change from the
United States to another location. For any and all length of service related
benefit plans, the Managing Director's service date shall be recognized as
January 1, 1982 to the extent that under the terms of the plan the plan is
legally permitted to do so.
2) The Managing Director shall be entitled to receive annually five (5)
weeks of vacation (holiday) to be taken at such times as the Managing Director
chooses, subject, however, to approval of the Company, in addition to the
normally scheduled holidays which are recognized by the Company.
3) The Managing Director shall be provided with an automobile along with
reimbursement for insurance and operating expenses, according to the general
Automobile Policy maintained by the Company. The type and size of the
automobile shall be suitable and fitting for the role of the Managing Director
and subject to final approval of the Company.
4) In the event the Managing Director shall die or become permanently
disabled during the term of this Agreement, Managing Director or his
dependents or beneficiaries, as the case may be, shall continue to be paid
such remuneration and continue to participate in such benefit programs in
accordance with the practices of the local company with which he was employed
at the time of his death or permanent disability. Health plan benefits
(including medical, hospitalization, dental and vision) which were being
provided to the Managing Director and his dependents at the time of his death
shall be continued for his eligible dependents during any period of salary
continuation.
5) The Managing Director and/or his dependent family is entitled to full
relocation benefits under the Company's relocation policy if, while his
principal residence is outside of Italy, this Agreement should be terminated
by the Company under the provisions of Section 2 Paragraph B subparagraph (i),
or in the event the Managing Director shall die during the term of this
Agreement. [While it is acknowledged that the Managing Director's residence in
New York, New York on the date hereof, the managing Director agrees to
relocate his resident to be proximate to the place determined from time to
time to be the headquarters of the Company.] The Managing Director will be
reimbursed for any expenses incurred in connection with any [such] relocation
*of his residence* pursuant to the Company's relocation policy.
SECTION 4. SPECIAL PROVISIONS
A. In the event the Company elects not to continue this Agreement at the end
of the initial term pursuant to Section 2 Paragraph A or in the event of the
Managing Director's termination of employment by the Company pursuant to
Section 2 Paragraph B sub-paragraph (i), the Managing Director shall be
entitled to receive severance pay ("Severance Pay") equal to 12 months pay in
addition to any salary due until the end of the initial term of this
Agreement, at his then current base salary; provided, however, that if the
termination of employment occurs after the expiration of the initial term of
this Agreement, such Severance Pay shall be equal to 18 months pay at his then
current base salary.
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Severance Pay shall be in the form of salary continuation unless the parties
mutually agree to otherwise pay such amounts.
B. During any period in which Severance Pay is payable hereunder, as
described above, the Managing Director shall continue to participate in those
Benefit Plans described in Section 3 Paragraph C above which provide health,
medical or life insurance benefits (but only to the extent that the Managing
Director and his eligible dependents are not eligible to receive reasonably
comparable benefits in connection with the Managing Director's or his eligible
dependents' subsequent employment).
C. In the event of termination of this Agreement by the Company, except "for
cause" as defined in Section 2 Paragraph B sub-paragraph (iii), or if the
Company elects not to continue this Agreement after the initial term, the
Managing Director shall be entitled to retain the right to exercise any Stock
Options granted pursuant to the Long Term Incentive Plan according to the time
such Options are exercisable under the various Stock Option Agreements in
effect at the time of termination.
D. In the event that ownership of the Company's voting stock by Finmeccanica
SpA and its affiliates at any time is not sufficient for Finmeccanica to
appoint a majority of the members of the Supervisory Board of the Company,
then a Change-in-Control event shall be deemed to have occurred and the
following special provisions shall become effective:
(i) The term of this Agreement shall immediately be extended until the
later of the expiration of the twenty-four (24) month period following
the date of the Change-in-Control or the expiration of the [initial]
*additional three year* term of the Agreement.
(ii) If this Agreement is terminated by the Company during such extended
period, except "for cause" as defined above, the Managing Director
shall be entitled to receive a severance benefit as defined in Section
4 Paragraph A above, but with the period during which severance
payments are made after the expiration of the term of the agreement
established in accordance with Paragraph D subparagraph (i) above to
be equal to 18 months. The severance payment under this section shall
be based on the higher of his base compensation in effect as of the
date of the termination of this Agreement or his base compensation in
effect as of the date of the Change-in-Control. In addition, the
Managing Director shall receive a cash payment equal to the highest
short term incentive bonus paid *and stock option granted* under the
term of this Agreement times the number of years and partial years in
which the Severance Pay is payable. (For example, if the Managing
Director receives 3 years of Severance Pay, he shall receive 3 years
incentive pay; if he receives 2 years and 4 months Severance Pay, he
shall receive 2 1/3 years incentive pay.) This provision shall
constitute the full amount of Severance Pay due the Managing Director
in the event of Change-in-Control as defined herein. In addition, the
Benefits described under Section 3 Paragraph C, above which provide
health, medical or life insurance benefits (but only to the extent
that the Managing Director and his eligible dependents are not
eligible to receive reasonably comparable benefits in connection with
the Managing Director's or his eligible dependents' subsequent
employment) shall be provided for the period of time equivalent to the
maximum severance and notice period to which the Managing Director is
entitled as defined in this Agreement.
(iii) A "constructive dismissal" entitling the Managing Director, at his
election made within ninety (90) days thereafter, to the provisions
of sub-paragraph (ii) of this Section under the following
circumstances: a material reduction in the Managing Director's
duties, responsibilities and functions (not including a mere change
in the Managing Director's title); a reduction in the aggregate base
compensation received by the Managing Director from the Company and
each subsidiary thereof; the failure of the Company to continue to
provide any of the employment benefits or perquisites described
herein without substituting substantially similar benefits; or the
failure of the Company to obtain an assumption of the obligations of
the Company to perform this Agreement by any successor to the
Company.
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E. Should, by operation of law or regulation, the Company be unable to
continue Managing Director's participation in any benefit plan(s) required
hereunder following termination of his services hereunder, then the Company
shall arrange a comparable benefit or provide a cash payment of equivalent
total value to the Managing Director.
F. If the Managing Director is terminated "for cause" he shall be entitled
to receive pay through his last day worked and his earned but unused vacation
pay for the year of his termination. Benefit plan coverage will be treated in
accordance with plan provisions or as required by law.
G. The Managing Director, following his termination of services hereunder
for whatever reason, shall not during the period for which the Managing
Director is entitled to receive Severance Pay (or, if the termination is for
just cause pursuant to Section 2, Paragraph B(iii), for thirty-six (36) months
following his termination of services hereunder) directly or indirectly employ
or solicit (or cause or assist any other person to employ or solicit) for
employment, any employee of the Company (or any of its affiliates),
wheresoever situated, who was employed by the Company (or any of its
affiliates) as of the date of the Managing Director's termination.
H. During the term of this Agreement and for the period during which the
Managing Director is entitled to receive Severance Pay (or, if the termination
is for just cause pursuant to Section 2, Paragraph B(iii), for the period of
thirty-six (36) months from the date of termination of services hereunder),
the Managing Director will not, directly or indirectly, engage, participate or
be interested in as owner, officer, director, manager, employee, consultant or
otherwise or have any financial interest in, or aid or assist anyone else in
the conduct of, any business or activity in any jurisdiction which is at the
time competitive with the business of the Company or its affiliates as carried
on as of such date of termination or is actively being considered as an
additional business of the Company or its affiliates on such date of
termination; provided, however, that the Managing Director's ownership of not
more than 5% of the securities of any corporation or any entity which are
traded on any securities exchange or in the over-the-counter market shall not
constitute a violation of this Section H.
I. The Managing Director acknowledges and agrees that a breach by him of the
restrictive covenants set forth above will cause the Company irreparable
injury and damage. The Managing Director, therefore, expressly agrees that the
Company shall be entitled to injunctive and/or other equitable relief to
prevent an anticipatory or continuing breach of such covenants. Nothing herein
shall be construed as a waiver by the Company of any right it may have or
hereafter acquire to monetary damages by reason of any injury to its property,
business or reputation or otherwise arising out of any wrongful act or
omission of the Managing Director.
J. While the restrictions and covenants set forth in this Agreement are
considered by the parties to be reasonable under all the circumstances, it is
recognized that restrictions and covenants of their nature may fail for
unforeseen technical reasons. Accordingly, it is agreed that if any such
restriction or covenant shall be adjudged void as going beyond what is
reasonable under all the circumstances for the protection of the interests of
the Company or any of its affiliates, but would be valid if part of the
wording thereof were deleted or the periods (if any) thereof reduced or the
range of activities or geographical area (if any) thereof reduced in scope,
such restriction or covenant shall apply with such modifications as may be
necessary to make it valid and effective.
SECTION 5. EFFECT OF TERMINATION
Upon termination of this Agreement for any reason, the Managing Director
shall immediately resign from any and all official positions with the Company
and any of its affiliates. The Managing Director shall cooperate fully with
the Company including rendering such assistance and cooperation as is
reasonably requested to transition responsibilities to others.
SECTION 6. NOTICES
All notices given in connection with this Agreement shall be in writing and
shall be deemed to have been given:
(i)At the time delivered;
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(ii)At the time telecopied with confirmation by the receiving party or
agent; or,
(iii) four (4) days after deposit at any general or branch of the official
postal service of the country in which the Managing Director has
established his residence or the United States of America enclosed in
a registered or certified, postage-paid envelope addressed to the
address of the respective parties as follows:
To the Company: Elsag Bailey Process Automation, NV
Schiphol Boulevard
1118 B6
The Netherlands
To the Managing Director:
Vincenzo Cannatelli
Corso Venezia, 29
20121 Milano
Italy
or to such other addresses as the parties provide to each other.
SECTION 7. FAILURE TO ASSERT RIGHTS AND WAIVERS
The Managing Director's or the Company's failure to insist upon strict
compliance with any provision of this agreement or the failure to assert any
right the Managing Director or the Company may have hereunder, including,
without limitation, the right of the Company to terminate the Managing
Director with or without cause, shall not be deemed to be a waiver of such
provision or right or any other provision or right of this Agreement. No
waiver by either party of any breach by the other party of any condition or
provision of this Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same
or at any prior or subsequent times.
SECTION 8. ENTIRE AGREEMENT, EFFECT ON PRIOR AGREEMENTS AND AMENDMENTS
This Agreement constitutes the entire agreement of the parties relating to
the employment of the Managing Director by the Company and supersedes all
prior agreements and understandings whether written or oral, related thereto.
This Agreement may not be amended or modified except in a writing signed by
the Company and the Managing Director.
SECTION 9. BINDING AGREEMENTS, REQUIRED ACTIONS
The parties respectively state that this Agreement is not contrary to any
other agreement or understanding that applies to them and this Agreement will
be a binding and valid obligation. The parties agree to execute such documents
and to take such further actions as are necessary to accomplish the intent of
this Agreement. If during the term of this Agreement, the Managing Director is
serving as a member of the Supervisory Board of the Company and any action is
to be or any be taken by the Supervisory Board with respect to his employment
or benefits under this Agreement, the Managing Director agrees that such
action may be considered and taken solely by the other members of the
Supervisory Board.
SECTION 10. ASSIGNMENT
This Agreement is personal to the Managing Director and shall not be
assignable by the Managing Director to any other person or entity. The
Company's rights and obligations under this Agreement shall inure to the
benefit or and be binding upon the successors and assigns of the Company upon
any sale of all or substantially all of the Company's assets or upon any
merger or consolidation of the Company with any other corporation or entity.
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SECTION 11. GOVERNING LAW
The validity, interpretation, construction, performance and enforcement of
this Agreement shall be governed by the laws of The Netherlands. Any
controversy arising under this Agreement or its enforcement shall be subject
to the exclusive jurisdiction of the Court of Amsterdam in the first instance.
SECTION 12. INVALIDITY
The invalidity or unenforceability of any term of this Agreement shall not
invalidate or otherwise affect any other term of this Agreement which shall
remain in full force and effect.
SECTION 13. HEADINGS
The headings contained herein are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement.
SECTION 14. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall be
deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
FOR THE COMPANY: FOR THE MANAGING DIRECTOR:
BY __________________________________ -------------------------------------
ITS Chairman of the Supervisory Board
WITNESS: WITNESS:
- ------------------------------------- -------------------------------------
NAME NAME
- ------------------------------------- -------------------------------------
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EXHIBIT 6
<PAGE>
EXHIBIT 6 TO SCHEDULE 14D-9
October 20, 1998
Elsag Bailey Process Automation N.V.
World Trade Center
Schiphol Boulevard 157
1118 BG Luchthaven Schiphol
The Netherlands
Dear Stockholder:
I am pleased to inform you that on October 14, 1998, Elsag Bailey Process
Automation N.V. (the "Company") entered into an Acquisition Agreement (the
"Acquisition Agreement") with ABB Transportation Participations B.V., a
corporation organized under the laws of The Netherlands (the "Purchaser").
Pursuant to the Acquisition Agreement, the Purchaser is today commencing a
tender offer (the "Offer") to purchase all issued and outstanding shares of
common stock, par value 1.00 Netherlands Guilders per share, of the Company
(the "Company Shares"), at a price per Company Share of $39.30, net to the
seller in cash, and all of the issued and outstanding 5 1/2% Convertible Trust
Originated Preferred Securities issued by Elsag Bailey Financing Trust
("Preferred Securities"), at a price per Preferred Security of $61.21, net to
the seller in cash.
Your Management Board and Supervisory Board, in each case in accordance with
the Company's articles of association and applicable law, have unanimously
determined that the Offer, upon the terms and subject to the conditions set
forth in the Acquisition Agreement, is fair to, and in the best interests of,
the holders of Company Shares, the holders of the Preferred Securities and
other relevant constituencies, the Company's subsidiaries and the enterprises
carried on by the Company and its subsidiaries. Your Management Board and
Supervisory Board also approved the Acquisition Agreement and the transactions
contemplated by the Acquisition Agreement, including the Offer.
ACCORDINGLY, THE MANAGEMENT BOARD AND SUPERVISORY BOARD RECOMMEND THAT
HOLDERS OF COMPANY SHARES AND PREFERRED SECURITIES ACCEPT THE OFFER AND TENDER
THEIR COMPANY SHARES AND PREFERRED SECURITIES THEREUNDER TO THE PURCHASER.
In arriving at this recommendation, the Management Board and Supervisory
Board gave careful consideration to a number of factors which are described in
the enclosed Schedule 14D-9. Among such factors is the opinion of Merrill
Lynch International ("Merrill Lynch"), the Company's financial advisor, that
the cash consideration of $39.30 per Company Share to be received by holders
of Company Shares in the Offer is fair to such holders from a financial point
of view. The full text of the written opinion of Merrill Lynch is attached to
the enclosed Schedule 14D-9 and you are urged to read such opinion in its
entirety.
Also enclosed in the Schedule 14D-9 is the Purchaser's Offer to Purchase and
related materials, including a Letter of Transmittal to be used for tendering
your Company Shares and/or Preferred Securities. These documents set forth the
terms and conditions of the Offer and provide instructions as to how to tender
your securities. We urge you to read the enclosed material and consider this
information carefully.
On Behalf of the Management Board
and Supervisory Board
Sincerely,
/s/ Vincenzo Cannatelli
Vincenzo Cannatelli
Managing Director &
Chief Executive Officer
<PAGE>
EXHIBIT 7
<PAGE>
ELSAG BAILEY SIGNS DEFINITIVE AGREEMENT FOR ACQUISITION BY ABB
FOR IMMEDIATE RELEASE
Amsterdam, The Netherlands--(October 14, 1998). Elsag Bailey Process
Automation N.V. (NYSE: EBY) announced today that it has signed a definitive
agreement with ABB to make a recommended cash tender offer for all outstanding
shares of Elsag Bailey Process Automation.
Under the terms of the agreement, the purchaser will begin a cash tender
offer for all outstanding common shares of Elsag Bailey at US$39.30 per common
share and for all 5 1/2% preferred securities issued by the Elsag Bailey
Financing Trust at US$61.21 per preferred share, within five business days of
this announcement. The total consideration payable to holders of such
securities under the tender offer, as well as to holders of options held by
Elsag Bailey employees and directors, is approximately $1.5 billion, and will
be financed from ABB's own resources.
In a separate agreement, Finmeccanica S.p.A. has entered into a definitive
agreement with ABB to tender all of its holdings in Elsag Bailey common and
preferred shares concurrent with the tender offer. Finmeccanica owns
approximately 53% of the outstanding equity of Elsag Bailey on a fully diluted
basis. Completion of the tender offer is dependent, among other conditions, on
a minimum of 75% of the fully diluted share capital of Elsag Bailey being
validly tendered and not withdrawn, and on certain regulatory approvals.
Mr. Goran Lindahl, ABB Group President and Chief Executive Officer,
characterized his company's goals for the partnership, stating, "We are
delighted to add a company with Elsag Bailey's strength, technological
diversity, and global reach to our business portfolio. By combining our
complementary product lines, we will strengthen our powerful range of robust,
vertically-integrated solutions. Our collective technologies, market channels,
and professional workforce will help us provide a most comprehensive and
direct response to the needs of our customers worldwide."
Mr. Vincenzo Cannatelli, Elsag Bailey Managing Director and Chief Executive
Officer, also commented on the transaction, stating, "We are very pleased to
have gained the commitment to partnership of a quality industry leader such as
ABB Group. The synergies of our products, our people, and our global market
presence are dramatic, and can only reinforce the effort we have put forth to
position Elsag Bailey as a leading "one-stop-shop" producer of process
automation technologies. We are very pleased with the excellent value which
this transaction represents for our shareholders, and we are committed to
achieving maximum future value for our customers, our employees, and our new
business partners."
The ABB Group (http://www.abb.com) serves customers worldwide in power
generation, transmission, and distribution; automation; oil, gas, and
petrochemicals, industrial products and contracting; financial services; and
rail transportation. The Group reported orders in 1997 of US$35 billion and
employs about 220,000 people.
Elsag Bailey Process Automation N.V. (http://www.ebpa.com), headquartered in
the Netherlands, is a leading provider of automation systems, process
instrumentation, analytical measurement products, and professional services.
The company's technologies are sold worldwide for the automation of various
processes in the electric power, chemical and pharmaceutical, oil and gas,
pulp and paper, metals and mining, food beverage and other industries. The
company employs some 11,000 among its operating units in more than 30
countries. Elsag Bailey recorded revenues of $1.5 billion during 1997.
For copies of additional press releases or quarterly reports, call Elsag
Bailey's Fax-on-Demand service at 1-888-329-2311, or visit the Company's web
site at www.ebpa.com. Requests for information can also be made via e-mail at
[email protected].
NOTE: This document contains forward-looking statements within the meaning of
federal securities law. These forward-looking statements include, among
others, statements concerning anticipated future events and
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expectations which are not historical facts. The forward-looking statement in
this press release is subject to numerous risks and uncertainities which could
cause actual results to differ materially from those expressed or implied by
those statements.
Contacts:
Brad A. Hoffman John Fox
Elsag Bailey Process Automation ABB Corporate Communications
Wickliffe, Ohio USA Zurich, Switzerland
Telephone: 1-440-585-3809 Telephone: 41 1 317 7371
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