-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M0YuyMnQodA+3+9SGyt/Vlu4ayjrZPZugg5FHqoa0E1mJrV0IJlFnSR+LNv6cx1C DtEZ3RdvtUzrhRHx4BGkag== 0000950103-99-000523.txt : 19990608 0000950103-99-000523.hdr.sgml : 19990608 ACCESSION NUMBER: 0000950103-99-000523 CONFORMED SUBMISSION TYPE: SC 14D1/A PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 19990607 GROUP MEMBERS: EMERSON ELECTRIC CO. GROUP MEMBERS: EMERSUB LXXIV INC SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: DANIEL INDUSTRIES INC CENTRAL INDEX KEY: 0000026821 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 741547355 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: SC 14D1/A SEC ACT: SEC FILE NUMBER: 005-04872 FILM NUMBER: 99641486 BUSINESS ADDRESS: STREET 1: 9753 PINE LAKE DR CITY: HOUSTON STATE: TX ZIP: 77055 BUSINESS PHONE: 7134676000 MAIL ADDRESS: STREET 1: 9753 PINE LAKE DRIVE CITY: HOUSTON STATE: TX ZIP: 77055 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: EMERSUB LXXIV INC CENTRAL INDEX KEY: 0001086625 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 14D1/A BUSINESS ADDRESS: STREET 1: 8000 WEST FLORISSANT AVENUE CITY: ST LOUIS STATE: MO ZIP: 63136-8506 BUSINESS PHONE: 3145532000 MAIL ADDRESS: STREET 1: 8000 WEST FLORISSANT AVENUE CITY: ST LOUIS STATE: MO ZIP: 63136-8506 SC 14D1/A 1 =============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- SCHEDULE 14D-1 TENDER OFFER STATEMENT PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934 (Amendment No. 3) ----------------------- Daniel Industries, Inc. (Name of Subject Company) Emerson Electric Co. Emersub LXXIV, Inc. (Bidders) Common Stock, $1.25 Par Value (Title of Class of Securities) ----------------------- 236235-10-7 (CUSIP Number of Class of Securities) ----------------------- W. Wayne Withers, Esq. Senior Vice President, General Counsel and Secretary Emerson Electric Co. 8000 West Florissant Avenue St. Louis, Missouri 63136-8506 (314) 553-2000 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications on Behalf of Bidder) ----------------------- With Copies to: Phillip R. Mills, Esq. Davis Polk & Wardwell 450 Lexington Avenue New York, NY 10017 (212) 450-4000 =============================================================================== CUSIP No. 236235-10-7 - ------- ----------- 1. NAMES OF REPORTING PERSONS IRS IDENTIFICATION NOS. ABOVE PERSONS (ENTITIES ONLY) EMERSON ELECTRIC CO. IRS IDENTIFICATION NO. 43-0259330 - ------- ---------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------- ---------------------------------------------------------------------- 3. SEC USE ONLY - ------- ---------------------------------------------------------------------- 4. SOURCE OF FUNDS WC; OO; BK - ------- ---------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) [ ] - ------- ---------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION MISSOURI - ------- ---------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON NONE - ------- ---------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 0% - ------- ---------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON CO - ------- ---------------------------------------------------------------------- 1 CUSIP No. 236235-10-7 - ------- ----------- 1. NAMES OF REPORTING PERSONS IRS IDENTIFICATION NOS. ABOVE PERSONS (ENTITIES ONLY) EMERSUB LXXIV, INC. IRS IDENTIFICATION NO. 43-1850428 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) [ ] (b) [ ] - ------- ---------------------------------------------------------------------- 3. SEC USE ONLY - ------- ---------------------------------------------------------------------- 4. SOURCE OF FUNDS AF - ------- ---------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(e) OR 2(f) [ ] - ------- ---------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION DELAWARE - ------- ---------------------------------------------------------------------- 7. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON NONE - ------- ---------------------------------------------------------------------- 8. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (7) EXCLUDES CERTAIN SHARES [ ] - ------------------------------------------------------------------------------- 9. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (7) 0% - ------- ---------------------------------------------------------------------- 10. TYPE OF REPORTING PERSON CO - ------- ---------------------------------------------------------------------- 2 This Amendment No. 3 amends and supplements the Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") originally filed with the Securities and Exchange Commission (the "Commission") on May 18, 1999 by Emersub LXXIV, Inc., a Delaware corporation ("Purchaser") and a wholly-owned subsidiary of Emerson Electric Co., a Missouri Corporation ("Parent"), as amended by Amendment No. 1 filed with the Commission on May 24, 1999 and Amendment No. 2 filed with the Commission on May 27, 1999, relating to the offer by Purchaser to purchase all outstanding shares of Common Stock, $1.25 par value (the "Common Stock"), of Daniel Industries, Inc. (the "Company"), including the related right as to each share to purchase one one-hundredth of a share of Series A Junior Participating Preferred Stock, $1.00 par value, of the Company (singularly, a "Right" and collectively, the "Rights") (singularly, a share of such Common Stock, including the related Right, a "Share" and collectively, the "Shares"), at $21.25 per Share, net to the seller in cash, upon the terms and subject to the conditions set forth in the Offer to Purchase dated as of May 18, 1999 and in the related Letter of Transmittal (which together constitute the "Offer"), copies of which are attached as Exhibits (a)(1) and (a)(2), respectively, to the Schedule 14D-1. All capitalized terms used in this Amendment No. 3 without definition have the meanings attributed to them in the Schedule 14D-1. Item 10. Additional Information Item 10(c) is hereby amended and supplemented by adding to the end thereof the following: The 15-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable to the purchase of Shares pursuant to the Offer expired on June 3, 1999. On June 4, 1999, Parent and the Company issued a joint press release regarding such expiration. The full text of the joint press release is attached hereto as Exhibit (a)(10) and is incorporated herein by reference. Antitrust -- Canada. The statutory waiting period under the Competition Act (Canada) applicable to Purchaser's acquisition of the Shares pursuant to the Offer expired on June 2, 1999. The Commissioner of Competition retains jurisdiction to challenge such an acquisition for up to three years after its consummation. Item 10(e) is hereby amended and supplemented as follows: On June 4, 1999, the parties to the litigation brought against the Company, Purchaser and the members of the Company's board of directors (collectively, "Defendants") by a Company stockholder purportedly on behalf of all Company stockholders entered into a memorandum of understanding (the "Memorandum of Understanding") setting forth the parties' agreement in principle to the terms of a proposed settlement of that action. Under the Memorandum of Understanding, Defendants agreed, in order to avoid the burden and expense of further litigation and to put to rest all claims arising out of or relating in any way to the Offer or the Merger and to permit the Offer to proceed without risk of injunctive relief, that the Company will (i) mail to the Company's stockholders an amendment to the Company's Schedule 14D-9 that will contain certain supplemental disclosures and (ii) issue a press release announcing that the parties to the action have reached a settlement in principle, subject to the approval of the Court of Chancery of the State of Delaware in and for New Castle County (the "Court"). The settlement contemplated in the Memorandum of Understanding is subject to a number of conditions, including the mailing of the amendment referred to in clause (i) of the preceding sentence to the Company's stockholders on or before June 7, 1999; the consummation of the Offer; the completion by plaintiff of appropriate discovery reasonably satisfactory to plaintiff's counsel; the drafting and execution of definitive settlement documents; and final Court approval of the settlement and dismissal of the action with prejudice and without costs to any party except as provided below. If the Court approves the settlement that is contemplated in the Memorandum of Understanding, Defendants and certain other parties will be released from all claims that were or could have been raised against them in the action (or that relate in any way to the Merger, the Merger Agreement or the Offer) and the action will be dismissed with prejudice as to plaintiff and a class consisting of all persons (other than Defendants and their affiliates) who owned or have owned stock on or after May 21, 1999 3 through and including the closing of the Merger (the "Class"). The Company will cause the dissemination of the notice of the settlement to members of the Class in accordance with Delaware law and will pay all costs and expenses incurred in providing such notice to the members of the Class. In connection with the Court approval of the settlement contemplated in the Memorandum of Understanding, plaintiff's counsel may apply to the Court for an award of fees and expenses of up to an aggregate amount of $200,000 which, if awarded, will be paid by the Company to the receiving agent for plaintiff's counsel. Defendants and other releasees will not take any position regarding such application for fees and expenses. This description of the terms of the proposed settlement is qualified in its entirety by reference to the Memorandum of Understanding, a copy of which is attached as Exhibit (g)(4) and is incorporated herein by reference. On June 7, 1999, Parent and the Company issued a joint press release regarding the proposed settlement. The full text of the joint press release is attached hereto as Exhibit (a)(11) and is incorporated herein by reference. Item 11. Material to Be Filed as Exhibits Item 11 is hereby amended and supplemented as follows: (a)(10) Text of Joint Press Release issued by Emerson Electric Co. and Daniel Industries, Inc. on June 4, 1999 (a)(11) Text of Joint Press Release issued by Emerson Electric Co. and Daniel Industries, Inc. on June 7, 1999. (g)(4) Memorandum of Understanding dated June 4, 1999 4 After due inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. June 7, 1999 EMERSON ELECTRIC CO. By: /s/ Robert M. Cox, Jr. ------------------------------------ Name: Robert M. Cox, Jr. Title: Senior Vice President - Acquisitions and Development EMERSUB LXXIV, INC. By: Robert M. Cox, Jr. ----------------------------------- Name: Robert M. Cox, Jr. Title: Vice President 5 Exhibit No. EXHIBIT INDEX - ----------- --------------------------------------------------------------- (a)(10) Text of Joint Press Release issued by Emerson Electric Co. and Daniel Industries, Inc. on June 4, 1999 (a)(11) Text of Joint Press Release issued by Emerson Electric Co. and Daniel Industries, Inc. on June 7, 1999 (g)(4) Memorandum of Understanding dated June 4, 1999 6 EX-99.A-10 2 EXHIBIT (a)(10) Emerson contact: William K. Anderson or Carter L. Dunkin 314-982-1700 Daniel contact: Sean P. O'Neill 713-827-3892 FOR IMMEDIATE RELEASE EMERSON ELECTRIC CO. AND DANIEL INDUSTRIES, INC. ANNOUNCE EXPIRATION OF HSR WAITING PERIOD ST. LOUIS, June 4, 1999 -- Emerson Electric Co. (NYSE:EMR) and Daniel Industries, Inc. (NYSE:DAN) announced today that the 15-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, applicable to the purchase of shares of common stock, par value $1.25 per share, of Daniel Industries, Inc. by Emersub LXXIV, Inc., a wholly owned subsidiary of Emerson Electric, pursuant to the tender offer commenced on May 18, 1999, expired on June 3, 1999. As previously announced, the offer and withdrawal rights under Emersub's tender offer will expire at 12:00 midnight, New York City time, on Tuesday, June 15, 1999, unless the offer is extended. Emerson Electric, based in St. Louis, is a global manufacturer with market and technology leadership in the areas of process control, industrial automation, electronics, HVAC, appliance components, electric motors, tools and storage products. Fiscal 1998 sales totaled $13.4 billion. Daniel Industries is an international leader in fluid measurement and flow control products and services for the oil and gas industry. Daniel provides a wide variety of flowmeters, valves, actuators, control systems and engineered solutions, primarily for producers, transporters, refiners and processors of oil and natural gas. The company reported revenues of $283.2 million in 1998. EX-99.A11 3 EXHIBIT (a)(11) Emerson contact: William K. Anderson or Carter L. Dunkin 314-982-1700 Daniel contact: Sean P. O'Neill 713-827-3892 FOR IMMEDIATE RELEASE EMERSON ELECTRIC CO. AND DANIEL INDUSTRIES, INC. SETTLE PURPORTED CLASS ACTION LAWSUIT BROUGHT BY A DANIEL STOCKHOLDER ST. LOUIS, June 7, 1999 -- Emerson Electric Co. (NYSE:EMR) and Daniel Industries, Inc. (NYSE:DAN) announced today an agreement in principle, subject to court approval, to settle litigation filed by a Daniel stockholder with respect to the transactions contemplated by the merger agreement providing for the acquisition of Daniel by a wholly owned subsidiary of Emerson. The lawsuit was purportedly filed on behalf of the stockholders of Daniel. A memorandum of understanding provides that Daniel will furnish certain supplemental disclosures in an amendment to its Schedule 14D-9, which was filed today with the Securities and Exchange Commission and which is being mailed today to Daniel stockholders. The memorandum of understanding will also be filed today with the SEC as an exhibit to both an amendment to Daniel's Schedule 14D-9 and an amendment to Emerson's Schedule 14D-1. Pursuant to the merger agreement, Emerson's wholly owned subsidiary commenced a tender offer on May 18, 1999, for all outstanding shares of common stock of Daniel Industries, Inc. The offer and withdrawal rights under the tender offer will expire at midnight, EDT, on Tuesday, June 15, 1999, unless the offer is extended. Emerson Electric, based in St. Louis, is a global manufacturer with market and technology leadership in the areas of process control, industrial automation, 1 electronics, HVAC, appliance components, electric motors, tools and storage products. Fiscal 1998 sales totaled $13.4 billion. Daniel Industries is an international leader in fluid measurement and flow control products and services for the oil and gas industry. Daniel provides a wide variety of flowmeters, valves, actuators, control systems and engineered solutions, primarily for producers, transporters, refiners and processors of oil and natural gas. The company reported revenues of $283.2 million in 1998. 2 EX-99.G4 4 EXHIBIT (g)(4) MEMORANDUM OF UNDERSTANDING WHEREAS, there is now pending a putative class action lawsuit in the Court of Chancery of the State of Delaware in and for New Castle County (the "Court") entitled "Miller v. Daniel Industries, Inc., et al., C.A. No. 17175" (the "Action"), brought on behalf of the stockholders of Daniel Industries, Inc. ("Daniel" or the "Company"); WHEREAS, the Class Action Complaint was filed in this Action on May 21, 1999 (hereinafter, the "Complaint"); WHEREAS, the Complaint challenges public disclosures concerning a merger agreement among Daniel, non-party Emerson Electric Co. ("EEC") and Emersub LXXIV, Inc. ("Emersub"). Pursuant to the agreement for the merger (the "Merger Agreement"), Emersub has commenced a tender offer (the "Tender Offer") for any and all shares of Daniel at $21.25 per share, which Tender Offer will be followed by a cash out merger (the "Merger") at the same price. The Complaint alleges, inter alia, that Daniel's Board of Directors (the "Individual Defendants") breached their fiduciary duties to Daniel's stockholders by failing to disclose all material information concerning the Tender Offer and Merger, including inter alia, failing to provide information to enable the shareholders to understand why Daniel's Board decided to sell the Company, failing to disclose information concerning the range of values for the company that were considered by Daniel's Board, not disclosing the assumptions that were made in connection with certain projections of the future operating performance of Daniel, and omitting information regarding the potential of alternative transactions and the nature or amount of any competing bid for Daniel; WHEREAS, on May 21, 1999, plaintiff moved to preliminarily enjoin the Tender Offer and Merger, and the Court scheduled a preliminary injunction hearing for June 11, 1999; WHEREAS, plaintiff's counsel has reviewed documents made available on an expedited basis by Daniel relating to the allegations made in the Complaint; WHEREAS, plaintiff's counsel and defendants' counsel engaged in arm's-length negotiations concerning a possible settlement of the action; WHEREAS, Daniel and the Individual Defendants maintain that they were not required to issue any supplemental disclosures and all defendants maintain that they have committed no breaches of fiduciary duties or disclosure violations whatsoever; and WHEREAS, counsel for the parties have reached an agreement in principle providing for the settlement of the Action between and among plaintiff, on behalf of himself and the putative class of persons on behalf of whom plaintiff has brought the Action, and defendants, on the terms and subject to the conditions set forth below (the "Settlement"); NOW, THEREFORE, as a result of the foregoing and the negotiations among counsel to the parties, the parties to the Action have agreed in principle as follows: 2 1. Daniel shall mail to all stockholders as soon as practicable an amendment to its current Schedule 14D-9, which amendment shall contain the supplemental disclosures attached hereto as Exhibit A. 2. Daniel will issue a press release as soon as reasonably practicable, announcing that the parties to the Action have reached a settlement in principle, subject to Court approval. 3. The mailing described in Paragraph 1 will be accompanied by a letter to Daniel's stockholders stating that: (a) the mailing is being made prior to the closing date of the Tender Offer, which is currently scheduled to close on June 15, 1999; (b) the mailing is being made pursuant to an agreement in principle to settle the Action, and that the stockholders will receive a Notice of Settlement in more detail at a future date; and (c) nominees are requested promptly to forward copies of the letter and its enclosures to any beneficial holders for whom they act as nominees. 4. Daniel and the Individual Defendants maintain that they were not required to issue any supplemental disclosures and all defendants maintain that they have committed no breaches of fiduciary duties or disclosure violations whatsoever. 5. The parties to the Action will attempt in good faith to agree upon and execute as promptly as practicable but, in no event more than 45 days, an appropriate Stipulation of Settlement (the "Stipulation") of all claims asserted in the Complaint filed in the Action and all other claims (as described hereinafter), if 3 any, arising out of or relating, in whole or in part, to the Tender Offer or the Merger, and such other documentation as may be required in order to obtain any and all necessary or appropriate Court approvals of the Settlement, upon and consistent with the terms set forth in this Memorandum of Understanding, including that for the consideration set forth above, the Stipulation shall provide for the dismissal of all such claims with prejudice and without costs to any party (except as set forth herein). The Stipulation will also expressly provide, inter alia: a. for class certification pursuant to Delaware Chancery Court Rule 23(b)(1) and (b)(2) of a non-opt out settlement class consisting of all persons (other than defendants and their affiliates) who owned or have owned stock of Daniel on or after May 21, 1999, and their successors in interest and transferees, immediate and remote, through and including the closing of the Merger (the "Class"); b. that all defendants have denied, and continue to deny, that they have committed any violations of law, and that defendants are entering into the Stipulation because the proposed Settlement would eliminate the burden and expense of further litigation, would finally put to rest all claims arising out of or relating in any way to the Tender Offer or the Merger and would permit the Tender Offer to proceed without risk of injunctive relief; c. for the release of all claims of Class members, whether known, unknown or unknowable, asserted or unasserted against defendants and 4 any of their present or former officers, directors, employees, agents, attorneys, accountants, financial advisors, commercial bank lenders, investment bankers, representatives, affiliates, associates, parents, subsidiaries, general and limited partners and partnerships, heirs, executors, administrators, successors and assigns, whether under state, federal, common or administrative law (including claims arising under the federal securities laws), and whether directly, derivatively, representatively or arising in any other capacity, and in connection with, or that arise out of any claim that was or could have been brought in the Action or that relates in any way to the Merger (whether or not such claim could have been asserted in the Action), the negotiation, consideration or formulation of the Merger and the Merger Agreement, or the Tender Offer, the fiduciary obligations of any of the defendants or other persons to be released in connection with the Tender Offer or Merger, or the disclosure obligations of any of the defendants (or persons to be released) in connection with the Tender Offer or Merger, or any other claim relating in any way to any of the foregoing; d. the parties to the Action will present the Settlement to the Court for hearing and approval as soon as practicable and, following appropriate notice to members of the Class, will use their best efforts to obtain final Court approval of the Settlement, and the release and dismissal of the Action with prejudice as against plaintiff and the Class, 5 with no right to opt-out of the Settlement and without awarding costs to any party (except as provided herein). It is expressly acknowledged that the Tender Offer may be, and is expected to be, closed prior to final Court approval of the Settlement. As used in this Memorandum of Understanding, "final Court approval" of the Settlement means that the Court has entered an Order approving the Settlement in accordance with the Stipulation, and that Order is finally affirmed on appeal or is no longer subject to appeal; e. provided that the Stipulation has been executed and final Court approval of the Settlement (including the Class release) and dismissal of the Action by the Court with prejudice has been obtained in accordance with the Stipulation, plaintiff's counsel of record in the Action may apply to the Court for an award of attorneys' fees and reasonable out-of-pocket disbursements. Subject to the terms and conditions of this Memorandum of Understanding and the contemplated Stipulation, plaintiff's counsel may apply for an award of fees and expenses the total amount of which shall not exceed $200,000, to be paid by Daniel to Goodkind Labaton Rudoff & Sucharow, L.L.P., as receiving agent for plaintiff's counsel, within ten (10) days after the Court's award of attorneys fees and expenses becomes final. Defendants and other releasees will not take any position regarding such an application for fees and expenses; and 6 f. Daniel shall cause the dissemination of notice of the Settlement to members of the Class in accordance with Delaware law and shall pay all costs and expenses incurred in providing such notice to the members of the Class. 6. The consummation of the Settlement is subject to: (a) the mailing of materials to stockholders of record as described in Paragraph 1 on or before June 7, 1999; (b) the consummation of the Tender Offer; (c) the completion by plaintiff of appropriate discovery in the Action reasonably satisfactory to plaintiff's counsel; (d) the drafting and execution of the Stipulation and other agreements necessary to effectuate the terms of the proposed Settlement; and (e) final Court approval (as defined above) of the Settlement and dismissal of the Action with prejudice and without awarding costs to any party except as provided herein. Any of the defendants shall have the right to withdraw from the proposed Settlement in the event that any claims arising out of or relating, in whole or in part, to the Tender Offer or the Merger (whether direct, derivative or otherwise) are commenced against any person in any court prior to final Court approval of the Settlement, and such claims are not dismissed or stayed in contemplation of dismissal. Plaintiff shall have the right to withdraw from the proposed Settlement in the event that plaintiff's counsel in the Action determine subsequent to the execution of this Memorandum of Understanding but prior to the execution of the Stipulation that the Settlement is not fair and reasonable. This Memorandum of Understanding shall be null and void and of no force and effect in the event of any 7 such withdrawal by any party or if, for any other reason, the Settlement is not consummated. In such event, this Memorandum of Understanding shall not be deemed to prejudice in any way the respective positions of the parties with respect to the Action, and neither the existence of this Memorandum of Understanding nor its contents shall be admissible in evidence or shall be referred to for any purpose in the Action or in any other litigation or proceeding. 7. The parties to the Action agree that except as expressly provided herein, the Action shall be stayed pending submission of the proposed Settlement to the Court for its consideration. Plaintiff's counsel agrees that the defendants' time to answer or otherwise respond to the Complaint in the Action is extended without date. Counsel shall enter into such documentation as shall be required to effectuate the foregoing agreements. 8. This Memorandum of Understanding may be executed in counterparts by any of the signatories hereto, including by telecopier, and as so executed shall constitute one agreement. 9. This Memorandum of Understanding and the Stipulation contemplated by it shall be governed by, and construed in accordance with, the laws of the State of Delaware, without regard to Delaware's conflict of law rules. 10. This Memorandum of Understanding may be modified or amended only by a writing signed by the signatories hereto. 11. This Memorandum of Understanding shall be binding upon and inure to the benefit of the parties and their respective agents, executors, heirs, 8 successors and assigns. Plaintiff and his counsel represent and warrant that none of the claims or causes of action asserted in the Action have been assigned, encumbered or in any manner transferred, in whole or in part. Dated: June 4, 1999 Of Counsel: ROSENTHAL, MONHAIT, GROSS & GODDESS, P.A. Jonathan M. Plasse GOODKIND LABATON RUDOFF & SUCHAROW, L.L.P. 100 Park Avenue /s/ Norman M. Monhait New York, NY 10017 --------------------------------------- (212) 907-0700 Norman M. Monhait Mellon Bank Center, Suite 1401 P.O. Box 1070 Wilmington, DE 19899 (302) 656-4433 Attorneys for Plaintiff Of Counsel: MORRIS, NICHOLS, ARSHT & TUNNEL Gerard G. Pecht FULBRIGHT & JAWORSKI, L.L.P. 1301 McKinney, Suite 5100 Houston, TX 77010-3095 /s/ A. Gilchrist Sparks, III (713) 651-5151 --------------------------------------- A. Gilchrist Sparks, III 1201 North Market Street P.O. Box 1347 Wilmington, DE 19899-1347 (302) 658-9200 Attorneys for Defendants Daniel Industries, Inc., Ronald C. Lassiter, Thomas J. Keefe, Michael M. Carroll, W.A. Griffin, Brian E. O'Neill, Ralph F. Cox, Leo E. Linbeck, Jr., Nathan M. Avery and Gibson Gayle, Jr. 9 Of Counsel: RICHARDS, LAYTON & FINGER Arthur F. Golden Frances E. Bivens DAVIS POLK & WARDWELL /s/ Allen M. Terrell, Jr. 450 Lexington Avenue --------------------------------------- New York, NY 10017 Allen M. Terrell, Jr. (212) 450-4000 Russell C. Silberglied One Rodney Square P.O. Box 551 Wilmington, DE 19899 (302) 658-6541 Attorneys for Defendant Emersub LXXIV, Inc. 10 Exhibit A Background of the Transaction On March 4, 1999, the Company received an unsolicited written proposal for a business combination with another company in which the Company's stockholders would receive cash and stock of the other company aggregating $15 per share of Common Stock. On the same date, the Company retained Simmons & Company International ("Simmons"), as the Company's financial advisor, to assist the Company in its consideration of the business combination proposal. On March 16, 1999, the Board of Directors of the Company met to consider the business combination proposal. At that meeting the Board discussed the proposal with Simmons and the Company's management and legal advisors. The Board, with the assistance of its advisors, also considered the Company's business, historical and projected future performance, historical trading prices for the Company's stock, market conditions, competition, possible alternative transactions (including a sale of the Company) for maximizing value for the Company's stockholders, the potential values for the Company using discounted cash flows, various multiples and comparable transactions analyses and the range of possible values that could be achieved if the Company were to remain independent or pursue its other alternatives. After considering all of those factors, the Board (i) determined that the business combination proposal was inadequate and rejected it and (ii) decided to initiate a strategic review to evaluate its options for maximizing the value of the Company to its stockholders, including a possible business combination with a larger company. Later on March 16, 1999, the Company announced publicly that its Board of Directors had received and rejected the unsolicited proposal described above and that the Board had decided to initiate a strategic review to evaluate its options for maximizing the value of the Company to its stockholders. The Company also announced that it had retained Simmons to assist the Company with its strategic review. In the course of the Company's review, 28 potential purchasers for the Company were given the opportunity to sign confidentiality agreements. The Company and Simmons believed that these 28 parties constituted the companies that could be expected both to have an interest in pursuing a transaction with the Company and to be able to consummate a transaction at an acceptable price. Nineteen of these parties, including Parent, agreed to execute confidentiality agreements. Thereafter, Simmons distributed the Company's Confidential Descriptive Memorandum prepared by Simmons and the Company to each of the interested parties that had executed a confidentiality agreement. The Confidential Descriptive Memorandum contained a more detailed analysis of the Company's business than was available publicly and included portions of the Company's strategic business plan, projections for the Company as a whole as well as for its business units and a description of the key underlying assumptions by business unit used in developing the projections. Interested parties were invited to submit preliminary indications of interest on April 19, 1999 based on the information provided, subject to confirmatory due diligence, stating the price and form of consideration (including cash, stock or a combination of the two) that they would be willing to pay in an acquisition transaction involving the Company. Subsequent to the receipt and review of the preliminary indications of interest, the Company invited nine of those interested parties separately to attend a presentation by the Company's management, to tour the Company's plant and office facilities in Houston, Texas and to review selected due diligence materials in a data room at the Company's offices. Eight of those interested parties, including Parent, participated in that due diligence review of the Company. Each of these eight interested parties was also provided with two versions of the Company's proposed merger agreement, one for use with a stock for stock acquisition and the other for use in a cash acquisition. The eight interested parties were invited to submit firm proposals by May 24, 1999 which were to state, among other things, the price each was willing to pay to acquire the Company, the form of consideration to be paid to the Company's stockholders and any financing or other contingencies, and to include their comments on the applicable version of the Company's proposed form of merger agreement. Throughout the proposal solicitation process, the Company and its advisors were in regular contact with the interested parties regarding their due diligence investigation of the Company and their bids for the Company. At the request of Parent, C.F. Knight, Chairman & CEO of Parent, and D.N. Farr, Senior Executive Vice President of Parent responsible for the Process Control business of Parent, met on May 7, 1999 with key management of the Company, including R.C. Lassiter, the Chairman of the Board and CEO of the Company. Following that meeting, Mr. Knight proposed to Mr. Lassiter that Parent acquire the Company for $21.25 per Share in cash. Messrs. Lassiter, Knight and Farr discussed Parent's proposal and tentatively agreed on it, subject to the approval of the Boards of Directors of the Company, Parent and Purchaser, negotiation of definitive agreements and receipt by the Company of a fairness opinion from Simmons. Among other things, Parent's offer of $21.25 in cash per Share was higher than any indication of interest submitted previously by any other party and, in the Company's opinion, was likely to be superior to any bid that any other potential purchaser was likely to make. In addition, Parent's proposed terms permitted another bidder to make a superior proposal which Parent could respond to with a more favorable proposal; or if the Parent did not do so, the Company could terminate its Merger Agreement with Parent and the Purchaser and, subject to paying certain termination fees and expense reimbursement to Parent, enter into a merger agreement with the alternative bidder. To date, the Company has not received any proposal or indication of interest higher than $21.25 per Share. Between May 7, 1999 and May 12, 1999, representatives of the Company and Parent (including financial and legal advisors) met to negotiate the terms of the Merger Agreement and the Stock Option Agreement. 2 On May 12, 1999, at a meeting of the Board of Directors of the Company, the Board received a presentation by Simmons and its opinion that, as of that date, and based on the assumptions made, matters considered and limits of review set forth therein, the consideration to be received by the holders of the Shares (other than Parent and its affiliates) in the Offer and the Merger is fair to such holders from a financial point of view. After discussion and consideration of the factors previously described in item 4 of the Company's Schedule 14D-9, the Board unanimously approved the Offer and the Merger (including the execution of the Merger Agreement and the Stock Option Agreement) based on its conclusion that Parent's offer of $21.25 in cash per Share was superior to all other options available to the Company for maximizing value to its stockholders, including the option to remain independent. The Board also unanimously recommended that stockholders tender their Shares pursuant to the Offer. -----END PRIVACY-ENHANCED MESSAGE-----