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EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇ DELAWARE I, INC.
AND
WESTERN ATLAS INC.
DATED AS OF MAY 10, 1998
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TABLE OF CONTENTS
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ARTICLE 1
THE MERGER
Section 1.1 The Merger.................................................. 1
Section 1.2 The Closing................................................. 1
Section 1.3 Effective Time.............................................. 1
ARTICLE 2
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation................................ 2
Section 2.2 Bylaws...................................................... 2
ARTICLE 3
DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION AND PARENT
Section 3.1 Directors of Surviving Corporation.......................... 2
Section 3.2 Officers of Surviving Corporation........................... 2
Section 3.3 Parent Board of Directors; President........................ 2
ARTICLE 4
CONVERSION OF COMPANY COMMON STOCK
Section 4.1 Certain Definitions......................................... 2
Section 4.2 Conversion of Company Stock................................. 3
Section 4.3 Exchange of Certificates Representing Company Common
Stock....................................................... 4
Section 4.4 Adjustment of Exchange Ratio................................ 5
Section 4.5 Rule 16b-3 Approval......................................... 5
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Existence; Good Standing; Corporate Authority............... 6
Section 5.2 Authorization, Validity and Effect of Agreements............ 6
Section 5.3 Capitalization.............................................. 6
Section 5.4 Significant Subsidiaries.................................... 6
Section 5.5 No Violation of Law......................................... 7
Section 5.6 No Conflict................................................. 7
Section 5.7 SEC Documents............................................... 7
Section 5.8 Litigation.................................................. 8
Section 5.9 Absence of Certain Changes.................................. 8
Section 5.10 Taxes....................................................... 8
Section 5.11 Employee Benefit Plans...................................... 9
Section 5.12 Labor Matters............................................... 10
Section 5.13 Environmental Matters....................................... 10
Section 5.14 Intellectual Property....................................... 10
Section 5.15 Insurance................................................... 11
Section 5.16 No Brokers.................................................. 11
Section 5.17 Opinion of Financial Advisor................................ 11
Section 5.18 Parent Stock Ownership...................................... 11
Section 5.19 Reorganization.............................................. 11
Section 5.20 Pooling..................................................... 11
Section 5.21 Vote Required............................................... 11
Section 5.22 Amendment to the Company Rights Agreement................... 11
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Section 5.23 Certain Approvals........................................... 12
Section 5.24 Certain Contracts........................................... 12
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Section 6.1 Existence; Good Standing; Corporate Authority............... 12
Section 6.2 Authorization, Validity and Effect of Agreements............ 12
Section 6.3 Capitalization.............................................. 12
Section 6.4 Significant Subsidiaries.................................... 13
Section 6.5 No Violation of Law......................................... 13
Section 6.6 No Conflict................................................. 13
Section 6.7 SEC Documents............................................... 14
Section 6.8 Litigation.................................................. 14
Section 6.9 Absence of Certain Changes.................................. 14
Section 6.10 Taxes....................................................... 15
Section 6.11 Employee Benefit Plans...................................... 15
Section 6.12 Labor Matters............................................... 16
Section 6.13 Environmental Matters....................................... 16
Section 6.14 Intellectual Property....................................... 17
Section 6.15 Insurance................................................... 17
Section 6.16 No Brokers.................................................. 17
Section 6.17 Opinion of Financial Advisor................................ 17
Section 6.18 Company Stock Ownership..................................... 17
Section 6.19 Reorganization.............................................. 17
Section 6.20 Pooling..................................................... 17
Section 6.21 Vote Required............................................... 17
Section 6.22 Certain Approvals........................................... 17
Section 6.23 Certain Contracts........................................... 18
ARTICLE 7
COVENANTS
Section 7.1 Conduct of Businesses....................................... 18
Section 7.2 No Solicitation by the Company.............................. 20
Section 7.3 No Solicitation by Parent................................... 21
Section 7.4 Meetings of Stockholders.................................... 21
Section 7.5 Filings; Best Efforts....................................... 22
Section 7.6 Inspection.................................................. 23
Section 7.7 Publicity................................................... 23
Section 7.8 Registration Statement...................................... 23
Section 7.9 Listing Application......................................... 24
Section 7.10 Letters of Accountants...................................... 24
Section 7.11 Agreements of Rule 145 Affiliates........................... 24
Section 7.12 Expenses.................................................... 25
Section 7.13 Indemnification and Insurance............................... 25
Section 7.14 Certain Benefits............................................ 26
Section 7.15 Reorganization; Pooling..................................... 28
Section 7.16 Rights Agreement............................................ 28
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ARTICLE 8
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the
Merger...................................................... 29
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger...................................................... 29
Section 8.3 Conditions to Obligation of Parent and Merger Sub to Effect
the Merger.................................................. 30
ARTICLE 9
TERMINATION
Section 9.1 Termination by Mutual Consent............................... 30
Section 9.2 Termination by Parent or the Company........................ 30
Section 9.3 Termination by the Company.................................. 31
Section 9.4 Termination by Parent....................................... 31
Section 9.5 Effect of Termination....................................... 32
Section 9.6 Extension; Waiver........................................... 33
ARTICLE 10
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and Agreements... 33
Section 10.2 Notices..................................................... 34
Section 10.3 Assignment; Binding Effect; Benefit......................... 34
Section 10.4 Entire Agreement............................................ 34
Section 10.5 Amendments.................................................. 35
Section 10.6 Governing Law............................................... 35
Section 10.7 Counterparts................................................ 35
Section 10.8 Headings.................................................... 35
Section 10.9 Interpretation.............................................. 35
Section 10.10 Waivers..................................................... 35
Section 10.11 Incorporation of Exhibits................................... 35
Section 10.12 Severability................................................ 35
Section 10.13 Enforcement of Agreement.................................... 36
Section 10.14 Obligation of Parent........................................ 36
Section 10.15 Subsidiaries................................................ 36
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of May 10,
1998 is among ▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated, a Delaware corporation ("Parent"),
▇▇▇▇▇ ▇▇▇▇▇▇ Delaware I, Inc., a Delaware corporation and a direct, wholly owned
subsidiary of Parent ("Merger Sub"), and Western Atlas Inc., a Delaware
corporation (the "Company").
RECITALS
WHEREAS, Parent and the Company have each determined to engage in a
strategic business combination with the other;
WHEREAS, in furtherance thereof, the parties hereto desire to merge Merger
Sub with and into the Company (the "Merger"), with the Company surviving as a
direct, wholly owned subsidiary of Parent, pursuant to which each share of the
Company Common Stock (as defined in Section 4.1) will be converted into the
right to receive Parent Common Stock (as defined in Section 4.1);
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have determined the Merger, in the manner contemplated herein, to be
desirable and in the best interests of their respective corporations and
stockholders and to be consistent with, and in furtherance of, their respective
business strategies and goals, and, by resolutions duly adopted, have approved
and adopted this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a reorganization within the meaning of section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code");
WHEREAS, for financial accounting purposes, it is intended that the Merger
be accounted for as a "pooling of interests" under U.S. generally accepted
accounting principles;
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 The Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub shall
be merged with and into the Company in accordance with this Agreement, and the
separate corporate existence of Merger Sub shall thereupon cease. The Company
shall be the surviving corporation in the Merger (sometimes hereinafter referred
to as the "Surviving Corporation"). The Merger shall have the effects specified
in the Delaware General Corporation Law (the "DGCL").
SECTION 1.2 The Closing. Subject to the terms and conditions of this
Agreement, the closing of the Merger (the "Closing") shall take place (a) at the
offices of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇, at 9:00 a.m., local time, on the first business day immediately following
the day on which the last to be fulfilled or waived of the conditions set forth
in Article 8 shall be fulfilled or waived in accordance herewith or (b) at such
other time, date or place as Parent and the Company may agree. The date on which
the Closing occurs is hereinafter referred to as the "Closing Date."
SECTION 1.3 Effective Time. If all the conditions to the Merger set forth
in Article 8 shall have been fulfilled or waived in accordance herewith and this
Agreement shall not have been terminated as provided in Article 9, Parent,
Merger Sub and the Company shall cause a certificate of merger (the "Certificate
of Merger") meeting the requirements of section 251 of the DGCL to be properly
executed and filed in accordance with such section on the Closing Date. The
Merger shall become effective at the time of filing of the Certificate of Merger
with the Secretary of State of the State of Delaware in accordance with the
DGCL, or at such later time that the parties hereto shall have agreed upon and
designated in such filing as the effective time of the Merger (the "Effective
Time").
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ARTICLE 2
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
SECTION 2.1 Certificate of Incorporation. The certificate of incorporation
of the Company in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation, until duly amended in
accordance with applicable law.
SECTION 2.2 Bylaws. The bylaws of Merger Sub in effect immediately prior to
the Effective Time shall be the bylaws of the Surviving Corporation, until duly
amended in accordance with applicable law.
ARTICLE 3
DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION AND PARENT
SECTION 3.1 Directors of Surviving Corporation. The directors of Merger Sub
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation as of the Effective Time.
SECTION 3.2 Officers of Surviving Corporation. The officers of the Company
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation as of the Effective Time.
SECTION 3.3 Parent Board of Directors; President. ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be
elected as President of Parent as of the Effective Time, and ▇▇▇ ▇. ▇▇▇▇▇▇ shall
continue as Chairman of the Board of Directors and Chief Executive Officer of
Parent. The Board of Directors of Parent will take such action as may be
necessary to cause the election or appointment of ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and two other persons designated by the Company after consultation with
the Parent to be directors of Parent as of the Effective Time; provided that the
Company shall not designate any person not currently a member of the Company's
Board of Directors to which the Parent shall have reasonably objected. Such new
directors shall be designated into the classes of directors of Parent in
accordance with the Parent's bylaws in such classes as the Company shall
indicate, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall be appointed to the Executive Committee of
Parent's Board of Directors and not less than one such new director shall be
appointed to each of the other committees of such Board.
ARTICLE 4
CONVERSION OF COMPANY COMMON STOCK
SECTION 4.1 Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
(a) "Company Common Stock" shall mean the common stock, par value
$1.00 per share, of the Company.
(b) "Parent Common Stock" shall mean the common stock, par value $1.00
per share, of Parent.
(c) "Exchange Ratio" shall equal (i) 2.4, if the Parent Share Price is
greater than or equal to $38.25 but less than or equal to $42.75; (ii) if
the Parent Share Price is greater than $42.75 but less than or equal to
$44.75, that fraction, rounded to the nearest thousandth, or if there shall
not be a nearest thousandth, to the next lower thousandth, equal to the
quotient obtained by dividing $102.60 by the Parent Share Price; (iii) if
the Parent Share Price is greater than $44.75, 2.293; and (iv) if the
Parent Share Price is less than $38.25, that fraction, rounded to the
nearest thousandth, or if there shall not be a nearest thousandth, to the
next higher thousandth, equal to the quotient obtained by dividing $91.80
by the Parent Share Price; provided, however, that except as provided in
Section 9.3(d), the Exchange Ratio shall in no event be greater than 2.623,
notwithstanding that the Parent Share Price is less than $35.00.
(d) "Parent Share Price" shall mean the average of the per share
closing prices of Parent Common Stock as reported on the consolidated
transaction reporting system for securities traded on the New York
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Stock Exchange, Inc. ("NYSE") (as reported in the New York City edition of
The Wall Street Journal or, if not reported thereby, another authoritative
source) for the 20 consecutive trading days ending on the fifth trading day
prior to the Closing Date, appropriately adjusted for any stock splits,
reverse stock splits, stock dividends, recapitalizations or other similar
transactions.
(e) "Stock Option Agreements" shall mean (i) the Stock Option
Agreement dated the date hereof between Parent and the Company pursuant to
which Parent has granted to the Company an option to purchase a certain
number of shares of Parent Common Stock and (ii) the Stock Option Agreement
dated the date hereof between the Company and Parent pursuant to which the
Company has granted to Parent an option to purchase a certain number of
shares of Company Common Stock.
SECTION 4.2 Conversion of Company Stock.
(a) At the Effective Time, each share of the common stock, par value
$0.01 per share, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid and
non-assessable share of Common Stock, par value $1.00 per share, of the
Surviving Corporation.
(b) At the Effective Time, each share of the Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than
shares of Company Common Stock (i) held in the Company's treasury or (ii)
owned by Parent, Merger Sub or any other wholly owned Subsidiary (as
defined in Section 10.15) of Parent or the Company) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be
converted into the right to receive a number of shares of Parent Common
Stock equal to the Exchange Ratio.
(c) As a result of the Merger and without any action on the part of
the holder thereof, each share of the Company Common Stock shall cease to
be outstanding and shall be canceled and retired and shall cease to exist,
and each holder of a certificate (a "Certificate") representing any shares
of the Company Common Stock shall thereafter cease to have any rights with
respect to such shares of the Company Common Stock, except the right to
receive, without interest, Parent Common Stock and cash for fractional
shares of Parent Common Stock in accordance with Sections 4.3(b) and 4.3(e)
upon the surrender of such Certificate.
(d) Each share of the Company Common Stock issued and held in the
Company's treasury, and each share of the Company Common Stock owned by
Parent, Merger Sub or any other wholly owned Subsidiary of Parent or the
Company shall, at the Effective Time and by virtue of the Merger, cease to
be outstanding and shall be canceled and retired without payment of any
consideration therefor, and no stock of Parent or other consideration shall
be delivered in exchange therefor.
(e) (i) At the Effective Time, all options (individually, a "Company
Option" and collectively, the "Company Options") then outstanding under the
Western Atlas Inc. 1993 Stock Incentive Plan and the Western Atlas Inc.
Director Stock Option Plan (collectively, the "Company Stock Option Plans")
shall remain outstanding following the Effective Time. At the Effective
Time, the Company Options shall, by virtue of the Merger and without any
further action on the part of the Company or the holder of any Company
Option, be assumed by Parent in such manner that Parent (i) is a
corporation "assuming a stock option in a transaction to which section
424(a) applied" within the meaning of section 424 of the Code or (ii) to
the extent that section 424 of the Code does not apply to any Company
Option, would be such a corporation were section 424 of the Code applicable
to such option. Each Company Option assumed by Parent shall be exercisable
upon the same terms and conditions as under the applicable Company Stock
Option Plan and the applicable option agreement issued thereunder, except
that (i) each Company Option shall be exercisable for that whole number of
shares of Parent Common Stock (rounded to the nearest whole share) into
which the number of shares of the Company Common Stock subject to such
Company Option immediately prior to the Effective Time would be converted
under Section 4.2(b), and (ii) the option price per share of Parent Common
Stock shall be an amount equal to the option price per share of Company
Common Stock subject to such Company Option in effect
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immediately prior to the Effective Time divided by the Exchange Ratio (the
price per share, as so determined, being rounded upward to the nearest full
cent).
(ii) Parent shall take all corporate action necessary to reserve for
issuance a number of shares of Parent Common Stock equal to the number of
shares of Parent Common Stock issuable upon the exercise of the Company
Options assumed by Parent pursuant to this Section 4.2(e). From and after
the date of this Agreement, except as provided in Section 7.1(f), no
additional options shall be granted by the Company or its Subsidiaries
under the Company Stock Option Plans or otherwise. At the Effective Time or
as soon as practicable, but in no event more than three business days,
thereafter, Parent shall file with the Securities and Exchange Commission
(the "SEC") a Registration Statement on Form S-8 covering all shares of
Parent Common Stock to be issued upon exercise of the Company Options and
shall cause such registration statement to remain effective for as long as
there are outstanding any Company Options.
SECTION 4.3 Exchange of Certificates Representing Company Common Stock.
(a) As of the Effective Time, Parent shall deposit, or shall cause to
be deposited, with an exchange agent selected by Parent, which shall be
Parent's transfer agent for the Parent Common Stock or such other party
reasonably satisfactory to the Company (the "Exchange Agent"), for the
benefit of the holders of shares of Company Common Stock, for exchange in
accordance with this Article 4, certificates representing the shares of
Parent Common Stock and the cash in lieu of fractional shares (such cash
and certificates for shares of Parent Common Stock, together with any
dividends or distributions with respect thereto, being hereinafter referred
to as the "Exchange Fund") to be issued pursuant to Section 4.2 and paid
pursuant to this Section 4.3 in exchange for outstanding shares of Company
Common Stock.
(b) Promptly after the Effective Time, Parent shall cause the Exchange
Agent to mail to each holder of record of one or more Certificates (other
than to holders of Company Common Stock that, pursuant to Section 4.2(d),
are canceled without payment of any consideration therefor): (A) a letter
of transmittal (the "Letter of Transmittal") which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent
and shall be in such form and have such other provisions as Parent and the
Company may reasonably specify and (B) instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing
shares of Parent Common Stock and cash in lieu of fractional shares. Upon
surrender of a Certificate for cancellation to the Exchange Agent together
with such Letter of Transmittal, duly executed and completed in accordance
with the instructions thereto, the holder of such Certificate shall be
entitled to receive in exchange therefor (x) a certificate representing
that number of whole shares of Parent Common Stock and (y) a check
representing the amount of cash in lieu of fractional shares, if any, and
unpaid dividends and distributions, if any, which such holder has the right
to receive in respect of the Certificate surrendered pursuant to the
provisions of this Article 4, after giving effect to any required
withholding tax, and the Certificate so surrendered shall forthwith be
canceled. No interest will be paid or accrued on the cash in lieu of
fractional shares and unpaid dividends and distributions, if any, payable
to holders of Certificates. In the event of a transfer of ownership of
Company Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent
Common Stock, together with a check for the cash to be paid in lieu of
fractional shares, shall be issued to such a transferee if the Certificate
representing such Company Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer
and to evidence that any applicable stock transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared or made after the Effective Time
with respect to Parent Common Stock with a record date after the Effective
Time shall be paid with respect to the shares to be issued upon conversion
of any Certificate until such Certificate is surrendered for exchange as
provided herein. Subject to the effect of applicable laws, following
surrender of any such Certificate, there shall be paid to the holder of the
certificates representing whole shares of Parent Common Stock issued in
exchange therefor, without interest, (i) at the time of such surrender, the
amount of dividends or other distributions with a record date after the
Effective Time theretofore payable with respect to such whole shares of
Parent Common Stock and not
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paid, less the amount of any withholding taxes which may be required
thereon, and (ii) at the appropriate payment date, the amount of dividends
or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of Parent Common Stock, less the amount of any
withholding taxes which may be required thereon.
(d) At or after the Effective Time, there shall be no transfers on the
stock transfer books of the Company of the shares of Company Common Stock
which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving
Corporation, the presented Certificates shall be canceled and exchanged for
certificates for shares of Parent Common Stock and cash in lieu of
fractional shares, if any, deliverable in respect thereof pursuant to this
Agreement in accordance with the procedures set forth in this Article 4.
Certificates surrendered for exchange by any person constituting an
"affiliate" of the Company for purposes of Rule 145(c) under the Securities
Act of 1933, as amended (the "Securities Act"), shall not be exchanged
until Parent has received a written agreement from such person as provided
in Section 7.11.
(e) No fractional shares of Parent Common Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional share of Parent
Common Stock pursuant to Section 4.2(b), cash adjustments will be paid to
holders in respect of any fractional share of Parent Common Stock that
would otherwise be issuable, and the amount of such cash adjustment shall
be equal to such fractional proportion of the Parent Share Price.
(f) Any portion of the Exchange Fund (including the proceeds of any
investments thereof and any shares of Parent Common Stock) that remains
unclaimed by the former stockholders of the Company one year after the
Effective Time shall be delivered to Parent. Any former stockholders of the
Company who have not theretofore complied with this Article 4 shall
thereafter look only to Parent for payment of their shares of Parent Common
Stock, cash in lieu of fractional shares and unpaid dividends and
distributions on the Parent Common Stock deliverable in respect of each
Certificate such former stockholder holds as determined pursuant to this
Agreement.
(g) None of Parent, the Surviving Corporation, the Exchange Agent or
any other person shall be liable to any former holder of shares of Company
Common Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required
by the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost,
stolen or destroyed Certificate the shares of Parent Common Stock and cash
in lieu of fractional shares, and unpaid dividends and distributions on
shares of Parent Common Stock as provided in Section 4.3(c), deliverable in
respect thereof pursuant to this Agreement.
SECTION 4.4 Adjustment of Exchange Ratio. In the event that, subsequent to
the date of this Agreement but prior to the Effective Time, the Company changes
the number of shares of Company Common Stock, or Parent changes the number of
shares of Parent Common Stock, issued and outstanding as a result of a stock
split, reverse stock split, stock dividend, recapitalization or other similar
transaction, the Exchange Ratio and other items dependent thereon shall be
appropriately adjusted.
SECTION 4.5 Rule 16b-3 Approval. Parent agrees that the Parent Board of
Directors or the Compensation Committee of the Parent Board of Directors shall
at or prior to the Effective Time adopt resolutions specifically approving, for
purposes of Rule 16b-3 ("Rule 16b-3") under the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), the receipt, pursuant to Section 4.2, of Parent
Common Stock and Parent stock options by officers and directors of the Company
who will become officers or directors of the Parent subject to Rule 16b-3.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered to Parent
concurrently with the execution hereof (the "Company Disclosure Letter") or as
disclosed with reasonable specificity in the Company Reports (as defined in
Section 5.7), the Company represents and warrants to Parent that:
SECTION 5.1 Existence; Good Standing; Corporate Authority. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. The Company is duly qualified to do
business as a foreign corporation and is in good standing under the laws of any
jurisdiction in which the character of the properties owned or leased by it
therein or in which the transaction of its business makes such qualification
necessary, except where the failure to be so qualified would not have,
individually or in the aggregate, a Company Material Adverse Effect (as defined
in Section 10.9). The Company has all requisite corporate power and authority to
own, operate and lease its properties and to carry on its business as now
conducted. The copies of the Company's certificate of incorporation and bylaws
previously made available to Parent are true and correct and contain all
amendments as of the date hereof.
SECTION 5.2 Authorization, Validity and Effect of Agreements. The Company
has the requisite corporate power and authority to execute and deliver this
Agreement, the Stock Option Agreements and all other agreements and documents
contemplated hereby. The consummation by the Company of the transactions
contemplated hereby and by the Stock Options Agreements has been duly authorized
by all requisite corporate action, other than, with respect to the Merger, the
approval and adoption of this Agreement by the Company's stockholders. This
Agreement and the Stock Option Agreements constitute the valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
SECTION 5.3 Capitalization. The authorized capital stock of the Company
consists of 150,000,000 shares of Company Common Stock and 25,000,000 shares of
preferred stock, par value $1.00 per share, of the Company ("Company Preferred
Stock") and, as of April 30, 1998, there were 54,802,834 shares of Company
Common Stock issued and outstanding and 4,360,254 shares of Company Common Stock
reserved for issuance upon exercise of outstanding Company Options, and no
shares of Company Preferred Stock issued and outstanding. All such issued and
outstanding shares of Company Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. One right to purchase
Series A Junior Participating Preferred Stock (each, a "Company Right") issued
pursuant to the Rights Agreement, dated as of August 17, 1994 (the "Company
Rights Agreement"), as amended, between the Company and Chemical Trust Company
of California is associated with and attached to each outstanding share of
Company Common Stock. As of the date of this Agreement, except as set forth in
this Section 5.3 or in the Stock Option Agreements and except for any shares of
Company Common Stock issued pursuant to Company Stock Option Plans described in
the Company Reports filed prior to the date of this Agreement, there are no
outstanding shares of capital stock and there are no options, warrants, calls,
subscriptions, convertible securities, or other rights, agreements or
commitments which obligate the Company or any of its Subsidiaries to issue,
transfer or sell any shares of capital stock or other voting securities of the
Company or any of its Subsidiaries. The Company has no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to
vote (or which are convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter.
SECTION 5.4 Significant Subsidiaries. For purposes of this Agreement,
"Significant Subsidiary" shall mean significant subsidiary as defined in Rule
1-02 of Regulation S-X of the Exchange Act. Each of the Company's Significant
Subsidiaries is a corporation or partnership duly organized, validly existing
and in good standing (where applicable) under the laws of its jurisdiction of
incorporation or organization, has the corporate or partnership power and
authority to own, operate and lease its properties and to carry on its business
as it is now being conducted, and is duly qualified to do business and is in
good standing (where applicable) in each jurisdiction in which the ownership,
operation or lease of its property or the conduct of its business requires such
qualification, except for jurisdictions in which such failure to be so qualified
or to be in
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good standing would not have a Company Material Adverse Effect. All of the
outstanding shares of capital stock of, or other ownership interests in, each of
the Company's Significant Subsidiaries is duly authorized, validly issued, fully
paid and nonassessable, and is owned, directly or indirectly, by the Company
free and clear of all liens, pledges, security interests, claims or other
encumbrances ("Liens"). Schedule 5.4 to the Company Disclosure Letter sets forth
for each Significant Subsidiary of the Company, its name and jurisdiction of
incorporation or organization.
SECTION 5.5 No Violation of Law. Neither the Company nor any of its
Subsidiaries is in violation of any order of any court, governmental authority
or arbitration board or tribunal, or any law, ordinance, governmental rule or
regulation to which the Company or any of its Subsidiaries or any of their
respective properties or assets is subject, except as would not have,
individually or in the aggregate, a Company Material Adverse Effect. The Company
and its Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all governmental authorities necessary for the
lawful conduct of their respective businesses (the "Company Permits"), except
where the failure so to hold would not have a Company Material Adverse Effect.
The Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply would not have a Company Material
Adverse Effect. To the knowledge of the Company, no investigation by any
governmental authority with respect to the Company or any of its Subsidiaries is
pending or threatened, other than those the outcome of which would not have a
Company Material Adverse Effect.
SECTION 5.6 No Conflict.
(a) Neither the execution and delivery by the Company of this
Agreement or the Stock Option Agreements nor the consummation by the
Company of the transactions contemplated hereby or thereby in accordance
with the terms hereof or thereof will: (i) conflict with or result in a
breach of any provisions of the certificate of incorporation or bylaws of
the Company; (ii) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or give rise
to a right of purchase under, or accelerate the performance required by, or
result in the creation of any Lien upon any of the properties of the
Company or its Subsidiaries under, or result in being declared void,
voidable, or without further binding effect, or otherwise result in a
detriment to the Company or any of its Subsidiaries under, any of the
terms, conditions or provisions of, any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, lease, contract, agreement,
joint venture 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 of their properties is bound or affected; or (iii)
contravene or conflict with or constitute a violation of any provision of
any law, rule, regulation, judgment, order or decree binding upon or
applicable to the Company or any of its Subsidiaries, except, in the case
of matters described in clause (ii) or (iii), as would not have,
individually or in the aggregate, a Company Material Adverse Effect.
(b) Neither the execution and delivery by the Company of this
Agreement or the Stock Option Agreements nor the consummation by the
Company of the transactions contemplated hereby or thereby in accordance
with the terms hereof or thereof will require any consent, approval or
authorization of, or filing or registration with, any governmental or
regulatory authority, other than (i) the filings provided for in Article 1
and (ii) filings required under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the Exchange Act, the
Securities Act or applicable state securities and "Blue Sky" laws and
applicable foreign competition or antitrust laws ((i) and (ii)
collectively, the "Regulatory Filings"), and listing on the NYSE of the
Company Common Stock to be issued upon exercise of the option granted to
Parent pursuant to the applicable Stock Option Agreement, except for any
consent, approval or authorization the failure of which to obtain and for
any filing or registration the failure of which to make would not have a
Company Material Adverse Effect.
SECTION 5.7 SEC Documents. The Company has made available to Parent each
registration statement, report, proxy statement or information statement (other
than preliminary materials) filed by the Company with the SEC since January 1,
1997, each in the form (including exhibits and any amendments thereto) filed
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with the SEC (collectively, the "Company Reports"). As of their respective
dates, the Company Reports (i) were prepared in all material respects in
accordance with the applicable requirements of the Securities Act, the Exchange
Act, and the rules and regulations thereunder and (ii) did not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in the light
of the circumstances under which they were made, not misleading except for such
statements, if any, as have been modified by subsequent filings with the SEC
prior to the date hereof. Each of the consolidated balance sheets included in or
incorporated by reference into the Company Reports (including the related notes
and schedules) fairly presents in all material respects the consolidated
financial position of the Company and its Subsidiaries as of its date and each
of the consolidated statements of income, cash flows and changes in
stockholders' equity of the Company included in or incorporated by reference
into the Company Reports (including any related notes and schedules) fairly
presents in all material respects the results of operations, cash flows or
changes in stockholders' equity, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to (x) such exceptions as may be permitted by Form 10-Q of
the SEC and (y) normal year-end audit adjustments), in each case in accordance
with generally accepted accounting principles consistently applied during the
periods involved, except as may be noted therein. Except as and to the extent
set forth on the consolidated balance sheet of the Company and its Subsidiaries
at December 31, 1997, including all notes thereto, as of such date, neither the
Company nor any of its Subsidiaries had any liabilities or obligations of any
nature (whether accrued, absolute, contingent or otherwise) that would be
required to be reflected on, or reserved against in, a balance sheet of the
Company or in the notes thereto prepared in accordance with generally accepted
accounting principles consistently applied, other than liabilities or
obligations which would not have, individually or in the aggregate, a Company
Material Adverse Effect.
SECTION 5.8 Litigation. There are no actions, suits or proceedings pending
against the Company or any of its Subsidiaries or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries, at law or in equity,
or before or by any federal, state or foreign commission, board, bureau, agency
or instrumentality, that are likely to have, individually or in the aggregate, a
Company Material Adverse Effect. There are no outstanding judgments, decrees,
injunctions, awards or orders against the Company or any of its Subsidiaries
that are likely to have, individually or in the aggregate, a Company Material
Adverse Effect.
SECTION 5.9 Absence of Certain Changes. Since December 31, 1997, there has
not been (i) any event or occurrence that has had or is likely to have a
Material Adverse Effect with respect to the Company, (ii) any material change by
the Company or any of its Subsidiaries, when taken as a whole, in any of its
accounting methods, principles or practices or any of its tax methods, practices
or elections, (iii) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of the Company or any redemption,
purchase or other acquisition of any of its securities, or (iv) any increase in
or establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option, stock purchase or other
employee benefit plan, except in the ordinary course of business.
SECTION 5.10 Taxes.
(a) Each of the Company, its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such
corporation is or was a member has (i) duly filed (or there has been filed
on its behalf) on a timely basis with appropriate governmental authorities
all tax returns, statements, reports, declarations, estimates and forms
("Returns") required to be filed by or with respect to it, except to the
extent that any failure to file would not have, individually or in the
aggregate, a Company Material Adverse Effect, and (ii) duly paid or
deposited in full on a timely basis or made adequate provisions in
accordance with generally accepted accounting principles (or there has been
paid or deposited or adequate provision has been made on its behalf) for
the payment of all taxes required to be paid by it, except to the extent
that any failure to pay or deposit or make adequate provision for the
payment of such taxes would not have, individually or in the aggregate, a
Company Material Adverse Effect. The Company's aggregate adjusted basis for
federal income tax purposes in its shares of Unova, Inc. immediately before
the distribution by the Company to its stockholders of such shares was
equal to at least $500 million.
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(b) (i) Except as set forth in the Company Disclosure Letter, the
federal income tax returns of the Company and each of its Subsidiaries have
been examined by the Internal Revenue Service (the "IRS") (or the
applicable statutes of limitation for the assessment of federal income
taxes for such periods have expired) for all periods; (ii) except to the
extent being contested in good faith, all material deficiencies asserted as
a result of such examinations and any other examinations of the Company and
its Subsidiaries by any taxing authority have been paid fully, settled or
adequately provided for in the financial statements contained in the
Company Reports; (iii) as of the date hereof, neither the Company nor any
of its Subsidiaries has granted any requests, agreements, consents or
waivers to extend the statutory period of limitations applicable to the
assessment of any taxes with respect to any Returns of the Company or any
of its Subsidiaries; (iv) neither the Company nor any of its Subsidiaries
is a party to, is bound by or has any obligation under any tax sharing,
allocation or indemnity agreement or any similar agreement or arrangement
that would have a Company Material Effect; and (v) neither the Company nor
any of its Subsidiaries is a party to an agreement that provides for the
payment of any amount that would constitute a "parachute payment" within
the meaning of section 280G of the Code.
For purposes of this Agreement, "tax" or "taxes" means all federal, state,
county, local, foreign or other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, accumulated earnings, personal holding company,
excess profits, franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, disability, capital
stock, or windfall profits taxes, customs duties or other taxes, fees,
assessments or governmental charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority (domestic or foreign).
SECTION 5.11 Employee Benefit Plans.
(a) Schedule 5.11 of the Company Disclosure Letter contains a list of
all U.S. Company Benefit Plans. The term "Company Benefit Plans" means all
material employee benefit plans and other material benefit arrangements,
including all "employee benefit plans" as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), covering
employees of the Company and its Subsidiaries. True and complete copies of
the U.S. Company Benefit Plans and, if applicable, the most recent Form
5500 and annual reports for each such plan have been made available to
Parent.
(b) Except as would not have, individually or in the aggregate, a
Company Material Adverse Effect: all applicable reporting and disclosure
requirements have been met with respect to the Company Benefit Plans; there
has been no "reportable event," as that term is defined in section 4043 of
ERISA, with respect to the Company Benefit Plans subject to Title IV of
ERISA; to the extent applicable, the Company Benefit Plans comply, in all
material respects, with the requirements of ERISA and the Code, and any
Company Benefit Plan intended to be qualified under section 401(a) of the
Code has been determined by the IRS to be so qualified; the Company Benefit
Plans have been maintained and operated, in all material respects, in
accordance with their terms, and there are no breaches of fiduciary duty in
connection with the Company Benefit Plans; to the Company's knowledge,
there are no pending or threatened claims against or otherwise involving
any Company Benefit Plan and no suit, action or other litigation (excluding
claims for benefits incurred in the ordinary course of Company Benefit Plan
activities) has been brought against or with respect to any such Company
Benefit Plan; all material contributions required to be made as of the date
hereof to the Company Benefit Plans have been made or provided for; the
Company does not maintain or contribute to any material plan or arrangement
which provides or has any liability to provide life insurance, medical or
other employee welfare benefits to any employee or former employee upon his
retirement or termination of employment and the Company has not
represented, promised or contracted (whether in oral or written form) to
any employee or former employee that such benefits would be provided; with
respect to the Company Benefit Plans or any "employee pension benefit
plans," as defined in section 3(2) of ERISA, that are subject to Title IV
of ERISA and have been maintained or contributed to within six years prior
to the Effective Time by the Company, its Subsidiaries or any trade or
business (whether or not incorporated) which is under common control, or
which is treated as a single employer, with the Company or any of its
Subsidiaries under
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sections 414(b), (c), (m), or (o) of the Code, (i) neither the Company nor
any of its Subsidiaries has incurred any direct or indirect liability under
title IV of ERISA in connection with any termination thereof or withdrawal
therefrom; (ii) there does not exist any accumulated funding deficiency
within the meaning of section 412 of the Code or section 302 of ERISA,
whether or not waived; and (iii) the actuarial value of the assets equal or
exceed the actuarial present value of the benefit liabilities, within the
meaning of section 4041 of ERISA, based upon reasonable actuarial
assumptions and asset valuation principles; and no prohibited transaction
has occurred with respect to any Company Benefit Plan that would result in
the imposition of any excise tax or other liability under the Code or
ERISA.
(c) Neither the Company nor any of its Subsidiaries nor any trade or
business (whether or not incorporated) which is under common control, or
which is treated as a single employer, with the Company or any of its
Subsidiaries under sections 414(b), (c), (m), or (o) of the Code,
contributes to, or has an obligation to contribute to, and has not within
six years prior to the Effective Time contributed to, or had an obligation
to contribute to, a multiemployer plan within the meaning of section 3(37)
of ERISA. The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any benefit plan, policy, arrangement or agreement or any trust or
loan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligations to fund benefits with
respect to any employee of the Company or any Subsidiary thereof.
SECTION 5.12 Labor Matters. Except as would not have a Company Material
Adverse Effect, (i) neither the Company nor any of its Subsidiaries is a party
to, or bound by, any collective bargaining agreement, contract or other
agreement or understanding with a U.S. labor union or U.S. labor organization
and (ii) to the Company's knowledge, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made or
threatened involving employees of the Company or any of its Subsidiaries.
SECTION 5.13 Environmental Matters. Except as would not have, individually
or in the aggregate, a Company Material Adverse Effect:
(a) there are not any past or present conditions or circumstances that
interfere with the conduct of the business of the Company and each of its
Subsidiaries in the manner now conducted or which interfere with compliance
with any order of any court, governmental authority or arbitration board or
tribunal, or any law, ordinance, governmental rule or regulation related to
human health or the environment ("Environmental Law");
(b) there are not any past or present conditions or circumstances at,
or arising out of, any current or former businesses, assets or properties
of the Company or any Subsidiary of the Company, including but not limited
to on-site or off-site disposal or release of any chemical substance,
product or waste, which could reasonably be expected to give rise to: (i)
liabilities or obligations for any cleanup, remediation, disposal or
corrective action under any Environmental Law or (ii) claims arising for
personal injury, property damage, or damage to natural resources; and
(c) neither the Company nor any of its Subsidiaries has (i) received
any notice of noncompliance with, violation of, or liability or potential
liability under any Environmental Law or (ii) entered into any consent
decree or order or is subject to any order of any court or governmental
authority or tribunal under any Environmental Law or relating to the
cleanup of any hazardous materials contamination.
SECTION 5.14 Intellectual Property. Except as previously disclosed to
Parent in writing, the Company and its Subsidiaries own or possess adequate
licenses or other valid rights to use all patents, patent rights, trademarks,
trademark rights and proprietary information used or held for use in connection
with their respective businesses as currently being conducted, except where the
failure to own or possess such licenses and other rights would not have,
individually or in the aggregate, a Company Material Adverse Effect, and there
are no assertions or claims challenging the validity of any of the foregoing
which are likely to have,
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individually or in the aggregate, a Company Material Adverse Effect. The conduct
of the Company's and its Subsidiaries' respective businesses as currently
conducted does not conflict with any patents, patent rights, licenses,
trademarks, trademark rights, trade names, trade name rights or copyrights of
others in any way likely to have, individually or in the aggregate, a Company
Material Adverse Effect. There is no material infringement of any proprietary
right owned by or licensed by or to the Company or any of its Subsidiaries which
is likely to have, individually or in the aggregate, a Company Material Adverse
Effect. The computer software operated, sold or licensed by the Company that is
material to its business or its internal operations is capable of providing or
is being or will be adapted, or is capable of being replaced, to provide
uninterrupted millennium functionality to record, store, process and present
calendar dates falling on or after January 1, 2000 in substantially the same
manner and with substantially the same functionality as such software records,
stores, processes and presents such calendar dates falling on or before December
31, 1999, except as would not have a Company Material Adverse Effect. The costs
of the adaptations and replacements referred to in the prior sentence will not
have a Company Material Adverse Effect.
SECTION 5.15 Insurance. The Company and its Subsidiaries maintain insurance
coverage reasonably adequate for the operation of their respective businesses
(taking into account the cost and availability of such insurance).
SECTION 5.16 No Brokers. The Company has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company or Parent to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby, except that the Company has retained as its financial advisor, the
arrangements with which have been disclosed in writing to Parent prior to the
date hereof.
SECTION 5.17 Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of to the effect that, as of the date of this
Agreement, the Exchange Ratio is fair, from a financial point of view, to the
holders of the Company Common Stock; it being understood and acknowledged by
Parent that such opinion has been rendered for the benefit of the Board of
Directors of the Company, and is not intended to, and may not, be relied upon by
Parent, its affiliates or their respective Subsidiaries.
SECTION 5.18 Parent Stock Ownership. Neither the Company nor any of its
Subsidiaries owns any shares of capital stock of Parent or any other securities
convertible into or otherwise exercisable to acquire capital stock of Parent.
SECTION 5.19 Reorganization. Neither the Company nor any of its
Subsidiaries has taken or failed to take any action, as a result of which the
Merger would not qualify as a reorganization within the meaning of section
368(a) of the Code.
SECTION 5.20 Pooling. Neither the Company nor any of its Subsidiaries has
taken or failed to take any action, as a result of which the Merger would not
qualify as a "pooling of interests" for financial accounting purposes.
SECTION 5.21 Vote Required. The affirmative vote of the holders of at least
a majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of Company capital stock necessary to approve
this Agreement and the transactions contemplated hereby.
SECTION 5.22 Amendment to the Company Rights Agreement. The Company has
amended or taken other action under the Company Rights Agreement so that none of
the execution and delivery of this Agreement or the Stock Option Agreements, the
conversion of shares of Company Common Stock into the right to receive Parent
Common Stock in accordance with Article 4 of this Agreement, the issuance of
shares of Company Common Stock upon exercise of the option granted to Parent
pursuant to the applicable Stock Option Agreement, and the consummation of the
Merger or any other transaction contemplated hereby or by the Stock Option
Agreement, will cause (i) the Company Rights to become exercisable under the
Company Rights Agreement, (ii) Parent or any of its Subsidiaries to be deemed an
"Acquiring Person" (as defined in the Company Rights Agreement), (iii) any such
event to be an event described in Section 11(a)(ii) or 13 of the Company Rights
Agreement or (iv) the "Shares Acquisition Date" or the "Distribution Date" (each
as
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defined in the Company Rights Agreement) to occur upon any such event, and so
that the Company Rights will expire immediately prior to the Effective Time. The
Company has delivered to Parent a true and complete copy of the Company Rights
Agreement, as amended to date.
SECTION 5.23 Certain Approvals. The Company Board of Directors has taken
any and all necessary and appropriate action to render inapplicable to the
Merger and the transactions contemplated by this Agreement and the Stock Option
Agreements the provisions of Section 203 of the DGCL. No other state takeover or
business combination statute applies or purports to apply to the Merger or the
transactions contemplated by this Agreement or the Stock Option Agreements.
SECTION 5.24 Certain Contracts. Neither the Company nor any of its
Subsidiaries is a party to or bound by any non-competition agreement or any
other agreement or obligation which purports to limit in any material respect
the manner in which, or the localities in which, all or any material portion of
the current business of the Company and its Subsidiaries, taken as a whole, or
the Parent and its Subsidiaries, taken as a whole, is conducted.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Except as set forth in the disclosure letter delivered to the Company
concurrently with the execution hereof (the "Parent Disclosure Letter") or as
disclosed with reasonable specificity in the Parent Reports (as defined in
Section 6.7), Parent and Merger Sub, jointly and severally, represent and
warrant to the Company that:
SECTION 6.1 Existence; Good Standing; Corporate Authority. Parent and
Merger Sub are corporations duly incorporated, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation.
Parent is duly qualified to do business as a foreign corporation and is in good
standing under the laws of any jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified would not have, individually or in the aggregate, a Parent Material
Adverse Effect (as defined in Section 10.9). Parent has all requisite corporate
power and authority to own, operate and lease its properties and to carry on its
business as now conducted. The copies of Parent's certificate of incorporation
and bylaws previously made available to the Company are true and correct and
contain all amendments as of the date hereof.
SECTION 6.2 Authorization, Validity and Effect of Agreements. Each of
Parent and Merger Sub has the requisite corporate power and authority to execute
and deliver this Agreement, the Stock Option Agreements and all other agreements
and documents contemplated hereby to which it is a party. Each of the
consummation by Parent and Merger Sub of the transactions contemplated hereby,
including the issuance and delivery by Parent of shares of Parent Common Stock
pursuant to the Merger, and the consummation by Parent of the transactions
contemplated by the Stock Option Agreements, has been duly authorized by all
requisite corporate action, other than approval of the issuance of the shares of
Parent Common Stock pursuant to the Merger contemplated hereby by Parent's
stockholders as required by the rules of the NYSE. This Agreement and the Stock
Option Agreements constitute the valid and legally binding obligations of each
of Parent and Merger Sub to the extent it is a party, enforceable in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
SECTION 6.3 Capitalization. The authorized capital stock of Parent consists
of 400,000,000 shares of Parent Common Stock and 15,000,000 shares of preferred
stock, par value $1.00 per share, of Parent ("Parent Preferred Stock"), and, as
of May 1, 1998, there were 169,709,279 shares of Parent Common Stock issued and
outstanding and 6,286,974 shares of Parent Common Stock reserved for issuance
upon exercise of outstanding Parent options and no shares of Parent Preferred
Stock issued and outstanding. All such issued and outstanding shares of Parent
Common Stock are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. The shares of Parent Common Stock to be issued in
connection with the
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Merger, when issued in accordance with this Agreement, will be validly issued,
fully paid and nonassessable. As of the date of this Agreement, except as set
forth in this Section 6.3 or in the Stock Option Agreements and except for any
shares of Parent Common Stock issued pursuant to plans described in the Parent
Reports filed prior to the date of this Agreement, there are no outstanding
shares of capital stock and there are no options, warrants, calls,
subscriptions, convertible securities or other rights, agreements or commitments
which obligate Parent or any of its Subsidiaries to issue, transfer or sell any
shares of capital stock or other voting securities of Parent or any of its
Subsidiaries. Parent has no outstanding bonds, debentures, notes or other
obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the stockholders of Parent on any matter.
SECTION 6.4 Significant Subsidiaries.
(a) Each of Parent's Significant Subsidiaries is a corporation or
partnership duly organized, validly existing and in good standing (where
applicable) under the laws of its jurisdiction of incorporation or organization,
has the corporate or partnership power and authority to own, operate and lease
its properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing (where applicable) in each
jurisdiction in which the ownership, operation or lease of its property or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing would not have a
Parent Material Adverse Effect. All of the outstanding shares of capital stock
of, or other ownership interests in, each of the Parent's Significant
Subsidiaries is duly authorized, validly issued, fully paid and nonassessable,
and is owned, directly or indirectly, by the Parent free and clear of all Liens.
Schedule 6.4 to the Parent Disclosure Letter sets forth for each Significant
Subsidiary of Parent its name and jurisdiction of incorporation or organization.
(b) All of the outstanding shares of capital stock of Merger Sub are owned
directly by Parent. Merger Sub was formed solely for the purpose of engaging in
the transactions contemplated hereby and has not engaged in any activities other
than in connection with the transactions contemplated by this Agreement.
SECTION 6.5 No Violation of Law. Neither Parent nor any of its Subsidiaries
is in violation of any order of any court, governmental authority or arbitration
board or tribunal, or any law, ordinance, governmental rule or regulation to
which Parent or any of its Subsidiaries or any of their respective properties or
assets is subject, except as would not have, individually or in the aggregate, a
Parent Material Adverse Effect. Parent and its Subsidiaries hold all permits,
licenses, variances, exemptions, orders, franchises and approvals of all
governmental authorities necessary for the lawful conduct of their respective
businesses (the "Parent Permits"), except where the failure so to hold would not
have a Parent Material Adverse Effect. Parent and its Subsidiaries are in
compliance with the terms of the Parent Permits, except where the failure so to
comply would not have a Parent Material Adverse Effect. To the knowledge of
Parent, no investigation by any governmental authority with respect to Parent or
any of its Subsidiaries is pending or threatened, other than those the outcome
of which would not have a Parent Material Adverse Effect.
SECTION 6.6 No Conflict.
(a) Neither the execution and delivery by Parent and Merger Sub of
this Agreement, the execution and delivery by Parent of the Stock Option
Agreements nor the consummation by Parent and Merger Sub of the
transactions contemplated hereby or thereby in accordance with the terms
hereof or thereof will: (i) conflict with or result in a breach of any
provisions of the certificate of incorporation or bylaws of Parent or
Merger Sub; (ii) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination or in a right of termination or cancellation of, or give rise
to a right of purchase under or accelerate the performance required by, or
result in the creation of any Lien upon any of the properties of Parent or
its Subsidiaries under, or result in being declared void, voidable, or
without further binding effect, or otherwise result in a detriment to
Parent or any of its Subsidiaries under any of the terms, conditions or
provisions of, any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, lease, contract, agreement, joint venture or other
instrument or obligation to which Parent or any of its Subsidiaries is a
party, or by which Parent or any of its Subsidiaries or any of their
properties is bound or affected; or (iii) contravene or conflict with or
constitute a violation of any provision of any law,
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rule, regulation, judgment, order or decree binding upon or applicable to
Parent or any of its Subsidiaries, except, in the case of matters described
in clause (ii) or (iii), as would not have, individually or in the
aggregate, a Parent Material Adverse Effect.
(b) Neither the execution and delivery by Parent or Merger Sub of this
Agreement, the execution and delivery by Parent of the Stock Option
Agreements nor the consummation by Parent or Merger Sub of the transactions
contemplated hereby or thereby in accordance with the terms hereof or
thereof will require any consent, approval or authorization of, or filing
or registration with, any governmental or regulatory authority, other than
Regulatory Filings, and listing of the Parent Common Stock to be issued in
the Merger and upon exercise of the option granted to the Company pursuant
to the applicable Stock Option Agreement under the rules of the NYSE,
except for any consent, approval or authorization the failure of which to
obtain and for any filing or registration the failure of which to make
would not have a Parent Material Adverse Effect.
SECTION 6.7 SEC Documents. Parent has made available to the Company each
registration statement, report, proxy statement or information statement (other
than preliminary materials) filed by Parent with the SEC since September 30,
1996, each in the form (including exhibits and any amendments thereto) filed
with the SEC (collectively, the "Parent Reports"). As of their respective dates,
the Parent Reports (i) were prepared in all material respects in accordance with
the applicable requirements of the Securities Act, the Exchange Act, and the
rules and regulations thereunder and (ii) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading except for such
statements, if any, as have been modified by subsequent filings with the SEC
prior to the date hereof. Each of the consolidated balance sheets included in or
incorporated by reference into the Parent Reports (including the related notes
and schedules) fairly presents in all material respects the consolidated
financial position of Parent and its Subsidiaries as of its date and each of the
consolidated statements of income, cash flows and changes in stockholders'
equity included in or incorporated by reference into the Parent Reports
(including any related notes and schedules) fairly presents in all material
respects the results of operations, cash flows or changes in stockholders'
equity, as the case may be, of Parent and its Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to (x) such
exceptions as may be permitted by Form 10-Q of the SEC and (y) normal year-end
audit adjustments), in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
as may be noted therein. Except as and to the extent set forth on the
consolidated balance sheet of Parent and its Subsidiaries at September 30, 1997,
including all notes thereto, as of such date, neither Parent nor any of its
Subsidiaries had any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on, or
reserved against in, a balance sheet of Parent or in the notes thereto prepared
in accordance with generally accepted accounting principles consistently
applied, other than liabilities or obligations which would not have,
individually or in the aggregate, a Parent Material Adverse Effect.
SECTION 6.8 Litigation. There are no actions, suits or proceedings pending
against Parent or any of its Subsidiaries or, to Parent's knowledge, threatened
against Parent or any of its Subsidiaries, at law or in equity, or before or by
any federal, state or foreign commission, board, bureau, agency or
instrumentality, that are likely to have, individually or in the aggregate, a
Parent Material Adverse Effect. There are no outstanding judgments, decrees,
injunctions, awards or orders against Parent or any of its Subsidiaries that are
likely to have, individually or in the aggregate, a Parent Material Adverse
Effect.
SECTION 6.9 Absence of Certain Changes. Since December 31, 1997, there has
not been (i) any event or occurrence that has had or is likely to have a
Material Adverse Effect with respect to Parent, (ii) any material change by
Parent or any of its Subsidiaries, when taken as a whole, in any of its
accounting methods, principles or practices or any of its tax methods, practices
or elections, (iii) any declaration, setting aside or payment of any dividend or
distribution in respect of any capital stock of Parent or any redemption,
purchase or other acquisition of any of its securities, except dividends on the
Parent Common Stock at a rate of not more than $0.115 per share per quarter, or
(iv) any increase in or establishment of any bonus, insurance, severance,
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deferred compensation, pension, retirement, profit sharing, stock option, stock
purchase or other employee benefit plan, except in the ordinary course of
business.
SECTION 6.10 Taxes.
(a) Each of Parent, its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such
corporation is or was a member has (i) duly filed (or there has been filed
on its behalf) on a timely basis with appropriate governmental authorities
all Returns required to be filed by or with respect to it, except to the
extent that any failure to file would not have, individually or in the
aggregate, a Parent Material Adverse Effect, and (ii) duly paid or
deposited in full on a timely basis or made adequate provisions in
accordance with generally accepted accounting principles (or there has been
paid or deposited or adequate provision has been made on its behalf) for
the payment of all taxes required to be paid by it, except to the extent
that any failure to pay or deposit or make adequate provision for the
payment of such taxes would not have, individually or in the aggregate, a
Parent Material Adverse Effect.
(b) (i) The federal income tax returns of Parent and each of its
Subsidiaries have been examined by the IRS (or the applicable statutes of
limitation for the assessment of federal income taxes for such periods have
expired) for all periods through and including September 30, 1993; (ii)
except to the extent being contested in good faith, all material
deficiencies asserted as a result of such examinations and any other
examinations of Parent and its Subsidiaries by any taxing authority have
been paid fully, settled or adequately provided for in the financial
statements contained in the Parent Reports; (iii) as of the date hereof,
neither Parent nor any of its Subsidiaries has granted any requests,
agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any taxes with respect to any
Returns of Parent or any of its Subsidiaries, except that Parent and its
Subsidiaries have agreed to extend the applicable Federal statutory period
of limitations to December 31, 1998 for the fiscal year ended October 1,
1994; (iv) neither Parent nor any of its Subsidiaries is a party to, is
bound by or has any obligation under any tax sharing, allocation or
indemnity agreement or any similar agreement or arrangement that would have
a Parent Material Adverse Effect; and (v) neither Parent nor any of its
Subsidiaries is a party to an agreement that provides for the payment of
any amount that would constitute a "parachute payment" within the meaning
of Section 280G of the Code.
SECTION 6.11 Employee Benefit Plans.
(a) Schedule 6.11 of the Parent Disclosure Letter contains a list of
all U.S. Parent Benefit Plans. The term "Parent Benefit Plans" means all
material employee benefit plans and other material benefit arrangements,
including all "employee benefit plans" as defined in ERISA, covering
employees of Parent and its Subsidiaries. True and complete copies of the
U.S. Parent Benefit Plans and, if applicable, the most recent Form 5500 and
annual reports for each such plan have been made available to the Company.
(b) Except as would not have, individually or in the aggregate, a
Parent Material Adverse Effect: all applicable reporting and disclosure
requirements have been met with respect to the Parent Benefit Plans; there
has been no "reportable event," as that term is defined in section 4043 of
ERISA, with respect to the Parent Benefit Plans subject to Title IV of
ERISA; to the extent applicable, the Parent Benefit Plans comply, in all
material respects, with the requirements of ERISA and the Code, and any
Parent Benefit Plan intended to be qualified under section 401(a) of the
Code has been determined by the IRS to be so qualified; the Parent Benefit
Plans have been maintained and operated, in all material respects, in
accordance with their terms, and there are no breaches of fiduciary duty in
connection with the Parent Benefit Plans; to Parent's knowledge, there are
no pending or threatened claims against or otherwise involving any Parent
Benefit Plan and no suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of Parent Benefit Plan activities)
has been brought against or with respect to any such Parent Benefit Plan;
all material contributions required to be made as of the date hereof to the
Parent Benefit Plans have been made or provided for; Parent does not
maintain or contribute to any material plan or arrangement which provides
or has any liability to provide life insurance, medical or other employee
welfare benefits to any employee or former employee upon his retirement or
termination of employment and Parent has not represented, promised or
contracted (whether in oral or written form)
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to any employee or former employee that such benefits would be provided;
with respect to the Parent Benefit Plans or any "employee pension benefit
plans," as defined in section 3(2) of ERISA, that are subject to Title IV
of ERISA and have been maintained or contributed to within six years prior
to the Effective Time by Parent, its Subsidiaries or any trade or business
(whether or not incorporated) which is under common control, or which is
treated as a single employer, with Parent or any of its Subsidiaries under
sections 414(b), (c), (m), or (o) of the Code, (i) neither Parent nor any
of its Subsidiaries has incurred any direct or indirect liability under
title IV of ERISA in connection with any termination thereof or withdrawal
therefrom; (ii) there does not exist any accumulated funding deficiency
within the meaning of section 412 of the Code or section 302 of ERISA,
whether or not waived; and (iii) the actuarial value of the assets equal or
exceed the actuarial present value of the benefit liabilities, within the
meaning of section 4041 of ERISA, based upon reasonable actuarial
assumptions and asset valuation principles; and no prohibited transaction
has occurred with respect to any Parent Benefit Plan that would result in
the imposition of any excise tax or other liability under the Code or
ERISA.
(c) Neither Parent nor any of its Subsidiaries nor any trade or
business (whether or not incorporated) which is under common control, or
which is treated as a single employer, with Parent or any of its
Subsidiaries under sections 414(b), (c), (m), or (o) of the Code,
contributes to, or has an obligation to contribute to, and has not within
six years prior to the Effective Time contributed to, or had an obligation
to contribute to, a multiemployer plan within the meaning of section 3(37)
of ERISA. The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the
occurrence of any additional or subsequent events) constitute an event
under any benefit plan, policy, arrangement or agreement or any trust or
loan that will or may result in any payment (whether of severance pay or
otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligations to fund benefits with
respect to any employee of Parent or any Subsidiary thereof.
SECTION 6.12 Labor Matters. Neither Parent nor any of its Subsidiaries is
subject to a dispute, strike or work stoppage with respect to any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization to which it is a party or by which it is bound which
would have a Parent Material Adverse Effect. To Parent's knowledge, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of Parent or any of
its Subsidiaries, except for those the formation of which would not have a
Parent Material Adverse Effect.
SECTION 6.13 Environmental Matters. Except as would not have, individually
or in the aggregate, a Parent Material Adverse Effect:
(a) there are not any past or present conditions or circumstances that
interfere with the conduct of the business of Parent and each of its
Subsidiaries in the manner now conducted or which interfere with compliance
with any order of any court, governmental authority or arbitration board or
tribunal, or any Environmental Law;
(b) there are not any past or present conditions or circumstances at,
or arising out of, any current or former businesses, assets or properties
of Parent or any Subsidiary of Parent, including but not limited to on-site
or off-site disposal or release of any chemical substance, product or
waste, which could reasonably be expected to give rise to: (i) liabilities
or obligations for any cleanup, remediation, disposal or corrective action
under any Environmental Law or (ii) claims arising for personal injury,
property damage, or damage to natural resources; and
(c) neither Parent nor any of its Subsidiaries has (i) received any
notice of noncompliance with, violation of, or liability or potential
liability under any Environmental Law or (ii) entered into any consent
decree or order or is subject to any order of any court or governmental
authority or tribunal under any Environmental Law or relating to the
cleanup of any hazardous materials contamination.
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SECTION 6.14 Intellectual Property. Except as previously disclosed to the
Company in writing, Parent and its Subsidiaries own or possess adequate licenses
or other valid rights to use all patents, patent rights, trademarks, trademark
rights and proprietary information used or held for use in connection with their
respective businesses as currently being conducted, except where the failure to
own or possess such licenses and other rights would not have, individually or in
the aggregate, a Parent Material Adverse Effect, and there are no assertions or
claims challenging the validity of any of the foregoing which are likely to
have, individually or in the aggregate, a Parent Material Adverse Effect. The
conduct of Parent's and its Subsidiaries' respective businesses as currently
conducted does not conflict with any patents, patent rights, licenses,
trademarks, trademark rights, trade names, trade name rights or copyrights of
others in any way likely to have, individually or in the aggregate, a Parent
Material Adverse Effect. There is no material infringement of any proprietary
right owned by or licensed by or to Parent or any of its Subsidiaries which is
likely to have, individually or in the aggregate, a Parent Material Adverse
Effect. The computer software operated, sold or licensed by Parent that is
material to its business or its internal operations is capable of providing or
is being or will be adapted, or is capable of being replaced, to provide
uninterrupted millennium functionality to record, store, process and present
calendar dates falling on or after January 1, 2000 in substantially the same
manner and with substantially the same functionality as such software records,
stores, processes and presents such calendar dates falling on or before December
31, 1999, except as would not have a Parent Material Adverse Effect. The costs
of the adaptations and replacements referred to in the prior sentence will not
have a Parent Material Adverse Effect.
SECTION 6.15 Insurance. Parent and its Subsidiaries maintain insurance
coverage reasonably adequate for the operation of their respective businesses
(taking into account the cost and availability of such insurance).
SECTION 6.16 No Brokers. Parent has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company or Parent to pay any finder's fees, brokerage or
agent's commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby, except that Parent has retained ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. as its financial
advisor, the arrangements with which have been disclosed in writing to the
Company prior to the date hereof.
SECTION 6.17 Opinion of Financial Advisor. The Board of Directors of Parent
has received the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. to the effect that, as of the
date thereof, the Exchange Ratio is fair to Parent from a financial point of
view.
SECTION 6.18 Company Stock Ownership. Neither Parent nor any of its
Subsidiaries owns any shares of capital stock of the Company or any other
securities convertible into or otherwise exercisable to acquire capital stock of
the Company.
SECTION 6.19 Reorganization. Neither Parent nor any of its Subsidiaries has
taken or failed to take any action, as a result of which the Merger would not
qualify as a reorganization within the meaning of section 368(a) of the Code.
SECTION 6.20 Pooling. Neither Parent nor any of its Subsidiaries has taken
or failed to take any action, as a result of which the Merger would not qualify
as a "pooling of interests" for financial accounting purposes.
SECTION 6.21 Vote Required. The vote of holders of Parent Common Stock
required by the rules of the NYSE is the only vote of the holders of any class
or series of Parent capital stock necessary to approve the issuance of Parent
Common Stock pursuant to this Agreement and the transactions contemplated
hereby.
SECTION 6.22 Certain Approvals. The Parent Board of Directors has taken any
and all necessary and appropriate action to render inapplicable to the Merger
and the transactions contemplated by this Agreement and the Stock Option
Agreements the provisions of Section 203 of the DGCL. No other state takeover or
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business combination statute applies or purports to apply to the Merger or the
transactions contemplated by this Agreement or the Stock Option Agreements.
SECTION 6.23 Certain Contracts. Neither the Parent nor any of its
Subsidiaries is a party to or bound by any non-competition agreement or any
other agreement or obligation which purports to limit in any material respect
the manner in which, or the localities in which, all or any material portion of
the current business of the Parent and its Subsidiaries, taken as a whole, or
the Company and its Subsidiaries, taken as a whole, is conducted.
ARTICLE 7
COVENANTS
SECTION 7.1 Conduct of Businesses. Prior to the Effective Time, except as
set forth in the Company Disclosure Letter or as expressly contemplated by any
other provision of this Agreement or the Stock Option Agreements, unless the
Parent or the Company, respectively, has consented in writing thereto, each of
the Company and Parent:
(a) shall, and shall cause each of its Subsidiaries to, conduct its
operations according to their usual, regular and ordinary course in
substantially the same manner as heretofore conducted;
(b) shall use its commercially reasonable best efforts, and shall
cause each of its Subsidiaries to use its commercially reasonable best
efforts, to preserve intact their business organizations and goodwill, keep
available the services of their respective officers and employees and
maintain satisfactory relationships with those persons having business
relationships with them;
(c) shall not amend its certificate of incorporation or bylaws;
(d) shall promptly notify the other of any material change in its
condition (financial or otherwise) or business or any material litigation
or material governmental complaints, investigations or hearings (or
communications in writing indicating that such litigation, complaints,
investigations or hearings may be contemplated), or the breach in any
material respect of any representation or warranty contained herein;
(e) shall promptly deliver to the other true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of
this Agreement;
(f) shall not (i) except pursuant to the exercise of options,
warrants, conversion rights and other contractual rights existing on the
date hereof, or referred to in clause (ii) below and disclosed pursuant to
this Agreement or in connection with transactions permitted by Section
7.1(i), issue any shares of its capital stock, effect any stock split or
otherwise change its capitalization as it existed on the date hereof, (ii)
grant, confer or award any option, warrant, conversion right or other right
not existing on the date hereof to acquire any shares of its capital stock
except (x) the automatic awards to non-employee directors pursuant to the
Western Atlas Inc. Director Stock Option Plan or the ▇▇▇▇▇ ▇▇▇▇▇▇
Incorporated Long-Term Incentive Plan, (y) the grant of options to new
employees consistent with past practice or pursuant to contractual
commitments existing on the date of this Agreement, and (z) the grant of
options by the Company or Parent prior to the Effective Time in amounts and
at times consistent with past practice, at exercise prices not less than
the fair market value of the underlying common stock on the date of grant
and, in each case, in an amount not to exceed 1.2 million shares of Company
Common Stock, in the case of the Company, and 120% of the Total Option
Dollars granted by the Parent, in the case of Parent, in the previous
fiscal year (provided that for purposes of the foregoing the term "Total
Option Dollars" shall mean the aggregate number of options granted
multiplied by the exercise price thereof) and notwithstanding the
provisions of Section 7.14 or any other provision of this Agreement to the
contrary, in the event the Company grants options to any of its employees
prior to the Effective Time, such employees will not be entitled to
participate in option grants by Parent subsequent to the Effective Time for
a period at least equal to one year subsequent to the grant of such options
to Company employees (e.g., if the Company follows its past practice of
granting options in July and Parent
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follows its past practice of granting options in October, such period would
be 15 months); (iii) increase any compensation or benefits, except in the
ordinary course of business consistent with past practice, or enter into or
amend any employment agreement with any of its present or future officers
or directors, except with new employees consistent with past practice, or
(iv) adopt any new employee benefit plan (including any stock option, stock
benefit or stock purchase plan) or amend (except as required by law) any
existing employee benefit plan in any material respect, except for changes
which are less favorable to participants in such plans;
(g) shall not (i) declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of its capital
stock or (ii) redeem, purchase or otherwise acquire any shares of its
capital stock or capital stock of any of its Subsidiaries, or make any
commitment for any such action, except in the case of Parent for the
declaration and payment of regular, quarterly dividends, consistent with
past practice, not to exceed $0.115 per share of Parent Common Stock per
quarter;
(h) shall not, and shall not permit any of its Subsidiaries to, sell,
lease or otherwise dispose of any of its assets (including capital stock of
Subsidiaries) which are material to the Company or Parent, as the case may
be, individually or in the aggregate, except in the ordinary course of
business;
(i) shall not, and shall not permit any of its Subsidiaries to, except
pursuant to contractual commitments in effect on the date hereof and
disclosed in the Parent Disclosure Letter or the Company Disclosure Letter,
as the case may be, acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or a substantial
portion of the assets of, or by any other manner, any business or any
corporation, partnership, association or other business organization or
division thereof or otherwise acquire or agree to acquire any assets or
securities in each case (i) for an aggregate consideration for all such
acquisitions in excess of $100 million (excluding acquisitions approved in
writing by Parent and the Company) and (ii) where a filing under the HSR
Act is required, except where Parent and the Company have agreed in writing
that such action is not likely to (x) have a material adverse effect on the
ability of the parties to consummate the transactions contemplated by this
Agreement or (y) delay materially the Effective Time;
(j) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(k) shall, and shall cause any of its Subsidiaries to, use reasonable
efforts to maintain with financially responsible insurance companies
insurance in such amounts and against such risks and losses as are
customary for such party;
(l) shall not, and shall not permit any of its Subsidiaries to, (i)
make or rescind any material express or deemed election relating to taxes
unless it is reasonably expected that such action will not materially and
adversely affect it (or Parent), including elections for any and all joint
ventures, partnerships, limited liability companies, working interests or
other investments where it has the capacity to make such binding election,
(ii) settle or compromise any material claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
taxes, except where such settlement or compromise will not materially and
adversely affect it (or Parent), or (iii) change in any material respect
any of its methods of reporting any item for federal income tax purposes
from those employed in the preparation of its federal income tax return for
the most recent taxable year for which a return has been filed, except as
may be required by applicable law or except for such changes that are
reasonably expected not to materially and adversely affect it (or Parent);
(m) shall not, nor shall it permit any of its Subsidiaries to, (i)
incur any indebtedness for borrowed money (except for (x) general corporate
purposes, (y) refinancings of existing debt and (z) other immaterial
borrowings that, in the case of (x), (y) or (z), permit prepayment of such
debt without penalty (other than LIBOR breakage costs)) or guarantee any
such indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities of such party or any of its
Subsidiaries or guarantee any debt securities of others, (ii) except in the
ordinary course of business, enter into any material lease (whether such
lease is an operating or capital lease) or create any material mortgages,
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liens, security interests or other encumbrances on the property of the
Company or any of its Subsidiaries in connection with any indebtedness
thereof, or (iii) make or commit to make aggregate capital expenditures in
excess of $75 million over the fiscal 1998 capital expenditures budget
previously disclosed to the other;
(n) shall not purchase any shares of Parent Common Stock or Company
Common Stock;
(o) shall not, nor shall it permit any of its Subsidiaries to, agree
in writing or otherwise to take any of the foregoing actions;
(p) subject to Section 7.5, shall not take any action that is likely
to delay materially or adversely affect the ability of any of the parties
hereto to obtain any consent, authorization, order or approval of any
governmental commission, board or other regulatory body or the expiration
of any applicable waiting period required to consummate the Merger; and
(q) during the period from the date of this Agreement through the
Effective Time, shall not terminate, amend, modify or waive any provision
of any confidentiality or standstill agreement to which it or any of its
respective Subsidiaries is a party; and during such period shall enforce,
to the fullest extent permitted under applicable law, the provisions of
such agreement, including by obtaining injunctions to prevent any breaches
of such agreements and to enforce specifically the terms and provisions
thereof in any court of the United States of America or any state having
jurisdiction.
SECTION 7.2 No Solicitation by the Company.
(a) The Company agrees that (i) neither it nor any of its Subsidiaries
shall, and shall not knowingly permit any of its officers, directors,
employees, agents or representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, solicit, initiate or knowingly encourage (including by
way of furnishing material non-public information) any inquiry, proposal or
offer (including, without limitation, any proposal or offer to its
stockholders) with respect to a tender offer, merger, consolidation,
business combination or similar transaction involving, or any purchase of
20% or more of the assets on a consolidated basis or 20% or more of any
class of capital stock of, the Company (any such proposal, offer or
transaction being hereinafter referred to as a "Company Acquisition
Proposal") or participate or engage in any discussions or negotiations
concerning a Company Acquisition Proposal; and (ii) it will immediately
cease and cause to be terminated any existing negotiations with any parties
conducted heretofore with respect to any of the foregoing; provided that
nothing contained in this Agreement shall prevent the Company or its Board
of Directors from (A) complying with Rule 14e-2 promulgated under the
Exchange Act with regard to a Company Acquisition Proposal, or (B) prior to
the Cutoff Date, providing information (pursuant to a confidentiality
agreement in reasonably customary form) to or engaging in any negotiations
or discussions with any person or entity who has made an unsolicited bona
fide Company Acquisition Proposal with respect to all the outstanding
Company Common Stock or all or substantially all the assets of the Company
that, in the good faith judgment of the Company's Board of Directors,
taking into account the likelihood of consummation, after consultation with
its financial advisors, is superior to the Merger (a "Company Superior
Proposal"), if the Board of Directors of the Company, after consultation
with its outside legal counsel, determines that the failure to do so would
be inconsistent with its fiduciary obligations.
(b) Prior to taking any action referred to in Section 7.2(a), if the
Company intends to participate in any such discussions or negotiations or
provide any such information to any such third party, the Company shall
give prompt prior notice to Parent of each such action. The Company will
immediately notify Parent of any such requests for such information or the
receipt of any Company Acquisition Proposal, including the identity of the
person or group engaging in such discussions or negotiations, requesting
such information or making such Company Acquisition Proposal, and the
material terms and conditions of any Company Acquisition Proposal.
(c) Nothing in this Section 7.2 shall permit the Company to enter into
any agreement with respect to a Company Acquisition Proposal during the
term of this Agreement, it being agreed that during the
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term of this Agreement, the Company shall not enter into any agreement with
any person that provides for, or in any way facilitates, a Company
Acquisition Proposal, other than a confidentiality agreement in reasonably
customary form.
(d) For purposes hereof, the "Cutoff Date" means the date the
conditions set forth in Section 8.1(a) are satisfied.
SECTION 7.3 No Solicitation by Parent.
(a) Parent agrees that (i) neither it nor any of its Subsidiaries
shall, and shall not knowingly permit any of its officers, directors,
employees, agents or representatives (including, without limitation, any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, solicit, initiate or knowingly encourage (including by
way of furnishing material non-public information) any inquiry, proposal or
offer (including, without limitation, any proposal or offer to its
stockholders) with respect to a tender offer, merger, consolidation,
business combination or similar transaction involving, or any purchase of
20% or more of the assets on a consolidated basis or 20% or more of any
class of capital stock of, Parent (any such proposal, offer or transaction
being hereinafter referred to as a "Parent Acquisition Proposal") or
participate or engage in any discussions or negotiations concerning a
Parent Acquisition Proposal; and (ii) it will immediately cease and cause
to be terminated any existing negotiations with any parties conducted
heretofore with respect to any of the foregoing; provided that nothing
contained in this Agreement shall prevent Parent or its Board of Directors
from (A) complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a Parent Acquisition Proposal, or (B) prior to the Cutoff Date,
providing information (pursuant to a confidentiality agreement in
reasonably customary form) to or engaging in any negotiations or
discussions with any person or entity who has made an unsolicited bona fide
Parent Acquisition Proposal with respect to all the outstanding Parent
Common Stock or all or substantially all the assets of Parent that, in the
good faith judgment of Parent's Board of Directors, taking into account the
likelihood of consummation, after consultation with its financial advisors,
is superior to the Merger (a "Parent Superior Proposal"), if the Board of
Directors of Parent, after consultation with its outside legal counsel,
determines that the failure to do so would be inconsistent with its
fiduciary obligations.
(b) Prior to taking any action referred to in Section 7.3(a), if
Parent intends to participate in any such discussions or negotiations or
provide any such information to any such third party, Parent shall give
prompt prior notice to the Company of each such action. The Parent will
immediately notify the Company of any such requests for such information or
the receipt of any Parent Acquisition Proposal, including the identity of
the person or group engaging in such discussions or negotiations,
requesting such information or making such Parent Acquisition Proposal, and
the material terms and conditions of any Parent Acquisition Proposal.
(c) Nothing in this Section 7.3 shall permit Parent to enter into any
agreement with respect to a Parent Acquisition Proposal during the term of
this Agreement, it being agreed that during the term of this Agreement,
Parent shall not enter into any agreement with any person that provides
for, or in any way facilitates, a Parent Acquisition Proposal, other than a
confidentiality agreement in reasonably customary form.
SECTION 7.4 Meetings of Stockholders.
(a) Each of Parent and the Company will take all action necessary in
accordance with applicable law and its certificate of incorporation and
bylaws to convene a meeting of its stockholders as promptly as practicable
to consider and vote upon (i) in the case of Parent, the approval of the
issuance of the shares of Parent Common Stock pursuant to the Merger
contemplated hereby and (ii) in the case of the Company, the approval of
this Agreement and the Merger. The Company and Parent shall coordinate and
cooperate with respect to the timing of such meetings and shall use their
best efforts to hold such meetings on the same day.
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(b) The Company and Parent, through their respective Boards of
Directors, shall recommend approval of such matters subject to the
determination by the Board of Directors of the Company and the Board of
Directors of Parent after consultation with their respective counsel that
recommending approval of such matters would not be inconsistent with its
fiduciary obligations. Additionally, the Board of Directors of the Company
or the Board of Directors of Parent may at any time prior to the Effective
Time withdraw, modify, or change any recommendation and declaration
regarding this Agreement or the Merger, or recommend and declare advisable
any other offer or proposal, if in the opinion of such Board of Directors
after consultation with its counsel the failure to so withdraw, modify, or
change its recommendation and declaration would be inconsistent with its
fiduciary obligations.
SECTION 7.5 Filings; Best Efforts.
(a) Subject to the terms and conditions herein provided, the Company
and Parent shall:
(i) promptly (but in not more than 20 business days from the date
hereof) make their respective filings under the HSR Act with respect to
the Merger and thereafter shall promptly make any other required
submissions under the HSR Act;
(ii) use their reasonable best efforts to cooperate with one
another in (a) determining which filings are required to be made prior
to the Effective Time with, and which consents, approvals, permits or
authorizations are required to be obtained prior to the Effective Time
from governmental or regulatory authorities of the United States, the
several states, and foreign jurisdictions in connection with the
execution and delivery of this Agreement and the consummation of the
Merger and the transactions contemplated hereby; and (b) timely making
all such filings and timely seeking all such consents, approvals,
permits or authorizations;
(iii) promptly notify each other of any communication concerning
this Agreement or the Merger to that party from any governmental
authority and permit the other party to review in advance any proposed
communication concerning this Agreement or the Merger to any
governmental entity;
(iv) not agree to participate in any meeting or discussion with any
governmental authority in respect of any filings, investigation or other
inquiry concerning this Agreement or the Merger unless it consults with
the other party in advance and, to the extent permitted by such
governmental authority, gives the other party the opportunity to attend
and participate thereat;
(v) furnish the other party with copies of all correspondence,
filings and communications (and memoranda setting forth the substance
thereof) between them and their affiliates and their respective
representatives on the one hand, and any government or regulatory
authority or members or their respective staffs on the other hand, with
respect to this Agreement and the Merger; and
(vi) furnish the other party with such necessary information and
reasonable assistance as such other parties and their respective
affiliates may reasonably request in connection with their preparation
of necessary filings, registrations or submissions of information to any
governmental or regulatory authorities, including without limitation,
any filings necessary or appropriate under the provisions of the HSR
Act.
(b) Without limiting Section 7.5(a), Parent and the Company shall:
(i) each use its best efforts to avoid the entry of, or to have
vacated or terminated, any decree, order or judgment that would
restrain, prevent or delay the Closing, including without limitation
defending through litigation on the merits any claim asserted in any
court by any party; and
(ii) each take any and all steps necessary to avoid or eliminate
each and every impediment under any antitrust, competition or trade
regulation law that may be asserted by any governmental entity with
respect to the Merger so as to enable the Closing to occur as soon as
reasonably possible (and in any event no later than 60 days following
the termination of all applicable waiting periods
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under the HSR Act, unless the parties are in litigation with the
government in which case at the conclusion of such litigation),
including without limitation, proposing, negotiating, committing to and
effecting, by consent decree, hold separate order or otherwise, the
sale, divestiture or disposition of such assets or businesses of Parent
or the Company or any of their respective subsidiaries or otherwise take
or commit to take any action that limits its freedom of action with
respect to, or its ability to retain, any of the businesses, product
lines or assets of Parent, the Company or their respective subsidiaries,
as may be required in order to avoid the entry of, or to the effect the
dissolution of, any injunction, temporary restraining order or other
order in any suit or proceeding, which would otherwise have the effect
of preventing or delaying the Closing. At the request of Parent, the
Company shall agree to divest, hold separate or otherwise take or commit
to take any action that limits its freedom of action with respect to, or
its ability to retain, any of the businesses, product lines or assets of
the Company or any of its Subsidiaries, provided that any such action
may be conditioned upon the consummation of the Merger and the
transactions contemplated hereby. Notwithstanding anything to the
contrary contained in this Agreement, in connection with any filing or
submission required or action to be taken by Parent, the Company or any
of their respective Subsidiaries to consummate the Merger or other
transactions contemplated in this Agreement, the Company shall not,
without Parent's prior written consent, recommend, suggest or commit to
any divestiture of assets or businesses of the Company and its
Subsidiaries.
SECTION 7.6 Inspection. From the date hereof to the Effective Time, each of
the Company and Parent shall allow all designated officers, attorneys,
accountants and other representatives of Parent or the Company, as the case may
be, access at all reasonable times upon reasonable notice to the records and
files, correspondence, audits and properties, as well as to all information
relating to commitments, contracts, titles and financial position, or otherwise
pertaining to the business and affairs of Parent and the Company and their
respective Subsidiaries, including inspection of such properties; provided that
no investigation pursuant to this Section 7.6 shall affect any representation or
warranty given by any party hereunder, and provided further that notwithstanding
the provision of information or investigation by any party, no party shall be
deemed to make any representation or warranty except as expressly set forth in
this Agreement. Notwithstanding the foregoing, no party shall be required to
provide any information which it reasonably believes it may not provide to the
other party by reason of applicable law, rules or regulations, which constitutes
information protected by attorney/client privilege, or which it is required to
keep confidential by reason of contract or agreement with third parties. The
parties hereto will make reasonable and appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply. Each of Parent and the Company agrees that it will not, and will
cause its respective representatives not to, use any information obtained
pursuant to this Section 7.6 for any purpose unrelated to the consummation of
the transactions contemplated by this Agreement.
SECTION 7.7 Publicity. The parties will consult with each other and will
mutually agree upon any press releases or public announcements pertaining to
this Agreement or the transactions contemplated hereby and shall not issue any
such press releases or make any such public announcements prior to such
consultation and agreement, except as may be required by applicable law or by
obligations pursuant to any listing agreement with any national securities
exchange, in which case the party proposing to issue such press release or make
such public announcement shall use its best efforts to consult in good faith
with the other party before issuing any such press releases or making any such
public announcements.
SECTION 7.8 Registration Statement.
(a) Each of Parent and the Company shall cooperate and promptly
prepare and Parent shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 (the "Form S-4") under the Securities
Act, with respect to the Parent Common Stock issuable in the Merger, a
portion of which Registration Statement shall also serve as the joint proxy
statement with respect to the meetings of the stockholders of Parent and of
the Company in connection with the Merger (the "Proxy Statement/
Prospectus"). The respective parties will cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the
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Exchange Act and the rules and regulations thereunder. Parent shall use its
best efforts, and the Company will cooperate with Parent, to have the Form
S-4 declared effective by the SEC as promptly as practicable. Parent shall
use its reasonable best efforts to obtain, prior to the effective date of
the Form S-4, all necessary state securities law or "Blue Sky" permits or
approvals required to carry out the transactions contemplated by this
Agreement and will pay all expenses incident thereto. Parent will advise
the Company, promptly after it receives notice thereof, of the time when
the Form S-4 has become effective or any supplement or amendment has been
filed, the issuance of any stop order, the suspension of the qualification
of the Parent Common Stock issuable in connection with the Merger for
offering or sale in any jurisdiction, or any request by the SEC for
amendment of the Proxy Statement/Prospectus or the Form S-4 or comments
thereon and responses thereto or requests by the SEC for additional
information.
(b) Each of Parent and the Company will use its best efforts to cause
the Proxy Statement/ Prospectus to be mailed to its stockholders as
promptly as practicable after the date hereof.
(c) Each of Parent and the Company agrees that the information
provided by it for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the
time of the respective meetings of stockholders of Parent and of the
Company, or, in the case of information provided by it for inclusion in the
Form S-4 or any amendment or supplement thereto, at the time it is filed or
becomes effective, (i) will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (ii) will comply as to form
in all material respects with the provisions of the Exchange Act.
SECTION 7.9 Listing Application. Parent shall promptly prepare and submit
to the NYSE a listing application covering the shares of Parent Common Stock
issuable in the Merger, and shall use its best efforts to obtain, prior to the
Effective Time, approval for the listing of such Parent Common Stock, subject to
official notice of issuance.
SECTION 7.10 Letters of Accountants.
(a) The Company shall use its reasonable best efforts to cause to be
delivered to Parent "comfort" letters of Deloitte & Touche LLP, the
Company's independent public accountants, dated the effective date of the
Form S-4 and the Closing Date, respectively, and addressed to Parent with
regard to certain financial information regarding the Company included in
the Form S-4, in form reasonably satisfactory to Parent and customary in
scope and substance for "comfort" letters delivered by independent public
accountants in connection with registration statements similar to the Form
S-4.
(b) Parent shall use its reasonable best efforts to cause to be
delivered to the Company "comfort" letters of Deloitte & Touche LLP,
Parent's independent public accountants, dated the effective date of the
Form S-4 and the Closing Date, respectively, and addressed to the Company,
with regard to certain financial information regarding Parent included in
the Form S-4, in form reasonably satisfactory to the Company and customary
in scope and substance for "comfort" letters delivered by independent
public accountants in connection with registration statements similar to
the Form S-4.
SECTION 7.11 Agreements of Rule 145 Affiliates. Prior to the Effective
Time, the Company shall cause to be prepared and delivered to Parent a list
identifying all persons who, at the time of the meeting or the meeting of the
Company's stockholders pursuant to Section 7.4, the Company believes may be
deemed to be "affiliates" of the Company, as that term is used in paragraphs (c)
and (d) of Rule 145 under the Securities Act (the "Rule 145 Affiliates"). Parent
shall be entitled to place restrictive legends on any shares of Parent Common
Stock received by such Rule 145 Affiliates. The Company shall use its best
efforts to cause each person who is identified as a Rule 145 Affiliate in such
list to deliver to Parent, at or prior to the Effective Time, a written
agreement, in the form to be approved by the parties hereto, that such Rule 145
Affiliate will not sell, pledge, transfer or otherwise dispose of any shares of
Parent Common Stock issued to such Rule 145 Affiliate pursuant to the Merger,
except pursuant to an effective registration statement or in compliance with
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Rule 145 or an exemption from the registration requirements of the Securities
Act. The Company shall use its best efforts to cause each person who is
identified as a Rule 145 Affiliate in such list, and the Parent shall use its
best efforts to cause each person who is an affiliate of Parent, to sign on or
prior to the thirtieth day prior to the Effective Time a written agreement, in
the form to be approved by the Company and Parent, that such party will not sell
or in any other way reduce such party's risk relative to any shares of Parent
Common Stock received in the Merger (within the meaning of Section 201.01 of the
SEC's Financial Reporting Release No. 1), until such time as financial results
(including combined sales and net income) covering at least 30 days of
post-merger operations have been published, except as permitted by Staff
Accounting Bulletin No. 76 (or any successor thereto) issued by the SEC.
SECTION 7.12 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
as expressly provided in Section 9.5.
SECTION 7.13 Indemnification and Insurance.
(a) From and after the Effective Time, Parent and the Surviving
Corporation shall indemnify, defend and hold harmless to the fullest extent
permitted under applicable law each person who is, or has been at any time
prior to the Effective Time, an officer or director of the Company (or any
Subsidiary or division thereof) and each person who served at the request
of the Company as a director, officer, trustee or fiduciary of another
corporation, partnership, joint venture, trust, pension or other employee
benefit plan or enterprise (individually, an "Indemnified Party" and,
collectively, the "Indemnified Parties") against all losses, claims,
damages, liabilities, costs or expenses (including attorneys' fees),
judgments, fines, penalties and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in
their capacities as such, whether commenced, asserted or claimed before or
after the Effective Time. In the event of any such claim, action, suit,
proceeding or investigation (an "Action"), (i) Parent and the Surviving
Corporation shall pay, as incurred, the fees and expenses of counsel
selected by the Indemnified Party, which counsel shall be reasonably
acceptable to the Surviving Corporation, in advance of the final
disposition of any such Action to the fullest extent permitted by
applicable law, and, if required, upon receipt of any undertaking required
by applicable law, and (ii) Parent and the Surviving Corporation will
cooperate in the defense of any such matter; provided, however, the
Surviving Corporation shall not be liable for any settlement effected
without its written consent (which consent shall not be unreasonably
withheld or delayed), and provided further, that Parent and the Surviving
Corporation shall not be obligated pursuant to this Section 7.13 to pay the
fees and disbursements of more than one counsel for all Indemnified Parties
in any single Action, unless, in the good faith judgment of any of the
Indemnified Parties, there is or may be a conflict of interests between two
or more of such Indemnified Parties, in which case there may be separate
counsel for each similarly situated group.
(b) The parties agree that the rights to indemnification, including
provisions relating to advances of expenses incurred in defense of any
action or suit, in the certificate of incorporation and bylaws of the
Company and its Subsidiaries with respect to matters occurring through the
Effective Time, shall survive the Merger and shall continue in full force
and effect for a period of six years from the Effective Time; provided,
however, that all rights to indemnification in respect of any Action
pending or asserted or claim made within such period shall continue until
the disposition of such Action or resolution of such claim.
(c) For a period of six years after the Effective Time, Parent and the
Surviving Corporation shall cause to be maintained officers' and directors'
liability insurance covering the Indemnified Parties who are or at any time
prior to the Effective Time covered by the Company's existing officers' and
directors' liability insurance policies on terms substantially no less
advantageous to the Indemnified Parties than such existing insurance;
provided, that after the third year after the Effective Time, the Surviving
Corporation shall not be required to pay annual premiums in excess of 250%
of the last annual premium paid by the Company prior to the date hereof
(the amount of which premium is set forth in the Company Disclosure
Letter), but in such case shall purchase as much coverage as reasonably
practicable for such amount.
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(d) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, under the DGCL or otherwise. The provisions of this Section
7.13 shall survive the consummation of the Merger and expressly are
intended to benefit each of the Indemnified Parties.
(e) In the event Parent, the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or
entity in such consolidation or merger or (ii) transfers all or
substantially all of its properties and assets to any person, then and in
either such case, proper provision shall be made so that the successors and
assigns of Parent or the Surviving Corporation, as the case may be, shall
assume the obligations set forth in this Section 7.13.
SECTION 7.14 Certain Benefits.
(a) From and after the Effective Time, Parent and its Subsidiaries
(including the Surviving Corporation) will honor in accordance with their
terms the executive, employment and other agreements and arrangements set
forth in Schedule 7.14(a)(i) of the Company Disclosure Letter or permitted
by Section 7.1(f) between the Company or its Subsidiaries and certain
employees and former employees thereof (the "Employment Agreements") and
certain executives and former executives thereof ("Executive Agreements")
and all of the Company Benefit Plans and the agreements described in
Section 7.14(e); provided, however, that nothing herein shall preclude any
change in any Company Benefit Plan effected on a prospective basis that is
permitted pursuant to this Section 7.14 and the terms of the applicable
Benefit Plan; provided, further, that the WAII Retirement/Profit Sharing
Plan and the WAII Benefits Restoration Plan (and the related cash
contribution bonus feature) described in Schedule 7.14(a)(ii) of the
Company Disclosure Letter (the "Profit Sharing Plans") shall be continued
at least through December 31, 1998 for Company Employees (as defined in
Section 7.14(d)) without any adverse amendment or modification, the
Company's Supplemental Retirement Plan and the WAII Executive Retirement
Plan described in Schedule 7.14(a)(iii) of the Company Disclosure Letter
(the "Retirement Plans") shall be continued through at least December 31,
1998 without any adverse amendment or modification, the Profit Sharing
Plans shall be continued without adverse amendment or modification for the
Western Geophysical division of the Company at least through the end of
Parent's fiscal year ending in 2001 (and shall be equitably adjusted by
Parent to appropriately reflect the stand-alone basis of Western
Geophysical), and the "change of control" provisions in the Profit Sharing
Plans and the Retirement Plans shall in no event be adversely amended or
modified. Company performance in respect of calculations made under the
Profit Sharing Plans for 1998 shall be calculated without taking into
account any expenses or costs associated with or arising as a result of
transactions contemplated by this Agreement or any non-recurring charges
that would not reasonably be expected to have been incurred had the
transactions contemplated by this Agreement not occurred. Parent hereby
acknowledges that the consummation of the Merger or stockholder approval of
the Merger, as applicable, will result in a "change of control" under the
Executive Agreements and the Employment Agreements, the WAII Supplemental
Retirement Plan, the WAII Executive Retirement Plan and the other Company
Benefit Plans set forth in Schedule 7.14(a)(i) of the Company Disclosure
Letter. Parent shall cause the Surviving Corporation (i) to assume the
obligations of the Company under the Company Benefit Plans as in effect
immediately prior to the Effective Time, and to continue to cover under
such Company Benefit Plans all Company Employees and former Company
Employees who are participants therein immediately prior to the Effective
Time and who remain eligible to participate in such Company Benefit Plans
pursuant to the terms thereof and will provide aggregate employee benefits
to such Company Employees that are no less favorable than the aggregate
employee benefits provided them immediately prior to the Effective Time;
provided, that the Surviving Corporation at its sole option may, except as
provided herein or by the terms of such plans, amend such plans at any time
following the Effective Time to provide employee benefits to Company
Employees which in the aggregate are no less favorable than those
applicable to similarly situated employees of Parent or, (ii) in lieu
thereof, except as provided herein or by the terms of the Company Benefit
Plans, to provide employee benefits to such Company Employees under Parent
Benefit Plans so that the aggregate employee benefits provided to such
Company
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Employees are no less favorable than those that are applicable to similarly
situated employees of Parent. After the Effective Time, any Company
Employee who is or becomes entitled to continued medical, dental,
hospitalization, long-term disability and life insurance coverage pursuant
to an agreement with the Company set forth in Schedule 7.14(a)(i) of the
Company Disclosure Letter will be entitled to participate under any
medical, dental, hospitalization, long-term disability and life insurance
plan sponsored by Parent or the Surviving Corporation which covers Company
Employees under the same terms and for payment of the same level of
premiums as specified in his or her agreement. The Surviving Corporation
and Parent shall not be obligated hereunder to cover any employee who is
not a Company Employee or former Company Employee or is not hired or
offered employment prior to the Effective Time under any employee benefit
plan, program or arrangement. With respect to the Parent Benefit Plans and
any plans established by the Surviving Corporation, Parent and the
Surviving Corporation shall grant to all Company Employees, from and after
the Effective Time, credit for all service with the Company and its
affiliates and predecessors (and any other service credited by the Company
under the Company Benefit Plans) prior to the Effective Time for seniority,
eligibility to participate, eligibility for benefits, benefit accrual and
vesting purposes. To the extent Parent Benefit Plans provide medical or
dental welfare benefits, such plans shall waive any pre-existing conditions
and actively-at-work exclusions with respect to Company Employees (but only
to the extent such Company Employees were provided coverage under the
Company Benefit Plans) and shall provide that any expenses incurred on or
before the Effective Time by or on behalf of any Company Employees shall be
taken into account under the Parent Benefit Plans for purposes of
satisfying applicable deductible, coinsurance and maximum out-of-pocket
provisions.
(b) The Company acknowledges that the consummation of the Merger will
generally result in a "change of control" under the executive agreements,
employment agreements, stock option plan and other employee benefit and
welfare plans of the Parent and its Subsidiaries containing change of
control provisions.
(c) Parent agrees to maintain the Company's severance or termination
plans and practices and the Company's Corporate Office Severance Plan (the
"Company Severance Plans") as in effect on the date hereof for a period of
one year from the Effective Time, and to maintain the Company's Executive
Severance Plan without amendment except pursuant to its terms, for the
benefit of Company Employees; provided, however, that any employees covered
by such plans shall not be covered by the Parent's Severance Plan or
Executive Severance Plan during such period that such Company's Employees
are covered under the Company Severance Plans or Executive Severance Plan,
as applicable.
(d) For purposes of this Section 7.14, the term "Company Employees"
shall mean all individuals employed by the Company and its Subsidiaries
(including those on lay-off, disability or leave of absence, paid or
unpaid) immediately prior to the Effective Time.
(e) Parent shall enter into definitive employment agreements prior to
the Effective Time with the Company Employees set forth on Schedule 7.14(e)
of the Company Disclosure Letter pursuant to the terms set forth on
Schedule 7.14(e) of the Company Disclosure Letter. In the event such
employment agreements are not entered into, the terms set forth on Schedule
7.14(e) of the Company Disclosure Letter shall govern the employment of
such Company Employees.
(f) With respect to the Company's 1995 Incentive Compensation Plan and
the Company's Individual Performance Award Plan (collectively, the
"Incentive Plans"), within 30 days following the Effective Time Company
Employees who remain employed by the Company or its affiliates as of the
Effective Time shall be paid (to the extent a pro rata bonus is not paid
under an employment agreement) an amount equal to their maximum potential
bonus awards under the Incentive Plans, multiplied by a fraction equal to
the number of days in 1998 through the Effective Time, divided by 365. The
remainder of the 1998 maximum potential bonus awards for Company Employees
shall be paid in the first payroll check in 1999, to those Company
Employees who are employed with the Parent or any of its affiliates on
December 31, 1998 or have been terminated prior to such date by the Company
without cause, or terminated due to death or disability. After the
Effective Time, any bonuses for periods commencing on or after January 1,
1999 will be paid under Parent's plans and practices. "Cause" shall mean
acts of theft,
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unethical conduct or dishonesty affecting the assets, properties or
business of the Surviving Corporation or Parent, willful misconduct or
continued material dereliction of duty after notice has been provided.
(g) Parent shall not terminate, or permit the Surviving Corporation to
terminate, other than for Cause, the employment of the individuals set
forth on Schedule 7.14(g) of the Company Disclosure Letter prior to January
1, 1999.
SECTION 7.15 Reorganization; Pooling.
(a) From and after the date hereof and until the Effective Time, none
of Parent, the Company, or any of their respective Subsidiaries shall
knowingly (i) take any action, or fail to take any reasonable action, as a
result of which the Merger would fail to qualify as a reorganization within
the meaning of section 368(a) of the Code or (ii) enter into any contract,
agreement, commitment or arrangement to take or fail to take any such
action. Each of the parties shall use its reasonable best efforts to obtain
the opinions of counsel referred to in Sections 8.2(b) and 8.3(b).
(b) From and after the date hereof and until the Effective Time, none
of the Company, Parent or any of their respective Subsidiaries shall
knowingly (i) take any action, or fail to take any reasonable action, that
would prevent the treatment of the Merger as a "pooling of interests" for
financial accounting purposes or (ii) enter into any contract, agreement,
commitment or arrangement to take or fail to take any such action.
(c) Following the Effective Time, neither Parent nor any of its
Subsidiaries shall knowingly take any action or knowingly cause any action
to be taken which would cause the Merger to fail to qualify as a
reorganization within the meaning of section 368(a) of the Code (and any
comparable provisions of applicable state or local law).
SECTION 7.16 Rights Agreement. Prior to the Effective Time, the Board of
Directors of the Company shall take any action (including, if necessary,
amending or terminating (but with respect to termination, only as of immediately
prior to the Effective Time) the Rights Agreement) necessary so that none of the
execution and delivery of this Agreement, the Stock Option Agreements, the
conversion of shares of Company Common Stock into the right to receive Parent
Common Stock in accordance with Article 4 of this Agreement, the issuance of
Company Common Stock upon exercise of the option granted to Parent pursuant to
the applicable Stock Option Agreement, the consummation of the Merger, or any
other transaction contemplated hereby or by the Stock Option Agreements will
cause (i) the Company Rights to become exercisable under the Company Rights
Agreement, (ii) Parent or any of its Subsidiaries to be deemed an "Acquiring
Person" (as defined in the Company Rights Agreement), (iii) any such event to be
an event described in Section 11(a)(ii) or 13 of the Company Rights Agreement or
(iv) the "Shares Acquisition Date" or the "Distribution Date" (each as defined
in the Company Rights Agreement) to occur upon any such event, and so that the
Company Rights will expire immediately prior to the Effective Time. Neither the
Board of Directors of the Company nor the Company shall take any other action to
terminate the Company Rights Agreement, redeem the Company Rights, cause any
person not to be or become an "Acquiring Person" or otherwise amend the Company
Rights Agreement in a manner adverse to Parent.
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ARTICLE 8
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) (i) This Agreement and the Merger shall have been adopted and
approved by the affirmative vote of holders of a majority of the issued and
outstanding shares of Company Common Stock entitled to vote thereon; and
(ii) The issuance of the shares of Parent Common Stock pursuant to the
Merger shall have been approved by the holders of issued and outstanding
shares of Parent Common Stock as and to the extent required by the rules of
the NYSE.
(b) The waiting period applicable to the consummation of the Merger
shall have expired or been terminated under (i) the HSR Act and (ii) any
mandatory waiting period under any applicable foreign competition or
antitrust law or regulation where the failure to observe such waiting
period referred to in this clause (ii) would have a Parent Material Adverse
Effect or a Company Material Adverse Effect.
(c) None of the parties hereto shall be subject to any decree, order
or injunction of a court of competent jurisdiction, U.S. or foreign, which
prohibits the consummation of the Merger; provided, however, that prior to
invoking this condition each party agrees to comply with Section 7.5, and
with respect to other matters not covered by Section 7.5, to use its
commercially reasonable best efforts to have any such decree, order or
injunction lifted or vacated; and no statute, rule or regulation shall have
been enacted by any governmental authority which prohibits or makes
unlawful the consummation of the Merger.
(d) The Form S-4 shall have become effective and no stop order with
respect thereto shall be in effect.
(e) The shares of Parent Common Stock to be issued pursuant to the
Merger shall have been authorized for listing on the NYSE, subject to
official notice of issuance.
(f) Parent and the Company shall have received from Deloitte & Touche
LLP letters that the Merger will be treated as a "pooling of interests" for
financial accounting purposes.
(g) The Company shall have received the written consent of the United
States Nuclear Regulatory Commission ("NRC") to the transfer of control of
all NRC licenses of the Company and its Subsidiaries pursuant to 10 CFR
30.34(b).
SECTION 8.2 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) Parent shall have performed in all material respects its covenants
and agreements contained in this Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of Parent
and Merger Sub contained in this Agreement and in any document delivered in
connection herewith shall be true and correct in all material respects as
of the date of this Agreement and as of the Closing Date (except for
representations and warranties made as of a specified date, which need be
true and correct in all material respects only as of the specified date),
and the Company shall have received a certificate of the Parent, executed
on its behalf by its President or a Vice President of Parent, dated the
Closing Date, certifying to such effect.
(b) The Company shall have received the opinion of Wachtell, Lipton,
▇▇▇▇▇ & ▇▇▇▇, counsel to the Company, in form and substance reasonably
satisfactory to the Company, dated the Closing Date, a copy of which shall
be furnished to Parent, to the effect that (i) the Merger will be treated
for federal
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income tax purposes as a reorganization within the meaning of section
368(a) of the Code and (ii) no gain or loss will be recognized by the
stockholders of the Company who exchange all of their Company Common Stock
solely for Parent Common Stock pursuant to the Merger (except with respect
to cash received in lieu of a fractional share interest in Parent Common
Stock). In rendering such opinion, such counsel shall be entitled to
receive and rely upon representations of officers of the Company and Parent
as to such matters as such counsel may reasonably request.
(c) At any time after the date of this Agreement, there shall not have
been any event or occurrence that has had or is likely to have a Parent
Material Adverse Effect.
SECTION 8.3 Conditions to Obligation of Parent and Merger Sub to Effect the
Merger. The obligations of Parent and Merger Sub to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) The Company shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations and
warranties of the Company contained in this Agreement and in any document
delivered in connection herewith shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date
(except for representations and warranties made as of a specified date,
which need be true and correct in all material respects only as of the
specified date), and Parent shall have received a certificate of the
Company, executed on its behalf by its President or a Vice President of the
Company, dated the Closing Date, certifying to such effect.
(b) Parent shall have received the opinion of ▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.,
counsel to Parent, in form and substance reasonably satisfactory to Parent,
dated the Closing Date, a copy of which will be furnished to the Company,
to the effect that the (i) Merger will be treated for federal income tax
purposes as a reorganization within the meaning of section 368(a) of the
Code and (ii) no gain or loss will be recognized by the stockholders of the
Company who exchange all of their Company Common Stock solely for Parent
Common Stock pursuant to the Merger (except with respect to cash received
in lieu of a fractional share interest in Parent Common Stock). In
rendering such opinion, such counsel shall be entitled to receive and rely
upon representations of officers of the Company and Parent as to such
matters as such counsel may reasonably request.
(c) At any time after the date of this Agreement, there shall not have
been any event or occurrence that has had or is likely to have a Company
Material Adverse Effect.
ARTICLE 9
TERMINATION
SECTION 9.1 Termination by Mutual Consent. This Agreement may be terminated
at any time prior to the Effective Time by the mutual written consent of the
Company and Parent.
SECTION 9.2 Termination by Parent or the Company. This Agreement may be
terminated by action of the Board of Directors of Parent or of the Company if:
(a) the Merger shall not have been consummated by October 31, 1998;
provided, however, that in the event Section 8.1(b)(i) or 8.1(c) or both
are the only conditions that are not satisfied or capable of being
immediately satisfied as a result of governmental litigation engaged in by
the parties pursuant to Section 7.5 under any antitrust, competition or
trade regulation law, such October 31, 1998 date shall be extended for a
period not to exceed the lesser of 90 days or the fifth business day after
the entrance by the court in which such litigation is pending of its
decision (whether or not subject to appeal or rehearing) in such
litigation; and provided, further, that the right to terminate this
Agreement pursuant to this clause (a) shall not be available to any party
whose failure to perform or observe in any material respect any of its
obligations under this Agreement in any manner shall have been the cause
of, or resulted in, the failure of the Merger to occur on or before such
date;
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(b) a meeting (including adjournments and postponements) of the
Company's stockholders for the purpose of obtaining the approval required
by Section 8.1(a)(i) shall have been held and such stockholder approval
shall not have been obtained; or
(c) a meeting (including adjournments and postponements) of the
Parent's stockholders for the purpose of obtaining the approval required by
Section 8.1(a)(ii) shall have been held and such stockholder approval shall
not have been obtained; or
(d) a United States federal or state court of competent jurisdiction
or United States federal or state governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and non-appealable; provided, however, that
the party seeking to terminate this Agreement pursuant to this clause (d)
shall have complied with Section 7.5 and with respect to other matters not
covered by Section 7.5 shall have used its commercially reasonable best
efforts to remove such injunction, order or decree.
SECTION 9.3 Termination by the Company. This Agreement may be terminated
prior to the Effective Time, by action of the Board of Directors of the Company
after consultation with its legal advisors, if
(a) the Board of Directors of the Company determines that proceeding
with the Merger would be inconsistent with its fiduciary obligations by
reason of a Company Superior Proposal and elects to terminate this
Agreement effective prior to the Cutoff Date; provided that the Company may
not effect such termination pursuant to this Section 9.3(a) unless and
until (i) Parent receives at least one week's prior written notice from the
Company of its intention to effect such termination pursuant to this
Section 9.3(a); (ii) during such week, the Company shall, and shall cause
its respective financial and legal advisors to, consider any adjustment in
the terms and conditions of this Agreement that Parent may propose; and
provided, further, that any termination of this Agreement pursuant to this
Section 9.3(a) shall not be effective until the Company has made the $50
million payment required by Section 9.5(a)(i); or
(b) (i) there has been a breach by Parent or Merger Sub of any
representation, warranty, covenant or agreement set forth in this Agreement
or if any representation or warranty of Parent or Merger Sub shall have
become untrue, in either case such that the conditions set forth in Section
8.2(a) would not be satisfied and (ii) such breach is not curable, or, if
curable, is not cured within 30 days after written notice of such breach is
given to Parent by the Company; provided, however, that the right to
terminate this Agreement pursuant to Section 9.3(b) shall not be available
to the Company if it, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this Agreement
such that the condition set forth in Section 8.3(a) shall not be satisfied;
or
(c) the Board of Directors of Parent shall have withdrawn or
materially modified, in a manner adverse to the Company, its approval or
recommendation of the Merger or recommended a Parent Acquisition Proposal,
or resolved to do so; or
(d) on the date on which the Closing would otherwise occur, the Parent
Share Price shall be less than $35.00; provided that (i) Parent shall
receive at least three business days' prior written notice of its intent to
effect such termination pursuant to this Section 9.3(d) and (ii) during
such three business day period, Parent shall not have elected to increase
the Exchange Ratio by agreeing that the proviso in Section 4.1(c)(iv) shall
not be given effect.
SECTION 9.4 Termination by Parent. This Agreement may be terminated at any
time prior to the Effective Time, by action of the Board of Directors of Parent
after consultation with its legal advisors, if:
(a) the Board of Directors of Parent determines that proceeding with
the Merger would be inconsistent with its fiduciary obligations by reason
of a Parent Superior Proposal and elects to terminate this Agreement
effective prior to the Cutoff Date; provided that Parent may not effect
such termination pursuant to this Section 9.4(a) unless and until (i) the
Company receives at least one week's prior
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written notice from Parent of its intention to effect such termination
pursuant to this Section 9.4(a); (ii) during such week, Parent shall, and
shall cause its respective financial and legal advisors to, consider any
adjustment in the terms and conditions of this Agreement that the Company
may propose; and provided, further, that any termination of this Agreement
pursuant to this Section 9.4(a) shall not be effective until Parent has
made the $50 million payment required by Section 9.5(b)(i); or
(b) (i) there has been a breach by the Company of any representation,
warranty covenant or agreement set forth in this Agreement or if any
representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 8.3(a) would not
be satisfied and (ii) such breach is not curable, or, if curable, is not
cured within 30 days after written notice of such breach is given by Parent
to the Company; provided, however, that the right to terminate this
Agreement pursuant to Section 9.4(b) shall not be available to Parent if
it, at such time, is in material breach of any representation, warranty,
covenant or agreement set forth in this Agreement such that the conditions
set forth in Section 8.2(a) shall not be satisfied; or
(c) the Board of Directors of the Company shall have withdrawn or
materially modified, in a manner adverse to Parent, its approval or
recommendation of the Merger or recommended a Company Acquisition Proposal,
or resolved to do so.
SECTION 9.5 Effect of Termination.
(a) If this Agreement is terminated
(i) by the Company pursuant to Section 9.3(a) [fiduciary out]; or
(ii) after the public announcement of a Company Acquisition
Proposal, by the Company or Parent pursuant to Section 9.2(b) [failure
to obtain Company stockholder approval]; or
(iii) after the public announcement or receipt by the Company's
Board of Directors of a Company Acquisition Proposal, by Parent pursuant
to Section 9.4(c) [withdrawal of Company recommendation to
stockholders];
then the Company shall pay Parent a fee of $50 million (subject to reduction
pursuant to Section 9 of the applicable Stock Option Agreement) at the time of
such termination in cash by wire transfer to an account designated by Parent. In
addition, if within one year after such termination, the Company enters into a
definitive agreement with respect to a Company Acquisition or a Company
Acquisition is consummated, in either case with the person making the Company
Acquisition Proposal related to the termination or any affiliate thereof, then
upon the consummation of such Company Acquisition, the Company shall pay Parent
an additional fee of $150 million (subject to reduction pursuant to Section 9 of
the applicable Stock Option Agreement) at the time of such consummation in cash
by wire transfer to an account designated by Parent. For purposes here, "Company
Acquisition" means (i) a consolidation, exchange of shares or merger of the
Company with any person, other than Parent or one of its Subsidiaries, and, in
the case of a merger, in which the Company shall not be the continuing or
surviving corporation, (ii) a merger of the Company with a person, other than
Parent or one of its Subsidiaries, in which the Company shall be the continuing
or surviving corporation but the then outstanding shares of Company Common Stock
shall be changed into or exchanged for stock or other securities of the Company
or any other person or cash or any other property or the shares of Company
Common Stock outstanding immediately before such merger shall after such merger
represent less than 50% of the voting stock of the Company outstanding
immediately after the merger, (iii) the acquisition of beneficial ownership of
50% or more of the voting stock of the Company by any person (as such term is
used under Section 13(d) of the Exchange Act), or (iv) a sale, lease or other
transfer of 50% or more of the assets of the Company to any person, other than
Parent or one of its Subsidiaries.
(b) If this Agreement is terminated
(i) by Parent pursuant to Section 9.4(a) [fiduciary out]; or
(ii) after the public announcement of a Parent Acquisition
Proposal, by the Company or Parent pursuant to Section 9.2(c) [failure
to obtain Parent stockholder approval]; or
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(iii) after the public announcement or receipt by Parent's Board of
Directors of a Parent Acquisition Proposal, by the Company pursuant to
Section 9.3(c) [withdrawal of Parent recommendation to stockholders];
then Parent shall pay the Company a fee of $50 million (subject to reduction
pursuant to Section 9 of the applicable Stock Option Agreement) at the time of
such termination in cash by wire transfer to an account designated by the
Company. In addition, if within one year after such termination, Parent enters
into a definitive agreement with respect to a Parent Acquisition or a Parent
Acquisition is consummated, in either case with the person making the Parent
Acquisition Proposal related to the termination or any affiliate thereof, then
upon the consummation of such Parent Acquisition, Parent shall pay the Company
an additional fee of $150 million (subject to reduction pursuant to Section 9 of
the applicable Stock Option Agreement) at the time of such consummation in cash
by wire transfer to an account designated by the Company. For purposes here,
"Parent Acquisition" means (i) a consolidation, exchange of shares or merger of
Parent with any person, other than the Company or one of its Subsidiaries, and,
in the case of a merger, in which Parent shall not be the continuing or
surviving corporation, (ii) a merger of Parent with a person, other than the
Company or one of its Subsidiaries, in which Parent shall be the continuing or
surviving corporation but the then outstanding shares of Parent Common Stock
shall be changed into or exchanged for stock or other securities of Parent or
any other person or cash or any other property or the shares of Parent Common
Stock outstanding immediately before such merger shall after such merger
represent less than 50% of the voting stock of Parent outstanding immediately
after the merger, (iii) the acquisition of beneficial ownership of 50% or more
of the voting stock of Parent by any person (as such term is used under Section
13(d) of the Exchange Act), or (iv) a sale, lease or other transfer of 50% or
more of the assets of Parent to any person, other than the Company or one of its
Subsidiaries.
(c) In the event of termination of this Agreement and the abandonment
of the Merger pursuant to this Article 9, all obligations of the parties
hereto shall terminate, except the obligations of the parties pursuant to
this Section 9.5 and Section 7.12 and except for the provisions of Sections
10.3, 10.4, 10.6, 10.8, 10.9, 10.12, 10.13 and 10.14, provided that nothing
herein shall relieve any party from any liability for any willful and
material breach by such party of any of its covenants or agreements set
forth in this Agreement and all rights and remedies of such nonbreaching
party under this Agreement in the case of such a willful and material
breach, at law or in equity, shall be preserved.
SECTION 9.6 Extension; Waiver. At any time prior to the Effective Time,
each party may by action taken by its Board of Directors, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other parties 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
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
ARTICLE 10
GENERAL PROVISIONS
SECTION 10.1 Nonsurvival of Representations, Warranties and Agreements. All
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall not survive the Merger;
provided, however, that the agreements contained in Article 4 and in Sections
7.11, 7.12, 7.13, 7.14, 7.15 and this Article 10 and the agreements delivered
pursuant to this Agreement shall survive the Merger.
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SECTION 10.2 Notices. Any notice required to be given hereunder shall be
sufficient if in writing, and sent by facsimile transmission or by courier
service (with proof of service), hand delivery or certified or registered mail
(return receipt requested and first-class postage prepaid), addressed as
follows:
(a) if to Parent or Merger Sub:
▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇, III
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr., Esq.
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company:
Western Atlas Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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, personally delivered or mailed.
SECTION 10.3 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. 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 Section 3.3, Article 4 and Sections 7.13 and 7.14 (other than the provisions
regarding equitable adjustment of the Profit Sharing Plans) and except as
provided in any agreements delivered pursuant hereto (collectively, the "Third
Party Provisions"), nothing in this Agreement, expressed or implied, is intended
to confer on any person other than 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. The Third Party
Provisions may be enforced by the beneficiaries thereof.
SECTION 10.4 Entire Agreement. This Agreement, the exhibits to this
Agreement, the Company Disclosure Letter, the Parent Disclosure Letter and any
documents delivered by the parties in connection herewith constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto. No addition to or
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modification of any provision of this Agreement shall be binding upon any party
hereto unless made in writing and signed by all parties hereto.
SECTION 10.5 Amendments. This Agreement may be amended by the parties
hereto, by action taken or authorized by their Boards of Directors, at any time
before or after approval of matters presented in connection with the Merger by
the stockholders of the Company or Parent, but after any such stockholder
approval, no amendment shall be made which by law requires the further approval
of stockholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 10.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its rules of conflict of laws. Each of the Company and Parent hereby irrevocably
and unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of Delaware and of the United States of America located in
the State of Delaware (the "Delaware Courts") for any litigation arising out of
or relating to this Agreement and the transactions contemplated hereby (and
agrees not to commence any litigation relating thereto except in such courts),
waives any objection to the laying of venue of any such litigation in the
Delaware Courts and agrees not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in an inconvenient forum.
SECTION 10.7 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 10.8 Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretative effect whatsoever.
SECTION 10.9 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing the
singular number shall include the plural and vice versa, and words denoting
any gender shall include all genders and words denoting natural persons
shall include corporations and partnerships and vice versa.
(b) The phrase "to the knowledge of" and similar phrases relating to
knowledge of the Company or Parent, as the case may be, shall mean the
actual knowledge of its executive officers.
(c) "Material Adverse Effect" with respect to the Company or Parent
shall mean a material adverse effect or change on (a) the business or
financial condition of a party and its Subsidiaries on a consolidated
basis, except for such changes or effects in general economic, capital
market, regulatory or political conditions or changes that affect generally
the energy services industry or (b) the ability of the party to consummate
the transactions contemplated by this Agreement or fulfill the conditions
to closing. "Company Material Adverse Effect" and "Parent Material Adverse
Effect" mean a Material Adverse Effect with respect to the Company and
Parent, respectively.
SECTION 10.10 Waivers. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
SECTION 10.11 Incorporation of Exhibits. The Company Disclosure Letter, the
Parent Disclosure Letter and all exhibits attached hereto and referred to herein
are hereby incorporated herein and made a part hereof for all purposes as if
fully set forth herein.
SECTION 10.12 Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or
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affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction. If any provision of this Agreement is
so broad as to be unenforceable, the provision shall be interpreted to be only
so broadly as is enforceable.
SECTION 10.13 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 Delaware Court, this
being in addition to any other remedy to which they are entitled at law or in
equity.
SECTION 10.14 Obligation of Parent. Whenever this Agreement requires Merger
Sub (or its successors) to take any action, such requirement shall be deemed to
include an undertaking on the part of Parent to cause Merger Sub to take such
action and a guarantee of the performance thereof.
SECTION 10.15 Subsidiaries. As used in this Agreement, the word
"Subsidiary" when used with respect to any party means any corporation or other
organization, whether incorporated or unincorporated, of which such party
directly or indirectly owns or controls at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization, or any organization of which such party
is a general partner.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused the
same to be duly delivered on their behalf on the day and year first written
above.
▇▇▇▇▇ ▇▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman of the Board,
President & CEO
▇▇▇▇▇ ▇▇▇▇▇▇ DELAWARE I, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇, III
----------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇, III
Title: Vice President
WESTERN ATLAS INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman of the Board
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