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AGREEMENT AND PLAN OF MERGER
AMONG
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇ MISSOURI, INC.,
▇▇▇▇▇ ▇▇▇▇▇▇ DELAWARE, INC.,
PETROLITE CORPORATION,
AND
WM. ▇. ▇▇▇▇▇▇▇▇▇ & COMPANY
DATED AS OF FEBRUARY 25, 1997
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TABLE OF CONTENTS
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1. The Mergers......................................................... 1
1.1. The Mergers................................................. 1
1.2. The Closing................................................. 1
1.3. Effective Times............................................. 2
2. Charter and Bylaws of the Surviving Corporations.................... 2
2.1. Charter..................................................... 2
2.2. Bylaws...................................................... 2
3. Directors and Officers of the Surviving Corporations................ 2
3.1. Directors................................................... 2
3.2. Officers.................................................... 3
4. Conversion of the Common Stock...................................... 3
4.1. Certain Definitions......................................... 3
4.2. Conversion of the ▇▇▇▇▇▇▇▇▇ Stock........................... 4
4.3. Conversion of the Company Stock............................. 4
4.4. Exchange of Certificates Representing ▇▇▇▇▇▇▇▇▇ Common Stock
and Company Common Stock.................................... 6
4.5. Adjustment of Company Share Value........................... 8
4.6. Dissenting Stockholders..................................... 8
5. Representations and Warranties of the Company....................... 8
5.1. Existence; Good Standing; Corporate Authority............... 8
5.2. Authorization, Validity and Effect of Agreements............ 9
5.3. Capitalization.............................................. 9
5.4. Subsidiaries................................................ 9
5.5. No Violation of Law......................................... 9
5.6. No Conflict................................................. 10
5.7. SEC Documents............................................... 10
5.8. Litigation.................................................. 11
5.9. Absence of Certain Changes.................................. 11
5.10. Taxes....................................................... 11
5.11. Employee Benefit Plans...................................... 12
5.12. Labor Matters............................................... 13
5.13. Environmental Matters....................................... 13
5.14. Trademarks, Patents and Copyrights.......................... 13
5.15. Insurance................................................... 13
5.16. No Brokers.................................................. 13
5.17. Opinion of Financial Advisor................................ 14
5.18. Parent Stock Ownership...................................... 14
5.19. Reorganization.............................................. 14
5.20. Vote Required............................................... 14
5.21. Amendment to the Company Rights Agreement................... 14
6. Representations and Warranties of ▇▇▇▇▇▇▇▇▇......................... 14
6.1. Existence; Good Standing; Corporate Authority............... 14
6.2. Authorization, Validity and Effect of Agreements............ 15
6.3. Capitalization.............................................. 15
6.4. Subsidiaries................................................ 15
6.5. No Violation of Law......................................... 15
6.6. No Conflict................................................. 15
6.7. Financial Statements........................................ 16
(i)
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6.8. Litigation.................................................. 16
6.9. Absence of Certain Changes.................................. 16
6.10. Taxes....................................................... 16
6.11. Employee Benefit Plans...................................... 17
6.12. Labor Matters............................................... 17
6.13. Environmental Matters....................................... 18
6.14. Trademarks, Patents and Copyrights.......................... 18
6.15. Insurance................................................... 18
6.16. No Brokers.................................................. 18
6.17. Opinion of Financial Advisor................................ 18
6.18. Parent Stock Ownership...................................... 18
6.19. Reorganization.............................................. 18
6.20. Vote Required............................................... 19
7. Representations and Warranties of Parent, Merger Sub and Merger 19
Grandsub............................................................
7.1. Existence; Good Standing; Corporate Authority............... 19
7.2. Authorization, Validity and Effect of Agreements............ 19
7.3. Capitalization.............................................. 19
7.4. Subsidiaries................................................ 20
7.5. No Violation of Law......................................... 20
7.6. No Conflict................................................. 20
7.7. SEC Documents............................................... 20
7.8. Litigation.................................................. 21
7.9. Absence of Certain Changes.................................. 21
7.10. Taxes....................................................... 21
7.11. Employee Benefit Plans...................................... 22
7.12. Environmental Matters....................................... 22
7.13. Trademarks, Patents and Copyrights.......................... 23
7.14. Insurance................................................... 23
7.15. No Brokers.................................................. 23
7.16. Opinion of Financial Advisor................................ 23
7.17. ▇▇▇▇▇▇▇▇▇ and Company Stock Ownership....................... 23
7.18. Reorganization.............................................. 23
7.19. Vote Required............................................... 23
8. Covenants........................................................... 24
8.1. Acquisition Proposals....................................... 24
8.2. Conduct of the Company and ▇▇▇▇▇▇▇▇▇'▇ Businesses........... 24
8.2A Conduct of Parent's Business................................ 26
8.3. Meetings of Stockholders.................................... 27
8.4. Filings; Other Action....................................... 28
8.5. Inspection of Records....................................... 28
8.6. Publicity................................................... 29
8.7. Registration Statement...................................... 29
8.8. Listing Application......................................... 29
8.9. Letters of Accountants...................................... 29
8.10. Agreements of Rule 145 Affiliates........................... 30
8.11. Expenses.................................................... 30
8.12. Indemnification and Insurance............................... 30
8.13. Certain Benefits............................................ 31
8.14. Reorganization; Pooling..................................... 33
8.15. Certain Tax Agreements...................................... 34
(ii)
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8.16. Obligations of Merger Sub and Merger Grandsub............... 34
8.17. Rights Agreement............................................ 34
8.18. Mutuality of Mergers........................................ 34
9. Conditions.......................................................... 34
9.1. Conditions to Each Party's Obligation to Effect the
Mergers..................................................... 34
9.2. Conditions to Obligation of the Company to Effect the
Company Merger.............................................. 35
9.3. Conditions to Obligation of ▇▇▇▇▇▇▇▇▇ to Effect the
▇▇▇▇▇▇▇▇▇ Merger............................................ 35
9.4. Conditions to Obligation of Parent, Merger Sub and Merger
Grandsub to Effect the Mergers.............................. 36
10. Termination......................................................... 37
10.1. Termination by Mutual Consent............................... 37
10.2. Termination by Parent, ▇▇▇▇▇▇▇▇▇ or the Company............. 37
10.3. Termination by the Company.................................. 37
10.4. Termination by ▇▇▇▇▇▇▇▇▇.................................... 38
10.5. Termination by Parent....................................... 38
10.6. Effect of Termination....................................... 39
10.7. Extension; Waiver........................................... 40
11. General Provisions.................................................. 41
11.1. Nonsurvival of Representations, Warranties and Agreements... 41
11.2. Notices..................................................... 41
11.3. Assignment; Binding Effect; Benefit......................... 42
11.4. Entire Agreement............................................ 42
11.5. Amendments.................................................. 42
11.6. Governing Law............................................... 42
11.7. Counterparts................................................ 43
11.8. Headings.................................................... 43
11.9. Interpretation.............................................. 43
11.10. Waivers..................................................... 43
11.11. Incorporation of Exhibits................................... 43
11.12. Severability................................................ 43
11.13. Enforcement of Agreement.................................... 43
11.14. Obligation of Parent........................................ 43
11.15. Subsidiaries................................................ 43
EXHIBITS
A. Form of Custodial Agreement (sec. 1.2)
B. Form of Certificate of the Company
C. Form of Certificate of ▇▇▇▇▇▇▇▇▇
D. Form of Certificate of Parent
(iii)
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INDEX OF DEFINED TERMS
(Not Part of This Agreement)
1987 Plan................................................... Section 4.3(e)(i)
1993 Plan................................................... Section 4.3(e)(i)
Acquisition Proposals....................................... Section 8.1
Action...................................................... Section 8.12(a)
Additional ▇▇▇▇▇ Assets..................................... Section 4.1(b)
Affiliates.................................................. Section 8.10(a)
Agreement................................................... Preamble
Antitrust Laws.............................................. Section 10.6(d)
Articles of Merger.......................................... Section 1.3(a)
Benefit Continuation Period................................. Section 8.13(a)
▇▇▇▇▇....................................................... Preamble
▇▇▇▇▇ Acquisition Proposal.................................. Section 8.1
▇▇▇▇▇ Benefit Plans......................................... Section 6.11
▇▇▇▇▇ Certificate........................................... Section 4.2(c)
▇▇▇▇▇ Common Stock.......................................... Section 4.2(b)
▇▇▇▇▇ Disclosure Letter..................................... Section 6
▇▇▇▇▇ Effective Time........................................ Section 1.3(a)
▇▇▇▇▇ Estimate.............................................. Section 4.1(b)(v)
▇▇▇▇▇ Exchange Ratio........................................ Section 4.1(e)
▇▇▇▇▇ Financial Statements.................................. Section 6.7
▇▇▇▇▇ Material Adverse Effect............................... Section 6.1
▇▇▇▇▇ Merger................................................ Recitals
▇▇▇▇▇ Share Value........................................... Section 4.1(a)
▇▇▇▇▇ Surviving Corporation................................. Section 1.1(a)
▇▇▇▇▇ Value................................................. Section 4.1(b)
Cause....................................................... Section 8.13(b)(ii)
Certificate of Merger....................................... Section 1.3(b)
Certificates................................................ Section 4.4(b)(i)
Closing..................................................... Section 1.2
Closing Date................................................ Section 1.2
Code........................................................ Recitals
Company..................................................... Preamble
Company Acquisition Proposal................................ Section 8.1
Company Benefit Plans....................................... Section 5.11
Company CEO................................................. Section 8.13(b)(ii)
Company Certificate......................................... Section 4.3(c)
Company Common Stock........................................ Section 4.3(b)
Company Disclosure Letter................................... Section 5
Company Effective Time...................................... Section 1.3(b)
Company Employees........................................... Section 8.13(d)
Company Exchange Ratio...................................... Section 4.1(f)
Company Material Adverse Effect............................. Section 5.1
Company Merger.............................................. Recitals
Company Option.............................................. Section 4.3(e)(i)
Company Options............................................. Section 4.3(e)(i)
Company Permits............................................. Section 5.5
Company Reports............................................. Section 5.7
Company Rights.............................................. Section 5.3
Company Rights Agreement.................................... Section 5.3
Company Share Value......................................... Section 4.1(c)
(iv)
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Company Stock Options Plan.................................. Section 4.3(e)(i)
Company's Expenses.......................................... Section 8.13(b)(i)
Confidentiality Agreements.................................. Section 11.4
Continuity Custodian........................................ Section 1.2
Continuity Fraction......................................... Section 4.4(b)
Custodial Agreement......................................... Section 1.2
Delaware Courts............................................. Section 11.6
DGCL........................................................ Section 1.1(b)
Dissenting Stockholders..................................... Section 4.6(a)
Environmental Law........................................... Section 5.13(a)
ERISA....................................................... Section 5.11
Exchange Act................................................ Section 5.6(b)
Exchange Agent.............................................. Section 4.4(a)
Exchange Fund............................................... Section 4.4(a)
Executive and Employment Agreements......................... Section 8.13(a)
Form S-4.................................................... Section 8.7(a)
HSR Act..................................................... Section 5.6(b)
Incentive Plans............................................. Section 8.13(b)
Indemnified Parties......................................... Section 8.12(a)
Indemnified Party........................................... Section 8.12(a)
Injunction.................................................. Section 9.4(c)
Interim Bonus Percentage.................................... Section 8.13(b)(ii)
IRS......................................................... Section 5.11
Letter of Transmittal....................................... Section 4.4(b)(i)
Liens....................................................... Section 5.4
Merger Grandsub............................................. Preamble
Merger Sub.................................................. Preamble
Mergers..................................................... Recitals
MGBCL....................................................... Section 1.1(a)
NYSE........................................................ Section 4.1(d)
Parent...................................................... Preamble
Parent Benefit Plans........................................ Section 7.11
Parent Common Stock......................................... Section 4.2(b)
Parent Material Adverse Effect.............................. Section 7.1
Parent Preferred Stock...................................... Section 7.3
Parent Pricing Period....................................... Section 4.1(d)
Parent Reports.............................................. Section 7.7
Parent Share Value.......................................... Section 4.1(d)
Price Waterhouse............................................ Section 8.9(a)
Proxy Statement/Prospectus.................................. Section 8.7(a)
Regulatory Filings.......................................... Section 5.6(b)
retained earnings........................................... Section 5.7
Rule 145 Affiliates......................................... Section 8.10
SEC......................................................... Section 4.3(e)(ii)
Securities Act.............................................. Section 4.4(d)
Subsidiary.................................................. Section 11.15
Surviving Corporation....................................... Section 1.1(b)
tax......................................................... Section 5.10
taxes....................................................... Section 5.10
Third Party Provisions...................................... Section 11.3
Transaction Expenses........................................ Section 10.6(c)(iii)
(v)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of February 25,
1997 among ▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated, a Delaware corporation ("Parent"), ▇▇▇▇▇
▇▇▇▇▇▇ Missouri, Inc., a Missouri corporation and a wholly owned subsidiary of
Parent ("Merger Sub"), ▇▇▇▇▇ ▇▇▇▇▇▇ Delaware, Inc., a Delaware corporation and a
wholly owned subsidiary of Merger Sub ("Merger Grandsub"), Petrolite
Corporation, a Delaware corporation (the "Company") and Wm. ▇. ▇▇▇▇▇▇▇▇▇ &
Company, a Missouri corporation ("▇▇▇▇▇▇▇▇▇").
RECITALS
WHEREAS, Parent desires to acquire all of the outstanding capital stock of
the Company.
WHEREAS, ▇▇▇▇▇▇▇▇▇ holds approximately 47.1% of the outstanding Company
Common Stock (as defined in Section 4.3(b)) and certain other assets that Parent
desires to acquire.
WHEREAS, the parties hereto desire to merge Merger Sub with and into
▇▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇▇ Merger"), with ▇▇▇▇▇▇▇▇▇ surviving as a wholly owned
subsidiary of Parent, pursuant to which each share of ▇▇▇▇▇▇▇▇▇ Common Stock (as
defined in Section 4.2(b)) will be converted into the right to receive Parent
Common Stock (as defined in Section 4.2(b)), and then to merge Merger Grandsub
with and into Company (the "Company Merger", and together with the ▇▇▇▇▇▇▇▇▇
Merger, the "Mergers"), with the Company surviving as a wholly owned subsidiary
of ▇▇▇▇▇▇▇▇▇, pursuant to which each share of Company Common Stock will be
converted into the right to receive Parent Common Stock, in each case, as more
fully provided for herein.
WHEREAS, the respective Boards of Directors of Parent, Merger Sub, Merger
Grandsub, the Company and ▇▇▇▇▇▇▇▇▇ have determined the Mergers, in the manner
contemplated herein, to be desirable and in the best interests of their
respective corporations and stockholders and, by resolutions duly adopted, have
approved and adopted this Agreement.
WHEREAS, it is intended that the Mergers provided for herein shall qualify
as reorganizations within the meaning of section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), for federal income tax purposes.
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
1. The Mergers.
1.1. The Mergers. (a) Subject to the terms and conditions of this
Agreement, at the ▇▇▇▇▇▇▇▇▇ Effective Time (as defined in Section 1.3(a)),
Merger Sub shall be merged with and into ▇▇▇▇▇▇▇▇▇ in accordance with this
Agreement, and the separate corporate existence of Merger Sub shall thereupon
cease. ▇▇▇▇▇▇▇▇▇ 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 General and
Business Corporation Law of the State of Missouri (the "MGBCL").
(b) Subject to the terms and conditions of this Agreement, at the Company
Effective Time (as defined in Section 1.3(b)), Merger Grandsub shall be merged
with and into the Company in accordance with this Agreement, and the separate
corporate existence of Merger Grandsub shall thereupon cease. The Company shall
be the surviving corporation in the Company Merger (sometimes hereinafter
referred to as the "Surviving Corporation"). The Company Merger shall have the
effects specified in the Delaware General Corporation Law (the "DGCL").
1.2. The Closing. Subject to the terms and conditions of this Agreement,
the closing of the Mergers (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 9 (excluding Section 9.2(d)) 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." At the Closing, ▇▇▇▇▇▇▇▇▇ will
enter into an agreement (the "Custodial Agreement") substantially in the form
attached hereto as Exhibit A. The Custodial Agreement will name a custodian (the
"Continuity Custodian") who will hold shares of Parent Common Stock under the
terms of the Custodial Agreement. Custodial Agreement fees shall be paid by the
▇▇▇▇▇▇▇▇▇ Surviving Corporation out of its own funds and no funds will be
supplied, directly or indirectly (including through Merger Sub), by Parent for
payment of such fees.
1.3. Effective Times. (a) If all the conditions to the ▇▇▇▇▇▇▇▇▇ Merger set
forth in Article 9 shall have been fulfilled or waived in accordance herewith
and this Agreement shall not have been terminated in accordance with Article 10,
Parent, Merger Sub and ▇▇▇▇▇▇▇▇▇ shall cause articles of merger (the "Articles
of Merger") meeting the requirements of sections 351.430 and 351.435 of the
MGBCL to be properly executed and filed in accordance with such sections on the
Closing Date. The ▇▇▇▇▇▇▇▇▇ Merger shall become effective at the time of filing
of the Articles of Merger with the Secretary of State of the State of Missouri
in accordance with the MGBCL or at such later time which the parties hereto
shall have agreed upon and designated in such filing as the effective time of
the ▇▇▇▇▇▇▇▇▇ Merger (the "▇▇▇▇▇▇▇▇▇ Effective Time").
(b) If all the conditions to the Company Merger set forth in Article 9
shall have been fulfilled or waived in accordance herewith and this Agreement
shall not have been terminated as provided in Article 10, Parent, Merger
Grandsub 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
Company 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, which shall be immediately after the filing of the Articles of
Merger in accordance with Section 1.3(a) hereof, or at such later time which the
parties hereto shall have agreed upon and designated in such filing as the
effective time of the Company Merger (the "Company Effective Time"), but in any
case shall be after the ▇▇▇▇▇▇▇▇▇ Effective Time.
ARTICLE 2
2. Charter and Bylaws of the Surviving Corporations.
2.1. Charter. (a) The articles of incorporation of ▇▇▇▇▇▇▇▇▇ in effect
immediately prior to the ▇▇▇▇▇▇▇▇▇ Effective Time shall be the articles of
incorporation of the ▇▇▇▇▇▇▇▇▇ Surviving Corporation, until duly amended in
accordance with applicable law.
(b) The certificate of incorporation of the Company in effect immediately
prior to the Company Effective Time shall be the certificate of incorporation of
the Surviving Corporation, until duly amended in accordance with applicable law.
2.2. Bylaws. (a) 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.
(b) The bylaws of Merger Grandsub in effect immediately prior to the
Company Effective Time shall be the bylaws of the Surviving Corporation, until
duly amended in accordance with applicable law.
ARTICLE 3
3. Directors and Officers of the Surviving Corporations.
3.1. Directors. (a) The directors of Merger Sub immediately prior to the
▇▇▇▇▇▇▇▇▇ Effective Time shall be the directors of the ▇▇▇▇▇▇▇▇▇ Surviving
Corporation as of the ▇▇▇▇▇▇▇▇▇ Effective Time.
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(b) The directors of Merger Grandsub immediately prior to the Company
Effective Time shall be the directors of the Surviving Corporation as of the
Company Effective Time.
3.2. Officers. (a) The officers of the Merger Sub immediately prior to the
▇▇▇▇▇▇▇▇▇ Effective Time shall be the officers of the ▇▇▇▇▇▇▇▇▇ Surviving
Corporation as of the ▇▇▇▇▇▇▇▇▇ Effective Time.
(b) The officers of the Company immediately prior to the Company Effective
Time shall be the officers of the Surviving Corporation as of the Company
Effective Time.
ARTICLE 4
4. Conversion of the Common Stock.
4.1. Certain Definitions. For purposes of this Article 4, the following
terms shall have the following meanings:
(a) "▇▇▇▇▇▇▇▇▇ Share Value" shall mean the ▇▇▇▇▇▇▇▇▇ Value (as
defined in Section 4.1(b)) divided by the number of shares of ▇▇▇▇▇▇▇▇▇
Common Stock issued and outstanding at the ▇▇▇▇▇▇▇▇▇ Effective Time.
(b) "▇▇▇▇▇▇▇▇▇ Value" shall mean the sum of (x) the product of the
Company Share Value (as defined in Section 4.1(c)) on the Closing Date
multiplied by the number of shares of Company Common Stock owned by
▇▇▇▇▇▇▇▇▇ on the Closing Date (5,337,360 shares as of the date hereof) plus
(y) the net after-tax value of the remainder of ▇▇▇▇▇▇▇▇▇'▇ assets (the
"Additional ▇▇▇▇▇▇▇▇▇ Assets") as of the Closing Date. For purposes of
calculating the net after-tax value referred to in clause (y) of the first
sentence of this Section 4.1(b):
(i) All cash and cash equivalents will be valued at face value and
all investment securities will be valued at their average closing price
for the 10 consecutive trading days ending immediately prior to the
second trading day prior to the Closing Date, as reported on the
principal exchange on which each such investment security trades, less
40% of the aggregate net taxable gain (taking into account taxable
losses only to the extent of taxable gains) which would have been
realized by ▇▇▇▇▇▇▇▇▇ were it to have sold all such assets at such value
on the Closing Date.
(ii) All other assets will be valued at their book value as
recorded on ▇▇▇▇▇▇▇▇▇'▇ books as of the Closing Date.
(iii) The book value of the liabilities (excluding deferred income
taxes relating to shares of Company Common Stock, cash equivalents and
investment securities) of ▇▇▇▇▇▇▇▇▇ as recorded on ▇▇▇▇▇▇▇▇▇'▇ books as
of the Closing Date (including all fees and expenses of financial,
legal, tax, accounting and other advisors and any compensation to be
paid to directors and officers of ▇▇▇▇▇▇▇▇▇ in connection with this
Agreement or otherwise in excess of $950,000) will be deducted from the
sum of items (i) and (ii) above. All calculations made pursuant to this
Section 4.1(b) shall be made in accordance with generally accepted
accounting principles, applied on a consistent basis with prior periods,
except as otherwise provided herein.
(iv) No later than five days prior to the scheduled Closing Date,
▇▇▇▇▇▇▇▇▇ shall deliver to Parent a good faith estimate of the net
after-tax value of the Additional ▇▇▇▇▇▇▇▇▇ Assets calculated in
accordance with this Section 4.1(b) (the "▇▇▇▇▇▇▇▇▇ Estimate").
▇▇▇▇▇▇▇▇▇ shall permit Parent's independent public accountants and other
representatives to observe and participate in the preparation of the
▇▇▇▇▇▇▇▇▇ Estimate and agrees to incorporate to the extent appropriate
their input into the determination of the ▇▇▇▇▇▇▇▇▇ Estimate. The net
after-tax value of the Additional ▇▇▇▇▇▇▇▇▇ Assets referred to in clause
(y) of the first sentence of this Section 4.1(b) shall be based upon the
▇▇▇▇▇▇▇▇▇ Estimate, adjusted as mutually agreed to by Parent and
▇▇▇▇▇▇▇▇▇, after good faith consultation, to reflect any change in the
value of the Additional ▇▇▇▇▇▇▇▇▇ Assets as of, and as computed
immediately prior to, the Closing Date and although the ▇▇▇▇▇▇▇▇▇
Surviving Corporation has the
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right to sell any or all of the Additional ▇▇▇▇▇▇▇▇▇ Assets at any time
after the Company Effective Time, any such sales shall not affect the
net after-tax value.
(c) "Company Share Value" shall mean $61.00; provided, however, if
subsequent to the date of this Agreement, but prior to the Company
Effective Time, Parent or any Subsidiary of Parent purchases any shares of
Company Common Stock at a per share price in excess of the Company Share
Value, the Company Share Value shall be increased to equal such higher per
share price.
(d) "Parent Share Value" 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 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 ten consecutive trading days ending immediately prior to
the second trading day prior to the Closing Date (the "Parent Pricing
Period"), appropriately adjusted for any stock splits, reverse stock
splits, stock dividends, recapitalizations or other similar transactions.
(e) "▇▇▇▇▇▇▇▇▇ Exchange Ratio" shall mean the quotient of the
▇▇▇▇▇▇▇▇▇ Share Value divided by the Parent Share Value (rounded to four
decimal places).
(f) "Company Exchange Ratio" shall mean the quotient of the Company
Share Value divided by the Parent Share Value (rounded to four decimal
places).
4.2. Conversion of the ▇▇▇▇▇▇▇▇▇ Stock. (a) At the ▇▇▇▇▇▇▇▇▇ Effective
Time, each share of the common stock, $.01 par value 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, $100.00
par value per share, of the ▇▇▇▇▇▇▇▇▇ Surviving Corporation.
(b) At the ▇▇▇▇▇▇▇▇▇ Effective Time, each share of the common stock,
$100.00 par value per share (the "▇▇▇▇▇▇▇▇▇ Common Stock"), of ▇▇▇▇▇▇▇▇▇ issued
and outstanding immediately prior to the ▇▇▇▇▇▇▇▇▇ Effective Time (other than
shares of ▇▇▇▇▇▇▇▇▇ Common Stock (i) held in ▇▇▇▇▇▇▇▇▇'▇ treasury, (ii) owned by
Parent, Merger Sub or any other wholly owned Subsidiary (as defined in Section
11.15) of Parent or ▇▇▇▇▇▇▇▇▇ or (iii) held by Dissenting Stockholders (as
defined in Section 4.6(a)) 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 common stock, $1.00 par value per share (the
"Parent Common Stock"), of Parent 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 ▇▇▇▇▇▇▇▇▇ Common Stock shall cease to
be outstanding and shall be canceled and retired and shall cease to exist, and
each holder (other than Dissenting Stockholders) of a certificate representing
any shares of the ▇▇▇▇▇▇▇▇▇ Common Stock (a "▇▇▇▇▇▇▇▇▇ Certificate") shall
thereafter cease to have any rights with respect to such shares of the ▇▇▇▇▇▇▇▇▇
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 4.2(b) and 4.4(e) upon the surrender of such ▇▇▇▇▇▇▇▇▇ Certificate.
(d) Each share of the ▇▇▇▇▇▇▇▇▇ Common Stock issued and held in
▇▇▇▇▇▇▇▇▇'▇ treasury, and each share of the ▇▇▇▇▇▇▇▇▇ Common Stock owned by
Parent, Merger Sub or any other wholly owned Subsidiary of Parent or ▇▇▇▇▇▇▇▇▇,
shall, at the ▇▇▇▇▇▇▇▇▇ Effective Time and by virtue of the ▇▇▇▇▇▇▇▇▇ Merger,
cease to be outstanding and shall be canceled and retired and no stock of Parent
or any other consideration shall be delivered in exchange therefor.
4.3. Conversion of the Company Stock. (a) At the Company Effective Time,
each share of the common stock, $.01 par value per share, of Merger Grandsub
outstanding immediately prior to the Company Effective Time shall be converted
into and become one fully paid and non-assessable share of capital stock,
without par value, of the Surviving Corporation.
(b) At the Company Effective Time, each share of the capital stock,
without par value (the "Company Common Stock"), of the Company issued and
outstanding immediately prior to the Company Effective Time (other than shares
of Company Common Stock (i) held in the Company's treasury or (ii) owned by
Parent,
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Merger Grandsub, ▇▇▇▇▇▇▇▇▇ Surviving Corporation or any other wholly owned
Subsidiary of Parent or the Company) shall, by virtue of the Company 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 Company
Exchange Ratio.
(c) As a result of the Company 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 "Company 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 4.4(e) upon the surrender of such
Company 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 Grandsub, ▇▇▇▇▇▇▇▇▇ Surviving Corporation or any other wholly owned
Subsidiary of Parent or the Company (other than shares issued pursuant to
Section 4.3(a)), shall, at the Company Effective Time and, by virtue of the
Company 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 Company Effective Time, all options (individually, a
"Company Option" and collectively, the "Company Options") then outstanding under
the Company's 1987 Incentive Stock Option Plan (the "1987 Plan"), 1993 Stock
Incentive Option Plan (the "1993 Plan") and the Stock Option Agreement, dated
August 11, 1995, between the Company and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (collectively, the
"Company Stock Option Plans") shall remain outstanding following the Company
Effective Time. At the Company Effective Time, the Company Options shall, by
virtue of the Company 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 [s]ection 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
Company Effective Time would be converted under Section 4.3(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 immediately prior to the Company Effective Time divided by the Company
Exchange Ratio (the price per share, as so determined, being rounded upward to
the nearest full cent). Pursuant to Section 2.9 of each of the 1987 Plan and the
1993 Plan and Section 5.8 of the 1993 Plan, all Company Options (as adjusted
pursuant to this Section 4.3(e)) granted under such Company Stock Options Plans
will immediately become exercisable upon consummation of the Company Merger and
will remain exercisable in full for a period of 12 months following consummation
of the Company Merger; provided, however, no Company Option granted under the
1987 Plan may be exercised more than 11 years after the date of grant thereof
and no Company Option granted under the 1993 Plan may be exercised more than 10
years after the date of grant thereof. Upon the expiration of the aforementioned
12 month period, any unexpired Company Options issued under the 1987 Plan or the
1993 Plan held by holders who continue to be employed by Parent or its
Subsidiaries shall, pursuant to the terms of such Company Stock Option Plans, no
longer be governed by Section 2.9 thereof, but shall continue to be and become
exercisable pursuant to the other provisions of the applicable Company Stock
Option Plan and the applicable option agreements issued thereunder.
(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 4.3(e). From and after the date of this
Agreement, except as provided in Section 8.2(f), no additional options shall be
granted by the Company or its
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Subsidiaries under the Company Stock Option Plans or otherwise. As soon as
practicable following the Company Effective Time, 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.
4.4. Exchange of Certificates Representing ▇▇▇▇▇▇▇▇▇ Common Stock and
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 ▇▇▇▇▇▇▇▇▇ and the Company (the
"Exchange Agent"), for the benefit of the holders of shares of ▇▇▇▇▇▇▇▇▇ Common
Stock and 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
Sections 4.2 and 4.3 and paid pursuant to this Section 4.4 in exchange for
outstanding shares of ▇▇▇▇▇▇▇▇▇ Common Stock or Company Common Stock.
(b) (i) Promptly after the ▇▇▇▇▇▇▇▇▇ Effective Time and the Company
Effective Time, respectively, Parent shall cause the Exchange Agent to mail to
each holder of record of one or more ▇▇▇▇▇▇▇▇▇ Certificates or Company
Certificates (collectively, the "Certificates") (other than to holders of
▇▇▇▇▇▇▇▇▇ Common Stock or Company Common Stock that, pursuant to Sections 4.2(d)
and 4.3(d), respectively, 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, the
Company and ▇▇▇▇▇▇▇▇▇ 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; provided, however, that in the case of
surrenders of ▇▇▇▇▇▇▇▇▇ Certificates, the Parent Common Stock issued in exchange
therefor shall be delivered as set forth in paragraph (ii) of this Section
4.4(b). 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 ▇▇▇▇▇▇▇▇▇ Common Stock
or Company Common Stock which is not registered in the transfer records of
▇▇▇▇▇▇▇▇▇ or the Company, respectively, 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, may be issued to such a transferee if the
Certificate representing such ▇▇▇▇▇▇▇▇▇ Common Stock or 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.
(ii) Certificates representing shares of Parent Common Stock issued
in exchange for ▇▇▇▇▇▇▇▇▇ Certificates shall be delivered to or for the
benefit of each of the holders of such ▇▇▇▇▇▇▇▇▇ Certificates as follows:
(A) a certificate representing a fraction of such shares (rounded
up to the next largest share) equal to the Continuity Fraction (as
hereinafter defined) shall be delivered to the Continuity Custodian, to
be held for the account of such holder pursuant to the terms of the
Custodial Agreement; and
(B) a certificate representing the remainder of such shares shall
be delivered to such holder, as specified in the Letter of Transmittal.
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"Continuity Fraction" shall mean the fraction derived by dividing (x)
one-half of the total number of shares of ▇▇▇▇▇▇▇▇▇ Common Stock outstanding as
of the date of this Agreement by (y) the total number of shares of ▇▇▇▇▇▇▇▇▇
Common Stock so outstanding less the number of shares of ▇▇▇▇▇▇▇▇▇ Common Stock
held by Dissenting Stockholders.
(c) Notwithstanding any other provisions of this Agreement, no dividends
or other distributions declared or made after the ▇▇▇▇▇▇▇▇▇ Effective Time or
the Company Effective Time, as applicable, with respect to Parent Common Stock
with a record date after the ▇▇▇▇▇▇▇▇▇ Effective Time or the Company Effective
Time, as applicable, 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 or the Company Effective Time, as applicable, theretofore payable
with respect to such whole shares of Parent Common Stock and not 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 or the Company Effective Time, as
applicable, 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 or the Company Effective
Time, respectively, there shall be no transfers on the stock transfer books of
▇▇▇▇▇▇▇▇▇ of the shares of ▇▇▇▇▇▇▇▇▇ Common Stock which were outstanding
immediately prior to the ▇▇▇▇▇▇▇▇▇ Effective Time and no transfers on the stock
transfer books of the Company of the shares of Company Common Stock which were
outstanding immediately prior to the Company Effective Time. If, after the
▇▇▇▇▇▇▇▇▇ Effective Time, ▇▇▇▇▇▇▇▇▇ Certificates are presented to the ▇▇▇▇▇▇▇▇▇
Surviving Corporation, or, after the Company Effective Time, Company
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 ▇▇▇▇▇▇▇▇▇ or 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 8.10.
(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) or Section 4.3(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 Value.
(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 ▇▇▇▇▇▇▇▇▇ or the Company one year after
the Company Effective Time shall be delivered to Parent. Any former stockholders
of ▇▇▇▇▇▇▇▇▇ or 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 Surviving
Corporation, the Exchange Agent or any other person shall be liable to any
former holder of shares of ▇▇▇▇▇▇▇▇▇ Common Stock or 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 or the Surviving Corporation, as the case may
be, the posting by such person of a bond in such reasonable amount as the
▇▇▇▇▇▇▇▇▇ Surviving Corporation or the Surviving
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14
Corporation, as the case may be, 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.
4.5. Adjustment of Company Share Value. In the event that, subsequent to
the date of this Agreement but prior to the Company Effective Time, the Company
changes the number of shares of Company Common Stock issued and outstanding as a
result of a stock split, reverse stock split, stock dividend, recapitalization
or other similar transaction, the Company Share Value and other items dependent
thereon shall be appropriately adjusted.
4.6. Dissenting Stockholders. (a) Notwithstanding any provision of this
Agreement to the contrary, shares of ▇▇▇▇▇▇▇▇▇ Common Stock that are outstanding
immediately prior to the ▇▇▇▇▇▇▇▇▇ Effective Time and that are held by
stockholders who (i) shall have filed with ▇▇▇▇▇▇▇▇▇, prior to or at the meeting
of stockholders of ▇▇▇▇▇▇▇▇▇ at which this Agreement will be submitted to a
vote, a written objection to the ▇▇▇▇▇▇▇▇▇ Merger, (ii) shall have not voted in
favor of the ▇▇▇▇▇▇▇▇▇ Merger and (iii) shall have demanded properly in writing
the fair value for such shares of ▇▇▇▇▇▇▇▇▇ Common Stock in accordance with
section 351.455 of the MGBCL ("Dissenting Stockholders"), shall not be converted
into or represent the right to receive the Parent Common Stock or cash for
fractional shares of Parent Common Stock in accordance with Sections 4.2(b) and
4.4(e) but shall become the right to receive payment of the fair value of such
shares of ▇▇▇▇▇▇▇▇▇ Common Stock in accordance with the provisions of section
351.455 of the MGBCL, provided, however, that any Dissenting Stockholder who
shall have failed to comply with the requirements of Section 351.455 of the
MGBCL shall be conclusively presumed to have consented to the ▇▇▇▇▇▇▇▇▇ Merger
and shall be bound by the terms thereof and the shares of ▇▇▇▇▇▇▇▇▇ Common Stock
held by such Dissenting Stockholder shall thereupon be deemed to have been
converted into and to have become exchangeable for, as of the ▇▇▇▇▇▇▇▇▇
Effective Time, the right to receive the Parent Common Stock and cash for
fractional shares of Parent Common Stock, if any, in accordance with Sections
4.2(b) and 4.4(e), without any interest thereon, upon surrender in the manner
provided in Section 4.4(b) of the ▇▇▇▇▇▇▇▇▇ Certificate or Certificates that
formerly evidenced such ▇▇▇▇▇▇▇▇▇ Common Stock. The right of a Dissenting
Stockholder to be paid the fair value of his or her shares pursuant to Section
351.455 of the MGBCL shall cease if and at such time ▇▇▇▇▇▇▇▇▇ shall abandon the
▇▇▇▇▇▇▇▇▇ Merger. Any payments to Dissenting Stockholders shall be paid by
▇▇▇▇▇▇▇▇▇ Surviving Corporation out of its own funds and no funds will be
supplied, directly or indirectly, by Parent for payment to Dissenting
Stockholders, nor will Parent directly or indirectly (including through Merger
Sub) reimburse ▇▇▇▇▇▇▇▇▇ Surviving Corporation for any payments to Dissenting
Stockholders.
(b) ▇▇▇▇▇▇▇▇▇ shall give Parent (i) prompt notice and copies of any
written objections to this Agreement received by ▇▇▇▇▇▇▇▇▇, any demands for fair
value of shares of ▇▇▇▇▇▇▇▇▇ Common Stock or other instruments served pursuant
to the MGBCL and received by ▇▇▇▇▇▇▇▇▇ and withdrawals of such demands and (ii)
the opportunity to participate in all negotiations and proceedings with respect
to demands for fair value under the MGBCL. ▇▇▇▇▇▇▇▇▇ shall not, except with the
prior written consent of Parent, make any payment (except to the extent that any
such payment is made pursuant to a final, nonappealable court order) with
respect to any demands for the fair value of ▇▇▇▇▇▇▇▇▇ Common Stock or offer to
settle or settle any such demands.
ARTICLE 5
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:
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
8
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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 below). 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. As used in
this Agreement, the phrase "Company Material Adverse Effect" shall mean a
material adverse effect on (a) the business, condition (financial or otherwise)
or results of operations of the Company and its Subsidiaries on a consolidated
basis or (b) the ability of the Company to consummate the transactions
contemplated by this Agreement.
5.2. Authorization, Validity and Effect of Agreements. The Company has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby. The consummation by the
Company of the transactions contemplated hereby has been duly authorized by all
requisite corporate action, other than, with respect to the Company Merger, the
approval and adoption of this Agreement by the Company's stockholders. This
Agreement constitutes the valid and legally binding obligation of the Company,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights and
general principles of equity. The Company has taken all action necessary to
render the restrictions set forth in Section 203 of the DGCL inapplicable to
this Agreement and the Company Merger.
5.3. Capitalization. The authorized capital stock of the Company consists
of 35,000,000 shares of Company Common Stock and, as of January 3, 1997, there
were 11,364,948 shares of Company Common Stock issued and outstanding and
663,100 shares of Company Common Stock reserved for issuance upon exercise of
outstanding Company Options. All such issued and outstanding shares of Company
Common Stock are duly authorized, validly issued, fully paid, nonassessable and
free of preemptive rights. One capital stock purchase right (each, a "Company
Right") issued pursuant to the Rights Agreement, dated as of March 28, 1994 (the
"Company Rights Agreement"), as amended, between the Company and Society
National Bank 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 and except for any shares of Company Common Stock issued
pursuant to Company Options outstanding as of January 3, 1997, 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.
5.4. Subsidiaries. Each of the Company's Subsidiaries is a corporation or
partnership duly organized, validly existing and in good standing 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 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 Company Material Adverse Effect. All
of the outstanding shares of capital stock of, or other ownership interests in,
each of the Company's 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
the following information for each Subsidiary of the Company, as applicable: (i)
its name and jurisdiction of incorporation or organization; (ii) its authorized
capital stock or share capital; and (iii) the number of issued and outstanding
shares of capital stock or share capital.
5.5. No Violation of Law. To the Company's knowledge (as defined in Section
11.9), 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
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16
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. As of the date of
this Agreement, 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.
5.6. No Conflict. (a) Neither the execution and delivery by the Company of
this Agreement nor the consummation by the Company of the transactions
contemplated hereby in accordance with the terms hereof, 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
nor the consummation by the Company of the transactions contemplated hereby in
accordance with the terms hereof 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 Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Securities Act or applicable state securities and "Blue
Sky" laws ((i) and (ii) collectively, the "Regulatory Filings"), 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.
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 October 31,
1995, each in the form (including exhibits and any amendments thereto) filed
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 of the Company
included in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents 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 ("retained
earnings") of the Company included in or incorporated by reference into the
Company Reports (including any related notes and schedules) fairly presents the
results of operations, cash flows or retained earnings, 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
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17
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 October 31, 1996, including all notes thereto, neither the Company nor any of
its Subsidiaries has 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 and liabilities and obligations arising in the ordinary course of
business since such date.
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 or state 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. Schedule 5.8 of the Company Disclosure Letter contains, as of
the date of this Agreement, an accurate and complete list of all actions, suits
and proceedings pending or, to the knowledge of the Company, threatened against
the Company or its Subsidiaries.
5.9. Absence of Certain Changes. Since October 31, 1996, there has not been
(i) any change in the financial condition or business of the Company or its
Subsidiaries which has had or is likely to have an adverse effect which is
material to the financial condition or business of the Company and its
Subsidiaries on a consolidated basis, other than any adverse change resulting
from adverse changes in general economic conditions, stock market fluctuations
or conditions or adverse changes in or affecting the oil services or specialty
chemical industries generally, (ii) any material change by the Company in its
accounting methods, principles or practices or 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, except dividends on the
Company Common Stock at a rate of not more than $.28 per share per quarter, 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.
5.10. Taxes. (a) The Company and its Subsidiaries have (i) duly filed (or
there has been filed on their behalf) on a timely basis with appropriate
governmental authorities all tax returns, statements, reports, declarations,
estimates and forms required to be filed by them, on or prior to the date
hereof, 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 their behalf) for the
payment of all taxes required to be paid by the Company or its Subsidiaries for
all periods ending through the date hereof, 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.
(b)(i) The federal income tax returns of the Company and each of its
Subsidiaries have been examined by the IRS (as defined in Section 5.11) (or the
applicable statutes of limitation for the assessment of federal income taxes for
such periods have expired) for all periods through and including October 31,
1994; (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 tax returns of the Company or
any of its Subsidiaries; (iv) neither the Company nor any of its Subsidiaries is
a party to any tax sharing or tax indemnity agreement; and (v) neither the
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18
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 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 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).
5.11. Employee Benefit Plans. Schedule 5.11 of the Company Disclosure
Letter contains a list of all material employee benefit plans and other 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 (the "Company Benefit Plans"). True and
complete copies of the Company Benefit Plans and, if applicable, the most recent
Form 5500 and annual reports for each such plan have been made available to
Parent. All applicable reporting and disclosure requirements have been met with
respect to the Company Benefit Plans except for any noncompliance that would not
result in a material liability to the Company. 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, which event is likely to
result in a material liability to the Company. 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 Internal Revenue Service
(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
is no material liability for breaches of fiduciary duty in connection with the
Company Benefit Plans. To the Company's knowledge, there are no pending or
anticipated 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, except for any of the
foregoing which would not have a Company Material Adverse Effect. 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 Company 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 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, except, in each case, for any liability or any
excise tax which would not have a Company Material Adverse Effect. 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 which would have a Company Material Adverse Effect. 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 Company 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)
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19
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.
5.12. Labor Matters. 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 labor union or labor organization. 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.
5.13. Environmental Matters. To the knowledge of the Company, and 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 may 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.
5.14. Trademarks, Patents and Copyrights. Except as previously disclosed to
Parent in writing, to the knowledge of the Company, 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 to the knowledge of the Company, 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 Company Material Adverse
Effect. To the knowledge of the Company, 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. To the
knowledge of the Company, 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.
5.15. Insurance. The Company has previously delivered to Parent a schedule
listing the officers' and directors' liability insurance policies, primary and
excess casualty insurance policies providing coverage for bodily injury and
property damage to third parties, including products liability and completed
operations coverage, and worker's compensation insurance policies maintained by
the Company and its Subsidiaries. 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).
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
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20
Agreement or the consummation of the transactions contemplated hereby, except
that the Company has retained ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. as its financial advisor and
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. as financial advisor to the Special Committee to the
Company's board of directors, the arrangements with which have been disclosed in
writing to Parent prior to the date hereof.
5.17. Opinion of Financial Advisor. The Company has received (a) the
opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. to the effect that, as of the date thereof, the
Company Exchange Ratio is fair to the holders of the Company Common Stock (other
than ▇▇▇▇▇▇▇▇▇) and (b) the opinion of ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. to the effect
that, as of the date thereof, the Company Exchange Ratio is fair, from a
financial point of view, to the holders of Company Common Stock (other than
▇▇▇▇▇▇▇▇▇); it being understood and acknowledged by Parent that such opinions
have been rendered for the benefit of the Board of Directors of the Company, and
are not intended to, and may not, be relied upon by Parent, its affiliates or
their respective Subsidiaries.
5.18. Parent Stock Ownership. Neither the Company nor any of its
Subsidiaries owns any shares of Parent Common Stock or other securities
convertible into or otherwise exercisable to acquire Parent Common Stock.
5.19. Reorganization. To the Company's knowledge, neither the Company nor
any of its stockholders has taken or failed to take any action, as a result of
which the Company Merger would not qualify as a reorganization within the
meaning of section 368(a) of the Code (and comparable provisions of applicable
state or local law).
5.20. Vote Required. Except as provided by Section 9.2(c), 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.
5.21. Amendment to the Company Rights Agreement. The Board of Directors of
the Company has resolved to amend the Company Rights Agreement so that none of
the execution and delivery of this Agreement, the conversion of shares of
Company Common Stock and ▇▇▇▇▇▇▇▇▇ Common Stock into the right to receive Parent
Common Stock in accordance with Article 4 of this Agreement, and the
consummation of the Company Merger and the ▇▇▇▇▇▇▇▇▇ Merger or any other
transaction contemplated hereby 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 deemed a "flip-over transaction or
event" or (iv) the "Stock Acquisition Date" or the "Distribution Date" (each as
defined in the Company Rights Agreement) to occur upon any such event, and so
that the "Expiration Date" (as defined in the Company Rights Agreement) of the
Company Rights will occur 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.
ARTICLE 6
6. Representations and Warranties of ▇▇▇▇▇▇▇▇▇. Except as set forth in the
disclosure letter delivered to Parent concurrently with the execution hereof
(the "▇▇▇▇▇▇▇▇▇ Disclosure Letter"), ▇▇▇▇▇▇▇▇▇ represents and warrants to Parent
that:
6.1. Existence; Good Standing; Corporate Authority. ▇▇▇▇▇▇▇▇▇ is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation. ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ Material Adverse Effect (as
defined below). ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇'▇ articles of incorporation and bylaws
previously made available to Parent are true and correct and contain all
amendments as of the date hereof. As used in this Agreement, the phrase
"▇▇▇▇▇▇▇▇▇ Material Adverse Effect" shall mean a material adverse effect on (a)
the business, condition (financial or otherwise) or
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21
results of operations of ▇▇▇▇▇▇▇▇▇ or (b) the ability of ▇▇▇▇▇▇▇▇▇ to consummate
the transactions contemplated by this Agreement.
6.2. Authorization, Validity and Effect of Agreements. ▇▇▇▇▇▇▇▇▇ has the
requisite corporate power and authority to execute and deliver this Agreement
and all agreements and documents contemplated hereby. The consummation by
▇▇▇▇▇▇▇▇▇ of the transactions contemplated hereby has been duly authorized by
all requisite corporate action, other than, with respect to the ▇▇▇▇▇▇▇▇▇
Merger, the approval and adoption of this Agreement by ▇▇▇▇▇▇▇▇▇'▇ stockholders.
This Agreement constitutes the valid and legally binding obligation of
▇▇▇▇▇▇▇▇▇, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
6.3. Capitalization. The authorized capital stock of ▇▇▇▇▇▇▇▇▇ consists of
8,800 shares of ▇▇▇▇▇▇▇▇▇ Common Stock and, as of December 31, 1996 and the date
hereof, there were 8,800 shares of ▇▇▇▇▇▇▇▇▇ Common Stock issued and
outstanding. All such issued and outstanding shares of ▇▇▇▇▇▇▇▇▇ Common Stock
are duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. As of the date of this Agreement, except as set forth in this
Section 6.3, 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 ▇▇▇▇▇▇▇▇▇ to issue, transfer or
sell any shares of capital stock or other voting securities of ▇▇▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇▇▇ on any matter.
6.4. Subsidiaries. ▇▇▇▇▇▇▇▇▇ has no Subsidiaries. As of the date of this
Agreement, ▇▇▇▇▇▇▇▇▇ owns beneficially 5,337,360 shares of Company Common Stock,
free and clear of all Liens. As of October 31, 1970, ▇▇▇▇▇▇▇▇▇ was the sole
beneficial owner of 667,170 shares of Company Common Stock, and the only change
in ▇▇▇▇▇▇▇▇▇'▇ ownership of Company Common Stock since such date has been
receipt of shares as a result of three two-for-one stock splits.
6.5. No Violation of Law. To ▇▇▇▇▇▇▇▇▇'▇ knowledge, ▇▇▇▇▇▇▇▇▇ is not 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
▇▇▇▇▇▇▇▇▇ or any of its properties or assets is subject, except as would not
have, individually or in the aggregate, a ▇▇▇▇▇▇▇▇▇ Material Adverse Effect.
6.6. No Conflict. (a) Neither the execution and delivery by ▇▇▇▇▇▇▇▇▇ of
this Agreement nor the consummation by ▇▇▇▇▇▇▇▇▇ of the transactions
contemplated hereby in accordance with the terms hereof, will: (i) conflict with
or result in a breach of any provisions of the articles of incorporation or
bylaws of ▇▇▇▇▇▇▇▇▇; (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 ▇▇▇▇▇▇▇▇▇ under, or
result in being declared void, voidable, or without further binding effect, or
otherwise result in a detriment to ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ is a party, or by which ▇▇▇▇▇▇▇▇▇ or any of its
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 ▇▇▇▇▇▇▇▇▇, except, in the case of
matters described in clause (ii) or (iii), as would not have, individually or in
the aggregate, a ▇▇▇▇▇▇▇▇▇ Material Adverse Effect.
(b) Neither the execution and delivery by ▇▇▇▇▇▇▇▇▇ of this Agreement nor
the consummation by ▇▇▇▇▇▇▇▇▇ of the transactions contemplated hereby in
accordance with the terms hereof will require any consent, approval or
authorization of, or filing or registration with, any governmental or regulatory
authority, other than Regulatory Filings, 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 ▇▇▇▇▇▇▇▇▇ Material Adverse Effect.
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6.7. Financial Statements. ▇▇▇▇▇▇▇▇▇ has made available to Parent its
audited balance sheets at October 31, 1996 and 1995 and audited statements of
income, retained earnings and cash flows for the years then ended (the foregoing
financial statements being collectively referred to herein as the "▇▇▇▇▇▇▇▇▇
Financial Statements"). The ▇▇▇▇▇▇▇▇▇ Financial Statements are complete and
correct in all material respects. Each of the balance sheets of ▇▇▇▇▇▇▇▇▇
included in ▇▇▇▇▇▇▇▇▇ Financial Statements (including the related notes and
schedules) fairly presents the financial position of ▇▇▇▇▇▇▇▇▇ as of its date
and each of the statements of income, retained earnings and cash flows of
▇▇▇▇▇▇▇▇▇ included in the ▇▇▇▇▇▇▇▇▇ Financial Statements (including any related
notes and schedules) fairly presents the results of operations, retained
earnings or cash flows, as the case may be, of ▇▇▇▇▇▇▇▇▇ for the periods set
forth therein, 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 balance sheet of
▇▇▇▇▇▇▇▇▇ at October 31, 1996, including all notes thereto, ▇▇▇▇▇▇▇▇▇ has no
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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ Material Adverse Effect and liabilities and obligations
arising in the ordinary course of business since such date.
6.8. Litigation. Except as disclosed in the ▇▇▇▇▇▇▇▇▇ Financial Statements,
there are no actions, suits or proceedings pending against ▇▇▇▇▇▇▇▇▇ or, to
▇▇▇▇▇▇▇▇▇'▇ knowledge, threatened against ▇▇▇▇▇▇▇▇▇, at law or in equity, or
before or by any federal or state commission, board, bureau, agency or
instrumentality, that are likely to have, individually or in the aggregate, a
▇▇▇▇▇▇▇▇▇ Material Adverse Effect. There are no outstanding judgments, decrees,
injunctions, awards or orders against ▇▇▇▇▇▇▇▇▇ that are likely to have,
individually or in the aggregate, a ▇▇▇▇▇▇▇▇▇ Material Adverse Effect. Schedule
6.8 of the ▇▇▇▇▇▇▇▇▇ Disclosure Letter contains, as of the date of this
Agreement, an accurate and complete list of all actions, suits and proceedings
pending or, to the knowledge of ▇▇▇▇▇▇▇▇▇, threatened against ▇▇▇▇▇▇▇▇▇.
6.9. Absence of Certain Changes. Since October 31, 1996, there has not been
(i) any change in the financial condition or business of ▇▇▇▇▇▇▇▇▇ which has had
or is likely to have an adverse effect which is material to the financial
condition or business of ▇▇▇▇▇▇▇▇▇, other than any adverse change resulting from
adverse changes in general economic conditions or stock market fluctuations,
(ii) any material change by ▇▇▇▇▇▇▇▇▇ in its accounting methods, principles or
practices or 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 ▇▇▇▇▇▇▇▇▇ or any redemption, purchase or other acquisition of
any of its securities, except dividends on the ▇▇▇▇▇▇▇▇▇ Common Stock disclosed
in the ▇▇▇▇▇▇▇▇▇ Disclosure Letter and dividends after the date hereof permitted
by Section 8.2, 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.
6.10. Taxes. (a) ▇▇▇▇▇▇▇▇▇ 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 required to be
filed by it, on or prior to the date hereof, except to the extent that any
failure to file would not have, individually or in the aggregate, a ▇▇▇▇▇▇▇▇▇
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
▇▇▇▇▇▇▇▇▇ for all periods ending through the date hereof, 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 ▇▇▇▇▇▇▇▇▇
Material Adverse Effect.
(b)(i) The federal income tax returns of ▇▇▇▇▇▇▇▇▇ 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 October 31, 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 ▇▇▇▇▇▇▇▇▇ by any taxing authority have been paid
fully, settled or adequately provided for in the ▇▇▇▇▇▇▇▇▇ Financial Statements;
(iii) as of the date hereof, ▇▇▇▇▇▇▇▇▇ has not granted any requests, agreements,
consents or waivers to extend
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the statutory period of limitations applicable to the assessment of any taxes
with respect to any tax returns of ▇▇▇▇▇▇▇▇▇; (iv) ▇▇▇▇▇▇▇▇▇ is not a party to
any tax sharing or tax indemnity agreement; and (v) ▇▇▇▇▇▇▇▇▇ is not a party to
an agreement which provides for the payment of any amount that would constitute
a "parachute payment" within the meaning of Section 280G of the Code.
6.11. Employee Benefit Plans. Schedule 6.11 of the ▇▇▇▇▇▇▇▇▇ Disclosure
Letter contains a list of all material employee benefit plans and other benefit
arrangements, including all "employee benefit plans" as defined in ERISA,
covering employees of ▇▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇▇ Benefit Plans"). True and
complete copies of the ▇▇▇▇▇▇▇▇▇ Benefit Plans and, if applicable, the most
recent Form 5500 and annual reports for each such plan have been made available
to Parent. All applicable reporting and disclosure requirements have been met
with respect to the ▇▇▇▇▇▇▇▇▇ Benefit Plans except for any noncompliance that
would not result in a material liability to ▇▇▇▇▇▇▇▇▇. There has been no
"reportable event," as that term is defined in Section 4043 of ERISA, with
respect to the ▇▇▇▇▇▇▇▇▇ Benefit Plans subject to Title IV of ERISA, which event
is likely to result in a material liability to ▇▇▇▇▇▇▇▇▇. To the extent
applicable, the ▇▇▇▇▇▇▇▇▇ Benefit Plans comply, in all material respects, with
the requirements of ERISA and the Code, and any ▇▇▇▇▇▇▇▇▇ Benefit Plan intended
to be qualified under section 401(a) of the Code has been determined by the IRS
to be so qualified. The ▇▇▇▇▇▇▇▇▇ Benefit Plans have been maintained and
operated, in all material respects, in accordance with their terms and there is
no material liability for breaches of fiduciary duty in connection with the
▇▇▇▇▇▇▇▇▇ Benefit Plans. To ▇▇▇▇▇▇▇▇▇'▇ knowledge, there are no pending or
anticipated material claims against or otherwise involving any ▇▇▇▇▇▇▇▇▇ Benefit
Plan and no suit, action or other litigation (excluding claims for benefits
incurred in the ordinary course of ▇▇▇▇▇▇▇▇▇ Benefit Plan activities) has been
brought against or with respect to any such ▇▇▇▇▇▇▇▇▇ Benefit Plan, except for
any of the foregoing which would not have a ▇▇▇▇▇▇▇▇▇ Material Adverse Effect.
All material contributions required to be made as of the date hereof to
▇▇▇▇▇▇▇▇▇ Benefit Plans have been made or provided for. ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ or any trade or business
(whether or not incorporated) which is under common control, or which is treated
as a single employer, with ▇▇▇▇▇▇▇▇▇ under Sections 414(b), (c), (m), or (o) of
the Code, (i) ▇▇▇▇▇▇▇▇▇ has not 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, except, in each case, for any liability or any excise tax
which would not have a ▇▇▇▇▇▇▇▇▇ Material Adverse Effect. No prohibited
transaction has occurred with respect to any ▇▇▇▇▇▇▇▇▇ Benefit Plan that would
result in the imposition of any excise tax or other liability under the Code or
ERISA which would have a ▇▇▇▇▇▇▇▇▇ Material Adverse Affect. Neither ▇▇▇▇▇▇▇▇▇
nor any trade or business (whether or not incorporated) which is under common
control, or which is treated as a single employer, with ▇▇▇▇▇▇▇▇▇ 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.
6.12. Labor Matters. ▇▇▇▇▇▇▇▇▇ is not a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. To ▇▇▇▇▇▇▇▇▇'▇ knowledge, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of ▇▇▇▇▇▇▇▇▇.
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6.13. Environmental Matters. To the knowledge of ▇▇▇▇▇▇▇▇▇, and except as
would not have, individually or in the aggregate, a ▇▇▇▇▇▇▇▇▇ Material Adverse
Effect:
(a) there are not any past or present conditions or circumstances
that interfere with the conduct of the business of ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇, including but not limited to on-site or off-site disposal or
release of any chemical substance, product or waste, which may 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) ▇▇▇▇▇▇▇▇▇ has not (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.
6.14. Trademarks, Patents and Copyrights. Except as previously disclosed to
Parent in writing, to the knowledge of the ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ owns or
possesses 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 its business 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 ▇▇▇▇▇▇▇▇▇ Material Adverse Effect, and
to the knowledge of ▇▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇▇ Material Adverse Effect. To the knowledge of
▇▇▇▇▇▇▇▇▇, the conduct of ▇▇▇▇▇▇▇▇▇'▇ business 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 ▇▇▇▇▇▇▇▇▇ Material Adverse Effect.
To the knowledge of ▇▇▇▇▇▇▇▇▇, there is no material infringement of any
proprietary right owned by or licensed by or to ▇▇▇▇▇▇▇▇▇ which is likely to
have, individually or in the aggregate, a ▇▇▇▇▇▇▇▇▇ Material Adverse Effect.
6.15. Insurance. ▇▇▇▇▇▇▇▇▇ has previously delivered to Parent a schedule
listing the officers' and directors' liability insurance policies, primary and
excess casualty insurance policies providing coverage for bodily injury and
property damage to third parties, including products liability and completed
operations coverage, and worker's compensation insurance policies maintained by
the ▇▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇▇ maintains insurance coverage reasonably adequate for
the operation of its business (taking into account the cost and availability of
such insurance).
6.16. No Brokers. ▇▇▇▇▇▇▇▇▇ has not entered into any contract, arrangement
or understanding with any person or firm which may result in the obligation of
▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ has retained ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated as its financial
advisor, the arrangements with which have been disclosed in writing to Parent
prior to the date hereof.
6.17. Opinion of Financial Advisor. ▇▇▇▇▇▇▇▇▇ has received the opinion of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, to the effect that, as of the date thereof,
the ▇▇▇▇▇▇▇▇▇ Exchange Ratio is fair, from a financial point of view, to the
holders of ▇▇▇▇▇▇▇▇▇ Common Stock; it being understood and acknowledged by
Parent that such opinion has been rendered for the benefit of the Board of
Directors of ▇▇▇▇▇▇▇▇▇, and is not intended to, and may not, be relied upon by
Parent, its affiliates or their respective Subsidiaries.
6.18. Parent Stock Ownership. ▇▇▇▇▇▇▇▇▇ owns no shares of Parent Common
Stock or any other securities convertible into or otherwise exercisable to
acquire Parent Common Stock.
6.19. Reorganization. To ▇▇▇▇▇▇▇▇▇'▇ knowledge, neither ▇▇▇▇▇▇▇▇▇ nor any
of its stockholders has taken or failed to take any action, as a result of which
the ▇▇▇▇▇▇▇▇▇ Merger or the Company Merger would not
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qualify as a reorganization within the meaning of section 368(a) of the Code
(and comparable provisions of applicable state or local law).
6.20. Vote Required. The affirmative vote of the holders of at least
two-thirds of the outstanding shares of ▇▇▇▇▇▇▇▇▇ Common Stock is the only vote
of the holders of any class or series of ▇▇▇▇▇▇▇▇▇ capital stock necessary to
approve this Agreement and the transactions contemplated hereby.
ARTICLE 7
7. Representations and Warranties of Parent, Merger Sub and Merger
Grandsub. Except as disclosed with reasonable specificity in the Parent Reports
(as defined in Section 7.7), Parent, Merger Sub and Merger Grandsub, jointly and
severally, represent and warrant to each of the Company and ▇▇▇▇▇▇▇▇▇ that:
7.1. Existence; Good Standing; Corporate Authority. Parent, Merger Sub and
Merger Grandsub 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. 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 and ▇▇▇▇▇▇▇▇▇ are true and correct and contain all
amendments as of the date hereof. As used in this Agreement, the phrase "Parent
Material Adverse Effect" shall mean a material adverse effect on (a) the
business, condition (financial or otherwise) or results of operations of Parent
and its Subsidiaries on a consolidated basis or (b) the ability of Parent,
Merger Sub or Merger Grandsub to consummate the transactions contemplated by
this Agreement.
7.2. Authorization, Validity and Effect of Agreements. Each of Parent,
Merger Sub and Merger Grandsub has the requisite corporate power and authority
to execute and deliver this Agreement and all agreements and documents
contemplated hereby. The consummation by Parent, Merger Sub and Merger Grandsub
of the transactions contemplated hereby including the issuance and delivery by
Parent of shares of Parent Common Stock pursuant to the Mergers has been duly
authorized by all requisite corporate action other than, if required by the
rules of the NYSE, approval of the issuance of the shares of Parent Common Stock
pursuant to the Mergers contemplated hereby by Parent's stockholders. This
Agreement constitutes the valid and legally binding obligation of each of
Parent, Merger Sub and Merger Grandsub, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of equity.
7.3. 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 December 27, 1996, there were 145,175,748 shares of Parent Common Stock
issued and outstanding 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 Mergers, 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 7.3 and except for any shares of Parent Common
Stock issued pursuant to plans described in the Parent Reports (as defined in
Section 7.7), 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 except as described
in the Parent Reports.
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7.4. Subsidiaries. (a) Each of Parent's Subsidiaries is a corporation or
partnership duly organized, validly existing and in good standing 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 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.
(b) All of the outstanding shares of capital stock of Merger Sub are owned
directly by Parent and all of the outstanding shares of capital stock of Merger
Grandsub are owned directly by Merger Sub. Each of Merger Sub and Merger
Grandsub 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.
7.5. No Violation of Law. To Parent's knowledge, 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.
7.6. No Conflict. (a) Neither the execution and delivery by Parent, Merger
Sub and Merger Grandsub of this Agreement, nor the consummation by Parent,
Merger Sub and Merger Grandsub of the transactions contemplated hereby in
accordance with the terms hereof, will: (i) conflict with or result in a breach
of any provisions of the certificate of incorporation or bylaws of Parent,
Merger Sub or Merger Grandsub; (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, 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, Merger Sub or Merger
Grandsub of this Agreement nor the consummation by Parent, Merger Sub or Merger
Grandsub of the transactions contemplated hereby in accordance with the terms
hereof will require any consent, approval or authorization of, or filing or
registration with, any governmental or regulatory authority, other than
Regulatory Filings, 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.
7.7. 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,
1995, 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 the consolidated financial position of Parent and
its Subsidiaries as
20
27
of its date and each of the consolidated statements of income, cash flows and
retained earnings included in or incorporated by reference into the Parent
Reports (including any related notes and schedules) fairly presents the results
of operations, cash flows or retained earnings, 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, 1996, including all notes thereto, neither Parent nor any of its
Subsidiaries has 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 and
liabilities and obligations arising in the ordinary course of business since
such date.
7.8. 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 or state 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 would have, individually
or in the aggregate, a Parent Material Adverse Effect.
7.9. Absence of Certain Changes. Since October 31, 1996, there has not been
(i) any change in the financial condition or business of Parent or its
Subsidiaries which has had or is likely to have an adverse effect which is
material to the financial condition or business of Parent and its Subsidiaries,
other than any adverse change resulting from adverse changes in general economic
conditions, stock market fluctuations or conditions or adverse changes in or
affecting the oilfield service and process industries generally, (ii) any
material change by Parent in its accounting methods, principles or practices or
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, deferred compensation, pension, retirement,
profit sharing, stock option, stock purchase or other employee benefit plan,
except in the ordinary course of business.
7.10. Taxes. (a) Parent and its Subsidiaries have (i) duly filed (or there
has been filed on their behalf) on a timely basis with appropriate governmental
authorities all tax returns, statements, reports, declarations, estimates and
forms required to be filed by them, on or prior to the date hereof, 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 their behalf) for the payment of all taxes required
to be paid by Parent or its Subsidiaries for all periods ending through the date
hereof, 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, 1991; (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 tax
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 January 31, 1998 for the fiscal years ended September 26, 1992
and October 2, 1993; and (iv) neither Parent nor any of its Subsidiaries is a
party to any tax sharing or tax indemnity agreement.
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7.11. Employee Benefit Plans. True and complete copies of all material
employee benefit plans and other benefit arrangements, including all "employee
benefit plans" as defined in ERISA, covering employees of Parent and its
Subsidiaries (the "Parent Benefit Plans") and, if applicable, the most recent
Form 5500 and annual reports for each such plan have been made available to each
of the Company and ▇▇▇▇▇▇▇▇▇. All applicable reporting and disclosure
requirements have been met with respect to the Parent Benefit Plans except for
any noncompliance that would not result in a material liability to Parent. There
has been no material "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,
which event is likely to result in a material liability to Parent. 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 is no material
liability for breaches of fiduciary duty in connection with the Parent Benefit
Plans. To Parent's knowledge, there are no pending or anticipated 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, except for any of the foregoing which would not have a
Parent Material Adverse Effect. 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) 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 Company 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, except, in each case, for any liability or any excise tax
which would not have a Parent Material Adverse Effect. 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 Company Effective Time contributed to, or had an obligation
to contribute to, a multiemployer plan within the meaning of Section 3(37) of
ERISA. 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 which would have a Parent Material Adverse Effect. 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.
7.12. Environmental Matters. To the knowledge of Parent, and 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;
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(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 may 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.
7.13. Trademarks, Patents and Copyrights. Except as previously disclosed to
the Company and ▇▇▇▇▇▇▇▇▇ in writing, to the knowledge of Parent, 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 to the knowledge of Parent, 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. To the
knowledge of Parent, 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. To the knowledge of the Parent,
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.
7.14. 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).
7.15. 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 and
▇▇▇▇▇▇▇▇▇ prior to the date hereof.
7.16. Opinion of Financial Advisor. Parent has received the opinion of
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. to the effect that, as of the date thereof, the
consideration to be paid by Parent pursuant to the Mergers is fair to Parent
from a financial point of view.
7.17. ▇▇▇▇▇▇▇▇▇ and Company Stock Ownership. Neither Parent nor any of its
Subsidiaries owns any shares of capital stock of the Company or of ▇▇▇▇▇▇▇▇▇ or
any other securities convertible into capital stock of ▇▇▇▇▇▇▇▇▇ or of the
Company.
7.18. Reorganization. To Parent's knowledge, neither Parent nor any of its
stockholders has taken or failed to take any action, as a result of which the
Company Merger or the ▇▇▇▇▇▇▇▇▇ Merger would not qualify as a reorganization
within the meaning of section 368(a) of the Code (and comparable provisions of
applicable state or local law).
7.19. Vote Required. No vote of the holders of any class or series of
Parent capital stock is necessary to approve the issuance of Parent Common Stock
pursuant to this Agreement and the transactions contemplated hereby unless the
rules of the NYSE require the vote of Parent stockholders as a result of the
aggregate number of shares of Parent Common Stock to be issued in the Mergers.
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ARTICLE 8
8. Covenants.
8.1. Acquisition Proposals. (a) Each of the Company and ▇▇▇▇▇▇▇▇▇ agrees
that (i) prior to the Company Effective Time, neither it nor any of its
Subsidiaries shall, and each of them 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 or encourage (including by way of furnishing
material non-public information), directly or indirectly, any inquiry, proposal
or offer (including, without limitation, any proposal or offer to its
stockholders) with respect to a tender offer, merger, consolidation or similar
transaction involving, or any purchase of 20% or more of the assets on a
consolidated basis or 20% or more of the capital stock of, the Company (any such
proposal or offer being hereinafter referred to as a "Company Acquisition
Proposal") or ▇▇▇▇▇▇▇▇▇ (any such proposal or offer being hereinafter referred
to as a "▇▇▇▇▇▇▇▇▇ Acquisition Proposal" and, collectively with a Company
Acquisition Proposal, "Acquisition Proposals") or engage in any negotiations
concerning an 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 their respective Board of
Directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a Company Acquisition Proposal or a ▇▇▇▇▇▇▇▇▇ Acquisition
Proposal, as the case may be, or (B) 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 Acquisition Proposal that is superior to the Company
Merger or the ▇▇▇▇▇▇▇▇▇ Merger, as the case may be, and is reasonably capable of
being financed, if the Board of Directors of the Company or the Board of
Directors of ▇▇▇▇▇▇▇▇▇, as the case may be, after consultation with such party's
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 8.1(a), if the
Company or ▇▇▇▇▇▇▇▇▇ intends to participate in any such discussions or
negotiations or provide any such information to any such third party, the
Company or ▇▇▇▇▇▇▇▇▇, as the case may be, shall give reasonable prior notice to
Parent of each such action. The Company or ▇▇▇▇▇▇▇▇▇, as the case may be, will
promptly notify Parent of any such requests for such information or the receipt
of any Acquisition Proposal, including the identity of the person or group
engaging in such discussions or negotiations, requesting such information or
making such Acquisition Proposal, and the material terms and conditions of any
Acquisition Proposal.
(c) Nothing in this Section 8.1 shall permit the Company or ▇▇▇▇▇▇▇▇▇ to
enter into any agreement with respect to an Acquisition Proposal during the term
of this Agreement, it being agreed that during the term of this Agreement,
neither the Company nor ▇▇▇▇▇▇▇▇▇ shall enter into any agreement with any person
that provides for, or in any way facilitates, an Acquisition Proposal, other
than a confidentiality agreement in reasonably customary form.
8.2. Conduct of the Company and ▇▇▇▇▇▇▇▇▇'▇ Businesses. Prior to the
Company Effective Time, except as set forth in the Company Disclosure Letter or
the ▇▇▇▇▇▇▇▇▇ Disclosure Letter or as contemplated by any other provision of
this Agreement, unless the other parties have consented in writing thereto, each
of the Company and ▇▇▇▇▇▇▇▇▇:
(a) shall, and shall cause each of their respective Subsidiaries to,
conduct its operations according to their usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
(b) shall use their best efforts, and shall cause each of their
respective Subsidiaries to use its 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 their certificate or articles of incorporation or
bylaws;
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(d) shall promptly notify the other parties 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 indicating that the same may be contemplated), or the
breach in any material respect of any representation or warranty contained
herein;
(e) shall promptly deliver to the other parties 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, 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, in the case of the Company, the automatic awards to
non-employee directors pursuant to Article V of the 1993 Plan, (iii)
increase any compensation or enter into or amend any employment agreement
with any of its present or future officers or directors, except for normal
increases consistent with past practice and the payment of cash bonuses to
officers pursuant to and consistent with Section 8.13(e) hereof, or (iv)
adopt any new employee benefit plan (including any stock option, stock
benefit or stock purchase plan) or amend 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, in the case of the Company, capital stock of any of its
Subsidiaries, or make any commitment for any such action, except (x) in the
case of the Company, for the declaration and payment of regular, quarterly
dividends, consistent with past practice, not to exceed $0.28 per share of
Company Common Stock per quarter and (y) in the case of ▇▇▇▇▇▇▇▇▇, except
for the declaration and payment of cash dividends consistent with past
practice and Section 8.14;
(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, individually or in the aggregate, except
in the ordinary course of business, and except in the case of ▇▇▇▇▇▇▇▇▇,
sales of portfolio securities;
(i) shall not, and shall not permit any of its Subsidiaries to,
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 which are material, individually or in the aggregate, except in the
case of ▇▇▇▇▇▇▇▇▇, investments in cash equivalents and investment-grade
securities;
(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 companies engaged in their respective businesses;
(l) shall not (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 the Company or ▇▇▇▇▇▇▇▇▇,
as the case may be, including elections for any and all joint ventures,
partnerships, limited liability companies, working interests or other
investments where the Company or ▇▇▇▇▇▇▇▇▇, as the case may be, 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 the
Company or ▇▇▇▇▇▇▇▇▇, as the case may be, or (iii) change in any material
respect any of its methods of reporting income or deductions for federal
income tax purposes from those expected to be employed in the preparation
of its federal income tax return for the taxable year ending October 31,
1996, except as may be required by
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applicable law or except for such changes that are reasonably expected not
to materially and adversely affect the Company or ▇▇▇▇▇▇▇▇▇, as the case
may be;
(m) in the case of the Company, shall not, nor shall it permit any of
its Subsidiaries to, (i) incur any indebtedness for borrowed money (except
for working capital under the Company's existing credit facilities, and (x)
refinancings of existing debt and (y) other immaterial borrowings that, in
the case of either (x) or (y), 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, 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 $3
million over the fiscal 1997 capital expenditures budget previously
disclosed to Parent by the Company;
(n) in the case of ▇▇▇▇▇▇▇▇▇, shall not (i) incur any indebtedness
for borrowed money or guarantee any such indebtedness or issue or sell any
of its debt securities or warrants or rights to acquire any of its debt
securities or guarantee any debt securities of others, (ii) enter into any
lease (whether such lease is an operating or capital lease) or create any
mortgages, liens, security interests or other encumbrances on the property
of ▇▇▇▇▇▇▇▇▇ in connection with any indebtedness thereof or (iii) commit to
aggregate capital expenditures in excess of $10,000;
(o) shall not purchase any shares of Parent Common Stock and, in the
case of ▇▇▇▇▇▇▇▇▇ shall not (i) sell or dispose of or encumber any shares
of Company Common Stock or (ii) purchase or otherwise acquire any shares of
Company Common Stock;
(p) shall not, nor shall it permit any of its Subsidiaries to, agree
in writing or otherwise to take any action inconsistent with the foregoing;
and
(q) shall not take any action that is likely to delay materially (but
in any event by more than 10 business days) 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
transactions contemplated by this Agreement.
8.2A Conduct of Parent's Business. Prior to the Company Effective Time,
except as expressly contemplated by any other provision of this Agreement,
unless the other parties have consented in writing thereto, Parent:
(a) shall not amend its Restated Certificate of Incorporation or
Bylaws in any way that materially and adversely affects the rights of
holders of Parent Common Stock;
(b) shall promptly notify the other parties 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 indicating that the same may be contemplated), or the
breach in any material respect of any representation or warranty contained
herein;
(c) during the period beginning five business days prior to the
Parent Pricing Period and ending at the Company Effective Time, shall not
(and shall cause its Subsidiaries not to) issue or sell any shares of
Parent's capital stock or the capital stock of any of its Subsidiaries (or
securities convertible into or exchangeable for capital stock) for less
than the fair market value thereof, except for issuances pursuant to
employee benefit plans or pursuant to outstanding options, warrants or
convertible securities in accordance with their terms, in each case as in
existence on the date hereof, and shall not issue to holders of Parent's
capital stock any rights to purchase any shares of Parent's capital stock
for less than the fair market value thereof if the ex-dividend date for
such distribution would be during the period beginning five business days
prior to the Parent Pricing Period and ending at the Company Effective
Time;
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(d) shall not (and shall cause its Subsidiaries not to) engage in any
substantial repurchase at a material premium, recapitalization,
restructuring or reorganization with respect to the Parent Common Stock;
(e) during the period beginning five business days prior to the
mailing of the Proxy Statement/Prospectus and ending at the Company
Effective Time, shall not (and shall cause its Subsidiaries not to) redeem,
repurchase or otherwise acquire any shares of Parent Common Stock (other
than pursuant to existing employee benefit plans);
(f) shall not declare, set aside or pay any dividend or make any
other distribution or payment with respect to any shares of Parent Common
Stock, or make any commitment for any such action, except regular quarterly
cash dividends in amounts consistent with past practice;
(g) shall not, and shall not permit any of its Subsidiaries to,
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 if (i) such entity or
business is engaged in the U.S. oilfield production chemicals business with
revenues in SIC codes in which either Parent or the Company has revenues or
(ii) such action is likely to (a) have a material adverse effect on the
ability of Parent to consummate the transactions contemplated by this
Agreement or (b) delay materially (but in any event by more than 10
business days) the ▇▇▇▇▇▇▇▇▇ Effective Time or the Company Effective Time;
(h) other than any acquisition as to which the purchase price is not
in excess of $200 million, shall not, and shall not permit any of its
Subsidiaries to, 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 the principal business of which is not related to the
oilfield service industry, the manufacture and sale of products for use in,
or the provision of services relating to the exploration, development or
production of oil or natural gas or other minerals or other businesses
engaged in by Parent on the date hereof; and
(i) subject to Section 8.4, shall not take any action that is likely
to delay materially (but in any event by more than 10 business days) 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 transactions contemplated by this
Agreement.
8.3. Meetings of Stockholders. (a) Each of Parent, if a vote of its
stockholders is required by the rules of the NYSE, ▇▇▇▇▇▇▇▇▇ and the Company
will take all action necessary in accordance with applicable law and its
certificate or articles 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 Mergers contemplated hereby and (ii) in the case of
▇▇▇▇▇▇▇▇▇ and the Company, the approval of this Agreement and the transactions
contemplated hereby. ▇▇▇▇▇▇▇▇▇ and the Company 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 and in any event, the vote of the Company
stockholders shall be taken prior to the vote of the ▇▇▇▇▇▇▇▇▇ stockholders.
(b) Parent, if a vote of its stockholders is required by the rules of the
NYSE, ▇▇▇▇▇▇▇▇▇ and the Company, 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 ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇ may
at any time prior to the Company Effective Time withdraw, modify, or change any
recommendation and declaration regarding this Agreement or the Mergers, or
recommend and declare advisable any other offer or proposal, if in the opinion
of such Board of Directors after consultation with its
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counsel the failure to so withdraw, modify, or change its recommendation and
declaration would be inconsistent with its fiduciary obligations.
8.4. Filings; Other Action. Subject to the terms and conditions herein
provided, the Company, ▇▇▇▇▇▇▇▇▇ and Parent shall: (a) promptly (but in not more
than 10 business days from the date hereof) make their respective filings and
thereafter make any other required submissions under the HSR Act with respect to
the Mergers; (b) use their best efforts to cooperate with one another in (i)
determining which filings are required to be made prior to the Company Effective
Time with, and which consents, approvals, permits or authorizations are required
to be obtained prior to the Company 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 Mergers and the transactions contemplated hereby and
(ii) timely making all such filings and timely seeking all such consents,
approvals, permits or authorizations; (c) furnish the others 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 governmental or regulatory authority
or members or their respective staffs, on the other hand, with respect to this
Agreement and the transactions contemplated hereby; (d) furnish the others 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 under the provisions of the HSR Act; (e) use their
commercially reasonable efforts to take, or cause to be taken, all other action
and do, or cause to be done, all other things necessary, proper or appropriate
to consummate and make effective the Mergers and the transactions contemplated
by this Agreement including, without limitation, the resolution of objections,
if any, as may be asserted by any governmental authority with respect to the
Mergers and the transactions contemplated hereby under any antitrust or trade or
regulatory laws or regulations of any governmental authority and (f) use their
commercially reasonable efforts to lift or rescind any injunction or restraining
order or other order adversely affecting the ability of the parties to
consummate the transactions contemplated hereby and use their commercially
reasonable efforts to defend any litigation seeking to enjoin, prevent or delay
the consummation of the Mergers or the transactions contemplated hereby or
seeking material damages. In complying with the foregoing, Parent, ▇▇▇▇▇▇▇▇▇ and
the Company shall each use all commercially reasonable measures available to
them to consummate the transactions contemplated hereby, so long as such
measures would not have a material adverse effect on the U.S. oilfield
production chemicals businesses of the Company or Parent (including any
Subsidiaries thereof), but shall not be required to take measures that would
have such a material adverse effect.
8.5. Inspection of Records. From the date hereof to the Company Effective
Time, each of the Company and ▇▇▇▇▇▇▇▇▇, on the one hand, and Parent, on the
other hand, shall allow all designated officers, attorneys, accountants and
other representatives of Parent or the Company and ▇▇▇▇▇▇▇▇▇, 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, the Company and ▇▇▇▇▇▇▇▇▇ and
their respective Subsidiaries; provided that no investigation pursuant to this
Section 8.5 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 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 8.5 for any purpose unrelated to the consummation of the transactions
contemplated by this Agreement. All non-public information obtained pursuant to
this Section 8.5 shall be governed by the Confidentiality Agreements (as defined
in Section 11.4).
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8.6. 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.
8.7. Registration Statement. (a) Each of Parent, the Company and ▇▇▇▇▇▇▇▇▇
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 Mergers,
a portion of which Registration Statement shall also serve as the joint proxy
statement with respect to the meetings of the stockholders of Parent, if a vote
of the stockholders of Parent is required by the rules of the NYSE, of the
Company and of ▇▇▇▇▇▇▇▇▇ in connection with the Mergers (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 Exchange Act
and the rules and regulations thereunder. Parent shall use its best efforts, and
the Company and ▇▇▇▇▇▇▇▇▇ 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 and ▇▇▇▇▇▇▇▇▇,
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 Mergers 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, if a vote of its stockholders is required pursuant to
the rules of the NYSE, ▇▇▇▇▇▇▇▇▇ and the Company will each 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, the Company and ▇▇▇▇▇▇▇▇▇ 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, if any, of ▇▇▇▇▇▇▇▇▇ 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.
8.8. Listing Application. Parent shall promptly prepare and submit to the
NYSE a listing application covering the shares of Parent Common Stock issuable
in the Mergers, 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.
8.9. Letters of Accountants. (a) The Company shall use its reasonable best
efforts to cause to be delivered to Parent "comfort" letters of Price Waterhouse
LLP ("Price Waterhouse"), 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 and substance 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) ▇▇▇▇▇▇▇▇▇ shall use its reasonable best efforts to cause to be
delivered to Parent "comfort" letters of Price Waterhouse, ▇▇▇▇▇▇▇▇▇'▇
independent public accountants, dated the effective date of the Form S-4 and the
Closing Date, respectively, and addressed to Parent, with respect to certain
financial information regarding
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▇▇▇▇▇▇▇▇▇ included in the Form S-4, in form and substance 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.
(c) Parent shall use its reasonable best efforts to cause to be delivered
to each of the Company and ▇▇▇▇▇▇▇▇▇ "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 each of the Company and
▇▇▇▇▇▇▇▇▇, with regard to certain financial information regarding Parent
included in the Form S-4, in form and substance reasonably satisfactory to the
Company and ▇▇▇▇▇▇▇▇▇ 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.
8.10. Agreements of Rule 145 Affiliates. Prior to the ▇▇▇▇▇▇▇▇▇ Effective
Time, each of ▇▇▇▇▇▇▇▇▇ and the Company shall cause to be prepared and delivered
to Parent a list identifying all persons who, at the time of the meeting of
▇▇▇▇▇▇▇▇▇'▇ stockholders or the meeting of the Company's stockholders pursuant
to Section 8.3, as the case may be, may be deemed to be "affiliates" of
▇▇▇▇▇▇▇▇▇ or of the Company, as the case may be, 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. ▇▇▇▇▇▇▇▇▇ or
the Company, as the case may be, 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 Mergers, except pursuant to an
effective registration statement or in compliance with Rule 145 or an exemption
from the registration requirements of the Securities Act. ▇▇▇▇▇▇▇▇▇ or the
Company, as the case may be, shall, to the extent necessary, use its best
efforts to cause each person who is identified as a Rule 145 Affiliate in such
list to sign on or prior to the thirtieth day prior to the ▇▇▇▇▇▇▇▇▇ Effective
Time, a written agreement, in the form to be approved by ▇▇▇▇▇▇▇▇▇ or the
Company, as the case may be, 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 Mergers (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.
8.11. Expenses. Whether or not the Mergers are 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 herein.
8.12. Indemnification and Insurance. (a) From and after the Company
Effective Time, Parent shall indemnify, defend and hold harmless to the fullest
extent permitted under applicable law each person who is now, or has been at any
time prior to the date hereof, an officer or director of the Company or
▇▇▇▇▇▇▇▇▇ (or any Subsidiary or division thereof), (individually, an
"Indemnified Party" and, collectively, the "Indemnified Parties"), against all
losses, claims, damages, liabilities, costs or expenses (including reasonable
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 Company Effective Time. In the event of any such claim, action, suit,
proceeding or investigation (an "Action"), (i) Parent shall pay, as incurred,
the reasonable fees and expenses of counsel selected by the Indemnified Party,
which counsel shall be reasonably acceptable to Parent, in advance of the final
disposition of any such Action to the fullest extent permitted by applicable
law, upon receipt of any undertaking required by applicable law, and (ii)
▇▇▇▇▇▇▇▇▇ Surviving Corporation and Surviving Corporation will cooperate in the
defense of any such matter; provided, however, that Parent shall not be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld), and provided further, that Parent shall not be
obligated pursuant to this Section 8.12 to pay the fees and disbursements of
more than one counsel for all Indemnified Parties in any single Action, unless,
in the opinion of counsel for any of the Indemnified Parties, there is a
conflict of interests between two or more of such Indemnified Parties.
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(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 or articles of incorporation and bylaws of the Company
and ▇▇▇▇▇▇▇▇▇ with respect to matters occurring through the Company Effective
Time, shall survive the Mergers and shall continue in full force and effect for
a period of six years from the Company Effective Time; provided, however, that
all rights to indemnification in respect of any Action pending or asserted
within such period shall continue until the disposition of such Action.
(c) (i) For a period of six years after the Company Effective Time, Parent
shall cause to be maintained officers' and directors' liability insurance
covering the Indemnified Parties who are currently covered, in their capacities
as officers and directors, 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.
(ii) For a period of six years after the ▇▇▇▇▇▇▇▇▇ Effective Time, Parent
shall cause to be maintained officers' and directors' liability insurance
covering the Indemnified Parties who are currently covered, in their capacities
as officers and directors, by ▇▇▇▇▇▇▇▇▇'▇ existing officers' and directors'
liability insurance policies on terms substantially no less advantageous to the
Indemnified Parties than such existing insurance.
(d) Parent shall pay all expenses, including reasonable attorneys' fees,
that may be incurred by any Indemnified Parties in enforcing the indemnity and
other obligations provided for in this Section 8.12.
(e) The rights of each Indemnified Party hereunder shall be in addition to
any other rights such Indemnified Party may have under the certificate or
articles of incorporation or bylaws of the Company or ▇▇▇▇▇▇▇▇▇, under the DGCL
or the MGBCL or otherwise. The provisions of this Section 8.12 shall survive the
consummation of the Mergers and expressly are intended to benefit each of the
Indemnified Parties.
(f) In the event Parent, Surviving Corporation or ▇▇▇▇▇▇▇▇▇ 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, Surviving Corporation or ▇▇▇▇▇▇▇▇▇ Surviving
Corporation, as the case may be, shall assume the obligations set forth in this
Section 8.12.
(g) ▇▇▇▇▇▇▇▇▇ Surviving Corporation and Surviving Corporation shall be
jointly and severally liable with Parent for all of Parent's obligations under
this Section 8.12.
8.13. Certain Benefits. (a) From and after the Company Effective Time,
Parent and its Subsidiaries will honor in accordance with their terms and this
Agreement the executive, employment and other agreements and arrangements set
forth in Section 8.13(a)(i) of the Company Disclosure Letter 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 one other individual, and all of the Company
Benefit Plans; 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 8.13. Parent hereby acknowledges that the consummation
of the Company Merger will result in a "change of control" under the Executive
Agreements and the Employment Agreements. Parent shall cause the Surviving
Corporation (i) to assume the obligations of the Company under the Company
Benefit Plans set forth on Schedule 8.13(a)(ii) of the Company Disclosure Letter
substantially as in effect immediately prior to the Company Effective Time, to
cover all Company Employees (as defined in Section 8.13(g)) who are participants
therein immediately prior to the Company Effective Time and who remain eligible
to participate in such Company Benefit Plans pursuant to the terms thereof;
provided, that the Surviving Corporation may amend such plans, other than the
Petrolite Corporation Vacation Plan and the Petrolite Corporation Severance
Plan, at any time following the Company Effective Time to provide benefits to
Company Employees which in the aggregate are comparable to those applicable to
similarly situated employees of Parent or, (ii) in lieu thereof, to provide
benefits to such Company Employees under Parent Benefit Plans so that the
aggregate benefits to such Company Employees are comparable to those that are
applicable to similarly situated employees of Parent. After the Company
Effective Time, any Company Employee who is or
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becomes entitled to continued medical coverage pursuant to an agreement with the
Company set forth in Section 8.13(a)(i) of the Company Disclosure Letter will be
entitled to participate under any medical 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 hired or assigned to work at a Company facility after the
Company Effective Time under any employee benefit plan, program or arrangement.
With respect to the Parent Benefit Plans, Parent and the Surviving Corporation
shall grant to all Company Employees, from and after the Company Effective Time,
credit for all service with the Company and its affiliates and predecessors
prior to the Company Effective Time for seniority, eligibility to participate,
eligibility for benefits 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 Company 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) Parent agrees to maintain the Petrolite Corporation Severance Plan as
in effect on the date hereof for a period of one year from the Company Effective
Time for the benefit of Company Employees.
(c) Parent agrees that any Company Employee who continues to be employed
by the Surviving Corporation or Parent or any Subsidiary thereof on November 1,
1997 will continue to be entitled to take the same paid vacation he or she would
have earned under the Petrolite Corporation Vacation Policy as in effect on the
date hereof to be taken during the period ending October 31, 1998.
(d) Promptly following the Company Effective Time, Parent shall cause the
Surviving Corporation to amend the Petrolite Corporation Retirement Plan (the
"PCRP") to provide that any Company Employee who continues in employment for at
least three (3) months following the Company Effective Time or whose employment
is terminated during such period without Cause (as defined in Section 8.13(e))
shall be provided with one additional year of service under the PCRP, for all
purposes for which such service is recognized under the PCRP. If required by
applicable law, the additional benefits with respect thereto will be provided
under a supplemental arrangement.
(e) (i) With respect to the Company's Annual Bonus Plan and Division Cash
Incentive and Bonus Plans (collectively, the "Incentive Plans"), the
determination of whether the performance targets have been met for the fiscal
year ending October 31, 1997, shall be made based on the actual performance for
such fiscal year or applicable portion thereof; provided, however, that the
impact that the Company Expenses may have on the applicable performance results
used to determine whether the performance targets have been met under the
Incentive Plans shall be disregarded. As used herein, "Company Expenses" shall
mean all fees and expenses (including, without limitation, all fees and expenses
of counsel, financial advisors, accountants, environmental and other experts and
consultants and all printing and advertising expenses) actually incurred or
accrued by the Company or incurred on the Company's behalf, or incurred by
Parent, Merger Sub, Merger Grandsub or ▇▇▇▇▇▇▇▇▇ and assumed by the Company,
whether pursuant to this Agreement or as a result of the Company Merger or
otherwise, in connection with this Agreement and the transactions contemplated
hereby (including, without limitation, in connection with the previously
announced proposed consent solicitation by ▇▇▇▇▇▇▇▇▇, the negotiation,
preparation, execution and performance of this Agreement, the structuring of the
Mergers, any agreements related hereto or thereto and any filings to be made in
connection therewith) whether incurred or accrued prior to or after the Company
Effective Time.
(ii) Bonuses payable pursuant to the Incentive Plans for the period from
November 1, 1996 to October 31, 1997 (the "Bonus Period") will be determined and
paid pursuant to the provisions of such Incentive Plans except as provided in
this Section 8.13(e). Schedule 8.13(e) lists the Incentive Plans and the sets
forth the aggregate maximum bonus amount payable to participants thereunder
("Participants") for the Bonus Period. The Company shall determine the bonus
amounts to be paid to each Participant for the period from November 1, 1996
through the Closing Date based on the criteria established for the applicable
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Incentive Plan, and shall pay such amounts to the Participant on or before the
Closing Date. The bonus amount paid to a Participant by the Company pursuant to
this Section 8.13(e) shall not exceed such Participant's maximum bonus amount
for the Bonus Period under the applicable Incentive Plan (the "Maximum Bonus
Amount") multiplied by a fraction, the numerator of which is the number of
calendar days from November 1, 1996 through and including the Closing Date and
the denominator of which is 365 (the "Prorated Maximum Bonus Amount"). Before
December 1, 1997, Parent shall determine the bonus amount to be paid to each
Participant for the period from the Closing Date through October 31, 1997, based
on criteria established by Parent, and the Surviving Corporation shall pay that
amount to the Participant; provided, however, (i) the bonus so paid to each
Participant shall not be less than 80% of the amount determined by multiplying
the difference between such Participant's Maximum Bonus Amount and such
Participant's Prorated Maximum Bonus Amount by a fraction, the numerator of
which is the bonus amount paid to such Participant by the Company on or before
the Closing Date pursuant to this Section 8.13(e) and the denominator of which
is such Participant's Prorated Maximum Bonus Amount; and (ii) the Surviving
Corporation shall pay the minimum amount determined in accordance with clause
(i) above to any Participant whose employment is terminated without Cause after
the Closing Date and before payment is made by the Surviving Corporation
pursuant to this Section 8.13(e). "Cause" shall mean acts of theft, unethical
conduct or dishonesty affecting the assets, properties or business of the
Surviving Corporation or Parent, willful misconduct or material dereliction of
duty. Notwithstanding the foregoing, no payment shall be made with respect to
the Bonus Period following the date hereof to any Participant who is a party to
an Executive Agreement unless such Participant agrees in advance in writing that
to the extent that the receipt of any such payment would cause other payments
payable to such Participant pursuant to his or her Executive Agreement which
would otherwise be deductible by the Company for federal income tax purposes to
become non-deductible for such purposes pursuant to Section 280G of the Code,
such excess payment shall reduce any severance amounts payable to such
Participant pursuant to his or her Executive Agreement.
(f) It is the intent of Parent that for a period of two years following
the Company Effective Time, any reductions in workforce in respect of employees
of Parent and the Surviving Corporation shall be made on a fair and equitable
basis, without regard to whether employment commenced with Parent or the Company
or their respective Subsidiaries, and that any Company Employee whose employment
is terminated or job is eliminated by Parent or any of its Subsidiaries during
such period shall be entitled to participate on a fair and equitable basis in
the job opportunity and employment placement programs offered by Parent or any
of its Subsidiaries.
(g) For purposes of this Section 8.13, 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 Company Effective Time.
8.14. Reorganization; Pooling. (a) From and after the date hereof and
until the Company Effective Time, none of Parent, the Company, ▇▇▇▇▇▇▇▇▇ or any
of their respective Subsidiaries shall knowingly (i) take any action, or fail to
take any action, as a result of which the ▇▇▇▇▇▇▇▇▇ Merger or the Company Merger
would 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); 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
efforts to obtain the opinions of counsel referred to in Sections 9.2(b) and
9.3(b).
(b) From and after the date hereof and until the Company Effective Time,
none of the Company, ▇▇▇▇▇▇▇▇▇ or any of their respective Subsidiaries shall, to
the extent necessary, knowingly take any action, or fail to take any action,
that would prevent the treatment of the ▇▇▇▇▇▇▇▇▇ Merger or the Company Merger
as a "pooling of interests" for financial accounting purposes.
(c) Following the Company 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 or the Company 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).
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(d) From and after the ▇▇▇▇▇▇▇▇▇ Effective Time and until the Company
Effective Time, Parent agrees that it will not take any actions that would cause
either (i) ▇▇▇▇▇▇▇▇▇ not to be a wholly owned Subsidiary of Parent or (ii)
Merger Grandsub not to be a wholly owned Subsidiary of ▇▇▇▇▇▇▇▇▇.
8.15. Certain Tax Agreements. At or before the Closing, ▇▇▇▇▇▇▇▇▇ will (i)
provide to Parent a duly executed statement described in U.S. Treasury
regulation section 1.897-2(h)(1), which is issued by ▇▇▇▇▇▇▇▇▇ and is dated not
more than 30 days before the Closing Date, certifying that the ▇▇▇▇▇▇▇▇▇ Common
Stock is not a United States real property interest and (ii) provide to the IRS
a duly executed notice described in U.S. Treasury regulation section
1.897-2(h)(2).
8.16. Obligations of Merger Sub and Merger Grandsub. Parent will take all
action necessary to cause each of Merger Sub and Merger Grandsub to perform its
obligations under this Agreement and to consummate the ▇▇▇▇▇▇▇▇▇ Merger and the
Company Merger, respectively, on the terms and conditions set forth in this
Agreement. Neither Merger Sub nor Merger Grandsub will issue any shares of its
capital stock, any securities convertible into or exchangeable for its capital
stock, or any option, warrant or other right to acquire its capital stock to any
person or entity other than Parent.
8.17. 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 conversion of shares
of Company Common Stock and ▇▇▇▇▇▇▇▇▇ Common Stock into the right to receive
Parent Common Stock in accordance with Article 4 of this Agreement, and the
consummation of the Company Merger and the ▇▇▇▇▇▇▇▇▇ Merger or any other
transaction contemplated hereby 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 deemed a "flip-over transaction or
event" or (iv) the "Stock Acquisition Date" or the "Distribution Date" (each as
defined in the Company Rights Agreement) to occur upon any such event, and so
that the "Expiration Date" (as defined in the Company Rights Agreement) of the
Company Rights will occur 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.
8.18. Mutuality of Mergers. Each of Parent, Merger Sub and ▇▇▇▇▇▇▇▇▇ agrees
that it shall not effect the ▇▇▇▇▇▇▇▇▇ Merger until all conditions precedent to
the obligations of Parent, Merger Grandsub and the Company to effect the Company
Merger have been satisfied or waived, other than the condition to the Company
Merger set forth in Section 9.2(d) hereof.
ARTICLE 9
9. Conditions.
9.1. Conditions to Each Party's Obligation to Effect the Mergers. The
respective obligation of each party to effect the Mergers shall be subject to
the fulfillment at or prior to the Closing Date of the following conditions:
(a) (i) This Agreement, the Company Merger and the transactions
contemplated hereby shall have been approved by the affirmative vote of holders
of a majority of the issued and outstanding shares of Company Common Stock
entitled to vote thereon.
(ii) This Agreement, the ▇▇▇▇▇▇▇▇▇ Merger and the transactions
contemplated hereby shall have been approved by the affirmative vote of the
holders of at least two-thirds of the issued and outstanding shares of ▇▇▇▇▇▇▇▇▇
Common Stock entitled to vote thereon.
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(iii) The issuance of the shares of Parent Common Stock pursuant to the
Mergers 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 Mergers under
the HSR Act shall have expired or been terminated.
(c) None of the parties hereto shall be subject to any decree, order or
injunction of a court of competent jurisdiction which prohibits the consummation
of the transactions contemplated by this Agreement; provided, however, that
prior to invoking this condition each party agrees to comply with Section 8.4,
and with respect to other matters, to use its commercially reasonable 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 either of the Mergers.
(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 Mergers
shall have been authorized for listing on the NYSE, subject to official notice
of issuance.
9.2. Conditions to Obligation of the Company to Effect the Company Merger.
The obligation of the Company to effect the Company 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, Merger Sub
and Merger Grandsub 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 President or a Vice President of Parent, dated the
Closing Date, certifying to such effect.
(b) The Company shall have received the opinion of Fried, Frank, Harris,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel to the Company, in form and substance
reasonably satisfactory to the Company, dated the Closing Date, to the effect
that the Company Merger will be treated for federal income tax purposes as a
reorganization within the meaning of section 368(a) of the Code. In rendering
such opinion, special counsel to the Company shall be entitled to rely upon
representations of officers of the Company, ▇▇▇▇▇▇▇▇▇ and Parent and
stockholders of the Company substantially in the form of Exhibits B, C and D
hereto and as to such other matters as such counsel may reasonably request.
(c) This Agreement, the Company Merger and the transactions contemplated
hereby shall have been approved by the holders of a majority of the outstanding
shares of Company Common Stock voting on such matter, excluding for these
purposes shares of Company Common Stock owned by ▇▇▇▇▇▇▇▇▇.
(d) The ▇▇▇▇▇▇▇▇▇ Merger shall have been consummated.
9.3. Conditions to Obligation of ▇▇▇▇▇▇▇▇▇ to Effect the ▇▇▇▇▇▇▇▇▇
Merger. The obligation of ▇▇▇▇▇▇▇▇▇ 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, Merger Sub
and Merger Grandsub 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 ▇▇▇▇▇▇▇▇▇ shall have
received a certificate of the President or a Vice President of Parent, dated the
Closing Date, certifying to such effect.
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(b) ▇▇▇▇▇▇▇▇▇ shall have received the opinion of ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇,
L.L.C., special counsel to ▇▇▇▇▇▇▇▇▇, in form and substance reasonably
satisfactory to ▇▇▇▇▇▇▇▇▇, dated the Closing Date, to the effect that the
▇▇▇▇▇▇▇▇▇ Merger will be treated for federal income tax purposes as a
reorganization within the meaning of section 368(a) of the Code. In rendering
such opinion, special counsel to ▇▇▇▇▇▇▇▇▇ shall be entitled to rely upon
representations of officers of the Company, ▇▇▇▇▇▇▇▇▇ and Parent and
stockholders of ▇▇▇▇▇▇▇▇▇ substantially in the form of Exhibits B, C and D
hereto and as to such other matters as such counsel may reasonably request,
(c) All conditions to the Company Merger other than the condition set
forth in Section 9.2(d) hereto shall have been satisfied or waived.
9.4. Conditions to Obligation of Parent, Merger Sub and Merger Grandsub to
Effect the Mergers. The obligations of Parent and Merger Sub to effect the
▇▇▇▇▇▇▇▇▇ Merger and the obligations of Parent and Merger Grandsub to effect the
Company 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 President and the Chief Financial Officer of the Company,
dated the Closing Date, certifying to such effect.
(b) ▇▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇▇
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 President or a Vice President of ▇▇▇▇▇▇▇▇▇, dated the Closing
Date, certifying to such effect.
(c) No decree, order or injunction of a court of competent jurisdiction,
and no order of any governmental authority and no other legal restraint or
prohibition in any such case arising under any Antitrust Law (as defined in
Section 10.6(d)) ("Injunction") shall be in effect (i) imposing any limitation
upon the ability of Parent or any of its Subsidiaries effectively to control the
business or operations of the Company, ▇▇▇▇▇▇▇▇▇ or any of their respective
Subsidiaries or (ii) prohibiting or imposing any limitation upon Parent's or any
of its Subsidiaries' ownership or operation of all or any portion of the
business or assets or properties of Parent, the Company or ▇▇▇▇▇▇▇▇▇ or any of
their respective Subsidiaries or compelling Parent, the Company or ▇▇▇▇▇▇▇▇▇ or
any of their respective Subsidiaries to divest or hold separate all or any
portion of the business or assets or properties of Parent, the Company or
▇▇▇▇▇▇▇▇▇ or any of their respective Subsidiaries, or imposing any other
limitation upon any of them in the conduct of their businesses, which in the
case of (i) or (ii) would have a material adverse effect on the U.S. oilfield
production chemicals business of the Company or Parent (including any
Subsidiaries thereof), and no suit or proceeding by a governmental authority
seeking such an Injunction or an Injunction preventing or making illegal the
consummation of any of the Mergers shall be pending; provided, however, prior to
invoking this condition, Parent agrees to comply with Section 8.4.
(d) At the ▇▇▇▇▇▇▇▇▇ Effective Time, the aggregate number of shares of
▇▇▇▇▇▇▇▇▇ Common Stock held by Dissenting Stockholders shall not exceed 10% of
the total number of issued and outstanding shares of ▇▇▇▇▇▇▇▇▇ Common Stock.
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ARTICLE 10
10. Termination.
10.1. Termination by Mutual Consent. This Agreement may be terminated at
any time prior to the Company Effective Time, before or after the approval of
this Agreement by the stockholders of the Company, ▇▇▇▇▇▇▇▇▇ or, if applicable,
Parent by the mutual written consent of the Company, ▇▇▇▇▇▇▇▇▇ and Parent.
10.2. Termination by Parent, ▇▇▇▇▇▇▇▇▇ or the Company. This Agreement may
be terminated by action of the Board of Directors of Parent, of ▇▇▇▇▇▇▇▇▇ or of
the Company if:
(a) the Mergers shall not have been consummated by September 5, 1997;
provided, however, 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
Mergers to occur on or before such date; provided, further, if approval by
Parent's stockholders of the issuance of Parent Common Stock pursuant to the
Mergers is required by the rules of the NYSE and such approval has not yet been
obtained, that such date may be extended from time to time by the Company by
written notice to Parent and ▇▇▇▇▇▇▇▇▇ for up to an additional 120 days in the
aggregate, but in no event to a date earlier than the earliest date on which the
Parent may obtain such approval under SEC regulations, NYSE rules and the DGCL;
or
(b) the approval of the Company's stockholders required by Section 9.1(a)
shall not have been obtained at a meeting duly convened therefor or at any
adjournment thereof; or
(c) the approval of ▇▇▇▇▇▇▇▇▇'▇ stockholders required by Section 9.1(a)
shall not have been obtained at a meeting duly convened therefor or at any
adjournment thereof; or
(d) the approval of Parent's stockholders if required by Section 9.1(a)
shall not have been obtained at a meeting duly convened therefor or at any
adjournment thereof; or
(e) 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
transactions contemplated by this Agreement 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 (e) shall
have complied with Section 8.4 and with respect to other matters shall have used
its commercially reasonable efforts to remove such injunction, order or decree.
10.3. Termination by the Company. This Agreement may be terminated at any
time prior to the ▇▇▇▇▇▇▇▇▇ Effective Time, before or after the adoption and
approval by the stockholders of the Company referred to in Section 9.1(a)(i), by
action of the Board of Directors of the Company after consultation with its
legal advisors and ▇▇▇▇▇▇▇▇▇, if:
(a) the Board of Directors of the Company determines that proceeding with
the transactions contemplated hereby would be inconsistent with its fiduciary
obligations by reason of a Company Acquisition Proposal; provided that the
Company may not effect such termination pursuant to this Section 10.3(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
10.3(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 10.3(a) shall
not be effective until the Company has made the payment required by Section
10.6(a)(i); or
(b) (i) there has been a breach by Parent, Merger Sub or Merger Grandsub
of any representation, warranty, covenant or agreement set forth in this
Agreement or if any representation or warranty of Parent, Merger Sub or Merger
Grandsub shall have become untrue, in either case such that the conditions set
forth in Section 9.2(a) would not be satisfied and (ii) such breach is not
curable, or, if curable, is not cured within
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30 days after written notice of such breach is given to Parent by the Company or
▇▇▇▇▇▇▇▇▇; provided, however, that the right to terminate this Agreement
pursuant to this Section 10.3(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 9.4(a) shall not be satisfied; or
(c) the approval of the Company's stockholders required by Section 9.2(c)
shall not have been obtained at a meeting duly convened therefor or at any
adjournment thereof.
10.4. Termination by ▇▇▇▇▇▇▇▇▇. This Agreement may be terminated at any
time prior to the ▇▇▇▇▇▇▇▇▇ Effective Time, before or after the adoption and
approval by the stockholders of ▇▇▇▇▇▇▇▇▇ referred to in Section 9.1(a)(ii), by
action of the Board of Directors of ▇▇▇▇▇▇▇▇▇ after consultation with its legal
advisors and the Company, if:
(a) the Board of Directors of ▇▇▇▇▇▇▇▇▇ determines that proceeding with
the transactions contemplated hereby would be inconsistent with its fiduciary
obligations by reason of a ▇▇▇▇▇▇▇▇▇ Acquisition Proposal; provided that
▇▇▇▇▇▇▇▇▇ may not effect such termination pursuant to this Section 10.4(a)
unless and until (i) Parent receives at least one week's prior written notice
from ▇▇▇▇▇▇▇▇▇ of its intention to effect such termination pursuant to this
Section 10.4(a); (ii) during such week, ▇▇▇▇▇▇▇▇▇ 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 10.4(a) shall
not be effective until ▇▇▇▇▇▇▇▇▇ has made the payment required by Section
10.6(b)(i); or
(b) (i) there has been a breach by Parent, Merger Sub or Merger Grandsub
of any representation, warranty, covenant or agreement set forth in this
Agreement or if any representation or warranty of Parent, Merger Sub or Merger
Grandsub shall have become untrue, in either case such that the conditions set
forth in Section 9.3(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 to Parent by the Company or ▇▇▇▇▇▇▇▇▇; provided, however,
that the right to terminate this Agreement pursuant to this Section 10.4(b)
shall not be available to ▇▇▇▇▇▇▇▇▇ 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 9.4(b) shall not be
satisfied.
10.5. Termination by Parent. This Agreement may be terminated at any time
prior to the ▇▇▇▇▇▇▇▇▇ Effective Time, before or after any approval by the
stockholders of Parent referred to in Section 9.1(a)(iii), by action of the
Board of Directors of Parent, if:
(a) (i) there has been a breach by ▇▇▇▇▇▇▇▇▇ of any representation,
warranty, covenant or agreement set forth in this Agreement or if any
representation or warranty of ▇▇▇▇▇▇▇▇▇ shall have become untrue, in either case
such that the conditions set forth in Section 9.4(b) 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 ▇▇▇▇▇▇▇▇▇; or
(b) (i) there has been a breach by the Company of any representation or
warranty contained 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 9.4(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; or
(c) the Board of Directors of ▇▇▇▇▇▇▇▇▇ shall have withdrawn or materially
modified, in a manner adverse to Parent, its approval or recommendation of the
▇▇▇▇▇▇▇▇▇ Merger or recommended a ▇▇▇▇▇▇▇▇▇ Acquisition Proposal, or resolved to
do so; or
(d) 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 Company Merger or recommended a Company Acquisition
Proposal, or resolved to do so;
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provided, however, that the right to terminate this Agreement pursuant to
Section 10.5(a) or (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 either Section
9.2(a) or 9.3(a) shall not be satisfied.
10.6. Effect of Termination. (a) If this Agreement is terminated
(i) by the Company pursuant to Section 10.3(a); or
(ii) after the public announcement of a Company Acquisition Proposal, by
▇▇▇▇▇▇▇▇▇, the Company or Parent pursuant to Section 10.2(b) (unless the
condition Section 9.2(c) shall have been satisfied)or by the Company pursuant to
Section 10.3(c); or
(iii) after receipt by the Company's Board of Directors or the public
announcement of a Company Acquisition Proposal, by Parent pursuant to Section
10.5(d);
then the Company shall pay Parent a fee of $27 million in cash by wire transfer
to an account designated by Parent; provided, however, that the fee payable
under this Section 10.6(a) shall be reduced by the amount of any Transaction
Expenses paid to Parent pursuant to Section 10.6(c).
(b) If this Agreement is terminated
(i) by ▇▇▇▇▇▇▇▇▇ pursuant to Section 10.4(a); or
(ii) by ▇▇▇▇▇▇▇▇▇, the Company or Parent pursuant to Section 10.2(c)
(unless the stockholder vote required by Section 9.1(a)(i) shall have been taken
and the condition specified in Section 9.2(c) shall not have been satisfied
after the public announcement of a Company Acquisition Proposal); or
(iii) after receipt by the ▇▇▇▇▇▇▇▇▇ Board of Directors or the public
announcement of a Company Acquisition Proposal, by ▇▇▇▇▇▇▇▇▇, the Company or
Parent pursuant to Section 10.2(b), if the condition specified in Section 9.2(c)
shall have been satisfied; or
(iv) after receipt by ▇▇▇▇▇▇▇▇▇'▇ Board of Directors or the public
announcement of a ▇▇▇▇▇▇▇▇▇ Acquisition Proposal or a Company Acquisition
Proposal, by Parent pursuant to Section 10.5(c);
then ▇▇▇▇▇▇▇▇▇ shall (x) pay Parent a fee of $20 million in cash by wire
transfer to an account designated by Parent; provided, however, that the fee
payable under this Section 10.6(b), shall be reduced by the amount of any
Transaction Expenses paid to Parent pursuant to Section 10.6(c) and (y)
reimburse the Company for all of its Transaction Expenses (as defined in clause
(c)(iv) below) upon receipt of reasonable documentation therefor. The amount of
any fees payable by ▇▇▇▇▇▇▇▇▇ to Parent pursuant to this Section 10.6(b) shall
be further reduced by the amount of any fees payable by the Company to Parent
pursuant to Section 10.6(a).
(c) (i) If this Agreement is terminated pursuant to Section 10.2(d) by
reason of the failure of Parent's stockholders to approve the issuance of the
shares of Parent Common Stock pursuant to the Mergers contemplated hereby (other
than in a circumstance requiring the payment of the amount provided for in
Section 10.6(d)), then Parent shall, upon receipt of reasonable documentation
therefor, reimburse each of the Company and ▇▇▇▇▇▇▇▇▇ for all of their
respective Transaction Expenses.
(ii) If this Agreement is terminated (x) pursuant to Section 10.2(b) by
reason of the failure of the Company's stockholders to approve and adopt this
Agreement and the transactions contemplated hereby or (y) pursuant to Section
10.3(c), by reason of the failure of the holders of a majority of the
outstanding shares of Company Common Stock voting on such matter (excluding for
these purposes Company Common Stock owned by ▇▇▇▇▇▇▇▇▇) to approve this
Agreement and the transactions contemplated hereby, then the Company shall, upon
receipt of reasonable documentation therefor, reimburse each of Parent and
▇▇▇▇▇▇▇▇▇ for all of their respective Transaction Expenses, except that if the
stockholder vote required by Section 9.2(c) shall have been obtained, but the
stockholder vote required by Section 9.1(a)(i) shall not have been obtained,
then ▇▇▇▇▇▇▇▇▇, in lieu of the Company, shall reimburse each of Parent and the
Company for all of their respective Transaction Expenses.
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(iii) If this Agreement is terminated pursuant to Section 10.2(c) by
reason of the failure of the ▇▇▇▇▇▇▇▇▇ stockholders to approve and adopt this
Agreement and the transactions contemplated hereby, then ▇▇▇▇▇▇▇▇▇ shall, upon
receipt of reasonable documentation therefor, reimburse each of Parent and the
Company for all of its Transaction Expenses.
(iv) "Transaction Expenses" shall mean all reasonable out-of-pocket
expenses and fees (including, without limitation, all fees and expenses of
counsel, financial advisors, accountants, environmental and other experts and
consultants and all printing and advertising expenses) actually incurred or
accrued by a party or incurred on such party's behalf in connection with this
Agreement and the transactions contemplated hereby (including, without
limitation, in connection with the negotiation, preparation, execution,
performance and termination of this Agreement, the structuring of the Mergers,
any agreements related hereto or thereto and any filings to be made in
connection therewith) to the extent incurred or accrued prior to the termination
of this Agreement.
(d) If this Agreement is terminated (A) by Parent, the Company or
▇▇▇▇▇▇▇▇▇ pursuant to Section 10.2(e) as a result of an Injunction or other
action relating to any antitrust, trade, or regulatory laws or regulations of
any governmental, regulatory or administrative authority, agency or commission
(U.S. or foreign) ("Antitrust Laws") or (B) by Parent, the Company or ▇▇▇▇▇▇▇▇▇
pursuant to (i) Section 10.2(a) at a time when the nonconsummation of the
Mergers is a result of the failure to satisfy the conditions set forth in
Sections 9.1(b) or (c) or Section 9.4(c) by reason, in any such case, of any
Antitrust Law or (ii) Section 10.2(d) at a time when the conditions set forth in
Sections 9.1(b) or (c) or Section 9.4(c) shall not have been satisfied by
reason, in any such case, of any Antitrust Law, and neither the Company nor
▇▇▇▇▇▇▇▇▇ shall have failed to perform or observe, in any material respect, any
of its obligations under this Agreement (including, without limitation, Section
8.4), then Parent shall, on the day of such termination, pay to the Company a
fee of $30 million in cash by wire transfer of immediately available funds to an
account designated by the Company.
(e) In the event of termination of this Agreement and the abandonment of
the Mergers pursuant to this Article 10, all obligations of the parties hereto
shall terminate, except the obligations of the parties pursuant to this Section
10.6 and Section 8.11 and except for the provisions of Sections 11.3, 11.4,
11.6, 11.8, 11.9, 11.12, 11.13 and 11.14. Moreover, in the event of termination
of this Agreement pursuant to Section 10.2(a), 10.2(e), 10.3, 10.4 or 10.5,
nothing herein shall prejudice the ability of a non-breaching party from seeking
damages from any other party for any willful breach of this Agreement,
including, without limitation, attorneys' fees and the right to pursue any
remedy at law or in equity; provided, that (i) in the event Parent receives any
fee pursuant to Section 10.6(a) or (b), as the case may be, it shall not assert
or pursue in any manner, directly or indirectly, any claim or cause of action
against either of the Company or ▇▇▇▇▇▇▇▇▇ or any of its officers or directors
based in whole or in part upon a breach of this Agreement by them or their
receipt, consideration, negotiation, recommendation, or approval of a ▇▇▇▇▇▇▇▇▇
Acquisition Proposal or a Company Acquisition Proposal or the exercise (x) by
the Company of its right of termination under Section 10.3(a) or (y) by
▇▇▇▇▇▇▇▇▇ of its right of termination under Section 10.4(a); and (ii) in the
event the Company receives the payment pursuant to Section 10.6(d), such payment
shall not prejudice the ability of the Company to seek damages against Parent
for any breach of the provisions of Section 8.4. Any payment received by the
Company pursuant to Section 10.6(d) shall be credited against any such damages
awarded to the Company.
10.7. Extension; Waiver. At any time prior to the Company 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.
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ARTICLE 11
11. General Provisions.
11.1. 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 Mergers;
provided, however, that the agreements contained in Article 4 and in Sections
8.10, 8.11, 8.12, 8.13, 8.14, and this Article 11 and the agreements delivered
pursuant to this Agreement shall survive the Mergers. The Confidentiality
Agreements shall survive any termination of this Agreement, and the provisions
of such Confidentiality Agreements shall apply to all information and material
delivered by any party hereunder.
11.2. 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, Merger Sub, or Merger Grandsub:
▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇, III
▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr., Esq.
▇▇▇▇▇ & ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to the Company:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Petrolite Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
41
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(c) if to ▇▇▇▇▇▇▇▇▇:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.C.
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇ LLP
One Metropolitan Square
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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.
11.3. 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
Article 4 and Sections 8.12 and 8.13 (a) through (e) and 10.6(e) 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.
11.4. Entire Agreement. This Agreement, the exhibits to this Agreement, the
Company Disclosure Letter, the ▇▇▇▇▇▇▇▇▇ Disclosure Letter, the confidentiality
agreement dated January 9, 1997, between Parent and the Company, the
confidentiality agreement, dated July 19, 1996, between ▇▇▇▇▇▇▇▇▇ and Parent and
the Confidentiality Agreement dated February 23, 1997 among Parent, the Company
and ▇▇▇▇▇▇▇▇▇ (collectively, the "Confidentiality Agreements"), 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 modification of any provision of this Agreement shall
be binding upon any party hereto unless made in writing and signed by all
parties hereto. During the term of this Agreement, no party hereto shall
terminate any of the foregoing Confidentiality Agreements.
11.5. 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 Mergers 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.
11.6. Governing Law. Except to the extent that Missouri law is mandatorily
applicable to the ▇▇▇▇▇▇▇▇▇ Merger, the obligations of the members of
▇▇▇▇▇▇▇▇▇'▇ Board of Directors and the rights of the stockholders of ▇▇▇▇▇▇▇▇▇,
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
42
49
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. ▇▇▇▇▇▇▇▇▇
hereby agrees to service of process in any litigation arising out of or relating
to this Agreement and the transactions contemplated hereby by certified mail,
return receipt requested, postage prepaid to ▇▇▇▇▇▇▇▇▇ (with a copy as specified
in Section 11.2) at its address for notice specified in Section 11.2.
11.7. 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.
11.8. 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.
11.9. Interpretation. In this Agreement, 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. In this agreement, 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 and with respect to
the Company, its Director of Safety, Health and Environmental Affairs.
11.10. 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.
11.11. Incorporation of Exhibits. The Company Disclosure Letter, the
▇▇▇▇▇▇▇▇▇ 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.
11.12. 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 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 broad as is enforceable.
11.13. 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.
11.14. Obligation of Parent. Whenever this Agreement requires Merger Sub or
Merger Grandsub (or their respective successors) to take any action, such
requirement shall be deemed to include an undertaking on the part of Parent to
cause Merger Sub or Merger Grandsub, as the case may be, to take such action and
a guarantee of the performance thereof.
11.15. 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
43
50
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: Senior Vice President
and Chief Financial Officer
▇▇▇▇▇ ▇▇▇▇▇▇ MISSOURI, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇ ▇▇▇▇▇▇ DELAWARE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
PETROLITE CORPORATION
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Chairman, President and
Chief Executive Officer
WM. ▇. ▇▇▇▇▇▇▇▇▇ & COMPANY
By: /s/ V. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: V. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Vice President
44
51
EXHIBIT A
CUSTODIAL AGREEMENT
This Custodial Agreement ("Agreement") is dated as of , 1997 by
and between Wm. ▇. ▇▇▇▇▇▇▇▇▇ & Company, a Missouri corporation ("▇▇▇▇▇▇▇▇▇"),
▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated, a Delaware corporation ("Parent"), and Boatmen's
Trust Company (and any successor thereto, "Continuity Custodian"). The parties
enter into this Agreement on behalf of certain third-party beneficiaries
referred to in the Agreement and Plan of Merger dated as of February 25, 1997
("Merger Agreement") involving ▇▇▇▇▇▇▇▇▇ and Parent, as holders of ▇▇▇▇▇▇▇▇▇
Common Stock.
RECITALS
▇. ▇▇▇▇▇▇▇▇▇ and Parent are parties to the Merger Agreement with respect to
the ▇▇▇▇▇▇▇▇▇ Merger which is intended to qualify as a reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended
("Code").
B. As part of the ▇▇▇▇▇▇▇▇▇ Merger, Parent will issue to each holder of
▇▇▇▇▇▇▇▇▇ Common Stock the number of shares of Parent Common Stock to which such
holder is entitled under the Merger Agreement.
C. In order to facilitate qualification of the ▇▇▇▇▇▇▇▇▇ Merger as a
reorganization within the meaning of Section 368(a) of the Code, certificates
representing the Continuity Fraction of the shares of Parent Common Stock issued
to each holder of ▇▇▇▇▇▇▇▇▇ Common Stock shall be delivered by Parent on behalf
of such holder to the Continuity Custodian for deposit in a custody account
("Continuity Account").
D. All capitalized terms used herein and not otherwise defined herein shall
have the respective meaning ascribed thereto in the Merger Agreement.
Now, therefore, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I
CONTINUITY ACCOUNT
SECTION 1.01. Appointment. ▇▇▇▇▇▇▇▇▇ hereby appoints the Continuity
Custodian to act for the benefit of the holders of ▇▇▇▇▇▇▇▇▇ Common Stock in
accordance with the terms of this Agreement.
SECTION 1.02. Deposit of Parent Common Stock. Promptly upon surrender of
any ▇▇▇▇▇▇▇▇▇ Certificate for cancellation to the Exchange Agent together with a
Letter of Transmittal with respect thereto, Parent, on behalf of the holder of
record of such ▇▇▇▇▇▇▇▇▇ Certificate, shall deliver to the Continuity Custodian
for deposit a certificate standing in the name of such holder representing the
Continuity Fraction of the shares of Parent Common Stock issued to such holder
(less any fractional share) ("Continuity Shares"). Such Continuity Shares shall
remain titled on Parent's books in the name of such holder (individually,
"Continuity Shareholder" and together with other such holders, "Continuity
Shareholders"), and such holder shall have all other rights of a shareholder,
including the right to vote the Continuity Shares, during the term of this
Agreement.
SECTION 1.03. Continuity Custodian's Duties and Authority. Subject to the
terms and conditions set forth on Annex I attached hereto, which is incorporated
herein by reference, the Continuity Custodian shall perform the following duties
and shall have the following authority:
(a) The Continuity Custodian shall hold and safely keep all Continuity
Shares in the Continuity Account until the fifth anniversary of the Closing
Date ("Termination Date"), unless earlier delivered to the Continuity
Shareholders in accordance with Section 1.03(b) of this Agreement, and
shall take reasonable steps to provide for the physical safety of such
Continuity Shares from theft, disappearance or destruction.
52
(b) If, at any time, or from time to time, before the Termination
Date, the Continuity Custodian receives written notice from ▇▇▇▇▇▇▇▇▇▇ &
Chasnoff, L.L.C. (or any successor counsel appointed by a majority in
interest of the Continuity Shareholders) that such counsel is of the
opinion that a sale or other transfer of all or a portion of the Continuity
Shares by a Continuity Shareholder, which sale or transfer is described in
reasonable detail in a written notice provided to such counsel, would not
violate the "continuity of shareholder interest" requirements then imposed
under Section 368 of the Code and the U.S. Treasury regulations thereunder
with respect to the ▇▇▇▇▇▇▇▇▇ Merger, the Continuity Custodian shall
deliver certificates representing any such Continuity Shares to the
appropriate Continuity Shareholder or in accordance with written
instructions from such shareholder.
(c) As soon as practicable following the Termination Date (and in any
event within 90 days thereafter), the Continuity Custodian shall deliver
certificates representing any Continuity Shares remaining in the Continuity
Account to the appropriate Continuity Shareholders or in accordance with
written instructions from them.
SECTION 1.04. Parent's duties. Parent shall perform the following duties:
(a) Parent shall cause all certificates representing Continuity Shares
to be endorsed with the following legend during the term of this Agreement:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND
TRANSFERABLE ONLY IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF A
CUSTODIAL AGREEMENT DATED AS OF , 1997; PROVIDED, THAT THIS
LEGEND SHALL BE VOID AND OF NO FURTHER EFFECT NOT LATER THAN THE
FIFTH ANNIVERSARY OF SUCH DATE. A COPY OF THE AGREEMENT IS ON FILE AT
THE PRINCIPAL OFFICE OF THE CORPORATION.
(b) Parent shall not issue any new certificate representing any
Continuity Share in lieu of any such certificate purportedly lost, stolen,
destroyed or mutilated without the written consent of the Continuity
Custodian.
(c) Parent shall direct all dividend payments and proxy and other
shareholder materials to each Continuity Shareholder at the address
indicated in such Continuity Shareholder's Letter of Transmittal or as
subsequently instructed by such Continuity Shareholder; provided, however,
that dividends paid with respect to Continuity Shares in the form of
additional shares of Parent Common Stock shall be delivered to the
Continuity Custodian and held in the Continuity Account.
SECTION 1.05. Fees and Expenses.
(a) The Continuity Custodian shall be entitled to an annual fee for
its services under this Agreement at the rate of $5,000 and to
reimbursement for all reasonable expenses, including reasonable attorney's
fees.
(b) ▇▇▇▇▇▇▇▇▇▇ & Chasnoff, L.L.C. (or any successor counsel appointed
by the Continuity Custodian) shall be entitled to reasonable attorney's
fees for services rendered prior to the Termination Date or, if earlier,
the date that no Continuity Shares remain in the Continuity Account for any
services provided by it in accordance with Section 1.03(b) of this
Agreement; provided, however, that ▇▇▇▇▇▇▇▇▇ Surviving Corporation's
obligation to pay for such services shall not exceed $25,000 in any
12-month period.
(c) All fees and expenses payable pursuant to clauses (a) and (b) of
this Section 1.05 shall be paid by ▇▇▇▇▇▇▇▇▇ Surviving Corporation out of
its own funds and no funds will be supplied, directly or indirectly, by
Parent for payment of such fees and expenses and Parent will not, directly
or indirectly, reimburse ▇▇▇▇▇▇▇▇▇ Surviving Corporation for payment of
such fees and expenses.
SECTION 1.06. Resignation. The Continuity Custodian may resign from such
position upon notice of such resignation to the Continuity Shareholders and
written acceptance of such position under the terms of
2
53
this Agreement by Mercantile Trust Company N.A., (or any successor thereto) or
if it is unable or unwilling to serve, Commerce Bank, N.A., (or any successor
thereto) or if it is unable or unwilling to serve, United Missouri Bank (or any
successor thereto).
SECTION 1.07. Assignment. Except in accordance with Section 1.03(b) of this
Agreement or upon death, no Continuity Shareholder shall have any power to sell,
assign, transfer, encumber or in any other manner dispose of any interest in any
of the Continuity Shares or the Continuity Account before the Termination Date.
ARTICLE II
MISCELLANEOUS
SECTION 2.01. Notices. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be sufficiently given if (i) delivered personally, (ii) mailed by
certified or registered mail, return receipt requested; or (iii) transmitted by
facsimile. The address for notice to each party is as shown on the signature
page of this Agreement, or as subsequently modified by written notice. The
address for notice to each Continuity Shareholder shall be as indicated in such
Continuity Shareholder's Letter of Transmittal, or as subsequently modified by
written notice.
SECTION 2.02. Amendments and Waivers. No amendment of this Agreement shall
be valid unless (i) written; (ii) agreed to by Continuity Shareholders
representing a majority of the Continuity Shares; and (iii) consented to by
Parent and the Continuity Custodian, which consent shall not be unreasonably
withheld if such amendment would not have an adverse effect on Parent or the
Continuity Custodian. No waiver by a party of any covenant shall be deemed to
extend to any prior or subsequent covenant.
SECTION 2.03. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the permitted successors and assigns of the parties.
SECTION 2.04. Governing Law. This Agreement shall be governed by and
construed in accordance with Missouri law.
SECTION 2.05. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be deemed an original.
SECTION 2.06. Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes any prior oral or written understandings, agreements or
representations by or between the parties with respect thereto.
SECTION 2.07. Headings. The section headings of this Agreement are inserted
for convenience only and shall not affect the meaning or interpretation of this
Agreement.
SECTION 2.08. Severability. Each provision of this Agreement is distinct
and severable and if any such provision shall be held to be invalid, illegal or
against public policy, the validity or the legality of the remainder of this
Agreement shall not be affected thereby.
SECTION 2.09. Tax Reporting. Unless otherwise required by U.S. Treasury
regulations to be issued in the future, the parties to this Agreement will treat
the Continuity Shares and any other shares of Parent Common Stock deposited with
the Continuity Custodian hereunder for purposes of Section 468B(g) of the Code
and for all other income tax purposes as being owned by the Continuity
Shareholders during the period such shares are held by the Continuity Custodian
hereunder. The parties to this Agreement will make any elections or filings
required to characterize such shares in a manner consistent with the preceding
sentence.
3
54
The parties have executed this Agreement as of the date first above
written.
▇▇▇▇▇ ▇▇▇▇▇▇ INCORPORATED
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇, III
By:
----------------------------------
Title:
---------------------------------
WM. ▇. ▇▇▇▇▇▇▇▇▇ & COMPANY
▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇.▇.▇.
▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By:
----------------------------------
Title:
---------------------------------
BOATMEN'S TRUST COMPANY
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Corporate Trust Division
By:
----------------------------------
Title:
---------------------------------
4
55
ANNEX I
GENERAL TERMS AND CONDITIONS
The following provisions shall be part of the Agreement to which this
exhibit is attached:
1) The duties of Boatmen's Trust Company or any successor thereto,
(the "Custodian") shall be as expressed under the Agreement and the
Custodian shall have no implied duties. The permissive right or power to
take any action shall not be construed as a duty to take action under any
circumstances and the Custodian shall not be liable except in the event of
its gross negligence or willful misconduct.
2) The Custodian shall not be obligated to risk its own funds in the
administration of the account and shall have a lien against any funds,
securities or other property in its possession or control (the "Account")
for its fees, expenses and advancements. The Custodian need not take any
action under the Agreement which may involve it in any expense or liability
until indemnified to its satisfaction for any expense or liability it
reasonably believes it may incur.
3) Any recitals contained in the Agreement shall be deemed to be those
of the parties thereto and not the Custodian.
4) Unless specifically required by the Agreement, the Custodian shall
not be required to give any bond or surety or report to any Court despite
any statute, custom or rule to the contrary.
5) The Custodian shall be protected in acting upon any notice,
request, consent, certificate, order, affidavit, letter, telegram, or other
paper or document believed by it to be genuine and correct and to have been
signed or sent by the proper person and persons.
6) The Custodian may execute any of the duties under the Agreement by
or through agents or receivers.
7) The Custodian shall not be required to take notice or be deemed to
have notice of any default or other fact or event under the Agreement
unless the Custodian shall be specifically notified in writing of such
default, fact or event.
8) The Custodian may engage legal counsel, who may be counsel for any
party to the Agreement, and shall not be liable for any act or omission
taken or suffered pursuant to the opinion of such counsel. The fees and
expenses of such counsel shall be deemed to be a proper expense for which
the Custodian will have a lien against the Account.
9) Unless specifically required by the terms of the Agreement, the
Custodian need not take notice of or enforce any other document or
relationship, including, without limiting the generality of the foregoing,
any contract, settlement, arrangement, plan, assignment, pledge, release,
decree or the like, but its duties shall be solely as set out in the
Agreement.
10) Acquiror hereby agrees to indemnify and save harmless the
Custodian from and against any loss, liability or expense reasonably
incurred, without negligence or bad faith on its part, arising out of or in
connection with the Agreement, including the expense of defending itself
against any claim or liability in the premises. This indemnity agreement
shall survive the termination of the Agreement.
56
EXHIBIT B
COMPANY
OFFICER'S CERTIFICATE
The undersigned officer of Petrolite Corporation (the "Company") hereby
certifies that as of (i) the date hereof, (ii) the ▇▇▇▇▇▇▇▇▇ Effective Time and
(iii) the Company Effective Time:
1. Unless otherwise specified, capitalized terms shall have the
meanings assigned to them in the Agreement and Plan of Merger (the "Merger
Agreement") dated as of February 25, 1997 among the Company, ▇▇▇▇▇ ▇▇▇▇▇▇
Incorporated ("Parent"), ▇▇▇▇▇ ▇▇▇▇▇▇ Missouri, Inc. ("Merger Sub"), ▇▇▇▇▇
▇▇▇▇▇▇ Delaware, Inc. ("Merger Grandsub"), and Wm. ▇. ▇▇▇▇▇▇▇▇▇ & Company
("▇▇▇▇▇▇▇▇▇").
2. To the best knowledge of the management of the Company, the Company
has no shareholder that owns, directly or beneficially, 5% or more of the
Company Common Stock, other than ▇▇▇▇▇▇▇▇▇ and those shareholders listed on
Schedule A hereto. To the best knowledge of the management of the Company,
there is no plan or intention on the part of shareholders of the Company to
sell, exchange, or otherwise dispose of a number of shares of Parent Common
Stock received in the Company Merger that would reduce the Company
shareholders' ownership of Parent Common Stock (excluding shares owned by
▇▇▇▇▇▇▇▇▇ and the 5% shareholders listed on Schedule A) to a number of
shares having a value, as of the date of the Company Merger, of less than
50 percent(1) of the value of all of the formerly outstanding stock of the
Company (other than stock held by ▇▇▇▇▇▇▇▇▇) as of the same date. For
purposes of this representation, shares of the Company Common Stock
exchanged for cash in lieu of fractional shares of Parent Common Stock in
the Company Merger will be treated as outstanding Company Common Stock on
the date of the Company Merger. Moreover, shares of Company Common Stock
and shares of Parent Common Stock held by the Company shareholders and
otherwise sold, redeemed, or disposed of prior or subsequent to the Company
Merger will be considered in making this representation.
3. The Company and the shareholders of the Company will pay their
respective expenses, if any, incurred in connection with the Company
Merger.
4. On the date of the Company Merger, the Company will not have
outstanding any warrants, options, convertible securities, or any other
type of right pursuant to which any person could acquire stock in the
Company that, if exercised or converted, would affect ▇▇▇▇▇▇▇▇▇'▇
acquisition or retention of control of the Company, as defined in Section
368(c).(2)
5. Less than 50% of the value of the Company's total assets are
invested in stocks and securities within the meaning of Section
368(a)(2)(F)(iii) and (iv).
6. The formula set forth in the Merger Agreement for the exchange of
Parent Common Stock for the stock of the Company is the result of
arm's-length bargaining. The fair market value of the Parent Common Stock
received by each Company shareholder in the Company Merger, plus the cash
received in lieu of a fractional share of Parent Common Stock, will be
approximately equal to the fair market value of the Company stock
surrendered in the Company Merger. Company shareholders will not receive
any consideration in exchange for the Company stock other than Parent
Common Stock and cash in lieu of fractional shares of Parent Common Stock.
7. At the time of the Company Merger, the fair market value of the
assets of the Company will exceed the sum of its liabilities and the
liabilities to which its assets are subject.
8. No Company shareholder will receive Parent Common Stock as separate
consideration for, or allocable to, any employment agreement. No
shareholder of the Company who is also an employee of ▇▇▇▇▇▇▇▇▇ or the
Company will receive compensation as separate consideration for, or
allocable to, any of his or her stock.
---------------
1 Such percentage may be reduced to such lower amount as satisfactory to special
counsel to the Company.
2 All references to "Section" are to the Internal Revenue Code of 1986, as
presently in force.
57
9. The Company is not under the jurisdiction of a court in a title 11
or similar case within the meaning of Section 368(a)(3)(A).
10. In the Company Merger, shares of Company Common Stock will be
exchanged solely for shares of Parent Common Stock. For purposes of this
representation, shares of Company stock exchanged for cash or other
property originating with Parent or a direct or indirect subsidiary of
Parent (excluding cash received in lieu of fractional shares of Parent
Stock) will be treated as Company Common Stock outstanding at the time of
the Company Merger.
11. No liabilities of the Company or its shareholders will be assumed
by Parent in the Company Merger nor will any of the Company stock acquired
in the Company Merger be subject to any liabilities.
12. There will be no dissenters' rights in connection with the Company
Merger.
PETROLITE CORPORATION
Dated: By:
------------------------------- -----------------------------
Name:
Title:
2
58
EXHIBIT C
▇▇▇▇▇▇▇▇▇
OFFICER'S CERTIFICATE
The undersigned officer of Wm. ▇. ▇▇▇▇▇▇▇▇▇ & Company ("▇▇▇▇▇▇▇▇▇") hereby
certifies that as of (i) the date hereof, (ii) the ▇▇▇▇▇▇▇▇▇ Effective Time and
(iii) the Company Effective Time:
1. Unless otherwise specified, capitalized terms shall have the
meanings assigned to them in the Agreement and Plan of Merger (the "Merger
Agreement") dated as of February 25, 1997 among ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Incorporated ("Parent"), ▇▇▇▇▇ ▇▇▇▇▇▇ Missouri, Inc. ("Merger Sub"), ▇▇▇▇▇
▇▇▇▇▇▇ Delaware, Inc. ("Merger Grandsub"), and Petrolite Corporation (the
"Company").
2. To the best knowledge of the management of ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ has
no shareholder that owns, directly or beneficially, 1% or more of the
▇▇▇▇▇▇▇▇▇ Common Stock, other than those shareholders listed on Schedule A
hereto. To the best knowledge of the management of ▇▇▇▇▇▇▇▇▇, there is no
plan or intention on the part of shareholders of ▇▇▇▇▇▇▇▇▇ to sell,
exchange, or otherwise dispose of a number of shares of Parent Common Stock
received in the ▇▇▇▇▇▇▇▇▇ Merger that would reduce the ▇▇▇▇▇▇▇▇▇
shareholders' ownership of Parent Common Stock to a number of shares having
a value, as of the date of the ▇▇▇▇▇▇▇▇▇ Merger, of less than 50 percent of
the value of all of the formerly outstanding stock of ▇▇▇▇▇▇▇▇▇ as of the
same date. For purposes of this representation, shares of ▇▇▇▇▇▇▇▇▇ Common
Stock exchanged in the ▇▇▇▇▇▇▇▇▇ Merger for cash in lieu of fractional
shares of Parent Common Stock or surrendered by Dissenting Stockholders
will be treated as outstanding ▇▇▇▇▇▇▇▇▇ stock on the date of the ▇▇▇▇▇▇▇▇▇
Merger. Moreover, shares of ▇▇▇▇▇▇▇▇▇ Stock and shares of Parent Common
Stock held by ▇▇▇▇▇▇▇▇▇ shareholders and otherwise sold, redeemed, or
disposed of prior or subsequent to the ▇▇▇▇▇▇▇▇▇ Merger will be considered
in making this representation.
3. ▇▇▇▇▇▇▇▇▇ and the shareholders of ▇▇▇▇▇▇▇▇▇ will pay their
respective expenses, if any, incurred in connection with the ▇▇▇▇▇▇▇▇▇
Merger, subject to the terms of the Custodial Agreement.
4. There is no intercorporate indebtedness existing between Parent and
▇▇▇▇▇▇▇▇▇ or between Merger Sub and ▇▇▇▇▇▇▇▇▇ that was issued, acquired, or
will be settled at a discount.
5. On the date of the ▇▇▇▇▇▇▇▇▇ Merger, ▇▇▇▇▇▇▇▇▇ will not have
outstanding any warrants, options, convertible securities, or any other
type of right pursuant to which any person could acquire stock in ▇▇▇▇▇▇▇▇▇
that, if exercised or converted, would affect Parent's acquisition or
retention of control of ▇▇▇▇▇▇▇▇▇, as defined in Section 368(c).(1)
6. At the ▇▇▇▇▇▇▇▇▇ Effective Time, ▇▇▇▇▇▇▇▇▇ will hold at least 90%
of the fair market value of its net assets and at least 70% of the fair
market value of its gross assets held immediately prior to the ▇▇▇▇▇▇▇▇▇
Merger. For purposes of this representation, there shall be included as
assets of ▇▇▇▇▇▇▇▇▇ held immediately prior to the ▇▇▇▇▇▇▇▇▇ Merger amounts
originating with ▇▇▇▇▇▇▇▇▇ that are used (i) to pay Dissenting
Stockholders, (ii) to pay ▇▇▇▇▇▇▇▇▇ shareholders who receive cash in lieu
of fractional shares of Parent Stock in the ▇▇▇▇▇▇▇▇▇ Merger, (iii) to pay
reorganization expenses, (iv) to pay creditors of ▇▇▇▇▇▇▇▇▇ (other than
amounts paid in the course of ordinary business), and (v) to make
redemptions and distributions (except for regular, normal dividends). [This
representation will be deleted if it can not be given.]
7. In the ▇▇▇▇▇▇▇▇▇ Merger, shares of ▇▇▇▇▇▇▇▇▇ Common Stock will be
exchanged solely for shares of Parent Common Stock. For purposes of this
representation, shares of ▇▇▇▇▇▇▇▇▇ stock exchanged for cash or other
property originating with Parent or a direct or indirect subsidiary of
Parent (including cash received in lieu of fractional shares of Parent
Common Stock) will be treated as ▇▇▇▇▇▇▇▇▇ stock outstanding at the time of
the ▇▇▇▇▇▇▇▇▇ Merger.
---------------
1 All references made to "Section" are to the Internal Revenue Code of 1986, as
presently in force.
59
8. The formula set forth in the Merger Agreement for the exchange of
Parent Common Stock for the stock of ▇▇▇▇▇▇▇▇▇ is the result of
arm's-length bargaining. The fair market value of the Parent Common Stock
received by each ▇▇▇▇▇▇▇▇▇ shareholder in the ▇▇▇▇▇▇▇▇▇ Merger, plus the
cash received in lieu of a fractional share of Parent Common Stock, will be
approximately equal to the fair market value of the ▇▇▇▇▇▇▇▇▇ stock
surrendered in the ▇▇▇▇▇▇▇▇▇ Merger. ▇▇▇▇▇▇▇▇▇ shareholders will not
receive any consideration in exchange for the ▇▇▇▇▇▇▇▇▇ stock other than
Parent Common Stock, cash in lieu of fractional shares of Parent Stock, and
cash or other property received by Dissenting Stockholders.
9. At the time of the ▇▇▇▇▇▇▇▇▇ Merger, the fair market value of the
assets of ▇▇▇▇▇▇▇▇▇ will exceed the sum of its liabilities and the
liabilities to which its assets are subject.
10. No ▇▇▇▇▇▇▇▇▇ shareholder will receive Parent Common Stock as
separate consideration for, or allocable to, any employment agreement. No
shareholder of ▇▇▇▇▇▇▇▇▇ who is an employee of ▇▇▇▇▇▇▇▇▇ or the Company
will receive compensation as separate consideration for, or allocable to,
any of his or her stock.
11. ▇▇▇▇▇▇▇▇▇ is not under the jurisdiction of a court in a title 11
or similar case within the meaning of Section 368(a)(3)(A).
12. ▇▇▇▇▇▇▇▇▇ directly owns 5,337,360 shares of Company Common Stock,
none of which was acquired either (i) after February 23, 1992 (other than
through a stock split) or (ii) in contemplation of the Mergers.
WM. ▇. ▇▇▇▇▇▇▇▇▇ & COMPANY
Dated: By:
------------------------------- -----------------------------
Name:
Title:
2
60
EXHIBIT D
PARENT
OFFICER'S CERTIFICATE
The undersigned officer of ▇▇▇▇▇ ▇▇▇▇▇▇ Incorporated, a Delaware
corporation ("Parent") hereby certifies as of (i) the date hereof, (ii) the
▇▇▇▇▇▇▇▇▇ Effective Time and (iii) the Company Effective Time that:
1. Unless otherwise specified, capitalized terms shall have the
meanings assigned to them in the Agreement and Plan of Merger (the "Merger
Agreement") dated as of February 25, 1997 among Parent, ▇▇▇▇▇ ▇▇▇▇▇▇
Missouri, Inc. ("Merger Sub"), ▇▇▇▇▇ ▇▇▇▇▇▇ Delaware, Inc. ("Merger
Grandsub"), Petrolite Corporation (the "Company") and Wm. ▇. ▇▇▇▇▇▇▇▇▇ &
Company ("▇▇▇▇▇▇▇▇▇").
2. Immediately prior to the ▇▇▇▇▇▇▇▇▇ Merger, Parent will own all of
the issued and outstanding stock of Merger Sub, and Merger Sub will own all
of the issued and outstanding stock of Merger Grandsub.
3. Neither Parent nor any of its affiliates has any plans or intention
to reacquire any of the Parent Common Stock issued in the ▇▇▇▇▇▇▇▇▇ Merger
or the Company Merger.
4. Parent has no plan or intention to liquidate ▇▇▇▇▇▇▇▇▇ or to cause
▇▇▇▇▇▇▇▇▇ to liquidate the Company; to merge ▇▇▇▇▇▇▇▇▇ with and into
another corporation or to cause ▇▇▇▇▇▇▇▇▇ to merge the Company with or into
another corporation; to cause ▇▇▇▇▇▇▇▇▇ to sell or otherwise dispose of the
stock of ▇▇▇▇▇▇▇▇▇; to cause ▇▇▇▇▇▇▇▇▇ to sell or otherwise dispose of the
stock of the Company or to cause either of ▇▇▇▇▇▇▇▇▇ or the Company to sell
or otherwise dispose of any of its assets or any of the assets acquired
from Merger Sub, except for (i) dispositions of assets of ▇▇▇▇▇▇▇▇▇ other
than its stock of the Company or (ii) dispositions made in the ordinary
course of business.
5. Following the Mergers, Parent will cause ▇▇▇▇▇▇▇▇▇ to continue to
hold its stock of the Company and will cause the Company to continue its
historical business or use a significant portion of its historic business
assets in a business.
6. Parent and Merger Sub will pay their respective expenses, if any,
incurred in connection with the Mergers.
7. There is no intercorporate indebtedness existing between Parent and
▇▇▇▇▇▇▇▇▇ or between Merger Sub and ▇▇▇▇▇▇▇▇▇ that was issued, acquired, or
will be settled at a discount.
8. With respect to each of Parent (as of the ▇▇▇▇▇▇▇▇▇ Effective Time
and the Company Effective Time) and Merger Sub (as of the ▇▇▇▇▇▇▇▇▇
Effective Time), less than 50 percent of the value of its total assets are
invested in stocks and securities within the meaning of Section
368(a)(2)(F)(iii) and (iv).(1)
9. Parent does not own, nor has it owned during the past five years,
any shares of ▇▇▇▇▇▇▇▇▇ Common Stock or the Company Common stock.
10. Merger Sub will have no liabilities assumed by ▇▇▇▇▇▇▇▇▇, and will
not transfer to ▇▇▇▇▇▇▇▇▇ any assets subject to liabilities, in the
▇▇▇▇▇▇▇▇▇ Merger.
11. Parent has no plan or intention as part of the plan of the Mergers
to cause ▇▇▇▇▇▇▇▇▇ or the Company to issue after the ▇▇▇▇▇▇▇▇▇ Effective
Time or the Company Effective Time, respectively, additional shares of
stock of ▇▇▇▇▇▇▇▇▇ or the Company, or any warrants, options, convertible
securities, or any other type of right pursuant to which any person could
acquire stock in ▇▇▇▇▇▇▇▇▇ or the Company.
12. Immediately following the ▇▇▇▇▇▇▇▇▇ Merger, ▇▇▇▇▇▇▇▇▇ will hold at
least 90% of the fair market value of its net assets and at least 70% of
the fair market value of its gross assets held immediately prior to the
▇▇▇▇▇▇▇▇▇ Merger.
---------------
1 All references to "Section" are to the Internal Revenue Code of 1986, as
presently in force.
61
13. In the ▇▇▇▇▇▇▇▇▇ Merger, shares of ▇▇▇▇▇▇▇▇▇ stock will be
exchanged solely for shares of Parent Common Stock. For purposes of this
representation, shares of ▇▇▇▇▇▇▇▇▇ Common Stock exchanged for cash or
other property originating with Parent or a direct or indirect subsidiary
of Parent (including cash received in lieu of fractional shares of Parent
Common Stock) will be treated as ▇▇▇▇▇▇▇▇▇ stock outstanding at the time of
the ▇▇▇▇▇▇▇▇▇ Merger.
14. The formula set forth in the Merger Agreement for the exchange of
Parent Common Stock for the stock of ▇▇▇▇▇▇▇▇▇ is the result of
arm's-length bargaining. The fair market value of the Parent Common Stock
received by each ▇▇▇▇▇▇▇▇▇ shareholder in the ▇▇▇▇▇▇▇▇▇ Merger, plus the
cash received in lieu of a fractional share of Parent Common Stock, will be
approximately equal to the fair market value of the ▇▇▇▇▇▇▇▇▇ stock
surrendered in the ▇▇▇▇▇▇▇▇▇ Merger. ▇▇▇▇▇▇▇▇▇ shareholders will not
receive any consideration in exchange for the ▇▇▇▇▇▇▇▇▇ stock other than
Parent Stock, cash in lieu of fractional shares of Parent Stock, and cash
or other property received by Dissenting Stockholders.
15. No ▇▇▇▇▇▇▇▇▇ shareholder will receive Parent Stock as separate
consideration for, or allocable to, any employment agreement. No
shareholder of ▇▇▇▇▇▇▇▇▇ who is also an employee of ▇▇▇▇▇▇▇▇▇ or the
Company will receive compensation as separate consideration for, or
allocable to, any of his or her stock.
16. In the Company Merger, shares of Company Common Stock will be
exchanged solely for shares of Parent Common Stock. For purposes of this
representation, shares of Company stock exchanged for cash or other
property originating with Parent or a direct or indirect subsidiary of
Parent (excluding cash received in lieu of fractional shares of Parent
Stock) will be treated as Company stock outstanding at the time of the
Company Merger.
17. No liabilities of the Company or its shareholders will be assumed
by Parent in the Company Merger nor will any of the Company stock acquired
in the Company Common Stock be subject to any liabilities.
18. The formula set forth in the Merger Agreement for the exchange of
Parent Common Stock for the stock of the Company is the result of
arm's-length bargaining. The fair market value of the Parent Common Stock
received by each Company shareholder in the Company Merger, plus the cash
received in lieu of a fractional share of Parent Common Stock, will be
approximately equal to the fair market value of the Company stock
surrendered in the Company Merger. Company shareholders will not receive
any consideration in exchange for the Company stock other than Parent
Common Stock, and cash in lieu of fractional shares of Parent Common Stock.
19. No Company shareholder will receive Parent Common Stock as
separate consideration for, or allocable to, any employment agreement. No
shareholder of the Company who is also an employee of ▇▇▇▇▇▇▇▇▇ or the
Company will receive compensation as separate consideration for, or
allocable to, any of his or her stock.
▇▇▇▇▇ ▇▇▇▇▇▇ INCORPORATED
Dated: By:
------------------------------- -----------------------------
Name:
Title:
2