EXHIBIT 2.A
AGREEMENT AND PLAN OF MERGER
DATED AS OF JUNE 9, 1997
BY AND AMONG
HALLIBURTON COMPANY,
HALLIBURTON M.S. CORP.
AND
NUMAR CORPORATION
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS
SECTION 1.01 Definitions................................................................................. -1-
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SECTION 1.02 Rules of Construction....................................................................... -2-
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ARTICLE II TERMS OF MERGER
SECTION 2.01 Statutory Merger........................................................................... -2-
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SECTION 2.02 Effective Time............................................................................. -2-
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SECTION 2.03 Effect of the Merger....................................................................... -2-
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SECTION 2.04 Articles of Incorporation; Bylaws.......................................................... -2-
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SECTION 2.05 Directors and Officers..................................................................... -3-
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ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Merger Consideration; Conversion and Cancellation of Securities............................ -3-
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SECTION 3.02 Exchange of Certificates................................................................... -4-
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SECTION 3.03 Closing.................................................................................... -7-
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SECTION 3.04 Stock Transfer Books....................................................................... -7-
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ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification; Subsidiaries............................................... -7-
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SECTION 4.02 Articles of Incorporation and Bylaws....................................................... -7-
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SECTION 4.03 Capitalization............................................................................. -8-
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SECTION 4.04 Authorization of Plan...................................................................... -9-
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SECTION 4.05 Approvals.................................................................................. -10-
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SECTION 4.06 No Violation............................................................................... -10-
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SECTION 4.07 Reports.................................................................................... -10-
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SECTION 4.08 No Material Adverse Effect; Conduct........................................................ -11-
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SECTION 4.09 Title to Properties........................................................................ -11-
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SECTION 4.10 Certain Obligations........................................................................ -12-
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SECTION 4.11 Authorizations; Compliance................................................................. -12-
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SECTION 4.12 Litigation; Compliance with Laws........................................................... -12-
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SECTION 4.13 Employee Benefit Plans..................................................................... -13-
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SECTION 4.14 Taxes...................................................................................... -16-
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SECTION 4.15 Environmental Matters...................................................................... -16-
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SECTION 4.16 Intellectual Property...................................................................... -17-
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SECTION 4.17 Insurance.................................................................................. -19-
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SECTION 4.18 Pooling; Tax Matters....................................................................... -19-
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SECTION 4.19 Affiliates................................................................................. -20-
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SECTION 4.20 Certain Business Practices................................................................. -20-
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SECTION 4.21 Opinion of Financial Advisor............................................................... -20-
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SECTION 4.22 Brokers.................................................................................... -20-
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SECTION 4.23 AntiTakeover Law........................................................................... -20-
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF ACQUIROR
SECTION 5.01 Organization and Qualification; Subsidiaries............................................... -21-
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SECTION 5.02 Certificate of Incorporation and Bylaws.................................................... -21-
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SECTION 5.03 Capitalization............................................................................. -21-
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SECTION 5.04 Authorization of Plan...................................................................... -23-
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SECTION 5.05 Approvals.................................................................................. -23-
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SECTION 5.06 No Violation............................................................................... -23-
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SECTION 5.07 Reports.................................................................................... -24-
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SECTION 5.08 No Material Adverse Effect; Conduct........................................................ -24-
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SECTION 5.09 Title to Properties........................................................................ -25-
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SECTION 5.10 Certain Obligations........................................................................ -25-
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SECTION 5.11 Authorizations; Compliance................................................................. -25-
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SECTION 5.12 Litigation; Compliance with Laws........................................................... -26-
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SECTION 5.13 Employee Benefit Plans..................................................................... -26-
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SECTION 5.14 Taxes...................................................................................... -27-
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SECTION 5.15 Environmental Matters...................................................................... -27-
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SECTION 5.16 Pooling; Tax Matters....................................................................... -28-
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SECTION 5.17 Insurance.................................................................................. -29-
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SECTION 5.18 Affiliates................................................................................. -29-
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SECTION 5.19 Certain Business Practices................................................................. -29-
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SECTION 5.20 Brokers.................................................................................... -29-
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SECTION 5.21 Acquiring Person........................................................................... -29-
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ARTICLE VI COVENANTS
SECTION 6.01 Affirmative Covenants...................................................................... -30-
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SECTION 6.02 Negative Covenants......................................................................... -30-
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SECTION 6.03 No Solicitation............................................................................ -35-
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SECTION 6.04 Access and Information..................................................................... -35-
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SECTION 6.05 Confidentiality Agreement.................................................................. -36-
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ARTICLE VII ADDITIONAL AGREEMENTS
SECTION 7.01 Meeting of Shareholders.................................................................... -36-
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SECTION 7.02 Registration Statement; Proxy Statements................................................... -36-
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SECTION 7.03 Appropriate Action; Consents; Filings...................................................... -38-
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SECTION 7.04 Affiliates; Pooling; Tax Treatment......................................................... -40-
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SECTION 7.05 Public Announcements....................................................................... -40-
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SECTION 7.06 NYSE Listing............................................................................... -41-
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SECTION 7.07 Comfort Letters............................................................................ -41-
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SECTION 7.08 Assumption of Obligations to Issue Stock and Obligations of Employee Benefit Plans......... -41-
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SECTION 7.09 Operations of Company...................................................................... -42-
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SECTION 7.10 Indemnification of Directors and Officers.................................................. -42-
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SECTION 7.11 Newco...................................................................................... -44-
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SECTION 7.12 Event Notices.............................................................................. -44-
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ARTICLE VIII CLOSING CONDITIONS
SECTION 8.01 Conditions to Obligations of Each Party Under This Plan.................................... -44-
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SECTION 8.02 Additional Conditions to Obligations of the Acquiror Companies............................. -45-
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SECTION 8.03 Additional Conditions to Obligations of the Company........................................ -46-
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ARTICLE IX TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination................................................................................ -46-
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SECTION 9.02 Effect of Termination...................................................................... -48-
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SECTION 9.03 Amendment.................................................................................. -48-
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SECTION 9.04 Waiver..................................................................................... -48-
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SECTION 9.05 Fees, Expenses and Other Payments.......................................................... -49-
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ARTICLE X GENERAL PROVISIONS
SECTION 10.01 Effectiveness of Representations, Warranties and Agreements............................... -50-
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SECTION 10.02 Notices................................................................................... -50-
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SECTION 10.03 Headings.................................................................................. -51-
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SECTION 10.04 Severability.............................................................................. -51-
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SECTION 10.05 Entire Agreement.......................................................................... -52-
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SECTION 10.06 Assignment................................................................................ -52-
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SECTION 10.07 Parties in Interest....................................................................... -52-
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SECTION 10.08 Failure or Indulgence Not Waiver; Remedies Cumulative.................................... -52-
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SECTION 10.09 Governing Law............................................................................. -52-
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SECTION 10.10 Specific Performance...................................................................... -52-
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SECTION 10.11 Counterparts.............................................................................. -53-
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ANNEXES
Annex A Schedule of Defined Terms
Annex B NUMAR Affiliate's Agreement
Annex C Halliburton Affiliate's Agreement
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of June 9, 1997 (this "Plan"),
is by and among Halliburton Company, a Delaware corporation ("Acquiror"),
Halliburton M.S. Corp., a Delaware corporation and a wholly owned subsidiary of
Acquiror ("Newco"), and NUMAR Corporation, a Pennsylvania corporation (the
"Company"). The Acquiror and Newco are sometimes referred to herein as the
"Acquiror Companies."
RECITALS:
The Board of Directors of the Company has determined that the business
combination to be effected by means of the Merger is consistent with and in
furtherance of the long-term business strategy of the Company and is fair to,
and in the best interests of, the Company and has approved and adopted this Plan
and recommended approval and adoption of this Plan by the shareholders of the
Company.
The Board of Directors of the Acquiror has determined that the business
combination to be effected by means of the Merger is consistent with and in
furtherance of the long-term business strategy of the Acquiror and is fair to,
and in the best interests of, the Acquiror and its stockholders and has approved
and adopted this Plan.
Upon the terms and subject to the conditions of this Plan and in accordance
with the PBCL, Newco will merge with and into the Company and the Company will
be the Surviving Corporation.
For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of the provisions of Section
368(a) of the Code.
The Merger is intended to be treated as a "pooling of interests" for
accounting purposes.
The parties hereto acknowledge the execution and delivery of the Stock
Option Agreement and the Voting Agreements concurrently with the execution and
delivery of this Plan.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this Plan,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. Certain capitalized and other terms used in
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this Plan are defined in Annex A hereto and are used herein with the meanings
ascribed to them therein.
SECTION 1.02 Rules of Construction. Unless the context otherwise
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requires, as used in this Plan: (a) a term has the meaning ascribed to it; (b)
an accounting term not otherwise defined has the meaning ascribed to it in
accordance with GAAP; (c) "or" is not exclusive; (d) "including" means
"including, without limitation;" (e) words in the singular include the plural;
(f) words in the plural include the singular; (g) words applicable to one gender
shall be construed to apply to each gender; (h) the terms "hereof," "herein,"
"hereby," "hereto" and derivative or similar words refer to this entire Plan;
and (i) the terms "Article" or "Section" shall refer to the specified Article or
Section of this Plan.
ARTICLE II
TERMS OF MERGER
SECTION 2.01 Statutory Merger. Subject to the terms and conditions and
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in reliance upon the representations, warranties, covenants and agreements
contained herein, Newco shall merge with and into the Company at the Effective
Time. The terms and conditions of the Merger and the mode of carrying the same
into effect shall be as set forth in this Plan. As a result of the Merger, the
constituent corporations shall be a single corporation which shall be the
Company as the corporation herein designated as the Surviving Corporation, and
the separate corporate existence of each of the constituent corporations shall
cease except that of the Company, which shall continue as the Surviving
Corporation.
SECTION 2.02 Effective Time. As soon as practicable after the
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satisfaction or, if permissible, waiver of the conditions set forth in Article
VIII, the parties hereto shall cause the Merger to be consummated by filing
Articles of Merger with the Secretary of State of the Commonwealth of
Pennsylvania and a Certificate of Merger with the Secretary of State of the
State of Delaware, in such form as required by, and executed in accordance with,
the relevant provisions of the PBCL and the DGCL.
SECTION 2.03 Effect of the Merger. At the Effective Time, the effect of
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the Merger shall be as provided in the applicable provisions of the PBCL,
including Section 1929 thereof. Without limiting the generality of the foregoing
but subject thereto, all the property, real, personal and mixed, and franchises
of each of the constituent corporations, and all debts due on whatever account
to either of them, including subscriptions for shares and other choses in action
belonging to either of them, shall be deemed to be transferred to and vested in
the Surviving Corporation without further action, and the title to any real
estate, or any interest therein, vested in either of the corporations shall not
revert or be in any way impaired by reason
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of the Merger. The Surviving Corporation shall from and after the Effective Time
be responsible for all the liabilities of each of the corporations so merged.
SECTION 2.04 Articles of Incorporation; Bylaws. At the Effective Time,
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the articles of incorporation and the bylaws of the Company, as in effect
immediately prior to the Effective Time, shall become the articles of
incorporation and the bylaws of the Surviving Corporation.
SECTION 2.05 Directors and Officers. The directors of Newco immediately
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prior to the Effective Time shall be the directors of the Surviving Corporation,
each to hold office in accordance with the articles of incorporation and bylaws
of the Surviving Corporation, and the officers of the Company immediately prior
to the Effective Time shall be the officers of the Surviving Corporation, in
each case until their respective successors are duly elected or appointed and
qualified.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Merger Consideration; Conversion and Cancellation of
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Securities. The manner and basis of converting in the Merger the shares of each
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corporation into shares of the Surviving Corporation or the shares or other
obligations of the Acquiror shall be as set forth in this Article III. At the
Effective Time, by virtue of the Merger and without any action on the part of
the Acquiror Companies, the Company or the holders of any of the following
securities:
(a) Subject to the other provisions of this Article III, each share of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (excluding Dissenters' Shares and any Company Common Stock
described in Section 3.01(c)) shall be converted into 0.4832 of one share
of Acquiror Common Stock. Notwithstanding the foregoing, if between the
date of this Plan and the Effective Time the outstanding shares of Acquiror
Common Stock or Company Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Common Stock Exchange Ratio shall be
correspondingly adjusted to reflect such stock dividend, subdivision,
reclassification, recapitalization, split, combination or exchange of
shares.
(b) All shares of Company Common Stock shall, upon conversion thereof
into shares of Acquiror Common Stock at the Effective Time, cease to be
outstanding and shall be automatically canceled and retired, and each
certificate previously evidencing Company Common Stock outstanding
immediately prior to the Effective Time (other than Dissenters' Shares and
Company Common Stock described in Section 3.01(c)) shall thereafter be
deemed, for all purposes, other than the payment of dividends or
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distributions, to represent that number of shares of Acquiror Common Stock
determined pursuant to the Common Stock Exchange Ratio and, if applicable,
the right to receive cash pursuant to Section 3.02(e). The holders of
certificates previously evidencing Company Common Stock shall cease to have
any rights with respect to such Company Common Stock except as otherwise
provided herein or by law.
(c) Notwithstanding any provision of this Plan to the contrary, each
share of Company Common Stock held in the treasury of the Company and each
share of Company Common Stock, if any, owned by the Acquiror or any direct
or indirect wholly owned Subsidiary of the Acquiror or of the Company
immediately prior to the Effective Time shall be canceled and extinguished
without conversion thereof.
(d) Each share of common stock, par value $1.00 per share, of Newco
issued and outstanding immediately prior to the Effective Time shall be
converted into one share of common stock, par value $1.00 per share, of the
Surviving Corporation.
(e) Notwithstanding anything herein to the contrary, shares of Company
Common Stock outstanding immediately prior to the Effective Time and held
by a holder who has not voted in favor of the Plan or consented thereto in
writing and who has demanded the right to be paid the fair value for such
shares of Company Common Stock in accordance with Section 1930 of the PBCL
("Dissenters' Shares") shall not be converted into shares of Acquiror
Common Stock as otherwise provided in this Section 3.01 unless and until
such holder fails to continue perfection of, or withdraws or otherwise
loses, such right to be paid the fair value for such shares. If after the
Effective Time any such holder fails to continue perfection of, or
withdraws or loses, such right of appraisal, such Dissenters' Shares shall
thereupon be deemed to have been, and shall be treated as if they had been,
converted into shares of Acquiror Common Stock as provided in this Section
3.01
SECTION 3.02 Exchange of Certificates.
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(a) Exchange Fund. At the Closing, the Acquiror shall deposit, or
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cause to be deposited, with the Exchange Agent, for the benefit of the
former holders of Company Common Stock and for exchange through the
Exchange Agent in accordance with this Article III, certificates evidencing
that number of shares of Acquiror Common Stock equal to the product of the
Common Stock Exchange Ratio and the number of shares of Company Common
Stock issued and outstanding immediately prior to the Effective Time
(exclusive of any Dissenters' Shares and any such shares to be canceled
pursuant to Section 3.01(c)). The Exchange Agent shall, pursuant to
irrevocable instructions from the Acquiror, deliver certificates evidencing
Acquiror Common Stock, together with any cash to be paid in lieu of
fractional interests in shares of Acquiror Common Stock pursuant to Section
3.02(e) and any dividends or distributions related to such Acquiror Common
Stock, in exchange for certificates theretofore evidencing Company Common
Stock surrendered to the Exchange Agent pursuant to Section 3.02(c).
Except as
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contemplated by Sections 3.02(e) and (h), the Exchange Fund shall not be
used for any other purpose.
(b) Letter of Transmittal. Promptly after the Effective Time, the
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Acquiror will cause the Exchange Agent to send to each record holder of
Company Common Stock immediately prior to the Effective Time (other than
Dissenters' Shares) a letter of transmittal and other appropriate materials
for use in surrendering to the Exchange Agent certificates that prior to
the Effective Time evidenced shares of Company Common Stock.
(c) Exchange Procedures. Promptly after the Effective Time, the
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Exchange Agent shall distribute to each former holder of Company Common
Stock, upon surrender to the Exchange Agent for cancellation of one or more
certificates that theretofore evidenced shares of Company Common Stock,
certificates evidencing the appropriate number of shares of Acquiror Common
Stock into which such shares of Company Common Stock were converted
pursuant to the Merger. If shares of Acquiror Common Stock are to be issued
to a Person other than the Person in whose name the surrendered certificate
or certificates are registered, it shall be a condition of issuance of the
Acquiror Common Stock that the surrendered certificate or certificates
shall be properly endorsed, with signatures guaranteed, or otherwise in
proper form for transfer and that the Person requesting such payment shall
pay any transfer or other taxes required by reason of the issuance of
Acquiror Common Stock to a Person other than the registered holder of the
surrendered certificate or certificates or such Person shall establish to
the satisfaction of the Acquiror that such tax has been paid or is not
applicable.
(d) Distributions with Respect to Unexchanged Shares of Company Common
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Stock. No dividends or other distributions declared or made with respect
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to Acquiror Common Stock with a record date after the Effective Time shall
be paid to the holder of any certificate that theretofore evidenced shares
of Company Common Stock until the holder of such certificate shall
surrender such certificate. Subject to the effect of any applicable
escheat laws, following surrender of any such certificate, there shall be
paid to the holder of the certificates evidencing whole shares of Acquiror
Common Stock issued in exchange therefor, without interest, (i) promptly,
the amount of any cash payable with respect to a fractional share of
Acquiror Common Stock to which such holder is entitled pursuant to Section
3.02(e) and the amount of dividends or other distributions with a record
date after the Effective Time theretofore paid with respect to such whole
shares of Acquiror Common Stock and (ii), at the appropriate payment date,
the amount of dividends or other distributions, with a record date after
the Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such whole shares of Acquiror
Common Stock.
(e) No Fractional Shares. Notwithstanding anything herein to the
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contrary, no certificates or scrip evidencing fractional shares of Acquiror
Common Stock shall be issued in connection with the Merger, and any such
fractional share interests to which
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a holder of record of Company Common Stock at the Effective Time would
otherwise be entitled shall not entitle such holder to vote or to any
rights of a stockholder of the Acquiror. In lieu of any such fractional
shares, each holder of record of Company Common Stock at the Effective Time
who but for the provisions of this Section 3.02(e) would be entitled to
receive a fractional interest of a share of Acquiror Common Stock by virtue
of the Merger shall be paid cash, without any interest thereon, as
hereinafter provided. The Acquiror shall instruct the Exchange Agent to
determine the number of whole shares and fractional shares of Acquiror
Common Stock allocable to each holder of record of Company Common Stock at
the Effective Time, to aggregate all such fractional shares into whole
shares, to sell the whole shares obtained thereby in the open market at
then prevailing prices on behalf of holders who otherwise would be entitled
to receive fractional share interests and to distribute to each such holder
such holder's ratable share of the total proceeds of such sale, after
making appropriate deductions of the amount, if any, required for federal
income tax withholding purposes and after deducting any applicable transfer
taxes. All brokers' fees and commissions incurred in connection with such
sales shall be paid by the Acquiror.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
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that remains unclaimed by the former holders of Company Common Stock for 12
months after the Effective Time shall be delivered to the Acquiror, upon
demand, and any former holders of Company Common Stock who have not
theretofore complied with this Article III shall thereafter look only to
the Acquiror for the Acquiror Common Stock and any cash to which they are
entitled. Notwithstanding any other provisions herein, neither the
Exchange Agent nor any party hereto shall be liable to any former holder of
Company Common Stock for any Acquiror Common Stock, cash in lieu of
fractional share interests or dividends or distributions thereon delivered
to a public official pursuant to any applicable abandoned property, escheat
or similar law. If any certificates evidencing Company Common Stock shall
not have been surrendered prior to the seventh anniversary of the Effective
Time (or such earlier date on which any shares of Acquiror Common Stock,
any cash in lieu of fractional share interests or dividends or
distributions with respect to Acquiror Common Stock to which the holder of
such certificates would otherwise be entitled would escheat to or become
the property of any governmental entity), then, immediately prior to such
date, any such shares, cash, dividends or distributions in respect of such
shares shall, to the extent permitted by applicable Law, become the
property of the Acquiror, free and clear of all adverse claims and
interests of any Person previously entitled thereto.
(g) Withholding of Tax. The Acquiror shall be entitled to deduct and
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withhold from the consideration otherwise payable pursuant to this Plan to
any former holder of Company Common Stock such amounts as the Acquiror (or
any affiliate thereof) or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code or any
state, local or foreign tax Law. To the extent that amounts are so
withheld by the Acquiror, such withheld amounts shall be treated for all
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purposes of this Plan as having been paid to the former holder of Company
Common Stock in respect of which such deduction and withholding was made by
the Acquiror.
(h) Investment of Exchange Fund. The Exchange Agent may invest any
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cash included in the Exchange Fund in deposit accounts or short-term money
market instruments, as directed by the Acquiror, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
the Acquiror. The Acquiror shall deposit with the Exchange Agent as part
of the Exchange Fund cash in an amount equal to any loss of principal
resulting from such investments promptly after the incurrence of such a
loss.
SECTION 3.03 Closing. The Closing shall take place at the offices of
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▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ promptly after
satisfaction or, if permissible, waiver of the conditions to Closing set forth
in Article VIII herein. At the conclusion of the Closing on the Closing Date,
the parties hereto shall cause the Articles of Merger to be filed with the
Secretary of State of the Commonwealth of Pennsylvania and the Certificate of
Merger with the Secretary of State of the State of Delaware.
SECTION 3.04 Stock Transfer Books. At the Effective Time, the stock
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transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company other than to reflect transfers of shares through the
date on which the Effective Time occurs.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Acquiror Companies that:
SECTION 4.01 Organization and Qualification; Subsidiaries. The Company
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and each Subsidiary of the Company are legal entities duly organized, validly
existing and in good standing under the Laws of their respective jurisdictions
of incorporation or organization, have all requisite corporate power and
authority to own, lease and operate their respective properties and to carry on
their businesses as they are now being conducted and are duly qualified and in
good standing to do business in the jurisdictions in which the nature of the
businesses conducted by them or the ownership or leasing of their respective
properties makes such qualification necessary, other than any matters, including
the failure to be so qualified and in good standing, that could not reasonably
be expected to have a Material Adverse Effect on the Company. Section 4.01 of
the Company's Disclosure Letter sets forth, as of the date of this Plan, a true
and complete list of all the Company's directly or indirectly owned
Subsidiaries, together with (A) a specification of the nature of legal
organization of such Subsidiary, (B) the jurisdiction of incorporation or other
organization of such Subsidiary and (C) an indication of whether such Subsidiary
is a Significant Subsidiary. Neither the Company nor any of its Subsidiaries
owns an
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equity interest in any other partnership, joint venture arrangement or other
business entity that is Material to the Company.
SECTION 4.02 Articles of Incorporation and Bylaws. The Company has
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heretofore marked for identification and delivered to the Acquiror complete and
correct copies of the articles of incorporation and the bylaws or the equivalent
organizational documents, in each case as amended or restated to the date
hereof, of the Company and each of its Subsidiaries. Neither the Company nor any
of its Subsidiaries is in violation of any of the provisions of its articles of
incorporation or bylaws (or equivalent organizational documents).
SECTION 4.03 Capitalization.
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(a) The authorized capital stock of the Company consists of (i)
50,000,000 shares of Company Common Stock, of which, as of March 31, 1997,
8,389,653 shares were issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the Company's articles of
incorporation or bylaws or any agreement to which the Company is a party or
is bound, and (ii) 10,000,000 shares of Preferred Stock, par value $0.01
per share, none of which is issued and outstanding. Between March 31, 1997
and the date of this Plan, no shares of Company Common Stock have been
issued by the Company, except upon exercise of Company Stock Options
outstanding under the Company Option Plans. Except as set forth in Section
4.03(a) of the Company's Disclosure Letter, the Company has not, since
March 31, 1997, granted any options for, or other rights to purchase,
shares of Company Common Stock.
(b) Except for shares reserved for issuance upon exercise of Company
Stock Options granted pursuant to the Company Option Plans or the Company
Warrants and, in each case, listed in Section 4.03(b) of the Company's
Disclosure Letter, no shares of Common Stock are reserved for issuance,
and, except for such Company Stock Options, there are no contracts,
agreements, commitments or arrangements obligating the Company (i) to
offer, sell, issue or grant any shares of, or any options, warrants or
rights of any kind to acquire any shares of, or any securities that are
convertible into or exchangeable for any shares of, capital stock of the
Company or (ii) to redeem, purchase or acquire, or offer to purchase or
acquire, any outstanding shares of, or any outstanding options, warrants or
rights of any kind to acquire any shares of, or any outstanding securities
that are convertible into or exchangeable for any shares of, capital stock
of the Company.
(c) Section 4.03(c) of the Company's Disclosure Letter sets forth with
respect to each Subsidiary of the Company (i) the numbers of shares of
authorized, issued and outstanding capital stock of, or other equity
interests in, each such Subsidiary, (ii) the number of such shares of
capital stock or other equity interests owned of record and beneficially by
the Company or another Subsidiary of the Company, together with the name of
such holder or holders, and (iii) the names and addresses of any holders,
other
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than the Company or another Subsidiary, of record or beneficially of the
capital stock or other equity interests of such Subsidiary. Except as set
forth in Section 4.03(c) of the Company's Disclosure Letter, (x) the issued
and outstanding shares of capital stock of, or other equity interests in,
each of the Subsidiaries of the Company that are owned by the Company or
any of its Subsidiaries have been duly authorized and are validly issued,
and, with respect to capital stock, are fully paid and nonassessable, and
were not issued in violation of any preemptive or similar rights of any
past or present equity holder of such Subsidiary; (y) all such issued and
outstanding shares, or other equity interests, that are indicated as owned
by the Company or one of its Subsidiaries in Section 4.03(c) of the
Company's Disclosure Letter are owned (A) beneficially as set forth therein
and (B) free and clear of all Liens; (z) no shares of capital stock of, or
other equity interests in, any Subsidiary of the Company are reserved for
issuance, and there are no contracts, agreements, commitments or
arrangements obligating the Company or any of its Subsidiaries (A) to
offer, sell, issue, grant, pledge, dispose of or encumber any shares of
capital stock of, or other equity interests in, or any options, warrants or
rights of any kind to acquire any shares of capital stock of, or other
equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests
in, any of the Subsidiaries of the Company or (B) to redeem, purchase or
acquire, or offer to purchase or acquire, any outstanding shares of capital
stock of, or other equity interests in, or any outstanding options,
warrants or rights of any kind to acquire any shares of capital stock of,
or other equity interest in, or any outstanding securities that are
convertible into or exchangeable for, any shares of capital stock of, or
other equity interests in, any of the Subsidiaries of the Company or (C) to
grant any Lien on any outstanding shares of capital stock of, or other
equity interest in, any of the Subsidiaries of the Company; except for any
matter under clause (x), (y) or (z) of this Section 4.03(c) that could not
reasonably be expected to have a Material Adverse Effect on the Company.
(d) Except for the Company Stock Options and the Company Warrants
listed in Section 4.03(b) of the Company's Disclosure Letter, there are no
voting trusts, proxies or other agreements, commitments or understandings
of any character to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries is bound with respect to
the voting of any shares of capital stock of the Company or any of its
Subsidiaries, with respect to the registration of the offering, sale or
delivery of any shares of capital stock of the Company or any of its
Subsidiaries under the Securities Act or otherwise relating to any shares
of capital stock of the Company or any of its Subsidiaries, except in the
case of any Subsidiaries of the Company that are not Significant
Subsidiaries for any matters that could not reasonably be expected to have
a Material Adverse Effect on the Company.
SECTION 4.04 Authorization of Plan. The Company has all requisite
---------------------
corporate power and authority to execute and deliver this Plan and, subject to
approval of the Plan by the shareholders of the Company as required by the
applicable provisions of the PBCL, each instrument required hereby to be
executed and delivered by it at the Closing, to perform its
-9-
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this Plan and
each instrument required hereby to be executed and delivered by it at the
Closing and the performance of its obligations hereunder and thereunder have
been duly and validly authorized by all requisite corporate action on the part
of the Company (other than, with respect to the Merger, the approval and
adoption of this Plan by the holders of a majority of the outstanding shares of
Company Common Stock in accordance with the applicable provisions of the PBCL
and the Company's articles of incorporation). This Plan has been duly executed
and delivered by the Company and (assuming due authorization, execution and
delivery hereof by the other parties hereto) constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as the same may be limited by legal principles of general
applicability governing the application and availability of equitable remedies.
SECTION 4.05 Approvals. Except for the applicable requirements, if any,
---------
of (a) the Securities Act, (b) the Exchange Act, (c) state securities or blue
sky laws, (d) the HSR Act, (e) the NASD, (f) the filing and recordation of
appropriate merger documents as required by the PBCL and (g) those Laws,
Regulations and Orders noncompliance with which could not reasonably be expected
to have a material adverse effect on the ability of the Company to perform its
obligations under this Plan or to have a Material Adverse Effect on the Company,
no filing or registration with, no waiting period imposed by and no
Authorization of, any Governmental Authority is required under any Law,
Regulation or Order applicable to the Company or any of its Subsidiaries to
permit the Company to execute, deliver or perform this Plan or any instrument
required hereby to be executed and delivered by it at the Closing.
SECTION 4.06 No Violation. Assuming effectuation of all filings and
------------
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Authorizations of Governmental Authorities
indicated as required in Section 4.05 and receipt of the approval of the Plan by
the shareholders of the Company as required by the applicable provisions of the
PBCL, neither the execution and delivery by the Company of this Plan or any
instrument required hereby to be executed and delivered by it at the Closing nor
the performance by the Company of its obligations hereunder or thereunder will
(a) violate or breach the terms of or cause a default under (i) any Law,
Regulation or Order applicable to the Company, (ii) the articles of
incorporation or bylaws of the Company or (iii) any contract or agreement to
which the Company or any of its Subsidiaries is a party or by which it or any of
its properties or assets is bound, or (b) with the passage of time, the giving
of notice or the taking of any action by a third Person, have any of the effects
set forth in clause (a) of this Section, except in any such case for any matters
described in this Section (other than clause (ii) hereof) that could not
reasonably be expected to have either a material adverse effect upon the ability
of the Company to perform its obligations under this Plan or a Material Adverse
Effect on the Company. Prior to the execution of this Plan, the Board of
Directors of the Company has taken all necessary action to cause this Plan and
the transactions contemplated hereby to be exempt from the provisions of
Subchapter F (Business Combinations) of Chapter 25 of the PBCL.
-10-
SECTION 4.07 Reports.
-------
(a) Since April 14, 1994, the Company has filed (i) all SEC Reports
required to be filed by it with the Commission and (ii) the Company and its
Subsidiaries have filed all other Reports required to be filed by any of
them with any other Governmental Authorities, including state securities
administrators, except where the failure to file any such Reports could not
reasonably be expected to have a Material Adverse Effect on the Company.
Such Reports, including all those filed after the date of this Plan and
prior to the Effective Time, (x) were prepared in all material respects in
accordance with the requirements of applicable Law (including, with respect
to SEC Reports, the Securities Act and the Exchange Act, as the case may
be, and the applicable Regulations of the Commission thereunder) and (y),
in the case of the SEC Reports, did not at the time they were filed contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The Company Consolidated Financial Statements and any
consolidated financial statements of the Company (including any related
notes thereto) contained in any SEC Reports filed by the Company with the
Commission after the date of this Plan (i) have been or will have been
prepared in accordance with the published Regulations of the Commission and
in accordance with GAAP (except (A) to the extent required by changes in
GAAP and (B), with respect to the SEC Reports filed by the Company prior to
the date of this Plan, as may be indicated in the notes thereto) and (ii)
fairly present the consolidated financial position of the Company and its
Subsidiaries as of the respective dates thereof and the consolidated
results of their operations and cash flows for the periods indicated
(including, in the case of any unaudited interim financial statements,
reasonable estimates of normal and recurring year-end adjustments).
(c) Except as set forth in Section 4.07(c) of the Company's
Disclosure Letter, there exist no liabilities or obligations of the Company
and its Subsidiaries that are Material to the Company, whether accrued,
absolute, contingent or threatened, and that would be required to be
reflected, reserved for or disclosed under GAAP in consolidated financial
statements of the Company as of and for the period ended on the date of
this representation and warranty, other than (i) liabilities or obligations
that are adequately reflected, reserved for or disclosed in the Company's
Consolidated Financial Statements, (ii) liabilities or obligations incurred
in the ordinary course of business of the Company since March 31, 1997 and
(iii) liabilities or obligations the incurrence of which is permitted by
Section 6.02(a).
SECTION 4.08 No Material Adverse Effect; Conduct.
-----------------------------------
(a) Since March 31, 1997, no event (other than any event that is of
general application to all or a substantial portion of the Company's
industry and other than any event that is expressly subject to any other
representation or warranty contained in
-11-
Article IV) has, to the Knowledge of the Company, occurred that,
individually or together with other similar events, could reasonably be
expected to constitute or cause a Material Adverse Effect on the Company.
(b) Except as set forth in Section 4.08(b) of the Company's Disclosure
Letter, during the period from March 31, 1997 to the date of this Plan,
neither the Company nor any of its Subsidiaries has engaged in any conduct
that is proscribed during the period from the date of this Plan to the
Effective Time by subsections (i) through (xii) of Section 6.02(a).
SECTION 4.09 Title to Properties. The Company or its Subsidiaries,
-------------------
individually or together, have indefeasible title to all of the properties
reflected in the Company's Consolidated Balance Sheet, other than any properties
reflected in the Company's Consolidated Balance Sheet that have been sold or
otherwise disposed of since the date of the Company's Consolidated Balance Sheet
or are not, individually or in the aggregate, Material to the Company, free and
clear of Liens, other than (x) Liens the existence of which is reflected in the
Company's Consolidated Financial Statements, (y) Permitted Encumbrances and (z)
Liens that, individually or in the aggregate, are not Material to the Company.
The Company or its Subsidiaries, individually or together, hold under valid
lease agreements all real and personal properties reflected in the Company's
Consolidated Balance Sheet as being held under capitalized leases, and all real
and personal property that is subject to the operating leases to which reference
is made in the notes to the Company's Audited Consolidated Financial Statements,
and enjoy peaceful and undisturbed possession of such properties under such
leases, other than (i) any properties as to which such leases have terminated in
the ordinary course of business since the date of the Company's Consolidated
Balance Sheet and (ii) any properties that, individually or in the aggregate,
are not Material to the Company. Neither the Company nor any of its
Subsidiaries has received any written notice of any adverse claim to the title
to any properties owned by them or with respect to any lease under which any
properties are held by them, other than any claims that, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect on
the Company.
SECTION 4.10 Certain Obligations. Except for those listed in Section
-------------------
4.10 of the Company's Disclosure Letter or filed as Exhibits to the Company's
SEC Reports, neither the Company nor any of its Subsidiaries is a party to or
bound by any Material Contract. Except as set forth in Section 4.10 of the
Company's Disclosure Letter, all Material Contracts to which the Company or any
of its Subsidiaries is a party are in full force and effect, the Company or the
Subsidiary of the Company that is a party to or bound by such Material Contract
has performed its obligations thereunder to date and, to the Knowledge of the
Company, each other party thereto has performed its obligations thereunder to
date, other than any failure of a Material Contract to be in full force and
effect or any nonperformance thereof that could not reasonably be expected to
have a Material Adverse Effect on the Company.
SECTION 4.11 Authorizations; Compliance. The Company and its
--------------------------
Subsidiaries have obtained all Authorizations that are necessary to carry on
their businesses as currently
-12-
conducted, except for any such Authorizations as to which, individually or in
the aggregate, the failure to possess could not reasonably be expected to have a
Material Adverse Effect on the Company. Such Authorizations are in full force
and effect, have not been violated in any respect that could reasonably be
expected to have a Material Adverse Effect on the Company and there is no
action, proceeding or investigation pending or, to the Knowledge of the Company,
threatened regarding suspension, revocation or cancellation of any such
Authorization, except in the case of any suspension, revocation or cancellation
of any such Authorization that could not reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 4.12 Litigation; Compliance with Laws. There are no actions,
--------------------------------
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Company, threatened against the Company or
any of its Subsidiaries, at law or in equity, in any Court or before or by any
Governmental Authority, except actions, suits or proceedings that are set forth
in Section 4.12 or Section 4.15 of the Company's Disclosure Letter or ,
individually or, with respect to multiple actions, suits or proceedings that
allege similar theories of recovery based on similar facts, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on the
Company. There are no claims pending or, to the Knowledge of the Company,
threatened by any Persons against the Company or any of its Subsidiaries for
indemnification pursuant to any statute, organizational document, contract or
otherwise with respect to any action, suit, investigation or proceeding pending
in any Court or before or by any Governmental Authority. Except as set forth in
Section 4.12 of the Company's Disclosure Letter, the Company and its
Subsidiaries are in substantial compliance with all applicable Laws and
Regulations and are not in default with respect to any Order applicable to the
Company or any of its Subsidiaries, except such events of noncompliance or
defaults that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 4.13 Employee Benefit Plans.
----------------------
(a) Each Benefit Plan of the Company and its Subsidiaries is listed in
Section 4.13(a) of the Company's Disclosure Letter, including, with respect
to Terminated Benefit Plans, the date of termination. True and correct
copies of each of the following have been made available to the Acquiror:
the most recent annual report (Form 5500) relating to each such Current
Benefit Plan filed with the IRS, each such Current Benefit Plan, the
trust agreement, if any, relating to each such Current Benefit Plan, the
most recent summary plan description for each such Current Benefit Plan for
which a summary plan description is required by ERISA, the most recent
actuarial report or valuation relating to each such Current Benefit Plan
subject to Title IV of ERISA and the most recent determination letter, if
any, issued by the IRS with respect to any such Current Benefit Plan
qualified under Section 401 of the Code.
(b) Except as set forth in Section 4.13(b) of the Company's Disclosure
Letter, with respect to such Benefit Plans, no event has occurred and, to
the Knowledge of the Company, there exists no condition or set of
circumstances in connection with which the
-13-
Company or any of its Subsidiaries could be subject to any liability under
the terms of such Benefit Plans, ERISA, the Code or any other applicable
Law, other than any condition or set of circumstances that could not
reasonably be expected to have a Material Adverse Effect on the Company.
(c) As to any such Current Benefit Plan intended to be qualified under
Section 401 of the Code, such Benefit Plan satisfies in form the
requirements of such Section, except to the extent amendments are not
required by Law to be made until a date after the Effective Time. There
has been no termination or partial termination of any such Benefit Plan
within the meaning of Section 411(d)(3) of the Code.
(d) As to any such Terminated Benefit Plan intended to have been
qualified under Section 401 of the Code, such Terminated Benefit Plan
received a favorable determination letter from the IRS with respect to its
termination.
(e) There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the Knowledge of the Company, threatened
against, or with respect to, any of such Benefit Plans or their assets that
could reasonably be expected to have a Material Adverse Effect on the
Company.
(f) There is no matter pending (other than routine qualification
determination filings) with respect to any of such Benefit Plans before the
IRS, the Department of Labor or the PBGC.
(g) All contributions required to be made to such Benefit Plans
pursuant to their terms and provisions have been made timely.
(h) As to any such Current Benefit Plan subject to Title IV of ERISA,
(i) there has been no event or condition which presents a significant risk
of plan termination, (ii) no accumulated funding deficiency, whether or not
waived, within the meaning of Section 302 of ERISA or Section 412 of the
Code has been incurred, (iii) no reportable event within the meaning of
Section 4043 of ERISA (for which the disclosure requirements of Regulation
section 2615.3 and section 4043.1 et seq., promulgated by the PBGC, have
not been waived) has occurred within six years prior to the date of this
Plan, (iv) no notice of intent to terminate such Benefit Plan has been
given under Section 4041 of ERISA, (v) no proceeding has been instituted
under Section 4042 of ERISA to terminate such Benefit Plan, (vi) no
liability to the PBGC has been incurred (other than with respect to
required premium payments) and (vii) the assets of the Benefit Plan equal
or exceed the actuarial present value of the benefit liabilities, within
the meaning of Section 4041 of ERISA, under the Benefit Plan, based upon
reasonable actuarial assumptions and the asset valuation principles
established by the PBGC.
(i) Except as set forth in Section 4.13(i) of the Company's Disclosure
Letter, in connection with the consummation of the transactions
contemplated by this Plan, no
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payments have been or will be made under any such Current Benefit Plans or
any of the programs, agreements, policies or other arrangements described
in Section 4.13(k) of the Company's Disclosure Letter which, in the
aggregate, would be nondeductible under Section 280G of the Code.
(j) Except as set forth in Section 4.13(j) of the Company's Disclosure
Letter, the execution and delivery of this Plan and the consummation of the
transactions contemplated hereby will not (i) require the Company or any of
its Subsidiaries to make a larger contribution to, or pay greater benefits
under, any Current Benefit Plan or any of the programs, agreements,
policies or other arrangements described in Section 4.13(k) of the
Company's Disclosure Letter than it otherwise would or (ii) create or give
rise to any additional vested rights or service credits under any Current
Benefit Plan or any of such programs, agreements, policies or other
arrangements.
(k) Except as set forth in Section 4.13(k) of the Company's Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or is
bound by any severance agreement (involving $50,000 or more), program or
policy. True and correct copies of all employment agreements and change-
in-control agreements with officers and employees of the Company and its
Subsidiaries, and all vacation, overtime and other compensation policies of
the Company and its Subsidiaries relating to their employees have been made
available to the Acquiror.
(l) Except as set forth in Section 4.13(l) of the Company's Disclosure
Letter, no Benefit Plan provides retiree medical or retiree life insurance
benefits to any Person and neither the Company nor any of its Subsidiaries
is contractually or otherwise obligated (whether or not in writing) to
provide any Person with life insurance or medical benefits upon retirement
or termination of employment, other than as required by the provisions of
Sections 601 through 608 of ERISA and Section 4980B of the Code. Each
Benefit Plan or other arrangement described in Section 4.13(l) of the
Company's Disclosure Letter may be unilaterally amended or terminated in
its entirety without liability except as to benefits accrued thereunder
prior to such amendment or termination.
(m) Neither the Company nor any of its Subsidiaries contributes or has
an obligation to contribute, and has not within six years prior to the date
of this Plan contributed or had an obligation to contribute, to a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(n) The vacation policies of the Company and its Subsidiaries do not
provide for carryover of vacation from one calendar year to the next.
(o) No collective bargaining agreement to which the Company or any of
its Subsidiaries is a party is currently in effect or is being negotiated
by the Company or any of its Subsidiaries. There is no pending or, to the
Knowledge of the Company, threatened labor dispute, strike or work stoppage
against the Company or any of its
-15-
Subsidiaries that could reasonably be expected to have a Material Adverse
Effect on the Company. To the Knowledge of the Company and except as set
forth in Section 4.13(o) of the Company's Disclosure Letter, neither the
Company or any of its Subsidiaries nor any representative or employee of
the Company or any of its Subsidiaries has committed any unfair labor
practices in connection with the operation of the business of the Company
and its Subsidiaries, and there is no pending or, to the Knowledge of the
Company, threatened charge or complaint against the Company or any of its
Subsidiaries by the National Labor Relations Board or any comparable agency
of any state of the United States.
SECTION 4.14 Taxes.
-----
(a) Except for such matters as could not reasonably be expected to
have a Material Adverse Effect on the Company, all returns and reports of
or with respect to any Tax ("Tax Returns") that are required to be filed by
or with respect to the Company or any of its Subsidiaries on or before the
Effective Time have been or will be timely filed, all Taxes that are due
on or before the Effective Time have been or will be timely paid in full,
all withholding Tax requirements imposed on or with respect to the Company
or any of its Subsidiaries have been or will be satisfied in full in all
respects and no penalty, interest or other charge is or will become due
with respect to the late filing of any such Tax Return or late payment of
any such Tax.
(b) Except as set forth in Section 4.14(b) of the Company's Disclosure
Letter, all such Tax Returns have been audited by the applicable
Governmental Authority or the applicable statute of limitations has expired
for the period covered by such Tax Returns.
(c) Except as set forth in Section 4.14(c) of the Company's Disclosure
Letter, there is not in force any extension of time with respect to the due
date for the filing of any such Tax Return or any waiver or agreement for
any extension of time for the assessment or payment of any Tax due with
respect to the period covered by any such Tax Return.
(d) There is no claim against the Company or any of its Subsidiaries
for any Taxes, and no assessment, deficiency or adjustment has been
asserted or proposed with respect to any such Tax Return, that, in either
case, could reasonably be expected to have a Material Adverse Effect on the
Company.
(e) Except as set forth in Section 4.14(e) of the Company's Disclosure
Letter, none of the Company and its Subsidiaries, during the last ten
years, has been a member of an affiliated group filing a consolidated
federal income Tax Return.
SECTION 4.15 Environmental Matters. Except for matters disclosed in
---------------------
Section 4.15 of the Company's Disclosure Letter and except for matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the
-16-
Company, (a) the properties, operations and activities of the Company and its
Subsidiaries are in compliance with all applicable Environmental Laws; (b) the
Company and its Subsidiaries and the properties and operations of the Company
and its Subsidiaries are not subject to any existing, pending or, to the
Knowledge of the Company, threatened action, suit, investigation, inquiry or
proceeding by or before any Court or Governmental Authority under any
Environmental Law; (c) all Authorizations, if any, required to be obtained or
filed by the Company or any of its Subsidiaries under any Environmental Law in
connection with the business of the Company and its Subsidiaries have been
obtained or filed and are valid and currently in full force and effect; (d)
there has been no release of any hazardous substance, pollutant or contaminant
into the environment by the Company or its Subsidiaries or in connection with
their properties or operations; (e) there has been no exposure of any Person or
property to any hazardous substance, pollutant or contaminant in connection with
the properties, operations and activities of the Company and its Subsidiaries;
and (f) the Company and its Subsidiaries have made available to the Acquiror all
internal and external environmental audits and studies and all correspondence on
substantial environmental matters (in each case relevant to the Company or any
of its Subsidiaries) in the possession of the Company or its Subsidiaries.
SECTION 4.16 Intellectual Property.
---------------------
(a) Schedule 4.16(a) to the Company's Disclosure Letter contains:
(i) A listing and identification of all unexpired U.S. and foreign
patents, pending patent applications and unpatented, but identified,
inventions which are owned by the Company or its Subsidiaries (the "Patents
List");
(ii) A listing of all U.S. and all foreign trademarks, service
marks, registrations and pending applications for registrations of marks,
trade names and registered U.S. and foreign copyrights which are owned by
the Company or any Subsidiary of the Company (the "Trademark/Copyright
List");
(iii) A listing (the "Agreements List") of all agreements to which
the Company or any Subsidiary of the Company is a party (A) under which
royalties presently are payable or in the future will or may become payable
by or to the Company or any Subsidiary of the Company, or (B) which concern
rights to patents, technology, processes or proprietary information of any
Person relating to the businesses of the Company and its Subsidiaries as
they presently are conducted, have been conducted in the past or may be
conducted in the future, or (C) which in any other way affect ownership,
control, use or disclosure of intellectual property or technology material
in any way to the businesses of the Company and its Subsidiaries as they
presently are conducted, have been conducted in the past or may be
conducted in the future.
(b) Except as disclosed in Schedule 4.16(b) to the Company's Disclosure
Letter:
-17-
(i) The Company or a Subsidiary of the Company is the record owner
of, and has good title, free of any liens or other encumbrances, to all of
the items on the Patents List and the Trademark/Copyright List;
(ii) To the Knowledge of the Company, no Person has asserted that
either the Company or any Subsidiary of the Company or any licensee of the
Company or any Subsidiary of the Company, is infringing or has infringed
within the six years prior to the date hereof, any foreign or domestic
patent, trademark, service ▇▇▇▇, trade name, or copyright, or has
misappropriated or improperly used or disclosed any trade secret,
confidential information or know how or any Person;
(iii) To the Knowledge of the Company, no Person is infringing or
has infringed, within the six years prior to the date hereof, any item on
the Patents List or the Trademark/Copyright List, or has misappropriated or
improperly used or disclosed any trade secret, confidential information or
know-how of the Company or any Subsidiary of the Company;
(iv) To the Knowledge of the Company, no operations of the Company
or its Subsidiaries are infringing, or have infringed within the six years
prior to the date hereof, any foreign or domestic patent, trademark,
service ▇▇▇▇, trade name or copyright of any Person, or has involved any
misappropriation or improper use or disclosure of any trade secret,
confidential information or know-how of any Person;
(v) All necessary working requirements, all proofs of use,
renewals and all fees, annuities and other payments which are due on or
before the date of this Plan for any items in the Patents List and/or
Trademark/Copyright List have been met or paid;
(vi) None of the items in the Patents List or the
Trademark/Copyright List is the subject of any pending or, to the Knowledge
of the Company, threatened interference, re-examination, opposition,
cancellation or other protest proceeding;
(vii) To the Knowledge of the Company, the claims contained in the
issued patents on the Patents List are valid;
(viii) It has been the policy and practice of the Company and its
Subsidiaries to require that all employees, consultants and other Persons
to whom confidential information relating to the business of the Company
and its Subsidiaries is disclosed shall execute and deliver written
agreements (A) not to use or disclose any such confidential information,
except pursuant to the terms of such agreements or with the written consent
of the Company or its Subsidiary, as the case may be, and (B) to reduce to
writing, disclose and assign to the Company or its Subsidiary, as the case
may be, all inventions, discoveries and improvements, patentable or
unpatentable, and there has been no material deviation from such policy and
practice;
-18-
(ix) To the Knowledge of the Company, there is no foreign or
domestic patent which is reasonably expected by the Company or any of its
Subsidiaries to restrict materially the Acquiring Companies or their
Affiliates from practicing, licensing or otherwise exploiting the
intellectual property of the Company and its Subsidiaries, comprising, (A)
the items on the Patents List and the Trademark/Copyright List and (B) the
Company's and its Subsidiaries' confidential business information and trade
secrets;
(x) To the Knowledge of the Company and its Subsidiaries, all
Material obligations required to be performed to date, by the Company, its
Subsidiaries and any other Person pursuant to the agreements on the
Agreements List have been performed and no party to any such agreement is
materially in default in any respect thereunder.
SECTION 4.17 Insurance. The Company and its Subsidiaries own and are
---------
beneficiaries under all such insurance policies underwritten by reputable
insurers that, as to risks insured, coverages and related limits and
deductibles, are customary in the industry in which the Company and its
Subsidiaries operate. All premiums due with respect to all such insurance
policies that are Material have been paid and, to the Knowledge of the Company,
all such policies are in full force and effect. Section 4.17 of the Company's
Disclosure Letter sets forth a list, including the name of the underwriter, the
risks insured, coverage and related limits and deductibles, expiration dates and
significant riders, of the principal insurance policies currently maintained by
the Company and its Subsidiaries.
SECTION 4.18 Pooling; Tax Matters. Neither the Company nor, to the
--------------------
Knowledge of the Company, any of its Affiliates has taken or agreed to take any
action that would prevent (a) the Merger from being treated as a "pooling of
interests" in accordance with GAAP and the Regulations of the Commission or (b)
the Merger from constituting a reorganization within the meaning of section
368(a) of the Code. Without limiting the generality of the foregoing:
(a) There is no plan or intention by any shareholder of the Company
who owns 5% or more of the Company Common Stock, and to the Knowledge of
the management of the Company, there is no plan or intention on the part of
any of the remaining shareholders of the Company, to sell, exchange or
otherwise dispose of a number of shares of Acquiror Common Stock to be
received in the Merger that would reduce the ownership of Acquiror Common
Stock by the holders of Company Common Stock who will receive such Acquiror
Common Stock in the Merger to a number of shares having a value, as of the
Effective Time, of less than 50% of the value of all Company Common Stock
(including shares of Company Common Stock sold for cash in lieu of
fractional shares of Acquiror Common Stock and Dissenters' Shares)
outstanding immediately prior to the Effective Time.
(b) To the Knowledge of the Company, there is no agreement, plan or
intention by any shareholder of the Company that owns 5% or more of the
outstanding Company Common Stock to sell, exchange or otherwise dispose of
any of the shares of Acquiror Common Stock to be received by such
shareholder in the Merger.
-19-
(c) The Company and the shareholders of the Company will each pay
their respective expenses, if any, incurred in connection with the Merger.
(d) There is no intercorporate indebtedness existing between the
Company and the Acquiror or between the Company and Newco that was issued,
acquired or will be settled at a discount.
(e) The Company is not an investment company as defined in section
368(a)(2)(F)(iii) and (iv) of the Code.
(f) 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) of the Code.
SECTION 4.19 Affiliates. Section 4.19 of the Company's Disclosure Letter
----------
contains a true and complete list of all Persons who are directors or executive
officers of the Company and any other Persons who, to the Knowledge of the
Company, may be deemed to be Affiliates of the Company. Concurrently with the
execution and delivery of this Plan, the Company has delivered to the Acquiror
an executed letter agreement, substantially in the form of Annex B hereto, from
each such Person so identified.
SECTION 4.20 Certain Business Practices. As of the date of this Plan,
--------------------------
neither the Company or any of its Subsidiaries nor any director, officer,
employee or agent of the Company or any of its Subsidiaries has (a) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (b) made any unlawful payment to any
foreign or domestic government official or employee or to any foreign or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (c) consummated any transaction, made
any payment, entered into any agreement or arrangement or taken any other action
in violation of Section 1128B(b) of the Social Security Act, as amended, or (d)
made any other unlawful payment, except for any such matters that could not
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 4.21 Opinion of Financial Advisor. The Company has received the
----------------------------
opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. Incorporated on the date of this Plan to the
effect that the Common Stock Exchange Ratio is fair, from a financial point of
view, to the holders of Company Common Stock in the Merger.
SECTION 4.22 Brokers. Except as set forth in Section 4.22 of the
-------
Company's Disclosure Letter, no broker, finder or investment banker (other than
▇▇▇▇▇▇▇▇ Wertheim & Co. Incorporated and B. G. Consulting Corp.) is entitled to
any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Plan based upon arrangements made by or on
behalf of the Company. Prior to the date of this Plan, the Company has made
available to the Acquiror a complete and correct copy of all agreements between
the Company and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. Incorporated and B. G. Consulting Corp.
-20-
pursuant to which such firms will be entitled to any payment relating to the
transactions contemplated by this Plan.
SECTION 4.23 AntiTakeover Law. None of the provisions of Subchapters E,
-----------------
G and H of Chapter 25 of the PBCL is applicable to the Plan or the Merger by
virtue of the operation of Article 9 of the Company's articles of incorporation.
The provisions of Subchapter F of Chapter 25 of the PBCL are not applicable to
the Plan or the Merger by virtue of the actions of the Board of Directors of the
Company in adopting the Plan on June 9, 1997.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ACQUIROR
The Acquiror Companies hereby represent and warrant to the Company that:
SECTION 5.01 Organization and Qualification; Subsidiaries. The Acquiror,
--------------------------------------------
Newco and each other Significant Subsidiary of the Acquiror are legal entities
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization, have all requisite
corporate power and authority to own, lease and operate their respective
properties and to carry on their businesses as they are now being conducted and
are duly qualified and in good standing to do business in each jurisdiction in
which the nature of the business conducted by them or the ownership or leasing
of their respective properties makes such qualification necessary, other than
any matters, including the failure to be so qualified and in good standing, that
could not reasonably be expected to have a Material Adverse Effect on the
Acquiror. Section 5.01 of the Acquiror's Disclosure Letter sets forth, as of the
date of this Plan, a true and complete list of all Significant Subsidiaries of
the Acquiror, together with the jurisdiction of incorporation of each such
Subsidiary and the percentage of each such Subsidiary's outstanding capital
stock or other equity interests owned by the Acquiror or another Subsidiary of
the Acquiror.
SECTION 5.02 Certificate of Incorporation and Bylaws. The Acquiror has
---------------------------------------
heretofore marked for identification and furnished to the Company complete and
correct copies of the certificate of incorporation and the bylaws or the
equivalent organizational documents, in each case as amended or restated to the
date hereof, of the Acquiror and each of its Significant Subsidiaries. Neither
the Acquiror nor any of its Significant Subsidiaries is in violation of any of
the provisions of its certificate of incorporation or bylaws (or equivalent
organizational documents).
SECTION 5.03 Capitalization.
--------------
(a) The authorized capital stock of the Acquiror consists of (i)
400,000,000 shares of Acquiror Common Stock of which as of March 31, 1997
126,455,962 shares were issued and outstanding, all of which are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights created by statute, the Acquiror's
-21-
certificate of incorporation or bylaws or any agreement to which the
Acquiror is a party or is bound and (ii) 5,000,000 shares of Preferred
Stock, without par value, of which none is issued but of which 2,000,000
shares have been designated as Series A Junior Participating Preferred
Stock. Between March 31, 1997 and the date of this Plan, no shares of
Acquiror Common Stock have been issued by the Acquiror except Acquiror
Common Stock issued pursuant to the exercise of outstanding Acquiror Stock
Options, Acquiror Restricted Stock and Acquiror Common Stock issued
otherwise as set forth in Section 5.03(a) of the Acquiror's Disclosure
Letter. Except as set forth in Section 5.03(a) of the Acquiror's Disclosure
Letter, the Acquiror has not, since March 31, 1997, granted any options
for, or other rights to purchase, shares of Acquiror Common Stock.
(b) Except as set forth in Section 5.03(b) of the Acquiror's
Disclosure Letter and except for shares reserved for issuance pursuant to
the Acquiror Stock Plans, no shares of Common Stock are reserved for
issuance, and, except for Acquiror Stock Options, Acquiror Restricted Stock
agreements and for the Acquiror's obligations under the Acquiror's Rights
Agreement, there are no contracts, agreements, commitments or arrangements
obligating the Acquiror to offer, sell, issue or grant any shares of, or
any options, warrants or rights of any kind to acquire any shares of, or
any securities that are convertible into or exchangeable for any shares of,
capital stock of the Acquiror, to redeem, purchase or acquire, or offer to
purchase or acquire, any outstanding shares of, or any outstanding options,
warrants or rights of any kind to acquire any shares of, or any outstanding
securities that are convertible into or exchangeable for any shares of,
capital stock of the Acquiror or to grant any Lien on any shares of
capital stock of the Acquiror.
(c) Except as set forth in Section 5.03(c) of the Acquiror's
Disclosure Letter, (i) all the issued and outstanding shares of capital
stock of, or other equity interests in, each Significant Subsidiary of the
Acquiror are owned by the Acquiror or one of its Subsidiaries, have been
duly authorized and are validly issued, and, with respect to capital stock,
are fully paid and nonassessable, and were not issued in violation of any
preemptive or similar rights of any past or present equity holder of such
Subsidiary; (ii) all such issued and outstanding shares, or other equity
interests, that are owned by the Acquiror or one of its Subsidiaries are
owned free and clear of all Liens; (iii) no shares of capital stock of, or
other equity interests in, any Significant Subsidiary of the Acquiror are
reserved for issuance, and there are no contracts, agreements, commitments
or arrangements obligating the Acquiror or any of its Significant
Subsidiaries (A) to offer, sell, issue, grant, pledge, dispose of or
encumber any shares of capital stock of, or other equity interests in, or
any options, warrants or rights of any kind to acquire any shares of
capital stock of, or other equity interests in, or any securities that are
convertible into or exchangeable for any shares of capital stock of, or
other equity interests in, any of the Significant Subsidiaries of the
Acquiror or (B) to redeem, purchase or acquire, or offer to purchase or
acquire, any outstanding shares of capital stock of, or other equity
interests in, or any outstanding options, warrants or rights of any kind to
acquire any shares of capital stock of, or other equity interests in, or
any
-22-
outstanding securities that are convertible into or exchangeable for, any
shares of capital stock of, or other equity interests in, any of the
Significant Subsidiaries of the Acquiror or (C) to grant any Lien on any
outstanding shares of capital stock of, or other equity interests in, any
of the Significant Subsidiaries of the Acquiror; except for any matter
under clause (i), (ii) or (iii) of this Section 5.03(c) that could not
reasonably be expected to have a Material Adverse Effect on the Acquiror.
(d) Except for revocable proxies granted by the Acquiror or its
Subsidiaries with respect to the capital stock of Subsidiaries owned by the
Acquiror or its Subsidiaries, there are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which the
Acquiror or any of its Significant Subsidiaries is a party or by which the
Acquiror or any of its Significant Subsidiaries is bound with respect to
the voting of any shares of capital stock of the Acquiror or any of its
Significant Subsidiaries.
SECTION 5.04 Authorization of Plan. Each of the Acquiror and Newco has
---------------------
all requisite corporate power and authority to execute and deliver this Plan and
each instrument required hereby to be executed and delivered by it at the
Closing, to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby. The execution and delivery by each of
Acquiror and Newco of this Plan and each instrument required hereby to be
executed and delivered by each of them at the Closing and the performance of
their respective obligations hereunder and thereunder have been duly and validly
authorized by all requisite corporate action on the part of the Acquiror and
Newco, respectively. This Plan has been duly executed and delivered by the
Acquiror and Newco and (assuming due authorization, execution and delivery
hereof by the other party hereto) constitutes a legal, valid and binding
obligation of the Acquiror and Newco, enforceable against the Acquiror and Newco
in accordance with its terms, except as the same may be limited by legal
principles of general applicability governing the application and availability
of equitable remedies.
SECTION 5.05 Approvals. Except for the applicable requirements, if any,
---------
of (a) the Securities Act, (b) the Exchange Act, (c) state securities or blue
sky laws, (d) the HSR Act, (e) the NYSE, (f) the filing and recordation of
appropriate merger documents as required by the PBCL and the DGCL and (g) those
Laws, Regulations and Orders noncompliance with which could not reasonably be
expected to have a material adverse effect on the ability of the Acquiror or
Newco to perform its obligations under this Plan or to have a Material Adverse
Effect on the Acquiror, no filing or registration with, no waiting period
imposed by and no Authorization of, any Governmental Authority is required under
any Law, Regulation or Order applicable to the Acquiror or Newco to permit the
Acquiror or Newco to execute, deliver or perform this Plan or any instrument
required hereby to be executed and delivered by it at the Closing. To the
Knowledge of the Acquiror, there are no facts or circumstances that could
reasonably be expected to preclude the Acquiror Common Stock to be issued in the
Merger from being approved for listing on the NYSE.
-23-
SECTION 5.06 No Violation. Assuming effectuation of all filings and
------------
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, Governmental Authorities
indicated as required in Section 5.05, neither the execution and delivery by the
Acquiror or Newco of this Plan or any instrument required hereby to be executed
and delivered by it at the Closing nor the performance by the Acquiror or Newco
of its obligations hereunder or thereunder will (a) violate or breach the terms
of or cause a default under (i) any Law, Regulation or Order applicable to the
Acquiror or Newco, (ii) the certificate of incorporation or bylaws of the
Acquiror or Newco or (iii) any contract or agreement to which the Acquiror or
any of its Subsidiaries is a party or by which it or any of its properties or
assets is bound, or (b) with the passage of time, the giving of notice or the
taking of any action by a third Person, have any of the effects set forth in
clause (a) of this Section, except in any such case for any matters described in
this Section that could not reasonably be expected to have a material adverse
effect upon the ability of the Acquiror or Newco to perform its obligations
under this Plan or a Material Adverse Effect on the Acquiror.
SECTION 5.07 Reports.
-------
(a) Since December 31, 1993, the Acquiror has filed all SEC Reports
required to be filed by the Acquiror with the Commission. The Acquiror's
SEC Reports, including those filed after the date of this Plan and prior to
the Effective Time, (i) were prepared in all material respects in
accordance with the applicable requirements of the Securities Act and the
Exchange Act, as the case may be, and the applicable Regulations of the
Commission thereunder and (ii) did not at the time they were filed contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
(b) The Acquiror's Consolidated Financial Statements and any
consolidated financial statements of the Acquiror (including any related
notes thereto) contained in any SEC Reports filed by the Acquiror with the
Commission after the date of this Plan (i) have been or will have been
prepared in accordance with the published Regulations of the Commission and
in accordance with GAAP (except (A) to the extent required by changes in
GAAP and (B), with respect to SEC Reports filed by the Acquiror prior to
the date of this Plan, as may be indicated in the notes thereto) and (ii)
fairly present the consolidated financial position of the Acquiror and its
Subsidiaries as of the respective dates thereof and the consolidated
results of their operations and cash flows for the periods indicated
(including, in the case of any unaudited interim financial statements,
reasonable estimates of normal and recurring year-end adjustments).
(c) Except as set forth in Section 5.07(c) of the Acquiror's
Disclosure Letter, there exist no liabilities or obligations of the
Acquiror and its Subsidiaries that are Material to the Acquiror, whether
accrued, absolute, contingent or threatened, that would be required to be
reflected, reserved for or disclosed under GAAP in consolidated financial
statements of the Acquiror as of and for the period ended on the date of
this
-24-
representation and warranty, other than (i) liabilities or obligations
that are adequately reflected, reserved for or disclosed in the Acquiror's
Consolidated Financial Statements, (ii) liabilities or obligations incurred
in the ordinary course of business of the Acquiror since ▇▇▇▇▇ ▇▇, ▇▇▇▇,
(▇▇▇) liabilities or obligations the incurrence of which is permitted by
Section 6.02(b) and (iv) liabilities or obligations that are not Material
to the Acquiror.
SECTION 5.08 No Material Adverse Effect; Conduct.
-----------------------------------
(a) Since March 31, 1997, no event (other than any event that is of
general application to all or a substantial portion of the Acquiror's
industries and other than any event that is expressly subject to any other
representation or warranty contained in Article V) has, to the Knowledge of
the Acquiror, occurred that, individually or together with other similar
events, could reasonably be expected to constitute or cause a Material
Adverse Effect on the Acquiror.
(b) Except as set forth in Section 5.08(b) of the Acquiror's
Disclosure Letter, during the period from March 31, 1997 to the date of
this Plan, neither the Acquiror nor any of its Subsidiaries has engaged in
any conduct that is proscribed during the period from the date of this Plan
to the Effective Time by subsections (i) through (viii) of Section 6.02(b).
SECTION 5.09 Title to Properties. The Acquiror or its Subsidiaries,
-------------------
individually or together, have indefeasible title to all of the properties
reflected in the Acquiror's Consolidated Balance Sheet, other than any
properties reflected in the Acquiror's Consolidated Balance Sheet that have been
sold or otherwise disposed of since the date of the Acquiror's Consolidated
Balance Sheet or are not, individually or in the aggregate, Material to the
Acquiror, free and clear of Liens, other than (x) Liens the existence of which
is reflected in the Acquiror's Consolidated Financial Statements, (y) Permitted
Encumbrances and (z) Liens that, individually or in the aggregate, are not
Material to the Acquiror. The Acquiror or its Subsidiaries, individually or
together, hold under valid lease agreements all real and personal properties
reflected in the Acquiror's Consolidated Balance Sheet as being held under
capitalized leases, and all real and personal property that is subject to the
operating leases to which reference is made in the notes to the Acquiror's
Audited Consolidated Financial Statements, and enjoy peaceful and undisturbed
possession of such properties under such leases, other than (i) any properties
as to which such leases have terminated in the ordinary course of business since
the date of the Acquiror's Consolidated Balance Sheet and (ii) any properties
that, individually or in the aggregate, are not Material to the Acquiror.
SECTION 5.10 Certain Obligations. Except as set forth in Section 5.10
-------------------
of the Acquiror's Disclosure Letter, all Material Contracts to which the
Acquiror or any of its Subsidiaries is a party are in full force and effect, the
Acquiror or the Subsidiary of the Acquiror that is a party to or bound by such
Material Contract has performed its obligations thereunder to date and, to the
Knowledge of the Acquiror, each other party thereto has performed its
obligations thereunder to date, other than any failure of any such Material
Contract to be in full
-25-
force and effect or any nonperformance thereof that could not reasonably be
expected to have a Material Adverse Effect on the Acquiror.
SECTION 5.11 Authorizations; Compliance. To the Knowledge of the
--------------------------
Acquiror, the Acquiror and its Subsidiaries have obtained all Authorizations
that are necessary to carry on their businesses as currently conducted, except
for any such Authorizations as to which the failure to possess, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect on the Acquiror. Such Authorizations are in full force and effect, have
not been violated in any respect that could reasonably be expected to have a
Material Adverse Effect on the Acquiror and there is no action, proceeding or
investigation pending or threatened regarding suspension, revocation or
cancellation of any of such Authorizations, except in the case of any
suspension, revocation or cancellation of such Authorizations that could not
reasonably be expected to have a Material Adverse Effect on the Acquiror.
SECTION 5.12 Litigation; Compliance with Laws. There are no actions,
--------------------------------
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Acquiror, threatened against the Acquiror or
any of its Subsidiaries, at law or in equity, in any Court or before or by any
Governmental Authority, except actions, suits or proceedings that are set forth
in Section 5.12 or Section 5.15 of the Acquiror's Disclosure Letter or ,
individually or, with respect to multiple actions, suits or proceedings that
allege similar theories of recovery based on similar facts, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on the
Acquiror. The Acquiror and its Subsidiaries are in substantial compliance with
all applicable Laws and Regulations and are not in default with respect to any
Order applicable to the Acquiror or any of its Subsidiaries, except such events
of noncompliance or defaults that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Acquiror.
SECTION 5.13 Employee Benefit Plans. Except as set forth in Section 5.13
----------------------
of the Acquiror's Disclosure Letter:
(a) No event has occurred and, to the Knowledge of the Acquiror, there
exists no condition or set of circumstances in connection with which the
Acquiror or any of its Subsidiaries could be subject to any liability under
the terms of any Benefit Plans of the Acquiror or any of its Significant
Subsidiaries or, with respect to any such Benefit Plan, under ERISA, the
Code or any other applicable Law, other than any condition or set of
circumstances that could not reasonably be expected to have a Material
Adverse Effect on the Acquiror.
(b) As to any such Current Benefit Plan intended to be qualified under
Section 401 of the Code, such Benefit Plan satisfies in form the
requirements of such Section, except to the extent amendments are not
required by Law to be made until a date after the Effective Time. There has
been no termination or partial termination of any such Benefit Plan within
the meaning of Section 411(d)(3) of the Code.
-26-
(c) As to any such Terminated Benefit Plan intended to have been
qualified under Section 401 of the Code, such Terminated Benefit Plan
received a favorable determination letter from the IRS with respect to its
termination.
(d) There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the Knowledge of the Acquiror, threatened
against, or with respect to, any of such Benefit Plans or their assets that
could reasonably be expected to have a Material Adverse Effect on the
Acquiror.
(e) As to any such Current Benefit Plan subject to Title IV of ERISA,
(i) there has been no event or condition which presents the material risk
of plan termination, (ii) no accumulated funding deficiency, whether or not
waived, within the meaning of Section 302 of ERISA or Section 412 of the
Code has been incurred, (iii) no reportable event within the meaning of
Section 4043 of ERISA (for which the disclosure requirements of Regulation
section 2615.3 and section 4043.1 et seq., promulgated by the PBGC, have
not been waived) has occurred within six years prior to the date of this
Plan, (iv) no notice of intent to terminate such Benefit Plan has been
given under Section 4041 of ERISA, (v) no proceeding has been instituted
under Section 4042 of ERISA to terminate such Benefit Plan, (vi) no
liability to the PBGC has been incurred (other than with respect to
required premium payments) and (vii) the assets of the Benefit Plan equal
or exceed the actuarial present value of the benefit liabilities, within
the meaning of Section 4041 of ERISA, under the Benefit Plan, based upon
reasonable actuarial assumptions and the asset valuation principles
established by the PBGC.
(f) Neither the Acquiror nor any of its Subsidiaries contributes or
has an obligation to contribute, and has not within six years prior to the
date of this Plan contributed or had an obligation to contribute, to a
multiemployer plan within the meaning of Section 3(37) of ERISA.
SECTION 5.14 Taxes.
-----
(a) Except for such matters as could not reasonably be expected to
have a Material Adverse Effect on the Acquiror, all Tax Returns that are
required to be filed by or with respect to the Acquiror or any of its
Subsidiaries on or before the Effective Time have been or will be timely
filed, all Taxes that are due on or before the Effective Time have been or
will be timely paid in full, all withholding Tax requirements imposed on
or with respect to the Acquiror or any of its Subsidiaries have been or
will be satisfied in full in all respects and no penalty, interest or
other charge is or will become due with respect to the late filing of any
such Tax Return or late payment of any such Tax.
(b) There is no claim against the Acquiror or any of its Subsidiaries
for any Taxes, and no assessment, deficiency or adjustment has been
asserted or proposed with
-27-
respect to any such Tax Return, that, in either case, could reasonably be
expected to have a Material Adverse Effect on the Acquiror.
SECTION 5.15 Environmental Matters. Except for matters disclosed in
---------------------
Section 5.15 of the Acquiror's Disclosure Letter and except for matters that,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect on the Acquiror, (a) the properties, operations and
activities of the Acquiror and its Subsidiaries are in compliance with all
applicable Environmental Laws; (b) the Acquiror and its Subsidiaries and the
properties and operations of the Acquiror and its Subsidiaries are not subject
to any existing, pending or, to the Knowledge of the Acquiror, threatened
action, suit, investigation, inquiry or proceeding by or before any Court or
Governmental Authority under any Environmental Law; (c) all Authorizations, if
any, required to be obtained or filed by the Acquiror or any of its Subsidiaries
under any Environmental Law in connection with the business of the Acquiror and
its Subsidiaries have been obtained or filed and are valid and currently in full
force and effect; (d) there has been no release of any hazardous substance,
pollutant or contaminant into the environment by the Acquiror or its
Subsidiaries or in connection with their properties or operations; and (e) there
has been no exposure of any Person or property to any hazardous substance,
pollutant or contaminant in connection with the properties, operations and
activities of the Acquiror and its Subsidiaries.
SECTION 5.16 Pooling; Tax Matters. Neither the Acquiror nor, to the
--------------------
Knowledge of the Acquiror, any of its Affiliates has taken or agreed to take any
action that would prevent (a) the Merger from being treated for financial
accounting purposes as a "pooling of interests" in accordance with GAAP and the
Regulations of the Commission or (b) the Merger from constituting a
reorganization within the meaning of section 368(a) of the Code. Without
limiting the generality of the foregoing:
(a) Following the Merger, the Surviving Corporation will hold at
least 90 percent of the fair market value of the Company's net assets,
at least 70 percent of the fair market value of the Company's gross
assets, at least 90 percent of the fair market value of the net assets
of Newco and at least 70 percent of the fair market value of the gross
assets of Newco, held immediately prior to the Merger, taking into
account amounts paid for Dissenters' Shares and used to pay Merger
Expenses and any distributions other than regular dividends.
(b) The Acquiror has no plan or intention to (A) liquidate the
Surviving Corporation, (B) merge the Surviving Corporation with or
into another corporation, (C) sell or otherwise dispose of the stock
of the Surviving Corporation except for transfers of stock to
corporations controlled (within the meaning of section 368(c) of the
Code) by the Acquiror, (D) cause or permit the Surviving Corporation
to issue additional shares of its capital stock that would result in
the Acquiror's losing control (within the meaning of section 368(c) of
the Code) of the Surviving Corporation, (E) cause or permit the
Surviving Corporation to sell or otherwise dispose of any of its
assets or of any of the assets
-28-
acquired from Newco except for dispositions made in the ordinary
course of business or transfers of assets to a corporation controlled
by the Surviving Corporation or (F) reacquire any of the Acquiror
Common Stock issued to the holders of Company Common Stock in the
Merger.
(c) Newco has no liabilities that will be assumed by the
Surviving Corporation in the Merger and will not transfer to the
Surviving Corporation in the Merger any assets subject to liabilities.
(d) Following the Merger, the Surviving Corporation will continue
the historic business of the Company or use a significant portion of
its assets in a business.
(e) There is no intercorporate indebtedness existing between the
Company and the Acquiror or between the Company and Newco that was
issued, acquired, or will be settled at a discount.
(f) The Acquiror does not own, nor has it owned during the past
five years, any shares of capital stock of the Company.
SECTION 5.17 Insurance. The Acquiror and its Subsidiaries own and are
---------
beneficiaries under all such insurance policies underwritten by reputable
insurers that, as to risks insured, coverages and related limits and
deductibles, are customary for a company of the size and nature of the Acquiror
and which is similarly situated. All premiums due with respect to all such
insurance policies that are Material have been paid and, to the Knowledge of the
Acquiror, all such policies are in full force and effect.
SECTION 5.18 Affiliates. Section 5.18 of the Acquiror's Disclosure
----------
Letter contains a true and complete list of all Persons who, to the Knowledge of
the Acquiror, may be deemed to be Affiliates of the Acquiror, including all
directors and executive officers of the Acquiror. Concurrently with the
execution and delivery of this Plan, the Acquiror has delivered to the Company
an executed letter agreement, substantially in the form of Annex C hereto, from
each such Person so identified as an Affiliate of the Acquiror.
SECTION 5.19 Certain Business Practices. As of the date of this Plan,
--------------------------
neither the Acquiror or any of its Subsidiaries nor any director, officer,
employee or agent of the Acquiror or any of its Subsidiaries has (a) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (b) made any unlawful payment to any
foreign or domestic government official or employee or to any foreign or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (c) consummated any transaction, made
any payment, entered into any agreement or arrangement or taken any other action
in violation of Section 1128B(b) of the Social Security Act, as amended, or (d)
made any other unlawful payment, except for any such matters that could not
reasonably be expected to have a Material Adverse Effect on the Acquiror.
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SECTION 5.20 Brokers. Except as set forth in Section 5.20 of the
-------
Acquiror's Disclosure Letter, no broker, finder or investment banker (other than
▇▇▇▇▇▇, Read & Co. Inc.) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Plan based
upon arrangements made by or on behalf of the Acquiror.
SECTION 5.21 Acquiring Person. Based on the information set forth in the
----------------
Company's SEC Reports, no holder of 5% or more of the outstanding Company Common
Stock whose existence is disclosed therein will at the Effective Time become an
"Acquiring Person," as such term is defined in the Acquiror's Rights Agreement,
as a result of any of the transactions contemplated by this Plan.
ARTICLE VI
COVENANTS
SECTION 6.01 Affirmative Covenants. The Company hereby covenants and
---------------------
agrees that, prior to the Effective Time, unless otherwise expressly
contemplated by this Plan or consented to in writing by the Acquiror, it will
and will cause its Subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices;
(b) use all reasonable efforts to preserve substantially intact its
business organization, maintain its rights and franchises, retain the
services of its respective key employees and maintain its relationships
with its respective customers and suppliers;
(c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain
supplies and inventories in quantities consistent with its customary
business practice; and
(d) use all reasonable efforts to keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to that
currently maintained;
except for any matters that, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 6.02 Negative Covenants.
------------------
(a) The Company covenants and agrees that, except as expressly
contemplated by this Plan or otherwise consented to in writing by the
Acquiror, from the date of this Plan until the Effective Time, it will not
do, and will not permit any of its Subsidiaries to do, any of the
following:
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(i) (A) increase the compensation payable to or to become
payable to any director or executive officer, except for increases in
salary or wages payable or to become payable upon promotion to an
office having greater operational responsibilities or otherwise in the
ordinary course of business and consistent with past practice; (B)
grant any severance or termination pay (other than pursuant to the
normal severance policy of the Company or its Subsidiaries as in
effect on the date of this Plan) to, or enter into any employment or
severance agreement with, any director, officer or employee, either
individually or as part of a class of similarly situated persons; (C)
establish, adopt or enter into any Benefit Plan or (D), except as may
be required by applicable Law and actions that are not inconsistent
with the provisions of Section 7.08 of this Plan, amend or take any
other actions (including the acceleration of vesting, waiving of
performance criteria or the adjustment of awards or any other actions
permitted upon a change in control of such party or a filing under
Section 13(d) or 14(d) of the Exchange Act with respect to such party)
with respect to any of the Benefit Plans of such party;
(ii) declare or pay any dividend on, or make any other
distribution in respect of, outstanding shares of capital stock,
except for dividends by a wholly owned Subsidiary of the Company to
the Company or another wholly owned Subsidiary of the Company;
(iii) (A) redeem, purchase or acquire, or offer to purchase or
acquire, any outstanding shares of capital stock of, or other equity
interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity
interests in, or any outstanding options, warrants or rights of any
kind to acquire any shares of capital stock of, or other equity
interests in, the Company or any of its Subsidiaries (other than (1)
any such acquisition by the Company or any of its wholly owned
Subsidiaries directly from any wholly owned Subsidiary of the Company,
(2) any repurchase, forfeiture or retirement of shares of Company
Common Stock or Company Stock Options occurring pursuant to the terms
(as in effect on the date of this Plan) of any existing Benefit Plan
of the Company or any of its Subsidiaries or (3) any periodic purchase
of Company Common Stock for allocation to employee's accounts
occurring pursuant to the terms (as in effect on the date of this
Plan) of any existing employee stock purchase plan); (B) to effect any
reorganization or recapitalization; or (C) to split, combine or
reclassify any of the capital stock of, or other equity interests in,
the Company or any of its Subsidiaries or to issue or to authorize or
propose the issuance of any other securities in respect of, in lieu of
or in substitution for, shares of such capital stock or such equity
interests;
(iv) (A) offer, sell, issue or grant, or authorize the offering,
sale, issuance or grant, of any shares of capital stock of, or other
equity interests in, any securities convertible into or exchangeable
for any shares of capital stock of,
-31-
or other equity interests in, or any options, warrants or rights of
any kind to acquire any shares of capital stock of, or other equity
interests in, the Company or any of its Subsidiaries, other than
issuances of Company Common Stock (1) upon the exercise of Company
Stock Options outstanding at the date of this Plan in accordance with
the terms thereof (as in effect on the date of this Plan), (2) upon
the expiration of any restrictions upon issuance of any grant existing
at the date of this Plan of restricted stock or bonus stock pursuant
to the terms (as in effect on the date of this Plan) of any Benefit
Plans of the Company or any of its Subsidiaries or (3) any periodic
issuance of shares of Company Common Stock required by the terms (as
in effect on the date of this Plan) of any Benefit Plans of the
Company or any of its Subsidiaries, (B) amend or otherwise modify the
terms (as in effect on the date of this Plan) of any outstanding
options, warrants or rights the effect of which shall be to make such
terms more favorable to the holders thereof (except as may be required
by ERISA or other applicable Law); (C) take any action to accelerate
the vesting of any outstanding Company Stock Options or (D) grant any
Lien with respect to any shares of capital stock of, or other equity
interests in, any Subsidiary of the Company;
(v) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or all or a portion of the
assets of, or in any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof or otherwise to acquire any assets of any other Person (other
than the purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with past practice);
(vi) sell, lease, exchange or otherwise dispose of, or grant any
Lien (other than a Permitted Encumbrance) with respect to, any of the
assets of the Company or any of its Subsidiaries that are Material to
the Company, except for dispositions of assets and inventories in the
ordinary course of business and consistent with past practice and
dispositions of assets and purchase money Liens incurred in connection
with the original acquisition of assets and secured by the assets
acquired in an amount not to exceed $50,000 in the aggregate;
(vii) adopt any amendments to its charter or bylaws or other
organizational documents that would alter the terms of its capital
stock or other equity interests or would have a material adverse
effect on the ability of the Company to perform its obligations under
this Plan;
(viii) (A) change any of its methods of accounting in effect at
December 31, 1996, except as may be required to comply with GAAP, (B)
make or rescind any election relating to Taxes (other than any
election which must be made periodically which is made consistent with
past practice), (C) settle or compromise any claim, action, suit,
litigation, proceeding, arbitration, investigation, audit or
controversy relating to Taxes (except where the cost to the
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Company and its Subsidiaries of such settlements or compromises,
individually or in the aggregate, does not exceed $50,000) or (D)
change any of its methods of reporting income or deductions for
federal income tax purposes from those employed in the preparation of
the federal income tax returns for the taxable year ending December
31, 1995, except, in each case, as may be required by Law and for
matters that could not reasonably be expected to have a Material
Adverse Effect on the Company;
(ix) incur any obligations for borrowed money or purchase money
indebtedness (other than purchase money indebtedness as to which Liens
may be granted as permitted by Section 6.02(a)(vi)) that are Material
to the Company, whether or not evidenced by a note, bond, debenture or
similar instrument, except drawings under credit lines existing at the
date of this Plan or otherwise in the ordinary course of business
consistent with past practice and, in the latter instance, in no event
(including purchase money indebtedness as to which Liens may be
granted pursuant to Section 6.02(a)(vi)) in excess of $50,000;
(x) release any third Person from its obligations under any
existing standstill agreement relating to a Competing Transaction or
otherwise under any confidentiality agreement or similar agreement;
(xi) enter into any Material Contract with any third Person that
provides for an exclusive arrangement with that third Person or is
substantially more restrictive on the Company or any of its
Subsidiaries or substantially less advantageous to the Company or any
of its Subsidiaries than Material Contracts existing on the date
hereof; or
(xii) agree in writing or otherwise to do any of the foregoing.
(b) The Acquiror covenants and agrees that, except as expressly
contemplated by this Plan or otherwise consented to in writing by the
Company, from the date of this Plan until the Effective Time, it will not
do, and will not permit any of its Subsidiaries to do, any of the
following:
(i) declare or pay any extraordinary dividend or distribution
(such term not including the Acquiror's regular quarterly dividend or
any change thereto) in cash or property other than Acquiror Common
Stock, except for dividends by a wholly owned Subsidiary of the
Acquiror to the Acquiror or another wholly owned Subsidiary of the
Acquiror;
(ii) (A) redeem, purchase or acquire, or offer to purchase or
acquire, any outstanding shares of capital stock of, or other equity
interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity
interests in, or any outstanding options, warrants or rights of
-33-
any kind to acquire any shares of capital stock of, or other equity
interests in, the Acquiror or any of its Subsidiaries (other than (1)
any such acquisition by the Acquiror or any of its wholly owned
Subsidiaries directly from any wholly owned Subsidiary of the
Acquiror, (2) any repurchase, forfeiture or retirement of shares of
Acquiror Common Stock or Acquiror Stock Options occurring pursuant to
the terms of any existing Benefit Plan of the Acquiror or any of its
Subsidiaries or (3) any periodic purchase of Acquiror Common Stock for
allocation to employee's accounts occurring pursuant to the terms of
any existing Benefit Plan of the Acquiror or any of its Subsidiaries)
or (B) effect any reorganization or recapitalization other than any
reorganization or recapitalization that could not reasonably be
expected to have a material adverse effect on the ability of the
Acquiror to perform its obligations under this Plan;
(iii) offer, sell, issue or grant, or authorize the offering,
sale, issuance or grant, of any shares of capital stock of, or other
equity interests in, any securities convertible into or exchangeable
for any shares of capital stock of, or other equity interests in, or
any options, warrants or rights of any kind to acquire any shares of
capital stock of, or other equity interests in, the Acquiror or any of
its Subsidiaries, other than issuances of Acquiror Common Stock (A)
upon the exercise of Acquiror Stock Options outstanding at the date of
this Plan in accordance with the terms thereof, (B) as Acquiror
Restricted Stock, (C) upon the expiration of any restrictions upon
issuance of any grant existing at the date of this Plan of restricted
stock or bonus stock pursuant to the terms of any Benefit Plans of the
Acquiror or any of its Subsidiaries, (D) any periodic issuance of
shares of Acquiror Common Stock occurring pursuant to the terms of any
Benefit Plan of the Acquiror or any of its Subsidiaries or (E) any
issuance of shares of Acquiror Common Stock for cash or in connection
with any acquisition of equity interests, assets or businesses that
could not reasonably be expected to have a material adverse effect on
the ability of the Acquiror to perform its obligations under this
Plan;
(iv) acquire or agree to acquire, by merging or consolidating
with, by purchasing an equity interest in or all or a portion of the
assets of, or in any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, or otherwise to acquire any assets of any other Person (other
than the purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with past practice and acquisitions
of equity interests, assets and businesses that could not reasonably
be expected to have a material adverse effect on the ability of the
Acquiror to perform its obligations under this Plan);
(v) sell, lease, exchange or otherwise dispose of, or grant any
Lien (other than a Permitted Encumbrance) with respect to, any of the
assets of the Acquiror or any of its Subsidiaries that are Material to
the Acquiror, except for
-34-
dispositions of assets and inventories in the ordinary course of
business and consistent with past practice and dispositions of assets
and incurrences of Liens that could not reasonably be expected to have
a material adverse effect on the ability of the Acquiror to perform
its obligations under this Plan;
(vi) adopt any amendments to its charter or bylaws or other
organizational documents that would alter the terms of the Acquiror's
Common Stock or could reasonably be expected to have a material
adverse effect on the ability of the Acquiror to perform its
obligations under this Plan;
(vii) incur any obligations for borrowed money or purchase money
indebtedness that are Material to the Acquiror, whether or not
evidenced by a note, bond, debenture or similar instrument, except
drawings under credit lines existing at the date of this Plan,
obligations incurred in the ordinary course of business consistent
with past practice and obligations that could not reasonably be
expected to have a material adverse effect on the ability of the
Acquiror to perform its obligations under this Plan; or
(viii) agree in writing or otherwise to do any of the foregoing.
SECTION 6.03 No Solicitation. From the date of this Plan until the
---------------
Effective Time or the termination of this Plan pursuant to Section 9.01, the
Company agrees that it will not (a) initiate, solicit or encourage (including by
way of furnishing information or assistance), or take any other action knowingly
to facilitate, any inquiries from any Person or the making of any proposal by
any Person that constitutes, or may reasonably be expected to lead to, any
Competing Transaction, (b) enter into discussions or negotiate with any Person
in furtherance of such inquiries or to obtain a Competing Transaction, (c) agree
to or endorse any Competing Transaction or (d) authorize or permit any of the
Company's Representatives to take any such action, and the Company shall
promptly notify the Acquiror of all relevant terms of any such inquiries and
proposals received by the Company, any of its Subsidiaries or any Company
Representative relating to any of such matters and, if such inquiry or proposal
is in writing, the Company shall promptly deliver or cause to be delivered to
the Acquiror a copy of such inquiry or proposal; provided, however, that nothing
contained in this Section 6.03 shall prohibit the Board of Directors of the
Company from complying with Rule 14e-2 promulgated under the Exchange Act with
regard to a tender offer or exchange offer for shares of Company Common Stock
commenced prior to the Company Shareholders' Meeting. Pending the Effective Time
or the termination of the Plan, the Company shall not, through action of its
Board of Directors, approve the acquisition of Company Common Stock by any
Person, other than the Acquiror and any of its Subsidiaries and Affiliates, who,
following such acquisition, would be an "interested shareholder" under
Subchapter F of Chapter 25 of the PBCL.
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SECTION 6.04 Access and Information.
----------------------
(a) Each of the Company and the Acquiror shall, and shall cause its
Subsidiaries to, (i) afford to the other and its officers, directors,
employees, accountants, consultants, legal counsel, agents and other
representatives (collectively, in the case of the Company, the "Company's
Representatives" and, in the case of the Acquiror, the "Acquiror's Repre
sentatives") access, at reasonable times upon reasonable prior notice, to
the officers, employees, agents, properties, offices and other facilities
of the other and to its books and records and (ii) furnish promptly to the
other and its Representatives such information concerning its business,
properties, contracts, records and personnel (including financial,
operating and other data and information) as may be reasonably requested,
from time to time, by or on behalf of the other party.
(b) If this Plan is terminated for any reason pursuant to Article IX
hereof, each of the Company and the Acquiror shall, within ten days after a
request therefor from the other, return or destroy (and provide the other
party within such ten day time period with a certificate of an executive
officer certifying such destruction) all of the information furnished to
such party and its Representatives pursuant to the provisions of Section
6.04(a) and all internal memoranda, analyses, evaluations and other similar
material containing, reflecting or prepared from any such information, in
each case other than information available to the general public without
restriction.
SECTION 6.05 Confidentiality Agreement. The parties shall comply with,
--------------------------
and shall cause their respective Representatives to comply with, all of their
respective obligations under the Confidentiality Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Meeting of Shareholders. The Company shall, promptly after
-----------------------
the date of this Plan, take all actions necessary in accordance with the PBCL
and the Company's articles of incorporation and bylaws to convene a special
meeting of the Company's shareholders to consider adoption of this Plan (the
"Company Shareholders' Meeting"), and the Company shall consult with the
Acquiror in connection therewith. The Company covenants and agrees that (i) the
Board of Directors of the Company shall recommend approval of the Plan to the
shareholders of the Company at the Company Shareholders' Meeting, (ii) the
Company Proxy Statement shall include the recom mendation of the Company's
Board of Directors in favor of the Plan; and (iii) the Company shall use all
reasonable efforts to solicit from shareholders of the Company proxies in favor
of the adoption of this Plan and to secure the vote or consent of shareholders
required by the PBCL and the Company's articles of incorporation and bylaws to
approve and adopt this Plan; provided, however, that the Board of Directors of
the Company may withdraw, modify or change its recommendation of this Plan to
the extent necessary to conform such recommendation to a recommendation adopted
in good faith by the Board of
-36-
Directors pursuant to section 14e-2 of the Exchange Act in response to a tender
offer or exchange offer for the Company Common Stock commenced after the date of
this Plan and prior to the Effective Time.
SECTION 7.02 Registration Statement; Proxy Statements.
----------------------------------------
(a) As promptly as practicable after the date of this Plan, the
Acquiror shall prepare a registration statement on Form S-4 (such
registration statement, together with any amendments thereof or supplements
thereto, being the "Registration Statement"), which, with the assistance of
the Company, shall contain a prospectus/proxy statement relating to the
vote of shareholders of the Company at the Company Shareholders' Meeting
(the "Prospectus/Proxy Statement"), in connection with the registration
under the Securities Act of the offering, sale and delivery of Acquiror
Common Stock to be issued in the Merger pursuant to this Plan. As promptly
as practicable after the date of this Plan, the Company shall assist the
Acquiror in preparing the Prospectus/Proxy Statement and shall, pursuant to
the Proxy Rules under the Exchange Act, file the same, in preliminary form,
with the Commission, together with a form of proxy, in connection with the
vote of the Company's shareholders with respect to this Plan (such
Prospectus/Proxy Statement, together with any amendments thereof or
supplements thereto, in each case in the form or forms mailed to the
Company's shareholders, being the "Company Proxy Statement"). The Acquiror
and the Company agree to use all reasonable efforts to effect such filing
on or before June 17, 1997 and to mail such Prospectus/Proxy Statement to
the shareholders of the Company on or before July 30, 1997; provided,
however, that neither party shall be compelled by such undertaking to make
any concession to any Governmental Authority that it in good faith regards
as inappropriate. As soon as reasonably appropriate, the Acquiror shall
file the Registration Statement with the Commission pursuant to the
registration provisions of the Securities Act. The Acquiror and the
Company will use all reasonable efforts to have or cause the Registration
Statement to become effective as promptly as practicable, and shall take
any action required to be taken under any applicable federal or state
securities Laws in connection with the issuance of shares of Acquiror
Common Stock in the Merger. Each of the Acquiror Companies and the Company
shall furnish all information concerning it and the holders of its capital
stock as the other may reasonably request in connection with such actions.
As promptly as practicable after the Registration Statement shall have
become effective, the Company shall mail the Company Proxy Statement to its
shareholders entitled to notice of and to vote at the Company Shareholders'
Meeting.
(b) The information supplied by the Company for inclusion in the
Registration Statement shall not, at the time the Registration Statement is
declared effective, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading. The information
supplied by the Company for inclusion in the Company Proxy Statement to be
sent to the shareholders of the Company in connection with the Company
Shareholders' Meeting shall not, at the date the Company Proxy Statement
(or any
-37-
supplement thereto) is first mailed to shareholders or at the time of the
Company Shareholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If at any time
prior to the Effective Time any event or circumstance relating to the
Company or any of its Affiliates, or its or their respective officers or
directors, should be discovered by the Company that should be set forth in
an amendment to the Registration Statement or a supplement to the Company
Proxy Statement, the Company shall promptly inform the Acquiror. All
documents that the Company is responsible for filing with the SEC in
connection with the transactions contemplated herein shall comply as to
form in all material respects with the applicable requirements of the
Securities Act and the Regulations thereunder and the Exchange Act and the
Regulations thereunder.
(c) The information supplied by the Acquiror Companies for inclusion
in the Registration Statement shall not, at the time the Registration
Statement is declared effective, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading. The
information supplied by the Acquiror Companies for inclusion in the Company
Proxy Statement to be sent to the shareholders of the Company in connection
with the Company Shareholders' Meeting shall not, at the date the Company
Proxy Statement (or any supplement thereto) is first mailed to shareholders
or at the time of the Company Shareholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
If at any time prior to the Effective Time any event or circumstance
relating to the Acquiror or any of its Affiliates, or to their respective
officers or directors, should be discovered by the Acquiror that should be
set forth in an amendment to the Registration Statement or a supplement to
the Company Proxy Statement, the Acquiror shall promptly inform the
Company. All documents that the Acquiror Companies are responsible for
filing with the Commission in connection with the transactions contemplated
hereby shall comply as to form in all material respects with the applicable
requirements of the Securities Act and the Regulations thereunder and the
Exchange Act and the Regulations thereunder.
(d) No amendment or supplement to the Registration Statement or the
Company Proxy Statement will be made by the Acquiror or the Company without
the approval of the other party which will not be unreasonably withheld or
delayed. The Acquiror and the Company each will advise the other, promptly
after it receives notice thereof, of the time when the Registration
Statement has become effective or any supplement or amendment has been
filed, the issuance of any stop order suspending the effectiveness of the
Registration Statement or the solicitation of proxies pursuant to the
Company Proxy Statement, the suspension of the qualification of the
Acquiror Common Stock issuable in connection with the Merger for offering
or sale in any jurisdiction, any request by the staff of the Commission for
amendment of the Registration Statement or
-38-
the Company Proxy Statement, the receipt from the staff of the Commission
of comments thereon or any request by the staff of the Commission for
additional information with respect thereto.
SECTION 7.03 Appropriate Action; Consents; Filings.
-------------------------------------
(a) The Company and the Acquiror shall each use all reasonable efforts
(i) to take, or to cause to be taken, all actions, and to do, or to cause
to be done, all things that, in either case, are necessary, proper or
advisable under applicable Law or otherwise to consummate and make
effective the transactions contemplated by this Plan, (ii) to obtain from
any Governmental Authorities any Authorizations or Orders required to be
obtained or made by the Acquiror or the Company or any of their
Subsidiaries in connection with the authorization, execution, delivery and
performance of this Plan and the consummation of the transactions
contemplated hereby, including the Merger, (iii) to make all necessary
filings, and thereafter make any other required submissions, with respect
to this Plan and the Merger required under (A) the Securities Act (in the
case of Acquiror) and the Exchange Act and the Regulations thereunder, and
any other applicable federal or state securities Laws, (B) the HSR Act and
(C) any other applicable Law. The Acquiror and the Company shall cooperate
with each other in connection with the making of all such filings,
including providing copies of all such documents to the nonfiling party and
its advisors prior to filings and, if requested, shall accept all
reasonable additions, deletions or changes suggested in connection
therewith. The Company and the Acquiror shall furnish all information
required for any application or other filing to be made pursuant to any
applicable Law or any applicable Regulations of any Governmental Authority
(including all information required to be included in the Company Proxy
Statement or the Registration Statement) in connection with the
transactions contemplated by this Plan.
(b) Each of the Company and the Acquiror shall give prompt notice to
the other of (i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with
the Merger, (ii) any notice or other communication from any Governmental
Authority in connection with the Merger, (iii) any actions, suits, claims,
investigations or proceedings commenced or threatened in writing against,
relating to or involving or otherwise affecting the Company, the Acquiror
or their Subsidiaries that relate to the consummation of the Merger; (iv)
the occurrence of a default or event that, with notice or lapse of time or
both, will become a default under any Material Contract of the Acquiror or
Material Contract of the Company; and (v) any change that is reasonably
likely to have a Material Adverse Effect on the Company or the Acquiror or
is likely to delay or impede the ability of either the Acquiror or the
Company to consummate the transactions contemplated by this Agreement or to
fulfill their respective obligations set forth herein.
(c) The Acquiror Companies and the Company agree to cooperate and use
all reasonable efforts vigorously to contest and resist any action,
including legislative,
-39-
administrative or judicial action, and to have vacated, lifted, reversed or
overturned any Order (whether temporary, preliminary or permanent) of any
Court or Governmental Authority that is in effect and that restricts,
prevents or prohibits the consummation of the Merger or any other
transactions contemplated by this Plan, including the vigorous pursuit of
all available avenues of administrative and judicial appeal and all
available legislative action. Each of the Acquiror Companies and the
Company also agree to take any and all actions, including the disposition
of assets or the withdrawal from doing business in particular
jurisdictions, required by any Court or Governmental Authority as a
condition to the granting of any Authorization or Order necessary for the
consummation of the Merger or as may be required to avoid, lift, vacate or
reverse any legislative or judicial action which would otherwise cause any
condition to the Closing not to be satisfied; provided, however, that in no
event shall either party take, or be required to take, any action that
could reasonably be expected to have an Material Adverse Effect on the
Company or the Acquiror.
(d) (i) Each of the Company and Acquiror shall give (or shall cause
their respective Subsidiaries to give) any notices to third Persons,
and use, and cause their respective Subsidiaries to use, all
reasonable efforts to obtain any consents from third Persons (A)
necessary, proper or advisable to consummate the transactions
contemplated by this Plan, (B) otherwise required under any contracts,
licenses, leases or other agreements in connection with the
consummation of the transactions contemplated hereby or (C) required
to prevent a Material Adverse Effect on the Company from occurring
prior to or after the Effective Time or a Material Adverse Effect on
the Acquiror from occurring after the Effective Time.
(ii) If any party shall fail to obtain any consent from a third
Person described in subsection (d)(i) above, such party shall use all
reasonable efforts, and shall take any such actions reasonably
requested by the other parties, to limit the adverse effect upon the
Company and Acquiror, their respective Subsidiaries, and their
respective businesses resulting, or which could reasonably be expected
to result after the Effective Time, from the failure to obtain such
consent.
SECTION 7.04 Affiliates; Pooling; Tax Treatment.
----------------------------------
(a) The Company shall use all reasonable efforts to obtain from any
Person who may be deemed to have become an Affiliate of the Company after
the date of this Plan and on or prior to the Effective Time a written
agreement substantially in the form of Annex B hereto as soon as
practicable after attaining such status.
(b) The Acquiror Companies shall not be required to maintain the
effectiveness of the Registration Statement for the purpose of resale by
shareholders of the Company who may be Affiliates of the Company pursuant
to Rule 145 under the Securities Act.
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(c) Each party hereto shall use all reasonable efforts to cause the
Merger to be treated for financial accounting purposes as a Pooling
Transaction, and shall not take, and shall use all reasonable efforts to
prevent any Affiliate of such party from taking, any actions which could
prevent the Merger from being treated for financial accounting purposes as
a Pooling Transaction.
(d) Each party hereto shall use all reasonable efforts to cause the
Merger to qualify, and shall not take, and shall use all reasonable efforts
to prevent any Affiliate of such party from taking, any actions which could
prevent the Merger from qualifying, as a reorganization under the
provisions of Section 368(a) of the Code.
SECTION 7.05 Public Announcements. The Acquiror and the Company shall
--------------------
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation.
SECTION 7.06 NYSE Listing. The Acquiror shall use all reasonable efforts
------------
to cause the shares of Acquiror Common Stock to be issued in the Merger to be
approved for listing (subject to official notice of issuance) on the NYSE prior
to the Effective Time.
SECTION 7.07 Comfort Letters.
---------------
(a) The Company shall use all reasonable efforts to cause Coopers &
▇▇▇▇▇▇▇ LLP, the Company's independent accountants, to deliver a letter
dated as of the date of the Company Proxy Statement, and addressed to the
Company and the Acquiror, in form and substance reasonably satisfactory to
Acquiror and customary in scope and substance for agreed upon procedures
letters delivered by independent public accountants in connection with
registration statements and proxy statements similar to the Registration
Statement and the Company Proxy Statement.
(b) The Acquiror shall use all reasonable efforts to cause ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP, the Acquiror's independent accountants, to deliver a letter
dated as of the date of the Prospectus/Proxy Statement, and addressed to
the Acquiror and the Company, in form and substance reasonably satisfactory
to the Company and customary in scope and substance for agreed upon
procedures letters delivered by independent public accounts in connection
with registration statements and proxy statements similar to the
Registration Statement and the Prospectus/Proxy Statement.
SECTION 7.08 Assumption of Obligations to Issue Stock and Obligations of
-----------------------------------------------------------
Employee Benefit Plans.
----------------------
(a) At the Effective Time, automatically and without any action on the
part of the holder thereof, each outstanding Company Stock Option shall be
assumed by the Surviving Corporation and shall become an option to purchase
that number of shares of
-▇▇-
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Stock obtained by multiplying the number of shares of
Company Common Stock issuable upon the exercise of such option by the
Common Stock Exchange Ratio at an exercise price per share equal to the per
share exercise price of such option divided by the Common Stock Exchange
Ratio and otherwise upon the same terms and conditions as such outstanding
option to purchase Company Common Stock; provided, however, that in the
case of any option to which Section 421 of the Internal Revenue Code
applies by reason of the qualifications under Section 422 or 423 of such
Code, the exercise price, the number of shares purchasable pursuant to such
option and the terms and conditions of exercise of such option shall be
determined in a manner that complies with Section 424(a) of the Code.
(b) On or prior to the Effective Time, the Company shall take or cause
to be taken all such actions, reasonably satisfactory to the Acquiror, as
may be necessary or desirable in order to authorize the transactions
contemplated by subsection (a) of this Section.
(c) The Acquiror shall take all corporate actions necessary to reserve
for issuance a sufficient number of shares of Acquiror Common Stock for
delivery upon exercise of the Company Stock Options assumed by the
Surviving Corporation pursuant to Section 7.08(a) above.
(d) As promptly as practicable after the Effective Time, the Acquiror
shall file one or more Registration Statements on Form S-8 (or any
successor or other appropriate forms) with respect to the shares of
Acquiror Common Stock subject to the Company Stock Options and shall use
its reasonable efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of
the prospectus or prospectuses contained therein) for so long as such
options remain outstanding and to comply with applicable state securities
and blue sky laws.
(e) Except as provided herein or as otherwise agreed to by the
parties, each of the Company Option Plans providing for the issuance or
grant of Company Stock Options shall be assumed as of the Effective Time by
the Surviving Corporation with such amendments thereto as may be required
to reflect the Merger.
(f) Provided that the Acquiror shall not be obligated with respect to
any action taken by the Company or its Subsidiaries with respect to the
Employee Benefit Plans of the Company or its Subsidiaries in violation of
the provisions of Section 6.02(a), the Acquiror hereby agrees to guarantee
and to cause the Surviving Corporation and each Subsidiary of the Surviving
Corporation to honor and perform all obligations of the Surviving
Corporation and each Subsidiary of the Surviving Corporation under all
Benefit Plans of the Company and such Subsidiaries listed on Section
4.13(a) of the Company's Disclosure Letter and all employment contracts of
the Company listed on Section 4.10 of the Company's Disclosure Letter.
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SECTION 7.09 Operations of Company. Section 7.09 of the Acquiror
----------------------
Disclosure Letter sets forth the intentions of the Acquiror with respect to the
method of operating the business of the Company and its Subsidiaries from and
after the Effective Time and with respect to the continuation by the Company and
its Subsidiaries of the employment of their respective employees. Such matters
are the intentions of the Acquiror as of the date of the Plan, are subject to
change in the discretion of the Acquiror and shall not be construed to create
any third party rights in any Person other than the parties to this Agreement.
SECTION 7.10 Indemnification of Directors and Officers.
-----------------------------------------
(a) Until six years from the Effective Time, the articles of
incorporation and bylaws of the Surviving Corporation as in effect
immediately after the Effective Time shall not be amended to reduce or
limit the rights of indemnity afforded to the present and former directors
and officers of the Company thereunder or to reduce or limit the ability of
the Company to indemnify such persons or to hinder, delay or make more
difficult the exercise of such rights of indemnity or the ability to
indemnify. The Surviving Corporation will at all times exercise the powers
granted to it by its articles of incorporation, its bylaws and applicable
law to indemnify to the fullest extent possible the present and former
directors, officers, employees and agents of the Company against claims
made against them arising from their service in such capacities prior to
the Effective Time.
(b) If any claim or claims shall, subsequent to the Effective Time and
within six years thereafter, be made against any present or former
director, officer, employee or agent of the Company based on or arising out
of the services of such Person prior to the Effective Time in the capacity
of such Person as a director, officer, employee or agent of the Company,
the provisions of subsection (a) of this Section respecting the articles of
incorporation and bylaws of the Surviving Corporation shall continue in
effect until the final disposition of all such claims.
(c) The Acquiror hereby agrees after the Effective Time to guarantee
the payment of the Surviving Corporation's indemnification obligations
described in Section 7.10(a) up to an amount determined as of the Effective
Time equal to (i) the fair market value of any assets of the Surviving
Corporation or any of its Subsidiaries distributed to the Acquiror or any
of its Subsidiaries (other than the Surviving Corporation and its
Subsidiaries), minus (ii) any liabilities of the Surviving Corporation or
any of its Subsidiaries assumed by the Acquiror or any of its Subsidiaries
(other than the Surviving Corporation and its Subsidiaries), minus (iii)
the fair market value of any assets of the Acquiror or any of its
Subsidiaries (other than the Surviving Corporation and its Subsidiaries)
contributed to the Surviving Corporation or any of its Subsidiaries and
(iv) plus any liabilities of the Acquiror or any of its Subsidiaries (other
than the Surviving Corporation and its Subsidiaries) assumed by the
Surviving Corporation or any of its Subsidiaries.
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(d) Notwithstanding subsections (a), (b) and (c) of this Section 7.10,
the Acquiror and the Surviving Corporation shall be released from the
obligations imposed by such subsection if the Acquiror shall assume the
obligations of the Surviving Corporation thereunder by operation of Law or
otherwise. Notwithstanding anything to the contrary in this Section 7.10,
neither the Acquiror nor the Surviving Corporation shall be liable for any
settlement effected without its written consent, which shall not be
unreasonably withheld.
(e) The Acquiror shall cause to be maintained in effect until six
years from the Effective Time the current policies of directors' and
officers' liability insurance maintained by the Company (or substitute
policies providing at least the same coverage and limits and containing
terms and conditions that are not materially less advantageous) with
respect to claims arising from facts or events which occurred before the
Effective Time; provided, however, that in no event shall the Acquiror or
the Surviving Corporation be required to expend more than 200 percent of
the current annual premiums paid by the Company for such insurance.
(f) The provisions of this Section 7.10 are intended to be for the
benefit of, and shall be enforceable by, each Person entitled to
indemnification hereunder and the heirs and representatives of such Person.
SECTION 7.11 Newco. Prior to the Effective Time, Newco shall not conduct
------
any business or make any investments other than as specifically contemplated by
this Plan and will not have any assets (other than the minimum amount of cash
required to be paid to Newco for the valid issuance of its stock to the
Acquiror).
SECTION 7.12 Event Notices. From and after the date of this Agreement
-------------
until the Effective Time, each party hereto shall promptly notify the other
party hereto of (i) the occurrence or nonoccurrence of any event the occurrence
or nonoccurrence of which would be likely to cause any condition to the
obligations of such party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied and (ii) the failure of such
party to comply with any covenant or agreement to be complied with by it
pursuant to this Agreement which would be likely to result in any condition to
the obligations of such party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied. No delivery of any notice
pursuant to this Section 7.12 shall cure any breach of any representation or
warranty of such party contained in this Agreement or otherwise limit or affect
the remedies available hereunder to the party receiving such notice.
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ARTICLE VII
CLOSING CONDITIONS
SECTION 8.01 Conditions to Obligations of Each Party Under This Plan.
-------------------------------------------------------
The respective obligations of each party to effect the Merger and the other
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Effective Time of the following conditions, any or all of which may
be waived by the parties hereto, in whole or in part, to the extent permitted by
applicable Law:
(a) Effectiveness of the Registration Statement. The Registration
-------------------------------------------
Statement shall have been declared effective by the Commission under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the Commission and no
proceedings for that purpose shall have been initiated by the Commission.
(b) Shareholder Approval. This Plan shall have been approved and
--------------------
adopted by the requisite votes of the shareholders of the Company.
(c) No Order. No Court or Governmental Authority shall have enacted,
--------
issued, promulgated, enforced or entered any Law, Regulation or Order
(whether temporary, preliminary or permanent) that is in effect and has the
effect of making the Merger illegal or otherwise prohibiting consummation
of the Merger.
(d) HSR Act. The applicable waiting period under the HSR Act shall
-------
have expired or been terminated.
(e) Pooling of Interests. The Acquiror and the Company shall have
--------------------
been advised in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP on the date upon which the
Effective Time is to occur that, in reliance in part on the concurrent
opinion of Coopers & ▇▇▇▇▇▇▇ LLP that the Company is a "poolable entity",
the Merger should for financial accounting purposes be treated as a Pooling
Transaction.
(f) Dissenters' Rights. The holders of record of no more than 7% of
------------------
the outstanding Company Common Stock shall, immediately prior to the
Closing, have perfected and continued to perfect statutory dissenters'
rights under Subchapter D of the PBCL.
SECTION 8.02 Additional Conditions to Obligations of the Acquiror
----------------------------------------------------
Companies. The obligations of the Acquiror Companies to effect the Merger and
---------
the other transactions contemplated hereby shall be subject to the satisfaction
at or prior to the Effective Time of the following conditions, any or all of
which may be waived by the Acquiror Companies, in whole or in part, to the
extent permitted by applicable Law:
-45-
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of the Company contained in this Plan shall be true and correct
as of the date of this Plan and as of the Effective Time as though made
again on and as of the Effective Time except to the extent that any
misrepresentations and breaches of warranty at the Closing shall not in the
aggregate be Material to the Company. The Acquiror Companies shall have
received a certificate of the President and the Chief Financial Officer of
the Company, dated the date of the Effective Time, to such effect.
(b) Agreements and Covenants. The Company shall have performed or
------------------------
complied in all material respects with all agreements and covenants
required by this Plan to be performed or complied with by it on or prior to
the Effective Time. The Acquiror Companies shall have received a
certificate of the President and the Chief Financial Officer of the
Company, dated the date of the Effective Time, to such effect.
(c) Tax Opinion. The Acquiror shall have received the opinion dated
------------
on or prior to the effective date of the Registration Statement of ▇▇▇▇▇▇ &
▇▇▇▇▇▇ L.L.P. to the effect that (i) the Merger will constitute a
reorganization under section 368(a) of the Code, (ii) the Acquiror, the
Company and Newco will each be a party to that reorganization, and (iii) no
gain or loss will be recognized by the Acquiror, the Company or Newco by
reason of the Merger.
SECTION 8.03 Additional Conditions to Obligations of the Company. The
---------------------------------------------------
obligations of the Company to effect the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived by
the Company, in whole or in part, to the extent permitted by applicable Law.
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of the Acquiror Companies contained in this Plan shall be true
and correct as of the date of this Plan and as of the Effective Time as
though made again on and as of the Effective Time except to the extent that
any misrepresentations and breaches of warranty at the Closing shall not in
the aggregate be Material to the Acquiror. The Company shall have received
a certificate of the Chairman of the Board, the President or any Vice
President and the Chief Financial Officer of each of the Acquiror
Companies, dated the date of the Effective Time, to such effect.
(b) Agreements and Covenants. The Acquiror Companies shall have
------------------------
performed or complied in all material respects with all agreements and
covenants required by this Plan to be performed or complied with by them on
or prior to the Effective Time. The Company shall have received a
certificate of the Chairman of the Board, the President or any Vice
President and the Chief Financial Officer of each of the Acquiror
Companies, dated the date of the Effective Time, to such effect.
-46-
(c) Tax Opinion. The Company shall have received the opinion dated on
-----------
or prior to the effective date of the Registration Statement of Drinker
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP to the effect that (i) the Merger will constitute a
reorganization under section 368(a) of the Code, (ii) the Acquiror, the
Company and Newco will each be a party to that reorganization, and (iii) no
gain or loss will be recognized by the shareholders of the Company upon the
receipt of shares of Acquiror Common Stock in exchange for shares of
Company Common Stock pursuant to the Merger except with respect to any cash
received in lieu of fractional share interests.
(d) Investment Banker's Opinion. The Company shall have received, on
----------------------------
or prior to the date of mailing of the Company Proxy Statement to the
holders of Company Common Stock, a written opinion from ▇▇▇▇▇▇▇▇ Wertheim &
Co. Incorporated, dated the date of such mailing, confirming the opinion to
which reference is made in Section 4.21.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination. This Plan may be terminated at any time prior
-----------
to the Effective Time, whether before or after approval of this Plan and the
Merger by the shareholders of the Company:
(a) by mutual consent of the Acquiror and the Company;
(b) by the Acquiror, upon a material breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in
this Plan, or if any representation or warranty of the Company shall have
become untrue in any material respect, in either case such that the
conditions set forth in Section 8.02(a) or Section 8.02(b) would not be
satisfied (a "Terminating Company Breach"); provided that, if such
Terminating Company Breach is curable by the Company through the exercise
of reasonable efforts and for so long as the Company continues to exercise
such reasonable efforts, the Acquiror may not terminate this Plan under
this Section 9.01(b);
(c) by the Company, upon a material breach of any representation,
warranty, covenant or agreement on the part of the Acquiror Companies set
forth in this Plan, or if any representation or warranty of the Acquiror
Companies shall have become untrue in any material respect, in either case
such that the conditions set forth in Section 8.03(a) or Section 8.03(b)
would not be satisfied (a "Terminating Acquiror Breach"); provided that, if
such Terminating Acquiror Breach is curable by the Acquiror Companies
through the exercise of their reasonable efforts and for so long as the
Acquiror Companies continue to exercise such reasonable efforts, the
Company may not terminate this Plan under this Section 9.01(c);
-47-
(d) by either Acquiror or the Company, if there shall be any Order
which is final and nonappealable preventing the consummation of the Merger,
unless the party relying on such Order has not complied with its
obligations under Section 7.03;
(e) by either Acquiror or the Company, if the Merger shall not have
been consummated before December 31, 1997; provided, however, that this
Plan may be extended by written notice of either Acquiror or the Company to
a date not later than February 28, 1998, if the Merger shall not have been
consummated as a result of the Company or the Acquiror Companies having
failed by December 31, 1997 to receive all required Authorizations and
Orders with respect to the Merger or as a result of the entering of an
Order by a Court or Governmental Authority; and provided, further, that,
prior to February 28, 1998, no party shall be entitled to terminate this
Plan pursuant to this Section 9.01(e) if such party is in material breach
of any representation, warranty, covenant or agreement on the part of such
party set forth in this Plan;
(f) by either Acquiror or the Company, if this Plan shall fail to
receive the requisite vote for approval and adoption by the shareholders of
the Company at the Company Shareholders' Meeting;
(g) by the Acquiror, if
(i) any Person (other than the Acquiror or any Affiliate of the
Acquiror) shall have commenced (as such term is defined in Rule 14d-2
under the Exchange Act) a tender or exchange offer to purchase any
shares of Company Common Stock such that, upon consummation of such
offer, such Person would own or control 35% or more of the then
outstanding Company Common Stock and the Board of Directors of the
Company, within 10 Business Days thereafter, either fails to recommend
against acceptance of such tender or exchange offer by the Company's
shareholders or takes no position with respect thereto; or
(ii) any Person (other than the Acquiror, the Company or any of
their Subsidiaries) shall, subsequent to the date of this Agreement,
acquire beneficial ownership (as such term is defined in Rule 13d-3
under the Exchange Act) or the right to acquire beneficial ownership
of, or any Group shall have been formed that beneficially owns, or has
the right to acquire beneficial ownership (as such term is defined in
Rule 13d-3 under the Exchange Act) of, (A) 35% or more of the then
outstanding Company Common Stock and the Plan has failed to receive
the requisite vote at the Company Shareholders' Meeting or (B) 45% or
more of the then outstanding Company Common Stock.
The right of any party hereto to terminate this Plan pursuant to this
Section 9.01 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this Plan.
-48-
SECTION 9.02 Effect of Termination. Except as provided in Section 9.05
---------------------
of this Plan, in the event of the termination of this Plan pursuant to Section
9.01, this Plan shall forthwith become void, there shall be no liability on the
part of the Acquiror Companies or the Company or any of their respective
officers or directors to the other and all rights and obligations of any party
hereto shall cease, except that nothing herein shall relieve any party from
liability for any misrepresentation or breach of any covenant or agreement under
this Plan.
SECTION 9.03 Amendment. This Plan may be amended by the parties hereto
---------
by action authorized by their respective Boards of Directors at any time prior
to the Effective Time; provided, however, that, after approval of the Plan by
the shareholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each share of Company
Common Stock shall be converted pursuant to this Plan upon consummation of the
Merger. This Plan may not be amended except by an instrument in writing signed
by the parties hereto.
SECTION 9.04 Waiver. At any time prior to the Effective Time, any party
------
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document delivered pursuant hereto and (c) waive compliance by the other party
with any of the agreements or conditions contained herein. Any such extension
or waiver shall be valid only if set forth in an instrument in writing signed by
the party or parties to be bound thereby. For purposes of this Section 9.04, the
Acquiror Companies shall be deemed to be one party.
SECTION 9.05 Fees, Expenses and Other Payments.
---------------------------------
(a) Except as provided in subsections (b) and (c) of this Section
9.05, all Expenses incurred by the parties hereto shall be borne solely and
entirely by the party that incurred such Expenses; provided, however, that
the allocable share of the Acquiror Companies as a group and the Company
for all Expenses of printing, filing and mailing the Registration Statement
and the Company Proxy Statement and all Commission and other regulatory
filing fees incurred in connection with the Registration Statement and the
Company Proxy Statement shall be one-half each; and provided, further that
Acquiror may, at its option, pay any Expenses of the Company.
(b) (i) The Company agrees that, if the Acquiror shall
terminate this Plan pursuant to Section 9.01(g)(i) or 9.01(g)(ii),
then in each such case the Company shall pay to the Acquiror $ 9
million.
(ii) The Company agrees that, if (A) Acquiror shall terminate
this Plan pursuant to Section 9.01(b) and such termination is the
result of an intentional or willful breach by the Company of any
agreement, covenant, representation or warranty herein and (B) either
(1) within 12 months after such termination of this Plan the Company
shall have entered into a definitive agreement with respect to
-49-
a Competing Transaction with any Person or Group, other than Acquiror,
its Subsidiaries or Affiliates, to which the Company shall have
furnished information or with which the Company shall have had any
contacts or entered into any discussions or negotiations relating to a
Competing Transaction at any time during the period commencing 12
months prior to the date of this Plan through the date of termination
of this Plan or (2) within 12 months after such termination of this
Plan, any Person or Group to which the Company shall have furnished
such information or with which it shall have had such contacts,
discussions or negotiations shall have acquired beneficial ownership,
by tender offer or exchange offer or otherwise, of 35% or more of the
outstanding Company Common Stock and, in either case, the
consideration received or to be received by the shareholders of the
Company participating in such transaction shall be higher on a per
share basis than the consideration payable to the shareholders of the
Company under this Plan on a per share basis or such transaction shall
be on more favorable terms to the shareholders of the Company than the
Merger, then in such case the Company shall pay to Acquiror $9
million.
(iii) For purposes of subsection (b)(ii) of this Section 9.05,
the value of the consideration received or to be received by the
Company's shareholders shall be determined as of the date of the
agreement or the transaction therein referenced, the value of the
consideration payable to such shareholders under this Plan shall be
determined as of the date of termination of this Plan and the
consideration per share received or to be received by the shareholders
of the Company in any transaction other than the Merger shall be
equitably adjusted to give effect to any stock dividend, stock split
or stock combination effected subsequent to the date of this Plan.
(c) Any payment required to be made pursuant to Section 9.05(b) of
this Plan shall be made to the Acquiror not later than two Business Days
after delivery to the Company of notice of demand for payment, and shall be
made by wire transfer of immediately available funds to an account
designated by the Acquiror in the notice of demand for payment delivered
pursuant to this Section 9.05(c).
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Effectiveness of Representations, Warranties and Agreements.
-----------------------------------------------------------
(a) Except as set forth in Section 10.01(b) of this Plan, the
representations, warranties and agreements of each party hereto shall
remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any Person
controlling any such party or any of their officers, directors,
representatives or agents whether prior to or after the execution of this
Plan.
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(b) The representations and warranties in this Plan shall terminate at
the Effective Time.
SECTION 10.02 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly given
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses or sent by electronic transmission to the telecopier number specified
below:
(a) If to any of the Acquiror Companies, to:
Halliburton Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Executive Vice President and General Counsel
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
First City Tower
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ III
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Company, to:
NUMAR Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President and Chief Financial Officer
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
Drinker ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Telecopier No.: 610/993-8585
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed delivered on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed delivered
three days after the date the same is postmarked.
SECTION 10.03 Headings. The headings contained in this Plan are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Plan.
SECTION 10.04 Severability. If any term or other provision of this Plan
------------
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Plan shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Plan so as to effect the original intent
of the parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 10.05 Entire Agreement. This Plan (together with the Annexes, the
----------------
Company's Disclosure Letter and the Acquiror's Disclosure Letter) constitutes
the entire agreement of the parties, and, except for the Confidentiality
Agreement which shall remain in full force and effect, supersedes all prior
agreements and undertakings, both written and oral, among the parties, with
respect to the subject matter hereof.
SECTION 10.06 Assignment. This Plan shall not be assigned by operation of
----------
Law or otherwise.
SECTION 10.07 Parties in Interest. This Plan shall be binding upon and
-------------------
inure solely to the benefit of each party hereto, and nothing in this Plan,
express or implied, other than Section 7.10 which is intended also to benefit
the directors and officers of the Company therein referenced, is intended to or
shall confer upon any other Person any right, benefit or remedy of any nature
whatsoever under or by reason of this Plan.
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SECTION 10.08 Failure or Indulgence Not Waiver; Remedies Cumulative. No
------------------------------------------------------
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty or agreement herein,
nor shall any single or partial exercise of any such right preclude other or
further exercise thereof or of any other right. All rights and remedies
existing under this Plan are cumulative to, and not exclusive to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 10.09 Governing Law. This Plan shall be governed by, and
-------------
construed in accordance with, the Laws of the State of Texas, regardless of the
Laws that might otherwise govern under applicable principles of conflicts of
law; provided, however, that any matter involving the internal corporate affairs
of the Company shall be governed by the provisions of the PBCL and that any
matter involving the internal corporate affairs of the Acquiror or Newco shall
be governed by the provisions of the DGCL.
SECTION 10.10 Specific Performance. The parties hereby acknowledge and
---------------------
agree that the failure of any party to this Plan to perform its agreements and
covenants hereunder, including its failure to take all actions as are necessary
on its part to the consummation of the Merger, will cause irreparable injury to
the other parties to this Plan for which damages, even if available, will not be
an adequate remedy. Accordingly, each of the parties hereto hereby consents to
the granting of equitable relief (including specific performance and injunctive
relief) by any court of competent jurisdiction to enforce any party's
obligations hereunder. The parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this Section is without prejudice to any other rights
that the parties hereto may have for any failure to perform this Plan.
SECTION 10.11 Counterparts. This Plan may be executed in multiple
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Plan to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
HALLIBURTON COMPANY
By:_____________________________________
Name:
Title:
HALLIBURTON M. S. CORP.
By:_____________________________________
Name:
Title:
NUMAR CORPORATION
By:_____________________________________
Name:
Title:
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ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Plan shall have the meanings set forth
below unless the context shall otherwise require:
"Acquiror" shall mean Halliburton Company, a Delaware corporation, and its
successors from time to time.
"Acquiror Common Stock" shall mean the common stock, par value $2.50 per
share, of the Acquiror.
"Acquiror Companies" shall have the meaning ascribed to such term in the
first paragraph of this Plan.
"Acquiror Representatives" shall have the meaning ascribed to such term in
Section 6.04.
"Acquiror Restricted Stock" shall mean Acquiror Common Stock issued in
restricted stock awards pursuant to the Halliburton Company 1993 Stock and Long-
Term Incentive Plan or the Halliburton Company Restricted Stock Plan for Non-
Employee Directors and subject to the restrictions provided therein.
"Acquiror Stock Options" shall mean stock options granted pursuant to the
Acquiror Stock Plans.
"Acquiror Stock Plans" shall mean the Halliburton Company 1993 Stock and
Long-Term Incentive Plan and the Halliburton Company Restricted Stock Plan for
Non-Employee Directors and the Landmark Graphics Corporation 1984 Incentive
Stock Option Plan, the Landmark Graphics Corporation 1985 Incentive Stock Option
Plan, the Landmark Graphics Corporation 1987 Nonqualified Stock Option Plan, the
Landmark Graphics Corporation 1989 Flexible Stock Option Plan, the Landmark
Graphics Corporation Directors' Stock Option Plan, the Landmark Graphics
Corporation Consultants' Stock Option Plan, the Landmark Graphics Corporation
1990 Employee Stock Option Plan and the Landmark Graphics Corporation 1994
Flexible Incentive Plan.
"Acquiror's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Acquiror and its Subsidiaries as of December
31, 1995 and December 31, 1996 and the related consolidated statements of
operations and cash flows for the fiscal years ended December 31, 1994, 1995 and
1996, together with the notes thereto, all as audited by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
independent accountants, under their report with respect thereto dated January
22, 1997 and included in the Acquiror's Annual Report on Form 10-K for the year
ended December 31, 1996 filed with the Commission.
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"Acquiror's Consolidated Balance Sheet" shall mean the consolidated balance
sheet of the Acquiror as of December 31, 1996 included in the Acquiror's Audited
Consolidated Financial Statements.
"Acquiror's Consolidated Financial Statements" shall mean the Acquiror's
Audited Consolidated Financial Statements and the Acquiror's Unaudited
Consolidated Financial Statements.
"Acquiror's Disclosure Letter" shall mean a letter of even date herewith
delivered by the Acquiror to the Company with the execution of the Plan, which,
among other things, shall identify exceptions to the Acquiror's representations
and warranties contained in Article V by specific section and subsection
references.
"Acquiror's Rights Agreement" shall mean the Restated Rights Agreement
dated December 1, 1996 between Halliburton Company and ChaseMellon Shareholder
Services, L.L.C., as Rights Agent.
"Acquiror's Unaudited Consolidated Financial Statements" shall mean the
unaudited consolidated balance sheet of the Acquiror and its Subsidiaries as of
March 31, 1997 and the related consolidated statements of operations and cash
flows for the fiscal quarters ended March 31, 1996 and March 31, 1997, together
with the notes thereto, included in the Acquiror's Quarterly Report on Form 10-Q
for the quarter ended March 31, 1997 filed with the Commission.
"Affiliate" shall, with respect to any Person, mean any other Person that
controls, is controlled by or is under common control with the former.
"Articles of Merger" shall have the meaning ascribed to such term in
Section 1926 of the PBCL.
"Authorization" shall mean any and all permits, licenses, authorizations,
orders, certificates, registrations or other approvals granted by any
Governmental Authority.
"Benefit Plans" shall mean, with respect to a specified Person, any
employee pension benefit plan (whether or not insured), as defined in Section
3(2) of ERISA, any employee welfare benefit plan (whether or not insured) as
defined in Section 3(1) of ERISA, any plans that would be employee pension
benefit plans or employee welfare benefit plans if they were subject to ERISA,
such as foreign plans and plans for directors, any stock bonus, stock ownership,
stock option, stock purchase, stock appreciation rights, phantom stock or other
stock plan (whether qualified or nonqualified), and any bonus or incentive
compensation plan sponsored, maintained, or contributed to by the specified
Person or any of its Subsidiaries for the benefit of any of the present or
former directors, officers, employees, agents, consultants or other similar
representatives providing services to or for the specified Person or any of its
Subsidiaries in connection with such services or any such plans which have been
so sponsored, maintained, or
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contributed to within six years prior to the date of this Plan; provided,
however, that such term shall not include (a) routine employment policies and
procedures developed and applied in the ordinary course of business and
consistent with past practice, including wage, vacation, holiday and sick or
other leave policies, (b) workers compensation insurance and (c) directors and
officers liability insurance.
"Business Day" means any day other than a day on which banks in the State
of Texas or the Commonwealth of Pennsylvania are authorized or obligated to be
closed;
"Certificate of Merger" shall have the meaning ascribed to such term in
Section 252 of the DGCL.
"Closing" shall mean a meeting, which shall be held in accordance with
Section 3.03, of representatives of the parties to the Plan at which, among
other things, all documents deemed necessary by the parties to the Plan to
evidence the fulfillment or waiver of all conditions precedent to the
consummation of the transactions contemplated by the Plan are executed and
delivered.
"Closing Date" shall mean the date of the Closing as determined pursuant to
Section 3.03.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Common Stock Exchange Ratio" shall mean the ratio of conversion of Company
Common Stock into Acquiror Common Stock pursuant to the Merger as provided in
Section 3.01(a).
"Company" shall mean NUMAR Corporation, a Pennsylvania corporation, and its
successors from time to time.
"Company Common Stock" shall mean the common shares, par value $0.01 per
share, of the Company.
"Company Option Plans" shall mean the Company's 1994 Stock Incentive Plan,
1995 Employee Stock Purchase Plan and the individual stock option agreements
with the individuals named in Section 4.03(b) of the Company's Disclosure
Letter.
"Company Proxy Statement" shall have the meaning ascribed to such term in
Section 7.02(a).
"Company Representatives" shall have the meaning ascribed to such term in
Section 6.03.
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"Company Stock Options" shall mean stock options granted pursuant to the
Company Option Plans.
"Company Shareholders' Meeting" shall have the meaning ascribed to such
term in Section 7.01.
"Company Warrants" shall mean those certain warrants to purchase 37,879
shares of Company Common Stock pursuant to the Warrant Agreement between the
Company and MMC/GATX Partnership No. I dated August 16, 1991, as amended by
Amendments Nos. 1, 2 and 3 thereto.
"Company's Consolidated Balance Sheet" shall mean the consolidated balance
sheet of the Company as of December 31, 1996 included in the Company's Audited
Consolidated Financial Statements.
"Company's Disclosure Letter" shall mean a letter of even date herewith
delivered by the Company to the Acquiror Companies concurrently with the
execution of the Plan, which, among other things, shall identify exceptions to
the Company's representations and warranties contained in Article IV by specific
section and subsection references.
"Company's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Company and its Subsidiaries as of December
31, 1995 and December 31, 1996 and the related consolidated and combined
statements of operations and cash flows for the fiscal years ended December 31,
1994, 1995 and 1996, together with the notes thereto, all as audited by Coopers
& ▇▇▇▇▇▇▇ LLP, independent accountants, under their report with respect thereto
dated March 4,1997 and included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 filed with the Commission.
"Company's Consolidated Financial Statements" shall mean the Company's
Audited Consolidated Financial Statements and the Company's Unaudited
Consolidated Financial Statements.
"Company's Unaudited Consolidated Financial Statements" shall mean the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
March 31, 1997 and the related consolidated statements of operations and cash
flows for the three months periods ended March 31, 1996 and March 31, 1997,
together with the notes thereto, included in the Company's Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997 filed with the Commission.
"Competing Transaction" shall mean (a) a merger, consolidation, share
exchange, business combination or similar transaction involving the Company or
any of its Significant Subsidiaries; (b) a sale, lease, exchange, transfer or
other disposition of 35% or more of the assets of the Company and its
Subsidiaries, taken as a whole, in a single transaction or series of
transactions; or (c) the acquisition (in the case of a Group, through the
formation of such
A-4
Group or otherwise) by a Person or Group of beneficial ownership (as such term
is defined in Rule 13d-3 under the Exchange Act) or the right to acquire
beneficial ownership of 35% or more of the outstanding Company Common Stock,
whether by tender offer or exchange offer or otherwise or (d) the acquisition in
any manner, directly or indirectly, of a Material equity interest in any voting
securities of, or a substantial portion of the assets of, the Company or any of
its Significant Subsidiaries, other than the transactions contemplated by this
Plan.
"Confidentiality Agreement" shall mean that certain confidentiality
agreement between the Acquiror and the Company dated May 27, 1997.
"Constituent Corporations" shall mean the Company and Newco.
"control" (including the terms "controlled," "controlled by" and "under
common control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise.
"Court" shall mean any court or arbitration tribunal of the United States,
any foreign country or any domestic or foreign state, and any political
subdivision thereof, and shall include the European Court of Justice.
"Current Benefit Plans" shall mean Benefit Plans that are sponsored,
maintained, or contributed to by a specified Person or any of its Subsidiaries
as of the date of this Plan.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Dissenters' Shares" shall have the meaning ascribed to such term in
Section 3.01(e).
"Effective Time" shall mean the date and time of the completion of the
filing of the Articles of Merger with the Secretary of State of the Commonwealth
of Pennsylvania in accordance with Section 2.02.
"Environmental Law or Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations, or orders of any Governmental Authority
pertaining to health or the environment currently in effect and applicable to a
specified Person and its Subsidiaries, including the Clean Air Act, as amended,
the Comprehensive Environmental, Response, Compensation, and Liability Act of
1980 ("CERCLA"), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe
Drinking Water Act, as amended, the Toxic Substances Control Act, as amended,
the Hazardous & Solid Waste Amendments Act of 1984, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, the Oil Pollution Act of 1990, as amended
("OPA"), any state or local Laws implementing the foregoing federal Laws, and
all other environmental conservation or protection Laws. For purposes of the
Plan, the terms
A-5
"hazardous substance" and "release" have the meanings specified in CERCLA;
provided, however, that, to the extent the Laws of the state or locality in
which the property is located establish a meaning for "hazardous substance" or
"release" that is broader than that specified in either CERCLA, such broader
meaning shall apply, and the term "hazardous substance" shall include all
dehydration and treating wastes, waste (or spilled) oil, and waste (or spilled)
petroleum products, and (to the extent in excess of background levels)
radioactive material, even if such are specifically exempt from classification
as hazardous substances pursuant to CERCLA or RCRA or the analogous statutes of
any jurisdiction applicable to the specified Person or its Subsidiaries or any
of their respective properties or assets.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the Regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the Regulations promulgated thereunder.
"Exchange Agent" shall mean ChaseMellon Shareholder Services, L.L.C.
"Exchange Fund" shall mean the fund of Acquiror Common Stock, cash in lieu
of fractional share interests and dividends and distributions, if any, with
respect to such shares of Acquiror Common Stock established at the Exchange
Agent pursuant to Section 3.02(a).
"Expenses" shall mean all reasonable out-of-pocket expenses (including all
fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its Affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Plan, the preparation, printing,
filing and mailing of the Registration Statement and the Company Proxy
Statement, the solicitation of stockholder approvals and all other matters
related to the consummation of the transactions contemplated hereby.
"GAAP" shall mean accounting principles generally accepted in the United
States as in effect from time to time consistently applied by a specified
Person.
"Governmental Authority" shall mean any governmental agency or authority
(other than a Court) of the United States, any foreign country, or any domestic
or foreign state, and any political subdivision thereof, and shall include any
multinational authority having governmental or quasi-governmental powers.
"Group" shall have the meaning accorded to such term as it is defined under
Section 13(d) of the Exchange Act and the Regulations promulgated thereunder.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
A-6
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean, with respect to either the Company or the Acquiror,
the actual knowledge of any executive officer of such party.
"Law" shall mean all laws, statutes, ordinances, rules and regulations of
the United States, any foreign country, or any domestic or foreign state, and
any political subdivision or agency thereof, including all decisions of Courts
having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest, adverse claim,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing), any conditional sale or other title retention agreement, any
lease in the nature thereof or the filing of or agreement to give any financing
statement under the Laws of any jurisdiction.
"Material" shall mean material to the condition (financial and other),
results of operations, business or prospects of a specified Person and its
Subsidiaries, if any, taken as a whole; provided, however, that, as used in this
definition the word "material" shall have the meaning accorded thereto pursuant
to Section 11 of the Securities Act.
"Material Adverse Effect" shall mean any change or effect that would be
material and adverse to the consolidated business, condition (financial or
otherwise), operations, performance or properties of a specified Person and its
Subsidiaries, if any, taken as a whole; provided, however, that, as used in this
definition the word "material" shall have the meaning accorded thereto pursuant
to Section 11 of the Securities Act.
"Material Contract" shall mean each contract, lease, indenture, agreement,
arrangement or understanding to which a specified Person or any of its
Subsidiaries is a party or to which any of the assets or operations of such
specified Person or any of its Subsidiaries is subject that is of a type that
would be required to be included as an exhibit to a registration statement on
Form S-1 pursuant, in the case of the Company, to Paragraph (2), (4) or (10) of
Item 601(b) and, in the case of the Acquiror, to Paragraph (10) (other than
clause (iii) thereof) of Item 601(b) of Regulation S-K under the Securities Act
if such a registration statement were to be filed by such Person under the
Securities Act on the date of determination. Notwithstanding the foregoing,
such term shall, in the case of the Company, include any of the following
contracts, agreements or commitments, whether oral or written:
(1) Any collective bargaining agreement or other agreement with any
labor union;
(2) any agreement, contract or commitment with any other Person, other
than any agency or representation entered in the ordinary course of
business, containing any
A-7
covenant limiting the freedom of such specified Person or any of its
Subsidiaries to engage in any line of business or to compete with any other
Person;
(3) any partnership, joint venture or profit sharing agreement with
any Person, which partnership, joint venture or profit sharing agreement
generated revenues during its most recently completed fiscal year of
$100,000 or more;
(4) any employment or consulting agreement, contract or commitment
between the Company or any of its Subsidiaries and any employee, officer or
director thereof (i) having more than one year to run from the date hereof,
(ii) providing for an obligation to pay or accrue compensation of $100,000
or more per annum or (iii) providing for the payment or accrual of any
additional compensation upon a change in control of such Person or any of
its Subsidiaries or upon any termination of such employment or consulting
relationship following a change in control of such Person or any of its
Subsidiaries;
(5) any agency or representation agreement with any Person that is not
terminable by the Company or one of its Subsidiaries without penalty upon
not more than one year's notice; and
(6) any confidentiality agreement, development agreement or license
agreement relating to the products of the Company or any of its
Subsidiaries.
"Merger" shall mean the merger of Newco with an into the Company as
provided in Article II of this Plan.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Newco" shall mean Halliburton M.S. Corp., a Delaware corporation and a
wholly owned Subsidiary of the Acquiror.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority, federal, foreign, state or local.
"PBCL" shall mean the Business Corporation Law of the Commonwealth of
Pennsylvania.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean the following:
A-8
(1) liens for taxes, assessments and other governmental charges not
delinquent or which are currently being contested in good faith by
appropriate proceedings; provided that, in the latter case, the specified
Person or one of its Subsidiaries shall have set aside on its books
adequate reserves with respect thereto;
(2) mechanics' and materialmen's liens not filed of record and similar
charges not delinquent or which are filed of record but are being contested
in good faith by appropriate proceedings; provided that, in the latter
case, the specified Person or one of its Subsidiaries shall have set aside
on its books adequate reserves with respect thereto;
(3) liens in respect of judgments or awards with respect to which the
specified Person or one of its Subsidiaries shall in good faith currently
be prosecuting an appeal or other proceeding for review and with respect to
which such Person or such Subsidiary shall have secured a stay of execution
pending such appeal or such proceeding for review; provided that such
Person or such Subsidiary shall have set aside on its books adequate
reserves with respect thereto;
(4) easements, leases, reservations or other rights of others in, or
minor defects and irregularities in title to, property or assets of a
specified Person or any of its Subsidiaries; provided that such easements,
leases, reservations, rights, defects or irregularities do not materially
impair the use of such property or assets for the purposes for which they
are held; and
(5) any lien or privilege vested in any lessor, licensor or permittor
for rent or other obligations of a specified Person or any of its
Subsidiaries thereunder so long as the payment of such rent or the
performance of such obligations is not delinquent.
"Person" shall mean an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association or
unincorporated organization, or any other form of business or professional
entity, but shall not include a Court or Governmental Authority.
"Plan" shall mean the Agreement and Plan of Merger made and entered into as
of June 9, 1997 among Acquiror, Newco and the Company, including any amendments
thereto and each Annex (including this Annex A) and schedule thereto (including
the Acquiror's Disclosure Letter and the Company's Disclosure Letter).
"Pooling Transaction" shall mean a business combination that is treated for
financial accounting purposes as a "pooling of interests" in accordance with
GAAP and the Regulations of the Commission.
"Prospectus/Proxy Statement" shall have the meaning ascribed to such term
in Section 7.02(a).
"Registration Statement" shall have the meaning ascribed to such term in
Section 7.02(a).
A-9
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of Law or of any rule or regulation of any self-
regulatory organization, such as the NYSE or the NASD.
"Reports" shall mean, with respect to a specified Person, all reports,
registrations, filings and other documents and instruments required to be filed
by the specified Person or any of its Subsidiaries with any Governmental
Authority (other than the Commission).
"Representatives" shall mean, collectively, the Company's Representatives
and the Acquiror's Representatives.
"SEC Reports" shall mean (1) all Annual Reports on Form 10-K, (2) all
Quarterly Reports on Form 10-Q, (3) all proxy statements relating to meetings of
shareholders (whether annual or special), (4) all Current Reports on Form 8-K
and (5) all other reports, schedules, registration statements or other documents
required to be filed during a specified period by a specified Person with the
Commission pursuant to the Securities Act or the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Significant Subsidiary" means any Subsidiary of the Company or Acquiror,
as the case may be, that constitutes a significant subsidiary of such party as
such term is defined in Rule 1-02 of Regulation S-X of the Commission.
"Stock Option Agreement" shall mean that certain Stock Option Agreement of
even date herewith between the Acquiror and the Company.
A "Subsidiary" of a specified Person shall be any corporation, partnership,
limited liability company, joint venture or other legal entity of which the
specified Person (either alone or through or together with any other subsidiary)
owns, directly or indirectly, 50% or more of the stock or other equity or
partnership interests the holders of which are generally entitled to vote for
the election of the board of directors or other governing body of such
corporation or other legal entity or of which the specified Person controls the
management.
"Surviving Corporation" shall mean the Company as the corporation surviving
the Merger.
"Tax Returns" shall have the meaning ascribed to such term in Section
4.14(a) of the Plan.
"Taxes" shall mean all taxes, charges, imposts, tariffs, fees, levies or
other similar assessments or liabilities, including income taxes, ad valorem
taxes, excise taxes, withholding taxes, stamp taxes or other taxes of or with
respect to gross receipts, premiums, real property, personal property, windfall
profits, sales, use, transfers, licensing, employment, payroll and franchises
imposed by or under any Law; and such terms shall include any interest, fines,
A-10
penalties, assessments or additions to tax resulting from, attributable to or
incurred in connection with any such tax or any contest or dispute thereof.
"Terminated Benefit Plans" shall mean Benefit Plans that were sponsored,
maintained, or contributed to by a specified Person or any of its Subsidiaries
within six years prior to the date of this Plan but which have been terminated
prior to the date of this Plan.
"Terminating Acquiror Breach" shall have the meaning ascribed to such term
in Section 9.01(c).
"Terminating Company Breach" shall have the meaning ascribed to such term
in Section 9.01(b).
"Voting Agreement" shall mean one of those several Voting Agreements of
even date herewith between the Acquiror and certain shareholders of the Company.
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ANNEX B
NUMAR AFFILIATE'S AGREEMENT
Halliburton Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
The undersigned has been advised that, as of the date hereof, the
undersigned may be deemed to be an "affiliate" of NUMAR Corporation, a
Pennsylvania corporation (the "Company"), as that term is defined in the
Regulations of the Commission under the Securities Act.
Pursuant to the terms and subject to the conditions of that certain
Agreement and Plan of Merger by and among Halliburton Company, a Delaware
corporation (the "Acquiror"), Halliburton M.S. Corp., a newly formed Delaware
corporation and a wholly owned subsidiary of the Acquiror ("Newco"), and the
Company to be dated as of June 9, 1997 (the "Plan") providing, among other
things, for the merger of Newco with and into the Company (the "Merger"), the
undersigned will be entitled to receive shares of Acquiror Common Stock in
exchange for shares of Company Common Stock owned by the undersigned at the
Effective Time of the Merger as determined pursuant to the Plan. Capitalized
terms used but not defined herein are defined in Annex A to the Plan and are
used herein with the same meanings as ascribed to them therein.
The undersigned understands that the Merger will be treated for financial
accounting purposes as a "pooling of interests" in accordance with GAAP and that
the staff of the Commission has issued certain guidelines that should be
followed to ensure the application of pooling of interests accounting to the
transaction.
In consideration of the agreements contained herein, the Acquiror's
reliance on this letter in connection with the consummation of the Merger and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned hereby represents, warrants and agrees
that the undersigned will not make any sale, transfer or other disposition of
(i) Company Common Stock during the period from the date hereof until the
earlier of the Effective Time and the termination of the Plan (which period, if
the Merger is consummated, will be greater than 30 days), (ii) Acquiror Common
Stock received by the undersigned pursuant to the Merger or otherwise owned by
the undersigned until such time as financial statements that include at least 30
days of combined operations of the Company and the Acquiror after the Merger
shall have been publicly reported, unless the undersigned shall have delivered
to the Acquiror prior to any such sale, transfer or other disposition, a written
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opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public accountants for the
Acquiror, or a written no-action letter from the accounting staff of the
Commission, in either case in form and substance reasonably satisfactory to the
Acquiror, to the effect that such sale, transfer or other disposition will not
cause the Merger to not to be treated as a "pooling of interests" for financial
accounting purposes in accordance with GAAP and the Regulations of the
Commission or (iii) Acquiror Common Stock received by the undersigned pursuant
to the Merger in violation of the Securities Act or the Regulations thereunder.
The undersigned has been advised that the offering, sale and delivery of the
shares of Acquiror Common Stock pursuant to the Merger will have been registered
with the Commission under the Securities Act on a Registration Statement on Form
S-4. The undersigned has also been advised, however, that, since the
undersigned may be deemed to be an affiliate of the Company at the time the
Merger is submitted for a vote of the shareholders of the Company, the Acquiror
Common Stock received by the undersigned pursuant to the Merger can be sold by
the undersigned only (i) pursuant to an effective registration statement under
the Securities Act, (ii) in conformity with the volume and other limitations of
Rule 145 promulgated by the Commission under the Securities Act or (iii) in
reliance upon an exemption from registration that is available under the
Securities Act.
The undersigned also understands that instructions will be given to the
transfer agent for the Acquiror Common Stock with respect to the Acquiror Common
Stock to be received by the undersigned pursuant to the Merger and that there
will be placed on the certificates representing such shares of Acquiror Common
Stock, or any substitutions therefor, a legend stating in substance as follows:
"These shares were issued in a transaction to which Rule 145 promulgated
under the Securities Act of 1933, as amended, applies. These shares may
only be transferred in accordance with the terms of such Rule and an
Affiliate's Agreement between the original holder of such shares and
Halliburton Company, a copy of which agreement is on file at the principal
offices of Halliburton Company."
It is understood and agreed that the legend set forth above shall be
removed upon surrender of certificates bearing such legend by delivery of
substitute certificates without such legend if (i) the undersigned shall have
delivered to the Acquiror an opinion of counsel, in form and substance
reasonably satisfactory to the Acquiror, to the effect that (A) the sale or
other disposition of the shares represented by the surrendered certificates may
be effected without registration of the offering, sale and delivery of such
shares under the Securities Act and (B) the shares to be so transferred may be
publicly offered, sold and delivered by the transferee thereof without
compliance with the registration provisions of the Securities Act and (ii) the
other restrictions set forth herein are no longer applicable.
By its execution hereof, the Acquiror agrees that it will, as long as the
undersigned owns any Acquiror Common Stock to be received by the undersigned
pursuant to the Merger, take all reasonable efforts to make timely filings with
the Commission of all reports required to be filed by it pursuant to the
Exchange Act and will promptly furnish upon written request of the undersigned a
written statement confirming that such reports have been so timely filed.
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If you are in agreement with the foregoing, please so indicate by signing
below and returning a copy of this letter to the undersigned, at which time this
letter shall become a binding agreement between us.
Very truly yours,
By:___________________________________
Name:
Title:
Date:
Address:
ACCEPTED this ___ day
of June, 1997
Halliburton Company
By:_______________________________
Name:
Title:
▇-▇
▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇'▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ Company
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
The undersigned has been advised that, as of the date hereof, the
undersigned may be deemed to be an "affiliate" of Halliburton Company, a
Delaware corporation (the "Acquiror"), as that term is defined in the
Regulations of the Commission under the Securities Act.
The undertakings contained in this Affiliate's Agreement are being given by
the undersigned in connection with that certain Agreement and Plan of Merger by
and among the Acquiror, Halliburton M.S. Corp., a newly formed Delaware
corporation and a wholly owned subsidiary of the Acquiror ("Newco"), and NUMAR
Corporation, a Pennsylvania corporation (the "Company"),to be dated as of June
9, 1997 (the "Plan"), providing, among other things, for the merger of Newco
with and into the Company (the "Merger"). Capitalized terms used but not
defined herein are defined in Annex A to the Plan and are used herein with the
same meanings as ascribed to them therein.
The undersigned understands that the Merger will be treated for financial
accounting purposes as a "pooling of interests" in accordance with GAAP and that
the staff of the Commission has issued certain guidelines that should be
followed to ensure the application of pooling of interests accounting to the
transaction.
In consideration of the agreements contained herein, the Acquiror's
reliance on this letter in connection with the consummation of the Merger and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned hereby represents, warrants and agrees
that the undersigned will not make any sale, transfer or other disposition of
(i) Company Common Stock during the period from the date hereof until the
earlier of the Effective Time and the termination of the Plan (which period, if
the Merger is consummated, will be greater than 30 days) or (ii) Acquiror Common
Stock owned by the undersigned until such time as financial statements that
include at least 30 days of combined operations of the Company and the Acquiror
after the Merger shall have been publicly reported, unless the undersigned shall
have delivered to the Acquiror prior to any such sale, transfer or other
disposition, a written opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public
accountants for the Acquiror, or a written no-action letter from the accounting
staff of the Commission, in either case in form and substance reasonably
satisfactory to the Acquiror, to the effect that such sale, transfer or other
disposition will not cause the Merger to not to be treated as a "pooling
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of interests" for financial accounting purposes in accordance with GAAP and the
Regulations of the Commission.
If you are in agreement with the foregoing, please so indicate by signing
below and returning a copy of this letter to the undersigned, at which time this
letter shall become a binding agreement between us.
Very truly yours,
By: ____________________________
Name:
Title:
Date:
Address:
ACCEPTED this ___ day
of June, 1997
Halliburton Company
By: _______________________________
Name:
Title:
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