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AGREEMENT AND PLAN OF MERGER
among
XXXXX XXXXXX XXXXXXXXXXXX,
XXXXX XXXXXX DELAWARE I, INC.
and
WESTERN ATLAS INC.
Dated as of May 10, 1998
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ARTICLE 1
THE MERGER
Section 1.1 The Merger................................................... 1
Section 1.2 The Closing.................................................. 1
Section 1.3 Effective Time............................................... 2
ARTICLE 2
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation................................. 2
Section 2.2 Bylaws....................................................... 2
ARTICLE 3
DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION AND PARENT
Section 3.1 Directors of Surviving Corporation........................... 2
Section 3.2 Officers of Surviving Corporation............................ 3
Section 3.3 Parent Board of Directors; President......................... 3
ARTICLE 4
CONVERSION OF COMPANY COMMON STOCK
Section 4.1 Certain Definitions.......................................... 3
Section 4.2 Conversion of Company Stock.................................. 4
Section 4.3 Exchange of Certificates Representing
Company Common Stock......................................... 5
Section 4.4 Adjustment of Exchange Ratio................................. 7
Section 4.5 Rule 16b-3 Approval.......................................... 8
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Existence; Good Standing; Corporate Authority................ 8
Section 5.2 Authorization, Validity and Effect of Agreements............. 8
Section 5.3 Capitalization............................................... 9
Section 5.4 Significant Subsidiaries..................................... 9
Section 5.5 No Violation of Law.......................................... 10
Section 5.6 No Conflict.................................................. 10
Section 5.7 SEC Documents................................................ 11
Section 5.8 Litigation................................................... 11
Section 5.9 Absence of Certain Changes................................... 11
Section 5.10 Taxes........................................................ 12
Section 5.11 Employee Benefit Plans....................................... 13
Section 5.12 Labor Matters................................................ 14
Section 5.13 Environmental Matters........................................ 14
Section 5.14 Intellectual Property........................................ 15
Section 5.15 Insurance.................................................... 15
Section 5.16 No Brokers................................................... 15
Section 5.17 Opinion of Financial Advisor................................. 15
Section 5.18 Parent Stock Ownership....................................... 16
Section 5.19 Reorganization............................................... 16
Section 5.20 Pooling...................................................... 16
Section 5.21 Vote Required................................................ 16
Section 5.22 Amendment to the Company Rights Agreement.................... 16
Section 5.23 Certain Approvals............................................ 16
Section 5.24 Certain Contracts............................................ 17
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 6.1 Existence; Good Standing; Corporate Authority................ 17
Section 6.2 Authorization, Validity and Effect of Agreements............. 17
Section 6.3 Capitalization............................................... 18
Section 6.4 Significant Subsidiaries..................................... 18
Section 6.5 No Violation of Law.......................................... 19
Section 6.6 No Conflict.................................................. 19
Section 6.7 SEC Documents................................................ 20
Section 6.8 Litigation................................................... 20
Section 6.9 Absence of Certain Changes................................... 21
Section 6.10 Taxes........................................................ 21
Section 6.11 Employee Benefit Plans....................................... 22
Section 6.12 Labor Matters................................................ 23
Section 6.13 Environmental Matters........................................ 23
Section 6.14 Intellectual Property........................................ 23
Section 6.15 Insurance.................................................... 24
Section 6.16 No Brokers................................................... 24
Section 6.17 Opinion of Financial Advisor................................. 24
Section 6.18 Company Stock Ownership...................................... 24
Section 6.19 Reorganization............................................... 24
Section 6.20 Pooling...................................................... 25
Section 6.21 Vote Required................................................ 25
Section 6.22 Certain Approvals............................................ 25
Section 6.23 Certain Contracts............................................ 25
ARTICLE 7
COVENANTS
Section 7.1 Conduct of Businesses........................................ 25
Section 7.2 No Solicitation by the Company............................... 28
Section 7.3 No Solicitation by Parent.................................... 29
Section 7.4 Meetings of Stockholders..................................... 30
Section 7.5 Filings; Best Efforts........................................ 31
Section 7.6 Inspection................................................... 32
Section 7.7 Publicity.................................................... 33
Section 7.8 Registration Statement....................................... 33
Section 7.9 Listing Application.......................................... 34
Section 7.10 Letters of Accountants....................................... 34
Section 7.11 Agreements of Rule 145 Affiliates............................ 34
Section 7.12 Expenses..................................................... 35
Section 7.13 Indemnification and Insurance................................ 35
Section 7.14 Certain Benefits............................................. 36
Section 7.15 Reorganization; Pooling...................................... 39
Section 7.16 Rights Agreement............................................. 39
ARTICLE 8
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger................................................... 40
Section 8.2 Conditions to Obligation of the Company to Effect
the Merger................................................... 41
Section 8.3 Conditions to Obligation of Parent and Merger Sub to
Effect the Merger............................................ 41
ARTICLE 9
TERMINATION
Section 9.1 Termination by Mutual Consent................................ 42
Section 9.2 Termination by Parent or the Company......................... 42
Section 9.3 Termination by the Company................................... 43
Section 9.4 Termination by Parent........................................ 44
Section 9.5 Effect of Termination........................................ 45
Section 9.6 Extension; Waiver............................................ 46
ARTICLE 10
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and Agreements.... 47
Section 10.2 Notices...................................................... 47
Section 10.3 Assignment; Binding Effect; Benefit.......................... 48
Section 10.4 Entire Agreement............................................. 48
Section 10.5 Amendments................................................... 48
Section 10.6 Governing Law................................................ 48
Section 10.7 Counterparts................................................. 49
Section 10.8 Headings..................................................... 49
Section 10.9 Interpretation............................................... 49
Section 10.10 Waivers...................................................... 49
Section 10.11 Incorporation of Exhibits.................................... 50
Section 10.12 Severability................................................. 50
Section 10.13 Enforcement of Agreement..................................... 50
Section 10.14 Obligation of Parent......................................... 50
Section 10.15 Subsidiaries................................................. 50
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of May 10, 1998 is
among Xxxxx Xxxxxx Incorporated, a Delaware corporation ("Parent"), Xxxxx Xxxxxx
Delaware I, Inc., a Delaware corporation and a direct, wholly owned subsidiary
of Parent ("Merger Sub"), and Western Atlas Inc., a Delaware corporation (the
"Company").
RECITALS
WHEREAS, Parent and the Company have each determined to engage in a strategic
business combination with the other;
WHEREAS, in furtherance thereof, the parties hereto desire to merge Merger Sub
with and into the Company (the "Merger"), with the Company surviving as a
direct, wholly owned subsidiary of Parent, pursuant to which each share of the
Company Common Stock (as defined in Section 4.1) will be converted into the
right to receive Parent Common Stock (as defined in Section 4.1);
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have determined the Merger, in the manner contemplated herein, to be
desirable and in the best interests of their respective corporations and
stockholders and to be consistent with, and in furtherance of, their respective
business strategies and goals, and, by resolutions duly adopted, have approved
and adopted this Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger qualify
as a reorganization within the meaning of (a) of the Internal Revenue Code of
1986, as amended (the "Code");
WHEREAS, for financial accounting purposes, it is intended that the Merger be
accounted for as a "pooling of interests" under U.S. generally accepted
accounting principles;
NOW, THEREFORE, in consideration of the foregoing, and of the representations,
warranties, covenants and agreements contained herein, the parties hereto hereby
agree as follows:
ARTICLE 1
THE MERGER
Section 1.1 The Merger. Subject to the terms and conditions
of this Agreement, at the Effective Time (as defined in Section 1.3), Merger Sub
shall be merged with and into the Company in accordance with this Agreement, and
the separate corporate existence of Merger Sub shall thereupon cease. The
Company shall be the surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation"). The Merger shall have the effects
specified in the Delaware General Corporation Law (the "DGCL").
Section 1.2 The Closing. Subject to the terms and conditions
of this Agreement, the closing of the Merger (the "Closing") shall take place
(a) at the offices of Xxxxx & Xxxxx, L.L.P., Xxx Xxxxx Xxxxx, 000 Xxxxxxxxx,
Xxxxxxx, Xxxxx, at 9:00 a.m., local time,
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on the first business day immediately following the day on which the last to be
fulfilled or waived of the conditions set forth in Article 8 shall be fulfilled
or waived in accordance herewith or (b) at such other time, date or place as
Parent and the Company may agree. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
Section 1.3 Effective Time. If all the conditions to the
Merger set forth in Article 8 shall have been fulfilled or waived in accordance
herewith and this Agreement shall not have been terminated as provided in
Article 9, Parent, Merger Sub and the Company shall cause a certificate of
merger (the "Certificate of Merger") meeting the requirements of Section 251 of
the DGCL to be properly executed and filed in accordance with such the Closing
Date. The Merger shall become effective at the time of filing of the Certificate
of Merger with the Secretary of State of the State of Delaware in accordance
with the DGCL, or at such later time that the parties hereto shall have agreed
upon and designated in such filing as the effective time of the Merger (the
"Effective Time").
ARTICLE 2
CERTIFICATE OF INCORPORATION AND BYLAWS
OF THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation. The certificate of
incorporation of the Company in effect immediately prior to the Effective Time
shall be the certificate of incorporation of the Surviving Corporation, until
duly amended in accordance with applicable law.
Section 2.2 Bylaws. The bylaws of Merger Sub in effect
immediately prior to the Effective Time shall be the bylaws of the Surviving
Corporation, until duly amended in accordance with applicable law.
ARTICLE 3
DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION AND PARENT
Section 3.1 Directors of Surviving Corporation. The directors
of Merger Sub immediately prior to the Effective Time shall be the directors of
the Surviving Corporation as of the Effective Time.
Section 3.2 Officers of Surviving Corporation. The officers
of the Company immediately prior to the Effective Time shall be the officers of
the Surviving Corporation as of the Effective Time.
Section 3.3 Parent Board of Directors; President. Xxxx X.
Xxxxxxx shall be elected as President of Parent as of the Effective Time, and
Xxx X. Xxxxxx shall continue as Chairman of the Board of Directors and Chief
Executive Officer of Parent. The Board of Directors of Parent will take such
action as may be necessary to cause the election or
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appointment of Xxxxx X. Xxxxx, Xxxx X. Xxxxxxx and two other persons designated
by the Company after consultation with the Parent to be directors of Parent as
of the Effective Time; provided that the Company shall not designate any person
not currently a member of the Company's Board of Directors to which the Parent
shall have reasonably objected. Such new directors shall be designated into the
classes of directors of Parent in accordance with the Parent's bylaws in such
classes as the Company shall indicate, Xxxx X. Xxxxxxx shall be appointed to the
Executive Committee of Parent's Board of Directors and not less than one such
new director shall be appointed to each of the other committees of such Board.
ARTICLE 4
CONVERSION OF COMPANY COMMON STOCK
Section 4.1 Certain Definitions. For purposes of this
Agreement, the following terms shall have the following meanings:
(a) "Company Common Stock" shall mean the common stock, par
value $1.00 per share, of the Company.
(b) "Parent Common Stock" shall mean the common stock, par
value $1.00 per share, of Parent.
(c) "Exchange Ratio" shall equal (i) 2.4, if the Parent Share
Price is greater than or equal to $38.25 but less than or equal to $42.75; (ii)
if the Parent Share Price is greater than $42.75 but less than or equal to
$44.75, that fraction, rounded to the nearest thousandth, or if there shall not
be a nearest thousandth, to the next lower thousandth, equal to the quotient
obtained by dividing $102.60 by the Parent Share Price; (iii) if the Parent
Share Price is greater than $44.75, 2.293; and (iv) if the Parent Share Price is
less than $38.25, that fraction, rounded to the nearest thousandth, or if there
shall not be a nearest thousandth, to the next higher thousandth, equal to the
quotient obtained by dividing $91.80 by the Parent Share Price; provided,
however, that except as provided in Section 9.3(d), the Exchange Ratio shall in
no event be greater than 2.623, notwithstanding that the Parent Share Price is
less than $35.00.
(d) "Parent Share Price" shall mean the average of the per
share closing prices of Parent Common Stock as reported on the consolidated
transaction reporting system for securities traded on the New York Stock
Exchange, Inc. ("NYSE") (as reported in the New York City edition of The Wall
Street Journal or, if not reported thereby, another authoritative source) for
the 20 consecutive trading days ending on the fifth trading day prior to the
Closing Date, appropriately adjusted for any stock splits, reverse stock splits,
stock dividends, recapitalizations or other similar transactions.
(e) "Stock Option Agreements" shall mean (i) the Stock Option
Agreement dated the date hereof between Parent and the Company pursuant to which
Parent has granted to the Company an option to purchase a certain number of
shares of Parent Common Stock and (ii) the Stock Option Agreement dated the date
hereof between the Company and Parent pursuant to
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which the Company has granted to Parent an option to purchase a certain number
of shares of Company Common Stock.
Section 4.2 Conversion of Company Stock.
(a) At the Effective Time, each share of the common stock,
par value $0.01 per share, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and become one fully paid and
non-assessable share of Common Stock, par value $1.00 per share, of the
Surviving Corporation.
(b) At the Effective Time, each share of the Company Common
Stock issued and outstanding immediately prior to the Effective Time (other than
shares of Company Common Stock (i) held in the Company's treasury or (ii) owned
by Parent, Merger Sub or any other wholly owned Subsidiary (as defined in
Section 10.15) of Parent or the Company) shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into the
right to receive a number of shares of Parent Common Stock equal to the Exchange
Ratio.
(c) As a result of the Merger and without any action on the
part of the holder thereof, each share of the Company Common Stock shall cease
to be outstanding and shall be canceled and retired and shall cease to exist,
and each holder of a certificate (a "Certificate") representing any shares of
the Company Common Stock shall thereafter cease to have any rights with respect
to such shares of the Company Common Stock, except the right to receive, without
interest, Parent Common Stock and cash for fractional shares of Parent Common
Stock in accordance with Sections 4.3(b) and 4.3(e) upon the surrender of such
Certificate.
(d) Each share of the Company Common Stock issued and held in
the Company's treasury, and each share of the Company Common Stock owned by
Parent, Merger Sub or any other wholly owned Subsidiary of Parent or the Company
shall, at the Effective Time and by virtue of the Merger, cease to be
outstanding and shall be canceled and retired without payment of any
consideration therefor, and no stock of Parent or other consideration shall be
delivered in exchange therefor.
(e) (i) At the Effective Time, all options (individually, a
"Company Option" and collectively, the "Company Options") then outstanding under
the Western Atlas Inc. 1993 Stock Incentive Plan and the Western Atlas Inc.
Director Stock Option Plan (collectively, the "Company Stock Option Plans")
shall remain outstanding following the Effective Time. At the Effective Time,
the Company Options shall, by virtue of the Merger and without any further
action on the part of the Company or the holder of any Company Option, be
assumed by Parent in such manner that Parent (i) is a corporation "assuming a
stock option in a transaction to which (a) applied" within the meaning of
section 424 of the Code or (ii) to the extent that of the Code does not apply to
any Company Option, would be such a corporation were section 424 of the Code
applicable to such option. Each Company Option assumed by Parent shall be
exercisable upon the same terms and conditions as under the applicable Company
Stock Option Plan and the applicable option agreement issued thereunder, except
that (i) each Company Option shall be exercisable for that whole number of
shares of Parent Common Stock (rounded to the nearest whole share) into which
the number of shares of the Company Common Stock subject to such
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Company Option immediately prior to the Effective Time would be converted under
Section 4.2(b), and (ii) the option price per share of Parent Common Stock shall
be an amount equal to the option price per share of Company Common Stock subject
to such Company Option in effect immediately prior to the Effective Time divided
by the Exchange Ratio (the price per share, as so determined, being rounded
upward to the nearest full cent).
(ii) Parent shall take all corporate action necessary to
reserve for issuance a number of shares of Parent Common Stock equal to the
number of shares of Parent Common Stock issuable upon the exercise of the
Company Options assumed by Parent pursuant to this Section 4.2(e). From and
after the date of this Agreement, except as provided in Section 7.1(f), no
additional options shall be granted by the Company or its Subsidiaries under the
Company Stock Option Plans or otherwise. At the Effective Time or as soon as
practicable, but in no event more than three business days, thereafter, Parent
shall file with the Securities and Exchange Commission (the "SEC") a
Registration Statement on Form S-8 covering all shares of Parent Common Stock to
be issued upon exercise of the Company Options and shall cause such registration
statement to remain effective for as long as there are outstanding any Company
Options.
Section 4.3 Exchange of Certificates Representing Company
Common Stock.
(a) As of the Effective Time, Parent shall deposit, or shall
cause to be deposited, with an exchange agent selected by Parent, which shall be
Parent's transfer agent for the Parent Common Stock or such other party
reasonably satisfactory to the Company (the "Exchange Agent"), for the benefit
of the holders of shares of Company Common Stock, for exchange in accordance
with this Article 4, certificates representing the shares of Parent Common Stock
and the cash in lieu of fractional shares (such cash and certificates for shares
of Parent Common Stock, together with any dividends or distributions with
respect thereto, being hereinafter referred to as the "Exchange Fund") to be
issued pursuant to Section 4.2 and paid pursuant to this Section 4.3 in exchange
for outstanding shares of Company Common Stock.
(b) Promptly after the Effective Time, Parent shall cause the
Exchange Agent to mail to each holder of record of one or more Certificates
(other than to holders of Company Common Stock that, pursuant to Section 4.2(d),
are canceled without payment of any consideration therefor): (A) a letter of
transmittal (the "Letter of Transmittal") which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon delivery of the Certificates to the Exchange Agent and shall be in
such form and have such other provisions as Parent and the Company may
reasonably specify and (B) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of Parent
Common Stock and cash in lieu of fractional shares. Upon surrender of a
Certificate for cancellation to the Exchange Agent together with such Letter of
Transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of such Certificate shall be entitled to receive in exchange
therefor (x) a certificate representing that number of whole shares of Parent
Common Stock and (y) a check representing the amount of cash in lieu of
fractional shares, if any, and unpaid dividends and distributions, if any, which
such holder has the right to receive in respect of the Certificate surrendered
pursuant to the provisions of this Article 4, after
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giving effect to any required withholding tax, and the Certificate so
surrendered shall forthwith be canceled. No interest will be paid or accrued on
the cash in lieu of fractional shares and unpaid dividends and distributions, if
any, payable to holders of Certificates. In the event of a transfer of ownership
of Company Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent Common
Stock, together with a check for the cash to be paid in lieu of fractional
shares, shall be issued to such a transferee if the Certificate representing
such Company Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.
(c) Notwithstanding any other provisions of this Agreement,
no dividends or other distributions declared or made after the Effective Time
with respect to Parent Common Stock with a record date after the Effective Time
shall be paid with respect to the shares to be issued upon conversion of any
Certificate until such Certificate is surrendered for exchange as provided
herein. Subject to the effect of applicable laws, following surrender of any
such Certificate, there shall be paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore
payable with respect to such whole shares of Parent Common Stock and not paid,
less the amount of any withholding taxes which may be required thereon, and (ii)
at the appropriate payment date, the amount of dividends or other distributions
with a record date after the Effective Time but prior to surrender and a payment
date subsequent to surrender payable with respect to such whole shares of Parent
Common Stock, less the amount of any withholding taxes which may be required
thereon.
(d) At or after the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the shares of Company
Common Stock which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, the presented Certificates shall be canceled and exchanged for
certificates for shares of Parent Common Stock and cash in lieu of fractional
shares, if any, deliverable in respect thereof pursuant to this Agreement in
accordance with the procedures set forth in this Article 4. Certificates
surrendered for exchange by any person constituting an "affiliate" of the
Company for purposes of Rule 145(c) under the Securities Act of 1933, as amended
(the "Securities Act"), shall not be exchanged until Parent has received a
written agreement from such person as provided in Section 7.11.
(e) No fractional shares of Parent Common Stock shall be
issued pursuant hereto. In lieu of the issuance of any fractional share of
Parent Common Stock pursuant to Section 4.2(b), cash adjustments will be paid to
holders in respect of any fractional share of Parent Common Stock that would
otherwise be issuable, and the amount of such cash adjustment shall be equal to
such fractional proportion of the Parent Share Price.
(f) Any portion of the Exchange Fund (including the proceeds
of any investments thereof and any shares of Parent Common Stock) that remains
unclaimed by the former stockholders of the Company one year after the Effective
Time shall be delivered to
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Parent. Any former stockholders of the Company who have not theretofore complied
with this Article 4 shall thereafter look only to Parent for payment of their
shares of Parent Common Stock, cash in lieu of fractional shares and unpaid
dividends and distributions on the Parent Common Stock deliverable in respect of
each Certificate such former stockholder holds as determined pursuant to this
Agreement.
(g) None of Parent, the Surviving Corporation, the Exchange
Agent or any other person shall be liable to any former holder of shares of
Company Common Stock for any amount properly delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(h) In the event any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock and cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of Parent Common Stock
as provided in Section 4.3(c), deliverable in respect thereof pursuant to this
Agreement.
Section 4.4 Adjustment of Exchange Ratio. In the event that,
subsequent to the date of this Agreement but prior to the Effective Time, the
Company changes the number of shares of Company Common Stock, or Parent changes
the number of shares of Parent Common Stock, issued and outstanding as a result
of a stock split, reverse stock split, stock dividend, recapitalization or other
similar transaction, the Exchange Ratio and other items dependent thereon shall
be appropriately adjusted.
Section 4.5 Rule 16b-3 Approval. Parent agrees that the
Parent Board of Directors or the Compensation Committee of the Parent Board of
Directors shall at or prior to the Effective Time adopt resolutions specifically
approving, for purposes of Rule 16b-3 ("Rule 16b-3") under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the receipt, pursuant to
Section 4.2, of Parent Common Stock and Parent stock options by officers and
directors of the Company who will become officers or directors of the Parent
subject to Rule 16b-3.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure letter delivered to Parent concurrently
with the execution hereof (the "Company Disclosure Letter") or as disclosed with
reasonable specificity in the Company Reports (as defined in Section 5.7), the
Company represents and warrants to Parent that:
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Section 5.1 Existence; Good Standing; Corporate Authority.
The Company is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation. The Company is
duly qualified to do business as a foreign corporation and is in good standing
under the laws of any jurisdiction in which the character of the properties
owned or leased by it therein or in which the transaction of its business makes
such qualification necessary, except where the failure to be so qualified would
not have, individually or in the aggregate, a Company Material Adverse Effect
(as defined in Section 10.9). The Company has all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as now conducted. The copies of the Company's certificate of incorporation and
bylaws previously made available to Parent are true and correct and contain all
amendments as of the date hereof.
Section 5.2 Authorization, Validity and Effect of Agreements.
The Company has the requisite corporate power and authority to execute and
deliver this Agreement, the Stock Option Agreements and all other agreements and
documents contemplated hereby. The consummation by the Company of the
transactions contemplated hereby and by the Stock Options Agreements has been
duly authorized by all requisite corporate action, other than, with respect to
the Merger, the approval and adoption of this Agreement by the Company's
stockholders. This Agreement and the Stock Option Agreements constitute the
valid and legally binding obligations of the Company, enforceable in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
Section 5.3 Capitalization. The authorized capital stock of
the Company consists of 150,000,000 shares of Company Common Stock and
25,000,000 shares of preferred stock, par value $1.00 per share, of the Company
("Company Preferred Stock") and, as of April 30, 1998, there were 54,802,834
shares of Company Common Stock issued and outstanding and 4,360,254 shares of
Company Common Stock reserved for issuance upon exercise of outstanding Company
Options, and no shares of Company Preferred Stock issued and outstanding. All
such issued and outstanding shares of Company Common Stock are duly authorized,
validly issued, fully paid, nonassessable and free of preemptive rights. One
right to purchase Series A Junior Participating Preferred Stock (each, a
"Company Right") issued pursuant to the Rights Agreement, dated as of August 17,
1994 (the "Company Rights Agreement"), as amended, between the Company and
Chemical Trust Company of California is associated with and attached to each
outstanding share of Company Common Stock. As of the date of this Agreement,
except as set forth in this Section 5.3 or in the Stock Option Agreements and
except for any shares of Company Common Stock issued pursuant to Company Stock
Option Plans described in the Company Reports filed prior to the date of this
Agreement, there are no outstanding shares of capital stock and there are no
options, warrants, calls, subscriptions, convertible securities, or other
rights, agreements or commitments which obligate the Company or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of the Company or any of its Subsidiaries. The Company has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any
matter.
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Section 5.4 Significant Subsidiaries. For purposes of this
Agreement, "Significant Subsidiary" shall mean significant subsidiary as defined
in Rule 1-02 of Regulation S-X of the Exchange Act. Each of the Company's
Significant Subsidiaries is a corporation or partnership duly organized, validly
existing and in good standing (where applicable) under the laws of its
jurisdiction of incorporation or organization, has the corporate or partnership
power and authority to own, operate and lease its properties and to carry on its
business as it is now being conducted, and is duly qualified to do business and
is in good standing (where applicable) in each jurisdiction in which the
ownership, operation or lease of its property or the conduct of its business
requires such qualification, except for jurisdictions in which such failure to
be so qualified or to be in good standing would not have a Company Material
Adverse Effect. All of the outstanding shares of capital stock of, or other
ownership interests in, each of the Company's Significant Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable, and is owned, directly
or indirectly, by the Company free and clear of all liens, pledges, security
interests, claims or other encumbrances ("Liens"). Schedule 5.4 to the Company
Disclosure Letter sets forth for each Significant Subsidiary of the Company, its
name and jurisdiction of incorporation or organization.
Section 5.5 No Violation of Law. Neither the Company nor any
of its Subsidiaries is in violation of any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation to which the Company or any of its Subsidiaries or any of
their respective properties or assets is subject, except as would not have,
individually or in the aggregate, a Company Material Adverse Effect. The Company
and its Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all governmental authorities necessary for the
lawful conduct of their respective businesses (the "Company Permits"), except
where the failure so to hold would not have a Company Material Adverse Effect.
The Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except where the failure so to comply would not have a Company Material
Adverse Effect. To the knowledge of the Company, no investigation by any
governmental authority with respect to the Company or any of its Subsidiaries is
pending or threatened, other than those the outcome of which would not have a
Company Material Adverse Effect.
Section 5.6 No Conflict.
(a) Neither the execution and delivery by the Company of this
Agreement or the Stock Option Agreements nor the consummation by the Company of
the transactions contemplated hereby or thereby in accordance with the terms
hereof or thereof will: (i) conflict with or result in a breach of any
provisions of the certificate of incorporation or bylaws of the Company; (ii)
violate, or conflict with, or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or give rise to a right of purchase under, or
accelerate the performance required by, or result in the creation of any Lien
upon any of the properties of the Company or its Subsidiaries under, or result
in being declared void, voidable, or without further binding effect, or
otherwise result in a detriment to the Company or any of its Subsidiaries under,
any of the terms, conditions or provisions of, any note,
-9-
bond, mortgage, indenture, deed of trust, license, franchise, permit, lease,
contract, agreement, joint venture or other instrument or obligation to which
the Company or any of its Subsidiaries is a party, or by which the Company or
any of its Subsidiaries or any of their properties is bound or affected; or
(iii) contravene or conflict with or constitute a violation of any provision of
any law, rule, regulation, judgment, order or decree binding upon or applicable
to the Company or any of its Subsidiaries, except, in the case of matters
described in clause (ii) or (iii), as would not have, individually or in the
aggregate, a Company Material Adverse Effect.
(b) Neither the execution and delivery by the Company of this
Agreement or the Stock Option Agreements nor the consummation by the Company of
the transactions contemplated hereby or thereby in accordance with the terms
hereof or thereof will require any consent, approval or authorization of, or
filing or registration with, any governmental or regulatory authority, other
than (i) the filings provided for in Article 1 and (ii) filings required under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Exchange Act, the Securities Act or applicable state securities and
"Blue Sky" laws and applicable foreign competition or antitrust laws ((i) and
(ii) collectively, the "Regulatory Filings"), and listing on the NYSE of the
Company Common Stock to be issued upon exercise of the option granted to Parent
pursuant to the applicable Stock Option Agreement, except for any consent,
approval or authorization the failure of which to obtain and for any filing or
registration the failure of which to make would not have a Company Material
Adverse Effect.
Section 5.7 SEC Documents. The Company has made available to
Parent each registration statement, report, proxy statement or information
statement (other than preliminary materials) filed by the Company with the SEC
since January 1, 1997, each in the form (including exhibits and any amendments
thereto) filed with the SEC (collectively, the "Company Reports"). As of their
respective dates, the Company Reports (i) were prepared in all material respects
in accordance with the applicable requirements of the Securities Act, the
Exchange Act, and the rules and regulations thereunder and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading
except for such statements, if any, as have been modified by subsequent filings
with the SEC prior to the date hereof. Each of the consolidated balance sheets
included in or incorporated by reference into the Company Reports (including the
related notes and schedules) fairly presents in all material respects the
consolidated financial position of the Company and its Subsidiaries as of its
date and each of the consolidated statements of income, cash flows and changes
in stockholders' equity of the Company included in or incorporated by reference
into the Company Reports (including any related notes and schedules) fairly
presents in all material respects the results of operations, cash flows or
changes in stockholders' equity, as the case may be, of the Company and its
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to (x) such exceptions as may be permitted by Form 10-Q of
the SEC and (y) normal year-end audit adjustments), in each case in accordance
with generally accepted accounting principles consistently applied during the
periods involved, except as may be noted therein. Except as and to the extent
set forth on the consolidated balance sheet of the Company and its Subsidiaries
at December 31, 1997, including all notes thereto, as of such date, neither the
Company nor any of its Subsidiaries had any liabilities or obligations of any
nature (whether
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accrued, absolute, contingent or otherwise) that would be required to be
reflected on, or reserved against in, a balance sheet of the Company or in the
notes thereto prepared in accordance with generally accepted accounting
principles consistently applied, other than liabilities or obligations which
would not have, individually or in the aggregate, a Company Material Adverse
Effect.
Section 5.8 Litigation. There are no actions, suits or
proceedings pending against the Company or any of its Subsidiaries or, to the
Company's knowledge, threatened against the Company or any of its Subsidiaries,
at law or in equity, or before or by any federal, state or foreign commission,
board, bureau, agency or instrumentality, that are likely to have, individually
or in the aggregate, a Company Material Adverse Effect. There are no outstanding
judgments, decrees, injunctions, awards or orders against the Company or any of
its Subsidiaries that are likely to have, individually or in the aggregate, a
Company Material Adverse Effect.
Section 5.9 Absence of Certain Changes. Since December 31,
1997, there has not been (i) any event or occurrence that has had or is likely
to have a Material Adverse Effect with respect to the Company, (ii) any material
change by the Company or any of its Subsidiaries, when taken as a whole, in any
of its accounting methods, principles or practices or any of its tax methods,
practices or elections, (iii) any declaration, setting aside or payment of any
dividend or distribution in respect of any capital stock of the Company or any
redemption, purchase or other acquisition of any of its securities, or (iv) any
increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option, stock purchase
or other employee benefit plan, except in the ordinary course of business.
Section 5.10 Taxes.
(a) Each of the Company, its Subsidiaries and each
affiliated, consolidated, combined, unitary or similar group of which any such
corporation is or was a member has (i) duly filed (or there has been filed on
its behalf) on a timely basis with appropriate governmental authorities all tax
returns, statements, reports, declarations, estimates and forms ("Returns")
required to be filed by or with respect to it, except to the extent that any
failure to file would not have, individually or in the aggregate, a Company
Material Adverse Effect, and (ii) duly paid or deposited in full on a timely
basis or made adequate provisions in accordance with generally accepted
accounting principles (or there has been paid or deposited or adequate provision
has been made on its behalf) for the payment of all taxes required to be paid by
it, except to the extent that any failure to pay or deposit or make adequate
provision for the payment of such taxes would not have, individually or in the
aggregate, a Company Material Adverse Effect. The Company's aggregate adjusted
basis for federal income tax purposes in its shares of Unova, Inc. immediately
before the distribution by the Company to its stockholders of such shares was
equal to at least $500 million.
(b) (i) Except as set forth in the Company Disclosure Letter,
the federal income tax returns of the Company and each of its Subsidiaries have
been examined by the Internal Revenue Service (the "IRS") (or the applicable
statutes of limitation for the assessment of federal income taxes for such
periods have expired) for all periods; (ii) except to the extent being contested
in good faith, all material deficiencies asserted as a result of such
examinations
-11-
and any other examinations of the Company and its Subsidiaries by any taxing
authority have been paid fully, settled or adequately provided for in the
financial statements contained in the Company Reports; (iii) as of the date
hereof, neither the Company nor any of its Subsidiaries has granted any
requests, agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any taxes with respect to any
Returns of the Company or any of its Subsidiaries; (iv) neither the Company nor
any of its Subsidiaries is a party to, is bound by or has any obligation under
any tax sharing, allocation or indemnity agreement or any similar agreement or
arrangement that would have a Company Material Effect; and (v) neither the
Company nor any of its Subsidiaries is a party to an agreement that provides for
the payment of any amount that would constitute a "parachute payment" within the
meaning of section 280G of the Code.
For purposes of this Agreement, "tax" or "taxes" means all federal, state,
county, local, foreign or other net income, gross income, gross receipts, sales,
use, ad valorem, transfer, accumulated earnings, personal holding company,
excess profits, franchise, profits, license, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, disability, capital
stock, or windfall profits taxes, customs duties or other taxes, fees,
assessments or governmental charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority (domestic or foreign).
Section 5.11 Employee Benefit Plans.
(a) Schedule 5.11 of the Company Disclosure Letter contains a
list of all U.S. Company Benefit Plans. The term "Company Benefit Plans" means
all material employee benefit plans and other material benefit arrangements,
including all "employee benefit plans" as defined in the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), covering employees of the
Company and its Subsidiaries. True and complete copies of the U.S. Company
Benefit Plans and, if applicable, the most recent Form 5500 and annual reports
for each such plan have been made available to Parent.
(b) Except as would not have, individually or in the
aggregate, a Company Material Adverse Effect: all applicable reporting and
disclosure requirements have been met with respect to the Company Benefit Plans;
there has been no "reportable event," as that term is defined in section 4043 of
ERISA, with respect to the Company Benefit Plans subject to Title IV of ERISA;
to the extent applicable, the Company Benefit Plans comply, in all material
respects, with the requirements of ERISA and the Code, and any Company Benefit
Plan intended to be qualified under section 401(a) of the Code has been
determined by the IRS to be so qualified; the Company Benefit Plans have been
maintained and operated, in all material respects, in accordance with their
terms, and there are no breaches of fiduciary duty in connection with the
Company Benefit Plans; to the Company's knowledge, there are no pending or
threatened claims against or otherwise involving any Company Benefit Plan and no
suit, action or other litigation (excluding claims for benefits incurred in the
ordinary course of Company Benefit Plan activities) has been brought against or
with respect to any such Company Benefit Plan; all material contributions
required to be made as of the date hereof to the Company Benefit Plans have been
made or provided for; the Company does not maintain or contribute to any
material
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plan or arrangement which provides or has any liability to provide life
insurance, medical or other employee welfare benefits to any employee or former
employee upon his retirement or termination of employment and the Company has
not represented, promised or contracted (whether in oral or written form) to any
employee or former employee that such benefits would be provided; with respect
to the Company Benefit Plans or any "employee pension benefit plans," as defined
in ) of ERISA, that are subject to Title IV of ERISA and have been maintained or
contributed to within six years prior to the Effective Time by the Company, its
Subsidiaries or any trade or business (whether or not incorporated) which is
under common control, or which is treated as a single employer, with the Company
or any of its Subsidiaries under sections 414(b), (c), (m), or (o) of the Code,
(i) neither the Company nor any of its Subsidiaries has incurred any direct or
indirect liability under title IV of ERISA in connection with any termination
thereof or withdrawal therefrom; (ii) there does not exist any accumulated
funding deficiency within the meaning of section 412 of the Code or section 302
of ERISA, whether or not waived; and (iii) the actuarial value of the assets
equal or exceed the actuarial present value of the benefit liabilities, within
the meaning of section 4041 of ERISA, based upon reasonable actuarial
assumptions and asset valuation principles; and no prohibited transaction has
occurred with respect to any Company Benefit Plan that would result in the
imposition of any excise tax or other liability under the Code or ERISA.
(c) Neither the Company nor any of its Subsidiaries nor any
trade or business (whether or not incorporated) which is under common control,
or which is treated as a single employer, with the Company or any of its
Subsidiaries under sections 414(b), (c), (m), or (o) of the Code, contributes
to, or has an obligation to contribute to, and has not within six years prior to
the Effective Time contributed to, or had an obligation to contribute to, a
multiemployer plan within the meaning of section 3(37) of ERISA. The execution
of, and performance of the transactions contemplated in, this Agreement will not
(either alone or upon the occurrence of any additional or subsequent events)
constitute an event under any benefit plan, policy, arrangement or agreement or
any trust or loan that will or may result in any payment (whether of severance
pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligations to fund benefits with respect
to any employee of the Company or any Subsidiary thereof.
Section 5.12 Labor Matters. Except as would not have a
Company Material Adverse Effect, (i) neither the Company nor any of its
Subsidiaries is a party to, or bound by, any collective bargaining agreement,
contract or other agreement or understanding with a U.S. labor union or U.S.
labor organization and (ii) to the Company's knowledge, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of the Company or
any of its Subsidiaries.
Section 5.13 Environmental Matters. Except as would not have,
individually or in the aggregate, a Company Material Adverse Effect:
(a) there are not any past or present conditions or
circumstances that interfere with the conduct of the business of the Company and
each of its Subsidiaries in the manner now conducted or which interfere with
compliance with any order of any court, governmental
-13-
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation related to human health or the environment ("Environmental
Law");
(b) there are not any past or present conditions or
circumstances at, or arising out of, any current or former businesses, assets or
properties of the Company or any Subsidiary of the Company, including but not
limited to on-site or off-site disposal or release of any chemical substance,
product or waste, which could reasonably be expected to give rise to: (i)
liabilities or obligations for any cleanup, remediation, disposal or corrective
action under any Environmental Law or (ii) claims arising for personal injury,
property damage, or damage to natural resources; and
(c) neither the Company nor any of its Subsidiaries has (i)
received any notice of noncompliance with, violation of, or liability or
potential liability under any Environmental Law or (ii) entered into any consent
decree or order or is subject to any order of any court or governmental
authority or tribunal under any Environmental Law or relating to the cleanup of
any hazardous materials contamination.
Section 5.14 Intellectual Property. Except as previously
disclosed to Parent in writing, the Company and its Subsidiaries own or possess
adequate licenses or other valid rights to use all patents, patent rights,
trademarks, trademark rights and proprietary information used or held for use in
connection with their respective businesses as currently being conducted, except
where the failure to own or possess such licenses and other rights would not
have, individually or in the aggregate, a Company Material Adverse Effect, and
there are no assertions or claims challenging the validity of any of the
foregoing which are likely to have, individually or in the aggregate, a Company
Material Adverse Effect. The conduct of the Company's and its Subsidiaries'
respective businesses as currently conducted does not conflict with any patents,
patent rights, licenses, trademarks, trademark rights, trade names, trade name
rights or copyrights of others in any way likely to have, individually or in the
aggregate, a Company Material Adverse Effect. There is no material infringement
of any proprietary right owned by or licensed by or to the Company or any of its
Subsidiaries which is likely to have, individually or in the aggregate, a
Company Material Adverse Effect. The computer software operated, sold or
licensed by the Company that is material to its business or its internal
operations is capable of providing or is being or will be adapted, or is capable
of being replaced, to provide uninterrupted millennium functionality to record,
store, process and present calendar dates falling on or after January 1, 2000 in
substantially the same manner and with substantially the same functionality as
such software records, stores, processes and presents such calendar dates
falling on or before December 31, 1999, except as would not have a Company
Material Adverse Effect. The costs of the adaptations and replacements referred
to in the prior sentence will not have a Company Material Adverse Effect.
Section 5.15 Insurance. The Company and its Subsidiaries
maintain insurance coverage reasonably adequate for the operation of their
respective businesses (taking into account the cost and availability of such
insurance).
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Section 5.16 No Brokers. The Company has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of the Company or Parent to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that the Company has retained Credit Suisse First
Boston Corporation as its financial advisor, the arrangements with which have
been disclosed in writing to Parent prior to the date hereof.
Section 5.17 Opinion of Financial Advisor. The Board of
Directors of the Company has received the opinion of Credit Suisse First Boston
Corporation to the effect that, as of the date of this Agreement, the Exchange
Ratio is fair, from a financial point of view, to the holders of the Company
Common Stock; it being understood and acknowledged by Parent that such opinion
has been rendered for the benefit of the Board of Directors of the Company, and
is not intended to, and may not, be relied upon by Parent, its affiliates or
their respective Subsidiaries.
Section 5.18 Parent Stock Ownership. Neither the Company nor
any of its Subsidiaries owns any shares of capital stock of Parent or any other
securities convertible into or otherwise exercisable to acquire capital stock of
Parent.
Section 5.19 Reorganization. Neither the Company nor any of
its Subsidiaries has taken or failed to take any action, as a result of which
the Merger would not qualify as a reorganization within the meaning of section
368(a) of the Code.
Section 5.20 Pooling. Neither the Company nor any of its
Subsidiaries has taken or failed to take any action, as a result of which the
Merger would not qualify as a "pooling of interests" for financial accounting
purposes.
Section 5.21 Vote Required. The affirmative vote of the
holders of at least a majority of the outstanding shares of Company Common Stock
is the only vote of the holders of any class or series of Company capital stock
necessary to approve this Agreement and the transactions contemplated hereby.
Section 5.22 Amendment to the Company Rights Agreement. The
Company has amended or taken other action under the Company Rights Agreement so
that none of the execution and delivery of this Agreement or the Stock Option
Agreements, the conversion of shares of Company Common Stock into the right to
receive Parent Common Stock in accordance with Article 4 of this Agreement, the
issuance of shares of Company Common Stock upon exercise of the option granted
to Parent pursuant to the applicable Stock Option Agreement, and the
consummation of the Merger or any other transaction contemplated hereby or by
the Stock Option Agreement, will cause (i) the Company Rights to become
exercisable under the Company Rights Agreement, (ii) Parent or any of its
Subsidiaries to be deemed an "Acquiring Person" (as defined in the Company
Rights Agreement), (iii) any such event to be an event described in Section
11(a)(ii) or 13 of the Company Rights Agreement or (iv) the "Shares Acquisition
Date" or the "Distribution Date" (each as defined in the Company Rights
Agreement) to occur upon any such event, and so that the Company Rights will
expire immediately prior to the Effective
-15-
Time. The Company has delivered to Parent a true and complete copy of the
Company Rights Agreement, as amended to date.
Section 5.23 Certain Approvals. The Company Board of
Directors has taken any and all necessary and appropriate action to render
inapplicable to the Merger and the transactions contemplated by this Agreement
and the Stock Option Agreements the provisions of Section 203 of the DGCL. No
other state takeover or business combination statute applies or purports to
apply to the Merger or the transactions contemplated by this Agreement or the
Stock Option Agreements.
Section 5.24 Certain Contracts. Neither the Company nor any
of its Subsidiaries is a party to or bound by any non-competition agreement or
any other agreement or obligation which purports to limit in any material
respect the manner in which, or the localities in which, all or any material
portion of the current business of the Company and its Subsidiaries, taken as a
whole, or the Parent and its Subsidiaries, taken as a whole, is conducted.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB
Except as set forth in the disclosure letter delivered to the Company
concurrently with the execution hereof (the "Parent Disclosure Letter") or as
disclosed with reasonable specificity in the Parent Reports (as defined in
Section 6.7), Parent and Merger Sub, jointly and severally, represent and
warrant to the Company that:
Section 6.1 Existence; Good Standing; Corporate Authority.
Parent and Merger Sub are corporations duly incorporated, validly existing and
in good standing under the laws of their respective jurisdictions of
incorporation. Parent is duly qualified to do business as a foreign corporation
and is in good standing under the laws of any jurisdiction in which the
character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified would not have, individually or in the aggregate, a
Parent Material Adverse Effect (as defined in Section 10.9). Parent has all
requisite corporate power and authority to own, operate and lease its properties
and to carry on its business as now conducted. The copies of Parent's
certificate of incorporation and bylaws previously made available to the Company
are true and correct and contain all amendments as of the date hereof.
Section 6.2 Authorization, Validity and Effect of Agreements.
Each of Parent and Merger Sub has the requisite corporate power and authority to
execute and deliver this Agreement, the Stock Option Agreements and all other
agreements and documents contemplated hereby to which it is a party. Each of the
consummation by Parent and Merger Sub of the transactions contemplated hereby,
including the issuance and delivery by Parent of shares of Parent Common Stock
pursuant to the Merger, and the consummation by Parent of the transactions
contemplated by the Stock Option Agreements, has been duly authorized by all
requisite corporate action, other than approval of the issuance of the shares of
Parent Common
-16-
Stock pursuant to the Merger contemplated hereby by Parent's stockholders as
required by the rules of the NYSE. This Agreement and the Stock Option
Agreements constitute the valid and legally binding obligations of each of
Parent and Merger Sub to the extent it is a party, enforceable in accordance
with their respective terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
Section 6.3 Capitalization. The authorized capital stock of
Parent consists of 400,000,000 shares of Parent Common Stock and 15,000,000
shares of preferred stock, par value $1.00 per share, of Parent ("Parent
Preferred Stock"), and, as of May 1, 1998, there were 169,709,279 shares of
Parent Common Stock issued and outstanding and 6,286,974 shares of Parent Common
Stock reserved for issuance upon exercise of outstanding Parent options and no
shares of Parent Preferred Stock issued and outstanding. All such issued and
outstanding shares of Parent Common Stock are duly authorized, validly issued,
fully paid, nonassessable and free of preemptive rights. The shares of Parent
Common Stock to be issued in connection with the Merger, when issued in
accordance with this Agreement, will be validly issued, fully paid and
nonassessable. As of the date of this Agreement, except as set forth in this
Section 6.3 or in the Stock Option Agreements and except for any shares of
Parent Common Stock issued pursuant to plans described in the Parent Reports
filed prior to the date of this Agreement, there are no outstanding shares of
capital stock and there are no options, warrants, calls, subscriptions,
convertible securities or other rights, agreements or commitments which obligate
Parent or any of its Subsidiaries to issue, transfer or sell any shares of
capital stock or other voting securities of Parent or any of its Subsidiaries.
Parent has no outstanding bonds, debentures, notes or other obligations the
holders of which have the right to vote (or which are convertible into or
exercisable for securities having the right to vote) with the stockholders of
Parent on any matter.
Section 6.4 Significant Subsidiaries.
(a) Each of Parent's Significant Subsidiaries is a
corporation or partnership duly organized, validly existing and in good standing
(where applicable) under the laws of its jurisdiction of incorporation or
organization, has the corporate or partnership power and authority to own,
operate and lease its properties and to carry on its business as it is now being
conducted, and is duly qualified to do business and is in good standing (where
applicable) in each jurisdiction in which the ownership, operation or lease of
its property or the conduct of its business requires such qualification, except
for jurisdictions in which such failure to be so qualified or to be in good
standing would not have a Parent Material Adverse Effect. All of the outstanding
shares of capital stock of, or other ownership interests in, each of the
Parent's Significant Subsidiaries is duly authorized, validly issued, fully paid
and nonassessable, and is owned, directly or indirectly, by the Parent free and
clear of all Liens. Schedule 6.4 to the Parent Disclosure Letter sets forth for
each Significant Subsidiary of Parent its name and jurisdiction of incorporation
or organization.
(b) All of the outstanding shares of capital stock of Merger
Sub are owned directly by Parent. Merger Sub was formed solely for the purpose
of engaging in the transactions
-17-
contemplated hereby and has not engaged in any activities other than in
connection with the transactions contemplated by this Agreement.
Section 6.5 No Violation of Law. Neither Parent nor any of
its Subsidiaries is in violation of any order of any court, governmental
authority or arbitration board or tribunal, or any law, ordinance, governmental
rule or regulation to which Parent or any of its Subsidiaries or any of their
respective properties or assets is subject, except as would not have,
individually or in the aggregate, a Parent Material Adverse Effect. Parent and
its Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all governmental authorities necessary for the
lawful conduct of their respective businesses (the "Parent Permits"), except
where the failure so to hold would not have a Parent Material Adverse Effect.
Parent and its Subsidiaries are in compliance with the terms of the Parent
Permits, except where the failure so to comply would not have a Parent Material
Adverse Effect. To the knowledge of Parent, no investigation by any governmental
authority with respect to Parent or any of its Subsidiaries is pending or
threatened, other than those the outcome of which would not have a Parent
Material Adverse Effect.
Section 6.6 No Conflict.
(a) Neither the execution and delivery by Parent and Merger
Sub of this Agreement, the execution and delivery by Parent of the Stock Option
Agreements nor the consummation by Parent and Merger Sub of the transactions
contemplated hereby or thereby in accordance with the terms hereof or thereof
will: (i) conflict with or result in a breach of any provisions of the
certificate of incorporation or bylaws of Parent or Merger Sub; (ii) violate, or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination or in a right of
termination or cancellation of, or give rise to a right of purchase under or
accelerate the performance required by, or result in the creation of any Lien
upon any of the properties of Parent or its Subsidiaries under, or result in
being declared void, voidable, or without further binding effect, or otherwise
result in a detriment to Parent or any of its Subsidiaries under any of the
terms, conditions or provisions of, any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, lease, contract, agreement, joint venture or
other instrument or obligation to which Parent or any of its Subsidiaries is a
party, or by which Parent or any of its Subsidiaries or any of their properties
is bound or affected; or (iii) contravene or conflict with or constitute a
violation of any provision of any law, rule, regulation, judgment, order or
decree binding upon or applicable to Parent or any of its Subsidiaries, except,
in the case of matters described in clause (ii) or (iii), as would not have,
individually or in the aggregate, a Parent Material Adverse Effect.
(b) Neither the execution and delivery by Parent or Merger
Sub of this Agreement, the execution and delivery by Parent of the Stock Option
Agreements nor the consummation by Parent or Merger Sub of the transactions
contemplated hereby or thereby in accordance with the terms hereof or thereof
will require any consent, approval or authorization of, or filing or
registration with, any governmental or regulatory authority, other than
Regulatory Filings, and listing of the Parent Common Stock to be issued in the
Merger and upon exercise of
-18-
the option granted to the Company pursuant to the applicable Stock Option
Agreement under the rules of the NYSE, except for any consent, approval or
authorization the failure of which to obtain and for any filing or registration
the failure of which to make would not have a Parent Material Adverse Effect.
Section 6.7 SEC Documents. Parent has made available to the
Company each registration statement, report, proxy statement or information
statement (other than preliminary materials) filed by Parent with the SEC since
September 30, 1996, each in the form (including exhibits and any amendments
thereto) filed with the SEC (collectively, the "Parent Reports"). As of their
respective dates, the Parent Reports (i) were prepared in all material respects
in accordance with the applicable requirements of the Securities Act, the
Exchange Act, and the rules and regulations thereunder and (ii) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in the light of the circumstances under which they were made, not misleading
except for such statements, if any, as have been modified by subsequent filings
with the SEC prior to the date hereof. Each of the consolidated balance sheets
included in or incorporated by reference into the Parent Reports (including the
related notes and schedules) fairly presents in all material respects the
consolidated financial position of Parent and its Subsidiaries as of its date
and each of the consolidated statements of income, cash flows and changes in
stockholders' equity included in or incorporated by reference into the Parent
Reports (including any related notes and schedules) fairly presents in all
material respects the results of operations, cash flows or changes in
stockholders' equity, as the case may be, of Parent and its Subsidiaries for the
periods set forth therein (subject, in the case of unaudited statements, to (x)
such exceptions as may be permitted by Form 10-Q of the SEC and (y) normal
year-end audit adjustments), in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
as may be noted therein. Except as and to the extent set forth on the
consolidated balance sheet of Parent and its Subsidiaries at September 30, 1997,
including all notes thereto, as of such date, neither Parent nor any of its
Subsidiaries had any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) that would be required to be reflected on, or
reserved against in, a balance sheet of Parent or in the notes thereto prepared
in accordance with generally accepted accounting principles consistently
applied, other than liabilities or obligations which would not have,
individually or in the aggregate, a Parent Material Adverse Effect.
Section 6.8 Litigation. There are no actions, suits or
proceedings pending against Parent or any of its Subsidiaries or, to Parent's
knowledge, threatened against Parent or any of its Subsidiaries, at law or in
equity, or before or by any federal, state or foreign commission, board, bureau,
agency or instrumentality, that are likely to have, individually or in the
aggregate, a Parent Material Adverse Effect. There are no outstanding judgments,
decrees, injunctions, awards or orders against Parent or any of its Subsidiaries
that are likely to have, individually or in the aggregate, a Parent Material
Adverse Effect.
Section 6.9 Absence of Certain Changes. Since December 31,
1997, there has not been (i) any event or occurrence that has had or is likely
to have a Material Adverse Effect with respect to Parent, (ii) any material
change by Parent or any of its Subsidiaries, when taken
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as a whole, in any of its accounting methods, principles or practices or any of
its tax methods, practices or elections, (iii) any declaration, setting aside or
payment of any dividend or distribution in respect of any capital stock of
Parent or any redemption, purchase or other acquisition of any of its
securities, except dividends on the Parent Common Stock at a rate of not more
than $0.115 per share per quarter, or (iv) any increase in or establishment of
any bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option, stock purchase or other employee benefit plan,
except in the ordinary course of business.
Section 6.10 Taxes.
(a) Each of Parent, its Subsidiaries and each affiliated,
consolidated, combined, unitary or similar group of which any such corporation
is or was a member has (i) duly filed (or there has been filed on its behalf) on
a timely basis with appropriate governmental authorities all Returns required to
be filed by or with respect to it, except to the extent that any failure to file
would not have, individually or in the aggregate, a Parent Material Adverse
Effect, and (ii) duly paid or deposited in full on a timely basis or made
adequate provisions in accordance with generally accepted accounting principles
(or there has been paid or deposited or adequate provision has been made on its
behalf) for the payment of all taxes required to be paid by it, except to the
extent that any failure to pay or deposit or make adequate provision for the
payment of such taxes would not have, individually or in the aggregate, a Parent
Material Adverse Effect.
(b) (i) The federal income tax returns of Parent and each of
its Subsidiaries have been examined by the IRS (or the applicable statutes of
limitation for the assessment of federal income taxes for such periods have
expired) for all periods through and including September 30, 1993; (ii) except
to the extent being contested in good faith, all material deficiencies asserted
as a result of such examinations and any other examinations of Parent and its
Subsidiaries by any taxing authority have been paid fully, settled or adequately
provided for in the financial statements contained in the Parent Reports; (iii)
as of the date hereof, neither Parent nor any of its Subsidiaries has granted
any requests, agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any taxes with respect to any
Returns of Parent or any of its Subsidiaries, except that Parent and its
Subsidiaries have agreed to extend the applicable Federal statutory period of
limitations to December 31, 1998 for the fiscal year ended October 1, 1994; (iv)
neither Parent nor any of its Subsidiaries is a party to, is bound by or has any
obligation under any tax sharing, allocation or indemnity agreement or any
similar agreement or arrangement that would have a Parent Material Adverse
Effect; and (v) neither Parent nor any of its Subsidiaries is a party to an
agreement that provides for the payment of any amount that would constitute a
"parachute payment" within the meaning of Section 280G of the Code.
Section 6.11 Employee Benefit Plans.
(a) Schedule 6.11 of the Parent Disclosure Letter contains a
list of all U.S. Parent Benefit Plans. The term "Parent Benefit Plans" means all
material employee benefit plans and other material benefit arrangements,
including all "employee benefit plans" as defined in
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ERISA, covering employees of Parent and its Subsidiaries. True and complete
copies of the U.S. Parent Benefit Plans and, if applicable, the most recent Form
5500 and annual reports for each such plan have been made available to the
Company.
(b) Except as would not have, individually or in the
aggregate, a Parent Material Adverse Effect: all applicable reporting and
disclosure requirements have been met with respect to the Parent Benefit Plans;
there has been no "reportable event," as that term is defined in 3 of ERISA,
with respect to the Parent Benefit Plans subject to Title IV of ERISA; to the
extent applicable, the Parent Benefit Plans comply, in all material respects,
with the requirements of ERISA and the Code, and any Parent Benefit Plan
intended to be qualified under Section 401(a) of the Code has been determined by
the IRS to be so qualified; the Parent Benefit Plans have been maintained and
operated, in all material respects, in accordance with their terms, and there
are no breaches of fiduciary duty in connection with the Parent Benefit Plans;
to Parent's knowledge, there are no pending or threatened claims against or
otherwise involving any Parent Benefit Plan and no suit, action or other
litigation (excluding claims for benefits incurred in the ordinary course of
Parent Benefit Plan activities) has been brought against or with respect to any
such Parent Benefit Plan; all material contributions required to be made as of
the date hereof to the Parent Benefit Plans have been made or provided for;
Parent does not maintain or contribute to any material plan or arrangement which
provides or has any liability to provide life insurance, medical or other
employee welfare benefits to any employee or former employee upon his retirement
or termination of employment and Parent has not represented, promised or
contracted (whether in oral or written form) to any employee or former employee
that such benefits would be provided; with respect to the Parent Benefit Plans
or any "employee pension benefit plans," as defined in section 3(2) of ERISA,
that are subject to Title IV of ERISA and have been maintained or contributed to
within six years prior to the Effective Time by Parent, its Subsidiaries or any
trade or business (whether or not incorporated) which is under common control,
or which is treated as a single employer, with Parent or any of its Subsidiaries
under sections 414(b), (c), (m), or (o) of the Code, (i) neither Parent nor any
of its Subsidiaries has incurred any direct or indirect liability under title IV
of ERISA in connection with any termination thereof or withdrawal therefrom;
(ii) there does not exist any accumulated funding deficiency within the meaning
of section 412 of the Code or of ERISA, whether or not waived; and (iii) the
actuarial value of the assets equal or exceed the actuarial present value of the
benefit liabilities, within the meaning of section 4041 of ERISA, based upon
reasonable actuarial assumptions and asset valuation principles; and no
prohibited transaction has occurred with respect to any Parent Benefit Plan that
would result in the imposition of any excise tax or other liability under the
Code or ERISA.
(c) Neither Parent nor any of its Subsidiaries nor any trade
or business (whether or not incorporated) which is under common control, or
which is treated as a single employer, with Parent or any of its Subsidiaries
under sections 414(b), (c), (m), or (o) of the Code, contributes to, or has an
obligation to contribute to, and has not within six years prior to the Effective
Time contributed to, or had an obligation to contribute to, a multiemployer plan
within the meaning of Section 3(37) of ERISA. The execution of, and performance
of the transactions contemplated in, this Agreement will not (either alone or
upon the occurrence of any additional or subsequent events) constitute an event
under any benefit plan, policy, arrangement
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or agreement or any trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligations to fund
benefits with respect to any employee of Parent or any Subsidiary thereof.
Section 6.12 Labor Matters. Neither Parent nor any of its
Subsidiaries is subject to a dispute, strike or work stoppage with respect to
any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization to which it is a party or
by which it is bound which would have a Parent Material Adverse Effect. To
Parent's knowledge, there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or threatened
involving employees of Parent or any of its Subsidiaries, except for those the
formation of which would not have a Parent Material Adverse Effect.
Section 6.13 Environmental Matters. Except as would not have,
individually or in the aggregate, a Parent Material Adverse Effect:
(a) there are not any past or present conditions or
circumstances that interfere with the conduct of the business of Parent and each
of its Subsidiaries in the manner now conducted or which interfere with
compliance with any order of any court, governmental authority or arbitration
board or tribunal, or any Environmental Law;
(b) there are not any past or present conditions or
circumstances at, or arising out of, any current or former businesses, assets or
properties of Parent or any Subsidiary of Parent, including but not limited to
on-site or off-site disposal or release of any chemical substance, product or
waste, which could reasonably be expected to give rise to: (i) liabilities or
obligations for any cleanup, remediation, disposal or corrective action under
any Environmental Law or (ii) claims arising for personal injury, property
damage, or damage to natural resources; and
(c) neither Parent nor any of its Subsidiaries has (i)
received any notice of noncompliance with, violation of, or liability or
potential liability under any Environmental Law or (ii) entered into any consent
decree or order or is subject to any order of any court or governmental
authority or tribunal under any Environmental Law or relating to the cleanup of
any hazardous materials contamination.
Section 6.14 Intellectual Property. Except as previously
disclosed to the Company in writing, Parent and its Subsidiaries own or possess
adequate licenses or other valid rights to use all patents, patent rights,
trademarks, trademark rights and proprietary information used or held for use in
connection with their respective businesses as currently being conducted, except
where the failure to own or possess such licenses and other rights would not
have, individually or in the aggregate, a Parent Material Adverse Effect, and
there are no assertions or claims challenging the validity of any of the
foregoing which are likely to have, individually or in the aggregate, a Parent
Material Adverse Effect. The conduct of Parent's and its Subsidiaries'
respective businesses as currently conducted does not conflict with any patents,
patent rights, licenses, trademarks, trademark rights, trade names, trade name
rights or copyrights of others in
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any way likely to have, individually or in the aggregate, a Parent Material
Adverse Effect. There is no material infringement of any proprietary right owned
by or licensed by or to Parent or any of its Subsidiaries which is likely to
have, individually or in the aggregate, a Parent Material Adverse Effect. The
computer software operated, sold or licensed by Parent that is material to its
business or its internal operations is capable of providing or is being or will
be adapted, or is capable of being replaced, to provide uninterrupted millennium
functionality to record, store, process and present calendar dates falling on or
after January 1, 2000 in substantially the same manner and with substantially
the same functionality as such software records, stores, processes and presents
such calendar dates falling on or before December 31, 1999, except as would not
have a Parent Material Adverse Effect. The costs of the adaptations and
replacements referred to in the prior sentence will not have a Parent Material
Adverse Effect.
Section 6.15 Insurance. Parent and its Subsidiaries maintain
insurance coverage reasonably adequate for the operation of their respective
businesses (taking into account the cost and availability of such insurance).
Section 6.16 No Brokers. Parent has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of the Company or Parent to pay any finder's fees, brokerage
or agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby, except that Parent has retained Xxxxxxx Xxxxx & Co. as its
financial advisor, the arrangements with which have been disclosed in writing to
the Company prior to the date hereof.
Section 6.17 Opinion of Financial Advisor. The Board of
Directors of Parent has received the opinion of Xxxxxxx Xxxxx & Co. to the
effect that, as of the date thereof, the Exchange Ratio is fair to Parent from a
financial point of view.
Section 6.18 Company Stock Ownership. Neither Parent nor any
of its Subsidiaries owns any shares of capital stock of the Company or any other
securities convertible into or otherwise exercisable to acquire capital stock of
the Company.
Section 6.19 Reorganization. Neither Parent nor any of its
Subsidiaries has taken or failed to take any action, as a result of which the
Merger would not qualify as a reorganization within the meaning of section
368(a) of the Code.
Section 6.20 Pooling. Neither Parent nor any of its
Subsidiaries has taken or failed to take any action, as a result of which the
Merger would not qualify as a "pooling of interests" for financial accounting
purposes.
Section 6.21 Vote Required. The vote of holders of Parent
Common Stock required by the rules of the NYSE is the only vote of the holders
of any class or series of Parent capital stock necessary to approve the issuance
of Parent Common Stock pursuant to this Agreement and the transactions
contemplated hereby.
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Section 6.22 Certain Approvals. The Parent Board of Directors
has taken any and all necessary and appropriate action to render inapplicable to
the Merger and the transactions contemplated by this Agreement and the Stock
Option Agreements the provisions of Section 203 of the DGCL. No other state
takeover or business combination statute applies or purports to apply to the
Merger or the transactions contemplated by this Agreement or the Stock Option
Agreements.
Section 6.23 Certain Contracts. Neither the Parent nor any of
its Subsidiaries is a party to or bound by any non-competition agreement or any
other agreement or obligation which purports to limit in any material respect
the manner in which, or the localities in which, all or any material portion of
the current business of the Parent and its Subsidiaries, taken as a whole, or
the Company and its Subsidiaries, taken as a whole, is conducted.
ARTICLE 7
COVENANTS
Section 7.1 Conduct of Businesses. Prior to the Effective
Time, except as set forth in the Company Disclosure Letter or as expressly
contemplated by any other provision of this Agreement or the Stock Option
Agreements, unless the Parent or the Company, respectively, has consented in
writing thereto, each of the Company and Parent:
(a) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
(b) shall use its commercially reasonable best efforts, and
shall cause each of its Subsidiaries to use its commercially reasonable
best efforts, to preserve intact their business organizations and
goodwill, keep available the services of their respective officers and
employees and maintain satisfactory relationships with those persons
having business relationships with them;
(c) shall not amend its certificate of incorporation or
bylaws;
(d) shall promptly notify the other of any material change in
its condition (financial or otherwise) or business or any material
litigation or material governmental complaints, investigations or
hearings (or communications in writing indicating that such litigation,
complaints, investigations or hearings may be contemplated), or the
breach in any material respect of any representation or warranty
contained herein;
(e) shall promptly deliver to the other true and correct
copies of any report, statement or schedule filed with the SEC
subsequent to the date of this Agreement;
(f) shall not (i) except pursuant to the exercise of options,
warrants, conversion rights and other contractual rights existing on
the date hereof, or referred to in clause (ii) below and disclosed
pursuant to this Agreement or in connection with
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transactions permitted by Section 7.1(i), issue any shares of its
capital stock, effect any stock split or otherwise change its
capitalization as it existed on the date hereof, (ii) grant, confer or
award any option, warrant, conversion right or other right not existing
on the date hereof to acquire any shares of its capital stock except
(x) the automatic awards to non-employee directors pursuant to the
Western Atlas Inc. Director Stock Option Plan or the Xxxxx Xxxxxx
Incorporated Long-Term Incentive Plan, (y) the grant of options to new
employees consistent with past practice or pursuant to contractual
commitments existing on the date of this Agreement, and (z) the grant
of options by the Company or Parent prior to the Effective Time in
amounts and at times consistent with past practice, at exercise prices
not less than the fair market value of the underlying common stock on
the date of grant and, in each case, in an amount not to exceed 1.2
million shares of Company Common Stock, in the case of the Company, and
120% of the Total Option Dollars granted by the Parent, in the case of
Parent, in the previous fiscal year (provided that for purposes of the
foregoing the term "Total Option Dollars" shall mean the aggregate
number of options granted multiplied by the exercise price thereof) and
notwithstanding the provisions of Section 7.14 or any other provision
of this Agreement to the contrary, in the event the Company grants
options to any of its employees prior to the Effective Time, such
employees will not be entitled to participate in option grants by
Parent subsequent to the Effective Time for a period at least equal to
one year subsequent to the grant of such options to Company employees
(e.g., if the Company follows its past practice of granting options in
July and Parent follows its past practice of granting options in
October, such period would be 15 months); (iii) increase any
compensation or benefits, except in the ordinary course of business
consistent with past practice, or enter into or amend any employment
agreement with any of its present or future officers or directors,
except with new employees consistent with past practice, or (iv) adopt
any new employee benefit plan (including any stock option, stock
benefit or stock purchase plan) or amend (except as required by law)
any existing employee benefit plan in any material respect, except for
changes which are less favorable to participants in such plans;
(g) shall not (i) declare, set aside or pay any dividend or
make any other distribution or payment with respect to any shares of
its capital stock or (ii) redeem, purchase or otherwise acquire any
shares of its capital stock or capital stock of any of its
Subsidiaries, or make any commitment for any such action, except in the
case of Parent for the declaration and payment of regular, quarterly
dividends, consistent with past practice, not to exceed $0.115 per
share of Parent Common Stock per quarter;
(h) shall not, and shall not permit any of its Subsidiaries
to, sell, lease or otherwise dispose of any of its assets (including
capital stock of Subsidiaries) which are material to the Company or
Parent, as the case may be, individually or in the aggregate, except in
the ordinary course of business;
(i) shall not, and shall not permit any of its Subsidiaries
to, except pursuant to contractual commitments in effect on the date
hereof and disclosed in the Parent Disclosure Letter or the Company
Disclosure Letter, as the case may be, acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial equity
interest
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in or a substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, association or other
business organization or division thereof or otherwise acquire or agree
to acquire any assets or securities in each case (i) for an aggregate
consideration for all such acquisitions in excess of $100 million
(excluding acquisitions approved in writing by Parent and the Company)
and (ii) where a filing under the HSR Act is required, except where
Parent and the Company have agreed in writing that such action is not
likely to (x) have a material adverse effect on the ability of the
parties to consummate the transactions contemplated by this Agreement
or (y) delay materially the Effective Time;
(j) except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the
accounting principles or practices used by it;
(k) shall, and shall cause any of its Subsidiaries to, use
reasonable efforts to maintain with financially responsible insurance
companies insurance in such amounts and against such risks and losses
as are customary for such party;
(l) shall not, and shall not permit any of its Subsidiaries
to, (i) make or rescind any material express or deemed election
relating to taxes unless it is reasonably expected that such action
will not materially and adversely affect it (or Parent), including
elections for any and all joint ventures, partnerships, limited
liability companies, working interests or other investments where it
has the capacity to make such binding election, (ii) settle or
compromise any material claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes,
except where such settlement or compromise will not materially and
adversely affect it (or Parent), or (iii) change in any material
respect any of its methods of reporting any item for federal income tax
purposes from those employed in the preparation of its federal income
tax return for the most recent taxable year for which a return has been
filed, except as may be required by applicable law or except for such
changes that are reasonably expected not to materially and adversely
affect it (or Parent);
(m) shall not, nor shall it permit any of its Subsidiaries
to, (i) incur any indebtedness for borrowed money (except for (x)
general corporate purposes, (y) refinancings of existing debt and (z)
other immaterial borrowings that, in the case of (x), (y) or (z),
permit prepayment of such debt without penalty (other than LIBOR
breakage costs)) or guarantee any such indebtedness or issue or sell
any debt securities or warrants or rights to acquire any debt
securities of such party or any of its Subsidiaries or guarantee any
debt securities of others, (ii) except in the ordinary course of
business, enter into any material lease (whether such lease is an
operating or capital lease) or create any material mortgages, liens,
security interests or other encumbrances on the property of the Company
or any of its Subsidiaries in connection with any indebtedness thereof,
or (iii) make or commit to make aggregate capital expenditures in
excess of $75 million over the fiscal 1998 capital expenditures budget
previously disclosed to the other;
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(n) shall not purchase any shares of Parent Common Stock or
Company Common Stock;
(o) shall not, nor shall it permit any of its Subsidiaries
to, agree in writing or otherwise to take any of the foregoing actions;
(p) subject to Section 7.5, shall not take any action that is
likely to delay materially or adversely affect the ability of any of
the parties hereto to obtain any consent, authorization, order or
approval of any governmental commission, board or other regulatory body
or the expiration of any applicable waiting period required to
consummate the Merger; and
(q) during the period from the date of this Agreement through
the Effective Time, shall not terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement to which it or
any of its respective Subsidiaries is a party; and during such period
shall enforce, to the fullest extent permitted under applicable law,
the provisions of such agreement, including by obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the
terms and provisions thereof in any court of the United States of
America or any state having jurisdiction.
Section 7.2 No Solicitation by the Company.
(a) The Company agrees that (i) neither it nor any of its
Subsidiaries shall, and shall not knowingly permit any of its officers,
directors, employees, agents or representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, solicit, initiate or knowingly encourage (including by way of
furnishing material non-public information) any inquiry, proposal or offer
(including, without limitation, any proposal or offer to its stockholders) with
respect to a tender offer, merger, consolidation, business combination or
similar transaction involving, or any purchase of 20% or more of the assets on a
consolidated basis or 20% or more of any class of capital stock of, the Company
(any such proposal, offer or transaction being hereinafter referred to as a
"Company Acquisition Proposal") or participate or engage in any discussions or
negotiations concerning a Company Acquisition Proposal; and (ii) it will
immediately cease and cause to be terminated any existing negotiations with any
parties conducted heretofore with respect to any of the foregoing; provided that
nothing contained in this Agreement shall prevent the Company or its Board of
Directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a Company Acquisition Proposal, or (B) prior to the Cutoff Date,
providing information (pursuant to a confidentiality agreement in reasonably
customary form) to or engaging in any negotiations or discussions with any
person or entity who has made an unsolicited bona fide Company Acquisition
Proposal with respect to all the outstanding Company Common Stock or all or
substantially all the assets of the Company that, in the good faith judgment of
the Company's Board of Directors, taking into account the likelihood of
consummation, after consultation with its financial advisors, is superior to the
Merger (a "Company Superior Proposal"), if the Board of Directors of the
Company, after consultation with its outside legal counsel, determines that the
failure to do so would be inconsistent with its fiduciary obligations.
-27-
(b) Prior to taking any action referred to in Section 7.2(a),
if the Company intends to participate in any such discussions or negotiations or
provide any such information to any such third party, the Company shall give
prompt prior notice to Parent of each such action. The Company will immediately
notify Parent of any such requests for such information or the receipt of any
Company Acquisition Proposal, including the identity of the person or group
engaging in such discussions or negotiations, requesting such information or
making such Company Acquisition Proposal, and the material terms and conditions
of any Company Acquisition Proposal.
(c) Nothing in this Section 7.3 shall permit the Company to
enter into any agreement with respect to a Company Acquisition Proposal during
the term of this Agreement, it being agreed that during the term of this
Agreement, the Company shall not enter into any agreement with any person that
provides for, or in any way facilitates, a Company Acquisition Proposal, other
than a confidentiality agreement in reasonably customary form.
(d) For purposes hereof, the "Cutoff Date" means the date the
conditions set forth in Section 8.1(a) are satisfied.
Section 7.3 No Solicitation by Parent.
(a) Parent agrees that (i) neither it nor any of its
Subsidiaries shall, and shall not knowingly permit any of its officers,
directors, employees, agents or representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, solicit, initiate or knowingly encourage (including by way of
furnishing material non-public information) any inquiry, proposal or offer
(including, without limitation, any proposal or offer to its stockholders) with
respect to a tender offer, merger, consolidation, business combination or
similar transaction involving, or any purchase of 20% or more of the assets on a
consolidated basis or 20% or more of any class of capital stock of, Parent (any
such proposal, offer or transaction being hereinafter referred to as a "Parent
Acquisition Proposal") or participate or engage in any discussions or
negotiations concerning a Parent Acquisition Proposal; and (ii) it will
immediately cease and cause to be terminated any existing negotiations with any
parties conducted heretofore with respect to any of the foregoing; provided that
nothing contained in this Agreement shall prevent Parent or its Board of
Directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a Parent Acquisition Proposal, or (B) prior to the Cutoff Date,
providing information (pursuant to a confidentiality agreement in reasonably
customary form) to or engaging in any negotiations or discussions with any
person or entity who has made an unsolicited bona fide Parent Acquisition
Proposal with respect to all the outstanding Parent Common Stock or all or
substantially all the assets of Parent that, in the good faith judgment of
Parent's Board of Directors, taking into account the likelihood of consummation,
after consultation with its financial advisors, is superior to the Merger (a
"Parent Superior Proposal"), if the Board of Directors of Parent, after
consultation with its outside legal counsel, determines that the failure to do
so would be inconsistent with its fiduciary obligations.
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(b) Prior to taking any action referred to in Section 7.3(a),
if Parent intends to participate in any such discussions or negotiations or
provide any such information to any such third party, Parent shall give prompt
prior notice to the Company of each such action. The Parent will immediately
notify the Company of any such requests for such information or the receipt of
any Parent Acquisition Proposal, including the identity of the person or group
engaging in such discussions or negotiations, requesting such information or
making such Parent Acquisition Proposal, and the material terms and conditions
of any Parent Acquisition Proposal.
(c) Nothing in this Section 7.3 shall permit Parent to enter
into any agreement with respect to a Parent Acquisition Proposal during the term
of this Agreement, it being agreed that during the term of this Agreement,
Parent shall not enter into any agreement with any person that provides for, or
in any way facilitates, a Parent Acquisition Proposal, other than a
confidentiality agreement in reasonably customary form.
Section 7.4 Meetings of Stockholders.
(a) Each of Parent and the Company will take all action
necessary in accordance with applicable law and its certificate of incorporation
and bylaws to convene a meeting of its stockholders as promptly as practicable
to consider and vote upon (i) in the case of Parent, the approval of the
issuance of the shares of Parent Common Stock pursuant to the Merger
contemplated hereby and (ii) in the case of the Company, the approval of this
Agreement and the Merger. The Company and Parent shall coordinate and cooperate
with respect to the timing of such meetings and shall use their best efforts to
hold such meetings on the same day.
(b) The Company and Parent, through their respective Boards
of Directors, shall recommend approval of such matters subject to the
determination by the Board of Directors of the Company and the Board of
Directors of Parent after consultation with their respective counsel that
recommending approval of such matters would not be inconsistent with its
fiduciary obligations. Additionally, the Board of Directors of the Company or
the Board of Directors of Parent may at any time prior to the Effective Time
withdraw, modify, or change any recommendation and declaration regarding this
Agreement or the Merger, or recommend and declare advisable any other offer or
proposal, if in the opinion of such Board of Directors after consultation with
its counsel the failure to so withdraw, modify, or change its recommendation and
declaration would be inconsistent with its fiduciary obligations.
Section 7.5 Filings; Best Efforts.
(a) Subject to the terms and conditions herein provided, the
Company and Parent shall:
(i) promptly (but in not more than 20 business days from the
date hereof) make their respective filings under the HSR Act with
respect to the Merger and thereafter shall promptly make any other
required submissions under the HSR Act;
(ii) use their reasonable best efforts to cooperate with one
another in (a) determining which filings are required to be made prior
to the Effective Time with, and
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which consents, approvals, permits or authorizations are required to be
obtained prior to the Effective Time from governmental or regulatory
authorities of the United States, the several states, and foreign
jurisdictions in connection with the execution and delivery of this
Agreement and the consummation of the Merger and the transactions
contemplated hereby; and (b) timely making all such filings and timely
seeking all such consents, approvals, permits or authorizations;
(iii) promptly notify each other of any communication
concerning this Agreement or the Merger to that party from any
governmental authority and permit the other party to review in advance
any proposed communication concerning this Agreement or the Merger to
any governmental entity;
(iv) not agree to participate in any meeting or discussion
with any governmental authority in respect of any filings,
investigation or other inquiry concerning this Agreement or the Merger
unless it consults with the other party in advance and, to the extent
permitted by such governmental authority, gives the other party the
opportunity to attend and participate thereat;
(v) furnish the other party with copies of all
correspondence, filings and communications (and memoranda setting forth
the substance thereof) between them and their affiliates and their
respective representatives on the one hand, and any government or
regulatory authority or members or their respective staffs on the other
hand, with respect to this Agreement and the Merger; and
(vi) furnish the other party with such necessary information
and reasonable assistance as such other parties and their respective
affiliates may reasonably request in connection with their preparation
of necessary filings, registrations or submissions of information to
any governmental or regulatory authorities, including without
limitation, any filings necessary or appropriate under the provisions
of the HSR Act.
(b) Without limiting Section 7.5(a), Parent and the Company
shall:
(i) each use its best efforts to avoid the entry of, or to
have vacated or terminated, any decree, order or judgment that would
restrain, prevent or delay the Closing, including without limitation
defending through litigation on the merits any claim asserted in any
court by any party; and
(ii) each take any and all steps necessary to avoid or
eliminate each and every impediment under any antitrust, competition or
trade regulation law that may be asserted by any governmental entity
with respect to the Merger so as to enable the Closing to occur as soon
as reasonably possible (and in any event no later than 60 days
following the termination of all applicable waiting periods under the
HSR Act, unless the parties are in litigation with the government in
which case at the conclusion of such litigation), including without
limitation, proposing, negotiating, committing to and effecting, by
consent decree, hold separate order or otherwise, the sale, divestiture
or disposition of such assets or businesses of Parent or the Company or
any of their respective subsidiaries
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or otherwise take or commit to take any action that limits its freedom
of action with respect to, or its ability to retain, any of the
businesses, product lines or assets of Parent, the Company or their
respective subsidiaries, as may be required in order to avoid the entry
of, or to the effect the dissolution of, any injunction, temporary
restraining order or other order in any suit or proceeding, which would
otherwise have the effect of preventing or delaying the Closing. At the
request of Parent, the Company shall agree to divest, hold separate or
otherwise take or commit to take any action that limits its freedom of
action with respect to, or its ability to retain, any of the
businesses, product lines or assets of the Company or any of its
Subsidiaries, provided that any such action may be conditioned upon the
consummation of the Merger and the transactions contemplated hereby.
Notwithstanding anything to the contrary contained in this Agreement,
in connection with any filing or submission required or action to be
taken by Parent, the Company or any of their respective Subsidiaries to
consummate the Merger or other transactions contemplated in this
Agreement, the Company shall not, without Parent's prior written
consent, recommend, suggest or commit to any divestiture of assets or
businesses of the Company and its Subsidiaries.
Section 7.6 Inspection. From the date hereof to the Effective
Time, each of the Company and Parent shall allow all designated officers,
attorneys, accountants and other representatives of Parent or the Company, as
the case may be, access at all reasonable times upon reasonable notice to the
records and files, correspondence, audits and properties, as well as to all
information relating to commitments, contracts, titles and financial position,
or otherwise pertaining to the business and affairs of Parent and the Company
and their respective Subsidiaries, including inspection of such properties;
provided that no investigation pursuant to this Section 7.6 shall affect any
representation or warranty given by any party hereunder, and provided further
that notwithstanding the provision of information or investigation by any party,
no party shall be deemed to make any representation or warranty except as
expressly set forth in this Agreement. Notwithstanding the foregoing, no party
shall be required to provide any information which it reasonably believes it may
not provide to the other party by reason of applicable law, rules or
regulations, which constitutes information protected by attorney/client
privilege, or which it is required to keep confidential by reason of contract or
agreement with third parties. The parties hereto will make reasonable and
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply. Each of Parent and the Company
agrees that it will not, and will cause its respective representatives not to,
use any information obtained pursuant to this for any purpose unrelated to the
consummation of the transactions contemplated by this Agreement.
Section 7.7 Publicity. The parties will consult with each
other and will mutually agree upon any press releases or public announcements
pertaining to this Agreement or the transactions contemplated hereby and shall
not issue any such press releases or make any such public announcements prior to
such consultation and agreement, except as may be required by applicable law or
by obligations pursuant to any listing agreement with any national securities
exchange, in which case the party proposing to issue such press release or make
such public announcement shall use its best efforts to consult in good faith
with the other party before issuing any such press releases or making any such
public announcements.
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Section 7.8 Registration Statement.
(a) Each of Parent and the Company shall cooperate and
promptly prepare and Parent shall file with the SEC as soon as practicable a
Registration Statement on Form S-4 (the "Form S-4") under the Securities Act,
with respect to the Parent Common Stock issuable in the Merger, a portion of
which Registration Statement shall also serve as the joint proxy statement with
respect to the meetings of the stockholders of Parent and of the Company in
connection with the Merger (the "Proxy Statement/Prospectus"). The respective
parties will cause the Proxy Statement/Prospectus and the Form S-4 to comply as
to form in all material respects with the applicable provisions of the
Securities Act, the Exchange Act and the rules and regulations thereunder.
Parent shall use its best efforts, and the Company will cooperate with Parent,
to have the Form S-4 declared effective by the SEC as promptly as practicable.
Parent shall use its reasonable best efforts to obtain, prior to the effective
date of the Form S-4, all necessary state securities law or "Blue Sky" permits
or approvals required to carry out the transactions contemplated by this
Agreement and will pay all expenses incident thereto. Parent will advise the
Company, promptly after it receives notice thereof, of the time when the Form
S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the Parent
Common Stock issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form S-4 or comments thereon and responses thereto
or requests by the SEC for additional information.
(b) Each of Parent and the Company will use its best efforts
to cause the Proxy Statement/Prospectus to be mailed to its stockholders as
promptly as practicable after the date hereof.
(c) Each of Parent and the Company agrees that the
information provided by it for inclusion in the Proxy Statement/Prospectus and
each amendment or supplement thereto, at the time of mailing thereof and at the
time of the respective meetings of stockholders of Parent and of the Company,
or, in the case of information provided by it for inclusion in the Form S-4 or
any amendment or supplement thereto, at the time it is filed or becomes
effective, (i) will not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) will comply as to form in all material respects with
the provisions of the Exchange Act.
Section 7.9 Listing Application. Parent shall promptly
prepare and submit to the NYSE a listing application covering the shares of
Parent Common Stock issuable in the Merger, and shall use its best efforts to
obtain, prior to the Effective Time, approval for the listing of such Parent
Common Stock, subject to official notice of issuance.
Section 7.10 Letters of Accountants.
(a) The Company shall use its reasonable best efforts to
cause to be delivered to Parent "comfort" letters of Deloitte & Touche LLP, the
Company's independent public accountants, dated the effective date of the Form
S-4 and the Closing Date, respectively, and
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addressed to Parent with regard to certain financial information regarding the
Company included in the Form S-4, in form reasonably satisfactory to Parent and
customary in scope and substance for "comfort" letters delivered by independent
public accountants in connection with registration statements similar to the
Form S-4.
(b) Parent shall use its reasonable best efforts to cause to
be delivered to the Company "comfort" letters of Deloitte & Touche LLP, Parent's
independent public accountants, dated the effective date of the Form S-4 and the
Closing Date, respectively, and addressed to the Company, with regard to certain
financial information regarding Parent included in the Form S-4, in form
reasonably satisfactory to the Company and customary in scope and substance for
"comfort" letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
Section 7.11 Agreements of Rule 145 Affiliates. Prior to the
Effective Time, the Company shall cause to be prepared and delivered to Parent a
list identifying all persons who, at the time of the meeting or the meeting of
the Company's stockholders pursuant to Section 7.4, the Company believes may be
deemed to be "affiliates" of the Company, as that term is used in paragraphs (c)
and (d) of Rule 145 under the Securities Act (the "Rule 145 Affiliates"). Parent
shall be entitled to place restrictive legends on any shares of Parent Common
Stock received by such Rule 145 Affiliates. The Company shall use its best
efforts to cause each person who is identified as a Rule 145 Affiliate in such
list to deliver to Parent, at or prior to the Effective Time, a written
agreement, in the form to be approved by the parties hereto, that such Rule 145
Affiliate will not sell, pledge, transfer or otherwise dispose of any shares of
Parent Common Stock issued to such Rule 145 Affiliate pursuant to the Merger,
except pursuant to an effective registration statement or in compliance with
Rule 145 or an exemption from the registration requirements of the Securities
Act. The Company shall use its best efforts to cause each person who is
identified as a Rule 145 Affiliate in such list, and the Parent shall use its
best efforts to cause each person who is an affiliate of Parent, to sign on or
prior to the thirtieth day prior to the Effective Time a written agreement, in
the form to be approved by the Company and Parent, that such party will not sell
or in any other way reduce such party's risk relative to any shares of Parent
Common Stock received in the Merger (within the meaning of Section 201.01 of the
SEC's Financial Reporting Release No. 1), until such time as financial results
(including combined sales and net income) covering at least 30 days of
post-merger operations have been published, except as permitted by Staff
Accounting Bulletin No. 76 (or any successor thereto) issued by the SEC.
Section 7.12 Expenses. Whether or not the Merger is
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, except as expressly provided in Section 9.5.
Section 7.13 Indemnification and Insurance.
(a) From and after the Effective Time, Parent and the
Surviving Corporation shall indemnify, defend and hold harmless to the fullest
extent permitted under applicable law
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each person who is, or has been at any time prior to the Effective Time, an
officer or director of the Company (or any Subsidiary or division thereof) and
each person who served at the request of the Company as a director, officer,
trustee or fiduciary of another corporation, partnership, joint venture, trust,
pension or other employee benefit plan or enterprise (individually, an
"Indemnified Party" and, collectively, the "Indemnified Parties") against all
losses, claims, damages, liabilities, costs or expenses (including attorneys'
fees), judgments, fines, penalties and amounts paid in settlement in connection
with any claim, action, suit, proceeding or investigation arising out of or
pertaining to acts or omissions, or alleged acts or omissions, by them in their
capacities as such, whether commenced, asserted or claimed before or after the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (an "Action"), (i) Parent and the Surviving Corporation shall pay,
as incurred, the fees and expenses of counsel selected by the Indemnified Party,
which counsel shall be reasonably acceptable to the Surviving Corporation, in
advance of the final disposition of any such Action to the fullest extent
permitted by applicable law, and, if required, upon receipt of any undertaking
required by applicable law, and (ii) Parent and the Surviving Corporation will
cooperate in the defense of any such matter; provided, however, the Surviving
Corporation shall not be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld or delayed), and
provided further, that Parent and the Surviving Corporation shall not be
obligated pursuant to this Section 7.13 to pay the fees and disbursements of
more than one counsel for all Indemnified Parties in any single Action, unless,
in the good faith judgment of any of the Indemnified Parties, there is or may be
a conflict of interests between two or more of such Indemnified Parties, in
which case there may be separate counsel for each similarly situated group.
(b) The parties agree that the rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action or suit, in the certificate of incorporation and bylaws of the Company
and its Subsidiaries with respect to matters occurring through the Effective
Time, shall survive the Merger and shall continue in full force and effect for a
period of six years from the Effective Time; provided, however, that all rights
to indemnification in respect of any Action pending or asserted or claim made
within such period shall continue until the disposition of such Action or
resolution of such claim.
(c) For a period of six years after the Effective Time,
Parent and the Surviving Corporation shall cause to be maintained officers' and
directors' liability insurance covering the Indemnified Parties who are or at
any time prior to the Effective Time covered by the Company's existing officers'
and directors' liability insurance policies on terms substantially no less
advantageous to the Indemnified Parties than such existing insurance; provided,
that after the third year after the Effective Time, the Surviving Corporation
shall not be required to pay annual premiums in excess of 250% of the last
annual premium paid by the Company prior to the date hereof (the amount of which
premium is set forth in the Company Disclosure Letter), but in such case shall
purchase as much coverage as reasonably practicable for such amount.
(d) The rights of each Indemnified Party hereunder shall be
in addition to any other rights such Indemnified Party may have under the
certificate of incorporation or bylaws of the Company or any of its
Subsidiaries, under the DGCL or otherwise. The provisions of this
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Section 7.13 shall survive the consummation of the Merger and expressly are
intended to benefit each of the Indemnified Parties.
(e) In the event Parent, the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
in such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then and in either such case, proper
provision shall be made so that the successors and assigns of Parent or the
Surviving Corporation, as the case may be, shall assume the obligations set
forth in this Section 7.13.
Section 7.14 Certain Benefits.
(a) From and after the Effective Time, Parent and its
Subsidiaries (including the Surviving Corporation) will honor in accordance with
their terms the executive, employment and other agreements and arrangements set
forth in Schedule 7.14(a)(i) of the Company Disclosure Letter or permitted by
Section 7.14(f) between the Company or its Subsidiaries and certain employees
and former employees thereof (the "Employment Agreements") and certain
executives and former executives thereof ("Executive Agreements") and all of the
Company Benefit Plans and the agreements described in Section 7.14(e); provided,
however, that nothing herein shall preclude any change in any Company Benefit
Plan effected on a prospective basis that is permitted pursuant to this Section
7.14 and the terms of the applicable Benefit Plan; provided, further, that the
WAII Retirement/Profit Sharing Plan and the WAII Benefits Restoration Plan (and
the related cash contribution bonus feature) described in Schedule 7.14(a)(ii)
of the Company Disclosure Letter (the "Profit Sharing Plans") shall be continued
at least through December 31, 1998 for Company Employees (as defined in Section
7.14(d)) without any adverse amendment or modification, the Company's
Supplemental Retirement Plan and the WAII Executive Retirement Plan described in
Schedule 7.14(a)(iii) of the Company Disclosure Letter (the "Retirement Plans")
shall be continued through at least December 31, 1998 without any adverse
amendment or modification, the Profit Sharing Plans shall be continued without
adverse amendment or modification for the Western Geophysical division of the
Company at least through the end of Parent's fiscal year ending in 2001 (and
shall be equitably adjusted by Parent to appropriately reflect the stand-alone
basis of Western Geophysical), and the "change of control" provisions in the
Profit Sharing Plans and the Retirement Plans shall in no event be adversely
amended or modified. Company performance in respect of calculations made under
the Profit Sharing Plans for 1998 shall be calculated without taking into
account any expenses or costs associated with or arising as a result of
transactions contemplated by this Agreement or any non-recurring charges that
would not reasonably be expected to have been incurred had the transactions
contemplated by this Agreement not occurred. Parent hereby acknowledges that the
consummation of the Merger or stockholder approval of the Merger, as applicable,
will result in a "change of control" under the Executive Agreements and the
Employment Agreements, the WAII Supplemental Retirement Plan, the WAII Executive
Retirement Plan and the other Company Benefit Plans set forth in Schedule
7.14(a)(i) of the Company Disclosure Letter. Parent shall cause the Surviving
Corporation (i) to assume the obligations of the Company under the Company
Benefit Plans as in effect immediately prior to the Effective Time, and to
continue to cover under such Company Benefit Plans all Company Employees and
former Company
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Employees who are participants therein immediately prior to the Effective Time
and who remain eligible to participate in such Company Benefit Plans pursuant to
the terms thereof and will provide aggregate employee benefits to such Company
Employees that are no less favorable than the aggregate employee benefits
provided them immediately prior to the Effective Time; provided, that the
Surviving Corporation at its sole option may, except as provided herein or by
the terms of such plans, amend such plans at any time following the Effective
Time to provide employee benefits to Company Employees which in the aggregate
are no less favorable than those applicable to similarly situated employees of
Parent or, (ii) in lieu thereof, except as provided herein or by the terms of
the Company Benefit Plans, to provide employee benefits to such Company
Employees under Parent Benefit Plans so that the aggregate employee benefits
provided to such Company Employees are no less favorable than those that are
applicable to similarly situated employees of Parent. After the Effective Time,
any Company Employee who is or becomes entitled to continued medical, dental,
hospitalization, long-term disability and life insurance coverage pursuant to an
agreement with the Company set forth in Schedule 7.14(a)(i) of the Company
Disclosure Letter will be entitled to participate under any medical, dental,
hospitalization, long-term disability and life insurance plan sponsored by
Parent or the Surviving Corporation which covers Company Employees under the
same terms and for payment of the same level of premiums as specified in his or
her agreement. The Surviving Corporation and Parent shall not be obligated
hereunder to cover any employee who is not a Company Employee or former Company
Employee or is not hired or offered employment prior to the Effective Time under
any employee benefit plan, program or arrangement. With respect to the Parent
Benefit Plans and any plans established by the Surviving Corporation, Parent and
the Surviving Corporation shall grant to all Company Employees, from and after
the Effective Time, credit for all service with the Company and its affiliates
and predecessors (and any other service credited by the Company under the
Company Benefit Plans) prior to the Effective Time for seniority, eligibility to
participate, eligibility for benefits, benefit accrual and vesting purposes. To
the extent Parent Benefit Plans provide medical or dental welfare benefits, such
plans shall waive any pre-existing conditions and actively-at-work exclusions
with respect to Company Employees (but only to the extent such Company Employees
were provided coverage under the Company Benefit Plans) and shall provide that
any expenses incurred on or before the Effective Time by or on behalf of any
Company Employees shall be taken into account under the Parent Benefit Plans for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions.
(b) The Company acknowledges that the consummation of the
Merger will generally result in a "change of control" under the executive
agreements, employment agreements, stock option plan and other employee benefit
and welfare plans of the Parent and its Subsidiaries containing change of
control provisions.
(c) Parent agrees to maintain the Company's severance or
termination plans and practices and the Company's Corporate Office Severance
Plan (the "Company Severance Plans") as in effect on the date hereof for a
period of one year from the Effective Time, and to maintain the Company's
Executive Severance Plan without amendment except pursuant to its terms, for the
benefit of Company Employees; provided, however, that any employees covered by
such plans shall not be covered by the Parent's Severance Plan or Executive
Severance Plan
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during such period that such Company's Employees are covered under the Company
Severance Plans or Executive Severance Plan, as applicable.
(d) For purposes of this Section 7.14, the term "Company
Employees" shall mean all individuals employed by the Company and its
Subsidiaries (including those on lay-off, disability or leave of absence, paid
or unpaid) immediately prior to the Effective Time.
(e) Parent shall enter into definitive employment agreements
prior to the Effective Time with the Company Employees set forth on Schedule
7.14(e) of the Company Disclosure Letter pursuant to the terms set forth on
Schedule 7.14(e) of the Company Disclosure Letter. In the event such employment
agreements are not entered into, the terms set forth on Schedule 7.14(e) of the
Company Disclosure Letter shall govern the employment of such Company Employees.
(f) With respect to the Company's 1995 Incentive Compensation
Plan and the Company's Individual Performance Award Plan (collectively, the
"Incentive Plans"), within 30 days following the Effective Time Company
Employees who remain employed by the Company or its affiliates as of the
Effective Time shall be paid (to the extent a pro rata bonus is not paid under
an employment agreement) an amount equal to their maximum potential bonus awards
under the Incentive Plans, multiplied by a fraction equal to the number of days
in 1998 through the Effective Time, divided by 365. The remainder of the 1998
maximum potential bonus awards for Company Employees shall be paid in the first
payroll check in 1999, to those Company Employees who are employed with the
Parent or any of its affiliates on December 31, 1998 or have been terminated
prior to such date by the Company without cause, or terminated due to death or
disability. After the Effective Time, any bonuses for periods commencing on or
after January 1, 1999 will be paid under Parent's plans and practices. "Cause"
shall mean acts of theft, unethical conduct or dishonesty affecting the assets,
properties or business of the Surviving Corporation or Parent, willful
misconduct or continued material dereliction of duty after notice has been
provided.
(g) Parent shall not terminate, or permit the Surviving
Corporation to terminate, other than for Cause, the employment of the
individuals set forth on Schedule 7.14(g) of the Company Disclosure Letter prior
to January 1, 1999.
Section 7.15 Reorganization; Pooling.
(a) From and after the date hereof and until the Effective
Time, none of Parent, the Company, or any of their respective Subsidiaries shall
knowingly (i) take any action, or fail to take any reasonable action, as a
result of which the Merger would fail to qualify as a reorganization within the
meaning of (a) of the Code or (ii) enter into any contract, agreement,
commitment or arrangement to take or fail to take any such action. Each of the
parties shall use its reasonable best efforts to obtain the opinions of counsel
referred to in Sections 8.2(b) and 8.3(b).
(b) From and after the date hereof and until the Effective
Time, none of the Company, Parent or any of their respective Subsidiaries shall
knowingly (i) take any action, or
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fail to take any reasonable action, that would prevent the treatment of the
Merger as a "pooling of interests" for financial accounting purposes or (ii)
enter into any contract, agreement, commitment or arrangement to take or fail to
take any such action.
(c) Following the Effective Time, neither Parent nor any of
its Subsidiaries shall knowingly take any action or knowingly cause any action
to be taken which would cause the Merger to fail to qualify as a reorganization
within the meaning of (a) of the Code (and any comparable provisions of
applicable state or local law).
Section 7.16 Rights Agreement. Prior to the Effective Time,
the Board of Directors of the Company shall take any action (including, if
necessary, amending or terminating (but with respect to termination, only as of
immediately prior to the Effective Time) the Rights Agreement) necessary so that
none of the execution and delivery of this Agreement, the Stock Option
Agreements, the conversion of shares of Company Common Stock into the right to
receive Parent Common Stock in accordance with Article 4 of this Agreement, the
issuance of Company Common Stock upon exercise of the option granted to Parent
pursuant to the applicable Stock Option Agreement, the consummation of the
Merger, or any other transaction contemplated hereby or by the Stock Option
Agreements will cause (i) the Company Rights to become exercisable under the
Company Rights Agreement, (ii) Parent or any of its Subsidiaries to be deemed an
"Acquiring Person" (as defined in the Company Rights Agreement), (iii) any such
event to be an event described in Section 11(a)(ii) or 13 of the Company Rights
Agreement or (iv) the "Shares Acquisition Date" or the "Distribution Date" (each
as defined in the Company Rights Agreement) to occur upon any such event, and so
that the Company Rights will expire immediately prior to the Effective Time.
Neither the Board of Directors of the Company nor the Company shall take any
other action to terminate the Company Rights Agreement, redeem the Company
Rights, cause any person not to be or become an "Acquiring Person" or otherwise
amend the Company Rights Agreement in a manner adverse to Parent.
ARTICLE 8
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) (i) This Agreement and the Merger shall have been adopted
and approved by the affirmative vote of holders of a majority of the
issued and outstanding shares of Company Common Stock entitled to vote
thereon; and
(ii) The issuance of the shares of Parent Common Stock
pursuant to the Merger shall have been approved by the holders of
issued and outstanding shares of Parent Common Stock as and to the
extent required by the rules of the NYSE.
(b) The waiting period applicable to the consummation of the
Merger shall have expired or been terminated under (i) the HSR Act and
(ii) any mandatory waiting
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period under any applicable foreign competition or antitrust law or
regulation where the failure to observe such waiting period referred to
in this clause (ii) would have a Parent Material Adverse Effect or a
Company Material Adverse Effect.
(c) None of the parties hereto shall be subject to any
decree, order or injunction of a court of competent jurisdiction, U.S.
or foreign, which prohibits the consummation of the Merger; provided,
however, that prior to invoking this condition each party agrees to
comply with Section 7.5, and with respect to other matters not covered
by Section 7.5, to use its commercially reasonable best efforts to have
any such decree, order or injunction lifted or vacated; and no statute,
rule or regulation shall have been enacted by any governmental
authority which prohibits or makes unlawful the consummation of the
Merger.
(d) The Form S-4 shall have become effective and no stop
order with respect thereto shall be in effect.
(e) The shares of Parent Common Stock to be issued pursuant
to the Merger shall have been authorized for listing on the NYSE,
subject to official notice of issuance.
(f) Parent and the Company shall have received from Deloitte
& Touche LLP letters that the Merger will be treated as a "pooling of
interests" for financial accounting purposes.
(g) The Company shall have received the written consent of
the United States Nuclear Regulatory Commission ("NRC") to the transfer
of control of all NRC licenses of the Company and its Subsidiaries
pursuant to 10 CFR 30.34(b).
Section 8.2 Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions:
(a) Parent shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations and
warranties of Parent and Merger Sub contained in this Agreement and in
any document delivered in connection herewith shall be true and correct
in all material respects as of the date of this Agreement and as of the
Closing Date (except for representations and warranties made as of a
specified date, which need be true and correct in all material respects
only as of the specified date), and the Company shall have received a
certificate of the Parent, executed on its behalf by its President or a
Vice President of Parent, dated the Closing Date, certifying to such
effect.
(b) The Company shall have received the opinion of Wachtell,
Lipton, Xxxxx & Xxxx, counsel to the Company, in form and substance
reasonably satisfactory to the Company, dated the Closing Date, a copy
of which shall be furnished to Parent, to the effect that (i) the
Merger will be treated for federal income tax purposes as a
reorganization within the meaning of section 368(a) of the Code and
(ii) no gain or loss
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will be recognized by the stockholders of the Company who exchange all
of their Company Common Stock solely for Parent Common Stock pursuant
to the Merger (except with respect to cash received in lieu of a
fractional share interest in Parent Common Stock). In rendering such
opinion, such counsel shall be entitled to receive and rely upon
representations of officers of the Company and Parent as to such
matters as such counsel may reasonably request.
(c) At any time after the date of this Agreement, there shall
not have been any event or occurrence that has had or is likely to have
a Parent Material Adverse Effect.
Section 8.3 Conditions to Obligation of Parent and Merger Sub
to Effect the Merger. The obligations of Parent and Merger Sub to effect the
Merger shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions:
(a) The Company shall have performed in all material respects
its covenants and agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations and
warranties of the Company contained in this Agreement and in any
document delivered in connection herewith shall be true and correct in
all material respects as of the date of this Agreement and as of the
Closing Date (except for representations and warranties made as of a
specified date, which need be true and correct in all material respects
only as of the specified date), and Parent shall have received a
certificate of the Company, executed on its behalf by its President or
a Vice President of the Company, dated the Closing Date, certifying to
such effect.
(b) Parent shall have received the opinion of Xxxxx & Xxxxx,
L.L.P., counsel to Parent, in form and substance reasonably
satisfactory to Parent, dated the Closing Date, a copy of which will be
furnished to the Company, to the effect that the (i) Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of section 368(a) of the Code and (ii) no gain or loss will be
recognized by the stockholders of the Company who exchange all of their
Company Common Stock solely for Parent Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional
share interest in Parent Common Stock). In rendering such opinion, such
counsel shall be entitled to receive and rely upon representations of
officers of the Company and Parent as to such matters as such counsel
may reasonably request.
(c) At any time after the date of this Agreement, there shall
not have been any event or occurrence that has had or is likely to have
a Company Material Adverse Effect.
ARTICLE 9
TERMINATION
Section 9.1 Termination by Mutual Consent. This Agreement may
be terminated at any time prior to the Effective Time by the mutual written
consent of the Company and Parent.
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Section 9.2 Termination by Parent or the Company. This
Agreement may be terminated by action of the Board of Directors of Parent or of
the Company if:
(a) the Merger shall not have been consummated by October 31,
1998; provided, however, that in the event Section 8.1(b)(i) or 8.1(c)
or both are the only conditions that are not satisfied or capable of
being immediately satisfied as a result of governmental litigation
engaged in by the parties pursuant to under any antitrust, competition
or trade regulation law, such October 31, 1998 date shall be extended
for a period not to exceed the lesser of 90 days or the fifth business
day after the entrance by the court in which such litigation is pending
of its decision (whether or not subject to appeal or rehearing) in such
litigation; and provided, further, that the right to terminate this
Agreement pursuant to this clause (a) shall not be available to any
party whose failure to perform or observe in any material respect any
of its obligations under this Agreement in any manner shall have been
the cause of, or resulted in, the failure of the Merger to occur on or
before such date;
(b) a meeting (including adjournments and postponements) of
the Company's stockholders for the purpose of obtaining the approval
required by Section 8.1(a)(i) shall have been held and such stockholder
approval shall not have been obtained; or
(c) a meeting (including adjournments and postponements) of
the Parent's stockholders for the purpose of obtaining the approval
required by Section 8.1(a)(ii) shall have been held and such
stockholder approval shall not have been obtained; or
(d) a United States federal or state court of competent
jurisdiction or United States federal or state governmental, regulatory
or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the Merger and such order, decree,
ruling or other action shall have become final and non-appealable;
provided, however, that the party seeking to terminate this Agreement
pursuant to this clause (d) shall have complied with Section 7.5 and
with respect to other matters not covered by Section 7.5 shall have
used its commercially reasonable best efforts to remove such
injunction, order or decree.
Section 9.3 Termination by the Company. This Agreement may be
terminated prior to the Effective Time, by action of the Board of Directors of
the Company after consultation with its legal advisors, if
(a) the Board of Directors of the Company determines that
proceeding with the Merger would be inconsistent with its fiduciary
obligations by reason of a Company Superior Proposal and elects to
terminate this Agreement effective prior to the Cutoff Date; provided
that the Company may not effect such termination pursuant to this
Section 9.3(a) unless and until (i) Parent receives at least one week's
prior written notice from the Company of its intention to effect such
termination pursuant to this Section 9.3(a); (ii) during such week, the
Company shall, and shall cause its respective financial and legal
advisors to, consider any adjustment in the terms and conditions of
this Agreement that Parent may propose; and provided, further, that any
termination of this Agreement
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pursuant to this Section 9.3(a) shall not be effective until the
Company has made the $50 million payment required by Section 9.3(a)(i);
or
(b) (i) there has been a breach by Parent or Merger Sub of
any representation, warranty, covenant or agreement set forth in this
Agreement or if any representation or warranty of Parent or Merger Sub
shall have become untrue, in either case such that the conditions set
forth in Section 8.2(a) would not be satisfied and (ii) such breach is
not curable, or, if curable, is not cured within 30 days after written
notice of such breach is given to Parent by the Company; provided,
however, that the right to terminate this Agreement pursuant to Section
9.2(b) shall not be available to the Company if it, at such time, is in
material breach of any representation, warranty, covenant or agreement
set forth in this Agreement such that the condition set forth in
Section 8.3(a) shall not be satisfied; or
(c) the Board of Directors of Parent shall have withdrawn or
materially modified, in a manner adverse to the Company, its approval
or recommendation of the Merger or recommended a Parent Acquisition
Proposal, or resolved to do so; or
(d) on the date on which the Closing would otherwise occur,
the Parent Share Price shall be less than $35.00; provided that (i)
Parent shall receive at least three business days' prior written notice
of its intent to effect such termination pursuant to this Section
9.3(d) and (ii) during such three business day period, Parent shall not
have elected to increase the Exchange Ratio by agreeing that the
proviso in Section 4.1(c)(iv) shall not be given effect.
Section 9.4 Termination by Parent. This Agreement may be
terminated at any time prior to the Effective Time, by action of the Board of
Directors of Parent after consultation with its legal advisors, if:
(a) the Board of Directors of Parent determines that
proceeding with the Merger would be inconsistent with its fiduciary
obligations by reason of a Parent Superior Proposal and elects to
terminate this Agreement effective prior to the Cutoff Date; provided
that Parent may not effect such termination pursuant to this Section
9.4(a) unless and until (i) the Company receives at least one week's
prior written notice from Parent of its intention to effect such
termination pursuant to this Section 9.4(a); (ii) during such week,
Parent shall, and shall cause its respective financial and legal
advisors to, consider any adjustment in the terms and conditions of
this Agreement that the Company may propose; and provided, further,
that any termination of this Agreement pursuant to this Section 9.4(a)
shall not be effective until Parent has made the $50 million payment
required by Section 9.5(b)(i); or
(b) (i) there has been a breach by the Company of any
representation, warranty covenant or agreement set forth in this
Agreement or if any representation or warranty of the Company shall
have become untrue, in either case such that the conditions set forth
in Section 8.3(a) would not be satisfied and (ii) such breach is not
curable, or, if curable, is not cured within 30 days after written
notice of such breach is
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given by Parent to the Company; provided, however, that the right to
terminate this Agreement pursuant to (b) shall not be available to
Parent if it, at such time, is in material breach of any
representation, warranty, covenant or agreement set forth in this
Agreement such that the conditions set forth in Section 8.2(a) shall
not be satisfied; or
(c) the Board of Directors of the Company shall have
withdrawn or materially modified, in a manner adverse to Parent, its
approval or recommendation of the Merger or recommended a Company
Acquisition Proposal, or resolved to do so.
Section 9.5 Effect of Termination.
(a) If this Agreement is terminated
(i) by the Company pursuant to Section 9.3(a) [fiduciary
out]; or
(ii) after the public announcement of a Company Acquisition
Proposal, by the Company or Parent pursuant to Section 9.2(b) [failure
to obtain Company stockholder approval]; or
(iii) after the public announcement or receipt by the
Company's Board of Directors of a Company Acquisition Proposal, by
Parent pursuant to Section 9.4(c) [withdrawal of Company recommendation
to stockholders];
then the Company shall pay Parent a fee of $50 million (subject to reduction
pursuant to Section 9 of the applicable Stock Option Agreement) at the time of
such termination in cash by wire transfer to an account designated by Parent. In
addition, if within one year after such termination, the Company enters into a
definitive agreement with respect to a Company Acquisition or a Company
Acquisition is consummated, in either case with the person making the Company
Acquisition Proposal related to the termination or any affiliate thereof, then
upon the consummation of such Company Acquisition, the Company shall pay Parent
an additional fee of $150 million (subject to reduction pursuant to Section 9 of
the applicable Stock Option Agreement) at the time of such consummation in cash
by wire transfer to an account designated by Parent. For purposes here, "Company
Acquisition" means (i) a consolidation, exchange of shares or merger of the
Company with any person, other than Parent or one of its Subsidiaries, and, in
the case of a merger, in which the Company shall not be the continuing or
surviving corporation, (ii) a merger of the Company with a person, other than
Parent or one of its Subsidiaries, in which the Company shall be the continuing
or surviving corporation but the then outstanding shares of Company Common Stock
shall be changed into or exchanged for stock or other securities of the Company
or any other person or cash or any other property or the shares of Company
Common Stock outstanding immediately before such merger shall after such merger
represent less than 50% of the voting stock of the Company outstanding
immediately after the merger, (iii) the acquisition of beneficial ownership of
50% or more of the voting stock of the Company by any person (as such term is
used under Section 13(d) of the Exchange Act), or (iv) a sale, lease or other
transfer of 50% or more of the assets of the Company to any person, other than
Parent or one of its Subsidiaries.
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(b) If this Agreement is terminated
(i) by Parent pursuant to Section 9.4(a) [fiduciary out]; or
(ii) after the public announcement of a Parent Acquisition
Proposal, by the Company or Parent pursuant to Section 9.2(c) [failure
to obtain Parent stockholder approval]; or
(iii) after the public announcement or receipt by Parent's
Board of Directors of a Parent Acquisition Proposal, by the Company
pursuant to Section 9.3(c) [withdrawal of Parent recommendation to
stockholders];
then Parent shall pay the Company a fee of $50 million (subject to reduction
pursuant to Section 9 of the applicable Stock Option Agreement) at the time of
such termination in cash by wire transfer to an account designated by the
Company. In addition, if within one year after such termination, Parent enters
into a definitive agreement with respect to a Parent Acquisition or a Parent
Acquisition is consummated, in either case with the person making the Parent
Acquisition Proposal related to the termination or any affiliate thereof, then
upon the consummation of such Parent Acquisition, Parent shall pay the Company
an additional fee of $150 million (subject to reduction pursuant to Section 9 of
the applicable Stock Option Agreement) at the time of such consummation in cash
by wire transfer to an account designated by the Company. For purposes here,
"Parent Acquisition" means (i) a consolidation, exchange of shares or merger of
Parent with any person, other than the Company or one of its Subsidiaries, and,
in the case of a merger, in which Parent shall not be the continuing or
surviving corporation, (ii) a merger of Parent with a person, other than the
Company or one of its Subsidiaries, in which Parent shall be the continuing or
surviving corporation but the then outstanding shares of Parent Common Stock
shall be changed into or exchanged for stock or other securities of Parent or
any other person or cash or any other property or the shares of Parent Common
Stock outstanding immediately before such merger shall after such merger
represent less than 50% of the voting stock of Parent outstanding immediately
after the merger, (iii) the acquisition of beneficial ownership of 50% or more
of the voting stock of Parent by any person (as such term is used under Section
13(d) of the Exchange Act), or (iv) a sale, lease or other transfer of 50% or
more of the assets of Parent to any person, other than the Company or one of its
Subsidiaries.
(c) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article 9, all obligations of the
parties hereto shall terminate, except the obligations of the parties pursuant
to this Section 9.5 and Section 7.12 and except for the provisions of Sections
10.3, 10.4, 10.6, 10.8, 10.9, 10.12, 10.13 and 10.14, provided that nothing
herein shall relieve any party from any liability for any willful and material
breach by such party of any of its covenants or agreements set forth in this
Agreement and all rights and remedies of such nonbreaching party under this
Agreement in the case of such a willful and material breach, at law or in
equity, shall be preserved.
Section 9.6 Extension; Waiver. At any time prior to the
Effective Time, each party may by action taken by its Board of Directors, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b)
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waive any inaccuracies in the representations and warranties made to such party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions for the benefit of such
party contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE 10
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and
Agreements. All representations, warranties and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall not survive the
Merger; provided, however, that the agreements contained in Article 4 and in
Sections 7.11, 7.12, 7.13, 7.14, 7.15 and this Article 10 and the agreements
delivered pursuant to this Agreement shall survive the Merger.
Section 10.2 Notices. Any notice required to be given
hereunder shall be sufficient if in writing, and sent by facsimile transmission
or by courier service (with proof of service), hand delivery or certified or
registered mail (return receipt requested and first-class postage prepaid),
addressed as follows:
(a) if to Parent or Merger Sub:
Xxxxx Xxxxxx Incorporated
0000 Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxxx X'Xxxxxxx, III
Facsimile: (000) 000-0000
with a copy to:
J. Xxxxx Xxxxxxxx, Jr., Esq.
Xxxxx & Xxxxx, L.L.P.
Xxx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000-0000
Facsimile: (000) 000-0000
if to the Company:
Western Atlas Inc.
00000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
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with a copy to:
Xxxxxx X. Xxxx, Esq.
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 10.3 Assignment; Binding Effect; Benefit. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties. Subject to
the preceding sentence, this Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, except for
the provisions of Section 3.3, Article 4 and Sections 7.13 and 7.14 (other than
the provisions regarding equitable adjustment of the Profit Sharing Plans) and
except as provided in any agreements delivered pursuant hereto (collectively,
the "Third Party Provisions"), nothing in this Agreement, expressed or implied,
is intended to confer on any person other than the parties hereto or their
respective heirs, successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement. The
Third Party Provisions may be enforced by the beneficiaries thereof.
Section 10.4 Entire Agreement. This Agreement, the exhibits
to this Agreement, the Company Disclosure Letter, the Parent Disclosure Letter
and any documents delivered by the parties in connection herewith constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto. No addition to or modification of any provision of this Agreement shall
be binding upon any party hereto unless made in writing and signed by all
parties hereto.
Section 10.5 Amendments. This Agreement may be amended by the
parties hereto, by action taken or authorized by their Boards of Directors, at
any time before or after approval of matters presented in connection with the
Merger by the stockholders of the Company or Parent, but after any such
stockholder approval, no amendment shall be made which by law requires the
further approval of stockholders without obtaining such further approval. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 10.6 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware without
regard to its rules of conflict of laws. Each of the Company and Parent hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of Delaware and of the
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Xxxxxx Xxxxxx xx Xxxxxxx located in the State of Delaware (the "Delaware
Courts") for any litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying of
venue of any such litigation in the Delaware Courts and agrees not to plead or
claim in any Delaware Court that such litigation brought therein has been
brought in an inconvenient forum.
Section 10.7 Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
Section 10.8 Headings. Headings of the Articles and Sections
of this Agreement are for the convenience of the parties only, and shall be
given no substantive or interpretative effect whatsoever.
Section 10.9 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words
describing the singular number shall include the plural and vice versa, and
words denoting any gender shall include all genders and words denoting natural
persons shall include corporations and partnerships and vice versa.
(b) The phrase "to the knowledge of" and similar phrases
relating to knowledge of the Company or Parent, as the case may be, shall mean
the actual knowledge of its executive officers.
(c) "Material Adverse Effect" with respect to the Company or
Parent shall mean a material adverse effect or change on (a) the business or
financial condition of a party and its Subsidiaries on a consolidated basis,
except for such changes or effects in general economic, capital market,
regulatory or political conditions or changes that affect generally the energy
services industry or (b) the ability of the party to consummate the transactions
contemplated by this Agreement or fulfill the conditions to closing. "Company
Material Adverse Effect" and "Parent Material Adverse Effect" mean a Material
Adverse Effect with respect to the Company and Parent, respectively.
Section 10.10 Waivers. Except as provided in this Agreement,
no action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
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Section 10.11 Incorporation of Exhibits. The Company
Disclosure Letter, the Parent Disclosure Letter and all exhibits attached hereto
and referred to herein are hereby incorporated herein and made a part hereof for
all purposes as if fully set forth herein.
Section 10.12 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broadly as is enforceable.
Section 10.13 Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof in any
Delaware Court, this being in addition to any other remedy to which they are
entitled at law or in equity.
Section 10.14 Obligation of Parent. Whenever this Agreement
requires Merger Sub (or its successors) to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause Merger
Sub to take such action and a guarantee of the performance thereof.
Section 10.15 Subsidiaries. As used in this Agreement, the
word "Subsidiary" when used with respect to any party means any corporation or
other organization, whether incorporated or unincorporated, of which such party
directly or indirectly owns or controls at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the board of directors or others performing similar functions with respect to
such corporation or other organization, or any organization of which such party
is a general partner.
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IN WITNESS WHEREOF, the parties have executed this Agreement and caused the same
to be duly delivered on their behalf on the day and year first written above.
XXXXX XXXXXX INCORPORATED
By:
Name:
Title:
XXXXX XXXXXX DELAWARE I, INC.
By:
Name:
Title:
WESTERN ATLAS INC.
By:
Name:
Title:
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