STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT dated as of May 10, 1998 is by and
between Xxxxx Xxxxxx Incorporated, a Delaware corporation (the "Company"), and
Western Atlas Inc., a Delaware corporation (the "Grantee").
RECITALS
The Grantee, the Company and Merger Sub propose to enter into
the Merger Agreement providing, among other things, for the Merger pursuant to
the Merger Agreement of Merger Sub with and into the Grantee which shall be the
surviving corporation.
As a condition and inducement to the Grantee's willingness to
enter into the Merger Agreement, the Grantee has requested that the Company
agree, and the Company has agreed, to grant the Grantee the Option.
The Board of Directors of the Grantee has approved the Merger
Agreement, the Merger and this Agreement and has recommended approval of the
Merger Agreement by the holders of common stock of the Company.
The Board of Directors of the Company has approved the Merger
Agreement, the Merger and this Agreement and has recommended approval of the
issuance of shares of Common Stock, par value $1.00 per share, of the Company
("Company Common Stock") pursuant to the Merger Agreement by the holders of
Company Common Stock.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, the Company and the Grantee agree as
follows:
1. Capitalized Terms. Those capitalized terms used but not
defined herein that are defined in the Merger Agreement are used herein with the
same meanings as ascribed to them therein; provided, however, that, as used in
this Agreement, "Person" shall have the meaning specified in Sections 3(a)(9)
and 13(d)(3) of the Exchange Act. Those capitalized terms used in this Agreement
that are not defined in the Merger Agreement are defined in Annex A hereto and
are used herein with the meanings ascribed to them therein.
2. The Option.
(a) Grant of Option. Subject to the terms and conditions set
forth herein, the Company hereby grants to the Grantee an irrevocable option to
purchase, out of the authorized but unissued Company Common Stock, 33,772,146
shares of Company Common Stock (as adjusted as set forth herein) (the "Option
Shares"), at the Exercise Price.
(b) Exercise Price. The exercise price (the "Exercise Price")
of the Option shall be $41.125 per Option Share.
(c) Term. The Option shall be exercisable at any time and from
time to time following the occurrence of an Exercise Event and shall remain in
full force and effect until the earliest to occur of (i) the Effective Time,
(ii) the first anniversary of the receipt by Grantee of written notice from the
Company of the occurrence of an Exercise Event and (iii) termination of the
Merger Agreement in accordance with its terms prior to the occurrence of an
Exercise Event (the "Option Term"). If the Option is not theretofore exercised,
the rights and obligations set forth in this Agreement shall terminate at the
expiration of the Option Term.
(d) Exercise of Option.
(i) The Grantee may exercise the Option, in whole or in part,
at any time and from time to time during the Option Term. Notwithstanding the
expiration of the Option Term, the Grantee shall be entitled to purchase those
Option Shares with respect to which it has exercised the Option in accordance
with the terms hereof prior to the expiration of the Option Term.
(ii) If the Grantee wishes to exercise the Option, it shall
send a written notice (an "Exercise Notice") (the date of which being herein
referred to as the "Notice Date") to the Company specifying (i) the total number
of Option Shares it intends to purchase pursuant to such exercise and (ii) a
place and a date (the "Closing Date") not earlier than three Business Days nor
later than 15 Business Days from the Notice Date for the closing of the purchase
and sale pursuant to the Option (the "Closing").
(iii) If the Closing cannot be effected by reason of the
application of any Law, Regulation or Order, the Closing Date shall be extended
to the tenth Business Day following the expiration or termination of the
restriction imposed by such Law, Regulation or Order. Without limiting the
foregoing, if prior notification to, or Authorization of, any Governmental
Authority is required in connection with the purchase of such Option Shares by
virtue of the application of such Law, Regulation or Order, the Grantee and, if
applicable, the Company shall promptly file the required notice or application
for Authorization and the Grantee, with the cooperation of the Company, shall
expeditiously process the same.
(iv) Notwithstanding Section 2(d)(iii), if the Closing Date
shall not have occurred within nine months after the related Notice Date as a
result of one or more restrictions imposed by the application of any Law,
Regulation or Order, the exercise of the Option effected on the Notice Date
shall be deemed to have expired.
(e) Payment and Delivery of Certificates.
(i) At each Closing, the Grantee shall pay to the Company in
immediately available funds by wire transfer to a bank account designated by the
Company an amount equal to the Exercise Price multiplied by the number of Option
Shares to be purchased on such Closing Date.
(ii) At each Closing, simultaneously with the delivery of
immediately available funds as provided above, the Company shall deliver to the
Grantee a certificate or
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certificates representing the Option Shares to be purchased at such Closing,
which Option Shares shall be duly authorized, validly issued, fully paid and
nonassessable and free and clear of all Liens, and the Grantee shall deliver to
the Company its written agreement that the Grantee will not offer to sell or
otherwise dispose of such Option Shares in violation of applicable Law or the
provisions of this Agreement.
(f) Certificates. Certificates for the Option Shares delivered
at each Closing shall be endorsed with a restrictive legend that shall read
substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS
OF MAY 10, 1998. A COPY OF SUCH AGREEMENT WILL BE PROVIDED TO THE
HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE COMPANY OF A WRITTEN
REQUEST THEREFOR.
A new certificate or certificates evidencing the same number of shares of the
Company Common Stock will be issued to the Grantee in lieu of the certificate
bearing the above legend, and such new certificate shall not bear such legend,
insofar as it applies to the Securities Act, if the Grantee shall have delivered
to the Company a copy of a letter from the staff of the Commission, or an
opinion of counsel in form and substance reasonably satisfactory to the Company
and its counsel, to the effect that such legend is not required for purposes of
the Securities Act.
(g) If at the time of issuance of any Company Common Stock
pursuant to any exercise of the Option, the Company shall have issued any share
purchase rights or similar securities to holders of Company Common Stock, then
each Option Share purchased pursuant to the Option shall also include rights
with terms substantially the same as and at least as favorable to the Grantee as
those issued to other holders of Company Common Stock.
3. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in the Company Common Stock by
reason of a stock dividend, split-up, combination, recapitalization, exchange of
shares or similar transaction, the type and number of shares or securities
subject to the Option, and the Exercise Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements governing
such transaction, so that the Grantee shall receive upon exercise of the Option
the same class and number of outstanding shares or other securities or property
that Grantee would have received in respect of the Company Common Stock if the
Option had been exercised immediately prior to such event, or the record date
therefor, as applicable.
(b) If any additional shares of Company Common Stock are
issued after the date of this Agreement (other than pursuant to an event
described Section 3(a) above), the number of shares of Company Common Stock then
remaining subject to the Option shall be adjusted so that, after such issuance
of additional shares, such number of shares then remaining subject to the
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Option, together with shares theretofore issued pursuant to the Option, equals
19.9% of the number of shares of Company Common Stock then issued and
outstanding.
(c) To the extent any of the provisions of this Agreement
apply to the Exercise Price, they shall be deemed to refer to the Exercise Price
as adjusted pursuant to this Section 3.
4. Retention of Beneficial Ownership. To the extent that the
Grantee shall exercise the Option, the Grantee shall, unless the Grantee shall
exercise the Put Right or the Company shall exercise the Call Right, retain sole
ownership of the shares of Company Common Stock so acquired through the end of
the Call Period.
5. Repurchase at the Option of Grantee.
(a) At the request of the Grantee made at any time and from
time to time after the occurrence of an Exercise Event and prior to the earlier
of (i) 120 days after the expiration of the Option Term and (ii) 120 days after
the conditions to the payment by the Company of the additional $150 million fee
under Section 9.5 of the Merger Agreement shall have occurred (the "Put
Period"), the Company (or any successor thereto) shall, at the election of the
Grantee (the "Put Right"), repurchase from the Grantee (i) that portion of the
Option relating to all or any part of the Unexercised Option Shares (or as to
which the Option has been exercised but the Closing has not occurred) and (ii)
all or any portion of the shares of Company Common Stock purchased by the
Grantee pursuant hereto and with respect to which the Grantee then has
ownership. The date on which the Grantee exercises its rights under this Section
5 is referred to as the "Put Date." Such repurchase shall be at an aggregate
price (the "Put Consideration") equal to the sum of:
(i) the aggregate Exercise Price paid by the
Grantee for any Option Shares which the Grantee owns and as to
which the Grantee is exercising the Put Right;
(ii) the excess, if any, of the Applicable Price
over the Exercise Price paid by the Grantee for each Option
Share as to which the Grantee is exercising the Put Right
multiplied by the number of such shares; and
(iii) the excess, if any, of (x) the Applicable
Price per share of Company Common Stock over (y) the Exercise
Price multiplied by the number of Unexercised Option Shares as
to which the Grantee is exercising the Put Right.
(b) If the Grantee exercises its rights under this Section 5,
the Company shall, within five Business Days after the Put Date, pay the Put
Consideration to the Grantee in immediately available funds, and the Grantee
shall surrender to the Company the Option or portion of the Option and the
certificates evidencing the shares of Company Common Stock purchased thereunder.
The Grantee shall warrant to the Company that, immediately prior to the
repurchase thereof pursuant to this Section 5, the Grantee had sole record and
Beneficial
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Ownership of the Option or such shares, or both, as the case may be,
and that the Option or such shares, or both, as the case may be, were then held
free and clear of all Liens.
(c) If the Option has been exercised, in whole or in part, as
to any Option Shares subject to the Put Right but the Closing thereunder has not
occurred, the payment of the Put Consideration shall, to that extent, render
such exercise null and void.
(d) Notwithstanding any provision to the contrary in this
Agreement, the Grantee may not exercise its rights pursuant to this Section 5 in
a manner that would result in Total Profit of more than the Profit Cap;
provided, however, that nothing in this sentence shall limit the Grantee's
ability to exercise the Option in accordance with its terms.
6. Repurchase at the Option of the Company.
(a) To the extent the Grantee shall not have previously
exercised its rights under Section 5, at the request of the Company made at any
time during the 120-day period commencing at the expiration of the Put Period
(the "Call Period"), the Company may repurchase from the Grantee, and the
Grantee shall sell, or cause to be sold, to the Company, all (but not less than
all) of the shares of Company Common Stock acquired by the Grantee pursuant
hereto and with respect to which the Grantee has ownership at the time of such
repurchase at a price per share equal to the greater of (A) the Current Market
Price and (B) the Exercise Price per share in respect of the shares so acquired
(such price per share multiplied by the number of shares of Company Common Stock
to be repurchased pursuant to this Section 6 being herein called the "Call
Consideration"). The date on which the Company exercises its rights under this
Section 6 is referred to as the "Call Date."
(b) If the Company exercises its rights under this Section 6,
the Company shall, within five Business Days pay the Call Consideration in
immediately available funds, and the Grantee shall surrender to the Company
certificates evidencing the shares of Company Common Stock purchased hereunder,
and the Grantee shall warrant to the Company that, immediately prior to the
repurchase thereof pursuant to this Section 6, the Grantee had sole record and
Beneficial Ownership of such shares and that such shares were then held free and
clear of all Liens.
7. Registration Rights.
(a) The Company shall, if requested by the Grantee at any time
and from time to time during the Registration Period, as expeditiously as
practicable, prepare, file and cause to be made effective up to two registration
statements under the Securities Act if such registration is required in order to
permit the offering, sale and delivery of any or all shares of Company Common
Stock or other securities that have been acquired by or are issuable to the
Grantee upon exercise of the Option in accordance with the intended method of
sale or other disposition stated by the Grantee, including, at the sole
discretion of the Company, a "shelf" registration statement under Rule 415 under
the Securities Act or any successor provision, and the Company shall use all
reasonable efforts to qualify such shares or other securities under any
applicable state securities laws. The Company shall use all reasonable efforts
to cause each such registration
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statement to become effective, to obtain all consents or waivers of other
parties that are required therefor and to keep such registration statement
effective for such period not in excess of 180 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of the Company hereunder
to file a registration statement and to maintain its effectiveness may be
suspended for one or more periods of time not exceeding 60 days in the aggregate
if the Board of Directors of the Company shall have determined in good faith
that the filing of such registration or the maintenance of its effectiveness
would require disclosure of nonpublic information that would materially and
adversely affect the Company. For purposes of determining whether two requests
have been made under this Section 7, only requests relating to a registration
statement that has become effective under the Securities Act and pursuant to
which the Grantee has disposed of all shares covered thereby in the manner
contemplated therein shall be counted. Notwithstanding any other provision of
this Section 7, any request for registration shall permit the Company, upon
notice given within 20 days of the request for registration, to repurchase from
the Grantee any shares as to which the Grantee requests registration at a price
per share equal to the Current Market Price at the date the Company notifies the
Grantee of its decision to so repurchase.
(b) The Registration Expenses shall be for the account of the
Company; provided, however, that the Company shall not be required to pay any
Registration Expenses with respect to such registration if the registration
request is subsequently withdrawn at the request of the Grantee unless the
Grantee agrees to forfeit its right to request one registration.
(c) The Grantee shall provide all information reasonably
requested by the Company for inclusion in any registration statement to be filed
hereunder. If during the Registration Period the Company shall propose to
register under the Securities Act the offering, sale and delivery of Company
Common Stock for cash for its own account or for any other stockholder of the
Company pursuant to a firm underwriting, it shall, in addition to the Company's
other obligations under this Section 7, allow the Grantee the right to
participate in such registration provided that the Grantee participates in the
underwriting; provided, however, that, if the managing underwriter of such
offering advises the Company in writing that in its opinion the number of shares
of Company Common Stock requested to be included in such registration exceeds
the number that can be sold in such offering, the Company shall, after fully
including therein all securities to be sold by the Company, include the shares
requested to be included therein by Grantee pro rata (based on the number of
shares intended to be included therein) with the shares intended to be included
therein by Persons other than the Company.
(d) In connection with any offering, sale and delivery of
Company Common Stock pursuant to a registration statement effected pursuant to
this Section 7, the Company and the Grantee shall provide each other and each
underwriter of the offering with customary representations, warranties and
covenants, including covenants of indemnification and contribution.
8. First Refusal. Subject to the provisions of Sections 4 and
5 herein, at any time after the first occurrence of an Exercise Event and prior
to the second anniversary of the first purchase of shares of Company Common
Stock pursuant to the Option, if the Grantee shall
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desire to sell, assign, transfer or otherwise dispose of all or any of the
Option Shares or other securities acquired by it pursuant to the Option, it
shall give the Company written notice of the proposed transaction (an "Offeror's
Notice"), identifying the proposed transferee, accompanied by a copy of a
binding offer to purchase such shares or other securities signed by such
transferee and setting forth the terms of the proposed transaction. An Offeror's
Notice shall be deemed an offer by the Grantee to the Company, which may be
accepted, in whole but not in part, within 20 Business Days of the receipt of
such Offeror's Notice, on the same terms and conditions and at the same price at
which the Grantee is proposing to transfer such shares or other securities to
such transferee. The purchase of any such shares or other securities by the
Company shall be settled within 20 Business Days of the date of the acceptance
of the offer and the purchase price shall be paid to the Grantee in immediately
available funds. If the Company shall fail or refuse to purchase all the shares
or other securities covered by an Offeror's Notice, the Grantee may, within 60
days from the date of the Offeror's Notice, sell all, but not less than all, of
such shares or other securities to the proposed transferee at no less than the
price specified and on terms no more favorable than those set forth in the
Offeror's Notice; provided, however, that the provisions of this sentence shall
not limit the rights the Grantee may otherwise have if the Company has accepted
the offer contained in the Offeror's Notice and wrongfully refuses to purchase
the shares or other securities subject thereto. The requirements of this Section
8 shall not apply to (a) any disposition as a result of which the proposed
transferee would own beneficially not more than 2% of the outstanding voting
power of the Company, (b) any disposition of Company Common Stock or other
securities by a Person to whom the Grantee has assigned its rights under the
Option with the consent of the Company, (c) any sale by means of a public
offering registered under the Securities Act or (d) any transfer to a wholly
owned Subsidiary of the Grantee which agrees in writing to be bound by the terms
hereof.
9. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in
no event shall the Grantee's Total Profit exceed the Profit Cap and, if it
otherwise would exceed such amount, the Grantee, at its sole election, shall
either (i) deliver to the Company for cancellation Option Shares previously
purchased by Grantee, (ii) pay cash or other consideration to the Company, (iii)
reduce the amount of the fee payable to Grantee under Section 9.5 of the Merger
Agreement or (iv) undertake any combination thereof, so that the Grantee's Total
Profit shall not exceed the Profit Cap after taking into account the foregoing
actions.
(b) Notwithstanding any other provision of this Agreement,
this Stock Option may not be exercised for a number of Option Shares that would,
as of the Notice Date, result in a Notional Total Profit of more than the Profit
Cap, and, if exercise of the Option otherwise would exceed the Profit Cap, the
Grantee, at its sole option, may increase the Exercise Price for that number of
Option Shares set forth in the Exercise Notice so that the Notional Total Profit
shall not exceed the Profit Cap; provided, however, that nothing in this
sentence shall restrict any exercise of the Option otherwise permitted by this
Section 9(b) on any subsequent date at the Exercise Price set forth in Section
2(b) if such exercise would not then be restricted under this Section 9(b).
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10. Listing. If the Company Common Stock or any other
securities then subject to the Option are then listed on the NYSE, the Company,
upon the occurrence of an Exercise Event, will promptly file an application to
list on the NYSE the shares of the Company Common Stock or other securities then
subject to the Option and will use all reasonable efforts to cause such listing
application to be approved as promptly as practicable.
11. Replacement of Agreement. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, the Company will execute and deliver a new
Agreement of like tenor and date. Any such new Agreement shall constitute an
additional contractual obligation of the Company, whether or not the Agreement
so lost, stolen, destroyed or mutilated shall at any time be enforceable by
anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger
Agreement or as otherwise expressly provided herein, each of the parties hereto
shall bear and pay all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third Party Beneficiary;
Severability. Except as otherwise set forth in the Merger Agreement, this
Agreement (including the Merger Agreement and the other documents and
instruments referred to herein and therein) (i) constitutes the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) is not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
(d) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
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(e) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware, regardless of
the Laws that might otherwise govern under applicable principles of conflicts of
law.
(f) Descriptive Headings. The descriptive headings contained
herein are for convenience or reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses or sent by
electronic transmission to the telecopier number specified below:
If to the Company to:
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 Grantee to:
Western Atlas Inc.
00000 Xxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
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
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(h) Counterparts. This Agreement and any amendments hereto may
be executed in counterparts, each of which shall be deemed an original and all
of which taken together shall constitute but a single document.
(i) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be sold, assigned
or otherwise disposed of or transferred by either of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
party, except that the Grantee may assign this Agreement to a wholly owned
Subsidiary of the Grantee; provided, however, that no such assignment shall have
the effect of releasing the Grantee from its obligations hereunder. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(j) Further Assurances. In the event of any exercise of the
Option by the Grantee, the Company and the Grantee shall execute and deliver all
other documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(k) Specific Performance. The parties hereto hereby
acknowledge and agree that the failure of any party to this Agreement to perform
its agreements and covenants hereunder will cause irreparable injury to the
other party to this Agreement for which damages, even if available, will not be
an adequate remedy. Accordingly, each of the parties hereto hereby consents to
the granting of equitable relief (including specific performance and injunctive
relief) by any court of competent jurisdiction to enforce any party's
obligations hereunder. The parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
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IN WITNESS WHEREOF, the Company and the Grantee have caused
this Stock Option Agreement to be signed by their respective officers thereunto
duly authorized, all as of the day and year first written above.
XXXXX XXXXXX INCORPORATED
By:
Name:
Title:
WESTERN ATLAS INC.
By:
Name:
Title:
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Stock Option Agreement
shall have the meanings set forth below unless the context shall otherwise
require:
"Agreement" shall mean this Stock Option Agreement.
"Applicable Price" means the highest of (i) the highest
purchase price per share paid pursuant to a third party's tender or exchange
offer made for shares of Company Common Stock after the date hereof and on or
prior to the Put Date, (ii) the price per share to be paid by any third Person
for shares of Company Common Stock pursuant to an agreement for a Business
Combination Transaction entered into on or prior to the Put Date, and (iii) the
Current Market Price. If the consideration to be offered, paid or received
pursuant to either of the foregoing clauses (i) or (ii) shall be other than in
cash, the value of such consideration shall be determined in good faith by an
independent nationally recognized investment banking firm jointly selected by
the Grantee and the Company, which determination shall be conclusive for all
purposes of this Agreement.
"Authorization" shall mean any and all permits, licenses,
authorizations, orders certificates, registrations or other approvals granted by
any Governmental Authority.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially
Own" shall have the meanings ascribed to them in Rule 13d-3 under the Exchange
Act.
"Business Combination Transaction" shall mean (i) a
consolidation, exchange of shares or merger of the Company with any Person,
other than the Grantee 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 the Grantee 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 common shares and common share equivalents of the Company
outstanding immediately after the merger or (iii) a sale, lease or other
transfer of all or substantially all the assets of the Company to any Person,
other than the Grantee or one of its Subsidiaries.
"Business Day" shall mean a day other than Saturday, Sunday or
a federal holiday.
"Call Consideration" shall have the meaning ascribed to such
term in Section 5 herein.
"Call Date" shall have the meaning ascribed to such term in
Section 5 herein.
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"Call Period" shall have the meaning ascribed to such term in
Section 5 herein.
"Closing" shall have the meaning ascribed to such term in
Section 2 herein.
"Closing Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Court" shall mean any court or arbitration tribunal of the
United States, any foreign country or any domestic or foreign state, and any
political subdivision thereof, and shall include the European Court of Justice.
"Current Market Price" shall mean, as of any date, the average
of the closing prices (or, if such securities should not trade on any trading
day, the average of the bid and asked prices therefor on such day) of the
Company Common Stock as reported on the New York Stock Exchange Composite Tape
during the ten consecutive trading days ending on (and including) the trading
day immediately prior to such date or, if the shares of Company Common Stock are
not quoted thereon, on The Nasdaq Stock Market or, if the shares of Company
Common Stock are not quoted thereon, on the principal trading market (as defined
in Regulation M under the Exchange Act) on which such shares are traded as
reported by a recognized source during such ten Business Day period.
"Exercise Event" shall mean any of the events giving rise to
the obligation of the Company to pay the $50 million fee under Section 9.5 of
the Merger Agreement.
"Exercise Notice" shall have the meaning ascribed to such term
in Section 2(d) herein.
"Exercise Price" shall have the meaning ascribed to such term
in Section 2 herein.
"Governmental Authority" shall mean any governmental agency or
authority (other than a Court) of the United States, any foreign country, or any
domestic or foreign state, and any political subdivision thereof, and shall
include any multinational authority having governmental or quasi-governmental
powers.
"Law" shall mean all laws, statutes and ordinances of the
United States, any state of the United States, any foreign country, any foreign
state and any political subdivision thereof, including all decisions of Courts
having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest,
adverse claim, encumbrance, lien or charge of any kind (including any agreement
to give any of the foregoing), any conditional sale or other title retention
agreement, any lease in the nature thereof or the filing of or agreement to give
any financing statement under the Laws of any jurisdiction.
"Merger Agreement" shall mean that certain Agreement and Plan
of Merger dated as of the date hereof among Xxxxx Xxxxxx Incorporated, a
Delaware corporation, Xxxxx Xxxxxx Delaware I, Inc., a Delaware corporation, and
Western Atlas Inc., a Delaware corporation.
A-2
"Merger Sub" shall mean Xxxxx Xxxxxx Delaware I, Inc., a
Delaware corporation and a wholly owned subsidiary of the Company.
"Notice Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Notional Total Profit" shall mean, with respect to any number
of Option Shares as to which the Grantee may propose to exercise the Option, the
Total Profit determined as of the date of the Exercise Notice assuming that the
Option were exercised on such date for such number of Option Shares and assuming
such Option Shares, together with all other Option Shares held by the Grantee
and its Affiliates as of such date, were sold for cash at the closing market
price for the Company Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions) and including all amounts
theretofore received or concurrently being paid to the Grantee pursuant to
clauses (i), (ii) and (iii) of the definition of Total Profit.
"Offeror's Notice" shall have the meaning ascribed to such
term in Section 8 herein.
"Option" shall mean the option granted by the Company to
Grantee pursuant to Section 2 herein.
"Option Shares" shall have the meaning ascribed to such term
in Section 2 herein.
"Option Term" shall have the meaning ascribed to such term in
Section 2 herein.
"Order" shall mean any judgment, order or decree of any Court
or Governmental Authority, federal, foreign, state or local, of competent
jurisdiction.
"Profit Cap" shall mean $50 million, unless the conditions to
the payment by the Company of the additional $150 million fee under Section 9.5
of the Merger Agreement shall have occurred, in which case "Profit Cap" shall
mean $200 million.
"Put Consideration" shall have the meaning ascribed to such
term in Section 5 herein.
"Put Date" shall have the meaning ascribed to such term in
Section 5 herein.
"Put Period" shall have the meaning ascribed to such term in
Section 5 herein.
"Put Right" shall have the meaning ascribed to such term in
Section 5 herein.
"Registration Expenses" shall mean the expenses associated
with the preparation and filing of any registration statement pursuant to
Section 7 herein and any sale covered thereby (including any fees related to
blue sky qualifications and filing fees in respect of the National Association
of Securities Dealers, Inc.), but excluding underwriting discounts or
commissions or broker's fees in respect to shares to be sold by the Grantee and
the fees and disbursements of the Grantee's counsel.
A-3
"Registration Period" shall mean, subject to Section 4 hereof,
the period of two years following the first exercise of the Option by the
Grantee.
"Regulation" shall mean any rule or regulation of any
Governmental Authority having the effect of Law or of any rule or regulation of
any self-regulatory organization, such as the NYSE.
"Total Profit" shall mean the aggregate (before income taxes)
of the following: (i) all amounts received by the Grantee or concurrently being
paid to the Grantee pursuant to Section 5 for the repurchase of all or part of
the unexercised portion of the Option, (ii) (A) the amounts received by the
Grantee or concurrently being paid to the Grantee pursuant to the sale of Option
Shares (or any other securities into which such Option Shares are converted or
exchanged), including sales made to the Company or pursuant to a registration
statement under the Securities Act or any exemption therefrom, less (B) the
Grantee's purchase price for such Option Shares and (iii) all amounts received
by the Grantee from the Company or concurrently being paid to the Grantee
pursuant to Section 9.5 of the Merger Agreement.
"Unexercised Option Shares" shall mean, from and after the
Exercise Date until the expiration of the Option Term, those Option Shares as to
which the Option remains unexercised from time to time.
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