EXHIBIT 2
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (the "Agreement") is entered into as of October
22, 1998, by and among VEBA Corporation, a Delaware corporation ("VEBA"), and
MEMC Electronic Materials, Inc., a Delaware corporation (the "Company").
RECITALS
A. The Company proposes to issue (the "Rights Offering") to holders of
its Common stock, par value $0.01 per share (the "Common Stock"), other than
VEBA, upon the terms and subject to the conditions set forth in the prospectus
(the "Prospectus") contained in the Registration Statement (as herein defined),
rights (the "Rights") to purchase shares of its Common Stock, exercisable at a
price per share equal to the Purchase Price (as hereinafter defined). The Rights
and the Common Stock issuable upon exercise thereof are hereinafter sometimes
collectively referred to as the "Rights Securities;" and
B. The Company proposes to issue and sell to VEBA, and VEBA proposes to
buy from the Company, upon the terms and subject to the conditions set forth
herein, the Common Shares (as herein defined) at a price per share equal to the
Purchase Price, which will be identical to the subscription price in the Rights
Offering.
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants, representations, warranties, conditions and agreements hereinafter
expressed, the parties agree as follows:
Section 1
Sale and Purchase of the Common Shares
Subject to the terms and conditions of this Agreement, the Company will
issue and sell to VEBA and VEBA will purchase from the Company, at the Closing
provided for in Section 2, the Common Shares, at a price per share equal to the
Purchase Price.
Section 2
Closing
The sale of the Common Shares to be purchased by VEBA shall take place
at the offices of Xxxxx Xxxx LLP, 000 X. Xxxxxxxx, Xxxxx 0000, Xx. Xxxxx,
Xxxxxxxx 00000-0000 at 10:00 A.M., Central Standard Time, at a closing (the
"Closing") to be held on the date that is the Business Day immediately following
the Calculation Date; provided that in no event shall the date of Closing be
later than December 30, 1998. At the Closing, the Company will deliver to the
Escrow Agent certificates for the Common Shares registered in VEBA's name (or in
the name of VEBA's nominee or assignee in accordance with Section 7.4), against
delivery by VEBA to the Escrow Agent of immediately available funds by federal
wire transfer in the amount of the aggregate Purchase Price therefor. After the
Closing the certificates for the Common Shares and such funds shall be held by
the Escrow Agent pursuant to and in accordance with the terms of the Escrow
Agreement. If at the Closing the Company shall fail to tender certificates for
the Common Shares as provided above in this Section 2, or any of the conditions
specified in Section 3(a) shall not have been fulfilled, VEBA shall, at its
election, be relieved of all further obligations under this Agreement, without
thereby waiving any other rights VEBA may have by reason of such failure or such
nonfulfillment.
Section 3
Conditions to Closing
(a) VEBA's obligations to purchase and pay for the Common Shares are
subject to the fulfillment, prior to or at the Closing, of the following
conditions:
3.1 Representations and Warranties. The representations and warranties
of the Company contained in this Agreement shall be true and correct when made
and at the time of the Closing.
3.2 Performance. The Company shall have performed and complied in all
material respects with all agreements and conditions contained herein required
to be performed or complied with prior to or at the Closing.
3.3 Compliance Certificate. VEBA shall have received an Officer's
Certificate of the Company, dated the date of the Closing and satisfactory in
form and substance to VEBA, in the name and on behalf of the Company, certifying
that the conditions specified in Section 3.1 and 3.2 have been fulfilled.
3.4 Opinions of Counsel. VEBA shall have received at the time of
Closing the opinion of Xxxxx Xxxx LLP, counsel for the Company, addressed to
VEBA, dated the date of the Closing and substantially to the following effect:
(i) The Company is a corporation validly existing and is in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as described in the
Registration Statement;
(ii) The Common Shares have been duly authorized and, when issued and
delivered to VEBA against payment therefor in accordance with the terms of
this Agreement, will be (A) validly issued, fully paid and nonassessable and
(B) free of any preemptive or similar rights under the certificate of
incorporation or bylaws of the Company, or to the knowledge of such counsel,
pursuant to any other agreement;
(iii) None of the issuance and sale of the Common Shares, the
execution, delivery or performance of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby
constitutes or will constitute a violation or breach of, or a default under,
the certificate of incorporation or bylaws of the Company or any Material
Agreement or will result in the creation or imposition of any lien, charge
or encumbrance pursuant to any Material Agreement, upon any property or
assets of the Company or any of its subsidiaries, nor will any such action
result in any violation of the Delaware General Corporation Law (the "DGCL")
or any existing Federal or Missouri law, regulation, ruling (assuming
compliance with all applicable state securities and Blue Sky laws),
recognized by such counsel to be applicable to, or any judgment, injunction,
order of decree known to such counsel, of any Federal or Missouri court to
be applicable to, the Company, its subsidiaries or any of their respective
properties (provided, the term "Material Agreement" shall mean any
agreement, indenture, lease or other instrument or agreement that is both
(i) an exhibit to the Registration Statement and (ii) an agreement,
indenture, lease or other instrument or agreement to which the Company or
any of its subsidiaries is a party or by which any of their properties or
assets are bound);
(iv) (A) The Company has the corporate power and authority to enter
into this Agreement and to issue, sell and deliver the Common Shares
pursuant to this Agreement, and (B) this Agreement has been duly authorized,
executed and delivered by the Company and is a legally valid and binding
agreement of the Company;
(v) No consent, approval, authorization or other order of, or
registration or filing with, any Federal or Missouri court, regulatory body,
administrative agency or other governmental body, agency or official is
required to be obtained by the Company (except as may be required under
state securities or Blue Sky laws governing the sale and distribution of the
Shares) for the valid issuance and sale of the Common Shares; and
(vi) Each of the Incorporated Documents, as amended or supplemented by
the Registration Statement or otherwise, as of the date hereof (and except
for the financial statements and the notes thereto and the schedules and
other financial and statistical data or schedules included therein or
omitted therefrom, as to which such counsel need not express any opinion),
comply as to form in all material respects with the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
In addition to the matters set forth above, such opinion shall also
contain a statement to the effect that, although counsel has not undertaken,
except as otherwise indicated in their opinion, to determine independently, and
does not assume any responsibility for, the accuracy or completeness of the
statements in the Registration Statement, such counsel has participated in the
preparation of the Registration Statement and the Prospectus, including review
and discussion of the contents thereof (including a review and discussion of the
contents of all Incorporated Documents), and nothing has come to the attention
of such counsel that has caused it to believe (i) that the Registration
Statement (including the Incorporated Documents but excluding any VEBA
Information (as defined below)) contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or (ii) that the Prospectus
(including the Incorporated Documents but excluding any VEBA Information (as
defined below)) contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and the notes thereto and the schedules and other financial
and statistical data included or incorporated by reference in the Registration
Statement or the Prospectus or omitted therefrom). With respect to specific
matters with respect to which Xxxxx Xxxx does not represent the Company, the
foregoing statement may be delivered by other counsel that represents the
Company with respect to such matters, such counsel to be reasonably acceptable
to VEBA.
In rendering the foregoing opinion, such counsel may rely, as to
matters involving laws of any jurisdiction other than Missouri or the United
States or the DGCL, upon opinions addressed to VEBA of other counsel reasonably
acceptable to VEBA; provided that insofar as any such opinion relates to the
DGCL, such opinion may be delivered by Xxxxxxxx Xxxxxx & Finger, P.A. In
rendering the opinion specified in clause (iv) above such counsel shall assume
that, insofar is it relates to enforceability, that the laws of the State of New
York are the same as the laws of the State of Missouri. In addition, the
foregoing opinion may contain customary assumptions and qualifications.
3.5 Secretary's Certificate. VEBA shall have received a Certificate,
dated the date of the Closing, of the Secretary or an Assistant Secretary of the
Company, certifying as to the resolutions adopted by the Board of Directors of
the Company or its Special Committee approving the documents and/or transactions
contemplated hereby, copies of which resolutions shall be attached to such
Certificate.
3.6 Absence of Certain Changes. (i) There shall not have been any
material adverse change in the capital stock of the Company nor any material
increase in the short-term or long-term debt of the Company and its subsidiaries
on a consolidated basis (other than in the ordinary course of business or
pursuant to agreements with VEBA AG or its affiliates) from the date of this
Agreement; (ii) there shall not have been, since the date of this Agreement any
material adverse change in the condition (financial or other), business,
prospects, properties, net worth or result of operations of the Company and its
subsidiaries taken as a whole and (iii) the Company and its subsidiaries shall
not have any liabilities or obligations, direct or contingent (whether or not in
the ordinary course of business), that are material to the Company and its
subsidiaries, taken as a whole, other than those in existence on the date hereof
or those pursuant to any agreement with VEBA AG or its affiliates.
3.7 Registration Rights Agreement. The Registration Rights Agreement
shall have been amended to include all Common Shares and any other shares of
Common Stock acquired by VEBA or VEBA AG and any of its direct or indirect
subsidiaries after the date hereof as Registrable Stock thereunder.
3.8 Fairness Opinion. The Company shall have received a fairness
opinion from a financial advisor substantially to the effect that (i) the
Purchase Price to be paid by VEBA to the Company pursuant to this Agreement is
fair to the Company and its stockholders (excepting VEBA) from a financial point
of view as of the date thereof, (ii) the financial terms and conditions of the
Rights Offering are consistent with those of rights offerings by public
companies reviewed and deemed comparable to the Rights Offering by such
financial advisor and (iii) the subscription price in the Rights Offering is
fair to the Company and its stockholders (excepting VEBA) from a financial point
of view as of the date thereof.
3.9 Comfort Letter. VEBA shall have received, to the extent not
precluded by KPMG Peat Marwick LLP's accounting policy, a letter addressed to it
and dated the date of the Closing from KPMG Peat Marwick LLP independent
certified public accountants to the Company, in form and substance reasonably
acceptable to VEBA and set forth in SAS 72 and customary for a firm commitment
underwriting.
(b) The Company's obligations to issue and sell the Common Shares are
subject to the fulfillment, prior to or at the Closing, of the condition that
the Company shall have received a fairness opinion from a financial advisor
substantially to the effect that (i) the Purchase Price is fair to the Company
and its stockholders (excepting VEBA) from a financial point of view as of the
date thereof, (ii) the financial terms and conditions of the Rights Offering are
consistent with those of rights offerings by public companies reviewed and
deemed comparable to the Rights Offering by such financial advisor and (iii) the
subscription price in the Rights Offering is fair to the Company and its
stockholders (excepting VEBA) from a financial point of view as of the date
thereof.
Section 4
Representations and Warranties of the Company
The Company represents and warrants on and as of the date hereof, and
as of the date of the Closing, as follows:
4.1 Organization, Standing, Qualification, Etc. The Company and each
of its subsidiaries is a corporation duly incorporated, validly existing and in
good standing under the laws of its jurisdiction of organization, has all the
requisite corporate power and authority to carry on its business as described in
the Registration Statement and Prospectus and is qualified to do business in
every jurisdiction where such qualification or registration is required, except
where the failure to qualify or register would not have, individually or in the
aggregate, a material adverse effect on the condition (financial or other),
business, properties, prospects, net worth or results of operations of the
Company and its subsidiaries taken as a whole (a "Material Adverse Effect").
4.2 Authorization. (a) The Company has taken all actions necessary to
authorize it (i) to execute, deliver and perform all of its obligations under
this Agreement and (ii) to consummate the transactions contemplated hereby. This
Agreement is a legally valid and binding obligation of the Company, enforceable
against it in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws relating to or affecting the rights of creditors generally and by
general principles of equity (regardless of whether such enforceability is
sought in equity or at law).
(b) The Common Shares have been duly authorized and, when issued and
delivered to VEBA against payment therefor in accordance with the terms of this
Agreement, will be validly issued, fully paid and nonassessable and free of any
preemptive or other similar rights.
4.3 Capital Stock. All of the outstanding shares of Common Stock have
been duly authorized and validly issued, are fully paid and nonassessable, and
are free of any preemptive or similar rights.
4.4 No Violation or Conflict; No Default. (a) Provided that the
aggregate number of shares of Common Stock to be issued in connection with the
Rights Offering and issued and sold to VEBA pursuant hereto and the Standby
Agreement (as defined below) does not exceed 150,000,000 and the aggregate
proceeds therefrom does not exceed $200 million, none of the issuance and sale
of the Common Shares, the execution, delivery or performance of this Agreement
by the Company, the consummation by the Company of the transactions contemplated
hereby nor the compliance with the terms of this Agreement (A) requires any
consent, approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official or conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the certificate or articles of
incorporation or bylaws, or other organizational documents, of the Company or
any of its subsidiaries or (B) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any agreement, indenture, lease
or other instrument to which the Company or any of its subsidiaries is a party
or by which any of them or any of their respective properties may be bound, or
violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of its subsidiaries
or any of their respective properties, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be bound
or to which any of the property or assets of any of them is subject except for,
in the case of the foregoing clause (B), such violations which would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) Neither the Company nor any of its subsidiaries is in violation (A)
of its certificate or articles of incorporation or by-laws, or other
organizational documents, or (B) of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of its
subsidiaries, including, without limitation, (i) any foreign, Federal, state or
local law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) any Federal or state law relating to
discrimination in the hiring, promotion or pay of employees or any applicable
federal or state wages and hours laws, or (iii) any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
thereunder (collectively, "ERISA"), or of any decree of any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries except for, in the case of the foregoing clause (B), such
violations which would not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(c) Neither the Company nor any of its subsidiaries is in default in
the performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any other agreement,
indenture, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their respective
properties may be bound, except for such defaults which would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
4.5 Registration Statement and Prospectus. (a) The Registration
Statement does not contain 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 not misleading, and the Prospectus does not contain an untrue
statement of material fact or omit to state a material fact necessary in order
to make the statements, in light of the circumstances in which they are made,
not misleading, except that this representation and warranty does not apply to
statements in or omissions from the Registration Statement or the Prospectus
relating to the VEBA Information.
(b) The historical financial statements, together with related
schedules and notes, included in the Registration Statement and the Prospectus,
comply as to form in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"); such historical
financial statements, together with related schedules and notes, present fairly
the consolidated financial position, results of operations, cash flows and
changes in the financial position of the entities to which they relate on the
basis stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied through the periods involved, except as
disclosed therein; and the other financial and statistical information and data
included in the Registration Statement and the Prospectus, are accurately
presented in all material respects and, to the extent applicable, prepared on a
basis consistent in all material respects with such financial statements and the
books and records of the entities to which they relate.
4.6 Permits. The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations including, without limitation, under any
applicable Environmental Laws, of governmental or regulatory authorities
("permits") as are necessary to own its respective properties and to conduct its
business subject to such qualifications and exceptions as may be set forth in
the Registration Statement and Prospectus and as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect; the
Company and each of its subsidiaries has fulfilled and performed all its
material obligations with respect to such permits subject in each case to such
qualifications as may be set forth in the Registration Statement and Prospectus
and no event has occurred which allows, or after notice or lapse of time or both
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permit subject in each case
to such qualifications as may be set forth in the Registration Statement and
Prospectus.
4.7 Incorporated Documents. The Incorporated Documents heretofore filed
with the Commission, when they were filed (or, if any amendment with respect to
any such document was filed, when such amendment was filed), conformed in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, and any further Incorporated Documents so filed will,
when they are filed, conform in all material respects with the requirements of
the Exchange Act and the rules and regulations thereunder; no such document when
it was filed (or, if an amendment with respect to any such document was filed,
when such amendment was filed), contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; and any further Incorporated
Documents so filed will, when they are filed, not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that this
representation and warranty will not apply to any VEBA Information.
4.8 No Material Adverse Change. (a) No Material Adverse Change. Since
December 31, 1997 except as set forth in the Registration Statement, there has
not been a material adverse change in the condition (financial or other),
business, prospects, properties, net worth or results of operations of the
Company and its subsidiaries on a consolidated basis (a "Material Adverse
Change").
4.9 Litigation. Except to the extent set forth in the Registration
Statement, there are no actions, claims, suits, citations or proceedings
(including, without limitation, an investigation or partial proceeding, such as
a deposition) pending, or to the knowledge of the Company, threatened
("Proceedings") against or affecting the Company or any of its subsidiaries or
any of their respective properties or assets, that either individually or in the
aggregate are reasonably likely to have a Material Adverse Effect. There is no
Proceeding seeking to restrain, enjoin, prevent the consummation of or otherwise
challenge this Agreement, the Rights Offering, the issuance of the Common Shares
or the transactions contemplated hereby. Neither the Company nor any of its
subsidiaries is subject to any judgment, order, decree, rule or regulation of
any court, governmental authority or arbitration board or tribunal that has had
a Material Adverse Effect or, except to the extent set forth in the Registration
Statement, that could reasonably be expected to have a Material Adverse Effect.
4.10 Private Offering. Assuming the truth and correctness of the
representations and warranties set forth in Section 6 hereof, the sale of the
Common Shares hereunder is exempt from the registration and prospectus delivery
requirements of the Securities Act.
4.11 No Stabilization or Manipulation. The Company has not taken,
directly or indirectly, any action designed to cause or to result in, or that
has constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company.
Section 5
Expenses; Indemnification
5.1 Expenses. If the transactions contemplated by this Agreement are
not consummated (other than because of VEBA's breach of its obligations
hereunder), the Company agrees to reimburse VEBA and its affiliates (as defined
in the Securities Act), other than the Company and its subsidiaries, for all
reasonable out-of-pocket expenses (including reasonable fees and expenses of
counsel) incurred by VEBA and such affiliates in connection with this Agreement
and the transactions contemplated hereby. Notwithstanding anything in this
Agreement to the contrary, the provisions of this Section 5.1 shall survive the
termination of this Agreement.
5.2 Indemnification. (a) In addition to all other sums due hereunder or
provided for in this Agreement, the Company hereby agrees, without limitation as
to time, to indemnify VEBA and its affiliates, directors, officers, employees,
counsel, agents or representatives (collectively, the "VEBA Indemnified
Parties") against, and hold each of them harmless from, to the fullest extent
lawful, all losses, claims, damages, liabilities, costs (including, without
limitation, costs of preparation and reasonable attorneys' fees and
disbursements) and expenses, including expenses of investigation (collectively,
"Losses"), incurred by each of them and arising out of or in connection with (i)
this Agreement, (ii) a breach of any representation, warranty, covenant or
agreement of the Company hereunder or (iii) the transactions contemplated hereby
(or any other document or instrument executed herewith or pursuant hereto or
thereto) whether or not the transactions contemplated by this Agreement are
consummated and whether or not any VEBA Indemnified Party is a formal party to
any proceeding. The Company agrees to reimburse any VEBA Indemnified Party
promptly for all such Losses as they are incurred by such VEBA Indemnified Party
(regardless of whether it is or may be ultimately determined that a VEBA
Indemnified Party is not entitled to indemnification hereunder). The obligations
of the Company to each VEBA Indemnified Party hereunder shall be separate
obligations, and the Company's liability to any such VEBA Indemnified Party
hereunder shall not be extinguished solely because any other VEBA Indemnified
Party is not entitled to indemnity hereunder. The obligations of the Company
under this Section 5.2 shall survive any transfer of the Common Shares by VEBA
and the termination of this Agreement. Notwithstanding the foregoing, (x) to the
extent (A) the compliance certificate delivered pursuant to Section 3.3 contains
any exceptions and (B) VEBA nevertheless elects to consummate the transactions
contemplated under this Agreement, the Company shall not be obligated to
indemnify, hold harmless or contribute to the Losses of any VEBA Indemnified
Party (or reimburse its related expenses) with respect to such exceptions under
this Section 5.2 and VEBA shall not have any claim or remedy under this
Agreement with respect to such excepted matters (except, in both such instances,
to the extent such Losses result from an inaccuracy contained in such compliance
certificate), and (y) the Company shall not be obligated to indemnify, hold
harmless or contribute to the Losses of any VEBA Indemnified Party (or reimburse
its related expenses) to the extent any Loss arises out of or is in connection
with a claim made pursuant to clause (i) and/or (iii) of this Section 5.2(a) and
results from the wrongful act or omission of such VEBA Indemnified Party or
results from an act or omission with respect to which a court of competent
jurisdiction would find such VEBA Indemnified Party liable or culpable. In
addition, the Company shall not be obligated to indemnify, hold harmless or
contribute to the Losses of any VEBA Indemnified Party (or reimburse its related
expenses) to the extent any Loss arises out of or is in connection with a claim
(x) made pursuant to clause (i) and/or (iii) of this Section 5.2(a) and (y)
originally brought, commenced or asserted by a VEBA Indemnified Party.
(b) In addition to all other consideration provided for in this
Agreement, VEBA hereby agrees, without limitation as to time, to indemnify the
Company and its subsidiaries, directors, officers, employees, counsel, agents or
representatives (collectively, the "Company Indemnified Parties") against, and
hold each of them harmless from, to the fullest extent lawful, all Losses
incurred by each of them and arising out of or in connection with a breach of
any representation, warranty, covenant or agreement of VEBA hereunder whether or
not the transactions contemplated by this Agreement are consummated and whether
or not any Company Indemnified Party is a formal party to any proceeding. VEBA
agrees to reimburse any Company Indemnified Party promptly for all such Losses
as they are incurred by such Company Indemnified Party (regardless of whether it
is or may be ultimately determined that a Company Indemnified Party is not
entitled to indemnification hereunder). The obligations of VEBA to each Company
Indemnified Party hereunder shall be separate obligations, and VEBA's liability
to any such Company Indemnified Party hereunder shall not be extinguished solely
because any other Company Indemnified Party is not entitled to indemnity
hereunder. The obligations of VEBA under this Section 5.2 shall survive any
transfer of the Common Shares by VEBA and the termination of this Agreement.
(c) The procedures set forth in Section 8(c) of the Registration Rights
Agreement dated July 12, 1995 between the Company and Xxxx Corporation (a
predecessor to VEBA) shall govern any indemnification pursuant to this Section
5.2.
(d) If the indemnification provided for in this Section 5.2 is
unavailable to, or insufficient to hold harmless, any indemnified party in
respect of any Losses referred to herein, then an indemnifying party shall have
an obligation to contribute to the amount paid or payable by such indemnified
party as a result of such Losses in such proportion as is appropriate to reflect
its relative fault, on the one hand, and such indemnified party, on the other
hand, in connection with the actions which resulted in such Losses as well as
any other relevant equitable considerations. The amount paid or payable by any
such person as a result of the Losses referred to above shall be deemed to
include, subject to the limitations set forth in Section 5.2, any legal or other
fees or expenses reasonably incurred by such Person in connection with any
investigation, lawsuit or legal or administrative action or proceeding.
(e) The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 5.2 were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to in subsection (c) of this Section 5.2.
5.2 Arbitration. (a) Resolution of any and all disputes arising from or
in connection with the determination of to what extent, if any, a claim is made
pursuant to clause (i) and/or (iii) of Section 5.2(a) as compared to clause (ii)
of Section 5.2(a) or to what extent, if any, a VEBA Indemnified Party is
entitled to indemnification pursuant to clause (y) in the penultimate sentence
of Section 5.2(a) ("Disputes"), shall be exclusively governed by and settled in
accordance with the provisions of this Section; provided, that the foregoing
shall not preclude equitable or other judicial relief to enforce the provisions
hereof or to preserve the status quo pending resolution of Disputes hereunder.
Each party to this Agreement (each a "Party" and together the "Parties") may
commence proceedings hereunder by delivery of written notice providing a
reasonable description of the Dispute to the other Party, including a reference
to this Section (the "Dispute Notice").
(b) The Parties shall first attempt in good faith to resolve promptly
any Dispute by negotiations between executives who have authority to settle it
(as to each Party, an "Executive"). Not later than 35 days after delivery of the
Dispute Notice, each Party shall designate an Executive and meet with the other
Party's Executive at a reasonably acceptable time and place, and thereafter as
such Executives deem reasonably necessary. The Executives shall exchange
relevant information and endeavor to resolve the Dispute. Prior to any such
meeting, each Party's Executive shall advise the other as to any other
individuals who will attend such meeting. All negotiations pursuant to this
Section shall be confidential and shall be treated as compromise negotiations
for purposes of Rule 408 of the Federal Rules of Evidence and similarly under
other federal and state rules of evidence.
(c) Except to the extent the Parties agree to continue proceedings
pursuant to paragraph (b) hereof, the Parties shall, commencing not later than
35 days after the date of delivery of the Dispute Notice, endeavor to settle the
Dispute by Mediation pursuant to the Center for Public Resources ("CPR") Model
Procedure for Mediation of Business Disputes, as amended from time to time,
and/or according to such other or additional rules or procedures as the Parties
may agree. The neutral third party in such Mediation shall be as agreed by the
Parties or, failing such agreement, selected with the assistance of the CPR.
(d) (1) The Parties hereby agree to submit all Disputes to arbitration
under the following provisions, which arbitration shall be final and binding
upon the Parties, their successors and assigns, and that the following
provisions constitute a binding arbitration clause under applicable law.
(2) Either Party may initiate arbitration of a Dispute by delivery of a
demand therefor (the "Arbitration Demand") to the other Party not sooner than 60
days after the date of delivery of the Dispute Notice but at any time
thereafter; provided, that if a Party (the "Non-Cooperative Party") does not
cooperate in the procedures provided under paragraph (b) or paragraph (c), the
other Party may initiate arbitration at such earlier time as such
non-cooperation shall become reasonably apparent, and the arbitrators may assess
against the Non-Cooperative Party damages and expenses arising from such
non-cooperation, including attorney's fees and expenses and Arbitration Costs
(as defined below) in connection with arbitration hereunder.
(3) The arbitration shall be conducted in New York by one arbitrator
selected by agreement of the Parties not later than 10 days after delivery of
the Arbitration Demand or, failing such agreement, appointed pursuant to the
Commercial Arbitration Rules of the American Arbitration Association, as amended
from time to time (the "AAA Rules"). If an arbitrator becomes unable to serve,
his or her successor(s) shall be similarly selected or appointed.
(4) The arbitration shall be conducted pursuant to the Federal
Arbitration Act and the Missouri Uniform Arbitration Act and such procedures as
the Parties may agree or, in the absence of or failing such agreement, pursuant
to the AAA Rules. Notwithstanding the foregoing: (A) each party shall be allowed
to conduct discovery through written requests for information, document
requests, requests for stipulations of fact, and depositions; (B) the nature and
extent of such discovery shall be determined by the Panel, taking into account
the needs of the Parties and the desirability of making discovery expeditious
and cost-effective; (C) the Panel may issue orders to protect the
confidentiality of information to be disclosed in discovery; and (D) the Panel's
discovery rulings may be enforced in any court of competent jurisdiction.
(5) All hearings shall be conducted on an expedited schedule, and all
proceedings shall be confidential. Either Party may at its expense make a
stenographic record thereof.
(6) The Panel shall complete all hearings not later than 90 days after
selection or appointment. The Panel's decision shall be in writing and shall
specify the factual and legal bases for the decision. The Panel shall apportion
all costs and expenses of the arbitration, including the Panel's fees and
expenses and fees and expenses of experts ("Arbitration Costs") between the
prevailing and non-prevailing Party as the Panel deems fair and reasonable and
consistent with the principles and provisions of Section 5.2. In circumstances
where (A) a Dispute has been asserted or defended against on grounds that the
Panel deems manifestly unreasonable, or (B) the non-prevailing Party has
rejected participation in procedures under paragraph (b) or (c), the Panel may
assess all Arbitration Costs against the non-prevailing Party and may include in
the award the prevailing Party's attorney's fees and expenses in connection with
any and all proceedings under this Section. Any assessment or apportionment of
Arbitration Costs in accordance with the foregoing sentences shall not affect
the amount, if any, an indemnified party is entitled to receive on account of
any Losses pursuant to the provisions of Section 5.2. Notwithstanding the
foregoing, in no event may the Panel award multiple, punitive or exemplary
damages.
(7) Either Party may assert appropriate statutes of limitation as a
defense in arbitration; provided, that upon delivery of a Dispute Notice any
such statute shall be tolled pending resolution hereunder.
(e) Confidentiality - Notice. Each Party shall notify the other
promptly, and in any event prior to disclosure to any third person, if it
receives any request for access to confidential information or proceedings
hereunder.
Section 6
Purchase for Investment;
Other Representations and Warranties
VEBA represents and warrants on and as of the date hereof and as of the
date of issuance of the Common Shares and, to the extent specified below, VEBA
agrees, as follows:
6.1 Purchase for Investment. Subject to VEBA's right of assignment set
forth in Section 7.4, VEBA is purchasing the Common Shares for its own account
or for one or more separate accounts maintained by VEBA, in each case for
investment and not with a view to the distribution or sale thereof in violation
of the securities laws.
6.2 Authorization. The execution, delivery and performance by VEBA of
this Agreement are within VEBA's powers (corporate or otherwise), have been duly
authorized by all necessary action (corporate or otherwise) on the part of VEBA,
and do not contravene or constitute a default under (a) any provision of
applicable law, rule or regulation applicable to VEBA, (b) VEBA's certificate of
incorporation, bylaws, partnership agreement or other governing instruments or
(c) any agreement, judgment, injunction, order, decree or other instrument
binding upon VEBA, except for any such contravention or default as would not,
individually or in the aggregate, be reasonably likely to prevent VEBA from
performing its obligations hereunder.
6.3 Enforceability. This Agreement constitutes VEBA's legally valid and
binding obligation, enforceable against VEBA in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting
the rights of creditors generally and by general principles of equity
(regardless of whether such enforceability is sought in equity or at law).
6.4 No Public Market. VEBA understands that the offering and the sale
of the Common Shares are intended to be exempt from registration under the
Securities Act pursuant to Section 4(2) of the Securities Act. VEBA is an
accredited investor within the meaning of Regulation D under the Securities Act.
6.5 Organization. VEBA is a corporation duly organized and validly
existing, is in good standing under the laws of the State of Delaware.
6.6 Brokers. Neither VEBA nor its affiliates (other than the Company
or its subsidiaries) has employed any investment banker, broker or finder
or incurred any liability for any brokerage fees, commissions or finder's
fees in connection with the transactions contemplated by this Agreement.
6.7 Financial Status. VEBA has as of the date of this Agreement, the
financial wherewithal to honor its commitments hereunder.
6.8 Reliance. VEBA acknowledges that the Company is relying upon the
representations and warranties contained herein in determining to make the sale
of the Common Shares, and VEBA consents to such reliance.
6.9 Representations and Warranties; Registration Statement. Except to
the extent set forth in any officer's certificate delivered pursuant to Section
3.3, neither VEBA AG nor VEBA has any reason to believe that a breach of any
representation or warranty contained herein has occurred or that the
Registration Statement or Prospectus (if amended or supplemented, as amended or
supplemented) contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
Section 7
Miscellaneous
7.1 Amendments, Etc. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively) only with the
written consent of the Company and VEBA.
7.2 Definitions.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized or required by law
to close.
"Calculation Date" means (x) the date on which the Company has
substantially complied with and responded to all of the Commission's comments
regarding the Registration Statement and Rights Offering and the Commission has
indicated its willingness, other than insofar as the disclosure therein relates
to the fairness opinion to be delivered to the Special Committee of the Board of
Directors of the Company, to accelerate the effectiveness of the Registration
Statement, or (y) such other date mutually agreed to by the parties.
"Commission" means the Securities and Exchange Commission.
"Common Shares" means a number of shares of Common Stock equal to
106,100,000 divided by the Purchase Price rounded up to the nearest whole
number.
"Escrow Agent" means an escrow agent mutually agreed to between the
Company and VEBA.
"Escrow Agreement" means an escrow agreement among the Escrow Agent,
VEBA and the Company in form and substance reasonably acceptable to the Company
and VEBA, it being understood that the parties intend that the only condition
necessary to release the escrowed funds to the Company and the certificates
representing the Common Shares to VEBA or its permitted assignee shall be that
the Commission declares the Registration Statement effective.
"Purchase Price" per Common Share shall mean the volume weighted
average trading price of the Common Stock for the five consecutive trading days
ending on the day prior to the Calculation Date.
"Registration Statement" means the Registration Statement relating to
the Rights Securities on Form S-3 or another appropriate form under the
Securities Act.
"VEBA Information" means the following information: (i) the identity,
business, management and activities of VEBA AG and its affiliates (other than
the Company and its subsidiaries); (ii) the plans of VEBA AG or its affiliates
(other than the Company and its subsidiaries) relating to the Company or shares
of Common Stock; (iii) the number of shares of Common Stock beneficially owned
by VEBA or which VEBA has the right to acquire; (iv) information regarding the
ownership or control of VEBA common stock by VEBA AG and its affiliates; (v)
statements regarding the commitment or intentions of VEBA AG and affiliates
(other than the Company and its subsidiaries) with respect to the Company; and
(vi) the plans of VEBA AG or its affiliates with respect to the inclusion of the
Company in the VEBA consolidated federal income tax return filed by VEBA and
related matters in the event that VEBA's ownership of Common Stock entitles VEBA
to include the Company in VEBA's consolidated federal income tax return.
7.3 Survival of Agreements, Representations and Warranties. The rights
and remedies in respect of the representations, warranties, covenants and
agreements herein or in any certificate or other instrument delivered in
connection with this Agreement shall survive the sale and purchase of the Common
Shares herein contemplated regardless of any investigation made by any party
hereto. No representation or warranty made or deemed made as of any date
pursuant to any Section of this Agreement shall be deemed by reason of this
Section 7.3 to have been made or deemed made as of any other date. All
statements in any such certificate or other instrument shall constitute
representations and warranties as of the date of such certificates.
7.4 Assignment; Binding Agreement. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon VEBA, its successors, and permitted assigns and the Company, its
successors, and permitted assigns. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be transferred, delegated, or assigned
(by operation of law or otherwise) by either of the parties hereto without the
prior written consent of the other party, except that VEBA shall have the right
to transfer and assign its rights hereunder to purchase the Common Shares and
any other rights or benefits afforded to it by this Agreement to (x) VEBA AG or
VEBA Zweite Verwaltungsgesellschaft mbH and (y) any other direct or indirect
wholly owned subsidiary of VEBA AG, provided that, only in the case of the
foregoing subclause (y), to the extent required by law, such right to transfer
and assign shall be subject to the prior approval of the Company's Board of
Directors, which approval shall not be unreasonably withheld and, in the case of
both of the foregoing sub-clauses (x) and (y), any such transferee makes the
representations and warranties contained in Sections 6.1 and 6.4 and
acknowledges and agrees to the provisions of Section 7.19. Any such transfer
shall not discharge VEBA from its obligations hereunder.
7.5 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the Company and VEBA and supersedes all prior agreements
and understandings, written or oral, relating to the subject matter hereof.
7.6 Notices, Etc. All notices, requests, demands, and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given and made upon being delivered either
by courier or fax delivery to the party for whom it is intended, provided that a
copy thereof is deposited, postage prepaid, certified or registered mail, return
receipt requested, in the United States mail, bearing the address shown in this
Section 7.5 for, or such other address as may be designated in writing hereafter
by, such party:
If to VEBA:
VEBA Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxx Xxxxxx Xxxxxxxx
President
Fax: (000) 000-0000
If to the Company:
MEMC Electronic Materials Inc.
000 Xxxxx Xxxxx (City of X'Xxxxxx)
Xx. Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Corporate Vice President,
General Counsel and Secretary
Fax: (000) 000-0000
7.7 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. There shall be
substituted for any such provision so rendered ineffective a provision which, as
far as legally possible, most nearly reflects the intent of the parties hereto.
7.8 Use of Proceeds. The Company hereby agrees to use the proceeds from
the sale of the Common Shares in the manner and for the purposes specified in
the Registration Statement.
7.9 Termination. Either party may terminate this Agreement if more than
an aggregate of 150 million shares of Common Stock would be required to be
issued, or more than $200 million would be received by the Company, in
connection with the consummation of the purchase and sale of Common Shares
contemplated hereby and the consummation of the Rights Offering and the
transactions contemplated by the Standby Agreement dated the date hereof between
VEBA and the Company (the "Standby Agreement"). The Company shall have the right
to terminate this Agreement if the Special Committee of the Board of Directors
of the Company determines in good faith, after receiving the advice of outside
counsel, that proceeding with the Rights Offering would result in a breach of
its fiduciary duties to the Company's stockholders under applicable law.
7.10 Taxes. In the event that VEBA and its affiliates' ownership of
Common Stock, entitles VEBA to include the Company in the VEBA consolidated
federal income tax return, VEBA and the applicable VEBA affiliates shall enter
into a tax sharing or affiliation agreement with the Company. Such agreement
shall provide that the inclusion of the Company in the VEBA consolidated federal
income tax return will not be detrimental to the Company for federal income tax
purposes as compared with the federal income tax treatment of the Company had it
not been includible in the VEBA consolidated federal income tax return and such
agreement shall be in form and substance reasonably acceptable to the Company
and VEBA.
7.11 Comfort Letter. The Company agrees to endeavor in good faith to
obtain the receipt of the Comfort Letter described in Section 3.9.
7.12 Counterparts. This Agreement may be executed in any number of
counterparts, and by each party hereto in separate counterparts, each of which
counterpart shall be an original, but all of which together shall constitute one
and the same Agreement. Delivery of an executed counterpart of a signature page
of this Agreement by telecopier shall be effective as delivery of a manually
executed counterpart of this Agreement.
7.13 Headings. The section headings in this Agreement are for purposes
of reference only and shall not limit or define the meaning hereof.
7.14 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL OR EQUITABLE
ACTION, SUIT, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE SECURTIES OR ANY
TRANSACTION CONTEMPLATED HEREBY OR THEREBY, THE SUBJECT MATTER OF ANY OF THE
FOREGOING OR THE ACTIONS OF ANY PARTY HERETO OR THERETO IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF OR THEREOF.
7.15 GOVERNING LAW. THIS AGREEMENT AND (UNLESS OTHERWISE EXPRESSLY
PROVIDED) ALL AMENDMENTS AND SUPPLEMENTS TO, AND ALL CONSENTS AND WAIVERS
PURSUANT TO, THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
7.16 Registration Statement. Any reference in this Agreement to the
Registration Statement shall be to the most recent Registration Statement, as
filed with the Commission (notwithstanding that such Registration Statement is
subject to completion and has not yet been declared effective by the Commission)
or to the extent no Registration Statement has been filed with the Commission,
the Company's draft Registration Statement attached hereto as Schedule A. In
addition, any reference in this Agreement to the Registration Statement shall be
deemed to include any documents filed under the Exchange Act which have been (or
would have been had such Registration Statement then been filed with and
declared effective by the Commission) incorporated by reference therein. As used
herein, the term "Incorporated Documents" means the documents which at the time
are (or would have been had such Registration Statement then been filed with and
declared effective by the Commission) incorporated by reference in the
Registration Statement.
7.17 Covenants of VEBA. In further consideration of the agreements of
the Company herein contained, VEBA covenants as follows:
VEBA has not taken and during the period of the calculation of the
Purchase Price, will not take, directly or indirectly, any action designed to or
which might be reasonably expected to cause or result in stabilization or
manipulation of the price of the Company's Common Stock, and VEBA has no reason
to believe that any such action has been taken by its controlled affiliates
other than the Company and its subsidiaries, and during the period of the
calculation of the Purchase Price, will not permit any such controlled affiliate
to take such action.
7.18 Waiver of Rights. Assuming consummation of the issuance and
purchase of the Common Shares in accordance with this Agreement, VEBA
acknowledges and agrees that neither VEBA nor any assignee of its Shares or
assignee of its rights under this Agreement will be entitled to any distribution
of Rights from the Company in the Rights Offering. If VEBA transfers any shares
of Common Stock prior to the Record Date of the Rights Offering, VEBA will cause
any such transferee to agree that it will not be entitled to any distribution of
Rights from the Company in the Rights Offering with respect to such shares.
7.19 Restricted Nature of Shares. VEBA acknowledges that the Common
Shares, in its hands, will be restricted securities under the Securities Act
which may not be sold or offered for sale in the absence of an effective
registration statement as to such Common Shares under the Securities Act or an
opinion of counsel satisfactory to the Company that such registration is not
required. VEBA agrees it will not transfer, by way of gift or otherwise, or sell
the Common Shares or any part thereof, unless such Common Shares have been
registered under the Securities Act and any applicable state securities laws or
it first obtains, at its own expense, if requested by the Company, an opinion of
counsel reasonably satisfactory to the Company that the transfer of such Common
Shares may be effected without registration under the Securities Act and any
applicable state securities laws. VEBA acknowledges that the certificates
evidencing the Common Shares will contain a legend to such effect.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first above written.
VEBA CORPORATION
By /s/ A. Xxxx Xxxxxxxxxxx, Xx.
--------------------------------
Name: A. Xxxx Xxxxxxxxxxx, Xx.
Title: Vice President
MEMC ELECTRONIC MATERIALS INC.
By /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President/
Chief Financial Officer
