EXHIBIT 10.1
EXECUTION COPY
AMENDED AND RESTATED
AGREEMENT AND PLAN
OF RECAPITALIZATION
DATED AS OF APRIL 10, 2001
AMONG
HALLIBURTON COMPANY,
THE SELLER NAMED HEREIN,
AND
DEG ACQUISITIONS, LLC
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. Definitions....................................................2
Section 1.02. Rules of Construction..........................................2
ARTICLE II
SALE AND PURCHASE
Section 2.01. Sale and Purchase of Securities................................2
Section 2.02. Sale and Purchase of BV Companies..............................4
Section 2.03. Cash Consideration.............................................4
Section 2.04. The Closings...................................................4
Section 2.05. Pre-Closing Transactions.......................................5
Section 2.06. Transactions at the First Closing..............................5
Section 2.07. Transactions at the Second Closing.............................7
Section 2.08. Adjustment of the Preliminary Purchase Price...................8
Section 2.09. Procedures for Calculating the Purchase Price Adjustment.......9
Section 2.10. Adjustments to Net Equity.....................................11
Section 2.11. Allocation of Purchase Price Adjustment.......................13
Section 2.12. Amendments to Effect Recapitalization.........................13
Section 2.13. Delayed Purchases.............................................13
Section 2.14. Joint Ventures................................................14
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND DRESSER INDUSTRIES
Section 3.01. Organization and Qualification................................15
Section 3.02. Authorization of Agreement....................................15
Section 3.03. Approvals.....................................................16
Section 3.04. No Violation..................................................16
Section 3.05. No Brokers....................................................16
Section 3.06. Title to Securities...........................................17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER
Section 4.01. Organization..................................................17
Section 4.02. Authorization of Agreement....................................17
Section 4.03. Approvals.....................................................18
Section 4.04. No Violation..................................................18
Section 4.05. Title to Securities...........................................18
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
i
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING MEMBERS OF THE COMPANY GROUPS
Section 5.01. Organization; Subsidiaries....................................19
Section 5.02. Organizational Documents; Authorization; No Violation.........20
Section 5.03. Capitalization................................................20
Section 5.04. Title to Properties...........................................21
Section 5.05. Financial Statements..........................................22
Section 5.06. Authorizations................................................23
Section 5.07. Compliance With Laws; Regulation of Businesses................24
Section 5.08. Taxes.........................................................24
Section 5.09. Principal Contracts...........................................26
Section 5.10. Employees.....................................................26
Section 5.11. Environmental Matters.........................................30
Section 5.12. Litigation....................................................31
Section 5.13. Material Adverse Changes......................................31
Section 5.14. Customers and Suppliers.......................................32
Section 5.15. Adequacy of Assets............................................32
Section 5.16. Full Disclosure...............................................32
Section 5.17. Disclaimers...................................................32
ARTICLE VI
REPRESENTATIONS AND WARRANTIES REGARDING ACQUIROR
Section 6.01. Organization and Qualification................................33
Section 6.02. Authorization of Agreement....................................33
Section 6.03. Approvals.....................................................34
Section 6.04. No Violation..................................................34
Section 6.05. Commitment Letters............................................34
Section 6.06. No Brokers....................................................34
Section 6.07. Transitory Merger Sub.........................................34
ARTICLE VII
REPRESENTATIONS AND WARRANTIES REGARDING BUYERS
Section 7.01. Organization..................................................35
Section 7.02. Authorization of Agreement....................................35
Section 7.03. Approvals.....................................................35
Section 7.04. No Violation..................................................35
Section 7.05. Investment in Securities......................................36
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AGREEMENT AND PLAN OF RECAPITALIZATION
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ARTICLE VIII
COVENANTS OF THE PARENT
Section 8.01. Affirmative Covenants Regarding
Operation of the Businesses...................................36
Section 8.02. Negative Covenants Regarding the
Operation of the Businesses...................................37
Section 8.03. Access to Information.........................................41
Section 8.04. Insurance Benefits............................................41
Section 8.05. Compliance with Competition Laws Applicable
to Designated Regulatory Assets...............................42
Section 8.06. Covenant Not to Compete.......................................44
Section 8.07. Nonsolicitation...............................................45
Section 8.08. Accountants' Opinion and Consents.............................46
Section 8.09. Financing.....................................................46
Section 8.10. Financial Statements..........................................48
Section 8.11. Assignments...................................................48
Section 8.12. Release of Liens..............................................48
Section 8.13. Environmental Schedules.......................................48
Section 8.14. Use of Dresser Name...........................................48
ARTICLE IX
COVENANTS OF THE ACQUIROR
Section 9.01. Confidentiality Agreement.....................................49
Section 9.02. Corporate Name................................................49
Section 9.03. Surety Arrangements...........................................49
Section 9.04. Dresser Valve Division Contracts..............................49
ARTICLE X
MUTUAL COVENANTS
Section 10.01. Cooperation...................................................50
Section 10.02. Ancillary Agreements..........................................52
Section 10.03. Public Announcements..........................................53
Section 10.04. Transfer Taxes................................................53
Section 10.05. Expenses......................................................53
Section 10.06. Tax Matters...................................................53
Section 10.07. Offers to Employees...........................................56
Section 10.08. Related Party Contracts.......................................57
Section 10.09. Litigation Support............................................57
Section 10.10. Post-Closing Matters..........................................58
ARTICLE XI
CONDITIONS TO FIRST CLOSING
Section 11.01. Conditions to Obligations of
Each Party Under This Agreement...............................59
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AGREEMENT AND PLAN OF RECAPITALIZATION
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Section 11.02. Additional Conditions to the Parent's Obligations.............60
Section 11.03. Additional Conditions to the Acquiror's Obligations...........61
ARTICLE XII
INDEMNIFICATION
Section 12.01. Survival of Representations, Warranties,
Covenants and Agreements......................................63
Section 12.02. General Indemnification by the Parent.........................64
Section 12.03. General Indemnification by the Acquiror.......................68
Section 12.04. Procedures....................................................69
Section 12.05. Special Environmental Indemnification Provisions..............72
Section 12.06. Punitive Damages..............................................75
Section 12.07. Failure of Acquiror to Close..................................75
Section 12.08. No Right of Contribution......................................75
Section 12.09. Specific Performance..........................................75
Section 12.10. Sole Remedy...................................................75
ARTICLE XIII
TERMINATION, AMENDMENT AND WAIVER
Section 13.01. Termination...................................................76
Section 13.02. Effect of Termination.........................................77
Section 13.03. Amendment.....................................................77
Section 13.04. Waiver........................................................77
ARTICLE XIV
MISCELLANEOUS
Section 14.01. Notices.......................................................77
Section 14.02. Headings......................................................79
Section 14.03. Severability..................................................79
Section 14.04. Entire Agreement..............................................79
Section 14.05. Assignment....................................................80
Section 14.06. Successors; Parties in Interest...............................80
Section 14.07. Failure or Indulgence Not Waiver; Remedies Cumulative.........80
Section 14.08. Disclosure Letters............................................80
Section 14.09. Governing Law.................................................80
Section 14.10. Arbitration...................................................80
Section 14.11. Confidentiality Agreements....................................81
Section 14.12. Counterparts..................................................81
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
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ANNEXES
Annex A -- Definitions.
Annex B -- Reorganization (Components and Procedure).
Annex C -- List of the Seller, Buyers and BV Companies and
BV Allocable Purchase Price.
Annex D -- Allocation Procedures for Purchase Price Adjustment.
APPENDICES
Appendix I -- Form of Merger Agreement.
Appendix II -- Forms of Releases of Intercompany Indebtedness.
Appendix III -- Forms of Releases of Claims.
Appendix IV -- Form of Assignment of Name.
Appendix V -- Form of Highway 6 Lease Agreement.
Appendix VI -- Form of Employee Benefits Agreement.
Appendix VII -- Form of Transition Services Agreement.
Appendix VIII -- Form of Stockholders' Agreement.
Appendix IX -- Form of Category 2A Purchase and Sale Agreement.
Appendix X -- Form of Opinion of Acquiror's Counsel.
Appendix XI -- Form of Opinion of Parent's Counsel.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
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EXECUTION COPY
AMENDED AND RESTATED AGREEMENT AND PLAN OF RECAPITALIZATION
This AMENDED AND RESTATED AGREEMENT AND PLAN OF RECAPITALIZATION (this
"Agreement") dated as of April 10, 2001, is by and among Halliburton Company, a
Delaware corporation (the "Parent"), Dresser B.V., a Netherlands company and a
wholly owned indirect Subsidiary of the Parent (the "Seller") and DEG
Acquisitions, LLC, a Delaware limited liability company (the "Acquiror"). This
Agreement amends and restates in its entirety that certain Agreement and Plan of
Recapitalization dated as of January 30, 2001 by and among the Parent, the
Seller and the Acquiror, as amended by Amendatory Agreement No. 1 thereto, dated
March 2001, and Amendatory Agreement No. 2 thereto, dated March 2001. References
in this Agreement to the "date of this Agreement," or "the date hereof" shall
refer to January 30, 2001.
RECITALS:
The Parent has determined to redeploy a significant portion of its
assets. Accordingly, the Parent desires to sell, and the Acquiror has determined
to purchase, certain interests in the Parent's businesses relating to, among
other things, the design, manufacturing and marketing of engineered measurement,
flow control and power systems for customers primarily in the energy industry.
In order to accomplish this transaction, the Parent will, in
consultation with the Acquiror and in the manner set forth herein, prior to the
First Closing effect the Reorganization described in Annex B of the various
legal entities that comprise the Dresser Equipment Group.
After giving effect to the Reorganization, (a) the Parent desires to
cause Dresser Industries and DEGI to engage, and the Acquiror desires to engage,
and to cause Transitory Merger Sub to engage, in the transactions contemplated
by Article II herein at the First Closing and (b) immediately following the
First Closing, the Parent desires to cause the Seller to engage, and the
Acquiror desires to cause the Buyers to engage, in the transactions contemplated
by Article II herein at the Second Closing.
On Xxxxx 00, 0000, XXXX changed its legal name from "Dresser Equipment
Group, Inc." to "Dresser, Inc." References in this Agreement (including the
exhibits, annexes and schedules hereto) to "Dresser Equipment Group, Inc." shall
mean Dresser, Inc.
NOW, THEREFORE, the parties hereto, in consideration of the premises
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, agree as follows:
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Capitalized and other terms used in this
Agreement are defined in Annex A attached hereto and are used herein with the
meanings ascribed to them therein.
Section 1.02. Rules of Construction.
(a) Unless the context otherwise requires, as used in this Agreement:
(i) a term defined in Annex A has the meaning ascribed to it in
Annex A; (ii) an accounting term not defined herein has the
meaning ascribed to it in accordance with U.S. GAAP; (iii) "or"
is not exclusive; (iv) "including" means "including without
limitation;" (v) words in the singular include the plural and
vice versa; (vi) words applicable to one gender shall be
construed to apply to each gender; (vii) the terms "hereof,"
"herein," "hereby," "hereto" and derivative or similar words
refer to this entire Agreement, including the Annexes and
Appendices hereto; (viii) the terms "Article," "Section," "Annex"
and "Appendix" shall refer to the specified Article, Section,
Annex or Appendix of or to this Agreement; (ix) the term
"Schedule" shall refer to the appropriate Schedule to the
Parent's Disclosure Letter or the Acquiror's Disclosure Letter;
and (x) the phrases "pursuant to," "as described in" and "subject
to the terms of," when used with reference to a particular
Section of this Agreement, or words of similar import, shall
refer to such Section and to any Schedule of the Parent's
Disclosure Letter or the Acquiror's Disclosure Letter referenced
therein.
(b) A reference to any Person includes such Person's successors and
permitted assigns.
(c) Any reference to "days" shall mean calendar days unless "Business
Days" (as defined in Annex A) are expressly specified.
(d) Each Annex and Appendix identified in this Agreement is
incorporated herein by reference and made a part hereof for all
purposes.
(e) The Parent and the Acquiror, each represented by legal counsel,
have each participated in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or
interpretation should arise, this Agreement shall be construed as
if drafted jointly by such parties and no presumption or burden
of proof shall arise favoring or burdening any party hereto by
virtue of the authorship of any of the provisions of this
Agreement.
ARTICLE II
SALE AND PURCHASE
Section 2.01. Sale and Purchase of Securities. On the terms and
subject to the conditions contained in this Agreement, the Parent agrees to
cause DEGI and Dresser Industries to engage at the First Closing in the
following transactions, and the Acquiror agrees to engage and to cause the
Transitory Merger Sub to engage at the First Closing in the following
transactions:
HALLIBURTON COMPANY
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(a) The Acquiror shall purchase from Transitory Merger Sub, upon
original issue, common stock of Transitory Merger Sub for
cash in an amount in U.S. Dollars (which the Acquiror
estimates will be approximately $400,000,000) equal to at
least the Purchase Price, plus fees and expenses incurred by
the Acquiror in connection with the transactions
contemplated hereby (other than fees or discounts related to
the Loan) less the Loan (the "Investment");
(b) DEGI shall borrow an amount in cash in U.S. Dollars equal to
at least $970,000,000 (nine hundred seventy million dollars)
(the net proceeds to DEGI pursuant to this clause (b), being
the "Loan"), comprised of (i) borrowings from a syndicate of
Lenders on Terms contemplated by the Commitment Letter Term
Sheet attached to the Bank Commitment Letter and (ii) the
proceeds from the issuance of senior subordinated notes in a
private placement of such notes or borrowings from a
syndicate of Lenders on the Terms contemplated by the
Commitment Letter Term Sheet attached to the Bridge
Commitment Letter; and
(c) The Acquiror and the Parent shall cause the merger (the
"Merger") of Transitory Merger Sub with and into DEGI, which
shall be the corporation surviving the Merger, to be
effected through execution and delivery of the Merger
Agreement and the filing thereof with the Secretary of State
of Delaware, pursuant to which:
(i) All the issued and outstanding capital stock of
Transitory Merger Sub shall be converted into an
aggregate number of shares of common stock of DEGI
("DEGI Common Stock") equal to (i) the total number of
shares of DEGI Common Stock outstanding immediately
prior to the Merger multiplied by (ii) 0.949;
(ii) subject to the provisions of clause (iii) of this
subsection (c), the number of shares of DEGI Common
Stock owned by Dresser Industries equal to (i) the
total number of shares of DEGI Common Stock
outstanding immediately prior to the Merger multiplied
by (ii) 0.949 shall be converted into the right to
receive cash in an aggregate amount equal to (A) the
DEGI Group Preliminary Purchase Price Percentage times
the Preliminary Purchase Price as adjusted by (B) a
portion of the Purchase Price Adjustment determined in
accordance with the Allocation Procedures (the "Merger
Consideration") (with the balance of the shares of
DEGI Common Stock owned by Dresser Industries to
remain outstanding); and
(iii) if any Management Shares are outstanding at the
effective date of the Merger, then (A) the number of
shares of DEGI Common Stock converted into the right
to receive cash pursuant to clause (ii) of this
subsection (c) shall be increased by a number equal to
the number of
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
3
Management Shares and (B) the consideration payable to
Dresser Industries in connection with the Merger shall
be increased by the amount of the cash consideration
received by DEGI against the issuance of such
Management Shares.
(d) Any Management Shares issued by DEGI prior to the First
Closing shall be sold to management employees at a price per
share not less than an amount equal to the Merger
Consideration plus the BV Consideration divided by the
number of shares of DEGI Common Stock to be converted by
Dresser Industries in the Merger as determined pursuant to
clause (ii) of subsection 2.01(c) before giving effect to
clause (iii) of subsection 2.01(c).
Section 2.02. Sale and Purchase of BV Companies. On the terms and
subject to the conditions contained in this Agreement, the Parent agrees to
cause the Seller to engage at the Second Closing in the following transactions,
and the Acquiror agrees to cause each of the Buyers to engage at the Second
Closing in the following transactions: The Seller shall assign to the
appropriate Buyer as indicated on Annex C hereto, and such Buyer shall accept,
the Equity Securities of the BV Company whose name is set forth next to the name
of such Buyer on Annex C hereto. In consideration for such assignments, the
Buyers shall pay to the Seller cash in U.S. Dollars in an aggregate amount equal
to (a) the BV Preliminary Purchase Price Percentage times the Preliminary
Purchase Price as adjusted by (b) a portion of the Purchase Price Adjustment
determined in accordance with the Allocation Procedures (the "BV
Consideration").
Section 2.03. Cash Consideration.
(a) The aggregate cash consideration to be paid to Dresser Industries
and the Seller for engaging in the transactions contemplated by
Sections 2.01 and 2.02 herein shall consist of the Purchase
Price. The "Purchase Price" shall be equal to the Preliminary
Purchase Price as adjusted by the Purchase Price Adjustment in
accordance with Sections 2.08 and 2.09.
(b) The parties hereto have agreed that the "Preliminary Purchase
Price" shall be equal to (i) U.S. $1,309,111,797 (one billion
three hundred nine million one hundred eleven thousand seven
hundred ninety-seven dollars) less (ii) the amount which, when
taken together with the aggregate consideration paid to acquire
the Management Shares, equals 5.1% of the Equity of DEGI.
Section 2.04. The Closings.
(a) The transactions contemplated by Section 2.01 shall be
consummated (the "First Closing") on the date and at the time and
place determined pursuant to this subsection (a). The First
Closing shall be held at the offices of Xxxxxx & Xxxxxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 on the Closing Date. The
"Closing Date" shall be the fifteenth (15th) Business Day
following the date on which the Closing Conditions (other than
conditions that can be satisfied only by delivery of
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
4
certificates or other documents at the Closings and where such
delivery is in the control of a party hereto) have been fulfilled
or waived. If such date is not a Business Day, then the Closing
Date shall be the next succeeding Business Day.
(b) Upon fulfillment or waiver of the Closing Conditions to which
reference is made in subsection (a) of this Section, either the
Parent or the Acquiror may give the other notice thereof (the
"Closing Notice") and the date of receipt of such Closing Notice
determined in accordance with Section 14.01 shall be the first
Business Day of the time periods therein referenced.
(c) Immediately following the First Closing, the transactions
contemplated by Section 2.02 shall be consummated (the "Second
Closing"). The Second Closing shall be held at the same location
as the First Closing. The consummation of the Second Closing
shall be a condition subsequent to the consummation of the First
Closing, such that if the Second Closing shall not occur
immediately following the First Closing either the Parent or the
Acquiror shall be entitled to cause the rescission of the
transactions consummated at the First Closing.
Section 2.05. Pre-Closing Transactions.
(a) Prior to the First Closing, the Parent shall effect the
Reorganization described in Annex B. The Parent and the Acquiror
shall cooperate with each other with respect to the
implementation of the Reorganization described in Annex B,
including actions involving filings with Governmental
Authorities, the execution of agreements, transfer documents and
similar instruments and the issuance of securities. If the Parent
and the Acquiror consent in writing to any action that is
inconsistent with the transactions described on Annex B hereto,
then Annex B shall, automatically and without further action by
the parties hereto, be deemed to have been amended to the extent
necessary to permit such action.
(b) The Parent shall prior to the First Closing cause the outstanding
DEGI Common Stock to be subdivided pursuant to a stock split on a
basis that is mutually satisfactory to the Acquiror and the
Parent.
(c) In any case in which the Reorganization, as the Reorganization
may be amended as provided in subsection (a) of this Section 2.05
prior to the First Closing, requires that a member of a Company
Group be "formed" or otherwise implies that it must be organized
de novo, the parties hereto acknowledge that counsel to, or other
representatives of, the Parent or the Acquiror may, in lieu of a
legal entity organized de novo, use a previously formed legal
entity "off the shelf" for such purpose ( herein called a "Shelf
Entity").
Section 2.06. Transactions at the First Closing. Subject to the terms
and conditions of this Agreement, the Parent shall at the First Closing cause
DEGI to do and perform the following actions
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
5
and to deliver the following documents, and the Acquiror shall do and perform
the following actions and deliver the following documents. At the First Closing,
the following events shall occur, each event being (i) conditioned on the
occurrence or waiver of each other event and (ii) deemed to occur simultaneously
with each other event:
(a) Financial Transactions:
(i) The Acquiror shall purchase from the Transitory Merger Sub
upon original issue shares of common stock for cash in the
amount of the Investment;
(ii) DEGI shall execute and deliver the Loan Documents against
the funding of the full amount of the Loan to DEGI by wire
transfer of immediately available funds to the wire
transfer address of DEGI provided in written instructions
to the Acquiror not less than three (3) Business Days prior
to the Closing Date; and
(iii) the Parent and the Acquiror shall cause the Merger to be
effected in accordance with subsection (c) of Section 2.01;
provided, however, that the amount of cash to be paid to
Dresser Industries pursuant to the Merger at the time of
the First Closing (subject to adjustment pursuant to
Sections 2.08 and 2.09) shall be an aggregate amount equal
to the DEGI Group Preliminary Purchase Price Percentage
times the Estimated Purchase Price. The consideration to be
received by Dresser Industries pursuant to the Merger shall
be paid to Dresser Industries by wire transfer of
immediately available funds to the wire transfer address of
Dresser Industries provided in written instructions by the
Acquiror not less than three (3) Business Days prior to the
Closing Date.
(b) Ancillary Agreements. The parties to each Ancillary Agreement
shall execute and deliver such Ancillary Agreement.
(c) Intercompany Indebtedness. Any Intercompany Indebtedness owed at
the Closing Date by any member of the Parent Group to any member
of the DEGI Group or by any member of the DEGI Group to any
member of the Parent Group shall be discharged, whether, at the
election of the Parent (provided, that the Parent shall cooperate
with the Acquiror to structure such discharge in the manner that
is most tax-efficient to all the parties), by payment by the
obligor or by release and forgiveness by the obligee pursuant to
a written release, in form and substance substantially similar to
the form thereof attached hereto as Appendix II, executed and
delivered at the First Closing. The Intercompany Indebtedness has
not been reflected in the Initial Balance Sheet, and will not be
reflected in the Estimated or Closing Balance Sheet, as an asset
or liability and, consequently, shall have no effect on the
calculation of the Purchase Price Adjustment hereunder.
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AGREEMENT AND PLAN OF RECAPITALIZATION
6
(d) The Parent shall at the First Closing execute, where appropriate,
and deliver to the Acquiror the following documents:
(i) A release, in form and substance substantially similar to
the form thereof attached hereto as Appendix III, by the
Parent on behalf of itself and the Parent Group of all
claims that they may have against any member of the DEGI
Group with respect to the operation or conduct of the
Businesses prior to the Closing Date;
(ii) A certificate in the form required by Treasury Regulation
Section 1.1445-2; and
(iii) such other documents and instruments as shall evidence
fulfillment or waiver of the Closing Conditions.
(e) The Acquiror shall at the First Closing execute, where
appropriate, and deliver to the Parent such documents and
instruments as shall evidence fulfillment or waiver of the
Closing Conditions.
Section 2.07. Transactions at the Second Closing. Subject to the
terms of this Agreement and to the condition that the First Closing shall have
been effected, the Parent shall cause the Seller at the Second Closing to do and
perform the following actions and to deliver the following documents, and the
Acquiror shall do and perform the following actions and cause the Buyers at the
Second Closing to do and perform the following actions and to deliver the
following documents. At the Second Closing, the following events shall occur,
each event being (i) conditioned on the occurrence or waiver of each other event
and (ii) deemed, except as otherwise provided in subsection (b) of this Section,
to occur simultaneously with each other event:
(a) The Parent shall cause the Seller to deliver, in the sequence
provided on Annex C, to the appropriate Buyer the certificate or
certificates evidencing the Equity Securities of the BV Companies
to be sold by it at the Second Closing in accordance with Annex
C, which certificates shall be duly endorsed for transfer or
accompanied by duly executed stock transfer powers or other
appropriate instruments of assignment and transfer in favor of
the Buyer;
(b) The Acquiror shall cause the Buyers to deliver or cause to be
delivered to the Seller cash in the amount of the BV Preliminary
Purchase Price Percentage times the Estimated Purchase Price.
Such amount shall be paid in United States Dollars by wire
transfer of immediately available funds to the wire transfer
address of the Seller provided in written instructions by the
Seller not less than three (3) Business Days prior to the Closing
Date.
(c) Any Intercompany Indebtedness owed at the Closing Date by any
member of the Parent Group to any member of the BV Group or by
any member of the BV Group
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AGREEMENT AND PLAN OF RECAPITALIZATION
7
to any member of the Parent Group shall be discharged, whether,
at the election of the Parent (provided, that the Parent shall
cooperate with the Acquiror to structure such discharge in the
manner that is most tax-efficient to all the parties), by payment
by the obligor or by release and forgiveness by the obligee
pursuant to a written release, in form and substance
substantially similar to the form thereof attached hereto as
Appendix II, executed and delivered at the Second Closing. The
Intercompany Indebtedness has not been reflected in the Initial
Balance Sheet, and will not be reflected in the Estimated or
Closing Balance Sheet, as an asset or liability and,
consequently, shall have no effect on the calculation of the
Purchase Price Adjustment hereunder.
(d) The Parent shall at the Second Closing execute, where
appropriate, and deliver to the Acquiror, a release, in form and
substance substantially similar to the form thereof attached
hereto as Appendix III, by the Parent on behalf of itself and the
Parent Group of all claims that they may have against any member
of the BV Group with respect to the operation or conduct of the
Businesses prior to the Closing Date.
Section 2.08. Adjustment of the Preliminary Purchase Price.
(a) By no later than five (5) Business Days after the delivery of a
Closing Notice, the Parent shall deliver to the Acquiror on a
consolidated basis, (i) the balance sheet of the Businesses as of
December 31, 2000 and the related statement of results of
operations for the twelve months then ended (the "Year-End
Financial Statements") and (ii) the balance sheet (the "Estimated
Balance Sheet") as of the close of business on the last day of
the most recently completed calendar month for which internal
management financial statements are available (the "Estimated
Balance Sheet Date") and the related statement of results of
operations of the Businesses for the period beginning on January
1, 2001 and ending on the Estimated Balance Sheet Date (together
with the Estimated Balance Sheet, the "Estimated Financial
Statements"). The Year End Financial Statements and the Estimated
Financial Statements shall be prepared in accordance with U.S.
GAAP applied consistently with the Initial Financial Statements.
The Year End Financial Statements shall present fairly the
financial position and the results of operations of the
Businesses as of the date and for the period then ended and the
Estimated Financial Statements shall, to the extent reasonably
practicable in light of the purpose for which they were prepared
and the time parameter provided in this subsection, present
fairly the financial position and results of operations of the
Businesses as of the date and for the period then ended.
(b) The "Estimated Purchase Price" shall mean the Preliminary
Purchase Price adjusted by the Estimated Purchase Price
Adjustment. The Preliminary Purchase Price shall be increased by
a positive Estimated Purchase Price Adjustment and decreased by a
negative Estimated Purchase Price Adjustment.
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AGREEMENT AND PLAN OF RECAPITALIZATION
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(c) The "Estimated Purchase Price Adjustment" shall be an amount
equal to the increase (positive) or decrease (negative) in the
Net Equity as of the Initial Balance Sheet Date to the Estimated
Balance Sheet Date, determined, in accordance with Section 2.10,
by comparing the amount of Net Equity as of the Initial Balance
Sheet Date with the amount of Net Equity as of the Estimated
Balance Sheet Date; provided, however, that, if the amount of
such Estimated Purchase Price Adjustment is less than U.S.
$10,000,000 (ten million dollars), whether positive or negative,
the Estimated Purchase Price Adjustment shall be deemed to be $0.
(d) For purposes of the determination of the Estimated Purchase Price
Adjustment and the Purchase Price Adjustment, Intercompany
Indebtedness shall be classified and reflected in each of the
Initial Balance Sheet, the Estimated Balance Sheet and the
Closing Balance Sheet neither as an asset nor a liability.
Section 2.09. Procedures for Calculating the Purchase Price
Adjustment.
(a) Following the end of the calendar month in which the First
Closing shall occur, the Acquiror shall cause to be prepared and
delivered to the Parent, no later than ninety (90) days following
the end of such month, on a consolidated basis, the Closing
Financial Statements, prepared in accordance with U.S. GAAP
applied consistently with the Initial Financial Statements which
shall be certified by Xxxxxx Xxxxxxxx LLP as presenting fairly
the financial position of the Businesses as of the Closing Date.
Thereafter, the Acquiror shall promptly provide to the Parent
such supporting work papers or other supporting information as
may be reasonably requested by the Parent, including access to
the work papers of Xxxxxx Xxxxxxxx LLP prepared in connection
with the audit of the Initial Financial Statements and the audit
of the Closing Financial Statements. To the extent that the
judgment of management of the Businesses is relied upon for any
estimate used to prepare the Closing Balance Sheet as required or
permitted by U.S. GAAP, such judgment shall not differ in any
material respect from the judgment relied upon for the same or
any similar estimate used to prepare the Initial Financial
Statements unless there has been a material change since the date
of the Initial Financial Statements in the facts upon which such
judgment is based.
(b) If the Parent shall have any objections to the Closing Balance
Sheet, the Parent shall within twenty (20) Business Days
following receipt of the Closing Balance Sheet so notify the
Acquiror, stating in reasonable detail the basis for any such
objections; provided, however, that the only bases for objection
shall be (i) non-compliance with the standards set forth in
subsection (a) of this Section for the preparation of the Closing
Balance Sheet and (ii) computational errors. If the Parent fails
to notify the Acquiror of any such objections in writing within
such twenty (20) Business Day period, the Parent shall be deemed
to have concurred with the Closing Balance Sheet. Otherwise,
following any such notification, the Acquiror and the Parent
shall endeavor in good faith for a period not to exceed twenty
(20) Business Days to
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
9
resolve their differences (the "Differences"). If the parties are
unable to resolve all their Differences and have not agreed in
writing to extend the resolution period, either the Parent or the
Acquiror shall, if the aggregate amount of the unresolved
Differences does not exceed U.S. $10 million, be entitled for a
period of twenty (20) additional Business Days to request the
Accounting Firm to resolve the unresolved Differences or, if the
aggregate amount of the unresolved Differences exceeds $10
million, to apply for arbitration pursuant to the provisions of
Section 14.10. If the parties are unable to resolve all their
Differences but neither party shall apply to the Accounting Firm
or for arbitration for resolution of the remaining Differences,
the determinations set forth in the Closing Balance Sheet, as
adjusted for those Differences that the parties were able to
resolve, shall be
deemed to be dispositive.
(c) If either party shall request the Accounting Firm to resolve the
unresolved Differences, both parties shall cooperate with the
Accounting Firm and its representatives by providing access to
all relevant Books and Records and access at reasonable times to
personnel having relevant information. The Accounting Firm shall
be requested to use all reasonable efforts to resolve such
Differences in favor of the Parent in their entirety or in favor
of the Acquiror in their entirety within twenty (20) Business
Days after the matter is referred to it on the basis of the
standards set forth in subsection (a) of this Section or as soon
thereafter as possible. Upon completion of its task, the
Accounting Firm shall notify each party of its determination of
the matters subject to the Differences, which determination shall
be conclusive. The fees and expenses of the Accounting Firm shall
be borne 50% by the Parent and 50% by the Acquiror.
(d) If either party shall apply for arbitration to resolve the
unresolved Differences, or if the Accounting Firm is unable to
resolve the Differences, both parties shall cooperate with the
arbitration tribunal and its representatives by providing access
to all relevant Books and Records and access at reasonable times
to personnel having relevant information. The arbitration
tribunal shall be requested to use all reasonable efforts to
resolve such Differences in favor of the Parent in their entirety
or in favor of the Acquiror in their entirety within twenty (20)
Business Days after the matter is referred to it on the basis of
the standards set forth in subsection (a) of this Section or as
soon thereafter as possible. The determination of the arbitration
tribunal with respect to the Differences shall be conclusive.
Unless differently awarded by the arbitration tribunal, the fees
and expenses of arbitration shall be borne 50% by the Parent and
50% by the Acquiror.
(e) The "Purchase Price Adjustment" shall mean an amount equal to the
increase (positive) or decrease (negative) in the Net Equity of
the Businesses from the Initial Balance Sheet Date to the Closing
Date in accordance with Section 2.10, determined by comparing the
amount of Net Equity as of the Initial Balance Sheet Date with
the amount of Net Equity as of the Closing Date (based on the
Closing Balance Sheet as finally determined pursuant to
subsections (a) through (d) of this Section).
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
10
(f) The result obtained by subtracting the Estimated Purchase Price
Adjustment from the Purchase Price Adjustment is referred to as
the "Post-Closing Payment Amount." The Post-Closing Payment
Amount shall be paid by the Acquiror to the Parent if it is
positive or by the Parent to the Acquiror if it is negative, in
cash in United States Dollars, by wire transfer of immediately
available funds to the wire transfer address of the Acquiror
provided in written instructions to the Parent or to the wire
transfer address of the Parent provided in written instructions
to the Acquiror, as appropriate, on the third (3rd) Business Day
following the date on which the procedures in this Section 2.09
have been completed. The Post-Closing Payment Amount shall bear
simple interest at the lowest interest rate applicable under the
revolving credit agreement referred to in the Commitment Letter
Term Sheets from the Closing Date to the date of such payment,
inclusive.
(g) If, notwithstanding the representations and warranties set forth
in subsection (a) of Section 5.05 herein, it shall be determined
that the Initial Financial Statements were not in fact prepared
in accordance with U.S. GAAP, the Closing Financial Statements
prepared pursuant to subsection (a) of Section 2.09 need not be
prepared consistently with the Initial Financial Statements to
the extent and only to the extent that such Initial Financial
Statements were not prepared in accordance with U.S. GAAP. If the
Closing Financial Statements are not prepared consistently with
the Initial Financial Statements pursuant to this subsection (g)
of Section 2.09 and such inconsistency results in a decrease in
the amount of the Purchase Price Adjustment, any indemnification
to be paid by the Parent to the Acquiror with respect to any such
breach of the representations and warranties in Section 5.05 that
caused the Purchase Price Adjustment shall be reduced by the
amount of such decrease.
Section 2.10. Adjustments to Net Equity. In determining the Estimated
Purchase Price Adjustment and the Purchase Price Adjustment pursuant to Sections
2.08 and 2.09, the Net Equity reflected in the Initial Balance Sheet, the
Estimated Balance Sheet and the Closing Balance Sheet shall be adjusted as
follows:
(a) Solely for the purpose of determining Net Equity in calculating
the Estimated Purchase Price Adjustment and the Purchase Price
Adjustment, the Net Equity reflected in each of such Balance
Sheets shall be adjusted to exclude the following assets and
liabilities in order that these assets and liabilities shall have
no effect on the Estimated Purchase Price Adjustment or the
Purchase Price Adjustment: (i) The Highway 6 Real Property; (ii)
the accumulated projected benefit obligation for the
postretirement medical and life benefits; (iii) assets
transferred in excess of liabilities assumed of the DICON defined
benefit retirement plan (Plan No. 164); (iv) reserves for
uninsured litigation; and (v) the self-insurance reserves for
workers' compensation, general liability, product liability and
automobile liability. For the purpose of clarity of
identification of the foregoing items, the amounts reflected on,
or missing from, the Initial Balance Sheet for each of the above
listed items is as follows: (A) Real Property subject to the
Highway 6 Deed: $12.4 million, (B) the
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
11
accumulated projected benefit obligation for the post-retirement
medical and life benefits: $128.3 million, (C) assets transferred
in excess of liabilities assumed of the DICON defined benefit
retirement plan (Plan No. 164): $9.0 million, (D) reserves for
uninsured litigation: $10 million, and (E) the self-insurance
reserves, including case reserves and IBNR, for workers'
compensation, general liability, product liability and automobile
liability: $21.7 million.
(b) The Initial Balance Sheet includes an asset in the amount of
$14,708,000 (fourteen million seven hundred and eight thousand
dollars) representing the assets in excess of liabilities of the
Dresser Canada Retirement Income Plan. This $14,708,000 asset is
not an asset of a member of a Company Group and should not have
been included in the Initial Financial Statements. In computing
Net Equity at the Initial Balance Sheet Date, the Net Equity
shall be reduced by $14,708,000, but this reduction shall not be
made to the Net Equity to be determined as of either the
Estimated Balance Sheet Date or the Closing Balance Sheet Date.
The Parent shall not be entitled to make further adjustments to
Net Equity reflected in the Initial Balance Sheet (other than
those adjustments identified in this Agreement) after the date
hereof. If it is determined by the Acquiror during the period
from the date hereof to the date on which the Closing Balance
Sheet is delivered to the Parent that any liabilities reflected
in the Initial Balance Sheet are not liabilities of a member of a
Company Group or that any assets of a member of a Company Group
are not reflected in the Initial Balance Sheet, then the Net
Equity determined by reference to the Initial Balance Sheet shall
be increased to exclude such liabilities or to include such
assets up to $14,780,000 in order that they shall have no effect
on the Estimated Purchase Price Adjustment or the Purchase Price
Adjustment.
(c) No adjustments will be recorded in the Estimated Balance Sheet or
the Closing Balance Sheet related to the allocation of the
purchase price in connection with the acquisition of NIMCO.
(d) Solely for the purpose of determining Net Equity in calculating
the Estimated Purchase Price Adjustment and the Purchase Price
Adjustment, cash and cash equivalents (net of the aggregate
amount of (i) outstanding checks and overdrafts drawn on bank
accounts of all members of the Company Groups and (ii) any notes
payable by any member of either Company Group) ("Net Cash") shall
be deemed to be $11.5 million on the Initial Balance Sheet
notwithstanding the $23 million in Net Cash actually reflected in
the Initial Balance Sheet. No adjustment shall be made to the
actual Net Cash on the Estimated Balance Sheet or Closing Balance
Sheet.
(e) To the extent that Net Cash reflected in the Estimated Balance
Sheet or Closing Balance Sheet exceeds $11.5 million in
compliance with Section 11.03 (f), such excess will contribute
positively to any Purchase Price Adjustment calculation to the
benefit of the Parent.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
12
No other adjustments will be made to the Net Equity reflected in each
of the Initial Balance Sheet, the Estimated Balance Sheet or the Closing Balance
Sheet for the purpose of computing the Estimated Purchase Price Adjustments or
the Purchase Price Adjustment. Accordingly, any changes in the amounts of other
assets or liabilities reflected in the Estimated Balance Sheet or the Closing
Balance Sheet as compared with the Initial Balance Sheet will have an effect on
the Estimated Purchase Price Adjustment or the Purchase Price Adjustment or
both.
Section 2.11. Allocation of Purchase Price Adjustment. The Purchase
Price Adjustment shall be allocated among Dresser Industries and the Seller in
accordance with the Allocation Procedures of Annex D. Dresser Industries and the
Seller shall be deemed to hold that portion of the Purchase Price Adjustment
that it has theretofore received in constructive trust pending allocation of the
entire Purchase Price Adjustment in accordance with such Allocation Procedures.
Upon completion of the allocation, Dresser Industries and the Seller shall make
such payments of cash in U.S. Dollars as shall be necessary to give effect to
the allocation and the Parent shall, promptly after completion of the
allocation, provide to the Acquiror a copy of the allocation, together with
evidence, reasonably satisfactory to the Acquiror, of such payments.
Section 2.12. Amendments to Effect Recapitalization. The parties
acknowledge that certain amendments to the structure of the transactions
contemplated hereby may be necessary in order to record such transactions as a
Recapitalization for financial reporting purposes, as well as amendments to
provide for the adjustment of the Purchase Price to account for the retention of
equity by the Parent and the rollover of management equity, and the parties
shall cooperate in good faith to effect such amendments.
Section 2.13. Delayed Purchases. Notwithstanding any provisions to the
contrary herein,
(a) If at the time of the First Closing any of the Category 2A
Requirements applicable to the First Closing shall not have been
satisfied, the Acquiror may elect, in its sole discretion, to
delay the purchase of the Equity Securities of the DEGI Group
member located in such jurisdiction in which such Category 2A
Requirements shall not have been satisfied until such time as
such requirements have been satisfied; provided that the Acquiror
shall have given written notice to the Parent of such election no
later than ten (10) Business Days prior to the Closing Date. In
such event, (i) prior to the First Closing, the Parent shall (A),
if the assets subject to delayed purchase have not theretofore
been transferred to the DEGI Group, cause a Retained Subsidiary
to retain such assets or, if the assets subject to delayed
purchase have theretofore been transferred to the DEGI Group,
cause the appropriate member of the DEGI Group to transfer such
Equity Securities to a member of the Parent Group; (ii) the
Preliminary Purchase Price and the Merger Consideration shall be
reduced by the dollar amount allocated to such Equity Securities
on Schedule 2.13 to the Parent's Disclosure Letter; (iii) for any
determination of Net Equity, the transfer of such Equity
Securities pursuant to this subsection (a) shall be disregarded;
and (iv) at the First Closing, the Acquiror shall execute and
deliver to the Parent a Purchase and Sale Agreement, in form and
substance substantially similar to the form thereof attached
hereto as Appendix IX.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
13
(b) If at the time of the Second Closing any of the Category 2A
Requirements applicable to the Second Closing shall not have been
satisfied, the Acquiror may elect, in its sole discretion, to
delay the purchase of the Equity Securities of the BV Group
member located in such jurisdiction in which such Category 2A
Requirements shall not have been satisfied until such time as
such requirements have been satisfied; provided that the Acquiror
shall have given written notice to the Parent of such election no
later than ten (10) Business Days prior to the Closing Date. In
such event, (i) prior to the Second Closing, the Parent shall
(A), if the assets subject to delayed purchase have not
theretofore been transferred to the BV Group, cause a Retained
Subsidiary to retain such assets or, if the assets subject to
delayed purchase have theretofore been transferred to the BV
Group, cause the appropriate member of the BV Group to transfer
such Equity Securities to a member of the Parent Group; (ii) the
Preliminary Purchase Price and the BV Consideration shall be
reduced by the dollar amount allocated to such Equity Securities
on Schedule 2.13 to the Parent's Disclosure Letter; (iii) for any
determination of Net Equity, the transfer of such Equity
Securities pursuant to this subsection (b) shall be disregarded;
and (iv) at the Second Closing, the Acquiror shall execute and
deliver to the Parent a Purchase and Sale Agreement, in form and
substance substantially similar to the form thereof attached
hereto as Appendix IX.
(c) If the Equity Securities of any member of the DEGI Group or the
BV Group are subject to delayed purchase pursuant to subsection
(a) or (b) of this Section 2.13 and the operations of such member
are conducted in more than one jurisdiction, the Parent and the
Acquiror shall cooperate in amending Annex B to preserve the
assets of such member that are located in any jurisdiction other
than the Category 2A Jurisdiction resulting in the delayed
purchase.
Section 2.14. Joint Ventures.
(a) If prior to the First Closing, a third Person has, with respect
to its rights under any Contractual Transfer Restrictions
relating to any DEGI Joint Venture, (i) (A) exercised a right to
acquire the Equity Securities of the DEGI Joint Venture owned
indirectly by DEGI (giving effect to the Reorganization), (B)
failed to waive any such rights or (C) failed to provide a
required consent and (ii) consummation of the transactions
contemplated hereby would violate the terms of such Contractual
Transfer Restriction, then (x) such DEGI Joint Venture shall be
deemed not to be a member of the DEGI Group; (y) the Preliminary
Purchase Price and the Merger Consideration shall be reduced by
the dollar amount allocated to such DEGI Joint Venture on
Schedule 2.14 to the Parent's Disclosure Letter; and (z) for any
determination of Net Equity, such DEGI Joint Venture shall be
disregarded.
(b) If prior to the Second Closing, a third Person has, with respect
to its rights under any Contractual Transfer Restrictions
relating to any BV Joint Venture, (i) (A) exercised a right to
acquire the Equity Securities of the BV Joint Venture owned
indirectly by a BV Company (giving effect to the Reorganization),
(B) failed to waive any such
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
14
rights or (C) failed to provide a required consent and (ii)
consummation of the transactions contemplated hereby would
violate the terms of such Contractual Transfer Restriction, then
(x) such BV Joint Venture shall be deemed not to be a member of
the BV Group; (ii) the Preliminary Purchase Price and the BV
Consideration shall be reduced by the dollar amount allocated to
such BV Joint Venture on Schedule 2.14 to the Parent's Disclosure
Letter; and (iii) for any determination of Net Equity, such BV
Joint Venture shall be disregarded.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING PARENT AND DRESSER
INDUSTRIES
Except as set forth in the Parent's Disclosure Letter and subject to
the limitations set forth in Section 12.01, the Parent represents and warrants
to the Acquiror that:
Section 3.01. Organization and Qualification. The Parent is a
corporation duly organized, validly existing and in good standing under the Laws
of the State of Delaware, has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as it is now
being conducted. The Parent is duly qualified to do business as a foreign
corporation and is in good standing (in those jurisdictions in which the concept
of good standing is applicable) in each jurisdiction in which the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except where the failure to be so qualified or in good
standing could not reasonably be expected to affect materially and adversely the
Parent's ability to perform its obligations under this Agreement or any
Ancillary Agreement. Dresser Industries is a corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, has all
requisite corporate power and authority to own, lease and operate its properties
and to carry on its business as it is now being conducted and is duly qualified
to do business as a foreign corporation and is in good standing (in those
jurisdictions in which the concept of good standing is applicable) in each
jurisdiction in which the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified or in good standing could not reasonably be expected
to affect materially and adversely the Parent's ability to cause Dresser
Industries to consummate the transactions contemplated under this Agreement or
any Ancillary Agreement.
Section 3.02. Authorization of Agreement. The Parent has all requisite
corporate power and authority to execute and deliver this Agreement and each of
the Ancillary Agreements to which it will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by the Parent of this Agreement and each
of the Ancillary Agreements to which it will be a party and the performance by
the Parent of its obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of the Parent.
No vote of, or consent by, the holders of any class or series of capital stock
or voting debt issued by the Parent is necessary to authorize the execution and
delivery by the Parent of this Agreement or any Ancillary Agreement to which it
will
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
15
be a party or the performance by the Parent of its obligations hereunder or
thereunder. This Agreement has been, and each Ancillary Agreement to which the
Parent will be a party will at the First Closing have been, duly executed and
delivered by the Parent and (assuming due authorization, execution and delivery
hereof by the Acquiror and thereof by each other party thereto) constitutes or,
in the case of each such Ancillary Agreement, will at the First Closing
constitute the legal, valid and binding obligation of the Parent, enforceable
against the Parent in accordance with its terms, except as enforcement hereof or
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar Laws relating to or affecting the
enforcement of creditors' rights generally and legal principles of general
applicability governing the availability of equitable remedies (whether
considered in a proceeding in equity or at law or under applicable legal codes).
Section 3.03. Approvals. Except for (a) such filings and approvals as
may be required under the HSR Act, (b) other Regulatory Transfer Restrictions
and (c) applicable Legal Requirements, if any, noncompliance with which, in the
case of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Parent from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses, no filing or registration with, no
waiting period imposed by, and no Authorization of, any Court or Governmental
Authority is required under any Legal Requirement applicable to the Parent or
any of its Affiliates (excluding the Seller and the members of the Company
Groups) to permit the Parent to execute, deliver or perform this Agreement or
any Ancillary Agreement to which it will be a party or to permit the Parent to
consummate the transactions contemplated hereby or thereby.
Section 3.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 3.03, neither the execution
and delivery by the Parent of this Agreement or any Ancillary Agreement to which
it will be a party nor the performance by the Parent of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default or give rise to rights under any Contractual Transfer Restrictions under
(i) any Legal Requirement applicable to the Parent or Dresser Industries, (ii)
the Organizational Documents of the Parent or Dresser Industries, or (iii) any
contract or agreement to which the Parent or Dresser Industries is a party or by
which the Parent or Dresser Industries or any of their properties or assets is
bound (including any provision thereof requiring any Third Person Consents) or
(b), with the passage of time, the giving of notice or the taking of any action
by a third Person, have any of the effects set forth in clause (a) of this
Section, except for any matters described in clauses (a)(i) and (a)(iii) of this
Section that could not reasonably be expected, individually or in the aggregate,
to prevent the Parent from performing this Agreement or any Ancillary Agreement
to which it will be a party in all material respects or to have a Material
Adverse Effect on the Businesses.
Section 3.05. No Brokers. No broker, finder or investment banker
(other than Xxxxxx Xxxxxxx Xxxx Xxxxxx Incorporated) is entitled to any
brokerage, finder's or investment banking fee or commission in connection with
the transactions contemplated by this Agreement based upon
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
16
arrangements made by or on behalf of the Parent or its Affiliates. All fees and
expenses of the Parent and its Affiliates incurred pursuant to the engagement of
Xxxxxx Xxxxxxx Xxxx Xxxxxx Incorporated will be discharged by the Parent.
Section 3.06. Title to Securities. Dresser Industries has, or after
giving effect to the Reorganization will have, directly or indirectly, good
title to the Equity Securities of each member of the DEGI Group indicated as
owned, directly or indirectly, by DEGI on Schedule 5.03(a) to the Parent's
Disclosure Letter, free and clear of any Liens, and there are no contracts,
agreements, commitments or arrangements of the Parent or any of its Subsidiaries
obligating Dresser Industries (other than pursuant to this Agreement and the
Reorganization) to sell or to offer to sell any Equity Securities of any such
member of the DEGI Group or to purchase or acquire, or to offer to purchase or
acquire, any outstanding Equity Securities of any such member of the DEGI Group.
Upon consummation of the transactions contemplated hereby, the Acquiror will
acquire good title to such Equity Securities to be acquired by Acquiror
hereunder directly or indirectly, free and clear of any such Liens (other than
any created by the Acquiror).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES REGARDING THE SELLER
Except as set forth in the Parent's Disclosure Letter and subject to
the limitations set forth in Section 12.01, the Parent and the Seller, jointly
and severally, represent and warrant to the Acquiror that:
Section 4.01. Organization. The Seller is a legal entity duly
organized, validly existing and in good standing under the Laws of its
jurisdiction of incorporation or organization and has all requisite
organizational power and authority to own, lease and operate its properties and
to carry on its business as it is now being conducted. The Seller is duly
qualified to do business as a foreign corporation and is in good standing (in
those jurisdictions in which the concept of good standing is applicable) in each
jurisdiction in which the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary in order for the
Seller to perform this Agreement and any Ancillary Agreement to which it is a
party in all material respects.
Section 4.02. Authorization of Agreement. The Seller has all requisite
organizational power and authority to execute and deliver this Agreement and
each Ancillary Agreement to which it will be a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby.
The execution and delivery by the Seller of this Agreement and each Ancillary
Agreement to which it will be a party and the performance by the Seller of its
obligations hereunder and thereunder have been duly and validly authorized by
all requisite organizational action on the part of the Seller and, to the extent
required by Law, Regulation or the Seller's Organizational Documents, by the
holder of the Seller's Equity Securities. This Agreement has been, and any
Ancillary Agreement to which it will be a party will at the Second Closing have
been, duly executed and delivered by the Seller and (assuming due authorization,
execution and delivery hereof by the Acquiror and of any Ancillary Agreement by
each Buyer) constitutes or, in the case
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
17
of any such Ancillary Agreement, will at the Second Closing constitute the
legal, valid and binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as enforcement hereof or thereof may
be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar Laws relating to or affecting the enforcement of
creditors' rights generally and legal principles of general applicability
governing the availability of equitable remedies (whether considered in a
proceeding in equity or at law or under applicable legal codes).
Section 4.03. Approvals. Except for (a) such filings and approvals as
may be required under the HSR Act, (b) other Regulatory Transfer Restrictions
and (c) applicable Legal Requirements, if any, noncompliance with which, in the
case of clause (c), could not reasonably be expected, individually or in the
aggregate, to prevent the Seller from performing this Agreement or any Ancillary
Agreement to which it will be a party in all material respects or to have a
Material Adverse Effect on the Businesses, no filing or registration with, no
waiting period imposed by, and no Authorization of, any Court or Governmental
Authority is required under any Legal Requirement applicable to the Seller to
permit the Seller to execute, deliver or perform this Agreement or any Ancillary
Agreement to which it will be a party or to consummate the transactions
contemplated hereby.
Section 4.04. No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, any Court or Governmental
Authority indicated as required pursuant to Section 4.03, neither the execution
and delivery by the Seller of this Agreement or any Ancillary Agreement to which
it will be a party nor the performance by the Seller of its obligations
hereunder or thereunder will (a) violate or breach the terms of or cause a
default or give rise to any rights under (i) any Legal Requirement applicable to
the Seller, or (ii) the Organizational Documents of the Seller, or (iii) any
contract or agreement to which such Seller is a party or by which it or any of
its properties or assets is bound (including any provisions thereof requiring
any Third Person Consents) or (b), with the passage of time, the giving of
notice or the taking of any action by a third Person, have any of the effects
set forth in clause (a) of this Section, except in any such case for any matters
described in clauses (a)(i) and (a)(iii) of this Section that could not
reasonably be expected, individually or in the aggregate, to prevent the Seller
from performing this Agreement or any Ancillary Agreement to which it will be a
party in all material respects or to have a Material Adverse Effect on the
Businesses.
Section 4.05. Title to Securities. The Seller has, or after giving
effect to the Reorganization will have, good title to the Equity Securities of
each BV Company to be sold by the Seller hereunder as provided on Annex C, free
and clear of any Liens, and there are no contracts, agreements, commitments or
arrangements of any Person obligating the Seller (other than pursuant to this
Agreement and the Reorganization) to sell or to offer to sell any Equity
Securities of any such BV Company or to purchase or acquire, or to offer to
purchase or acquire, any outstanding Equity Securities of any such BV Company.
Upon consummation of the transactions contemplated hereby, each Buyer will
acquire good title to the Securities to be purchased by such Buyer hereunder as
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
18
provided on Annex B, free and clear of any such Liens (other than any created by
the Acquiror or such Buyer).
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING
MEMBERS OF THE COMPANY GROUPS
Except for the representations and warranties set forth in Sections
5.01, 5.02, and 5.03, to the extent that any of the representations and
warranties set forth in this Article V is made with respect to any member of a
Company Group that is a Non-Controlled Entity, the representation and warranty
is qualified as being given only to the Knowledge of the Parent. Each of the
representations and warranties contained in this Article V, other than those
made in subsection (b) of Section 5.02 but including those that are made only as
of the date hereof, gives effect to the Reorganization as if the Reorganization
had been effected on the date of this Agreement. Subject to the preceding
provisions of this Article V, to the matters set forth in the Parent's
Disclosure Letter and to the limitations set forth in Section 12.01, the Parent
and the Seller, jointly and severally, represent and warrant to the Acquiror
that:
Section 5.01. Organization; Subsidiaries.
(a) Each member of each Company Group is a legal entity duly
organized, validly existing and in good standing (in those
jurisdictions in which the concept of good standing is
applicable) under the Laws of its jurisdiction of incorporation
or organization and has all requisite organizational power and
authority to own, lease and operate its properties and to carry
on its business as it is now being conducted, other than any
matters that could not reasonably be expected, individually or in
the aggregate, to have a Material Adverse Effect on the
Businesses. Each member of each Company Group is duly qualified
to do business as a foreign corporation or entity and is in good
standing (in those jurisdictions in which the concept of good
standing is applicable) in each jurisdiction in which the
character of the property owned or leased by it or the nature of
its activities makes such qualification necessary, except where
any such failure to be so qualified or in good standing, could
not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect on the Businesses. Schedule
5.01 of the Parent's Disclosure Letter sets forth a true and
complete list, as of the date of this Agreement, of the members
of each Company Group, together with (a) a specification of the
nature of the legal organization of each such entity, (b) the
jurisdiction of incorporation or other organization of each such
entity, (c) the magnitude (expressed as a percentage of the
aggregate ordinary voting power of all outstanding Equity
Securities of such legal entity) of the direct or indirect equity
investment of the Parent (and, if different, the economic
interest) in each such entity and (d) the identity of the
Business to be conducted by each member of each Company Group
after giving effect to the Reorganization.
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
19
(b) To the extent that any member of a Company Group constitutes a
"Shelf Entity" in accordance with subsection (c) of Section 2.05,
such Shelf Entity, immediately prior to the time it became a
member of a Company Group (i) was not a party to, and had no
liability or obligation under, any executory contract or
agreement, whether written or oral, and (ii) had no assets or
other liabilities or obligations (whether accrued, absolute or
otherwise).
Section 5.02. Organizational Documents; Authorization; No Violation.
(a) The Parent has heretofore made available to the Acquiror complete
and correct copies of the Organizational Documents, in each case
as amended or restated to the date hereof, of each member of each
Company Group. None of the members of either Company Group is in
violation of any of the provisions of its Organizational
Documents, except for any such violations that could not
reasonably be expected, individually or in the aggregate, to have
a Material Adverse Effect on the Businesses.
(b) At the time of the Reorganization, each member of each Company
Group will, to the extent required, have all requisite
organizational power and authority to consummate the
Reorganization and the other transactions contemplated to be
consummated by it by this Agreement, and the consummation of the
Reorganization and such other transactions will have been, to the
extent required, duly and validly authorized by all requisite
company action on the part of each such entity.
(c) The consummation of the Reorganization and the other transactions
contemplated by this Agreement will not (i) violate or breach the
terms of or cause a default or give rise to rights under any
Contractual Transfer Restrictions under (A) any Legal Requirement
applicable to any member of either Company Group, (B) the
Organizational Documents of any member of either Company Group or
(C) any contract or agreement to which any member of either
Company Group is a party or by which it or its properties or
assets are bound (including any provision thereof requiring any
Third Person Consent) or (ii), with the passage of time, the
giving of notice or the taking of any action by a third Person,
have any of the effects set forth in clause (i) of this
subsection (c), except for any matters described in clauses (A)
and (C) of clause (i) of this subsection (c) that could not
reasonably be expected, individually or in the aggregate, to
prevent any member of either Company Group from consummating the
Reorganization or the other transactions contemplated by this
Agreement in all material respects or to have a Material Adverse
Effect on the Businesses.
Section 5.03. Capitalization.
(a) The authorized Equity Securities of each member of each Company
Group, the total outstanding Equity Securities of each such
Company Group member and the name of the record holders of all
the outstanding Equity Securities of each such Company
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
20
Group member, in each case as of the date of this Agreement, are
as set forth in Schedule 5.03(a) of the Parent's Disclosure
Letter.
(b) No Equity Securities of any member of either Company Group are
reserved for issuance, and there are no outstanding options,
warrants, calls, pre-emptive rights, subscriptions or other
rights, contracts, agreements, commitments or arrangements
obligating any such Company Group member to offer, sell, issue or
grant any of its Equity Securities or to redeem, purchase or
acquire, or offer to purchase or acquire, any of its outstanding
Equity Securities.
(c) Except as required by this Agreement and the Reorganization,
there are no options, warrants, calls, pre-emptive rights,
subscriptions or other rights, contracts, agreements, commitments
or arrangements obligating any such Company Group member (A) to
offer, sell, issue, grant, pledge, dispose of or encumber any
Equity Securities of any other Company Group member or (B) to
purchase or acquire, or offer to purchase or acquire, any
outstanding Equity Securities of any other Company Group member
or (C) to grant any Lien on any outstanding Equity Securities of
any other Company Group member.
(d) All the issued and outstanding Equity Securities of each member
of each Company Group that are owned directly or indirectly by
the Parent have been duly authorized and are validly issued and,
with respect to capital stock, are fully paid and nonassessable.
All such issued and outstanding Equity Securities that are owned
directly or indirectly by the Parent are owned free and clear of
all Liens.
(e) Except for matters contemplated by this Agreement or the
Ancillary Agreements and for revocable proxies, if any, granted
by any member of either Company Group with respect to the capital
stock of another Company Group member, there are no voting
trusts, proxies or other agreements, commitments or
understandings of any character to which any member of either
Company Group is a party or by which it is bound with respect to
the voting of any Equity Securities of any Company Group member.
Section 5.04. Title to Properties.
(a) Schedule 5.04(a)(i) sets forth all of the Real Property owned by
any member of either Company Group and Schedule 5.04(a)(ii) sets
forth all of the Real Property leased by any member of either
Company Group other than any such leased Real Property that is
not individually or in the aggregate Material to the Businesses.
The appropriate member of each Company Group has (i) good and
marketable title to all of the Real Property marked as
"designated" (the "Designated Real Property") on Schedule
5.04(a)(i) to the Parent's Disclosure Letter and (ii) good and
defensible title to the other properties reflected in the Initial
Financial Statements (other than, in the case of this clause
(ii), (A) any properties sold or otherwise disposed of in the
ordinary course of business since the Initial Balance Sheet Date,
and (B) any
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
21
properties that are not material to the Businesses) free and
clear of Liens, other than (X) Liens securing debt, the existence
of which is reflected in the Initial Financial Statements, (Y)
Permitted Encumbrances and (Z) Liens that are not, individually
or in the aggregate, Material to the Businesses. The appropriate
member of each Company Group holds under valid lease agreements
(i) all Material Real Property reflected in Schedule 5.04(a)(ii)
to the Parent's Disclosure Letter and (ii) all other properties
reflected in the Initial Financial Statements as being held under
capitalized leases or operating leases and enjoys peaceful and
undisturbed possession of such properties under such leases,
other than, in the case of clause (ii), (A) any properties as to
which such leases have terminated in the ordinary course of
business since the Initial Balance Sheet Date without any
liability of such Company Group member party thereto that is
Material to the Businesses and (B) any properties that are not,
individually or in the aggregate, Material to the Businesses.
Each such lease is valid and enforceable against the Company
Group member party thereto and, to the Knowledge of the Parent,
each other party thereto, in accordance with its terms and there
is not under any such lease any existing default by the Company
Group member party thereto or, to the Knowledge of the Parent,
any other party thereto, or any condition, event or act which,
with notice or lapse of time or action of a third Person, would
constitute such a default, except in each case for matters that
could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Businesses.
Neither the Parent, the Seller nor any Company Group member has
received any written notification of any adverse claim to the
title to any properties owned by such Company Group member or
with respect to any lease under which any properties are held by
it, other than any claims that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse
Effect on the Businesses.
(b) Schedule 5.04(b) to the Parent's Disclosure Letter sets forth, as
of the date hereof, to the extent material to a Business, all
Intellectual Property owned by or registered in the name of any
member of either Company Group or in which any such entity has
any rights including the name of the Company Group member in
whose name such Intellectual Property is registered or which has
such rights and the Business to which such Intellectual Property
relates. Except as could not reasonably be expected to have a
Material Adverse Effect on the Businesses, as of the date hereof
the members of the Company Groups own, or have the valid right to
use, all of the Intellectual Property. Except as could not
reasonably be expected to have a Material Adverse Effect on the
Businesses, after giving effect to the Reorganization, the
members of the Company Groups which conduct each Business will
own, or have the valid right to use, all of the Intellectual
Property used in such Business.
Section 5.05. Financial Statements.
(a) The Initial Financial Statements (i) are attached as Schedule
5.05 to the Parent's Disclosure Letter, (ii) have been prepared
in accordance with U.S. GAAP
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
22
consistently applied, (iii) fairly present the combined financial
position of the Businesses as of the respective dates thereof and
the combined results of operations of the Businesses for the
periods indicated and (iv) reflect all material "loss
contingencies" as determined under Statement of Financial
Accounting Standards No. 5 other than those for which, at the
time of preparation of the Initial Financial Statements, the
members of the Parent Group were expected to be responsible after
giving effect to the transactions contemplated hereby.
(b) There exist no liabilities, obligations or commitments, whether
direct or indirect, absolute or contingent, of the members of
either Company Group that are Material to the Businesses and that
would be required to be reflected or reserved for under U.S. GAAP
in an historical combined balance sheet of the members of the
Company Groups, other than (i) liabilities or obligations that
are reflected or reserved for in the Initial Financial
Statements, (ii) liabilities or obligations excluded from the
Initial Financial Statements as described in note 2 to such
Initial Financial Statements, (iii) liabilities or obligations
incurred in the ordinary course of business of the Businesses
since the Initial Balance Sheet Date and (iv) liabilities or
obligations incurred since the Initial Balance Sheet Date of the
nature of liabilities that may be incurred after the date of this
Agreement pursuant to subsection (b) of Section 8.02. None of the
liabilities described in clauses (iii) and (iv) of the preceding
sentence has or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
the Businesses.
(c) The books, records and accounts of the members of the Company
Groups, in reasonable detail, accurately and fairly reflect in
the aggregate the transactions and dispositions of the assets of
the Businesses. No member of either Company Group has engaged in
any Material transaction, maintained any Material bank account or
used any Material corporate funds except for transactions, bank
accounts and funds that have been and are reflected in the
normally maintained Books and Records of such member of either
Company Group.
(d) The notes to the Initial Financial Statements fairly reflect in
all material respects all transactions between or among any
member of either Company Group and any Affiliate thereof (other
than transactions solely between or among the members of the
Company Groups).
Section 5.06. Authorizations. Each member of each Company Group has
obtained all Authorizations that are necessary to carry on the Business related
thereto as currently conducted, except for any such Authorizations that its
failure to possess, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Businesses. Each such
Authorization (i) is in full force and effect, (ii) has not been violated in any
respect and (iii) is not subject to any suspension, revocation or cancellation,
other than for matters, in any such case, that could not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect on the
Businesses. There is no action, proceeding or investigation pending or, to the
Knowledge of the Parent, threatened regarding suspension, revocation or
cancellation of any of such Authorizations, except in any circumstances in which
the suspension, revocation or cancellation of such
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
23
Authorizations could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect on the Businesses.
Section 5.07. Compliance With Laws; Regulation of Businesses. Each
member of each Company Group is and, to the extent that any noncompliance could
reasonably be expected to have current consequences, has been in compliance with
all applicable Laws and Regulations and any Orders applicable to any such
entity, other than Environmental Laws and, to the extent applicable to the
execution, delivery and performance of this Agreement, foreign competition Laws
and except such events of noncompliance or defaults that, individually or, with
respect to multiple events of noncompliance or defaults arising out of the same
facts or circumstances, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect on the Businesses. To the Knowledge of the
Parent, each member of each Company Group has at all times been in compliance
with, and continues to comply with, the Foreign Corrupt Practices Act of 1977,
as amended.
Section 5.08. Taxes. Except for any matter that could not reasonably
be expected, individually or in the aggregate, to have a Material Adverse Effect
on the Businesses:
(a) (i) all Tax Returns that were required to be filed by or with
respect to any member of a Company Group, or any member of the
Parent Group insofar as it affects any member of a Company Group,
have been duly and timely filed, (ii) all items of income, gain,
loss, deduction and credit or other items ("Tax Items") required
to be included in each such Tax Return have been so included and
all such Tax Items and any other information provided in each
such Tax Return are true, correct and complete insofar as such
items are related to or affect a member of a Company Group, (iii)
all Taxes shown as due on each such Tax Return have been timely
paid in full insofar as such Taxes are related to or affect a
member of a Company Group, (iv) insofar as such items are related
to or affect a member of a Company Group, no penalty, interest or
other charge is or will become due with respect to the late
filing of any such Tax Return or late payment of any such Tax and
(v) all Tax withholding and deposit requirements imposed on or
with respect to any member of a Company Group, or any member of
the Parent Group insofar as it affects any member of a Company
Group, have been satisfied in full in all respects;
(b) no member of a Company Group (or the Parent Group insofar as it
affects any member of a Company Group) has in force any waiver of
any statute of limitations in respect of Taxes or any extension
of time with respect to a Tax assessment or deficiency;
(c) there are no pending Tax audits or examinations and no proposed
deficiencies or other claims for unpaid Taxes of any member of a
Company Group for which written notice has been received;
HALLIBURTON COMPANY
AGREEMENT AND PLAN OF RECAPITALIZATION
24
(d) Schedule 5.08(d) to the Parent's Disclosure Letter contains a
list as of the date hereof of (i) all tax allocation or sharing
agreements to which any member of either Company Group is a party
and (ii) each member of a Company Group that has any liability
for the Taxes of any other Person (other than members of its
respective Company Group) under United States Treasury Regulation
section 1.1502-6 (or any similar provision of state, local or
foreign law);
(e) the aggregate unpaid Taxes of all members of the Company Groups
(computed with respect to each such member on the basis of the
income, operations and activities of such member through the
Closing Date as if the applicable taxable year of such member
ended on the Closing Date) did not, as of the date of the
Closing, exceed the amounts reserved for Tax liability (as
distinguished from any reserve for deferred taxes established to
reflect timing differences between book and tax income) in the
reserve for Taxes set forth on the face of (rather than in any
notes to) the Closing Financial Statements;
(f) none of the assets of any member of any Company Group is property
required to be treated as being owned by any other Person
pursuant to the "safe harbor lease" provisions of former Section
168(f)(8) of the Code;
(g) none of the assets of any member of any Company Group directly or
indirectly secures any debt the interest on which is tax-exempt
under Section 103(a) of the Code;
(h) none of the assets of any member of any Company Group is
"tax-exempt use property" within the meaning of Section 168(h) of
the Code;
(i) each member of each Company Group that is not a corporation is
properly classified for United States federal income tax purposes
as a partnership or a disregarded entity, and not as an
association or publicly traded partnership taxable
