EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
among
HERCULES INCORPORATED,
WATER ACQUISITION CO.
and
BETZDEARBORN INC.
Dated as of July 30, 1998
AGREEMENT AND PLAN OF MERGER, dated as of July 30, 1998 (the
"Agreement"), among Hercules Incorporated, a Delaware corporation ("Parent"),
Water Acquisition Co., a Pennsylvania corporation and a wholly owned subsidiary
of Parent ("Merger Sub"), and BetzDearborn Inc., a Pennsylvania corporation (the
"Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have approved the acquisition of the Company by Parent upon the
terms and subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have approved this Agreement and the merger of Merger Sub with
and into the Company (the "Merger") in accordance with the Pennsylvania Business
Corporation Law of 1988, as amended (the "PBCL"), and upon the terms and subject
to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, Parent, Merger Sub and the Company agree
as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement and in accordance with the PBCL, Merger
Sub shall be merged with and into the Company at the Effective Time (as defined
below) of the Merger. Following the Merger, the separate corporate existence of
Merger Sub shall cease, and the Company shall continue as the surviving
corporation (the "Surviving Corporation") and shall succeed to and assume all
the rights and obligations of Merger Sub in accordance with the PBCL.
Section 1.2. Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on a date to be specified by the parties (the
"Closing
Date"), which (subject to the satisfaction or waiver of the conditions set forth
in Article VI) shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Section 6.1, at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Wilmington, Delaware,
unless another date or place is agreed to in writing by the parties hereto.
Section 1.3. Effective Time. Subject to the provisions of this
Agreement, on the Closing Date, the parties shall file in the office of the
Department of State of the Commonwealth of Pennsylvania articles of merger (the
"Articles of Merger") containing the information required to be set forth
therein under Section 1926 of the PBCL and executed in accordance with the PBCL
and shall make all other filings or recordings, if any, required under the PBCL.
The Merger shall become effective at the time of filing of the Articles of
Merger, or at such later time as is agreed upon by the parties hereto and set
forth in an amendment to this Agreement (such time as the Merger becomes
effective is referred to herein as the "Effective Time").
Section 1.4. Effects of the Merger. The Merger shall have the
effects set forth in Section 1929 of the PBCL.
Section 1.5. Articles of Incorporation and Bylaws of the Surviving
Corporation.
(a) At the Effective Time, the Restated Articles of Incorporation of
the Company as in effect immediately prior to the Effective Time shall become
the articles of incorporation of the Surviving Corporation after the Effective
Time, until thereafter amended as provided by the PBCL and therein.
(b) The Bylaws of the Company as in effect immediately prior to the
Effective Time shall become the bylaws of the Surviving Corporation after the
Effective Time, until thereafter amended as provided by the PBCL, the articles
of incorporation of the Surviving Corporation and such Bylaws.
Section 1.6. Directors. The directors of Merger Sub immediately
prior to the Effective Time shall become the directors of the Surviving
Corporation, until the earlier of their death, resignation or removal or until
their respective successors are duly elected and qualified.
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Section 1.7. Officers. The officers of the Company immediately prior
to the Effective Time shall become the officers of the Surviving Corporation,
until the earlier of their resignation or removal or until their respective
successors are duly elected and qualified.
ARTICLE II
CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES
Section 2.1. Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of the Company, Merger Sub or
the holders of any securities of the Company or Merger Sub:
(a) Each Common Share, par value $0.10 per share, of the Company
(the "Company Common Shares") issued and held, immediately prior to the
Effective Time, in the Company's treasury or by any of the Company's direct or
indirect wholly owned subsidiaries, and each Company Common Share that is owned
by Parent, Merger Sub or any other subsidiary of Parent, shall automatically be
cancelled and retired and shall cease to exist, and no consideration shall be
delivered in exchange therefor.
(b) Each issued and outstanding Company Common Share (other than
shares to be cancelled in accordance with Section 2.1(a) and Dissenting Shares
(as defined below)), including Company Common Shares outstanding by virtue of
the conversion immediately prior to the Effective Time of each share of issued
and outstanding Series A ESOP Convertible Preferred Stock, par value $.10 per
share, of the Company (the "Company Series A Preferred Shares"), shall be
converted into the right to receive $72 in cash, without interest thereon (the
"Merger Consideration"). As of the Effective Time, all Company Common Shares
converted pursuant to Sections 2.1(a) or (b) shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate or certificates which immediately prior to the Effective
Time represented outstanding Company Common Shares (together with certificates
which immediately prior to the Effective Time represented outstanding Company
Series A Preferred Shares, the "Certificates") shall cease to have any rights as
shareholders of the Company, except the right to receive the Merger
Consideration for Company Common Shares held by them.
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(c) Shares of Dissenting Shareholders. Notwithstanding any provision
of this Agreement to the contrary, any issued and outstanding Company Common
Shares ("Dissenting Shares") held by a Dissenting Shareholder (as defined below)
shall not be converted as described in Section 2.1(b) but shall become the right
to receive such consideration as may be determined to be due to such Dissenting
Shareholder pursuant to the PBCL; provided, however, that each Company Common
Share outstanding immediately prior to the Effective Time and held by a
Dissenting Shareholder who, after the Effective Time, loses his or her right of
appraisal, pursuant to the PBCL, shall be deemed to be converted as of the
Effective Time into the right to receive the Merger Consideration. The Company
shall give Parent (i) prompt notice of any written demands for appraisal of
Company Common Shares received by the Company and (ii) the opportunity to direct
all negotiations and proceedings with respect to any such demands. The Company
shall not, without prior written consent of Parent, voluntarily make any payment
with respect to, or settle, offer to settle or otherwise negotiate, any such
demands. As used in this Agreement, the term "Dissenting Shareholder" means any
record holder or beneficial owner of Company Common Shares or Company Series A
Preferred Shares who complies with all provisions of the PBCL concerning the
right of holders of Company Common Shares and Company Series A Preferred Shares
to dissent from the Merger and obtain fair value for their shares.
(d) Each issued and outstanding common share, par value $.01 per
share, of Merger Sub shall be converted into one validly issued, fully paid and
nonassessable common share of the Surviving Corporation.
Section 2.2. Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall enter
into an agreement with American Stock Transfer & Trust Co., or such other bank
or trust company as may be designated by Parent and as shall be reasonably
satisfactory to the Company (the "Exchange Agent"). No later than the Effective
Time, Parent shall deposit with the Exchange Agent, for the benefit of the
holders of Company Common Shares, for exchange in accordance with this Article
II, through the Exchange Agent, cash in an amount sufficient to make any cash
payment due under Section 2.1 (the "Exchange Fund").
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
Certificate whose shares were converted into the right to receive the Merger
Consid-
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eration pursuant to Section 2.1(b) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent may
reasonably specify), and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, and such other documents as may reasonably be
required by the Exchange Agent, the holder of such Certificate shall be entitled
to receive in exchange therefor the product of the Merger Consideration
multiplied by the number of Company Common Shares represented by such
Certificate (including, with respect to Certificates representing Company Series
A Preferred Shares, the number of Company Common Shares into which such Company
Series A Preferred Shares have been converted immediately prior to the Effective
Time), and the Certificate so surrendered shall forthwith be cancelled. In the
event of a transfer of ownership of Company Common Shares or Company Series A
Preferred Shares represented by any Certificate which is not registered in the
transfer records of the Company, the Merger Consideration payable in respect of
such Company Common Shares or such Company Series A Preferred Shares may be
issued to a person other than the person in whose name the Certificate so
surrendered is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the person requesting such issuance
shall pay any transfer or other non-income taxes required by reason of the
payment of such Merger Consideration to a person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that any
such tax has been paid or is not applicable. Parent or the Exchange Agent shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Company Common Shares such amounts
as Parent or the Exchange Agent is required to withhold or deduct under the
Internal Revenue Code of 1986, as amended (the "Code"), or any provision of
state, local or foreign law with respect to the making of such payment. To the
extent that amounts are so withheld by Parent or the Exchange Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of Company Common Shares in respect of whom such
deduction and withholding were made by Parent or the Exchange Agent. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration into which the Company
Common Shares formerly represented by such Certificate (including, with respect
to Certificates that represented Company Series A Preferred Shares, the Company
Common Shares into which the Company Series A Preferred Shares were converted
immediately prior to
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the Effective Time) have been converted. No interest will be paid or will accrue
on any cash payable to holders of Certificates pursuant to the provisions of
this Article II.
(c) Closing of Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the Company Common Shares or Company Series A Preferred Shares
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation or the
Exchange Agent for any reason, they shall be cancelled and exchanged as provided
in this Article II, except as otherwise provided by law.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of the Certificates for nine months
after the Effective Time shall be delivered to Parent upon demand, and any
holders of the Certificates who have not theretofore complied with this Article
II shall thereafter look only to Parent for payment of their claim for Merger
Consideration.
(e) No Liability. None of the Company, Parent, Merger Sub, the
Surviving Corporation or the Exchange Agent shall be liable to any person in
respect of any Merger Consideration paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.
(f) Investment of Exchange Fund. The Exchange Agent shall invest all
cash included in the Exchange Fund, as reasonably directed by Parent, on a daily
basis. Any interest and other income resulting from such investments shall be
paid to Parent.
(g) Lost Certificates. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond in such
reasonable amount as the Surviving Corporation may direct as indemnity against
any claim that may be made against it with respect to such Certificate, the
Exchange Agent will pay in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration payable in respect thereof pursuant to this
Agreement.
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Section 2.3. Stock Options and Restricted Shares.
(a) Each Stock Option (as defined below) outstanding at the
Effective Time, whether or not exercisable, shall, at the Effective Time, be
cancelled and shall thereupon be converted into the right to receive cash,
without interest thereon, in the amount, if any, equal to the product of (i) the
number of Company Common Shares issuable upon the exercise of such Stock Option
(the "Option Shares") multiplied by (ii) the amount, if any, by which the Merger
Consideration exceeds the per share exercise price with respect to such Option
Shares; provided, however, that each Stock Option granted under the ESPP (as
defined below) shall be deemed for purposes hereof to have a per share exercise
price of zero.
(b) Any and all restrictions pursuant to the Stock Incentive Plan
(as defined below) on the ownership of each Company Common Share issued pursuant
to the Stock Incentive Plan and outstanding immediately prior to the Effective
Time ("Restricted Shares") shall lapse at the Effective Time.
(c) Notwithstanding anything to the contrary herein, if it is
determined that compliance with any of the foregoing provisions of this Section
2.3 may cause any individual subject to Section 16 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), to become subject to the profit
recovery provisions thereof, any Stock Options held by such individual may, if
such person so agrees, subject to the proviso of this sentence, be cancelled or
purchased, as the case may be, at the Effective Time or at such later time as
may be necessary to avoid application of such profit recovery provisions and
such person will be entitled to receive from the Company or the Surviving
Corporation cash in the amount, if any, equal to the product of (i) the number
of Option Shares multiplied by (ii) the amount, if any, by which the Merger
Consideration exceeds the per share exercise price with respect to such Option
Shares; provided that the parties hereto will cooperate, including by attempting
to provide alternate arrangements, so as to achieve the intent of the foregoing
without giving rise to such profit recovery.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth with respect to matters disclosed in the letter
delivered by the Company to Parent prior to the execution of this Agreement (the
"Company Letter") or in the Company SEC Reports (as defined below) filed with
the SEC prior to the execution of this Agreement, the Company represents and
warrants to Parent and Merger Sub as follows:
Section 3.1. Organization; Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Pennsylvania and has the corporate power and authority to
own its properties and assets and to carry on its business as it is now being
conducted and is duly qualified to do business and is in good standing in each
jurisdiction in which the ownership of its properties or the conduct of its
business requires such qualification, except for jurisdictions in which the
failure to be so qualified or in good standing would not, individually or in the
aggregate, have a Material Adverse Effect (as hereinafter defined) on the
Company. As used in this Agreement, any reference to any state of facts, event,
change or effect having a "Material Adverse Effect" on or with respect to the
Company or Parent, as the case may be, means such state of facts, event, change
or effect that has had, or would reasonably be expected to have, a material
adverse effect on the business, assets or financial condition of the Company and
its Subsidiaries (as defined below), taken as a whole, or Parent and its
Subsidiaries, taken as a whole, as the case may be. Each of the Company's
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization,
has the corporate power and authority to carry on its business as it is now
being conducted, and is duly qualified to do business and is in good standing in
each jurisdiction in which the conduct of its business requires such
qualification, except for jurisdictions in which the failure to be so qualified
or in good standing would not, individually or in the aggregate, have a Material
Adverse Effect on the Company. All outstanding shares of capital stock of, or
other ownership interests in, the Company's Subsidiaries (i) are validly issued,
fully paid and non-assessable, (ii) except for director qualifying shares and
minimum shareholder requirements or as may be required under applicable foreign
laws, are owned by the Company, directly or indirectly, and (iii) to the extent
owned by the Company, directly or indirectly, are free and clear of all liens,
claims, mortgages, encumbrances, pledges, security interests, equities or
charges of any kind (each, a "Lien"). There are no existing options, rights of
first refusal, preemptive rights, calls,
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claims or commitments of any character relating to the issued or unissued
capital stock or other securities of, or other ownership interests in, any
Subsidiary of the Company, except for director qualifying shares and minimum
shareholder requirements or as may be required under applicable foreign laws.
Section 3.2. Capital Stock.
(a) The authorized capital stock of the Company consists of (i)
250,000,000 Company Common Shares and (ii) 1,000,000 preferred shares, par value
$.10 per share, of which 500,030 shares have been designated as Company Series A
Preferred Shares. At the close of business on July 24, 1998, (i) 33,630,831
Company Common Shares were issued, of which 3,876,818 Company Common Shares were
held by the Company in its treasury, (ii) 471,271 Company Series A Preferred
Shares were issued and outstanding (and 2,638,991 Company Common Shares were
reserved for issuance upon the conversion thereof), (iii) 4,986,186 Company
Common Shares were reserved for issuance pursuant to the Company's 1981 and 1987
Employee Stock Option Plans (together, the "Stock Option Plan"), (iv) 256,508
Company Common Shares were reserved for issuance pursuant to the Company's 1997
Employee Stock Purchase Plan (the "ESPP") and (v) 425,474 Company Common Shares
were reserved for issuance pursuant to the Company's Employee Stock Incentive
Plan (the "Stock Incentive Plan"). In addition, Company Common Shares are
potentially issuable upon distribution and exercise of the rights (the "1988
Rights") to purchase Company Common Shares issued pursuant to the Rights
Agreement dated as of January 1, 1992 (as amended from time to time, the "1988
Rights Plan") between the Company and American Stock Transfer and Trust Company,
as rights agent, which restates with a successor rights agent the Rights
Agreement dated as of September 8, 1988 between the Company and Mellon Bank
(East) N.A., as rights agent. The 1988 Rights Agreement expires on September 19,
1998 and from and after that date, Company Common Shares will be potentially
issuable upon distribution and exercise of the rights (the "Rights") to purchase
Company Common Shares pursuant to the Rights Agreement dated as of February 12,
1998 (as amended from time to time, the "Company Rights Plan") between the
Company and American Stock Transfer and Trust Company, as rights agent. At the
close of business on July 24, 1998, (i) options under the Stock Option Plan to
acquire 3,797,214 Common Shares were outstanding, of which options to acquire
3,173,349 Company Common Shares were exercisable, and (ii) options to acquire
1,188,972 Company Common Shares remained available for grant under the Stock
Option Plan. During the period commencing on January 1, 1998 and ending on June
30, 1998, 96,277 Company Common Shares were acquired pursuant to Stock Options
exer-
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cised under the ESPP. Except as set forth above, at the close of business on
July 24, 1998, no shares of capital stock or other voting securities of the
Company were issued, reserved for issuance or outstanding. At the close of
business on July 24, 1998, there were no outstanding stock appreciation rights
or rights (other than outstanding employee stock options to purchase Company
Common Shares pursuant to the Stock Option Plan or the ESPP (collectively, the
"Stock Options") to purchase or acquire Company Common Shares on a deferred
basis. All outstanding shares of capital stock of the Company are, and all
shares which may be issued will be, when issued and paid for, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. There are no notes, bonds, debentures or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which shareholders of the
Company may vote. Except as set forth above or in Section 3.1, at the close of
business on July 24, 1998, there were no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its Subsidiaries was a party or by
which any of them was bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. At the close of business on
July 24, 1998, except as provided pursuant to the terms of the Company Series A
Preferred Shares, there were no outstanding contractual obligations of the
Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or any of its Subsidiaries. At the
close of business on July 24, 1998, there were no outstanding contractual
obligations of the Company to vote or to dispose of any shares of the capital
stock of any of its Subsidiaries.
Section 3.3. Corporate Authority Relative to this
Agreement; No Violation; No Existing Violation.
(a) The Company has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby (subject to the terms and conditions hereof) have been duly and validly
authorized by the Board of Directors of the Company (the "Company Board"), and
except for the approval and adoption of this Agreement by the Company's
shareholders, no other corporate proceedings on the part of the Company are
necessary to
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authorize the execution and delivery of this Agreement, or the consummation of
the transactions contemplated hereby. As of the date hereof, the Company Board
has determined that the transactions contemplated by this Agreement are in the
best interests of the Company and its shareholders and to recommend to such
shareholders that they approve and adopt this Agreement. This Agreement has been
duly and validly executed and delivered by the Company and, assuming this
Agreement constitutes the valid and binding agreement of the other parties
hereto, this Agreement constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
(b) The execution and delivery by the Company of this Agreement do
not, and the consummation by the Company of the transactions contemplated hereby
will not, result in any violation of, default or event of default (with or
without notice or lapse of time or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation, or result in the
creation of any lien, security interest, charge or encumbrance upon any of the
properties or assets of the Company or any of its Subsidiaries under: (i) any
provision of the Restated Articles of Incorporation or Bylaws of the Company or
the comparable organizational documents of any of its Subsidiaries, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease, agreement,
instrument, permit, concession, franchise, license or guarantee applicable to
the Company or any of its Subsidiaries or (iii) any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or any of their respective properties or assets, other than, in
the case of clauses (ii) and (iii), any such violations, defaults, events of
default, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company or prevent the consummation of any of the transactions contemplated
hereby. No filing or registration with, or authorization, consent or approval
of, any governmental body or authority is required by or with respect to the
Company or any of its Subsidiaries in connection with the execution and delivery
of this Agreement by the Company, or the consummation of the transactions
contemplated hereby, except: (i) in connection, or in compliance, with the
provisions of the Xxxx-Xxxxx Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), applicable non-United States competition, antitrust and
investment laws, and the Exchange Act, (ii) for the filing of Articles of Merger
with the Department of State of the Commonwealth of Pennsylvania and (iii) for
such other consents, orders, authorizations, registrations, declarations and
filings the failure of which to obtain or make would not, individually or in the
aggregate, have a Material Adverse Effect on the Company and would not prevent
the consummation of any of the transactions contemplated hereby.
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(c) Neither the Company nor any of its Subsidiaries is in violation
of (i) its charter or other organizational documents or by-laws, (ii) any
applicable law, ordinance or administrative or governmental rule or regulation
or (iii) any order, decree or judgment of any governmental body or authority
having jurisdiction over the Company or any of its Subsidiaries, except, in the
case of clause (i) with respect to the Company's Subsidiaries and, in the case
of clause (ii) or (iii) with respect to the Company and its Subsidiaries, for
any violations that, individually or in the aggregate, would not have a Material
Adverse Effect on the Company. As of the date hereof, there is no existing
default, event of default or event that, but for the giving of notice or lapse
of time or both, would constitute a default or event of default under any loan
or credit agreement, note, bond, mortgage, indenture, lease, agreement,
instrument, permit, concession, franchise, license or guarantee, which would,
individually or in the aggregate, have a Material Adverse Effect on the Company.
Section 3.4. Reports and Financial Statements. Since June 30, 1996,
the Company has filed all reports, statements, prospectuses and other filings
required to be filed by it with the Securities and Exchange Commission (the
"SEC") under the rules and regulations of the SEC. As of their respective dates,
such reports, statements, prospectuses and other filings (collectively, the
"Company SEC Reports") filed with the SEC prior to the date of this Agreement
(i) complied, and each Company SEC Report filed with the SEC on or after the
date of this Agreement (collectively, the "Subsequent SEC Reports") will comply,
as to form in all material respects with the applicable requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the Exchange Act
and, in each case, the rules and regulations promulgated thereunder and (ii) did
not, and each Subsequent SEC Report will not, at the time of filing, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in the Company SEC Reports (including any related notes and
schedules) fairly present in all material respects the financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and the
results of operations and cash flows for the periods or as of the dates then
ended (subject, in the case of the unaudited interim financial statements, to
normal recurring year-end adjustments and any other adjustments described
therein), in each case, in accordance with generally accepted accounting
principles in the United States ("GAAP") consistently applied during the periods
involved (except as otherwise disclosed
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therein or in the notes thereto). None of the Company's Subsidiaries is required
to file any reports, statements, prospectuses or other filings with the SEC.
Section 3.5. No Undisclosed Liabilities. As of the date hereof,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, and
there is no existing condition, situation or set of circumstances which would
reasonably be expected to result in such a liability or obligation, in each
case, that would be required by GAAP to be reflected on a consolidated balance
sheet of the Company and its Subsidiaries (or disclosed in the notes thereto)
except liabilities or obligations which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.6. Permits; No Violation of Law.
(a) The Company and its Subsidiaries have received such
certificates, permits, licenses, franchises, consents, approvals, orders,
authorizations and clearances from appropriate governmental bodies and
authorities (the "Company Licenses") as are necessary to conduct their
respective businesses substantially in the manner currently conducted, and all
such Company Licenses are valid and in full force and effect, except for any
such Company Licenses which the failure to have or to be in full force and
effect would not have, individually or in the aggregate, a Material Adverse
Effect on the Company. The Company and its Subsidiaries are in compliance with
their respective obligations under the Company Licenses, with only such
exceptions as, individually or in the aggregate, would not have a Material
Adverse Effect on the Company.
(b) The businesses of the Company and its Subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any governmental
body or authority (provided that no representation or warranty is made in this
Section 3.6 with respect to Environmental Laws (as hereinafter defined)) except
for violations or possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.7. Environmental Laws and Regulations. (a) The Company and
each of its Subsidiaries is in compliance with all applicable federal, state,
local and foreign laws and regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata) (collectively,
"Environmental Laws"), which compliance includes, but is not limited to, the
possession by the
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Company and its Subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof, except for non-compliance which would not,
individually or in the aggregate, have a Material Adverse Effect on the Company;
(b) neither the Company nor any of its Subsidiaries has received written notice
of, or, is the subject of, any actions, causes of action, claims,
investigations, demands or notices by any person asserting an obligation to
conduct investigations or clean-up activities under Environmental Law or
alleging liability under or non-compliance with any Environmental Law
(collectively, "Environmental Claims") which would, individually or in the
aggregate, have a Material Adverse Effect on the Company; and (c) to the
Company's knowledge, there are no facts, circumstances or conditions in
connection with the operation of its business or any currently or formerly
owned, leased or operated facilities that are reasonably likely to lead to any
Environmental Claims in the future which would, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Section 3.8. Employee Benefit Plans.
The Company Letter sets forth the name of each material Company Plan
(as defined below). Except as set forth in the Company Letter, true, correct and
complete copies of such material Company Plans have heretofore been delivered to
Parent. Each Company Plan that is an employment, severance, termination,
consulting or retirement plan or agreement which contains any provision that
becomes effective upon the occurrence of a change of control of the Company is
referred to herein as a "Severance Arrangement" and is specifically identified
as such in the Company Letter. Each Company Plan complies in all material
respects with the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder ("ERISA"), the Code (to the
extent that ERISA and the Code are applicable) and all other applicable laws and
administrative or governmental rules and regulations. No "reportable event"
(within the meaning of Section 4043 of ERISA) has occurred with respect to any
Company Plan for which the 30-day notice requirement has not been waived (other
than with respect to the transactions contemplated by this Agreement), and no
condition exists which would subject the Company or any ERISA Affiliate (as
defined below) to any fine under Section 4071 of ERISA; and no action has been
taken, or is currently being considered, to terminate any Company Plan subject
to Title IV of ERISA. No Company Plan, or any trust created thereunder, has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA), whether or not waived. There are no actions, suits or claims pending or,
to the Company's knowledge, threatened (other
14
than routine claims for benefits) with respect to any Company Plan which would
have, individually or in the aggregate, a Material Adverse Effect on the
Company. Neither the Company nor any of its ERISA Affiliates has incurred or
would reasonably be expected to incur any liability under or pursuant to Title
IV of ERISA that has not previously been satisfied (other than payment of
premiums to the PBGC). No prohibited transactions described in Section 406 of
ERISA or Section 4975 of the Code have occurred which would result in any
material liability to the Company or its Subsidiaries. All Company Plans that
are intended to be qualified under Section 401(a) of the Code have received a
favorable determination letter as to such qualification from the Internal
Revenue Service, and the Company knows of no event that has occurred, either by
reason of any action or failure to act, which would cause the loss of any such
qualification. There are no Company Multiemployer Plans. As used herein: (i)
"Company Plan" means each deferred compensation and each incentive compensation,
equity compensation plan, "welfare" plan, fund or program (within the meaning of
Section 3(1) of ERISA); "pension" plan, fund or program (within the meaning of
Section 3(2) of ERISA); each employment, termination or severance agreement; and
each other employee benefit plan, fund, program, agreement or arrangement, in
each case, that is sponsored, maintained or contributed to or required to be
contributed to by the Company or an "ERISA Affiliate", or to which the Company
or an ERISA Affiliate is party, whether written or oral, for the benefit of any
employee or former employee of the Company or any Subsidiary other than a
Company Multiemployer Plan (the "Company Plans"); (ii) "Company Multiemployer
Plan" means a "multiemployer plan" (as defined in Section 4001(a)(3) of ERISA)
to which the Company or any of its ERISA Affiliates is or has been obligated to
contribute or otherwise may have any liability; and (iii) "ERISA Affiliate"
means any trade or business, whether or not incorporated, that together with the
Company or any of its Subsidiaries would be deemed a "single employer" within
the meaning of Section 4001(b)(1) of ERISA.
Section 3.9. Absence of Certain Changes or Events. Since March 31,
1998 (a) the businesses of the Company and its Subsidiaries have been conducted
in the ordinary course consistent with past practice, (b) there has not been any
event, occurrence, development or state of circumstances or facts that has had,
or would have, a Material Adverse Effect on the Company and (c) neither the
Company nor any of its Subsidiaries has taken any action or omitted to take any
action, which act or omission, if taken after the date of this Agreement, would
result in a breach or violation of Section 5.1(e), (i), (m), (n) or (o).
15
Section 3.10. Investigations; Litigation.
(a) To the Company's knowledge, there is no investigation or review
pending by any governmental body or authority with respect to the Company or any
of its Subsidiaries which would, individually or in the aggregate, have a
Material Adverse Effect on the Company, nor has any governmental body or
authority notified the Company of an intention to conduct the same; and
(b) There are no actions, suits or proceedings pending (or, to the
Company's knowledge, threatened) against or affecting the Company or its
Subsidiaries, or any of their respective properties at law or in equity, or
before any federal, state, local or foreign governmental body or authority
which, individually or in the aggregate, would have a Material Adverse Effect on
the Company.
Section 3.11. Proxy Statement. None of the information to be
included in the Proxy Statement (as defined below) or any amendments thereof or
supplements thereto will, at the time of the mailing of the Proxy Statement or
any amendments or supplements thereto, and at the time of the Company Meeting
(as defined below), contains any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except that no representation is made by the Company with
respect to information regarding Parent and Merger Sub that is incorporated by
reference or supplied to the Company by or on behalf of Parent or Merger Sub for
inclusion in the Proxy Statement or any amendments thereof or supplements
thereto. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
promulgated thereunder. The letter to shareholders of the Company, notice of
meeting, proxy statement and form of proxy to be distributed to holders of
Company Common Shares and Company Series A Preferred Shares in connection with
the Merger and any annexes, schedules and exhibits required to be filed with the
SEC in connection therewith are collectively referred to herein as the "Proxy
Statement."
Section 3.12. Company Rights Plan. The Company, including the
Company Board, has taken all action necessary to ensure that the execution and
delivery of this Agreement, and, subject to the accuracy of the representations
and warranties contained in Section 4.8, the consummation of the transactions
contemplated hereby, including the Merger, will not cause (i) Parent or Merger
Sub to become an "Acquiring Person" (as defined in the Company Rights Plan or
the 1988
16
Rights Plan), (ii) a "Stock Acquisition Date" (as defined in the Company Rights
Plan or the 1988 Rights Plan) or a "Distribution Date" (as defined in the
Company Rights Plan or the 1988 Rights Plan) to occur, (iii) the Rights issued
pursuant to the Company Rights Plan to become exercisable or (iv) the 1988
Rights issued pursuant to the 1988 Rights Plan to become exercisable.
Section 3.13. Tax Matters.
(a) All federal, state, local and foreign Tax Returns (as defined
below) required to be filed by or on behalf of the Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which the Company or any of its Subsidiaries is or was a member ("Company
Affiliated Group"), have been timely filed (taking into account extensions), and
all such Tax Returns are complete and accurate except to the extent any failure
to file or any inaccuracies in filed Tax Returns would not, individually or in
the aggregate, have a Material Adverse Effect on the Company. All material Taxes
due and owing by the Company, any Subsidiary of the Company or any Company
Affiliated Group have been timely paid (taking into account extensions), or
adequately reserved for in accordance with GAAP in the financial statements
included in the Company SEC Reports filed with the SEC prior to the date of this
Agreement. There are no liens for Taxes upon any assets of the Company, the
Subsidiaries of the Company or any Company Affiliated Group apart from liens for
Taxes not yet due and payable and liens for Taxes which would not have a
Material Adverse Effect on the Company. There is no audit examination,
deficiency, refund litigation, proposed adjustment or matter in controversy with
respect to (i) any federal Taxes due and owing by the Company, any Subsidiary of
the Company or any Company Affiliated Group or (ii) any Taxes (other than
federal Taxes) due and owing by the Company, any Subsidiary of the Company or
any Company Affiliated Group except those relating to Taxes (other than federal
Taxes) which, if adversely determined, would not have a Material Adverse Effect
on the Company. Prior to the date of this Agreement, the Company has provided
Parent with written schedules of (i) the taxable years of the Company for which
the statutes of limitations with respect to federal and Material State (as
defined below) income Taxes have not expired, and (ii) with respect to federal
and Material State income Taxes, those years for which examinations have been
completed, those years for which examinations are presently being conducted, and
those years for which examinations have not yet been initiated. The Company and
each of its Subsidiaries have complied in all respects with all rules and
regulations relating to the payment and withholding of Taxes, except to the
extent any such failure to comply would not, individually or in the aggregate,
have a Material Adverse Effect
17
on the Company. Neither the Company nor any of its Subsidiaries (i) has waived
any statutory period of limitations in respect of its or their Taxes or Tax
Returns except where such waiver would not have a Material Adverse Effect on the
Company or (ii) is a party to, bound by or has any obligation under any Tax
sharing, allocation, indemnity, or similar contract or arrangement.
(b) For purposes of this Agreement: (i) "Taxes" means any and all
federal, state, local, foreign, provincial, territorial and other taxes,
imposts, rates, levies, assessments and other charges of any kind whatsoever
whether imposed directly or through withholding (together with any and all
interest, penalties, additions to tax and additional amounts applicable with
respect thereto), including income, franchise, windfall and other profits, gross
receipts, property, sales, use, capital stock, payroll, employment, social
security, workers' compensation, unemployment compensation, net worth, excise,
withholding, ad valorem and value added taxes; (ii) "Tax Return" means any
declaration, return, report, schedule, certificate, statement or other similar
document (including relating or supporting information) required to be filed or,
where none is required to be filed with a taxing authority, the statement or
other document issued by a taxing authority in connection with any Tax,
including any information return, claim for refund, amended return or
declaration of estimated Tax; and (iii) "Material State" means any state for
which the allocation percentage of any of the Company, BetzDearborn Hydrocarbon
Process Group or BetzDearborn Paper Process Group in the 1996 taxable year
exceeds 10%.
Section 3.14. Opinion of Financial Advisor. The Board of Directors
of the Company has received the opinion of X.X. Xxxxxx Securities Inc., dated
the date of this Agreement, to the effect that, as of such date, the Merger
Consideration is fair to the holders of Company Common Shares from a financial
point of view.
Section 3.15. Required Vote of the Company Shareholders. The
affirmative vote of the holders of (a) a majority of the outstanding Company
Common Shares and Company Series A Preferred Shares, voting together and not by
class, and (b) at least two-thirds of the outstanding Company Common Shares and
Company Series A Preferred Shares (regardless of class), voting together and not
by class, represented in person or by proxy at the Company Meeting (together,
the "Company Shareholder Approval"), are required to approve and adopt this
Agreement. No other vote of the holders of any shares of capital stock of the
Company, or of the holders of any other securities of the Company (equity or
otherwise), is required by law, including the PBCL, the Restated Articles of
Incorporation or
18
Bylaws of the Company, or otherwise, in order for the Company to consummate the
transactions contemplated hereby, including the Merger.
Section 3.16. Intellectual Property. The Company and its
Subsidiaries own, or are validly licensed or otherwise have the right to use,
all material patents, patent rights, trademarks, trade names, service marks,
copyrights, know-how and other proprietary intellectual property rights and
computer programs that are material to the conduct of the business of the
Company and its Subsidiaries, taken as a whole (collectively, "Intellectual
Property Rights"). As of the date hereof, to the Company's knowledge, no claims
are pending or threatened that the Company or any of its Subsidiaries is
infringing or otherwise adversely affecting the rights of any person with regard
to any Intellectual Property Right so as to materially adversely affect any of
the Company's Intellectual Property Rights, and the Company is not aware of any
basis for any such claims. To the Company's knowledge, no person is infringing
the rights of the Company or any of its Subsidiaries with respect to any
Intellectual Property Right so as to materially adversely affect such
Intellectual Property Right.
Section 3.17. Labor Matters. As of the date hereof, neither the
Company nor any of its Subsidiaries is party to any collective bargaining
agreement, memorandum of understanding, settlement or other labor agreement with
any union or labor organization and no union or labor organization has been
recognized by the Company or any of its Subsidiaries as an exclusive bargaining
representative for employees of the Company or any of its Subsidiaries. As of
the date hereof, to the Company's knowledge: (a) there is no current union
representation matter involving employees of the Company or any of its
Subsidiaries, nor does the Company have knowledge of any significant activity or
proceeding of any labor organization (or representative thereof) or employee
group to organize any such employees; (b) there is no material labor dispute,
strike, picketing or work stoppage, or any lockout, involving employees of the
Company or any of its Subsidiaries pending or, to the Company's knowledge,
threatened against or involving the Company or any of its Subsidiaries; and (c)
there is no (i) arbitration, unfair labor practice, investigation, employment
discrimination or other labor or employment related charge, complaint or claim
against the Company or any of its Subsidiaries pending or, to the Company's
knowledge, threatened before any court, arbitrator, mediator or governmental
agency or tribunal, or (ii) no adjudication by any court, arbitrator, mediator
or governmental agency or tribunal that, in the case of either clause (i) or
(ii) above, has or would have a Material Adverse Effect on the Company.
19
Section 3.18. Takeover Statutes. Subchapters D (Section 2538), E, F,
G, H, I and J of Chapter 25 of the PBCL do not apply to this Agreement or the
transactions contemplated hereby. The Company Board has approved this Agreement
and the transactions contemplated hereby. Part IV of Article 5th of the
Company's Restated Articles of Incorporation does not apply to this Agreement or
the transactions contemplated hereby. No Pennsylvania takeover statute (other
than Sections 1921 through 1930 of Subchapter C of Chapter 19 of the PBCL and
provisions of the PBCL generally applicable to the powers of a corporation and
the duties and powers of its board of directors in a takeover context, including
Section 1502(a)(18), 1525(b), 1715 and 2513) is applicable to the transactions
contemplated hereby, including the Merger.
Section 3.19. Finders or Brokers. Except for X.X. Xxxxxx Securities
Inc., a true, correct and complete copy of whose engagement agreement has been
provided to Parent, neither the Company nor any of its Subsidiaries has employed
any investment banker, broker, finder or intermediary in connection with the
transactions contemplated hereby who might be entitled to any fee or any
commission in connection with or upon consummation of the Merger based on
arrangements made by or on behalf of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
Except as set forth with respect to matters disclosed in the letter
delivered by Parent to the Company prior to the execution of this Agreement (the
"Parent Letter"), or in Parent's reports, statements, prospectuses and other
filings required to be filed and filed by it with the SEC under the rules and
regulations of the SEC prior to the execution of this Agreement, Parent and
Merger Sub represent and warrant to the Company as follows:
Section 4.1. Organization; Qualification. Parent is a corporation
duly organized, validly existing and is in good standing under the laws of the
State of Delaware; Merger Sub is a corporation duly organized, validly existing,
is in good standing under the laws of the Commonwealth of Pennsylvania and is a
direct, wholly owned subsidiary of Parent; and each of Parent and Merger Sub has
the corporate power and authority to carry on its business as it is now being
conducted and is duly qualified and is in good standing in each jurisdiction in
which the
20
ownership of its properties or the conduct of its business requires such
qualification, except for jurisdictions in which the failure to be so qualified
or in good standing would not, individually or in the aggregate, have a Material
Adverse Effect on Parent.
Section 4.2. Corporate Authority Relative to this Agreement; No
Violation.
(a) Each of Parent and Merger Sub has the corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby (subject to the terms and conditions
hereof) have been duly and validly authorized by the Board of Directors of
Parent and Merger Sub, and by Parent as the sole shareholder of Merger Sub, and
no other corporate proceedings on the part of Parent or Merger Sub are necessary
to authorize the execution and delivery of this Agreement, or the consummation
of the transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Parent and Merger Sub and, assuming this
Agreement constitutes the valid and binding agreement of the other party hereto,
this Agreement constitutes the valid and binding agreement of Parent and Merger
Sub, enforceable against Parent and Merger Sub in accordance with its terms.
(b) The execution and delivery of this Agreement by Parent and
Merger Sub do not, and the consummation by Parent and Merger Sub of the
transactions contemplated hereby will not, result in any violation of, or
default or event of default (with or without notice or lapse of time or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of Parent or Merger Sub
under: (i) any provision of the Certificate of Incorporation or By-laws of
Parent or the comparable organizational documents of any of its Subsidiaries,
including Merger Sub, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease, agreement, instrument, permit, concession, franchise, license
or guarantee applicable to Parent or Merger Sub, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Parent or any
of its Subsidiaries or any of their respective properties or assets, other than,
in the case of clauses (ii) and (iii), any such violations, defaults, events of
default, rights, liens, security interests, charges or encumbrances that,
individually or in the aggregate, would not have a Material Adverse Effect on
Parent or would not prevent the consummation of any of the transactions
contemplated hereby. No filing or registra-
21
tion with, or authorization, consent or approval of, any governmental body or
authority is required by or with respect to Parent or any of its Subsidiaries,
including Merger Sub, in connection with the execution and delivery of this
Agreement by Parent or Merger Sub, or the consummation of the transactions
contemplated hereby, except: (i) in connection, or in compliance, with the
provisions of the HSR Act, applicable non-United States competition, antitrust
and investment laws, and the Exchange Act, (ii) for the filing of Articles of
Merger with the Department of State of the Commonwealth of Pennsylvania and
(iii) for such other consents, orders, authorizations, registrations,
declarations and filings the failure of which to obtain or make would not,
individually or in the aggregate, have a Material Adverse Effect on Parent.
Section 4.3. Proxy Statement. None of the information regarding
Parent or Merger Sub that is incorporated by reference or supplied to the
Company by or on behalf of Parent or Merger Sub for inclusion in the Proxy
Statement or any amendments thereof or supplements thereto will, at the time of
the mailing of the Proxy Statement or any amendments or supplements thereto, and
at the time of the Company Meeting, contains any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Section 4.4. Litigation. There are no actions, suits or proceedings
pending (or, to Parent's knowledge, threatened) against or affecting Parent or
Merger Sub or any of their respective properties at law or in equity, or before
any federal, state, local or foreign governmental body or authority which,
individually or in the aggregate, would have a Material Adverse Effect on Parent
or Merger Sub.
Section 4.5. Voting Requirements. No vote of the holders of any
class or series of the capital stock of Parent is necessary to approve and adopt
this Agreement or the transactions contemplated hereby.
Section 4.6. Financing. At the Effective Time, Parent and Merger Sub
will have available all of the funds necessary to consummate the transactions
contemplated hereby.
Section 4.7. Finders or Brokers. Except for SBC Warburg Dillon Read
Inc., neither Parent nor Merger Sub has employed any investment banker, broker,
finder or intermediary in connection with the transactions contemplated
22
hereby who might be entitled to any fee or any commission in connection with or
upon consummation of the Merger based on arrangements made by or on behalf of
Parent or Merger Sub.
Section 4.8. Control Shares, Interested Shareholder or Acquiring
Person. Except to the extent, if any, caused by the execution and delivery of
this Agreement, or the negotiation of or discussions concerning the transactions
contemplated by this Agreement, none of Parent, Merger Sub or any of their
respective "affiliates" or "associates" (each as defined in Section 2552 of the
PBCL for purposes of clauses (i) and (ii) below, as defined in the Company
Rights Plan or the 1988 Rights Plan for purposes of clause (iii) below and as
defined in Part IV of Article 5th of the Company's Restated Articles of
Incorporation for purposes of clause (iv) below) (i) directly or indirectly,
alone or as part of a group, owns or may exercise or direct the exercise of
voting power of any "control shares" of the Company as defined in Section 2562
of the PBCL, (ii) has been or is an "interested shareholder" as defined in
Section 2538 or Section 2553 of the PBCL or is, or is part of, a "controlling
person or group" (as defined in Section 2543 or 2573 of the PBCL), (iii)
directly or indirectly, together or as part of a group, is the beneficial owner
(as defined in the Company Rights Plan or the 1988 Rights Plan) of 20% or more
of the outstanding Company Common Shares or (iv) is an "Interested Shareholder"
as defined in Part IV of Article 5th of the Company's Restated Articles of
Incorporation. None of Parent, Merger Sub or any other Subsidiary of Parent
beneficially owns (as such term is defined in Section 13(d) of the Exchange Act)
any Company Common Shares, except for any such shares owned by any benefit or
similar plan of Parent as to which neither Parent nor any of its Subsidiaries
exercises investment authority.
ARTICLE V
COVENANTS AND AGREEMENTS
Section 5.1. Conduct of Business by the Company. From and after the
date hereof and prior to the Effective Time or the date, if any, on which this
Agreement is earlier terminated pursuant to Section 7.1 (the "Termination
Date"), and except (i) as may be required by law, (ii) as may be agreed in
writing by Parent, (iii) as may be expressly permitted pursuant to this
Agreement or (iv) as set forth in Section 5.1 of the Company Letter, the
Company:
23
(a) shall, and shall cause each of its Subsidiaries to, conduct its
operations in the ordinary course of business in substantially the same manner
as heretofore conducted;
(b) shall use all reasonable efforts, and shall cause each of its
Subsidiaries to use all reasonable efforts, to preserve intact its business
organization and goodwill, keep available the services of its key employees and
preserve its relationships with those persons having business dealings with the
Company and its Subsidiaries;
(c) shall confer at such times as Parent may reasonably request with
one or more representatives of Parent to report material matters and the general
status of ongoing operations and shall provide financial and operating data to
Parent to the extent reasonably requested by Parent;
(d) shall not, and shall not permit any of its Subsidiaries that is
not wholly owned to, authorize or pay any dividends on or make any distribution
with respect to its outstanding shares of stock (other than regular quarterly
cash dividends with record dates and payment dates consistent with past practice
of not more than $.38 per Company Common Share and $4.00 per Company Series A
Preferred Share) and, with respect to any Subsidiary of the Company that is not
wholly owned by the Company, except as contractually required on the date
hereof;
(e) shall not, and shall not permit any of its Subsidiaries to,
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock, except for any such transaction by a wholly
owned Subsidiary of the Company which remains a wholly owned Subsidiary after
consummation of such transaction;
(f) shall not, and shall not permit any of its Subsidiaries to,
enter into or amend any employment, severance or similar agreements or
arrangements with any of their respective directors or executive officers or key
employees, or adopt any new or amend any existing employee benefit plans,
programs or arrangements, except as may be required by applicable law or an
existing Company Plan or collective bargaining or similar agreement; provided,
that the Company and any Subsidiary may engage in any of the following in the
ordinary course of business with respect to key employees: hiring and
terminating; conducting performance reviews; awarding merit increases in pay;
and provision of severance payments and benefits; and provided, further, that
the Company may implement a retention plan for
24
key employees of the Company and its Subsidiaries, as described in the Company
Letter;
(g) subject to Section 5.7(b), shall not, and shall not permit any
of its Subsidiaries to, authorize, publicly announce or enter into an agreement
with respect to, any merger, consolidation or business combination (other than
the Merger);
(h) shall not propose or adopt any amendment to its charter or
Bylaws, or similar governing documents;
(i) shall not, and shall not permit any of its Subsidiaries to,
issue or authorize the issuance of, or agree to issue or sell any shares of
their capital stock of any class, or any other equity interests (in each case,
whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise) other than the issuance of
capital stock upon exercise of Stock Options outstanding on the date hereof and
the release of shares of capital stock from restrictions pursuant to the terms
in effect on the date hereof and other than any issuances, authorizations,
agreements and sales (to the Company or any other wholly owned Subsidiary of the
Company) by a wholly owned Subsidiary of the Company in the ordinary course of
business;
(j) shall not, and shall not permit any of its Subsidiaries to,
purchase or redeem any shares of its capital stock, or any other equity
interests or any rights, warrants or options to acquire any such shares or
interests, except for any such purchases or redemptions by a wholly owned
Subsidiary of the Company in the ordinary course of business;
(k) shall not, and shall not permit any of its Subsidiaries to,
incur, assume or prepay any material indebtedness or any other material
liabilities, other than in the ordinary course of business consistent with past
practice;
(l) shall not, and shall not permit any of its Subsidiaries to, (i)
make any material loans, advances or capital contributions to, or investments
in, any other person, other than by the Company or a Subsidiary of the Company
to or in the Company or any wholly owned Subsidiary of the Company or (ii) pay,
discharge or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), in each case, other than
indebtedness, issuances of debt securities, guarantees, loans, advances, capital
contributions, investments, payments,
25
discharges or satisfactions incurred or committed to in the ordinary course of
business consistent with past practice;
(m) shall not sell, lease, license, mortgage or otherwise encumber
or subject to any Lien, or otherwise dispose of, any of its material properties
or material assets (including securitizations), other than in the ordinary
course of business consistent with past practice;
(n) shall not, and shall not permit any of its Subsidiaries to, (i)
make any material Tax election, except those made in the ordinary course of
business that are consistent with past practice and would not have an effect
with respect to periods following the Merger, or settle or compromise any
material Tax liability or (ii) change its fiscal year;
(o) except as described in the Company SEC Reports filed with the
SEC prior to the date of this Agreement, or as required by a governmental body
or authority, shall not change its methods of accounting (including make any
material write-off or reduction in the carrying value of any assets) in effect
at December 31, 1997, other than as required by changes in GAAP as agreed by the
Company's independent auditors; and
(p) shall not, and shall not permit any of its Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions or take any
action which would (x) make any representation or warranty in Article III untrue
or incorrect in any material respect or (y) result in any of the conditions to
the Merger set forth in Article VI not being satisfied.
Section 5.2. Access. The Company shall afford to Parent and to
Parent's officers, employees, accountants, counsel and other authorized
representatives (except to the extent prohibited by applicable law as advised by
counsel and except as may be limited by any confidentiality obligation contained
in any contract with a third party) reasonable access during normal business
hours, throughout the period prior to the earlier of the Effective Time or the
Termination Date, to its and its Subsidiaries' properties, books and records
(including Tax Returns) and any report, schedule or other document filed or
received by it pursuant to the requirements of federal or state securities laws,
including all Subsequent SEC Reports. Parent hereby agrees that it will treat
all such information in accordance with the Confidentiality Agreement, dated as
of May 7, 1998, between the Company and Parent (the "Confidentiality
Agreement").
26
Section 5.3. Other Agreements.
(a) The Company shall:
(i) prepare and file with the SEC as soon as is reasonably
practicable the Proxy Statement on a confidential basis, and shall use all
reasonable efforts to have the Proxy Statement cleared by the SEC under the
Exchange Act as soon as is reasonably practicable; and
(ii) (A) cooperate with Parent in order to lift any
injunctions or remove any other impediment to the consummation of the
transactions contemplated by this Agreement and (B) use all reasonable efforts
to lift or remove any such injunction or impediment.
(b) Parent and Merger Sub shall (i) cooperate with the Company in
order to lift any injunctions or remove any other impediment to the consummation
of the transactions contemplated by this Agreement and (ii) each use all
reasonable efforts to lift or remove any such injunction or impediment.
(c) Subject to the limitations contained in Section 5.2, the
Company and Parent shall each furnish to one another and to one another's
counsel all such information as may be required in order to effect the foregoing
actions pursuant to Sections 5.3(a) and (b).
(d) The Company shall cause the Proxy Statement to be mailed
to holders of the Shares as promptly as practicable after the Proxy Statement is
cleared by the SEC under the Exchange Act.
(e) The Company shall, as soon as practicable following the
date of this Agreement, duly call, give notice of, convene and hold a meeting of
its shareholders (the "Company Meeting") for the purpose of obtaining the
Company Shareholder Approval and shall, through its Board of Directors, and,
subject to its fiduciary duties under applicable law, recommend to its
shareholders the adoption of this Agreement and the transactions contemplated
hereby, including the Merger. Without limiting the generality of the foregoing
but subject to its rights to terminate this Agreement pursuant to Section 7.1,
the Company agrees that its obligations pursuant to the first sentence of this
Section 5.3(d) shall not be affected by the
27
commencement, public proposal, public disclosure or communication to the Company
of any Takeover Proposal or Superior Proposal (each as defined below).
Section 5.4. Employer and Employee Benefit Plans.
(a) For two years after the Effective Time, Parent shall, or
shall cause the Surviving Corporation to, provide employee (i) welfare benefits,
(ii) pension and savings benefits, (iii) incentive compensation, (iv) executive
benefits, (v) severance and (vi) other employee benefits for the benefit of
employees of the Company, which, in the aggregate, are no less favorable than
such benefits provided immediately prior to the Effective Time by the Company
and its Subsidiaries. Without limiting the generality of the foregoing, any
Company Employee (as defined below) who has met the requirements of the "rule of
85" under any Company Plan that is a "pension plan" within the meaning of
Section 3(2) of ERISA (as in effect as of the date hereof) (such plans, the
"Company Pension Plans") on or before the Effective Time, or who would meet such
requirements if he or she remained an active participant in such Company Plan
until the second anniversary of the Effective Time, shall be entitled to pension
benefits no less favorable than the pension benefits he or she would be entitled
under all Company Pension Plans (as in effect as of the date hereof) if he or
she retired when he or she first met such requirements (regardless of whether or
when he or she actually retires). Nothing in this Agreement shall be interpreted
as limiting the power of Parent or the Surviving Corporation to amend or
terminate any such plan of the Company or any other employee benefit plan,
program, agreement or policy or as requiring Parent or the Surviving Corporation
to retain any individual as an employee of Parent.
(b) At or prior to the Effective Time, Parent shall adopt the
severance plan in the form of Exhibit A attached hereto (the "Merger Severance
Plan"). From and after the Effective Time, Parent shall cause the Surviving
Corporation to honor the Merger Severance Plan. Each individual who is a party
to an agreement that is a Severance Arrangement shall be deemed to have
experienced a termination for "good reason" (as defined therein) at the
Effective Time and the Surviving Corporation shall provide such individual with
all payments and benefits required by such agreement, except as may be otherwise
agreed in writing by such individual prior to the Effective Time in accordance
with the provisions of Exhibit B hereto.
(c) Immediately after the date hereof, the Company shall amend
the ESPP (i) to prohibit prior to the termination of this Agreement the
28
modification by any participant of any election thereunder the effect of which
is to increase such participant's contributions to the plan above the level of
such participant's contributions as of the date hereof and (ii) to provide that
no further Stock Options will be granted thereunder, and that the Option Term
(as defined in the ESPP) for the Stock Options granted thereunder on July 1,
1998 shall end on the earlier of December 31, 1998 or the day on which occurs
the Effective Time.
(d) Following the Effective Time, Parent shall provide, and
shall cause the Surviving Corporation and all of Parent's other Subsidiaries to
provide, to individuals who are employed by the Company and its Subsidiaries
immediately before the Effective Time ("Company Employees"), credit for all
service with the Company and its Subsidiaries and their respective predecessors
for all purposes (except where such credit would cause a duplication of
benefits) under employee benefit plans and programs, as if such service were
service with Parent and its Subsidiaries.
(e) The Company, Parent and the Surviving Corporation shall
take all steps necessary so that, effective at the Effective Time, all Company
Employees who are participants in the Company's Employee Stock Ownership and
401(k) Plan (the "KESOP") at the Effective Time are fully vested in their
accounts in such plan and the Company shall direct the trustee of the KESOP to
use the Merger Consideration received with respect to unallocated shares to
purchase shares of Parent Common Stock.
(f) Following the Effective Time, Parent and the Surviving
Corporation shall (i) select employees for continued employment based upon a
process providing equal opportunity and fairness to Company Employees and
individuals who are employees of Parent and its Subsidiaries immediately before
the Effective Time ("Parent Employees") and (ii) deal fairly with both Company
Employees and Parent Employees without regard to their prior affiliation.
Section 5.5. Filings; Other Actions.
Subject to the terms and conditions herein provided, the
Company and Parent shall (i) promptly make their respective filings and
thereafter make any other required submissions under the HSR Act, (ii) use all
reasonable efforts to cooperate with one another in (x) determining whether any
filings are required to be made with, or consents, permits, authorizations or
approvals are required to be obtained from, any third party or other
governmental or regulatory
29
bodies or authorities of federal, state, local and foreign jurisdictions in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby and (y) timely making all
such filings and timely seeking all such consents, permits, authorizations or
approvals, and (iii) use all reasonable efforts to take, or cause to be taken,
all other actions and do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective the transactions
contemplated hereby, including taking all such further action as reasonably may
be necessary to resolve such objections, if any, as the Federal Trade
Commission, the Antitrust Division of the Department of Justice, state antitrust
enforcement authorities or competition authorities of any other jurisdiction or
any other person may assert under relevant antitrust or competition laws with
respect to the transactions contemplated hereby.
Section 5.6. Takeover Statute. If any "fair price," "moratorium,"
"control share acquisition" or other form of antitakeover statute or regulation
shall become applicable to the transactions contemplated hereby, including any
provision of the PBCL, each of Parent and the Company, and the members of their
respective Boards of Directors, shall, subject to their fiduciary duties under
applicable law, grant such approvals and take such actions as are reasonably
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute or regulation on the
transactions contemplated hereby.
Section 5.7. No Solicitation.
(a) From and after the date hereof, the Company shall not, nor shall
it permit its Subsidiaries to, nor shall it authorize or permit any of its
directors, officers, employees, attorneys, financial advisors, accountants,
agents or other representatives or those of any of its Subsidiaries to, directly
or indirectly through any person, (i) solicit or initiate (including by way of
furnishing non-public information) any inquiries or the making of a proposal
which constitutes a Takeover Proposal or (ii) engage in, or continue,
discussions or negotiations relating thereto; provided, however, that, so long
as the Company complies in all respects with its obligations under this Section
5.7, the Company may engage in discussions or negotiations with, and, subject to
entering into a confidentiality agreement substantially similar to the
Confidentiality Agreement, furnish information concerning the Company and its
Subsidiaries, businesses, properties or assets to, any bona fide third party
which has made a bona fide unsolicited Superior Proposal if the Company promptly
(but in no case later than 36 hours) notifies Parent of the receipt of such
30
Superior Proposal, including the material terms and conditions thereof (and any
change in the material terms and conditions thereof) and, subject to the
fiduciary duties of the Company Board under applicable law, the identity of the
person making such Superior Proposal. As used in this Agreement, (x) "Takeover
Proposal" shall mean any inquiry, proposal or offer made by a third party prior
to the shareholder vote at the Company Shareholder Meeting for any acquisition
of 20% or more of the assets, or 20% or more of the voting securities, of the
Company or any of its Subsidiaries, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any of its Subsidiaries, or any
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company or any of its
Subsidiaries, other than the transactions contemplated by this Agreement and (y)
"Superior Proposal" shall mean a Takeover Proposal made on terms that a majority
of the members of the Company Board determines in good faith (after consultation
with an independent financial advisor) is more favorable than the transactions
contemplated by this Agreement if such Takeover Proposal were to be consummated.
(b) Except as expressly permitted by this Section 5.7, neither the
Company Board nor any committee thereof shall (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Board of Directors or such committee of the Merger or
this Agreement (except as required by their fiduciary duties under applicable
law), (ii) approve or recommend, or propose publicly to approve or recommend,
any Takeover Proposal or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar
agreement, arrangement or understanding (each, an "Acquisition Agreement")
related to any Takeover Proposal, or to redeem or otherwise render inapplicable
the Company Rights Plan, the 1988 Rights Plan, or the Rights or the 1988 Rights
granted thereunder in response to any Takeover Proposal. Notwithstanding the
foregoing, in the event that prior to the adoption of this Agreement by the
shareholders of the Company, the Company Board receives a Superior Proposal
(that is not subject to any financing condition), the Company Board may, if it
determines in good faith, by resolution duly adopted after consultation with its
outside counsel (who may be its regularly engaged outside counsel), that the
failure to take such action would reasonably be expected to constitute a breach
of its fiduciary duties under applicable law, (x) withdraw or modify its
approval or recommendation of the Merger or this Agreement and (y) approve or
recommend such Superior Proposal and terminate this Agreement as permitted
pursuant to the terms of Section 7.1(e) (and concurrently with or immediately
after such termination
31
cause the Company to enter into a definitive agreement with respect to such
Superior Proposal) but only at a time that is after the third business day
following Parent's receipt of written notice from the Company advising Parent
that the Company Board has received a Superior Proposal, providing Parent with a
copy of such Superior Proposal and identifying the person making such Superior
Proposal with the intent of enabling Parent to agree to a modification of the
terms and conditions of this Agreement so that the transactions contemplated
hereby may be effected.
(c) Nothing contained herein shall prohibit the Company from taking
and disclosing to its shareholders a position contemplated by Rule 14e-2(a)
under the Exchange Act with respect to any tender or exchange offer.
Section 5.8. Public Announcements. The Company and Parent shall
consult with and provide each other the reasonable opportunity to review and
comment upon any press release or other public statement or comment prior to the
issuance of such press release or other public statement or comment relating to
this Agreement or the transactions contemplated herein and shall not issue any
such press release or other public statement or comment prior to such
consultation, except, in any case, as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange, it
being understood that this Section 5.8 shall, with respect to Parent, Merger Sub
and the Company, supersede Section 18 of the Confidentiality Agreement.
Section 5.9. Indemnification and Insurance. Parent agrees that (i)
all rights to indemnification existing in favor of any director, officer,
employee or agent of the Company or its Subsidiaries (the "Indemnified Parties")
as provided in their respective certificates of incorporation, by-laws or
comparable organizational documents or in indemnification agreements with the
Company or any of its Subsidiaries which are listed in or attached to the
Company Letter shall survive the Merger and shall continue in full force and
effect for a period of not less than six years from the Effective Time and (ii)
Parent shall guarantee the performance of the Surviving Corporation of its
obligations referred to in clause (i) provided, that in the event any claim or
claims are asserted or made within such six-year period, all rights to
indemnification in respect of any such claim or claims, and Parent's guarantee
with respect thereto, shall continue until final disposition of any and all such
claims. Parent also agrees to indemnify all Indemnified Parties to the fullest
extent permitted by applicable law with respect to all acts or omissions arising
out of such individuals' services as officers, directors, employees or agents of
the Company or any of its Subsidiaries or as trustees or fiduciaries of any plan
for the benefit of employees or
32
directors of, or otherwise on behalf of the Company or any of its Subsidiaries,
occurring prior to the Effective Time, including the transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, in the
event any such Indemnified Party is or becomes involved in any capacity in any
action, proceeding or investigation in connection with any matter, including the
transactions contemplated by this Agreement, occurring prior to or at the
Effective Time, Parent shall pay as incurred such Indemnified Party's reasonable
legal and other expenses (including the cost of any investigation and
preparation) incurred in connection therewith. From and after the Effective
Time, Parent shall pay all reasonable expenses, including attorneys' fees, that
may be incurred by any Indemnified Party in enforcing the indemnity and other
obligations provided for in this Section 5.9. Parent further agrees that Section
4.1(b) and Article VII of the Bylaws of the Company shall not be rescinded,
amended or modified prior to the sixth anniversary of the Effective Time. For a
period of six years after the Effective Time, Parent shall cause the Surviving
Corporation to maintain in effect the current policies of directors' and
officers' liability insurance and fiduciary liability insurance maintained by
the Company (provided that Parent may substitute therefore policies of at least
the same coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured) with respect to any claims
arising from facts or events that occurred on or before the Effective Time;
provided, however, that in no event shall Parent be required to expend with
respect to such insurance policies in any one year greater than an amount equal
to 150% of the annual premiums currently paid by the Company for such insurance.
Section 5.10. Corporate Matters.
(a) At or prior to the Effective Time, Parent shall (i)
increase the size of its Board of Directors to fourteen members and elect four
current directors of the Company selected by the Company Board, including
Xxxxxxx X. Xxxx, to fill the vacancies created thereby, (ii) cause each existing
committee of its Board of Directors to be comprised of the current members
thereof plus a number of the former directors of the Company such that
approximately one-third of the directors on each such committee shall be former
directors of the Company, (iii) cause each of R. Xxxxx Xxxxxxx and Xxxxxxx X.
Xxxx to be appointed Co-Chief Executive Officer of Parent, (iv) establish and
maintain for so long as Messrs. Xxxxxxx and Xxxx serve as Co-Chief Executive
Officers of Parent an "Office of the Chairman", comprised of R. Xxxxx Xxxxxxx,
who shall serve as Chairman, Xxxxxxx X. Xxxx who shall serve as Vice Chairman
and Xxxxxxx X. Xxxxx who shall serve as President and Chief Operating Officer of
Parent, (v) provide that (A) Xxxxxx XxxXxxxxx shall
33
continue to serve as Senior Vice President and Chief Financial Officer of
Parent, (B) Xxxxx X. Xxxxxx shall be appointed Senior Vice President (Company
Non-Paper Operations), (C) Xxxxxxxx Di Xxxxx shall be appointed Senior Vice
President (Paper Operations), (D) all other officers and senior management
reporting to the Chief Operating Officer shall be determined by Messrs. Xxxxxxx,
Xxxx and Xxxxx and (E) all other officers and senior management reporting to the
Co-Chief Executive Officers shall be determined by Messrs. Xxxxxxx and Xxxx, all
of the foregoing to be effective from and after the Effective Time. If any
person named in this Section 5.10(a) is unwilling or unable to hold such office
as is set forth above, his successor shall be selected by the Board of Directors
of Parent.
(b) From and after the Effective Time, unless tax and other
considerations result in another location being more favorable to Parent, (i)
Parent shall continue to maintain its corporate headquarters in Wilmington,
Delaware and (ii) all other specific business headquarters shall be determined
by Messrs. Xxxxxxx and Xxxx.
(c) From and after the Effective Time, Parent shall conduct its
businesses under the "Hercules" name provided that (i) the water treatment
business of Parent and the Surviving Corporation shall be conducted under the
"BetzDearborn" name and (ii) as determined by Messrs. Xxxxxxx and Xxxx, certain
businesses of the Surviving Corporation shall be conducted under the
"Hercules/BetzDearborn" name.
Section 5.11. Shareholder Litigation. The Company shall give Parent
the opportunity to participate in the defense or settlement of any shareholder
litigation against the Company or its directors relating to the transactions
contemplated by this Agreement; provided, however, that no such settlement shall
be agreed to without Parent's consent which shall not be unreasonably withheld
or delayed; provided, further, that nothing contained in this Section 5.11 shall
prevent the Company or its directors, as the case may be, from being represented
in any such litigation by counsel of its or his choice.
5.12. No Acquisition of Company Common Shares. None of Parent,
Merger Sub or any other Subsidiary of Parent shall acquire any Company Common
Shares at any time prior to the earlier to occur of (i) the Effective Time and
(ii) the Termination Date, it being understood and intended by the parties that
this Section 5.12 shall, with respect to Parent, Merger Sub and the other
Subsidiaries of Parent, supersede Section 17 of the Confidentiality Agreement.
34
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) The Company Shareholder Approval shall have been obtained in
accordance with applicable law and the rules of the New York Stock Exchange,
Inc.
(b) No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered, promulgated or enforced by any
court or other tribunal or governmental body or authority which prohibits the
consummation of the transactions contemplated by this Agreement, including the
Merger, substantially on the terms contemplated hereby, and shall continue to be
in effect.
(c) Any applicable waiting period under the HSR Act shall have
expired or been terminated and any other approvals of any governmental entity
shall have been obtained, except where the failure to obtain such other
approvals of any governmental entity would not have a Material Adverse Effect on
the Company or Parent, as the case may be.
Section 6.2. Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger is further subject to
the fulfillment of the following conditions:
(a) The representations and warranties of Parent and Merger Sub that
are qualified by reference to a Material Adverse Effect on Parent shall be true
and correct and the representations and warranties that are not so qualified
shall be true and correct except where the failure to be true and correct would
not have a Material Adverse Effect on Parent or on the ability of Parent or
Merger Sub to consummate the transactions contemplated by this Agreement, in
each case as of the date hereof and, except to the extent such representations
and warranties speak as of an earlier date, as of the Effective Time, as though
made at and as of the Effective
35
Time, and the Company shall have received a certificate signed on behalf of
Parent by its chief executive officer or executive vice president to such
effect.
(b) Each of Parent and Merger Sub shall have performed all
obligations required to be performed by it under this Agreement at or prior to
the Effective Time except where the failure to so perform would not have a
Material Adverse Effect on Parent or on the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement, and the Company
shall have received a certificate signed on behalf of Parent by its chief
executive officer or executive vice president to such effect.
Section 6.3. Conditions to Obligation of Parent and Merger Sub to
Effect the Merger. The obligation of Parent and Merger Sub to effect the Merger
is further subject to the fulfillment of the following conditions:
(a) The representations and warranties of the Company that are
qualified by reference to a Material Adverse Effect on the Company shall be true
and correct and the representations and warranties that are not so qualified
shall be true and correct except where the failure to be true and correct would
not have a Material Adverse Effect on the Company or on the ability of the
Company to consummate the transactions contemplated by this Agreement, in each
case as of the date hereof and, except to the extent such representations and
warranties speak as of an earlier date, as of the Effective Time, as though made
at and as of the Effective Time, and Parent shall have received a certificate
signed on behalf of the Company by its chief executive officer or executive vice
president to such effect.
(b) The Company shall have performed all obligations required to be
performed by it under this Agreement at or prior to the Effective Time except
where the failure to so perform would not have a Material Adverse Effect on the
Company or on the ability of the Company to consummate the transactions
contemplated hereby, and Parent shall have received a certificate signed on
behalf of the Company by its chief executive officer or executive vice president
to such effect.
36
ARTICLE VII
TERMINATION
Section 7.1. Termination or Abandonment. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Effective Time, whether before or after
the Company Shareholder Approval:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if (i) the Closing Date shall
not have occurred on or before February 28, 1999 (the "Termination Date") and
(ii) the party seeking to terminate this Agreement pursuant to this clause
7.1(b) shall not have breached in any material respect its obligations under
this Agreement in any manner that shall have contributed to the failure to
consummate the Merger on or before such date;
(c) by either the Company or Parent, if (i) a statute, rule,
regulation or executive order shall have been enacted, entered or promulgated
prohibiting the consummation of the Merger substantially on the terms
contemplated hereby or (ii) (A) an order, decree, ruling or injunction shall
have been entered permanently restraining, enjoining or otherwise prohibiting
the consummation of the Merger substantially on the terms contemplated hereby
and such order, decree, ruling or injunction shall have become final and
non-appealable and (B) the party seeking to terminate this Agreement pursuant to
this clause 7.1(c)(ii) shall have used all reasonable efforts to remove such
order, decree, ruling or injunction;
(d) by either the Company or Parent, if the Company Shareholder
Approval shall not have been obtained by reason of the failure to obtain the
required vote at a duly held meeting of shareholders or of any adjournment,
postponement or continuation thereof;
(e) by the Company pursuant to Section 5.7(b), except that the
Company may not terminate this Agreement pursuant to this clause 7.1(e) unless
and until (i) the Company shall have complied with its obligations under Section
5.7, and (ii) the Company shall simultaneously pay to Parent the Parent
Termination Fee (as defined below) and, to the extent required by Section 7.2,
the Parent Expense Amount (as defined below);
37
(f) by Parent, if the Company Board shall have approved or
recommended any Takeover Proposal;
(g) by the Company, if any person or group (other than any party
hereto or any of its Subsidiaries or affiliates) acquires prior to the Effective
Time, or if prior to the Effective Time, Parent enters into an agreement
pursuant to which any person or group is to acquire, more than 50% of the issued
and outstanding voting securities of Parent; or
(h) by either the Company or Parent, if there shall have been a
material breach by the other of any of its representations, warranties,
covenants or agreements contained in this Agreement, which if not cured would
cause the conditions set forth in Sections 6.2(a) or 6.3(a), as the case may be,
not to be satisfied, and such breach shall not have been cured within 30 days
after notice thereof shall have been received by the party alleged to be in
breach.
In the event of termination of this Agreement pursuant to this Section 7.1, this
Agreement shall terminate (except for the provisions of this Section 7.1,
Section 7.2 and Article VIII) and there shall be no other liability hereunder on
the part of Parent, Merger Sub or the Company, except liability arising out of
any willful breach of this Agreement occurring prior to the date on which this
Agreement is terminated or as provided for in the Confidentiality Agreement. In
addition, the Confidentiality Agreement shall survive the termination hereof,
provided that upon termination of this Agreement for any reason, the
Confidentiality Agreement shall be amended, without any further action on the
part of any party thereto, to delete Section 17 thereof in its entirety; and
from and after such termination, neither Parent nor any of its controlled
affiliates (as defined therein) shall acquire any Company Common Shares prior to
May 7, 1999; provided, however, that nothing contained herein shall prohibit
Parent or any of its controlled affiliates from commencing a tender offer or
exchange offer for Company Common Shares pursuant to Section 14(d) of the
Exchange Act prior to such time so long as no Company Common Shares are acquired
prior to such time.
Section 7.2. Termination Fees. (a) Notwithstanding any provision in
this Agreement to the contrary, if (i) this Agreement is terminated by the
Company pursuant to Section 7.1(e), (ii) this Agreement is terminated by Parent
pursuant to Section 7.1(f), or (iii) (A) prior to the termination of this
Agreement, a Takeover Proposal is publicly proposed or publicly disclosed, (B)
this Agreement is terminated by the Company pursuant to Section 7.1(b) or by
Parent or the Company
38
pursuant to Section 7.1(d), and (C) concurrently with or within twelve months
after the date of such termination (x) the Company shall have entered into an
Acquisition Agreement with any party (other than Parent) with respect to a
Takeover Proposal or (y) a Takeover Proposal shall have been consummated, then,
in each case, the Company shall (without prejudice to any other rights of Parent
against the Company) pay to Parent, by wire transfer of immediately available
funds, (i) a fee in cash (the "Parent Termination Fee") equal to $76 million and
(ii) an amount in cash equal to $15 million which Parent believes is a good
faith estimate of its anticipated expenses in connection with this Agreement
(including attorneys' fees and fees of financial advisors) ("Parent Expense
Amount"); provided, that payment of the Parent Expense Amount shall not be made
to the extent that it is reasonably determined that such payment would prevent
the Company from accounting for any subsequent business combination as a
pooling-of-interests for financial accounting purposes. Payment of the Parent
Termination Fee and the Parent Expense Amount shall be made simultaneously with
such termination in the case of a termination by the Company pursuant to Section
7.1(e) and promptly, but in no event later than the fifth business day following
a termination by Parent pursuant to Section 7.1(f) and, in the case of clause
(iii) of the first sentence of this Section 7.2(a), upon the earlier of the
execution by the Company of an Acquisition Agreement and the consummation of any
Takeover Proposal.
(b) Notwithstanding any provision in this Agreement to the contrary,
if this Agreement is terminated by the Company pursuant to Section 7.1(g), then
Parent shall (without prejudice to any other rights of the Company against
Parent) pay to the Company, by wire transfer of immediately available funds, a
fee in cash (the "Company Termination Fee") equal to (i) $76 million and (ii) an
amount in cash equal to $15 million to reimburse the Company for its anticipated
expenses in connection with this Agreement (including attorney's fees and fees
of financial advisors) ("Company Expense Amount"). Payment of the Company
Termination Fee and the Company Expense Amount shall be made promptly, but in no
event later than the fifth business day following termination of this Agreement
by the Company pursuant to Section 7.1(g).
(c) Any payment made pursuant to Section 7.2(a) or (b) hereunder
shall represent the sole remedy for any termination requiring such payment and
the party making such payment shall have no further liability hereunder except
as otherwise provided in the last paragraph of Section 7.1.
39
ARTICLE VIII
MISCELLANEOUS
Section 8.1. No Survival of Representations and
Warranties. None of the representations and warranties in this
Agreement or in any instrument delivered pursuant to this Agreement
shall survive the Merger.
Section 8.2. Expenses. Except as set forth in Section 7.2, whether
or not the Merger is consummated, all costs and expenses (including applicable
filing fees of the SEC) incurred in connection with this Agreement and the
transactions contemplated hereby, including the Merger, shall be paid by the
party required to incur such expenses.
Section 8.3. Counterparts; Effectiveness. This Agreement may be
executed in counterparts, each of which shall be an original with the same
effect as if the signatures thereto and hereto were upon the same instrument,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered (by telecopy or otherwise) to the other
parties.
Section 8.4. Amendment or Supplement. At any time before or after
approval of the matters presented in connection with the Merger by the
shareholders of the Company and prior to the Effective Time, this Agreement may
be amended or supplemented in writing by Parent and the Company with respect to
any of the terms contained in this Agreement if such amendment or supplement is
approved by the respective Boards of Directors of Parent and the Company, except
that following approval by the shareholders of the Company, there shall be no
amendment or change to the provisions hereof which (x) by law or in accordance
with the rules of any relevant stock exchange requires further approval by such
shareholders without such further approval nor any amendment or (y) is not
permitted under applicable law.
Section 8.5. Extension of Time; Waiver. At any time prior to the
Effective Time, the Company and Parent may:
(a) extend the time for the performance of any of the
obligations or acts of the other party;
40
(b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered pursuant hereto;
or
(c) waive compliance with any of the agreements or conditions of the
other party contained herein.
Notwithstanding the foregoing, no failure or delay by the Company or Parent in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise of any
other right hereunder. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
Section 8.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania,
without regard to the principles of conflicts of law.
Section 8.7. Jurisdiction. Each of the parties hereto (i) consents
to submit itself to the personal jurisdiction of any Federal court located in
the Commonwealth of Pennsylvania or any Commonwealth of Pennsylvania state court
in the event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (ii) agrees that it will not attempt to deny or
defeat such personal jurisdiction by motion or other request for leave from any
such court, and (iii) agrees that it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than a Federal court sitting in the Commonwealth of Pennsylvania or a
Commonwealth of Pennsylvania state court.
Section 8.8. Notices. All notices and other communications hereunder
shall be in writing (including telecopy or similar writing) and shall be
effective (a) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 8.8 and the appropriate telecopy
confirmation is received or (b) if given by any other means, when delivered at
the address specified in this Section 8.8:
41
To Parent or Merger Sub:
Hercules Incorporated
Hercules Plaza
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esquire
Telecopy: (000) 000-0000
To the Company:
BetzDearborn Inc.
0000 Xxxxxxxx Xxxx
P.O. Box 3002
Trevose, Pennsylvania 19053-6783
Attention: Xx. Xxxxx X. Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX x0000
Attention: Xxxxx X. Xxxx, Esquire
Telecopy: (000) 000-0000
Section 8.9. Assignment; Binding Effect. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agree-
42
ment shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors and assigns.
Section 8.10. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
Section 8.11. Enforcement of Agreement. The parties hereto agree
that money damages or other remedy at law would not be a sufficient or adequate
remedy for any breach or violation of, or a default under, this Agreement by
them and that in addition to all other remedies available to them, each of them
shall be entitled to the fullest extent permitted by law to an injunction
restraining such breach, violation or default or threatened breach, violation or
default and to any other equitable relief, including specific performance,
without bond or other security being required.
Section 8.12. Entire Agreement; Third-Party Beneficiaries. This
Agreement and, as modified by Sections 5.8 and 5.12, the Confidentiality
Agreement constitute the entire agreement among the parties hereto, and
supersede all other prior agreements and understandings, both written and oral,
among the parties, or between any of them, with respect to the subject matter
hereof and thereof, and is not intended to and shall not confer upon any person
other than the parties hereto any rights or remedies hereunder (except for the
provisions of Article II, Section 5.9 and 5.10(a) which are intended for the
benefit of, and may be enforced by, the persons referred to therein and the
third sentence of Section 5.4(b) which may be enforced by Messrs. Xxxx or Xxxxxx
but only to the extent that such individual has not taken a position as an
employee with Parent after the Effective Time).
Section 8.13. Headings. Headings and captions of the articles and
sections of this Agreement are for convenience of the parties only, and shall be
given no substantive or interpretive effect whatsoever.
Section 8.14. Certain Definitions; Interpretation. References in
this Agreement to "Subsidiaries" of any party shall mean any corporation,
partnership, association, trust or other form of legal entity of which (i) 50%
or more of the
43
outstanding voting securities are on the date hereof directly or
indirectly owned by such party, or (ii) such party or any Subsidiary of such
party is a general partner (excluding partnerships in which such party or any
Subsidiary of such party does not have a majority of the voting interests in
such partnership). References in this Agreement (except as specifically
otherwise defined) to "affiliates" shall mean, as to any person, any other
person which, directly or indirectly, controls, or is controlled by, or is under
common control with, such person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean the possession, directly or indirectly, of the power
to direct or cause the direction of management or policies of a person, whether
through the ownership of securities or partnership of other ownership interests,
by contract or otherwise. References in this Agreement to "person" shall mean an
individual, a corporation, a partnership, an association, a trust or any other
entity, group (as such term is used in Section 13 of the Exchange Act) or
organization, including, without limitation, a governmental body or authority.
References in this Agreement to the "knowledge" of any party hereto, or words of
similar import, shall mean the knowledge, after due inquiry, of such party's
"officers" (as such term is defined in Rule 16a-1 promulgated under the Exchange
Act). When used in this Agreement, the word "including" shall be deemed in all
cases to be followed by the words "without limitation."
[SIGNATURE PAGE FOLLOWS]
44
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
and Plan of Merger to be duly executed and delivered as of the date first above
written.
HERCULES INCORPORATED
By: /s/ R. Xxxxx Xxxxxxx
Name: R. Xxxxx Xxxxxxx
Title: Chairman and Chief Executive Officer
WATER ACQUISITION CO.
By: /s/ R. Xxxxx Xxxxxxx
Name: R. Xxxxx Xxxxxxx
Title: Chairman of the Board of Directors
and Chief Executive Officer
BETZDEARBORN INC.
By: /s/ Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx
Title: Chairman of the Board of Directors
and Chief Executive Officer
