EXHIBIT 3
STANDBY AGREEMENT
THIS STANDBY AGREEMENT (the "Agreement") is entered into as of October
22, 1998, by and among VEBA Corporation, a Delaware corporation ("VEBA"), and
MEMC Electronic Materials, Inc., a Delaware corporation (the "Company").
RECITALS
A. Pursuant to a stock purchase agreement, dated the date hereof (the
"Stock Purchase Agreement"), the Company proposes to issue to VEBA approximately
$106 million of its Common Stock, par value $0.01 per share (the "Common
Stock"), at a purchase price per share determined in accordance with the Stock
Purchase Agreement (the "VEBA Purchase Price") (the transactions contemplated by
the Stock Purchase Agreement being hereinafter referred to as the "Private
Placement"); and
B. The Company also proposes to issue (the "Rights Offering"), upon the
terms and subject to the conditions set forth in the Prospectus (as hereinafter
defined), rights (the "Rights") to purchase shares of its Common Stock. Each
Right will be exercisable at a price per share to be set forth in the Prospectus
(the "Subscription Price") and evidenced by transferable certificates (the
"Rights Certificates"). The Subscription Price and the VEBA Purchase Price will
be identical. The date on which the Rights Offering expires is referred to as
the "Expiration Date" and the time which the Rights Offering expires on the
Expiration Date is referred to as the "Expiration Time." The Rights and the
Common Stock issuable and issued upon exercise thereof are hereinafter sometimes
collectively referred to as the "Securities."
NOW, THEREFORE, in consideration of the recitals and the mutual
covenants, representations, warranties, conditions and agreements hereinafter
expressed, the parties agree as follows:
ARTICLE I
STANDBY COMMITMENT FOR PURCHASE AND SALE OF SHARES
1.1. Registration Statement and Prospectus; Public Offering. The
Company will file with the Securities and Exchange Commission (the
"Commission"), pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), and the published rules and regulations adopted by the
Commission under it (the "Rules"), a registration statement on Form S-3 or
another appropriate form under the Securities Act, including a preliminary
prospectus, relating to the Securities, and will use its reasonable efforts to
permit such registration statement to become effective. The registration
statement as amended at the time it becomes effective (the "Effective Date"),
including all financial statements and all exhibits set forth therein, is called
the "Registration Statement," and the prospectus relating to the Rights Offering
included in the Registration Statement (including information deemed a part of
such Registration Statement pursuant to Rule 430A under the Securities Act), is
called the "Prospectus." Any reference in this Agreement to the Registration
Statement or Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein as of the date of any such Registration
Statement or Prospectus, as the case may be, and any reference to any amendment
or supplement to the Registration Statement or Prospectus shall be deemed to
refer to and include any documents filed after such date under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") which, upon filing, are
incorporated by reference therein. As used herein, the term "Incorporated
Documents" means the documents which at the time are incorporated by reference
in the Registration Statement or the Prospectus or any amendment or supplement
thereto.
1.2. Purchase and Sale of Shares. On the basis of the representations,
warranties and other agreements herein contained, VEBA agrees to purchase and
the Company agrees to sell at the Subscription Price any shares of Common Stock
offered in the Rights Offering and not otherwise subscribed for by the other
stockholders of the Company prior to the Expiration Time ("Shares"), but only
after satisfaction in full of the Oversubscription Privileges of all other
stockholders of the Company. Notwithstanding the foregoing, but subject to the
provisions of Section 3.1, VEBA agrees that, to the extent the rounding up of
Rights distributed to stockholders or any other reason causes the aggregate
proceeds from the Stock Purchase Agreement, the Rights Offering and pursuant to
this Agreement to exceed $200 million (or the aggregate number of shares of
Common Stock issued pursuant to both transactions to exceed 150 million shares),
the number of shares of Common Stock sold by the Company and purchased by VEBA
pursuant to this Agreement shall be reduced, in order that the aggregate
proceeds from the Private Placement, the Rights Offering and pursuant to this
Agreement shall not exceed $200 million and the aggregate number of shares of
Common Stock issued in such transactions shall not exceed 150 million. If VEBA
or its affiliates purchase any Rights, on the New York Stock Exchange or
otherwise, during the Rights Offering, VEBA agrees that neither it nor its
affiliates (other than the Company and its subsidiaries) will exercise its
Oversubscription Privilege with respect to such Rights.
1.3. Payment and Delivery. VEBA shall pay for the Shares by wire
transfer of immediately available funds to a bank account designated by the
Company and the Company shall deliver the Shares at the office of Xxxxxxxxxx &
Xxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 A.M., New
York City time, on the same business day as the shares of Common Stock are
issued to the holders of Rights in the Rights Offering, which date shall be the
first business day following the Expiration Date, or at such other date or place
as shall be determined by agreement between VEBA and the Company. This date and
time are sometimes referred to as the "Closing Date." On the Closing Date, the
Company shall deliver or cause to be delivered certificates representing the
Shares to VEBA against payment as aforesaid. Upon delivery, the certificates for
the Shares shall be registered in the name of VEBA (or its permitted assignee in
accordance with Section 6.4) and in such denominations as VEBA shall request in
writing not less than two full business days prior to the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with VEBA that:
(a) The Company is a corporation duly organized and validly
existing, is in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to carry on its business as
described in the Registration Statement and the Prospectus. The Company is duly
qualified as a foreign corporation and is in good standing in all other
jurisdictions in which such qualification is required, provided however, that
the Company need not be qualified in a jurisdiction in which its failure to
qualify would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or other), business, properties, prospects,
net worth or results of operations of the Company and its subsidiaries taken as
a whole (a "Material Adverse Effect").
(b) No person is entitled to any preemptive or similar rights to
subscribe for the Shares.
(c) All the outstanding shares of Common Stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable and
are free of any preemptive or similar rights. The Rights, the Common Stock
issuable upon exercise of the Rights and the Shares to be issued and sold to
VEBA pursuant to this Agreement have been duly authorized and such Common Stock
and Shares, when issued and paid for, will be validly issued, fully paid and
non-assessable; such securities are not subject to any preemptive or similar
rights. The capital stock of the Company conforms in all material respects to
the description thereof in the Registration Statement and the Prospectus.
(d) Neither the issuance and sale of the Securities, the
execution, delivery or performance of this Agreement by the Company, the
consummation by the Company of the transactions contemplated hereby by the
Company (including the issuance and sale of the Shares to VEBA) nor the
compliance with the terms of the Rights and this Agreement (A) requires any
consent, approval, authorization or other order of or registration or filing
with, any court, regulatory body, administrative agency or other governmental
body, agency or official (except such as may be required for the registration of
the Securities under the Securities Act, compliance with the rules of the
National Association of Securities Dealers, Inc., compliance with the securities
or Blue Sky laws of various jurisdictions and compliance with the rules of the
New York Stock Exchange, all of which have been or will be effected in
accordance with this Agreement) conflicts or will conflict with or constitutes
or will constitute a breach of, or a default under, the certificate or articles
of incorporation or bylaws, or other organizational documents, of the Company or
any of its subsidiaries or (B) conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, any agreement, indenture, lease
or other instrument to which the Company or any of its subsidiaries is a party
or by which any of them or any of their respective properties may be bound, or
violates or will violate any statute, law, regulation or filing or judgment,
injunction, order or decree applicable to the Company or any of its subsidiaries
or any of their respective properties, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to the terms of any agreement or
instrument to which any of them is a party or by which any of them may be bound
or to which any of the property or assets of any of them is subject except for,
in the case of the foregoing clause (B), such violations which would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(e) The Registration Statement in the form in which it becomes
effective and also in such form as it may be when any post-effective amendment
thereto shall become effective, will comply in all material respects with the
provisions of the Securities Act and will not at any such times contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and the Prospectus and any supplement or amendment thereto when filed with the
Commission under Rule 424(b) under the Securities Act will comply in all
material respects with the provisions of the Securities Act and will not at any
such time contain an untrue statement of material fact or omit to state a
material fact necessary in order to make the statements, in light of the
circumstances in which they are made, not misleading, except that this
representation and warranty does not apply to the VEBA Information (as defined
below).
(f) There are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened against the Company or any of its
subsidiaries, or to which the Company or any of its subsidiaries, or to which
any of their respective properties is subject, that are required to be described
in the Registration Statement or the Prospectus but are not so described as
required.
(g) Neither the Company nor any of its subsidiaries is in
violation (A) of its certificate or articles of incorporation or by-laws, or
other organizational documents, or (B) of any law, ordinance, administrative or
governmental rule or regulation applicable to the Company or any of its
subsidiaries, including, without limitation, (i) any foreign, Federal, state or
local law or regulation relating to the protection of human health and safety,
the environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) any Federal or state law relating to
discrimination in the hiring, promotion or pay of employees or any applicable
federal or state wages and hours laws, or (iii) any provisions of the Employee
Retirement Income Security Act or the rules and regulations promulgated
thereunder (collectively, "ERISA"), or of any decree of any court or
governmental agency or body having jurisdiction over the Company or any of its
subsidiaries except for, in the case of the foregoing clause (B), such
violations which would not, either individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(h) Neither the Company nor any of its subsidiaries is in default
in the performance of any obligation, agreement or condition contained in any
bond, debenture, note or any other evidence of indebtedness or in any other
agreement, indenture, lease or other instrument to which the Company or any of
its subsidiaries is a party or by which any of them or any of their respective
properties may be bound, except for such defaults which would not, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(i) The historical financial statements, together with related
schedules and notes, included in the Registration Statement and the Prospectus
(and any amendment or supplement thereto), comply as to form in all material
respects with the requirements of the Securities Act; such historical financial
statements, together with related schedules and notes, present fairly the
consolidated financial position, results of operations, cash flows and changes
in financial position of the entities to which they relate on the basis stated
in the Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and notes
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data included
in the Registration Statement and the Prospectus (and any amendment or
supplement thereto), are accurately presented in all material respects and, to
the extent applicable, prepared on a basis consistent in all material respects
with such financial statements and the books and records of the entities to
which they relate.
(j) The execution and delivery of, and the performance by the
Company of its obligations under, this Agreement have been duly and validly
authorized by the Company, and this Agreement has been duly executed and
delivered by the Company and constitutes the valid and legally binding agreement
of the Company, enforceable against the Company in accordance with its terms,
except as rights to indemnity and contribution hereunder may be limited by
federal or state securities laws and subject to limitations on enforcement under
applicable bankruptcy, insolvency, liquidation, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors' rights
generally and to general equitable principles (whether considered in a
proceeding in equity or at law).
(k) Except as disclosed in the Registration Statement and the
Prospectus, subsequent to the respective dates as of which such information is
given in the Registration Statement and the Prospectus: neither the Company nor
any of its subsidiaries has incurred any material liability or obligation,
direct or contingent, or entered into any transaction, not in the ordinary
course of business, that is material to the Company and its subsidiaries taken
as a whole, and there has not been any material change in the capital stock, or
material increase in the short-term debt or long-term debt, of the Company or
any of its subsidiaries (except pursuant to agreements with VEBA and its
affiliates), or any material adverse change, or any development involving, or
which may reasonably be expected to involve, a prospective material adverse
change in the condition (financial or other), business, properties, prospects,
net worth or results of operations of the Company and its subsidiaries, taken as
a whole.
(l) The Company and each of its subsidiaries has such permits,
licenses, franchises and authorizations including, without limitation, under any
applicable Environmental Laws, of governmental or regulatory authorities
("permits") as are necessary to own its respective properties and to conduct its
business in the manner described in the Registration Statement and Prospectus,
subject to such qualifications as may be set forth in the Registration Statement
and Prospectus and with such exceptions as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; the Company
and each of its subsidiaries has fulfilled and performed all its material
obligations with respect to such permits and no event has occurred which allows,
or after notice or lapse of time or both would allow, revocation or termination
thereof or results in any other material impairment of the rights of the holder
of any such permit, subject in each case to such qualification as may be set
forth in the Registration Statement and Prospectus.
(m) The Incorporated Documents heretofore filed, when they were
filed (or, if any amendment with respect to any such document was filed, when
such amendment was filed), conformed in all material respects with the
requirements of the Exchange Act and the rules and regulations thereunder, and
any further Incorporated Documents so filed will, when they are filed, conform
in all material respects with the requirements of the Exchange Act and the rules
and regulations thereunder; no such document when it was filed (or, if an
amendment with respect to any such document was filed, when such amendment was
filed), contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading; and no such further document, when it is filed, will contain an
untrue statement of a material fact or will omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that this representation and warranty does not apply to VEBA
Information.
(n) The Company has not taken, directly or indirectly, any action
designed to cause or to result in, or that has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any security of the Company to facilitate the issuance of the Rights or
the sale or resale of the Common Stock issuable upon exercise of the Rights or
Shares.
2.2. Representations and Warranties of VEBA. VEBA represents and
warrants to the Company that, as of the date of this Agreement, and covenants
and agrees that as of the Closing Date, it will be deemed to have represented
and warranted as of such date, that:
(a) VEBA is a corporation duly organized and validly existing, is
in good standing under the laws of the State of Delaware.
(b) The execution and delivery of, and the performance by VEBA of
its obligations under, this Agreement have been duly and validly authorized by
VEBA, and this Agreement has been duly executed and delivered by VEBA and
constitutes the valid and legally binding agreement of VEBA, enforceable against
VEBA in accordance with its terms, except as rights to indemnity and
contribution hereunder may be limited by federal or state securities laws and
subject to limitations on enforcement under applicable bankruptcy, insolvency,
liquidation, fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and to general equitable principles
(whether considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of this Agreement, the
consummation of the transactions herein contemplated and the compliance with the
terms this Agreement will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, or give rise to rights of
termination under, any deed of trust, lease, sublease, the certificate or
articles of incorporation or by-laws of VEBA, or any indenture, mortgage, or
other agreement or instrument to which VEBA is a party or by which VEBA or its
property is bound, or any applicable law, rule, regulation, judgment, order or
decree of any government, governmental instrumentality or court, domestic or
foreign, having jurisdiction over VEBA or any of its subsidiaries, or the
properties or operations of any of them, except for any such conflict, breach,
default, or right of termination, as would not, individually or in the
aggregate, be reasonably likely to prevent VEBA from performing its obligations
hereunder.
(d) The VEBA Information as reflected in or omitted from the
Registration Statement and the Prospectus does not and will not include 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 in which they were made, not misleading. "VEBA Information" means
the following information: (i) the identity, business, management and activities
of VEBA AG and its affiliates (other than the Company and its subsidiaries),
(ii) the plans of VEBA AG or its affiliates (other than the Company and its
subsidiaries) relating to the Company or shares of Common Stock, (iii) the
number of shares of Common Stock beneficially owned by VEBA or which VEBA has a
right to acquire, (iv) information regarding the ownership or control of VEBA
common stock by VEBA AG and its affiliates (other than the Company and its
subsidiaries), (v) statements regarding the commitment or intentions of VEBA AG
and affiliates (other than the Company and its subsidiaries) with respect to the
Company, and (vi) the plans of VEBA AG or its affiliates with respect to the
inclusion of the Company in the consolidated federal income tax return filed by
VEBA ("VEBA Consolidated Federal Income Tax Return") and related matters in the
event that the ownership of Common Stock by VEBA AG or its affiliates entitles
any such entity to include the Company in the VEBA Consolidated Federal Income
Tax Return.
(e) Neither VEBA AG nor VEBA has any reason to believe that a
breach of any representation or warranty contained herein has occurred or that
the Registration Statement or Prospectus (if amended or supplemented, as amended
or supplemented) contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(f) Neither VEBA nor its affiliates (other than the Company or its
subsidiaries) has employed any investment banker, broker or finder or incurred
any liability for any brokerage fees, commissions or finder's fees in connection
with the transactions contemplated by this Agreement.
(g) VEBA has as of the date of this Agreement, and will have upon
exercise of its Rights, the financial wherewithal to honor its commitments
hereunder.
(h) VEBA understands that the offering and sale of the Shares is
intended to be exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to Section 4(2) of the Securities Act.
VEBA is not acquiring the Shares as a result of (i) any advertisement, article,
notice or other communication published in any newspaper, magazine, or similar
media or broadcast over television or radio or (ii) any seminar meeting whose
attendees had been invited as a result of, subsequent to, or pursuant to any of
the foregoing.
(i) VEBA (or any permitted assignee under Section 6.4) is
acquiring the Shares solely by and for its own account as principal, for
investment purposes only, and not for the account of any other person and not
with a view to, or for, distribution, assignment, fractionalization or resale or
distribution to others in whole or in part in violation of the Securities Act.
(j) VEBA is an accredited investor under the Securities Act.
(k) VEBA hereby waives its right under the Registration Rights
Agreement between VEBA (as successor to Xxxx Corporation) and the Company, dated
July 12, 1995, (the "Registration Rights Agreement") to have its existing shares
of Common Stock included in the Registration Statement and thereby registered
under the Securities Act in connection therewith.
(l) VEBA acknowledges that the Company is relying upon the
representations and warranties contained herein in determining to make the sale
of the Shares, and VEBA consents to such reliance.
ARTICLE III
RIGHTS OFFERING
3.1. Subscription Offer. The Company will use its reasonable efforts to
distribute at no charge to holders of its Common Stock of record as of the close
of business on a date (the "Record Date") established by the special committee
of the Board of Directors designated to take all board action in connection
with, and to consider and/or approve, the Rights Offering (the "Special
Committee"), a specified number or fraction of transferable subscription rights
(each, a "Right") for every share of Common Stock held on the Record Date, with
each such Right entitling the holder thereof to subscribe for (the "Basic
Subscription Privilege") and to purchase one share of Common Stock, for the
Subscription Price. The number of Rights distributed to each holder of Common
Stock will be rounded up to the nearest whole number. Notwithstanding the
foregoing, VEBA agrees that the Company will not distribute any Rights to VEBA
or to any permitted transferee of its shares of Common Stock. If VEBA transfers
any shares of Common Stock prior to the Record Date, VEBA will cause any such
transferee to agree that it will not be entitled to any distribution of Rights
from the Company in the Rights Offering with respect to such shares. The Rights
will expire as provided in the Prospectus, unless extended as described therein.
Each Right also carries with it the right to subscribe (the "Oversubscription
Privilege") at the Subscription Price for an unlimited number of shares of
Common Stock that are not otherwise purchased through the exercise of the Basic
Subscription Privilege, subject to reduction by the Company in certain
circumstances. If an insufficient number of shares of Common Stock are available
to satisfy fully all subscriptions pursuant to the Oversubscription Privilege,
then the available shares of Common Stock will be prorated among those persons
who subscribe pursuant to the Oversubscription Privilege (other than VEBA or its
permitted transferee), based on the respective numbers of Rights exercised by
such persons pursuant to the Basic Subscription Privilege. The Company shall
allocate Shares to VEBA as provided in Section 1.2. The Rights will be evidenced
by the Rights Certificates. Notwithstanding anything contained in this
Agreement, in no event shall the Rights Offering result in VEBA and its
affiliates (within the meaning of the Securities Act) in the aggregate owning
less than 52% of the issued and outstanding shares of Common Stock of the
Company (excluding shares issuable pursuant to the Company's employee benefit
plans), immediately after consummation of the Rights Offering.
3.2. Restricted Nature of Shares. VEBA acknowledges that the Shares, in
its hands, will be restricted securities under the Securities Act which may not
be sold or offered for sale in the absence of an effective registration
statement as to such Shares under the Securities Act or an opinion of counsel
satisfactory to the Company that such registration is not required. VEBA agrees
it will not transfer, by way of gift or otherwise, or sell the Shares or any
part thereof, unless such Shares have been registered under the Securities Act
and any applicable state securities laws or it first obtains, at its own
expense, if requested by the Company, an opinion of counsel reasonably
satisfactory to the Company that the transfer of such Shares may be effected
without registration under the Securities Act and any applicable state
securities laws. VEBA acknowledges that the certificates evidencing the Shares
will contain a legend to such effect.
ARTICLE IV
COVENANTS OF THE PARTIES
4.1 Covenants of the Company. In further consideration of the
agreements of VEBA herein contained, the Company covenants as follows:
(a) Effectiveness of Registration Statement. The Company will use
its reasonable efforts to cause the Registration Statement to become effective
and will advise VEBA promptly and, if requested by VEBA, will confirm such
advice in writing (i) when the Registration Statement, or any post-effective
amendment to the Registration Statement, shall have become effective, or any
supplement to the Prospectus or any amended Prospectus shall have been filed,
(ii) of the necessity of amending or supplementing the Prospectus or any amended
Prospectus in order to then meet the requirements of the Securities Act and the
reasons why such amendment or supplement is necessary, (iii) of any request of
the Commission for amendment or supplementing of the Registration Statement or
Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary or
amended preliminary prospectus or the Prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the institution of any proceedings for any of such purposes. The Company will
use its reasonable efforts to prevent the issuance of any such stop order or of
any order preventing or suspending such use and to obtain as soon as possible
the lifting thereof, if issued.
(b) Amendment of Registration Statement and Prospectus. The
Company will not file any amendment to the Registration Statement or make any
amendment or supplement to the Prospectus (including the filing of any document
which, upon filing, becomes an Incorporated Document) of which VEBA shall not
previously have been advised or to which VEBA shall reasonably object after
being so advised.
(c) Copies. The Company will deliver to VEBA, without charge, as
soon as the Registration Statement shall have become effective, 10 copies of the
Prospectus (as supplemented or amended, if the Company shall have made any
supplements or amendments to the Prospectus).
(d) Authorized Shares. The Company will maintain at all times
sufficient reserved, authorized but unissued shares of Common Stock for issuance
upon exercise of the Rights.
(e) Amendment or Termination of Rights Offering. The Company
reserves the right to amend the terms and conditions of the Rights Offering;
provided, however, the Company may not change the Subscription Price or the
number of shares of Common Stock issuable in the Rights Offering or take any
other action which would materially adversely affect VEBA's rights hereunder
without the written consent of VEBA. The Company may terminate the Rights
Offering at any time only if (i) it does not receive the Fairness Opinion (as
defined in Section 5.1(f)) or (ii) the special committee of the board of
directors of the Company delegated authority to take action in connection with
the Rights Offering determines in good faith, after receiving the advice of
outside counsel, that proceeding with the Rights Offering would result in a
breach of its fiduciary duties to the Company's stockholders under applicable
law.
(f) Rule 158. The Company will make generally available to its
security holders an earnings statement, which need not be audited, covering a
twelve-month period commencing after the effective date of the Registration
Statement (as defined in Rule 158 under the Securities Act) and ending not later
than 15 months thereafter, as soon as practicable after the end of such period,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act.
(g) Expenses. In the event of a termination of this Agreement or
if the Rights Offering is not otherwise consummated (other than solely (i)
because of a breach by VEBA of its representations, warranties, covenants or
agreements hereunder or (ii) pursuant to Section 6.8(c) of this Agreement), the
Company agrees to reimburse VEBA and its affiliates (as defined in the
Securities Act), other than the Company and its subsidiaries, for all reasonable
out-of-pocket expenses (including reasonable fees and expenses of counsel)
incurred by VEBA and such affiliates in connection with the Rights Offering (but
excluding expenses attributable to the Private Placement), provided the Company
receives reasonable supporting documentation of such expenses.
(h) No Price Stabilization or Manipulation. The Company (a) will not,
except as disclosed in the Registration Statement, sell, bid for or purchase, or
pay anyone any compensation for soliciting purchases of, the Company's Common
Stock or the Rights and (b) will not, until the later of the Expiration Date or
the completion of the distribution (within the meaning of Regulation M under the
Exchange Act) of the shares of Common Stock, sell, bid for or purchase, apply or
agree to pay to any person any compensation for soliciting another to purchase
any other securities of the Company (except for the solicitation of the
exercises of Rights pursuant to this Agreement). The foregoing shall not apply
to the offer, sale, agreement to sell or delivery with respect to (1) shares of
Common Stock offered and sold upon exercise of the Rights, as described in the
Prospectus, or (2) any shares of Common Stock sold pursuant to any employee
benefit plan.
4.2 Covenants of VEBA. In further consideration of the agreements of
the Company herein contained, VEBA covenants as follows:
(a) VEBA has not taken and will not take, directly or indirectly,
any action designed to or which might be reasonably expected to cause or result
in stabilization or manipulation of the price of the Company's Common Stock, and
VEBA has no reason to believe that any such action has been taken by its
affiliates other than the Company and its subsidiaries, and will not permit any
such affiliate to take such action.
(b) When the Registration Statement becomes effective, the VEBA
Information (as defined in Section 2.2(d)) will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading.
(c) VEBA will not take any action to prevent the Registration
Statement or any post-effective amendment thereto from becoming effective.
(d) VEBA will use its reasonable efforts to do or perform all
things required to be done or performed by VEBA or its affiliates (other than
the Company and its subsidiaries) prior to the Closing Date to satisfy all
conditions precedent to the consummation of the transactions contemplated
hereby.
(e) Until the Expiration Date, VEBA will advise the Company
promptly, and if requested by the Company, will promptly confirm such advice in
writing, of (A) any change in (i) the VEBA Information, or (ii) VEBA's
intentions with respect to transactions and relationships among VEBA AG or its
affiliates (other than the Company and its subsidiaries), on the one hand, and
the Company or its affiliates, on the other hand, or (B) any new information
relating to (i) VEBA Information or (ii) VEBA's intentions with respect to
transactions and relationships among VEBA AG or its affiliates, on the one hand,
and the Company or its affiliates, on the other hand, that causes the
Registration Statement or the Prospectus (as then amended or supplemented, if
amended or supplemented) to contain an untrue statement of material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances in which they are made, not misleading.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF VEBA
5.1. Conditions to VEBA's Obligations. The obligation of VEBA to
purchase the Shares hereunder is subject to the satisfaction of the following
conditions on or prior to the Expiration Date:
(a) VEBA shall have received on the Expiration Date, the opinion
of Xxxxx Xxxx LLP, counsel for the Company, addressed to VEBA, dated the
Expiration Date and substantially to the effect that:
(i) The Company is a corporation validly existing and is in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to carry on its business as described in the
Registration Statement and the Prospectus;
(ii) The shares of Common Stock issuable upon exercise of the
Rights and issuable to VEBA pursuant to this Agreement have been duly
authorized and, when issued and delivered against payment therefor in
accordance with the terms of the Rights Offering or this Agreement as the
case may be, will be (A) validly issued, fully paid and nonassessable and
(B) free of any preemptive or similar rights that entitle or will entitle
any person to acquire any shares of Common Stock upon the issuance thereof
by the Company by operation of the certificate of incorporation or bylaws of
the Company, or to the knowledge of such counsel, pursuant to any agreement;
(iii) None of the issuance and sale of the shares of Common
Stock upon exercise of the Rights, the execution, delivery or performance of
this Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby (including the issuance and sale to VEBA of
the Shares) nor the compliance by the Company with the terms of the Rights
and this Agreement constitutes or will constitute a violation or breach of,
or a default under, the certificate of incorporation or bylaws of the
Company or any Material Agreement, or will result in the creation or
imposition of any lien, charge or encumbrance pursuant to any Material
Agreement upon any property or assets of the Company or any of its
subsidiaries, nor will any such action result in any violation of the
Delaware General Corporation Law (the "DGCL"), any existing Federal or
Missouri law, regulation, ruling (assuming compliance with all applicable
state securities and Blue Sky laws) recognized by such counsel to be
applicable to, or any judgment, injunction, order or decree known to such
counsel of any Federal or Missouri court to be applicable to the Company,
its subsidiaries or any of their respective properties (provided, the term
"Material Agreement" shall mean any agreement, indenture, lease or other
instrument that is both (i) an exhibit to the Registration Statement and
(ii) an agreement, indenture, lease or other instrument to which the Company
or any of its subsidiaries is a party or by which any of their properties or
assets are bound);
(iv) Such counsel has been advised by the Staff of the
Commission that the Registration Statement has become effective under the
Securities Act and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement has been issued
and no proceedings for that purpose are pending before or threatened by the
Commission; and any required filing of the Prospectus pursuant to Rule
424(b) has been made in accordance with Rule 424(b);
(v) (A) The Company has the corporate power and authority to
enter into this Agreement and to issue, sell and deliver the shares of
Common Stock issuable upon exercise of the Rights and to VEBA pursuant to
this Agreement, (B) the Rights Offering has been duly authorized by
corporate action, and (C) this Agreement has been duly authorized, executed
and delivered by the Company;
(vi) No consent, approval, authorization or other order of,
or registration or filing with, any Federal or Missouri court, regulatory
body, administrative agency or other governmental body, agency, or official
is required to be obtained by the Company (except as have been obtained
under the Securities Act and the Exchange Act or such as may be required
under state securities or Blue Sky laws governing the sale and distribution
of the shares of Common Stock) for the valid issuance and sale of the shares
of Common Stock issuable upon exercise of the Rights or to VEBA in
accordance with this Agreement; and
(vii) Each of the Registration Statement, as of its effective
date, and the Prospectus, as of its date (including Incorporated Documents
and except for the financial statements and the notes thereto and the
schedules and other financial and statistical data or schedules included
therein or omitted therefrom, as to which such counsel need not express any
opinion), comply as to form in all material respects with the requirements
of the Securities Act.
In addition to the matters set forth above, such opinion shall also contain a
statement to the effect that, although counsel has not undertaken, except as
otherwise indicated in their opinion, to determine independently, and does not
assume any responsibility for, the accuracy or completeness of the statements in
the Registration Statement, such counsel has participated in the preparation of
the Registration Statement and the Prospectus, including review and discussion
of the contents thereof (including a review and discussion of the contents of
all Incorporated Documents), and nothing has come to the attention of such
counsel that has caused it to believe (i) that the Registration Statement
(including the Incorporated Documents), and any amendment thereto, at the time
it became effective (excluding any VEBA Information), contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) that the Prospectus (including the Incorporated Documents), or any
amendment or supplement to the Prospectus, as of its respective date, and as of
the Closing Date (excluding any VEBA Information) contained any untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading (it being understood that such counsel need not
express any opinion with respect to the financial statements and the notes
thereto and the schedules and other financial and statistical data or schedules
included or incorporated by reference in the Registration Statement or the
Prospectus or omitted therefrom).
With respect to specific matters with respect to which Xxxxx Xxxx LLP
does not represent the Company, the foregoing statement may be delivered by
other counsel that represents the Company with respect to such matters, such
counsel to be reasonably acceptable to VEBA.
In rendering the foregoing opinion, such counsel may rely, as to
matters involving laws of any jurisdiction other than Missouri or the United
States or the DGCL, upon opinions addressed to VEBA of other counsel reasonably
acceptable to VEBA, provided that insofar as any such opinion relates to the
DGCL, such opinion may be delivered by Xxxxxxxx, Xxxxxx & Finger, P.A. In
addition, the foregoing opinion may contain customary assumptions and
qualifications.
(b) VEBA shall have received a letter addressed to it and dated
the Expiration Date from KPMG Peat Marwick LLP independent certified public
accountants to the Company, in form and substance reasonably acceptable to VEBA
and set forth in SAS 72 and customary for a firm commitment underwriting.
(c) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken; (ii) there shall not have been any material
change in the capital stock of the Company nor any material increase in the
short-term or long-term debt of the Company and its subsidiaries on a
consolidated basis (other than in the ordinary course of business or pursuant to
existing agreements with VEBA AG or its affiliates) from the date of this
Agreement; (iii) there shall not have been, since the date of this Agreement any
material adverse change in the condition (financial or other), business,
prospects, properties, net worth or results of operations of the Company and its
subsidiaries taken as a whole; (iv) the Company and its subsidiaries shall not
have any liabilities or obligations, direct or contingent (whether or not in the
ordinary course of business, except for any liabilities or obligations, direct
or contingent, with VEBA and its affiliates), that are material to the Company
and its subsidiaries, taken as a whole, other than those in existence on the
date hereof; and (v) all the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
on and as of the Expiration Date as if made on and as of the Expiration Date;
and (vi) VEBA shall have received a certificate, dated the Expiration Date and
signed by the chief executive officer and the chief financial officer (or other
reasonably acceptable officers) in the name and on behalf of the Company to the
effect set forth in this Section 5.1(c).
(d) The Shares and Rights shall have been approved for listing on
the New York Stock Exchange, subject to official notice of issuance, prior to
the Expiration Date.
(e) The Registration Rights Agreement shall have been amended to
include all Shares purchased by VEBA, VEBA AG or any subsidiaries of VEBA AG and
any other shares of Common Stock acquired or purchased by VEBA, VEBA AG or any
subsidiaries of VEBA AG after the date hereof as Registrable Stock thereunder,
such amendment to be effective as of the Closing Date.
(f) VEBA shall have received confirmation that the Company
received prior to commencement of the Rights Offering a fairness opinion from a
financial advisor substantially to the effect that (i) the VEBA Purchase Price
to be paid to the Company by VEBA is fair to the Company and its stockholders
(other than VEBA) from a financial point of view as of the date thereof, (ii)
the financial terms and conditions of the Rights Offering are consistent with
those of rights offerings by public companies reviewed and deemed comparable to
the Rights Offering by such financial advisor and (iii) the Subscription Price
is fair to the Company and its stockholders (other than VEBA) from a financial
point of view as of the date thereof (the "Fairness Opinion").
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless VEBA, its officers, directors, employees and agents
and each person, if any, who controls VEBA (collectively, the "VEBA Indemnified
Persons") within the meaning of Section 15 of the Securities Act or Section
20(a) of the Exchange Act from and against any and all losses, claims, damages,
liabilities and reasonable expenses (including reasonable legal fees and costs
of investigation) (collectively "Losses") arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only with respect to information
other than VEBA Information, except that the Company shall have no obligations
under this Section 6.1 for any untrue statement or omission to state a material
fact contained in a preliminary prospectus that was corrected in the Prospectus
(as amended or supplemented). The foregoing indemnity agreement shall be in
addition to any liability which the Company may otherwise have. Notwithstanding
the foregoing, to the extent (A) the compliance certificate delivered pursuant
to Section 5.1(c)(vi) contains any exceptions and (B) VEBA nevertheless elects
to consummate the transaction contemplated under this Agreement, the Company
shall not be obligated to indemnify, hold harmless or contribute to the Losses
of any VEBA Indemnified Party (or reimburse its related expenses) with respect
to such exceptions under this Section 6.1 and VEBA shall not have any claim or
remedy under this Agreement with respect to such excepted matters, except (x) to
the extent such Losses result from an inaccuracy contained in such compliance
certificate and (y) to the extent such Losses result from an action, suit or
proceeding commenced by a person other than a VEBA Indemnified Person arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or in
any amendment or supplement thereto, or arising out of or based upon any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only with respect to information other than VEBA Information; except that the
Company shall have no obligations under this Section 6.1 for any untrue
statement or omission to state a material fact contained in a preliminary
prospectus that was corrected in the Prospectus (as amended or supplemented).
(b) VEBA agrees to indemnify and hold harmless the Company, its
officers, directors, employees and agents, and any person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, to the same extent as the foregoing indemnity from the
Company to VEBA, but only with respect to the VEBA Information except that VEBA
shall have no obligations under this Section 6.2 for any untrue statement or
omission to state a material fact with regard to the VEBA Information contained
in a preliminary prospectus that was corrected in the Prospectus (as amended or
supplemented). The foregoing indemnity agreement shall be in addition to any
liability which VEBA may otherwise have.
(c) If the indemnification provided for in this Section 6.1 is
unavailable to an indemnified party under paragraphs (a) or (b) hereof in
respect of any Losses referred to therein, then an indemnifying party, in lieu
of indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such Losses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and VEBA on the other hand from the Rights Offering and
the Private Placement taken as a whole, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and VEBA on the
other hand in connection with the statements or omissions that resulted in such
Losses, as well as any other relevant equitable considerations.
(d) The procedures set forth in Section 8(c) of the Registration
Rights Agreement dated July 12, 1995 between the Company and Xxxx Corporation (a
predecessor to VEBA) shall govern any indemnification pursuant to this Section
6.1.
6.2. Notice. All notices, requests, demands, and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given and made upon being delivered either by courier
or fax delivery to the party for whom it is intended, provided that a copy
thereof is deposited, postage prepaid, certified or registered mail, return
receipt requested, in the United States mail, bearing the address shown in this
Section 6.1 for, or such other address as may be designated in writing hereafter
by, such party:
If to VEBA:
VEBA Corporation
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xx. Xxxxx Xxxxxx Xxxxxxxx
President
Fax: (000) 000-0000
If to the Company:
MEMC Electronic Materials Inc.
000 Xxxxx Xxxxx (City of X'Xxxxxx)
Xx. Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Corporate Vice President,
General Counsel and Secretary
Fax: (000) 000-0000
6.3. Entire Agreement. This Agreement, together with the Stock Purchase
Agreement, embodies the entire agreement and understanding of the parties hereto
with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings relative to such subject matter.
6.4. Assignment; Binding Agreement. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon VEBA, its successors, and permitted assigns and the Company, its
successors, and permitted assigns. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be transferred, delegated, or assigned
(by operation of law or otherwise) by either of the parties hereto without the
prior written consent of the other party, except that VEBA shall have the right
to transfer and assign its rights hereunder to purchase Common Stock and any
other rights or benefits afforded to it by this Agreement to (x) VEBA AG or VEBA
Zweite Verwaltungsgesellschaft mbH and (y) any other direct or indirect wholly
owned subsidiary of VEBA AG, provided that, only in the case of the foregoing
subclause (y), to the extent required by law, such right to transfer and assign
shall be subject to the prior approval of the Company's Board of Directors,
which approval shall not be unreasonably withheld and, in the case of both of
the foregoing sub clauses (x) and (y), any such transferee makes the
representations and warranties contained in Sections 2.2(h), 2.2(i) and 2.2(j)
and acknowledges and agrees to the provisions of Section 3.2. Any such transfer
shall not discharge VEBA from its obligations hereunder.
6.5. Counterparts; Expenses. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument. Except to the extent set forth in Section 4.1(g), each party shall
bear the fees and expenses incurred by such party incidental to the preparation
of, and the consummation of the transactions contemplated by, this Agreement.
6.6. Headings; Interpretation. The article and section headings
contained in this Agreement are inserted for convenience only and shall not
affect in any way the meaning or interpretation of the Agreement. Each reference
in this Agreement to an Article or Section, unless otherwise indicated, shall
mean an Article or a Section of this Agreement. References herein to "days,"
unless otherwise indicated, are to consecutive calendar days. Both parties have
participated substantially in the negotiation and drafting of this Agreement and
agree that no ambiguity herein should be construed against the draftsman.
6.7 Taxes. In the event that VEBA and its affiliates' ownership of
Common Stock entitles VEBA to include the Company in the VEBA Consolidated
Federal Income Tax Return, VEBA and the applicable VEBA affiliates shall enter
into a tax sharing or affiliation agreement with the Company. Such tax sharing
or affiliation agreement shall provide that the inclusion of the Company in the
VEBA Consolidated Federal Income Tax Return will not be detrimental to the
Company for federal income tax purposes as compared with the federal income tax
treatment of the Company had it not been includible in the VEBA Consolidated
Federal Income Tax Return and such tax sharing or affiliation agreement shall be
in form and substance reasonably acceptable to the Company and VEBA.
6.8. Termination of the Agreement.
(a) Prior to consummation of the transactions contemplated hereby,
this Agreement may be terminated: (i) at any time prior to the Closing Date,
upon termination of the Rights Offering by the Company, in accordance with
Section 4.1(e), without further liability or obligation, or (ii) after March 31,
1999, by either party hereto, without further liability or obligation, if (x)
such party is not in breach or violation hereof and (y) the conditions to such
party's obligations have not then been satisfied.
(b) Either party may terminate this Agreement if more than an
aggregate of 150 million shares of Common Stock would be required to be issued
in connection with, or the Company would receive more than $200 million from,
the consummation of the purchase and sale of Common Stock pursuant to this
Agreement, the Stock Purchase Agreement and the Rights Offering.
(c) This Agreement shall be subject to termination in VEBA's
discretion after consultation with the Company, without liability on the part of
VEBA to the Company, by notice to the Company, if on or 20 days prior to the
Expiration Date, (i) trading in securities generally on the New York Stock
Exchange, American Stock Exchange or the Nasdaq National Market is suspended or
materially limited, (ii) a general moratorium on commercial banking activities
in New York shall have been declared by either federal or New York State
authorities, or (iii) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or material
adverse change in political, financial or economic conditions, which has a
materially adverse impact on the ability of the Company to distribute the shares
of Common Stock in the Rights Offering.
(d) The provisions of Section 4.1(g) and Article VI shall survive
any termination of this Agreement.
6.9. Governing Law. This Agreement shall in all respects be construed
in accordance with and governed by the substantive laws of the State of New
York, without reference to its choice of law rules, except that matters subject
to the General Corporation Law of Delaware shall be governed by such laws.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first above written.
VEBA CORPORATION
By /s/ A. Xxxx Xxxxxxxxxxx, Xx.
--------------------------------
Name: A. Xxxx Xxxxxxxxxxx, Xx.
Title: Vice President
MEMC ELECTRONIC MATERIALS INC.
By /s/ Xxxxx X. Xxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxx
Title: Executive Vice President/
Chief Financial Officer
