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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
HALLIBURTON COMPANY
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK, $2.50 PAR VALUE 406216101
- ---------------------------------- -------------------
(Title of class of securities) (CUSIP number)
CLINT E. ABLES, ESQ.
DRESSER INDUSTRIES, INC.
POST OFFICE BOX 718
2001 ROSS AVENUE
DALLAS, TEXAS 75201
(214) 740-6000
WITH A COPY TO:
DENNIS J. BLOCK, ESQ.
WEIL, GOTSHAL & MANGES LLP
767 FIFTH AVENUE
NEW YORK, NEW YORK 10153
(212) 310-8000
(Name, address and telephone number of person authorized to receive notices and
communications)
FEBRUARY 25, 1998
- --------------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities
of that Section of the Exchange Act but shall be subject to all other provisions
of the Exchange Act.
Beneficial ownership percentages set forth herein assume that at February 23,
1998 there were 262,591,336 shares of Halliburton Company Common Stock
outstanding.
(Continued on following page(s))
(Page 1 of 14 Pages)
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CUSIP No. 406216101 13D Page 2 of 14
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1 NAME OF REPORTING PERSON: DRESSER INDUSTRIES, INC.
S.S. OR I.R.S. IDENTIFICATION NO. 75-0813641
OF ABOVE PERSON:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (A) [_]
(B) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS: NOT APPLICABLE
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [_]
PURSUANT TO ITEM 2(d) OR 2(e):
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF DELAWARE
ORGANIZATION:
- --------------------------------------------------------------------------------
NUMBER OF 7 SOLE VOTING POWER: 39,388,700**
SHARES
-----------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER: NONE
OWNED BY
-----------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER: 39,388,700**
REPORTING
-----------------------------------------------------
PERSON WITH 10 SHARED DISPOSITIVE POWER: NONE
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY 39,388,700**
REPORTING PERSON:
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES [_]
CERTAIN SHARES:
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 13.0%
(APPROX.)
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON: CO
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**All of such shares of common stock of Halliburton Company (the "Company") may
be deemed to be beneficially owned, for purposes of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), by Dresser
Industries, Inc. ("Dresser") due to a stock option agreement between Dresser and
the Company. The filing of this statement shall not be construed as an admission
by Dresser that it is for the purpose of Section 13(d) of the Exchange Act the
beneficial owner of such shares. See Items 4 and 5.
Item 1. Security and Issuer.
-------------------
This statement on Schedule 13D relates to the common stock,
$2.50 par value (the "Common Stock"), of Halliburton Company, a Delaware
corporation (the "Company"). The address of the Company's principal executive
office is 3600 Lincoln Plaza, 500 N. Akard, Dallas, Texas 75201.
Item 2. Identity and Background.
-----------------------
(a), (b), (c) and (f). This statement on Schedule 13D is filed
on behalf of Dresser Industries, Inc., a Delaware corporation ("Dresser").
Dresser, together with its subsidiaries, is a supplier of products, technical
services and project management for hydrocarbon energy-related activities that
are primarily utilized in oil and gas drilling, production and transmission. The
business address of Dresser is 2001 Ross Avenue, Dallas, Texas 75201. The name,
business address, present principal occupation or employment and citizenship of
each director and executive officer of Dresser is set forth on Appendix I hereto
and incorporated herein by reference.
(d) and (e). During the past five years, neither Dresser, nor,
to the best of its knowledge, any of its directors and executive officers, has
(a) been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), or (b) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state
3
securities laws or a finding of any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
-------------------------------------------------
The Option (as defined below) was granted in consideration of
entering into the Merger Agreement (as defined below) and Dresser granting a
reciprocal option to the Company. Dresser did not pay any cash consideration in
respect of the Option and has not purchased any shares of Common Stock
thereunder.
Item 4. Purpose of Transaction.
----------------------
On February 25, 1998, Dresser, the Company and Halliburton
N.C., Inc., a Delaware corporation and wholly-owned direct subsidiary of the
Company ("Acquisition"), entered into an Agreement and Plan of Merger (the
"Merger Agreement") which provides that, following the satisfaction or waiver of
the conditions set forth therein, Acquisition will merge with and into Dresser,
with Dresser continuing as the surviving corporation (the "Merger"). Each
stockholder of Dresser will receive one share of Common Stock for each share of
Dresser common stock. As a result of the merger, Dresser will become a
wholly-owned direct subsidiary of the Company.
The Merger is conditioned upon, among other things, (i)
approval by the stockholders of Dresser as to the Merger, (ii) approval by the
stockholders of the Company as to the
4
charter amendment increasing the number of authorized shares of Common Stock and
the issuance of Common Stock pursuant to the Merger, (iii) the effectiveness of
the Company's registration statement on Form S-4 to be filed with the Securities
and Exchange Commission, (iv) the acceptance of the Common Stock to be issued in
the Merger for listing on the New York Stock Exchange, subject to official
notice of issuance, (v) the expiration of any waiting period applicable to the
Merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, (vi) the absence of any law, government regulation or order opposing
the Merger, (vii) the party's respective accountants confirming in writing their
views that the Merger qualifies for "pooling-of-interests" accounting treatment
and (viii) the receipt by the Company and Dresser of opinions of their counsel
that the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, and that no gain or loss will be recognized by Dresser or
the Company as a result of the Merger.
In connection with the execution of the Merger Agreement and
to facilitate the consummation of the Merger, Dresser entered into a Stock
Option Agreement, dated February 25, 1998 (the "Stock Option Agreement"), with
the Company. Pursuant to the Stock Option Agreement, the Company has granted
Dresser an
5
irrevocable option (the "Option") to purchase 39,388,700 shares of Common Stock
(the "Shares") at an exercise price of the lesser of (i) $44.00 per share and
(ii) the closing price of the Common Stock on the date of the exercise of the
Option. The Option may be exercised by Dresser in whole or in part within one
year after termination of the Merger Agreement in the event that the Merger
Agreement is terminated in certain specified circumstances. The Merger Agreement
also provides for the repurchase of Options and/or Shares by the Company under
certain circumstances. Dresser must pay for the Shares in immediately available
funds by wire transfer.
The foregoing summary of the Stock Option Agreement does not
purport to be complete and is subject to all of the terms and provisions of the
Stock Option Agreement, a copy of which is filed as Exhibit 1 to this Schedule
13D and incorporated by reference herein.
Except as set forth above, Dresser currently has no other
plans nor intentions that could result in or relate to any of the transactions
described in subparagraph (a) through (j) of Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer
------------------------------------
(a) and (b). Dresser, due to the option agreements with
respect to the Common Stock set forth in the Stock Option Agreement and
described in Item 4, may be deemed to beneficially
6
own, for purposes of Section 13(d) of the Exchange Act, 39,388,700 shares of
Common Stock, representing approximately 13% of the Company's outstanding shares
of Common Stock. The filing of this statement shall not be construed as an
admission by Dresser that it is for the purposes of Section 13(d) of the
Exchange Act the beneficial owner of such shares.
Upon exercise of the Option, Dresser would have sole power to
vote or to direct the vote of the Shares acquired pursuant to such exercise.
Subject to the terms of the Stock Option Agreement, upon exercise of the Option,
Dresser would have sole power to dispose or to direct the disposition of the
Shares acquired pursuant to such exercise.
(c). No transactions in shares of Common Stock were
effected by Dresser during the past 60 days.
(d). Not applicable.
(e). Not applicable.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer
------------------------------------------------------
Except for the Merger Agreement and the Stock Option
Agreement, neither Dresser, nor, to the best of its knowledge, any other person
named in Item 2 has any contract, arrangement, understanding or relationship
(legal or otherwise) with any person with respect to any securities of the
Company, including, but not limited to, transfer or voting of any securities,
finder's fees, joint ventures, loan or option arrangements, puts
7
or calls, guarantees of profits, division of profits or loss, or
the giving or withholding of proxies.
Item 7. Materials to Be Filed as Exhibits
---------------------------------
The following are filed as exhibits hereto:
1. Agreement and Plan of Merger, dated February 25,
1998, by and among Halliburton Company, Halliburton, N.C., Inc.
and Dresser Industries, Inc.; and
2. Stock Option Agreement, dated February 25, 1998,
by and among Dresser Industries, Inc. and Halliburton Company.
8
SIGNATURE
---------
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: March 9, 1998
DRESSER INDUSTRIES, INC.
By: /s/ Clint E. Ables
-------------------
Clint E. Ables
Vice President and
General Counsel
9
EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
1. Agreement and Plan of Merger, dated February 25, 1998, by
and among Halliburton Company, Halliburton, N.C., Inc. and
Dresser Industries, Inc.; and
2. Stock Option Agreement, dated February 25, 1998, by and
among Dresser Industries, Inc. and Halliburton Company.
10
APPENDIX I
The following table sets forth the name, business address,
position with Dresser and principal occupation or employment and the name and
principal business of any corporation or other organization in which such
employment is conducted by each director and executive officer of Dresser. The
principal business address of Dresser is Post Office Box 718, 2001 Ross Avenue,
Dallas, Texas 75201 and, unless otherwise indicated, the business address of
each person listed below is the aforesaid address. All of the individuals listed
below are citizens of the United States.
Position With Dresser;
Name and Principal Occupation or
Business Address Employment
- ---------------- ------------------------
William E. Bradford Director of Dresser;
Chairman of the Board of
Dresser since December
1996 and Chief Executive
Officer since November
1995; Director, Ultramar
Diamond Shamrock
Corporation; and Oryx
Energy Company.
Samuel B. Casey, Jr. Director of Dresser;
Angell-Brown, Inc. Director, Dixon
1250 N. Tamiami Trail Ticonderoga Company;
Suite 306 Global Industrial
Naples, FL 34104 Technologies Inc.; and
Northbrook, Inc., a
Division of JMB, Inc.
Lawrence S. Eagleburger Director of Dresser;
Baker, Donelson, Bearman Senior Foreign Policy
& Caldwell Advisor, Baker, Donelson,
801 Pennsylvania Avenue NW Bearman & Caldwell,
Suite 800 Washington, D.C., since
Washington, DC 20004 January 1993; Director,
Phillips Petroleum
Company; Stimsonite;
Universal Corporation;
Corning Corp.; and COMSAT.
Sylvia A. Earle, Ph.D. Director of Dresser;
12812 Skyline Blvd. Explorer in Residence,
Oakland, CA 94619-3125 National Geographic
Society, Washington, D.C.,
since January 1998;
Consultant to Sea Web,
11
since July 1997; Founder
and Chairman since 1994,
Deep Ocean Exploration and
Research, Inc., Oakland,
California; Director, Oryx
Energy Company.
Rawles Fulgham Director of Dresser;
Merrill Lynch & Co., Inc. Senior Advisor, Merrill
2121 San Jacinto Lynch & Co., Inc., Dallas,
Suite 1110 Texas, financial services,
Dallas, TX 75201 since September 1989;
Director, BancTec, Inc.;
Global Industrial
Technologies Inc.; and NCH
Corporation.
John A. Gavin Director of Dresser;
2100 Century Park West Chairman of the Board,
Los Angeles, CA 90067-6900 President, and Chief
Executive Officer, Gamma
Services International,
Los Angeles, California;
Managing Director (Latin
America), Hicks, Muse,
Tate & Furst, since 1995;
Director, Atlantic
Richfield Company;
Pinkerton's, Inc.;
Krause's Furniture Co.;
Apex Mortgage Capital,
Inc.; International Wire
Holdings; Hotchkis and
Wiley, Mutual Funds; and
Kap Resources (Canadian).
Ray L. Hunt Director of Dresser;
Hunt Consolidated, Inc. Chairman of the Board and
2000 Fountain Place Chief Executive officer,
1445 Ross Avenue Dallas, Hunt Oil Company, Dallas,
TX 75202-2785 Texas; Chairman of the
Board, Chief Executive
officer, and President,
Hunt Consolidated, Inc.,
Dallas, Texas; Chairman of
the Board, Chief Executive
Officer and President, RRH
Corporation, Dallas,
Texas; Director,
Electronic Data Systems
Corporation; PepsiCo,
Inc.; Ergo Science
Incorporated; Security
Capital Group
Incorporated; and
12
Federal Reserve Bank of
Dallas.
J. Landis Martin Director of Dresser;
TIMET President and Chief
1999 Broadway, Suite 4300 Executive Officer of NL
Denver, CO 80202 Industries, Inc., Houston,
Texas; Chairman of
Titanium Metals
Corporation, Denver,
Colorado, Chief Executive
Officer since January
1995; Director, NL
Industries, Inc.; Titanium
Metals Corporation;
Tremont Corporation; and
Apartment Investment and
Management Corporation.
Lionel H. Olmer Director of Dresser;
Paul, Weiss, Rifkind, Wharton partner, Paul, Weiss,
& Garrison Rifkind, Wharton &
1615 L Street, NW, #1300 Garrison, law firm,
Washington, DC 20036 Washington, D.C.;
Director, SIPEX Corp.
Jay A. Precourt Director of Dresser; Vice
Tejas Gas Corporation Chairman and Chief
1301 McKinney, Suite 700 Executive Officer, and,
Houston, TX 77010 since October 1996,
President of Tejas Gas
Corporation, Houston,
Tejas; Director, Coral
Energy, L.P.; Founders
Funds, Inc.; Texas Gas
Corporation; and the
Timken Company.
Donald C. Vaughn Director of Dresser;
President and Chief
Operating Officer since
December 1996; Director,
The Houston Exploration
Company.
Richard W. Vieser Director of Dresser;
4100 School Street Director, Ceridian
Keene, NH 03431 Corporation; Global
Industrial Technologies
Inc.; Sybron
International; Varian
Associates, Inc.; and Berg
Electronics &
International Wire Corp.
13
George H. Juetten Senior Vice President of
Dresser since July 1997;
Chief Financial Officer
since December 1996.
Michael J. Kammerer Senior Vice President of
Dresser and President of
Engineered Equipment and
Systems Group since July
1997.
Robert J. Menerey Senior Vice President of
Dresser and President of
Drilling and Production
Group since July 1997.
Patrick M. Murray Senior Vice President of
Dresser and President of
Strategic Initiatives and
Acquisition/Divestiture
Group since July 1997.
A. Jack Stanley Senior Vice President of
Dresser and President of
Engineering and
Construction Group since
July 1997.
G. Phillip Tevis Senior Vice President of
Dresser and President of
Dresser Marketing Group
since July 1997.
Clint E. Ables Vice President and General
Counsel of Dresser since
October 1993.
Paul M. Bryant Vice President - Human
Resources of Dresser since
May 1993.
Ardon B. Judd, Jr. Vice President -
1100 Connecticut Avenue N.W. Washington Counsel of
Suite 810 Washington, DC 20036 Dresser since September
1986.
Rebecca R. Morris Vice President - Corporate
Counsel of Dresser since
January 1994; Secretary
since November 1990.
14
David R. Smith Vice President - Tax of
Dresser since January
1994.
William R. Bradle Treasurer of Dresser since
October 1997.
Kenneth J. Kotara Controller of Dresser
since December 1996.
15
NYFS07...:\51\42351\0022\2037\SCH3028L.43A
EXHIBIT 1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
HALLIBURTON COMPANY
HALLIBURTON N.C., INC.
AND
DRESSER INDUSTRIES, INC.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
SECTION 1.01 Definitions...................................................1
SECTION 1.02 Rules of Construction.........................................1
ARTICLE II TERMS OF MERGER
SECTION 2.01 Statutory Merger..............................................2
SECTION 2.02 Effective Time................................................2
SECTION 2.03 Effect of the Merger..........................................2
SECTION 2.04 Certificate of Incorporation; Bylaws..........................2
SECTION 2.05 Directors and Officers........................................2
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01 Merger Consideration; Conversion and Cancellation of
Securities...........................................2
SECTION 3.02 Exchange of Certificates......................................3
SECTION 3.03 Closing.......................................................6
SECTION 3.04 Stock Transfer Books..........................................6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01 Organization and Qualification; Subsidiaries..................6
SECTION 4.02 Certificate of Incorporation and Bylaws.......................6
SECTION 4.03 Capitalization................................................6
SECTION 4.04 Authorization of Agreement....................................8
SECTION 4.05 Approvals.....................................................8
SECTION 4.06 No Violation..................................................8
SECTION 4.07 Reports.......................................................9
SECTION 4.08 No Material Adverse Effect; Conduct..........................10
SECTION 4.09 Certain Business Practices...................................10
SECTION 4.10 Certain Obligations..........................................10
SECTION 4.11 Authorizations; Compliance...................................10
SECTION 4.12 Litigation; Compliance with Laws.............................11
SECTION 4.13 Employee Benefit Plans.......................................11
SECTION 4.14 Taxes........................................................14
SECTION 4.15 Environmental Matters........................................14
SECTION 4.16 Insurance....................................................14
SECTION 4.17 Pooling; Tax Matters.........................................15
SECTION 4.18 Affiliates...................................................15
SECTION 4.19 Opinion of Financial Advisor.................................15
SECTION 4.20 Brokers......................................................15
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PARENT
SECTION 5.01 Organization and Qualification; Subsidiaries.................16
AGREEMENT AND PLAN OF MERGER
-ii-
SECTION 5.02 Certificate of Incorporation and Bylaws......................16
SECTION 5.03 Capitalization...............................................16
SECTION 5.04 Authorization of Agreement...................................17
SECTION 5.05 Approvals....................................................18
SECTION 5.06 No Violation.................................................18
SECTION 5.07 Reports......................................................19
SECTION 5.08 No Material Adverse Effect; Conduct..........................19
SECTION 5.09 Certain Business Practices...................................20
SECTION 5.10 Certain Obligations..........................................20
SECTION 5.11 Authorizations; Compliance...................................20
SECTION 5.12 Litigation; Compliance with Laws.............................20
SECTION 5.13 Employee Benefit Plans.......................................21
SECTION 5.14 Taxes........................................................23
SECTION 5.15 Environmental Matters........................................24
SECTION 5.16 Insurance....................................................24
SECTION 5.17 Pooling; Tax Matters.........................................24
SECTION 5.18 Affiliates...................................................25
SECTION 5.19 Brokers......................................................26
SECTION 5.20 Opinion of Financial Advisor. ..............................26
SECTION 5.21 Acquiring Person.............................................26
ARTICLE VI COVENANTS
SECTION 6.01 Affirmative Covenants........................................26
SECTION 6.02 Negative Covenants...........................................27
SECTION 6.03 No Solicitation by the Company...............................33
SECTION 6.04 No Solicitation by the Parent................................34
SECTION 6.05 Access and Information.......................................35
ARTICLE VII ADDITIONAL AGREEMENTS
SECTION 7.01 Meetings of Stockholders.....................................35
SECTION 7.02 Registration Statement; Proxy Statements.....................36
SECTION 7.03 Appropriate Action; Consents; Filings........................38
SECTION 7.04 Affiliates; Pooling; Tax Treatment...........................40
SECTION 7.05 Public Announcements.........................................40
SECTION 7.06 NYSE Listing.................................................40
SECTION 7.07 Rights Agreement; State Takeover Statutes....................40
SECTION 7.08 Comfort Letters..............................................41
SECTION 7.09 Assumption of Obligations to Issue Stock and
Obligations of Employee Benefit Plans; Employees....41
SECTION 7.10 Indemnification of Directors and Officers....................44
SECTION 7.11 Newco........................................................45
SECTION 7.12 Event Notices................................................45
SECTION 7.13 Parent Board of Directors; Committees........................46
SECTION 7.14 Transition Management........................................46
SECTION 7.15 Employment Contracts.........................................46
AGREEMENT AND PLAN OF MERGER
-iii-
SECTION 7.16 Waiver by Company Joint Venture Partners.....................46
ARTICLE VIII CLOSING CONDITIONS
SECTION 8.01 Conditions to Obligations of Each Party Under This
Agreement...........................................47
SECTION 8.02 Additional Conditions to Obligations of the Parent
Companies...........................................48
SECTION 8.03 Additional Conditions to Obligations of the Company..........48
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01 Termination..................................................49
SECTION 9.02 Effect of Termination........................................51
SECTION 9.03 Amendment....................................................51
SECTION 9.04 Waiver.......................................................51
SECTION 9.05 Fees, Expenses and Other Payments............................52
ARTICLE X GENERAL PROVISIONS
SECTION 10.01 Effectiveness of Representations, Warranties and Agreements..54
SECTION 10.02 Notices......................................................54
SECTION 10.03 Headings.....................................................55
SECTION 10.04 Severability.................................................55
SECTION 10.05 Entire Agreement.............................................55
SECTION 10.06 Assignment...................................................55
SECTION 10.07 Parties in Interest..........................................56
SECTION 10.08 Failure or Indulgence Not Waiver; Remedies Cumulative........56
SECTION 10.09 Governing Law................................................56
SECTION 10.10 Specific Performance.........................................56
SECTION 10.11 Counterparts.................................................56
AGREEMENT AND PLAN OF MERGER
-iv-
ANNEXES
-------
Annex A Schedule of Defined Terms
Annex B Affiliate's Agreement (Dresser Industries, Inc.) Affiliates)
Annex C Affiliate's Agreement (Halliburton Company) Affiliates)
AGREEMENT AND PLAN OF MERGER
-v-
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of February 25, 1998 (this
"Agreement"), is by and among Halliburton Company, a Delaware corporation (the
"Parent"), Halliburton N.C., Inc., a Delaware corporation and a wholly owned
direct subsidiary of the Parent ("Newco"), and Dresser Industries, Inc., a
Delaware corporation (the "Company"). The Parent and Newco are sometimes
referred to herein as the "Parent Companies."
RECITALS:
The Company and the Parent have determined to engage in a business
combination as peer firms in a merger of equals.
In furtherance thereof, the respective Boards of Directors of the
Company, the Parent and Newco have approved this Agreement and the Merger of
Newco with and into the Company.
For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization within the meaning of the provisions of Section
368(a) of the Code.
The Merger is intended to be treated as a "pooling of interests" for
accounting purposes.
The parties hereto acknowledge the execution and delivery of the Stock
Option Agreements concurrently with the execution and delivery of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. Certain capitalized and other terms used in
this Agreement are defined in Annex A hereto and are used herein with the
meanings ascribed to them therein.
SECTION 1.2 Rules of Construction. Unless the context otherwise
requires, as used in this Agreement: (a) a term has the meaning ascribed to it;
(b) an accounting term not otherwise defined has the meaning ascribed to it in
accordance with GAAP; (c) "or" is not exclusive; (d) "including" means
"including, without limitation;" (e) words in the singular include the plural;
(f) words in the plural include the singular; (g) words applicable to one gender
shall be construed to apply to each gender; (h) the terms "hereof," "herein,"
"hereby," "hereto" and derivative or similar words refer to this entire
Agreement; and (i) the terms "Article" or "Section" shall refer to the specified
Article or Section of this Agreement.
ARTICLE II
TERMS OF MERGER
SECTION 2.1 Statutory Merger. Subject to the terms and conditions and
in reliance upon the representations, warranties, covenants and agreements
contained herein, Newco shall merge with and into the Company at the Effective
Time. The terms and conditions of the Merger and the mode of carrying the same
into effect shall be as set forth in this Agreement. As a result of the Merger,
the separate corporate existence of Newco shall cease and the Company shall
continue as the Surviving Corporation.
SECTION 2.2 Effective Time. As soon as practicable after the
satisfaction or, if permissible, waiver of the conditions set forth in Article
VIII, the parties hereto shall cause the Merger to be consummated by filing a
Certificate of Merger with the Secretary of State of the State of Delaware, in
such form as required by, and executed in accordance with the relevant
provisions of, the GCL.
SECTION 2.3 Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of the GCL. Without
limiting the generality of the foregoing, and subject thereto, at the Effective
Time, except as otherwise provided herein, all the property, rights, privileges,
powers and franchises of Newco and the Company shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Newco and the Company
shall become the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.4 Certificate of Incorporation; Bylaws. At the Effective
Time, the certificate of incorporation and the bylaws of the Company, as in
effect immediately prior to the Effective Time, shall be the certificate of
incorporation and the bylaws of the Surviving Corporation.
SECTION 2.5 Directors and Officers. The directors of Newco immediately
prior to the Effective Time shall be the directors of the Surviving Corporation,
each to hold office in accordance with the certificate of incorporation and
bylaws of the Surviving Corporation, and the officers of the Company immediately
prior to the Effective Time shall be the officers of the Surviving Corporation,
in each case until their respective successors are duly elected or appointed and
qualified.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.1 Merger Consideration; Conversion and Cancellation of
Securities. At the Effective Time, by virtue of the Merger and without any
action on the part of the Parent Companies, the Company or the holders of any of
the following securities:
(a) Subject to the other provisions of this Article III, each
share of Company Common Stock, including the associated right to
receive or purchase shares of Series A
AGREEMENT AND PLAN OF MERGER
-2-
Junior Preferred Stock of the Company pursuant to the terms of the
Company's Rights Agreement, issued and outstanding immediately prior to
the Effective Time (excluding any Company Common Stock described in
Section 3.01(c)) shall be converted into one share of Parent Common
Stock. Notwithstanding the foregoing, if between the date of this
Agreement and the Effective Time the outstanding shares of the Parent
Common Stock or the Company Common Stock shall have been changed into a
different number of shares or a different class, by reason of any stock
dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, the Common Stock Exchange Ratio
shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares.
(b) All shares of Company Common Stock shall, upon conversion
thereof into shares of Parent Common Stock at the Effective Time, cease
to be outstanding and shall be automatically canceled and retired, and
each certificate previously evidencing Company Common Stock outstanding
immediately prior to the Effective Time (other than Company Common
Stock described in Section 3.01(c)) shall thereafter be deemed, for all
purposes other than the payment of dividends or distributions, to
represent that number of shares of Parent Common Stock determined
pursuant to the Common Stock Exchange Ratio and, if applicable, the
right to receive cash pursuant to Section 3.02(d) or (e) or both. The
holders of certificates previously evidencing Company Common Stock
shall cease to have any rights with respect to such Company Common
Stock except as otherwise provided herein or by law.
(c) Notwithstanding any provision of this Agreement to the
contrary, each share of Company Common Stock held in the treasury of
the Company and each share of Company Common Stock, if any, owned by
the Parent or any direct or indirect wholly owned Subsidiary of the
Parent or of the Company immediately prior to the Effective Time shall
be canceled and extinguished without conversion thereof.
(d) Each share of common stock, par value $1.00 per share, of
Newco issued and outstanding immediately prior to the Effective Time
shall be converted into one share of common stock, par value $.25 per
share, of the Surviving Corporation.
SECTION 3.2 Exchange of Certificates.
(a) Exchange Fund. At the Closing, the Parent shall deposit,
or cause to be deposited, with the Exchange Agent, for the benefit of
the former holders of Company Common Stock and for exchange through the
Exchange Agent in accordance with this Article III, certificates
evidencing that number of shares of Parent Common Stock equal to the
product of the Common Stock Exchange Ratio and the number of shares of
Company Common Stock issued and outstanding immediately prior to the
Effective Time (exclusive of any such shares to be canceled pursuant to
Section 3.01(c)). The Exchange Agent shall, pursuant to irrevocable
instructions from the Parent, deliver certificates evidencing Parent
Common Stock, together with any cash to be paid in lieu of fractional
interests in shares of Parent Common Stock pursuant to Section 3.02(e)
and any dividends or distributions related to such Parent Common Stock
to be paid pursuant to Section
AGREEMENT AND PLAN OF MERGER
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3.02(d), in exchange for certificates theretofore evidencing Company
Common Stock surrendered to the Exchange Agent pursuant to Section
3.02(c). Except as contemplated by Sections 3.02(f), (g) and (h), the
Exchange Fund shall not be used for any other purpose.
(b) Letter of Transmittal. Not later than five (5) Business
Days after the Effective Time, the Parent will cause the Exchange Agent
to send to each record holder of Company Common Stock immediately prior
to the Effective Time a letter of transmittal and other appropriate
materials for use in surrendering to the Exchange Agent certificates
that prior to the Effective Time evidenced shares of Company Common
Stock.
(c) Exchange Procedures. Promptly after the Effective Time,
the Exchange Agent shall distribute to each former holder of Company
Common Stock, upon surrender to the Exchange Agent for cancellation of
one or more certificates that theretofore evidenced shares of Company
Common Stock, certificates evidencing the appropriate number of shares
of the Parent Common Stock into which such shares of Company Common
Stock were converted pursuant to the Merger. If shares of Parent Common
Stock are to be issued to a Person other than the Person in whose name
the surrendered certificate or certificates are registered, it shall be
a condition of issuance of Parent Common Stock that the surrendered
certificate or certificates shall be properly endorsed, with signatures
guaranteed, or otherwise in proper form for transfer and that the
Person requesting such payment shall pay any transfer or other taxes
required by reason of the issuance of Parent Common Stock to a Person
other than the registered holder of the surrendered certificate or
certificates or such Person shall establish to the satisfaction of the
Parent that such tax has been paid or is not applicable.
(d) Distributions with Respect to Unexchanged Shares of
Company Common Stock. No dividends or other distributions declared or
made with respect to the Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any certificate that
theretofore evidenced shares of Company Common Stock until the holder
of such certificate shall surrender such certificate. Subject to the
effect of any applicable abandoned property, escheat or similar laws,
following surrender of any such certificate, there shall be paid to the
holder of the certificates evidencing whole shares of Parent Common
Stock issued in exchange therefor, without interest, (i) promptly, the
amount of any cash payable with respect to a fractional share of Parent
Common Stock to which such holder is entitled pursuant to Section
3.02(e), (ii) the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to
such whole shares of Parent Common Stock and (iii) at the appropriate
payment date, the amount of dividends or other distributions, with a
record date after the Effective Time but prior to surrender and a
payment date occurring after surrender, payable with respect to such
whole shares of Parent Common Stock.
AGREEMENT AND PLAN OF MERGER
-4-
(e) No Fractional Shares. Notwithstanding anything herein to
the contrary, no certificates or scrip evidencing fractional shares of
Parent Common Stock shall be issued in connection with the Merger, and
any such fractional share interests to which a holder of record of
Company Common Stock at the Effective Time would otherwise be entitled
shall not entitle such holder to vote or to any rights of a stockholder
of the Parent. In lieu of any such fractional shares, each holder of
record of Company Common Stock at the Effective Time who but for the
provisions of this Section 3.02(e) would be entitled to receive a
fractional interest of a share of Parent Common Stock by virtue of the
Merger shall be paid cash, without any interest thereon, as hereinafter
provided. The Parent shall instruct the Exchange Agent to determine the
number of whole shares and fractional shares of Parent Common Stock
allocable to each holder of record of Company Common Stock at the
Effective Time, to aggregate all such fractional shares into whole
shares, to sell the whole shares obtained thereby in the open market at
then prevailing prices on behalf of holders who otherwise would be
entitled to receive fractional share interests and to distribute to
each such holder such holder's ratable share of the total proceeds of
such sale, after making appropriate deductions of the amount, if any,
required for federal income tax withholding purposes and after
deducting any applicable transfer taxes. All brokers' fees and
commissions incurred in connection with such sales shall be paid by the
Parent.
(f) Termination of Exchange Fund. Any portion of the Exchange
Fund that remains unclaimed by the former holders of Company Common
Stock for 12 months after the Effective Time shall be delivered to the
Parent, upon demand, and any former holders of Company Common Stock who
have not theretofore complied with this Article III shall thereafter
look only to the Parent for the Parent Common Stock and any cash to
which they are entitled. Notwithstanding any other provisions herein,
neither the Exchange Agent nor any party hereto shall be liable to any
former holder of Company Common Stock for any Parent Common Stock, cash
in lieu of fractional share interests or dividends or distributions
thereon delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(g) Withholding of Tax. The Parent shall be entitled to deduct
and withhold from the consideration otherwise payable pursuant to this
Agreement to any former holder of Company Common Stock such amounts as
the Parent (or any affiliate thereof) or the Exchange Agent is required
to deduct and withhold with respect to the making of such payment under
the Code or state, local or foreign tax Law. To the extent that amounts
are so withheld by the Parent, such withheld amounts shall be treated
for all purposes of this Agreement as having been paid to the former
holder of Company Common Stock in respect of which such deduction and
withholding was made by the Parent.
(h) Investment of Exchange Fund. The Exchange Agent may invest
any cash included in the Exchange Fund in deposit accounts or
short-term money market instruments, as directed by the Parent, on a
daily basis. Any interest and other income resulting from such
investments shall be paid to the Parent. The Parent shall deposit with
the Exchange Agent as part of the Exchange Fund cash in an amount equal
to any loss
AGREEMENT AND PLAN OF MERGER
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of principal resulting from such investments promptly after the
incurrence of such a loss.
SECTION 3.3 Closing. The Closing shall take place at the offices of
Vinson & Elkins L.L.P., 4000 Trammel Crow Center, 2001 Ross Avenue, Dallas,
Texas 75201, at 10:00 a.m. on the next Business Day following the date on which
the conditions to the Closing have been satisfied or waived or at such other
place, time and date as the parties hereto may agree. At the conclusion of the
Closing on the Closing Date, the parties hereto shall cause the Certificate of
Merger to be filed with the Secretary of State of the State of Delaware.
SECTION 3.4 Stock Transfer Books. At the close of business on the date
of the Effective Time, the stock transfer books of the Company shall be closed
and there shall be no further registration of transfers of shares of Company
Common Stock thereafter on the records of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Parent Companies,
subject to the limitations set forth in Section 10.01, that:
SECTION 4.1 Organization and Qualification; Subsidiaries. The Company
and each Significant Subsidiary of the Company are legal entities duly
organized, validly existing and in good standing under the Laws of their
respective jurisdictions of incorporation or organization, have all requisite
corporate power and authority to own, lease and operate their respective
properties and to carry on their businesses as they are now being conducted and
are duly qualified and in good standing to do business in the jurisdictions in
which the nature of the businesses conducted by them or the ownership or leasing
of their respective properties makes such qualification necessary, other than
any matters, including the failure to be so qualified and in good standing, that
could not reasonably be expected to have a Material Adverse Effect on the
Company. Section 4.01 of the Company's Disclosure Letter sets forth a true and
complete list of all the Company's directly or indirectly owned Significant
Subsidiaries, together with (A) a specification of the nature of legal
organization of such Subsidiary, and (B) the jurisdiction of incorporation or
other organization of such Subsidiary.
SECTION 4.2 Certificate of Incorporation and Bylaws. The Company has
heretofore marked for identification and delivered to the Parent complete and
correct copies of the certificate of incorporation and the bylaws, in each case
as amended or restated to the date hereof, of the Company. The Company is not in
violation of any of the provisions of its certificate of incorporation or
bylaws.
AGREEMENT AND PLAN OF MERGER
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SECTION 4.3 Capitalization.
(a) The authorized capital stock of the Company consists of
(i) 400,000,000 shares of Company Common Stock, of which, as of
February 23, 1998, (A) 175,479,962 shares were issued and outstanding,
all of which are duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights created by statute,
the Company's certificate of incorporation or bylaws or any agreement
to which the Company is a party or is bound and (B) 9,385,769 shares
were held in the treasury of the Company and (ii) 10,000,000 shares of
Preferred Stock, with no par value, of which none are issued and
outstanding but of which 2,000,000 shares have been designated as
Series A Junior Preferred Stock. Since October 31, 1997, except as set
forth in Section 4.03(a) of the Company's Disclosure Letter, (x) no
shares of Company Common Stock have been issued by the Company, except
upon exercise of Company Stock Options outstanding under the Company
Stock Plans and (y) the Company has not granted any options for, or
other rights to purchase, shares of Company Common Stock.
(b) Except for shares reserved for issuance pursuant to the
Company Stock Plans described in Section 4.03(b) of the Company's
Disclosure Letter (which reservations are also listed in detail in
Section 4.03(b) of the Company's Disclosure Letter), no shares of
Common Stock are reserved for issuance, and, except for the Company's
Rights Plan and Company Stock Options, there are no contracts,
agreements, commitments or arrangements obligating the Company (i) to
offer, sell, issue or grant any Equity Security of the Company or (ii)
to redeem, purchase or acquire, or offer to purchase or acquire, any
outstanding Equity Security of the Company.
(c) Except as set forth in Section 4.03(c) of the Company's
Disclosure Letter, (i) all the issued and outstanding shares of capital
stock of, or other equity interests in, each Significant Subsidiary of
the Company are owned by the Company or one of its Subsidiaries, have
been duly authorized and are validly issued, and, with respect to
capital stock, are fully paid and nonassessable, and were not issued in
violation of any preemptive or similar rights of any past or present
equity holder of such Subsidiary; (ii) all such issued and outstanding
shares, or other equity interests, that are owned by the Company or one
of its Subsidiaries are owned free and clear of all Liens; (iii) no
shares of capital stock of, or other equity interests in, any
Significant Subsidiary of the Company are reserved for issuance, and
there are no contracts, agreements, commitments or arrangements
obligating the Company or any of its Significant Subsidiaries (A) to
offer, sell, issue, grant, pledge, dispose of or encumber any Equity
Securities of any of the Significant Subsidiaries of the Company or (B)
to redeem, purchase or acquire, or offer to purchase or acquire, any
outstanding Equity Securities of any of the Significant Subsidiaries of
the Company or (C) to grant any Lien on any outstanding shares of
capital stock of, or other equity interests in, any of the Significant
Subsidiaries of the Company; except for any matter under clause (i),
(ii) or (iii) of this Section 4.03(c) that could not reasonably be
expected to have a Material Adverse Effect on the Company.
(d) Except for the revocable proxies granted by the Company or
its Subsidiaries with respect to the capital stock of Subsidiaries
owned by the Company or
AGREEMENT AND PLAN OF MERGER
-7-
its Subsidiaries, there are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which the
Company or any of its Significant Subsidiaries is a party or by which
the Company or any of its Significant Subsidiaries is bound with
respect to the voting of any shares of capital stock of the Company or
any of its Significant Subsidiaries.
SECTION 4.4 Authorization of Agreement. The Company has all requisite
corporate power and authority to execute and deliver this Agreement and the
Company Stock Option Agreement and, subject, in the case of this Agreement, to
approval of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock in accordance with the applicable provisions of
the GCL and the Company's certificate of incorporation, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby. The execution and delivery by the Company of this Agreement
and the Company Stock Option Agreement and the performance by the Company of its
obligations hereunder and thereunder have been duly and validly authorized by
all requisite corporate action on the part of the Company (other than, with
respect to the Merger, the approval and adoption of this Agreement by the
holders of a majority of the outstanding shares of Company Common Stock in
accordance with the applicable provisions of the GCL and the Company's
certificate of incorporation). This Agreement and the Company Stock Option
Agreement have been duly executed and delivered by the Company and (assuming due
authorization, execution and delivery hereof by the other parties hereto)
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the same may be
limited by legal principles of general applicability governing the application
and availability of equitable remedies.
SECTION 4.5 Approvals. Except for the applicable requirements, if any,
of (a) the Securities Act, (b) the Exchange Act, (c) state securities or blue
sky laws, (d) the HSR Act, (e) the competition Laws, Regulations and Orders of
foreign Governmental Authorities as set forth in Section 4.05 of the Company's
Disclosure Letter, (f) the NYSE, (g) the filing and recordation of appropriate
merger documents as required by the GCL and (h) those Laws, Regulations and
Orders noncompliance with which could not reasonably be expected to have a
Material Adverse Effect on the Company, no filing or registration with, no
waiting period imposed by and no Authorization of, any Governmental Authority is
required under any Law, Regulation or Order applicable to the Company or any of
its Subsidiaries to permit the Company to execute, deliver or perform this
Agreement or the Company Stock Option Agreement or to consummate the
transactions contemplated hereby or thereby.
SECTION 4.6 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by and receipt of all Authorizations of Governmental Authorities
indicated as required in Section 4.05 and receipt of the approval of this
Agreement by the holders of a majority of the outstanding shares of Company
Common Stock as required by the GCL and except as set forth in Section 4.06 of
the Company's Disclosure Letter, neither the execution and delivery by the
Company of this Agreement or the Company Stock Option Agreement nor the
performance by the Company of its obligations hereunder or thereunder will (a)
violate or breach the terms of or cause a default under (i) any Law, Regulation
or Order applicable to the Company, (ii) the certificate of
AGREEMENT AND PLAN OF MERGER
-8-
incorporation or bylaws of the Company or (iii) any contract or agreement to
which the Company or any of its Subsidiaries is a party or by which it or any of
its properties or assets is bound, or (b) with the passage of time, the giving
of notice or the taking of any action by a third Person, have any of the effects
set forth in clause (a) of this Section, except in any such case for any matters
described in this Section (other than clause (ii) hereof) that could not
reasonably be expected to have Material Adverse Effect on the Company. Prior to
the execution of this Agreement, the Board of Directors of the Company has taken
all necessary action to cause this Agreement and the transactions contemplated
hereby to be exempt from the provisions of Section 203 of the GCL and to ensure
that the execution, delivery and performance of this Agreement by the parties
hereto will not cause any rights to be distributed or to become exercisable
under the Company's Rights Agreement. Assuming the representation of the Parent
in Section 5.17(g) is true, neither of the Parent Companies is (a) an "Acquiring
Person" as defined in the Company's Rights Agreement or (b) will become an
"Acquiring Person" as defined therein as a result of any of the transactions
contemplated by this Agreement.
SECTION 4.7 Reports.
(a) Since October 31, 1994, (i) the Company has filed all SEC
Reports required to be filed by it with the Commission and (ii) the
Company and its Subsidiaries have filed all other Reports required to
be filed by any of them with any other Governmental Authorities,
including state securities administrators, except where the failure to
file any such Reports could not reasonably be expected to have a
Material Adverse Effect on the Company. Such Reports, including all
those filed after the date of this Agreement and prior to the Effective
Time, (x) were prepared in all material respects in accordance with the
requirements of applicable Law (including, with respect to the SEC
Reports, the Securities Act and the Exchange Act, as the case may be,
and the applicable Regulations of the Commission thereunder) and (y),
in the case of the SEC Reports, did not at the time they were filed
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The Company's Audited Consolidated Financial Statements
and any consolidated financial statements of the Company (including any
related notes thereto) contained in any SEC Reports filed by the
Company with the Commission after the date of this Agreement (i) have
been or will have been prepared in accordance with GAAP (except (A) to
the extent required by changes in GAAP and (B), with respect to the
Company's Audited Consolidated Financial Statements, as may be
indicated in the notes thereto and (C), in the case of any unaudited
interim financial statements, as permitted by Form 10-Q) and (ii)
fairly present the consolidated financial position of the Company and
its Subsidiaries as of the respective dates thereof and the
consolidated results of their operations and cash flows for the periods
indicated (subject, in the case of any unaudited interim financial
statements, to normal and recurring year-end adjustments).
(c) Except as set forth in Section 4.07(c) of the Company's
Disclosure Letter, there exist no liabilities or obligations of the
Company and its Subsidiaries that are
AGREEMENT AND PLAN OF MERGER
-9-
Material to the Company, whether accrued, absolute, contingent or
threatened, and that would be required to be reflected, reserved for or
disclosed under GAAP in consolidated financial statements of the
Company as of and for the period ended on the date of this
representation and warranty, other than (i) liabilities or obligations
that are adequately reflected, reserved for or disclosed in the
Company's Audited Consolidated Financial Statements, (ii) liabilities
or obligations incurred in the ordinary course of business of the
Company since October 31, 1997, (iii) liabilities or obligations the
incurrence of which is permitted by Section 6.02(a) and (iv)
liabilities or obligations that are not Material to the Company.
SECTION 4.8 No Material Adverse Effect; Conduct.
(a) Since October 31, 1997, no event (other than any event
that is of general application to all or a substantial portion of the
Company's industry and other than any event that is expressly subject
to any other representation or warranty contained in Article IV) has,
to the Knowledge of the Company, occurred that, individually or
together with other similar events, could reasonably be expected to
constitute or cause a Material Adverse Effect on the Company.
(b) Except as set forth in Section 4.08(b) of the Company's
Disclosure Letter, during the period from October 31, 1997 to the date
of this Agreement, neither the Company nor any of its Subsidiaries has
engaged in any conduct that is proscribed during the period from the
date of this Agreement to the Effective Time by subsections (i) through
(xiv) of Section 6.02(a).
SECTION 4.9 Certain Business Practices. As of the date of this
Agreement, neither the Company or any of its Subsidiaries nor any director,
officer, employee or agent of the Company or any of its Subsidiaries has (a)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (b) made any unlawful payment
to any foreign or domestic government official or employee or to any foreign or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (c) consummated any transaction, made
any payment, entered into any agreement or arrangement or taken any other action
in violation of Section 1128B(b) of the Social Security Act, as amended, or (d)
made any other unlawful payment, except for any such matters that could not
reasonably be expected to have a Material Adverse Effect on the Company.
SECTION 4.10 Certain Obligations. Except for those listed in Section
4.10 of the Company's Disclosure Letter, neither the Company nor any of its
Subsidiaries is a party to or bound by any (a) Noncompete Agreement or (b) any
agreement that contains change of control or similar provisions that would give
any Person that is a party to any such agreement the right, as a result of the
execution of this Agreement or the consummation of any of the transactions
contemplated hereby, to purchase any Material interest of the Company in any
joint venture, partnership or similar arrangement.
SECTION 4.11 Authorizations; Compliance. The Company and its
Subsidiaries have obtained all Authorizations that are necessary to carry on
their businesses as currently
AGREEMENT AND PLAN OF MERGER
-10-
conducted, except for any such Authorizations as to which, individually or in
the aggregate, the failure to possess could not reasonably be expected to have a
Material Adverse Effect on the Company. Such Authorizations are in full force
and effect, have not been violated in any respect that could reasonably be
expected to have a Material Adverse Effect on the Company and there is no
action, proceeding or investigation pending or, to the Knowledge of the Company,
threatened regarding suspension, revocation or cancellation of any such
Authorizations, except for any suspensions, revocations or cancellations of any
such Authorizations that, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect on the Company.
SECTION 4.12 Litigation; Compliance with Laws. There are no actions,
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Company, threatened against the Company or
any of its Subsidiaries, at law or in equity, in any Court or before or by any
Governmental Authority, except actions, suits, investigations or proceedings
that are disclosed in the Company's SEC Reports, that are set forth in Section
4.12 or Section 4.15 of the Company's Disclosure Letter or that, individually
or, with respect to multiple actions, suits or proceedings that allege similar
theories of recovery based on similar facts, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Company. There
are no Material claims pending or, to the Knowledge of the Company, threatened
by any Persons against the Company or any of its Subsidiaries for
indemnification pursuant to any statute, organizational document, contract or
otherwise with respect to any claim, action, suit, investigation or proceeding
pending in any Court or before or by any Governmental Authority. Except as set
forth in Section 4.12 of the Company's Disclosure Letter and with respect to the
matters covered by Sections 4.09, 4.13, 4.14 and 4.15, the Company and its
Subsidiaries are in substantial compliance with all applicable Laws and
Regulations and are not in default with respect to any Order applicable to the
Company or any of its Subsidiaries, except such events of noncompliance or
defaults that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 4.13 Employee Benefit Plans. Except as set forth in the
Company's SEC Reports or in Section 4.13 of the Company's Disclosure Letter:
(a) With respect to each Company Benefit Plan, no event has
occurred and, to the Knowledge of the Company, there exists no
condition or set of circumstances in connection with which the Company
or any of its Subsidiaries could be subject to any liability under the
terms of such Company Benefit Plan, ERISA, the Code or any other
applicable Law, other than any condition or set of circumstances that
could not reasonably be expected to have a Material Adverse Effect on
the Company.
(b) Each Current Company Benefit Plan intended to be qualified
under Section 401 of the Code (i) satisfies in form the requirements of
such Section except to the extent amendments are not required by Law to
be made until a date after the Effective Time, (ii) has received a
favorable determination letter from the IRS regarding such qualified
status and (iii) has not, since the receipt of the most recent
favorable determination letter, been amended other than amendments
required by applicable Law.
AGREEMENT AND PLAN OF MERGER
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(c) Except as would not reasonably be expected to result in a
Material Adverse Effect on the Company, there has been no termination
or partial termination of any Current Company Benefit Plan within the
meaning of Section 4.11(d)(3) of the Code and, to the Knowledge of the
Company, each Current Company Benefit Plan has been operated in
material compliance with its provisions and with applicable Law.
(d) Any Terminated Company Benefit Plan intended to have been
qualified under Section 401 of the Code received a favorable
determination letter from the IRS with respect to its termination.
(e) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the Knowledge of the Company,
threatened against, or with respect to, any Company Benefit Plan or its
assets that could reasonably be expected to have a Material Adverse
Effect on the Company and, to the Knowledge of the Company, no facts or
circumstances exist that could give rise to any such actions, suits or
claims, except as would not reasonably be expected to have a Material
Adverse Effect on the Company.
(f) To the Knowledge of the Company, there is no matter
pending (other than routine qualification determination filings) with
respect to any Company Benefit Plans before the IRS, the Department of
Labor, the PBGC or any other Governmental Authority, except as would
not reasonably be expected to have a Material Adverse Effect on the
Company.
(g) All contributions required to be made to Company Benefit
Plans pursuant to their terms and the provisions of ERISA, the Code or
any other applicable Law have been timely made, except as would not
reasonably be expected to have a Material Adverse Effect on the
Company.
(h) As to any Current Company Benefit Plan subject to Title IV
of ERISA, (i) there has been no event or condition which presents a
significant risk of plan termination, (ii) no accumulated funding
deficiency, whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code has been incurred (iii) no reportable
event within the meaning of Section 4043 of ERISA (for which the
disclosure requirements of Regulation section 4043.1, et seq.,
promulgated by the PBGC, have not been waived) has occurred within six
years prior to the date of this Agreement, (iv) no notice of intent to
terminate such Benefit Plan has been given under Section 4041 of ERISA,
(v) no proceeding has been instituted under Section 4042 of ERISA to
terminate such Benefit Plan, (vi) no liability to the PBGC has been
incurred (other than with respect to required premium payments) and
(vii) the assets of the Benefit Plan equal or exceed the actuarial
present value of the benefit liabilities, within the meaning of Section
4041 of ERISA, under the Benefit Plan, based upon reasonable actuarial
assumptions and the asset valuation principles established by the PBGC,
except as would not reasonably be expected to have a Material Adverse
Effect on the Company.
(i) In connection with the consummation of the transactions
contemplated by this Agreement, no payment of money or other property,
acceleration of benefits or
AGREEMENT AND PLAN OF MERGER
-12-
provision of other rights has been or will be made under any Current
Company Benefit Plan that could reasonably be expected to be
nondeductible under Section 280G of the Code, whether or not some other
subsequent action or event would be required to cause such payment,
acceleration or provision to be triggered.
(j) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (i)
require the Company or any of its Subsidiaries to make a larger
contribution to, or pay greater benefits or provide other rights under,
any Current Company Benefit Plan or any of the programs, agreements,
policies or other arrangements described in the Company's Disclosure
Letter in response to paragraph (k) below than it otherwise would,
whether or not some other subsequent action or event would be required
to cause such payment or provision to be triggered or (ii) create or
give rise to any additional vested rights or service credits under any
Current Company Benefit Plan or any of such programs, agreements,
policies or other arrangements, whether or not some other subsequent
action or event would be required to cause such creation or
acceleration to be triggered.
(k) Neither the Company nor any of its Subsidiaries is a party
to or is bound by any severance or change in control agreement, program
or policy (involving $500,000 or more of future payments) with respect
to any employee, officer or director.
(l) No Current Company Benefit Plan (other than a Company
Benefit Plan maintained outside the United States that is either fully
insured or fully funded through a retirement plan) provides retiree
medical or retiree life insurance benefits to any Person and neither
the Company nor any of its Subsidiaries is contractually or otherwise
obligated (whether or not in writing) to provide any Person with life
insurance or medical benefits upon retirement or termination of
employment, other than as required by the provisions of Sections 601
through 608 of ERISA and Section 4980B of the Code.
(m) Neither the Company nor any of its Subsidiaries
contributes or has an obligation to contribute, and has not within six
years prior to the date of this Agreement contributed, had an
obligation to contribute, or had any other liability to a multiemployer
plan within the meaning of Section 3(37) of ERISA.
(n) The Company has not contributed, transferred or otherwise
provided any cash, securities or other property to any grantee, trust,
escrow or other arrangement that has the effect of providing or setting
aside assets for benefits payable pursuant to any termination,
severance or other change in control agreement.
(o) Except as would not reasonably be expected to have a
Material Adverse Effect on the Company, (i) no collective bargaining
agreement is being negotiated by the Company or any of its
Subsidiaries, (ii) there is no pending or, to the Knowledge of the
Company, threatened labor dispute, strike or work stoppage against the
Company or any of its Subsidiaries, (iii) to the Knowledge of the
Company, neither the Company or any of its Subsidiaries nor any
representative or employee of the Company or any of its Subsidiaries
has in the United States committed any Material unfair labor practices
in
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connection with the operation of the business of the Company and its
Subsidiaries, and (iv) there is no pending or, to the Knowledge of the
Company, threatened charge or complaint against the Company or any of
its Subsidiaries by or before the National Labor Relations Board or any
comparable agency of any state of the United States.
SECTION 4.14 Taxes.
(a) Except for such matters as could not reasonably be
expected to have a Material Adverse Effect on the Company, all returns
and reports of or with respect to any Tax ("Tax Returns") that are
required to be filed by or with respect to the Company or any of its
Subsidiaries on or before the Effective Time have been or will be
timely filed, all Taxes that are shown to be due on such Tax Returns
have been or will be timely paid in full, all withholding Tax
requirements imposed on or with respect to the Company or any of its
Subsidiaries have been or will be satisfied in full in all respects and
no penalty, interest or other charge is or will become due with respect
to the late filing of any such Tax Return or late payment of any such
Tax.
(b) There is no claim against the Company or any of its
Subsidiaries for any Taxes, and no assessment, deficiency or adjustment
has been asserted or proposed in writing with respect to any such Tax
Return, that, in either case, could reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 4.15 Environmental Matters.
(a) Except for matters disclosed in the Company's SEC Reports
or in Section 4.15 of the Company's Disclosure Letter and except for
matters that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company, (i) the
properties, operations and activities of the Company and its
Subsidiaries are in compliance with all applicable Environmental Laws;
(ii) the Company and its Subsidiaries and the properties and operations
of the Company and its Subsidiaries are not subject to any existing,
pending or, to the Knowledge of the Company, threatened action, suit,
investigation, inquiry or proceeding by or before any Court or
Governmental Authority under any Environmental Law; (iii) all
Authorizations, if any, required to be obtained or filed by the Company
or any of its Subsidiaries under any Environmental Law in connection
with the business of the Company and its Subsidiaries have been
obtained or filed and are valid and currently in full force and effect;
(iv), to the Knowledge of the Company, there has been no release of any
hazardous substance, pollutant or contaminant into the environment by
the Company or its Subsidiaries or in connection with their properties
or operations; and (v) there has been no exposure of any Person or
property to any hazardous substance, pollutant or contaminant in
connection with the properties, operations and activities of the
Company and its Subsidiaries.
(b) The Company and its Subsidiaries have made available to
the Parent all internal and external environmental audits and studies
and all correspondence on environmental matters (in each case relevant
to the Company or any of its Subsidiaries)
AGREEMENT AND PLAN OF MERGER
-14-
in the possession of the Company or its Subsidiaries for such matters
as could reasonably be expected to have a Material Adverse Effect on
the Company.
SECTION 4.16 Insurance. The Company and its Subsidiaries own and are
beneficiaries under all such insurance policies underwritten by reputable
insurers that, as to risks insured, coverages and related limits and
deductibles, are customary in the industries in which the Company and its
Subsidiaries operate. All premiums due with respect to all such insurance
policies that are Material have been paid and, to the Knowledge of the Company,
all such policies are in full force and effect.
SECTION 4.17 Pooling; Tax Matters. Neither the Company nor, to the
Knowledge of the Company, any of its Affiliates has taken or agreed to take any
action that would prevent (a) the Merger from being treated for financial
accounting purposes as a "pooling of interests" in accordance with GAAP and the
Regulations of the Commission or (b) the Merger from constituting a
reorganization within the meaning of section 368(a) of the Code. Without
limiting the generality of the foregoing:
(a) Prior to and in connection with the Merger, (i) none of
the Company Common Stock will be redeemed, (ii) no extraordinary
distribution will be made with respect to Company Common Stock, and
(iii) none of the Company Common Stock will be acquired by any person
related (as defined in Treas. Reg. ss. 1.368-1(e)(3) without regard to
ss. 1.368-1(e)(3)(i)(A)) to the Company.
(b) The Company and the stockholders of the Company will each
pay their respective expenses, if any, incurred in connection with the
Merger.
(c) There is no intercorporate indebtedness existing between
the Company and the Parent or between the Company and Newco that was
issued, acquired or will be settled at a discount.
(d) The Company is not an investment company as defined in
section 368(a)(2)(F)(iii) and (iv) of the Code.
(e) The Company is not under the jurisdiction of a court in a
title 11 or similar case within the meaning of section 368(a)(3)(A) of
the Code.
SECTION 4.18 Affiliates. Section 4.18 of the Company's Disclosure
Letter contains a true and complete list of all Persons who are directors or
executive officers of the Company and any other Persons who, to the Knowledge of
the Company, may be deemed to be Affiliates of the Company. Concurrently with
the execution and delivery of this Agreement, the Company has delivered to the
Parent an executed letter agreement, substantially in the form of Annex B
hereto, from each such Person so identified.
SECTION 4.19 Opinion of Financial Advisor. The Company has received
the opinion of Salomon Smith Barney on the date of this Agreement to the effect
that the Common
AGREEMENT AND PLAN OF MERGER
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Stock Exchange Ratio is fair, from a financial point of view, to the holders of
Company Common Stock.
SECTION 4.20 Brokers. No broker, finder or investment banker (other
than Salomon Smith Barney) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. Prior to the date
of this Agreement, the Company has made available to the Parent a complete and
correct copy of all agreements between the Company and Salomon Smith Barney
pursuant to which such firm will be entitled to any payment relating to the
transactions contemplated by this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARENT
The Parent Companies hereby represent and warrant to the Company,
subject to the limitations set forth in Section 10.01, that:
SECTION 5.1 Organization and Qualification; Subsidiaries. The Parent,
Newco and each other Significant Subsidiary of the Parent are legal entities
duly organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization, have all requisite
corporate power and authority to own, lease and operate their respective
properties and to carry on their businesses as they are now being conducted and
are duly qualified and in good standing to do business in each jurisdiction in
which the nature of the business conducted by them or the ownership or leasing
of their respective properties makes such qualification necessary, other than
any matters, including the failure to be so qualified and in good standing, that
could not reasonably be expected to have a Material Adverse Effect on the
Parent. Section 5.01 of the Parent's Disclosure Letter sets forth a true and
complete list of all the Parent's directly or indirectly owned Significant
Subsidiaries, together with (A) a specification of the nature of legal
organization of such Subsidiary and (B) the jurisdiction of incorporation or
other organization of such Subsidiary.
SECTION 5.2 Certificate of Incorporation and Bylaws. The Parent has
heretofore marked for identification and furnished to the Company complete and
correct copies of the certificate of incorporation and the bylaws, in each case
as amended or restated to the date hereof, of the Parent. The Parent is not in
violation of any of the provisions of its certificate of incorporation or
bylaws.
SECTION 5.3 Capitalization.
(a) The authorized capital stock of the Parent consists of (i)
400,000,000 shares of Parent Common Stock of which as of February 23,
1998, 262,591,336 shares were issued and outstanding, all of which are
duly authorized, validly issued, fully paid and nonassessable and not
subject to preemptive rights created by statute, the Parent's
certificate of incorporation or bylaws or any agreement to which the
Parent is a party or is bound, and (ii) 5,000,000 shares of Preferred
Stock, without par value, of which none
AGREEMENT AND PLAN OF MERGER
-16-
is issued but of which 2,000,000 shares have been designated as Series
A Junior Participating Preferred Stock. Since December 31, 1997, except
as set forth in Section 5.03(a) of the Parent's Disclosure Letter, (x)
no shares of Parent Common Stock have been issued by the Parent except
the Parent Common Stock issued pursuant to the exercise of outstanding
Parent Stock Options and Parent Restricted Stock and Parent Common
Stock issued otherwise as set forth in Section 5.03(a) of the Parent's
Disclosure Letter and (y) the Parent has not granted any options for,
or other rights to purchase, shares of Parent Common Stock.
(b) Except as set forth in Section 5.03(b) of the Parent's
Disclosure Letter and except for shares reserved for issuance pursuant
to the Parent Stock Plans described in Section 5.03(b) of the Parent's
Disclosure Letter, no shares of Parent Common Stock are reserved for
issuance, and, except for the Parent Stock Options, the Parent
Restricted Stock agreements and for the Parent's obligations under the
Parent's Rights Agreement, there are no contracts, agreements,
commitments or arrangements obligating the Parent (i) to offer, sell,
issue or grant any Equity Securities of the Parent or (ii) to redeem,
purchase or acquire, or offer to purchase or acquire, any outstanding
Equity Securities of the Parent or to grant any Lien on any shares of
capital stock of the Parent.
(c) Except as set forth in Section 5.03(c) of the Parent's
Disclosure Letter, (i) all the issued and outstanding shares of capital
stock of, or other equity interests in, each Significant Subsidiary of
the Parent are owned by the Parent or one of its Subsidiaries, have
been duly authorized and are validly issued, and, with respect to
capital stock, are fully paid and nonassessable, and were not issued in
violation of any preemptive or similar rights of any past or present
equity holder of such Subsidiary; (ii) all such issued and outstanding
shares, or other equity interests, that are owned by the Parent or one
of its Subsidiaries are owned free and clear of all Liens; (iii) no
shares of capital stock of, or other equity interests in, any
Significant Subsidiary of the Parent are reserved for issuance, and
there are no contracts, agreements, commitments or arrangements
obligating the Parent or any of its Significant Subsidiaries (A) to
offer, sell, issue, grant, pledge, dispose of or encumber any Equity
Securities of any of the Significant Subsidiaries of the Parent or (B)
to redeem, purchase or acquire, or offer to purchase or acquire, any
outstanding Equity Securities of any of the Significant Subsidiaries of
the Parent or (C) to grant any Lien on any outstanding shares of
capital stock of, or other equity interests in, any of the Significant
Subsidiaries of the Parent; except for any matter under clause (i),
(ii) or (iii) of this Section 5.03(c) that could not reasonably be
expected to have a Material Adverse Effect on the Parent.
(d) Except for revocable proxies granted by the Parent or its
Subsidiaries with respect to the capital stock of Subsidiaries owned by
the Parent or its Subsidiaries, there are no voting trusts, proxies or
other agreements, commitments or understandings of any character to
which the Parent or any of its Significant Subsidiaries is a party or
by which the Parent or any of its Significant Subsidiaries is bound
with respect to the voting of any shares of capital stock of the Parent
or any of its Significant Subsidiaries.
AGREEMENT AND PLAN OF MERGER
-17-
SECTION 5.4 Authorization of Agreement. Each of the Parent and Newco
has all requisite corporate power and authority to execute and deliver this
Agreement and, in the case of the Parent, the Parent Stock Option Agreement and
subject, in the case of this Agreement, to approval of the Charter Amendment and
the Share Issuance by the holders of a majority of the outstanding shares of
Parent Common Stock in accordance with the applicable provisions of the GCL and
the Parent's certificate of incorporation, to perform its obligations hereunder
and, in the case of the Parent, thereunder and to consummate the transactions
contemplated hereby and, in the case of the Parent, thereby. The execution and
delivery by each of the Parent and Newco of this Agreement and the execution and
delivery by the Parent of the Parent Stock Option Agreement and the performance
of their respective obligations hereunder and, in the case of the Parent,
thereunder have been duly and validly authorized by all requisite corporate
action on the part of the Parent and Newco, respectively (other than, with
respect to the Merger, the approval and adoption of the Charter Amendment and
the Share Issuance by the holders of a majority of the outstanding shares of
Parent Common Stock in accordance with the applicable provisions of the GCL and
the Parent's certificate of incorporation). This Agreement has been duly
executed and delivered by the Parent and Newco and (assuming due authorization,
execution and delivery hereof by the other party hereto) constitutes a legal,
valid and binding obligation of the Parent and Newco, enforceable against the
Parent and Newco in accordance with its terms, except as the same may be limited
by legal principles of general applicability governing the application and
availability of equitable remedies. The Parent Stock Option Agreement has been
duly executed and delivered by the Parent and (assuming due authorization,
execution and delivery thereof by the other party thereto) constitutes a legal,
valid and binding obligation of the Parent enforceable against the Parent in
accordance with its terms, except as the same may be limited by legal principles
of general applicability governing the application and availability of equitable
remedies.
SECTION 5.5 Approvals. Except for the applicable requirements, if any,
of (a) the Securities Act, (b) the Exchange Act, (c) state securities or blue
sky laws, (d) the HSR Act, (e) the competition Laws, Regulations and Orders of
foreign Governmental Authorities as set forth in Section 5.05 of the Parent's
Disclosure Letter, (f) the NYSE, (g) the filing and recordation of appropriate
merger documents as required by the GCL and (h) those Laws, Regulations and
Orders noncompliance with which could not reasonably be expected to have a
Material Adverse Effect on the Parent, no filing or registration with, no
waiting period imposed by and no Authorization of, any Governmental Authority is
required under any Law, Regulation or Order applicable to the Parent or Newco to
permit the Parent or Newco to execute, deliver or perform this Agreement or, in
the case of the Parent, the Parent Stock Option Agreement or to consummate the
transactions contemplated hereby or thereby. To the Knowledge of the Parent,
there are no facts or circumstances that could reasonably be expected to
preclude the Parent Common Stock to be issued in the Merger from being approved
for listing on the NYSE.
SECTION 5.6 No Violation. Assuming effectuation of all filings and
registrations with, termination or expiration of any applicable waiting periods
imposed by, and receipt of all Authorizations of, Governmental Authorities
indicated as required in Section 5.05 and receipt of the approval of the Charter
Amendment and the Share Issuance by the holders of a majority of the outstanding
shares of Parent Common Stock as required by the GCL and except as set forth in
Section 5.06 of the Parent's Disclosure Letter, neither the execution and
delivery by the Parent or Newco of this Agreement or by the Parent of the Parent
Stock Option Agreement nor the
AGREEMENT AND PLAN OF MERGER
-18-
performance by the Parent or Newco of its obligations hereunder or thereunder
will (a) violate or breach the terms of or cause a default under (i) any Law,
Regulation or Order applicable to the Parent or Newco, (ii) the certificate of
incorporation or bylaws of the Parent or Newco or (iii) any contract or
agreement to which the Parent or any of its Subsidiaries is a party or by which
it or any of its properties or assets is bound, or (b), with the passage of
time, the giving of notice or the taking of any action by a third Person, have
any of the effects set forth in clause (a) of this Section, except in any such
case for any matters described in this Section (other than clause (ii) hereof)
that could not reasonably be expected to have a Material Adverse Effect on the
Parent.
SECTION 5.7 Reports.
(a) Since December 31, 1994, the (i) Parent or its predecessor
has filed all SEC Reports required to be filed by the Parent with the
Commission and (ii) the Parent and its Subsidiaries have filed all
other Reports required to be filed by any of them with any other
Governmental Authorities, including state securities administrators,
except where the failure to file any such Reports could not reasonably
be expected to have a Material Adverse Effect on the Parent. Such
Reports, including those filed after the date of this Agreement and
prior to the Effective Time, (i) were prepared in all material respects
in accordance with applicable Law (including, with respect to the SEC
Reports, the Securities Act and the Exchange Act, as the case may be,
and the applicable Regulations of the Commission thereunder) and (ii)
in the case of the SEC Reports, did not at the time they were filed
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The Parent's Audited Consolidated Financial Statements and
any consolidated financial statements of the Parent (including any
related notes thereto) contained in any SEC Reports filed by the Parent
with the Commission after the date of this Agreement (i) have been or
will have been prepared in accordance with the published Regulations of
the Commission and in accordance with GAAP (except (A) to the extent
required by changes in GAAP, (B), with respect to the Parent's Audited
Consolidated Financial Statements, as may be indicated in the notes
thereto and (C) in the case of any unaudited financial statements, as
permitted by Form 10-Q) and (ii) fairly present the consolidated
financial position of the Parent and its Subsidiaries as of the
respective dates thereof and the consolidated results of their
operations and cash flows for the periods indicated (subject, in the
case of any unaudited interim financial statements, to normal and
recurring year-end adjustments).
(c) Except as set forth in Section 5.07(c) of the Parent's
Disclosure Letter, there exist no liabilities or obligations of the
Parent and its Subsidiaries that are Material to the Parent, whether
accrued, absolute, contingent or threatened, that would be required to
be reflected, reserved for or disclosed under GAAP in consolidated
financial statements of the Parent as of and for the period ended on
the date of this representation and warranty, other than (i)
liabilities or obligations that are adequately reflected, reserved for
or disclosed in the Parent's Audited Consolidated Financial Statements,
(ii) liabilities or
AGREEMENT AND PLAN OF MERGER
-19-
obligations incurred in the ordinary course of business of the Parent
since December 31, 1997, (iii) liabilities or obligations the
incurrence of which is permitted by Section 6.02(b) and (iv)
liabilities or obligations that are not Material to the Parent.
SECTION 5.8 No Material Adverse Effect; Conduct.
(a) Since December 31, 1997, no event (other than any event
that is of general application to all or a substantial portion of the
Parent's industries and other than any event that is expressly subject
to any other representation or warranty contained in Article V) has, to
the Knowledge of the Parent, occurred that, individually or together
with other similar events, could reasonably be expected to constitute
or cause a Material Adverse Effect on the Parent.
(b) Except as set forth in Section 5.08(b) of the Parent's
Disclosure Letter, during the period from December 31, 1997, to the
date of this Agreement, neither the Parent nor any of its Subsidiaries
has engaged in any conduct that is proscribed during the period from
the date of this Agreement to the Effective Time by subsections (i)
through (xiv) of Section 6.02(b).
SECTION 5.9 Certain Business Practices. As of the date of this
Agreement, neither the Parent or any of its Subsidiaries nor any director,
officer, employee or agent of the Parent or any of its Subsidiaries has (a) used
any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (b) made any unlawful payment to any
foreign or domestic government official or employee or to any foreign or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (c) consummated any transaction, made
any payment, entered into any agreement or arrangement or taken any other action
in violation of Section 1128B(b) of the Social Security Act, as amended, or (d)
made any other unlawful payment, except for any such matters that could not
reasonably be expected to have a Material Adverse Effect on the Parent.
SECTION 5.10 Certain Obligations. Except for those listed in Section
5.10 of the Parent's Disclosure Letter or filed as Exhibits to the Parent's SEC
Reports, neither the Parent nor any of its Subsidiaries is a party to or bound
by (a) any Noncompete Agreement or (b) any agreement that contains change of
control or similar provisions that would give any Person that is a party to any
such agreement the right, as a result of the execution of this Agreement or the
consummation of any of the transactions contemplated hereby, to purchase any
Material interest of the Parent in any joint venture, partnership or similar
arrangement..
SECTION 5.11 Authorizations; Compliance. The Parent and its
Subsidiaries have obtained all Authorizations that are necessary to carry on
their businesses as currently conducted, except for any such Authorizations as
to which the failure to possess, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Parent. Such
Authorizations are in full force and effect, have not been violated in any
respect that could reasonably be expected to have a Material Adverse Effect on
the Parent and there is no action, proceeding or investigation pending or
threatened regarding suspension, revocation or cancellation of any of such
Authorizations, except in the case of any suspension, revocation or cancellation
AGREEMENT AND PLAN OF MERGER
-20-
of such Authorizations that could not reasonably be expected to have a Material
Adverse Effect on the Parent.
SECTION 5.12 Litigation; Compliance with Laws. There are no actions,
suits, investigations or proceedings (including any proceedings in arbitration)
pending or, to the Knowledge of the Parent, threatened against the Parent or any
of its Subsidiaries, at law or in equity, in any Court or before or by any
Governmental Authority, except actions, suits, proceedings or investigations
that are disclosed in the Parent's SEC Reports, that are set forth in Section
5.12 or Section 5.15 of the Parent's Disclosure Letter or that, individually or,
with respect to multiple actions, suits or proceedings that allege similar
theories of recovery based on similar facts, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect on the Parent. There
are no Material claims pending or, to the Knowledge of the Parent, threatened by
any Persons against the Parent or any of its Subsidiaries for indemnification
pursuant to any statute, organizational document, contract or otherwise with
respect to any claim, action, suit, investigation or proceeding pending in any
Court or before or by any Governmental Authority. Except with respect to the
matters covered by Sections 5.09, 5.13, 5.14 and 5.15, the Parent and its
Subsidiaries are in substantial compliance with all applicable Laws and
Regulations and are not in default with respect to any Order applicable to the
Parent or any of its Subsidiaries, except such events of noncompliance or
defaults that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Parent.
SECTION 5.13 Employee Benefit Plans. Except as set forth in the
Parent's SEC Reports or in Section 5.13 of the Parent's Disclosure Letter:
(a) With respect to each Parent Benefit Plan, no event has
occurred and, to the Knowledge of the Parent, there exists no condition
or set of circumstances in connection with which the Parent or any of
its Subsidiaries could be subject to any liability under the terms of
such Parent Benefit Plan, ERISA, the Code or any other applicable Law,
other than any condition or set of circumstances that could not
reasonably be expected to have a Material Adverse Effect on the Parent.
(b) Each Current Parent Benefit Plan intended to be qualified
under Section 401 of the Code (i) satisfies in form the requirements of
such Section except to the extent amendments are not required by Law to
be made until a date after the Effective Time, (ii) has received a
favorable determination letter from the IRS regarding such qualified
status, and (iii) has not, since the receipt of the most recent
favorable determination letter, been amended other than amendments
required by applicable Law.
(c) Except as would not reasonably be expected to result in a
Material Adverse Effect on the Parent, there has been no termination or
partial termination of any Current Parent Benefit Plan within the
meaning of Section 4.11(d)(3) of the Code and, to the Knowledge of the
Parent, each Current Parent Benefit Plan has been operated in material
compliance with its provisions and with applicable Law.
AGREEMENT AND PLAN OF MERGER
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(d) Any Terminated Parent Benefit Plan intended to have been
qualified under Section 401 of the Code received a favorable
determination letter from the IRS with respect to its termination.
(e) There are no actions, suits or claims pending (other than
routine claims for benefits) or, to the Knowledge of the Parent,
threatened against, or with respect to, any Parent Benefit Plan or its
assets that could reasonably be expected to have a Material Adverse
Effect on the Parent and, to the Knowledge of the Parent, no facts or
circumstances exist that could give rise to any such actions, suits or
claims, except as would not reasonably be expected to have a Material
Adverse Effect on the Parent.
(f) To the Knowledge of the Parent, there is no matter pending
(other than routine qualification determination filings) with respect
to any Parent Benefit Plans before the IRS, the Department of Labor,
the PBGC or any other Governmental Authority, except as would not
reasonably be expected to have a Material Adverse Effect on the Parent.
(g) All contributions required to be made to Parent Benefit
Plans pursuant to their terms and the provisions of ERISA, the Code or
any other applicable Law have been timely made, except as would not
reasonably be expected to have a Material Adverse Effect on the Parent.
(h) As to any Current Parent Benefit Plan subject to Title IV
of ERISA, (i) there has been no event or condition which presents a
significant risk of plan termination, (ii) no accumulated funding
deficiency, whether or not waived, within the meaning of Section 302 of
ERISA or Section 412 of the Code has been incurred (iii) no reportable
event within the meaning of Section 4043 of ERISA (for which the
disclosure requirements of Regulation section 4043.1, et seq.,
promulgated by the PBGC have not been waived) has occurred within six
years prior to the date of this Agreement, (iv) no notice of intent to
terminate such Benefit Plan has been given under Section 4041 of ERISA,
(v) no proceeding has been instituted under Section 4042 of ERISA to
terminate such Benefit Plan, (vi) no liability to the PBGC has been
incurred (other than with respect to required premium payments) and
(vii) the assets of the Benefit Plan equal or exceed the actuarial
present value of the benefit liabilities, within the meaning of Section
4041 of ERISA, under the Benefit Plan, based upon reasonable actuarial
assumptions and the asset valuation principles established by the PBGC,
except as would not reasonably be expected to have a Material Adverse
Effect on the Parent.
(i) In connection with the consummation of the transactions
contemplated by this Agreement, no payment of money or other property,
acceleration of benefits or provision of other rights has been or will
be made under any Current Parent Benefit Plan that could reasonably be
expected to be nondeductible under Section 280G of the Code, whether or
not some other subsequent action or event would be required to cause
such payment, acceleration or provision to be triggered.
AGREEMENT AND PLAN OF MERGER
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(j) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby will not (i)
require the Parent or any of its Subsidiaries to make a larger
contribution to, or pay greater benefits or provide other rights under,
any Current Parent Benefit Plan or any of the programs, agreements,
policies or other arrangements described in the Parent's Disclosure
Letter in response to paragraph (k) below than it otherwise would,
whether or not some other subsequent action or event would be required
to cause such payment or provision to be triggered or (ii) create or
give rise to any additional vested rights or service credits under any
Current Parent Benefit Plan or any of such programs, agreements,
policies or other arrangements, whether or not some other subsequent
action or event would be required to cause such creation or
acceleration to be triggered.
(k) Neither the Parent nor any of its Subsidiaries is a party
to or is bound by any severance or change in control agreement, program
or policy (involving $500,000 or more of future payments) with respect
to any employee, officer or director.
(l) No Current Parent Benefit Plan (other than a Parent
Benefit Plan maintained outside the United States that is either fully
insured or fully funded through a retirement plan) provides retiree
medical or retiree life insurance benefits to any Person and neither
the Parent nor any of its Subsidiaries is contractually or otherwise
obligated (whether or not in writing) to provide any Person with life
insurance or medical benefits upon retirement or termination of
employment, other than as required by the provisions of Sections 601
through 608 of ERISA and Section 4980B of the Code.
(m) Neither the Parent nor any of its Subsidiaries contributes
or has an obligation to contribute, and has not within six years prior
to the date of this Agreement contributed, had an obligation to
contribute, or had any other liability to a multiemployer plan within
the meaning of Section 3(37) of ERISA.
(n) The Parent has not contributed, transferred or otherwise
provided any cash, securities or other property to any grantee, trust,
escrow or other arrangement that has the effect of providing or setting
aside assets for benefits payable pursuant to any termination,
severance or other change in control agreement.
(o) Except as would not reasonably be expected to have a
Material Adverse Effect on the Parent, (i) no collective bargaining
agreement is being negotiated by the Parent or any of its Subsidiaries,
(ii) there is no pending or, to the Knowledge of the Parent, threatened
labor dispute, strike or work stoppage against the Parent or any of its
Subsidiaries, (iii) to the Knowledge of the Parent, neither the Parent
or any of its Subsidiaries nor any representative or employee of the
Parent or any of its Subsidiaries has in the United States committed
any Material unfair labor practices in connection with the operation of
the business of the Parent and its Subsidiaries, and (iv) there is no
pending or, to the Knowledge of the Parent, threatened charge or
complaint against the Parent or any of its Subsidiaries by or before
the National Labor Relations Board or any comparable agency of any
state of the United States.
AGREEMENT AND PLAN OF MERGER
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SECTION 5.14 Taxes.
(a) Except for such matters as could not reasonably be
expected to have a Material Adverse Effect on the Parent, all Tax
Returns that are required to be filed by or with respect to the Parent
or any of its Subsidiaries on or before the Effective Time have been or
will be timely filed, all Taxes that are shown to be due on such Tax
Returns have been or will be timely paid in full, all withholding Tax
requirements imposed on or with respect to the Parent or any of its
Subsidiaries have been or will be satisfied in full in all respects and
no penalty, interest or other charge is or will become due with respect
to the late filing of any such Tax Return or late payment of any such
Tax.
(b) There is no claim against the Parent or any of its
Subsidiaries for any Taxes, and no assessment, deficiency or adjustment
has been asserted or proposed in writing with respect to any such Tax
Return, that, in either case, could reasonably be expected to have a
Material Adverse Effect on the Parent.
SECTION 5.15 Environmental Matters. Except for matters disclosed in the
Parent's SEC Reports or in Section 5.15 of the Parent's Disclosure Letter and
except for matters that, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect on the Parent, (a) the properties,
operations and activities of the Parent and its Subsidiaries are in compliance
with all applicable Environmental Laws; (b) the Parent and its Subsidiaries and
the properties and operations of the Parent and its Subsidiaries are not subject
to any existing, pending or, to the Knowledge of the Parent, threatened action,
suit, investigation, inquiry or proceeding by or before any Court or
Governmental Authority under any Environmental Law; (c) all Authorizations if
any, required to be obtained or filed by the Parent or any of its Subsidiaries
under any Environmental Law in connection with the business of the Parent and
its Subsidiaries have been obtained or filed and are valid and currently in full
force and effect; (d), to the Knowledge of the Parent, there has been no release
of any hazardous substance, pollutant or contaminant into the environment by the
Parent or its Subsidiaries or in connection with their properties or operations;
and (e) there has been no exposure of any Person or property to any hazardous
substance, pollutant or contaminant in connection with the properties,
operations and activities of the Parent and its Subsidiaries.
SECTION 5.16 Insurance. The Parent and its Subsidiaries own and are
beneficiaries under all such insurance policies underwritten by reputable
insurers that, as to risks insured, coverages and related limits and
deductibles, are customary in the industries in which the Parent and its
Subsidiaries operate. All premiums due with respect to all such insurance
policies that are Material have been paid and, to the Knowledge of the Parent,
all such policies are in full force and effect.
SECTION 5.17 Pooling; Tax Matters. Neither the Parent nor, to the
Knowledge of the Parent, any of its Affiliates has taken or agreed to take any
action that would prevent (a) the Merger from being treated for financial
accounting purposes as a "pooling of interests" in accordance with GAAP and the
Regulations of the Commission or (b) the Merger from constituting a
reorganization within the meaning of section 368(a) of the Code. Without
limiting the generality of the foregoing:
AGREEMENT AND PLAN OF MERGER
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(a) In connection with the Merger, none of the Company Common
Stock will be acquired by the Parent or a person related (as defined in
Treas. Reg. ss. 1.368-1(e)(3)) to the Parent for consideration other
than the Parent Common Stock except for any cash received in lieu of
fractional share interests in the Parent Common Stock pursuant to
Section 3.02(e) of this Agreement.
(b) Following the Merger, the Surviving Corporation will hold
at least 90 percent of the fair market value of the Company's net
assets, at least 70 percent of the fair market value of the Company's
gross assets, at least 90 percent of the fair market value of the net
assets of Newco and at least 70 percent of the fair market value of the
gross assets of Newco, held immediately prior to the Merger, taking
into account amounts used to pay Expenses relating to the Merger and
any distributions other than regular dividends.
(c) The Parent has no plan or intention to (i) liquidate the
Surviving Corporation, (ii) merge the Surviving Corporation with or
into another corporation, (iii) sell or otherwise dispose of the stock
of the Surviving Corporation except for transfers or successive
transfers to one or more corporations controlled (within the meaning of
section 368(c) of the Code) in each case by the transferor corporation,
(iv) cause the Surviving Corporation to issue additional shares of its
capital stock that would result in the Parent's losing control (within
the meaning of section 368(c) of the Code) of the Surviving
Corporation, (v) cause or permit the Surviving Corporation to sell or
otherwise dispose of any of its assets or of any of the assets acquired
from Newco except for dispositions made in the ordinary course of
business or transfers or successive transfers to one or more
corporations controlled (within the meaning of section 368(c) of the
Code) in each case by the transferor corporation, or (vi) reacquire or
cause any person related to the Parent (as defined in Treas. Reg.
1.368-1(a)(3)) to acquire any of the Parent Common Stock issued to the
holders of Company Common Stock pursuant to the Merger.
(d) Newco has no liabilities that will be assumed by the
Surviving Corporation in the Merger and will not transfer to the
Surviving Corporation in the Merger any assets subject to liabilities.
(e) Following the Merger, the Surviving Corporation will
continue the historic business of the Company or use a significant
portion of its assets in a business, within the meaning of Treas.
Reg. ss. 1.368-1(d).
(f) There is no intercorporate indebtedness existing between
the Company and the Parent or between the Company and Newco that was
issued, acquired or will be settled at a discount.
(g) Neither the Parent nor any person related to the Parent
(within the meaning of Treas. Reg. ss. 1.368-1(e)(3)) owns, or has
owned during the past five years, any shares of the capital stock of
the Company other than up to 500 shares of Company Common Stock.
AGREEMENT AND PLAN OF MERGER
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SECTION 5.18 Affiliates. Section 5.18 of the Parent's Disclosure Letter
contains a true and complete list of all Persons who, to the Knowledge of the
Parent, may be deemed to be Affiliates of the Parent, including all directors
and executive officers of the Parent. Concurrently with the execution and
delivery of this Agreement, the Parent has delivered to the Company an executed
letter agreement, substantially in the form of Annex C hereto, from each such
Person so identified as an Affiliate of the Parent.
SECTION 5.19 Brokers. Except as set forth in Section 5.19 of the
Parent's Disclosure Letter, no broker, finder or investment banker (other than
SBC Warburg Dillon Read Inc. and Goldman, Sachs & Co.) is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Parent. Prior to the date of this Agreement, the Parent has
made available to the Company a complete and correct copy of all agreements
between the Parent and SBC Warburg Dillon Read Inc. or Goldman, Sachs & Co. and
pursuant to which either of such firms will be entitled to any payment relating
to the transactions contemplated by this Agreement.
SECTION 5.20 Opinion of Financial Advisor. The Parent has received the
opinions of SBC Warburg Dillon Read Inc. and Goldman, Sachs & Co. on the date of
this Agreement to the effect that the Common Stock Exchange Ratio is fair, from
a financial point of view, to the Parent.
SECTION 5.21 Acquiring Person. Based on the information set forth in
the Company's SEC Reports, no holder of 5% or more of the outstanding Company
Common Stock whose existence is disclosed therein will at the Effective Time
become an "Acquiring Person," as such term is defined in the Parent's Rights
Agreement, as a result of any of the transactions contemplated by this
Agreement.
ARTICLE VI
COVENANTS
SECTION 6.1 Affirmative Covenants.
(a) The Company hereby covenants and agrees that, prior to the
Effective Time, unless otherwise expressly contemplated by this
Agreement or consented to in writing by the Parent, it will and will
cause its Subsidiaries to:
(i) operate its business in the usual and ordinary
course consistent with past practices;
(ii) use all reasonable efforts to preserve
substantially intact its business organization, maintain its
rights and franchises, retain the services of its respective
key employees (subject to its work force requirements) and
maintain its relationships with its respective customers and
suppliers;
AGREEMENT AND PLAN OF MERGER
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(iii) maintain and keep its properties and assets in
as good repair and condition as at present, ordinary wear and
tear excepted; and
(iv) use all reasonable efforts to keep in full force
and effect insurance and bonds comparable in amount and scope
of coverage to that currently maintained;
except for any matters that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on the
Company.
(b) The Parent hereby covenants and agrees that, prior to the
Effective Time, unless otherwise expressly contemplated by this
Agreement or consented to in writing by the Company, it will and will
cause its Subsidiaries to:
(i) operate its business in the usual and
ordinary course consistent with past practices;
(ii) use all reasonable efforts to preserve
substantially intact its business organization, maintain its
rights and franchises, retain the services of its respective
key employees (subject to its work force requirements) and
maintain its relationships with its respective customers and
suppliers;
(iii) maintain and keep its properties and assets in
as good repair and condition as at present, ordinary wear and
tear excepted; and
(iv) use all reasonable efforts to keep in full force
and effect insurance and bonds comparable in amount and scope
of coverage to that currently maintained;
except for any matters that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on the
Parent.
SECTION 6.2 Negative Covenants.
(a) The Company covenants and agrees that, except as expressly
set forth in the Company's Disclosure Letter, as expressly contemplated
by this Agreement or as otherwise consented to in writing by the
Parent, from the date of this Agreement until the Effective Time, it
will not do, and will not permit any of its Subsidiaries to do, any of
the following:
(i) (A) increase the compensation payable to or to
become payable to any director or executive officer, (B)
except as otherwise provided in Section 6.02(a)(ii), grant any
severance or termination pay; (C) amend or otherwise modify
the terms of any outstanding options, warrants or rights the
effect of which shall be to make such terms more favorable to
the holders thereof; (D) take any action to accelerate the
vesting of any outstanding Company Stock Options; (E) amend
AGREEMENT AND PLAN OF MERGER
-27-
or take any other actions to increase the amount or accelerate
the payment or vesting of any benefit under any Benefit Plan
(including the acceleration of vesting, waiving of performance
criteria or the adjustment of awards or any other actions
permitted upon a change in control of such party or permitted
upon a filing under Section 13(d) or 14(d) of the Exchange Act
with respect to such party) or (F) contribute, transfer or
otherwise provide any cash, securities or other property to
any grantee, trust, escrow or other arrangement that has the
effect of providing or setting aside assets for benefits
payable pursuant to any termination, severance or other change
in control agreement; except (i) pursuant to any contract,
agreement or other legal obligation of the Company or any of
its Subsidiaries existing at the date of this Agreement, (ii)
in the case of severance or termination payments, pursuant to
the severance policy of the Company or its Subsidiaries
existing at the date of this Agreement and (iii) in the case
of options, warrants, rights or Benefit Plans, amendments
required by ERISA or other applicable Law.
(ii) (A) enter into any employment or severance
agreement with, any director or executive officer, either
individually or as part of a class of similarly situated
persons, or (B) establish, adopt or enter into any new Benefit
Plan; except employment and severance agreements and Benefit
Plans for the benefit of any newly employed or promoted
officers or employees, in which case the terms of such
agreements and Benefit Plans shall be reasonably consistent
with those existing at the date of this Agreement, and except
Benefit Plans relating to health and life insurance benefits
established or adopted in the ordinary course of business
consistent with past practice;
(iii) declare or pay any extraordinary dividend on,
or make any other distribution in respect of outstanding
shares of capital stock, except for dividends by a wholly
owned Subsidiary of the Company to the Company or another
wholly owned Subsidiary of the Company and cash dividends on
the Company Common Stock payable at approximately the same
times as paid during the fiscal year ended October 31, 1997
and in amounts per share not to exceed those paid on the
Company Common Stock during the fourth quarter of the fiscal
year ended October 31, 1997;
(iv) (A) redeem, purchase or acquire, or offer to
purchase or acquire, any outstanding Equity Securities of the
Company or any of its Subsidiaries other than (1) any such
acquisition by the Company or any of its wholly owned
Subsidiaries directly from any wholly owned Subsidiary of the
Company, (2) any repurchase, forfeiture or retirement of
shares of Company Common Stock or Company Stock Options
occurring pursuant to the terms (as in effect on the date of
this Agreement) of any existing Benefit Plan of the Company or
any of its Subsidiaries, (3) the repurchase or redemption of
rights pursuant to the terms (as in effect on the date of this
Agreement) of the Company Rights Agreement to the extent
required by a court of competent jurisdiction or (4) any
periodic purchase of Company Common Stock for allocation to
employee's accounts occurring pursuant to the terms (as in
effect on the date of this Agreement) of any existing
AGREEMENT AND PLAN OF MERGER
-28-
employee stock purchase plan; (B) effect any reorganization or
recapitalization; or (C) split, combine or reclassify any of
the capital stock of, or other equity interests in, the
Company or any of its Subsidiaries or issue or authorize or
propose the issuance of any other securities in respect of, in
lieu of or in substitution for, such Equity Securities;
(v) (A) offer, sell, issue or grant, or authorize the
offering, sale, issuance or grant, of any Equity Securities of
the Company or any of its Subsidiaries, other than issuances
of Company Common Stock (1) upon the exercise of Company Stock
Options outstanding at the date of this Agreement in
accordance with the terms thereof (as in effect on the date of
this Agreement), (2) upon the expiration of any restrictions
upon issuance of any grant existing at the date of this
Agreement of restricted stock or bonus stock pursuant to the
terms (as in effect on the date of this Agreement) of any
Benefit Plans of the Company or any of its Subsidiaries, (3)
that constitute periodic issuances of shares of Company Common
Stock required by the terms (as in effect on the date of this
Agreement) of any Benefit Plans of the Company or any of its
Subsidiaries or (4) issuances of Company Common Stock pursuant
to the Company's dividend reinvestment program as in effect on
the date of this Agreement or (B) grant any Lien with respect
to any Equity Securities of any Subsidiary of the Company;
(vi) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or all
or a portion of the assets of, or in any other manner, any
business or any corporation, partnership, association or other
business organization or division thereof or otherwise to
acquire any assets of any other Person (other than any such
transaction that is not Material to the Company and the
purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with past practice);
(vii) sell, lease, exchange or otherwise dispose of,
or grant any Lien with respect to, any of the assets of the
Company or any of its Subsidiaries that are Material to the
Company, except for dispositions of assets and inventories in
the ordinary course of business and consistent with past
practice and dispositions of assets and purchase money Liens
incurred in connection with the original acquisition of assets
and secured by the assets;
(viii) adopt any amendments to its charter or bylaws
or other organizational documents that would alter the terms
of its capital stock or other equity interests or would have a
Material Adverse Effect on the Company;
(ix) (A) change any of its methods of accounting in
effect at October 31, 1997, except as may be required to
comply with GAAP, (B) make or rescind any election relating to
Taxes (other than any election that must be made periodically
and that is made consistent with past practice), (C) settle or
compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to
Taxes or (D) change any of its
AGREEMENT AND PLAN OF MERGER
-29-
methods of reporting income or deductions for federal income
tax purposes from those employed in the preparation of the
federal income tax returns for the taxable year ended October
31, 1996, except, in each case, as may be required by Law and
for matters that could not reasonably be expected to have a
Material Adverse Effect on the Company;
(x) incur any obligations for borrowed money or
purchase money indebtedness that are Material to the Company,
whether or not evidenced by a note, bond, debenture or similar
instrument, except purchase money indebtedness as to which
Liens may be granted pursuant to Section 6.02(a)(vii),
drawings under credit lines existing at the date of this
Agreement and borrowings evidenced by obligations having a
term of up to five years issued in the ordinary course of
business consistent with past practice.
(xi) subject to the fiduciary duties of its Board of
Directors, release any third Person from its obligations under
any existing standstill agreement relating to a Competing
Transaction or otherwise under any confidentiality agreement
or similar agreement;
(xii) enter into any Material agreement with any
third Person that provides for an exclusive arrangement with
that third Person;
(xiii) subject to the fiduciary duties of its Board
of Directors, amend, modify or terminate the Company's Rights
Agreement or redeem any rights to purchase shares of the
Company's Series A Junior Preferred Stock except as may be
necessary to consummate the transactions contemplated by this
Agreement; or
(xiv) agree in writing or otherwise to do any of the
foregoing.
(b) The Parent covenants and agrees that, except as expressly
set forth in the Parent's Disclosure Letter, as expressly contemplated
by this Agreement or as otherwise consented to in writing by the
Company, from the date of this Agreement until the Effective Time, it
will not do, and will not permit any of its Subsidiaries to do, any of
the following:
(i) (A) increase the compensation payable to or to
become payable to any director or executive officer, (B)
except as otherwise provided in Section 6.02(b)(ii), grant any
severance or termination pay; (C) amend or otherwise modify
the terms of any outstanding options, warrants or rights the
effect of which shall be to make such terms more favorable to
the holders thereof; (D) take any action to accelerate the
vesting of any outstanding Parent Stock Options; (E) amend or
take any other actions to increase the amount or accelerate
the payment or vesting of any benefit under any Benefit Plan
(including the acceleration of vesting, waiving of performance
criteria or the adjustment of awards or any other actions
permitted upon a change in control of such party or permitted
upon a filing under Section 13(d) or 14(d) of the Exchange Act
with respect to such party) or
AGREEMENT AND PLAN OF MERGER
-30-
(F) contribute, transfer or otherwise provide any cash,
securities or other property to any grantee, trust, escrow or
other arrangement that has the effect of providing or setting
aside assets for benefits payable pursuant to any termination,
severance or other change in control agreement; except (i)
pursuant to any contract, agreement or other legal obligation
of the Parent or any of its Subsidiaries existing at the date
of this Agreement, (ii) in the case of severance or
termination payments, pursuant to the severance policy of the
Parent or its Subsidiaries existing at the date of this
Agreement, (iii) in the case of options, warrants, rights or
Benefit Plans, amendments required by ERISA or other
applicable Law and (iv) any such increase, grant, amendment,
modification or action that, taken together with all other
such increases, grants, amendments, modifications and actions,
does not result in a Material increase in compensation or
benefits expense to the Parent and its Subsidiaries, taken as
a whole;
(ii) (A) enter into any employment or severance
agreement with, any director or executive officer, either
individually or as part of a class of similarly situated
persons, or (B) establish, adopt or enter into any new Benefit
Plan; except employment and severance agreements and Benefit
Plans for the benefit of any newly employed or promoted
officers or employees, in which case the terms of such
agreements and Benefit Plans shall be reasonably consistent
with those existing at the date of this Agreement, and except
Benefit Plans relating to health and life insurance benefits
established or adopted in the ordinary course of business
consistent with past practice;
(iii) declare or pay any extraordinary dividend on,
or make any other distribution in respect of outstanding
shares of capital stock, except for dividends by a wholly
owned Subsidiary of the Parent to the Parent or another wholly
owned Subsidiary of the Parent and cash dividends on the
Parent Common Stock payable at approximately the same times
and in amounts per share as those paid on the Parent Common
Stock during the fiscal year ended December 31, 1997;
(iv) (A) redeem, purchase or acquire, or offer to
purchase or acquire, any outstanding Equity Securities of the
Parent or any of its Subsidiaries other than (1) any such
acquisition by the Parent or any of its wholly owned
Subsidiaries directly from any wholly owned Subsidiary of the
Parent, (2) any repurchase, forfeiture or retirement of shares
of Parent Common Stock or Parent Stock Options occurring
pursuant to the terms (as in effect on the date of this
Agreement) of any existing Benefit Plan of the Parent or any
of its Subsidiaries, (3) the repurchase or redemption of
rights pursuant to the terms (as in effect on the date of this
Agreement) of the Parent's Rights Agreement to the extent
required by a court of competent jurisdiction or (4) any
periodic purchase of Parent Common Stock for allocation to
employee's accounts occurring pursuant to the terms (as in
effect on the date of this Agreement) of any existing employee
stock purchase plan; (B) effect any reorganization or
recapitalization; or (C) split, combine or reclassify any of
the Equity Securities of the Parent or any of its
AGREEMENT AND PLAN OF MERGER
-31-
Subsidiaries or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in
substitution for, such Equity Securities;
(v) (A) offer, sell, issue or grant, or authorize the
offering, sale, issuance or grant, of any Equity Securities of
the Parent or any of its Subsidiaries, other than issuances of
Parent Common Stock (1) upon the exercise of Parent Stock
Options outstanding at the date of this Agreement in
accordance with the terms thereof (as in effect on the date of
this Agreement), (2) as Parent Restricted Stock, (3) upon the
expiration of any restrictions upon issuance of any grant
existing at the date of this Agreement of restricted stock or
bonus stock pursuant to the terms (as in effect on the date of
this Agreement) of any Benefit Plans of the Parent or any of
its Subsidiaries or (4) that constitute periodic issuances of
shares of Parent Common Stock required by the terms (as in
effect on the date of this Agreement) of any Benefit Plan of
the Parent or any of its Subsidiaries; or (B) grant any Lien
with respect to any Equity Securities of any Subsidiary of the
Parent;
(vi) acquire or agree to acquire, by merging or
consolidating with, by purchasing an equity interest in or all
or a portion of the assets of, or in any other manner, any
business or any corporation, partnership, association or other
business organization or division thereof, or otherwise to
acquire any assets of any other Person (other than any such
transaction that is not Material to the Parent and the
purchase of assets from suppliers or vendors in the ordinary
course of business and consistent with past practice);
(vii) sell, lease, exchange or otherwise dispose of,
or grant any Lien with respect to, any of the assets of the
Parent or any of its Subsidiaries that are Material to the
Parent, except for dispositions of assets and inventories in
the ordinary course of business and consistent with past
practice and dispositions of assets and purchase money Liens
incurred in connection with the original acquisition of assets
and secured by the assets;
(viii) adopt any amendments to its charter or bylaws
or other organizational documents that would alter the terms
of its capital stock or other equity interests or would have a
Material Adverse Effect on the Parent;
(ix) (A) change any of its methods of accounting in
effect at December 31, 1997, except as may be required to
comply with GAAP, (B) make or rescind any election relating to
Taxes (other than any election that must be made periodically
that is made consistent with past practice), (C) settle or
compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to
Taxes or (D) change any of its methods of reporting income or
deductions for federal income tax purposes from those employed
in the preparation of the federal income tax returns for the
taxable year ended December 31, 1996, except, in each case, as
may be required by Law
AGREEMENT AND PLAN OF MERGER
-32-
and for matters that could not reasonably be expected to have
a Material Adverse Effect on the Parent;
(x) incur any obligations for borrowed money or
purchase money indebtedness that are Material to the Parent,
whether or not evidenced by a note, bond, debenture or similar
instrument, except purchase money indebtedness as to which
Liens may be granted pursuant to Section 6.02(b)(vii),
drawings under credit lines existing at the date of this
Agreement and borrowings evidenced by obligations having a
term of up to five years issued in the ordinary course of
business consistent with past practice.
(xi) subject to the fiduciary duties of its Board of
Directors, release any third Person from its obligations under
any existing standstill agreement relating to a Competing
Transaction or otherwise under any confidentiality agreement
or similar agreement;
(xii) enter into any Material agreement with any
third Person that provides for an exclusive arrangement with
that third Person;
(xiii) subject to the fiduciary duties of its Board
of Directors, amend, modify or terminate the Parent's Rights
Agreement or redeem any rights to purchase shares of the
Parent's Series A Junior Participating Preferred Stock except
as may be necessary to consummate the transactions
contemplated by this Agreement; or
(xiv) agree in writing or otherwise to do any of the
foregoing.
SECTION 6.3 No Solicitation by the Company. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement pursuant to Section 9.01, the Company agrees that neither the Company
nor any of its Subsidiaries nor any of the directors and officers of the Company
or any of its Subsidiaries shall, and that it shall direct and use its best
efforts to cause the other employees, agents and representatives (including
investment bankers, attorneys and accountants) employed or retained by the
Company or any of its Subsidiaries not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate (including by way of furnishing
information or assistance) any Acquisition Proposal or any inquiries that may
reasonably be expected to lead to an Acquisition Proposal. The Company further
agrees that neither the Company nor any of its Subsidiaries nor any of the
directors and officers of the Company or any of its Subsidiaries shall, and that
it shall direct and use its best efforts to cause the other employees, agents
and representatives (including investment bankers, attorneys and accountants)
employed or retained by the Company or any of its Subsidiaries not to, directly
or indirectly, engage in any discussion with or provide any confidential
information or data to any Person that may reasonably be expected to lead to an
Acquisition Proposal or engage in any negotiations concerning, or otherwise
facilitate any effort or attempt to make or implement, an Acquisition Proposal.
Notwithstanding the foregoing, the Board of Directors of the Company shall be
permitted (A), to the extent applicable, to comply, with regard to an
Acquisition Proposal, with Rule 14e-2(a) promulgated under the Exchange Act, (B)
in response
AGREEMENT AND PLAN OF MERGER
-33-
to an unsolicited bona fide written Acquisition Proposal from any Person, to
recommend such Acquisition Proposal to the Company's stockholders or withdraw or
modify in any adverse manner its approval or recommendation of this Agreement,
or both, or (C) to engage in any discussions or negotiations with, or provide
any information to, any Person in response to an unsolicited bona fide written
Acquisition Proposal by any such Person, if and only to the extent that, in any
such case described in clause (B) or (C), (i) the Required Company Vote shall
not have been theretofore obtained, (ii) the Board of Directors of the Company
shall have concluded in good faith that such Acquisition Proposal (x) in the
case of that described in clause (B) above would, if consummated, constitute a
Superior Proposal or (y), in the case described in clause (C) above could
reasonably be expected to constitute a Superior Proposal, (iii) the Board of
Directors of the Company shall have determined in good faith on the basis of
advice of outside legal counsel that such action is necessary for such Board of
Directors to act in a manner consistent with its fiduciary duties under
applicable Law and (iv) prior to providing any information or data to any Person
in connection with an Acquisition Proposal by any such Person, the Board of
Directors shall have received from such Person an executed confidentiality
agreement containing customary terms and provisions. The Company shall promptly
notify the Parent of such inquiries, proposals or offers received by, or any
such discussions or negotiations sought to be initiated or continued with, any
of its representatives indicating, in connection with such notice, the name of
such Person and the material terms and conditions of any proposals or offers.
The Company agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Nothing in this Section
6.03 shall permit the Parent or the Company to terminate this Agreement (except
as specifically provided in Article IX).
SECTION 6.4 No Solicitation by the Parent. From the date of this
Agreement until the earlier of the Effective Time or the termination of this
Agreement pursuant to Section 9.01, the Parent agrees that neither the Parent
nor any of its Subsidiaries nor any of the directors and officers of the Parent
or any of its Subsidiaries shall, and that it shall direct and use its best
efforts to cause the other employees, agents and representatives (including
investment bankers, attorneys and accountants) employed or retained by the
Parent or any of its Subsidiaries not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate (including by way of furnishing
information or assistance) any Acquisition Proposal or any inquiries that may
reasonably be expected to lead to an Acquisition Proposal. The Parent further
agrees that neither the Parent nor any of its Subsidiaries nor any of the
directors and officers of the Parent or any of its Subsidiaries shall, and that
it shall direct and use its best efforts to cause the other employees, agents
and representatives (including investment bankers, attorneys and accountants)
employed or retained by the Parent or any of its Subsidiaries not to, directly
or indirectly, engage in any discussion with or provide any confidential
information or data to any Person that may reasonably be expected to lead to an
Acquisition Proposal or engage in any negotiations concerning, or otherwise
facilitate any effort or attempt to make or implement, an Acquisition Proposal.
Notwithstanding the foregoing, the Board of Directors of the Parent shall be
permitted (A), to the extent applicable, to comply, with regard to an
Acquisition Proposal, with Rule 14e- 2(a) promulgated under the Exchange Act,
(B) in response to an unsolicited bona fide written Acquisition Proposal from
any Person, to recommend such Acquisition Proposal to the Parent's stockholders
or withdraw or modify in any adverse manner its approval or recommendation of
this Agreement, or both, or (C) to engage in any discussions or negotiations
with, or provide any
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information to, any Person in response to an unsolicited bona fide written
Acquisition Proposal by any such Person, if and only to the extent that, in any
such case described in clause (B) or (C), (i) the Required Parent Vote shall not
have been theretofore obtained, (ii) the Board of Directors of the Parent shall
have concluded in good faith that such Acquisition Proposal (x) in the case of
that described in clause (B) above would, if consummated, constitute a Superior
Proposal or (y), in the case described in clause (C) above could reasonably be
expected to constitute a Superior Proposal, (iii) the Board of Directors of the
Parent shall have determined in good faith on the basis of advice of outside
legal counsel that such action is necessary for such Board of Directors to act
in a manner consistent with its fiduciary duties under applicable Law and (iv)
prior to providing any information or data to any Person in connection with an
Acquisition Proposal by any such Person, the Board of Directors shall have
received from such Person an executed confidentiality agreement containing
customary terms and provisions. The Parent shall promptly notify the Company of
such inquiries, proposals or offers received by, or any such discussions or
negotiations sought to be initiated or continued with, any of its
representatives indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any proposals or offers. The
Parent agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal. Nothing in this Section
6.04 shall permit the Parent or the Company to terminate this Agreement (except
as specifically provided in Article IX).
SECTION 6.5 Access and Information.
(a) Each of the Company and the Parent shall, and shall cause
its Subsidiaries to, (i) afford to the other and its officers,
directors, employees, accountants, consultants, legal counsel, agents
and other representatives (collectively, in the case of the Company,
the "Company's Representatives" and, in the case of the Parent, the
"Parent's Representatives") access, at reasonable times upon reasonable
prior notice, to the officers, employees, agents, properties, offices
and other facilities of the other and to its books and records and (ii)
furnish promptly to the other and its Representatives such information
concerning its business, properties, contracts, records and personnel
(including financial, operating and other data and information) as may
be reasonably requested, from time to time, by or on behalf of the
other party.
(b) Each party to this Agreement (the Parent Companies being
considered one party for purposes of this Section 6.05(b)) shall hold
in confidence all nonpublic information received from the other party
to this Agreement until such time as such information is otherwise
publicly available. If this Agreement is terminated for any reason
pursuant to Article IX hereof, each of the Company and the Parent
shall, within ten days after a request therefor from the other, return
or destroy (and provide the other party within such ten-day time period
with a certificate of an executive officer certifying such destruction)
all of the information furnished to such party and its Representatives
pursuant to the provisions of Section 6.05(a) and all internal
memoranda, analyses, evaluations and other similar material containing,
reflecting or prepared from any such information, in each case other
than information available to the general public without restriction.
AGREEMENT AND PLAN OF MERGER
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ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Meetings of Stockholders.
(a) The Company shall, promptly after the date of this
Agreement, take all actions necessary in accordance with the GCL and
its certificate of incorporation and bylaws to convene a special
meeting of the Company's stockholders to consider approval and adoption
of this Agreement and the Merger (the "Company Stockholders' Meeting"),
and the Company shall consult with the Parent in connection therewith.
Subject to Section 6.03 herein and to the fiduciary duties of its Board
of Directors, the Board of Directors of the Company shall recommend to
the stockholders of the Company the approval of this Agreement and the
Company shall use all reasonable efforts to solicit from stockholders
of the Company proxies in favor of the approval and adoption of this
Agreement and the Merger and to secure the vote or consent of
stockholders required by the GCL and its certificate of incorporation
and bylaws to approve and adopt this Agreement and the Merger (the
"Required Company Vote").
(b) The Parent shall, promptly after the date of this
Agreement, take all actions necessary in accordance with the GCL and
its certificate of incorporation and bylaws to convene a special
meeting of the Parent's stockholders to consider approval of the
Charter Amendment and the Share Issuance (the "Parent Stockholders'
Meeting"), and the Parent shall consult with the Company in connection
therewith. Subject to Section 6.04 and to the fiduciary duties of its
Board of Directors, the Board of Directors of the Parent shall
recommend to the stockholders of the Parent the approval of the Charter
Amendment and the Share Issuance and the Parent shall use all
reasonable efforts to solicit from stockholders of the Parent proxies
in favor of the approval of the Charter Amendment and the Share
Issuance and to secure the vote or consent of the stockholders of the
Parent required by the GCL and the rules of the NYSE to approve the
Charter Amendment and the Share Issuance (the "Required Parent Vote").
SECTION 7.2 Registration Statement; Proxy Statements.
(a) Joint Proxy Statement/Prospectus. As promptly as
practicable after the execution of this Agreement, the Parent and the
Company shall jointly prepare and file with the Commission a joint
proxy statement and forms of proxies in connection with (i) the
solicitation of proxies to be voted at the Parent Stockholders' Meeting
with respect to the Charter Amendment and the Share Issuance and (ii)
in connection with the solicitation of proxies to be voted at the
Company Stockholders' Meeting with respect to this Agreement and the
Merger (such joint proxy statement, together with any amendments
thereof or supplements thereto effected prior to the effective date of
the Registration Statement, being the "Joint Proxy Statement"). At such
time as the Parent and the Company deem appropriate, the Parent shall
prepare and file with the Commission a registration statement on Form
S-4 (such registration statement, together with any
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amendments thereof or supplements thereto, being the "Registration
Statement"), containing a proxy statement for stockholders of the
Parent and a proxy statement/prospectus for stockholders of the Company
in connection with the registration under the Securities Act of the
offering, sale and delivery of the Parent Common Stock to be issued
pursuant to this Agreement in the Merger to stockholders of the Company
(the "Joint Proxy Statement/Prospectus"). The Joint Proxy
Statement/Prospectus shall include substantially all the information
included in the Joint Proxy Statement, as it shall be then amended.
Each of the Parent Companies and the Company shall furnish all
information concerning it and the holders of its capital stock as the
other may reasonably request in connection with such actions. Each of
the Parent Companies and the Company will use all reasonable efforts to
have or cause the Registration Statement to become effective as
promptly as practicable, and shall take any action required to be taken
under any applicable federal or state securities Laws in connection
with the issuance of shares of Parent Common Stock in the Merger. As
promptly as practicable after the Registration Statement shall have
become effective, (x) the Parent shall mail the Joint Proxy
Statement/Prospectus to its stockholders entitled to notice of and to
vote at the Parent's Stockholders' Meeting and (y) the Company shall
mail the Joint Proxy Statement/Prospectus to its stockholders entitled
to notice of and to vote at the Company Stockholders' Meeting.
(b) Company Information. The information supplied by the
Company for inclusion in the Registration Statement shall not, at the
time the Registration Statement is declared effective, contain 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 not misleading. The information supplied by the
Company for inclusion in (i) the Joint Proxy Statement/Prospectus shall
not, at the date the Joint Proxy Statement/Prospectus (or any
supplement thereto) is first mailed to stockholders of the Parent, at
the date (if different) the Joint Proxy Statement/Prospectus (or any
supplement thereto) is first mailed to stockholders of the Company, at
the time of the Parent Stockholders' Meeting, at the time (if
different) of the Company Stockholders' Meeting or at the Effective
Time, contain 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 the light of the circumstances under
which they were made, not misleading. If at any time prior to the
Effective Time any event or circumstance relating to the Company or any
of its Subsidiaries, or its or their respective officers or directors,
should be discovered by the Company that should be set forth in an
amendment to the Registration Statement or a supplement to the Joint
Proxy Statement/Prospectus, the Company shall promptly inform the
Parent. All documents that the Company is responsible for filing with
the Commission in connection with the transactions contemplated herein
shall comply as to form in all material respects with the applicable
requirements of the Securities Act and the Regulations thereunder and
the Exchange Act and the Regulations thereunder.
(c) The Parent Companies Information. The information supplied
by the Parent Companies for inclusion in the Registration Statement
shall not, at the time the Registration Statement is declared
effective, contain any untrue statement of a material
AGREEMENT AND PLAN OF MERGER
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fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading.
Such information supplied by the Parent for inclusion in (i) the Joint
Proxy Statement/Prospectus shall not, at the date the Joint Proxy
Statement/Prospectus (or any supplement thereto) is first mailed to
stockholders of the Parent, at the date (if different) the Joint Proxy
Statement/Prospectus (or any supplement thereto) is first mailed to
stockholders of the Company, at the time of the Parent Stockholders'
Meeting, at the time (if different) of the Company Stockholders'
Meeting or at the Effective Time, contain 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 the
light of the circumstances under which they are made, not misleading.
If at any time prior to the Effective Time any event or circumstance
relating to the Parent or any of its Affiliates, or to their respective
officers or directors, should be discovered by the Parent that should
be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement/Prospectus, the Parent shall
promptly inform the Company. All documents that the Parent Companies
are responsible for filing with the Commission in connection with the
transactions contemplated hereby shall comply as to form in all
material respects with the applicable requirements of the Securities
Act and the Regulations thereunder and the Exchange Act and the
Regulations thereunder.
(d) No amendment or supplement to the Registration Statement,
the Joint Proxy Statement or the Joint Proxy Statement/Prospectus shall
be made by the Parent or the Company without the approval of the other
party, which shall not be unreasonably withheld or delayed. The Parent
and the Company each will advise the other, promptly after it receives
notice thereof, of the time when the Registration Statement has become
effective or any supplement or amendment has been filed, the issuance
of any stop order suspending the effectiveness of the Registration
Statement or the solicitation of proxies pursuant to the Joint Proxy
Statement/Prospectus, the suspension of the qualification of the Parent
Common Stock issuable in connection with the Merger for offering or
sale in any jurisdiction, any request by the staff of the Commission
for amendment of the Registration Statement, the Joint Proxy Statement
or the Joint Proxy Statement/Prospectus, the receipt from the staff of
the Commission of comments thereon or any request by the staff of the
Commission for additional information with respect thereto.
SECTION 7.3 Appropriate Action; Consents; Filings.
(a) The Company and the Parent shall each use all reasonable
efforts (i) to take, or to cause to be taken, all actions, and to do,
or to cause to be done, all things that, in either case, are necessary,
proper or advisable under applicable Law or otherwise to consummate and
make effective the transactions contemplated by this Agreement, (ii) to
obtain from any Governmental Authorities any Authorizations or Orders
required to be obtained by the Parent or the Company or any of their
Subsidiaries in connection with the authorization, execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby, including the Merger, (iii) to make
all necessary filings, and thereafter make any other required
submissions, with respect to this Agreement and the Merger required
under (A) the Securities Act (in the case of the
AGREEMENT AND PLAN OF MERGER
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Parent) and the Exchange Act and the Regulations thereunder, and any
other applicable federal or state securities Laws, (B) the HSR Act and
(C) any other applicable Law. The Parent and the Company shall
cooperate with each other in connection with the making of all such
filings, including providing copies of all such documents to the
nonfiling party and its advisors prior to filings and, if requested,
shall accept all reasonable additions, deletions or changes suggested
in connection therewith. The Company and the Parent shall furnish all
information required for any application or other filing to be made
pursuant to any applicable Law or any applicable Regulations of any
Governmental Authority (including all information required to be
included in the Joint Proxy Statement, the Joint Proxy
Statement/Prospectus or the Registration Statement) in connection with
the transactions contemplated by this Agreement.
(b) Each of the Company and the Parent shall give prompt
notice to the other of (i) any notice or other communication from any
Person alleging that the consent of such Person is or may be required
in connection with the Merger, (ii) any notice or other communication
from any Governmental Authority in connection with the Merger, (iii)
any actions, suits, claims, investigations or proceedings commenced or
threatened in writing against, relating to or involving or otherwise
affecting the Company, the Parent or their Subsidiaries that relate to
the consummation of the Merger; and (iv) any change that is reasonably
likely to have a Material Adverse Effect on the Company or the Parent,
respectively, or is likely to delay or impede the ability of either the
Company or the Parent, respectively, to consummate the transactions
contemplated by this Agreement or to fulfill their respective
obligations set forth herein.
(c) The Parent Companies and the Company agree to cooperate
and use all reasonable efforts vigorously to contest and resist any
action, including legislative, administrative or judicial action, and
to have vacated, lifted, reversed or overturned any Order (whether
temporary, preliminary or permanent) of any Court or Governmental
Authority that is in effect and that restricts, prevents or prohibits
the consummation of the Merger or any other transactions contemplated
by this Agreement, including the vigorous pursuit of all available
avenues of administrative and judicial appeal and all available
legislative action. Each of the Parent Companies and the Company also
agree to take any and all actions, including the disposition of assets
or the withdrawal from doing business in particular jurisdictions,
required by any Court or Governmental Authority as a condition to the
granting of any Authorization or Order necessary for the consummation
of the Merger or as may be required to avoid, lift, vacate or reverse
any legislative or judicial action which would otherwise cause any
condition to the Closing not to be satisfied; provided, however, that
in no event shall either party take, or be required to take, any action
that could reasonably be expected to have a Material Adverse Effect on
the Combined Companies.
(d) (i) Each of the Company and the Parent shall give (or
shall cause their respective Subsidiaries to give) any notices
to third Persons, and use, and cause their respective
Subsidiaries to use, all reasonable efforts to obtain any
consents from third Persons (A) necessary, proper or advisable
to consummate the transactions contemplated by this Agreement
or to satisfy any of the conditions set
AGREEMENT AND PLAN OF MERGER
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forth in Article VIII, (B) otherwise required under any
contracts, licenses, leases or other agreements in connection
with the consummation of the transactions contemplated hereby
or (C) required to prevent a Material Adverse Effect on the
Company from occurring prior to or after the Effective Time or
a Material Adverse Effect on the Parent from occurring after
the Effective Time.
(ii) If any party shall fail to obtain any consent
from a third Person described in subsection (d)(i) above, such
party shall use all reasonable efforts, and shall take any
such actions reasonably requested by the other parties, to
limit the adverse effect upon the Company and the Parent,
their respective Subsidiaries, and their respective businesses
resulting, or that could reasonably be expected to result
after the Effective Time, from the failure to obtain such
consent.
SECTION 7.4 Affiliates; Pooling; Tax Treatment.
(a) The Company shall use all reasonable efforts to obtain
from any Person who may be deemed to have become an Affiliate of the
Company after the date of this Agreement and on or prior to the Closing
Date a written agreement substantially in the form of Annex B hereto as
soon as practicable after attaining such status.
(b) The Parent shall use all reasonable efforts to obtain from
any Person who may be deemed to have become an Affiliate of the Parent
after the date of this Agreement and on or prior to the Closing Date a
written agreement substantially in the form of Annex C hereto as soon
as practicable after attaining such status.
(c) The Parent Companies shall not be required to maintain the
effectiveness of the Registration Statement for the purpose of resale
by stockholders of the Company who may be Affiliates of the Company
pursuant to Rule 145 under the Securities Act.
(d) Each party hereto shall use all reasonable efforts to
cause the Merger to be treated for financial accounting purposes as a
Pooling Transaction, and shall not take, and shall use all reasonable
efforts to prevent any Affiliate of such party from taking, any actions
that could prevent the Merger from being treated for financial
accounting purposes as a Pooling Transaction.
(e) Each party hereto shall use all reasonable efforts to
cause the Merger to qualify, and shall not take, and shall use all
reasonable efforts to prevent any Affiliate of such party from taking,
any actions that could prevent the Merger from qualifying, as a
reorganization under the provisions of Section 368(a) of the Code.
SECTION 7.5 Public Announcements. The Parent and the Company shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Merger and shall not issue any such press
release or make any such public statement prior to such consultation.
AGREEMENT AND PLAN OF MERGER
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SECTION 7.6 NYSE Listing. The Parent shall use all reasonable efforts
to cause the shares of the Parent Common Stock to be issued in the Merger to be
approved for listing (subject to official notice of issuance) on the NYSE prior
to the Effective Time.
SECTION 7.7 Rights Agreement; State Takeover Statutes. The Company
shall take all action (including, if necessary, redeeming all of the outstanding
rights issued pursuant to the Company Rights Agreement or amending or
terminating the Company Rights Agreement) so that the execution, delivery and
performance of this Agreement and the consummation of the Merger and the other
transactions contemplated hereby do not and will not result in the grant of any
rights to any Person under the Company Rights Agreement or enable or require any
outstanding rights to be exercised, distributed or triggered. The Company will
take all steps necessary to exempt the transactions contemplated by this
Agreement from Section 203 of the GCL.
SECTION 7.8 Comfort Letters.
(a) The Company shall use all reasonable efforts to cause
Price Waterhouse LLP, the Company's independent accountants, to deliver
a letter dated as of the date of the Joint Proxy Statement/Prospectus,
and addressed to the Company and the Parent, in form and substance
reasonably satisfactory to the Parent and customary in scope and
substance for agreed upon procedures letters delivered by independent
public accountants in connection with registration statements and proxy
statements similar to the Registration Statement and the Joint Proxy
Statement/Prospectus.
(b) The Parent shall use all reasonable efforts to cause
Arthur Andersen LLP, the Parent's independent accountants, to deliver a
letter dated as of the date of the Joint Proxy Statement/Prospectus,
and addressed to the Parent and the Company, in form and substance
reasonably satisfactory to the Company and customary in scope and
substance for agreed upon procedures letters delivered by independent
public accountants in connection with registration statements and proxy
statements similar to the Registration Statement and the Joint Proxy
Statement/Prospectus.
SECTION 7.9 Assumption of Obligations to Issue Stock and Obligations of
Employee Benefit Plans; Employees.
(a) At the Effective Time, automatically and without any
action on the part of the holder thereof, each outstanding Company
Stock Option shall be assumed by the Parent and shall become an option
to purchase that number of shares of the Parent Common Stock obtained
by multiplying the number of shares of Company Common Stock issuable
upon the exercise of such option by the Common Stock Exchange Ratio at
an exercise price per share equal to the per share exercise price of
such option divided by the Common Stock Exchange Ratio and otherwise
upon the same terms and conditions as such outstanding option to
purchase Company Common Stock; provided, however, that in the case of
any option to which Section 421 of the Internal Revenue Code applies by
reason of the qualifications under Section 422 or 423 of such Code, the
exercise price, the number of shares purchasable pursuant to such
option and the terms and conditions
AGREEMENT AND PLAN OF MERGER
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of exercise of such option shall be determined in a manner that
complies with Section 424(a) of the Code.
(b) On or prior to the Effective Time, the Company shall take
or cause to be taken all such actions, reasonably satisfactory to the
Parent, as may be necessary or desirable in order to authorize the
transactions contemplated by subsection (a) of this Section.
(c) The Parent shall take all corporate actions necessary to
reserve for issuance a sufficient number of shares of Parent Common
Stock for delivery upon exercise of the Company Stock Options assumed
by the Parent pursuant to Section 7.09(a) above and shares of Parent
Common Stock otherwise to be issued under other Company Stock Plans.
(d) As promptly as practicable after the Effective Time, the
Parent shall file one or more Registration Statements on Form S-8 (or
any successor or other appropriate form) with respect to the shares of
Parent Common Stock subject to the Company Stock Options or otherwise
issuable under other Company Stock Plans and shall use its reasonable
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such
options remain outstanding and to comply with applicable state
securities and blue sky laws.
(e) Except as provided herein or as otherwise agreed to by the
parties, each of the Company Stock Plans providing for the issuance or
grant of Company Stock Options or Company Common Stock shall be assumed
as of the Effective Time by the Parent with such amendments thereto as
may be required to reflect the Merger.
(f) Provided that the Parent shall not be obligated with
respect to any action taken by the Company or its Subsidiaries with
respect to the Benefit Plans of the Company or its Subsidiaries in
violation of the provisions of Section 6.02(a), the Parent hereby
agrees to guarantee from and after the Effective Time and to cause the
Surviving Corporation and each Subsidiary of the Surviving Corporation
to honor and perform all obligations of the Surviving Corporation and
each Subsidiary of the Surviving Corporation under all Benefit Plans of
the Company and such Subsidiaries and under any agreement or
arrangement implemented as provided in the Company's Disclosure Letter
or as otherwise contemplated by this Agreement and the Company's
Disclosure Letter.
(g) The Parent shall and shall cause the Surviving Corporation
and each Subsidiary of the Surviving Corporation to take all corporate
action necessary to:
(i) maintain with respect to eligible participants
(as of the Effective Time) the Company's retiree medical plan,
except to the extent that any modifications thereto are
consistent with changes in the medical plans provided by the
Parent and its subsidiaries for similarly situated active
employees;
AGREEMENT AND PLAN OF MERGER
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(ii) maintain the "pension equalizer" contributions
to the Company Retirement Savings Plan, the related
nonqualified savings plan or a successor plan that would
provide at least the same level of benefits as the "pension
equalizer" arrangement, with respect to employees who are
eligible participants as of the Effective Time, after taking
into account any retirement benefits provided to such
participants by any plans or programs of the Parent or any of
its Subsidiaries after the Effective Time;
(iii) maintain the Company Executive Deferred
Compensation Plan, except that no additional employee
deferrals shall be made under such plan after the Effective
Time and valuation with respect to stock deferrals existing at
such time shall thereafter be based upon the Parent Common
Stock;
(iv) maintain the Company's Executive Life Insurance
Program, except that after the Effective Time no additional
participants shall be covered by such program;
(v) maintain the Company's Supplemental Executive
Retirement Plan with respect to employees that are eligible
participants as of the Effective Time, but the offset under
such plan shall take into account any employer provided
retirement benefits under any plans or programs of the Parent
or any of its Subsidiaries after the Effective Time;
(vi) administer the Performance Stock Unit Program
and the Incentive Stock Unit Plan of the Company in accordance
with their terms, with such adjustments in the performance
targets as may be necessary to reflect the Merger, but no new
grants of awards shall be made under such plans; and
The Company represents that true and complete copies of all of the
plans and programs referred to in this Section 7.09(g) have been
delivered to the Parent.
(h) Subject to Section 7.09(g), until the third anniversary of
the Effective Time (the "Benefits Maintenance Period") the Parent shall
and shall cause the Surviving Corporation and each Subsidiary of the
Surviving Corporation to provide each employee of the Company or any of
its Subsidiaries at the Effective Time ("Company Participants") with
employee benefits and compensation after the Effective Time that are
substantially comparable to similarly situated employees of the Parent
and its Subsidiaries. At the Effective Time, the Parent shall adopt the
severance program described in Section 7.09(h) of the Company's
Disclosure Letter and shall maintain such program for the period set
forth in such description.
(i) If Company Participants are included in any benefit plan,
including provision for vacation, of the Parent, the Surviving
Corporation or their Subsidiaries, the Company Participants shall
receive credit for service prior to the Effective Time with the Company
and its Subsidiaries to the same extent such service was counted under
similar Benefit Plans of the Company for purposes of determining
eligibility to participate,
AGREEMENT AND PLAN OF MERGER
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vesting, eligibility for retirement and, with respect to vacation,
disability and severance, benefit accrual. If Company Participants or
their dependents are included in any medical, dental or health plan (a
"Successor Plan") other than the plan or plans they participated in at
the Effective Time (a "Predecessor Plan") any such Successor Plan shall
not include pre-existing condition exclusions, except to the extent
such exclusions were applicable under the applicable Predecessor Plan
and shall credit co-pays and deductibles to the same extent credited
under the Predecessor Plan.
(j) Except as otherwise specifically set forth above, nothing
contained herein shall be construed as requiring Parent to continue any
specific Benefit Plan, or to continue the employment of any specific
person.
SECTION 7.10 Indemnification of Directors and Officers.
(a) To the extent, if any, not provided by an existing right
of indemnification or other agreement or policy, from and after the
Effective Time, the Surviving Corporation shall, to the fullest extent
permitted by applicable law, indemnify, defend and hold harmless each
person who is now, or has been at any time prior to the date hereof, or
who becomes prior to the Effective Time, an officer or director of the
Company or any of its Subsidiaries (each an "Indemnified Party" and
collectively, the "Indemnified Parties") against (i) all losses,
expenses (including reasonable attorney's fees and expenses), claims,
damages or liabilities or, subject to the proviso of the next
succeeding sentence, amounts paid in settlement, arising out of actions
or omissions occurring at or prior to, at or after the Effective Time
(and whether asserted or claimed prior to, at or after the Effective
Time) that are, in whole or in part, based on or arising out of the
fact that such person is or was a director or officer of such party
(the "Indemnified Liabilities"), and (ii) all Indemnified Liabilities
to the extent they are based on or arise out of or pertain to the
transactions contemplated by this Agreement. In the event of any such
loss, expense, claim, damage or liability arising before the Effective
Time, (i) the Surviving Corporation shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel
shall be reasonably satisfactory to the Surviving Corporation, promptly
after statements therefor are received and otherwise advance to such
Indemnified Party upon request reimbursement of documented expenses
reasonably incurred, in either case to the extent not prohibited by the
GCL, (ii) the Parent and the Surviving Corporation will cooperate in
the defense of any such matter and (iii) any determination required to
be made with respect to whether an Indemnified Party's conduct complies
with the standards set forth under the GCL and the certificate of
incorporation or by-laws of the Surviving Corporation shall be made by
independent counsel mutually acceptable to the Parent and the
Indemnified Party; provided, however, that the Parent and the Surviving
Corporation shall not be liable for any settlement affected without
their written consent (which consent shall not be unreasonably
withheld). The Indemnified Parties as a group may retain only one law
firm with respect to each related matter except to the extent there is,
in the opinion of counsel to an Indemnified Party, under applicable
standards of professional conduct, a conflict on any significant issue
between positions of such Indemnified Party and any other Indemnified
Party or Indemnified Parties.
AGREEMENT AND PLAN OF MERGER
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(b) The Parent agrees to guarantee unconditionally the
performance of the Surviving Corporation's obligations pursuant to
Section 7.10(a).
(c) For a period of six years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect policies
of directors and officers' liability insurance maintained by the
Company for the benefit of those persons who are currently covered by
such policies on terms no less favorable than the terms of such current
insurance coverage; provided, however, that the Surviving Corporation
shall not be required to expend in any year an amount in excess of 200%
of the annual aggregate premiums currently paid by the Company for such
insurance; and provided, further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall
be obligated to obtain a policy with the best coverage available, in
the reasonable judgment of the Board of Directors of the Parent, for a
cost not exceeding such amount.
(d) If the Parent or any of its successors or assigns (i)
consolidates with or merges into any other person or entity and shall
not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all of substantially all of
its properties and assets to any person or entity, then and in either
such case, proper provisions shall be made so that the successors and
assigns of the Parent shall assume the obligations set forth in this
Section 7.10.
(e) To the fullest extent permitted by law, from and after the
Effective Time, all rights to indemnification as of the date hereof in
favor of the employees, agents, directors and officers of the Company
and its Subsidiaries with respect to their activities as such prior to
the Effective Time, as provided in their respective certificates of
incorporation and by-laws in effect on the date thereof, or otherwise
in effect on the date hereof, 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.
(f) The provisions of this Section 7.10 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party,
his or her heirs and his or her representatives.
SECTION 7.11 Newco. Prior to the Effective Time, Newco shall not
conduct any business or make any investments other than as specifically
contemplated by this Agreement and will not have any assets (other than the
minimum amount of cash required to be paid to Newco for the valid issuance of
its stock to the Parent).
SECTION 7.12 Event Notices. From and after the date of this Agreement
until the Effective Time, each party hereto shall promptly notify the other
party hereto of the occurrence or nonoccurrence of any event the occurrence or
nonoccurrence of which would be likely to cause any condition to the obligations
of the latter party to effect the Merger and the other transactions contemplated
by this Agreement not to be satisfied. No delivery of any notice pursuant to
this Section 7.12 shall cure any breach of any representation or warranty of the
party giving such
AGREEMENT AND PLAN OF MERGER
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notice contained in this Agreement or otherwise limit or affect the remedies
available hereunder to the party receiving such notice.
SECTION 7.13 Parent Board of Directors; Committees.
(a) The Parent's Board of Directors will take such action as
may be necessary to cause the number of directors comprising the Board
of Directors of the Parent at the Effective Time to be 14 persons, nine
of whom shall be current members of the Board of Directors of the
Parent including Richard B. Cheney and five of whom shall be current
members of the Board of Directors of the Company including William B.
Bradford. The specific members of the Parent's Board of Directors will
be chosen by a committee consisting of Richard B. Cheney, William E.
Bradford and the current chairman or the Nominating Committee of each
of the Parent and the Company.
(b) At or promptly after the Closing, the Parent's Board of
Directors will take such action as may be necessary so that one or more
of such designees of the Company will be added to each committee of the
Parent's Board of Directors on an approximate proportional basis.
SECTION 7.14 Transition Management. As soon as practicable after the
date of this Agreement, the parties shall create a special transition management
task force (the "Task Force"), which shall be comprised of William E. Bradford,
Richard B. Cheney, David J. Lesar and Donald C. Vaughn. The Task Force shall
examine various alternatives regarding the manner in which to best organize the
business of the Combined Companies after the Effective Time.
SECTION 7.15 Employment Contracts. The Parent shall, as of or prior to
the Effective Time, enter into employment contracts with William E. Bradford and
Donald C. Vaughn on terms reasonably acceptable to the parties pursuant to which
William E. Bradford shall hold the position of Chairman of the Board of
Directors of the Parent and Donald C. Vaughn shall hold the office of Vice
Chairman of the Parent and at the Effective Time each of Messrs. Bradford and
Vaughn shall be appointed to the Parent's Executive Committee, a non- board
committee comprised of executive officers of the Parent, which after the
Effective Time shall initially consist of such persons and Messrs. Cheney and
Lesar.
SECTION 7.16 Waiver by Company Joint Venture Partners. The Company
shall not amend or modify the written waivers it has received from each of the
Company Joint Venture Partners of any and all rights such partners may have to
purchase any interest of the Company in any of the Company Joint Ventures that
arise as a result of the execution of this Agreement or the consummation of any
of the transactions contemplated hereby.
SECTION 7.17 Transfer Taxes. The Company and the Parent shall cooperate
in the preparation, execution and filing of all returns, questionnaires,
applications or other documents regarding any real property transfer or gains,
sales, use, transfer and stamp taxes, any transfer, recording, registration and
other fees and any similar taxes that become payable in connection with the
transactions contemplated by this Agreement ("Transfer Taxes"). The Company
shall pay or cause to be paid any such Transfer Taxes.
AGREEMENT AND PLAN OF MERGER
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ARTICLE VIII
CLOSING CONDITIONS
SECTION 8.1 Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and the
other transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Closing of the following conditions, any or all of which may be
waived by the parties hereto, in whole or in part, to the extent permitted by
applicable Law:
(a) Effectiveness of the Registration Statement. The
Registration Statement shall have been declared effective by the
Commission under the Securities Act, and the pro forma financial
statements contained in the Registration Statement at the effective
date thereof shall reflect the Merger for financial accounting purposes
as a Pooling Transaction. No stop order suspending the effectiveness of
the Registration Statement shall have been issued by the Commission and
no proceedings for that purpose shall have been initiated by the
Commission.
(b) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the
stockholders of the Company as required by the GCL. The Charter
Amendment and the Share Issuance shall have been approved and adopted
by the requisite vote of the stockholders of the Parent as required by
the GCL and the rules of the NYSE.
(c) No Order. No Court or Governmental Authority shall have
enacted, issued, promulgated, enforced or entered any Law, Regulation
or Order (whether temporary, preliminary or permanent) that is in
effect and has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger.
(d) HSR Act. The waiting period under the HSR Act applicable
to the Merger shall have expired or been terminated.
(e) Foreign Governmental Authorities. The applicable waiting
period under any competition Laws, Regulations and Orders of foreign
Governmental Authorities, as set forth in the Parent's Disclosure
Letter and the Company's Disclosure Letter, shall have expired or been
terminated.
(f) Pooling of Interests. The Parent and the Company shall
have been advised in writing by Arthur Andersen LLP on the date upon
which the Effective Time is to occur that, in reliance in part on the
concurrent opinion of Price Waterhouse LLP or its successor that the
Company is a "poolable entity," the Merger should, for financial
accounting purposes, be treated as a Pooling Transaction.
(g) The shares of Parent Common Stock to be issued in the
Merger shall have been listed, subject to official notice of issuance,
on the NYSE.
AGREEMENT AND PLAN OF MERGER
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SECTION 8.2 Additional Conditions to Obligations of the Parent
Companies. The obligations of the Parent Companies to effect the Merger and the
other transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Closing of the following conditions, any or all of which may be
waived by the Parent Companies, in whole or in part, to the extent permitted by
applicable Law:
(a) Representations and Warranties. Each of the
representations and warranties of the Company contained in this
Agreement that is qualified as to materiality shall be true and
correct, and each of such representations and warranties that is not so
qualified shall be true and correct in all material respects, as of the
date of this Agreement and as of the Closing Date as though made again
on and as of the Closing Date. The Parent Companies shall have received
a certificate of the Chief Executive Officer and the Chief Financial
Officer of the Company, dated the Closing date, to such effect.
(b) Agreements and Covenants. The Company shall have performed
or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it on or
prior to the Closing Date. The Parent Companies shall have received a
certificate of the President and the Chief Executive Officer of the
Company, dated the Closing date, to such effect.
(c) Tax Opinion. The Parent shall have received the opinion
dated as of the Closing Date of Vinson & Elkins L.L.P. to the effect
that (i) the Merger will constitute a reorganization under section
368(a) of the Code, (ii) the Parent, the Company and Newco will each be
a party to that reorganization, and (iii) no gain or loss will be
recognized by the Parent, the Company or Newco by reason of the Merger.
In rendering such opinion, Vinson & Elkins L.L.P. shall receive and may
rely upon representations contained in certificates of the Company and
the Parent substantially in the form of Annexes D and E hereto.
SECTION 8.3 Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing of the following conditions, any or all of which may be waived by the
Company, in whole or in part, to the extent permitted by applicable Law:
(a) Representations and Warranties. Each of the
representations and warranties of the Parent contained in this
Agreement that is qualified as to materiality shall be true and
correct, and each of such representations and warranties that is not so
qualified shall be true and correct in all material respects, as of the
date of this Agreement and as of the Closing Date as though made again
on and as of the Closing Date. The Company shall have received a
certificate of the Chairman of the Board, the President or any Vice
President and the Chief Financial Officer of each of the Parent
Companies, dated the Closing date, to such effect.
(b) Agreements and Covenants. The Parent Companies shall have
performed or complied in all material respects with all agreements and
covenants required by this
AGREEMENT AND PLAN OF MERGER
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Agreement to be performed or complied with by them on or prior to the
Closing Date. The Company shall have received a certificate of the
Chairman of the Board, the President or any Vice President and the
Chief Financial Officer of each of the Parent Companies, dated the
Closing Date, to such effect.
(c) Tax Opinion. The Company shall have received the opinion
dated as of the Closing Date of Weil, Gotshal & Manges LLP to the
effect that (i) the Merger will constitute a reorganization under
section 368(a) of the Code, (ii) the Parent, the Company and Newco will
each be a party to that reorganization, and (iii) no gain or loss will
be recognized by the stockholders of the Company upon the receipt of
shares of the Parent Common Stock in exchange for shares of Company
Common Stock pursuant to the Merger except with respect to any cash
received in lieu of fractional share interests. In rendering such
opinion, Weil, Gotshal & Manges LLP shall receive and may rely upon the
representations contained in certificates of the Company and the Parent
substantially in the form of Annexes D and E hereto.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of this Agreement
and the Merger by the stockholders of the Company and before or after approval
of the Charter Amendment and the Share Issuance by the stockholders of the
Parent:
(a) by mutual consent of the Parent and the Company;
(b) by the Parent, upon a breach of any representation,
warranty, covenant or agreement on the part of the Company set forth in
this Agreement or if any representation or warranty of the Company
shall have become untrue, in either case such that the conditions set
forth in Section 8.02(a) or Section 8.02(b) would not be satisfied and
such breach or untruth would result in a Material Adverse Effect on the
Company (a "Terminating Company Breach"); provided that, if such
Terminating Company Breach is curable by the Company through the
exercise of its reasonable efforts and for so long as the Company
continues to exercise such reasonable efforts, the Parent may not
terminate this Agreement under this Section 9.01(b);
(c) by the Company, upon a breach of any representation,
warranty, covenant or agreement on the part of the Parent Companies set
forth in this Agreement or if any representation or warranty of the
Parent Companies shall have become untrue, in either case, such that
the conditions set forth in Section 8.03(a) or Section 8.03(b) would
not be satisfied and such breach or untruth would result in a Material
Adverse Effect on the Parent (a "Terminating Parent Breach"); provided
that, if such Terminating Parent Breach is curable by the Parent
Companies through the exercise of their reasonable efforts and for so
long as the Parent Companies continue to exercise such reasonable
efforts, the Company may not terminate this Agreement under this
Section 9.01(c);
AGREEMENT AND PLAN OF MERGER
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(d) by either the Parent or the Company, if there shall be any
final and nonappealable Order that prevents the consummation of the
Merger, unless the party relying on such Order has not complied with
its obligations under Section 7.03;
(e) by either the Parent or the Company, if the Merger shall
not have been consummated before December 31, 1998; provided, however,
that this Agreement may be extended by written notice of either the
Parent or the Company to a date not later than March 31, 1999, if the
Merger shall not have been consummated as a result of the Company or
the Parent Companies having failed by December 31, 1998 to receive all
required Authorizations and Orders with respect to the Merger or as a
result of the entering of an Order by a Court or Governmental
Authority; and provided, further, that, prior to March 31, 1999, no
party shall be entitled to terminate this Agreement pursuant to this
Section 9.01(e) if such party is in Material breach of any
representation, warranty, covenant or agreement on the part of such
party set forth in this Agreement;
(f) by either the Parent or the Company, if this Agreement
shall fail to receive the Required Company Vote by the stockholders of
the Company at the Company Stockholders' Meeting;
(g) by either the Parent or the Company, if the Charter
Amendment and the Share Issuance shall fail to receive the Required
Parent Vote by the stockholders of the Parent at the Parent
Stockholders' Meeting;
(h) by the Company, at any time prior to receipt of the
Required Company Vote, upon 72 hours prior written notice to the
Parent, if (i) the Board of Directors of the Company shall have
concluded in good faith based on advice of outside counsel that such
action is necessary to act in a manner consistent with its fiduciary
duties under applicable law and (ii) the Parent does not make, within
72 hours of receipt of the Company's written notification of its
intention to terminate this Agreement, an offer that the Board of
Directors of the Company determines, in good faith after consultation
with its financial advisors, is at least as favorable, from a financial
point of view, to the stockholders of the Company as any Superior
Proposal considered by the Board of Directors in making its
determination under clause (i). The Company agrees (x) that it will not
enter into a binding agreement referred to in clause (ii) above until
at least 72 hours after it has provided the notice to the Parent
required thereby and (y) to notify the Parent promptly if its intention
to enter into a written agreement referred to in its notification shall
change at any time after giving such notification;
(i) by the Parent, at any time prior to receipt of the
Required Parent Vote, upon 72 hours prior written notice to the
Company, if (i) the Board of Directors of the Parent shall have
concluded in good faith based on advice of outside counsel that such
action is necessary to act in a manner consistent with its fiduciary
duties under applicable law and (ii) the Company does not make, within
72 hours of receipt of the Parent's written notification of its
intention to terminate this Agreement, an offer that the Board of
Directors of the Parent determines, in good faith after consultation
with its financial advisors, is at least as favorable, from a financial
point of view, to the stockholders of the
AGREEMENT AND PLAN OF MERGER
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Parent as any Superior Proposal considered by the Board of Directors in
making its determination under clause (i). The Parent agrees (x) that
it will not enter into a binding agreement referred to in clause (ii)
above until at least 72 hours after it has provided the notice to the
Company required thereby and (y) to notify the Company promptly if its
intention to enter into a written agreement referred to in its
notification shall change at any time after giving such notification;
or
(j) by the Parent, upon two Business Days' prior written
notice to the Company, if the Board of Directors of the Company (A)
shall withdraw or modify in any manner adverse to the Parent the
Board's approval or recommendation of this Agreement and the Merger,
(B) shall approve or recommend any Superior Proposal or (C) shall
resolve to take any of the actions specified in clause (A) or (B).
(k) by the Company, upon two Business Days' prior written
notice to the Parent, if the Board of Directors of the Parent (A) shall
withdraw or modify in any manner adverse to the Company the Board's
approval or recommendation of the Charter Amendment and the Share
Issuance, (B) shall approve or recommend any Superior Proposal or (C)
shall resolve to take any of the actions specified in clause (A) or
(B).
The right of any party hereto to terminate this Agreement pursuant to
this Section 9.01 shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective officers, directors,
representatives or agents, whether prior to or after the execution of this
Agreement.
SECTION 9.2 Effect of Termination. Except as provided in Section 9.05
or Section 10.01 of this Agreement, in the event of the termination of this
Agreement pursuant to Section 9.01, this Agreement shall forthwith become void,
there shall be no liability on the part of the Parent Companies or the Company
or any of their respective officers or directors to the other and all rights and
obligations of any party hereto shall cease, except that nothing herein shall
relieve any party from liability for any misrepresentation or breach of any
covenant or agreement under this Agreement.
SECTION 9.3 Amendment. This Agreement may be amended by the parties
hereto by action authorized by their respective Boards of Directors at any time
prior to the Effective Time; provided, however, that, after approval of the
Merger by the stockholders of the Company, or approval of the Charter Amendment
and Share Issuance by the stockholders of the Parent, no amendment may be made
that would reduce the amount or change the type of consideration into which each
share of Company Common Stock shall be converted pursuant to this Agreement upon
consummation of the Merger or that would otherwise require the approval of the
stockholders of the Company or the Parent under the GCL. This Agreement may not
be amended except by an instrument in writing signed by the parties hereto.
SECTION 9.4 Waiver. At any time prior to the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other party hereto, (b) waive any inaccuracies in the
representations and warranties of the other party
AGREEMENT AND PLAN OF MERGER
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contained herein or in any document delivered pursuant hereto and (c) waive
compliance by the other party with any of the agreements or conditions contained
herein. Any such extension or waiver shall be valid only if set forth in an
instrument in writing signed by the party or parties to be bound thereby. For
purposes of this Section 9.04, the Parent Companies shall be deemed to be one
party.
SECTION 9.5 Fees, Expenses and Other Payments.
(a) Except as provided in this Section 9.05, all Expenses
incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred such Expenses; provided, however, that the
allocable share of the Parent Companies as a group and the Company for
all Expenses related to printing, filing and mailing the Registration
Statement, the Joint Proxy Statement and the Joint Proxy
Statement/Prospectus and all Commission and other regulatory filing
fees incurred in connection with the Registration Statement, the Joint
Proxy Statement and the Joint Proxy Statement/Prospectus shall be
one-half each; and provided, further, that the Parent may, at its
option, but subject to Section 7.04(e), pay any Expenses of the Company
that are solely and directly related to the Merger.
(b) If this Agreement is terminated by the Parent pursuant to
Section 9.01(j) (change of recommendation), then the Company shall pay
to the Parent a termination fee equal to $50 million.
(c) If this Agreement is terminated by the Company pursuant to
Section 9.01(k) (change of recommendation), then the Parent shall pay
to the Company a termination fee equal to $50 million.
(d) If (i) this Agreement is terminated pursuant to (A)
Section 9.01(b) (breach), (B) Section 9.01(h) (fiduciary out), (C)
Section 9.01(f) (failure to obtain stockholder approval), or (D)
Section 9.01(j) (change of recommendation), (ii) at the time of such
termination (or in the case of clause (i)(C) above, prior to the
Company Stockholders' Meeting), there shall have been an Acquisition
Proposal involving the Company or any of its Subsidiaries that, at the
time of such termination (or such meeting, as the case may be), shall
not have been (x) rejected by the Company and its Board of Directors or
(y) withdrawn by the Person making such Acquisition Proposal and (iii)
within twelve months of any such termination, the Company or any of its
Subsidiaries accepts a written offer or enters into a written agreement
to consummate an Acquisition Proposal with such Person or any of its
Affiliates and (iv) the Company or such Subsidiary is thereafter
acquired, through merger, consolidation, share exchange, sale of assets
or otherwise, by such Person or any of its Affiliates (a "Company
Acquisition"), then the Company (jointly and severally with its
Subsidiaries) shall at the closing (and as a condition of such closing)
of such Company Acquisition or of such Acquisition Proposal, pay the
Parent immediately a termination fee of $175 million.
(e) If (i) this Agreement is terminated pursuant to (A)
Section 9.01(c) (breach), (B) Section 9.01(i) (fiduciary out), (C)
Section 9.01(g) (failure to obtain stockholder
AGREEMENT AND PLAN OF MERGER
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approval), or (D) Section 9.01(k) (change of recommendation), (ii) at
the time of such termination (or in the case of clause (i)(C) above,
prior to the Parent Stockholders' Meeting), there shall have been an
Acquisition Proposal involving the Parent or any of its Subsidiaries
that, at the time of such termination (or such meeting, as the case may
be), shall not have been (x) rejected by the Parent and its Board of
Directors or (y) withdrawn by the Person making such Acquisition
Proposal and (iii) within twelve months of any such termination, the
Parent or any of its Subsidiaries accepts a written offer or enters
into a written agreement to consummate an Acquisition Proposal with
such Person or any of its Affiliates and (iv) the Parent or such
Subsidiary is thereafter acquired, through merger, consolidation, share
exchange, sale of assets or otherwise, by such Person or any of its
Affiliates (a "Parent Acquisition"), then the Parent (jointly and
severally with its Subsidiaries) shall at the closing (and as a
condition of such closing) of such Parent Acquisition or of such
Acquisition Proposal, pay the Company immediately a termination fee of
$175 million.
(f) If either party shall fail to pay the other party any fee
or other amount due hereunder, the failing party shall pay the costs
and expenses (including legal fees and expenses) of the other party in
connection with any action, including the filing of any lawsuit or
other legal action, taken to collect payment, together with interest on
the amount of any unpaid fee at the publicly announced prime interest
rate of Citibank N.A., in effect from time to time, from the date such
fee or other payment was required to be paid until payment in full.
(g) Notwithstanding anything herein to the contrary, the
aggregate amount payable to the Parent pursuant to Section 9.05 shall
not exceed $175 million exclusive of any amounts paid pursuant to
Section 9.05(f).
(h) Notwithstanding anything herein to the contrary, the
aggregate amount payable to the Company pursuant to Section 9.05 shall
not exceed $175 million exclusive of any amounts paid pursuant to
Section 9.05(f).
(i) Subject to the following sentences, the payments required
by this Section 9.05 shall constitute liquidated damages in full and
complete satisfaction of, and shall be the sole and exclusive remedy of
the Parent or the Company, as the case may be, for, any loss,
liability, damage or claim arising out of or in conjunction with the
transactions contemplated by this Agreement, including any termination
of this Agreement pursuant to Section 9.01 and shall not constitute a
penalty. Notwithstanding the foregoing sentence, if (i) this Agreement
is terminated by the Parent as a result of a willful breach of any
representation, warranty, covenant or agreement by the Company and no
termination fee is required to be paid pursuant to Section 9.05(d), the
Parent may pursue any remedies available to it at law or in equity and
shall be entitled to recover such additional amounts as the Parent may
be entitled to receive at law or in equity or (ii) this Agreement is
terminated by the Company as a result of a willful breach of any
representation, warranty, covenant or agreement by the Parent and no
termination fee is required to be paid pursuant to Section 9.05(e), the
Company may pursue any remedies
AGREEMENT AND PLAN OF MERGER
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available to it at law or in equity and shall be entitled to recover
such additional amounts as the Parent may be entitled to receive at law
or in equity.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Effectiveness of Representations, Warranties and
Agreements.
(a) Except as set forth in Section 10.01(b) of this Agreement,
the representations, warranties, covenants and agreements of each party
hereto shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any other party hereto,
any Person controlling any such party or any of their officers,
directors, representatives or agents whether prior to or after the
execution of this Agreement.
(b) The representations and warranties in this Agreement shall
terminate at the Effective Time and the representations, warranties,
covenants and agreements of each of the parties hereto shall terminate
upon the termination of this Agreement pursuant to Section 9.01, except
that the covenants and agreements set forth in Sections 6.05, 9.02 and
9.05 and in Article X hereof shall survive such termination of this
Agreement.
SECTION 10.2 Notices. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given if delivered personally, mailed by registered or certified mail (postage
prepaid, return receipt requested) to the parties at the following addresses or
sent by electronic transmission to the telecopier number specified below:
(a) If to any of the Parent Companies, to:
Halliburton Company
3600 Lincoln Plaza
500 North Akard
Dallas, Texas 75201-3391
Attention: Lester L. Coleman
Executive Vice President
and General Counsel
Telecopier No.: (214) 978-2658
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with a copy to:
Vinson & Elkins L.L.P.
First City Tower
1001 Fannin
Houston, Texas 77002-6760
Attention: William E. Joor III
Telecopier No.: (713) 758-2346
(b) If to the Company, to:
Dresser Industries, Inc.
2001 Ross Avenue
Dallas, Texas 75221
Attention: Clint Ables
Vice President and General Counsel
Telecopier No.: (214) 740-6904
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block
Telecopier No.: (212) 310-8007
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed delivered on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed delivered three
days after the date the same is postmarked.
SECTION 10.3 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 10.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
AGREEMENT AND PLAN OF MERGER
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SECTION 10.5 Entire Agreement. This Agreement (together with the
Annexes, the Company's Disclosure Letter and the Parent's Disclosure Letter and
the Stock Option Agreements) constitutes the entire agreement of the parties,
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, with respect to the subject matter hereof (including the
Confidentiality Agreement).
SECTION 10.6 Assignment. This Agreement shall not be assigned by
operation of Law or otherwise.
SECTION 10.7 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, other than Section 7.09(f) (to the extent of and
only with respect to the individuals named in Section 4.13 of the Company's
Disclosure Letter in response to the representation and warranty set forth in
Section 4.13(k) as parties to the severance agreements therein disclosed and
their heirs and representatives) and Section 7.10 which is intended also to
benefit the Indemnified Persons therein referenced, and their heirs and
representatives, is intended to or shall confer upon any other Person any right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.
Notwithstanding the foregoing and any other provision of this Agreement, and in
addition to any other required action of the Board of Directors of the Parent a
majority of the directors (or their successors) serving on the Board of
Directors of the Parent who are designated by the Company pursuant to Section
7.13 shall be entitled during the three year period commencing at the Effective
Time (the "Three Year Period") to enforce the provisions of Sections 7.09 and
7.13 on behalf of the Company's officers, directors and employees, as the case
may be. Such directors' rights and remedies under the preceding sentence are
cumulative and are in addition to any other rights and remedies that they may
have at law or in equity, but in no event shall this Section 10.07 be deemed to
impose any additional duties on any such directors. The Parent shall pay, at the
time they are incurred, all costs, fees and expenses of such directors incurred
in connection with the assertion of any rights on behalf of the persons set
forth above pursuant to this Section 10.07.
SECTION 10.8 Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence in, any breach of any representation, warranty, covenant or
agreement herein, nor shall any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative with, and not exclusive
of, any rights or remedies otherwise available.
SECTION 10.9 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware, regardless of
the Laws that might otherwise govern under applicable principles of conflicts of
law; provided, however, that any matter involving the internal corporate affairs
of any party hereto shall be governed by the provisions of the GCL.
SECTION 10.10 Specific Performance. The parties hereby acknowledge
and agree that the failure of any party to this Agreement to perform its
agreements and covenants
AGREEMENT AND PLAN OF MERGER
-56-
hereunder, including its failure to take all actions as are necessary on its
part to the consummation of the Merger, will cause irreparable injury to the
other parties to this Agreement for which damages, even if available, will not
be an adequate remedy. Accordingly, each of the parties hereto hereby consents
to the granting of equitable relief (including specific performance and
injunctive relief) by any court of competent jurisdiction to enforce any party's
obligations hereunder. The parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this Section is without prejudice to any other rights
that the parties hereto may have for any failure to perform this Agreement.
SECTION 10.11 Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
AGREEMENT AND PLAN OF MERGER
-57-
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
HALLIBURTON COMPANY
By:
HALLIBURTON N.C., INC.
By:
DRESSER INDUSTRIES, INC.
By:
AGREEMENT AND PLAN OF MERGER
-58-
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Agreement shall have the meanings
set forth below unless the context shall otherwise require:
"Acquisition Proposal" shall mean any proposal or offer with respect to
a merger, consolidation, share exchange, business combination, reorganization,
recapitalization, liquidation, dissolution or similar transaction involving, or
any purchase or sale of all or any significant portion of the assets or 30% or
more of the Equity Securities of, the Company or the Parent, as applicable, or
any Significant Subsidiary of the Company or the Parent, as applicable, that, in
any case, could be reasonably expected to interfere with the consummation of the
Merger or the other transactions contemplated by this Agreement.
"Affiliate" shall, with respect to any specified Person, mean any other
Person that controls, is controlled by or is under common control with the
specified Person.
"Agreement" shall mean the Agreement and Plan of Merger made and
entered into as of February 25, 1998 among the Parent, Newco and the Company,
including any amendments thereto and each Annex (including this Annex A) and
Schedule thereto (including the Parent's Disclosure Letter and the Company's
Disclosure Letter).
"Authorization" shall mean any and all permits, licenses,
authorizations, orders, certificates, registrations or other approvals granted
by any Governmental Authority.
"Benefit Plans" shall mean, with respect to a specified Person, any
employee pension benefit plan (whether or not insured), as defined in Section
3(2) of ERISA, any employee welfare benefit plan (whether or not insured) as
defined in Section 3(1) of ERISA, any plans that would be employee pension
benefit plans or employee welfare benefit plans if they were subject to ERISA,
such as foreign plans and plans for directors, any stock bonus, stock ownership,
stock option, stock purchase, stock appreciation rights, phantom stock,
severance, employment, change- in-control, deferred compensation and any bonus
or incentive compensation plan, agreement, program or policy (whether qualified
or nonqualified, written or oral) sponsored, maintained, or contributed to by
the specified Person or any of its Subsidiaries for the benefit of any of the
present or former directors, officers, employees, agents, consultants or other
similar representatives providing services to or for the specified Person or any
of its Subsidiaries in connection with such services or any such plans which
have been so sponsored, maintained or contributed to within six years prior to
the date of this Agreement; provided, however, that such term shall not include
(a) routine employment policies and procedures developed and applied in the
ordinary course of business and consistent with past practice, including wage,
vacation, holiday and sick or other leave policies, (b) workers compensation
insurance and (c) directors and officers liability insurance.
"Benefits Maintenance Period" shall have the meaning ascribed to such
term in Section 7.09(h).
"Business Day" means any day other than a day on which banks in the
State of Texas are authorized or obligated to be closed;
"Certificate of Merger" shall have the meaning ascribed to such term in
Section 2.02.
"Charter Amendment" shall mean an amendment to the Restated Certificate
of Incorporation of the Parent to increase the number of authorized shares of
Parent Common Stock to be issued in the Merger.
"Closing" shall mean a meeting, which shall be held in accordance with
Section 3.03, of representatives of the parties to the Agreement at which, among
other things, all documents deemed necessary by the parties to the Agreement to
evidence the fulfillment or waiver of all conditions precedent to the
consummation of the transactions contemplated by the Agreement are executed and
delivered.
"Closing Date" shall mean the date of the Closing as determined
pursuant to Section 3.03.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"Combined Companies" shall mean the Parent, the Surviving Corporation
and their Subsidiaries after giving effect to the Merger.
"Commission" shall mean the Securities and Exchange Commission.
"Common Stock Exchange Ratio" shall mean the ratio of conversion of
Company Common Stock into Parent Common Stock pursuant to the Merger as provided
in Section 3.01(a).
"Company Acquisition" shall have the meaning ascribed to such term in
Section 9.05(d).
"Company Annual Report" shall mean the Annual Report on Form 10-K of
the Company for the year ended October 31, 1997 filed with the Commission.
"Company Benefit Plans" shall mean Benefit Plans with respect to the
Company and its Subsidiaries.
"Company Common Stock" shall mean the common stock, par value $0.25 per
share, of the Company.
"Company Joint Venture Partners" shall mean the partners or
participants in the Company Joint Ventures other than the Company.
"Company Joint Ventures" shall mean Dresser-Rand Company, a
partnership, and Ingersoll-Dresser Pump Company, a partnership.
"Company Participants" shall have the meaning ascribed to such term in
Section 7.09(h).
"Company Stock Option Agreement" shall mean that certain Stock Option
Agreement of even date herewith between the Company (as grantor) and the Parent
(as grantee).
AGREEMENT AND PLAN OF MERGER
ANNEX A-2
"Company Stock Options" shall mean stock options granted pursuant to
the Company Stock Plans.
"Company Stock Plans" shall mean the plans described in Section 4.03(b)
of the Company's Disclosure Letter.
"Company Stockholders' Meeting" shall have the meaning ascribed to such
term in Section 7.01(a).
"Company's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Company and its Subsidiaries as of October
31, 1996 and 1997 and the related consolidated and combined statements of
operations and cash flows for the fiscal years ended October 31, 1995, 1996 and
1997, together with the notes thereto, all as audited by Price Waterhouse LLP,
independent accountants, under their report with respect thereto dated November
26, 1997 and included in the Company Annual Report.
"Company's Consolidated Balance Sheet" shall mean the consolidated
balance sheet of the Company as of October 31, 1997 included in the Company's
Audited Consolidated Financial Statements.
"Company's Disclosure Letter" shall mean a letter of even date herewith
delivered by the Company to the Parent Companies concurrently with the execution
of the Agreement, which, among other things, shall identify exceptions to the
Company's representations and warranties contained in Article IV by specific
section and subsection references.
"Company's Representatives" shall have the meaning ascribed to such
term in Section 6.05.
"Company's Rights Agreement" shall mean that certain Rights Agreement
dated as of August 16, 1990 between the Company and Bank of New York as
successor to Harris Trust Company of New York, as rights agent.
"Competing Transaction" shall mean any merger, consolidation, share
exchange, business combination or similar transaction involving the specified
Person or any of its Subsidiaries or the acquisition in any manner, directly or
indirectly, of a Material equity interest in any voting securities of, or a
substantial portion of the assets of, the specified Person or any of its
Significant Subsidiaries, other than the transactions contemplated by this
Agreement.
"Confidentiality Agreement" shall mean that certain confidentiality
agreement between the Parent and the Company dated February 2, 1998.
"Constituent Corporations" shall mean the Company and Newco.
"control" (including the terms "controlled," "controlled by" and "under
common control with") means (except where another definition is expressly
indicated) the possession, directly or indirectly or as trustee or executor, of
the power to direct or cause the direction of the
AGREEMENT AND PLAN OF MERGER
ANNEX A-3
management or policies of a Person, whether through the ownership of stock or as
trustee or executor, by contract or credit arrangement or otherwise.
"Court" shall mean any court or arbitration tribunal of the United
States, any foreign country or any domestic or foreign state, and any political
subdivision thereof, and shall include the European Court of Justice.
"Current Company Benefit Plans" shall mean Benefit Plans that are
sponsored, maintained or contributed to by the Company or any of its
Subsidiaries as of the date of this Agreement.
"Current Parent Benefit Plans" shall mean Benefit Plans that are
sponsored, maintained or contributed to by the Parent or any of its Subsidiaries
as of the date of this Agreement.
"Effective Time" shall mean the date and time of the completion of the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with Section 2.02.
"Environmental Law or Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations, or orders of any Governmental Authority
pertaining to health or the environment currently in effect and applicable to a
specified Person and its Subsidiaries, including the Clean Air Act, as amended,
the Comprehensive Environmental, Response, Compensation, and Liability Act of
1980 ("CERCLA"), as amended, the Federal Water Pollution Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, the
Resource Conservation and Recovery Act of 1976 ("RCRA"), as amended, the Safe
Drinking Water Act, as amended, the Toxic Substances Control Act, as amended,
the Hazardous & Solid Waste Amendments Act of 1984, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials
Transportation Act, as amended, the Oil Pollution Act of 1990, as amended
("OPA"), any state or local Laws implementing the foregoing federal Laws, and
all other environmental conservation or protection Laws. For purposes of the
Agreement, the terms "hazardous substance" and "release" have the meanings
specified in CERCLA; provided, however, that, to the extent the Laws of the
state or locality in which the property is located establish a meaning for
"hazardous substance" or "release" that is broader than that specified in either
CERCLA, such broader meaning shall apply, and the term "hazardous substance"
shall include all dehydration and treating wastes, waste (or spilled) oil, and
waste (or spilled) petroleum products, and (to the extent in excess of
background levels) radioactive material, even if such are specifically exempt
from classification as hazardous substances pursuant to CERCLA or RCRA or the
analogous statutes of any jurisdiction applicable to the specified Person or its
Subsidiaries or any of their respective properties or assets.
"Equity Securities" shall mean, with respect to a specified Person, any
shares of capital stock of, or other equity interests in, or any securities that
are convertible into or exchangeable for any shares of capital stock of, or
other equity interests in, or any options, warrants or rights of any kind to
acquire any shares of capital stock of, or other equity interests in, such
Person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the Regulations promulgated thereunder.
AGREEMENT AND PLAN OF MERGER
ANNEX A-4
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the Regulations promulgated thereunder.
"Exchange Agent" shall mean ChaseMellon Shareholder Services, L.L.C.
"Exchange Fund" shall mean the fund of Parent Common Stock, cash in
lieu of fractional share interests and dividends and distributions, if any, with
respect to such shares of Parent Common Stock established at the Exchange Agent
pursuant to Section 3.02(a).
"executive officer" shall mean each "officer," as such term is defined
in Rule 16a-1(f) of the Commission, of the specified Person.
"Expenses" shall mean all reasonable out-of-pocket expenses (including
all reasonable fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its Affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution and performance of this Agreement, the
preparation, printing, filing and mailing of the Registration Statement, the
Joint Proxy Statement/Prospectus and the Joint Proxy Statement, the solicitation
of stockholder approvals and all other matters related to the consummation of
the transactions contemplated hereby.
"GAAP" shall mean accounting principles generally accepted in the
United States as in effect from time to time consistently applied by a specified
Person.
"GCL" shall mean the General Corporation Law of the State of Delaware.
"Governmental Authority" shall mean any governmental agency or
authority (other than a Court) of the United States, any foreign country, or any
domestic or foreign state, and any political subdivision thereof, and shall
include any multinational authority having governmental or quasi-governmental
powers.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"IRS" shall mean the Internal Revenue Service.
"Joint Proxy Statement/Prospectus" shall have the meaning ascribed to
such term in Section 7.02(a).
"Joint Proxy Statement" shall have the meaning ascribed to such term in
Section 7.02(a).
"Knowledge" shall mean, with respect to either the Company or the
Parent, the actual knowledge of the chief executive officer, the chief operating
officer, the chief financial officer or the general counsel of such party.
AGREEMENT AND PLAN OF MERGER
ANNEX A-5
"Law" shall mean all laws, statutes and ordinances of the United
States, any state of the United States, any foreign country, any foreign state
and any political subdivision thereof, including all decisions of Courts having
the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest, adverse
claim, encumbrance, lien or charge of any kind (including any agreement to give
any of the foregoing), any conditional sale or other title retention agreement,
any lease in the nature thereof or the filing of or agreement to give any
financing statement under the Laws of any jurisdiction.
"Material" shall mean material to the (a) consolidated business,
condition (financial and other), results of operations, properties or prospects
of a specified Person and its Subsidiaries, if any, taken as a whole or (b) to
the specified Person's ability to perform its obligations under this Agreement
or fulfill the conditions to Closing; provided, however, that, as used in this
definition the word "material" shall have the meaning accorded thereto pursuant
to Section 11 of the Securities Act.
"Material Adverse Effect" shall mean any change or effect that would be
material and adverse (a) to the consolidated business, condition (financial or
otherwise), results of operations, properties or prospects of a specified Person
and its Subsidiaries, if any, taken as a whole, except for such changes or
effects resulting from changes in general economic, regulatory or political
conditions or changes that affect generally the energy services and related
construction and engineering industry or (b) to the specified Person's ability
to perform its obligations under this Agreement or fulfill the conditions to
Closing; provided, however, that, as used in this definition the word "material"
shall have the meaning accorded thereto pursuant to Section 11 of the Securities
Act.
"Merger" shall mean the merger of Newco with an into the Company as
provided in Article II of this Agreement.
"Newco" shall mean Halliburton N.C., Inc., a Delaware corporation and a
wholly owned Subsidiary of the Parent.
"Noncompete Agreement" shall mean any agreement or arrangement that
materially restricts or limits the specified Person's ability to engage or
participate in any line of business that is Material to such specified Person.
"NYSE" shall mean the New York Stock Exchange, Inc.
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority, federal, foreign, state or local, of competent
jurisdiction.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Parent Acquisition" shall have the meaning ascribed to such term in
Section 9.05(e).
AGREEMENT AND PLAN OF MERGER
ANNEX A-6
"Parent Annual Report" shall mean the Annual Report on Form 10-K of the
Parent for the year ended December 31, 1997 filed with the Commission.
"Parent Benefit Plans" shall mean Benefit Plans with respect to the
Parent and its Subsidiaries.
"Parent Common Stock" shall mean the common stock, par value $2.50 per
share, of the Parent.
"Parent Stock Option Agreement" shall mean that certain Stock Option
Agreement of even date herewith between the Parent (as grantor) and the Company
(as grantee).
"Parent Restricted Stock" shall mean the Parent Common Stock issued in
restricted stock awards pursuant to the Parent Stock Plans.
"Parent Stock Options" shall mean stock options granted pursuant to the
Parent Stock Plans.
"Parent Stock Plans" shall mean the plans described in Section 5.03(b)
of the Parent's Disclosure Letter.
"Parent Stockholders' Meeting" shall have the meaning ascribed to such
term in Section 7.01(b).
"Parent's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Parent and its Subsidiaries as of December
31, 1997 and December 31, 1996 and the related consolidated statements of
operations and cash flows for the fiscal years ended December 31, 1995, 1996 and
1997, together with the notes thereto, all as audited by Arthur Andersen LLP,
independent accountants, under their report with respect thereto dated January
22, 1998 and included in the Parent Annual Report.
"Parent's Consolidated Balance Sheet" shall mean the consolidated
balance sheet of the Parent as of December 31, 1997 included in the Parent's
Audited Consolidated Financial Statements.
"Parent's Disclosure Letter" shall mean a letter of even date herewith
delivered by the Parent to the Company with the execution of the Agreement,
which, among other things, shall identify exceptions to the Parent's
representations and warranties contained in Article V by specific section and
subsection references.
"Parent's Representatives" shall have the meaning ascribed to such term
in Section 6.05.
"Parent's Rights Agreement" shall mean the Restated Rights Agreement
dated December 1, 1996 between the Parent and ChaseMellon Shareholder Services,
L.L.C., as Rights Agent.
AGREEMENT AND PLAN OF MERGER
ANNEX A-7
"Person" shall mean (i) an individual, partnership, limited liability
company, corporation, joint stock company, trust, estate, joint venture,
association or unincorporated organization, or any other form of business or
professional entity, but shall not include a Court or Governmental Authority, or
(2) any "person" for purposes of Section 13(d)(3) of the Exchange Act.
"Pooling Transaction" shall mean a business combination that is treated
for financial accounting purposes as a "pooling of interests" in accordance with
GAAP and the Regulations of the Commission.
"Predecessor Plan" shall have the meaning ascribed to such term in
Section 7.09(i).
"Registration Statement" shall have the meaning ascribed to such term
in Section 7.02(a).
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of Law or of any rule or regulation of any
self-regulatory organization, such as the NYSE.
"Reports" shall mean, with respect to a specified Person, all reports,
registrations, filings and other documents and instruments required to be filed
by the specified Person or any of its Subsidiaries with any Governmental
Authority (other than the Commission).
"Representatives" shall mean, collectively, the Company's
Representatives and the Parent's Representatives.
"Required Parent Vote" shall have the meaning ascribed to such term in
Section 7.01(b).
"Required Company Vote" shall have the meaning ascribed to such term in
Section 7.01(a).
"SEC Reports" shall mean (1) all Annual Reports on Form 10-K, (2) all
Quarterly Reports on Form 10-Q, (3) all proxy statements relating to meetings of
stockholders (whether annual or special), (4) all Current Reports on Form 8-K
and (5) all other reports, schedules, registration statements or other documents
required to be filed during a specified period by a specified Person with the
Commission pursuant to the Securities Act or the Exchange Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Share Issuance" shall mean the issuance of shares of the Parent Common
Stock to be issued in the Merger.
"Significant Subsidiary" means any Subsidiary of the Company or the
Parent, as the case may be, that constitutes a significant subsidiary of such
party as such term is defined in Rule 1-02 of Regulation S-X of the Commission.
"Stock Option Agreements" shall mean the Company Stock Option Agreement
and the Parent Stock Option Agreement.
AGREEMENT AND PLAN OF MERGER
ANNEX A-8
A "Subsidiary" of a specified Person shall be any corporation,
partnership, limited liability company, joint venture or other legal entity of
which the specified Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, 50% or more of the stock or other
equity or partnership interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity or of which the specified Person controls the
management.
"Successor Plan" shall have the meaning ascribed to such term in
Section 7.09(i).
"Superior Proposal" means a bona fide Acquisition Proposal that the
Board of Directors of the specified Person determines in its good faith judgment
(after consultation with its financial advisers and legal counsel) (i) would
result in a transaction that is more favorable to the specified Person's
stockholders, from a financial point of view, than the transactions contemplated
by this Agreement and (ii) is reasonably capable of being completed; provided,
however, that, for the purposes of this definition, the term "Acquisition
Proposal" shall have the meaning ascribed to it herein except that the reference
therein to 30% shall be deemed to be a reference to 50% and the proposal or
offer therein described shall be deemed only to refer to a transaction involving
the Company or the assets of the Company (including the shares of the
Subsidiaries of the Company), taken as a whole, rather than any transaction
relating to any of the Subsidiaries of the Company alone.
"Surviving Corporation" shall mean the Company as the corporation
surviving the Merger.
"Tax Returns" shall have the meaning ascribed to such term in Section
4.14(a) of the Agreement.
"Taxes" shall mean all taxes, charges, imposts, tariffs, fees, levies
or other similar assessments or liabilities, including income taxes, ad valorem
taxes, excise taxes, withholding taxes, stamp taxes or other taxes of or with
respect to gross receipts, premiums, real property, personal property, windfall
profits, sales, use, transfers, licensing, employment, payroll and franchises
imposed by or under any Law; and such terms shall include any interest, fines,
penalties, assessments or additions to tax resulting from, attributable to or
incurred in connection with any such tax or any contest or dispute thereof.
"Terminated Company Benefit Plans" shall mean Benefit Plans that were
sponsored, maintained or contributed to by the Company or any of its
Subsidiaries within six years prior to the date of this Agreement but which have
been terminated prior to the date of this Agreement.
"Terminated Parent Benefit Plans" shall mean Benefit Plans that were
sponsored, maintained, or contributed to by the Parent or any of its
Subsidiaries within six years prior to the date of this Agreement but which have
been terminated prior to the date of this Agreement.
"Terminating Company Breach" shall have the meaning ascribed to such
term in Section 9.01(b).
AGREEMENT AND PLAN OF MERGER
ANNEX A-9
"Terminating Parent Breach" shall have the meaning ascribed to such
term in Section 9.10(c).
"Transfer Taxes" shall have the meaning ascribed to such term in
Section 7.17.
AGREEMENT AND PLAN OF MERGER
ANNEX A-10
ANNEX B
Dresser Industries, Inc. Affiliates
AFFILIATE'S AGREEMENT
[Date]
Halliburton Company
3600 Lincoln Plaza
500 North Akard
Dallas, Texas 75201-3391
Ladies and Gentlemen:
The undersigned has been advised that, as of the date hereof, the
undersigned may be deemed to be an "affiliate" of Dresser Industries, Inc., a
Delaware corporation (the "Company"), as that term is defined for purposes of
paragraphs (c) and (d) of Rule 145 of the Regulations of the Commission under
the Securities Act.
Pursuant to the terms and subject to the conditions of that certain
Agreement and Plan of Merger by and among Halliburton Company, a Delaware
corporation (the "Parent"), Halliburton N.C., Inc., a newly formed Delaware
corporation and a wholly owned Subsidiary of the Parent ("Newco"), and the
Company dated as of February 25, 1998 (the "Merger Agreement"), providing for,
among other things, the merger of Newco with and into the Company (the
"Merger"), the undersigned will be entitled to receive shares of Parent Common
Stock in exchange for shares of Company Common Stock owned by the undersigned at
the Effective Time of the Merger as determined pursuant to the Merger Agreement.
Capitalized terms used but not defined herein are defined in Annex A to the
Merger Agreement and are used herein with the same meanings as ascribed to them
therein.
The undersigned understands that the Merger will be treated for
financial accounting purposes as a "pooling of interests" in accordance with
generally accepted accounting principles and that the staff of the Commission
has issued certain guidelines that should be followed to ensure the application
of pooling of interests accounting to the transaction.
In consideration of the agreements contained herein, the Parent's
reliance on this letter in connection with the consummation of the Merger and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned hereby represents, warrants and agrees
that the undersigned will not, without the consent of the Parent, make any sale,
gift, transfer or other disposition (including deposit into a margin account
with a brokerage firm) of (i) Company Common Stock during the period (the
"Restricted Period") from the
AGREEMENT AND PLAN OF MERGER
Annex B-1
Commencement Date (as defined below) until the earlier of the Effective Time and
the termination of the Merger Agreement (which period, if the Merger is
consummated, will be greater than thirty (30) days), (ii) Parent Common Stock
received by the undersigned pursuant to the Merger or otherwise owned by the
undersigned at any time during the Restricted Period or thereafter until such
time as financial statements that include at least thirty (30) days of combined
operations of the Company and the Parent after the Merger shall have been
publicly reported, unless the undersigned shall have delivered to the Parent,
prior to any such sale, gift, transfer or other disposition, a written opinion
from Arthur Andersen LLP, independent public accountants for the Parent, or a
written no-action letter from the accounting staff of the Commission, in either
case in form and substance reasonably satisfactory to the Parent, to the effect
that such sale, transfer or other disposition will not cause the Merger not to
be treated as a "pooling of interests" for financial accounting purposes in
accordance with generally accepted accounting principles and the Regulations of
the Commission or (iii) the Parent Common Stock received by the undersigned
pursuant to the Merger in violation of the Securities Act or the Regulations
thereunder. For purposes of this agreement, "Commencement Date" shall mean the
date of receipt by the undersigned of prior written notice from the Parent
advising the undersigned of the commencement of the Restricted Period on a day
that is at least 45 days prior to the Closing Date as estimated in good faith by
the Parent. The undersigned has been advised that the offering, sale and
delivery of the shares of Parent Common Stock pursuant to the Merger will have
been registered with the Commission under the Securities Act on a Registration
Statement on Form S-4. The undersigned has also been advised, however, that,
since the undersigned may be deemed to be an Affiliate of the Company at the
time the Merger is submitted for a vote of the stockholders of the Company, the
Parent Common Stock received by the undersigned pursuant to the Merger can be
sold by the undersigned only (i) pursuant to an effective registration statement
under the Securities Act, (ii) in conformity with the volume and other
limitations of Rule 145 promulgated by the Commission under the Securities Act
or (iii) in reliance upon an exemption from registration that is available under
the Securities Act.
The undersigned also understands that instructions will be given to the
transfer agent for the Parent Common Stock with respect to the Parent Common
Stock to be received by the undersigned pursuant to the Merger and that there
will be placed on the certificates representing such shares of Parent Common
Stock, or any substitutions therefor, a legend stating in substance as follows:
"These shares were issued in a transaction to which Rule 145
promulgated under the Securities Act of 1933, as amended, applies.
These shares may only be transferred in accordance with the terms of
such Rule and an Affiliate's Agreement between the original holder of
such shares and Halliburton Company, a copy of which agreement is on
file at the principal offices of Halliburton Company."
It is understood and agreed that the legend set forth above shall be removed
upon surrender of certificates bearing such legend by delivery of substitute
certificates without such legend if the undersigned shall have delivered to the
Parent an opinion of counsel, in form and substance reasonably satisfactory to
the Parent, to the effect that (i) the sale or disposition of the shares
represented by the surrendered certificates may be effected without registration
of the offering, sale and delivery of such shares under the Securities Act and
(ii) the shares to be so transferred
AGREEMENT AND PLAN OF MERGER
Annex B-2
may be publicly offered, sold and delivered by the transferee thereof without
compliance with the registration provisions of the Securities Act.
By its execution hereof, the Parent agrees that it will, as long as the
undersigned owns any shares of Parent Common Stock to be received by the
undersigned pursuant to the Merger that are subject to the restrictions on sale,
transfer or other disposition herein set forth, take all reasonable efforts to
make timely filings with the Commission of all reports required to be filed by
it pursuant to the Exchange Act and will promptly furnish upon written request
of the undersigned a written statement confirming that such reports have been so
timely filed.
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this letter to the undersigned, at which
time this letter shall become a binding agreement between us.
Very truly yours,
By: ____________________________________
Name:
Title:
Date:
Address:
ACCEPTED this ___ day
of __________, 199__
HALLIBURTON COMPANY
By: _____________________________________
Name:
Title:
AGREEMENT AND PLAN OF MERGER
Annex B-3
ANNEX C
Halliburton Company Affiliates
AFFILIATE'S AGREEMENT
[Date]
Halliburton Company
3600 Lincoln Plaza
500 North Akard
Dallas, Texas 75201-3391
Ladies and Gentlemen:
The undersigned has been advised that, as of the date hereof, the
undersigned may be deemed to be an "affiliate" of Halliburton Company, a
Delaware corporation (the "Parent"), as that term is defined in the Regulations
of the Commission under the Securities Act.
The undertakings contained in this Affiliate's Agreement are being
given by the undersigned in connection with that certain Agreement and Plan of
Merger by and among the Parent, Halliburton N.C., Inc., a newly formed Delaware
corporation and a wholly owned Subsidiary of the Parent ("Newco"), and Dresser
Industries, Inc., a Delaware Corporation (the "Company") dated as of February
25, 1998 (the "Merger Agreement"), providing for, among other things, the merger
of Newco with and into the Company (the "Merger"). Capitalized terms used but
not defined herein are defined in Annex A to the Merger Agreement and are used
herein with the same meanings as ascribed to them therein.
The undersigned understands that the Merger will be treated for
financial accounting purposes as a "pooling of interests" in accordance with
generally accepted accounting principles and that the staff of the Commission
has issued certain guidelines that should be followed to ensure the application
of pooling of interests accounting to the transaction.
In consideration of the agreements contained herein, the Parent's
reliance on this letter in connection with the consummation of the Merger and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned hereby represents, warrants and agrees
that the undersigned will not, without the consent of the Parent, make any sale,
gift, transfer or other disposition (including deposit into a margin account
with a brokerage firm) of (i) Company Common Stock during the period (the
"Restricted Period") from the Commencement Date (as defined below) until the
earlier of the Effective Time and the termination of the Merger Agreement (which
period, if the Merger is consummated, will be greater than thirty (30) days) or
(ii) Parent Common Stock owned by the undersigned at any time during the
Restricted Period or thereafter until such time as financial statements that
include at
AGREEMENT AND PLAN OF MERGER
Annex C-1
least thirty (30) days of combined operations of the Company and the Parent
after the Merger shall have been publicly reported, unless the undersigned shall
have delivered to the Parent, prior to any such sale, gift, transfer or other
disposition, a written opinion from Arthur Andersen LLP, independent public
accountants for the Parent, or a written no-action letter from the accounting
staff of the Commission, in either case in form and substance reasonably
satisfactory to the Parent, to the effect that such sale, transfer or other
disposition will not cause the Merger not to be treated as a "pooling of
interests" for financial accounting purposes in accordance with generally
accepted accounting principles and the Regulations of the Commission. For
purposes of this agreement, "Commencement Date" shall mean the date of receipt
by the undersigned of prior written notice from the Parent advising the
undersigned of the commencement of the Restricted Period on a day that is at
least 45 days prior to the Closing Date as estimated in good faith by the
Parent.
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this letter to the undersigned, at which
time this letter shall become a binding agreement between us.
Very truly yours,
By:
Name:
Title:
Date:
Address:
ACCEPTED this ___ day
of __________, 199__
HALLIBURTON COMPANY
By:
Name:
Title:
AGREEMENT AND PLAN OF MERGER
Annex C-2
EXHIBIT 2
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT is dated as of February 25, 1998 by and
between Halliburton Company, a Delaware corporation (the "Parent"), and Dresser
Industries, Inc., a Delaware corporation (the "Grantee").
RECITALS:
The Grantee, the Parent and Newco propose to enter into a Merger
Agreement providing, among other things, for the Merger pursuant to the Merger
Agreement of Newco with and into the Grantee which shall be the surviving
corporation.
As a condition and inducement to the Grantee's willingness to enter
into the Merger Agreement, the Grantee has requested that the Parent agree, and
the Parent has agreed, to grant the Grantee the Option.
The Board of Directors of the Grantee has approved the Merger
Agreement, the Merger and this Agreement and has recommended approval of the
Merger Agreement by the holders of Common Stock of the Grantee.
The Board of Directors of the Parent has approved the Merger Agreement,
the Merger and this Agreement and has recommended approval of the Charter
Amendment and the Share Issuance by the holders of Parent Common Stock.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, the Parent and the Grantee agree as follows:
1. Capitalized Terms. Those capitalized terms used but not defined
herein that are defined in the Merger Agreement are used herein with the same
meanings as ascribed to them therein; provided, however, that, as used in this
Agreement, "Person" shall have the meaning specified in Sections 3(a)(9) and
13(d)(3) of the Exchange Act. Those capitalized terms used in this Agreement
that are not defined in the Merger Agreement are defined in Annex A hereto and
are used herein with the meanings ascribed to them therein.
2. The Option.
(a) Grant of Option. Subject to the terms and conditions
set forth herein, the Parent hereby grants to the Grantee an
irrevocable option to purchase, out of the authorized
but unissued Parent Common Stock, 39,388,700 shares of Parent Common
Stock (as adjusted as set forth herein) (the "Option Shares"), at the
Exercise Price.
(b) Exercise Price. The exercise price (the "Exercise Price")
of the Option shall be the lesser of (i) $44.00 per Option Share and
(ii) the Common Stock Exchange Ratio multiplied by the Closing Price of
the Parent Common Stock on the date of exercise of the Option.
(c) Term. The Option shall be exercisable at any time and from
time to time following the occurrence of an Exercise Event and shall
remain in full force and effect until the earliest to occur of (i) the
Effective Time, (ii) the first anniversary of the receipt by Grantee of
written notice from the Parent of the occurrence of an Exercise Event
and (iii) termination of the Merger Agreement in accordance with its
terms prior to the occurrence of an Exercise Event (the "Option Term");
provided, however, that the Option Term shall be extended until the
commencement of the Put Period if, at the end of the Option Term, the
events described in clauses (i), (ii) and (iii) of Section 9.05(e) of
the Merger Agreement have transpired and the acceptance or agreement
referenced in clause (iii) of such Section 9.05(e) has not been
terminated without consummation of the transactions contemplated
thereby. If so extended, the Option Term shall expire contemporaneously
with any termination of the acceptance or agreement referenced in
clause (iii) of such Section 9.05(e). If the Option is not theretofore
exercised, the rights and obligations set forth in this Agreement shall
terminate at the expiration of the Option Term.
(d) Exercise of Option. The Grantee may exercise the Option,
in whole or in part, at any time and from time to time during the
Option Term. Notwithstanding the expiration of the Option Term, the
Grantee shall be entitled to purchase those Option Shares with respect
to which it has exercised the Option in accordance with the terms
hereof prior to the expiration of the Option Term.
(i) If the Grantee wishes to exercise the Option, it
shall send a written notice (an "Exercise Notice") (the date
of which being herein referred to as the "Notice Date") to the
Parent specifying (i) the total number of Option Shares it
intends to purchase pursuant to such exercise and (ii) a place
and a date (the "Closing Date") not earlier than three (3)
Business Days nor later than 15 Business Days from the Notice
Date for the closing of the purchase and sale pursuant to the
Option (the "Closing").
(ii) If the Closing cannot be effected by reason of
the application of any Law, Regulation or Order, the Closing
Date shall be extended to the tenth Business Day following the
expiration or termination of the restriction imposed by such
Law,
2
Regulation or Order. Without limiting the foregoing, if prior
notification to, or Authorization of, any Governmental
Authority is required in connection with the purchase of such
Option Shares by virtue of the application of such Law,
Regulation or Order, the Grantee and, if applicable, the
Parent shall promptly file the required notice or application
for Authorization and the Grantee, with the cooperation of the
Parent, shall expeditiously process the same.
(iii) Notwithstanding Section 2(d)(ii), if the
Closing Date shall not have occurred within nine months after
the related Notice Date as a result of one or more
restrictions imposed by the application of any Law, Regulation
or Order, the exercise of the Option effected on the Notice
Date shall be deemed to have expired.
(e) Payment and Delivery of Certificates.
(i) At each Closing, the Grantee shall pay to the
Parent in immediately available funds by wire transfer to a
bank account designated by the Parent an amount equal to the
Exercise Price multiplied by the Option Shares to be purchased
on such Closing Date.
(ii) At each Closing, simultaneously with the
delivery of immediately available funds as provided in Section
5(a), the Parent shall deliver to the Grantee a certificate or
certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be duly authorized,
validly issued, fully paid and nonassessable and free and
clear of all Liens, and the Grantee shall deliver to the
Parent its written agreement that the Grantee will not offer
to sell or otherwise dispose of such Option Shares in
violation of applicable Law or the provisions of this
Agreement.
(f) Certificates. Certificates for the Option Shares delivered
at each Closing shall be endorsed with a restrictive legend that shall
read substantially as follows:
THE TRANSFER OF THE STOCK REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO RESTRICTIONS ARISING UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND PURSUANT
TO THE TERMS OF A STOCK OPTION AGREEMENT DATED AS OF
FEBRUARY 25, 1998. A COPY OF SUCH AGREEMENT WILL BE
PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE PARENT OF A WRITTEN REQUEST THEREFOR.
3
A new certificate or certificates evidencing the same number of shares
of the Parent Common Stock will be issued to the Grantee in lieu of the
certificate bearing the above legend, and such new certificate shall
not bear such legend, insofar as it applies to the Securities Act, if
the Grantee shall have delivered to the Parent a copy of a letter from
the staff of the Commission, or an opinion of counsel in form and
substance reasonably satisfactory to the Parent and its counsel, to the
effect that such legend is not required for purposes of the Securities
Act.
(g) If at the time of issuance of any Parent Common Stock
pursuant to any exercise of the Option, the Parent shall have issued
any share purchase rights or similar securities to holders of Parent
Common Stock, then each Option Share purchased pursuant to the Option
shall also include rights with terms substantially the same as and at
least as favorable to the Grantee as those issued to other holders of
Parent Common Stock.
3. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in the Parent Common Stock by
reason of a stock dividend, split-up, combination, recapitalization,
exchange of shares or similar transaction, the type and number of
shares or securities subject to the Option, and the Exercise Price
therefor, shall be adjusted appropriately, and proper provision shall
be made in the agreement governing such transaction, so that the
Grantee shall receive upon exercise of the Option the same class and
number of outstanding shares or other securities or property that
Grantee would have received in respect of the Parent Common Stock if
the Option had been exercised immediately prior to such event, or the
record date therefor, as applicable.
(b) If any additional shares of Parent Common Stock are issued
after the date of this Agreement (other than pursuant to an event
described Section 3(a) above), the number of shares of Parent Common
Stock then remaining subject to the Option shall be adjusted so that,
after such issuance of additional shares, such number of shares then
remaining subject to the Option, together with shares theretofore
issued pursuant to the Option, equals 15% of the number of shares of
Parent Common Stock then issued and outstanding; provided, however,
that the number of shares of Parent Common Stock subject to the Option
shall only be increased to the extent the Parent then has available
authorized but unissued and unreserved shares of Parent Common Stock,
(c) To the extent any of the provisions of this Agreement
apply to the Exercise Price, they shall be deemed to refer to the
Exercise Price as adjusted pursuant to this Section 3.
4. Retention of Beneficial Ownership. To the extent that the Grantee
shall exercise the Option, the Grantee shall, unless the Grantee shall exercise
the Put Right or the Alternative Put
4
Right or the Parent shall exercise the Call Right or the Alternative Call Right,
retain Beneficial Ownership of the shares of Parent Common Stock so acquired
through the later of the end of the Call Period or the end of the Alternative
Call Period.
5. Repurchase at the Option of Grantee.
(a) At the request of the Grantee made at any time during a
period of sixty (60) days after the termination fee for which provision
is made in Section 9.05(e) of the Merger Agreement becomes payable (the
"Put Period"), the Parent (or any successor thereto) shall, at the
election of the Grantee (the "Put Right"), repurchase from the Grantee
(i) all or any portion of the Option that then remains unexercised (or
as to which the Option has been exercised but the Closing has not
occurred) and (ii) all or any portion of the shares of Parent Common
Stock purchased by the Grantee pursuant hereto and with respect to
which the Grantee then has Beneficial Ownership. The date on which the
Grantee exercises its rights under this Section 4 is referred to as the
"Put Date." Such repurchase shall be at an aggregate price (the "Put
Consideration") equal to the sum of:
(i) the aggregate Exercise Price paid by the Grantee
for any Option Shares which the Grantee owns and as to which
the Grantee is exercising the Put Right;
(ii) the excess, if any, of the Applicable Price over
the Exercise Price paid by the Grantee for each Option Share
as to which the Grantee is exercising the Put Right multiplied
by the number of such shares; and
(iii) the excess, if any, of (x) the Applicable Price
for each share of Parent Common Stock over (y) the Exercise
Price multiplied by the number of Unexercised Option Shares as
to which the Grantee is exercising the Put Right.
(b) At the request of the Grantee made at any time after the
first Exercise Event and ending on the First Anniversary of the Notice
Date (the "Alternative Put Period"), the Parent (or any successor
thereto) shall, at the election of the Grantee (the "Alternative Put
Right"), repurchase from the Grantee all or any portion of the shares
of Parent Common Stock purchased by the Grantee pursuant hereto and
with respect to which the Grantee then has Beneficial Ownership. The
date on which the Grantee exercises its rights under this Section 4 is
referred to as the "Alternative Put Date." Such repurchase shall be at
an aggregate price (the "Alternative Put Consideration") equal to the
Exercise Price multiplied by the number of shares of Parent Common
Stock so purchased by the Parent and for which the Alternative Put
Right has been exercised.
5
(c) If the Grantee exercises its rights under this Section 4,
the Parent shall, within five Business Days after the Put Date or the
Alternative Put Period, pay the Put Consideration or the Alternative
Put Consideration, as the case may be, to the Grantee in immediately
available funds, and the Grantee shall surrender to the Parent the
Option or portion of the Option and the certificates evidencing the
shares of Parent Common Stock purchased thereunder. The Grantee shall
warrant to the Parent that, immediately prior to the repurchase thereof
pursuant to this Section 4, the Grantee had sole record and Beneficial
Ownership of the Option or such shares, or both, as the case may be,
and that the Option or such shares, or both, as the case may be, were
then held free and clear of all Liens.
(d) If the Option has been exercised, in whole or in part, as
to any Option Shares subject to the Put Right or the Alternative Put
Right but the Closing thereunder has not occurred, the payment of the
Put Consideration or the Alternative Put Consideration shall, to that
extent, render such exercise null and void.
(e) Notwithstanding any provision to the contrary in this
Agreement, the Grantee may not exercise its rights pursuant to this
Section 4 in a manner that would result in the cash payment to the
Grantee of an aggregate amount under this Section 4 of more than $225
million, including the amount, if any, paid to the Grantee pursuant to
Section 9.05 of the Merger Agreement; provided, however, that nothing
in this sentence shall limit the Grantee's ability to exercise the
Option in accordance with its terms.
6. Repurchase at the Option of the Parent.
(a) To the extent the Grantee shall not have previously
exercised its rights under Section 5, at the request of the Parent made
at any time during the sixty (60) day period commencing at the
expiration of the Put Period (the "Call Period"), the Parent may
repurchase from the Grantee, and the Grantee shall sell, or cause to be
sold, to the Parent, all (but not less than all) of the shares of
Parent Common Stock acquired by the Grantee pursuant hereto and with
respect to which the Grantee has Beneficial Ownership (other than
Beneficial Ownership derived solely from the power to vote or direct
the voting of such Parent Common Stock) at the time of such repurchase
at a price per share equal to the greater of (A) the Current Market
Price and (B) the Exercise Price per share in respect of the shares so
acquired (such price per share multiplied by the number of shares of
Parent Common Stock to be repurchased pursuant to this Section 6 being
herein called the "Call Consideration"). The date on which the Parent
exercises its rights under this Section 6 is referred to as the "Call
Date."
(b) If (x) at the end of the Option Term (without giving
effect to any extension thereof) not all the events described in
clauses (i), (ii) and (iii) of Section 9.05(e) of the
6
Merger Agreement have occurred or, (y) if at the end of the Option Term
(including giving effect to any extension thereof) all the events
referenced in clause (x) have occurred but the acceptance or agreement
referenced in clause (iii) of such Section 9.05(e) has been terminated
without consummation of the transactions contemplated thereby, then, at
the request of the Parent made at any time during the sixty (60) day
period commencing at the expiration of the Alternative Put Period (the
"Alternative Call Period"), the Parent may repurchase from the Grantee,
and the Grantee shall sell, or cause to be sold, to the Parent, all
(but not less than all) of the shares of Parent Common Stock acquired
by the Grantee pursuant hereto and with respect to which the Grantee
has Beneficial Ownership (other than Beneficial Ownership derived
solely from the power to vote or direct the voting of such Parent
Common Stock) at the time of such repurchase at a price per share equal
to the Exercise Price per share in respect of the shares so acquired
(such price per share multiplied by the number of shares of Parent
Common Stock to be repurchased pursuant to this Section 6 being herein
called the "Alternative Call Consideration"). The date on which the
Parent exercises its rights under this Section 6 is referred to as the
"Alternative Call Date."
(c) If the Parent exercises its rights under this Section 6,
the Parent shall, within five Business Days pay the Call Consideration
in immediately available funds, and the Grantee shall surrender to the
Parent certificates evidencing the shares of Parent Common Stock
purchased hereunder, and the Grantee shall warrant to the Parent that,
immediately prior to the repurchase thereof pursuant to this Section 6,
the Grantee had sole record and Beneficial Ownership of such shares and
that such shares were then held free and clear of all Liens.
7. Registration Rights.
(a) The Parent shall, if requested by the Grantee at any time
and from time to time during the Registration Period, as expeditiously
as practicable, prepare, file and cause to be made effective up to two
registration statements under the Securities Act if such registration
is required in order to permit the offering, sale and delivery of any
or all shares of Parent Common Stock or other securities that have been
acquired by or are issuable to the Grantee upon exercise of the Option
in accordance with the intended method of sale or other disposition
stated by the Grantee, including, at the sole discretion of the Parent,
a "shelf" registration statement under Rule 415 under the Securities
Act or any successor provision, and the Parent shall use all reasonable
efforts to qualify such shares or other securities under any applicable
state securities laws. The Parent shall use all reasonable efforts to
cause each such registration statement to become effective, to obtain
all consents or waivers of other parties that are required therefor and
to keep such registration statement effective for such period not in
excess of 180 days from the day such registration statement first
becomes effective as may be reasonably necessary to effect such sale or
other
7
disposition. The obligations of the Parent hereunder to file a
registration statement and to maintain its effectiveness may be
suspended for one or more periods of time not exceeding 60 days in the
aggregate if the Board of Directors of the Parent shall have determined
in good faith that the tiling of such registration or the maintenance
of its effectiveness would require disclosure of nonpublic information
that would materially and adversely affect the Parent. For purposes of
determining whether two requests have been made under this Section 7,
only requests relating to a registration statement that has become
effective under the Securities Act and pursuant to which the Grantee
has disposed of all shares covered thereby in the manner contemplated
therein shall be counted.
(b) The Registration Expenses shall be for the account of the
Parent; provided, however, that the Parent shall not be required to pay
any Registration Expenses with respect to such registration if the
registration request is subsequently withdrawn at the request of the
Grantee unless the Grantee agrees to forfeit its right to request one
registration; and provided, further, that, if at the time of such
withdrawal Grantee has learned of a material adverse change in the
results of operations, condition (financial or other), business or
prospects of the Parent as compared with the information known to the
Grantee at the time of its request and has withdrawn the request with
reasonable promptness following disclosure by the Parent of such
material adverse change, then the Grantee shall not be required to pay
any of such Registration Expenses and shall retain all remaining rights
to request registration.
(c) The Grantee shall provide all information reasonably
requested by the Parent for inclusion in any registration statement to
be filed hereunder. If during the Registration Period the Parent shall
propose to register under the Securities Act the offering, sale and
delivery of Parent Common Stock for cash for its own account or for any
other stockholder of the Parent pursuant to a firm underwriting, it
shall, in addition to the Parent's other obligations under this Section
7 allow the Grantee the right to participate in such registration
provided that the Grantee participates in the underwriting; provided,
however, that, if the managing underwriter of such offering advises the
Parent in writing that in its opinion the number of shares of Parent
Common Stock requested to be included in such registration exceeds the
number that can be sold in such offering, the Parent shall, after fully
including therein all securities to be sold by the Parent, include the
shares requested to be included therein by Grantee pro rata (based on
the number of shares intended to be included therein) with the shares
intended to be included therein by Persons other than the Parent.
(d) In connection with any offering, sale and delivery of
Parent Common Stock pursuant to a registration statement effected
pursuant to this Section 7, the Parent and the Grantee shall provide
each other and each underwriter of the offering with customary
8
representations, warranties and covenants, including covenants of
indemnification and contribution.
8. First Refusal. Subject to the provisions of Section 4 herein, at any
time after the first occurrence of an Exercise Event and prior to the second
anniversary of the first purchase of shares of Parent Common Stock pursuant to
the Option, if the Grantee shall desire to sell, assign, transfer or otherwise
dispose of all or any of the Option Shares or other securities acquired by it
pursuant to the Option, it shall give the Parent written notice of the proposed
transaction (an "Offeror's Notice"), identifying the proposed transferee,
accompanied by a copy of a binding offer to purchase such shares or other
securities signed by such transferee and setting forth the terms of the proposed
transaction. An Offeror's Notice shall be deemed an offer by the Grantee to the
Parent, which may be accepted, in whole but not in part, within ten Business
Days of the receipt of such Offeror's Notice, on the same terms and conditions
and at the same price at which the Grantee is proposing to transfer such shares
or other securities to such transferee. The purchase of any such shares or other
securities by the Parent shall be settled within ten Business Days of the date
of the acceptance of the other and the purchase price shall be paid to the
Grantee in immediately available funds. If the Parent shall fail or refuse to
purchase all the shares or other securities covered by an Offeror's Notice, the
Grantee may, within 60 days from the date of the Offeror's Notice, sell all, but
not less than all, of such shares or other securities to the proposed transferee
at no less than the price specified and on terms no more favorable than those
set forth in the Offeror's Notice; provided, however, that the provisions of
this sentence shall not limit the rights the Grantee may otherwise have if the
Parent has accepted the offer contained in the Offeror's Notice and wrongfully
refuses to purchase the shares or other securities subject thereto. The
requirements of this Section 8 shall not apply to (a) any disposition as a
result of which the proposed transferee would own beneficially not more than 2%
of the outstanding voting power of the Parent, (b) any disposition of Parent
Common Stock or other securities by a Person to whom the Grantee has assigned
its rights under the Option with the consent of the Parent, (c) any sale by
means of a public offering registered under the Securities Act or (d) any
transfer to a wholly owned Subsidiary of the Grantee which agrees in writing to
be bound by the terms hereof.
9. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement, in
no event shall the Grantee's Total Profit exceed $225 million and, if
it otherwise would exceed such amount, the Grantee, at its sole
election, shall either (i) deliver to the Parent for cancellation
Option Shares previously purchased by Parent, (ii) pay cash or other
consideration to the Parent or (iii) undertake any combination thereof,
so that the Grantee's Total Profit shall not exceed 225 million after
taking into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement,
this Stock Option may not be exercised for a number of Option shares
that would, as of the Notice Date,
9
result in a Notional Total Profit of more than $225 million, and, if
exercise of the Option otherwise would exceed such amount, the Grantee,
at its sole option, may increase the Exercise Price for that number of
Option Shares set forth in the Exercise Notice so that the Notional
Total Profit shall not exceed $225 million; provided, however, that
nothing in this sentence shall restrict any exercise of the Option
otherwise permitted by this Section 9(b) on any subsequent date at the
Exercise Price set forth in Section 2(b).
10. Listing. If the Parent Common Stock or any other securities then
subject to the Option are then listed on the New York Stock Exchange, the
Parent, upon the occurrence of an Exercise Event, will promptly file an
application to list on the New York Stock Exchange the shares of the Parent
Common Stock or other securities then subject to the Option and will use all
reasonable efforts to cause such listing application to be approved as promptly
as practicable.
11. Replacement of Agreement. Upon receipt by the Parent of evidence
reasonably satisfactory to it of the loss, theft, destruction or mutilation of
this Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, the Parent will execute and deliver a new Agreement of
like tenor and date. Any such new Agreement shall constitute an additional
contractual obligation of the Parent, whether or not the Agreement so lost,
stolen, destroyed or mutilated shall at any time be enforceable by anyone.
12. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger
Agreement or as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated
hereunder, including fees and expenses of its own financial
consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of
such provision. This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written
agreement executed by the parties hereto.
(c) Entire Agreement; No Third Party Beneficiary;
Severability. Except as otherwise set forth in the Merger Agreement,
this Agreement (including the Merger Agreement and the other documents
and instruments referred to herein and therein) (i) constitutes the
entire agreement and supersedes all prior agreements and
understandings, both written and oral, including without limitation any
conflicting provisions of the Confidentiality Agreement, between the
parties with respect to the subject matter hereof and
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(ii) is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
(d) Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
(e) Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Delaware,
regardless of the Laws that might otherwise govern under applicable
principles of conflicts of law.
(f) Descriptive Headings. The descriptive headings contained
herein are for convenience or reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
(g) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified
mail (return receipt requested) to the parties at the following
addresses or sent by electronic transmission to the telecopier number
specified below:
If to the Parent to:
Halliburton Company
3600 Lincoln Plaza
500 North Akard
Dallas, Texas 75201-3391
Attention: Lester L. Coleman
Telecopier No.: (214) 978-2658
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with a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, Texas 77002-6760
Attention: William E. Joor III
Telecopier No.: (713) 615-5201
If to Grantee to:
Dresser Industries, Inc.
2001 Ross Avenue
Dallas, Texas 75221
Attention: Clint Ables
Telecopier No.: (214) 740-6904
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Dennis J. Block
Telecopier No.: (212)310-8007
(h) Counterparts. This Agreement and any amendments hereto may
be executed in counterparts, each of which shall be deemed an original
and all of which taken together shall constitute but a single document.
(i) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be
assigned by either of the parties hereto (whether by operation of law
or otherwise) without the prior written consent of the other party,
except that the Grantee may assign this Agreement to a wholly owned
Subsidiary of the Grantee; provided, however, that no such assignment
shall have the effect of releasing the Grantee from its obligations
hereunder. Subject to the preceding sentence, this Agreement shall be
binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
(j) Further Assurances. In the event of any exercise of
the Option by the Grantee, the Parent and the Grantee shall execute and
deliver all other documents and
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instruments and take all other action that may be reasonably necessary
in order to consummate the transactions provided for by such exercise.
(k) Specific Performance. The parties hereto hereby
acknowledge and agree that the failure of any party to this Agreement
to perform its agreements and covenants hereunder will cause
irreparable injury to the other party to this Agreement for which
damages, even if available, will not be an adequate remedy.
Accordingly, each of the parties hereto hereby consents to the granting
of equitable relief (including specific performance and injunctive
relief) by any court of competent jurisdiction to enforce any party's
obligations hereunder. The parties further agree to waive any
requirement for the securing or posting of any bond in connection with
the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have
for any failure to perform this Agreement.
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IN WITNESS WHEREOF, the Parent and the Grantee have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
DRESSER INDUSTRIES, INC.
By: /s/ _________________________
HALLIBURTON COMPANY
By: _________________________
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IN WITNESS WHEREOF, the Parent and the Grantee have caused this Stock
Option Agreement to be signed by their respective officers thereunto duly
authorized, all as of the day and year first written above.
DRESSER INDUSTRIES, INC.
By: ________________________
HALLIBURTON COMPANY
By: /s/ ________________________
David J. Lesar
President and Chief
Operating Officer
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ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Stock Option Agreement shall have
the meanings set forth below unless the context shall otherwise require:
"Agreement" shall mean this Stock Option Agreement.
"Alternative Call Consideration" shall have the meaning ascribed to
such term in Section 6(b).
"Alternative Call Date" shall have the meaning ascribed to such term in
Section 6(b).
"Alternative Call Period" shall have the meaning ascribed to such term
in Section 6(b).
"Alternative Call Right" shall have the meaning ascribed to such term
in Section 6(b).
"Alternative Put Consideration" shall have the meaning ascribed to such
term in Section 5(b).
"Alternative Put Date" shall have the meaning ascribed to such term in
Section 5(b).
"Alternative Put Period" shall have the meaning ascribed to such term
in Section 5(b).
"Alternative Put Right" shall have the meaning ascribed to such term in
Section 5(b).
"Applicable Price" means the highest of (i) the highest purchase price
per share paid pursuant to a tender or exchange offer made for shares of Parent
Common Stock after the date hereof and on or prior to the Put Date, (ii) the
price per share to be paid by any third Person for shares of Parent Common Stock
pursuant to an agreement for a Business Combination Transaction entered into on
or prior to the Put Date, and (iii) the Current Market Price. If the
consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of such
consideration shall be determined in good faith by an independent nationally
recognized investment banking firm selected by the Grantee and reasonably
acceptable to the Parent, which determination shall be conclusive for all
purposes of this Agreement.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially Own" shall
have the meanings ascribed to them in Rule 13d-3 under the Exchange Act.
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"Business Combination Transaction" shall mean (i) a consolidation,
exchange of shares or merger of the Parent with any Person, other than the
Grantee or one of its subsidiaries, and, in the case of a merger, in which the
Parent shall not be the continuing or surviving corporation, (ii) a merger of
the Parent with a Person, other than the Grantee or one of its Subsidiaries, in
which the Parent shall be the continuing or surviving corporation but the then
outstanding shares of Parent Common Stock shall be changed into or exchanged for
stock or other securities of the Parent or any other Person or cash or any other
property or the shares of Parent Common stock outstanding immediately before
such merger shall after such merger represent less than 50% of the common shares
and common share equivalents of the Parent outstanding immediately after the
merger or (iii) a sale, lease or other transfer of all or substantially all the
assets of the Parent to any Person, other than the Grantee or one of its
Subsidiaries.
"Call Consideration" shall have the meaning ascribed to such term in
Section 5 herein.
"Call Date" shall have the meaning ascribed to such term in Section 5
herein.
"Call Period" shall have the meaning ascribed to such term in Section 5
herein.
"Closing" shall have the meaning ascribed to such term in Section 2
herein.
"Closing Date" shall have the meaning ascribed to such term in Section
2 herein.
"Confidentiality Agreement" shall mean that certain Letter Agreement
between the parties hereto dated February 2, 1998.
"Current Market Price" shall mean, as of any date, the average of the
closing prices (or, if such securities should not trade on any trading day, the
average of the bid and asked prices therefor on such day) of the Parent Common
Stock as reported on the New York Stock Exchange Composite Tape during the ten
consecutive trading days ending on (and including) the trading day immediately
prior to such date or, if the shares of Parent Common Stock are not quoted
thereon, on The Nasdaq Stock Market or, if the shares of Parent Common Stock are
not quoted thereon, on the principal trading market (as defined in Regulation M
under the Exchange Act) on which such shares are traded as reported by a
recognized source during such ten Business Day period.
"Exercise Event" shall mean any of the events giving rise to a right of
termination of the Merger Agreement under Section 9.01(c) (breach), 9.01(g)
(failure to obtain stockholder approval), 9.01(i) (fiduciary out) or 9.01(k)
(change of recommendation); provided, however, that, in the case of the events
set forth in Sections 9.01(c) and 9.01(g), at the time of such events described
in Section 9.01(c) or prior to the Parent Stockholders' Meeting referenced in
Section 9.01(g), there shall also have been an Acquisition Proposal involving
the Parent or any of its Subsidiaries that, at
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the time of such events or meeting, shall not have been (x) rejected by the
Parent and its Board of Directors or (y) withdrawn by the Person making such
Acquisition Proposal.
"Exercise Notice" shall have the meaning ascribed to such term in
Section 2(d)(i) herein.
"Exercise Price" shall have the meaning ascribed to such term in
Section 2 herein.
"Merger Agreement" shall mean that certain Agreement and Plan of Merger
dated as of the date hereof among Halliburton Company, a Delaware corporation,
Dresser Industries, Inc., a Delaware corporation, and Halliburton N.C., Inc., a
Delaware corporation and a wholly owned subsidiary of Halliburton Company.
"Newco" shall mean Halliburton N.C., Inc., a Delaware corporation and a
wholly owned subsidiary of Grantee.
"Notice Date" shall have the meaning ascribed to such term in Section 2
herein.
"Notional Total Profit" shall mean, with respect to any number of
Option Shares as to which the Grantee may propose to exercise the Option, the
Total Profit determined as of the date of the Exercise Notice assuming that the
Option were exercised on such date for such number of Option Shares and assuming
such Option Shares, together with all other Option Shares held by the Grantee
and its Affiliates as of such date, were sold for cash at the closing market
price for the Parent Common Stock as of the close of business on the preceding
trading day (less customary brokerage commissions).
"Offeror's Notice" shall have the meaning ascribed to such term in
Section 8 herein.
"Option" shall mean the option granted by the Parent to Grantee
pursuant to Section 2 herein.
"Option Shares" shall have the meaning ascribed to such term in Section
2 herein.
"Option Term" shall have the meaning ascribed to such term in Section 2
herein.
"Put Consideration" shall have the meaning ascribed to such term in
Section 4 herein.
"Put Date" shall have the meaning ascribed to such term in Section 4
herein.
"Put Period" shall have the meaning ascribed to such term in Section 4
herein.
"Put Right" shall have the meaning ascribed to such term in Section 4
herein.
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"Registration Expenses" shall mean the expenses associated with the
preparation and filing of any registration statement pursuant to Section 6
herein and any sale covered thereby (including any fees related to blue sky
qualifications and filing fees in respect of the National Association of
Securities Dealers, Inc.), but excluding underwriting discounts or commissions
or brokers' fees in respect to shares to be sold by the Grantee and the fees and
disbursements of the Grantee's counsel.
"Registration Period" shall mean the period of two years following the
first exercise of the Option by the Grantee.
"Total Profit" shall mean the aggregate (before income taxes) of the
following: (i) all amounts received by the Grantee pursuant to Sections 5 and 6
for the repurchase of all or part of the unexercised portion of the Option, (ii)
(A) the net cash amounts received by the Grantee pursuant to the sale of Option
Shares (or any other securities into which such Option Shares are converted or
exchanges) to any party not an Affiliate of the Grantee, less (B) the Grantee's
purchase price for such Option Shares and (iii) all amounts received by the
Grantee from the Parent pursuant to Section 9.05 (other than Section 9.05(f)) of
the Merger Agreement.
"Unexercised Option Shares" shall mean those Option Shares as to which
the Option remains unexercised from time to time.
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