<PAGE>
PRELIMINARY COPIES
CONFIDENTIAL, FOR USE OF
THE COMMISSION ONLY
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14C
(Rule 14C-101)
INFORMATION REQUIRED IN INFORMATION STATEMENT
SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(C)
OF THE SECURITIES EXCHANGE ACT OF 1934
Check the appropriate box:
[x] Preliminary information [x] Confidential, for Use of the
statement Commission Only (as
permitted by Rule 14c-5(d)(2))
[ ] Definitive information
statement
CBI INDUSTRIES, INC.
(Name of Registrant as Specified in Charter)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14c-5(g).
[x] Fee computed on table below per Exchange Act Rules 14c-5(g) and
0-11.
(1) Title of each class of securities to which transaction applies:
Common Stock, par value $2.50 per share
(2) Aggregate number of securities to which transaction applies:
2,718,358 shares of Common Stock
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):
Pursuant to the Agreement and Plan of Merger among CBI Industries,
Inc., Praxair, Inc. and PX Acquisition Corp., dated as of December
22, 1995, the price to be paid for each share to be purchased in the
merger is $33.00. Pursuant to Rule 0-11(c), the filing fee of
$17,941.16 was calculated as 1/50 of 1% of the total cash payment to
be made in the merger, which is equal to the product of $33.00 per
share and 2,718,358 shares to be purchased.
(4) Proposed maximum aggregate value of transaction:
$89,705,814.00
(5) Total fee paid:
$17,941.16
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount Previously Paid: N/A
(2) Form, Schedule or Registration Statement No.: N/A
(3) Filing Party: N/A
(4) Date Filed: N/A
<PAGE>
CBI INDUSTRIES, INC.
800 JORIE BOULEVARD
OAK BROOK, ILLINOIS 60521-2261
_________, 1996
Dear Stockholder:
As announced on December 22, 1995, CBI Industries, Inc. and Praxair
Inc. have entered into a merger agreement. Pursuant to an amended tender
offer for all of CBI's outstanding common stock, Praxair has already
acquired, through a wholly owned subsidiary, approximately 94% of the
outstanding common stock of CBI. Pursuant to the merger agreement, CBI
will merge with Praxair's wholly owned subsidiary. In the merger, our
remaining stockholders will receive, in exchange for their shares of common
stock, $33.00 cash per share, without interest thereon. Praxair will
thereupon own the entire common equity interest in CBI.
A special meeting of stockholders will be held at ,
at A.M., Central Standard Time, on , 1996, to consider and vote
upon a proposal to approve the merger agreement and the merger previously
approved by our Board of Directors. Approval of the merger agreement and
the merger requires the affirmative vote of a majority of the outstanding
stock of CBI entitled to vote thereon. Because Praxair's 94% interest will
be voted in favor of the proposal, its passage is assured without the vote
of any other stockholder. In light of this, you are not being asked for a
proxy and are requested not to send one. If you so wish, you may vote your
shares by attending the special meeting in person. The accompanying
Information Statement explains in detail the terms of the merger. Please
read the Information Statement carefully.
We appreciate your loyalty and support as a stockholder of our
company in the past as we move forward with this transition to new
ownership.
Sincerely yours,
H. William Lichtenberger
<PAGE> 1
CBI INDUSTRIES, INC.
800 JORIE BOULEVARD
OAK BROOK, ILLINOIS 60521-2261
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD , 1996
To The Stockholders of CBI INDUSTRIES, INC.:
NOTICE IS HEREBY GIVEN that a special meeting of the holders of
Shares (as defined below) of CBI Industries, Inc., a Delaware corporation
(the "Company"), will be held at , at A.M.,
Central Standard Time, on , 1996 (the "Special Meeting") for the
following purposes:
1. To consider and vote upon a proposal (the "Merger
Proposal") to approve and adopt the Agreement and Plan of Merger (the
"Merger Agreement"), attached as Exhibit A to the accompanying Information
Statement, among Praxair, Inc., a Delaware corporation ("Praxair"), PX
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
Praxair (the "Purchaser"), and the Company dated as of December 22, 1995
and the Merger (as defined herein). Under the terms of the Merger
Agreement, at the Effective Time (as defined in the Merger Agreement), (i)
the Purchaser will be merged with and into the Company (the "Merger"),
(ii) each outstanding share of the Company's Common Stock, par value $2.50
per share (the "Common Stock"), and the associated Preferred Stock Purchase
Rights issued pursuant to the Rights Agreement, dated as of March 4, 1986,
as amended, between the Company and First Chicago Trust Company of New
York, as Rights Agent (the "Rights" and, together with such shares of
Common Stock, except where the context otherwise requires, the "Shares"),
(other than Shares owned by Praxair, the Purchaser or any other subsidiary
of Praxair and any Shares which are held by dissenting Stockholders
exercising appraisal rights pursuant to Section 262 of the Delaware General
Corporation Law, as amended), will be converted into the right to receive
$33.00 in cash, without interest thereon and (iii) each Share issued and
outstanding and owned by Praxair, the Purchaser or any other subsidiary of
Praxair, and each Share issued and held in the Company's treasury will
cease to be outstanding, will be canceled and retired without payment of
any consideration therefor and will cease to exist.
2. To transact such other business as may properly come before
the meeting or any adjournment thereof.
Only the holders of Shares of record at the close of business
on , 1996, will be entitled to notice of, and to vote at, the
Special Meeting.
<PAGE> 2
The Company's Board of Directors (the "Board") has determined
that the Merger is fair to and in the best interests of the Company and its
stockholders, has approved the Merger Agreement and the Merger and
recommends that holders of Shares vote in favor of the Merger Proposal.
By Order of the Board of Directors,
____________________
Secretary
Dated , 1996
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
<PAGE> 1
TABLE OF CONTENTS
Page No.
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE SPECIAL MEETING . . . . . . . . . . . . . . . . . . . . . . . 4
CERTAIN INFORMATION CONCERNING THE COMPANY . . . . . . . . . . . 6
CERTAIN INFORMATION CONCERNING PRAXAIR AND THE PURCHASER . . . . 8
BACKGROUND OF THE MERGER . . . . . . . . . . . . . . . . . . . 10
RECOMMENDATION OF THE BOARD AND REASONS FOR THE MERGER . . . . . 17
OPINIONS OF FINANCIAL ADVISORS . . . . . . . . . . . . . . . . . 19
INTERESTS OF CERTAIN PERSONS . . . . . . . . . . . . . . . . . . 24
CERTAIN EFFECTS OF THE CONSUMMATION OF THE OFFER
ON THE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . 27
STRUCTURE OF THE MERGER . . . . . . . . . . . . . . . . . . . . . 27
FINANCING OF THE MERGER . . . . . . . . . . . . . . . . . . . . . 28
ACCOUNTING TREATMENT OF THE MERGER . . . . . . . . . . . . . . . 28
CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS . . . . . . 28
CERTAIN FEDERAL TAX CONSEQUENCES OF THE MERGER . . . . . . . . . 29
THE MERGER AGREEMENT . . . . . . . . . . . . . . . . . . . . . . 30
TRADING PRICES . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS . . . . . . . . . 35
SECURITY OWNERSHIP OF MANAGEMENT OF THE COMPANY . . . . . . . . . 35
INDEPENDENT PUBLIC ACCOUNTANTS . . . . . . . . . . . . . . . . . 36
OTHER MATTERS TO COME BEFORE THE MEETING . . . . . . . . . . . . 36
INCORPORATION OF DOCUMENTS BY REFERENCE . . . . . . . . . . . . . 36
ANNEXES:
ANNEX A Appraisal Rights . . . . . . . . . . . . . . . . A-1
EXHIBITS:
EXHIBIT A Agreement and Plan of Merger
EXHIBIT B Fairness Opinion of Lehman Brothers Inc.
EXHIBIT C Fairness Opinion of Merrill Lynch & Co.
<PAGE>
CBI INDUSTRIES, INC.
800 Jorie Boulevard
Oak Brook, IL 60521-2268
INFORMATION STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS
, 1996
INTRODUCTION
This Information Statement is being furnished to the holders of
Shares (as defined herein) (the "Stockholders") of CBI Industries, Inc. a
Delaware corporation (the "Company"), as of the Record Date (as defined
herein) to consider the proposal (the "Merger Proposal") to approve and
adopt the Agreement and Plan of Merger (the "Merger Agreement"), attached
hereto as Exhibit A, among Praxair, Inc., a Delaware corporation
("Praxair"), PX Acquisition Corp., a Delaware corporation and a wholly
owned subsidiary of Praxair (the "Purchaser"), and the Company dated as of
December 22, 1995. Pursuant to the Merger Agreement, the Purchaser amended
its then outstanding tender offer to purchase all outstanding Shares, among
other things, to increase the price to be paid pursuant thereto to $33.00
per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase
dated November 3, 1995, as amended and supplemented by the Supplement to
the Offer to Purchase dated December 28, 1995 and the revised Letter of
Transmittal (which together constitute the "Amended Praxair Offer"). The
Amended Praxair Offer expired at 12:00 midnight, New York City time, on
Thursday, January 11, 1996. The Purchaser accepted for payment 41,094,108
Shares, validly tendered pursuant to the Amended Praxair Offer and not
withdrawn, representing approximately 94% of the total number of
outstanding shares of the Company entitled to vote at the Special Meeting
(as defined herein). The Merger (as defined herein) will be consummated on
the terms and subject to the conditions set forth in the Merger Agreement.
This Information Statement is being mailed on or about
, 1996 to the holders of record of the Shares at the close of
business on , 1996.
<PAGE> 2
SUMMARY
The following is a brief summary of certain information contained
elsewhere in this Information Statement. This summary is not intended to
be complete and is qualified in its entirety by the more detailed
information contained in this Information Statement and the Annex and
Exhibits hereto, to which reference is made for a complete statement of the
matters discussed below. Capitalized terms used in the following summary
have the meanings set forth elsewhere in this Information Statement.
Stockholders are urged to read this Information Statement and the Annex and
Exhibits hereto in their entirety.
PURPOSE OF SPECIAL MEETING To vote upon the Merger Proposal. (See
"INTRODUCTION"; "THE SPECIAL MEETING")
DATE AND TIME OF SPECIAL MEETING _______________, 1996 at ____ A.M.,
Central Standard Time
PLACE OF MEETING ____________________
____________________
____________________
RECORD DATE _______________, 1996
NUMBER OF OUTSTANDING SHARES
ENTITLED TO VOTE 43,891,766
MERGER TERMS In the Merger, the Company will become
a wholly owned subsidiary of Praxair,
and each outstanding Share (other than
Shares owned by Praxair, the Purchaser
or any other subsidiary of Praxair,
Shares held in the Company's treasury
and Dissenting Shares) will be
converted into the right to receive
$33.00 per Share in cash, without
interest thereon. (See "STRUCTURE OF
THE MERGER" and "THE MERGER
AGREEMENT").
REQUIRED VOTE The affirmative vote of a majority of
the outstanding stock of the Company
entitled to vote thereon is required
for approval of the Merger
<PAGE> 3
Agreement and the Merger. (See
"SPECIAL MEETING--Voting at the Special
Meeting.")
RECOMMENDATION OF THE
COMPANY'S BOARD OF DIRECTORS The Company's Board of Directors has
determined that the Merger is fair to
and in the best interests of the
Company and its stockholders, has
approved the Merger Agreement and the
Merger and recommends that holders of
Shares vote in favor of the Merger
Proposal. (See "RECOMMENDATION OF THE
BOARD AND REASONS FOR THE MERGER").
OPINION OF FINANCIAL ADVISOR Lehman Brothers Inc. and Merrill Lynch
& Co., the Company's financial
advisors, have determined that as of
the date of such opinions, the $33.00
per Share consideration to be received
by the stockholders of the Company
pursuant to the Merger is fair to such
stockholders from a financial point of
view (See "RECOMMENDATION OF THE BOARD
AND REASONS FOR THE MERGER").
RIGHTS OF DISSENTING STOCKHOLDERS Under the Delaware General Corporation
Law, any Stockholder who neither votes
in favor of the Merger nor consents
thereto in writing, who delivers a
demand for appraisal prior to the vote
of the Stockholders on the Merger, and
who has otherwise complied with the
applicable requirements of Section 262
of the DGCL has the right, subject to
compliance with certain procedural
requirements, to an appraisal of, and
to receive cash payment for, the "fair
value" of his Shares. (See "THE
SPECIAL MEETING-Dissenters' Rights of
Appraisal" and Annex A).
<PAGE> 4
THE SPECIAL MEETING
PURPOSE OF THE SPECIAL MEETING
At a special meeting of the Stockholders of CBI to be held at
at A.M., Central Standard Time on , 1996 (the "Special
Meeting"), the Stockholders of the Company will be asked to consider and
vote upon a proposal (the "Merger Proposal") to approve and adopt the
Merger Agreement and the Merger. Under the terms of the Merger Agreement,
at the Effective Time (as defined in the Merger Agreement), (i) the
Purchaser will be merged with and into the Company (the "Merger"), (ii) the
Company will be the corporation surviving the Merger (the "Surviving
Corporation"), (iii) the separate existence of the Purchaser will cease,
(iv) each issued and outstanding share of the Company's Common Stock, par
value $2.50 per share (the "Common Stock"), and the associated Preferred
Stock Purchase Rights issued pursuant to the Rights Agreement, dated as of
March 4, 1986, as amended, between the Company and First Chicago Trust
Company of New York (the "Rights Agent"), as Rights Agent (the "Rights" and
together with such shares of Common Stock, except where the context
otherwise requires, the "Shares") (other than any Shares owned by Praxair,
the Purchaser or any other subsidiary of Praxair and any Shares which are
held by dissenting stockholders exercising appraisal rights pursuant to
Section 262 of the Delaware General Corporation Law, as amended (the
"DGCL")) will be converted into the right to receive $33.00 in cash,
without interest thereon (the "Merger Consideration"), and (v) each Share
issued and outstanding and owned by Praxair, the Purchaser or any other
subsidiary of Praxair, and each Share issued and held in the Company's
treasury will cease to be outstanding, will be canceled and retired without
payment of any consideration therefor and will cease to exist.
VOTING AT THE SPECIAL MEETING
According to the Company's Restated Certificate of Incorporation, as
amended (the "Restated Company Certificate") the Stockholders are entitled
to one vote for each Share on each matter submitted to a vote of the
stockholders of the Company. In addition, the holders of shares of $2.27
Convertible Series C Preferred Stock of the Company, par value $1.00 per
share (the "Series C Preferred"), are entitled to 1.5 votes on all matters
upon which the Stockholders are entitled to vote and vote together with the
Stockholders as a single class. The Board of Directors of the Company (the
"Board") has fixed the close of business on , 1996 as the record
date (the "Record Date") for the determination of Stockholders entitled to
notice of, and to vote at, the Special Meeting. At the close of business
on the Record Date, there were Shares outstanding and entitled to
vote, held by Stockholders of record and no outstanding shares of
Series C Preferred. Accordingly, only Stockholders of record on the
Record Date will be entitled to notice of, and to vote at, the Special
Meeting. <PAGE> 5
Stockholders of record on the Record Date are entitled to one vote
per Share, exercisable in person, at the Special Meeting. The presence in
person of the holders of a majority of the outstanding stock of the Company
entitled to vote is necessary to constitute a quorum at the Special
Meeting.
The affirmative vote of a majority of the outstanding stock of the
Company entitled to vote thereon is required by the DGCL for approval of
the Merger Agreement and the Merger. AS PURCHASER HAS ACQUIRED 41,094,108
SHARES PURSUANT TO THE AMENDED PRAXAIR OFFER WHICH, TOGETHER WITH SHARES
PREVIOUSLY HELD BY PRAXAIR AND THE PURCHASER REPRESENT APPROXIMATELY 94% OF
THE OUTSTANDING STOCK OF THE COMPANY ENTITLED TO VOTE AS OF THE RECORD
DATE, PRAXAIR AND THE PURCHASER HAVE SUFFICIENT VOTING POWER TO APPROVE THE
MERGER AGREEMENT AND MERGER WITHOUT THE VOTE OF ANY OTHER STOCKHOLDER OF
THE COMPANY. PURSUANT TO THE TERMS OF THE MERGER AGREEMENT, PRAXAIR AND
THE PURCHASER HAVE AGREED TO VOTE SUCH SHARES FOR APPROVAL AND ADOPTION OF
THE MERGER AGREEMENT AND THE MERGER. ABSTENTIONS FROM VOTING OF SHARES
THAT ARE PRESENT AT THE SPECIAL MEETING, BROKER NON-VOTES AND ABSTENTIONS
WILL HAVE THE SAME EFFECT AS VOTES AGAINST ADOPTION OF THE MERGER AGREEMENT
AND THE MERGER. SEE "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS".
On December 22, 1995, the Board approved the Amended Praxair Offer,
the Merger Agreement and the Merger for the purposes of Sections 203 and
251 of the DGCL and for purposes of Article Tenth and Article Fifteenth of
the Restated Company Certificate.
DISSENTERS' RIGHTS OF APPRAISAL
Under Section 262 of the DGCL, any Stockholder who neither votes in
favor of the Merger nor consents thereto in writing, who delivers a demand
for appraisal prior to the vote of the Stockholders on the Merger, and who
has otherwise complied with the applicable requirements of Section 262 of
the DGCL has the right to an appraisal of, and to receive cash payment for,
the "fair value" of his Shares (the "Dissenting Shares"), at the Effective
Time, excluding any element of value arising from the accomplishment or
expectation of the Merger. In order to exercise such right, a Stockholder
must comply with each of the procedural requirements of Section 262 of the
DGCL, a summary of and the text of which is set forth in Annex A hereto.
Stockholders should read Section 262 of the DGCL in its entirety. The
"fair value" of each Share would be determined in judicial proceedings, the
results of which cannot be predicted. The failure to take any of the steps
required under Section 262 of the DGCL in a timely manner will result in a
loss of appraisal rights.
The Merger Agreement provides that the Company shall give Praxair
prompt notice of any demands received by the Company for appraisal of
Shares and, if any holders of
<PAGE> 6
Dissenting Shares shall be entitled to be paid the "fair value" of his or
her Shares, as provided in Section 262 of the DGCL, the Company shall give
Praxair notice thereof and Praxair shall have the right to participate in
all negotiations and proceedings with respect to any such demands. The
Company shall not, except with the prior written consent of Praxair,
voluntarily make any payment with respect to, or settle or offer to settle,
any such demand for payment. If any holder of Dissenting Shares shall fail
to perfect or shall have effectively withdrawn or lost the right to
dissent, the Dissenting Shares shall thereupon be treated as though such
Dissenting Shares had been converted into the Merger Consideration. See
Annex A hereto.
OTHER MATTERS TO BE CONSIDERED
It is not anticipated that any matter other than approval of the
Merger Proposal will be brought before the Special Meeting. If any other
matter should properly come before the Special Meeting, those present at
the Special Meeting will be entitled to vote with respect to such properly
raised matters.
CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is a Delaware corporation with its principal executive
offices located at 800 Jorie Boulevard, Oak Brook, Illinois 60521-2268.
The Company has subsidiaries operating throughout the world in producing
and distributing carbon dioxide and industrial gases, in designing,
engineering, fabricating and erecting metal plate structures and executing
other contracting services, and in providing oil and refined petroleum
product storage and blending facilities.
Set forth below is certain selected information of the Company and
its consolidated subsidiaries which has been excerpted and derived from the
Company's Annual Report on Form 10-K for the fiscal years ended December 31,
1994, 1993, 1992 and 1991, and the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1995. More comprehensive
financial and other information is included in such reports (including
management's discussion and analysis of results of operations and financial
position) and in other reports and documents filed by the Company with the
Securities and Exchange Commission (the "Commission") and the financial
information set forth below is qualified in its entirety by reference to
such reports and documents filed with the Commission and all of the
financial statements and related notes contained therein. These reports
and other documents may be examined and copies thereof may be obtained in
the manner set forth in this Information Statement. See "INCORPORATION OF
DOCUMENTS BY REFERENCE". Such material should also be available for
inspection at the offices of The New York Stock Exchange, Inc., 20 Broad
Street, New York, NY 10005.
<PAGE> 7
CBI INDUSTRIES, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(In thousands, except per Share data)
<TABLE>
<CAPTION>
Nine Months
Ended Year Ended December 31,
September 30,
1995 1994 1993 1992 1991
(unaudited)
<S> <C> <C> <C> <C> <C>
SUMMARY OF EARNINGS DATA:
Revenues . . . . . . . . . . $1,385,716 $1,890,907 $1,671,744 $1,672,774 $1,614,901
Income from operations . . . 115,977 160,540 26,145<F1> 166,280 167,533
Income (loss) before taxes, minority
interest and cumulative
effect of accounting changes 79,608 118,910 (2,235)<F1> 145,500 136,965
Net income (loss) to holders of
Shares . . . . . . . . . . . 27,733 45,454 (39,846)<F1> 65,537<F2> 53,408
Net income (loss) per Share . 0.73 1.20 (1.07)<F1> 1.79<F2> 1.54
Net income (loss) per fully
diluted Share . . . . . . . 0.67 1.10 (0.89)<F1> 1.59<F2> 1.38
BALANCE SHEET DATA:<F3>
Total assets . . . . . . . . $2,124,373 2,008,712 $1,870,245 $1,685,325 $1,478,871
Current assets . . . . . . . 541,116 517,854 471,274 434,160 457,317
Current liabilities . . . . . 351,618 379,052 345,070 325,458 337,675
Long-term debt . . . . . . . 716,331 666,730 607,579 410,998 259,550
Common stockholders' equity . 696,814 677,698 643,532 688,294 645,591
<FN>
<F1> After a special charge of $91,600 ($68,400 after tax), which was
equivalent to a net loss per Share of $1.84 ($1.60 on a fully diluted
basis).
<F2> Before cumulative effect of accounting changes.
<F3> At period end.
</FN>
</TABLE>
<TABLE>
<CAPTION>
For the Nine Months Ended For the Year Ended
September 30, 1995 December 31, 1994
<S> <C> <C>
Book value
per Share . . . . . . . . . . . . . . . $18.20 $17.80
Cash dividends declared
per Share . . . . . . . . . . . . . . . 0.36 0.48
Income from continuing operations
per Share . . . . . . . . . . . . . . . 3.04 4.24
</TABLE>
<PAGE> 8
CERTAIN INFORMATION CONCERNING
PRAXAIR AND THE PURCHASER
Praxair is a Delaware corporation with its principal executive
offices located at 39 Old Ridgebury Road, Danbury, Connecticut 06810-5113.
Praxair is the largest supplier of industrial gases in North and
South America and one of the three largest worldwide. The gases find wide
use in the primary metals, metal fabrication, chemicals, medical,
electronics, petroleum refining, aerospace, food processing, oil and gas,
glass, environmental remediation, printing and pulp and paper industries.
Set forth below is certain selected financial information of Praxair
and its consolidated subsidiaries which has been excerpted and derived from
Praxair's Quarterly Reports on Form 10-Q for the quarter ended September
30, 1995 and the quarter ended September 30, 1994. More comprehensive
financial and other information is included in such reports (including
management's discussion and analysis of results of operations and financial
position) and in other reports and documents filed by Praxair with the
Commission and the financial information set forth below is qualified in
its entirety by reference to such reports and documents filed with the
Commission and all of the financial statements and related notes contained
therein. Such reports and other information should be available for
inspection at the public reference facilities of the Commission at 450
Fifth Street, N.W., Washington, DC 20549, and at the regional offices of
the Commission located at Seven World Trade Center, 13th Floor, New York,
NY 10048 and Citicorp Center, 500 West Madison Street (Suite 1400),
Chicago, IL 60661. Copies of such information should be obtainable, by
mail, upon payment of the Commission's customary charges, by writing to the
Commission's principal office at 450 Fifth Street, N.W., Washington, DC
20549. Such material should also be available for inspection at the
offices of The New York Stock Exchange, Inc., 20 Broad Street, New York, NY
10005.
<PAGE> 9
PRAXAIR, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION
(In millions, except per share data)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1995 1994
(unaudited)
<S> <C> <C>
SUMMARY OF EARNINGS DATA:
Sales . . . . . . . . . . . . . . . . . . . . . . . . $ 2,339 $ 1,989
Income from operations . . . . . . . . . . . . . . . . 411 328
Income before taxes and minority
interests . . . . . . . . . . . . . . . . . . . . . . 323 249
Net income to common stockholders . . . . . . . . . . . 196 148
Net income per share of common stock . . . . . . . .
Book value per share (fully diluted) 1.37 1.06
BALANCE SHEET DATA: <F1>
Total assets . . . . . . . . . . . . . . . . . . . . $ 3,929 $ 3,423
Current assets . . . . . . . . . . . . . . . . . . . 890 800
Current liabilities . . . . . . . . . . . . . . . . . 1,016 747
Long-term debt . . . . . . . . . . . . . . . . . . . 936 963
Common stockholders' equity . . . . . . . . . . . . . 1,048 817
<FN>
<F1> At period end.
</FN>
</TABLE>
The Company does not take any responsibility for the accuracy or
completeness of information contained in this Information Statement with
respect to the Purchaser or Praxair or any of their subsidiaries or
affiliates, or for any failure by the Purchaser or Praxair to disclose
events which may have occurred or may affect the significance or accuracy
of any such information.
The Purchaser, a Delaware corporation, which is a wholly owned
subsidiary of Praxair, was organized to acquire the Company and has not
conducted any unrelated activities since its organization. The principal
executive office of the Purchaser is located at the principal executive
office of Praxair.
Financial information of the Purchaser is not provided because
Purchaser is a newly formed corporation with no historical financial
information and will be merged with and into
<PAGE> 10
the Company as of the Effective Time, at which time the separate corporate
existence of the Purchaser shall cease.
BACKGROUND OF THE MERGER
Shortly after the December 1994 unsolicited proposal by another
company to acquire certain assets of the Company, Mr. H. William
Lichtenberger, the Chairman and Chief Executive Officer of Praxair,
contacted Mr. John E. Jones, the then Chairman, President and Chief
Executive Officer of the Company, to advise him of Praxair's willingness to
consider a variety of possible transactions with the Company involving its
industrial gases business, if the Company concluded it wished to effect
some transaction in response to the unsolicited proposal. Mr. Jones
indicated he would contact Praxair if he wished to pursue such a
transaction.
Several months later Mr. Lichtenberger contacted Mr. Jones to arrange
a meeting. On May 19, 1995, Mr. Lichtenberger and Mr. Jones met in
Chicago, Illinois and Mr. Lichtenberger raised with Mr. Jones a variety of
possible transactions between Praxair and the Company, including the
possibility of a business combination between Praxair and the Company. Mr.
Jones indicated that he would consider Mr. Lichtenberger's ideas and
respond after such consideration.
Having heard no response from Mr. Jones, on August 28, 1995, Mr.
Lichtenberger telephoned Mr. Jones to solicit a response regarding the
possible transactions discussed at the May 19, 1995 meeting. During that
call they agreed to meet on August 31, 1995 in the New York area.
On August 31, 1995, Mr. Lichtenberger and Mr. John A. Clerico, Vice
President and Chief Financial Officer of Praxair, met with Mr. Jones and
Mr. A.J. Schneider, Chief Financial Officer of the Company, and discussed
further a possible business combination between Praxair and the Company.
During the course of that meeting Mr. Lichtenberger and Mr. Jones discussed
the business rationale and strategic benefits of such a business
combination as well as various possible structures and bases upon which
such a business combination might proceed. At the conclusion of the
meeting, Mr. Jones indicated he would contact Mr. Lichtenberger after the
Labor Day holiday. On September 5, 1995, Mr. Jones called Mr.
Lichtenberger to discuss further the possible business combination that had
been the subject of the August 31 meeting. Mr. Jones indicated on that
call that he wanted to consider the matter further and that they should
talk further on Mr. Lichtenberger's return from a scheduled overseas trip.
In a late September, 1995 telephone conversation, Mr. Jones indicated
that he would respond to Mr. Lichtenberger following the Company's planned
October Board meeting.
<PAGE> 11
At a meeting of the Board on October 11, the Board considered Mr.
Lichtenberger's invitation to enter into negotiations and directed
Mr. Jones to tell Mr. Lichtenberger that the Company was not for sale and
was not interested in negotiating with Praxair. On October 20, 1995, Mr.
Jones telephoned Mr. Lichtenberger to indicate that the Company had decided
to discontinue their discussions relating to a business combination between
Praxair and the Company.
On October 27, 1995, Mr. Lichtenberger telephoned Mr. Jones to inform
him that Praxair was making a formal proposal to the Board relating to a
proposed merger. In addition, the following letter was hand delivered to
Mr. Jones:
October 27, 1995
Mr. John E. Jones
Chairman, President and Chief
Executive Officer
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, IL 60521-7001
Dear John:
As you know, over the past six months you and I have had several
discussions regarding a possible transaction to effect a merger of our
respective companies. Based on our conversations, I think we both realize
that significant benefits could be realized by both our companies from such
a transaction. Therefore, I was greatly disappointed when you told me on
October 20 that you had decided not to continue our discussions.
As I told you during that telephone conversation, in recent weeks we
at Praxair have continued to carefully study the dynamics and potential
advantages of a business combination of Praxair and CBI. As a result, we
now feel even more strongly that such a business combination would result
in significant strategic benefits for both our companies and our respective
shareholders. In light of your current position which you communicated to
me on October 20, and given what we continue to view as the compelling
rationale for a business combination, we have decided that the best way to
proceed is for Praxair to submit a specific proposal to your Board of
Directors for its formal consideration.
Accordingly, on behalf of the Board of Directors of Praxair, I am
pleased to propose herewith the merger of Praxair and CBI pursuant to which
your shareholders would receive $32.00 for each share of CBI common stock,
which we would propose to pay in either cash or Praxair common stock. Our
proposal to effect a merger of Praxair and CBI is subject to
<PAGE> 12
the negotiation of a mutually satisfactory definitive merger agreement
containing customary terms and closing conditions.
I hope that you will recognize the powerful business logic behind our
proposal and that you will promptly submit it to your Board of Directors
for its consideration with a favorable recommendation from you. It is our
hope that, after appropriate consideration by your Board of Directors, your
Board will authorize proceeding with the negotiation of the definitive
merger agreement on the terms we have proposed.
The price per share in our merger proposal is based on our present
knowledge of CBI, which is limited to public information. It is our view
that the price we are proposing would be both fair and highly attractive to
your shareholders. Our proposal offers your shareholders a significant
premium over the current market value of CBI.
The transaction we propose represents a clearly attractive
opportunity for Praxair to combine the leading industrial gases supplier in
North and South America and the premier world supplier of carbon dioxide.
The combined enterprise will be strongly positioned to maximize our
marketing, engineering and technological skills as it expands its
operations further into major global markets. It will also be able to
develop significant new applications for a wide range of products and
advanced technologies to enable our customers to improve their
productivity, product quality and environmental performance. Together,
Praxair's and CBI's business portfolios and synergies will provide the
enterprise with considerable opportunities to support strong future sales
and earnings growth.
We are prepared to move promptly in connection with our proposal. We
would be happy to meet with you and other members of your Board of
Directors and senior management as soon as practicable to discuss our
proposal in detail and to answer any questions you or they may have. We
realize that your Board of Directors will want to carefully consider our
proposal, but we do ask that the Board respond to us as soon as possible,
and in any event by noon, on November 1, 1995.
While we would very much prefer that a business combination of our
companies be effected pursuant to the negotiation of a merger on the terms
we have proposed, you and your Board should appreciate that if your Board
rejects our proposal to negotiate a merger, we reserve the right to propose
directly to the shareholders of CBI a cash offer for CBI by Praxair.
We look forward to hearing the response of your Board of Directors
after it has reviewed our merger proposal.
Sincerely,
/s/ H.W. Lichtenberger
H.W. Lichtenberger
<PAGE> 13
On October 29, 1995, Praxair issued a press release, which set forth
the foregoing letter and indicated that Praxair had proposed a merger to
the Board.
On October 30, 1995, Praxair commenced litigation against the Company
and the members of the Board in the Delaware Court of Chancery, seeking
among other things, an order (i) compelling the Board to redeem the Rights
or to amend the Rights Agreement so as to make the Rights inapplicable to
any acquisition proposal which equals or exceeds Praxair's proposed merger
and (ii) declaring that the Board is in breach of its fiduciary duty by
continuing to deploy the Rights Agreement.
On October 31, 1995, Mr. Jones telephoned Mr. Lichtenberger to
indicate that (i) the Company would not respond to Mr. Lichtenberger's
October 27th letter by Praxair's deadline of noon on November 1, 1995 and
(ii) the Board would consider in due course the matters contained in Mr.
Lichtenberger's October 27th letter.
On November 1, 1995, Praxair announced that it intended to commence
and on Friday, November 3, 1995, Praxair did commence, a tender offer to
purchase all outstanding Shares at a price of $32.00 per Share, net to the
seller in cash, without interest thereon upon the terms and subject to the
conditions set forth in the Offer to Purchase dated November 3, 1995 and
the related Letter of Transmittal (which together constituted the "Praxair
Offer").
On November 6, 8 and 14, 1995, the Board met with its legal and
financial advisors to review the Praxair Offer. On November 16, 1995, the
Company filed a Solicitation/ Recommendation Statement on Schedule 14D-9
(the "Schedule 14D-9") with the Commission stating that the Board
unanimously recommended that the Company's stockholders reject the Praxair
Offer and not tender any Shares pursuant thereto. The Schedule 14D-9 also
stated that the Company was in the preliminary stages of discussion and
negotiation concerning a possible extraordinary transaction involving the
Company, having entered into confidentiality and standstill agreements
concerning the furnishing of confidential information to parties indicating
an interest in such a transaction and having responded to due diligence
inquiries. The Schedule 14D-9 stated that, in addition, the Company had
preliminary discussions with other parties regarding their potential
interest in such a transaction.
<PAGE> 14
On November 17, 1995, Praxair sent the following letter to the Company:
November 17, 1995
Mr. John E. Jones
Chairman, President
and Chief Executive Officer
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, Illinois 60521-2268
Dear John:
As CBI Industries, Inc. ("CBI") indicated in its
Solicitation/Recommendation Statement on Schedule 14D-9, dated November 16,
1995, CBI is actively exploring alternatives to maximize shareholder value.
In that regard, CBI has (i) entered into agreements concerning the
furnishing of confidential information to other parties, (ii) responded to
due diligence inquiries and (iii) had preliminary discussions with other
parties regarding such other parties' potential interest in entering into,
among other things, an extraordinary transaction with CBI.
As stated in my letter to you, dated October 27, 1995, our offer to
acquire CBI at $32 per share is based on publicly available information.
We object strongly to the provision by CBI of non-public information
relating to CBI or any of its subsidiaries and access to any individuals
within CBI or any of its subsidiaries to any other party interested in the
purchase of or a business combination with CBI without the contemporaneous
provision of such information and access to Praxair, Inc. ("Praxair").
We believe that in connection with any discussions regarding the
possible sale of CBI, it is the fiduciary duty of the CBI Board of
Directors to maximize the value of CBI for its shareholders. We
additionally believe that to do so (and to properly discharge such
fiduciary duty) the CBI Board of Directors must, among other things, ensure
that all interested parties are placed on a "level playing field" with
regard to non-public information and access to individuals. In this
regard, Praxair is prepared to promptly enter into a standard
confidentiality agreement, which agreement would not, of course, contain
any inappropriate provisions restricting our ability to make offers to or
otherwise communicate with CBI or its shareholders.
In addition, we are amending our complaint in Delaware to require
that CBI maintain a "level playing field" and provide non-public
information and access to individuals on a comparable and contemporaneous
basis.
<PAGE> 15
Please provide to us such a confidentiality agreement and, subsequent
to the execution thereof, any non-public information and access to
individuals which have already been provided to other interested parties.
Additionally, please implement proper procedures to ensure that Praxair
receives at least contemporaneously all such non-public information and
access to individuals provided to other interested parties in the future.
Very truly yours,
/s/ H. William Lichtenberger
H. William Lichtenberger
On November 21, 1995, Praxair announced that it had received a
request for additional information from the Federal Trade Commission
("FTC") pursuant to the Hart-Scott-Rodino Antitrust Improvement Act of
1976, as amended ("HSR Act"), that it was in the process of complying with
such request, and that the initial 15-day waiting period under the HSR Act
had been extended.
On December 5, 1995, Praxair and the Company entered into a
confidentiality agreement. Among other things, the confidentiality
agreement granted Praxair the right to review certain non-public
information concerning the Company on a comparable basis to the access to
such information provided by the Company to other third parties. The
confidentiality agreement also provided that, except under certain
conditions, neither Praxair nor any of its affiliates would acquire any
securities of the Company pursuant to the Praxair Offer or otherwise at any
time prior to January 15, 1996, or such earlier time as the Company entered
into a definitive agreement with any party or parties, including Praxair,
with respect to a transaction or transactions for the acquisition of all or
a majority of the Company's assets or securities.
Pursuant to the terms of the confidentiality agreement, Praxair was
granted an opportunity to conduct a due diligence investigation of certain
public and nonpublic information of the Company (which investigation
included interviews with certain members of the Company's management).
During the course of its review, Praxair was provided by the Company with,
among other things, (i) certain financial information regarding each of the
Company's businesses and (ii) certain consolidated Company projections for
the period 1995 through 1998, which showed a compound annual growth rate
for the projection period of 8%, 19% and 42% for revenues, income from
operations, and net income to common stockholders, respectively.
Such projections reflect various assumptions by the Company which may
or may not prove to be accurate and there can be no assurance that such
results will be realized. The
<PAGE> 16
Company prepared such projections in connection with its exploration of
alternatives to maximize stockholder value. Such projections were not
prepared for, or with a view toward, dissemination to the public. Such
projections were not prepared in accordance with published guidelines of
the American Institute of Certified Public Accountants or the Commission
regarding projections and forecasts, nor have such projections been
audited, examined or otherwise reviewed by independent auditors of the
Company. In addition, such projections are based upon many estimates and
are inherently subject to significant economic and competitive
uncertainties and contingencies, many of which are beyond the control of
management of the Company. Accordingly, actual results may be materially
higher or lower than those projected. The inclusion of such projections
herein should not be regarded as a representation by the Company or any
other person that the projections will prove to be correct.
On December 19, 1995 Praxair sent the following letter to the
Company:
December 19, 1995
Mr. John E. Jones
Chairman, President
and Chief Executive Officer
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, Illinois 60522-7001
Dear John:
As indicated to you during our telephone conversation this morning,
Praxair is prepared to increase its offer to acquire CBI Industries to $33
a share subject to the Board of Directors of CBI accepting such proposal
and CBI and Praxair entering into a mutually satisfactory merger agreement
by 5:00 p.m., Thursday, December 21, 1995.
Praxair is communicating this proposal to you at this time in the
interest of bringing this matter to a prompt and satisfactory conclusion.
We think that the underlying values for the businesses and operations of
CBI can best be preserved if this matter is resolved without any further
significant delay.
We understand that your Board of Directors will want to carefully
consider our proposal and obtain the opinion of its investment bankers as
to the fairness of the proposed price of $33 per share. However, as you
can appreciate, with a proposal of this sort, time is of the essence.
Therefore, if our proposal is not accepted by the deadline set forth above,
it will be withdrawn, in which case Praxair would intend to continue with
its tender offer for shares of CBI at $32 per share. Furthermore, you
should appreciate that Praxair reserves the
<PAGE> 17
right in the future to reduce the price it is offering in its tender offer
if the businesses and operations of CBI are impaired as a result of any
prolonged delay in the resolution of this matter.
I continue to be hopeful that you and your Board of Directors will
accept our offer, and we look forward to receiving your prompt response.
Sincerely,
/s/ H. William Lichtenberger
H. William Lichtenberger
On December 22, 1995, Praxair issued a press release announcing that,
at the request of the Board of the Company, it had extended the deadline
for its proposed expedited merger agreement at $33.00 per Share with the
Company until 1:00 p.m. Eastern time on Friday, December 22.
Also on December 22, 1995, Praxair issued a press release announcing
that discussions were underway with the Company regarding Praxair's
expedited $33.00 per Share merger offer.
Also on December 22, 1995, the Board met and unanimously approved the
Merger Agreement, the Amended Praxair Offer and the Merger, determined that
each of the Amended Praxair Offer and the Merger are fair to and in the
best interests of the Stockholders of the Company and voted to recommend
that the stockholders of the Company accept the Amended Praxair Offer. On
the same day, the Board of Directors of Praxair approved the Merger
Agreement. The Merger Agreement was thereafter executed on December 22,
1995 by Praxair, the Purchaser and the Company, and Praxair and the Company
issued a joint press release announcing the execution of the Merger
Agreement.
On December 28, 1995, the Purchaser and Praxair amended the Praxair
Offer as required by the Merger Agreement. Also on December 28, 1995, the
Company filed an amendment to its Schedule 14D-9, containing, among other
things, (i) the recommendation of the Board that the stockholders of the
Company accept the Amended Praxair Offer and (ii) the opinion of Lehman
Brothers Inc. and Merrill Lynch & Co., its financial advisors, that the
consideration to be received by the stockholders of the Company pursuant to
the Amended Praxair Offer and the Merger is fair to such stockholders from
a financial point of view.
Praxair had accepted for payment 41,094,108 Shares pursuant to the
Amended Praxair Offer.
<PAGE> 18
RECOMMENDATION OF THE BOARD AND REASONS FOR THE MERGER
At a meeting of the Board on December 22, 1995, the Board determined
that the Amended Praxair Offer and the Merger are fair to and in the best
interests of the Company and its stockholders. The Board recommended that
the Company's stockholders accept the Amended Praxair Offer and tender
their Shares pursuant to the Amended Praxair Offer.
In reaching its conclusions with respect to the Amended Praxair
Offer, the Board considered a number of factors, including the following:
1. The terms and conditions of the Amended
Praxair Offer and the Merger Agreement, including the
price to be paid in the Amended Praxair Offer and the
Merger;
2. The written opinions of Lehman Brothers Inc.
and Merrill Lynch & Co. that as of the date of such
opinions the $33.00 per Share to be received by the
stockholders of the Company pursuant to the Amended
Praxair Offer and the Merger is fair to such
stockholders from a financial point of view (copies of
such opinions setting forth assumptions made and matters
considered and limitations set forth by Lehman Brothers
Inc. and Merrill Lynch & Co. are included as Exhibits B
and C hereto, respectively, and stockholders are urged to
read such opinions in their entirety);
3. The recommendation of management of the
Company that the Amended Praxair Offer and the Merger be
approved;
4. The directors' knowledge of the Company's
business, financial condition, results of operations,
current business strategy and future prospects, the
nature of the markets in which the Company operates, the
Company's position in such markets, and the efforts by
the Company's management, with the advice and assistance
of its legal and financial advisors, to explore other
possible transactions involving the Company; and
5. The historical and current market prices for
the Shares.
The Board also considered communications from a third party
indicating an interest in discussing an acquisition of the Company's
industrial gas business for $2.05 billion, which amount could include the
assumption of debt. Such party indicated it was interested only in
pursuing an acquisition of such business and not an acquisition of any of
the Company's other businesses or of the Company as a whole. The Board
considered the responses to its search for potential buyers of the
Company's non-gas businesses and the possibility of distributing such
businesses to the Company's stockholders by means of a dividend, including
<PAGE> 19
the views of its financial advisors with respect to the range of potential
market values of such businesses. The Board determined to recommend the
Amended Praxair Offer after taking into account the foregoing, the fact
that there was no assurance that a definitive agreement with such third
party for the disposition of the industrial gas business could have been
negotiated, as well as the uncertainties, costs and delays associated with
a disposition of the Company's businesses in separate transactions,
including the uncertainty related to the value at which the securities of
the non-gas businesses would trade following the public distribution
thereof.
The foregoing discussion of the information and factors considered
and given weight by the Board is not intended to be exhaustive. In view of
the variety of factors considered in connection with its evaluation of the
Amended Praxair Offer, the Board did not find it practicable to, and did
not, quantify or otherwise assign relative weights to the specific factors
considered in reaching its determination. In addition, individual members
of the Board may have given different weights to different factors.
At the December 22, 1995 meeting of the Board, the Board also
approved the Amended Praxair Offer and the Merger for the purposes of
eliminating the application of Section 203 of the DGCL, and also approved
the Amended Praxair Offer and the Merger for purposes of Article Tenth and
Article Fifteenth of the Restated Company Certificate. The Board also
authorized an amendment to the Rights Agreement (the "December Rights
Agreement Amendment") to amend the definition of "Permitted Tender Offer"
such that a "Permitted Tender Offer" is any offer which the Board, in its
sole discretion and subject to any conditions the Board deems proper,
determines to be a Permitted Tender Offer. The Board further determined
that the Amended Praxair Offer constitutes a "Permitted Tender Offer" for
so long as the Merger Agreement was not terminated. The Board further
determined to defer until further action of the Board the occurrence of a
"Distribution Date". The December Rights Agreement Amendment, dated as of
December 22, 1995, was subsequently executed by the Company and the Rights
Agent.
On January 16, 1996, the directors of the Company executed a
unanimous written consent in lieu of a meeting of the Board, pursuant to
which Mr. H. William Lichtenberger, Mr. John A. Clerico, Mr. Edgar G.
Hotard and Mr. David H. Chaifetz were elected to the Board. On the same
day, all the directors of the Company (other than the four newly-elected
directors and other than Mr. John F. Riordan and Mr. Robert G. Wallace)
resigned from the Board. On January 17, 1996, the reconstituted Board
authorized an amendment to the Rights Agreement (the "January Rights
Agreement Amendment") to amend the definition of (i) "Exempt Person" such
that both Praxair and the Purchaser are included as "Exempt Persons" and
(ii) "Distribution Date" such that it shall be such date as may be
determined by action of the Board. The January Rights Agreement Amendment,
dated as of January 18, 1996, was subsequently executed by the Company and
the Rights Agent.
<PAGE> 20
OPINIONS OF FINANCIAL ADVISORS
The Company has engaged Lehman Brothers Inc. ("Lehman Brothers") and
Merrill Lynch & Co. ("Merrill Lynch," and together with Lehman Brothers, the
"Financial Advisors") to act as its financial advisors with respect to the
proposals made by Praxair, and any alternatives thereto, and to render their
opinions as to the fairness, from a financial point of view, to the
Company's stockholders of the consideration to be offered to such
stockholders in the Amended Praxair Offer and the Merger.
On December 22, 1995, in connection with the evaluation of the Merger
Agreement, the Amended Praxair Offer and the Merger by the Board, Lehman
Brothers and Merrill Lynch made a presentation to the Board with respect to
the consideration to be offered to the stockholders of the Company in the
Amended Praxair Offer and the Merger and delivered their opinions that, as
of the date of such opinions, and subject to assumptions, factors and
limitations set forth in such written opinions as described below, the
consideration to be offered to the stockholders of the Company in the
Amended Praxair Offer and the Merger is fair, from a financial point of
view, to such stockholders.
The full text of the written opinions of Lehman Brothers and Merrill
Lynch, each dated December 22, 1995, which set forth assumptions made,
factors considered and limitations on the review undertaken by Lehman
Brothers and Merrill Lynch, are included as Exhibit B and Exhibit C,
respectively, to this Information Statement, and are incorporated herein by
reference. The summary of the opinions of the Financial Advisors set forth
in this Information Statement is qualified in its entirety by reference to
the full text of such opinions.
No limitations were imposed by the Company on the scope of the
Financial Advisors' investigation or the procedures to be followed by the
Financial Advisors in rendering their opinions. The Financial Advisors were
not requested to and did not make any recommendation to the Board as to the
form or amount of consideration to be offered to the stockholders of the
Company in the Amended Praxair Offer and the Merger, which was determined
through arm's-length negotiations between the Company and Praxair in which
the Financial Advisors assisted in the Company. The Financial Advisors'
opinions are for the use and benefit of the Board and were rendered to the
Board in connection with its consideration of the Amended Praxair Offer and
the Merger. The Financial Advisors' opinions do not constitute a recommenda-
tion to any of the Company's stockholders as to whether to accept the
consideration offered to such stockholder in the Amended Praxair Offer and the
Merger. The Financial Advisors were not requested to opine as to, and their
opinions do not address, the Company's underlying business decision to proceed
with or effect the Amended Praxair Offer and the Merger.
In arriving at their opinions, the Financial Advisors reviewed and
analyzed: (i) the Merger Agreement and the specific terms of the Amended
Praxair Offer and the Merger, (ii) such publicly available information
concerning the Company and Praxair which the Financial Advisors believed to
be relevant to their inquiry, (iii) financial and operating information with
respect
<PAGE> 21
to the business, operations and prospects of the Company furnished to the
Financial Advisors by the Company including, without limitation, certain
projections prepared by the Company, (iv) a trading history of the Company's
common stock and a comparison of that trading history with those of other
companies that the Financial Advisors deemed relevant, (v) a comparison of
the historical financial results and present financial condition of the
Company with those of other companies that the Financial Advisors deemed
relevant, and (vi) a comparison of the financial terms of the Amended
Praxair Offer and the Merger with the financial terms of certain other
transactions that the Financial Advisors deemed relevant. In addition, in
arriving at their opinions, the Financial Advisors placed considerable
emphasis on the results of efforts to solicit indications of interest from
third parties with respect to an acquisition of all or part of the Company
or other strategic transactions involving the Company. The Financial
Advisors also had discussions with the management of the Company concerning
its business, operations, assets, financial condition and prospects and
undertook such other studies, analyses and investigations as they deemed
appropriate.
In arriving at their opinions, the Financial Advisors assumed and
relied upon the accuracy and completeness of the financial and other
information used by them without assuming any responsibility for independent
verification of such information. The Financial Advisors further relied
upon the assurances of management of the Company that they were not aware of
any facts that would make such information inaccurate or misleading. With
regard to the financial projections of the Company provided to the Financial
Advisors by the management of the Company, the Financial Advisors assumed
that such projections were reasonably prepared on a basis reflecting the
best currently available estimates and judgments of the management of the
Company as to the future financial performance of the Company and that the
Company will perform substantially in accordance with such projections. In
arriving at their opinions, the Financial Advisors did not conduct a
physical inspection of the properties and facilities of the Company and did
not make or obtain any evaluations or appraisals of the assets or
liabilities of the Company. The opinions of the Financial Advisors state
that they are necessarily based upon market, economic and other conditions
as they existed on, and could be evaluated as of, the date of the opinions.
In connection with their presentation to the Board and advising the
Board of their opinions on December 22, 1995, the Financial Advisors
performed certain financial and comparative analyses, as described below.
The preparation of a fairness opinion involves various determinations as to
the most appropriate and relevant methods of financial and comparative
analysis and the application of those methods to the particular
circumstances, and therefore, such an opinion is not readily susceptible to
summary description. Furthermore, in arriving at
<PAGE> 22
their fairness opinions, the Financial Advisors did not attribute any
particular weight to any analysis or factor considered by it, but rather
made qualitative judgments as to the significance and relevance of each
analysis and factor. Accordingly, the Financial Advisors believe that their
analyses must be considered as a whole and that considering any portions of
such analyses and of the factors considered, without considering all
analyses and factors, could create a misleading or incomplete view of the
process underlying the opinions. In their analyses, the Financial Advisors
made numerous assumptions with respect to industry performance, general
business and economic conditions and other matters, many of which are beyond
the control of the Company. Any estimates contained in the analyses are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than as set forth
therein. In addition, analyses relating to the value of businesses do not
purport to be appraisals or to reflect the prices at which businesses
actually may be sold.
Analysis of Selected Publicly Traded Comparable Companies. Using
publicly available information, the Financial Advisors compared selected
financial data of the Company with similar data of selected publicly traded
companies engaged in businesses considered by the Financial Advisors to be
comparable to those of the Company. Specifically, the Financial Advisors
included in their review AGA AB, Airgas Inc., Air Products & Chemicals, The
BOC Group, Fluor Corp., Foster Wheeler Corp., Jacobs Engineering Group,
L'Air Liquide S.A., Linde Group, Morrison Knudson Corp., Matrix Services,
McDermott Int'l., Pitt-Des Moines Inc. and Praxair, Inc. (the "Comparable
Universe"). The Financial Advisors calculated, among other things, current
market price per share as a multiple of the latest reported twelve months
("LTM") earnings per share ("EPS"), 1995 EPS estimate, 1996 EPS estimate and
the latest reported book value per share. The 1995 and 1996 EPS estimates
were based on the median of publicly-available earnings estimates made by
research analysts as provided by First Call Investor Service. The Financial
Advisors also calculated total equity market value plus net debt as a
multiple of each of LTM revenues, earnings before interest and taxes
("EBIT") and EBIT plus depreciation and amortization expenses ("EBITDA").
The results of these calculations were used to impute a range of values by
applying the multiples derived from the calculations to the Company's
financial data.
Because of the inherent differences between the businesses, operations
and prospects of the Company and the businesses, operations and prospects of
the companies included in the Comparable Universe, the Financial Advisors
believed that it was inappropriate to, and therefore did not, rely solely on
the quantitative results of the analysis, and accordingly also made
qualitative judgments concerning differences between the financial and
operating characteristics of the Company and the companies included in the
Comparable Universe that would affect
<PAGE> 23
the public trading values of the Company and such comparable companies.
Analysis of Selected Comparable Transactions. Using publicly available
information, the Financial Advisors compared selected financial data
(including total equity market value as a multiple of LTM net income and
book value and total equity market value plus net debt as a multiple of
revenues, EBIT and EBITDA) for the Company with similar data for selected
transactions deemed by the Financial Advisors to be relevant. Using the
same methodology as in the analysis of comparable companies, the multiples
derived from this analysis were used to impute a range of values for the
Company.
Because the reasons for and the circumstances surrounding each of the
transactions analyzed were specific to each transaction and because of the
inherent differences between the businesses, operations and prospects of the
Company and the businesses, operations and prospects of the selected
acquired companies analyzed, the Financial Advisors believed that it was
inappropriate to, and therefore did not, rely solely on the quantitative
results of the analysis, and accordingly also made qualitative judgments
concerning differences between the characteristics of these transactions and
the Amended Praxair Offer and the Merger that would affect the acquisition
values of the Company and such acquired companies.
Discounted Cash Flow Analysis. The Financial Advisors calculated the
present value of the future streams of unleveraged after-tax cash flows that
the Company would be expected to produce over a ten year period. The
analysis utilized financial projections through 1998 provided by the
Company's management and relied on certain assumptions with respect to the
Company's future business and operations beyond such date reviewed by and
discussed with the Company's management. After-tax cash flows were
calculated as the after-tax EBIT before amortization ("EBITA") plus
depreciation less net changes in non-cash working capital and capital
expenditures. The Financial Advisors calculated terminal values for the
Company by applying to projected EBITA and EBITDA a range of multiples based
on the analysis of the trading multiples of the Comparable Universe,
analysis of the selected comparable transactions and on the Financial
Advisors' general experience in mergers and acquisitions. The cash flow
streams and terminal values were then discounted to present values using a
range of discount rates which were chosen based on several assumptions
regarding the cost of capital of the Company and its businesses.
<PAGE> 24
Breakup Analysis. The Financial Advisors also analyzed the Company's
possible value under a breakup analysis, examining a wide variety of
scenarios under which the Company's different businesses could be sold for
cash or stock or could be separated and spun-off to trade publicly. These
transactions were examined under a variety of tax scenarios, including some
or all transactions being taxable transactions and subtracting estimated tax
liabilities from the value ranges. The estimated costs of breaking up the
Company were also subtracted from the value ranges, including costs related
to refinancing debt, fulfilling severance obligations, dividing the Company's
Employee Stock Ownership Plan among the employees in the respective
businesses and paying transaction fees. For purposes of the analysis, the
Financial Advisors relied upon tax data (including as to basis) provided by
the Company. The Financial Advisors marketed the separate businesses to a
number of interested parties and used the information resulting from this
process in performing this analysis to assess potential realizable values.
Each of Lehman Brothers and Merrill Lynch is an internationally
recognized investment banking firm engaged in, among other things, the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive bids, secondary
distributions of listed and unlisted securities, private placements, and
valuations for corporate and other purposes. The Board selected Lehman
Brothers and Merrill Lynch because of their expertise, reputation and
familiarity with the Company and because their investment banking
professionals have substantial experience in transactions similar to the
Amended Praxair Offer and the Merger.
Each of Lehman Brothers and Merrill Lynch has previously rendered
certain financial advisory and investment banking services to the Company,
for which it has received customary compensation. Pursuant to the terms of
an engagement letter agreement, dated November 14, 1995, between Lehman
Brothers, Merrill Lynch and the Company, the Company has paid fees totalling
$5,500,000 ($250,000 of which constituted a retainer fee) to Lehman Brothers
and fees totalling $5,500,000 ($250,000 of which constituted a retainer fee)
to Merrill Lynch as compensation for the services rendered by each in
connection with the Amended Praxair Offer and the Merger. In addition, the
Company has agreed to reimburse the Financial Advisors for their reasonable
expenses (including, without limitation, professional and legal fees and
disbursements) incurred by them in connection with their engagement, and to
indemnify the Financial Advisors and certain related persons against certain
liabilities in connection with their engagement, including certain
liabilities that may arise under the federal securities laws.
In the ordinary course of their respective businesses, each of Lehman
Brothers and Merrill Lynch actively trades in the securities of the Company
and Praxair for its own account and for the accounts of its customers and,
accordingly, may at any time hold a long or short position in such
securities.
INTERESTS OF CERTAIN PERSONS
Certain existing and former members of the Company's management and
Board (as well as other employees of the Company) have certain interests
that are described below that may present them with actual or potential
conflicts of interest in connection with the Merger.
Four designees of Praxair -- H. William Lichtenberger, John A.
Clerico, Edgar G. Hotard and David H. Chaifetz -- were elected to the Board
following consummation of the Amended Praxair Offer. Such designees did
not own any Shares as individuals as of the Record Date.
<PAGE> 25
STOCK OPTIONS AND RESTRICTED STOCK
Pursuant to the Merger Agreement, (i) each outstanding stock option
("Company Option") under the Company's Stock Option Plan and the Company's
1995 Stock Option Plan (collectively, the "Option Plans"), which was then
not exercisable became exercisable in full immediately prior to the
consummation of the Amended Praxair Offer and (ii) each option (and related
stock appreciation right) under the Option Plans outstanding immediately
prior to the Effective Time, whether or not then exercisable, will be
canceled and only entitle the holder thereof, upon surrender thereof, to
receive an amount in cash equal to the difference between $33.00 and the
exercise price per Share of such Company Option multiplied by the number of
Shares previously subject to such Company Option (such payment to be net of
applicable withholding taxes).
Pursuant to the Merger Agreement, the CBI Restricted Stock Award Plan
(1978), the CBI 1983 Restricted Stock Award Plan, the CBI 1989 Restricted
Stock Award Plan and the CBI 1994 Restricted Stock Award Plan (the
"Restricted Stock Plans") terminated following the purchase of Shares
pursuant to the Amended Praxair Offer. Under the terms of the Restricted
Stock Plans, all restrictions on Shares granted under such plans lapsed
following a termination of such plans after a Change in Control (as defined
therein). The acquisition by Praxair of beneficial ownership of 10% or
more of the Shares constituted a "Change in Control" for purposes of the
Restricted Stock Plans.
All of the executives and officers of the Company exercised their
Company Options (other than those options that became exercisable pursuant
to the Merger Agreement) prior to the consummation of the Amended Praxair
Offer. Each of the executives and officers of the Company tendered all of
his unrestricted Shares (including Shares obtained pursuant to the
Restricted Stock Plans and the Option Plans) in connection with the Amended
Praxair Offer. All Company Options that became exercisable pursuant to the
Merger Agreement and all restricted Shares that became unrestricted Shares
upon termination of the Restricted Stock Plans shall be canceled
immediately prior to the Effective Time and entitle the holder thereof to
cash.
STOCK AWARDS
The Compensation Committee of the Board approved certain awards under
the CBI 1994 Restricted Stock Award Plan (the "1994 Restricted Stock Plan")
effective immediately prior to the termination of the 1994 Restricted Stock
Plan. Specifically, the Compensation Committee resolved that 94.1% of each
award based on 1995 performance would be deemed earned and would be paid in
cash upon termination of the 1994 Restricted Stock Plan, and all awards
based on performance for fiscal years 1996 and 1997 would be awarded as if
payable in full and would be paid in cash. Pursuant to the Merger
Agreement, the Restricted Stock Plans terminated upon purchase of Shares
pursuant to the Amended Praxair Offer. Pursuant to the terms of the
Restricted Stock Plans, restrictions on restricted stock issued under such
Restricted Stock Plans lapsed upon termination of such Restricted Stock
Plans. The following awards became payable in full and were paid in cash
to the following persons who
<PAGE> 26
were then directors and executive officers of the Company: J.E. Jones
$489,878.40; L.E. Akin $171,457.44; C.E. Willoughby $73,481.76; A.J.
Schneider $44,089.06; C.O. Ziemer $73,481.76.
TERMINATION AGREEMENTS
Agreements between the Company and Messrs. Jones, Akin, Willoughby,
Schneider and Ziemer provide for each executive's continued employment for
a three-year period (or to age 65, if earlier) following a Change in
Control of the Company (the "Change in Control Agreements"). "Change in
Control" is defined as the occurrence at any time of any of the following
events: (a) an Acquiring Person (as defined below) has become such; or (b)
Continuing Directors (as defined below) cease to comprise a majority of the
Board. The term "Acquiring Person" means any Person (as defined therein)
who or which, together with all Affiliates (as defined therein) and Associates
(as defined therein) of such Person, shall be the Beneficial Owner (as defined
therein) of 10% or more of the Shares then outstanding (subject to certain
exceptions), but shall not include an Exempt Person (as defined therein).
The term "Continuing Director" means any member of the Board, while such
person is a member of the Board, who is not an Acquiring Person, or an
Affiliate or Associate of an Acquiring Person, or a representative of an
Acquiring Person or of any such Affiliate or Associate, and was a member of
the Board prior to March 4, 1986 and means any person who subsequently
becomes a member of the Board, while such person is a member of the Board,
who is not an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, or a representative of an Acquiring Person or of any such
Affiliate or Associate, if (a) such person's nomination for election or
election to the Board is recommended or approved by resolution of a
majority of the Continuing Directors or (b) such person is included as a
nominee in a proxy statement of the Company distributed when a majority of
the Board consists of Continuing Directors.
Compensation and benefits for the three-year period are based
generally on the executive's compensation and benefits before the Change in
Control, subject to stipulated increases, and are payable in a lump sum on
a discounted present value basis upon either (i) termination by the Company
of the executive's employment for any reason other than death, disability
or wilful and material breach of the agreement during such period, or (ii)
resignation of the executive following any of (a) a significant change in
the executive's authorities or duties, (b) a reduction in the executive's
total compensation or (c) any other breach of the executive's Change in
Control Agreement. Such benefits payable upon a termination of employment
following a Change in Control also include a cash payment equal to (a) the
fair market value of any restricted stock awards which are forfeited as a
result of such termination, and (b) with respect to any stock option that
ceases to be exercisable or which terminates, a payment equal to the excess
of the fair market value of the stock subject to such option over the
option exercise price. The Change in Control Agreements also contain
"gross up" provisions pursuant to which the executive will be paid
additional amounts to reimburse such executive for all excise taxes payable
pursuant to Code Section 4999 with respect to so-called golden parachutes,
which additional payments will also include
<PAGE> 27
those amounts necessary to permit the executive to pay all income and
excise taxes payable with respect to all such additional payments.
Pursuant to addenda to their respective Change in Control Agreements
with the Company, L.E. Akin and C.E. Willoughby also entered into Change in
Control Agreements with their employers, Chicago Bridge & Iron Company
("CBIC") and Liquid Carbonic Industries Corporation ("LCI"), respectively,
wholly owned subsidiaries of the Company. Messrs. Akin's and Willoughby's
Change of Control Agreements become effective upon either a Change in
Control of the Company or a Change in Ownership of CBIC or LCI, as the case
may be. A "Change in Ownership" of CBIC or LCI means an occurrence of an
event pursuant to which the ultimate right to elect the directors of CBIC
or LCI, as the case may be, is not exercisable by the Company or another
entity which directly or indirectly acquires stock of CBIC or LCI, as the
case may be, in a leveraged buyout in which the senior management of the
Company participates. Upon the earlier of a Change in Control in the
Company, or a Change in Ownership of CBIC or LCI, as the case may be, the
executive officer must, within 30 days of such change, notify both its
immediate employer and the Company as to which employment arrangement the
executive wishes to apply to his employment.
The acquisition by Praxair of beneficial ownership of approximately
94% of the Shares constituted a Change in Control and a Change in Ownership
pursuant to the Change in Control Agreements. On December 29, 1995, the
following executive officers of the Company received the following lump sum
payments as a portion of payments that would be payable pursuant to the
Change in Control Agreements: J.E. Jones $4,647,298; L.E. Akin $2,014,729;
C.E. Willoughby $1,643,362; A.J. Schneider $1,041,790; C.O. Ziemer
$1,118,887; Octavo Siuto $1,345,824; Larry Cooper $1,153,683; Steve Duffy
$757,798.
CERTAIN EFFECTS OF THE CONSUMMATION
OF THE OFFER ON THE SHARES
If the Merger is consummated, Stockholders will not have an
opportunity to continue their common equity interest in the Company as an
ongoing operation and therefore will not have the opportunity to share in
its future earnings and potential growth, if any. Following the Merger,
the Company plans to take all necessary actions (i) to de-register the
Shares under the Securities Exchange Act of 1934, as amended, and (ii) to
delist and de-register the Shares from the New York Stock Exchange (the
"NYSE").
STRUCTURE OF THE MERGER
In the Merger, each issued and outstanding Share (other than Shares
owned by Praxair, Purchaser or any other subsidiary of Praxair and each
Dissenting Share) will be
<PAGE> 28
converted into the right to receive the Merger Consideration. Each Share
issued and outstanding and owned by Praxair, the Purchaser or any other
subsidiary of Praxair and each Share issued and held in the Company's
treasury will cease to be outstanding, will be canceled and retired without
payment of any consideration therefor and will cease to exist. Each share
of Common Stock, par value $0.01 per share, of Purchaser issued and
outstanding immediately prior to the Effective Time will be converted into
and become one issued and outstanding share of common stock of the
Surviving Corporation. The Company will thereupon become a subsidiary of
Praxair and Praxair will own the entire common equity interest in the
Company.
The acquisition of the Shares is structured as a cash merger, with
the Company as the Surviving Corporation, to ensure that Praxair will
acquire all outstanding Shares from all public holders thereof without
materially disrupting the Company's operations.
FINANCING OF THE MERGER
The Purchaser estimates that the total amount of funds required to
purchase the number of Shares outstanding on a fully diluted basis and to
pay fees and expenses related to the Amended Praxair Offer and the Merger
will be approximately $1.5 billion of which approximately $1.36 billion was
paid to purchase Shares tendered pursuant to the Amended Praxair Offer.
The Purchaser has obtained such funds and plans to obtain additional
necessary funds, if any, through capital contributions or advances made by
Praxair. Praxair plans to obtain the necessary funds for such capital
contribution, together with funds necessary to refinance any existing
borrowings of Praxair and its subsidiaries and the Company and its
subsidiaries that become payable as a result of completion of the Amended
Praxair Offer or the Merger, pursuant to borrowings in the commercial paper
market or under the Credit Agreement (as defined herein).
On December 7, 1995, Praxair entered into a definitive $2,500,000,000
Credit Agreement (the "Credit Agreement") among Praxair, the banks party
thereto, Morgan Guaranty Trust Company of New York, as Documentation Agent,
and Chemical Bank, as Administrative Agent and Auction Agent. On January
12, 1996, the Credit Agreement became effective and the Commitments (as
defined in the Credit Agreement) of the banks thereunder became available
to Praxair. To date, no borrowings have been made under the Credit
Agreement.
<PAGE> 29
ACCOUNTING TREATMENT OF THE MERGER
The Merger will be accounted for under the "purchase" method of
accounting, whereby the purchase price for the Company will be allocated to
the identifiable assets and liabilities of the Company and its subsidiaries
based on their respective fair values.
CERTAIN LEGAL MATTERS; REQUIRED REGULATORY APPROVALS
Pursuant to the Merger Agreement, Praxair, the Purchaser and the
Company dismissed, with each party bearing its own costs and litigation
expenses, all proceedings pending between themselves and their affiliates
and to sign and deliver such further papers as may be necessary in
connection with such dismissals.
On October 30, 1995, four purported Stockholders commenced litigation
in the Delaware Court of Chancery against the Company and the Board,
alleging that the Board has violated its fiduciary duties to the Company's
stockholders by failing to pursue a possible transaction with Praxair and
employing the Rights Agreement to prevent Praxair from acquiring the
Company. Two additional Stockholder complaints were filed October 31 and
November 1. Each of these complaints seeks relief on behalf of a purported
class consisting of all Stockholders. In addition to injunctive and
declaratory relief, the Stockholder plaintiffs seek to recover damages on
behalf of the alleged class and an award of attorneys' fees. The Company
believes the foregoing actions are without merit, particularly in light of
the Merger Agreement and other transactions agreed upon between Praxair and
the Company subsequent to the filing of such actions.
Antitrust. On November 21, 1995, Praxair announced that it had
received a request for additional information from the FTC pursuant to the
HSR Act, that it was in the process of complying with such request, and that
the initial 15-day waiting period under the HSR Act was extended. Praxair
has reached an agreement with the staff of the FTC concerning a settlement
and consent order, which the FTC announced on January 11, 1996 had received
the approval of the Commissioners of the FTC. Pursuant to the agreement,
Praxair has signed a consent order which requires divestiture, within 12
months, of the merchant industrial gases assets and businesses of the
Company's liquid oxygen, nitrogen and argon production facilities in
Vacaville, CA; Irwindale, CA; Bozrah, CT; and Madison, WI.
No other U.S. federal or state regulatory requirement must be
complied with and no other approval must be obtained in connection with the
Merger.
CERTAIN FEDERAL TAX CONSEQUENCES OF THE MERGER
The following is a summary of the principal federal income tax
consequences of the Merger to Stockholders who hold their Shares as capital
assets. The discussion is based on the current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the applicable Treasury
Regulations ("Regulations") and public administrative and judicial
<PAGE> 30
interpretations of the Code and Regulations, all of which are subject to
change, which changes could be applied retroactively.
The tax consequences of the transfer of Shares by a holder pursuant
to the Merger will depend on the holder's particular facts and
circumstances. This discussion is for general information purposes only
and may not apply to Stockholders who are subject to special treatment
under the Code, such as (but not limited to) foreign persons, retirement
plans, regulated investment companies and dealers in securities. It does
not cover the special tax consequences that may apply to holders who
acquired their Shares pursuant to the exercise of employee stock options or
otherwise as compensation. This summary is not intended to address any
aspects of state, local, foreign or other tax laws. The discussion assumes
that the Company is not a collapsible corporation under section 341 of the
Code.
The receipt of cash from the Purchaser for Shares pursuant to the
Merger will be a taxable sale for federal income tax purposes (and also may
be a taxable sale under applicable state, local or foreign tax laws). In
general, a Stockholder will recognize gain or loss for federal income tax
purposes equal to the difference between the amount of cash received for
the Shares and the holder's adjusted tax basis in such Shares. Gain or
loss must be determined separately for each identifiable block of Shares
(i.e., shares acquired at the same time and at the same price in one
transaction) converted into cash in the Merger. Provided the Shares
constitute capital assets in the hands of the holder thereof such gain or
loss will be capital gain or loss and will be long-term capital gain or
loss if, on the date of the sale pursuant to the Merger, the Shares were
held for more than one year. The deduction of any capital loss may be
limited under the Code.
Unless a Stockholder complies with certain reporting and
certification procedures or is an exempt recipient under applicable
withholding provisions of the Code and Regulations, such holder may be
subject to withholding tax of 31% with respect to any cash payments
received pursuant to the Merger. This tax is not an additional tax, but is
treated as a payment of the taxpayer's federal income tax and may be
refunded if the taxpayer has otherwise satisfied its federal income tax
liability and the taxpayer complies with the applicable requirements for
obtaining a refund. Stockholders should consult their brokers or the
Paying Agent to ensure compliance with such procedures. Foreign
Stockholders should consult their own tax advisors regarding withholding
taxes in general.
THE PRECEDING DISCUSSION IS INTENDED ONLY AS A SUMMARY OF CERTAIN
FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER AND DOES NOT PURPORT TO BE A
COMPLETE ANALYSIS OR DISCUSSION OF ALL THE POTENTIAL TAX EFFECTS RELEVANT
THERETO. THUS, STOCKHOLDERS ARE URGED AND EXPECTED TO CONSULT THEIR OWN
TAX ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE MERGER TO
THEM
<PAGE> 31
UNDER FEDERAL, STATE, LOCAL OR OTHER TAX LAWS AND THE EFFECT OF ANY CHANGE
IN THE APPLICABLE TAX LAWS SINCE THE DATE HEREOF.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which
is attached hereto as Exhibit A. Such summary is qualified in its entirety
by reference to the text of the Merger Agreement.
The Amended Offer. Pursuant to the Merger Agreement, Praxair and the
Purchaser agreed, subject to certain conditions, to amend the Praxair Offer
(i) to increase the price per Share to be paid pursuant to the Praxair
Offer from $32.00 per Share to $33.00 per Share, net to the seller in cash,
without interest thereon , (ii) to amend and restate the conditions to the
Praxair Offer, (iii) to amend the Praxair Offer such that the Amended
Praxair Offer and withdrawal rights would expire at 12:00 midnight, New
York City time, on Thursday, January 11, 1996 and (iv) to provide for the
Merger as promptly as is practicable following the consummation of the
Amended Praxair Offer.
Company Actions. Pursuant to the Merger Agreement, the Company
approved of and consented to the Amended Praxair Offer and represented that
(i) the Board, by vote of all directors at a meeting duly called and held,
has, in light of and subject to the terms and conditions set forth in the
Merger Agreement, unanimously (x) determined that each of the Amended
Praxair Offer and the Merger is fair to, and in the best interests of, the
stockholders of the Company and (y) approved the Merger Agreement and the
transactions contemplated thereby, including the Amended Praxair Offer and
the Merger, and recommended acceptance of the Amended Praxair Offer and
approval and adoption of the Merger Agreement and the Merger by the
stockholders of the Company and (ii) Merrill Lynch & Co. and Lehman
Brothers Inc., the Company's financial advisors, rendered to the Board
their respective opinions that the consideration to be received by the
stockholders of the Company pursuant to the Amended Praxair Offer and the
Merger is fair to such stockholders from a financial point of view.
Pursuant to the Merger Agreement, promptly upon the purchase of and
payment for any Shares by the Purchaser pursuant to the Amended Praxair
Offer which represent at least a majority of the Shares (on a fully diluted
basis) and from time to time thereafter, Praxair and the Purchaser became
entitled to designate members of the Board such that Praxair and the
Purchaser would have a number of representatives on the Board, rounded up
to the next whole number, equal to the product of (x) the total number of
directors on the Board multiplied by (y) the percentage of the outstanding
Shares beneficially owned by the Purchaser or its affiliates. The Company
agreed, upon request by Praxair or the Purchaser, to promptly increase the
size of the Board to the extent permitted by the Restated Company
Certificate and, if necessary, secure the resignations of such number of
directors as would be
<PAGE> 32
necessary to enable Praxair's designees to be elected to the Board and
cause Praxair's designees to be so elected.
Following the election or appointment of Praxair's designees and
prior to the Effective Time, any action to be taken by the Board with
respect to the Merger Agreement will require approval by a majority of
those directors of the Company who have not been designated by Praxair or
the Purchaser. Until the Effective Time, the Company and Praxair will use
all reasonable efforts to retain as members of the Board at least two
directors who at the time are neither officers of Praxair or the Company
(or any of their respective affiliates), nor designees of the Purchaser (or
any of its affiliates), nor stockholders or affiliates of Purchaser (or any
respective affiliate).
The Merger. The Merger Agreement provides that in accordance with
the provisions thereof, at the Effective Time, the Purchaser will be merged
with and into the Company, and the Company will be the Surviving
Corporation in the Merger and will continue to be governed by the laws of
the State of Delaware. At the Effective Time, the separate corporate
existence of the Purchaser shall cease.
Pursuant to the Merger Agreement, as of the Effective Time, by virtue
of the Merger and without any action on the part of the holders of the
Shares, each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares owned by Praxair, the Purchaser of
any other subsidiary of Praxair or Shares which are held by dissenting
stockholders exercising appraisal rights pursuant to Section 262 of the
DGCL) will be converted into the right to receive, without interest, $33.00
in cash. Each Share issued and outstanding and owned by Praxair, the
Purchaser or any other subsidiary of Praxair, and each Share issued and
held in the Company's treasury will cease to be outstanding, will be
canceled and retired without payment of any consideration therefor and will
cease to exist. For a description of certain appraisal rights available to
stockholders under Delaware law in connection with the Merger, see "THE
SPECIAL MEETING -- Dissenters' Rights of Appraisal" and Annex A.
As of the Effective Time, by virtue of the Merger and without any
action on the part of the Purchaser or the holder thereof, each share of
Common Stock, par value $0.01 per share, of Purchaser issued and
outstanding immediately prior to the Effective Time will be converted into
one issued and outstanding share of common stock of the Surviving
Corporation.
Pursuant to the Merger Agreement, each share of 7.48% Cumulative
Preferred Stock, Series D of the Company, par value $1.00 per share, and
each share of $6.75 Cumulative Preferred Stock, Series E of the Company,
par value $1.00 per share, which immediately prior to the Effective Time is
issued and outstanding shall remain outstanding and shall be entitled to
the same dividend and other relative rights, preferences, limitations and
restrictions as are now provided by the Restated Company Certificate.
<PAGE> 33
Under the Merger Agreement, the Company agreed to take all actions
necessary to provide that, immediately prior to the consummation of the
Amended Praxair Offer, each outstanding option ("Company Option") to
purchase Shares under the Company's Stock Plans (as defined in the Merger
Agreement) which is not then exercisable would be exercisable in full and
each Company Option (and each related stock appreciation right) outstanding
prior to the Effective Time pursuant to any of the Stock Plans, whether or
not then exercisable, will be canceled and only entitle the holder thereof,
upon surrender thereof, to receive an amount in cash equal to the
difference between $33.00 (or such greater amount which might have been
paid pursuant to the Amended Praxair Offer) and the exercise price per
Share of such Company Option multiplied by the number of Shares previously
subject to such Company Option (such payment to be net of applicable
withholding taxes).
The Merger Agreement also provides that, subject to certain
exceptions, (i) the Stock Plans would terminate immediately following the
purchase of Shares pursuant to the Amended Praxair Offer and the provisions
in any other plan, program or arrangement, providing for the issuance or
grant of any other interest in respect of the capital stock of the Company
or any of its subsidiaries will be deleted as of the Effective Time and
(ii) the Company will use all reasonable efforts to ensure that following
the Effective Time no holder of Company Options or any participant in the
Stock Plans or any other plans, programs or arrangements shall have any
right thereunder to acquire any equity securities of the Company, the
Surviving Corporation or any subsidiary thereof.
The Merger Agreement provides that the Restated Company Certificate
will be the Certificate of Incorporation of the surviving corporation until
thereafter amended as provided by law and that the by-laws of the Purchaser
in effect at the Effective Time will be the by-laws of the Surviving
Corporation until thereafter amended as provided by law.
Under the Merger Agreement, subject to applicable law, the directors
of the Purchaser at the Effective Time will be the initial directors of the
Surviving Corporation and will hold office until their respective
successors are duly elected or appointed and qualified or until their
earlier death, resignation or removal.
Pursuant to the Merger Agreement, the officers of the Company at the
Effective Time will be the initial officers of the Surviving Corporation
and will hold office until their respective successors are duly appointed
and qualified, or their earlier death, resignation or removal.
Agreements of the Company, Praxair and the Purchaser. Pursuant to
the Merger Agreement and subject to certain terms therein, from the date of
the Merger Agreement until the Effective Time, the Company has agreed to,
upon reasonable notice, afford Praxair's officers, employees, counsel,
accountants and other representatives access during normal business hours
to its properties, books, contracts and records and, during such period,
<PAGE> 34
furnish promptly all information concerning its business, properties and
personnel as may be reasonably requested.
Under the Merger Agreement, from and after the Effective Time,
Praxair will indemnify, defend and hold harmless each present and former
officer, director and employee of the Company, determined as of the
Effective Time, against any costs or expenses, judgments, fines, losses,
claims, damages or liabilities incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of matters existing or
occurring at or prior to the Effective Time, whether asserted or claimed
prior to, at or after the Effective Time, to the fullest extent that the
Company would have been permitted under Delaware law and the Restated
Company Certificate or the Company's by-laws to indemnify such Person.
Pursuant to the Merger Agreement, for a period of not less than five
years after the Effective Time, Praxair has agreed that it shall use all
reasonable efforts to maintain the Company's existing directors' and
officers' liability insurance policy and employee benefit fiduciary
liability insurance (provided that Praxair may substitute therefor policies
of substantially similar coverage and amounts containing terms which are no
less advantageous); provided, however, that Praxair is not obligated to
make annual premium payments for such insurance to the extent such premiums
exceed 175% of the premiums paid as of the date of the Merger Agreement by
the Company for such insurance.
Pursuant to the Merger Agreement, Praxair has agreed that, for the
period of one year commencing on the consummation of the Amended Praxair
Offer, the employees of the Company and its subsidiaries and former
employees of the Company and its subsidiaries, other than employees covered
by collective bargaining agreements, will continue to be provided with
benefits under employee benefit plans with a value which is not less in the
aggregate than that currently provided by the Company and its subsidiaries
to such employees.
Conditions to the Merger. Under the Merger Agreement, the respective
obligations of Praxair and the Purchaser to consummate the Merger are
subject to the fulfillment of each of the following conditions, any or all
of which (other than the Minimum Tender Condition (as defined in the Merger
Agreement) may be waived in whole or in part by Praxair or the Purchaser,
as the case may be, to the extent permitted by applicable law: (a) the
Merger Agreement shall have been duly approved by the vote of stockholders
of the Company necessary to approve the Merger Agreement and the
transactions contemplated by the Merger Agreement, in accordance with
applicable law, the Restated Company Certificate and the by-laws of the
Company; (b) the Purchaser shall have purchased Shares pursuant to the
Amended Praxair Offer; (c) the waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated; (d) no United States or state court or other governmental
entity of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, judgment, decree,
injunction
<PAGE> 35
or other order (whether temporary, preliminary or permanent) which is in
effect and prohibits consummation of the transactions contemplated by the
Merger Agreement; (e) the Company shall have fulfilled its obligations
under the Merger Agreement in connection with Company Options, Stock Plans
and the Rights Agreement.
Under the Merger Agreement, the obligations of the Company to
consummate the Merger are subject to the fulfillment of each of the same
conditions as stated in the previous paragraph (except for Condition (e)),
any or all of which may be waived in whole or in part by the Company to the
extent permitted by applicable law.
Termination. The Merger Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time, before or after
the approval by stockholders of the Company, by the mutual consent of
Praxair and the Company, by action of their respective Boards of Directors.
Amendment. Subject to applicable law, the Merger Agreement may be
modified or amended by written agreement of Praxair, the Purchaser and the
Company at any time prior to the Effective Time with respect to any of the
terms contained therein.
TRADING PRICES
The Shares are listed and traded on the NYSE under the trading symbol
"CBI". On December 21, 1995, the last full day of trading prior to the
date of the public announcement of the execution of the Merger Agreement
and the announcement that Praxair had submitted to the Company a proposal
to acquire all outstanding Shares for $33.00 cash per Share, the high and
low sales prices per share of the Shares as reported on the NYSE were
$32.125 and $32.375, respectively.
On December 27, 1995, the last full day of trading prior to the
commencement of the Amended Praxair Offer, the high and low sales prices
per share for the Shares as reported on the NYSE were $32.875 and $32.750,
respectively. Share prices are as reported on the NYSE based on published
financial sources. STOCKHOLDERS ARE URGED TO OBTAIN CURRENT MARKET
QUOTATIONS FOR THE SHARES.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
According to information available to the Company as of the Record
Date, the following table sets forth certain information with respect to
each person known to the Company to be the beneficial owner of more than 5%
of any class of the Company's outstanding stock.
<PAGE> 36
Amount and
Title Name and Address Nature of Bene- Percent
of Class of Beneficial Owner ficial Ownership of Class
Common Stock Praxair, Inc. 41,173,408(1) 94%
39 Old Ridgebury Road
Danbury, CT 06810-5113
__________
(1) Praxair directly owns 79,200 Shares and indirectly owns 41,094,208
Shares through the Purchaser, including 41,094,108 Shares acquired pursuant
to the Amended Praxair Offer.
SECURITY OWNERSHIP OF MANAGEMENT
OF THE COMPANY
Mr. H. William Lichtenberger, Mr. John A. Clerico, Mr. Edgar G.
Hotard and Mr. David H. Chaifetz, who were elected to the Board as
designees of Praxair, may be deemed to beneficially own Shares. Each of
them disclaims beneficial ownership of such Shares. According to
information available to the Company as of the Record Date, each current
director and executive officer of the Company tendered his or her Shares in
the Amended Praxair Offer, and therefore has no beneficial ownership of any
Shares.
INDEPENDENT PUBLIC ACCOUNTANTS
It is not expected that representatives of Arthur Andersen will be
present at the Special Meeting.
OTHER MATTERS TO COME BEFORE THE MEETING
No other matters are intended to be brought before the meeting by the
Company nor does the Company know of any matters that are expected to be
properly brought before the meeting by others.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference into this Information
Statement the following documents previously filed with the Commission
pursuant to the Exchange Act:
1. Company's Annual Report on Form 10-K for the year ended December
31, 1994;
<PAGE> 37
2. Company's Quarterly Reports on Form 10-Q for each of the quarters
ended March 31, 1995; June 30, 1995; and September 30, 1995;
3. Company's Current Reports on Form 8-K dated April 5, 1995, April
21, 1995 and September 5, 1995.
In addition, all reports and other documents filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date hereof and prior to the Special Meeting shall be
deemed to be incorporated by reference herein and to be a part hereof from
the date of filing of such reports and documents. Any statement contained
in a document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Information Statement to the extent that a statement contained herein, or
in any other subsequently filed document that also is incorporated or
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Information Statement. A copy of any document incorporated by reference
herein (including any exhibit incorporated by reference in any such
document) may be obtained without charge by any person receiving this
Information Statement, upon written or oral request, by contacting the
Company at 800 Jorie Boulevard, Oak Brook, Illinois 60521-2268, Attention:
Secretary; telephone: (708) 572-7000. Such copy will be sent by first
class mail or other equally prompt means within one business day after
receipt of such request.
By Order of the Board of Directors,
_____________________________
Secretary
Dated _______ __, 1996
<PAGE> A-1
ANNEX A
SUMMARY OF APPRAISAL RIGHTS
The holders of the Shares are entitled to appraisal rights under
Section 262 of the DGCL ("Section 262"). Section 262 is reprinted in its
entirety herewith. All references in Section 262 and in this summary to a
"Stockholder" are to the record holder of the Shares as to which appraisal
rights are asserted. A person having a beneficial interest in the Shares
that are held of record in the name of another person, such as a broker or
nominee, must act promptly to cause the record holder to follow the steps
summarized below properly and in a timely manner to perfect whatever
appraisal rights the beneficial owner may have.
The following discussion is not a complete statement of the law
relating to appraisal rights and is qualified in its entirety by reference
to Section 262. This discussion and Section 262 should be reviewed
carefully by any holder who wishes to exercise statutory appraisal rights
or who wishes to preserve the right to do so, since failure to comply with
the procedures set forth herein or therein will result in the loss of
appraisal rights.
Stockholders of record who desire to exercise their appraisal rights
must satisfy all of the following conditions. A written demand for
appraisal of the Shares must be delivered to the Company at the address set
forth below prior to the vote of the Company's Stockholders on the Merger.
Voting against, abstaining from voting or failing to vote on the Merger
Agreement and the Merger will not constitute a demand for appraisal within
the meaning of Section 262.
Stockholders electing to exercise their appraisal rights under
Section 262 must not vote for approval and adoption of the Merger Agreement
and of the Merger.
The demand for appraisal must be executed by or for the Stockholder
of record, fully and correctly, as such Stockholder's name appears on the
certificate or certificates representing his or her Shares. If the Shares
are owned of record in a fiduciary capacity, such as by a trustee,
guardian, or custodian, such demand must be executed by the fiduciary. If
the Shares are owned of record by more than one person, as in a joint
tenancy or tenancy in common, such demand must be executed by or for all
record owners. An authorized agent, including an agent for two or more
record owners, may execute the demand for appraisal for a Stockholder of
record; however, the agent must identify the record owner and expressly
disclose the fact that, in exercising the demand, such person is acting as
agent for the record owner.
A record owner, such as a broker, who holds Shares as a nominee for
others, may exercise appraisal rights with respect to the Shares held for
all or less than all beneficial Owners of Shares as to which such person is
the record owner. In such cases the written demand for appraisal must set
forth the number of Shares covered by such demand. Where the number of
Shares is not expressly stated, the demand will be presumed to cover all
Shares outstanding in the name of such record owner. Beneficial owners who
are not record
<PAGE> A-2
owners and who intend to exercise appraisal rights should instruct their
record owners to comply strictly with the statutory requirements with
respect to the exercise of appraisal rights.
A Stockholder who elects to exercise appraisal rights must mail or
deliver his or her written demand to:
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, Illinois 60521-2268
The written demand for appraisal must specify the Stockholder's name
and mailing address, the number of Shares owned, and that the Stockholder
is thereby demanding appraisal of his or her Shares.
Within 120 days after the date on which the Merger becomes effective
(the "Merger Date") any Stockholder who has complied with the required
conditions of Section 262 may file a petition in the Delaware Court of
Chancery (the "Delaware Chancery Court") demanding a determination of the
fair value of the Shares of all holders of Shares who have so complied with
such conditions. If a petition for an appraisal is timely filed, after a
hearing on such petition, the Delaware Chancery Court will determine which
Stockholders are entitled to appraisal rights and will appraise the Shares
owned by such Stockholders, determining the fair value of such Shares,
exclusive of any element of value arising from the accomplishment or
expectation of the Merger, together with a fair rate of interest, if any,
to be paid upon the amount determined to be the fair value. In
determining fair value, the Delaware Chancery Court is to take into account
all relevant factors. In Weinberger v. UOP, Inc., et al., decided February
1, 1983, the Delaware Supreme Court, in discussing the considerations that
could be taken into account in determining fair value in an appraisal
proceeding, stated that "proof of value by any techniques or methods which
are generally considered acceptable in the financial community and
otherwise admissible in court" should be considered and that "fair price
obviously requires consideration of all relevant factors involving the
value of a company." The Delaware Supreme Court stated that, in making
this determination of fair value the court must consider market value,
asset value, dividends, earnings prospects, the nature of the enterprise
and any other facts which could be ascertained as of the date of the merger
which throw any light on future prospects of the merged corporation.
Section 262 provides that fair value is to be "exclusive of any element of
value arising from the accomplishment or expectation of the merger." In
Weinberger, the Delaware Supreme Court construed Section 262 to mean that
"elements of future value, including the nature of the enterprise, which
are known or susceptible of proof as of the date of the merger and not the
product of speculation may be considered."
Within 120 days after the Merger Date, any holder of Shares who has
complied with the requirements for exercise of appraisal rights as
discussed above and stated in Section 262
<PAGE> A-3
is entitled, upon written request, to receive from the Company a statement
setting forth the aggregate number of Shares not voted in favor of the
Merger and with respect to which demands for appraisal have been received
and the aggregate number of holders of such Shares. Such statement must be
mailed within 10 days after the written request therefor has been received
by the Company or, if later, within 10 days after the expiration of the
period for delivery to the Company of appraisal demands.
Stockholders considering seeking appraisal should have in mind that
the fair value of their Shares determined under Section 262 could be more
than, the same as or less than the consideration they are to receive
pursuant to the Merger if they do not seek appraisal of their Shares. The
cost of the appraisal proceeding may be determined by the Delaware
Chancery Court and assessed against such parties as the Delaware Chancery
Court deems equitable in the circumstances. Upon application of a
dissenting Stockholder, the Delaware Chancery Court may order that all or a
portion of the expenses incurred by any dissenting Stockholder in
connection with the appraisal proceeding, including without limitation
reasonable attorneys' fees and the fees and expenses of experts, be charged
pro rata against the value of all Shares entitled to appraisal.
Any Stockholder who has duly demanded appraisal in compliance with
Section 262 will not, after the Merger Date, be entitled to vote for any
purpose the Shares subject to such demand or to receive any dividends or
other distributions on such Shares, except for any dividends or
distributions payable to Stockholders of record at a date prior to the
Merger Date.
At any time within 60 days after the Merger Date, any Stockholder
will have the right to withdraw his or her demand for appraisal and to
accept the terms offered pursuant to the Merger; after this period, the
Stockholder may withdraw his or her demand for appraisal only with the
consent of the Company as the Surviving Corporation. If no petition for
appraisal is filed with the Delaware Chancery Court within 120 days after
the Merger Date by any Stockholder who has demanded appraisal, such
Stockholder's rights to appraisal will cease, and such Stockholder will be
entitled to receive the Merger Consideration. Inasmuch as the Company has
no obligation to file such a petition, and has no present intention to do
so, any stockholder who desires such a petition to be filed is advised to
file it on a timely basis. No petition timely filed in the Delaware
Chancery Court demanding appraisal shall be dismissed as to any Stockholder
without the approval of the Delaware Chancery Court, and such approval may
be conditioned upon such terms as the Delaware Chancery Court deems just.
<PAGE> A-4
SECTION 262 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE
Sec. 262. Appraisal Rights.
(a) Any stockholder of a corporation of this State who holds shares
of stock on the date of the making of a demand pursuant to subsection (d)
of this section with respect to such shares, who continuously holds such
shares through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to Sec. 228 of this title shall be entitled to an
appraisal by the Court of Chancery of the fair value of his shares of stock
under the circumstances described in subsections (b) and (c) of this
section. As used in this section, the word "stockholder" means a holder of
record of stock in a stock corporation and also a member of record of a
nonstock corporation; the words "stock" and "share" mean and include what
is ordinarily meant by those words and also membership or membership
interest of a member of a nonstock corporation; and the words "depository
receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class
or series of stock of a constituent corporation in a merger or
consolidation to be effected pursuant to Sec. 251, 252, 254, 257, 258, 263
or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock,
which stock, or depository receipts in respect thereof, at the record
date fixed to determine the stockholders entitled to receive notice
of and to vote at the meeting of stockholders to act upon the
agreement of merger or consolidation, were either (i) listed on a
national securities exchange or designated as a national market
system security on an interdealer quotation system by the National
Association of Securities Dealers, Inc. or (ii) held of record by
more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent
corporation surviving a merger if the merger did not require for its
approval the vote of the holders of the surviving corporation as
provided in subsections (f) or (g) of Sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any
class or series of stock of a constituent corporation if the holders
thereof are required by the terms of an agreement of merger or
consolidation pursuant to Sections 251, 252, 254, 257, 258, 263 and
264 of this title to accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock or depository
receipts at the effective date of the merger or consolidation will
be either listed on a national securities exchange or
<PAGE> A-5
designated as a national market system security on an interdealer
quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of
this paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under Sec. 253 of this title
is not owned by the parent corporation immediately prior to the
merger, appraisal rights shall be available for the shares of the
subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares
of any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section, shall
apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal
rights are provided under this section is to be submitted for
approval at a meeting of stockholders, the corporation, not less than
20 days prior to the meeting, shall notify each of its stockholders
who was such on the record date for such meeting with respect to
shares for which appraisal rights are available pursuant to
subsections (b) or (c) hereof that appraisal rights are available for
any or all of the shares of the constituent corporations, and shall
include in such notice a copy of this section. Each stockholder
electing to demand the appraisal of his shares shall deliver to the
corporation, before the taking of the vote on the merger or
consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends
thereby to demand the appraisal of his shares. A proxy or vote
against the merger or consolidation shall not constitute such a
demand. A stockholder electing to take such action must do so by a
separate written demand as herein provided. Within 10 days after the
effective date of such merger or consolidation, the surviving or
resulting corporation shall notify each stockholder of each
constituent corporation who
<PAGE> A-6
has complied with this subsection and has not voted in favor of or
consented to the merger or consolidation of the date that the merger
or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to Sec.
228 or 253 of this title, the surviving or resulting corporation,
either before the effective date of the merger or consolidation or
within 10 days thereafter, shall notify each of the stockholders
entitled to appraisal rights of the effective date of the merger or
consolidation and that appraisal rights are available for any or all
of the shares of the constituent corporation, and shall include in
such notice a copy of this section. The notice shall be sent by
certified or registered mail, return receipt requested, addressed to
the stockholder at his address as it appears on the records of the
corporation. Any stockholder entitled to appraisal rights may,
within 20 days after the date of mailing of the notice, demand in
writing from the surviving or resulting corporation the appraisal of
his shares. Such demand will be sufficient if it reasonably informs
the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder
who has complied with subsections (a) and (d) hereof and who is otherwise
entitled to appraisal rights, may file a petition in the Court of Chancery
demanding a determination of the value of the stock of all such
stockholders. Notwithstanding the foregoing, at any time within 60 days
after the effective date of the merger or consolidation, any stockholder
shall have the right to withdraw his demand for appraisal and to accept
the terms offered upon the merger or consolidation. Within 120 days after
the effective date of the merger or consolidation, any stockholder who has
complied with the requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation, a statement
setting forth the aggregate number of shares not voted in favor of the
merger or consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days
after his written request for such a statement is received by the surviving
or resulting corporation or within 10 days after expiration of the period
for delivery of demands for appraisal under subsection (d) hereof,
whichever is later.
(f) Upon the filing of any such petition by a stockholder, service
of a copy thereof shall be made upon the surviving or resulting
corporation, which shall within 20 days after such service file in the
office of the Register in Chancery in which the petition was filed a duly
verified list containing the names and addresses of all stockholders who
have demanded payment for their shares and with whom agreements as to the
value of their shares have not been reached by the surviving or resulting
corporation. If the petition shall be filed by the surviving or resulting
corporation, the petition shall be accompanied by such a duly verified
list. The Register in Chancery, if so ordered by the Court, shall give
notice of the time and
<PAGE> A-7
place fixed for the hearing of such petition by registered or certified
mail to the surviving or resulting corporation and to the stockholders
shown on the list at the addresses therein stated. Such notice shall also
be given by one or more publications at least one week before the day of
the hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The
forms of the notices by mail and by publication shall be approved by the
Court, and the costs thereof shall be borne by the surviving or resulting
corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become
entitled to appraisal rights. The Court may require the stockholders who
have demanded an appraisal for their shares and who hold stock represented
by certificates to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the Court may
dismiss the proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the
Court shall appraise the shares, determining their fair value exclusive of
any element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In determining
such fair value, the Court shall take into account all relevant factors.
In determining the fair rate of interest, the Court may consider all
relevant factors, including the rate of interest which the surviving or
resulting corporation would have had to pay to borrow money during the
pendency of the proceeding. Upon application by the surviving or
resulting corporation or by any stockholder entitled to participate in the
appraisal proceeding, the Court may, in its discretion, permit discovery or
other pretrial proceedings and may proceed to trial upon the appraisal
prior to the final determination of the stockholder entitled to an
appraisal. Any stockholder whose name appears on the list filed by the
surviving or resulting corporation pursuant to subsection (f) of this
section and who has submitted his certificates of stock to the Register in
Chancery, if such is required, may participate fully in all proceedings
until it is finally determined that he is not entitled to appraisal rights
under this section.
(i) The Court shall direct the payment of the fair value of the
shares, together with interest, if any, by the surviving or resulting
corporation to the stockholders entitled thereto. Interest may be simple
or compound, as the Court may direct. Payment shall be so made to each
such stockholder, in the case of holders of uncertificated stock forthwith,
and the case of holders of shares represented by certificates upon the
surrender to the corporation of the certificates representing such stock.
The Court's decree may be enforced as other decrees in the Court of
Chancery may be enforced, whether such surviving or resulting corporation
be a corporation of this State or of any state.
<PAGE> A-8
(j) The costs of the proceeding may be determined by the Court and
taxed upon the parties as the Court deems equitable in the circumstances.
Upon application of a stockholder, the Court may order all or a portion of
the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or
consolidation, no stockholder who has demanded his appraisal rights as
provided in subsection (d) of this section shall be entitled to vote such
stock for any purpose or to receive payment of dividends or other
distributions on the stock (except dividends or other distributions payable
to stockholders of record at a date which is prior to the effective date of
the merger or consolidation); provided, however, that if no petition for an
appraisal shall be filed within the time provided in subsection (e) of this
section, or if such stockholder shall deliver to the surviving or resulting
corporation a written withdrawal of his demand for an appraisal and an
acceptance of the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in subsection (e)
of this section or thereafter with the written approval of the corporation,
then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of
Chancery shall be dismissed as to any stockholder without the approval of
the Court, and such approval may be conditioned upon such terms as the
Court deems just.
(l) The shares of the surviving or resulting corporation to which
the shares of such objecting stockholders would have been converted had
they assented to the merger or consolidation shall have the status of
authorized and unissued shares of the surviving or resulting corporation.
<PAGE> 1
Exhibit A
AGREEMENT AND PLAN OF MERGER
Among
Praxair, Inc.,
PX Acquisition Corp.
and
CBI Industries, Inc.
Dated as of December 22, 1995
<PAGE> 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this
"Agreement"), dated as of December 22, 1995, among CBI Industries, Inc., a
Delaware corporation (the "Company"), Praxair, Inc., a Delaware corporation
("Praxair"), and PX Acquisition Corp., a Delaware corporation and a wholly-
owned subsidiary of Praxair ("Purchaser"). The Company and Purchaser are
hereinafter sometimes collectively referred to as the "Constituent
Corporations."
RECITALS
WHEREAS, the respective Boards of Directors of each of Praxair,
Purchaser and the Company have approved the acquisition of the Company by
Praxair upon the terms and subject to the conditions set forth herein;
WHEREAS, on November 3, 1995, Purchaser commenced an offer to
purchase (the "Initial Offer") all outstanding shares of Common Stock, par
value $2.50 per share (the "Shares"), of the Company together with the
associated rights (the "Rights") issued pursuant to the Rights Agreement,
dated as of March 4, 1986, as amended, between the Company and First
Chicago Trust Company of New York, as Rights Agent (as the same may be
further amended, the "Rights Agreement"), at a purchase price of $32 per
Share (and associated Right) (all references herein to "Rights" shall
include all benefits that may inure to holders of the Rights pursuant to
the Rights Agreement and, unless the context otherwise requires, all
references to "Shares" shall include the associated Rights), net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated November 3, 1995 (the
"Offer to Purchase") and in the related Letter of Transmittal
(collectively, the "Initial Offer Documents"); and
WHEREAS, the respective Boards of Directors of each of Praxair,
Purchaser and the Company have determined that it is in the best interests
of their respective stockholders for Purchaser to acquire the Company, upon
and subject to the terms and conditions of this Agreement, pursuant to the
Initial Offer, as amended pursuant to the terms of this Agreement (the
"Amended Offer"); and
WHEREAS, in furtherance of such acquisition, the respective
Boards of Directors of each of Praxair, Purchaser and the Company have
approved the merger of Purchaser with
<PAGE> 2
and into the Company (the "Merger") pursuant to this Agreement and the
Delaware General Corporation Law, as amended (the "DGCL"); and
WHEREAS, the Board of Directors of the Company (the "Board")
has, in light of and subject to the terms and conditions set forth herein,
(i) determined that the consideration to be paid for each Share in the
Amended Offer and the Merger is fair to, and in the best interests of, the
stockholders of the Company and (ii) has approved and adopted this
Agreement and the transactions contemplated hereby and has recommended
acceptance of the Amended Offer and approval and adoption by the
stockholders of the Company of this Agreement and the Merger; and
WHEREAS, each of the Company, Praxair and Purchaser desires to
make certain representations, warranties, covenants and agreements in
connection with this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
mutual representations, warranties, covenants, agreements and conditions
contained herein, the parties hereto agree as follows:
ARTICLE I
The Amended Offer; Actions by the Company; Directors
1.1. The Amended Offer. (a) Praxair and Purchaser have
filed with the Securities and Exchange Commission (the "Commission") a
Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with
respect to the Initial Offer which contains (included as exhibits) the
Initial Offer Documents. As promptly as practicable (but no later than the
fourth business day after the date of this Agreement), Praxair and
Purchaser shall file with the Commission an amendment to the Initial Offer
Documents (as so amended, and as the same may be further amended or
supplemented in accordance with the terms of this Agreement, the "Amended
Offer Documents"). The Company shall have the opportunity to review the
amendment to the Schedule 14D-1 to be filed in connection with the Amended
Offer prior to its being filed with the Commission. The Amended Offer
Documents shall contain a supplement to the Offer to Purchase, which shall
be mailed to the holders of Shares and which shall amend the Initial Offer
(i) to increase the price per Share payable in connection with the Amended
Offer to $33.00, (ii) to provide that the obligation of Praxair and
Purchaser to accept for payment and pay for Shares
<PAGE> 3
tendered pursuant to the Amended Offer shall only be subject to the
conditions set forth in Annex A hereto, and (iii) to change the expiration
date of the Amended Offer to midnight, New York City time, on a date that
is 10 business days following the filing of the amendment (as so extended,
and as it may be extended from time to time in accordance with the terms of
this Agreement, the "Expiration Date"); it being understood and agreed
that, except for the foregoing amendments or as otherwise provided herein,
the Amended Offer shall be on the same terms as the Initial Offer. Without
the prior written consent of the Company, Purchaser shall not decrease the
price per Share or change the form of consideration payable in the Amended
Offer, decrease the number of Shares sought or extend the Amended Offer
(other than as set forth below), amend or waive the Minimum Tender
Condition (as defined in Annex A), impose additional conditions to the
Amended Offer or amend any other term of the Amended Offer in any manner
adverse to the holders of Shares. Upon the terms and subject to the
conditions of the Amended Offer, Purchaser will accept for payment and will
purchase, as soon as permitted under the terms of the Amended Offer, all
Shares validly tendered and not withdrawn prior to the expiration of the
Amended Offer.
(b) Each of Praxair and Purchaser, on the one hand, and
the Company, on the other hand, agrees promptly to correct any information
provided by it for use in the Amended Offer Documents if and to the extent
that it shall have become false or misleading in any material respect, and
Praxair and Purchaser further agree to take all steps necessary to cause
the Amended Offer Documents as so corrected to be filed with the Commission
and to be disseminated to stockholders of the Company, in each case as and
to the extent required by applicable federal securities laws.
(c) Praxair and Purchaser agree that Purchaser shall not
terminate or withdraw the Amended Offer or extend the then scheduled
Expiration Date unless at the Expiration Date the conditions to the Amended
Offer described in Annex A hereto shall not have been satisfied or earlier
waived. If at the Expiration Date, the conditions to the Amended Offer
described in Annex A hereto shall not have been satisfied or earlier
waived, Purchaser may and, if requested by the Company, shall extend the
Expiration Date on one or more occasions for an additional period or
periods of time until the earlier of (i) the date which is sixty business
days following the date of the Amended Offer or (ii) the date this
Agreement is terminated in accordance with its terms; provided, that, this
sentence shall not be applicable in the event the conditions set forth in
<PAGE> 4
paragraph (v)(g) of Annex A hereto shall not have been satisfied or earlier
waived at the Expiration Date. Praxair and Purchaser shall use their
reasonable best efforts to consummate the Amended Offer in accordance with
the terms of this Agreement and the conditions to the Amended Offer set
forth in Annex A.
1.2. Actions by the Company. (a) The Company hereby
approves of and consents to the Amended Offer and represents that (i) the
Board by vote of all directors at a meeting duly called and held, has, in
light of and subject to the terms and conditions set forth herein,
unanimously (x) determined that each of the Amended Offer and the Merger is
fair to, and in the best interests of, the stockholders of the Company and
(y) approved this Agreement and the transactions contemplated hereby,
including the Amended Offer and the Merger, and recommends acceptance of
the Amended Offer and approval and adoption of this Agreement and the
Merger by the stockholders of the Company and (ii) Merrill Lynch & Co.
("Merrill Lynch") and Lehman Brothers Inc. ("Lehman Bros."), the Company's
financial advisors, have rendered to the Board their respective opinions
that the consideration to be received by the stockholders of the Company
pursuant to the Amended Offer and the Merger is fair to such stockholders
from a financial point of view.
(b) The Company agrees that it shall, on the same day that
Purchaser and Praxair file with the Commission an amendment to the Initial
Offer Documents pursuant to Section 1.1 hereof, file with the Commission an
amendment to its Solicitation/Recommendation Statement on Schedule 14D-9,
dated November 16, 1995 (including exhibits, as so amended, and as amended
from time to time, the "Amended Schedule 14D-9"), which amendment shall
include (i) subject to the proviso in the second sentence of
Section 1.2(c), the recommendation described in Section 1.2(a) hereof and
(ii) the information with respect to the Company and its officers and
directors, (including any directors to be elected or appointed pursuant to
Section 1.3 hereof) in form and substance satisfactory to Praxair and its
counsel, that is required under Section 14(f) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and Rule 14f-1 promulgated
thereunder. In such connection, Praxair and Purchaser shall promptly
furnish the Company with all information concerning their designees
required by Section 14(f) of the Exchange Act and Rule 14f-1 thereunder.
Praxair and Purchaser shall have the opportunity to review the Amended
Schedule 14D-9 prior to its being filed with the Commission.
<PAGE> 5
(c) The Company agrees that copies of such Schedule 14D-9
(excluding exhibits), shall be enclosed with the Amended Offer Documents to
be mailed by Purchaser to the stockholders of the Company in connection
with the Amended Offer. Each of the Company, one the one hand, and Praxair
and Purchaser, on the other hand, agrees promptly to correct any
information provided by either of them for use in the Amended Schedule 14D-
9 if and to the extent that it shall have become false or misleading in any
material respect, and the Company further agrees to take all steps
necessary to cause the Amended Schedule 14D-9 as so corrected to be filed
with the Commission and to be disseminated to the stockholders of the
Company, in each case as and to the extent required by applicable federal
securities laws; provided, however, that, subject to the provisions of
Article IX, such recommendation may be withdrawn, modified or amended to
the extent that the Board deems it necessary to do so in the exercise of
its fiduciary and other legal obligations after being so advised by outside
counsel. In connection with the Amended Offer, the Company will furnish
Praxair and Purchaser with such information, including lists of the
stockholders of the Company, mailing labels and lists of security
positions, and such assistance as Praxair or Purchaser or their agents may
request in communicating the Amended Offer to the record and beneficial
holders of the Shares.
1.3. Directors. Promptly upon the purchase of and payment
for any Shares by Purchaser pursuant to the Amended Offer which represent
at least a majority of the Shares (on a fully diluted basis) and from time
to time thereafter, Praxair and Purchaser shall be entitled to designate
members of the Board such that Praxair and Purchaser, subject to compliance
with Section 14(f) of the Exchange Act, will have a number of
representatives on the Board, rounded up to the next whole number, equal to
the product of (x) the total number of directors on the Board multiplied by
(y) the percentage of the outstanding Shares beneficially owned by
Purchaser or its affiliates; provided, that, any action to be taken prior
to the Effective Time (as defined in Section 2.3 hereof) by the Board with
respect to this Agreement shall be approved by a majority of those
directors of the Company who have not been designated by Praxair or
Purchaser. Notwithstanding the foregoing, until the Effective Time, the
Company and Praxair shall use all reasonable efforts to retain as members
of Company's Board of Directors at least two directors who at the time are
neither officers of Praxair or the Company (or any of their respective
affiliates), nor designees of Purchaser (or any of its affiliates), nor
shareholders or affiliates of Purchaser (or any respective affiliate) (the
"Disinterested
<PAGE> 6
Directors"). The Company shall, upon request by Praxair or Purchaser,
promptly increase the size of the Board to the extent permitted by the
Company's Restated Certificate of Incorporation (the "Company Charter")
and, to the extent required to comply with this Section 1.3, secure the
resignations of such number of directors as is necessary to enable
Praxair's designees to be elected to the Board and shall cause Praxair's
designees to be so elected.
ARTICLE II
The Merger; Closing; Effective Time
2.1. The Merger. Upon the terms and subject to the condi-
tions set forth in this Agreement, at the Effective Time (as defined in
Section 2.3 hereof) Purchaser shall be merged with and into the Company and
the separate corporate existence of Purchaser shall thereupon cease. The
Company shall be the surviving corporation in the Merger (sometimes
hereinafter referred to as the "Surviving Corporation") and shall continue
to be governed by the laws of the State of Delaware, and the separate
corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in Article III. The name of Surviving Corporation
shall be "CBI Industries, Inc." The Merger shall have the effects
specified in the DGCL.
2.2. Closing. The closing of the Merger (the "Closing")
shall take place (i) at the offices of Sullivan & Cromwell, 125 Broad
Street, New York, New York at 9:00 A.M. on the first business day following
the date on which the last to be fulfilled or waived of the conditions set
forth in Article VIII hereof (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment
or waiver of those conditions) shall be satisfied or waived in accordance
with this Agreement or (ii) at such other place and time and/or on such
other date as the Company and Praxair may agree in writing (the "Closing
Date").
2.3. Effective Time. As soon as practicable following the
Closing, and provided that this Agreement has not been terminated or
abandoned pursuant to Article IX hereof, the Company and Praxair will cause
a Certificate of Merger (the "Delaware Certificate of Merger") to be execu-
ted, acknowledged and filed with the Secretary of State of Delaware as
provided in Section 251 of the DGCL. The Merger shall become effective at
the time when the Delaware
<PAGE> 7
Certificate of Merger has been duly filed with the Secretary of State of
Delaware (the "Effective Time").
ARTICLE III
Certificate of Incorporation and By-Laws
of the Surviving Corporation
3.1. The Certificate of Incorporation. The Company
Charter, as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation (the "Charter"),
until duly amended as provided therein or by applicable law, except that
the first paragraph of Article Fourth of the Charter shall be amended to
read in its entirety as follows: "The aggregate number of shares that the
Corporation shall have the authority to issue is Twenty Million and One
Thousand (20,001,000), of which One Thousand (1,000) shares shall be Common
Stock, par value $2.50 per share and Twenty Million (20,000,000) shares
shall be Preferred Stock, par value $1.00 per share."
3.2. The By-Laws. The by-laws of Purchaser in effect at
the Effective Time shall be the by-laws of the Surviving Corporation (the
"By-Laws"), until thereafter amended as provided therein or by applicable
law.
ARTICLE IV
Officers and Directors
of the Surviving Corporation
4.1. Directors. The directors of Purchaser at the Effec-
tive Time shall, from and after the Effective Time, be the directors of the
Surviving Corporation and shall hold office until their successors have
been duly elected or appointed and qualified or until their earlier death,
resignation or removal in accordance with the Charter and By-Laws.
4.2. Officers. The officers of the Company at the
Effective Time shall, from and after the Effective Time, be the officers of
the Surviving Corporation and shall hold office until their successors have
been duly appointed and qualified or until their earlier death, resignation
or removal in accordance with the Charter and By-Laws.
4.3. Further Assurances. If, at any time after the
Effective Time, the Surviving Corporation shall consider
<PAGE> 8
or be advised that any deeds, bills of sale, assignments, assurances or any
other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right,
title or interest in, to or under any of the rights, properties or assets
of either of the Constituent Corporations acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or
otherwise to carry out this Agreement, the officers of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of each of the Constituent Corporations or otherwise, all such
deeds, bills of sale, assignments and assurances and to take and do, in the
name and on behalf of each of the Constituent Corporations or otherwise,
all such other actions and things as may be necessary or desirable to vest,
perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise
to carry out this Agreement.
ARTICLE V
Conversion or Cancellation of Shares in the Merger
5.1. Conversion or Cancellation of Shares. The manner of
converting or canceling shares of the Company and Purchaser in the Merger
shall be as follows:
(a) Conversion of Shares; Merger Consideration. At the
Effective Time, each Share issued and outstanding immediately prior to the
Effective Time (other than Shares owned by Praxair, Purchaser or any other
Subsidiary (as defined in Section 6.1(a) hereof) of Praxair (collectively,
the "Praxair Companies")) or Shares which are held by stockholders
("Dissenting Stockholders") exercising appraisal rights pursuant to
Section 262 of the DGCL) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to
receive, without interest, an amount in cash (the "Merger Consideration")
equal to $33.00 or such greater amount which may be paid pursuant to the
Amended Offer. All such Shares, by virtue of the Merger and without any
action on the part of the holders thereof, shall no longer be outstanding
and shall be canceled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall thereafter cease to
have any rights with respect to such Shares, except the right to receive
the Merger Consideration for such Shares upon the surrender of such
certificate in accordance with Section 5.2 or the right, if any, to receive
payment from the Surviving Corporation of
<PAGE> 9
the "fair value" of such Shares as determined in accordance with
Section 262 of the DGCL.
(b) Cancellation of Shares. At the Effective Time, each
Share issued and outstanding at the Effective Time and owned by any of the
Praxair Companies, and each Share issued and held in the Company's treasury
at the Effective Time, shall, by virtue of the Merger and without any
action on the part of the holder thereof, cease to be outstanding, shall be
canceled and retired without payment of any consideration therefor and
shall cease to exist.
(c) Conversion of Purchaser Common Stock. At the
Effective Time, each share of Common Stock, par value $0.01 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of
Purchaser or the holders of such shares, be converted into one issued and
outstanding share of common stock of the Surviving Corporation.
(d) Convertible Preferred Stock. At the Effective Time,
each share of $2.27 Convertible Voting Preferred Stock, Series C of the
Company, par value $1.00 per share (the "Convertible Preferred Shares"),
shall remain outstanding and shall be entitled to the same dividend and
other relative rights, preferences, limitations and restrictions as are now
provided by the Company Charter; provided, that, after the Effective Time,
the Convertible Preferred Shares shall no longer be convertible into
Shares; and provided, further, that each Convertible Preferred Share shall
be convertible, after the Effective Time, into the amount of cash that the
holder thereof might have been entitled to receive if such holder had
converted such Convertible Preferred Shares into Shares immediately prior
to the Effective Time.
(e) Cumulative Preferred Stock. Each share of 7.48%
Cumulative Preferred Stock, Series D of the Company, par value $1.00 per
share (the "Series D Preferred Shares"), and $6.75 Cumulative Preferred
Stock, Series E of the Company, par value $1.00 per share (the "Series E
Preferred Shares" and together with the Series D Preferred Shares, the
"Cumulative Preferred Shares" and the Cumulative Preferred Shares, together
with the Convertible Preferred Shares and the Junior Participating
Preferred Stock, Series A of the Company, par value $1.00 per share, the
"Preferred Shares"), which immediately prior to the Effective Time is
issued and outstanding shall remain outstanding and shall be entitled to
the same dividend and other relative rights, preferences,
<PAGE> 10
limitations and restrictions as are now provided by the Company Charter.
5.2. Payment for Shares. Praxair shall make available or
cause to be made available to the paying agent appointed by Praxair (the
"Paying Agent") amounts sufficient in the aggregate to provide all funds
necessary for the Paying Agent to make payments pursuant to Section 5.1(a)
hereof to holders of Shares issued and outstanding immediately prior to the
Effective Time. Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each Person who was, at the
Effective Time, a holder of record (other than any of the Praxair
Companies) of issued and outstanding Shares a form (mutually agreed to by
Purchaser and the Company) of letter of transmittal and instructions for
use in effecting the surrender of the certificates which, immediately prior
to the Effective Time, represented any of such Shares in exchange for
payment therefor. Upon surrender to the Paying Agent of such certificates,
together with such letter of transmittal, duly executed and completed in
accordance with the instructions thereto, the Surviving Corporation shall
promptly cause to be paid to the persons entitled thereto a check in the
amount to which such persons are entitled, after giving effect to any
required tax withholdings. No interest will be paid or will accrue on the
amount payable upon the surrender of any such certificate. If payment is
to be made to a Person other than the registered holder of the certificate
surrendered, it shall be a condition of such payment that the certificate
so surrendered shall be properly endorsed 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 payment to a Person other than the
registered holder of the certificate surrendered or establish to the
satisfaction of the Surviving Corporation or the Paying Agent that such tax
has been paid or is not applicable. One hundred and eighty days following
the Effective Time, the Surviving Corporation shall be entitled to cause
the Paying Agent to deliver to it any funds (including any interest
received with respect thereto) made available to the Paying Agent which
have not been disbursed to holders of certificates formerly representing
Shares outstanding on the Effective Time, and thereafter such holders shall
be entitled to look to the Surviving Corporation only as general creditors
thereof with respect to the cash payable upon due surrender of their
certificates. Notwithstanding the foregoing, neither the Paying Agent nor
any party hereto shall be liable to any holder of certificates formerly
representing Shares for any amount paid to a public official pursuant to
any applicable abandoned property, escheat or similar law. The Surviving
<PAGE> 11
Corporation shall pay all charges and expenses, including those of the
Paying Agent, in connection with the exchange of cash for Shares and
Praxair shall reimburse the Surviving Corporation for such charges and
expenses.
For the purposes of this Agreement, the term "Person" shall
mean any individual, corporation (including not-for-profit), general or
limited partnership, limited liability company, going venture, estate,
trust, association, organization, Governmental Entity (as defined in
Section 6.1(d)) or other entity of any kind or nature.
5.3. Dissenters' Rights. If any Dissenting Stockholder
shall be entitled to be paid the "fair value" of his or her Shares, as
provided in Section 262 of the DGCL, the Company shall give Praxair notice
thereof and Praxair shall have the right to participate in all negotiations
and proceedings with respect to any such demands. The Company shall give
Praxair prompt notice of any demands received by the Company for appraisal
of Shares and Praxair shall have the right to participate in all
negotiations and proceedings with respect to such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of Praxair, voluntarily make any payment with respect to, or settle
or offer to settle, any such demand for payment. If any Dissenting
Stockholder shall fail to perfect or shall have effectively withdrawn or
lost the right to dissent, the Shares held by such Dissenting Stockholder
shall thereupon be treated as though such Shares had been converted into
the Merger Consideration pursuant to Section 5.1 hereof.
5.4. Transfer of Shares After the Effective Time. No
transfers of Shares shall be made on the stock transfer books of the
Surviving Corporation at or after the Effective Time.
ARTICLE VI
Representations and Warranties
6.1. Representations and Warranties of the Company. The
Company hereby represents and warrants to Praxair and Purchaser that,
except as set forth in the disclosure letter delivered to Praxair by the
Company on or prior to entering into this Agreement (the "Company
Disclosure Letter"):
(a) Organization, Good Standing and Qualification. Each
of the Company and its Subsidiaries (as defined
<PAGE> 12
below) is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of organization and
has all requisite corporate or similar power and authority to own, lease
and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing
as a foreign corporation in each jurisdiction where the ownership or
operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in good
standing will not, when taken together with all other such failures have a
Company Material Adverse Effect (as defined below). The Company has made
available to Praxair a complete and correct copy of the Company's
certificate of incorporation and by-laws, each as amended to date. The
Company's certificate of incorporation and by-laws so delivered are in full
force and effect. Section 6.1(a) of the Company Disclosure Letter contains
a correct and complete list of each of its Subsidiaries (except for such
Subsidiaries that are immaterial) and each jurisdiction where the Company
and each of its Subsidiaries is organized.
As used in this Agreement, (i) the term "Subsidiary" means,
with respect to the Company, Praxair or Purchaser, as the case may be, any
entity, whether incorporated or unincorporated, domestic or foreign, of
which at least a majority of the securities or ownership interests having
by their terms ordinary voting power to elect a majority of the Board of
Directors or other persons performing similar functions is directly or
indirectly owned or controlled by such party or by one or more of its
respective Subsidiaries or by such party and any one or more of its
respective Subsidiaries and (ii) the term "Company Material Adverse Effect"
means a material adverse effect on the financial condition, business,
prospects or results of operations of the Company and its Subsidiaries
taken as a whole.
(b) Capital Structure. The authorized capital stock of
the Company consists of 240,000,000 Shares and 20,000,000 shares of
preferred stock, par value $1.00. As of September 30, 1995, there were
issued and outstanding 38,295,207 Shares; 3,484,713 Convertible Preferred
Shares; 550,000 Series D Preferred Shares; and 200,000 Series E Preferred
Shares. Each of the outstanding Convertible Preferred Shares are
convertible into 1.5 Shares. All of the issued and outstanding Shares and
Preferred Shares have been duly authorized and are validly issued, fully
paid and nonassessable and free of preemptive rights with respect thereto.
As of September 30, 1995, 1,488,407 Shares were held in the treasury of the
Company. As of the date hereof,
<PAGE> 13
there were outstanding options to purchase 1,216,350 Shares under the
Company's Stock Option Plan, effective as of January 1, 1987 (the "1987
Stock Option Plan") and outstanding options to purchase 70,500 Shares under
the Company's 1995 Stock Option Plan, effective as of January 1, 1995
(together with the 1987 Stock Option Plan, the CBI Restricted Stock Award
Plan (1978), the CBI 1983 Restricted Stock Award Plan, the CBI 1989
Restricted Stock Award Plan and the CBI 1994 Restricted Stock Award Plan,
the "Stock Plans"). The Company has no Shares or Preferred Shares reserved
for issuance, other than Shares reserved for issuance upon the exercise of
the conversion rights of holders of the Convertible Preferred Shares,
Shares and Preferred Shares reserved for issuance in connection with the
Rights granted pursuant to the Rights Agreement (which agreement will be
amended as described in Section 7.10(a) hereof), and Shares reserved for
issuance pursuant to the Company's 1994 Restricted Stock Award Plan,
effective March 9, 1994. Section 6.1(b) of the Company Disclosure Letter
contains a correct and complete list of each outstanding option to purchase
Shares under the Stock Plans (each a "Company Option"), including the
holder, date of grant, exercise price, the number of Shares subject thereto
and the number of stock appreciation rights, if any, granted in respect of
such Company Option. Except as set forth in Section 6.1(b) of the Company
Disclosure Letter, each of the outstanding shares of capital stock or other
securities of each of the Company's Subsidiaries is duly authorized,
validly issued, fully paid and nonassessable and owned by a direct or
indirect wholly-owned subsidiary of the Company, free and clear of any
lien, pledge, security interest, claim or other encumbrance. Except as set
forth above and except as set forth in Section 6.1(b) of the Company
Disclosure Letter, there are no preemptive or other outstanding rights,
options, warrants, conversion rights, stock appreciation rights, redemption
rights, repurchase rights, agreements, arrangements or commitments to issue
or sell any shares of capital stock or other securities of the Company or
any of its Subsidiaries or any securities or obligations convertible or
exchangeable into or exercisable for, or giving any Person a right to
subscribe for or acquire, any securities of the Company or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. Except as set forth in Section 6.1(b)
of the Company Disclosure Letter, the Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter ("Voting
Debt").
<PAGE> 14
(c) Corporate Authority; Approval and Fairness. The
Company has full requisite corporate power and authority and has taken all
corporate action necessary in order to execute, deliver and perform its
obligations under this Agreement and to consummate, subject only to
approval of this Agreement by the Company Requisite Vote (as defined in
Section 6.1(k) hereof), the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Board, and other than the Company Requisite Vote (as
defined in Section 6.1(k)), no other corporate proceedings are necessary to
authorize this Agreement or the consummation of the transactions
contemplated hereby. Assuming this Agreement constitutes a legal, valid
and binding agreement of Praxair and Purchaser, this Agreement constitutes
a legal, valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as enforcement may be limited
by general principles of equity, whether applied in a court of law or a
court of equity, and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally.
(d) Governmental Filings; No Violations. (i) Other than
the filings and/or notices (A) pursuant to Section 2.3 hereof, (B) under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), (C) in connection, or in compliance, with the provisions of the
Exchange Act, (D) as may be required under any Environmental Law (as
defined in Section 6.1(l) hereof) pertaining to any notification,
disclosure or required approval triggered by the Merger or the transactions
contemplated hereby, (E) filing with, and approval of, the New York Stock
Exchange, Inc. and the Commission with respect to the de-listing and de-
registration of the Shares, (F) the Investment Canada Act ("ICA"), (G) such
consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings as may be required under the corporation, takeover
or blue sky laws of various states or non-U.S. changes in control laws or
regulations and (H) to comply with the change of control, notification,
competition or other laws of jurisdictions listed in Section 6.1(d) of the
Company Disclosure Letter (collectively, the "Regulatory Filings"), no
notices, reports or other filings are required to be made by the Company
with, nor are any consents, registrations, approvals, permits or
authorizations required to be obtained by the Company from, any government
or governmental, regulatory or administrative authority or agency,
domestic, foreign or supranational (each, a "Governmental Entity"), in
connection with the execution and delivery of this Agreement by the Company
and
<PAGE> 15
the consummation by Purchaser of the Amended Offer and by the Company of
the Merger and the other transactions contemplated hereby, except those the
failure to make or obtain that are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect or prevent,
materially delay or materially impair the ability of the Company or the
Purchaser to consummate any of the transactions contemplated by this
Agreement.
(ii) The execution, delivery and performance of this
Agreement by the Company do not, and the consummation by the Company of the
Merger pursuant to the terms of this Agreement and the other transactions
contemplated hereby will not, except as set forth in Section 6.1(d) of the
Company Disclosure Letter, constitute or result in (A) a breach or
violation of, or a default under, the Company Charter or the by-laws of the
Company or the comparable governing instruments of any of their
Subsidiaries, (B) a breach or violation of, or a default under, the
vesting, creation or acceleration of any rights or obligations or the
creation of a lien, pledge, security interest or other encumbrance on the
assets of the Company or any of its Subsidiaries (with or without notice,
lapse of time or both) pursuant to any provision of any agreement, lease,
contract, note, mortgage, indenture, arrangement or other domestic or
foreign obligation ("Contracts") of the Company or any of its Subsidiaries
or any Law (as defined in Section 6.1(i)) or governmental or non-
governmental permit or license to which the Company or any of its
Subsidiaries is subject or (C) any change in the rights or obligations of
any party under any of the Contracts, except, in the case of clause (B) or
(C) above, for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, will not have a Company
Material Adverse Effect or prevent, delay or impair the ability of the
Company to consummate the transactions contemplated by this Agreement.
Section 6.1(d) of the Company Disclosure Letter sets forth a correct and
complete list of Contracts of the Company and its Subsidiaries pursuant to
which consents or waivers are or may be required prior to consummation of
the transactions contemplated by this Agreement (subject to the exception
set forth with respect to clauses (B) and (C) above). The Company will use
its reasonable best efforts to obtain the consents referred to in the
Disclosure Letter.
(e) Company Reports; Financial Statements. The Company
has filed with the Commission each registration statement, report, proxy
statement or information statement required to be filed by it since
December 31, 1994 (the "Audit Date"), including (i) the Company's Annual
Report on Form 10-K for the year ended December 31, 1994 and (ii) the
<PAGE> 16
Company's Quarterly Reports on Form 10-Q for the periods ended March 31,
1995, June 30, 1995, and September 30, 1995, (collectively, including any
such reports filed subsequent to the date hereof, the "Company Reports").
As of their respective dates, the Company Reports did not, and any Company
Reports filed with the Commission subsequent to the date hereof will not,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances in which they were made, not mis-
leading. Except as disclosed in Section 6.1(e) of the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries, nor any of their
respective assets, businesses, or operations, is as of the date of this
Agreement a party to, or is bound or affected by, or receives benefits
under any contract or agreement or amendment thereto, that in each case
would be required to be filed as an exhibit to a Form 10-K as of the date
of this Agreement that has not been filed as an exhibit to a Company Report
filed prior to the date of this Agreement. As of their respective dates,
the consolidated financial statements included in the Company Reports
complied as to form in all material respects with then applicable
accounting requirements and the published rules and regulations of the
Commission with respect thereto. Each of the consolidated balance sheets
included in or incorporated by reference into the Company Reports (includ-
ing the related notes and schedules) fairly presents the consolidated
financial position of the Company and its Subsidiaries as of its date and
each of the consolidated statements of income and of changes in cash flows
included in or incorporated by reference into the Company Reports
(including any related notes and schedules) fairly presents the results of
operations and changes in cash flows, as the case may be, of the Company
and its Subsidiaries for the periods set forth therein (subject, in the
case of unaudited statements, to the absence of notes and normal year-end
audit adjustments that will not be material in amount or effect), in each
case in accordance with U.S. generally accepted accounting principles
("GAAP") consistently applied during the periods involved, except as may be
noted therein.
(f) Absence of Certain Changes. Except as disclosed in
the Company Reports prior to the date hereof and except as disclosed in
Section 6.1(f) of the Company Disclosure Letter, since the Audit Date the
Company and its Subsidiaries have conducted their respective businesses
only in, and have not engaged in any material transaction other than
according to, the ordinary and usual course of such businesses and there
has not been (i) any change in the financial condition, business, prospects
or results of
<PAGE> 17
operations of the Company and its Subsidiaries, except those changes that
will not, individually or in the aggregate, have a Company Material Adverse
Effect; (ii) any material damage, destruction or other casualty loss with
respect to any material asset or property owned, leased or otherwise used
by the Company or any of its Subsidiaries, whether or not covered by
insurance; (iii) except for dividends that have already been declared and
publicly announced on Shares and payment of dividends on Preferred Shares
in accordance with its terms, any declaration, setting aside or payment of
any dividend or other distribution in respect of the capital stock of the
Company; (iv) any change by the Company in accounting principles, practices
or methods. Since the Audit Date, except as provided for herein or as
disclosed in the Company Reports prior to the date hereof, there has not
been any increase in the compensation payable or that could become payable
by the Company and its Subsidiaries to their officers or key employees or
any amendment of any of the Compensation and Benefit Plans (as defined in
Section 6.1(h) hereof) other than increases or amendments in the ordinary
course of business consistent with past practice.
(g) Litigation and Liabilities. Except as disclosed in
the Company Reports prior to the date hereof and except as disclosed in
Section 6.1(g) of the Company Disclosure Letter, there are no (i) civil,
criminal or administrative actions, suits, claims, hearings, investigations
or proceedings pending or threatened against the Company or any of its
Subsidiaries or Affiliates, in any foreign or domestic jurisdiction or
(ii) obligations or liabilities, whether or not accrued, contingent or
otherwise and whether or not required to be disclosed, including those
relating to matters involving any foreign or domestic Environmental Law (as
defined in Section 6.1(l)), or any other facts or circumstances that so far
as can reasonably be foreseen could result in any claims against or
obligations or liabilities of the Company or any of its Subsidiaries or
Affiliates, except for those that are not, individually or in the
aggregate, likely to have a Company Material Adverse Effect or prevent the
Company from consummating the transactions contemplated by this Agreement;
provided, however, that since December 31, 1994 and except as set forth in
Section 6.1(g) of the Company Disclosure Letter, the Company and its
Subsidiaries have not been subject to any civil judgment or arbitration
award in any jurisdiction, domestic or foreign, with a value in excess of
$500,000.
<PAGE> 18
(h) Employee Benefits.
(i) A copy (or, if unwritten, a summary thereof) of each
bonus, deferred compensation, pension, retirement, profit-sharing, thrift,
savings, employee stock ownership, stock bonus, stock purchase, restricted
stock, stock option, employment, termination, severance, compensation,
medical, health or other plan, agreement, policy or arrangement that covers
employees, directors, former employees or former directors of the Company
and its Subsidiaries and which are sponsored, maintained or contributed to
by the Company or its Subsidiaries (and excluding multiemployer plans as
defined under ERISA (as hereinafter defined) and excluding plans in foreign
jurisdictions as to which contributions are mandatory) (the "Compensation
and Benefit Plans") and any trust agreements or insurance contracts forming
a part of such Compensation and Benefit Plans has been made available to
Praxair prior to the date hereof. The Compensation and Benefit Plans are
listed in Section 6.1(h) of the Company Disclosure Letter.
(ii) All Compensation and Benefit Plans are in substantial
compliance with all applicable law, including the Code and the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"). Each
Compensation and Benefit Plan that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service (the
"IRS"), and the Company is not aware of any circumstances likely to result
in revocation of any such favorable determination letter. There is no
pending or, to the knowledge of the officers of the Company, threatened
material litigation relating to the Compensation and Benefit Plans.
Neither the Company nor any Subsidiary has engaged in a transaction with
respect to any Compensation and Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject the
Company or any of its Subsidiaries to a material tax or penalty imposed by
either Section 4975 of the Code or Section 502 of ERISA.
(iii) Except as disclosed in Section 6.1(h) of the Company
Disclosure Letter, as of the date hereof, no liability under Subtitle C
or D of Title IV of ERISA has been or is expected to be incurred by the
Company or any Subsidiary with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer
plan of any entity which is considered one employer with the Company
<PAGE> 19
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate"), except for such a liability that has as of the date hereof
been satisfied. Except as set forth in Section 6.1(h) of the Company
Disclosure Letter, the Company and its Subsidiaries have not incurred and
do not expect to incur any withdrawal liability with respect to a
multiemployer plan under Subtitle E to Title IV of ERISA, except for such a
liability that has as of the date hereof been satisfied. No notice of a
"reportable event", within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to
be filed for any Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof or will be required to be filed in
connection with the transaction contemplated by this Agreement.
(iv) All contributions required to be made under the terms
of any Compensation and Benefit Plan have been timely made or have been
properly reflected on the most recent consolidated balance sheet filed or
incorporated by reference in the Company Reports prior to the date hereof.
Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate
has an "accumulated funding deficiency" (whether or not waived) within the
meaning of Section 412 of the Code or Section 302 of ERISA. Neither the
Company nor its Subsidiaries has provided, or is required to provide,
security to any Pension Plan or to any single-employer plan of an ERISA
Affiliate pursuant to Section 401(a)(29) of the Code.
(v) Except as set forth in Section 6.1(h)(v) of the
Company Disclosure Letter, under each Pension Plan which is a single-
employer plan, as of the last day of the most recent plan year ended prior
to the date hereof, the actuarially determined present value of all
"benefit liabilities", within the meaning of Section 4001(a)(16) of ERISA
(as determined on the basis of the actuarial assumptions contained in the
Pension Plan's most recent actuarial valuation), did not exceed the then
current value of the assets of such Pension Plan, and there has been no
material adverse change in the financial condition of such Pension Plan
since the last day of the most recent plan year. Except as set forth in
Section 6.1(h)(v) of the Company Disclosure Letter, the withdrawal
liability under Subtitle E of Title I of ERISA of the Company and its
Subsidiaries under each multiemployer plan to which the Company, any of its
Subsidiaries or an ERISA Affiliate has contributed during the preceding
12 months, determined as if a "complete withdrawal", within the meaning of
Section 4203 of ERISA, had occurred as of the date hereof, does not exceed
$1,000,000.
<PAGE> 20
(vi) Neither the Company nor its domestic Subsidiaries have
any obligations for retiree health and life benefits under any Compensation
and Benefit Plan, except as set forth in the Company Disclosure Letter.
For a minimum of the past ten years any such plan has always provided that
the Company or its domestic Subsidiaries may amend or terminate any such
plan at any time without incurring any material liability thereunder.
(vii) Except as disclosed in the Company Reports prior to
the date hereof or as specifically contemplated by this Agreement or as set
forth in Section 6.1(h) of the Company Disclosure Letter, the consummation
of the Merger and the other transactions contemplated by this Agreement
will not (x) entitle any employees of the Company or its Subsidiaries to
severance pay, or (y) accelerate the time of payment or vesting or trigger
any payment of compensation or benefits under, increase the amount payable
or trigger any other material obligation pursuant to, any of the
Compensation or Benefit Plans.
(viii) All Compensation and Benefit Plans covering current or
former non-U.S. employees or former employees of the Company and its
Subsidiaries comply in all material respects with applicable local law.
The Company and its Subsidiaries have no material unfunded liabilities with
respect to any Pension Plan that covers such non-US employees.
(i) Compliance with Laws. Except as set forth in the
Company Reports prior to the date hereof and except as disclosed in
Section 6.1(i) of the Company Disclosure Letter, the businesses of each of
the Company and its Subsidiaries have not been, and are not being,
conducted in violation of any law, ordinance, regulation, judgment, order,
decree, arbitration award, license or permit of any Governmental Entity
(collectively, "Laws") with such exceptions as would not likely have a
Company Material Adverse Effect. Except as set forth in the Company
Reports prior to the date hereof and except as disclosed in Section 6.1(i)
of the Company Disclosure Letter, the Company is not aware of any material
investigation or review by any Governmental Entity with respect to the
Company or any of its Subsidiaries nor has any Governmental Entity
indicated to the Company an intention to conduct the same. No change is
required in the Company's or any of its Subsidiaries' processes, properties
or procedures in connection with any such Laws, and the Company has not
received any notice or communication of any noncompliance with any such
Laws that has not been cured as of the date hereof with such
<PAGE> 21
exceptions as would not likely have a Company Material Adverse Effect.
(j) Takeover Statutes. No supermajority vote is required
under any "fair price," "moratorium," "control share acquisition" or
similar antitakeover statute or regulation (each, a "Takeover Statute") in
connection with the Amended Offer, the Merger or the transactions
contemplated hereby. The Board has taken all appropriate and necessary
action such that the provisions of Section 203 of the DGCL will not apply
to any of the transactions contemplated by this Agreement.
(k) Voting Requirements; Company Articles. (i) The
affirmative vote of the holders of a majority of the outstanding stock
entitled to vote is the only vote of the holders of any class or series of
the Company's capital stock or of any Voting Debt of the Company necessary
to approve this Agreement and the transactions contemplated by this
Agreement (each outstanding Share being entitled to 1 vote and each
outstanding Convertible Preferred Share being entitled to 1.5 votes) (the
"Company Requisite Vote").
(ii) The Board of Directors of the Company has recommended
the Merger in accordance with Article Tenth of the Company Charter.
(iii) At least a majority of the Continuing Directors (as
defined in Article Fifteenth of the Company Charter) has approved the
Merger pursuant to the terms of this Agreement.
(l) Environmental Matters. Except as disclosed in the
Company Reports prior to the date hereof, except as disclosed in
Section 6.1(l) of the Company Disclosure Letter and except for such matters
that, alone or in the aggregate, will not have a Company Material Adverse
Effect, (i) the Company and its Subsidiaries have complied with all
applicable Environmental Laws; (ii) the properties presently or formerly
owned or operated by the Company or its Subsidiaries (including soil,
groundwater or surface features and buildings or structures thereon) (the
"Properties") do not contain any Hazardous Substances (as defined below)
other than as permitted under applicable Environmental Law, do not, and
have not, contained any underground storage tanks; (iii) neither the
Company nor any of its Subsidiaries has received any claims, notices,
demand letters or requests for information alleging that the Company may be
in violation of, or liable under, any Environmental Law and none of the
Company, its Subsidiaries or the Properties are subject to any agreement,
order or
<PAGE> 22
decree involving liability under any Environmental Law; (iv) no Hazardous
Substance has been disposed of or released on any of the Properties; (v)
the Company and Subsidiaries are not subject to liability for any off-site
disposal or contamination; and (vi) there are no other circumstances
involving the Company or its Subsidiaries that could be expected to result
in any claims, liability, costs or losses or any restrictions on the
ownership, use, or transfer of any Property pursuant to any Environmental
Law.
"Environmental Law" means any law, regulation, order, decree,
opinion or agency requirement relating to pollution, contamination, wastes,
hazardous materials or the protection of the environment, human health or
safety and "Hazardous Substance" means any waste, mixture or matter
containing any substance that is listed, classified under or regulated by
any government authority pursuant to any Environmental Law including any
petroleum compounds, asbestos, lead and polychlorinated biphenyls.
(m) Taxes. Except for such matters that would not be
reasonably likely to have, individually or in the aggregate, a Company
Material Adverse Effect, (a) the Company and its Subsidiaries have timely
filed all Tax Returns required to be filed by them with any taxing
authority with respect to Taxes for all periods heretofore ended, taking
into account any extension of time to file granted to or obtained on behalf
of the Company and its Subsidiaries, (b) all Taxes required to be paid with
respect to the periods covered by such Tax Returns or reports that are due
prior to the Effective Time have been paid or will be paid by the Effective
Time, (c) as of the date hereof, no deficiency for any amount of Tax has
been asserted or assessed by a taxing authority against the Company or any
of its Subsidiaries, except for amounts for which the Company has made an
adequate reserve as reflected in the Company Reports, (d) all liability for
Taxes of the Company or any of its Subsidiaries that are or will become due
or payable with respect to periods covered by the financial statements
referred to in Section 6.1(e) have been paid or adequately reserved for on
such financial statements to the extent required by GAAP, and (e) the
Company and its Subsidiaries are not liable for any Taxes arising out of
membership or participation in any consolidated, affiliated, combined or
unitary group in which it or any of its Subsidiaries was at any time a
member, other than such group the parent of which is the Company.
As used in this Agreement, (i) the term "Tax" (including, with
correlative meaning, the terms "Taxes", and "Taxable") includes all
federal, state, local and foreign
<PAGE> 23
income, profits, franchise, gross receipts, environmental, customs duty,
capital stock, severances, stamp, payroll, sales, employment, unemployment,
disability, use, property, withholding, excise, production, value added,
occupancy and other taxes, duties or assessments of any nature whatsoever,
together with all interest, penalties and additions imposed with respect to
such amounts and any interest in respect of such penalties and additions,
and (ii) the term "Tax Return" (including, with correlative meaning, the
term "Tax Returns") includes all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to Taxes.
(n) Labor Matters. Except as set forth in Section 6.1(n)
of the Company Disclosure Letter and with such exceptions as would not have
a Material Adverse Effect, neither the Company nor any of its Subsidiaries
is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or any of its Subsidiaries the subject of
any proceeding asserting that the Company or any of its Subsidiaries has
committed an unfair labor practice or is seeking to compel it to bargain
with any labor union or labor organization nor is there, nor has there been
for the past five years, any labor strike, dispute, walkout, work stoppage,
slow-down, lockout or other such controversy involving the Company or any
of its Subsidiaries pending or threatened.
(o) Information. None of the Amended Schedule 14D-9, the
Proxy Statement (as defined in Section 7.4 hereof) or any other document
filed or to be filed by or on behalf of the Company with the Commission or
any other governmental entity in connection with the transactions
contemplated by this Agreement contained when filed or will, at the
respective times filed with the Commission or other governmental entity
and, in addition, in the case of the Proxy Statement at the date it or any
amendment or supplement is mailed to stockholders of the Company and at the
time of any Special Meeting (as defined in Section 7.3), 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 made
therein, in light of the circumstances under which they were made, not
misleading; provided that the foregoing shall not apply to information
supplied by Praxair or the Purchaser specifically for inclusion or
incorporation by reference in any such document. The Amended Schedule 14D-
9 and the Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and
<PAGE> 24
regulations thereunder. None of the information supplied by the Company
specifically for inclusion or incorporation by reference in the Amended
Offer Documents or in any other document filed or to be filed by or on
behalf of Praxair or the Purchaser with the Commission or any other
Governmental Entity in connection with the transactions contemplated by
this Agreement contains any untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under
which they were made, not misleading.
(p) Brokers and Finders. Neither the Company nor any of
its officers, directors or employees has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders fees
in connection with the Merger or the other transactions contemplated in
this Agreement except that the Company has employed Merrill Lynch and
Lehman Bros. as its financial advisors, the arrangements with which have
been disclosed to Praxair prior to the date hereof.
6.2. Representations and Warranties of Praxair and
Purchaser. Praxair and Purchaser represent and warrant to the Company as
follows:
(a) Organization. Each of Praxair and Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and each of Praxair and Purchaser has all requisite
corporate or similar power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted.
(b) Authority. Each of Praxair and Purchaser has full
requisite corporate power and authority and has taken all corporate action
necessary to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized and approved by the Board of Directors of
each of Praxair and Purchaser and by Praxair as the sole stockholder of
Purchaser and no other corporate proceedings are necessary to authorize
this Agreement or the consummation of the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by each of
Praxair and Purchaser and, assuming this Agreement constitutes a legal,
valid and binding agreement of the Company, it constitutes a legal, valid
and binding agreement of each of
<PAGE> 25
Praxair and Purchaser, enforceable against them in accordance with its
terms.
(c) Governmental Filings; No Violations. (i) Other than
the Regulatory Filings no filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity is required
by Praxair or Purchaser in connection with the execution and delivery of
this Agreement, or the consummation by Praxair or Purchaser of the
transactions contemplated hereby except such other consents, orders,
authorizations, registrations, declarations and filings not obtained prior
to the Effective Time the failure of which to be obtained or made would
not, individually or in the aggregate, have a Praxair Material Adverse
Effect (as defined below).
(ii) The execution, delivery and performance of this Agreement
by each of Praxair and the Purchaser do not, and the consummation by the
Purchaser of the Merger pursuant to the terms of this Agreement and the
other transactions contemplated hereby will not, constitute or result in
(A) a breach or violation of, or a default under, their respective
certificates of incorporation or by-laws or the comparable governing
instruments of any of their Subsidiaries, (B) a breach or violation of, or
a default under, the vesting, creation or acceleration of any rights or
obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of Praxair, the Purchaser or any of their
Subsidiaries (with or without notice, lapse of time or both) pursuant to
any provision of any agreement, lease, contract, note, mortgage, indenture,
arrangement or other domestic or foreign obligation ("Praxair Contracts")
of Praxair, the Purchaser or any of their Subsidiaries or any Law (as
defined in Section 6.1(i)) or governmental or non-governmental permit or
license to which Praxair, the Purchaser or any of their Subsidiaries is
subject or (C) any change in the rights or obligations of any party under
any of the Praxair Contracts, except, in the case of clause (B) or (C)
above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, will not have a material adverse
effect on Praxair's or Purchaser's ability to perform their respective
obligations pursuant to this Agreement or consummate the Amended Offer and
the Merger (a "Praxair Material Adverse Effect") or for which Praxair or
Purchaser has received appropriate consents or waivers.
(d) Information. Neither the Amended Offer Documents nor
any other document filed or to be filed by or on behalf of Praxair or
Purchaser with the Commission or any other Governmental Entity in
connection with the
<PAGE> 26
transactions contemplated by this Agreement contained when filed or will,
at the respective times filed with the Commission or other Governmental
Entity, 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 made therein, in light of the circumstances under which
they were made, not misleading; provided, that, the foregoing shall not
apply to information supplied by the Company specifically for inclusion or
incorporation by reference in any such document. None of the information
supplied by Praxair or Purchaser specifically for inclusion or
incorporation by reference in the Amended Schedule 14D-9, the Proxy
Statement, or any other document filed or to be filed by or on behalf of
the Company with the Commission or any other governmental entity in
connection with the transactions contemplated by this Agreement contains
any untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(e) Financing. Prior to the consummation of the Amended
Offer, Praxair will have caused Purchaser to have at the time of acceptance
for payment and purchase of Shares under the Amended Offer and at the
Effective Time, the funds necessary to consummate the Amended Offer and the
Merger and the transactions contemplated thereby and to pay related fees
and expenses.
ARTICLE VII
Covenants
7.1. Interim Operations. (a) The Company covenants and
agrees as to itself and its Subsidiaries that, after the date hereof and
prior to the date on which Purchaser's nominees comprise a majority of the
Board of Directors of the Company (unless Praxair shall otherwise approve
in writing and except as otherwise expressly contemplated by this
Agreement):
(i) the business of it and its Subsidiaries shall be
conducted in the ordinary and usual course and, to the extent consistent
therewith, it and its Subsidiaries shall use its reasonable best efforts to
preserve its business organization intact and maintain its existing rela-
tions and goodwill with customers, suppliers, distributors, creditors,
lessors, employees and business associates;
<PAGE> 27
(ii) it shall not (A) sell or pledge any capital stock
owned by it in any of its Subsidiaries; (B) amend the Company Charter or
its by-laws or amend, modify or terminate the Rights Agreement; (C) split,
combine or reclassify its outstanding shares of capital stock; (D) declare,
set aside or pay any dividend payable in cash, stock or property in respect
of any Shares or Preferred Shares other than regular quarterly or semi-
annual cash dividends not in excess of $0.12 per Share and regular
quarterly or semi-annual cash dividends on the Preferred Shares; or
(E) repurchase, redeem or otherwise acquire, or permit any of its
Subsidiaries to purchase or otherwise acquire, any shares of its capital
stock or any securities convertible into or exchangeable or exercisable for
any shares of its capital stock except in connection with the ordinary
course of operations of the CBI Salaried Employee Stock Ownership Plan
(1987);
(iii) neither it nor any of its Subsidiaries shall except as
disclosed in Section 7.1(a) of the Company Disclosure Letter (A) issue,
sell, pledge, dispose of or encumber, or authorize or propose the issuance,
sale, pledge, disposition or encumbrance of, any shares of, or securities
convertible into or exchangeable or exercisable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of its
capital stock of any class or any Voting Debt or any other property or
assets (other than Shares issuable pursuant to options outstanding on the
date hereof under the Stock Plan or upon conversion of Convertible
Preferred Shares; (B) other than in the ordinary and usual course of busi-
ness, transfer, lease, license, guarantee, sell, mortgage, pledge, dispose
of any other property or assets or encumber any property or assets
(including capital stock of any of its Subsidiaries) or incur or modify any
material indebtedness or other liability; or (C) make any commitments for,
make or authorize any capital expenditures other than existing capital
expenditures required to be made pursuant to existing capital projects, as
set forth in Section 7.1(a)(iii) of the Company Disclosure Letter, which
have been previously authorized or, by any means, make any acquisition of,
or investment in, assets or stock of any other Person or entity;
(iv) except as disclosed in Section 7.1(a) of the Company
Disclosure Letter, neither it nor any of its Subsidiaries shall terminate,
establish, adopt, enter into, make any new grants or awards under, amend or
otherwise modify, any Compensation and Benefit Plans or increase the
salary, wage, bonus or other compensation of any employees other than
increases in compensation in the ordinary course
<PAGE> 28
of business, in each case, consistent with past practices with regard to
frequency and amount;
(v) neither it nor any of its Subsidiaries shall settle or
compromise any material claims or litigation or, except in the ordinary and
usual course of business modify, amend or terminate any of its material
Contracts or waive, release or assign any material rights or claims;
(vi) neither it nor any of its Subsidiaries shall make any
Tax election or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be cancelled or terminated except in the ordinary and
usual course of business; and
(vii) neither it nor any of its Subsidiaries will authorize
or enter into an agreement to do any of the foregoing.
(b) Other Actions. The Company shall not, and shall not
permit any of its Subsidiaries to, take any action that would, or that
could reasonably be expected to, result in (i) any of the representations
and warranties of the Company set forth in this Agreement that are
qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in
any material respect or (iii) any of the conditions to the Merger set forth
in Article VIII not being satisfied.
7.2. Acquisition Proposals. The Company agrees that
neither it nor any of its Subsidiaries nor any of the officers and
directors of it or its Subsidiaries shall, and that it shall direct and use
its best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly,
initiate, solicit, encourage or otherwise facilitate any inquiries or the
making of any proposal or offer with respect to a merger, reorganization,
consolidation or similar transaction involving, or any purchase of all or
any significant portion of the assets or any equity securities of (any such
proposal or offer being hereinafter referred to as an "Acquisition
Proposal"), it or any of its Subsidiaries (it being understood and agreed
that any action permitted under the exception in the next sentence shall
not be deemed a prohibited initiation, solicitation, encouragement or
facilitation hereunder). The Company further agrees that neither it nor
any of its Subsidiaries nor any of the officers and directors of it or its
Subsidiaries shall, and that it shall direct and use its
<PAGE> 29
best efforts to cause its and its Subsidiaries' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) not to, directly or indirectly,
except to the extent legally required for the discharge by the Board of its
fiduciary duties as advised by outside counsel, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Person relating to an Acquisition Proposal with
respect to it or any of its Subsidiaries, or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal with respect
to it or any of its Subsidiaries or any of their businesses. 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 of the foregoing it being understood however
that resumption of any such activities, discussions or negotiations shall
not violate this provision to the extent legally required for the discharge
by the Board of its fiduciary duties, as advised by outside counsel. The
Company agrees that it will use its reasonable best efforts to promptly
inform the individuals or entities referred to in the first sentence of
this Section 7.2 of the obligations undertaken in this Section 7.2. The
Company agrees that it will notify Praxair immediately if (i) any such
inquiries, proposals or offers are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with it or its Subsidiaries or (ii) the Company
determines that it is legally required for the discharge by the Board of
its fiduciary duties as advised by outside counsel to deliver such
information or to enter into such negotiations or discussions. The Company
also agrees that it will promptly request each Person that has heretofore
executed any confidentiality agreement in connection with the consideration
of an Acquisition Proposal with respect to the Company or any of its
Subsidiaries or any of their businesses to return all confidential
information heretofore furnished to such Person by or on behalf of it or
any of its Subsidiaries.
7.3. Stockholders Meeting. The Company, acting through the
Board, will take, in accordance with applicable law, the Company Charter
and the Company's by-laws, all action necessary to duly call, give notice
of, convene and hold a special meeting of stockholders (the "Special
Meeting") as soon as practicable after the purchase of Shares by Purchaser
pursuant to the Amended Offer for the purpose of considering and taking
action upon the Merger and this Agreement and such other matters as may be
necessary to consummate the transactions contemplated by this Agreement.
<PAGE> 30
Subject to the fiduciary obligations of the Board under applicable law as
advised by outside counsel, the Board shall recommend approval of the
Merger and the adoption of this Agreement. At any meeting of the Company's
stockholders, Praxair will cause the Shares acquired in the Amended Offer,
and any additional Shares owned by it or its affiliates, to be voted in
favor of this Agreement and the Merger.
7.4. Filings; Other Actions; Notification. (a) The
Company, acting through its Board, in consultation with Praxair, shall (i)
prepare and, following consummation of the Amended Offer, file with the
Commission a preliminary proxy statement (or, if applicable, a preliminary
information statement) relating to the matters to be considered at the
Special Meeting pursuant to this Agreement and use its reasonable best
efforts (x) to obtain and furnish the information required to be included
in the Proxy Statement (as hereinafter defined) and, after consultation
with Praxair, to respond promptly to any comments made by the Commission
with respect to the preliminary proxy statement (or, if applicable, a
preliminary information statement) and to cause a definitive proxy
statement (or, if applicable, a definitive information statement) (the
"Proxy Statement") to be mailed to its stockholders and (y) subject to the
fiduciary obligations of the Board of Directors of the Company under
applicable law as advised by outside counsel, to obtain the necessary
approvals of the Merger, this Agreement and such other matters as may be
necessary to consummate the transactions contemplated hereby by its
stockholders; and
(ii) subject to the fiduciary obligations of the Board
under applicable law as advised by outside counsel, include in the Proxy
Statement the recommendation of the Board that stockholders of the Company
vote in favor of the approval of the Merger and the adoption of this
Agreement.
(b) The Company and Praxair each shall cooperate with each
other and use (and cause their respective Subsidiaries to use) their
respective best efforts to prepare and file as promptly as practicable all
documentation to effect all necessary applications, notices, petitions,
filings and other documents and to obtain as promptly as practicable all
permits, consents, approvals and authorizations necessary or advisable to
be obtained from any third party and/or any Governmental Entity in
connection with the Merger and to consummate the other transactions
contemplated by this Agreement. Subject to applicable laws relating to the
exchange of information, Praxair and the Company shall have the right to
review in advance, and to
<PAGE> 31
the extent practicable each will consult the other on, all the information
relating to Praxair or the Company, as the case may be, and any of their
respective Subsidiaries, that appear in any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with the Merger and the other transactions contemplated by this
Agreement. In exercising the foregoing right, each of the Company and
Praxair shall act reasonably and as promptly as practicable.
(c) The Company and Praxair each shall, upon request by
the other and subject to applicable laws relating to the exchange of
information, furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and stockholders and such other matters
as may be reasonably necessary or advisable in connection with the Proxy
Statement or any other statement, filing, notice or application made by or
on behalf of Praxair, the Company or any of their respective Subsidiaries
to any third party and/or any Governmental Entity in connection with the
Merger and the transactions contemplated by this Agreement. Praxair agrees
that confidential information obtained by it pursuant hereto or pursuant to
the Confidentiality Agreement dated December 5, 1995 has been and shall be
treated in accordance with the provisions of such Confidentiality
Agreement.
(d) The Company and Praxair each shall keep the other
apprised of the status of matters relating to completion of the
transactions contemplated hereby, including promptly furnishing the other
with copies of notice or other communications received by Praxair or the
Company, as the case may be, or any of its Subsidiaries, from any third
party and/or any Governmental Entity with respect to the Merger and the
other transactions contemplated by this Agreement. The Company and Praxair
each shall give prompt notice to the other of any change that is reasonably
likely to result in a Company Material Adverse Effect or Praxair Material
Adverse Effect, respectively.
(e) Without limiting the generality of the undertakings
pursuant to this Section 7.4, the Company and Praxair each agree to take or
cause to be taken the following actions: (i) provide promptly to any and
all federal, state, local or foreign court or Government Entity with
jurisdiction over enforcement of any applicable antitrust laws ("Government
Antitrust Entity") information and documents requested by such Government
Antitrust Entity or necessary, proper or advisable to permit consummation
of the Merger and the transactions contemplated by this Agreement and (ii)
take promptly, in the event that any
<PAGE> 32
permanent or preliminary injunction or temporary restraining order, hold
separate order or other order is entered or sought in any proceeding that
would make consummation of the Merger or the Amended Offer in accordance
with the terms of this Agreement unlawful or that would prevent or delay
consummation of the Merger or the other transactions contemplated by this
Agreement, any and all steps (including the appeal thereof or the posting
of a bond and including the making of any divestiture; provided, that, the
making of any such divestitures with respect to assets in the United States
does not relate to assets generating more than $200,000,000 in revenues per
annum in the aggregate) necessary to vacate, modify or suspend or avoid
such injunction or order so as to permit such consummation of the Amended
Offer no later than the 60th business day after the date of the Amended
Offer.
7.5. Access. Upon reasonable notice, and except as may
otherwise be required by applicable law, the Company shall (and shall cause
its Subsidiaries to) afford Praxair's officers, employees, counsel,
accountants and other authorized representatives ("Representatives")
access, during normal business hours throughout the period prior to the
Effective Time, to its properties, books, contracts and records and, during
such period, shall (and shall cause its Subsidiaries to) furnish promptly
to the other all information concerning its business, properties and
personnel as may reasonably be requested; provided that, no investigation
pursuant to this Section 7.5 shall affect or be deemed to modify any repre-
sentation or warranty made by the Company, Praxair or Purchaser; and
provided, further, that, the foregoing shall not require the Company to
permit any inspection, or to disclose any information, that in the
reasonable judgment of the Company would result in the disclosure of any
trade secrets of third parties or violate any of its obligations with
respect to confidentiality if the Company shall have used reasonable best
efforts to obtain the consent of such third party to such inspection or
disclosure and provided, further, that Praxair shall use its reasonable
best efforts to promptly notify the Company if it discovers any information
that might indicate that any representation or warranty by the Company is
incorrect, incomplete or otherwise deficient. All requests for information
made pursuant to this Section 7.5 shall be directed to an executive officer
of the Company or such Person as may be designated by its officers.
7.6. Publicity. The initial press release shall be a joint
press release and thereafter the Company and Praxair each shall use
reasonable best efforts to consult with each other prior to issuing any
press releases or
<PAGE> 33
otherwise making public announcements with respect to the Merger and the
other transactions contemplated by this Agreement and prior to making any
filings with any third party and/or any Governmental Entity (including any
national securities exchange) with respect thereto.
7.7. Benefits.
(a) Stock Options. The Company shall take all actions
necessary to provide that, immediately prior to the consummation of the
Amended Offer, each Company Option which is not then exercisable will be
exercisable in full and each Company Option (and each related stock
appreciation right) outstanding prior to the Effective Time pursuant to any
of the Stock Plans, whether or not then exercisable, shall be canceled and
only entitle the holder thereof, upon surrender thereof, to receive an
amount in cash equal to the difference between the Merger Consideration and
the exercise price per Share of such Company Option multiplied by the
number of Shares previously subject to such Company Option (such payment to
be net of applicable withholding taxes).
(b) Except as set forth in Section 7.7(b) of the Company
Disclosure Letter and except as provided herein or as otherwise agreed to
by the parties and to the extent permitted by the Stock Plans, (i) the
Stock Plans shall terminate immediately following the purchase of Shares
pursuant to the Amended Offer and the provisions in any other plan, program
or arrangement, providing for the issuance or grant of any other interest
in respect of the capital stock of the Company or any of its Subsidiaries
shall be deleted as of the Effective Time and (ii) the Company shall use
all reasonable efforts to ensure that following the Effective Time no
holder of Company Options or any participant in the Stock Plans or any
other plans, programs or arrangements shall have any right thereunder to
acquire any equity securities of the Company, the Surviving Corporation or
any subsidiary thereof.
(c) Employee Benefits. Praxair agrees that, during the
period commencing on consummation of the Amended Offer and ending on the
first anniversary thereof, the employees of the Company and its
Subsidiaries and former employees of the Company and its Subsidiaries,
other than employees covered by collective bargaining agreements, will
continue to be provided with benefits under employee benefit plans with a
value which is not less in the aggregate than that currently provided by
the Company and its Subsidiaries to such employees. In so providing any
such benefits or plans, for purposes of participation and vesting Purchaser
and Praxair agree to give employees of the Company and its
<PAGE> 34
Subsidiaries service credit for all periods of employment with any such
entity prior to the Effective Time for purposes of any such plans or
benefits so provided. Praxair will, and will cause the Surviving
Corporation to, honor all employee (or former employee) benefit obligations
and contractual rights existing as of the Effective Time and, to the extent
set forth in the Company Reports or otherwise specifically disclosed in the
Company Disclosure Letter, all employment or severance agreements, plans or
policies of the Company and its Subsidiaries in accordance with their
terms. Purchaser acknowledge and agree that consummation of the Amended
Offer constitutes a "Change in Control" with respect to those persons
listed, and pursuant to the agreements and plans set forth in,
Section 7.7(c) of the Company Disclosure Letter.
7.8. Expenses. The Surviving Corporation shall pay all
charges and expenses, including those of the Paying Agent, in connection
with the transactions contemplated in Article V, and Praxair shall
reimburse the Surviving Corporation for such charges and expenses. Whether
or not the Merger is consummated, all costs and expenses incurred in con-
nection with this Agreement and the Merger and the other transactions
contemplated by this Agreement shall be paid by the party incurring such
expense, except as may be permitted by Section 9.5 hereof and except that
expenses incurred in connection with printing and mailing the Proxy
Statement shall be shared equally by Praxair and the Company.
7.9. Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, Praxair agrees that it will
indemnify and hold harmless each present and former director, officer and
employee of the Company, determined as of the Effective Time (the "Indemni-
fied Parties"), against any costs or expenses (including reasonable attor-
neys' fees), judgments, fines, losses, claims, damages or liabilities
(collectively, "Costs") incurred in connection with any claim, action,
suit, proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters existing or occurring at or prior
to the Effective Time, whether asserted or claimed prior to, at or after
the Effective Time, to the fullest extent that the Company would have been
permitted under Delaware law and the Company Charter or the Company's by-
laws in effect on the date hereof to indemnify such Person (and Praxair
shall also advance expenses as incurred to the fullest extent permitted
under applicable law; provided, that, the Person to whom expenses are
advanced provides an undertaking to repay such advances if it is ultimately
determined that such Person is not entitled to indemnification); and
provided, further, that, any
<PAGE> 35
determination required to be made with respect to whether an officer's or
director's conduct complies with the standards set forth under Delaware law
and the Company Charter and the Company's by-laws shall be made by counsel
selected by the Surviving Corporation. Purchaser agrees that all rights to
indemnification in favor of any present or former employee, agent, director
or officer of the Company and its subsidiaries (the "Indemnified Parties")
as provided in their respective charters or by-laws, in an agreement
between an Indemnified Party and the Company or any of its subsidiaries, 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 five years
from the Effective Time; provided that in the event any claim or claims are
asserted or made within such five-year period, all rights to
indemnification in respect of any such claim or claims shall continue until
final disposition of any and all such claims.
(b) Any Indemnified Party wishing to claim indemnification
under paragraph (a) of this Section 7.9, upon learning of any such claim,
action, suit, proceeding or investigation, shall promptly notify Praxair
thereof. An Indemnified Party may select counsel to represent him or her
in connection with any of the foregoing, which counsel shall be reasonably
acceptable to Purchaser, and Purchaser and the Company will cooperate in
the defense of any such matter; provided, however, that neither Purchaser
nor the Company shall be liable for any settlement effected without its
written consent and provided, further, that neither Purchaser nor the
Company shall be obligated to pay the fees and disbursements of more than
one counsel for all Indemnified Parties in any single matter except to the
extent that, in the opinion of counsel for the Indemnified Parties, two or
more of such Indemnified Parties have conflicting interests in the outcome
of such matter. Praxair shall not have any obligation hereunder to any
Indemnified Party if and when a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final, that
the indemnification of such Indemnified Party in the manner contemplated
hereby is prohibited by applicable law.
(c) Praxair agrees that it shall use all reasonable
efforts to maintain the Company's existing officers, and directors,
liability insurance policy and employee benefit plan fiduciary liability
insurance ("D&0 Insurance") for a period of not less than five years from
and after the Effective Time; provided, (i) that Praxair may substitute
therefor policies of substantially similar coverage and amounts containing
terms no less advantageous
<PAGE> 36
to the Indemnified Parties and (ii) if the existing D&O Insurance expires
or is canceled during such period, Praxair will use reasonable efforts to
obtain substantially similar D&O Insurance to the extent available;
provided, further, that, notwithstanding clauses (i) and (ii) of this
subsection 7.9(c), in the event that the aggregate annual premiums for D&O
Insurance at any time during such five year period shall exceed 175% of the
per annum rate of premium currently paid (the "Base Rate") by Company and
its Subsidiaries for such D&O Insurance on the date of this Agreement, then
Praxair shall only be obligated to provide the maximum coverage that shall
then be available at an annual premium equal to 175% of the Base Rate.
(d) If the Surviving Corporation or any of its successors
or assigns (i) shall consolidate with or merge into any other corporation
or entity and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) shall transfer all or
substantially all of its properties and assets to any individual,
corporation or other entity, then and in each such case, proper provisions
shall be made so that the successors and assigns of the Surviving
Corporation shall assume all of the obligations set forth in the last two
sentences of Section 7.7(c) and this Section 7.9.
(e) The provisions of this Section 7.9 are intended to be
for the benefit of, and shall be enforceable by, each of the Indemnified
Parties, their heirs and their representatives.
7.10. Other Actions by the Company and Praxair.
(a) Rights. The Company, acting through its Board, shall
take all necessary action (and shall notify Praxair of any such actions
taken) prior to the Expiration Date including, without limitation,
supplementing or amending the Rights Agreement to ensure that, so long as
this Agreement has not been terminated, the Amended Offer is a "Permitted
Tender Offer" (as defined in the Rights Agreement), (it being understood
that the Company shall amend the definition of "Permitted Tender Offer" in
the Rights Agreement), no "Distribution Date" (as defined in the Rights
Agreement) will occur and Section 11.1(b) of the Rights Agreement will not
be triggered, in each case as a result of the announcement, commencement or
consummation of the Amended Offer or the execution or delivery of this
Agreement with the effect that none of such events will trigger the
exercisability of the Rights or the separation of the Rights from the
certificates to which they are attached. So long as this Agreement has not
been
<PAGE> 37
terminated, the Board shall also take all further action (in addition to
that referred to above) requested in writing by Praxair or Purchaser
(including redeeming the Rights immediately prior to the Effective Time or
amending the Rights Agreement) in order to render the Rights inapplicable
to the Merger and the other transactions contemplated by this Agreement.
Except as provided above with respect to the Merger and the other
transactions by Praxair or Purchaser, the Board shall not (i) amend the
Rights Agreement or (ii) take any action with respect to, or make any
determination under, the Rights Agreement, including a redemption of the
Rights or any action to facilitate an Acquisition Proposal, provided,
however, that nothing herein shall be deemed to preclude the Company from
taking any action with respect to the Rights Agreement (including any
modification or amendment thereto or waiver thereof) as it applies to any
third party other than Praxair and the Purchaser to the extent required for
the Board of Directors of the Company to comply with its fiduciary
obligations under applicable law, as advised in writing by outside counsel
to the Company. The Company will promptly furnish to Praxair and Purchaser
a complete and correct copy of the Rights Agreement, as so amended.
(b) Takeover Statute. If any Takeover Statute is or may
become applicable to the Initial Offer, the Amended Offer, the Merger or
any other transaction contemplated by this Agreement, the Company and the
Board shall grant such approvals and take such actions as are necessary so
that such transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement or by the Merger and otherwise act to
eliminate or minimize the effects of such statute or regulation on such
transactions.
(c) Termination of Litigation. The parties hereto shall
immediately dismiss, with each party bearing its own costs and litigation
expenses, all proceedings pending between themselves and their affiliates
and each shall thereafter sign and deliver such further papers as may be
necessary in connection with such dismissals.
7.11. Notification of Certain Matters. Each of Praxair and
the Company shall give prompt notice to the other party of (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-
occurrence, of which would be likely to cause either (A) any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date hereof to the acceptance for
payment of Shares pursuant to the Amended Offer, (B) any condition set
forth in Annex A to be
<PAGE> 38
unsatisfied in any material respect at any time from the date hereof to the
date the Purchaser purchases Shares pursuant to the Amended Offer or (C)
any condition set forth in Article VIII hereof to be unsatisfied in any
material respect at any time from the date hereof to the Effective Time,
and (ii) any material failure of Praxair or the Company, as the case may
be, or any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 7.11 shall not limit or otherwise affect
the remedies available hereunder to the party receiving such notice.
ARTICLE VIII
Conditions
8.1. Conditions to Obligations of Praxair and Purchaser.
The respective obligations of Praxair and Purchaser to consummate the
Merger are subject to the fulfillment of each of the following conditions,
any or all of which may be waived in whole or in part by Praxair or
Purchaser, as the case may be, to the extent permitted by applicable law:
(a) Stockholder Approval. This Agreement shall have been
duly approved by Company Requisite Vote, in accordance with applicable law,
the Company Charter and the by-laws of the Company;
(b) Purchase of Shares. Purchaser (or one of the Praxair
Companies) shall have purchased Shares pursuant to the Amended Offer;
(c) Governmental Consents. The waiting period applicable
to the consummation of the Merger under the HSR Act shall have expired or
been terminated;
(d) Litigation. No United States or state court or other
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and prohibits consummation of the trans-
actions contemplated by this Agreement (collectively, an "Order");
<PAGE> 39
(e) Other Obligations. The Company shall have fulfilled
its obligations under Sections 7.7(a) and (b) and Section 7.10 hereof.
8.2. Conditions to Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
fulfillment of each of the following conditions, any or all of which may be
waived in whole or in part by the Company to the extent permitted by
applicable law:
(a) Stockholder Approval. This Agreement shall have been
duly approved by the Company Requisite Vote, in accordance with applicable
law, the Company Charter and the by-laws of the Company;
(b) Purchase of Shares. Purchaser (or one of the Praxair
Companies) shall have purchased Shares pursuant to the Amended Offer;
(c) Governmental Consents. The waiting period applicable
to the consummation of the Merger under the HSR Act shall have expired or
been terminated; and
(d) Order. There shall be in effect no Order.
ARTICLE IX
Termination
9.1. Termination by Mutual Consent. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, before or after the approval by stockholders of the Company
referred to in Sections 8.1(a) and 8.2(a) hereof, by the mutual consent of
Praxair and the Company, by action of their respective Boards of Directors.
9.2. Termination by Either Praxair or the Company. This
Agreement may be terminated and the Merger may be abandoned by action of
the Board of Directors of either Praxair or the Company if (i) Purchaser
shall have terminated the Amended Offer without purchasing any Shares
pursuant thereto; provided, that, in the case of termination of this
Agreement by Praxair, such termination of the Amended Offer is not in
violation of the terms of the Amended Offer or this Agreement or (ii) a
majority of the outstanding Shares shall not have been purchased pursuant
to the Amended Offer within 60 business days of the date thereof; provided,
further, that the right to terminate this Agreement pursuant to this
Section 9.2 will not be available
<PAGE> 40
to any party who at such time is in material breach of its obligations
under this Agreement.
9.3. Termination by Praxair. So long as Praxair is not in
material breach of any of its obligation hereunder, this Agreement may be
terminated and the Merger may be abandoned at any time prior to the
purchase of a majority of the outstanding Shares pursuant to the Amended
Offer, before or after the approval by stockholders of the Company referred
to in Sections 8.1(a) and 8.2(a) hereof, by action of the Board of Di-
rectors of Praxair, if (x) the representations and warranties of the
Company set forth in the Agreement shall not be true and correct in any
respect as of the Expiration Date as though made on or as of such date or
the Company shall have breached or failed in any material respect to
perform or comply with any material obligation, agreement or covenant
required by this Agreement to be performed or complied with by it except,
in each case, (i) for changes specifically permitted by this Agreement and
(ii) (A) those representations and warranties that address matters only as
of a particular date which are true and correct as of such date or (B)
where the failure of representations and warranties (without regard to
materiality qualifications therein contained) to be true and correct, or
the performance or compliance with such obligations, agreements or
covenants, do not, individually or in the aggregate, have a Company
Material Adverse Effect; or (y) the Board shall have withdrawn or modified
in a manner adverse to Praxair or Purchaser its approval or recommendation
of the Amended Offer, this Agreement or the Merger or the Board, upon
request by Praxair, shall fail to reaffirm such approval or recommendation
within 2 business days of such request, or shall have resolved to do any of
the foregoing.
9.4. Termination by the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the
Effective Time, before or after the approval by stockholders of the Company
referred to in Sections 8.1(a) and 8.2(a) hereof by action of the Board if
(i) Praxair or Purchaser shall have failed to comply in any material
respect with any of the covenants or agreements contained in this Agreement
to be complied with or performed by Praxair or Purchaser at or prior to
such date of termination, or any representation or warranty made by Praxair
in this Agreement shall be untrue or incorrect in any material respect,
(ii) Praxair or Purchaser shall have failed to amend the Initial Offer
within the time required in Section 1.1 or (iii) the Company receives an
Acquisition Proposal on terms the Board (after consultation with its
financial advisors) determines to be more favorable to the
<PAGE> 41
Company's stockholders than the terms of the Amended Offer and the Merger,
and the Board determines, as advised by outside counsel, that it is legally
required for the discharge of its fiduciary duties, (A) not to continue to
recommend that holders of Shares accept the Amended Offer and tender their
Shares pursuant to the Amended Offer, and (B) to accept such Acquisition
Proposal; provided, however, that the Company shall not be permitted to
terminate this Agreement pursuant to this Section 9.4(iii) unless it has
provided Praxair and Purchaser with two business days prior written notice
of this intent to so terminate this Agreement together with a detailed
summary of the terms and conditions (including proposed financing, if any)
of such Acquisition Proposal; provided, further, that Purchaser shall
receive the fee set forth in Section 9.5(b) immediately prior to any
termination pursuant to this Section 9.4(iii) by wire transfer in same day
funds.
9.5. Effect of Termination and Abandonment. (a) In the
event of termination of this Agreement and abandonment of the Merger
pursuant to this Article IX, no party hereto (or any of its directors or
officers) shall have any liability or further obligation to any other party
to this Agreement, except as provided in Section 9.5(b) below and Section
10.2 and except that nothing herein will relieve any party from liability
for any breach of this Agreement. Nothing herein shall limit the ability
of the Company upon termination of this Agreement in accordance with its
terms to make the Rights (or any similar rights issued under any new rights
agreement entered into by the Company) applicable to any proposal or offer
made by Praxair or any affiliate thereof.
(b) If (x) (i) the Amended Offer shall have remained open for a
minimum of at least 10 business days, (ii) after the date hereof any
corporation, partnership, person, other entity or group (as defined in
Section 13(d)(3) of the Exchange Act) other than Praxair or Purchaser or
any of their respective subsidiaries or affiliates (collectively, an
"Acquiring Person") shall have become the beneficial owner of 10% or more
of the outstanding Shares, and (iii) the Minimum Tender Condition (as
defined in Annex A) shall not have been satisfied and the Amended Offer is
terminated in accordance with this Agreement without the purchase of any
Shares thereunder, (y) Praxair shall have terminated this Agreement
pursuant to Section 9.3(y) hereof or (z) the Company shall have terminated
this Agreement pursuant to Section 9.4(iii) hereof, then the Company, if
requested by Praxair, shall promptly, but in no event later than two days
after the date of such request, pay Praxair a fee of $43,500,000 which
<PAGE> 42
amount shall be payable in same day funds. The Company acknowledges that
the agreements contained in this Section 9.5(b) are an integral part of the
transactions contemplated in this Agreement, and that, without these
agreements, Praxair and Purchaser would not enter into this Agreement;
accordingly, if the Company fails to promptly pay the amount due pursuant
to this Section 9.5(b), and, in order to obtain such payment, Praxair or
Purchaser commences a suit which results in a judgment against the Company
for the fee set forth in this paragraph (b), the Company shall pay to
Praxair or Purchaser its costs and expenses (including attorneys' fees) in
connection with such suit, together with interest on the amount of the fee
at the prime rate of Morgan Guaranty Trust Company of New York on the date
such payment was required to be made.
ARTICLE X
Miscellaneous and General
10.1. Survival. This Article X and the agreements of the
Company, Praxair and Purchaser contained in Sections 5.2 (but only to the
extent that such Section relates to actions to be taken after the Effective
Time), 5.3, 5.4, 7.7 and 7.9 shall survive the consummation of the Merger.
This Article X and the agreements of the Company, Praxair and Purchaser
contained in the last two sentences of Section 7.7(c), Section 7.8 and
Section 9.5 shall survive the termination of this Agreement. All other
representations, warranties, agreements and covenants in this Agreement
shall not survive the consummation of the Merger or the termination of this
Agreement.
10.2. Modification or Amendment. Subject to the provisions
of applicable law and Section 1.3 hereof, at any time prior to the
Effective Time, the parties hereto may modify or amend this Agreement, by
written agreement executed and delivered by duly authorized officers of the
respective parties.
10.3. Waiver of Conditions. The conditions to each of the
parties' obligations to consummate the Merger are for the sole benefit of
such party and may be waived by such party in whole or in part to the
extent permitted by applicable law.
10.4. Counterparts. This Agreement may be executed in any
number of counterparts, each such counterpart being deemed to be an
original instrument, and all such counterparts shall together constitute
the same agreement.
<PAGE> 43
10.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL
BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF
THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES
THEREOF. The parties hereby irrevocably submit to the jurisdiction of the
courts of the State of Delaware and the Federal courts of the United States
of America located in the State of Delaware solely in respect of the
interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement, and in respect of the
transactions contemplated hereby, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is
not subject thereto or that such action, suit or proceeding may not be
brought or is not maintainable in said courts or that the venue thereof may
not be appropriate or that this Agreement or any such document may not be
enforced in or by such courts, and the parties hereto irrevocably agree
that all claims with respect to such action or proceeding shall be heard
and determined in such a Delaware State or Federal court. The parties
hereby consent to and grant any such court jurisdiction over the Person of
such parties and over the subject matter of such dispute and agree that
mailing of process or other papers in connection with any such action or
proceeding in the manner provided in Section 10.6 or in such other manner
as may be permitted by law, shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH
SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH SUCH PARTY HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.5.
<PAGE> 44
10.6. Notices. Any notice, request, instruction or other
document to be given hereunder by any party to the others shall be in
writing and delivered personally or sent by registered or certified mail,
postage prepaid:
if to Praxair or Purchaser
Praxair, Inc.
39 Old Ridgebury Road
Danbury, CT 06810-5113
Attention: David H. Chaifetz, Esq.
with a copy to:
Neil T. Anderson, Esq.
Sullivan & Cromwell
125 Broad Street
New York, NY 10004
if to the Company
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, IL 60521-7001
Attention: Charles O. Ziemer, Esq.
with a copy to:
Richard D. Katcher, Esq.
Seth A. Kaplan, Esq.
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
or to such other persons or addresses as may be designated in writing by
the party to receive such notice.
10.7. Entire Agreement. This Agreement (including any
exhibits hereto), the Company Disclosure Letter and the Praxair Disclosure
Letter constitute the entire agreement, and supersede all other prior
agreements, understandings, representations and warranties both written and
oral, among the parties, with respect to the subject matter hereof.
10.8. No Third Party Beneficiaries. Except as provided in
the last two sentences of Section 7.7(c) and in Section 7.9 hereof, this
Agreement is not intended to confer upon any Person other than the parties
hereto any rights or remedies hereunder.
10.9. Obligations of Praxair and of the Company. Whenever
this Agreement requires a Subsidiary of Praxair to
<PAGE> 45
take any action, such requirement shall be deemed to include an undertaking
on the part of Praxair to cause such Subsidiary to take such action.
Whenever this Agreement requires a Subsidiary of the Company to take any
action, such requirement shall be deemed to include an undertaking on the
part of the Company to cause such Subsidiary to take such action and, after
the Effective Time, on the part of the Surviving Corporation to cause such
Subsidiary to take such action.
10.10. Severability. The provisions of this Agreement shall
be deemed severable and the invalidity or unenforceability of any provision
shall not affect the validity or enforceability or the other provisions
hereof. If any provision of this Agreement, or the application thereof to
any Person or any circumstance, is invalid or unenforceable, (a) a suitable
and equitable provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision and (b) the remainder of this Agreement
and the application of such provision to other Persons or circumstances
shall not be affected by such invalidity or unenforceability, nor shall
such invalidity or unenforceability affect the validity or enforceability
of such provision, or the application thereof, in any other jurisdiction.
10.11. Interpretation. The table of contents and headings
herein are for convenience of reference only, do not constitute part of
this Agreement and shall not be deemed to limit or otherwise affect any of
the provisions hereof. Where a reference in this Agreement is made to a
Section or Exhibit, such reference shall be to a Section of or Exhibit to
this Agreement unless otherwise indicated. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation."
10.12. Assignment. This Agreement shall not be assignable by
operation of law or otherwise and is not intended to create any obligations
to, or rights in respect of, any persons other than the parties hereto;
provided, however, that Praxair may designate, by written notice to the
Company, another wholly-owned direct or indirect subsidiary to be a
Constituent Corporation in lieu of Purchaser, in the event of which, all
references herein to Purchaser shall be deemed references to such other
subsidiary except that all representations and warranties made herein with
respect to Purchaser as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other subsidiary
as of the date of such designation.
<PAGE> 46
10.13. Enforcement of the Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that
the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
10.14. Disclosure. The inclusion of any matter on the
Company Disclosure Letter does not constitute an admission by the Company
that any such matter is material. A disclosure of any item by the Company
in any section of the Company Disclosure Letter shall be deemed disclosure
of such item for all purposes of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the
date first written above.
CBI Industries, Inc.
By: /s/ John E. Jones
Name: John E. Jones
Title: Chairman
Praxair, Inc.
By: /s/ H.W. Lichtenberger
Name: H.W. Lichtenberger
Title: Chairman and CEO
PX Acquisition Corp.
By: /s/ David H. Chaifetz
Name: David H. Chaifetz
Title: President
<PAGE> 1
ANNEX A
Notwithstanding any other provision of the Initial Offer or the
Amended Offer and provided that Purchaser shall not be obligated to accept
for payment any Shares until expiration or termination of all applicable
waiting periods under the HSR Act and Investment Canada Act, Purchaser
shall not be required to accept for payment or pay for, or may delay the
acceptance for payment of or payment for, any tendered Shares, or subject
to the terms of the Merger Agreement may, in its sole discretion, terminate
or amend the Amended Offer as to any Shares not then paid for if:
(i) there is not tendered and not withdrawn prior to the Expiration
Date at least that number of Shares (the "Minimum Number of
Shares") that would represent a majority of all outstanding
Shares on a fully diluted basis on the date of purchase (the
"Minimum Tender Condition"). For purposes of the Amended
Offer, "on a fully diluted basis" means, as of any date, the
number of Shares outstanding together with Shares that the
Company is required to issue pursuant to obligations
outstanding at that date under convertible securities, stock
options or otherwise.
(ii) Purchaser is not, in its reasonable discretion, satisfied that
the Rights will not become exercisable upon consummation of the
Amended Offer;
(iii) Purchaser is not satisfied, in its reasonable discretion, that
after consummation of the Amended Offer, the restrictions
contained in Section 203 of the DGCL will not apply to the
Merger;
(iv) Purchaser is not satisfied, in its reasonable discretion, that
no supermajority vote will be required by Article Tenth or
Article Fifteenth of the Company Charter to approve the Merger
or that after consummation of the Amended Offer, Purchaser will
otherwise possess sufficient voting power to effect the Merger
without the affirmative vote of any person other than
Purchaser;
(v) On or after December 21, 1995 and at or before the time of
payment for any of such Shares any of the following shall
occur:
<PAGE> 2
(a) there shall have occurred and be continuing (i) any
general suspension of, or limitation on prices for,
trading in securities on the NYSE or in the over-
the-counter market, (ii) a declaration of a banking
moratorium or any suspension of payments in respect
of banks in the United States, (iii) a commencement
or escalation of a war, armed hostilities or other
international or national calamity directly or
indirectly involving the United States (other than
the current action in Bosnia), (iv) any limitation
(whether or not mandatory) by any Governmental
Entity, on the extension of credit by banks or
other lending institutions, (v) any significant
adverse change in interest rates or major stock
indices in the United States or abroad, including,
without limitation, a decline of at least 15% in
either the Dow Jones Average of Industrial Stocks
or the Standard & Poor's 500 index from that
existing at the close of business on December 21,
1995, (vi) a currency moratorium on or a suspension
of, the currency exchange markets in the United
States, or (vii) in the case of any of the
foregoing existing at the date hereof, a material
acceleration or worsening thereof;
(b) there shall be instituted or pending any action,
litigation, proceeding, investigation or other
application (hereinafter, an "Action") by any
Governmental Entity: (i) challenging the
acquisition by Praxair, Purchaser or any other
wholly-owned subsidiary of Praxair of Shares,
seeking to restrain or prohibit the consummation of
the transactions contemplated by the Agreement, the
Amended Offer or the Merger, seeking to obtain any
material damages or otherwise directly or
indirectly relating to the transactions con-
templated by the Agreement, the Amended Offer or
the Merger or other subsequent business com-
bination; (ii) seeking to prohibit, or impose any
<PAGE> 3
material limitations on, Praxair's, Purchaser's or
any other wholly-owned subsidiary of Praxair's
ownership or operation of all or any portion of
their or the Company's business or assets
(including the business or assets of their
respective affiliates and subsidiaries), or to
compel Praxair or Purchaser to dispose of or hold
separate all or any portion of Praxair's or
Purchaser's or the Company's business or assets
(including the business or assets of their respec-
tive affiliates and subsidiaries) as a result of
the transactions contemplated by the Agreement, the
Amended Offer or the Merger or other subsequent
business combination; (iii) seeking to make the
acceptance for payment, purchase of, or payment
for, some or all of the Shares illegal or render
Purchaser unable to, or result in a delay in, or
restrict, the ability of Purchaser to accept for
payment, purchase or pay for some or all of the
Shares; (iv) seeking to impose material limitations
on the ability of Praxair or Purchaser effectively
to acquire or hold or to exercise full rights of
ownership of the Shares including, without
limitation, the right to vote the Shares purchased
by them on an equal basis with all other Shares on
all matters properly presented to the stockholders
of the Company; or (v) that, in any event, in the
reasonable judgment of Purchaser, is reasonably
likely to have a Company Material Adverse Effect
(other than litigation disclosed in the Company
Disclosure Letter);
(c) any statute, rule, regulation, order, judgment or
injunction shall be enacted or entered with respect
to the Amended Offer or the Merger, or any other
action shall have been taken by any court or other
Governmental Entity other than the application to
the Amended Offer or the Merger of waiting periods
under the HSR Act that, in the reasonable judgment
of Praxair or Purchaser, might, directly or
indirectly, reasonably be expected to
<PAGE> 4
result in any of the effects of, or have any of the
consequences sought to be obtained or achieved in,
any Action referred to in clauses (i) through (v)
of paragraph (b) above;
(d) it shall have been publicly disclosed or Praxair
shall have learned that (i) any person, entity or
"group" (as defined in Section 13(d) of the
Exchange Act and the rules promulgated thereunder)
shall have become the beneficial owner (as defined
in Section 13(d) of the Exchange Act and the rules
promulgated thereunder) of more than ten percent of
the Shares (other than for bona fide arbitrage
purposes); or (ii) any person, entity or group
shall have entered into a definitive agreement or
an agreement in principle with the Company with
respect to the acquisition of more than 10% of the
Shares or a merger, consolidation or other business
combination with or involving the Company;
(e) any change shall have occurred or be threatened (or
any development shall have occurred or been
threatened involving a prospective change) in the
financial condition, businesses or results of
operations of the Company or any of its
Subsidiaries that is or is reasonably likely to be
materially adverse to the Company and its
Subsidiaries taken as a whole, or Praxair or
Purchaser shall have become aware of any fact
(including, but not limited to, any prior change)
that has or is reasonably likely to have a material
adverse effect on the value of the Shares or the
Company and its Subsidiaries taken as a whole to
Praxair or Purchaser;
(f) Purchaser or Praxair and the Company shall have
entered into an agreement that the Amended Offer be
terminated or amended; or
(g) the representations and warranties of the Company
set forth in the Agreement
<PAGE> 5
shall not be true and correct in any respect as of
the Expiration Date of the Amended Offer as though
made on or as of such date or the Company shall
have breached or failed in any material respect to
perform or comply with any material obligation,
agreement or covenant required by this Agreement to
be performed or complied with by it except, in each
case, (i) for changes specifically permitted by
this Agreement and (ii) (A) those representations
and warranties that address matters only as of a
particular date which are true and correct as of
such date or (B) where the failure of
representations and warranties (without regard to
materiality qualifications therein contained) to be
true and correct, or the performance or compliance
with such obligations, agreements or covenants, do
not, individually or in the aggregate, have a
material adverse effect on the Company and its
subsidiaries, taken as a whole;
(h) the Board (or a majority of the Disinterested
Directors) shall have amended, modified or
withdrawn its recommendation in favor of the
Amended Offer or the Merger, or shall have failed
publicly to reconfirm such recommendation upon
request by Praxair or Purchaser, or shall have
endorsed, approved or recommended any other Acqui-
sition Proposal, or shall have resolved to do any
of the foregoing; or
(i) the Agreement shall have been terminated by the
Company or Praxair or Purchaser in accordance with
its terms, or Praxair or Purchaser shall have
reached an agreement or understanding in writing
with the Company providing for delay in payment for
the Shares;
which, in the reasonable judgment of Purchaser in any such case, and
regardless of the circumstances (including, without limitation, any action
or inaction by Purchaser, Praxair or any other affiliate of Praxair) giving
rise to any such condition, makes it
<PAGE> 6
inadvisable to proceed with the Amended Offer or with acceptance for
payment or payment for Shares.
The foregoing conditions are for the sole benefit of Praxair and
Purchaser and their respective affiliates and may be asserted by Praxair
and Purchaser regardless of the circumstances (including, without
limitation, any action or inaction by Praxair, Purchaser or any of their
respective affiliates) giving rise to any such condition other than the
Minimum Tender Condition or may be waived by Praxair or Purchaser in whole
or in part at any time and from time to time in its sole discretion. The
failure by Praxair or Purchaser at any time to exercise any of the
foregoing rights will not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances will
not be deemed a waiver with respect to any other facts and circumstances
and each such right will be deemed an ongoing right that may be asserted at
any time and from time to time.
<PAGE> i
Table of Contents
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
The Amended Offer; Actions by the Company; Directors . . . 2
1.1. The Amended Offer . . . . . . . . . . . . . . . . . . . 2
1.2. Actions by the Company . . . . . . . . . . . . . . . . 4
1.3. Directors . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II
The Merger; Closing; Effective Time . . . . . . . . 6
2.1. The Merger . . . . . . . . . . . . . . . . . . . . . . 6
2.2. Closing . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3. Effective Time . . . . . . . . . . . . . . . . . . . . 6
ARTICLE III
Certificate of Incorporation and By-Laws
of the Surviving Corporation . . . . . . . . . 7
3.1. The Certificate of Incorporation . . . . . . . . . . . 7
3.2. The By-Laws . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IV
Officers and Directors
of the Surviving Corporation . . . . . . . . . 7
4.1. Directors . . . . . . . . . . . . . . . . . . . . . . . 7
4.2. Officers . . . . . . . . . . . . . . . . . . . . . . . 7
4.2 Further Assurances . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
Conversion or Cancellation of Shares in the Merger . . . . 8
5.1. Conversion or Cancellation of Shares . . . . . . . . . 8
(a) Conversion of Shares; Merger
Consideration . . . . . . . . . . . . . . . . 8
(b) Cancellation of Shares . . . . . . . . . . . . . 9
(c) Conversion of Purchaser Common
Stock . . . . . . . . . . . . . . . . . . . . 9
(d) Convertible Preferred Stock . . . . . . . . . . 9
(e) Cumulative Preferred Stock . . . . . . . . . . . 9
5.2. Payment for Shares . . . . . . . . . . . . . . . . . 10
5.3. Dissenters' Rights . . . . . . . . . . . . . . . . . . 11
5.4. Transfer of Shares After the Effective
Time . . . . . . . . . . . . . . . . . . . . . . . . 11
<PAGE> ii
ARTICLE VI
Representations and Warranties . . . . . . . . . 11
6.1. Representations and Warranties of the
Company . . . . . . . . . . . . . . . . . . . . . . . 11
(a) Organization, Good Standing and
Qualification . . . . . . . . . . . . . . . . 11
(b) Capital Structure . . . . . . . . . . . . . . . 12
(c) Corporate Authority; Approval and
Fairness . . . . . . . . . . . . . . . . . . 13
(d) Governmental Filings; No Violations . . . . . . 14
(e) Company Reports; Financial
Statements . . . . . . . . . . . . . . . . . 15
(f) Absence of Certain Changes . . . . . . . . . . . 16
(g) Litigation and Liabilities . . . . . . . . . . . 17
(h) Employee Benefits . . . . . . . . . . . . . . . 18
(i) Compliance with Laws . . . . . . . . . . . . . . 20
(j) Takeover Statutes . . . . . . . . . . . . . . . 21
(k) Voting Requirements; Company
Articles . . . . . . . . . . . . . . . . . . 21
(l) Environmental Matters . . . . . . . . . . . . . 21
(m) Taxes . . . . . . . . . . . . . . . . . . . . . 22
(n) Labor Matters . . . . . . . . . . . . . . . . . 23
(o) Information . . . . . . . . . . . . . . . . . . 24
(p) Brokers and Finders . . . . . . . . . . . . . . 24
6.2. Representations and Warranties of Praxair
and Purchaser . . . . . . . . . . . . . . . . . . . . 24
(a) Organization . . . . . . . . . . . . . . . . . . 24
(b) Authority . . . . . . . . . . . . . . . . . . . 25
(c) Governmental Filings; No Violations . . . . . . 25
(d) Information . . . . . . . . . . . . . . . . . . 26
(e) Financing . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII
Covenants . . . . . . . . . . . . . . 27
7.1. Interim Operations . . . . . . . . . . . . . . . . . . 27
7.2. Acquisition Proposals . . . . . . . . . . . . . . . . . 28
7.3. Stockholders Meeting . . . . . . . . . . . . . . . . . 30
7.4. Filings; Other Actions; Notification . . . . . . . . . 30
7.5. Access . . . . . . . . . . . . . . . . . . . . . . . . 32
7.6. Publicity . . . . . . . . . . . . . . . . . . . . . . . 33
7.7. Benefits. . . . . . . . . . . . . . . . . . . . . . . . 33
(a) Stock Options . . . . . . . . . . . . . . . . . 33
(c) Employee Benefits . . . . . . . . . . . . . . . 33
7.8. Expenses . . . . . . . . . . . . . . . . . . . . . . . 34
7.9. Indemnification; Directors' and Officers'
Insurance . . . . . . . . . . . . . . . . . . . . . . 34
7.10. Other Actions by the Company and Praxair . . . . . . . 37
(a) Rights . . . . . . . . . . . . . . . . . . . . . 37
(b) Takeover Statute . . . . . . . . . . . . . . . . 37
(c) Termination of Litigation . . . . . . . . . . . 37
<PAGE> iii
7.11. Notification of Certain Matters . . . . . . . . . . . . 38
ARTICLE VIII
Conditions . . . . . . . . . . . . . . 38
8.1. Conditions to Obligations of Praxair and
Purchaser . . . . . . . . . . . . . . . . . . . . . . 38
(a) Stockholder Approval . . . . . . . . . . . . . . 38
(b) Purchase of Shares . . . . . . . . . . . . . . . 38
(c) Governmental and Regulatory
Consents . . . . . . . . . . . . . . . . . . 39
(d) Litigation . . . . . . . . . . . . . . . . . . . 39
(e) Other Obligations . . . . . . . . . . . . . . . 39
8.2. Conditions to Obligations of the Company . . . . . . . 39
(a) Stockholder Approval . . . . . . . . . . . . . . 39
(b) Purchase of Shares . . . . . . . . . . . . . . . 39
(c) Governmental Consents . . . . . . . . . . . . . 39
(d) Order . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX
Termination . . . . . . . . . . . . . . 40
9.1. Termination by Mutual Consent . . . . . . . . . . . . . 40
9.2. Termination by Either Praxair or the
Company . . . . . . . . . . . . . . . . . . . . . . . 40
9.3. Termination by Praxair . . . . . . . . . . . . . . . . 40
9.4. Termination by the Company . . . . . . . . . . . . . . 41
9.5. Effect of Termination and Abandonment . . . . . . . . . 41
ARTICLE X
Miscellaneous and General . . . . . . . . . . 43
10.1. Survival . . . . . . . . . . . . . . . . . . . . . . . 43
10.2. Modification or Amendment . . . . . . . . . . . . . . . 43
10.3. Waiver of Conditions . . . . . . . . . . . . . . . . . 43
10.4. Counterparts . . . . . . . . . . . . . . . . . . . . . 43
10.5. GOVERNING LAW AND VENUE; WAIVER OF JURY
TRIAL . . . . . . . . . . . . . . . . . . . . . . . . 43
10.6. Notices . . . . . . . . . . . . . . . . . . . . . . . . 44
10.7. Entire Agreement . . . . . . . . . . . . . . . . . . . 45
10.8. No Third Party Beneficiaries . . . . . . . . . . . . . 45
10.9. Obligations of Praxair and of the Company . . . . . . . 45
10.10. Severability. . . . . . . . . . . . . . . . . . . . . . 45
10.11. Interpretation . . . . . . . . . . . . . . . . . . . . 46
10.12. Assignment . . . . . . . . . . . . . . . . . . . . . . 46
<PAGE> 1
EXHIBIT B
[Letterhead of Lehman Brothers]
December 22, 1995
Board of Directors
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, IL 60521
Dear Members of the Board:
We understand that CBI Industries, Inc. (the "Company"),
Praxair, Inc. (the "Bidder") and Praxair Acquisition Corp., a wholly-owned
subsidiary of the Bidder ("Acquisition Sub"), have entered into an
Agreement and Plan of Merger dated as of December 22, 1995 (the "Merger
Agreement") which provides, among other things, for (i) the tender offer by
Acquisition Sub for all outstanding shares of the common stock, par value
$2.50 per share, together with certain associated rights, of the Company
for consideration of $33.00 net per share in cash (the "Tender Offer"), and
(ii) the subsequent merger (the "Merger," and together with the Tender
Offer, the "Transaction") of Acquisition Sub with and into the Company,
pursuant to which each outstanding share of the common stock of the Company
(other than shares held in treasury or held by the Bidder or any of its
affiliates or as to which dissenters' rights are perfected) will be
converted into the right to receive consideration of $33.00 net per share
in cash. The terms and conditions of the Transaction are set forth in more
detail in the Merger Agreement.
We have been requested by the Board of Directors of the Company
to render our opinion with respect to the fairness, from a financial point
of view, to the Company's shareholders of the consideration to be offered
to such shareholders in the Transaction. We have not been requested to
opine as to, and our opinion does not in any manner address, the Company's
underlying business decision to proceed with or effect the Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the
Merger Agreement and the specific terms of the Transaction, (2) such
publicly available information concerning the Company and the Bidder which
we believe to be relevant to our inquiry, (3) financial and operating
information with respect to the business, operations and prospects of the
Company furnished to us by the Company including, without limitation,
certain projections prepared
<PAGE> 2
by the Company, (4) a trading history of the Company's common stock and a
comparison of that trading history with those of other companies that we
deemed relevant, (5) a comparison of the historical financial results and
present financial condition of the Company with those of other companies
that we deemed relevant, and (6) a comparison of the financial terms of the
Transaction with the financial terms of certain other transactions that we
deemed relevant. In addition, in arriving at our opinion, we have
considered the results of efforts to solicit indications of interest from
third parties with respect to an acquisition of all or part of the Company
or other strategic transaction involving the Company. We also have had
discussions with the management of the Company concerning its business,
operations, assets, financial condition and prospects and undertook such
other studies, analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the
accuracy and completeness of the financial and other information used by us
without assuming any responsibility for independent verification of such
information and have further relied upon the assurances of management of
the Company that they are not aware of any facts that would make such
information inaccurate or misleading. With respect to the financial
projections of the Company, upon advice of the Company we have assumed that
such projections have been reasonably prepared on a basis reflecting the
best currently available estimates and judgments of the management of the
Company as to the future financial performance of the Company and that the
Company will perform substantially in accordance with such projections. In
arriving at our opinion, we have not conducted a physical inspection of the
properties and facilities of the Company and have not made or obtained any
evaluations or appraisals of the assets or liabilities of the Company. Our
opinion is necessarily based upon market, economic and other conditions as
they exist on, and can be evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion
as of the date hereof that, from a financial point of view, the
consideration to be offered to the shareholders of the Company in the
Transaction is fair to such shareholders.
We have, in the past, provided financial advisory and financing
services to the Company and are acting as financial advisor to the Company
in connection with the Transaction and will receive a fee for our services,
a portion of which is contingent upon the consummation of the
<PAGE> 3
Transaction. In addition, the Company has agreed to indemnify us for
certain liabilities that may arise out of the rendering of this opinion.
In the ordinary course of our business, we actively trade in the securities
of the Company and the Bidder for our own account and for the accounts of
our customers and, accordingly, may at any time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Board of
Directors of the Company. This opinion is not intended to be and does not
constitute a recommendation to any shareholder of the Company as to whether
to accept the consideration offered to such shareholder in the Transaction.
Very truly yours,
LEHMAN BROTHERS
<PAGE> 1
EXHIBIT C
[Letterhead of Merrill Lynch]
December 22, 1995
Board of Directors
CBI Industries, Inc.
800 Jorie Boulevard
Oak Brook, IL 60521
Dear Members of the Board:
We understand that CBI Industries, Inc. (the "Company"),
Praxair, Inc. (the "Bidder") and Praxair Acquisition Corp., a wholly-owned
subsidiary of the Bidder ("Acquisition Sub"), have entered into an
Agreement and Plan of Merger dated as of December 22, 1995 (the "Merger
Agreement") which provides, among other things, for (i) the tender offer by
Acquisition Sub for all outstanding shares of the common stock, par value
$2.50 per share, together with certain associated rights, of the Company
for consideration of $33.00 net per share in cash (the "Tender Offer"), and
(ii) the subsequent merger (the "Merger," and together with the Tender
Offer, the "Transaction") of Acquisition Sub with and into the Company,
pursuant to which each outstanding share of the common stock of the Company
(other than shares held in treasury or held by the Bidder or any of its
affiliates or as to which dissenters' rights are perfected) will be
converted into the right to receive consideration of $33.00 net per share
in cash. The terms and conditions of the Transaction are set forth in more
detail in the Merger Agreement.
We have been requested by the Board of Directors of the Company
to render our opinion with respect to the fairness, from a financial point
of view, to the Company's shareholders of the consideration to be offered
to such shareholders in the Transaction. We have not been requested to
opine as to, and our opinion does not in any manner address, the Company's
underlying business decision to proceed with or effect the Transaction.
In arriving at our opinion, we reviewed and analyzed: (1) the
Merger Agreement and the specific terms of the Transaction, (2) such
publicly available information concerning the Company and the Bidder which
we believe to be relevant to our inquiry, (3) financial and operating
information with respect to the business, operations and prospects of the
Company furnished to us by the Company including, without limitation,
certain projections prepared
<PAGE> 2
by the Company, (4) a trading history of the Company's common stock and a
comparison of that trading history with those of other companies that we
deemed relevant, (5) a comparison of the historical financial results and
present financial condition of the Company with those of other companies
that we deemed relevant, and (6) a comparison of the financial terms of the
Transaction with the financial terms of certain other transactions that we
deemed relevant. In addition, in arriving at our opinion, we have
considered the results of efforts to solicit indications of interest from
third parties with respect to an acquisition of all or part of the Company
or other strategic transactions involving the Company. We also have had
discussions with the management of the Company concerning its business,
operations, assets, financial condition and prospects and undertook such
other studies, analyses and investigations as we deemed appropriate.
In arriving at our opinion, we have assumed and relied upon the
accuracy and completeness of the financial and other information used by us
without assuming any responsibility for independent verification of such
information and have further relied upon the assurances of management of
the Company that they are not aware of any facts that would make such
information inaccurate or misleading. With respect to the financial
projections of the Company, upon advice of the Company we have assumed that
such projections have been reasonably prepared on a basis reflecting the
best currently available estimates and judgments of the management of the
Company as to the future financial performance of the Company and that the
Company will perform substantially in accordance with such projections. In
arriving at our opinion, we have not conducted a physical inspection of the
properties and facilities of the Company and have not made or obtained any
evaluations or appraisals of the assets or liabilities of the Company. Our
opinion is necessarily based upon market, economic and other conditions as
they exist on, and can be evaluated as of, the date of this letter.
Based upon and subject to the foregoing, we are of the opinion
as of the date hereof, that, from a financial point of view, the
consideration to be offered to the shareholders of the Company in the
Transaction is fair to such shareholders.
We have, in the past, provided financial advisory and financing
services to the Company and are acting as financial advisor to the Company
in connection with the Transaction and will receive a fee for our services,
a portion of which is contingent upon the consummation of the
<PAGE> 3
Transaction. In addition, the Company has agreed to indemnify us for
certain liabilities that may arise out of the rendering of this opinion.
In the ordinary course of our business, we actively trade in the securities
of the Company and the Bidder for our own account and for the accounts of
our customers and, accordingly, may at any time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Board of
Directors of the Company. This opinion is not intended to be and does not
constitute a recommendation to any shareholder of the Company as to whether
to accept the consideration offered to such shareholder in the Transaction.
Very truly yours,
MERRILL LYNCH
