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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 9, 1994
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PETROLITE CORPORATION
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(Exact name of Registrant as specified in its charter)
Delaware 0-685 43-0617572
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(State or other (Commission File No.) (I.R.S. Employer
jurisdiction of Identification No.)
incorporation)
369 Marshall Avenue, St. Louis, Missouri 63119
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (314) 961-3500
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None
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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(a) The Company has entered into a letter of intent (the
"Letter of Intent") with Wm. S. Barnickel & Company ("Barnickel
Company"), the William S. Barnickel Testamentary Trust ("Barnickel
Trust"), the John S. Lehmann Trust f/b/o John S. Lehmann, Jr. and
the John S. Lehmann Trust f/b/o Frederick W. Lehmann III (together,
the "Lehmann Trusts"), and Michael V. Janes, G.J. Brown, William B.
Janes, and John V. Janes (collectively, the "Janeses"), a copy of
which is attached hereto as Exhibit 99 and incorporated herein.
The Letter of Intent was executed by the last signatory thereto on
December 9, 1994. The Company issued a press release about the
Letter of Intent on December 9, 1994, a copy of which is attached
hereto as Exhibit 20 and incorporated herein.
The Letter of Intent sets forth the principal terms of the
proposed acquisition by the Company of substantially all of the
assets of Barnickel Company pursuant to a tax-free reorganization
(the "Proposed Reorganization") within the meaning of Section
368(a)(1)(C) of the United States Internal Revenue Code of 1986, as
amended. Subject to the satisfaction of certain conditions to the
closing (the "Closing") of the transactions contemplated in the
Proposed Reorganization, the Company would acquire, in exchange for
newly issued shares of its Capital Stock, substantially all of the
assets of Barnickel Company, consisting of shares of the Company's
Capital Stock (representing approximately 47% of the Company's
outstanding Capital Stock), certain interests in the Barnickel
Trust acquired by Barnickel Company ("Trust Interests"), and some
or all of the oil and gas properties owned by Barnickel Company
(the "Oil and Gas Properties").
By its terms the Letter of Intent is not a binding agreement
of the parties, except in certain limited respects specified
therein. It is an understanding in principle and an agreement to
negotiate in good faith to reach a definitive agreement (the
"Definitive Agreement") with respect to the Proposed
Reorganization. There is no assurance that a Definitive Agreement
will be entered into or, if it is, that the conditions to Closing
to be set forth in the Definitive Agreement will be satisfied and
the Proposed Reorganization consummated.
The following is a summary of certain terms and conditions of
the Proposed Reorganization as set forth in the Letter of Intent.
This summary does not purport to be a complete summary and is
qualified in its entirety by reference to the full text of the
Letter of Intent, which is incorporated herein by reference.
SALE OF BARNICKEL COMPANY PORTFOLIO; PURCHASE OF BARNICKEL TRUST
INTERESTS.
Prior to Closing, Barnickel Company would sell its portfolio
of marketable securities (other than shares of the Company's
Capital Stock) on the open market. After establishing reserves for
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or paying certain items specified in the Letter of Intent
(including income taxes on the sale), Barnickel Company would use
the remaining proceeds to purchase available beneficial interests
in the Barnickel Trust from beneficiaries other than the Janeses
and other than the Janes Family, as that term is defined in the
Letter of Intent. In its discretion, Barnickel Company also might
purchase any of its shares available for purchase from the Lehmann
Trusts.
PURCHASE OF BARNICKEL COMPANY ASSETS.
At the Closing, the Company would exchange newly issued shares
of its Capital Stock for the assets of Barnickel Company, as
follows:
1. The Company would issue one new share of Capital Stock to
Barnickel Company in exchange for each of the 5,337,360 shares of
Capital Stock owned by Barnickel Company at the Closing.
2. The Company would issue shares of Capital Stock equal in
value to the after-tax fair market value of the Oil and Gas
Properties, with certain adjustments as further specified in the
Letter of Intent.
3. In exchange for the Trust Interests owned by Barnickel
Company, the Company would issue shares of Capital Stock equal in
number to the number of shares of Capital Stock the Company would
receive as a Barnickel Trust beneficiary upon dissolution of
Barnickel Company and distribution of the Barnickel Trust.
The Company would assume at Closing (i) all liabilities
associated with the Oil and Gas properties, (ii) documented fees
and expenses of Barnickel Company's counsel, accountants,
appraisers and financial advisers in connection with the Proposed
Transaction, and (iii) a portion of the federal income taxes
attributable to Barnickel Company's sale of its marketable
securities; provided, however, that the Company would not assume
any liabilities under clauses (ii) and (iii) in excess of
$9,000,000 in the aggregate. The Company would not assume any
other liabilities of Barnickel Company.
DISSOLUTION OF BARNICKEL COMPANY; DISTRIBUTION OF BARNICKEL TRUST
ASSETS TO BENEFICIARIES; CREATION OF CUSTODIAL ACCOUNTS.
As soon as practicable following the Closing, Barnickel
Company would dissolve and distribute its remaining assets
(consisting of the shares of Capital Stock received by Barnickel
Company in the Proposed Transaction), but excluding the reserves
referenced above, to the Barnickel Company stockholders; namely,
the Barnickel Trust (or, if earlier distributed, its beneficiaries)
and the Lehmann Trusts. If not earlier distributed, immediately
upon receiving such remaining assets of Barnickel Company the
Barnickel Trust would distribute such assets to the beneficiaries
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of the Barnickel Trust (including the Company).
Upon dissolution of Barnickel Company, shares of Capital Stock
equal in value, as of the Closing, to one-half the value of the
outstanding Barnickel Company stock, plus one-half the value of
Barnickel Company stock purchased from the Lehmann Trusts, would be
deposited by or on behalf of the distributees (other than the
Company) with a custodian for purposes of meeting the "continuity
of interest" test required in a tax-free reorganization (the
"Continuity Custodial Arrangement"). During the five year period
following the Closing these shares would be released by the
custodian, as may be provided further in the custodial arrangement,
only upon receipt of an opinion of tax counsel reasonably
satisfactory in form and substance to the Company and its counsel
and to counsel for the Barnickel Trust.
Additional shares of Capital Stock having an approximate value
of up to $10,000,000 also would be deposited by or on behalf of the
distributees (other than the Company) with a custodian for up to
five years, and would be available during such five year period for
sale in satisfaction of certain indemnification obligations
incurred as part of the Proposed Reorganization for the benefit of
the officers and directors of Barnickel Company, the Barnickel
Trustees (as shareholders of Barnickel Company), and Morgan Stanley
& Co., Incorporated.
Each beneficial owner of the custodial shares would have the
right to vote and continue to receive all dividends declared on the
shares held in custody.
REPRESENTATION ON THE COMPANY BOARD OF DIRECTORS.
Upon the Closing, the Company Board of Directors (the "Board")
would increase the size of the Board to eleven directors. The
Board then would appoint to the Board two persons proposed by
Barnickel Company, subject to certain conditions set forth in the
Letter of Intent. These persons or, if they are unwilling or
unable to serve, other persons proposed by the owners of the
Company Capital Stock held under the Continuity Custodial
Arrangement, would be renominated, subject to certain conditions
set forth in the Letter of Intent, at successive annual meetings
for so long as the Continuity Custodial Arrangement remains in
existence. After the Continuity Custodial Arrangement is dissolved
the Board would nominate two persons as proposed jointly by the
Janeses.
As specified in the Letter of Intent, the right to nominate
persons is subject to the percentage ownership requirement
described below and certain other conditions set forth in the
Letter of Intent. The parties would have the right to nominate two
persons for so long as the Janeses aggregate beneficial ownership
is 15% or more of the Company's outstanding Capital Stock and the
right to nominate one person for so long as the Janeses aggregate
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beneficial ownership is 10% or more of the Company's outstanding
Capital Stock. The parties would not have the right to nominate
any persons if the Janeses aggregate beneficial ownership of the
Company's outstanding Capital Stock is less than 10%.
The Letter of Intent sets forth specific and detailed
provisions for determining the aggregate beneficial ownership of
the Janeses, which ownership can include shares owned by certain
transferees of each of the Janeses. During the five-year period
following the Closing, the Board's Executive and Nominating
Committees each would include at least one director appointed or
nominated as provided in the Letter of Intent.
STOCKHOLDER AGREEMENT.
The Letter of Intent provides for a Stockholder Agreement
among the Company, the Janeses and certain transferees of the
Janeses, (collectively, the "Stockholder Parties") as specified in
the Letter of Intent. In addition to the provision on Board
representation described above, the Stockholder Agreement would
contain the following undertakings by the Stockholder Parties:
- Not to transfer any shares of Company Capital Stock prior
to January 1, 1997 to any person who then owns, or would
own, 10% of the Company's outstanding stock; except that,
they could participate in a tender offer under certain
circumstances specified in the Letter of Intent.
- Not to engage in any open market sale of Company Capital
Stock prior to January 1, 1997 except through a secondary
offering pursuant to the registration rights agreement
described below or pursuant to paragraph (d) of SEC Rule
145.
- Not to engage in a private sale of Company Capital Stock
prior to January 1, 1997 without giving the Company a
right of first refusal, except for sales between the
Janeses or by any of them to Janes Family members.
- Not to acquire, prior to January 1, 1997, additional
shares of Company Capital Stock that would result in
their aggregate percentage ownership of outstanding
Company Capital Stock increasing by more than one
percent.
- Prior to the earlier of the Company's 1997 Annual Meeting
and June 30, 1997, not to call or participate in the
calling of a special meeting of Company stockholders
except as called by a majority of the Company Board; not
to submit any stockholder proposal to be voted upon at
any meeting of Company stockholders; not to institute,
encourage or participate in any proxy solicitation with
respect to a vote of Company's stockholders; and not to
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publicly or privately propose, encourage, solicit or
participate in the solicitation of any person to acquire
a substantial portion of Company's assets or more than 1%
of Company's outstanding Company Capital Stock.
- Through the Company's 1997 Annual Meeting, to vote all
shares of Company Capital Stock beneficially owned by
them and their affiliates in accordance with the
recommendations of the Company Board or for, against or
abstaining in the same proportion as the shares owned by
all other stockholders; except that, this provision would
not apply to certain transaction specified in the Letter
of Intent.
REGISTRATION RIGHTS AGREEMENT.
The Letter of Intent provides for a Registration Rights
Agreement among the Company, each of the Stockholder Parties, the
trustee of the Lehmann Trusts (on behalf of the Lehmann Trusts and
their beneficiaries) and the trustees of the Barnickel Trust (on
behalf of the beneficiaries of the Barnickel Trust) which would
contain substantially the following provisions:
- The parties would have in the aggregate not more than two
rights to demand registration and an unlimited number of
piggy-back registration rights for five years following
the Closing, and one right to demand registration in the
sixth year following the Closing, under certain
conditions set forth in the Letter of Intent. The
Company would pay the legal and other expenses of the
registration and offering but the participants would pay
the underwriting fees to the extent of their
participation.
- Subject to maintaining the "Continuity of Interest"
amount, there would be no maximum number of shares that
could be registered in any demand registration, but the
minimum number would be 150,000 shares. The maximum
number of shares that could be registered in any piggy-
back registration would be 650,000 shares and the minimum
number would be 20,000 shares.
- Under conditions specified in the Letter of Intent, the
Company would have the option of buying the shares
requested to be registered in lieu of registering them.
CONDITIONS TO CLOSING.
The obligations of the parties to consummate the transactions
contemplated in the Proposed Reorganization would be subject to the
satisfaction of certain conditions on or before the Closing which
would include, among others: (i) approval of the Definitive
Agreement by the boards of directors of the Company and Barnickel
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Company, (ii) approval of the Proposed Reorganization by the
beneficiaries of the Barnickel Trust representing equitable
ownership of an amount satisfactory to the trustees of the
Barnickel Trust of up to 90% of the trust interests, (iii) the
issuance of favorable rulings from the Internal Revenue Service
regarding qualification of the Proposed Reorganization as a tax-
free reorganization within the meaning of Section 368(a)(1)(C) of
the Code and regarding classification of the Barnickel Trust, in
its year of termination, as a trust within the meaning of Section
7701 of the Code for purposes relating to its taxation.
MISCELLANEOUS.
The Company would amend its Rights Agreement with Society
National Bank dated March 28, 1994 to provide that no rights issued
thereunder would become exercisable by reason of the actions
contemplated by the Proposed Reorganization, as specified in the
Letter of Intent.
(b) The Company has adopted Amendment No. 1 to its Rights
Agreement with Society National Bank dated March 28, 1994, a copy
of which is attached hereto as Exhibit 4, and incorporated by
reference herein. The amendment relates to the Letter of Intent
summarized in the preceding paragraphs of Item 5 of this Report.
In summary, the amendment provides that neither the execution,
delivery, nor performance of the Letter of Intent, nor any action
taken in accordance with the provisions of the Letter of Intent,
nor the execution and delivery of the Definitive Agreement, shall
be deemed to be, among other things, a triggering event for
purposes of the Rights Agreement, or cause the parties to the
Letter of Intent or their Affiliates or Associates to be deemed to
be "Acquiring Persons" as that term is defined in the Rights
Agreement.
Item 7. Financial Statements and Exhibits
(c) Exhibits.
4. Form of Amendment No. 1 to Rights Agreement
dated as of March 28, 1994 between the Company
and Society National Bank as Rights Agent.
20. Press Release dated December 9, 1994.
99. Letter of Intent dated November 21, 1994.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
PETROLITE CORPORATION
By: /s/ John M. Casper
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John M. Casper
Vice President and
Chief Financial Officer
Date: December 13, 1994
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AMENDMENT NO. 1 TO
RIGHTS AGREEMENT
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Amendment No. 1 (this "Amendment"), dated as of December 1,
1994, to the Rights Agreement (the "Rights Agreement"), dated as of
March 28, 1994, between Petrolite Corporation, a Delaware
corporation, and Society National Bank (the "Rights Agent").
WHEREAS, pursuant to Section 27 of the Rights Agreement, the
Company and the Rights Agent may from time to time supplement or
amend the Rights Agreement in accordance with Section 27 thereof;
WHEREAS, all acts and things necessary to make this Amendment
valid and enforceable have been performed and done, including, as
required by Section 27, the delivery to the Rights Agent of a
certificate from an appropriate officer of the Company stating that
this Amendment is in compliance with the terms of Section 27;
WHEREAS, the Company expects to receive an executed Letter of
Intent dated as of November 21, 1994 (the "Letter of Intent") from
Wm. S. Barnickel & Company ("Barnickel Company"), the William S.
Barnickel Testamentary Trust, the John S. Lehmann Trust F/B/O
John S. Lehmann, Jr., the John S. Lehmann Trust F/B/O Frederick S.
Lehmann II, Michael V. Janes, G. J. Brown, William B. Janes and
John V. Janes, Jr., which Letter of Intent outlines the principal
elements of a proposed acquisition by the Company of substantially
all the assets of Barnickel Company; and
WHEREAS, prior to receiving said executed Letter of Intent,
the Company desires to amend certain provisions of the Rights
Agreement.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein set forth, the parties agree that the
Rights Agreement is hereby amended as follows:
Section 1 of the Rights Agreement is amended by adding the
following new paragraph at the end of Section 1:
Notwithstanding anything in this Agreement that might
otherwise be deemed to the contrary, neither Wm. S. Barnickel &
Company, Boatmen's Bancshares, Inc., Boatmen's Trust Company, the
William S. Barnickel Testamentary Trust, the John S. Lehmann Trust
F/B/O John S. Lehmann, Jr., the John S. Lehmann Trust F/B/O
Frederick S. Lehmann II, Michael V. Janes, G. J. Brown, William B.
Janes and John V. Janes, Jr. (collectively, the "Sellers") nor any
of their Affiliates or Associates shall be deemed to be an
"Acquiring Person," and no Stock Acquisition Date, Distribution
Date, Section 11(a)(ii) Event or Section 13 Event shall occur, as
a result of (i) the execution, delivery and performance of the
Letter of Intent, dated as of November 21, 1994, by and between the
Sellers and the Company (the "Letter of Intent"); (ii) any action
taken by the Sellers or any of their Affiliates or Associates in
accordance with the provisions of the Letter of Intent; or
(iii) the execution and delivery of a Definitive Agreement (as
such term is defined in the Letter of Intent).
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The Rights Agreement shall not otherwise be supplemented or
amended by virtue of this Amendment, but shall remain in full force
and effect. This Amendment may be executed in one or more
counterparts, all which shall be considered one and the same
amendment and each of which shall be deemed an original.
IN WITNESS WHEREOF, the undersigned have caused this Amendment
to be duly executed, all of the day and year first above written.
Attest: PETROLITE CORPORATION
By: /s/ CHARLES R. MILLER By: /s/ JOHN F. MCCARTNEY
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Attest: SOCIETY NATIONAL BANK
By: /s/ DEBRA A. KINDRED By: /s/ LAURA KRESS
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NEWS COPY INFORMATION CONTACT:
FOR PETROLITE CORPORATION:
CHARLES R. MILLER
(314) 961-3500
FOR WM. S. BARNICKEL & COMPANY:
V. RAYMOND STRANGHOENER
(314) 466-3000
FOR IMMEDIATE RELEASE
PETROLITE CORPORATION AND WM. S. BARNICKEL & COMPANY
SIGN LETTER OF INTENT
ST. LOUIS, Dec. 9, 1994 -- Petrolite Corporation and Wm. S.
Barnickel & Company announced that they have signed a letter of
intent pursuant to which Petrolite would acquire substantially all
of the assets of Wm. S. Barnickel & Company, its largest
stockholder, in a tax-free reorganization between the two
companies.
In exchange for the assets of Wm. S. Barnickel & Company
("Barnickel Company"), which consist primarily of 5,337,360 shares
of Petrolite's Capital Stock, Petrolite would issue to Barnickel
Company an equal number of new shares of its Capital Stock.
Petrolite also would issue a small number of additional shares of
its Capital Stock, not likely to exceed 200,000 shares, to acquire
all or some of the oil and gas properties owned by Barnickel
Company and would assume certain Barnickel Company liabilities for
fees and expenses associated with the proposed transaction, and
certain pre-reorganization taxes in the aggregate amount of
$9.0 million.
Barnickel Company was incorporated in 1922. Ninety percent of
the stock of Barnickel Company is held by a trust created under the
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PETROLITE -- Page 2
Will of William S. Barnickel in the 1920s (the "Barnickel Trust").
The other 10 percent of the Barnickel Company stock is owned by two
other trusts. The Petrolite shares owned by Barnickel Company
comprise about 47 percent of the outstanding shares of Petrolite
stock.
"William S. Barnickel in effect created the oil field
specialty chemical industry in 1914, when the first of several
patents was issued to him on his pioneering discoveries," said
William E. Nasser, Petrolite chairman, president and chief
executive officer. "Building on his early success and his vision
for the company, subsequent generations of employees have
transformed Petrolite into an international company, serving
customers the world over and returning value to our stockholders.
This letter of intent represents another significant, positive
milestone in our company's growth and transformation."
Nasser noted that the letter of intent was the result of
extensive discussions among the principal parties and that the
transaction remains subject to a number of contingencies, including
execution of a definitive agreement and the receipt of certain
favorable rulings from the Internal Revenue Service regarding the
tax treatment of the transaction. "We are pleased that our efforts
to date have produced this agreement in principle," Nasser said,
"and we look forward to completing the negotiations in the near
future. However, we should stress that much work remains before
the transaction can be closed."
The contemplated transaction includes:
- Dissolution of Barnickel Company and distribution of the
Petrolite shares received by Barnickel Company to the
trusts that own the shares of Barnickel Company.
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PETROLITE -- Page 3
- Distribution of the Petrolite shares received by the
Barnickel Trust to the beneficiaries of the Barnickel
Trust.
- Two new seats on Petrolite's Board of Directors, bringing
the total number of directors to 11, to be filled by
persons proposed initially by Barnickel Company and
thereafter by certain Petrolite stockholders, including
the principal beneficiaries of the Barnickel Trust,
subject to certain restrictions related to their
continued ownership of specified amounts of Petrolite
shares.
- A Stockholder Agreement containing limitations on the
purchase and sale of Petrolite shares, and associated
standstill provisions and voting rights limitations, by
the principal beneficiaries of the Barnickel Trust. The
time period for the limitations on the purchase and sale
of Petrolite shares would be January 1, 1997 and the time
period for the limitations on voting rights and
standstill provisions would extend through Petrolite's
1997 annual meeting of stockholders.
- A Registration Rights Agreement providing specified
registration rights to the recipients of the Petrolite
Shares.
Barnickel Company and Petrolite are in the process of
preparing and negotiating the terms of a definitive agreement, and
until December 31, 1994, no party may discuss or solicit any other
proposal for a merger with Barnickel Company, a sale of its assets,
or a similar transaction. Upon the closing of the transaction,
Petrolite expects to take a charge against earnings of
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PETROLITE -- Page 4
approximately $10.5 million, or $.93 per share, reflecting the
designated liabilities of Barnickel Company assumed by Petrolite
and other expenses of Petrolite associated with the transaction.
St. Louis-based Petrolite Corporation is one of the world's
premier applied specialty chemical and process equipment design
companies. It supplies treatment programs, performance-enhancing
additives, and related process equipment and engineering services
to customers in more than a dozen major markets, worldwide.
# # #
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November 21, 1994
CONFIDENTIAL
The Board of Directors Trustee
Wm. S. Barnickel & Company John S. Lehmann Trust f/b/o
c/o Mr. Jules Chasnoff John S. Lehmann, Jr.
Lowenhaupt & Chasnoff, L.L.C. c/o Mr. John L. Phillips, Jr.
10 South Broadway, Suite 600 Boatmen's Trust Company
St. Louis, MO 63102-1733 P. O. Box 14737
St. Louis, MO 63178
Trustees Trustee
William S. Barnickel John S. Lehmann Trust f/b/o
Testamentary Trust Frederick W. Lehmann III
c/o Mr. Jules Chasnoff c/o Mr. John L. Phillips, Jr.
Lowenhaupt & Chasnoff, L.L.C. Boatmen's Trust Company
10 South Broadway, Suite 600 P. O. Box 14737
St. Louis, MO 63102-1733 St. Louis, MO 63178
Michael V. Janes G. J. Brown
8 Glenview Road 3 Indian Hill
St. Louis, MO 63124 St. Louis, MO 63124
William B. Janes John V. Janes, Jr.
724 Tulalip Road N.E. 5528 Beach Drive West
Marysville, WA 98271 Destin, FL 32541
Ladies and Gentlemen:
The purpose of this letter is to outline the principal elements of
a proposed acquisition of assets (the "Proposed Transaction")
pursuant to which Petrolite Corporation, a Delaware corporation
("Petrolite"), would acquire substantially all of the assets of Wm.
S. Barnickel & Company, a Missouri corporation ("Barnickel
Company"). Your concurrence in the proposal described herein by
execution of this letter in the spaces provided below will give
rise to an understanding in principle between the parties hereto,
it being understood and agreed that said understanding in principle
will not be binding upon the parties (except for the provisions of
paragraphs 13, 14, 15 and 16 hereof, each of which shall bind a
party severally and only to the extent that such party is referred
to therein), and that the parties shall have no obligations with
respect to the Proposed Transaction unless and until Petrolite and
Barnickel Company enter into a definitive agreement (the
"Definitive Agreement") and certain collateral agreements relating
thereto.
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The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 2
November 21, 1994
1. The Proposed Transaction would be structured as a transaction
qualifying as a reorganization within the meaning of Section
368(a)(1)(C) of the United States Internal Revenue Code of
1986, as amended (the "Code"). Petrolite would acquire (i)
all shares of Petrolite capital stock ("Petrolite Capital
Stock") owned by Barnickel Company as of the closing of the
Proposed Transaction (the "Closing"), (ii) any interests (the
"Trust Interests") in the William S. Barnickel Testamentary
Trust (the "Barnickel Trust") held by Barnickel Company as of
the Closing and (iii) the oil and gas properties owned by
Barnickel Company as of the Closing (the "O & G Properties");
provided, however, that if, with respect to any of the O & G
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Properties, there is any applicable right of first refusal, or
it is concluded by Petrolite after completion of the
environmental audits as described in paragraph 6 below and
after consultation with its advisers, that the existing or
potential liabilities, including but not limited to current
and prospective environmental liabilities, related to the
property exceed the value of the property to Petrolite, or
that Petrolite would be unlikely to acquire good and
marketable title on a property from Barnickel Company, then
the parties would negotiate in good faith to address such
concerns.
2. (a) Prior to the Closing, Barnickel Company would sell its
portfolio of marketable securities (the "Portfolio").
After establishing reserves for or paying (i) the federal
and state income taxes attributable to Barnickel
Company's sale of the Portfolio (less the amount of such
taxes to be assumed by Petrolite under paragraph 5
below), (ii) the trustees' fees (the "Trustees' Fees")
payable to the trustees of the Barnickel Trust (the
"Barnickel Trustees") upon the distribution of the assets
of the Barnickel Trust to the holders of the Trust
Interests contemplated to occur under subparagraph (b) of
this paragraph (and any proportional payments to the
trustee (the "Lehmann Trustee") of the John S. Lehmann
Trust f/b/o John S. Lehmann, Jr. and the John S. Lehmann
Trust f/b/o Frederick W. Lehmann III (collectively, the
"Lehmann Trusts"), (iii) "known claims" for discharging
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The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
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November 21, 1994
Barnickel Company's liabilities following the procedure
set forth in Section 351.478 of the Missouri General and
Business Corporation Law (the "Missouri Corporation
Law"), (iv) the insurance premium for Barnickel Company's
Officer and Director Liability Insurance Policy for up to
a six year period following the Closing with coverage of
up to $10,000,000; and (v) any other administrative
expenses, in an aggregate amount to be agreed upon in the
Definitive Agreement, associated with the dissolution of
Barnickel Company and the distribution of the Barnickel
Trust, Barnickel Company would offer to purchase Trust
Interests from the beneficiaries of the Barnickel Trust
("Barnickel Trust Beneficiaries") (or those of them
selected by Barnickel Company) other than Michael V.
Janes, G. J. Brown, William B. Janes and John V. Janes,
Jr. (any one such person referred to herein as a "Janes"
and collectively as the "Janeses"), and other than the
Janes Family (as defined in paragraph 7(c) below) (and,
in the discretion of Barnickel Company, to purchase its
shares held by the Lehmann Trusts), and would use as much
of the unreserved proceeds from the sale of the Portfolio
to effect such purchases as Trust Interests (and, if so
elected, shares of Barnickel Company) are available. It
is contemplated by Barnickel Company that the purchase
price for each Barnickel Trust Beneficiary's Trust
Interest so purchased shall be equal to the value of the
assets such Barnickel Trust Beneficiary otherwise would
be entitled to receive as a holder of such Trust Interest
under subparagraph (b) of this paragraph, assuming for
such purpose that (i) no purchase of Trust Interests were
to occur and (ii) each share of Petrolite Capital Stock
to be distributed is equal in value to the average
closing price of Petrolite Capital Stock for the 20
business days immediately preceding Barnickel Company's
offer to purchase the Trust Interests.
(b) As soon as practicable after the Closing, Barnickel
Company would be dissolved and its remaining assets
(excluding the foregoing reserves other than the
Trustees' Fees, which would be paid in conjunction with
<PAGE> 4
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 4
November 21, 1994
the distribution of the assets of the Barnickel Trust)
would be distributed to its stockholders, namely the
Barnickel Trust (or, if earlier distributed, its
beneficiaries) and the Lehmann Trusts. Immediately upon
receiving such assets from Barnickel Company, the
Barnickel Trust (if not earlier distributed) would
distribute such assets, including the shares of Petrolite
Capital Stock it received from Barnickel Company upon its
dissolution, to the holders of the Trust Interests
(including Petrolite). Notwithstanding the foregoing,
(i) Petrolite shares, as evidenced by the certificates
therefor, representing the "Continuity Amount", as
hereinafter defined, would not be so distributed to the
Barnickel Trust Beneficiaries (other than Petrolite) and
the Lehmann Trustee, but would be deposited under a
custodial arrangement on behalf of such distributees
(pursuant to action by the Barnickel Trustees and the
Lehmann Trustee, or the Barnickel Beneficiaries and the
Lehmann Trustee) as provided in paragraph 12 below; and
(ii) Petrolite shares, as evidenced by the certificates
therefor, in approximate value up to $10,000,000 would
not be so distributed to the Barnickel Trust
Beneficiaries (other than Petrolite) and the Lehmann
Trustee, but would be deposited under a custodial
arrangement for up to five years, and would be available
for sale in satisfaction of the indemnification
obligations contemplated by paragraph 10(b) below, as may
be specified further in the Definitive Agreement, and to
the extent such shares are not used to satisfy any such
indemnification obligations during such five-year period,
such shares would be distributed to the owners thereof.
At all meetings or votes, consents or authorizations of
Petrolite's stockholders between the Closing and the
distribution of the Barnickel Trust assets to the
Barnickel Trust Beneficiaries, the Petrolite Capital
Stock held by Barnickel Company, the Barnickel Trust or
under the custodial arrangements described in clauses (i)
and (ii) of this paragraph 2(b) will be voted by
Barnickel Company and/or the Barnickel Trust for or
against or abstain in the same proportion as the shares
<PAGE> 5
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 5
November 21, 1994
owned by all other stockholders of Petrolite (excluding
Barnickel Company and the Barnickel Trust). Both of the
custodial arrangements described in clauses (i) and (ii)
of this paragraph 2(b) would provide that the right to
vote, and to receive any dividends or distributions with
respect to, the shares subject thereto will remain with
or be passed through to the beneficial owners of the
shares.
(c) Petrolite would amend its Rights Agreement with Society
National Bank dated March 28, 1994 to provide expressly,
and in form reasonably satisfactory to Barnickel
Company's counsel, that no rights issued thereunder would
become exercisable by reason of (i) the issuance by
Petrolite of its shares of Capital Stock to Barnickel
Company as contemplated in paragraphs 3, 4 and 6 below;
(ii) the distribution of Petrolite Capital Stock by
Barnickel Company to the Barnickel Trust as contemplated
by subparagraph (b) of this paragraph; (iii) the
distribution of Petrolite Capital Stock by the Barnickel
Trust as contemplated by subparagraph (b) of this
paragraph; (iv) the agreements or actions of the Janeses
and the Principals to effectuate their rights to propose
Board nominees as contemplated by subparagraph 7(a)
below; (v) the deposit, retention, and subsequent release
of the "Continuity Amount" under the custodial
arrangement contemplated by clause (i) of paragraph 2(b)
above; (vi) the deposit, retention, and subsequent
release of shares of Petrolite Capital Stock under the
custodial arrangement contemplated by clause (ii) of
paragraph 2(b) above; and (vi) any actions required in
order to implement any provision related to registration
rights contemplated by paragraph 9 below.
(d) Barnickel Company would effect its dissolution in
compliance with the dissolution provisions of the
Missouri Corporation Law and would satisfy the procedures
set forth in Sections 351.478 and 351.482 of the Missouri
Corporation Law relating to "known claims" and "unknown
claims".
<PAGE> 6
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 6
November 21, 1994
3. Petrolite would issue new shares of Petrolite Capital Stock to
Barnickel Company in an amount equal to the number of shares
of Petrolite Capital Stock owned by Barnickel Company as of
the Closing. The issuance of such shares and the shares of
Petrolite Capital Stock contemplated by paragraphs 4 and 6
below, and the distribution of such shares to Barnickel
Company's stockholders and the Barnickel Trust Beneficiaries
as contemplated by this letter, shall be appropriately
registered by Petrolite under the Securities Act of 1933 and
qualified, unless exempt, under applicable state "blue sky"
laws.
4. Petrolite would also issue to Barnickel Company a number of
new shares of Petrolite Capital Stock equal to the product of
(a) the aggregate number of shares of Petrolite Capital Stock
to be issued to Barnickel Company under paragraphs 3 and 6
hereof and (b) a fraction, the numerator of which would be the
aggregate percentage ownership interest in Barnickel Company
indirectly owned by the Trust Interests purchased by Barnickel
Company pursuant to paragraph 2(a) above, expressed as a
fraction and calculated as if no such purchases were to occur
(the "Purchased Trust Interest Fraction"), and the denominator
of which would be one minus the Purchased Trust Interest
Fraction. (For example, if the aggregate number of Petrolite
shares issued under paragraphs 3 and 6 were 5,500,000 shares,
and the purchased Trust Interests represented a 20% indirect
interest in Barnickel Company, the number of Petrolite shares
to be issued for the purchased Trust Interests would be
5,500,000 (.20/1-.20) = 5,500,000 (.25) = 1,375,000 shares.
As a result, the shares issued by Petrolite for the purchased
Trust Interests would be equal to the number of shares
received by Petrolite upon the distribution of the Barnickel
Trust.)
5. Petrolite would assume (i) all liabilities associated with the
O & G Properties acquired by Petrolite; (ii) the obligations
of Barnickel Company with respect to the documented fees and
expenses of Barnickel Company's appraiser(s) and financial,
legal and accounting advisers (the "Advisory Fees") in
connection with the Proposed Transaction; and (iii) a portion
<PAGE> 7
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 7
November 21, 1994
of the liabilities of Barnickel Company for the federal income
taxes attributable to Barnickel Company's sale of the
Portfolio; provided, however, that in no event would
-------- -------
Petrolite's liability with respect to such documented Advisory
Fees and federal income tax liabilities exceed $9,000,000 in
the aggregate, and provided further that Petrolite would pay
to Barnickel Company cash in an amount equal to any excess of
$9,000,000 over the sum of such documented Advisory Fees and
federal income tax liabilities. Petrolite would not assume
any other liabilities of Barnickel Company, including but not
limited to, any income or other taxes, indemnification or
other liabilities of Barnickel Company or its officers or
directors arising out of or relating to the Proposed
Transaction or obligations resulting from the perfection of
dissenting shareholder rights under the Missouri Corporation
Law; provided, however, that Petrolite would represent and
-------- -------
warrant to Barnickel Company that to its best knowledge
neither Petrolite nor any member of Petrolite's management,
including its Assistant Treasurer, Director of Taxes, has any
knowledge of any fact, circumstance or situation involving
Barnickel Company, or any employee or agent thereof, relating
to the operation of Barnickel Company prior to December 8,
1993, which might reasonably be expected to give rise to any
liability, including any liability for indemnification,
against Barnickel Company.
6. Petrolite would also issue new shares of Petrolite Capital
Stock to Barnickel Company equal in value to the after-tax
fair market value (using Petrolite's marginal tax rate) of the
O & G Properties acquired by Petrolite; provided, that in
computing the after-tax fair market value of the O & G
Properties acquired by Petrolite, such value would be reduced
by an amount to be determined by the parties, but not greater
than $100,000. Fair market value of the O & G Properties
would be based on an independent appraisal performed by an
appraiser selected and paid by Barnickel Company and
reasonably satisfactory to Petrolite, in accordance with
procedures substantially similar to those outlined in the
letter of Miller and Lents, Ltd. dated July 7, 1994 to
William E. Nasser (a copy of which is attached hereto as
<PAGE> 8
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 8
November 21, 1994
Attachment 1); provided, however, that for purposes of such
-------- -------
appraisal, the appraiser would assume that the purchaser's
corporate income tax rate would equal Petrolite's marginal tax
rate of 37.6%. The number of new shares of Petrolite Capital
Stock that would be issued to Barnickel Company in respect of
the O & G Properties acquired by Petrolite would be based upon
the average of the closing prices of Petrolite Capital Stock
on the NASDAQ National Market System for the 20 consecutive
trading days immediately preceding the fifth trading day
before the Closing (the "Average Trading Price"). On or
before December 20, 1994, Petrolite would have the right to
conduct, and would use its best efforts to complete, Phase One
environmental audits satisfactory to Petrolite on each of the
O & G Properties and conduct such review of Barnickel
Company's title to such properties as it considered necessary
or desirable, (and also subject to the proviso in paragraph 1
above).
7. (a) Upon the Closing, pursuant to the Stockholder Agreements
described in paragraph 8 below (the "Stockholder
Agreements"), the Petrolite Board of Directors (the
"Board") would amend Petrolite's bylaws to increase the
size of the Board to eleven directors and appoint to the
Board two persons proposed by Barnickel Company, subject
to the conditions set forth below, for a period
commencing as of the Closing and expiring as of
Petrolite's first annual meeting following the Closing.
The Board would agree to (i) renominate such directors
who remain willing and able to serve, and, if any such
director becomes unwilling or unable to serve, such other
person as would be proposed jointly by the owners of the
Petrolite Capital Stock held under the custodial
arrangement contemplated by clause (i) of paragraph 2(b)
above (the "Principals"), subject to the conditions set
forth below, for election as directors at the first and
second annual meetings following the Closing; (ii)
nominate two persons as would be proposed jointly by the
Principals, subject to the conditions set forth below,
for election as directors at each subsequent annual
meeting for so long as any Petrolite Capital Stock is
<PAGE> 9
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 9
November 21, 1994
held under such custodial arrangement; and (iii) nominate
two persons as would be proposed jointly by the Janeses,
subject to the conditions set forth below, for election
as directors at each annual meeting thereafter; provided,
--------
however, that any of (i), (ii) or (iii) above shall apply
-------
only for so long as the Janeses are beneficial owners (as
that term is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")
except as provided in paragraph 7(c) below) of 15% or
more, in the aggregate, of Petrolite's outstanding
Capital Stock; provided, however, that for the initial
-------- -------
five year period after the Closing the calculation of the
percentage of Petrolite Capital Stock beneficially owned
by the Janeses would be based upon the lesser of the
Petrolite Capital Stock outstanding immediately after the
Closing or the amount then currently outstanding. The
Stockholder Agreements also would provide that in the
event the Janeses' aggregate beneficial ownership of
Petrolite's outstanding Capital Stock is 10% or more but
less than 15%, the Principals or the Janeses, as the case
may be, would be entitled to propose only one person for
election to the Board, and in the event the Janeses'
aggregate beneficial ownership of Petrolite's outstanding
Capital Stock is less than 10%, the Principals or the
Janeses, as the case may be, would no longer be entitled
to propose any persons for election to the Board by
virtue of the Stockholder Agreements. In each case, any
nominees proposed in the manner provided above would be
subject to approval of the Board's Nominating Committee
and the Board, each of which may determine, in the
exercise of its reasonable business judgment and taking
into account the purpose of this provision, that such
nomination is not appropriate under the circumstances.
In any instance in which any such nominee is rejected by
the Nominating Committee or the Board, Barnickel Company,
the Principals or the Janeses, as the case may be, would
be entitled to propose successive substitute nominees for
consideration until the Nominating Committee's and the
Board's approvals are obtained. The Board would
recommend to the stockholders the election of such
<PAGE> 10
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 10
November 21, 1994
nominee approved by the Nominating Committee and the
Board, and would use all reasonable efforts to solicit
proxies on such nominee's behalf. During the five year
period following the Closing, the Board's Executive and
Nominating Committees would each include at least one
director appointed or nominated under this subparagraph
(a).
(b) The Stockholder Agreements also would provide for
proportionate increases in the number of Board nominees
which the Principals or the Janeses are entitled to
propose in the event the size of the Board is increased
after the date of the Stockholder Agreements.
(c) Any determination of beneficial ownership under
subparagraph 7(a) or other provisions of this letter
would be made in accordance with Rule 13d-3 under the
Exchange Act; provided, however, that for purposes of
-------- -------
this paragraph 7, (i) for the ten-year period following
the Closing, a Janes would be deemed to have beneficial
ownership of any shares of Petrolite Capital Stock
transferred by him/her and beneficially owned by his/her
spouse, child or grandchild or the spouse of any of them,
or a trust for their benefit as defined in the Definitive
Agreement and, in the case of Michael Janes for only the
initial five-year period following the Closing and
notwithstanding clause (ii) of this subparagraph (c), by
a charitable trust or foundation established by him
(collectively the "Janes Family") and (ii) after the
initial five-year period following the Closing such
beneficial ownership would be reduced upon the death of
a Janes by the number of shares beneficially owned by the
decedent and the number of shares attributable to the
decedent under clause (i) of this subparagraph (c).
8. Each of the Janeses, and any Janes Family member, trustee
therefor or personal representative thereof who is or becomes
during the term of the Stockholder Agreements the beneficial
owner of any Petrolite Capital Stock (collectively referred to
herein as the "Stockholder Parties") would execute a
<PAGE> 11
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 11
November 21, 1994
Stockholder Agreement with Petrolite (and any purported
transfer to a Stockholder Party failing or refusing to execute
a Stockholder Agreement would be deemed null and void), which
agreement would contain the following restrictions:
(a) Transfers to 10% Holders: The Stockholder Parties would
------------------------
agree not to offer, sell or transfer any shares of
Petrolite Capital Stock prior to January 1, 1997 to any
person who then beneficially owns, or as a result of such
transaction would beneficially own, 10% or more of the
outstanding Petrolite Capital Stock; provided, however,
-------- -------
that the Stockholder Parties would have the right to
participate without restriction in any tender offer made
to all stockholders of Petrolite provided that if the
Board opposes such offer, the Stockholder Parties would
have the right only to tender their shares in the same
proportion as the shares owned by stockholders other than
the Stockholder Parties, their affiliates and associates
are tendered and that no tender or arrangement to tender
any shares would be made more than 48 hours prior to the
scheduled expiration of the tender offer.
(b) Resales of Petrolite Capital Stock: Except through a
----------------------------------
secondary offering referenced in paragraph 9 below or
pursuant to the provisions of paragraph (d) of SEC Rule
145, the Stockholder Parties would agree not to engage in
any open market sale of shares of Petrolite Capital Stock
prior to January 1, 1997.
(c) Right of First Refusal: The Stockholder Parties would
----------------------
agree not to engage in a private sale of shares of
Petrolite Capital Stock prior to January 1, 1997 without
giving Petrolite a right of first refusal on the proposed
private sale; provided, however, that this right of first
-------- -------
refusal would not apply to any such private sale between
the Janeses, or by any of them to his/her affiliates,
associates or Janes Family members.
(d) Additional Acquisition of Petrolite Capital Stock: The
-------------------------------------------------
Stockholder Parties would agree not to acquire, directly
<PAGE> 12
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 12
November 21, 1994
or indirectly, prior to January 1, 1997 additional shares
of Petrolite Capital Stock that would result in the
aggregate beneficial ownership of Petrolite Capital Stock
by the Stockholder Parties and their affiliates
increasing as a percentage of the Petrolite Capital Stock
then outstanding to an amount greater than the percentage
plus one of the Petrolite Capital Stock outstanding
beneficially owned by them as of the Closing (computed as
if the Petrolite Capital Stock to be distributable to a
Trust Interest then held by Barnickel Company were not
then outstanding).
(e) Standstill Provisions: The Stockholder Parties would
---------------------
agree that, prior to the earlier of Petrolite's 1997
Annual Meeting and June 30, 1997, without the prior
approval of the Board, neither they nor any of their
affiliates would (i) call or participate in any manner in
calling a special meeting of stockholders of Petrolite
other than a special meeting of stockholders the call of
which is supported by a majority of the Board, (ii)
submit any stockholder proposal to be voted upon at any
annual or special meeting of stockholders of Petrolite,
(iii) institute, encourage or participate in any proxy or
consent solicitation with respect to a vote of
Petrolite's stockholders (except for activities
undertaken in their capacity as a director of Petrolite
in connection with solicitations by the Board), or (iv)
publicly or privately propose, encourage, solicit or
participate in the solicitation of any person or entity
to acquire, offer to acquire or agree to acquire, by
merger, tender offer, purchase or otherwise, Petrolite or
a substantial portion of its assets or more than 1% of
the outstanding Petrolite Capital Stock (except in
connection with demand or piggy-back registrations
contemplated to occur under paragraph 9 below or other
market sales pursuant to open market transactions).
(f) Voting; Representation: At all meetings or votes,
----------------------
consents or authorizations of Petrolite's stockholders up
to and including Petrolite's 1997 Annual Meeting, the
<PAGE> 13
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 13
November 21, 1994
Stockholder Parties would agree to vote or use their
reasonable best efforts to direct the voting of all
shares of Petrolite Capital Stock beneficially owned by
them and their affiliates with respect to the election of
directors and all other matters either (i) in accordance
with the recommendations of the Board or (ii) for or
against or abstaining in the same proportion as the
shares owned by all other stockholders (excluding each of
the Stockholder Parties or their representatives that is
a Petrolite stockholder) are voted or abstained from
voting with respect to such matters; provided, however,
-------- -------
that this restriction shall not apply to voting with
respect to the following transactions when a stockholder
vote is required by applicable law, the rules of the
National Association of Securities Dealers or any
applicable exchange on which the Petrolite Capital Stock
is listed for trading and an affirmative vote on the
transaction is recommended by the Petrolite Board: (1) a
merger of Petrolite with another corporation; (2) a sale
of 50% or more of the assets of Petrolite; and (3) the
purchase of assets where the purchased assets would
constitute more than 25% of Petrolite's assets. The
Stockholder Parties would further agree that all the
shares of Petrolite Capital Stock beneficially owned by
them shall be represented in person or by proxy at all
meetings and that they and their affiliates would not
deposit any such shares of Petrolite Capital Stock in a
voting trust or enter into a voting agreement or other
agreement of similar effect with any other person, except
with respect to the custodial arrangements contemplated
by clauses (i) and (ii) of paragraph 2(b) above, or with
Janes Family members or the Principals for the sole
purpose of effectuating the proposed Board nominees for
purposes of paragraph 7 hereof.
9. Each of the Stockholder Parties, the Lehmann Trustee and the
Barnickel Trustees would enter into a Registration Rights
Agreement with Petrolite for the benefit of (i) themselves;
(ii) the Barnickel Trust Beneficiaries other than the
Stockholder Parties (subject to the establishment of a
<PAGE> 14
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 14
November 21, 1994
procedure for assignment of registration rights thereto
reasonably satisfactory to Petrolite); and (iii) to the extent
that they receive vested ownership of Petrolite Capital Stock
issued by Petrolite in accordance with the Proposed
Transaction, the beneficiaries of the Lehmann Trusts (the
"Lehmann Trust Beneficiaries") (collectively, for purposes of
this paragraph 9, the "Holders"), which agreement would
contain the following provisions:
(a) Number of Demands; Piggy-back Rights: The Holders would
------------------------------------
have in the aggregate not more than two rights to demand
registration and an unlimited number of piggy-back
registration rights for five years following the Closing,
and one right to demand registration in the sixth year
following the Closing (or earlier with the consent of the
Principals). Petrolite would pay the legal and other
expenses of the registration and offering but the
participating Holders would pay the underwriting fees to
the extent of their participation. For purposes of this
subparagraph, a demand registration requested by one or
more Holders would be deemed to exhaust one demand
registration right by all the Holders.
(b) Time Period for Exercising Demand Rights: The Holders
----------------------------------------
would be permitted to exercise their demand rights at any
time over the first five years and during the sixth year
following the Closing (but not within nine months of a
previous registration in which they were entitled to
participate and not more than once per calendar year).
(c) Number of Shares Eligible to be Registered: Subject to
------------------------------------------
paragraph 12 below, there would be no maximum number of
shares that could be registered in any single demand
registration, and the minimum number would be 150,000
shares. The maximum number of shares that could be
registered in any single piggy-back registration would be
650,000 shares, and the minimum number would be 20,000
shares. The number of shares requested to be registered
in either a demand or piggy-back registration would be
subject to customary cut back rights.
<PAGE> 15
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 15
November 21, 1994
(d) Right of First Refusal: Petrolite would have the option
----------------------
of buying all or any portion of the shares requested to
be registered by the participating Holders in lieu of
registering them pursuant to demand or piggy-back
registrations at a price equal to the average closing
price of Petrolite Capital Stock for the 20 business days
immediately preceding the date of such request for
registration and based upon procedures to be set forth in
the Registration Rights Agreement; provided, however,
-------- -------
that Petrolite's right to buy less than all of such
shares may be exercised only if the opportunity for an
underwritten offering of the balance of such shares not
bought by Petrolite would remain available to the
participating Holders on terms substantially similar to
the terms available to them if Petrolite had not bought
any such shares; and provided, further, that any shares
-------- -------
bought by Petrolite pursuant to this right of first
refusal in lieu of registering them pursuant to any
registration would be deemed to be registered for the
purpose of satisfying the numerical eligibility
requirement for such registration under subparagraph (c)
of this paragraph.
10. (a) If the Proposed Transaction is approved by the
affirmative vote of the Barnickel Trust Beneficiaries
other than Barnickel Company representing equitable
ownership of an amount satisfactory to the Barnickel
Trustees up to 90% of the Trust Interests (not equitably
owned by Barnickel Company), (i) the Barnickel Trustees
would vote the shares of Barnickel Company then held by
the Barnickel Trust for the Proposed Transaction, and
(ii) the Board of Directors of Barnickel Company would
vote the shares of Petrolite Capital Stock held by
Barnickel Company for the Proposed Transaction if a
Petrolite stockholder vote is solicited; provided,
however, that if not so approved, no person shall have
any further obligation, right or liability hereunder.
(b) As a part of the Proposed Transaction, (i) the officers
and directors of Barnickel Company shall have received
<PAGE> 16
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 16
November 21, 1994
rights of indemnification from the Barnickel Trust
Beneficiaries and the Lehmann Trusts as specified in the
Definitive Agreement; and (ii) the Barnickel Trustees (in
their capacity as owner of stock of Barnickel Company but
not as to their fiduciary capacity as trustees of the
Barnickel Trust) and Morgan Stanley & Co. Incorporated
shall have received comparable rights of indemnification
as specified in the Definitive Agreement, except that
such indemnification of Morgan Stanley & Co. Incorporated
would be limited in scope by the terms of Barnickel
Company's letter of indemnity dated March 1, 1994. The
indemnification rights shall apply only after the
exhaustion of any insurance proceeds applicable to the
matters otherwise subject to such indemnity rights.
11. In their capacities as Barnickel Trust Beneficiaries, the
Janeses would agree to approve the Proposed Transaction. The
Lehmann Trustee would also agree to approve the Proposed
Transaction as shareholder(s) of Barnickel Company.
12. During the five-year period from the date of the Closing
Petrolite shares, as evidenced by the certificates therefor,
representing an amount of stock equal to the "Continuity
Amount" (as hereinafter defined) of Petrolite Capital Stock
would be deposited by or on behalf of the distributees thereof
upon dissolution of Barnickel Company and the distribution of
the Barnickel Trust, under a custodial arrangement; provided,
--------
however, that at any time and from time to time upon receipt
-------
of an opinion of tax counsel reasonably satisfactory in form
and in substance to Petrolite and its counsel and Lowenhaupt
& Chasnoff, L.L.C. that a sale of a portion of such Continuity
Amount would not violate the "continuity of interest"
requirements imposed under Section 368 of the Code and related
regulations, such custodian would be required to release the
certificates representing such portion in the manner provided
under such custodial arrangement. For purposes of this
paragraph 12, the "Continuity Amount" shall be the number of
shares of Petrolite Capital Stock equal in value, as of the
Closing, to one-half the value of the outstanding Barnickel
Company stock as of the Closing plus one-half of the value of
<PAGE> 17
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 17
November 21, 1994
any Barnickel Company stock purchased from the Lehmann Trusts
prior to the Closing. In addition to the foregoing, Barnickel
Company and Petrolite would agree to use all reasonable
efforts to take, or cause to be taken, all appropriate action,
and to use all reasonable efforts to do, or cause to be done,
all things necessary, proper or advisable under law to cause
the Proposed Transaction to qualify as a reorganization within
the meaning of Section 368(a)(1)(C) of the Code and to obtain
the appropriate tax rulings to such effect. The Proposed
Transaction would not take place without a ruling from the
Internal Revenue Service reasonably satisfactory to counsel
for Petrolite and Barnickel Company that the Proposed
Transaction will constitute a reorganization within the
meaning of Section 368(a)(1)(C) of the Code, and without a
ruling reasonably satisfactory to counsel for the Barnickel
Trustees that the Barnickel Trust, in its year of termination,
will be classified as a trust within the meaning of Section
7701 of the Code for purposes relating to its taxation.
13. Until December 31, 1994 (or if a Definitive Agreement is
entered into before December 31, 1994, until the Closing or
termination of the Definitive Agreement), the parties agree
not to directly or indirectly, solicit, negotiate, participate
in or continue any discussions, or enter into any agreements,
arrangements or understandings relating to any other proposal
contemplating a merger, consolidation, liquidation, sale of
Barnickel Company's Petrolite Capital Stock or other similar
action with any person or entity, and further agree not to
solicit, encourage or participate in the solicitation of any
third party to initiate any action to accomplish or facilitate
any of the foregoing.
14. Each of the parties shall maintain the confidentiality of all
non-public information identified as such and given to them by
Petrolite, and such information will not be disclosed by
Barnickel Company or its representatives (except to the
parties hereto) without the consent of Petrolite or unless
required by law or legal process. Petrolite agrees to and
shall similarly maintain the confidentiality of all non-public
information supplied to it by Barnickel Company.
<PAGE> 18
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 18
November 21, 1994
15. The parties hereto agree that, to the maximum extent feasible,
but subject to the public disclosure and reporting
obligations, pursuant to the Exchange Act, of Petrolite,
Barnickel Company, Boatmen's Bancshares, Inc., Boatmen's Trust
Company, the Barnickel Trust, the Lehmann Trusts and any of
the Janeses, they shall advise each other prior to the
issuance of any reports, statements or releases pertaining to
this letter of intent or the implementation thereof.
16. Petrolite and Barnickel Company shall negotiate in good faith
toward entering into a Definitive Agreement with respect to
the Proposed Transaction.
If the foregoing is in accordance with your understanding of the
Proposed Transaction and constitutes a mutually satisfactory basis
for proceeding with the preparation by Petrolite and Barnickel
Company of a Definitive Agreement, please so indicate by signing
and dating this letter in the place indicated below and returning
one fully executed original to the undersigned.
Very truly yours,
PETROLITE CORPORATION
By: /s/ WILLIAM NASSER
------------------------------
William Nasser
Chairman, President and
Chief Executive Officer
Accepted and Approved as of
this 9th day of December, 1994:
WM. S. BARNICKEL & COMPANY
By: /s/ MICHAEL V. JANES
-------------------------
Name: Michael V. Janes
Title: President
<PAGE> 19
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 19
November 21, 1994
TRUSTEES UNDER THE WILLIAM S. BARNICKEL
TESTAMENTARY TRUST
/s/ MICHAEL V. JANES
------------------------------
Michael V. Janes
BOATMEN'S TRUST COMPANY
/s/ JOHN PETERS MACCARTHY
By: -------------------------
TRUSTEE UNDER THE JOHN S. LEHMANN
TRUST F/B/O JOHN S. LEHMANN, JR.
BOATMEN'S TRUST COMPANY
/s/ JOHN PETERS MACCARTHY
By: -------------------------
TRUSTEE UNDER THE JOHN S. LEHMANN
TRUST F/B/O FREDERICK S. LEHMANN III
BOATMEN'S TRUST COMPANY
/s/ JOHN PETERS MACCARTHY
By: -------------------------
<PAGE> 20
The Board of Directors
Trustees, William S. Barnickel Testamentary Trust
Trustee, John S. Lehmann Trust f/b/o John S. Lehmann, Jr.
Trustee, John S. Lehmann Trust f/b/o Frederick W. Lehmann III
Michael V. Janes
G. J. Brown
William B. Janes
John V. Janes, Jr.
Page 20
November 21, 1994
/s/ MICHAEL V. JANES
- - -----------------------------------
Michael V. Janes
/s/ G. J. BROWN
- - -----------------------------------
G. J. Brown
/s/ WILLIAM B. JANES
- - -----------------------------------
William B. Janes
/s/ JOHN V. JANES, JR.
- - -----------------------------------
John V. Janes, Jr.
