<PAGE>
EXHIBIT 2.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SYNOTEX COMPANY, INC.,
SYNOTEX ACQUISITION CORPORATION
AND
CATALYTICA, INC.
Dated as of August 2, 2000
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TABLE OF CONTENTS
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Article I The Merger 2
Section 1.1 The Merger 2
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Section 1.2 Effect on Company Common Stock 2
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Section 1.3 Exchange of Certificates 5
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Section 1.4 Company Options; Company Warrants 7
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Section 1.5 Employee Stock Purchase Plan 9
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Section 1.6 Distribution of the Energy Business 9
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Section 1.7 Lost Certificates 9
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Section 1.8 Merger Closing 9
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Section 1.9 Recalculation of Merger Consideration 10
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Article II The Surviving Corporation 10
Section 2.1 Certificate of Incorporation 10
----------------------------
Section 2.2 By-Laws 10
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Section 2.3 Officers And Directors 10
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Article III Representations and Warranties of the Company 11
Section 3.1 Corporate Existence and Power 11
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Section 3.2 Corporate Authorization 11
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Section 3.3 Consents and Approvals; No Violations 12
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Section 3.4 Capitalization 13
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Section 3.5 Subsidiaries 13
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Section 3.6 SEC Documents 14
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Section 3.7 Financial Statements 14
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Section 3.8 Absence Of Undisclosed Liabilities 15
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Section 3.9 Proxy Statement, Registration Statement 15
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Section 3.10 Absence Of Material Adverse Changes, Etc 15
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Section 3.11 Taxes 17
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Section 3.12 Employee Benefit Plans 18
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Section 3.13 Litigation; Compliance With Laws 20
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Section 3.14 Labor Matters 20
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Section 3.15 Certain Contracts And Arrangements 21
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Section 3.16 Environmental Matters 21
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Section 3.17 Intellectual Property 23
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Section 3.18 Opinion of Financial Advisor 24
----------------------------
Section 3.19 Board Recommendation 24
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Section 3.20 Finders' Fees 24
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Section 3.21 Section 203 of the Delaware General Corporation Law 25
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Section 3.22 Control of Catalytica Pharmaceuticals, Inc. 25
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Section 3.23 Rights Plan 25
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Section 3.24 Energy Contributions 25
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TABLE OF CONTENTS
(continued)
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Article IV Representations and Warranties of Parent and Merger Sub 26
Section 4.1 Corporate Existence and Power 26
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Section 4.2 Authorization 26
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Section 4.3 Consents and Approvals; No Violations 26
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Section 4.4 Proxy Statement 27
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Section 4.5 Litigation; Compliance With Laws 27
--------------------------------
Section 4.6 Board Approval 27
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Section 4.7 Absence of Material Adverse Change 27
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Section 4.8 Financing 28
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Section 4.9 Finders' Fees 28
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Article V Covenants of the Parties 28
Section 5.1 Conduct of the Business of the Company 28
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Section 5.2 Conduct of the Business of Parent 31
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Section 5.3 Stockholders' Meeting; Proxy Material 31
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Section 5.4 Access to Information; Confidentiality Agreement 31
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Section 5.5 No Solicitation 32
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Section 5.6 Director and Officer Liability 33
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Section 5.7 Commercially Reasonable Efforts 33
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Section 5.8 Certain Filings 34
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Section 5.9 Public Announcements 35
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Section 5.10 Further Assurances 35
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Section 5.11 Employee Matters 35
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Section 5.12 Disposition of Energy Business 36
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Section 5.13 Capitalization of Catalytica Pharmaceuticals, Inc. 36
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Section 5.14 State Takeover Laws 36
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Section 5.15 Certain Notifications 36
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Article VI Conditions to the Merger 37
Section 6.1 Conditions to Each Party's Obligations 37
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Section 6.2 Conditions to the Company's Obligation to Consummate the Merger 37
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Section 6.3 Conditions to Parent's Obligations to Consummate the Merger 38
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Article VII Termination 38
Section 7.1 Termination 38
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Section 7.2 Effect of Termination 40
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Section 7.3 Fees 40
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TABLE OF CONTENTS
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Article VIII Miscellaneous 41
Section 8.1 Notices 41
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Section 8.2 Survival of Representations and Warranties 42
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Section 8.3 Interpretation 42
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Section 8.4 Amendments, Modification and Waiver 43
-----------------------------------
Section 8.5 Successors and Assigns 43
----------------------
Section 8.6 Expenses 43
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Section 8.7 Specific Performance 43
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Section 8.8 Governing Law 43
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Section 8.9 Forum Selection; Consent to Jurisdiction 43
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Section 8.10 Severability 44
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Section 8.11 Third Party Beneficiaries 44
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Section 8.12 Entire Agreement 44
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Section 8.13 Counterparts; Effectiveness 44
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Schedule 1.6 Terms of Distribution A-1
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DEFINED TERMS
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Actual Exercise Payment....................................................................... Section 1.4(b)
Acquisition Proposal.......................................................................... Section 5.5
Acquisition Transaction....................................................................... Section 7.3(a)(ii)
Affiliate..................................................................................... Section 8.3
Agreement..................................................................................... Introduction
Antitrust Law................................................................................. Section 5.8(d)
Applicable Tax Rate........................................................................... Section 1.2(b)
Capitalization Amount......................................................................... Section 1.2(b)
CAT........................................................................................... Section 1.2(b)
Cash Amount................................................................................... Section 1.2(b)
CCSI.......................................................................................... Section 1.2(b)
Certificates.................................................................................. Section 1.3(b)
Chargeable Gain............................................................................... Section 1.2(b)
Cleanup....................................................................................... Section 3.16(a)
Closing....................................................................................... Section 1.8
Closing Date.................................................................................. Section 1.8
Code.......................................................................................... Section 3.11(a)
Company....................................................................................... Introduction
Company Approval Matters...................................................................... Section 5.3(a)
Company Common Stock.......................................................................... Section 3.4
Company Disclosure Schedule................................................................... Article III
Company ESPP.................................................................................. Section 1.5
Company Group Members......................................................................... Section 3.11(a)
Company Material Adverse Effect............................................................... Section 3.1
Company Options............................................................................... Section 1.4(a)
Company Participants.......................................................................... Section 5.11(a)
Company SEC Documents......................................................................... Section 3.6
Company Securities............................................................................ Section 3.4
Company Warrant............................................................................... Section 1.4(d)
Confidentiality Agreement..................................................................... Section 5.4
CSFB.......................................................................................... Section 3.18
DGCL.......................................................................................... Recitals
Dissenting Shares............................................................................. Section 1.2(c)(i)
Distribution.................................................................................. Section 1.6
Distribution Gain............................................................................. Section 1.2(b)
Distribution Statement........................................................................ Section 3.9(b)
Dutch Parent.................................................................................. Recitals
Effective Time................................................................................ Section 1.1(b)
Energy Business............................................................................... Section 1.6
Enron......................................................................................... Section 1.2(b)
Environmental Claim........................................................................... Section 3.16(a)(ii)
Environmental Costs and Liabilities........................................................... Section 3.16(a)(iii)
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Environmental Laws............................................................................ Section 3.16(a)(iv)
ERISA......................................................................................... Section 3.12(a)
ERISA Affiliate............................................................................... Section 3.12(a)
ERISA Pension Plan............................................................................ Section 3.12(m)
Estimated Exercise Payment.................................................................... Section 1.4(a)
Exchange Act.................................................................................. Section 3.3(b)
Exchange Fund................................................................................. Section 1.3(a)
Fair Market Value of Spinco Stock............................................................. Section 1.2(b)
GAAP.......................................................................................... Section 3.7(a)
Glaxo......................................................................................... Section 1.2(b)
Governmental Entity........................................................................... Section 3.3(b)
Guarantee..................................................................................... Recitals
Hazardous Materials........................................................................... Section 3.16(a)(v)
HSR Act....................................................................................... Section 3.3(b)
Include, Includes or Including................................................................ Section 8.3
Indemnitees................................................................................... Section 5.6(a)
Intellectual Property......................................................................... Section 3.17(c)
Knowledge..................................................................................... Section 8.3
Licenses...................................................................................... Section 3.1
Lien.......................................................................................... Section 3.5(b)
Maximum Amount................................................................................ Section 5.6(b)
Merger........................................................................................ Recitals
Merger Consideration.......................................................................... Section 1.2(b)
Merger Sub.................................................................................... Introduction
Morgan Stanley................................................................................ Section 3.18
Net Transaction Tax Liability................................................................. Section 1.2(b)
Non-Energy Subsidiary......................................................................... Section 1.2(b)
Option Cash-Out Amount........................................................................ Section 1.4(c)
Option Notice................................................................................. Section 1.4(a)
Option Proceeds............................................................................... Section 1.2(b)
Outside Date.................................................................................. Section 7.1(b)
Parent........................................................................................ Introduction
Parent Disclosure Schedule.................................................................... Article IV
Parent Material Adverse Effect................................................................ Section 4.1
Parent Plans.................................................................................. Section 5.11(a)
Paying Agent.................................................................................. Section 1.3(a)
Permits....................................................................................... Section 3.13(b)
Person........................................................................................ Section 1.3(a)
Pharma........................................................................................ Section 1.2(b)
Pharma Costs.................................................................................. Section 1.2(b)
Pharma Merger................................................................................. Section 1.2(b)
Pharma Rights................................................................................. Section 1.2(b)
Plans......................................................................................... Section 3.12(a)
Preferred Stock............................................................................... Section 3.4
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Proxy Statement............................................................................... Section 5.3(b)
Release....................................................................................... Section 3.16(a)(vi)
Representatives............................................................................... Section 5.4
Repurchase Rights............................................................................. Section 1.2(b)
Rights Agreement.............................................................................. Section 3.4
Secretary of State............................................................................ Section 1.1(b)
Securities Act................................................................................ Section 3.3(b)
Separation Date............................................................................... Section 1.2(b)
Share Exchange Agreements..................................................................... Section 1.2(b)
Special Meeting............................................................................... Section 5.3(a)
Spinco........................................................................................ Section 1.6
Stockholder................................................................................... Recitals
Stockholder Parties........................................................................... Recitals
Subsidiary.................................................................................... Section 1.2(b)
Superior Proposal............................................................................. Section 5.5
Surviving Corporation......................................................................... Section 1.1(a)
Taxes......................................................................................... Section 3.11(b)
Tax Return.................................................................................... Section 3.11(b)
Termination Fee............................................................................... Section 7.3(a)
Transaction Expenses.......................................................................... Section 1.2(b)
Voting Agreement.............................................................................. Recitals
Warrant Cash-Out Amount....................................................................... Section 1.4(d)
Without Limitation............................................................................ Section 8.3
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<PAGE>
AGREEMENT AND PLAN OF MERGER, dated as of August 2, 2000 (this
"Agreement"), by and among Synotex Company, Inc., a Delaware corporation
("Parent"), Synotex Acquisition Corporation, a Delaware corporation ("Merger
Sub"), and Catalytica, Inc., a Delaware corporation (the "Company").
W I T N E S S E T H
WHEREAS, upon the terms and subject to the conditions of this Agreement and
in accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Parent, Merger Sub and the Company have agreed to enter into a business
combination transaction pursuant to which Merger Sub will merge with and into
the Company (the "Merger").
WHEREAS, the Boards of Directors of Parent and Merger Sub (i) have
determined that the Merger is fair to, advisable and in the best interests of
Parent, Merger Sub and their stockholders, and (ii) have approved this
Agreement, the Merger and the other transactions contemplated by this Agreement.
WHEREAS, in connection with, and as a condition to, the Merger, the Company
shall distribute to its stockholders its entire ownership interest in the Energy
Business subject to, and in accordance with, the terms and conditions of this
Agreement.
WHEREAS, Parent is a wholly-owned subsidiary of DSM, N.V., a corporation
organized under the laws of the Netherlands ("Dutch Parent").
WHEREAS, as a condition to, and concurrently with, the execution of this
Agreement, Dutch Parent is entering into a Guarantee Agreement (the "Guarantee")
with the Company.
WHEREAS, as a condition to, and concurrently with, the execution of this
Agreement, Parent and the Company are entering into a Voting Agreement (the
"Voting Agreement") with Morgan Stanley Capital Partners III, L.P., Morgan
Stanley Capital Investors, L.P., MSCP III 892 Investors, L.P., James A. Cusumano
and Ricardo B. Levy (each a "Stockholder" and, together, the "Stockholder
Parties") pursuant to which the Stockholder Parties have agreed, inter alia, to
vote in favor of the approval and adoption of this Agreement.
WHEREAS, for United States federal income tax purposes, it is intended that
the Distribution (as defined below) and the Merger will be treated with respect
to the Company stockholders as an integrated transaction and that the
Distribution will be treated as a redemption of outstanding Company Common Stock
(as defined below) in connection with the complete termination of the Company
stockholders' interest in the Company.
WHEREAS, the Board of Directors of the Company (i) has determined that the
Merger Agreement and the Merger are advisable, fair to, and in the best
interests of, the Company and its stockholders, (ii) has approved this
Agreement, the Voting Agreement, the Merger and the other transactions
contemplated by this Agreement and the Voting Agreement, and (iii) has
determined to recommend the approval and adoption of this Agreement and the
Merger by the stockholders of the Company.
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NOW, THEREFORE, in consideration of the foregoing premises, and the
covenants, promises and representations set forth herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged and accepted, the parties hereto hereby agree as follows:
Article I
The Merger
Section 1.1 The Merger.
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(a) Upon the terms and subject to the conditions of this
Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub
shall be merged with and into the Company, whereupon the separate existence of
Merger Sub shall cease, and the Company shall continue as the surviving
corporation (sometimes referred to herein as the "Surviving Corporation") and
shall continue to be governed by the laws of the State of Delaware and shall
continue under the name "DSM Catalytica Pharmaceuticals, Inc."
(b) Concurrently with the Closing (as defined in Section 1.8
hereof), the Company and Merger Sub shall cause a certificate of merger with
respect to the Merger to be executed and filed with the Secretary of State of
the State of Delaware (the "Secretary of State") as provided in the DGCL. The
Merger shall become effective at 9:00 a.m. Eastern Standard Time on the day
following the Closing Date or at such other date and time as is agreed by the
parties, and such date and time is hereinafter referred to as the "Effective
Time."
(c) The Merger shall have the effects set forth in the DGCL.
Without limiting the generality of the foregoing and subject thereto, from and
after the Effective Time, the Surviving Corporation shall possess all
properties, rights, privileges, immunities, powers and franchises and be subject
to all of the obligations, restrictions, disabilities, liabilities, debts and
duties of the Company and Merger Sub.
Section 1.2 Effect on Company Common Stock. At the Effective Time:
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(a) Cancellation of Shares of Company Common Stock. Each share of
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Company Common Stock held by the Company as treasury stock and each share of
Company Common Stock owned by Spinco (as defined in Section 1.6), Parent, Merger
Sub or any direct or indirect wholly-owned subsidiary of Spinco, Parent or the
Company immediately prior to the Effective Time shall automatically be cancelled
and retired and cease to exist, and no consideration or payment shall be
delivered therefor or in respect thereto. All shares of Company Common Stock to
be converted into Merger Consideration pursuant to this Section 1.2 shall, by
virtue of the Merger and without any action on the part of the holders thereof,
cease to be outstanding, be cancelled and retired and cease to exist, and each
holder of a Certificate (as defined in Section 1.3(b)) shall thereafter cease to
have any rights with respect to such shares of Company Common Stock, except the
right to receive the Merger Consideration into which such shares of Company
Common Stock have been converted.
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(b) Conversion of Shares of Company Common Stock. Subject to Section
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1.3(d) hereof, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than shares of Company Common
Stock referred to in the first sentence of Section 1.2(a) hereof and Dissenting
Shares (as defined in Section 1.2(c)) shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the right to
receive an amount of cash, without interest, equal to the Merger Consideration.
"Merger Consideration" shall mean the quotient obtained by dividing (x) the Cash
Amount (as defined below) by (y) the sum of (A) the number of shares of Company
Common Stock outstanding as of the Effective Time (including shares deemed
outstanding pursuant to Sections 1.4(b) and 1.5 hereof), (B) the number of
shares of Company Common Stock subject to Company Options for which the Option
Cash - Out Amount has or will be paid pursuant to Section 1.4(c), and (C) the
number of shares of Company Common Stock subject to the Company Warrant for
which the Warrant Cash - Out Amount has or will be paid. The "Cash Amount"
shall equal $750,000,000, plus Option Proceeds, less the Capitalization Amount,
less Net Transaction Tax Liability, less Pharma Costs, less Repurchase Costs,
less Transaction Expenses (each, without duplication). "Option Proceeds" shall
mean the aggregate exercise price of (aa) all Company Options deemed to be
exercised pursuant to Section 1.4(b), (bb) the Company Warrant, if and to the
extent exercised after the date hereof, (cc) all shares of Company Common Stock
subject to Company Options for which the Option Cash - Out Amount has or will be
paid pursuant to Section 1.4(c), (dd) the Company Warrant, if the Warrant Cash -
Out Amount has or will be paid pursuant to Section 1.4(d) and (ee) the aggregate
purchase price of shares of Company Common Stock purchased pursuant to Section
1.5. "Capitalization Amount" shall mean the amount of cash and the fair market
value of any property contributed by the Company or any Subsidiary of the
Company other than Catalytica Combustion Systems, Inc. ("CCSI") or Catalytica
Advanced Technologies, Inc. ("CAT") to the Energy Business (as defined in
Section 1.6) after June 30, 2000, excluding the cancellation of any outstanding
intercompany accounts, notes or payables; provided, however, that for purposes
of determining the Cash Amount: (i) no capital contribution of cash or property
shall be deemed to have occurred in connection with the exercise of any option
to purchase capital stock of the Company or any Subsidiary as a result of the
application of Treas. Reg. (S)1.1032-3 or any similar state law and (ii) any
deduction allowable for federal, state, or local income tax purposes to Spinco
in connection with the exercise of any option to purchase stock of the Company
or any Subsidiary shall not be taken into account to the extent such amounts
have been taken into account in determining Net Transaction Tax Liability.
"Pharma Costs" shall mean the aggregate amount of cash and the fair market value
of property (other than Company Common Stock) paid or payable by the Company,
Pharma (as hereinafter defined) or any Subsidiary of the Company other than CCSI
or CAT (a "Non-Energy Subsidiary") in order to assure that 100% of the fully-
diluted equity of Pharma shall be owned by the Company as of the Effective Time,
free and clear of all liens, charges and encumbrances and that, immediately
prior to, and at, the Effective Time, there are no issued or outstanding (i)
securities of any person convertible into or exchangeable for shares of capital
stock or voting securities of any entity comprising Pharma, (ii) options,
warrants, preemptive or other rights to acquire from any entity comprising
Pharma, and no obligation of any such entity to issue, any capital stock or
voting securities of any such entity, or (iii) equity equivalent interests in
the ownership or earnings of any entity comprising Pharma or other similar
rights (the items in clauses (i), (ii), and (iii) being referred to collectively
as "Pharma Rights"). "Repurchase Costs" shall mean the aggregate amount of cash
and the fair market value of property (other than Company Common Stock), if any,
paid or payable by the Company or any
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Non-Energy Subsidiary (xx) to Enron Ventures Corp. or any of its affiliates
("Enron") in order to perform the covenants set forth in Section 5.16 and (yy)
to repurchase any shares of capital stock of the Company or any Non-Energy
Subsidiary in accordance with Section 5.1(b); provided, however, that no such
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amount set forth in this clause (yy) shall be duplicated with other amounts
deducted in the calculation of the Cash Amount. "Transaction Expenses" shall
mean the amount in excess of $5,000,000 of aggregate fees, costs or other
expenses (including attorneys' fees, investment banking fees, finder's fees,
breakage or prepayment fees or penalties) paid or incurred by the Company or any
Non-Energy Subsidiary, in connection with the negotiation, execution or delivery
of this Agreement, or the Voting Agreement or compliance by the Company or any
Non-Energy Subsidiary herewith. "Pharma" shall mean Catalytica Pharmaceuticals,
Inc. and Wyckoff, Inc. and their direct and indirect subsidiaries. "Net
Transaction Tax Liability" shall mean the product derived by multiplying the
Applicable Tax Rate by the Chargeable Gain. The "Applicable Tax Rate" shall be
0.405. "Chargeable Gain" shall mean the algebraic sum of the following items
(without duplication): (I) the Distribution Gain; less (II) any deductible items
of the Company attributable to the Distribution, treating expenses related to
the Distribution incurred or accrued on the date of the Distribution (the
"Separation Date") as not allocable to Spinco's tax period beginning on the date
after the Closing Date under Treas. Reg. (S)1.1502-76(b)(1)(ii)(B); less (III)
any net operating losses of Spinco for its tax year ended on the Separation Date
available for application against income of the consolidated group of which the
Company is the common parent for the Company's tax year ending on the Closing
Date; less (IV) the amount of any allowable deductions accrued on or prior to
the Closing Date attributable to the acceleration, exercise or cancellation of
the Company Options after the date hereof and on or prior to the Closing Date
(assuming for the purposes of this subsection that a disqualifying disposition
occurs with respect to all Company Options that are "incentive stock options"
under Section 422 of the Code (as defined in Section 3.11(a)) that are exercised
or cashed-out pursuant to Section 1.4(c) on or prior to the Closing Date); plus
(V) the amount, if any, of the positive taxable income of Spinco required to be
included for U.S. federal income tax purposes in the taxable income of the
consolidated group of which the Company is the common parent for the Company's
tax year ending on the Closing Date. "Distribution Gain" shall mean the excess,
if any, of the Fair Market Value of the Spinco Stock distributed in the
Distribution, over the Company's tax basis for U.S. federal income tax purpose
in such Spinco Stock. The "Fair Market Value of Spinco Stock" shall be
determined by multiplying the weighted average trading price of a share of
Spinco stock on the first full day of trading after the Distribution by the
number of shares of Spinco stock distributed. For purposes of this Agreement,
"Subsidiary" means with respect to any person, any corporation or other legal
entity of which such person owns, directly or indirectly, more than 50% of the
outstanding stock or other equity interests, the holders of which are entitled
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity. "Pharma Merger" shall be a merger of a
Subsidiary of the Company with undertaken in order to assure that 100% of the
fully-diluted equity of Pharma shall be owned by the Company. The "Share
Exchange Agreements" shall mean (a) the Share Exchange Agreement, dated as of
July 31, 1997, by and among the Company, Catalytica Pharmaceuticals, Inc. and
GlaxoWellcome Inc. (collectively with its affiliates, "Glaxo"), (b) the Share
Exchange Agreement, dated as of May 6, 1996, by and between the Company and
Pfizer Inc., and (c) the Stockholders Agreement, dated as of January 14, 1998,
by and among the Company, CCSI and Enron.
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(c) Dissenting Shares.
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(i) Any shares of Company Common Stock held by a holder who
has demanded and perfected appraisal rights for such shares in accordance with
Section 262 of the DGCL and who, as of the Effective Time, has not effectively
withdrawn or lost such appraisal rights ("Dissenting Shares") shall not be
converted into or represent a right to receive Merger Consideration pursuant to
Section 1.2(b), but the holder thereof shall only be entitled to such rights as
are granted by the DGCL.
(ii) Notwithstanding the provisions of subsection (i) above,
if any holder of shares of Company Common Stock who demands appraisal of such
shares under the DGCL shall effectively withdraw or lose (through failure to
perfect or otherwise) such holder's appraisal rights, then, as of the later of
(A) the Effective Time or (B) the occurrence of such event, such holder's shares
of Company Common Stock shall automatically be converted into and represent only
the right to receive Merger Consideration as provided in Section 1.2(b), without
interest thereon, upon surrender of the Certificate representing such shares.
(iii) The Company shall give Parent (A) prompt notice of its
receipt of any written demands for appraisal of any shares of Company Common
Stock, withdrawals of such demands, and any other instruments relating to the
Merger served pursuant to the DGCL and received by the Company and (B) the
opportunity to direct all negotiations and proceedings with respect to demands
for appraisal of any shares of Company Common Stock under the DGCL. The Company
shall not, except with the prior written consent of Parent or as may be required
under applicable law (in which case Parent shall be consulted), voluntarily make
any payment with respect to any demands for the appraisal of Company Common
Stock or offer to settle or settle any such demands or approve any withdrawal of
such demands.
(d) Closing of the Company's Transfer Books. At the Effective
---------------------------------------
Time, the stock transfer books of the Company shall be closed and no transfer of
Company Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be cancelled
and exchanged for Merger Consideration as provided in this Article I, subject to
applicable law in the case of Dissenting Shares.
(e) Conversion of Common Stock of Merger Sub. Each share of common
----------------------------------------
stock, $0.01 par value, of Merger Sub issued and outstanding immediately prior
to the Effective Time shall remain issued and outstanding and shall constitute a
share of common stock of the Surviving Corporation.
Section 1.3 Exchange of Certificates.
------------------------
(a) Prior to the mailing of the Proxy Statement (as defined in
Section 5.3(b) hereof) a bank, trust company or other person, reasonably
acceptable to the Company, shall be designated by Parent to act as the
depositary and paying agent for the delivery of the Merger Consideration in
exchange for shares of Company Common Stock (the "Paying Agent") in connection
with the Merger. From time to time, as necessary, at or following the Effective
Time, Parent shall deposit, or cause to be deposited, with the Paying Agent the
amount needed to pay the
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portion of the aggregate Merger Consideration for the benefit of the holders of
shares of Company Common Stock which are converted into the right to receive
Merger Consideration pursuant to Section 1.2(b) hereof for which Certificates
have been surrendered or payment is otherwise due (the "Exchange Fund"). For
purposes of this Agreement, "person" means any natural person, firm, individual,
corporation, limited liability company, partnership, association, joint venture,
company, business trust, trust or any other entity or organization, whether
incorporated or unincorporated, including a government or political subdivision
or any agency or instrumentality thereof.
(b) As of or promptly following the Effective Time, the Surviving
Corporation shall cause the Paying Agent to mail to each holder of record of a
certificate or certificates, which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (other than Dissenting
Shares) (the "Certificates"), (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent
and which shall be in the form and have such other provisions as Parent and the
Company may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration into
which the number of shares of Company Common Stock previously represented by
such Certificate shall have been converted into the right to receive pursuant to
this Agreement (which instructions shall provide that, at the election of the
surrendering holder, Certificates may be surrendered, and the Merger
Consideration in exchange therefor collected, by hand delivery). Upon surrender
of a Certificate for cancellation to the Paying Agent, together with a letter of
transmittal duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor the Merger Consideration for each share of Company Common
Stock formerly represented by such Certificate, to be mailed (or made available
for collection by hand if so elected by the surrendering holder) within three
business days of receipt thereof (but in no case prior to the Effective Time),
and the Certificate so surrendered shall be forthwith cancelled. The Paying
Agent shall accept such Certificates upon compliance with such reasonable terms
and conditions as the Paying Agent may impose to effect an orderly exchange
thereof in accordance with normal exchange practices.
(c) Any portion of the Exchange Fund which remains undistributed to
the holders of Certificates for six months after the Effective Time shall be
delivered to Parent, upon demand, and any holders of shares of Company Common
Stock prior to the Merger who have not theretofore complied with this Article I
shall thereafter look for payment of their claim, as general creditors thereof,
only to Parent for their claim for Merger Consideration, without interest.
(d) None of Parent, the Company or the Paying Agent shall be liable
to any person in respect of any Merger Consideration held in the Exchange Fund
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law. If any Certificates shall not have been surrendered
prior to one year after the Effective Time (or immediately prior to such earlier
date on which Merger Consideration in respect of such Certificate would
otherwise escheat to or become the property of any Governmental Entity (as
defined in Section 3.3(b) hereof)), any such Merger Consideration in respect of
such Certificate shall, to the extent permitted by applicable law, become the
property of Parent, free and clear of all claims or interest of any person
previously entitled thereto.
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Section 1.4 Company Options; Company Warrants.
---------------------------------
(a) Not later than fifteen days (15) prior to the Effective Time,
the Company shall send a notice (the "Option Notice") to all holders of options
to purchase Company Common Stock (the "Company Options"): (i) specifying that
such options shall not be assumed in connection with the Merger, (ii) specifying
that the vesting restrictions applicable to all options to purchase Company
Common Stock outstanding at the time of such notice shall be eliminated such
that no vesting restrictions remain thereon effective as of the date such notice
is given, (iii) specifying that any Company Options outstanding as of the
Effective Time shall terminate and be cancelled at such time and represent only
the right to receive the consideration, if any, specified in Section 1.4(c) in
accordance with this Agreement, (iv) setting forth an estimate of the Merger
Consideration and (v) setting forth a description of how to determine an
estimate of the excess, if any, of the exercise price per share of such Company
Options over the estimated Merger Consideration (the "Estimated Exercise
Payment"). Except as expressly provided herein, the Company shall not adjust the
terms of any Company Option as a result of the Distribution.
(b) The Company shall permit each holder of a Company Option who
desires to exercise all or any portion of such Company Option following receipt
of the Option Notice to exercise such Company Option (A) immediately prior to
the record date with respect to the Distribution or (B) after the record date
with respect to the Distribution but immediately prior to the Effective Time or
(C) at any other time permitted under the applicable Company Option. In the
event any such holder exercises all or any portion of a Company Option as
provided in clause (A) or (B) of the immediately preceding sentence, (i) the
holder shall be permitted to cause the Company to withhold the exercise price
with respect to such exercise out of the Merger Consideration (to the extent
thereof) to be received by such holder in respect of the shares of Common Stock
acquired pursuant to such exercise and (ii) the holder shall be obligated to pay
in cash to the Company, at the time of exercise, the Estimated Exercise Payment.
Any Company Common Stock issuable upon the exercise of Company Options as
provided in clause (A) or (B) of the first sentence of this paragraph shall by
virtue of the Merger, and without any action on the part of the holder thereof,
be converted into the right to receive the Merger Consideration payable in
respect thereof (net of any exercise price withholding obligation, as herein
provided), without the issuance of certificates representing issued and
outstanding shares of Company Common Stock; provided, that any Company Common
-------- ----
Stock issuable upon the exercise of Company Options as provided in clause (A) of
the first sentence of this paragraph shall be deemed issued and outstanding on
the record date with respect to the Distribution; and provided, further that any
-------- -------
Company Common Stock issuable upon the exercise of Company Options as provided
in clause (A) or (B) of the first sentence of this paragraph shall be deemed to
be issued and outstanding as of the Effective Time. After the Effective Time,
the Company shall determine the actual amount of the excess, if any, of the
exercise price of each Company Option over the actual Merger Consideration (the
"Actual Exercise Payment"), with respect to the Company Options exercised
pursuant to clauses (A) or (B) of the first sentence of this paragraph. To the
extent that the Actual Exercise Payment exceeds the Estimated Exercise Payment
made by any holder of a Company Option with respect to the shares of Company
Common Stock deemed issued pursuant to exercise, the Company shall notify such
party that a payment is due from such holder to the Company in the amount of the
excess of the Actual Exercise Payment over the Estimated Exercise Payment. The
Company shall retain any Distribution to be made to a holder of Company Options
who must make a payment to the Company in accordance with the immediately
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preceding sentence of this paragraph as security for such payment. To the
extent that the Estimated Exercise Payment made by a holder of a Company Option
exceeds the Actual Exercise Payment, the Company shall, or shall cause the
Paying Agent to, pay such holder the excess of the Estimated Exercise Payment
over the Actual Exercise Payment, on or about the time of the payment of the
Merger Consideration.
(c) All Company Options outstanding as of the Effective Time shall by
virtue of the Merger, and without any action on the part of the holder thereof,
be terminated and cancelled as of the Effective Time and converted into, and
represent only, the right to receive an amount in cash equal to the excess, if
any, of (i) the product of the Merger Consideration multiplied by the number of
shares of Company Common Stock subject to such Company Options immediately prior
to the Effective Time over (ii) the aggregate exercise price of all such shares
of Company Common Stock subject to such Company Option. The aggregate amount
payable pursuant to this paragraph (c) shall hereinafter be referred to as the
"Option Cash-Out Amount."
(d) Not later than fifteen days (15) prior to the record date for the
Distribution, the Company shall, in accordance with Section 5 thereof, deliver a
notice to the holder of the Stock Purchase Warrant, dated July 31, 1997, between
Glaxo and the Company (the "Company Warrant"). The Company shall permit the
holder of the Company Warrant to exercise all or any portion of such Company
Warrant at any time permitted thereunder. At the Effective Time, the Company
Warrant shall, by virtue of the Merger and without any action on the part of the
holder thereof, be converted into, and represent only, the right to receive,
upon delivery thereof to the Company, an amount in cash equal to the excess, if
any, of (i) the product of the Merger Consideration multiplied by the number of
shares of Company Common Stock subject to such Company Warrant immediately prior
to the Effective Time over (ii) the aggregate exercise price of all such shares
of Company Common Stock subject to such Company Warrant. The aggregate amount
payable pursuant to this paragraph (d) shall hereinafter be referred to as the
"Warrant Cash-Out Amount."
(e) Exchange Procedures for Company Options or Company Warrant.
----------------------------------------------------------
Promptly following the Effective Time, Parent shall cause the Paying Agent to
mail to each holder (as of the Effective Time) of a Company Option which was
converted into the right to receive the Option Cash-Out Amount pursuant to
Section 1.4(c) hereof or the Company Warrant if converted into the right to
receive the Warrant Cash-Out Amount pursuant to Section 1.4(d), (i) a letter of
transmittal (which shall be in such form and have such other provisions as
Parent may reasonably specify), and (ii) instructions for use in receiving cash
payable in respect of such Company Options or Company Warrant. Upon the
delivery of such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, together with the documentation
representing the Company Options or Company Warrant surrendered thereby, to the
Paying Agent, the holders of Company Options or Company Warrant shall be
entitled to receive the Option Cash-Out Amount or Warrant Cash-Out Amount
payable to them in respect of such Company Options pursuant to Section 1.4(c) or
Company Warrant pursuant to Section 1.4(d).
(f) Required Withholding. The Paying Agent shall be entitled to
--------------------
deduct and withhold from the Merger Consideration or any other consideration or
amount deliverable or otherwise payable pursuant to the Merger and this
Agreement to any holder or former holder of
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Company Common Stock or Company Options such amounts as may be required to be
deducted or withheld therefrom under the Code or under any applicable provision
of state, local or foreign tax law or under any other applicable legal
requirement. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
delivered or otherwise paid to the person to whom such amounts would otherwise
have been delivered or otherwise paid pursuant to the Merger and this Agreement.
Section 1.5 Employee Stock Purchase Plan. Immediately prior to the record
----------------------------
date with respect to the Distribution, in accordance with the terms of the
Company's 1992 Employee Stock Purchase Plan (the "Company ESPP"), all rights to
purchase shares of Company Common Stock outstanding under the Company ESPP
immediately prior to such record date shall be exercised and each share of
Company Common Stock purchased pursuant to such exercise shall by virtue of the
Merger, and without any action on the part of the holder thereof, be converted
into the right to receive the Merger Consideration payable in respect thereof,
without the issuance of certificates representing issued and outstanding shares
of Company Common Stock. Any Company Common Stock issued pursuant to the Company
ESPP shall be deemed issued and outstanding at the Effective Time and on the
record date with respect to the Distribution. The Company ESPP shall be
terminated immediately following such exercises.
Section 1.6 Distribution of the Energy Business. It is a condition to
-----------------------------------
each party's obligation to consummate the Merger that, on the Closing Date and
after the satisfaction and waiver of all conditions to the Merger other than the
condition set forth in Section 6.1(d), the capital stock of Spinco held by the
Company shall, subject to the penultimate sentence in Section 1.4(b), be
distributed in its entirety to the stockholders of the Company (the
"Distribution"). The terms of the Distribution will be determined by the
Company; provided, however, that Parent's consent, which shall not be
-------- -------
unreasonably withheld, shall be required in connection with any material
deviation from the terms and conditions of the Distribution described in
Schedule 1.6 and shall be required as to the final form of each of the specific
agreements identified in Schedule 1.6. "Spinco" shall mean the corporation whose
assets include the Energy Business. The "Energy Business" shall consist of CCSI
and CAT and any direct or indirect subsidiaries of either of them on the date
hereof.
Section 1.7 Lost Certificates. If any Certificate shall have been lost,
-----------------
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed and, if required by
the Surviving Corporation, the posting by such person of a bond, in such
reasonable amount as the Surviving Corporation may direct, as indemnity against
any claim that may be made against it with respect to such Certificate, the
Paying Agent will pay the Merger Consideration to which the holder thereof is
entitled pursuant to this Article I in exchange for such lost, stolen or
destroyed Certificate.
Section 1.8 Merger Closing. Subject to the satisfaction or waiver of the
--------------
conditions set forth in Article VI hereof, the closing of the Merger (the
"Closing") will take place at 10:00 a.m., California time, on a date to be
specified by the parties hereto, and no later than the second business day after
the satisfaction or waiver of the conditions set forth in Article VI hereof, at
the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, One
Market, Spear Tower, Suite 3300, San Francisco, California, unless another time,
date or place is agreed to in writing by the parties hereto (such date, the
"Closing Date").
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<PAGE>
Section 1.9 Dispute Resolution.
------------------
(a) In the event Parent and the Company disagree, prior to the
Effective Time, as to: (i) the calculation of the Cash Amount in Section 1.2(b),
(ii) whether the terms of the Distribution materially deviate from Schedule 1.6
or (iii) whether Parent's consent has been unreasonably withheld with respect to
such material deviation or the final form of any of the specific agreements
identified in Schedule 1.6, either of them may submit such dispute or
disagreement for final and binding determination to a mutually acceptable third
party arbitrator, such determination to be made within 10 days of the submission
to such arbitration by either of them. If Parent and the Company are unable to
mutually agree upon an arbitrator within one week of a party's notification to
the other of its desire to arbitrate, then each of them shall have one week to
select an arbitrator and such two arbitrators shall have one week to select a
third arbitrator, who shall have final authority to resolve such dispute within
10 days of the selection of such arbitrator. The parties shall share equally in
the fees and expenses of such arbitrators, and such fees and expenses shall be
paid by Spinco and Parent prior to the Effective Time.
(b) At least 15 days prior to the Closing Date, the Company will
provide to Parent the Company's latest estimate of the calculation of the Cash
Amount. Parent may, within 5 days of receipt of such calculation, object to the
determination of any component of the Cash Amount. In the event that Parent and
the Company cannot reach agreement on the disputed components of the
calculation, either party may seek to resolve such dispute through the mechanism
set forth in Section 1.9(a).
Article II
The Surviving Corporation
Section 2.1 Certificate of Incorporation. At the Effective Time, the
----------------------------
Certificate of Incorporation of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the Certificate of Incorporation of the Surviving
Corporation until thereafter amended as provided by law and such Certificate of
Incorporation of the Surviving Corporation.
Section 2.2 By-Laws. The by-laws of Merger Sub in effect at the Effective
-------
Time shall be the by-laws of the Surviving Corporation until thereafter amended
in accordance with applicable law, the certificate of incorporation of such
entity and the by-laws of such entity.
Section 2.3 Officers And Directors.
----------------------
(a) From and after the Effective Time, the officers of Merger Sub
at the Effective Time shall be the officers of the Surviving Corporation.
(b) The Board of Directors of the Surviving Corporation effective
as of, and immediately following, the Effective Time shall consist of the
directors of Merger Sub immediately prior to the Effective Time.
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Article III
Representations and Warranties of the Company
The Company represents and warrants to Parent, subject to such exceptions
as are disclosed (i) in any of the Company SEC Documents (as defined below)
filed prior to the date hereof or (ii) in writing in the disclosure letter
supplied by the Company to Parent, which disclosure shall provide an exception
to or otherwise qualify the representations or warranties of Company
specifically referred to in such disclosure and such other representations and
warranties to the extent such disclosure shall reasonably appear to be
applicable to such other representations or warranties (the "Company Disclosure
Schedule") as follows:
Section 3.1 Corporate Existence and Power. The Company is a corporation
-----------------------------
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals (collectively, "Licenses") required to
carry on its business as now conducted or presently proposed to be conducted
except for failures to have any such License which would not, in the aggregate,
have a Company Material Adverse Effect (as defined below). The Company is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction where the character of the property owned, leased or operated
by it or the nature of its activities makes such qualification necessary, except
in such jurisdictions where failures to be so qualified would not reasonably be
expected to, in the aggregate, have a Company Material Adverse Effect. As used
herein, the term "Company Material Adverse Effect" means a material adverse
effect on the condition (financial or otherwise), business, assets or results of
operations of the Company and its Subsidiaries (as defined in Section 1.2(b),
taken as a whole (assuming consummation of the Distribution in accordance with
the terms of this Agreement and Schedule 1.6), provided, however, that in no
event shall any effect that results from (a) the public announcement or pendency
of the transactions contemplated hereby or any actions taken in compliance with
this Agreement, (b) changes affecting the pharmaceuticals industry generally
unless such changes adversely affect the Company or its Subsidiaries (assuming
the consummation of the Distribution) in a materially disproportionate manner,
(c) changes affecting the United States economy generally, (d) changes in the
trading price of the Company Common Stock, or (e) stockholders class action
litigation arising from allegations of a breach of fiduciary duty relating to
this Agreement, the transactions contemplated hereby or any actions taken in
compliance with this Agreement , constitute a Company Material Adverse Effect.
The Company has heretofore made available to Parent true and complete copies of
the Certificate of Incorporation and the by-laws of the Company as currently in
effect.
Section 3.2 Corporate Authorization.
-----------------------
(a) The Company has the requisite corporate power and authority
toexecute and deliver this Agreement and, subject to approval of the Company's
stockholders, as set forth in Section 3.2(b) hereof and as contemplated by
Section 5.3 hereof, to perform its obligations hereunder. The execution and
delivery of this Agreement and the performance of its obligations hereunder have
been duly and validly authorized, and this Agreement and the Voting Agreement
have been approved, by the Board of Directors of the Company and no other
corporate proceedings on the part of the Company, other than the approval and
adoption of this Agreement by the
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<PAGE>
Company's stockholders, are necessary to authorize the execution, delivery and
performance of this Agreement. This Agreement has been duly executed and
delivered by the Company and constitutes, assuming due authorization, execution
and delivery of this Agreement by Parent, a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(b) Under applicable law, the Certificate of Incorporation and the
rules of the NASDAQ, the affirmative vote of the holders of a majority of the
shares of Common Stock and Class A Common Stock, voting together as a single
class, and the consent of the holders of a majority of the outstanding shares of
Class A Common Stock, voting as a separate class, outstanding on the record date
established by the Board of Directors of the Company in accordance with the by-
laws of the Company, applicable law and this Agreement, are the only votes
required to adopt this Agreement and, if applicable, approve the Distribution.
Section 3.3 Consents and Approvals; No Violations.
-------------------------------------
(a) Neither the execution and delivery of this Agreement nor the
performance by the Company of its obligations hereunder will (i) conflict with
or result in any breach of any provision of the Certificate of Incorporation or
the by-laws of the Company; (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration or
obligation to repurchase, repay, redeem or acquire or any similar right or
obligation) under any of the terms, conditions or provisions of any note,
mortgage, letter of credit, other evidence of indebtedness, guarantee, license,
permit, lease or agreement or similar instrument or obligation to which the
Company or any of its Subsidiaries is a party or by which any of them or any of
their assets may be bound or (iii) assuming that the filings, registrations,
notifications, authorizations, consents and approvals referred to in subsection
(b) below have been obtained or made, as the case may be, violate any order,
injunction, decree, statute, rule or regulation of any Governmental Entity to
which the Company or any of its Subsidiaries is subject, excluding from the
foregoing clauses (ii) and (iii) such requirements, defaults, breaches, rights
or violations that would not, in the aggregate, reasonably be expected to have a
Company Material Adverse Effect and/or would not have a material adverse effect
on the ability of the Company to perform its obligations hereunder.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any government or any agency, court,
tribunal, commission, board, bureau, department, political subdivision or other
instrumentality of any government (including any regulatory or administrative
agency), whether federal, state, multinational (including, but not limited to,
the European Community), provincial, municipal, domestic or foreign (each, a
"Governmental Entity") is required in connection with the execution and delivery
of this Agreement by the Company or the performance by the Company of its
obligations hereunder, except (i) the filing of the Certificate of Merger in
accordance with the DGCL; (ii) compliance with any applicable requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act") or any foreign laws regulating
competition, antitrust, investment or exchange controls; (iii) compliance with
any applicable requirements of the Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the "Exchange Act") and of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"); (iv) compliance with any applicable requirements of
state blue sky or takeover laws and (v) such
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<PAGE>
other consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings the failure of which to be obtained or made would not,
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect and/or would not have a material adverse effect on the ability of the
Company to perform its obligations hereunder.
Section 3.4 Capitalization. The authorized capital stock of the Company
--------------
consists of 120,000,000 shares of common stock par value $0.001 per share (the
"Company Common Stock"), of which 73,000,000 shares are designated as "Common
Stock," 30,000,000 shares are designated as "Class A Common Stock" and
17,000,000 are designated as "Class B Common Stock" and 5,000,000 shares of
preferred stock, par value $0.001 per share, of the Company (the "Preferred
Stock"). As of July 28, 2000, there were (i) 33,163,543 shares of Common Stock
issued and outstanding, (ii) 13,270,000 shares of Class A Common Stock issued
and outstanding, (iii) 11,730,000 shares of Class B Common Stock issued and
outstanding and (iii) no shares of Preferred Stock issued and outstanding. All
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable and were not issued in violation of
any preemptive rights. As of July 28, 2000, there were outstanding Company
Options to purchase 4,394,086 shares of Company Common Stock. Except (v) as set
forth on Schedule 3.4, (w) for changes since July 28, 2000, resulting from the
exercise of Company Options outstanding on such date, (x) for the Company
Warrant, (y) for the rights under the Share Exchange Agreements, and (z) for
preferred share purchase rights issued pursuant to the Rights Agreement, dated
as of October 23, 1996 and as amended as of July 28, 1997 and August 2, 2000,
between the Company and ChaseMellon Shareholder Services, L.L.P., a New Jersey
limited liability company (the "Rights Agreement"), there are outstanding (i) no
shares of capital stock or other voting securities of the Company, (ii) no
securities of the Company or any Subsidiary of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
(iii) no options, preemptive or other rights to acquire from the Company or any
of its Subsidiaries, and no obligation of the Company or any of its Subsidiaries
to issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company and (iv) no
equity equivalent interest in the ownership or earnings of the Company or the
Non-Energy Subsidiaries or other similar rights (the items in clauses (i), (ii),
(iii) and (iv) being referred to collectively as the "Company Securities").
There are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any Company Securities. No Subsidiary
of the Company owns any capital stock or other voting securities of the Company.
Section 3.5 Subsidiaries.
------------
(a) Each Non-Energy Subsidiary (i) is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation, (ii) has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and (iii) is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for failures of this representation
and warranty to be true which would not, in the aggregate, have a Company
Material Adverse Effect. All Non-Energy Subsidiaries and their respective
jurisdictions of incorporation are identified in Schedule 3.5 of the Company
Disclosure Schedule.
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<PAGE>
(b) All of the outstanding shares of capital stock of each Non-
Energy Subsidiary of the Company are duly authorized, validly issued, fully paid
and nonassessable, and, except as set forth in Schedule 3.5(b) of the Company
Disclosure Schedule, such shares are owned by the Company or by a Non-Energy
Subsidiary of the Company free and clear of any Liens (as defined hereafter) or
limitations on voting rights. There are no subscriptions, options, warrants,
calls, preemptive rights, rights, convertible securities or other agreements or
commitments of any character relating to the issuance, transfer, sale, delivery,
voting or redemption (including any rights of conversion or exchange under any
outstanding security or other instrument) of any of the capital stock or other
equity interests of any of such Non-Energy Subsidiaries. There are no agreements
requiring the Company or any of the Non-Energy Subsidiaries to make
contributions to the capital of, or lend or advance funds to, any Subsidiaries
of the Company. For purposes of this Agreement, "Lien" means, with respect to
any asset, any mortgage, lien, pledge, charge, security interest or encumbrance
of any kind in respect of such asset.
(c) Except as set forth on Schedule 3.5(c), the Company does not
own beneficially, directly or indirectly, any equity securities or similar
interests of any person, or any interest in a partnership or joint venture of
any kind other than in the Non-Energy Subsidiaries (assuming the consummation of
the Distribution) .
Section 3.6 SEC Documents. The Company has filed timely all required
-------------
reports, proxy statements, registration statements, forms and other documents
with the SEC on or after January 1, 1998 (the "Company SEC Documents"). As of
their respective dates, and giving effect to any amendments thereto, (a) the
Company SEC Documents complied in all material respects with the requirements of
the Securities Act or the Exchange Act, as the case may be, and the applicable
rules and regulations of the SEC promulgated thereunder and (b) none of the
Company SEC Documents at the time filed (or if amended or superceded by a filing
prior to the date of this Agreement, then on the date of such filing) contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. No Non-Energy Subsidiary is required to file any form, report,
registration statement or prospectus or other document with the SEC.
Section 3.7 Financial Statements.
--------------------
(a) The financial statements of the Company (including, in each
case, any notes and schedules thereto) included in the Company SEC Documents (a)
were prepared from the books and records of the Company and its Subsidiaries,
(b) complied as to form in all material respects with all applicable accounting
requirements and the rules and regulations of the SEC with respect thereto, (c)
are in conformity with United States generally accepted accounting principles
("GAAP"), applied on a consistent basis (except in the case of unaudited
statements, as otherwise permitted by the rules and regulations of the SEC and
described in the Notes included therewith) during the periods involved and (d)
fairly present, in all material respects, the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments which are not expected to be, individually or in the aggregate,
material in amount).
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<PAGE>
(b) The unaudited consolidating income statement of the Company
for the six-month period ended June 30, 2000 and balance sheet as of such date
that are attached as Schedule 3.7(b) of the Company Disclosure Schedule
(including any notes and schedules thereto): (i) were prepared from the books
and records of the Company and its Subsidiaries, (ii) are in conformity with
GAAP, applied on a consistent basis (except for the absence of explanatory
footnotes) during the period involved, and (iii) fairly present, in all material
respects, the financial position of the Company and its Subsidiaries as of the
date thereof and the results of their operations for the periods then ended
(subject to normal year-end audit adjustments which are not expected to be,
individually or in the aggregate, material in amount).
Section 3.8 Absence Of Undisclosed Liabilities. Except as set forth in
----------------------------------
the Company SEC Documents filed prior to the date of this Agreement, and except
for liabilities and obligations incurred in the ordinary course of business
since June 30, 2000, neither the Company nor any of the Non-Energy Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) except for those that would not, in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.
Section 3.9 Proxy Statement, Registration Statement.
---------------------------------------
(a) None of the information contained in the Proxy Statement (as
defined in Section 5.3(b)) (and any amendments thereof or supplements thereto)
will at the time of the mailing of the Proxy Statement to the stockholders of
the Company and at the time of the Special Meeting (as defined in Section
5.3(a)), contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except that no representation is made by the Company with
respect to statements made or omitted in the Proxy Statement based on
information supplied by Parent for inclusion in the Proxy Statement. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated thereunder, except
that no representation is made by the Company with respect to the statements
made or omitted in the Proxy Statement relating to Parent based on information
supplied by Parent for inclusion in the Proxy Statement.
(b) No registration statement filed by the Company or any
Subsidiary pursuant to the Exchange Act or, if necessary, the Securities Act, in
connection with the Distribution (together with any amendments thereof and any
supplements thereto, the "Distribution Statement") will, at the time the
Distribution Statement and each amendment or supplement thereto, if any, becomes
effective under the Securities Act or the Exchange Act, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading.
Section 3.10 Absence Of Material Adverse Changes, Etc. Since December 31,
----------------------------------------
1999, there has not been a Company Material Adverse Effect. Without limiting the
foregoing, except as disclosed in the Company SEC Documents filed by the Company
or as contemplated by this Agreement, since June 30, 2000, (i) other than in
connection with the negotiation of this Agreement, the Company and the Non-
Energy Subsidiaries have conducted their business in the ordinary course
consistent with past practice and (ii) there has not been:
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(a) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company or
any Company Subsidiary (other than a wholly-owned Subsidiary), or any
repurchase, redemption or other acquisition by the Company or any Subsidiary of
the Company (other than any wholly-owned Subsidiary) of any outstanding shares
of capital stock or other equity securities of, or other ownership interests in,
the Company, any Company Subsidiary or of any Company Securities;
(b) any amendment of any provision of the Certificate of
Incorporation or by-laws of, or of any material term of any outstanding security
issued by, the Company or any Non-Energy Subsidiary (other than any wholly-owned
Subsidiary) of the Company;
(c) any incurrence, assumption or guarantee by the Company or any
Non-Energy Subsidiary of any indebtedness for borrowed money other than
borrowings under existing credit facilities in the ordinary course of business;
(d) any change in any method of accounting or accounting practice
by the Company or any Non-Energy Subsidiary, except for any such change required
by reason of a change in GAAP;
(e) any (i) grant of any severance or termination pay to any
director, officer, consultant, independent contractor or employee of the Company
or any Non-Energy Subsidiary, (ii) employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
director, officer, consultant, independent contractor or employee of the Company
or any Non-Energy Subsidiary entered into, (iii) increase in benefits payable
under any existing severance or termination pay policies or employment
agreements or (iv) increase in compensation, bonus or other benefits payable to
directors, officers or employees of the Company or any Non-Energy Subsidiary, in
each case other than in the ordinary course of business with respect to Persons
other than directors or executive officers of the Company or any Non-Energy
Subsidiary;
(f) issuance of Company Securities other than pursuant to Company
Options outstanding as of June 30, 2000 and the issuance of Options after such
date in the ordinary course of business (and the issuance of Company Securities
pursuant thereto);
(g) acquisition or disposition of assets material to the Company
and its Subsidiaries (assuming consummation of the Distribution), except for
sales of inventory in the ordinary course of business, or any acquisition or
disposition of capital stock of any third party, or any merger or consolidation
with any third party, by the Company or any Non-Energy Subsidiary;
(h) entry by the Company or any Non-Energy Subsidiary into any
joint venture, partnership or similar agreement with any person other than a
wholly-owned Subsidiary; or
(i) any authorization of, or commitment or agreement to take any
of, the foregoing actions except as otherwise permitted by this Agreement.
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Section 3.11 Taxes.
-----
(a) Except as set forth in Schedule 3.11 of the Company
Disclosure Letter and for any such failures or events that could not reasonably
be expected to have a Company Material Adverse Effect: (1) all Tax Returns (as
defined below) required to be filed by or on behalf of the Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which the Company or any of its Subsidiaries is or has been a member ("Company
Group Members") have been timely filed, and all returns filed are complete and
accurate and correctly reflect the tax liabilities required to be reported
therein; (2) the Company, its Subsidiaries, and Company Group Members have
timely paid all Taxes (as defined below) that have become due or payable and
have adequately reserved for in accordance with GAAP all Taxes (whether or not
shown on any Tax Return) that have accrued but are not yet due or payable; (3)
there is no presently pending audit examination, deficiency, refund claim or
litigation, proposed adjustment or matter in controversy with respect to any
Taxes due and owing by the Company, any Subsidiary of the Company or any Company
Group Member and none of the above have knowledge that any such action or
proceeding is being contemplated; (4) neither the Company, any Subsidiary of the
Company nor any Company Group Member has filed any waiver of the statute of
limitations applicable to the assessment or collection of any Tax; (5) all
assessments for Taxes due and owing by the Company, any Subsidiary of the
Company or any Company Group Member with respect to completed and settled
examinations or concluded litigation have been paid; (6) neither the Company,
any Subsidiary of the Company nor any Company Group Member is a party to any
express or implied tax indemnity agreement, tax sharing agreement or other
agreement under which it could become liable to another person as a result of
the imposition of a Tax upon any person, or the assessment or collection of a
Tax; (7) the Company, each of its Subsidiaries, and each Company Group Member
has complied in all material respects with all rules and regulations relating to
the withholding of Taxes; (8) neither the Company, any Subsidiary, nor any
Company Group Member is a party to any agreement, contract, arrangement or plan
that has resulted or would result, individually or in the aggregate, in
connection with this Agreement or any change of control of the Company, any
Subsidiary, or any Company Group Member in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), and (9) neither the Company, any Subsidiary, nor
any Company Group Member has made any payments since December 31, 1999, and is
not a party to an agreement that could require it to make any payments
(including any deemed payment of compensation upon exercise of an option), that
would not be fully deductible by reason of Section 162(m) of the Code.
(b) For purposes of this Agreement, (i) "Taxes" means (A) all
taxes, levies or other like assessments, charges or fees (including estimated
taxes, charges and fees), including, without limitation, income, franchise,
corporation, advance corporation, windfall or other profits, gross receipts,
transfer, capital stock, excise, property, sales, use, value-added, ad valorem,
license, payroll, employment, withholding, social security, workers'
compensation, unemployment compensation, net worth, and other governmental taxes
or charges, imposed by the United States or any state, county, local or foreign
government or subdivision or agency thereof, and such term shall include any
interest, penalties, additions to tax or additional amounts imposed attributable
to such taxes, and (B) any liability for payment of amounts described in clause
(A) whether as a result of transferee liability, of being a member of an
affiliated, consolidated, combined or unitary group for any period, or otherwise
through operation of law, and (ii) "Tax Return" means any report, return,
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statement or other written information required to be filed with or supplied to
a taxing authority in connection with any Taxes, including any information
return, claim for refund, amended return or declaration of estimated tax.
Section 3.12 Employee Benefit Plans.
----------------------
(a) Except for any plan, fund, program, agreement or arrangement
that is subject to the laws of any jurisdiction outside the United States,
Schedule 3.12(a) of the Company Disclosure Schedule contains a true and complete
list of each material deferred compensation, incentive compensation, and equity
compensation plan; material "welfare" plan, fund or program (within the meaning
of section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")); material "pension" plan, fund or program (within the meaning
of section 3(2) of ERISA); each material employment, termination or severance
agreement; and each other material employee benefit plan, fund, program,
agreement or arrangement, in each case, that is in writing and sponsored,
maintained or contributed to or required to be contributed to by the Company or
by any trade or business, whether or not incorporated (each, an "ERISA
Affiliate"), that together with the Company would be deemed a "single employer"
within the meaning of section 4001(b) of ERISA, or to which the Company or an
ERISA Affiliate is party, whether written or oral, for the benefit of any
employee, consultant, director or former employee, consultant or director of the
Company or any Subsidiary of the Company. The plans, funds, programs, agreements
and arrangements listed on Schedule 3.12(a) of the Company Disclosure Schedule
are referred to herein collectively as the "Plans".
(b) With respect to each Plan, the Company has heretofore
delivered or made available to Parent true and complete copies of the Plan and
any amendments thereto (or if the Plan is not a written Plan, a description
thereof), any related trust or other funding vehicle, the most recent reports or
summaries required under ERISA or the Code and the most recent determination
letter received from the Internal Revenue Service with respect to each Plan
intended to qualify under section 401 of the Code.
(c) No liability under Title IV or section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied in
full, other than liability for premiums due the Pension Benefit Guaranty
Corporation (which premiums have been paid when due).
(d) Each Plan has been operated and administered in all material
respects in accordance with its terms and applicable law, including, but not
limited to, ERISA and the Code.
(e) Each Plan intended to be "qualified" within the meaning of
section 401(a) of the Code has received a favorable determination letter from
the Internal Revenue Service, or in the case of such a Plan for which a
favorable determination letter has not yet been received, the applicable
remedial amendment period under Section 401(b) of the Code has not expired.
(f) Except as set forth on Schedule 3.12(f) of the Company
Disclosure Letter, no Plan provides medical, surgical or hospitalization
benefits (whether or not insured) for employees or former employees of the
Company or any Subsidiary for periods extending beyond their retirement or other
termination of service, other than (i) coverage mandated by applicable law, or
(ii) benefits
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the full cost of which is borne by the current or former employee (or his or her
beneficiary), dependant or other covered person.
(g) There are no pending, or to the knowledge of the Company,
threatened or anticipated, claims that would reasonably be expected, in the
aggregate, to have a Company Material Adverse Effect by or on behalf of any
Plan, by any employee or beneficiary covered under any such Plan, or otherwise
involving any such Plan (other than routine claims for benefits).
(h) Except as set forth on Schedule 3.12(h) of the Company Disclosure
Letter, the consummation of the transactions contemplated by this Agreement will
not, either alone or in combination with another event, (i) entitle any current
or former employee or officer of the Company or any ERISA Affiliate to severance
pay, unemployment compensation or any other payment, except as expressly
provided in this Agreement, or (ii) accelerate the time of payment or vesting
(other than as a result of a full or partial plan termination resulting from the
transactions contemplated by this Agreement), or increase the amount of
compensation due any such employee or officer, other than payments,
accelerations or increases (x) under any employee benefit plan that is subject
to the laws of a jurisdiction outside of the United States or (y) mandated by
applicable law.
(i) To the knowledge of the Company, all employee benefit plans that
are subject to the laws of any jurisdiction outside the United States are in
material compliance with such applicable laws, including relevant Tax laws, and
the requirements of any trust deed under which they were established, except for
such exceptions to the foregoing which, in the aggregate, would not reasonably
be expected to have a Company Material Adverse Effect. Schedule 3.12(k) lists
all material employee pension benefit plans that are subject to the laws of any
jurisdiction outside the United States except for such plans that are
governmental or statutory plans.
(j) Each Plan can be amended prospectively or terminated at any time,
without advance notice, and without any liability other than for benefits
accrued prior to such amendment or termination (other than administrative
charges normally incurred in a plan termination).
(k) No agreement, commitment, or obligation exists to increase any
benefits under any Plan or to adopt any new Plan, other than in the ordinary
course of business.
(l) No Plan has any unfunded accrued benefits that are not fully
reflected in the Financial Statements in accordance with the Company's ordinary
accounting procedures.
(m) No pension plan subject to Title IV of ERISA (an "ERISA Pension
Plan") has incurred any "accumulated funding deficiency" or "waived funding
deficiency" within the meaning of Section 302 of ERISA or Section 412 of the
Code and the Company has never sought to obtain any variance from the minimum
funding standards pursuant to Section 412(d) of the Code. The funding method
used in connection with each ERISA Pension Plan meets the requirements of ERISA
and the Code and the actuarial assumptions used in connection with each such
plan are reasonable, given the experience of such ERISA Pension Plan and
reasonable expectations.
(n) The fair market value of the plan assets of each ERISA Pension
Plan are at least equal to (i) the present value of its benefit liabilities (as
defined in ERISA Section 4001(a)(16),
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including any unpredictable contingent event benefits within the meaning of Code
Section 412(l)(7), and determined on the basis of assumptions prescribed by the
PBGC for purposes of ERISA Section 4044), and (ii) the Projected Benefit
Obligations thereunder, as defined in Statement of Financial Accounting
Standards No. 87, including any allowance for indexation and ad hoc increases.
-- ---
No ERISA Pension Plan has been completely or partially terminated or been the
subject of a Reportable Event under ERISA Section 4043. No proceeding by the
PBGC to terminate any ERISA Pension Plan has been instituted, and the Company
has not incurred any liability to the PBGC (other than the PBGC premiums, all of
which have been timely paid) or otherwise under Title IV of ERISA with respect
to any ERISA Pension Plan.
(o) Neither the Company nor any Subsidiary maintains or
participates in any Voluntary Employees' Beneficiary Association, under Code
Sections 419 and 419A, which is intended to be exempt from taxation under
section 501(c)(9) of the Code.
(p) Neither the Company nor any ERISA Affiliate maintains,
participates in, contributes to, or has any obligation to contribute or any
liability with respect to any multiple employer or multiemployer plan, or has
had any obligation with respect to such a plan during the six years immediately
preceding the date of this Agreement.
Section 3.13 Litigation; Compliance With Laws.
--------------------------------
(a) Except as set forth on Schedule 3.13 of the Company
Disclosure Letter or in the Company SEC Documents filed prior to the date of
this Agreement or otherwise fully covered by insurance, there is no action, suit
or proceeding pending against, or to the knowledge of the Company threatened
against, the Company or any Non-Energy Subsidiary or any of their respective
properties before any court or arbitrator or any Governmental Entity which,
individually or in the aggregate, would reasonably be expected to have a Company
Material Adverse Effect.
(b) The Company and the Non-Energy Subsidiaries are in compliance
with all applicable laws, ordinances, rules and regulations of any federal,
state, local or foreign governmental authority applicable to their respective
businesses and operations, except for such violations, if any, which, in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect. All governmental approvals, permits and licenses (collectively,
"Permits") required to conduct the business of the Company and the Non-Energy
Subsidiaries have been obtained, are in full force and effect and are being
complied with except for such violations and failures to have Permits in full
force and effect, if any, which, individually or in the aggregate, would not
reasonably be expected to have a Company Material Adverse Effect.
Section 3.14 Labor Matters. (i) Since June 30, 2000, there has been no
-------------
labor strike, dispute, slowdown, stoppage or lockout actually pending or, to the
knowledge of the Company, threatened against the Company or any Non-Energy
Subsidiary; (ii) to the knowledge of the Company, no union organizing campaign
with respect to the Company's employees is underway; (iii) there is no unfair
labor practice charge or complaint against the Company or any Non-Energy
Subsidiary pending or, to the knowledge of the Company, threatened before the
National Labor Relations Board or any similar state or foreign agency; (iv)
there is no written grievance pending relating to any collective bargaining
agreement or other grievance procedure; (v) to the knowledge of the Company, no
charges with respect to or relating to the Company or any Non-Energy
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<PAGE>
Subsidiary are pending before the Equal Employment Opportunity Commission or any
other agency responsible for the prevention of unlawful employment practices;
and (vi) there are no collective bargaining agreements with any union covering
employees of the Company or any Non-Energy Subsidiary.
Section 3.15 Certain Contracts And Arrangements. Each material contract
----------------------------------
or agreement to which the Company or any Non-Energy Subsidiary is a party or by
which any of them is bound is in full force and effect, and neither the Company
nor any Non-Energy Subsidiary, nor, to the knowledge of the Company, any other
party thereto, is in breach of, or default under, any material contract or
material agreement to which the Company or any Non-Energy Subsidiary is a party
or by which any of them is bound, and no event has occurred that with notice or
passage of time or both would constitute such a breach or default thereunder by
the Company or any Non-Energy Subsidiary, or, to the knowledge of the Company,
any other party thereto, except for such breaches and defaults which, in the
aggregate, would not reasonably be expected to have a Company Material Adverse
Effect.
Section 3.16 Environmental Matters.
---------------------
(a) (i) "Cleanup" means all actions required to: (A) cleanup,
remove, treat or remediate Hazardous Materials (as defined hereafter) in the
indoor or outdoor environment; (B) prevent the Release (as defined hereafter) of
Hazardous Materials so that they do not migrate, endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; (C)
perform pre-remedial studies and investigations and post-remedial monitoring and
care; or (D) respond to any government requests for information or documents in
any way relating to cleanup, removal, treatment or remediation or potential
cleanup, removal, treatment or remediation of Hazardous Materials in the indoor
or outdoor environment.
(ii) "Environmental Claim" means any claim, action, cause of
action, investigation or written notice by any person alleging potential
liability (including, without limitation, potential liability for investigatory
costs, Cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) (A) pursuant to Environmental
Law or (B) arising out of, based on or resulting from the presence or Release of
any Hazardous Materials at any location, whether or not owned or operated by the
Company or any Non-Energy Subsidiary.
(iii) "Environmental Costs and Liabilities" mean any and all
losses, liabilities, obligations, damages (including compensatory, punitive and
consequential damages), fines, penalties, judgments, actions, claims, costs and
expenses (including, without limitation, fees, disbursements and expenses of
legal counsel, experts, engineers and consultants and the costs of
investigation, monitoring, remediation or other response action) pursuant to any
Environmental Law or arising from the presence or Release of any Hazardous
Materials.
(iv) "Environmental Laws" means all federal, state, local
and foreign laws, statutes, decisions, orders, decrees, rules, regulations or
requirements relating to pollution or protection of the environment or human
health or safety, including, without limitation, laws relating to the
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presence, Release or threatened Release of Hazardous Materials or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
transport or handling of Hazardous Materials.
(v) "Hazardous Materials" means all substances defined as a
"Hazardous Substance," "Oil," or "Pollutant or contaminant" in 40 C.F.R. Section
300.5, or defined, regulated or subject to liability as a hazardous substance,
material, waste or agent pursuant to any Environmental Law.
(vi) "Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, dispersal, leaching or migration into the
environment (including, without limitation, ambient air, surface water,
groundwater and surface or subsurface strata) or into or out of any property,
including the movement of Hazardous Materials through or in the air, soil,
surface water, groundwater or property.
(b) (i) The Company and the Non-Energy Subsidiaries have been at all
times and are in compliance with all applicable Environmental Laws (which
compliance includes, but is not limited to, the possession by the Company and
the Non-Energy Subsidiaries of all permits and other governmental authorizations
required under applicable Environmental Laws, and compliance with the terms and
conditions thereof), except where failures to be in compliance would not, in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
Since January 1, 1999 and prior to the date of this Agreement, neither the
Company nor any Non-Energy Subsidiary has received any communication (written or
oral), whether from a Governmental Entity, citizens' group, employee or
otherwise, alleging that the Company or any Non-Energy Subsidiary is not in such
compliance, except where failures to be in compliance would not, in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.
(ii) There is no Environmental Claim pending or, to the knowledge of
the Company, threatened against the Company or any Non-Energy Subsidiary or, to
the knowledge of the Company, against any person whose liability for any
Environmental Claim the Company or any Non-Energy Subsidiary has or may have
retained or assumed either contractually or by operation of law that would
reasonably be expected to have a Company Material Adverse Effect.
(iii) There are no present or past actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the Release or
presence of any Hazardous Material, that could (A) subject the Company or any
Non-Energy Subsidiary to Environmental Costs and Liabilities, or (B) form the
basis of any Environmental Claim against the Company or any Non-Energy
Subsidiary or, to the knowledge of the Company, against any person whose
liability for any Environmental Claim the Company or any Non-Energy Subsidiary
has or may have retained or assumed either contractually or by operation of law;
that, in either case, would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(iv) The Company agrees to cooperate with Parent to effect the
retention of any permits or other governmental authorizations under
Environmental Laws that will be required to permit the Company to conduct the
business as conducted by the Company and the Non-Energy Subsidiaries immediately
prior to the Closing Date. The Company and the Non-Energy Subsidiaries
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also agree to take all commercially reasonable actions and to cooperate with
Parent to ensure that the Company and the Non-Energy Subsidiaries shall continue
to benefit from the provisions of any indemnity relating to Environmental Claims
following the Effective Time.
(v) The Company has made available to Parent all assessments,
audits, investigations, and sampling or similar reports in the possession of the
Company or its Subsidiaries relating to health and safety, the environment, any
Release of Hazardous Materials, or Environmental Costs and Liabilities.
Section 3.17 Intellectual Property.
---------------------
(a) The Company and the Non-Energy Subsidiaries own or have the
right to use all material Intellectual Property (as defined hereafter)
reasonably necessary for the Company and the Subsidiaries to conduct their
business as it is currently conducted (assuming consummation of the
Distribution). All Intellectual Property registered by the Company has been
identified on Schedule 3.17(a) of the Company Disclosure Letter, which includes
a list of United States, international and foreign (i) patents and patent
applications, (ii) registered trademarks and trademark applications, and (iii)
registered copyright applications, in each case, owned by the Company and the
Non-Energy Subsidiaries (assuming consummation of the Distribution).
(b) To the knowledge of the Company: (i) all of the
registrations, including patents, relating to material Intellectual Property
owned by the Company and its Subsidiaries (assuming consummation of the
Distribution) are subsisting and unexpired, free of all liens or encumbrances,
and have not been abandoned; (ii) the Company and the Non-Energy Subsidiaries do
not infringe the intellectual property rights of any third party in any respect
that would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect; (iii) no judgment, decree, injunction, rule or
order has been rendered by Governmental Entity which would limit, cancel or
question the validity of, the Company's or its Subsidiaries' rights (assuming
consummation of the Distribution) in and to, any Intellectual Property owned by
the Company (assuming consummation of the Distribution) in any respect that
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect; and (iv) the Company and the Non-Energy
Subsidiaries have not received notice of any pending or threatened suit, action
or adversarial proceeding that seeks to limit, cancel or question the validity
of, or the Company's or its Subsidiaries' rights (assuming consummation of the
Distribution) in and to, any Intellectual Property, which would reasonably be
expected to have, individually or in the aggregate, a Company Material Adverse
Effect.
(c) For purposes of this Agreement "Intellectual Property" shall
mean all rights, privileges and priorities provided under U.S., state and
foreign law relating to intellectual property, including without limitation all
(w) (1) proprietary inventions, discoveries, processes, formulae, designs,
methods, techniques, procedures, concepts, developments, technology, new and
useful improvements thereof and proprietary know-how relating thereto, whether
or not patented or eligible for patent protection; (2) copyrights and
copyrightable works, including, but not limited to, computer applications,
programs, software, databases and related items; (3) trademarks, service marks,
trade names, and trade dress, the goodwill of any business symbolized thereby,
and all common-law rights relating thereto; (4) trade secrets and other
confidential information; (x) patents and invention
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disclosures; (y) all registrations, applications and recordings for any of the
foregoing and (z) licenses or other similar agreements granting to the Company
or any of the Non-Energy Subsidiaries the rights to use any of the foregoing.
(d) To the knowledge of the Company, the Company and the Non-
Energy Subsidiaries have not used and are not making use of any confidential or
proprietary information or trade secrets of any other person in breach of any
agreement to which the Company or any the Non-Energy Subsidiaries is subject or
in violation of any civil or criminal law.
(e) The Company and the Non-Energy Subsidiaries have taken
commercially reasonable security measures to protect the secrecy,
confidentiality and value of their trade secrets.
(f) To the knowledge of the Company, all employees of the Company
and the Non-Energy Subsidiaries have executed written agreements with the
Company or the Non-Energy Subsidiaries that assign to the Company or the Non-
Energy Subsidiaries all rights to inventions improvements, discoveries or
information relating to the business of the Company and the Non-Energy
Subsidiaries. To the Company's knowledge, no employee of the Company or any Non-
Energy Subsidiary has entered into any agreement that restricts or limits in any
way the scope or type of work in which the employee may be engaged or requires
the employee to transfer, assign or disclose any Intellectual Property or
information concerning the employee's work to anyone other than the Company or
the Non-Energy Subsidiaries.
Section 3.18 Opinions of Financial Advisors. The Company has received
------------------------------
the opinion of Morgan Stanley & Co. Incorporated ("Morgan Stanley"), dated as of
the date of this Agreement, to the effect that, as of the date of such opinion,
and based upon and subject to the matters stated therein, the aggregate merger
consideration (assuming consummation of the Distribution) is fair from a
financial point of view to the holders of Company Common Stock. The Company has
also received the opinion of Credit Suisse First Boston Corporation ("CSFB"),
dated as of the date of this Agreement, to the effect that, as of the date of
such opinion, and based upon and subject to the matters stated therein, the
aggregate merger consideration (assuming consummation of the Distribution) is
fair from a financial point of view to the holders of Company Common Stock,
other than Morgan Stanley Capital Partners III, Inc. and various other
investment funds affiliated therewith and their respective affiliates. True and
complete copies of such opinions will be delivered to Parent as soon as
practicable.
Section 3.19 Board Recommendation. The Board of Directors of the Company,
--------------------
at a meeting duly called and held, has approved the Distribution, this Agreement
and the Voting Agreement and (i) determined that this Agreement and the
transactions contemplated hereby, including the Merger and the Distribution,
taken together are advisable and in the best interests of the stockholders of
the Company; and (ii) resolved to recommend that the stockholders of the Company
adopt this Agreement.
Section 3.20 Finders' Fees. Except for Morgan Stanley and CSFB (true and
-------------
correct copies of whose engagement agreements have been provided to Parent),
whose fees will be paid by the Company, there is no investment banker, broker,
finder or other intermediary which has been retained by, or is authorized to act
on behalf of, the Company or any Non-Energy Subsidiary that
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would be entitled to any fee or commission from the Company, any Non-Energy
Subsidiary, Parent or any of Parent's affiliates upon consummation of the
Merger. Any fees to be paid with respect to the Distribution to investment
bankers, brokers, finders or other intermediaries shall be paid by Spinco.
Section 3.21 Section 203 of the Delaware General Corporation Law. The
---------------------------------------------------
Board of Directors of the Company has taken all actions so that (a) the
restrictions contained in Section 203 of the DGCL applicable to a "business
combination" (as defined in such Section 203) will not apply to the execution,
delivery or performance of this Agreement or the Voting Agreement or to the
consummation of the Merger or the other transactions contemplated by this
Agreement. No other "control share acquisition," "fair price" or other anti-
takeover laws or regulations enacted under state or federal laws in the United
States apply to this Agreement, the Voting Agreement or any of the transactions
contemplated hereby.
Section 3.22 Control of Pharma. The Company is the record and beneficial
-----------------
owner of shares of capital stock in Pharma sufficient to take the actions
necessary (i) to own all of the issued and outstanding capital stock of Pharma
at the Effective Time and (ii) to eliminate any outstanding options or warrants
to purchase shares of capital stock of Pharma at the Effective Time.
Section 3.23 Rights Plan. The Company has taken all action (including,
-----------
if required, redeeming all of the outstanding preferred share purchase rights
issued pursuant to the Rights Agreement) so that the entering into of this
Agreement, the Guarantee and the Voting Agreement and the consummation of the
transactions contemplated hereby and thereby do not and will not result in the
grant of any rights to any person under the Rights Agreement or enable the
rights to purchase the Company's Series A Participating Preferred Stock to be
exercised, or require that they be separated, distributed or triggered. The
Company has furnished Parent with true and correct copies of all such actions.
Section 3.24 Energy Contributions. Except as reflected in the
--------------------
financial statements attached as Schedule 3.7(b), since December 31, 1999,
neither the Company nor any Non-Energy Subsidiary has made any equity
contribution, or otherwise transferred any cash or property, to, or assumed any
liability on behalf of, the Energy Business.
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<PAGE>
Article IV
Representations and Warranties of Parent and Merger Sub
Parent and Merger Sub represent and warrant to the Company subject to such
exceptions as are disclosed in writing in the disclosure letter supplied by
Parent to the Company, which disclosure shall provide an exception to or
otherwise qualify the representations or warranties of Parent and Merger Sub
specifically referred to in such disclosure and such other representations and
warranties to the extent such disclosure shall reasonably appear to be
applicable to such other representations or warranties (the "Parent Disclosure
Schedule"), as follows:
Section 4.1 Corporate Existence and Power. Each of Parent and Merger Sub
-----------------------------
is a corporation duly incorporated (or other entity duly organized), validly
existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate or other power, as the case may be, and all
Licenses required to carry on its business as now conducted or presently
proposed to be conducted except for failures to have any such License which
would not, in the aggregate, have a Parent Material Adverse Effect (as defined
below). Each of Parent and Merger Sub is duly qualified to do business and is in
good standing in each jurisdiction where the character of the property owned,
leased or operated by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where failures to be so
qualified would not reasonably be expected to, in the aggregate, have a Parent
Material Adverse Effect. As used herein, the term "Parent Material Adverse
Effect" means a material adverse effect on the ability of Parent and Merger Sub
to consummate the transactions contemplated hereby.
Section 4.2 Authorization. Each of Parent and Merger Sub has the
-------------
requisite power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
and the performance by Parent and Merger Sub of their obligations hereunder have
been duly and validly authorized by the Board of Directors of Parent and Merger
Sub, and no other proceedings on the part of Parent (or its stockholders) or
Merger Sub are necessary to authorize the execution, delivery and performance of
this Agreement. This Agreement has been duly executed and delivered by Parent
and Merger Sub and constitutes, assuming due authorization, execution and
delivery of this Agreement by the Company, a valid and binding obligation of
Parent and Merger Sub, enforceable against them in accordance with its terms.
Section 4.3 Consents and Approvals; No Violations.
-------------------------------------
(a) Neither the execution and delivery of this Agreement nor the
performance by Parent or Merger Sub of their obligations hereunder will (i)
conflict with or result in any breach of any provision of the certificate of
incorporation or by-laws (or other governing or organizational documents) of
Parent or Merger Sub, or (ii) result in a violation or breach of, or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration or obligation to
repurchase, repay, redeem or acquire or any similar right or obligation) under
any of the terms, conditions or provisions of any note, mortgage, letter of
credit, other evidence of indebtedness, guarantee, license, lease or agreement
or similar instrument or obligation to which Parent or Merger Sub is a party or
by which any of them or any of the respective assets used or held for use by any
of them may be bound or (iii) assuming that the filings,
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registrations, notifications, authorizations, consents and approvals referred to
in subsection (b) below have been obtained or made, as the case may be, violate
any order, injunction, decree, statute, rule or regulation of any Governmental
Entity to which Parent or Merger Sub is subject, excluding from the foregoing
clauses (ii) and (iii) such requirements, defaults, breaches, rights or
violations that would not, in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect.
(b) No filing or registration with, notification to, or
authorization, consent or approval of, any Governmental Entity is required in
connection with the execution and delivery of this Agreement by Parent or Merger
Sub or the performance by them of their obligations hereunder, except (i) the
filing of the Certificate of Merger in accordance with the DGCL; (ii) compliance
with any applicable requirements of the HSR Act or any non-U.S. laws regulating
competition, antitrust, investment or exchange controls; (iii) compliance with
any applicable requirements of the Exchange Act; (iv) compliance with any
applicable requirements of state blue sky or takeover laws and (v) such other
consents, approvals, orders, authorizations, notifications, registrations,
declarations and filings the failure of which to be obtained or made would not
reasonably be expected to have a Parent Material Adverse Effect.
Section 4.4 Proxy Statement.
---------------
None of the information provided by Parent or Merger Sub to the Company in
writing for inclusion in the Proxy Statement will at the time of the mailing of
the Proxy Statement to the stockholders of the Company and at the time of the
Special Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 4.5 Litigation; Compliance With Laws.
--------------------------------
(a) There is no action, suit or proceeding pending against, or to
the knowledge of Parent threatened against, Parent or any Subsidiary of Parent
or any of their respective properties before any court or arbitrator or any
Governmental Entity which would reasonably be expected to have a Parent Material
Adverse Effect.
(b) Parent and its Subsidiaries are in compliance with all
applicable laws, ordinances, rules and regulations of any federal, state, local
or foreign governmental authority applicable to their respective businesses and
operations, except for such violations, if any, which, in the aggregate, would
not reasonably be expected to have a Parent Material Adverse Effect.
Section 4.6 Board Approval. The Board of Directors of Parent, at a
--------------
meeting duly called and held (or by written consent in accordance with the
DGCL), has approved this Agreement and determined that this Agreement and the
transactions contemplated hereby, including the Merger, taken together are fair
to and in the best interests of Parent and its shareholders.
Section 4.7 Absence of Material Adverse Change. Since June 30, 2000,
----------------------------------
there has not been a Parent Material Adverse Effect.
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<PAGE>
Section 4.8 Financing. The Parent has or will have sufficient funds
---------
available (through existing credit arrangements or otherwise) to pay the Merger
Consideration, to satisfy any obligation of Parent or Merger Sub in connection
with the transactions contemplated by this Agreement and to pay all fees and
expenses related to the transactions contemplated by this Agreement to be paid
by Parent or Merger Sub.
Section 4.9 Finders' Fees. Except for Chase Manhattan plc., whose fees
-------------
will be paid by Parent or one of its affiliates, there is no investment banker,
broker, finder or other intermediary that might be entitled to any fee or
commission in connection with or upon consummation of the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent.
Article V
Covenants of the Parties
Section 5.1 Conduct of the Business of the Company. From the date hereof
--------------------------------------
until the Effective Time, except as expressly contemplated or allowed by this
Agreement (including the Distribution), the Company and the Non-Energy
Subsidiaries shall conduct their businesses in the ordinary course consistent
with past practice and shall use commercially reasonable efforts to preserve
intact their business organizations and relationships with third parties and to
keep available the services of their present officers and employees. Without
limiting the generality of the foregoing, from the date hereof until the
Effective Time, except as expressly contemplated or allowed by this Agreement
(including the Distribution), the Company will not (and will not permit any of
its Non-Energy Subsidiaries to) take any action or knowingly omit to take any
action that would make any of its representations and warranties contained
herein false to an extent that would cause the condition set forth in Section
6.3(b) not to be satisfied.
In addition, except as expressly contemplated or allowed by the terms of
this Agreement, and except as expressly provided in Schedule 5.1 of the Company
Disclosure Letter, without the prior written consent of Parent, which, in the
case of clause (d), shall not be unreasonably withheld, during the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement pursuant to its terms or the Effective Time, the Company shall
not do any of the following and shall not permit its Non-Energy Subsidiaries to
do any of the following:
(a) Other than the Distribution or pursuant to the Pharma Merger
or the Share Exchange Agreements, declare, set aside or pay any dividends on or
make any other distributions (whether in cash, stock, equity securities of
property) in respect of any capital stock of the Company or any Company
Subsidiary or split, combine or reclassify any capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock of the Company or any Non-Energy Subsidiary;
(b) Other than (i) pursuant to the Pharma Merger or the Share
Exchange Agreements or (ii) in connection with the contribution of the
Capitalization Amount or the conversion of the intercompany accounts to equity
of CAT, purchase, redeem or otherwise acquire,
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<PAGE>
directly or indirectly, any shares of capital stock of the Company or its
Subsidiaries, or make any capital contribution to any Subsidiary of the Company,
except repurchases of unvested shares at cost in connection with the termination
of the employment relationship with any employee pursuant to stock option or
purchase agreements in effect on the date hereof;
(c) Issue, deliver, sell, authorize, pledge or otherwise encumber any
shares of capital stock or any securities convertible into shares of capital
stock, or subscriptions, rights, warrants or options to acquire any shares of
capital stock or any securities convertible into shares of capital stock, or
enter into other agreements or commitments of any character obligating it to
issue any such shares or convertible securities other than the issuance,
delivery and/or sale of (i) shares of Company Common Stock pursuant to the
exercise of Company Options outstanding on the date hereof, (ii) shares of
Company Common Stock issuable to participants in the Company ESPP, in the case
of (i) and (ii), consistent with the terms thereof, (iii) Company Options to
newly-hired non-executive employees in the ordinary course of business, (iv)
Company Options pursuant to periodic grants to non-executive employees in the
ordinary course of business, (v) Company Common Stock pursuant to the Pharma
Merger or (vi) Company Common Stock in fulfillment of obligations pursuant to
the Share Exchange Agreements;
(d) Incur any indebtedness for borrowed money, or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Company or
enter into any arrangement having the economic effect of any of the foregoing,
other than in the ordinary course of business consistent with past practice and
in an aggregate amount not in excess of $20,000,000;
(e) Make any capital expenditures or otherwise acquire (whether
pursuant to merger, stock or asset purchase or otherwise) in one transaction or
series of related transactions (i) any assets having a fair market value in
excess of $5,000,000 or (ii) all or substantially all of the equity interests of
any person or any business or division of any person, except, in the case of
capital expenditures, in accordance with the current Company annual budget and
plan (as of July 31, 2000) as previously disclosed to Parent;
(f) Amend the Company's or any Non-Energy Subsidiary's Certificate of
Incorporation or by-laws or equivalent documents;
(g) Sell, lease, encumber or otherwise dispose of any assets of the
Company or any Non-Energy Subsidiary, other than (i) sales in the ordinary
course of business consistent with past practice, (ii) equipment and property no
longer used in the operation of the Company's business and (iii) assets related
to discontinued operations;
(h) Except in the ordinary course of business, amend, modify or
terminate any material contract, agreement or arrangement of the Company or its
Subsidiaries (assuming the consummation of the Distribution) or otherwise waive,
release or assign any material rights, claims or benefits thereunder;
(i) Except as required by law or the current terms of an existing
agreement or other authorization disclosed in Schedule 5.1 of the Company
Disclosure Letter, (v) increase the
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<PAGE>
amount of compensation of any current or former director, officer or employee
(other than in the case of non-executive employees, ordinary periodic increases
consistent with past practices) or make any increase in or commitment to
increase any employee benefits or vest, fund or pay any pension or retirement
allowance other than as required by the current terms of any Plan, (w) grant any
severance or termination pay to any director, officer or employee of the Company
or any Non-Energy Subsidiary, (x) adopt, amend, modify (except as may be
required by law), enter into or commit to any additional employee benefit plan
or, except in the ordinary course of business, make any contribution to any
existing Plan, (y) increase the benefits payable under any existing severance or
termination pay policies or employment agreements or (z) take any affirmative
action to accelerate the vesting of any stock-based compensation;
(j) Change the Company's methods of accounting in effect at December
31, 1999, except as required by changes in GAAP or by Regulation S-X of the
Exchange Act, as concurred in by its independent public accountants;
(k) Enter into any agreement or arrangement that limits or otherwise
restricts the Company, any Non-Energy Subsidiary or any of their respective
affiliates or any successor thereto from engaging or competing in any line of
business or in any location, which agreement or arrangement would be material to
the business of the Company and its Subsidiaries taken as a whole (assuming
consummation of the Distribution);
(l) Settle, or propose to settle, any litigation, investigation,
arbitration, proceeding or other claim that is material to the business of the
Company and its Subsidiaries, taken as a whole (assuming consummation of the
Distribution), other than the payment, discharge or satisfaction of liabilities,
in the ordinary course of business consistent with past practice;
(m) Create or incur any material Lien on any material asset of the
Company and its Subsidiaries (assuming consummation of the Distribution), other
than in the ordinary course of business consistent with past practice or other
than in connection with the purchase of such asset;
(n) Other than the contribution of the Capitalization Amount, make
any material loan, advance or capital contribution to or investment in any
Person, other than loans, advances or capital contributions to, or investments
in, wholly owned Non-Energy Subsidiaries (or pursuant to the ordinary cash
management practices of the Company) made in the ordinary course of business
consistent with past practice;
(o) Other than in the ordinary course of business consistent with
past practice, (i) make any tax election with respect to Taxes or take any
position on any tax return filed on or after the date of this Agreement or adopt
any method thereof that is inconsistent with elections made, positions taken or
methods used in preparing or filing similar returns in prior periods or (ii)
enter into any settlement or compromise of any tax liability that in either case
is material to the business of the Company and its Subsidiaries, taken as a
whole (assuming consummation of the Distribution); or
(p) Agree in writing or otherwise to take any of the actions
described in Section 5.1(a) through (o) above.
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<PAGE>
Section 5.2 Conduct of the Business of Parent. From the date hereof until
---------------------------------
the Closing Date, except as expressly contemplated or allowed by this Agreement,
Parent will not (and will not permit any of its Subsidiaries to) take any action
or knowingly omit to take any action that would make any of its representations
and warranties contained herein false to an extent that would cause the
condition set forth in Section 6.2(b) not to be satisfied.
Section 5.3 Stockholders' Meeting; Proxy Material.
-------------------------------------
(a) Subject to the last sentence of this Section 5.3(a), the
Company shall, in accordance with applicable law and the Certificate of
Incorporation and the by-laws of the Company duly call, give notice of, convene
and hold a special meeting of its stockholders (the "Special Meeting") as
promptly as practicable after the date hereof for the purpose of considering and
taking action upon the adoption of this Agreement and, to the extent required by
applicable law, the Distribution (the "Company Approval Matters"). The Board of
Directors of the Company shall recommend approval and adoption of the Company
Approval Matters by the Company's stockholders; provided that the Board of
--------
Directors of the Company may withdraw, modify or change such recommendation if
(i) it believes in good faith that a Superior Proposal (as defined in Section
5.5) has been made and (ii) it has determined in good faith, after consultation
with the Company's outside counsel, that the withdrawal, modification or change
of such recommendation is necessary to comply with the fiduciary duties of the
Board of Directors of the Company under applicable law.
(b) Promptly following the date of this Agreement, the Company
shall prepare and file with the SEC a proxy statement relating to the Company
Approval Matters (together with any amendments thereof and any supplements
thereto, the "Proxy Statement"). Promptly following the date of this Agreement,
the Company shall also prepare and file with the SEC the Distribution Statement.
Parent and the Company shall cooperate with each other in connection with the
preparation of the foregoing documents. The Company will use commercially
reasonable efforts to cause the Proxy Statement and the Distribution Statement
to be mailed to the Company's stockholders as promptly as practicable after the
Distribution Statement is declared effective by the SEC.
(c) The Company shall as promptly as practicable notify (and
provide copies to) Parent of the receipt of any comments from the SEC relating
to the Proxy Statement and the Distribution Statement. All filings by the
Company with the SEC in connection with the transactions contemplated hereby,
including the Proxy Statement and any amendment or supplement thereto, shall be
subject to the prior review of Parent, and all mailings to the Company's
stockholders in connection with the transactions contemplated by this Agreement
shall be subject to the prior review of Parent.
Section 5.4 Access to Information; Confidentiality Agreement. Upon
------------------------------------------------
reasonable advance notice, between the date hereof and the Closing Date, the
Company shall (i) give Parent, its counsel, financial advisors, auditors and
other's authorized representatives (collectively, "Representatives") reasonable
access during normal business hours to the offices, properties, books and
records of the Company and the Non-Energy Subsidiaries (including to conduct
environmental testing, if desired), (ii) furnish to Parent's Representatives
such financial and operating data and other information relating to such party,
its Subsidiaries and their respective operations as such persons may reasona-
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<PAGE>
bly request and (iii) instruct the Company's and its Non-Energy Subsidiaries'
employees, counsel and financial advisors to cooperate with Parent in its
investigation of the business of the Company and its Subsidiaries; provided that
any information and documents received by Parent or its Representatives (whether
furnished before or after the date of this Agreement) shall be held in
accordance with the Confidentiality Agreement dated April 27, 2000 between Dutch
Parent and the Company (the "Confidentiality Agreement"), which shall remain in
full force and effect pursuant to the terms thereof, notwithstanding the
execution and delivery of this Agreement or the termination hereof until the
Effective Time.
Section 5.5 No Solicitation. From the date hereof until the Effective
---------------
Time or, if earlier, the termination of this Agreement, the Company and its
Subsidiaries shall not (whether directly or indirectly through advisors, agents
or other intermediaries), and the Company shall cause its and its Subsidiaries'
respective officers, directors, advisors, representatives or other agents not
to, directly or indirectly, (a) solicit, initiate or encourage any Acquisition
Proposal (as defined hereafter), (b) engage in negotiations with, or disclose
any non-public information relating to the Company or its Subsidiaries or afford
access to the properties, books or records of the Company or its Subsidiaries
to, any person or group (other than Parent or any designees of Parent)
concerning any Acquisition Proposal or (c) enter into any agreement with respect
to any Acquisition Proposal, other than in the manner contemplated by Section
7.1(f) provided, however, that if the Board of Directors of the Company
determines in good faith, based on such matters as it deems relevant, acting
only after consultation with the Company's outside counsel that it is necessary
to comply with its fiduciary duties to the Company's stockholders under the
DGCL, the Company may, in response to a bona fide Acquisition Proposal that was
not solicited or encouraged in breach of this Section 5.5 and that the Board of
Directors of the Company determines in good faith, after consultation with the
Company's financial advisor, constitutes a Superior Proposal, (i) furnish
information to the person or group who made such Acquisition Proposal, but only
pursuant to a confidentiality agreement substantially in the same form as was
executed by Parent prior to the execution of this Agreement and only if copies
of such information (to the extent not previously supplied) are concurrently
provided to Parent, and (ii) participate in discussions and negotiations
regarding such proposal or offer. The Company shall promptly (and in any event
within one business day after any of the Company's officers and directors
becoming aware thereof) (i) notify Parent in the event the Company or any of its
Subsidiaries or other affiliates or any of their respective officers, directors,
employees and agents receives any Acquisition Proposal, including the material
terms and conditions thereof and the identity of the party submitting such
proposal, and any request for non-public information in connection with an
Acquisition Proposal, (ii) provide a copy of any written agreements, proposals
or other materials that the Company receives from any such person or group, and
(iii) notify Parent of any material changes or developments with respect to any
of the matters described in clauses (i) and (ii). The Company shall immediately
cease and cause to be terminated any activities, discussions or negotiations
commenced or conducted prior to the date of this Agreement with any party other
than Parent or its affiliates with respect to any Acquisition Proposal. For
purposes of this Agreement, "Acquisition Proposal" means any offer or proposal
for a merger, consolidation, recapitalization, liquidation or other business
combination involving the Company or the acquisition or purchase of over 50% or
more of any class of equity securities of the Company, or any tender offer
(including self-tenders) or exchange offer that if consummated would result in
any person beneficially owning 50% or more of any class of equity securities of
the Company, or a substantial portion of the assets of, the Company and its
Subsidiaries taken as a whole, other than the
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transactions contemplated by this Agreement (including the Distribution). As
used herein, a "Superior Proposal" shall mean a bona fide Acquisition Proposal
which in the good faith judgment of the Company's Board of Directors, based on
such matters as it deems relevant, after consultation with the Company's
financial advisor, (i) provides greater benefits to the Company's stockholders
than those provided pursuant to this Agreement and (ii) provides that any
financing required to consummate the transaction contemplated by the offer is
committed and in the good faith determination of the Board of Directors of the
Company, after consultation with the Company's financial advisor, is likely to
be obtained by such person on a timely basis. Nothing contained in this Section
5.5 shall prohibit the Company or the Company's Board of Directors from taking
and disclosing to the Company's stockholders a position with respect to a tender
or exchange offer by a third party pursuant to Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act or from making any disclosure required by
applicable law.
Section 5.6 Director and Officer Liability.
------------------------------
(a) Parent shall cause all rights to indemnification and all
limitations on liability existing in favor of any individuals who on or prior to
the Effective Time were officers, directors, employees or agents of the Company
and any of its Non-Energy Subsidiaries (the "Indemnitees") as provided in the
Certificate of Incorporation or by-laws of the Company or an agreement between
an Indemnitee and the Company or a Subsidiary of the Company as in effect as of
the date hereof to continue in full force and effect in accordance with its
terms and to be satisfied by the Surviving Corporation or Parent.
(b) Subject to the terms and conditions set forth on Schedule
1.5(a), for six years after the Effective Time, Parent shall cause the Surviving
Corporation to provide officers' and directors' liability insurance in respect
of acts or omissions occurring prior to the Effective Time covering each such
person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date hereof; provided, however, that
-------- -------
in no event shall the Surviving Corporation be required to expend more than an
amount per year equal to 150% of current annual premiums paid by the Company for
such insurance (the "Maximum Amount") to maintain or procure insurance coverage
pursuant hereto; provided, further, that if the amount of the annual premiums
-------- -------
necessary to maintain or procure such insurance coverage exceeds the Maximum
Amount, the Surviving Corporation shall maintain or procure, for such six-year
period, the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Amount. The Company
represents that the current annual premium for such insurance equals
approximately $165,000.
(c) The obligations of Parent and the Surviving Corporation under
this Section 5.6 shall not be terminated or modified in such a manner as to
adversely affect any Indemnitee to whom this Section 5.6 applies without the
consent of such affected Indemnitee (it being expressly agreed that the
Indemnitees to whom this Section 5.6 applies shall be third party beneficiaries
of this Section 5.6).
Section 5.7 Commercially Reasonable Efforts. Upon the terms and subject
-------------------------------
to the conditions of this Agreement and those set forth on Schedule 1.6, each
party hereto shall use
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commercially reasonable efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement.
Section 5.8 Certain Filings.
---------------
(a) The Company and Parent shall cooperate with one another (i) in
connection with the preparation of the Proxy Statement, (ii) in determining
whether any action by or in respect of, or filing with, any Governmental Entity
is required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (iii) in
seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Proxy Statement or Distribution Statement and seeking timely to obtain any such
actions, consents, approvals or waivers. Without limiting the provisions of this
Section 5.8, each party hereto shall file with the Department of Justice and the
Federal Trade Commission a Pre-Merger Notification and Report Form pursuant to
the HSR Act in respect of the transactions contemplated hereby as soon as
reasonably practicable, and each party will use commercially reasonable efforts
to take or cause to be taken all actions necessary, including to promptly and
fully comply with any requests for information from regulatory Governmental
Entities, to obtain any clearance, waiver, approval or authorization relating to
the HSR Act that is necessary to enable the parties to consummate the
transactions contemplated by this Agreement. Without limiting the provisions of
this Section 5.8, each party hereto shall use commercially reasonable efforts to
promptly make the filings required to be made by it with all foreign
Governmental Entities in any jurisdiction in which the parties believe it is
necessary or advisable.
(b) The Company and Parent shall each use commercially reasonable
efforts to resolve such objections, if any, as may be asserted with respect to
the Merger or any other transaction contemplated by this Agreement under any
Antitrust Law (as defined below). If any administrative, judicial or legislative
action or proceeding is instituted (or threatened to be instituted) challenging
the Merger or any other transaction contemplated by this Agreement as violative
of any Antitrust Law, the Company and Parent shall each cooperate to contest and
resist any such action or proceeding, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that restricts, prevents or
prohibits consummation of the Merger or any other transaction contemplated by
this Agreement, including, without limitation, by pursuing all reasonable
avenues of administrative and judicial appeal. Notwithstanding anything to the
contrary in this Agreement, none of Parent, any of its Subsidiaries or the
Surviving Corporation, shall be required (and the Company shall not, without the
prior written consent of Parent, agree, but shall, if so directed by Parent,
agree) to hold separate or divest any of their respective assets or operations
or enter into any consent decree or licensing or other arrangement with respect
to any of their assets or operations.
(c) Each of the Company and Parent shall promptly inform the other
party of any material communication received by such party from the Federal
Trade Commission, the Antitrust Division of the Department of Justice or any
other governmental or regulatory authority regarding any of the transactions
contemplated hereby.
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<PAGE>
(d) "Antitrust Law" means the Sherman Act, as amended, the
Clayton Act, as amended, and all other federal, state and foreign statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines, and
other laws that are designed or intended to prohibit, restrict or regulate
competition or actions having the purpose or effect of monopolization or
restraint of trade.
Section 5.9 Public Announcements. The parties shall issue press releases
--------------------
in agreed upon form announcing the execution of this Agreement as soon as
practicable on or after the date hereof. Neither the Company, Parent nor any of
their respective affiliates shall issue or cause the publication of any press
release or other public announcement with respect to the Merger, this Agreement
or the other transactions contemplated hereby without the prior written consent
of the other party, except as may be required by law or by any listing agreement
with, or the policies of, a national securities exchange in which circumstance
reasonable efforts to consult will still be required to the extent practicable.
Section 5.10 Further Assurances. At and after the Effective Time, the
------------------
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions to vest, perfect
or confirm of record or otherwise in the Surviving Corporation any and all
right, title and interest in, to and under any of the rights, properties or
assets of the Company acquired or to be acquired by the Surviving Corporation,
as a result of, or in connection with, the Merger.
Section 5.11 Employee Matters.
----------------
(a) Following the Effective Time and for a period of one (1) full
year thereafter, the Parent, in its sole discretion, shall either: (i) continue
(or cause the Company to continue) to maintain the Plans on substantially
similar terms in the aggregate as in effect immediately prior to the Effective
Time, or (ii) arrange for each participant in the Plans employed at the Company
or a Non-Energy Subsidiary ("Company Participants") to participate in any
similar plans of the Parent ("Parent Plans") on terms in the aggregate no less
favorable than those offered to similarly situated employees of Parent, or (iii)
a combination of clauses (i) and (ii). Each Company Participant who continues to
be employed by the Company or any of its subsidiaries immediately following the
Effective Time shall, to the extent permitted by law and applicable tax
qualification requirements, and subject to any generally applicable break in
service or similar rule, receive credit for purposes of eligibility to
participate and vesting under the Parent Plans for years of service with the
Company or its subsidiaries prior to the Effective Time. Parent shall cause any
and all pre-existing condition limitations, eligibility waiting periods and
evidence of insurability requirements under any group health plans to be waived
with respect to such Company Participants and their eligible dependents and
shall provide them with credit for any co-payments and deductibles prior to the
Effective Time for purposes of satisfying any applicable deductible, out-of-
pocket, or similar requirements under any Parent Plans in which they are
eligible to participate immediately after the Effective Time. The provisions of
this Section 5.11 shall not create in any employee or former employee of the
Company or any Subsidiary of the Company any rights to employment or continued
employment with Parent, the Surviving Corporation or any Subsidiary or affiliate
thereof or infringe upon the right of any such entity to terminate the
employment of any such employee for any reason or no reason.
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(b) Prior to the Closing Date, the Company may adopt additional
retention and severance programs for specified non-executive employees of the
Company or a Non-Energy Subsidiary previously identified to Parent; provided
that such programs shall create aggregate obligations for the Company of no
greater than $1,150,000, excluding any ordinary course payments provided to
other employees under the Company's general severance plans.
Section 5.12 Disposition of Energy Business. The Company will use its
------------------------------
commercially reasonable efforts to consummate the Distribution in accordance
with Schedule 1.6 and will inform Parent promptly, and in no event later than
three business days after, material developments relating thereto. Parent will
cooperate with the Company in its efforts to consummate the Distribution
including by (i) providing assistance with respect to any proxy or information
statement required in connection with the Distribution and (ii) cooperating in
the filing of any tax election or Tax Returns required or deemed advisable by
the Company and after consummation of the Distribution, Spinco in connection
with the Distribution.
Section 5.13 Capitalization of Pharma. The Company shall take any
------------------------
necessary actions (i) to own all of the issued and outstanding capital stock of
Pharma at the Effective Time and (ii) to eliminate any outstanding Pharma Rights
at the Effective Time.
Section 5.14 State Takeover Laws. If any "fair price," "business
-------------------
combination" or "control share acquisition" statute or other similar statute or
regulation is or may become applicable to the Merger, the Company shall take
such actions as are necessary so that the transactions contemplated by this
Agreement may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise to eliminate or minimize the effects of any
such statute or regulation on the Merger.
Section 5.15 Certain Notifications. Between the date hereof and the
---------------------
Effective Time, each party shall promptly notify the other in writing after
becoming aware of the occurrence of any event which will, or is reasonably
likely to, result in the failure of any of the conditions to the Merger
specified in Article VI to be satisfied.
Section 5.16 Minority Interest of CCSI. The Company shall take all steps
-------------------------
necessary to cause the rights of Enron to exchange shares of stock of CCSI for,
or otherwise to acquire, shares of Company Common Stock under the Stockholders'
Agreement, dated January 14, 1998, among the Company, CCSI and Enron to be (A)
exercised and satisfied in full (including, if applicable, the resolution of any
disagreement as to the number of shares of Company Common Stock to which Enron
is entitled in respect of such exchange and delivery of such number) or (B)
waived and terminated, in each case on or prior to the Closing Date. The Company
shall deliver to Parent at or prior to the Closing evidence reasonably
satisfactory to Parent of the satisfaction in full or waiver and termination of
all such rights. Notwithstanding any other provision of this Agreement, this
covenant must be performed in all respects prior to the Closing Date.
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Article VI
Conditions to the Merger
Section 6.1 Conditions to Each Party's Obligations. The respective
--------------------------------------
obligations of the Parent, Merger Sub and the Company to consummate the Merger
are subject to the satisfaction or, to the extent permitted by applicable law,
the waiver on or prior to the Closing Date of each of the following conditions:
(a) The Company Approval Matters shall have been approved and
adopted by the stockholders of the Company in accordance with applicable law;
(b) Any applicable waiting periods or consents under the HSR Act
or any other applicable Antitrust Law relating to the Merger shall have expired,
been terminated or been granted, as applicable;
(c) No provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation of the
Merger or the other transactions contemplated by this Agreement; and
(d) The Distribution shall have been consummated.
Section 6.2 Conditions to the Company's Obligation to Consummate the
--------------------------------------------------------
Merger. The obligation of the Company to consummate the Merger shall be further
------
subject to the satisfaction or, to the extent permitted by applicable law, the
waiver on or prior to the Closing Date of each of the following conditions:
(a) Parent shall have performed in all material respects its
agreements and covenants contained in or contemplated by this Agreement that are
required to be performed by it at or prior to the Closing Date pursuant to the
terms hereof;
(b) The representations and warranties of Parent contained in
Article IV hereof shall be true and correct in all respects on the date hereof
and as of the Closing Date (or, to the extent such representations and
warranties speak as of an earlier date, they shall be true in all respects as of
such earlier date), disregarding, for these purposes, the phrases "material,"
"materially," "in all material respects," "Parent Material Adverse Effect" and
any similar phrase, except (i) as otherwise expressly contemplated by this
Agreement and (ii) for such failures to be true and correct which in the
aggregate do not constitute a Parent Material Adverse Effect; and
(c) The Company shall have received certificates signed by the
Chief Executive Officer of Parent, dated the Closing Date, to the effect that,
to such officer's knowledge, the conditions set forth in Sections 6.2(a) and
6.2(b) hereof have been satisfied or waived.
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Section 6.3 Conditions to Parent's Obligations to Consummate the Merger.
-----------------------------------------------------------
The obligations of Parent to effect the Merger shall be further subject to the
satisfaction, or to the extent permitted by applicable law, the waiver on or
prior to the Closing Date of each of the following conditions:
(a) The Company shall have performed in all material respects each
of its agreements and covenants contained in or contemplated by this Agreement
that are required to be performed by it at or prior to the Closing Date pursuant
to the terms hereof;
(b) The representations and warranties of the Company contained in
Article III hereof shall be true and correct in all respects on the date hereof
and as of the Closing Date (or, to the extent such representations and
warranties speak as of an earlier date, they shall be true in all respects as of
such earlier date), disregarding, for these purposes, the phrases "material,"
"materially," "in all material respects," "Company Material Adverse Effect" and
any similar phrase, except (i) as otherwise contemplated by this Agreement and
(ii) for such failures to be true and correct which in the aggregate do not
constitute a Company Material Adverse Effect.
(c) Parent shall have received a certificate signed by the chief
executive officer of the Company, dated the Closing Date, to the effect that, to
such officer's knowledge, the conditions set forth in Sections 6.3(a) and 6.3(b)
hereof have been satisfied or waived;
(d) The Company shall own all of the issued and outstanding
capital stock of Pharma and no Pharma Rights remain outstanding and the Company
shall have delivered evidence reasonably satisfactory to Parent demonstrating
that this condition has been satisfied.
(e) The aggregate number of Dissenting Shares of Company Common
Stock as of the Effective Time shall be less than 10% of the number of shares of
Company Common Stock outstanding as of the Effective Time.
SECTION 6.4 Conditions to Company's Obligation to Consummate the
----------------------------------------------------
Distribution. The Company's obligation to consummate the Distribution shall be
------------
subject to the condition that the conditions of Sections 6.1(a)-(c), 6.2 and 6.3
shall have been satisfied or waived.
Article VII
Termination
Section 7.1 Termination. Notwithstanding anything herein to the contrary,
-----------
this Agreement may be terminated and the transactions contemplated by this
Agreement may be abandoned at any time prior to the Closing Date, whether before
or after the Company has obtained stockholder approval:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Merger has not been
consummated by February 28, 2001, or such other date, if any, as the Company and
Parent shall agree upon (the
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"Outside Date"); provided, that the party seeking to terminate this Agreement
-------- ----
pursuant to this Section 7.1(b) shall not have breached in any material respect
its obligations under this Agreement;
(c) by either the Company or Parent, if there shall be any law or
regulation that makes consummation of the transactions contemplated by this
Agreement illegal or if any judgment, injunction, order or decree enjoining
Parent or the Company from consummating the transactions contemplated by this
Agreement is entered and such judgment, injunction, order or decree shall have
become final and nonappealable;
(d) by Parent, if (i) the Board of Directors of the Company shall
have withdrawn or modified or amended in any respect adverse to Parent its
approval or recommendation of the Company Approval Matters, (ii) the Board of
Directors of the Company shall have recommended to the stockholders of the
Company any Acquisition Proposal or shall have resolved or announced an
intention to do so, or (iii) a tender offer or exchange offer for 50% or more of
the outstanding shares of the Company Common Stock is announced or commenced
and, either (A) the Board of Directors of the Company recommends acceptance of
such tender offer or exchange offer by its stockholders or (B) within ten
business days of such commencement, the Board of Directors of the Company shall
have failed to recommend against acceptance of such tender offer or exchange
offer by its stockholders;
(e) by either the Company or Parent, if the approval of the
stockholders of the Company of the Company Approval Matters shall not have been
obtained at a duly held meeting of stockholders of the Company or any
adjournment thereof;
(f) by the Company, if the Board of Directors of the Company, prior
to the Special Meeting, shall elect to terminate this Agreement in order to
recommend or approve a Superior Proposal or to enter into an agreement for a
transaction that constitutes a Superior Proposal; provided that (x) the Company
--------
has notified Parent in writing that it intends to recommend or approve a
Superior Proposal or to enter into such an agreement, attaching the most current
version of such proposal or agreement to such notice at least 48 hours prior to
such termination, and (y) at any time at least 48 hours following written
notification by the Company to Parent, after taking into account any
modifications to the transactions contemplated by this Agreement that Parent has
then proposed in writing and not withdrawn, the Board of Directors of the
Company has determined that such proposal is and continues to be a Superior
Proposal, and (z) concurrently with the giving of notice of such termination,
pays to Parent the Termination Fee due under Section 7.3(a);
(g) by the Company if (i) there shall have been a breach of any
representations or warranties on the part of Parent set forth in this Agreement
or if any representations or warranties of Parent shall have become untrue, such
that the conditions set forth in Section 6.2(b) would be incapable of being
satisfied by the Outside Date, provided that the Company has not breached any of
--------
its obligations hereunder in any material respect; or (ii) there shall have been
a breach by Parent of any of its covenants or agreements hereunder having, in
the aggregate, a Parent Material Adverse Effect or materially adversely
affecting (or materially delaying) the ability of Parent or the Company to
consummate the Merger, and Parent has not cured such breach within thirty (30)
business days after notice by the Company thereof, provided that the Company has
--------
not breached any of its obligations hereunder in any material respect; or
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(h) by Parent if (i) there shall have been a breach of any
representations or warranties on the part of the Company or any of its
Subsidiaries set forth in this Agreement or if any representations or warranties
of the Company or any of its Subsidiaries shall have become untrue, such that
the conditions set forth in Section 6.3(b) would be incapable of being satisfied
by the Outside Date, provided that Parent has not breached any of its
--------
obligations hereunder in any material respect; or (ii) there shall have been a
breach by the Company or any of its Subsidiaries of one or more of its
respective covenants or agreements hereunder having, in the aggregate, a Company
Material Adverse Effect or materially adversely affecting (or materially
delaying) the ability of Parent or the Company to consummate the Merger, and the
Company has not cured such breach within thirty (30) business days after notice
by Parent thereof, provided that Parent has not breached any of its obligations
--------
hereunder in any material respect.
The party desiring to terminate this Agreement shall give written notice of
such termination to the other party.
Section 7.2 Effect of Termination. Except for any willful breach of this
---------------------
Agreement by any party hereto (which willful breach and liability therefor shall
not be affected by the termination of this Agreement or the payment of any fee
pursuant to Section 7.3 hereof), if this Agreement is terminated pursuant to
Section 7.1 hereof, then this Agreement shall become void and of no effect with
no liability on the part of any party hereto; provided, however, that
-------- -------
notwithstanding such termination the agreements contained in Sections 7.2, 7.3
and 8.7 hereof and the provision to Section 5.4 hereof shall survive the
termination hereof.
Section 7.3 Fees.
----
(a) The Company agrees to pay Parent in immediately available
funds by wire transfer an amount equal to $20 million (the "Termination Fee")
plus up to $5 million in expenses, if:
(i) this Agreement is terminated by Parent pursuant to
Section 7.1(d) hereof;
(ii) (A) this Agreement is terminated by Parent or the
Company pursuant to Section 7.1(b) or 7.1(e) hereof, (B) at or prior to the time
of such termination, an Acquisition Proposal with respect to the Company shall
have been made public, and (C) within twelve months after such termination, the
Company shall enter into a definitive agreement with respect to any Acquisition
Proposal or the transaction contemplated by any Acquisition Proposal (an
"Acquisition Transaction") relating to the Company shall be consummated; or
(iii) this Agreement is terminated by the Company pursuant to
Section 7.1(f) hereof.
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(b) If the Company is required to pay the Termination Fee plus
expenses pursuant to this Section 7.3, then the Company shall pay the
Termination Fee plus expenses, as applicable, (i) at or prior to the termination
of this Agreement by the Company, (ii) not later than one business day after the
termination of this Agreement by Parent or (iii) in the case of a fee payable
pursuant to Section 7.3(a)(ii), at or prior to the earlier of the execution of
the definitive agreement with respect to, and the consummation of, the
applicable Acquisition Transaction.
(c) Parent's right to receive such fee and expenses, and ability
to enforce the provisions of this Section 7.3, shall not be subject to approval
by the stockholders of the Company.
Article VIII
Miscellaneous
Section 8.1 Notices. All notices, requests, demands, waivers and other
-------
communications required or permitted to be given under this Agreement to any
party hereunder shall be in writing and deemed given upon (a) personal delivery,
(b) transmitter's confirmation of a receipt of a facsimile transmission, (c)
confirmed delivery by a standard overnight carrier or when delivered by hand or
(d) when mailed in the United States by certified or registered mail, postage
prepaid, addressed at the following addresses (or at such other address for a
party as shall be specified by notice given hereunder):
If to the Company, to:
Catalytica, Inc.
430 Ferguson Drive
Mountain View, California 94043
Fax: (650) 960-8754
Attention: Chief Financial Officer
with copies to:
Wilson Sonsini Goodrich & Rosati,
Professional Corporation
One Market, Spear Tower
San Francisco, California 94105
Fax: (415) 947-2099
Attention: Michael J. Kennedy, Esq.
and
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<PAGE>
Wilson Sonsini Goodrich & Rosati,
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304
Fax: (650) 493-6811
Attention: Barry E. Taylor, Esq.
If to Parent or Merger Sub, to:
Synotex Company, Inc.
One Columbia Nitrogen Road
Augusta, GA 30903
Fax: (706) 849-6999
Attention: William P. Bivins, Jr., Esq.
with copies to:
DSM, N.V.
Legal Department
Het Overloon 1, Heerlen
P.O. Box 6500, 6401 JH Heerlen
The Netherlands
Fax: 011-31-45-5787087
Attention: Ton C.M. van der Put, Esq.
and to
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Fax: (212) 225-3999
Attention: William A. Groll, Esq.
Section 8.2 Survival of Representations and Warranties. Except as
------------------------------------------
otherwise provided herein or in any document contemplated hereby, the
representations and warranties contained herein and in any certificate or other
writing delivered pursuant hereto shall not survive the Effective Time. All
other covenants and agreements contained herein which by their terms are to be
performed in whole or in part, or which prohibit actions, subsequent to the
Effective Time, shall survive the Merger in accordance with their terms.
Section 8.3 Interpretation. References herein to the "knowledge" (and all
--------------
variants and derivatives thereof) of a party shall mean the actual knowledge,
after reasonable inquiry, of the executive officers of such party. Whenever the
words "include," "includes" or "including" are used in this Agreement they shall
be deemed to be followed by the words "without limitation." As used
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in this Agreement, the term "affiliate" shall have the meaning set forth in Rule
12b-2 promulgated under the Exchange Act.
The article and section headings contained in this Agreement are solely for
the purpose of reference, are not part of the agreement of the parties hereto
and shall not in any way affect the meaning or interpretation of this Agreement.
Any matter disclosed pursuant to any Schedule of the Company Disclosure Schedule
or the Parent Disclosure Schedule shall not be deemed to be an admission or
representation as to the materiality of the item so disclosed.
Section 8.4 Amendments, Modification and Waiver. (a) Except as may
-----------------------------------
otherwise be provided herein, any provision of this Agreement may be amended,
modified or waived by the parties hereto, by action taken by or authorized by
their respective Board of Directors, prior to the Closing Date if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company and Parent or, in the case of a waiver, by the party against whom
the waiver is to be effective; provided that after the adoption of this
Agreement by the stockholders of the Company, no such amendment shall be made
except as allowed under applicable law.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
Section 8.5 Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that neither the Company nor Parent
may assign, delegate or otherwise transfer any of its rights or obligations
under this Agreement without the consent of the other party hereto.
Section 8.6 Expenses. Except as provided in Sections 1.2(b) and 7.3,
--------
whether or not the Merger shall be consummated, each party shall pay its own
expenses incident to preparing for, entering into and carrying out this
Agreement and the consummation of the transactions contemplated hereby.
Section 8.7 Specific Performance. The parties acknowledge and agree that
--------------------
any breach of the terms of this Agreement would give rise to irreparable harm
for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
Section 8.8 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware (regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof) as to all matters, including, but not limited to, matters of
validity, construction, effect, performance and remedies.
Section 8.9 Forum Selection; Consent to Jurisdiction. All disputes
----------------------------------------
arising out of or in connection with this Agreement shall be solely and
exclusively resolved by a court of competent
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<PAGE>
jurisdiction in the State of Delaware. The parties hereby consent to the
jurisdiction of the courts of the State of Delaware and the United States
District Court of the District of Delaware and waive any objections or rights as
to forum nonconveniens, lack of personal jurisdiction or similar grounds with
respect to any dispute relating to this Agreement
Section 8.10 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated herein are not affected in any manner
materially adverse to any party hereto. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner.
Section 8.11 Third Party Beneficiaries. This Agreement is solely for the
-------------------------
benefit of the Company and its successors and permitted assigns, with respect to
the obligations of Parent under this Agreement, and for the benefit of Parent
and its successors and permitted assigns, with respect to the obligations of the
Company under this Agreement, and this Agreement shall not, except to the extent
necessary to enforce the provisions of Article I and Section 5.6 hereof be
deemed to confer upon or give to any other third party any remedy, claim,
liability, reimbursement, cause of action or other right.
Section 8.12 Entire Agreement. This Agreement, including any exhibits or
----------------
schedules hereto and the Confidentiality Agreement constitute the entire
agreement among the parties hereto with respect to the subject matter hereof and
supersedes all other prior agreements or understandings, both written and oral,
between the parties or any of them with respect to the subject matter hereof.
Section 8.13 Counterparts; Effectiveness. This Agreement may be signed in
---------------------------
any number of counterparts and by facsimile, each of which shall be deemed an
original, with the same effect as if the signatures thereto and hereto were upon
the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by all of the other
parties hereto.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
SYNOTEX COMPANY, INC.
By: /s/ Arnold Gratama van Andel
------------------------------------
Arnold Gratama van Andel
Chairman and President
SYNOTEX ACQUISITION CORPORATION
By: /s/ Arnold Gratama van Andel
------------------------------------
Arnold Gratama van Andel
President
CATALYTICA, INC.
By: /s/ Ricardo B. Levy
------------------------------------
Ricardo B. Levy
President & Chief Executive Officer
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
