1
Exhibit 2(a)
Execution Copy
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AGREEMENT AND PLAN OF MERGER
AMONG
QUAKER STATE CORPORATION
QUAKER STATE - SLICK 50, INC.
SLICK 50, INC. I
AND
THE SLICK 50 STOCKHOLDERS
(as defined herein)
Dated as of May 26, 1995
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AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
(Not Part of the Agreement)
Page
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Certificate of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. By Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.4. Directors and Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5. Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.6. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7. Action by Slick 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVERSION OF SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1. Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2. Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3. Slick 50 Common Stock Elections . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.4. Proration of Per Share Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.5. Exchange of Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE III
INITIAL BASE CONSIDERATION ADJUSTMENT; READJUSTMENTS . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1. Adjustment of Initial Base Consideration . . . . . . . . . . . . . . . . . . . . . . . 9
3.2. Readjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV
ADDITIONAL PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1. Additional Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2. Computation of Additional Purchase Price and Adjusted EBIT . . . . . . . . . . . . . . 16
4.3. Review and Dispute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.4. Payment of Additional Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5. Adjustments to Earn Out Objectives . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SLICK 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.1. Organization, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.2. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.3. Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.4. Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.5. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.6. Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7. Absence of Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.8. Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.9. Severance, Termination, Change in Control and Similar Agreements . . . . . . . . . . . 25
5.10. Real and Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.11. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.12. Compliance with Other Instruments and Laws . . . . . . . . . . . . . . . . . . . . . 28
5.13. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.14. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
5.15. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.16. Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.17. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
5.18. Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.19. Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.20. Major Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
5.21. Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.22. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
5.23. Sale of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
5.24. Banking and Personnel Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.25. Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.26. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.27. Knowledge of Slick 50 Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.28. No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.29. No Other Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE COMPANY . . . . . . . . . . . . . . . . . . . . 41
6.1. Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.2. Authority Relative to this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 41
6.3. Consents and Approvals; No Violation . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.4. Finders and Investment Bankers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.5. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.6. Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.7. Stock Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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ARTICLE VII
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.1. Conduct of Business of Slick 50 . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
7.2. Parachute Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.3. Provision of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.4. Rule 144, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.5. Disposition of Acquired Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE VIII
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
8.1. Proxy Statement; Filings; Compliance With Securities Laws . . . . . . . . . . . . . . 47
8.2. Meeting of the Slick 50 Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.3. Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.4. Acquisition Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.5. Access to Information; Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . 50
8.6. Sale of Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
8.7. Officers' and Directors' Insurance; Indemnification of Officers and Directors . . . . 51
8.8. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.9. Indemnification of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
8.10. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
8.11. Gold Eagle Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE IX
CLOSING CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
9.1. Conditions Precedent to the Obligations of All Parties . . . . . . . . . . . . . . . . 56
9.2. Additional Conditions to the Obligation of Slick 50. . . . . . . . . . . . . . . . . 57
9.3. Conditions Precedent to Obligations of the Parent and the Company . . . . . . . . . . 58
ARTICLE X
CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.1. Time and Place . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
10.2. Filings at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE XI
TERMINATION AND ABANDONMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.2. Procedure and Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . 62
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ARTICLE XII
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
12.1. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
12.2. Waiver of Compliance; Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
12.3. Investigations; Survival of Warranties . . . . . . . . . . . . . . . . . . . . . . . 63
12.4. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
12.5. Assignment; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.7. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
12.8. Certain Defined Terms; Interpretation . . . . . . . . . . . . . . . . . . . . . . . . 65
12.9. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
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EXHIBITS
Exhibit A Percentage Ownership
Exhibit B Registration Rights Agreement
Exhibit C Guaranty
Exhibit D Option Cancellation Agreement
SCHEDULES
Schedule 1.4 Officers of the Surviving Corporation
Schedule 5.1 Organization, etc.
Schedule 5.1(b) Due Organization, Valid Existence and
Good Standing of Subsidiaries
Schedule 5.2 Capitalization
Schedule 5.4 Consents and Approvals; No Violation
Schedule 5.6 Absence of Undisclosed Liabilities
Schedule 5.7 Absence of Material Adverse Change
Schedule 5.9 Severance, Termination, Change in Con-
trol and Similar Agreements
Schedule 5.10(a) Real Property Owned or Leased
Schedule 5.10(b) Material Equipment and Personal Property
Owned or Leased
Schedule 5.10(c) Liens on Assets
Schedule 5.10(e) Required Easements, Rights of Way and
Similar Authorizations
Schedule 5.11 Litigation
Schedule 5.12 Compliance with Other Instruments and Laws
Schedule 5.13 Taxes
Schedule 5.14 ERISA
Schedule 5.17 Insurance
Schedule 5.18(b) Intellectual Property
Schedule 5.19 Contracts
Schedule 5.20 Major Customers
Schedule 5.20(b) Notice of Persons or Entities Who May
Discontinue Business With Slick 50 or
its Subsidiaries
Schedule 5.21 Affiliate Transactions
Schedule 5.24 Banking and Personnel Matters
Schedule 5.25 Product Warranties
Schedule 9.3(g) Third Party Consents
Schedule 11.1(g) Other Matters
Schedule 12.8 Marketing Costs and Expenses
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 26, 1995 (the
"Agreement"), among QUAKER STATE CORPORATION, a Delaware corporation (the
"Parent"), QUAKER STATE-SLICK 50, INC., a Delaware corporation and a
wholly-owned subsidiary of the Parent (the "Company"), SLICK 50, INC. I, a
Delaware corporation ("Slick 50"), and KIRBY ATTWELL, A. BENTON COCANOUGHER,
DAVID A. DILLINGHAM, RONALD D. FASH ("Fash"), GOLD EAGLE CO., an Illinois
corporation ("Gold Eagle"), DAVID M. GOLDSTEIN, RICHARD A. JAENICKE, WILLIAM
M. JETER, III, MARGARET LEA JETER, LONNIE L. McKINNEY, HERSCHEL A. MALTZ, W.O.
MENEFEE and CAROL L. PADLICK (such individuals, together with Gold Eagle are,
collectively, the "Slick 50 Stockholders"). Capitalized terms used herein
without definition are defined in Section 12.8 of this Agreement.
ARTICLE I
THE MERGER
1.1. The Merger. In accordance with the provisions of this
Agreement and the GCL, at the Effective Time (i) Slick 50 shall be merged with
and into the Company (the "Merger"), and the Company shall be the surviving
corporation (hereinafter sometimes called the "Surviving Corporation") and
shall continue its corporate existence under the laws of the State of Delaware;
(ii) the name, identity, existence, rights, privileges, powers, franchises,
properties and assets of the Company shall continue unaffected and unimpaired;
and (iii) the separate existence of Slick 50 shall cease, and all of the
rights, privileges, powers, franchises, properties and assets of Slick 50 shall
be vested in the Company.
1.2. Certificate of Incorporation. The Certificate of
Incorporation of the Company in effect immediately prior to the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended as provided therein or by law.
1.3. By Laws. The By Laws of the Company in effect
immediately prior to the Effective Time shall be the By Laws of the Surviving
Corporation until thereafter amended, altered or repealed as provided therein.
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1.4. Directors and Officers. The directors of the Company
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation and the persons set forth on Schedule 1.4 shall be the officers of
the Surviving Corporation, each to hold office in accordance with the
Certificate of Incorporation and By Laws of the Surviving Corporation until his
successor is appointed and qualified or until his earlier death, resignation or
removal.
1.5. Effective Time. The Merger shall become effective
simultaneously with the filing of a Certificate of Merger with the Secretary of
State of the State of Delaware in accordance with Sections 251 and 103 of the
GCL (the "Certificate of Merger"). The Certificate of Merger shall be filed as
soon as practicable after the Closing. The date and time when the Merger shall
become effective is hereinafter referred to as the "Effective Time".
1.6. Further Assurances. If at any time after the Effective
Time the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments or assurances or any other acts or things are
necessary, desirable or proper (a) to vest, perfect or confirm, of record or
otherwise, in the Surviving Corporation its right, title or interest in, to or
under any of the rights, privileges, powers, franchises, properties or assets
of Slick 50 acquired or to be acquired as a result of the Merger, or (b)
otherwise to carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their designees shall be
authorized to solicit in the name of Slick 50 any third party consents or other
documents required to be delivered by any third party, to execute and deliver,
in the name and on behalf of Slick 50, all such deeds, bills of sale,
assignments and assurances and do, in the name and on behalf of Slick 50, all
such other acts and things necessary, desirable or proper to vest, perfect or
confirm its right, title or interest in, to or under any of the rights,
privileges, powers, franchises, properties or assets of Slick 50 acquired or to
be acquired as a result of the Merger and otherwise to carry out the purposes
of this Agreement.
1.7. Action by Slick 50. Slick 50 represents that its Board
of Directors (the "Board") has voted to recommend adoption of this Agreement
and authorization of the Merger by the stockholders of Slick 50 at the meeting
of such stockholders to be held as specified in Section 8.2 (the "Stockholders'
Meeting").
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ARTICLE II
CONVERSION OF SHARES
2.1. Company Common Stock. (a) Each Outstanding Slick 50
Share (except for (i) any shares of Slick 50 Common Stock then owned
beneficially or of record by the Parent or the Company or any other subsidiary
of the Parent, (ii) shares of Slick 50 Common Stock held in the treasury of
Slick 50 or by any subsidiary of Slick 50, and (iii) Dissenting Shares) shall,
by virtue of the Merger and without any action on the part of the holder
thereof, be converted (subject to Section 2.4) into the following (such
amounts, in the aggregate, the "Initial Merger Consideration"):
(i) for each such Outstanding Slick 50 Share with respect to
which an election to receive cash has been effectively made and not
revoked or lost pursuant to Section 2.3 (" Electing Shares"), the
right to receive (A) cash from the Parent in an amount equal to the
Per Share Price plus (B) any Additional Purchase Price allocable to
such share, as determined and paid in accordance with the applicable
provisions of Article IV; or
(ii) for each such Outstanding Slick 50 Share other than
Electing Shares, the right to receive (A) such number of shares of
Parent Common Stock, rounded up or down to the nearest whole share, as
have a value (as determined pursuant to Section 2.1(c)) equal to the
Per Share Price plus (B) any Additional Purchase Price allocable to
such share, as determined and paid in accordance with the applicable
provisions of Article IV.
(b) The Initial Base Consideration shall be subject to
adjustment as specified in Section 3.1 and as so adjusted shall be referred to
herein as the "Base Consideration". The Base Consideration, together with the
Additional Purchase Price, shall be referred to herein as the "Merger
Consideration".
(c) For purposes of Section 2.1(a)(ii) hereof, each share of
Parent Common Stock shall be valued based on a per share price equal to the
average of the closing price of Parent Common Stock, as reported on the New
York Stock Exchange (the "NYSE"), for the sixty (60) trading days immediately
preceding the second business day prior to the Closing
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Date; provided that if such value is less than $12.60 per share, then such
value shall be deemed to be $12.60; and if such value exceeds $15.40 per share,
then such value shall be deemed to be $15.40 (such value, as determined taking
into account this proviso, the "Average Trading Price").
(d) Each Outstanding Slick 50 Share which is then owned
beneficially or of record by the Parent or the Company or any other direct or
indirect subsidiary of the Parent shall, by virtue of the Merger and without
any action on the part of the holder thereof, be cancelled and retired and
cease to exist, without any conversion thereof.
(e) Each share of Slick 50 Common Stock held in Slick 50's
treasury or by any subsidiary of Slick 50 immediately prior to the Effective
Time shall, by virtue of the Merger, be cancelled and retired and cease to
exist, without any conversion thereof.
(f) The holders of certificates representing Outstanding
Slick 50 Shares shall as of the Effective Time cease to have any rights as
stockholders of Slick 50, except such rights, if any, as they may have pursuant
to the GCL, and, except as aforesaid, their sole right shall be the right to
receive their pro rata share of the Merger Consideration, as determined and
paid in the manner set forth in this Agreement.
2.2. Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Outstanding Slick 50 Shares which are held by
stockholders who shall have effectively dissented from the Merger and perfected
their appraisal rights in accordance with the provisions of Section 262 of the
GCL (the "Dissenting Shares"), shall not be converted into or be exchangeable
for the right to receive the Merger Consideration, but the holders thereof
shall be entitled to payment from the Surviving Corporation of the appraised
value of such shares in accordance with the provisions of Section 262 of the
GCL; provided, however, that if any such holder shall have failed to perfect
such appraisal rights or shall have effectively withdrawn or lost such right,
his or her Outstanding Slick 50 Shares shall thereupon be converted into and
exchangeable for, at the Effective Time, their pro rata share of the Merger
Consideration, as determined and paid in the manner set forth in this
Agreement.
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2.3. Slick 50 Common Stock Elections. (a) Subject to
Section 9.3(i), each person who, on or prior to the Election Date referred to
in Section 2.3(c), is a record holder of shares of Slick 50 Common Stock (other
than the Parent or the Company or any other direct or indirect subsidiary of
the Parent) will be entitled, with respect to all or any portion of his shares,
to make an unconditional election (a "Cash Election") on or prior to such
Election Date to receive the Per Share Price in cash, on the basis hereinafter
set forth.
(b) Prior to the mailing of the Proxy Statement, the Parent
and the Stockholders' Representative shall enter into the Exchange Agent
Agreement (the "Exchange Agent Agreement") with Mellon Securities Trust Company
pursuant to which Mellon Securities Trust Company shall act as exchange agent
(the "Exchange Agent") for the payment of the Initial Merger Consideration.
(c) The Parent shall prepare and mail a form of election (the
"Form of Election") with the Proxy Statement to the record holders of Slick 50
Common Stock as of the Record Date for the Stockholders' Meeting, which Form of
Election shall be used by each record holder of shares of Slick 50 Common Stock
who wishes to elect to receive the Per Share Price in cash for any or all
shares of Slick 50 Common Stock held by such holder. Any such holder's
election to receive the Per Share Price in cash shall have been properly made
only if the Exchange Agent shall have received at its designated office, by
5:00 p.m., New York City time on the Election Date, a Form of Election properly
completed and signed.
(d) Any Form of Election may be revoked by the stockholder of
Slick 50 submitting it to the Exchange Agent only by written notice received by
the Exchange Agent (i) prior to 5:00 p.m., New York City time, on the Election
Date or (ii) after the date of the Stockholders' Meeting if (and only to the
extent that) the Exchange Agent is legally required to permit revocations and
the Effective Time of the Merger shall not have occurred prior to such date.
In addition, all Forms of Election shall automatically be revoked if the
Exchange Agent is notified in writing by the Parent and Slick 50 that the
Merger has been abandoned. If a Form of Election is revoked, the certificate
or certificates for the shares of Slick 50 Common Stock to which such Form of
Election relates shall be promptly returned to the stock-
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holder of Slick 50 submitting the same to the Exchange Agent.
(e) Absent manifest error, the determination of the Exchange
Agent shall be binding as to whether or not Cash Elections have been properly
made or revoked pursuant to this Section 2.3 with respect to shares of Slick 50
Common Stock and when Cash Elections and revocations were received by it. If
the Exchange Agent determines that any Cash Election was not properly made with
respect to shares of Slick 50 Common Stock, such shares shall be treated by the
Exchange Agent as shares which were not Electing Shares at the Effective Time
of the Merger, and such shares shall be exchanged in the Merger for shares of
Parent Common Stock pursuant to Section 2.1(b)(ii). The Exchange Agent shall
also make all computations as to the allocation and the proration contemplated
by Section 2.4, and any such computation shall, absent manifest error, be
final, binding and conclusive on the holders of shares of Slick 50 Common
Stock. The Exchange Agent may, with the mutual agreement of the Parent and
Slick 50, make such rules as are consistent with this Section 2.3 for the
implementation of the elections provided for herein as shall be necessary or
desirable fully to effect such elections.
2.4. Proration of Per Share Price. (a) Notwithstanding
anything in this Agreement to the contrary, the maximum number of shares of
Slick 50 Common Stock to be converted into the right to receive cash at the
Effective Time of the Merger (the "Cash Election Number") shall be equal to the
lesser of:
(i) (x) 50% of the number of the Outstanding Slick 50 Shares
held by the Slick 50 Stockholders less (y) the number of Dissenting
Shares with respect to which, at the Effective Time of the Merger,
demands for or rights of appraisal have not been withdrawn or lost;
and
(ii) if (and only if) the Base Price is less than the Average
Trading Price, (x) such number of shares of Slick 50 Common Stock
which, if so converted into cash at the Effective Time of the Merger,
would have an aggregate value (upon such conversion) equal to no more
than one-half of all the consideration to be paid by the Parent at the
Effective Time to the holders of the Outstanding Slick 50 Shares,
assuming for purposes of this calculation only, that each share of
Parent Common
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Stock to be so issued by the Parent at the Effective Time had a value equal to
the Base Price less (y) the number of shares of Dissenting Shares with respect
to which, at the Effective Time of the Merger, demands for rights of appraisal
have not been withdrawn or lost.
(b) If the number of Electing Shares exceeds the Cash
Election Number, then such Electing Shares shall be converted into the right to
receive the Per Share Price in cash or shares of Parent Common Stock in
accordance with the terms of Section 2.1 in the following manner:
(i) A cash proration factor (the "Cash Proration Factor")
shall be determined by dividing the Cash Election Number by the total
number of Electing Shares.
(ii) The number of Electing Shares covered by each Cash
Election to be converted into the right to receive the Per Share Price
in cash pursuant to Section 2.1(a)(i) shall be determined by
multiplying the Cash Proration Factor by the total number of Electing
Shares covered by such Cash Election.
(iii) All Electing Shares, other than those shares converted
into the right to receive the Per Share Price in cash in accordance
with Section 2.1(a)(i), shall be converted into shares of Parent
Common Stock as if such shares were not Electing Shares in accordance
with the terms of Section 2.1(a)(ii).
(c) If the number of Electing Shares is less than or equal to
the Cash Election Number, then all Electing Shares shall be converted into the
right to receive the Per Share Price in cash in accordance with the terms of
Section 2.1(a)(i), and all other shares of Slick 50 Common Stock other than
Electing Shares (and subject to Section 2.2) shall be converted into the right
to receive the Per Share Price in Parent Common Stock in accordance with
Section 2.1(a)(ii).
2.5. Exchange of Shares. (a) As soon as practicable after
the Effective Time, each holder of an outstanding certificate or certificates
which prior thereto represented Outstanding Slick 50 Shares (the
"Certificates") shall, upon surrender to the Exchange Agent of such Certificate
or Certificates and acceptance thereof by the Exchange Agent, be entitled to a
certificate or certificates repre-
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senting the number of shares of Parent Common Stock and the amount of cash, if
any, into which the aggregate number of shares of Slick 50 Common Stock
previously represented by such Certificate or Certificates surrendered shall
have been converted pursuant to this Agreement. The Exchange Agent shall
accept such Certificates upon compliance with such reasonable terms and
conditions as the Exchange Agent may impose, with the reasonable agreement of
the Stockholders' Representative, to effect an orderly exchange thereof in
accordance with normal exchange practices. The Exchange Agent shall deliver
all funds and shares of Parent Common Stock to which each holder of Slick 50
Common Stock is entitled to receive pursuant to this Section 2.5 within one day
following such holder's surrender of such holder's Certificates. The Parent
shall furnish to the Exchange Agent all funds and shares of Parent Common Stock
required to make such payments. No interest will be paid or accrued on the
Initial Merger Consideration upon the surrender of the Certificates. All
payments in respect of shares of Slick 50 Common Stock which are made in
accordance with the terms hereof shall be deemed to have been made in full
satisfaction of all rights pertaining to such shares, subject to any adjustment
to the Initial Base Consideration pursuant to Article III and the payment of
any Additional Purchase Price pursuant to Article IV. With respect to any
Certificate alleged to have been lost, stolen or destroyed, the owner or owners
of such Certificate shall be entitled to the consideration set forth above upon
delivery to the Exchange Agent of an affidavit of such owner or owners setting
forth such allegation and a bond sufficient to indemnify the Parent and the
Surviving Corporation against any claim that may be made against either or both
of them on account of the alleged loss, theft or destruction of any such
Certificate or the delivery of the payment set forth above.
(b) If consideration is to be delivered to a person other
than the person in whose name the Certificate surrendered in exchange therefor
is registered, it shall be a condition to delivery of the consideration that
the Certificate so surrendered shall be properly endorsed or otherwise in
proper form for transfer and that the person requesting such consideration
shall pay any transfer or other taxes required by reason of the payment to a
person other than the registered holder of the Certificate surrendered or
establish to the satisfaction of the Exchange Agent and the Surviving
Corporation that such tax has been paid or is not applicable.
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(c) Until surrendered in accordance with the provisions of
this Section 2.5, from and after the Effective Time, each Certificate (other
than (i) Certificates representing shares of Slick 50 Common Stock owned
beneficially or of record by the Parent, the Company or any other subsidiary of
the Parent, (ii) Certificates representing shares of Slick 50 Common Stock held
in Slick 50's treasury or by subsidiaries of Slick 50 and (iii) Dissenting
Shares in respect of which appraisal rights are perfected) shall represent for
all purposes the right to receive its pro rata portion of the Merger
Consideration, as determined and paid in the manner set forth in this
Agreement.
(d) After the Effective Time there shall be no transfers on
the stock transfer books of the Surviving Corporation of the Outstanding Slick
50 Shares. If, after the Effective Time, Certificates are presented to the
Surviving Corporation, they shall be cancelled and exchanged for the
consideration provided in Section 2.5(c).
ARTICLE III
INITIAL BASE CONSIDERATION ADJUSTMENT; READJUSTMENTS
3.1. Adjustment of Initial Base Consideration. (a) The
Initial Base Consideration will be subject to adjustment, as described in this
Section 3.1.
(b) (i) As soon as practicable after the Closing Date (but in
no event later than 60 days following the Closing Date), the Stockholders'
Representative will prepare or cause to be prepared and deliver to the Parent,
at the Parent's expense, an audited balance sheet of Slick 50 as of the close
of business on the business day immediately preceding the Closing Date (the
"Closing Balance Sheet"). In connection with the preparation of the Closing
Balance Sheet, the Stockholders' Representative and its authorized
representatives, including Ernst & Young, Slick 50's independent public
accountants, will have the right to review the historical information of Slick
50 as is necessary to prepare the Closing Balance Sheet. The Closing Balance
Sheet shall be prepared in accordance with U.S. generally accepted accounting
principles and the principles, procedures and elections consistent with the
past practices of Slick 50, except as provided in the following sentence. The
Closing Balance Sheet shall (v) include a reserve of $5.0 million for the
matters described on Schedule 5.11 hereto
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(the "Special Tax Reserve"), (w) include a reserve of $500,000 for the
litigation listed on page 12 of the "Legal Summary" attached to Schedule 5.11
hereto (the "Special EEOC Reserve"), (x) include a reserve of $4,500,000 for
the litigation listed on page 13 of the "Legal Summary" attached to Schedule
5.11 hereto (the "Special FTC Reserve") (collectively, the "Special Reserves")
(y) include the full amount of any indebtedness repaid by the Parent as
contemplated under Section 9.3(j) and (z) exclude any liabilities or reserves
in respect of any Transaction Costs, except to the extent that such Transaction
Costs exceed, in the aggregate, $300,000, in which case such excess Transaction
Costs shall be booked as a liability or reserve on the Closing Balance Sheet
unless they have previously been paid by the Slick 50 Stockholders.
Simultaneously with its delivery of the Closing Balance Sheet to the Parent,
the Stockholders' Representative will deliver to the Parent a copy of an
unqualified report of Ernst & Young indicating (i) that they performed an audit
of the Closing Balance Sheet in accordance with U.S. generally accepted
auditing standards approved and adopted by the American Institute of Certified
Public Accountants and (ii) that the Closing Balance Sheet fairly presents the
assets and liabilities of Slick 50 as of the Closing Date in accordance with
generally accepted accounting principles, except as set forth above in this
Section 3.1(b)(i).
(ii) Subject to Sections 3.1(b)(iv), 3.1(b)(vi) and
8.9(d)(v), within 45 days after the date of receipt by the Parent of the
Closing Balance Sheet:
(1) The Parent shall pay to each Slick 50 Stockholder who
received any portion of the Initial Merger Consideration, and each holder of a
Slick 50 Option who executes an Option Cancellation Agreement as contemplated
in Section 9.3(i) hereto (collectively, the "Applicable Slick 50
Stockholders"), an amount equal to the product of (A) the excess, if any, of
(x) the Closing Net Worth, over (y) $15,339,239 times (B) the percentage
allocated to such Applicable Slick 50 Stockholder on Exhibit A hereto, or,
(2) The Applicable Slick 50 Stockholders shall pay to the
Parent an amount equal to the excess, if any, of (x) $15,339,239 over (y) the
Closing Net Worth.
Any amounts payable by the Parent to the Applicable Slick 50 Stockholders or by
the Applicable Slick 50 Stockholders to the Parent, as the case may be,
pursuant to this Sec-
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tion 3.1(b) shall be referred to hereinafter as the "Initial Base Consideration
Adjustment". Notwithstanding anything in this Agreement to the contrary, the
Initial Base Consideration Adjustment shall be payable only as provided in
Section 3.1(b)(vii).
(iii) Subject to Section 3.1(b)(iv), the Closing Balance
Sheet delivered by the Stockholders' Representative to the Parent shall be
final, binding and conclusive on the parties hereto.
(iv) The Parent will have the right, with its independent
public accountant, Coopers & Lybrand, to review the information used in the
preparation of the Closing Balance Sheet and the review thereof, including
Ernst & Young's non-proprietary work papers, and to discuss such information
and the preparation and review thereof with the Stockholders' Representative
and with the personnel of Ernst & Young responsible therefor. The Parent may
dispute any items reflected on the Closing Balance Sheet by giving notice to
the Stockholders' Representative specifying the items on the Closing Balance
Sheet in dispute and setting forth the Parent's proposed adjustments. If the
parties and their respective accountants are unable to agree on a resolution
within 15 days after delivery of the Parent's notice of disagreement to the
Stockholders' Representative, then the parties will submit such dispute to
Arthur Andersen LLP, certified public accountants. Arthur Andersen LLP shall,
within 30 days after such submission, determine and report to the parties upon
such disputed items and such report shall be final, binding and conclusive on
the parties with respect to such items. The fees, expenses and costs of Arthur
Andersen LLP for the services described herein shall be allocated fifty percent
(50%) to the Parent and fifty percent (50%) to the Applicable Slick 50
Stockholders.
(v) The term "Adjusted Closing Balance Sheet", as used
herein, shall mean (x) the Closing Balance Sheet delivered by the Stockholders'
Representative to the Parent pursuant to Section 3.1(b)(i), in the event the
Parent does not dispute any item on the Closing Balance Sheet within 45 days
after receipt thereof, or (y) the definitive Closing Balance Sheet resulting
from the determinations made by Arthur Andersen LLP in accordance with Section
3.1(b)(iv) (in addition to those items theretofore agreed to by the
Stockholders' Representative and the Parent), in the event the Parent disputes
any such item.
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(vi) Payment of the Initial Base Consideration Adjustment
shall be delayed until the final resolution of all disputes as provided in this
Section 3.1, upon which event (i) any amounts due by the Parent to the
Applicable Slick 50 Stockholders shall, subject to Section 8.9(d)(v), be paid
by the Parent within 10 days thereafter and (ii) any amounts due by the
Applicable Slick 50 Stockholders to the Parent shall be paid by the Applicable
Slick 50 Stockholders in the manner set forth in the last sentence of Section
3.1(b)(vii). Any Initial Base Consideration Adjustment payable by the Parent
shall accrue interest from the Closing Date to the date of such payment at the
rate on 30-day Treasury Notes as in effect from time to time from the Closing
Date to the date of payment.
(vii) Any Initial Base Consideration Adjustment payable by
the Parent to any Applicable Slick 50 Stockholder pursuant to this Section
3.1(b), together with any interest accrued thereon in accordance with Section
3.1(b)(vi) hereof, shall be paid exclusively by the Parent delivering to such
Applicable Slick 50 Stockholder such number of shares of Parent Common Stock,
rounded up or down to the nearest whole share, as have a value, as determined
pursuant to the next sentence of this Section 3.1(b)(vii), equal to the sum of
(i) the portion of the Initial Base Consideration Adjustment payable by the
Parent to such Applicable Slick 50 Stockholder plus (ii) any interest accrued
thereon in accordance with Section 3.1(b)(vi) hereof. For purposes of this
Section 3.1(b)(vii), each share of Parent Common Stock shall be valued based on
a per share price equal to the Average Trading Price. Any Initial Base
Consideration Adjustment payable by the Applicable Slick 50 Stockholders to the
Parent pursuant to this Section 3.1(b) and any fees, expenses and costs of
Arthur Andersen LLP payable by the Applicable Slick 50 Stockholders pursuant to
Section 3.1(b)(iv) hereof, shall be paid exclusively by the Parent offsetting
any such amounts against any Additional Purchase Price that is otherwise
payable at any time by the Parent to any Applicable Slick 50 Stockholder
pursuant to Article IV.
(viii) As used in this Section 3.1 and in Section 8.9, the
term Stockholders' Representative shall mean Fash, unless Slick 50 Stockholders
owning a majority of the Outstanding Slick 50 Shares (other than any such
shares held by the Parent, the Company or any other direct or indirect
subsidiary of the Parent) shall notify the Parent in writing that they have
designated another specified individual (but
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not more than one individual) to serve as the Stockholders' Representative
under this Agreement.
3.2. Readjustments. (a) Special Tax Reserve. Within 75 days
after the Tax Readjustment Trigger Date, the Parent shall provide the
Stockholders' Representative with a certificate (the "Special Tax Reserve
Certificate"), signed by an officer of the Parent, setting forth the Parent's
good faith calculation of the excess (if any) of (i) the Special Tax Reserve
over (ii) the aggregate liabilities (the "Actual Tax Liabilities") actually
incurred by the Parent or any of its subsidiaries in respect of the matters
covered by such Special Tax Reserve (net of any tax benefits relating thereto).
(b) EEOC Reserve. Within 75 days after the EEOC Readjustment
Trigger Date, the Parent shall provide the Stockholders' Representative with a
certificate (the "EEOC Reserve Certificate"), signed by an officer of the
Parent, setting forth the Parent's good faith calculation of the excess (if
any) of (i) the Special EEOC Reserve over (ii) the aggregate liabilities (the
"Actual EEOC Liabilities") actually incurred by the Parent or any of its
subsidiaries in respect of the matters covered by such Special EEOC Reserve
(net of any tax benefits relating thereto).
(c) FTC Reserve. Within 75 days after the FTC Readjustment
Trigger Date, the Parent shall provide the Stockholders' Representative with a
certificate (the "FTC Reserve Certificate"), signed by an officer of the
Parent, setting forth the Parent's good faith calculation of the excess (if
any) of (i) the Special FTC Reserve over (ii) the aggregate liabilities (the
"Actual FTC Liabilities"; the Actual Tax Liabilities, the Actual EEOC
Liabilities and the Actual FTC Liabilities are, collectively, the "Actual
Liabilities") actually incurred by the Parent or any of its subsidiaries in
respect of the matters covered by such Special FTC Reserve (net of any tax
benefits relating thereto).
(d) Review of Reserve Readjustments. (i) The Stockholders'
Representative shall have 30 days from the date on which the Special Tax
Reserve Certificate, the EEOC Reserve Certificate or the FTC Reserve
Certificate, as the case may be, is delivered to him to review such certificate
(each such review period, a "Readjustment Review Period"). The Stockholders'
Representative shall be provided with all reasonable access to the relevant
books and records of the
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Company in connection with such review. If the Stockholders' Representative
disagrees in any respect with any calculation reflected on the Special Tax
Reserve Certificate, the EEOC Reserve Certificate or the FTC Reserve
Certificate, as the case may be, he may, on or prior to the last day of such
Readjustment Review Period, deliver a notice to the Parent setting forth, in
reasonable detail, each disputed item or amount and the basis for his
disagreement therewith (each such notice, a "Reserve Dispute Notice"). If a
Reserve Dispute Notice is not received by the Parent on or prior to the last
day of the applicable Readjustment Review Period, the Special Tax Reserve
Certificate, the EEOC Reserve Certificate or the FTC Reserve Certificate, as
the case may be, shall be deemed accepted by the Applicable Slick 50
Stockholders and all amounts and calculations reflected therein shall be final,
binding and conclusive on them for all purposes of this Agreement.
(ii) Upon receipt by the Parent of a Reserve Dispute Notice
from the Stockholders' Representative, the Parent and the Stockholders'
Representative will attempt to resolve any dispute with respect to any item
reflected on the Special Tax Reserve Certificate, the EEOC Reserve Certificate
or the FTC Reserve Certificate, as the case may be. If all such disputes are
not resolved within 15 days after the Parent's receipt of such Reserve Dispute
Notice, the Parent and the Applicable Slick 50 Stockholders will jointly retain
Arthur Andersen LLP to resolve such disputes and each of the Parent, on the one
hand, and the Applicable Slick 50 Stockholders, on the other, will pay one-half
of the fees and expenses of Arthur Andersen LLP and will cooperate fully with
such accounting firm to the extent reasonably required to resolve the dispute
in question. Arthur Andersen LLP shall consider all such disputed matters,
shall act promptly to resolve such matters and shall resolve such matters in
accordance with such rules and procedures, consistent with the terms of this
Agreement, as Arthur Andersen LLP in its sole discretion may prescribe. The
determination of Arthur Andersen LLP shall be final, binding and conclusive on
the Parent and the Applicable Slick 50 Stockholders for all purposes of this
Agreement.
(e) Method of Payment. (i) Upon the later to occur of the
tenth business day after (A) the termination of the applicable Readjustment
Review Period and (B) the resolution of any disputed items or amount reflected
in the applicable Reserve Dispute Notice, if any, the Parent shall, subject to
Section 8.9(d)(v) and the next sentence of this
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Section 3.2(e), pay to each Applicable Slick 50 Stockholder an amount equal to
the product of (x) the excess shown on the Special Tax Reserve Certificate, the
EEOC Reserve Certificate or the FTC Reserve Certificate, as the case may be (if
any), times (y) the percentage allocated to such Applicable Slick 50
Stockholder on Exhibit A hereto, together with interest thereon from the
Closing Date to the date such payment is actually paid at the rate on 30-year
Treasury Bonds as in effect from time to time during such period.
Notwithstanding anything in this Agreement to the contrary, the Parent shall
not be obligated to make any payment to any Applicable Slick 50 Stockholder
pursuant to this Section 3.2(e) (collectively, the "Readjustment Payments") to
the extent that, after giving effect thereto, such Readjustment Payment,
together with all previous Readjustment Payments would exceed the sum of (i)
the aggregate amount previously offset by the Parent against payments of
Additional Purchase Price pursuant to the last sentence of Section 3.1(b)(vii)
hereto, plus (ii) the amount of any additional Initial Base Consideration
Adjustment that would have been payable to the Applicable Slick 50 Stockholders
pursuant to Section 3.1(b)(ii) if the Adjusted Closing Balance Sheet had
included (in lieu of the Special Reserves): (x) each Actual Liability which
has been established prior to the making of such Readjustment Payment and (y)
each Special Reserve for which the corresponding Actual Liability has not been
so established prior to the making of such Readjustment Payment.
(ii) Any Readjustment Payments, together with any interest
accrued thereon in accordance with this Section 3.2(e), shall be paid by the
Parent's delivery to such Applicable Slick 50 Stockholder of such number of
shares of Parent Common Stock, rounded up or down to the nearest full share, as
have a value (as determined pursuant to the next sentence) equal to the sum of
such applicable Readjustment Payment plus such interest. For purposes of this
Section 3.2, each share of Parent Common Stock shall be valued based upon a per
share price equal to the average closing price of the Parent Common Stock as
reported on the NYSE for the sixty (60) trading days immediately preceding the
second business day prior to the date such payment is made.
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ARTICLE IV
ADDITIONAL PURCHASE PRICE
4.1. Additional Purchase Price. In addition to the Base
Consideration, the Parent shall pay the Additional Purchase Price (as
hereinafter defined) to the Applicable Slick 50 Stockholders in the manner
provided for in this Article IV.
4.2. Computation of Additional Purchase Price and Adjusted
EBIT. Within 105 days after the end of each Earn-Out Year, the Parent shall
deliver to the Stockholders' Representative a certificate, signed by an officer
of the Parent, setting forth the Parent's calculation of (i) Adjusted EBIT for
such year, (ii) the Synergy Savings for such year and (iii) the Earn-Out
Payment for such year, together with calculations and reasonable supporting
documentation with respect thereto (the "Annual Earn-Out Certificate"). For
purposes of preparing the Annual Earn-Out Certificate, the Parent shall compute
the Adjusted EBIT of the Acquired Business for each Earn-Out Year in accordance
with U.S. generally accepted accounting principles and the principles,
procedures and elections consistent with the past practices of the Parent,
except that any adjustment to any of the Special Reserves shall be made only as
a result of changed circumstances, in which event any such change shall be made
only through the application of the same principles, procedures and elections
which were utilized by the Parent in calculating the applicable Special
Reserve. Such computation of such Adjusted EBIT shall be based on the results
of operations of the Acquired Business which are included in the Parent's
audited consolidated financial statements for such year.
4.3. Review and Dispute. (a) The Stockholders'
Representative shall have 30 days from the date on which the Annual Earn-Out
Certificate is delivered to him to review such certificate (the "Review
Period"). The Stockholders' Representative shall be provided with all
reasonable access to the relevant books and records of the Company and Slick 50
in connection with such review. If the Stockholders' Representative disagrees
in any respect with any amount shown or calculation reflected in such
Certificate, he may, on or prior to the last day of the Review Period, deliver
a notice to the Parent setting forth, in reasonable detail, each disputed item
or amount and the basis for his disagreement therewith (the "Dispute Notice").
If a Dispute
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Notice is not received by the Parent on or prior to the last day of the Review
Period, the Annual Earn-Out Certificate shall be deemed accepted by the
Applicable Slick 50 Stockholders and all amounts and calculations reflected
therein shall be final, binding and conclusive on them for all purposes of this
Agreement.
(b) Upon receipt by the Parent of a Dispute Notice from the
Stockholders' Representative, the Parent and the Stockholders' Representative
will attempt to resolve any dispute with respect to any calculation reflected
in the Annual Earn-Out Certificate. If all such disputes are not so resolved
within 15 days after the Parent's receipt of the Dispute Notice, the Parent and
the Applicable Slick 50 Stockholders will jointly retain Arthur Andersen LLP to
resolve such disputes and each of the Parent, on the one hand, and the
Applicable Slick 50 Stockholders, on the other, will pay one-half of the fees
and expenses of Arthur Andersen LLP and will cooperate fully with such
accounting firm to the extent reasonably required to resolve the dispute in
question. Arthur Andersen LLP shall consider all such disputed matters, shall
act promptly to resolve such matters and shall resolve such matters in
accordance with such rules and procedures, consistent with the terms of this
Agreement, as Arthur Andersen LLP in its sole discretion may prescribe. The
determination of Arthur Andersen LLP shall be final, binding and conclusive on
the Parent and the Applicable Slick 50 Stockholders for all purposes of this
Agreement.
4.4. Payment of Additional Purchase Price. Upon the later to
occur of the tenth business day after (A) the termination of the Review Period
and (B) the resolution of any disputed items or amounts reflected in any
Dispute Notice, the Parent shall, subject to Section 8.9(d)(v) hereof, pay to
each Applicable Slick 50 Stockholder, as additional purchase price ("Additional
Purchase Price"), an amount equal to such Applicable Slick 50 Stockholder's
Allocable Percentage of the Earn-Out Payment for such Earn-Out Year, provided
that, notwithstanding anything in this Agreement to the contrary, the Parent
shall not be required to make any such payment to the extent that, after giving
effect thereto, the aggregate Additional Purchase Price theretofore paid to the
Applicable Slick Stockholders would exceed $35,000,000. To the extent that any
such Additional Purchase Price is withheld by the Parent pursuant to Section
8.9(d)(v) hereof but is ultimately paid by the Parent, or is otherwise not paid
by the Parent when due in accor-
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dance with this Section 4.4, such amount so paid shall accrue interest from the
date it is first payable pursuant to this Section 4.4 to the date it is
actually paid at the rate on 30-year Treasury Bonds as in effect from time to
time during such period. Any Additional Purchase Price payable to any
Applicable Slick 50 Stockholder, together with any interest accrued thereon in
accordance with the preceding sentence of this Section 4.3, shall be paid by
the Parent's delivery to such Applicable Slick 50 Stockholder of such number of
shares of Parent Common Stock, rounded up or down to the nearest whole share,
as have a value equal to the sum of such Additional Purchase Price and such
interest. For purposes of this Article IV, each share of Parent Common Stock
shall be valued based upon a per share price equal to the average closing price
of the Parent Common Stock as reported on the NYSE for the sixty (60) trading
days immediately preceding the second business day prior to the date such
payment is made.
4.5. Adjustments to Earn Out Objectives. In the event that
either (i) the application of the Parent's past principles, procedures and
elections to the calculation of the Adjusted EBIT for any Earn-Out Year or (ii)
a change in generally accepted accounting principles during any Earn-Out Year
would make it inequitable to compare the Adjusted EBIT for such Earn-Out Year
to the Earn-Out Objective for such Earn-Out Year for purposes of calculating
such year's Additional Purchase Price, then the Parent and the Stockholders'
Representative shall negotiate in good faith to recalculate the Earn-Out
Objective for such Earn-Out year to preserve, as closely as possible, the
commercial arrangements reflected in the provisions of this Article IV.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SLICK 50
Slick 50 hereby represents and warrants to the Parent and the
Company with respect to Slick 50 and the Slick 50 Subsidiaries as follows. In
addition, for purposes of Sections 5.3, 5.4, 5.8, 5.13(k), 5.23, 5.27 and 5.28,
each Slick 50 Stockholder hereby represents and warrants to the Parent and the
Company with respect to itself as follows.
5.1. Organization, etc. (a) Slick 50 is a corporation duly
organized, validly existing and in good stand-
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ing under the laws of the State of Delaware and has all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its business as now being conducted. Slick 50 is duly qualified or licensed and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
would not have a material adverse effect on the financial condition, operations
or business of Slick 50 and the Slick 50 Subsidiaries taken as a whole. Except
as set forth on Schedule 5.1 hereto, Slick 50 does not have any subsidiaries
and, except as set forth on Schedule 5.1 hereto, Slick 50 does not own any
capital stock of or equity interests in any corporation, partnership, joint
venture or other entity. Slick 50 has heretofore delivered or made available
to the Parent accurate and complete copies of the Certificate of Incorporation
and By Laws of Slick 50, as amended and in effect on the date hereof and Slick
50's minute books, which minute books accurately reflect all action taken on or
prior to the date hereof at the meetings of its stockholders and the Board and
all committees thereof. The stock certificate books and ledgers or Slick 50,
which have been made available to the Parent, are true, correct and complete,
and accurately reflect, at the date hereof, the ownership of the issued and
outstanding capital stock of Slick 50.
(b) Except as set forth on Schedule 5.1 (b), each of the
Slick 50 subsidiaries listed on Schedule 5.1 hereto (the "Slick 50
Subsidiaries") is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry out its business as now being conducted. Each of the
Slick 50 Subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified would not have a
material adverse effect on the financial condition, operations or business of
Slick 50 and the Slick 50 Subsidiaries taken as a whole. Slick 50 has
heretofore delivered to the Parent accurate and complete copies of the
Certificate of Incorporation and By Laws of each of the Slick 50 Subsidiaries,
as amended and in effect on the date hereof. The minute books of each of the
Slick 50 Subsidiaries, which have been made available to the Parent, contain a
true, complete and correct record of all
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corporate action taken on or prior to the date hereof at the meetings of each
subsidiaries' respective stockholders and board of directors and all committees
thereof. The stock certificate books and ledgers of each of the Slick 50
Subsidiaries, which have been made available to the Parent, are true, correct
and complete, and accurately reflect, at the date hereof, the ownership of the
issued and outstanding capital stock of each of the Slick 50 Subsidiaries.
Except as set forth on Schedule 5.1 Slick 50 owns of record and beneficially
100% of the issued and outstanding capital stock of each Slick 50 Subsidiary.
(c) Petrolon Group, Inc. Petrolon Group, Inc. has no
material assets or liabilities and is currently conducting no operations.
5.2. Capitalization. (a) The authorized capital stock of
Slick 50 and each of the Slick 50 Subsidiaries is as set forth on Schedule 5.2
hereto. All issued and outstanding shares of Slick 50 Common Stock and all
issued and outstanding shares of the capital stock of the Slick 50 Subsidiaries
are duly authorized, validly issued, fully paid, non-assessable and free of
preemptive rights. Schedule 5.2 sets forth the name of each person who owns
beneficially or of record any shares of Slick 50 capital stock and the number
of shares owned by each such person. Schedule 5.2 hereto shows the name of
each holder of an option to purchase shares of Slick 50 Common Stock, the
number of shares of Slick 50 Common Stock subject to all such options held by
such holder and the per share exercise price thereof.
(b) Except for the options listed on Schedule 5.2 hereto
(collectively, the "Slick 50 Options"), which options will all be cancelled
pursuant to the Option Cancellation Agreement prior to the Closing Date, there
are not now, and at the Effective Time there will not be, any options,
warrants, calls, subscriptions, or other rights or other agreements or
commitments of any nature whatsoever (either firm or conditional) obligating
Slick 50 or any of the Slick 50 Subsidiaries to issue, transfer, deliver or
sell, or cause to be issued, transferred, delivered or sold, any additional
shares of capital stock or other equity interest of Slick 50 or any of the
Slick 50 Subsidiaries, or any securities or obligations convertible into or
exchangeable for any such capital stock or other interests, or obligating Slick
50 or any of the Slick 50 Subsidiaries to grant, extend or enter
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into any such agreement or commitment and no authorization therefor has been
given or made.
5.3. Authority Relative to this Agreement. Slick 50 and such
Slick 50 Stockholder have all requisite power and authority (corporate or
otherwise) to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Slick 50 and the consummation by Slick 50 of the transactions contemplated
hereby have been duly and validly authorized and approved by the Board. Except
for the approval by the Slick 50 Stockholders which is referred to in Section
8.2, no other corporate action or proceedings on the part of Slick 50 are
necessary to authorize this Agreement or to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Slick 50 and such Slick 50 Stockholder and
constitutes a valid and legally binding agreement of Slick 50 and such Slick 50
Stockholder, enforceable against Slick 50 and such Slick 50 Stockholder in
accordance with its terms.
5.4. Consents and Approvals; No Violation. Except for
applicable requirements of the HSR Act and, in the case of Slick 50, the
approval of the Slick 50 Stockholders which is referred to in Section 8.2 and
the filing and recordation of appropriate merger documents as required by the
GCL (i) there is no legal impediment to Slick 50's or such Slick 50
Stockholder's consummation of the transactions contemplated by this Agreement,
and (ii) no filing with, and no permit, authorization, consent or approval of,
any public body or authority or, except as set forth on Schedule 5.4, other
third party is necessary for the consummation by Slick 50 or such Slick 50
Stockholder of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by Slick 50 or such Slick 50
Stockholder, nor the consummation by Slick 50 or such Slick 50 Stockholder of
the transactions contemplated hereby nor compliance by Slick 50 or such Slick
50 Stockholder with any of the provisions hereof will (i) conflict with or
result in any violation of any provision of the Certificate of Incorporation or
By Laws of Slick 50 or, in the case of Gold Eagle, the Certificate of
Incorporation or By Laws of Gold Eagle, (ii) violate any statute, rule,
regulation, order, writ, injunction or decree of any public body or authority
by which Slick 50 or any of the Slick 50 Subsidiaries or such Slick 50
Stockholder or any of their respective properties is bound or (iii) except as
set forth on Schedule
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5.4, 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) under any contract, agreement, note,
bond, mortgage, indenture, license, lease, franchise, permit or other
instrument or obligation to which Slick 50, any of the Slick 50 Subsidiaries or
such Slick 50 Stockholder is a party, or by which any of their respective
properties are bound, except, in the case of Slick 50 or the Slick 50
Subsidiaries, where such breach would not have a material adverse effect on the
financial condition, operations or business of Slick 50 and the Slick 50
Subsidiaries taken as a whole.
5.5. Financial Statements. (a) Slick 50 has previously
furnished to the Parent copies of Slick 50's consolidated financial statements
(including a year end balance sheet, an annual statement of income and a
statement of stockholders' equity) for each of the three fiscal years ended
November 30, 1994, together with the related audit reports of Ernst & Young,
independent certified public accountants.
(b) Slick 50 has also previously furnished to the Parent
unaudited consolidated financial statements of Slick 50 containing a balance
sheet at February 28, 1995 (the "Slick 50 Balance Sheet"), and a statement of
income for the three month period from November 30, 1994 to February 28, 1995
(the "Slick 50 Income Statement").
(c) The financial statements referred to in Sections 5.5(a)
and (b) (collectively, the "Financial Statements") are true and complete in all
material respects, and have been prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis from period to
period, except such changes as are required or permitted by changes in
generally accepted accounting principles and approved by Slick 50's certified
public accountants, and except that the unaudited interim consolidated
financial statements are subject to normal year end audit adjustments and do
not contain footnotes. The Financial Statements fairly present in all material
respects the financial condition of Slick 50 and the Slick 50 subsidiaries at
the respective dates thereof and the results of operations of Slick 50 and the
Slick 50 subsidiaries for the periods then ended.
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5.6. Absence of Undisclosed Liabilities. Except as set forth
on Schedule 5.6, neither Slick 50 nor any of the Slick 50 Subsidiaries has any
liabilities, obligations or contingencies of any nature whatsoever (whether
absolute, accrued, contingent or otherwise), except for (i) liabilities,
obligations or contingencies which are accrued or reserved against on the face
of (and not solely in any notes to) the Slick 50 Balance Sheet, (ii) immaterial
liabilities which were incurred after the date of the Slick 50 Balance Sheet
and (iii) liabilities arising under any agreements, licenses, contracts, leases
and commitments (x) listed on Schedule 5.19 hereto or which are not required to
be listed on Schedule 5.19 hereto because of the applicable thresholds set
forth in Section 5.19 or (y) which are entered into after the date of this
Agreement in the ordinary course of business in accordance with the terms of
this Agreement.
5.7. Absence of Material Adverse Change. Since February 28,
1995, except as specifically set forth in Schedule 5.7 or 5.19 hereto, neither
Slick 50 nor any of the Slick 50 Subsidiaries has:
(a) incurred any material obligations, liabilities or
commitments, whether absolute, accrued, contingent or otherwise
(including, without limitation, liabilities as a guarantor or
otherwise with respect to obligations of others),
(b) mortgaged, pledged or subjected to any Liens (other than
a Permitted Lien) any of its respective material assets, tangible or
intangible,
(c) acquired or disposed of any material assets or
properties, or entered into any agreement or other arrangement for any
such acquisition or disposition, other than, in any case, any
disposition of inventory in the ordinary course of business consistent
with past practices,
(d) forgiven or cancelled any material debts or claims,
(e) declared, made, paid or set apart any sum for any
dividend or other distribution to the stockholders of Slick 50 or
purchased or redeemed any shares of Slick 50's capital stock or issued
or granted any option, warrant or right to purchase any capital stock
of
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Slick 50 or any of the Slick 50 Subsidiaries, or reclassified Slick
50's capital stock,
(f) authorized the creation or issuance of or issued, sold or
disposed of or created any obligation to issue, sell or dispose of any
shares of Slick 50's or any of the Slick 50 Subsidiaries' capital
stock of any class, any notes, bonds or other securities, or any
options, warrants or rights to purchase any such shares, notes, bonds
or other securities, or any securities convertible into or
exchangeable for such shares, notes, bonds or other securities,
(g) increased or committed to increase in any manner the
compensation, bonus or bonus opportunity or fringe benefits of any
Employee or consultant (other than salary or wage increases granted in
the ordinary course of business and consistent with past practice or
pursuant to any existing contractual obligation listed on Schedule
5.19 hereto), entered into, adopted or amended or committed to enter
into, adopt or amend any employment, consulting, retention, change in
control, collective bargaining, bonus or other incentive compensation,
profit-sharing, health or other welfare, stock option or other equity,
pension, retirement, vacation, severance, deferred compensation or
other employment, compensation or benefit plan, policy, agreement,
trust, fund or arrangement for the benefit of any Employee or
consultant (whether or not legally binding),
(h) entered into any material transaction or contract other
than in connection with the transactions contemplated hereby,
(i) purchased, sold, assigned, pledged or otherwise
transferred or licensed any material tangible assets or any patent,
trademark, trade name, copyright, license, franchise, design or other
intangible assets or property,
(j) amended its Certificate of Incorporation or By Laws,
(k) changed any accounting methods or practices, including,
without limitation, any change in depreciation or amortization
policies or rates,
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(l) solicited any offer from another person or entity for the
purchase or other acquisition of all or any material part of the
shares or assets of Slick 50 or any of the Slick 50 Subsidiaries,
(m) suffered any damage, destruction or loss (whether or not
covered by insurance) to the tangible assets of Slick 50 or any of the
Slick 50 Subsidiaries that materially and adversely affects the
financial condition, operations or business of Slick 50 and the Slick
50 Subsidiaries taken as a whole,
(n) suffered any strike or other material labor trouble that
materially and adversely affects the financial condition, operations
or business of Slick 50 and the Slick 50 Subsidiaries taken as a
whole, or
(o) suffered any loss of employees or customers that
materially and adversely affects the financial condition, operations
or business of Slick 50 and the Slick 50 Subsidiaries taken as a
whole.
5.8. Finders and Investment Bankers. All negotiations
relating to this Agreement and the transactions contemplated hereby have been
carried on without the intervention of any person acting on behalf of Slick 50
or such Slick 50 Stockholder in such manner as to give rise to any valid claim
against the Parent, the Company or Slick 50 for any broker's or finder's fee or
similar compensation.
5.9. Severance, Termination, Change in Control and Similar
Agreements. Except as set forth on Schedule 5.9 hereto, neither Slick 50 nor
any of the Slick 50 Subsidiaries is a party to or bound by any agreement,
commitment or arrangement with or for the benefit of any current or former
employee or director providing for any severance, termination, change in
control or retention payments or benefits or for the vesting, enhancement or
acceleration of any payments or benefits in connection with or as a result of,
directly or indirectly, any change in control of Slick 50 or any of the Slick
50 Subsidiaries, or will be a party to or bound by any such agreement,
commitment or arrangement at the Effective Time.
5.10. Real and Personal Property. (a) Schedule 5.10(a)
hereto lists all real property owned (the "Owned Real Property") or leased (the
"Leased Real Property") or held for use by Slick 50 or any of the Slick 50
Subsidiaries
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and contains a legal description of each parcel of real property owned by Slick
50 or any of the Slick 50 Subsidiaries, including a summary description of the
buildings, structures and improvements thereon. Slick 50 has previously
delivered to the Parent a true and correct copy of each lease of real property
to which Slick 50 or any of the Slick 50 Subsidiaries is a party.
(b) Schedule 5.10(b) hereto contains a list of all material
equipment and other personal property owned or leased (and so identified as
owned or leased) by and carried on the books of Slick 50 or any of the Slick 50
Subsidiaries. A copy of each such lease has previously been delivered to the
Parent.
(c) Slick 50 and each Slick 50 Subsidiary is the owner of,
and has good and valid title to, all of the rights, title and interests in, to
and under all of the properties, assets, rights, claims and contracts of every
kind, character and description owned or held by it for use in connection with
its business, whether real (as to which it has good and marketable title),
personal or mixed, tangible or intangible (including goodwill) including,
without limitation, all assets reflected on the Slick 50 Balance Sheet or
utilized in the operations reflected in the Slick 50 Income Statement of Slick
50 included in the Financial Statements, as the same may exist on the Closing
Date, except for (i) cash expended and (ii) inventories and other assets sold
and receivables collected in the ordinary course of business since February 28,
1995, in all cases free and clear of all Liens, except for Permitted Liens and
as set forth on Schedule 5.10(c) hereto. To the knowledge of Slick 50, Slick
50 and each Slick 50 Subsidiary has maintained all tangible assets material to
its respective business in reasonable repair, working order and operating
condition, subject only to ordinary wear and tear, and all such tangible assets
are adequate and suitable in all material respects for the purposes for which
they are presently being used.
(d) With respect to each lease of real or personal property
listed in Schedule 5.10(a) hereto (i) such lease is in full force and effect
and is valid, binding and enforceable against Slick 50 or the applicable Slick
50 Subsidiary, as the case may be, and to the best of Slick 50's knowledge, the
lessor thereof, (ii) all accrued and payable rents have been paid, (iii) Slick
50 or such Slick 50 Subsidiary, as the case may be, is in peaceable possession
of the real property or personal property which
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is subject thereto and (iv) neither Slick 50 nor such Slick 50 Subsidiary, as
the case may be, nor to the knowledge of Slick 50, the lessor thereof, is in
default of any material provision thereof, and to the knowledge of Slick 50, no
event that with the giving of notice, the lapse of time or the happening of any
further event, or both, would become a default of a material provision, has
occurred under any such lease.
(e) Except as set forth on Schedule 5.10(e) hereto, Slick 50
and each Slick 50 Subsidiary has all easements, rights-of-way and similar
authorizations required for the ownership and use of the real property owned by
it and listed on Schedule 5.10(a) hereto, excluding immaterial easements,
rights-of-way or similar authorizations. Neither the whole nor any portion of
any real property owned or occupied by Slick 50 or any of the Slick 50
Subsidiaries has been condemned or otherwise taken by any public authority, and
neither Slick 50 nor any of the Slick 50 Subsidiaries has any notice that any
such condemnation or taking is threatened or contemplated.
(f) (i) None of the properties owned or occupied by Slick 50
or any of the Slick 50 Subsidiaries nor the occupancy or operation thereof is
in violation in any material respect of any law or any building, zoning or
other ordinance, code or regulation, the violation of which would have a
material adverse effect on the financial condition operations or business of
Slick 50 and the Slick 50 Subsidiaries taken as a whole; (ii) no notice from
any governmental body has been served upon Slick 50 or any of the Slick 50
Subsidiaries or upon any property owned or occupied by Slick 50 or any of the
Slick 50 Subsidiaries claiming any material violation of any such law,
ordinance, code or regulation or requiring, or calling to the attention of
Slick 50 or any of the Slick 50 Subsidiaries the need for, any work, repair,
construction, alterations or installation on or in connection with any such
properties which has not been complied with; and (iii) there is no material
encroachment of the improvements located on the real property owned or occupied
by Slick 50 or any of the Slick 50 Subsidiaries upon any adjoining property, or
of improvements located on any adjoining property upon any property owned or
occupied by Slick 50 or any of the Slick 50 Subsidiaries.
5.11. Litigation. Except as set forth on Schedule 5.11
hereto, there is not any governmental investigation or inquiry relating to
Slick 50 or any of the Slick 50 Sub-
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34
sidiaries which is pending and to which Slick 50 or any of the Slick 50
Subsidiaries is a party or of which Slick 50 or any of the Slick 50
Subsidiaries has received notice, nor is Slick 50 or any of the Slick 50
Subsidiaries party to any action, suit or proceeding which relates to the
transactions contemplated by this Agreement or would, if adversely determined,
result in any material liability to Slick 50 or any of the Slick 50
Subsidiaries, nor has Slick 50 or any of the Slick 50 Subsidiaries received an
actual threat of any such action, proceeding, investigation or inquiry. No
such action, proceeding, investigation or inquiry has been pending at any time
since December 31, 1992. There are no material citations, fines or penalties
heretofore asserted against Slick 50 or any of the Slick 50 Subsidiaries under
any federal, state, local or foreign law which remain unpaid, nor, except as
set forth on Schedule 5.11, has Slick 50 or any of the Slick 50 Subsidiaries
received any notices or any other communications since December 31, 1992 from
any federal, state, local or foreign agency or other governmental authority
with respect to any material violations or alleged violations of any material
federal, state, local or foreign law or regulation.
5.12. Compliance with Other Instruments and Laws. Neither
Slick 50 nor any of the Slick 50 Subsidiaries is in violation of or default
under any term of (a) its respective Certificate of Incorporation or By Laws,
(b) any note, bond, mortgage, indenture, instrument or agreement relating to
indebtedness for borrowed money, (c) any judgment, decree or order of any court
or governmental body, or (d) except as may be set forth in Schedule 5.12
hereto, any other material contract, agreement, license, lease, franchise,
permit or other instrument or obligation to which it is a party or by which it
or any of its respective properties or assets is bound, except where any such
default would not have a material adverse effect on the financial condition,
operations or business of Slick 50 and the Slick 50 Subsidiaries taken as a
whole. Slick 50 and each of the Slick 50 Subsidiaries is in compliance in all
material respects with all statutes, laws, ordinances, rules, regulations,
permits, concessions, grants, franchises, licenses or other governmental
authorizations or approvals applicable to the operation of its respective
businesses, except where the failure to so comply would not have a material
adverse effect on the financial condition, operations or business of Slick 50
and the Slick 50 Subsidiaries taken as a whole. All permits, concessions,
grants, franchises, licenses and other governmental authorizations and
approvals material to the conduct of the busi-
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35
ness of Slick 50 and each of the Slick 50 Subsidiaries have been duly obtained
and are in full force and effect. There are no proceedings pending or, to the
best of Slick 50's or any of the Slick 50 Stockholders' knowledge, threatened
which may result in the revocation, cancellation, suspension or materially
adverse modification thereof. None of such permits, concessions, grants,
franchises, licenses or other governmental authorizations and approvals will be
affected in a manner that would have a material adverse effect on the financial
condition, operations or business of Slick 50 and the Slick 50 Subsidiaries
taken as a whole by the consummation of the transactions contemplated by this
Agreement.
5.13. Taxes. (a) All Taxes that are or may be required to
be paid, collected or withheld by or with respect to Slick 50, any Slick 50
Subsidiary or any of their assets or business on or before the Closing Date or
that are or may be chargeable as a Lien on any of their assets have been timely
paid or collected or withheld and remitted to the appropriate taxing
authorities, except (i) as set forth on Schedule 5.13 and (ii) for any Taxes
which are not yet due and payable or are being contested in good faith by
appropriate proceedings and, in either case, for which adequate reserves have
been established and are being maintained in accordance with U.S. generally
accepted accounting principles.
(b) Except as set forth on Schedule 5.13, all Tax returns,
reports and filings ("Tax Returns") that are or may be required to be filed
(considering all extensions) by or with respect to Slick 50, any Slick 50
Subsidiary or any of their assets or business on or before the Closing Date
have been timely filed with the appropriate taxing authorities. All such Tax
Returns are true and correct in all material respects.
(c) Except as set forth on Schedule 5.13, none of Slick 50
and the Slick 50 Subsidiaries (i) has received any written notice of deficiency
or assessment of Tax from any taxing authority or, to the knowledge of Slick 50
and each of the Slick 50 Subsidiaries, has been threatened by any taxing
authority with any other deficiency or assessment of Tax, (ii) is currently
under, or has received notice of commencement of, any Tax audit by any taxing
authority or (iii) has executed any waiver of the statute of limitations with
respect to any taxable period.
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(d) Except as set forth on Schedule 5.13, neither Slick 50
nor any Slick 50 Subsidiary is or has been a member of any consolidated,
combined, unitary or similar group for purposes of filing Tax Returns or paying
Taxes at any time.
(e) Except as set forth on Schedule 5.13, there is no
contract, agreement or intercompany account system (including Tax sharing,
allocation and indemnification agreements) under which Slick 50 or any Slick 50
Subsidiary has, or may at any time in the future have, an obligation to
contribute to the payment of any portion of a Tax (or pay any amount computed
by reference to any portion of a Tax).
(f) Except as set forth on Schedule 5.13, no written ruling
or decision has been received from, and no closing or other similar agreement
has been executed with, any taxing authority that will be binding upon Slick 50
or any Slick 50 Subsidiary after the Closing.
(g) Neither Slick 50 nor any Slick 50 Subsidiary shall as a
result of the transactions contemplated hereby make or become obligated to
make, any excess parachute payment, as defined in Section 280G of the Code.
(h) Neither Slick 50 nor any Slick 50 Subsidiary has at any
time filed a consent under section 341(f) of the Code.
(i) Neither Slick 50 nor any Slick 50 Subsidiary is or has
been a "United States real property holding corporation" (as defined in section
897(c)(2) of the Code) during the applicable period specified in section
897(c)(1)(A)(ii) of the Code.
(j) None of the assets of Slick 50 or any Slick 50 Subsidiary
(i) is property required to be treated as being owned by any other person under
the "safe harbor lease" provisions of former section 168(f)(8) of the Internal
Revenue Code of 1954, as amended, or (ii) has been financed with or directly or
indirectly secures any bond or debt the interest on which is tax-exempt under
section 103(a) of the Code.
(k) Neither Slick 50 nor any of the Slick 50 Subsidiaries nor
such Slick 50 Stockholder has taken or agreed to take any action or has any
knowledge of any fact or circumstance that would prevent the transactions
contemplated hereby, including the Merger, from qualifying as a
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37
reorganization within the meaning of section 368(a) of the Code.
5.14. ERISA. Schedule 5.14 hereto contains a true and
complete list of each "employee benefit plan", as such term is defined in
section 3(3) of ERISA, and each bonus, incentive or deferred compensation,
severance, termination, retention, change in control, employment, stock option
or other equity-based, performance or other employee or retiree benefit or
compensation plan, trust, fund, program, arrangement, agreement, policy or
understanding, whether written or unwritten, that provides or may provide
benefits or compensation in respect of any employee, former employee, director
or former director of Slick 50 or any Slick 50 Subsidiary or the beneficiaries
or dependents of any such person (such employees, former employees, directors,
former directors, beneficiaries and dependents referred to collectively as the
"Employees") or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by Slick 50 or any of the Slick 50 Subsidiaries or any other trade
or business, whether or not incorporated, which, together with Slick 50 or any
of the Slick 50 Subsidiaries, is or would have been at any date of
determination occurring within the preceding six years, treated as a single
employer under section 414 of the Code (such trades and businesses referred to
as the "Related Persons"), or to which Slick 50 or any of the Slick 50
Subsidiaries or any Related Person contributes or is or has been obligated or
required to contribute (collectively, the "Plans").
Each Plan intended to be qualified under section 401(a) of the
Code, and the trust (if any) forming a part thereof, has received a favorable
determination letter from the IRS as to its qualification under the Code as
currently in effect and to the effect that each such trust is exempt from
taxation under section 501(a) of the Code, and nothing has occurred since the
date of such determination letter that could adversely affect such
qualification or tax-exempt status.
Neither Slick 50 nor any of the Slick 50 Subsidiaries nor any
Related Person would be liable for any material amount pursuant to section
4062, 4063 or 4064 of ERISA if any Plan that is subject to Title IV of ERISA
were to terminate as of the date hereof. Neither Slick 50 nor any of the Slick
50 Subsidiaries nor any Related Person has been involved in any transaction
that could cause Slick 50 or any
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38
of the Slick 50 Subsidiaries to be subject, directly or indirectly, to liability
under section 4069 or 4212 of ERISA. Neither Slick 50 nor any of the Slick 50
Subsidiaries nor any Related Person has incurred (either directly or indirectly,
including as a result of any indemnification obligation or joint and several
liability provision of any applicable law) any material liability under or
pursuant to Title I or IV of ERISA or the penalty, excise tax or joint and
several liability provisions of the Code relating to employee benefit plans and,
to the knowledge of Slick 50 and each of the Slick 50 Subsidiaries, no event,
transaction or condition has occurred or exists which could result in any such
liability to Slick 50 or any of the Slick 50 Subsidiaries. Each of the Plans
has been operated and administered in all respects in accordance with all
applicable laws, including but not limited to ERISA and the Code, except where
any such noncompliance would not result in a material liability to Slick 50 or
any of the Slick 50 Subsidiaries. There are no material pending or, to the
knowledge of Slick 50 and each of the Slick 50 Subsidiaries, threatened claims
by or on behalf of any of the Plans, by any Employee or otherwise involving any
such Plan or the assets of any Plan (other than routine claims for benefits). No
Plan is a "multiple employer plan" within the meaning of section 4063 or 4064 of
ERISA or a "multiemployer plan" within the meaning of section 4001(a)(3) of
ERISA. Each Plan that is subject to the minimum funding standards of ERISA or
the Code satisfies such standards under section 412 and 302 of the Code and
ERISA, respectively, and no such Plan has incurred an "accumulated funding
deficiency" within the meaning of such sections, whether or not waived. All
contributions and premiums required to have been made by Slick 50 or any of the
Slick 50 Subsidiaries to or in respect of any Plan under the terms of any such
Plan or pursuant to any applicable collective bargaining agreement or applicable
law (including, without limitation, ERISA and the Code) have been made within
the earliest time prescribed by any such Plan, agreement or law. No Employee is
or may become entitled to post-employment benefits of any kind by reason of
employment with Slick 50 or any of the Slick 50 Subsidiaries, including, without
limitation, death or medical benefits (whether or not insured), other than (i)
coverage mandated by section 4980B of the Code, (ii) retirement benefits payable
under any Plan intended to qualify under section 401(a) of the Code or (iii)
deferred compensation adequately reserved against in the Slick 50 Balance Sheet
or, to the extent not so reserved, compensation deferred with respect to
services rendered after February 28, 1995 in the ordinary course of
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the business of the Company and consistent with past practice. To the extent
required by U.S. generally accepted accounting principles, the Slick 50 Balance
Sheet will properly and adequately reflect any and all liabilities and
obligations of Slick 50 and each of the Slick 50 Subsidiaries relating to any
period ending on or prior to the date thereof to or in respect of the Employees
or the Plans for (A) unpaid compensation, salaries, wages, vacation and sick
pay, disability payments and other payroll items (including, without limitation,
bonus, incentive and deferred compensation) and (B) unpaid or unfunded
contributions, benefits, costs, Pension Benefit Guaranty Corporation premiums
and expenses to or in respect of any Plan.
5.15. Accounts Receivable. The accounts and notes receivable
of Slick 50 and the Slick 50 Subsidiaries reflected on the Closing Balance Sheet
shall have arisen only from bona fide transactions in the ordinary course of
business and shall be good and collectable free and clear of any Liens, except
to the extent of the reserve for uncollectible accounts and notes receivable
established on the Closing Balance Sheet. Slick 50 and each of the Slick 50
Subsidiaries has delivered to the Parent an accurate dating of all of its
respective accounts receivable as of February 28, 1995.
5.16. Inventories. All of Slick 50's and the Slick 50
Subsidiaries' inventories and supplies are reflected on the Slick 50 Balance
Sheet at cost or market, whichever is lower; now are, and on the Closing Date
will be, of sufficient quality or quantity for the normal operation of Slick
50's and the Slick 50 Subsidiaries' respective businesses; and did not on
February 28, 1995 contain, do not now contain, and on the Closing Date will not
contain, obsolete items carried on the Slick 50 Balance Sheet in an aggregate
amount in excess of 2.5% of the aggregate inventory and supplies in respect of
the businesses now conducted by Slick 50 and the Slick 50 Subsidiaries.
5.17. Insurance. Schedule 5.17 hereto lists all policies of
insurance covering Slick 50, any of the Slick 50 Subsidiaries or any of their
respective properties as maintained by Slick 50 or any of the Slick 50
Subsidiaries on the date hereof. Such policies are in full force and effect
and all premiums due thereon have been paid. Slick 50 and each of the Slick 50
Subsidiaries has complied in all material respects with the applicable terms
and provisions of such policies. No notice of termination or premium increase
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has been received under any of the policies. The insurance coverage provided
by such policies (including, without limitation, as to deductibles and
self-insured retentions) is of the type customarily maintained by similar
companies similarly situated.
5.18. Intellectual Property. (a) For purposes of this
Section 5.18, the term "Intellectual Property" means the United States and
foreign trademarks, trade names, trade dress, copyrights, and similar rights,
including registrations and applications to register or renew the registration
of any of the foregoing, the United States and foreign letters patent and
patent applications, and inventions, processes, designs, formulae, trade
secrets, know-how, confidential information, computer software, data and
documentation, and all similar intellectual property rights, tangible
embodiments of any of the foregoing (in any medium including electronic media),
and licenses of any of the foregoing.
(b) Schedule 5.18(b) hereto sets forth a complete and correct
list of all Intellectual Property that constitute trademarks and tradenames
that is owned by Slick 50 or any of the Slick 50 Subsidiaries. All of the
Intellectual Property that is owned by Slick 50 or any of the Slick 50
Subsidiaries (the "Owned Intellectual Property") constitutes all of the
Intellectual Property used or held for use in connection with, necessary for
the conduct of, or otherwise material to Slick 50's or any of the Slick 50
Subsidiaries' businesses (as presently conducted), except for computer software
licensed to Slick 50 or any of the Slick 50 Subsidiaries by third parties and
any other Intellectual Property Licenses under which Slick 50 or a Slick 50
Subsidiary is a licensee. Schedule 5.18(b) sets forth a complete and correct
list of all written or oral licenses and arrangements (i) pursuant to which the
use by any person of Intellectual Property (other than computer software) is
permitted by Slick 50 or any of the Slick 50 Subsidiaries and (ii) pursuant to
which the use by Slick 50 or any of the Slick 50 Subsidiaries of Intellectual
Property (other than computer software) is permitted by any person
(collectively, together with any of the foregoing relating to computer
software, the "Intellectual Property Licenses"). Immediately after the
Effective Time, Slick 50 and each of the Slick 50 Subsidiaries will have the
right to use all Intellectual Property described on Schedule 5.18(b) and all
computer software licensed by Slick 50 or any of the Slick 50 Subsidiaries and
will own all Owned Intellectual Property, free and clear of Liens, except as
set forth on Schedule 5.18(b). All Intel-
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lectual Property Licenses are in full force and effect in accordance with their
terms, and are free and clear of any Liens, except any Liens created by the
terms thereof, Permitted Liens or as set forth in Schedule 5.18(b). Neither
Slick 50 or any of the Slick 50 Subsidiaries nor, to the knowledge of Slick 50,
any other party is in default under any Intellectual Property License, except
where such default would not have a material adverse effect on the financial
condition, operations or business of Slick 50 and the Slick 50 Subsidiaries
taken as a whole and no such default is currently threatened. The conduct of
Slick 50's and each of the Slick 50 Subsidiaries' businesses does not infringe
the rights of any third party in respect of any Intellectual Property, except
as set forth on Schedule 5.18(b). Except as set forth on Schedule 5.18(b), to
the knowledge of Slick 50, none of the Owned Intellectual Property is being
infringed by third parties. Except as set forth on Schedule 5.18(b), there is
no claim or demand of any person pertaining to, or any proceeding which is
pending or threatened that challenges the rights of Slick 50 or any of the
Slick 50 Subsidiaries in respect of any Owned Intellectual Property or
Intellectual Property License, or that claims that any default exists under any
Intellectual Property License. Except as set forth on Schedule 5.18(b), the
Owned Intellectual Property has been duly registered with, filed in or issued
by, as the case may be, the United States Patent and Trademark Office and
United States Copyright Office or other filing offices, domestic or foreign, to
the extent necessary or, in the reasonable judgment of Slick 50, desirable, to
ensure sufficient protection under any applicable law, and the same remain in
full force and effect.
5.19. Contracts. Set forth on Schedule 5.19 hereto is a
complete and accurate list as of the date hereof of all agreements, licenses,
contracts, leases and commitments of the following types (and all amendments
thereto), written or oral, to which Slick 50 or any of the Slick 50
Subsidiaries is a party or by which any of them or any of their respective
properties is bound as of the date hereof:
(a) Mortgages, etc. Mortgages, indentures, security
agreements and other agreements and instruments relating to the
borrowing of money or advances of credit;
(b) Partnership. Partnership or joint venture agreements;
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(c) Employment. Employment agreements and consulting
agreements;
(d) Collective Bargaining. Collective bargaining agreements;
(e) Bonus Plans, etc. Bonus, profit sharing, compensation,
stock option, pension, retirement, severance, deferred compensation or
other plans, agreements, arrangements, trusts or funds for the benefit
of employees, including all arrangements subject to ERISA;
(f) Sales Agency, etc. Material sales agency, manufacturer's
representative or distributorship agreements, supply agreements,
marketing agreements, advertising agreements, licenses and any
agreements relating to Intellectual Property, including all
Intellectual Property Licenses;
(g) Capital Expenditures. Agreements or commitments for
capital expenditures in excess of $150,000 for any single project (it
being represented and warranted that all agreements or commitments for
capital expenditures do not exceed $300,000 in the aggregate);
(h) Keepwell Agreements. Agreements to provide funds or to
make any investment (in the form of a loan, capital contribution or
otherwise) in any entity or business;
(i) Agreements with Affiliates. Agreements or commitments
with any officer or director of Slick 50 or any of the Slick 50
Subsidiaries or any person who owns more than five percent (5%) of the
issued and outstanding shares of Slick 50 Common Stock;
(j) Geographical Restrictions. Contracts or binding
commitments limiting the freedom of Slick 50 or any of the Slick 50
Subsidiaries to compete in any line of business or in any geographical
area or with any person or entity;
(k) Purchase of Materials, Etc. Agreements, orders or
commitments for the purchase of materials, supplies, or services, or
for the sale of products, or services, in any case, having an unexpired
term of more than 12 months or involving aggregate payments in excess
of $100,000; and
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(l) Other Agreements. All other agreements, contracts and
commitments (excluding purchase orders and sales orders created in the
ordinary course of business), written or oral, to which Slick 50 or
any of the Slick 50 Subsidiaries is a party or by which any of their
respective properties is bound as of the date hereof, any one (or
series) of which in any way involve payments or receipts of more than
$75,000 in the course of the year following the date hereof.
All of the agreements, licenses, contracts, leases and
commitments listed on Schedule 5.19 are in full force and effect and neither
Slick 50 nor any of the Slick 50 Subsidiaries has received written notice of a
default or event which, with the lapse of time or notice, or both, would
constitute an event of default thereunder.
5.20. Major Customers. (a) Schedule 5.20 hereto sets forth
for the twelve-month period ended February 28, 1995, (a) the names and
addresses of the 10 largest customers of Slick 50 and the Slick 50
Subsidiaries, taken as a whole (based on the aggregate value of products
ordered from Slick 50 and the Slick 50 Subsidiaries by such customers during
such period), and (b) the amount for which each such customer was invoiced
during such period. Neither Slick 50 nor any of the Slick 50 Subsidiaries has
received any written, or to the knowledge of Slick 50, any other notice that
any such customer of Slick 50 or any of the Slick 50 Subsidiaries (i) has
ceased, or will cease, to purchase the products of Slick 50 or any of the Slick
50 Subsidiaries, as the case may be, (ii) has materially reduced, or will
materially reduce, purchases of the products of Slick 50 or any of the Slick 50
Subsidiaries, as the case may be, or (iii) has sought, or is seeking, to
materially reduce the price it will pay for the products of Slick 50 or any of
the Slick 50 Subsidiaries, as the case may be.
(b) Except as set forth on Schedule 5.20(b) hereto, neither
Slick 50 nor any of the Slick 50 Subsidiaries has received any written or any
other notice that any person or entity with whom Slick 50 or any of the Slick
50 Subsidiaries does business will not continue to do business with Slick 50 or
any of the Slick 50 Subsidiaries after the Closing Date on terms and conditions
substantially the same as those prevailing during the past 12 months. Slick 50
and each of the Slick 50 Stockholders believe that Slick 50's and the Slick 50
Subsidiaries' respective relations with
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persons and entities material to the conduct of their respective businesses are
good.
5.21. Affiliate Transactions. Schedule 5.21 hereto contains
a list of all contracts, agreements, transactions or commitments between any
Slick 50 Stockholder, any former stockholder of Slick 50, any stockholder or
former stockholder of any of the Slick 50 Subsidiaries, any officer, employee
or director of Slick 50 or any of the Slick 50 Subsidiaries, any family member
of any of the foregoing or any other affiliate of any of the foregoing, on the
one hand, and Slick 50 or any of the Slick 50 Subsidiaries, on the other hand,
other than (i) compensation paid as part of the employment relationship for
services rendered or (ii) contributions by Slick 50 or any of the Slick 50
Subsidiaries or payments of benefits under any defined benefit programs of
Slick 50 or any of the Slick 50 Subsidiaries (collectively, the "Affiliate
Transactions"), that (x) took place or were entered into during the 24 months
preceding the date of this Agreement or (y) provide for payments to be made by
Slick 50 which will bind Slick 50 or any of the Slick 50 Subsidiaries after the
Closing. Effective on the Closing Date, except as set forth on Schedule 5.21,
each Slick 50 Stockholder irrevocably waives all known and unknown claims it
may have against Slick 50 or any of the Slick 50 Subsidiaries or any past or
current officer or director (in any capacity) and hereby releases the Parent
and the Company and all such other parties from claims arising out of any state
of facts existing prior to the Closing Date, regardless of whether any such
claim arises under any of the agreements listed on Schedule 5.21 or otherwise.
5.22. Environmental Matters. (a) Compliance with
Environmental Laws. Slick 50 and each of the Slick 50 Subsidiaries has
complied and is in compliance in all material respects with all applicable
environmental laws pertaining to its respective assets and ownership thereof,
and to the operation of its respective businesses. Neither Slick 50 nor any of
the Slick 50 Subsidiaries has received any written notice or any other notice,
alleging that it is in violation of any applicable environmental law relating
to any of its respective assets or to the use or ownership thereof, or to the
operation of its respective businesses.
(b) Other Environmental Matters. (i) Neither Slick 50 nor
any of the Slick 50 Subsidiaries nor, to the knowledge of Slick 50, any other
person has caused or taken any action that will result in, and neither Slick 50
nor any
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of the Slick 50 Subsidiaries is subject to, any material liability or
obligation (other than restrictions on the use of such property or assets
imposed by law none of which restrictions materially affect the operation of
the business of such entities as presently conducted) relating to (x) the
environmental conditions on, under, or about the properties or assets of Slick
50 or any of the Slick 50 Subsidiaries owned, leased, operated or used by Slick
50 or any of the Slick 50 Subsidiaries or any predecessor thereto at the
present time or in the past, including, without limitation, the air, soil and
groundwater conditions at such properties or (y) the past or present use,
management, handling, transport, treatment, generation, storage, disposal or
release of any hazardous materials.
(ii) Slick 50 and each of the Slick 50 Subsidiaries has
disclosed and made available to the Parent all material information, including,
without limitation, all studies, analyses and test results, in the possession,
custody or control of or otherwise known to Slick 50 or to any of the Slick 50
Subsidiaries relating to (x) the environmental conditions on, under or about the
properties or assets of Slick 50 and all of the Slick 50 Subsidiaries owned,
leased, operated or used by Slick 50 or any of the Slick 50 Subsidiaries or any
predecessor in interest thereto at the present time or in the past, and (y) any
hazardous materials used, managed, handled, transported, treated, generated,
stored or released by Slick 50 or any of the Slick 50 Subsidiaries or any other
person on, under, about or from any of the properties or assets of Slick 50 or
any of the Slick 50 Subsidiaries or in connection with the operation of Slick
50's or any of the Slick 50 Subsidiaries' businesses.
5.23. Sale of Securities. Such Slick 50 Stockholder has no
current plan or intention to dispose of any of the shares of Parent Common
Stock to be received by it in the Merger, whether by sale, exchange,
assignment, transfer or other disposition. Without limiting the generality of
the foregoing, such Slick 50 Stockholder is purchasing shares of Parent Common
Stock in the Merger solely for investment, with no present intention to
distribute any such shares to any person in violation of any securities laws.
Such Slick 50 Stockholder will not sell or otherwise dispose of any shares of
Parent Common Stock, except in compliance with the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder and any other
applicable securities laws.
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5.24. Banking and Personnel Matters. Schedule 5.24 hereto
sets forth a true, complete and correct list of: (i) the names of all banks and
other financial institutions (with account numbers) in which Slick 50 or any of
the Slick 50 Subsidiaries has an account or safe deposit box, and all of the
brokerage firms and other entities and persons holding funds or investments of
Slick 50 or any of the Slick 50 Subsidiaries, and the names of all persons
authorized to draw thereon or have access thereto, and (ii) the names of all
persons holding powers of attorney from Slick 50 and each of the Slick 50
Subsidiaries and a summary statement of the terms thereof.
5.25. Product Warranties. Schedule 5.25 hereto sets forth
(i) all product warranties issued by Slick 50 or any of the Slick 50
Subsidiaries during the past five (5) years, (ii) all warranty claims asserted
against Slick 50 or any of the Slick 50 Subsidiaries during the past five (5)
years and (iii) any unasserted claims of such nature of which Slick 50 is
aware.
5.26. Disclosure. This Agreement and each certificate or
other instrument or document furnished by or on behalf of Slick 50 or any of
the Slick 50 Stockholders to the Parent, the Company or any agent or
representative of the Parent or the Company pursuant hereto, or in connection
herewith, taken as a whole, do not contain any untrue statement of material
fact, or omit to state a material fact, required to be stated herein or
therein, or necessary to make the statements contained herein or therein, in
light of the circumstances under which they were made, not misleading.
5.27. Knowledge of Slick 50 Matters. As of the Closing, such
Slick 50 Stockholder has reviewed each of the representations and warranties of
Slick 50 contained in this Agreement, together with the Schedules hereto, and
has no knowledge of the incorrectness of any such representation or warranty or
the incompleteness of any such Schedule.
5.28. No Breach. Slick 50 is not aware of any existing
material default by Gold Eagle under Slick 50's Supply Agreement with Gold
Eagle, dated as of August 1, 1993.
5.29. No Other Representations. Except and to the extent set
forth in this Article V, Slick 50 and such Slick 50 Stockholder make no
representation and warranty
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whatsoever to the Parent and the Company and hereby disclaims all liability or
responsibility for any such other representation or warranty made, communicated
or furnished (orally or in writing) to the Parent or the Company or their
representatives (including without limitation, any opinion, information,
projection or advice that may have been or may be provided to the Parent or the
Company by any director, officer, employee, agent, consultant or representative
of Slick 50 or such Slick 50 Stockholder or any affiliate thereof, including the
Business Summary dated August, 1994 provided to the Parent).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF THE PARENT AND THE COMPANY
The Parent and the Company each jointly and severally
represent and warrant to Slick 50 and the Slick 50 Stockholders as follows:
6.1. Organization. Each of the Parent and the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and each has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.
6.2. Authority Relative to this Agreement. Each of the
Parent and the Company has all requisite corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Parent and the Company and the consummation by the Parent and the Company of
the transactions contemplated hereby have been duly and validly authorized and
approved by the Boards of Directors of the Parent and the Company,
respectively, and, immediately prior to the Effective Time, no other corporate
action or proceedings on the part of the Parent or the Company will be
necessary to authorize this Agreement or the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by each of the Parent and the Company and constitutes a valid and
binding agreement of the Parent and the Company, enforceable against the Parent
and the Company in accordance with its terms.
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6.3. Consents and Approvals; No Violation. Except for
applicable requirements of the HSR Act, the Securities Act, and filing and
recordation of appropriate merger documents as required by the GCL, no filing
with, and no permit, authorization, consent or approval of, any public body or
authority is necessary for the consummation by the Parent and the Company of
the transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated hereby nor compliance by the Parent or the Company with any of the
provisions hereof will (a) conflict with or result in any violation of any
provision of the Certificate of Incorporation or By Laws of the Parent or the
Company, (b) violate any statute, rule, regulation, order, writ, injunction or
decree of any public body or authority by which the Parent or the Company or
any of their respective properties is bound, or (c) 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) under, any contract, agreement, note, bond, mortgage, indenture,
license, lease, franchise, permit or other instrument or obligation to which
the Parent or the Company is a party, or by which either of them or any of
their respective properties is bound.
6.4. Finders and Investment Bankers. All negotiations
relating to this Agreement and the transactions contemplated hereby have been
carried on without the intervention of any person acting on behalf of the
Parent or the Company in such manner as to give rise to any valid claim against
Slick 50 or any of the Slick 50 Stockholders for any broker's fee or finder's
fee or similar compensation.
6.5. Litigation. As of the date of this Agreement, there is
no action, proceeding or, to the best of the Parent's knowledge, any
governmental investigation or inquiry pending to which the Parent or the
Company is a party or of which it has received actual notice which relates to
the transactions contemplated by this Agreement, nor, to the best of the
Parent's knowledge, has any such action, proceeding, investigation or inquiry
been threatened.
6.6. Financial Statements and Reports. The Parent has filed
all required forms, reports and documents with the SEC required to be filed by
it pursuant to the Securities Act and the Exchange Act, and the rules and
regulations promulgated thereunder, all of which have complied
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in all material respects with all applicable requirements of the Securities Act
and the Exchange Act and such rules and regulations. The Parent has previously
furnished to Slick 50 copies of all such forms, reports and documents filed by
the Parent with the SEC since January 1, 1993 (hereinafter collectively referred
to as the "Parent Reports"). None of the Parent Reports, including, without
limitation, any financial statements or schedules included therein, at the time
filed, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of the Parent included in the Parent
Reports were prepared in accordance with generally accepted accounting
principles applied on a consistent basis (except as otherwise noted in such
financial statements) and present fairly the financial position, results of
operations and changes in financial position of the Parent and its consolidated
subsidiaries as of the dates or the periods indicated, subject, in the case of
unaudited interim consolidated financial statements, to normal year-end
adjustments.
6.7. Stock Issuance. The Parent Common Stock issued pursuant
to this Agreement has been duly authorized for issuance and, if and when issued
and delivered by the Parent in accordance with the provisions of this
Agreement, will be validly issued, fully paid and non-assessable. The issuance
of the Parent Common stock under this Agreement is not subject to any
preemptive or similar rights.
ARTICLE VII
COVENANTS
7.1. Conduct of Business of Slick 50. Except as specifically
provided in this Agreement or except with the prior written consent of the
Parent, during the period from the date of this Agreement to the Effective Time,
Slick 50 will, and will cause each of the Slick 50 Subsidiaries to, conduct its
respective operations only in the ordinary and usual course, and use, and will
cause each of the Slick 50 Subsidiaries to use, customary and reasonable efforts
to preserve intact its respective business organizations, to keep available the
services of its respective employees and consultants and to maintain
satisfactory relationships with its material licensors, licensees, suppliers,
contractors,
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distributors, customers and others having business relationships with it. Slick
50 will promptly advise the Parent in writing of any change in the financial
condition, operations or business of Slick 50 and the Slick 50 Subsidiaries
taken as a whole which Slick 50 or any of the Slick 50 Subsidiaries recognizes
is or is likely to be materially adverse. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Effective Time, Slick 50 will not, and will not permit any of the
Slick 50 Subsidiaries to do any of the following without the prior written
consent of the Parent:
(a) amend its Certificate of Incorporation or By-Laws;
(b) subject to the exercise of its fiduciary obligations to
the stockholders of Slick 50 under applicable law after advice of
counsel with respect to such obligations, rescind, modify, amend or
otherwise change or affect any of the resolutions of the Board
recommending adoption of this Agreement and authorization of the
Merger;
(c) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any shares of stock of any class, or any
securities convertible into or exchangeable for shares of such stock,
except, in the case of Slick 50, as required by any outstanding
options to purchase Slick 50 Common Stock described in Section 5.2(a);
(d) split, combine or reclassify any shares of any class of
its capital stock, declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any class of its capital stock, or redeem or
otherwise acquire any shares of such capital stock;
(e) (i) except (x) as set forth on Schedule 5.19 or (y) in the
ordinary course of business under existing lines of credit, create,
incur, assume, maintain or permit to exist any long-term debt,
including obligations in respect of capital leases, or create, incur,
assume, maintain or permit to exist any short-term borrowing in an
aggregate amount for Slick 50 and the Slick 50 Subsidiaries exceeding
$20,000; (ii) assume,
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guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person; (iii) make any loans, advances or capital contributions to, or
investments in, any other person (other than customary loans or
advances in the ordinary course of business to employees); or (iv)
waive, release, grant or transfer any material rights or materially
modify or change any existing license, lease, contract or other
document material to Slick 50 or any of the Slick 50 Subsidiaries;
(f) (i) increase or commit to increase in any manner the
compensation, bonus or bonus opportunity or fringe benefits of any
Employee or the benefits, rights or entitlements under any Plan of any
Employee, except (x) as set forth on Schedule 5.9 or (y) in the
ordinary course of business and in accordance with its customary past
practices (in which event Slick 50 will consult with the Parent before
taking or allowing any Slick 50 Subsidiary to take any such action);
(ii) pay or commit to pay any compensation, bonus, pension or other
retirement benefit or allowance, fringe benefit or other benefit not
required by an existing Plan; (iii) amend or commit to amend any Plan;
or (iv) institute or enter into or commit to institute or enter into
any additional bonus, profit-sharing, incentive, stock option or other
equity benefit, deferred compensation, severance, retention, change in
control, pension, retirement, health, welfare, group insurance or other
employee or retiree benefit plan, agreement, trust, fund or
arrangement, or any additional employment or consulting agreement with
or for the benefit of any person;
(g) except in the ordinary course of business, consistent
with past practice, sell, transfer, mortgage or otherwise dispose of,
or encumber, or agree to sell, transfer, assign, mortgage or otherwise
dispose of or encumber, any properties, real, personal or mixed;
(h) enter into any other agreements, commitments or contracts
which, individually or in the aggregate, are material to Slick 50 or
any of the Slick 50 Subsidiaries, except agreements, commitments or
contracts for the purchase, sale or lease of goods or services in the
ordinary course of business, consistent with past practice and not in
excess of current requirements, or otherwise make any material change
in the conduct of
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the business or operations of Slick 50 or any of the Slick 50
Subsidiaries;
(i) enter into any agreement, commitment or contract with
respect to the purchase of capital assets involving an amount in
excess of $50,000, in any case, or which would cause Slick 50 or any
of the Slick 50 Subsidiaries to exceed their 1995 fiscal year budget
for capital expenditures of $938,900.
(j) enter into any other agreements, leases, commitments or
contracts which individually involve the expenditure by Slick 50 or
any Slick 50 Subsidiary of more than $50,000;
(k) willfully and intentionally take any action that would
result in the representations and warranties of Slick 50 and the Slick
50 Stockholders contained in this Agreement not being true and correct
on the date made and on the Closing Date;
(l) make any new elections, or make any changes to current
elections, with respect to Taxes;
(m) create any direct or indirect subsidiary of Slick 50
whether by acquisition, merger or otherwise; or
(n) enter into any written or oral agreement to do any of the
foregoing.
7.2. Parachute Payments. Prior to the Effective Time, Slick
50 shall obtain shareholder approval for each payment or benefit payable to or
for the benefit of any person who would be treated as a "disqualified person"
under section 280G(c) of the Code if such payment is contingent on (within the
meaning of Section 280G of the Code) the consummation of the transactions
contemplated hereby. Such shareholder approval shall be obtained by Slick 50
in a manner sufficient to satisfy section 280G(b)(5)(A)(ii) of the Code, such
that no payment or benefit may be treated as a payment described in section
280G(b)(2)(A)(i) of the Code.
7.3. Provision of Funds. Simultaneously with the Closing,
the Parent shall make available to Slick 50 all funds needed by Slick 50 to
enable Slick 50 to make all of the payments required to be made under the
second sentence of Section 9.3(i) hereof.
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7.4. Rule 144, etc. For a period of five years subsequent to
the Closing Date, the Parent will file the reports required to be filed by it
under the Exchange Act and the rules and regulations adopted by the Securities
and Exchange Commission thereunder to the extent required from time to time to
enable any Applicable Slick 50 Stockholder who receives Parent Common Stock in
the Merger to sell such shares without registration under the Securities Act
within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such rule may be amended from time to time, or (b) any
successor rule or regulation hereafter adopted by the Securities and Exchange
Commission.
7.5. Disposition of Acquired Business. For a period of one
year subsequent to the Closing Date, the Parent will not dispose, directly or
indirectly, of any portion of the Acquired Business to the extent that, after
giving effect to such disposition, the Company would not meet the continuity of
enterprise requirements set forth in Section 1.368-1(d)(3) of the Code with
respect to the assets acquired in the Merger.
ARTICLE VIII
ADDITIONAL AGREEMENTS
8.1. Proxy Statement; Filings; Compliance With Securities
Laws. (a) As promptly as practicable and in any event within 15 days after the
date hereof, each of the Parent, Slick 50 and the Slick 50 Stockholders shall
prepare and mail to the stockholders of record of Slick 50 as of June 2, 1995
(the "Record Date"), a proxy statement, the Form of Election and an offering
memorandum with respect to the transactions contemplated by this Agreement for
use in connection with the Stockholders' Meeting. The term "Proxy Statement"
shall mean such proxy statement, such offering memorandum and all related
materials, including, without limitation, the Form of Election, at the time the
same initially are mailed to Slick 50's Stockholders and all amendments or
supplements thereto, if any, similarly mailed. Each of the Parent and Slick 50
shall have a reasonable opportunity to review and comment on the Proxy
Statement. Slick 50, each of the Slick 50 Stockholders, the Parent and the
Company each shall use its commercially reasonable efforts to obtain and furnish
the information required to be included in the Proxy Statement. Without
limiting the generality of the foregoing, in connection with the preparation
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of the Proxy Statement, the Parent, the Company, Slick 50 and each of the
Slick 50 Stockholders each agree to use their commercially reasonable efforts to
ensure that the shares of Parent Common Stock issued in the Merger are issued
in compliance with all Federal and state securities laws, including without
limitation, Regulation D (Sections 230.501-230.508) under the Securities Act
and, in connection therewith, to furnish to the Slick 50 Stockholders all
required disclosure documents pertaining to the Parent, Slick 50 and the
Merger. The information provided and to be provided by the Parent, the Company,
the Slick 50 Stockholders and Slick 50, respectively, with respect to itself
for use in the Proxy Statement shall, on the date the Proxy Statement is first
mailed to Slick 50's Stockholders and on the date of the Stockholders' Meeting
referred to in Section 8.2 hereof, be true and correct in all material respects
and shall not omit to state any material fact required to be stated therein or
necessary in order to make such information not false or misleading, and the
Parent, Slick 50, each of the Slick 50 Stockholders and the Company each agree
to correct promptly any such information provided by it for use in the Proxy
Statement which shall have become false or misleading. The Proxy Statement,
when mailed, shall comply as to form in all material respects with all
applicable requirements of law.
(b) As promptly as practicable, each of Slick 50, the Slick 50
Stockholders, the Parent and the Company each shall properly prepare and file
any filings required under any Federal, state, county, local or municipal law
relating to the Merger and the transactions contemplated herein (such filings,
together with the filings previously made by the parties hereto under the HSR
Act, are, collectively, the "Filings"). The Parent, on the one hand, and Slick
50, on the other, shall promptly notify the other of the receipt of any comments
on, or any request for amendments or supplements to, the Filings by any
governmental official, and each of Slick 50 and the Parent will supply the other
with copies of all correspondence between it and each of its subsidiaries and
representatives, on the one hand, and any appropriate governmental official, on
the other hand, with respect to the Filings. The Filings, when filed, shall
comply as to Form in all material respects with all applicable requirements of
law.
8.2. Meeting of the Slick 50 Stockholders. Slick 50 shall
take all action necessary in accordance with the GCL and Slick 50's Certificate
of Incorporation and By
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Laws to duly call, give notice of, convene and hold a meeting of its
stockholders within 20 days after the date of the mailing of the Proxy Statement
to consider and vote upon the adoption of this Agreement and the Merger. At
such meeting, all the shares of Slick 50 Common Stock owned by the Parent, the
Company or any other subsidiary or affiliate of the Parent shall be voted in
favor of the Merger. The stockholder vote required for the adoption of this
Agreement and the Merger shall be the vote required by the GCL and the Slick
50's Certificate of Incorporation, which is a majority of the shares voting at
the meeting where a quorum is present. The Proxy Statement shall contain notice
of the meeting and the determinations and recommendations of the Board as to the
Merger set forth in Section 1.7 hereof, subject to the Board's fiduciary
obligations to the stockholders of Slick 50 under applicable law after advice of
counsel with respect to such obligations.
8.3. Additional Agreements. Subject to the terms and
conditions herein provided and, prior to the Stockholder's Meeting, subject to
the fiduciary obligations of the Board under applicable law after advice of
counsel with respect to such obligations, each of the parties hereto, including,
without limitation, each of the Slick 50 Stockholders, agrees to use its
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 to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement and to cooperate with one another in connection
with the foregoing, including using its commercially reasonable efforts to
obtain all necessary consents, approvals and authorizations as are required to
be obtained under any Federal, state or local law or regulation, to defend all
lawsuits or other legal proceedings challenging this Agreement or the
consummation of the transactions contemplated hereby, to cause to be lifted or
rescinded any injunction or restraining order or other order adversely affecting
the ability of the parties to consummate the transactions contemplated hereby,
and to effect all necessary registrations and Filings.
8.4. Acquisition Proposals. None of Slick 50, any of the
Slick 50 Stockholders or any of Slick 50's directors, officers, employees,
representatives or agents (collectively, the "Representatives") shall, directly
or indirectly, solicit or initiate inquiries or proposals from or enter into
any agreement with respect to or, subject (in the case of Slick 50 only) to the
Board's fiduciary obligations
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to the stockholders of Slick 50 under applicable law after advice of counsel
with respect to such obligations, provide any confidential information to or
participate in any discussions or negotiations with, any corporation,
partnership, persons or other entity or group (other than Parent and its
subsidiaries and their respective directors, officers, employees,
representatives and agents) concerning any sale of material assets or shares of
capital stock of Slick 50, or any merger, consolidation or similar transaction
involving Slick 50. Slick 50 and each of the Slick 50 Stockholders will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any third parties conducted heretofore with
respect to any of the foregoing. Each of Slick 50 and the Slick 50 Stockholders
will notify the Parent immediately if any such inquiries or proposals are
received by, any such information is requested from, or any such negotiations or
discussions are sought to be initiated or continued with, such person or any of
its Representatives, and will promptly request each person which has heretofore
executed a confidentiality agreement in connection with its consideration of an
acquisition of Slick 50 or any material portion of its assets or stock to return
or destroy all confidential information furnished to such person by or on behalf
of Slick 50 or any of its Representatives.
8.5. Access to Information; Confidentiality. Between the
date of this Agreement and the Effective Time, Slick 50 will give the Parent
and its authorized representatives access to all plants, offices, stores and
other facilities of Slick 50 and the Slick 50 Subsidiaries and to all of the
books and records of Slick 50 and will permit the Parent to make such
inspections as it may require and will cause its officers and employees to
furnish the Parent with such financial and operating data and other information
with respect to the business and properties of Slick 50 and the Slick 50
Subsidiaries as the Parent may from time to time request. Notwithstanding the
foregoing, Slick 50 shall not be obligated to disclose the formula for Slick 50
prior to the Effective Time. The Parent agrees to be bound by and comply with
all the terms and provisions of the Confidentiality Agreement applicable to the
Parent thereunder.
8.6. Sale of Parent Common Stock. Each Slick 50 Stockholder
agrees not to sell, exchange, assign, transfer or otherwise dispose of any
shares of Parent Common Stock issued to such Slick 50 Stockholder in the
Merger, including any such shares issued as Additional Purchase Price or in
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respect of the Readjustment Payment, for a period of one year following the
date on which any certificate or certificates representing such shares of
Parent Common Stock are delivered to such Slick 50 Stockholders, provided that
with respect to any shares of Parent Common Stock issued as Additional Purchase
Price, the foregoing restriction shall not apply to any sale, exchange,
assignment, transfer or other disposition (collectively, a "Disposition") of
shares of Parent Common Stock with respect to which there is delivered to the
Parent an opinion of Sewell & Riggs, Katten Muchin & Zavis, or another law firm
of nationally recognized standing, in any case, satisfactory in form and
substance to Parent, stating that such Disposition will not cause the Merger to
fail to qualify as a reorganization within the meaning of Section 368(a)(2)(D)
of the Code. Such certificate or certificates representing such shares of
Parent Common Stock shall contain an appropriate legend to the effect set forth
in this Section 8.6. The transfer restrictions on Parent Common Stock set
forth in this Section 8.6 shall not apply to a pledge of Parent Common Stock or
a transfer by death or pursuant to a voting trust arrangement (a "Permitted
Transfer").
8.7. Officers' and Directors' Insurance; Indemnification of
Officers and Directors. The Parent agrees that for the entire period from the
Effective Time until at least six years after the Effective Time (a) the
certificate of incorporation and the by-laws of the Surviving Corporation shall
contain the provisions with respect to indemnification and exculpation from
liability set forth in Slick 50's Certificate of Incorporation and By-Laws as
of the date of this Agreement, which provisions shall not be amended, repealed
or otherwise modified during such period in any manner that would adversely
affect the rights thereunder of individuals who on or prior to the Effective
Time were directors, officers, employees or agents of Slick 50 unless such
modification is required by law, and (b) the Surviving Corporation shall either
(x) maintain in effect Slick 50's current directors' and officers' liability
insurance covering those persons who are currently covered on the date of this
Agreement by Slick 50's directors' and officers' liability insurance policy (a
copy of which has been heretofore delivered to the Parent) (the "Slick 50
Indemnified Parties"), or (y) cause the Surviving Corporation's directors' and
officers' liability insurance then in effect to cover those persons who are
covered on the date of this Agreement by Slick 50's directors' and officers'
liability insurance policy with respect to those matters covered by, and
subject
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to the same terms and limitations imposed by, the directors' and officers'
liability insurance policy that the Parent generally provides for its own
directors and officers.
8.8. Public Announcements. The Parent, Slick 50 and each of
the Slick 50 Stockholders will consult with one another before issuing any
press release or otherwise making any public statement with respect to this
Agreement or the Merger and shall not issue any such press release or make any
such public statement prior to such consultation without the consent of the
Parent and Slick 50, except as in the opinion of counsel for Slick 50 or the
Parent, as the case may be, is required by law.
8.9. Indemnification of the Parties. (a) By the Slick 50
Stockholders. Subject to the terms and conditions set forth herein, the
Applicable Slick 50 Stockholders shall severally indemnify the Parent, the
Company, the Surviving Corporation and their respective affiliates and officers,
directors, employees, agents, advisors and representatives (collectively, the
"Parent Indemnitees"), and hold such Parent Indemnitees harmless from and
against, and pay and reimburse the Parent Indemnitees for, any and all demands,
claims, actions, losses, damages, liabilities, obligations, fines, Taxes,
royalties, deficiencies, costs and expenses (including reasonable attorneys'
fees and costs of investigation), whether or not resulting from third-party
claims, including interest and penalties with respect thereto (collectively,
"Parent Damages"), asserted against or incurred or sustained by a Parent
Indemnitee as a result of or arising out of (i) any misrepresentation or breach
of any representation, warranty, covenant or agreement of Slick 50 or any of the
Slick 50 Stockholders contained in or made pursuant to this Agreement or in any
schedule or other instrument, certificate, agreement or document delivered by
Slick 50 or any Slick 50 Stockholder pursuant to this Agreement (in the case of
any such representation or warranty, without taking into account any
qualification as to the materiality or material adverse effect contained in such
representation or warranty), (ii) any Investment Banking Fees or (iii) any
Transaction Costs in excess of $300,000.
(b) Limitation on Indemnity. In the event of any Claim for
indemnity under Section 8.9(a) in respect of any breach of any representations
and warranties, the Parent Indemnitees making such Claim shall not be entitled
to indemnification therefor unless the Parent Indemnitees have sustained Parent
Damages in excess of four hundred thousand
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dollars ($400,000) in the aggregate, in which case the Parent Indemnitees shall
be entitled to indemnification for the full amount of all Parent Damages
suffered or incurred which are in excess of such amount.
(c) By the Parent and the Company. Subject to the terms and
conditions set forth herein, the Parent and the Company, jointly and severally,
shall indemnify the Slick 50 Stockholders and their respective affiliates,
officers, directors, employees, agents, advisors and representatives
(collectively, the "Slick 50 Indemnitees") and hold the Slick 50 Indemnitees
harmless from and against, and pay and reimburse the Slick 50 Indemnitees for,
any and all demands, claims, actions, losses, damages, liabilities, obligations,
fines, Taxes, royalties, deficiencies, costs and expenses, whether or not
resulting from third- party claims, including interest and penalties with
respect thereto (collectively, "Slick 50 Damages"), asserted against or incurred
or sustained by any Slick 50 Indemnitee as a result of or arising out of (i) any
misrepresentation or breach of any representation, warranty, covenant or
agreement of the Parent or the Company contained in or made pursuant to this
Agreement or in any schedule or other instrument, certificate, agreement or
document delivered by the Parent or the Company pursuant to this Agreement or
(ii) any corporate obligation or liability of Slick 50 which is imposed on any
Slick 50 Indemnitee as a result of such Slick 50 Indemnitee's status as a
stockholder of Slick 50 prior to the Closing, except to the extent that such
obligation or liability arises as a result of the indemnification furnished by
such Slick 50 Indemnitee to the Parent Indemnitees pursuant to this Agreement.
(d) Conditions of Indemnification. The right of any Parent
Indemnitee or any Slick 50 Indemnitee, as the case may be (any such indemnitee,
an "Indemnitee"), to indemnity with respect to claims for Parent Damages or
Slick 50 Damages, as the case may be (any such claim, a "Claim"), shall be
subject to the following terms and conditions:
(i) Such Indemnitee shall give the Stockholders'
Representative or the Parent, as the case may (any such recipient of any such
notice, the "Indemnifying Parties") prompt notice of any Claim asserted against
or incurred by such Indemnitee, and such Indemnitee shall permit the
Indemnifying Parties (at their own expense) to assume the defense of any claim
or any litigation resulting therefrom, provided
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that (i) counsel for the Indemnifying Parties who shall conduct the defense of
such claim or litigation shall be reasonably satisfactory to such Indemnitee,
(ii) such Indemnitee may participate in such defense at the expense of such
Indemnitee and (iii) the failure of such Indemnitee to give notice as provided
herein shall not relieve the Indemnifying Parties of their respective
indemnification obligation under this Agreement except to the extent that such
failure results in a lack of actual notice to the Indemnifying Parties and the
Indemnifying Parties are prejudiced as a result of such failure to give notice.
Except with the prior written consent of such Indemnitee, the Indemnifying
Parties, in the defense of any such claim or litigation, shall not consent to
entry of any judgment or enter into any settlement that provides for injunctive
or other non-monetary relief affecting such Indemnitee, or that would materially
increase the Tax liability of any Indemnitee. After notice from the
Indemnifying Parties to such Indemnitee of their election to assume the defense
of such claim or action, the Indemnifying Parties shall not be liable to such
Indemnitee under this Section 8.9 for any legal or other expenses subsequently
incurred by such Indemnitee in connection with the defense thereof, other than
reasonable costs of investigation; provided that such Indemnitee shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses for such counsel shall be at the
expense of such Indemnitee unless (x) the employment thereof has been
specifically authorized by the Indemnifying Parties or (y) such Indemnitee shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Parties and in the reasonable judgment of such counsel it is
advisable for such Indemnitee to employ separate counsel.
(ii) In the event that within thirty (30) business days after
the Indemnifying Parties' receipt of an Indemnitee's delivery of notice of any
Claim pursuant to Section 8.9(d)(i), the Indemnifying Parties fail to notify
such Indemnitee of their intention to defend such claim, such Indemnitee shall
(upon further notice to the Indemnifying Parties) have the right to undertake
the defense, compromise, settlement or payment in full of such Claim for the
account of the Indemnifying Parties.
(iii) Notwithstanding anything in this Agreement to the
contrary, all rights of the Slick 50 Stockholders as
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either Indemnitees or Indemnifying Parties under this Section 8.9 shall be
exercisable exclusively by the Stockholders' Representative, and the Parent
shall be entitled to deal exclusively with the Stockholders' Representative in
respect of all such rights.
(iv) Any Claim for indemnity under this Section 8.9 not made
within the applicable survival period set forth in Section 12.3 shall be
waived, provided that any representation or warranty that would otherwise
terminate under this Agreement shall continue to survive, if a Claim for
indemnity shall have been made within the applicable survival period, until
such Claim has been satisfied or otherwise resolved. The parties agree that an
Indemnitee may at its option give notice of a Claim under this Section 8.9 as
soon as it has become aware of a potential Claim, regardless of whether any
Parent Damages or Slick 50 Damages, as the case may be, have been suffered, so
long as such Indemnitee shall in good faith determine that such potential Claim
is not frivolous or that such Indemnitee may be liable or otherwise incur
Parent Damages or Slick 50 Damages as a result of such potential Claim or
otherwise and shall give written notice of such determination to the Parent or
the Stockholders' Representative, as the case may be.
(v) Notwithstanding anything in this Section 8.9 to the
contrary, the exclusive remedy for Parent Damages under this Section 8.9 shall
be to make set-offs against any payments of (i) any Initial Base Consideration
Adjustment, (ii) any Readjustment Payments and (iii) any Additional Purchase
Price that are otherwise payable by the Parent to any Slick 50 Stockholder
pursuant to Articles III and IV hereof; provided that the Parent Indemnitees
shall not be entitled to be compensated more than once for the same Parent
Damage, it being understood and agreed that to the extent any Parent Damage has
the direct effect of reducing the Additional Purchase Price otherwise payable
to the Applicable Slick 50 Stockholders in any year, the Parent Indemnitees
shall be deemed to be compensated for such Parent Damage to the extent of such
direct reduction to such Additional Purchase Price. The Parent shall be
entitled to withhold from (i) any Initial Base Consideration Adjustment, (ii)
any Readjustment Payment and (iii) any Additional Purchase Price any amount of
Parent Damages claimed by any Parent Indemnitee pending final resolution as to
the amount, if any, of indemnity owed by the Slick 50 Stockholders in respect
of such Parent Damages.
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8.10. Expenses. Each of the Parent and the Company shall pay
its own costs and expenses incurred in connection with the transactions
contemplated under this Agreement. Subject to Section 3.1(b)(i), Slick 50
shall pay the Transaction Costs. The Slick 50 Stockholders will be exclusively
responsible for paying any Investment Banking Fees of Slick 50 or any of the
Slick 50 Stockholders unless, prior to the Closing, Slick 50 shall notify the
Parent that it wishes to pay any such Investment Banking Fees, in which case
the Initial Base Consideration shall be reduced by the amount of any such
Investment Banking Fees.
8.11. Gold Eagle Agreement. The Parent acknowledges that (i)
Slick 50's Supply Agreement with Gold Eagle, dated as of August 1, 1993, will
survive the Merger and continue in effect in accordance with its terms until
August 31, 1996 and (ii) from and after the Closing, it will not allow the
Company to terminate such Supply Agreement prior to its stated expiration date
unless Gold Eagle materially breaches its obligations thereunder.
ARTICLE IX
CLOSING CONDITIONS
9.1. Conditions Precedent to the Obligations of All Parties.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Closing of each of the following
conditions:
(a) This Agreement and the Merger shall have been approved
and adopted by the requisite vote of the stockholders of Slick 50 at
the Stockholders' Meeting referred to in Section 8.2.
(b) Any waiting period (and any extension thereof) applicable
to the consummation of the Merger under the HSR Act shall have expired
or been terminated.
(c) No preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission nor
any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority shall be in effect which would
(i) make the consummation of the
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Merger by Parent illegal or (ii) otherwise prevent the consummation of
the Merger.
(d) The Company and each of David A. Dillingham, Tom Floyd and
Lonnie McKinney shall have entered into a 3-year employment and
non-competition agreement mutually acceptable to each such individual
and the Parent, it being understood (i) that the salary to be paid to
each such individual under each such employment agreement shall be
equal to his current salary with Slick 50, ( ii) each such individual
shall be eligible to receive benefits, and participate in bonus plans,
which are substantially equivalent to the benefits and bonus plans
which are made available to employees of the Parent holding comparable
positions, (iii) each such non-competition agreement would terminate
not later than one year after the termination of such employee's
employment by the Company, (iv) such employee's obligation to keep
confidential the Slick 50 formula and other confidential information
shall survive forever and ( v) to the extent applicable, each such
employment agreement shall provide for the termination and cancellation
of any and all prior employment agreements between Slick 50 or any
Slick 50 Subsidiary.
(e) The Parent and the Slick 50 Stockholders shall have
entered into a Registration Rights Agreement substantially in the form
of Exhibit B hereto.
(f) The Parent, the Stockholders' Representative and the
Exchange Agent shall have entered into the Exchange Agent Agreement.
(g) The Stockholders' Representative and the Parent shall
have agreed on the content of Exhibit A for use pursuant to Section
3.1(b)(ii) hereof.
(h) The Parent shall have satisfied in full Slick 50's
obligations to Fash under the Restructure Agreement, dated April 1,
1995 by and between Slick 50 and Fash and the Promissory Note, dated
April 1, 1995, from Slick 50 to Fash, and Fash shall have delivered to
Slick 50 an unconditional release from the obligations of such
Restructure Agreement and Promissory Note.
9.2. Additional Conditions to the Obligation of Slick 50.
The obligation of Slick 50 to effect the Merger is also subject to each of the
following conditions:
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(a) Each of the Parent and the Company shall have performed in
all material respects each obligation to be performed by it hereunder
on or prior to the Closing.
(b) The representations and warranties of the Parent and the
Company set forth in this Agreement shall be true and correct at and
as of the Effective Time as if made at and as of such time.
(c) Slick 50 shall have received a certificate, dated the
Closing Date, of the President or any Vice President of the Parent to
the effect that the conditions specified in paragraphs (a) and (b) of
this Section 9.2 have been fulfilled.
(d) Slick 50 shall have received the opinion of Debevoise &
Plimpton, counsel to the Parent and the Company, addressed to them and
dated the Closing Date, as to such items and in such form and
substance as are reasonably requested by Slick 50.
(e) The Parent shall have furnished Fash with guaranty
substantially in the form of Exhibit C hereto.
(f) There shall not have occurred after the date hereof any
material adverse change in the financial condition, results of
operations or business of the Parent.
(g) There shall not be any action or proceeding commenced by
or before any court or governmental agency or authority in the United
States, or threatened by any governmental agency or authority in the
United States, that challenges the consummation of the Merger.
9.3. Conditions Precedent to Obligations of the Parent and
the Company. The obligations of the Parent and the Company to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following additional conditions:
(a) Slick 50 and each of the Slick 50 Stockholders shall have
performed in all material respects each of its respective obligations
under this Agreement required to be performed by it on or prior to the
Effective Time pursuant to the terms hereof.
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(b) The representations and warranties of Slick 50 and the
Slick 50 Stockholders contained in this Agreement shall be true and
correct in all material respects when made and at and as of the
Effective Time as if made at and as of such time (it being understood
and agreed that in applying the provision of this Section 9.3(b) to
any such representation and warranty, any separate qualification as to
materiality or material adverse effect contained in any such
representation or warranty shall be disregarded).
(c) There shall not have occurred after the date hereof any
material adverse change in the financial condition, results of
operations or business of Slick 50 and the Slick 50 Subsidiaries taken
as a whole.
(d) The Company shall not have received notice from any
holder of any share of Slick 50 Common Stock outstanding immediately
prior to the Closing that such holder has exercised or intends to
exercise its appraisal rights under Section 262 of the GCL
(e) The Parent shall have received a certificate, dated the
Closing Date, of the President of Slick 50 to the effect that the
conditions specified in paragraphs (a), (b), (c) and (d) of this
Section 9.3 have been fulfilled.
(f) There shall not be any action or proceeding commenced by
or before any court or governmental agency or authority in the United
States, or threatened by any governmental agency or authority in the
United States, that challenges the consummation of the Merger or seeks
to impose material limitations on the ability of the Parent to exercise
full rights of ownership of any of the material assets or business of
Slick 50 or the Company or seeks material damages from the Parent or
the Company in connection with such ownership.
(g) All necessary third-party consents, including, without
limitation, all of the consents listed on Schedule 9.3(g) hereto,
relating to the Merger and the other transactions contemplated by this
Agreement shall have been obtained.
(h) The Parent and the Company shall each have received the
opinion of Sewell & Riggs, counsel to
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Slick 50 and the Slick 50 Stockholders, addressed to them and dated the
Closing Date, as to such items and in such form and substance as are
reasonably requested by the Parent.
(i) The Slick 50 Option Plan and all other equity based
plans of Slick 50 (and all stock option agreements entered into under
any such plan) shall have been terminated and all outstanding options
for the purchase of Slick 50 Stock and other equity awards relating to
Slick 50 Stock issued thereunder or otherwise shall have been exercised
or cancelled without liability on the part of Slick 50. Each holder of
a Slick 50 Option shall have entered into an Option Cancellation
Agreement, substantially in the form of Exhibit D hereto, pursuant to
which, among other things, each such holder's Slick 50 Options shall be
cancelled in full in exchange for the payment to such holder (using
funds supplied by the Parent) of an amount in cash equal to the excess
of (i) the product of (x) the Per Share Price times (y) the number of
shares of Slick 50 Common Stock with respect to which such option was
exercisable over (ii) the aggregate exercise price for such option.
(j) The Parent shall have received certificates from Slick 50
and each of the Slick 50 Stockholders, dated the Closing Date and
sworn to under penalty of perjury, to the effect that it is not a
"United States real property holding corporation" within the meaning
of section 897(c)(2) of the Code, each such certificate to be in form
set forth in the Treasury regulations.
(k) If requested by the Parent, all of the indebtedness
reflected on Schedule 5.19(a) hereto shall have been repaid in full
(using funds supplied by the Parent) and all of the agreements and
instruments relating to such indebtedness, including all security
agreements, filings and related instruments, shall have been
terminated to the satisfaction of the Parent.
(l) The Registration Rights Agreements listed on Schedule
5.21 and the Co-Sale Agreement listed on Schedule 5.21 hereto shall
each have been terminated without any liability to Slick 50.
(m) Gold Eagle shall have waived any future rights to
reimbursement of legal fees pursuant to the arrangement described in
the third sentence of Item 1
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under the caption "Exception to Waiver of Claims" on Schedule 5.21.
ARTICLE X
CLOSING
10.1. Time and Place. The Closing shall take place at the
offices of Debevoise & Plimpton, 875 Third Avenue, New York, N.Y. 10022, at
10:00 a.m., local time, as soon as practicable following satisfaction of the
closing conditions set forth in Article IX.
10.2. Filings at the Closing. At the Closing, the Parent and
Slick 50 shall cause the Certificate of Merger to be filed and recorded in
accordance with the provisions of Sections 103 and 251 of the GCL, and shall
take any and all other lawful actions and do any and all other lawful things
necessary to cause the Merger to become effective.
ARTICLE XI
TERMINATION AND ABANDONMENT
11.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time:
(a) by mutual consent of the Parent and Slick 50;
(b) by either the Parent or Slick 50 if the Merger shall not
have been consummated on or before August 1, 1995; provided, however,
that the right to terminate this Agreement shall not be available to
any party whose failure to fulfill any obligation of this Agreement
has been the cause of, or resulted in, the failure of the Merger to
have occurred on or before the aforesaid date;
(c) by either the Parent or Slick 50, if at the Stockholders'
Meeting (including any adjournment thereof), this Agreement or the
Merger shall fail to be approved by the requisite vote of the
stockholders of Slick 50 under the GCL;
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(d) by the Parent, if Slick 50 or any of the Slick 50
Stockholders shall have materially breached any of its respective
covenants herein or if Slick 50 or any of the Slick 50 Stockholders
shall have made a material misrepresentation;
(e) by Slick 50, if either the Parent or the Company shall
have materially breached any of its covenants herein or if either the
Parent or the Company shall have made a material misrepresentation
herein;
(f) by either the Parent or Slick 50, if any court of
competent jurisdiction or other governmental agency of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action restraining, enjoining or otherwise prohibiting the
Merger, and such order, decree, ruling or other action shall have
become final and non-appealable; or
(g) by the Parent by notice given within seven days of receipt
by the Parent of copies of the documents referred to in Schedule
11.1(g) for any reasonable reason relating to such documents.
11.2. Procedure and Effect of Termination. In the event of
termination and abandonment of the Merger by the Parent or Slick 50 pursuant to
Section 11.1, written notice thereof shall forthwith be given to Slick 50 or the
Parent, respectively, and this Agreement shall terminate and the Merger shall be
abandoned, without further action by any of the parties hereto. The Company and
each of the Slick 50 Stockholders agree that any termination by the Parent or
Slick 50, respectively, shall be conclusively binding upon it, whether given
expressly on its behalf or not. If this Agreement is terminated as provided
herein, no party hereto shall have any liability or further obligation to any
other party to this Agreement except that any termination shall be without
prejudice to the rights of any party hereto arising out of a breach by any other
party of any covenant or agreement contained in this Agreement, and except that
the provisions of Section 8.5 and 8.10 shall survive such termination.
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ARTICLE XII
MISCELLANEOUS
12.1. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented by mutual agreement of
the Parent, the Company, Slick 50 and each of the Slick 50 Stockholders owning
of record in the aggregate a majority of the issued and outstanding shares of
Slick 50 Common Stock. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
12.2. Waiver of Compliance; Consents. Any failure of the
Parent or the Company, on the one hand, or, Slick 50 or the Slick 50
Stockholders on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived by Slick 50 or the Parent,
respectively, only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 12.2. The Company
hereby agrees that any consent or waiver of compliance given by the Parent
hereunder shall be conclusively binding upon it, whether given expressly on its
behalf or not; and each of the Slick 50 Stockholders hereby agrees that any
consent or waiver of compliance given by Slick 50 hereunder shall be
conclusively binding upon them, whether given expressly on their behalf or not.
12.3. Investigations; Survival of Warranties. The respective
representations and warranties of the Parent, the Company, Slick 50 and the
Slick 50 Stockholders contained herein or in any certificates or other
documents delivered prior to or at the Closing shall not be deemed waived or
otherwise affected by any investigation made by any party hereto. Each and
every such representation and warranty shall survive the Closing for three
years.
12.4. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or mailed by registered or certified mail (return receipt requested) to the
parties at
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the following addresses (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof):
(a) if to the Parent or the Company, to:
Quaker State Corporation
255 Elm Street
Oil City, PA 16301
Attention: Secretary
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
(b) if to Slick 50, to:
Slick 50, Inc. I
1187 Brittmoore Road
Houston, Texas 77403
Attention: David A. Dillingham
with a copy to:
Sewell & Riggs
333 Clay Avenue
Suite 800
Houston, Texas 77002-4086
Attention: Frank Putman, Esq.
(c) if to any Slick 50 Stockholder, to:
Ronald D. Fash
16300 Katy Freeway
Suite 220
Houston, Texas 77094
with copies to:
Sewell & Riggs
333 Clay Avenue
Suite 800
Houston, Texas 77002-4086
Attention: Frank Putman, Esq.
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Katten Muchin & Zavis
525 West Monroe Street
Suite 1600
Chicago, Illinois 60661-3693
Attention: Stephen M. Neumer, Esq.
12.5. Assignment; Parties in Interest. This Agreement and
all of the provisions hereof shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns, but
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any of the parties hereto without the prior
written consent of the other parties, provided that the Parent or the Company
may assign its respective rights and obligations to any direct or indirect
subsidiary of the Parent, but no such assignment shall relieve the Parent of
its obligations hereunder, provided further, that none of the rights to or
interests in the Additional Purchase Price shall be assignable or transferable
except by operation of law or pursuant to a Permitted Transfer. This Agreement
is not intended to confer upon any other person except the parties hereto any
rights or remedies hereunder.
12.6. Governing Law. This Agreement shall be governed by the
laws of the State of Texas (regardless of the laws that might otherwise govern
under applicable principles of conflicts of law) as to all matters, including,
but not limited to, matters of validity, construction, effect, performance and
remedies.
12.7. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.8. Certain Defined Terms; Interpretation. (a) Certain
Definitions. For purposes of this Agreement the following words and phrases
shall have the following meanings (all terms defined in this Section 12.8 or in
other provisions of this Agreement in the singular are to have the same
meanings when used in the plural and vice versa):
"Acquired Business" shall mean Slick 50 or any successor
entity thereto, whether by merger or otherwise.
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"Actual EEOC Liabilities" shall have the meaning specified in
Section 3.2(b).
"Actual FTC Liabilities" shall have the meaning specified in
Section 3.2(c).
"Actual Liabilities" shall have the meaning specified in
Section 3.2(c).
"Actual Tax Liabilities" shall have the meaning specified in
Section 3.2(a).
"Adjusted Closing Balance Sheet" shall have the meaning
specified in Section 3.1(b)(v).
"Adjusted EBIT" shall mean for any Earn-Out Year, the sum of
(x) the consolidated net income (loss) of the domestic operations of
the Acquired Business for such Earn-Out Year before payment or
deduction of any Additional Purchase Price in respect of such year,
interest expense, interest income and income taxes plus (y) the amount
of any Deemed Affiliate Sales for such year. To the extent otherwise
included in the consolidated net income (loss) of the Acquired
Business, the following items shall be excluded: (i) the gain or loss
from any sale, exchange or other disposition of assets other than in
the ordinary course of business consistent with past practice, except
for sales of product lines, brands or proprietary rights owned as of
the Closing Date by Slick 50; (ii) any depreciation, amortization or
other expense resulting from the write-up of any asset or any
amortization of goodwill relating to the acquisition of Slick 50 by the
Parent; (iii) any expense directly or indirectly incurred in connection
with the acquisition of Slick 50 by the Parent, including any financing
expenses; (iv) any employee termination or other cost directly related
to a consolidation of services or facilities or other rationalization
of Slick 50 or the Slick 50 Subsidiaries subsequent to the Closing; (v)
any marketing costs or expenses of the Acquired Business for such
Earn-Out Year to the extent such costs and expenses exceed the
applicable amount for such Earn-Out Year set forth on Schedule 12.8
hereto; and (vi) any intercompany charges between the Acquired
Business, on the one hand, or the Parent or any Parent subsidiary of
the Parent, on the other hand, to the extent (and only to the extent)
such charges (x) relate to services which
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are not reasonably required by the Acquired Business in the operation
of its business during such Earn-Out Year and/or (y) represent a
disproportionate allocation of such charges to the Acquired Business
(as compared to the other units or subsidiaries of the Parent) in light
of all appropriate considerations.
"Affiliate Transactions" shall have the meaning specified in
Section 5.21.
"Agreement" shall have the meaning specified in the first
paragraph hereof.
"Allocable Percentage" shall mean, for each Applicable Slick
50 Stockholder, the percentage of the Outstanding Slick 50 Shares
owned by such Slick 50 Stockholder immediately prior to the Effective
Time. For the purposes of Article IV hereof, each holder of an option
to acquire Slick 50 Common Stock who is cashed out pursuant to the
Option Cancellation Agreement shall be deemed to be a Slick 50
Stockholder who holds the number of Shares into which his options
would have been exercisable immediately prior to the Effective Time,
but for such Option Cancellation Agreement.
"Applicable Slick 50 Stockholders" shall have the meaning
specified in Section 3.1(b)(ii)(1).
"Average Trading Price" shall have the meaning specified in
Section 2.1(c).
"Base Consideration" shall have the meaning specified in
Section 2.1(b).
"Base Price" means the closing trading price of Parent Common
Stock, as reported on the NYSE on the business day immediately prior
to the Closing Date.
"Board" shall have the meaning specified in Section 1.7.
"Cash Election" shall have the meaning specified in Section
2.3(a).
"Cash Election Number" shall have the meaning specified in
Section 2.4(a).
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"Cash Proration Factor" shall have the meaning specified in
Section 2.4(b)(i).
"Certificate of Merger" shall have the meaning specified in
Section 1.5.
"Certificates" shall have the meaning specified in Section
2.5(a).
"Claim" shall have the meaning specified in Section 8.9(d).
"Closing" means the closing of the Merger.
"Closing Balance Sheet" shall have the meaning specified in
Section 3.1(b)(i).
"Closing Date" means the date on which the Closing actually
occurs.
"Closing Net Worth" means the net worth of Slick 50 as
reflected on the Adjusted Closing Balance Sheet.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" shall have the meaning specified in the first
paragraph hereof.
"Confidentiality Agreement" means the Confidentiality
Agreement, dated as of June 14, 1994, between Slick 50 (then known as
Petrolon) and the Parent.
"Deemed Affiliate Sales" shall mean, with respect to any sale
or transfer of a product by the Acquired Business to the Parent or any
affiliate controlled by the Parent, the wholesale price then being
charged by the Acquired Business for the product to independent
customers similarly situated, less the price actually charged to the
Parent or such affiliate in connection with such sale or transfer.
"Dissenting Shares" shall have the meaning specified in Section
2.2.
"Earn-Out Payment" shall mean, for any Earn-Out Year, the
amount by which the Adjusted EBIT for such
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Earn-Out Year exceeds the EBIT Objective for such Earn-Out Year.
"Earn-Out Year" shall mean the First Earn-Out Year, the
Second Earn-Out Year or the Third Earn-Out Year, as the case may be.
"EBIT Objective" means, (x) with respect to the First Earn-Out
Year, $6,622,537 plus $1,000,000 plus the Synergy Savings for such
Earn-Out Year, (y) with respect to the Second Earn-Out Year,
$7,284,791 plus $1,000,000 plus the Synergy Savings for such Earn-Out
Year and (z) with respect to the Third Earn-Out Year, $8,013,270 plus
$1,000,000 plus the Synergy Savings for such Earn-Out Year.
"EEOC Readjustment Trigger Date" shall mean the date of the
final payment by the Parent or the Company, as the case may be (or
other final resolution), of all liabilities and obligations relating
to the matters covered by the Special EEOC Reserve.
"EEOC Reserve Certificate" shall have the meaning specified in
Section 3.2.
"Effective Time" shall have the meaning specified in Section
1.5.
"Electing Shares" shall have the meaning specified in Section
2.1(a)(i).
"Election Date" means the business day next preceding the date
of the Stockholders' Meeting.
"Employees" shall have the meaning specified in Section 5.14.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" shall have the meaning specified in Section
2.3(b).
"Existing Slick 50 Costs" shall mean $68,792,743.
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"Fash" shall have the meaning specified in the first paragraph
hereof.
"Filings" shall have the meaning specified in Section 8.1(b).
"Financial Statements" shall have the meaning specified in
Section 5.5(c).
"First Earn-Out Year" shall mean the period commencing on
January 1, 1996 and ending on December 31, 1996.
"Form of Election" shall have the meaning specified in Section
2.3(c).
"FTC Readjustment Trigger Date" shall mean the date of the
final payment by the Parent or the Company, as the case may be (or
other final resolution), of all liabilities and obligations relating
to the matters covered by the Special FTC Reserve.
"FTC Reserve Certificate" shall have the meaning specified in
Section 3.2.
"GCL" means the General Corporation Law of the State of
Delaware.
"Gold Eagle" shall have the meaning specified in the first
paragraph hereof.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"Indemnifying Parties" shall have the meaning specified in
Section 8.9(d)(i).
"Indemnitee" shall have the meaning specified in Section
8.9(d).
"Initial Base Consideration" means the sum of (i) $40 million
minus (ii) any Investment Banking Fees paid by Slick 50 pursuant to
Section 8.10 minus (iii) all amounts supplied by the Parent as
contemplated by Section 9.3(i) hereof.
"Initial Base Consideration Adjustment" shall have the meaning
specified in Section 3.1(b)(ii).
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"Initial Merger Consideration" shall have the meaning specified
in Section 2.1(a).
"Intellectual Property" shall have the meaning specified in
Section 5.18(a).
"Intellectual Property Licenses" shall have the meaning
specified in Section 5.18(b).
"Investment Banking Fees" means any fees of any investment
banking firm incurred by Slick 50 or any of the Slick 50 Stockholders
in connection with the transactions contemplated by this Agreement or
otherwise, other than fees of any such firm acting in the capacity of a
purchaser representative for the Slick 50 Stockholders, which fees
shall constitute Transaction Costs.
"Leased Real Property" shall have the meaning specified in
Section 5.10(a).
"Liens" means any lien, adverse claim, lease, security
interest or other charge or encumbrance.
"Merger" shall have the meaning specified in Section 1.1.
"Merger Consideration" shall have the meaning specified in
Section 2.1(b).
"NYSE" shall have the meaning specified in Section 2.1(c).
"Outstanding Slick 50 Shares" means the total number of shares
of Slick 50 Common Stock issued and outstanding immediately prior to
the Effective Time, provided that notwithstanding anything in this
Agreement or any other agreement to the contrary, no share of Slick 50
Common Stock issued or issuable upon exercise of any of the Slick 50
Options shall be deemed to be an "Outstanding Slick 50 Share" for any
purpose of this Agreement.
"Option Cancellation Agreement" shall have the meaning
specified in Section 9.3(i).
"Owned Intellectual Property" shall have the meaning specified
in Section 5.18(b).
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"Owned Real Property" shall have the meaning specified in
Section 5.10(a).
"Parent" shall have the meaning specified in the first
paragraph hereof.
"Parent Common Stock" means the capital stock of the Parent,
par value $1.00 per share.
"Parent Damages" shall have the meaning specified in Section
8.9(a).
"Parent Indemnitees" shall have the meaning specified in
Section 8.9(a).
"Parent Reports" shall have the meaning specified in Section
6.6.
"Per Share Price" means the quotient of (i) the Initial Base
Consideration divided by (ii) the Outstanding Slick 50 Shares.
"Permitted Lien" means any lien for taxes accrued and not yet
paid and for which reserves are being maintained in accordance with
generally accepted accounting principles, liens arising in the
ordinary course of business (provided that the obligations secured by
such liens are not delinquent or are being considered in good faith),
and such imperfections of title and encumbrances, if any, as would not
materially detract from the value of the property and assets
encumbered thereby.
"Permitted Transfer" shall have the meaning specified in
Section 8.6.
"Plans" shall have the meaning specified in Section 5.14.
"Proxy Statement" shall have the meaning specified in Section
8.1(a).
"Readjustment Payments" shall have the meaning specified in
Section 3.2.
"Readjustment Review Period" shall have the meaning specified
in Section 3.2(d).
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"Record Date" shall have the meaning specified in Section
8.1(a).
"Related Persons" shall have the meaning specified in Section
5.14.
"Representatives" shall have the meaning specified in Section
8.4.
"Second Earn-Out Year" shall mean the period commencing on
January 1, 1997 and ending on December 31, 1997.
"Securities Act" means the Securities Act of 1993, as amended.
"Slick 50" shall have the meaning specified in the first
paragraph hereof.
"Slick 50 Balance Sheet" shall have the meaning specified in
Section 5.5(b).
"Slick 50 Common Stock" means the common stock of Slick 50,
$.01 par value.
"Slick 50 Damages" shall have the meaning specified in Section
8.9(c).
"Slick 50 Income Statement" shall have the meaning specified
in Section 5.5(b).
"Slick 50 Indemnified Parties" shall have the meaning specified
in Section 8.7
"Slick 50 Indemnitees" shall have the meaning specified in
Section 8.9(c).
"Slick 50 Options" shall have the meaning specified in Section
5.2(b).
"Slick 50 Stockholders" shall have the meaning specified in the
first paragraph hereof.
"Slick 50 Subsidiaries" shall have the meaning specified in
Section 5.1(b).
"Special EEOC Reserve" shall have the meaning specified in
Section 3.1(b)(i).
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"Special FTC Reserve" shall have the meaning specified in
Section 3.1(b)(i).
"Special Tax Reserve" shall have the meaning specified in
Section 3.1(b)(i).
"Special Tax Reserve Certificate" shall have the meaning
specified in Section 3.2.
"Special Reserves" shall have the meaning specified in Section
3.1(b)(i).
"Stockholders' Meeting" shall have the meaning specified in
Section 1.7.
"Stockholders' Representative" shall have the meaning
specified in Section 3.1(b)(viii).
"Surviving Corporation" shall have the meaning specified in
Section 1.1.
"Synergy Savings" shall mean for any Earn-Out Year, the excess
of (x) the Existing Slick 50 Costs over (y) the sum of (i) the Cost of
Goods Sold for the Acquired Business for such year plus (ii) the
Selling, General & Administrative expenses of the Acquired Business
for such year (other than any such expenses consisting of payments
made under any of the Non-Competition or Consulting Agreements set
forth on Schedule 5.6 hereto).
"Tax Readjustment Trigger Date" shall mean the date of the
final payment by the Parent or the Company, as the case may be (or
other final resolution), of all liabilities and obligations relating
to the matters covered by the Special Tax Reserve.
"Tax Returns" shall have the meaning specified in Section 5.13
(b).
"Taxes" means all taxes, duties, levies, imposts, assessments,
fees and other governmental charges (including any interest and
penalties thereon and additions thereto).
"Third Earn-Out Year" shall mean the period commencing on
January 1, 1998 and ending on December 31, 1998.
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"Transaction Costs" means the reasonable costs and expenses
incurred by Slick 50 and the Slick 50 Stockholders in connection with
the transactions contemplated in this Agreement (including, but not
limited to, legal and accounting fees and the fees of any firm acting
in the capacity of a purchaser representative for the Slick 50
Stockholders, but excluding any Investment Banking Fees).
(b) Interpretation. (i) 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 and shall not in any way affect the meaning
or interpretation of this Agreement, (ii) the term "person" shall mean and
include an individual, a partnership, a joint venture, a corporation, a trust,
an unincorporated organization and a government or any department or agency
thereof; (iii) the terms "affiliate" and "associate" shall have the meanings set
forth in Rule l2b-2 of the General Rules and Regulations promulgated under the
Exchange Act; and (iv) the term "subsidiary" of any specified corporation shall
mean any corporation of which the outstanding securities having ordinary voting
power to elect a majority of the board of directors are directly or indirectly
owned by such specified corporation.
12.9. Entire Agreement. This Agreement, including the
documents and instruments referred to herein, together with the Confidentiality
Agreement, embodies the entire agreement and understanding of the parties
hereto in respect of the subject matter contained herein. There are no
restrictions, promises, representations, warranties, covenants or undertakings,
other than those expressly set forth or referred to herein or in the
Confidentiality Agreement. This Agreement, together with the Confidentiality
Agreement, supersedes all prior agreements and understandings between the
parties with respect to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on the date first above written.
QUAKER STATE CORPORATION
By: /s/ HERBERT M. BAUM
---------------------------
Herbert M. Baum
QUAKER STATE - SLICK 50 , Inc.
By: /s/ PAUL E. KONNEY
--------------------------
Paul E. Konney
SLICK 50, INC. I
By: /s/ DAVID DILLINGHAM
--------------------------
David Dillingham
/s/ KIRBY ATTWELL
------------------------------
Kirby Attwell
/s/ A. BENTON COCANOUGHER
------------------------------
A. Benton Cocanougher
/s/ DAVID A. DILLINGHAM
------------------------------
David A. Dillingham
/s/ RONALD D. FASH
------------------------------
Ronald D. Fash
83
GOLD EAGLE CO.
By: /s/ ROBERT HIRSCH
---------------------------
Robert Hirsch
/s/ DAVID M. GOLDSTEIN
------------------------------
David M. Goldstein
/s/ RICHARD A. JAENICKE
------------------------------
Richard A. Jaenicke
/s/ WILLIAM M. JETER, III
------------------------------
William M. Jeter, III
/s/ MARGARET LEA JETER
------------------------------
Margaret Lea Jeter
/s/ LONNIE L. McKINNEY
------------------------------
Lonnie L. McKinney
/s/ HERSCHEL A. MALTZ
------------------------------
Herschel A. Maltz
/s/ W. O. MENEFEE
------------------------------
W. O. Menefee
/s/ CAROL L. PADLICK
------------------------------
Carol L. Padlick
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LIST OF OMITTED EXHIBITS AND SCHEDULES - AGREEMENT AND PLAN OF MERGER
Omitted Exhibits:
- -----------------
A Percentage Ownership
B Registration Rights Agreement
C Guaranty
D Option Cancellation Agreement
List of Omitted Schedules:
- --------------------------
1.4 Officers of the Surviving Corporation
5.1 Organization, etc.
5.1(a) Due Organization, Valid Existence and Good Standing of Subsidiaries
5.2 Capitalization
5.4 Consents and Approvals; No Violation
5.6 Absence of Undisclosed Liabilities
5.7 Absence of Material Adverse Change
5.9 Severance, Termination, Change in Control and Similar Agreements
5.10(a) Real Property Owned or Leased
5.10(b) Material Equipment and Personal Property Owned or Leased
5.10(c) Liens on Assets
5.10(e) Required Easements, Rights of Way and Similar Authorizations
5.11 Litigation
5.12 Compliance with Other Instruments and Laws
5.13 Taxes
5.14 ERISA
5.17 Insurance
5.18(b) Intellectual Property
5.19 Contracts
5.20 Major Customers
5.20(b) Notice of Persons or Entities Who May Discontinue Business with Slick
50 or Its Subsidiaries
5.21 Affiliate Transactions
5.24 Banking and Personnel Matters
5.25 Product Warranties
9.3(g) Third Party Consents
11.1(g) Other Matters
12.8 Marketing Costs and Expenses
Quaker State hereby agrees to furnish supplementally to the Commission
upon request a copy of any omitted exhibit or schedule.