Document pdJ4Q26QEDkDZ3zX8rmZmw0k

-- (jf7A(X AGREEMENT AND PLAN OF MERGER f WESTERN MINERAL PRODUCTS COMPANY (a Minnesota Corporation) INTO W. R. GRACE A CO. (a Cwiiwdlort Corporation) [CONFORMED] AGREEMENT AND PLAN OF MERGER dried December 16,1966, between Wstox UoaaiL I'aooicrs Comfaitt, a Minnesota corporation (herein called "Western") whose principal office and place of business ia at 4725 Olson Highway, Minneapolis, Minnesota, and ita directors or a majority thereof, and W. R. Gate* k Co., a Connecticut corporation (herein sometimes called "Grass" or tha `Surviving Corporation") whose principal office and place of business is at 7 Hanover Square, New York, New York, and ita directors or a majority thereof (aaid corporations being herein aoao> times collectively referred to aa the "Constituent Corporations"). WITNESSETH: Wane**, the Board of Directors of each of the Constituent Corporations deems it advisable and to the general welfare and advantage of the Constituent Corporations and their respective share holders that the Constituent Corporations merge into a tingle corporation pursuant to this Agree ment and Plan of Merger (herein called "this Agreement") and the applicable provisions of the laws of the State of Connecticut and of the State of Minnesota; Now, Tanmu, in consideration of the mutual agreements, covenants, conditions and pro visoes herein contained, and for the purposes of prescribing the terms and conditions of the merger therein called the "Merger"), the mode of carrying the same into effect and sueh other provisions with respect to the Merger as art deemed necessary or desirable, the Constituent Corporations, ia asrordanee with the applicable provisions of the laws of the State of Connecticut and of the Stats of Minnesota, hereby agree each with the other as follows: 1. Merger. Western shall be, and hereby is, merged into Grace, which ia hereby designated to be the surviv ing corporation and which' said sunnring corporation shall be governed by the laws of ths State of Connecticut. * 2. Exchange of Shares. The manner of converting the shares of Western into the shares of the Surviving Corporation and the mode of carrying the Merger into effect ahall be as follow*: (a) Each of the 211,800 shares of the capital stock, $1 par value, of Western (herein eaHed "Western stock") issued end outstanding and held of record by shareholders other than Grace, shall he exchanged for and converted into .0897 of a share of Common Stock, $1 par valne, of the Surviving Corporation; (b) Each of the 10,100 shares of Western stock held in the treasury of Western and each of the 104,000 sham of Western stock held of record by Groce shall be cancelled and and bo shares or other securities of the Surviving Corporation iasued therefor; (e) Each authorised share of the Preferred Stock, Class A Preferred 8tock, Claes B Prefer red Stock, Claes C Preferred Stock and Common Stock of Grace whether or not issued or outstand- .......................... - ~f W.rvvr shall remain unchanged; (d) From and alter the effectiveness of the Merger, each holder of an outstanding eertifieate or certificates theretofore representing shim of Western atoch thall tnrrtnder the same to the Surviving Corporation or an agent appointed by it, and each each holder other than Grace, ahall be entitled, upon such surrender, to receive in exchange therefor a certificate or certificates representing the number of full shares of Common Stock, $1 par value, of the Surviving Corporation into which the shares of Western stock theretofore represented by the certificate or certificates so surrendered shall have been converted as aforesaid; and * (e) Ho certificates or scrip representing fractional sham of the Common Stock, $1 par value, of the Surviving Corporation shall be issued upon the surrender for exchange of certifi cates representing sham of Western stock as provided for hereinabove. The Surviving Corpo ration ahall, however, make appropriate arrangements either directly or through an agent or agents, for the sale, for the accounts of the holders of certificate* representing, prior to ths effectiveness of the Merger, shares of Western stock, of fractional sham of Common 8tock, $1 par value, of the Surviving Corporation to which such holders are entitled or for the purchase by sueh holders of additional fractions of a share of the Common Stock necessary to make up a full share. All expenses connected with the purchase and sale of fractional sham by any shareholder of Western will be paid by the Surviving Corporation. *~ 3. Effect of Merger. As of the close of business December 31, 1966, for accounting and operating and tax purpose* (herein called the "effectiveness of the Merger"), subject to the applicable laws of the 8t*t of Conaoe___^> tieut and the State of Minnesota: (a) Grace and Western shall be a single corporation, which shall be Grace, the surviving corporation, and the separate existence of Western shall cease; (b) Tbe Surviving Corporation shall thereupon and thereafter, to the extent consistent with its Certificate of Incorporation as in effect upon the effectiveness of the Merger, possess all the rights, privileges, powers, immunities and franchises, as well of a public as of a private nature, of each of the Constituent Corporations; and all assets, property, real, personal and mixed, and all rights, privileges, powers, franchises and immunities and all debts due on whatever seeount, and all other ehoses in action, and all and every other interest, of or belonging to or due to each of the Constituent Corporations, thall be taken and transferred to and vested in the Surviving Corporation without further act or deed; and tbe title to any real estate, or any interest therein, vested in either of the Constituent Corporations shall not revert or be in any way impaired by reason of the Merger; (e) All debts, liabilities and obligations of the Constituent Corporations shall become ths debts, liabilities and obligations of tbe Surviving Corporation and the Surviving Corporation shall thenceforth be responsible and liable for all the liabilities, obligations and penalties, in cluding liability to dissenting shareholders, of each of the Constituent Corporations; and any claim existing or action or proceeding, civil or criminal, pending by or against either of Constituent Corporations may be prosecuted as if the Merger had not taken plaee, or the Surviv ing Corporation may be substituted in its place; and any judgment rendered againlt either of the Constituent Corporations may be enforced against the Surviving Corporation. The liabili ties of the Constituent Corporations or of their shareholders, directors, or officers not be affected nor ahall the rights of creditors or of any persona dealing with the Constituent Corpo rations or sny liens upon the property of either of the Constituent Corporations be impaired by the Merger; (d) Surplus of the Constituent Corporations which vu available for the payment of divi dends or of other distributions to shareholders immediately prior to the Merger, continue to be so available to the Surviving Corporation for such payments to the same extent as before the Merger; (e) The Certificate of Incorporation and By-Laws of Grace, as ritiwg tad constituted upon the effectiveness of the Merger, ahall not be amended in any manner by ths Merger and 3 5 ta.n be and constitute tic Certificate of Incorporation tad By-Laws, respectively, of (ho Surviviaf Corporation; hot the Surviving Corporotion hereby reserves and shall have the riffct to eaeod, titer, ehsnge or repeal its Certificate of Incorporation sad By-Laws; ) (f) The Board of Director* and officers of Grace opoa the effectiveness of the Merger, shall be sad constitute the Board of Directors and officers of the Surviving Corporation; and (g) Any devise, bequest, gift or grant contained in any will or in any other instrument, made before or after the Merger, to or for the benefit of either of the Constituent Corporations shall inure to the benefit of the Surviving Corporation. So far as is necessary for that purpose, the existence of each of the Constituent Corporations shall be deemed to continue in and through the Surviving Corporation. 4. Other Terms of Merger. (a) The Surviving Corporation hereby agrees that it may be served with prooms in Ifia- oesota in any proceeding for enforcement of any obligation of Western u well as for enforce- moot of any obligation resulting from the provisions of Section 301.44 of the Minnesota Statutes 1*165. The Surviving Corporstion hereby irrevocably appoints the Secretary of 8tate of Minnesota as its agent to accept service of process in any such suit or other proceeding and hereby-a^eeifiet^ \V. R. Grace 4 Co., 7 Hanover Square, New York, New York 10005 aa the address to w^Ieh a Copy T/s* w- > `i. l of such process shall be mailed by the Secretary of State of Minnesota, and in any such suit or proceeding service of process upon it may be made in any of the manners set forth in Bection 303.13 of the Minnesota Slatatea 1965; 'I l (b) The stated capital with which the Surviving Corporation will begin business shall be - $29,673,003; and (e) Whenever a conveyance, assignment, transfer or any act, deed, or instrument is neces sary or appropriate to evidence the vesting of property or rigbts in the Surviving Corporation the officers of Western shall execute, acknowledge, and deliver such deeds or instruments and do such acta u may be necessary or appropriate in the premises. For such purposes, the existence, capacity and authority of Western and its officers and directors shall be deemed to be continued notwithstanding the Merger. S. Representations and Warranties by Western. Western represents and warrants to Grace as follows: ) (a) Western is a corporation duly organized, validly existing, and in good standing under the laws of the State of Minnesota. Western is licensed or qualified u a foreign corporation in good standing under the laws of the States of Colorado, Nebraska and Wisconsin and neither the character or location of the properties owned by it nor the nature of the business transacted by it makes license or qualification in any other foreign jurisdiction neceaary. Western has full power and authority to carry on its business as it is now being conducted and to own and operate its assets, properties and business. The copies of its Articles of Incorporation and all amendments thereto to date (certified by the Secretary of State of Minnesota) and of its by laws u amended to date.(certified by its Secretary) which have been delivered to Grace are true, complete and correct. (b) The authorised capital stock of Western conita of 350,000 shares of common stock, par value $1.00 per share, of which 315,800 shares (excluding 10,100 shares held in treasury) art dnly nd validly iasned and outstanding, fully paid and non-aaseisable. Then art no outstanding sub scriptions, options, warrants, calls, commitments or agreements relating to Western's authorised or issued common stock to which Western ia a party or by which it ia bound. i (c) Western baa delivered to Grace a true and correct list of the names and addresses of holder of its common stock and the number of shares held by each as of the date hereof. (d) The following ia a true and complete list setting forth (i) the name and jurisdiction of each corporation, a majority of the shares of the oatstanding stock of which is owned or eon- , P*`'v ...p S trolled, directly or indirectly, by Western (escb each corporation herein being eslled "Subsid iary" end sli of said corporations being herein eslled '`Subtidisries"); (ii) the jurisdictions in which eseh Subsidisry is licensed end qualified to do basincu ss s foreign corporation, (iii) the suthorised cspitsl stock of escb such Subsidisry, (it) the number of shsres of esch elsss of cspitsl stock of esch Subsidisry outstsnding, sod (v) the number of sheres of esch such elsss owned or controlled by Western: Shari of C|kil Stack Jariadktfe* t litanwtdi JtHtdlclitw Is Vkkk QaiUSad iaiirfad Owwad v Cum M OeWnflis br Vwim Verai Prod nets, Ine. Minnesota 2,500 ($10.00 par ralue) 100 100 Perl-Tile Company Minnesota lows North Dakota Wisconsin 10,000 preferred stoek ($1.00 par value) 15,000 common stoek ($1.00 par value) 5,000 5,000 5,000 5,000 Esch Subsidisry is s corporation duly organised, validly -rirting and in good standing under the laws of its state of incorporation. Esch Subsidiary is licensed or qualified ss a foreign corpo ration in good standing under the laws of the jurisdictions specified above, and neither the charac ter or location of the properties owned by it nor the naturt of the business transacted by it makes license or qualification in any other foreign jurisdiction necessary, other than the qualification of Perl-Tile Company in Illinois for the purpose of installing a roof deck near Moline, Illinois. Each Subsidiary has full power and authority to earry on its business ss it is now being eondueted and to own and operate its assets, properties and bosinea. The copies of the Articles or Certi ficate of Incorporation and all amendments thereto to date of each Sohsidiary (certified by tha Secretary of State of such corporation's jurisdiction of incorporation) end of its by-laws as amended to date (certified by its Secretary) which have been delivered to Grace are true, complete and correct. All the issued and outstanding shares of stock of each Subsidiary owned by Western are validly issued and outstanding, folly paid and non-tssestable, and are free and dear of all liens, encumbrances, options, calls, commitments or other agreements. Except for the Subsidiaries, Western does not have any affiliate or subsidiary, nor does it own any stock, bonds or other eecurities of, or have any proprietary interest in, any other corpo ration, association or business organization, except that Western owns $1,000 principal amount of Minneapolis Stadium Bonds, $100 principal amount of Durox Company Bonds an(M0 shares of common stock of Durox Company, and a membership in the Minneapolis Athletic Club. For the purposes of this psrsgrapb (d), the terms "affiliate" and "subsidiary" shall have the respective meanings assigned to them in Rule 405 of the General Roles and Regulations of the Securities and Exchange Commission under the Securities Act of 1933 in effect as of the date hereof. (s) The directors and officers of Western are as follows: Om*m BeM Lawrence J. Venard Harvey W. Steiff Clarence. V. S. Okerlnnd John EL Bishop Robert L. Eikenberry O. H. Johnson President and Director Vice President and Director Vice President and Director Secretary, Treasurer and Controller Director Director Director 4 (f) The following financial statements of Western ud the Subsidiaries, copies of which have been delivered to Grace by Weatern, are trne and complete: (i7 Balance Sheeta of Weatern aa at January 31, 1961, 1962, 1963 and 1964 and related Statementa of Income and Retained Earnings for the four fiacal yean then ended, certified by Boulay, Andenon, Waldo k Co., independent accountant!; (ii) Balance Sheet of Weatern aa at December 31, 1964 and related Statement of Income and Retained Eaminga for the eleven months then ended, certified by Anderson, Helgeaon, Lienor 4 Thoraen, independent accountants; (iii) Consolidated Balance Sheet of Western and Perl-Tile Company as at December 31, 1965, and related Consolidated Statements of Income and Retained Earnings for the year then ended, certified by Anderson, Helgeson, Lieser k Thoreen; Each of the aforesaid balance sheets presents fairly, as of its date, the financial condition of the corporation or corporations to which it refers and each of the aforesaid statements of income and retained earnings presents fairly the results of the operations of such corporation or corporations for the period or periods which it purports to cover in conformity with generally accepted accounting principles applied on a basis consistent with that of prior periods. In addition, Grace has received the Consolidated Balance Sheet of Western and its Subsidiaries as at September 30, 1966 and the Consolidated Statement of Income and Retained Eamingi for the 9 months period then ended, certified by Price Waterhouse k Co., independent accountants, referred to in Section 14 hereof. Ssid Consolidated Balance Sheet as at September 30, 1966 is herein referred to as the "Balance Sheet". (g) Except u and to the extent reflected or reserved against in the Balance Sheet as at September 30,1966, and to the extent reflected in the schedule delivered pursuant to Section 5(o) hereof, neither Western nor the Subsidiaries had aa of September 30, 1966 any debts, lisbilities or obligations of any nature, whether accrued, absolute, contingent or otherwise, and whether due or to become due, including, but not limited to, liabilities or obligations on account of taxes or other governmental charges, or penalties, interest or fines thereon or in respect thereof, and there is no basis for the assertion against Western or the Subsidiaries u of such date of any debt, liability or obligation, whether absolute, accrued, contingent or otherwise, of any nature or in any amount not fully reflected or reserved against in the Balance Sheet (h) Since September 30,1966 there has not been: (i) Any ehange in the condition (financial or otherwise), properties, assets, liabilities, business or prospects of Western or any Subsidiary, except changes in the ordinary course of business which in the aggregate have not been materially adverse; (ii) Any damage, destruction or loss (whether or not covered by insurance) materially and adversely affecting the properties, assets, business or prospects of Western or any Subsidiary; (iii) Any declaration, setting aside, or payment of any dividend or other distribution on or in respect of the capital stock of Western or any Subsidiary, any direct or indirect redemp tion, retirement, purchase or other acquisition of any of such stock, any issuance of sham of such stock or the granting, issuance or exercise of any right, warrant, option or com mitment by Western or any Subsidiary relating to its authorised or issued stock, except Western has declared and paid during January, June and September, 1966, dividends of lty, respectively, per share on its outstanding common stock; (iv) Except aa set forth on s schedule (certified by the Treasurer of Western) hereto fore delivered to Grace, any increase in the compensation, or in the rate of compensation or commissions payable or to become payable by Western or any Subsidiary to any director, officer, salaried employee earning $10,000 per annum or more, salesman or agent or any general increase in the eompenaation or rate of compensation payable or to become payable 5 to the hourly employee* or ularied employee* of Western or toy Subsidiary earning le*a than $10,000 per uuua ("general increase" for parpose* hereof ehill meis any inertise generally ipplicible to i class or group of employee* ud doe* not include increases gnuled to individull employee* for merit, length of service, change in position or responsibility or other rea son* ipplicible to epeciflc employee* and not generally to i class or group thereof), or any employee hired it salary in excea* of $10,000 per annum, or iny payment of any bonus, profit aharing or other extraordinary eompenaation to any employee; (t) Any change in the accounting methods or practice* followed by Western or any Subsidiary, or any change in depreciation or amortisation policies or rate* theretofore adopted; (ri) Any debt, obligation or liability (whether absolute or contingent) incurred by Western or any Subsidiary (whether or not presently outstanding) except (A) current lia bilities incurred, and obligation* under agreement* entered into, in the ordinary coarse of business and (B) obligations or liabilities entered into or incurred in connection with the execution of this Agreement; (vii) Any sale, lease, abandonment or other dispoaition by Western or any Subsidiary of any real property, or, other than in the ordinary course of btudneaa, of any machinery, equipment or other operating properties; nor any sale, assignment, tranafer or license by Western or any Subsidiary of any patent, trade-mark, trade name, brand name, copyright or interest thereunder, pending application for any patent, trade-mark or copyright or any invention, process, know-how, formula or trade secret or other intangible suet; or (viii) Any labor trouble, strike, or any other occurrence, event or condition of any lumiUr or diimilar character which materially and adversely affect* or may materially and adversely affect the assets, properties, business or prospects of Western or any Subsidiary. (i) Western and each Subsidiary ha* filed all tax return* (federal, date and local) required to he filed by it, and ha* paid all taxes shown to be due and payable on said return* or on any assessments received by it as well as all other taxes (federal, atale and local) due and payable by it on or before the date hereof, other than state and local taxes which are payable but the install ment payments of which are not yet doe. All federal income and exec* profits tax returns of Western has been indited by the appropriate governmental authority for all periods up to and including the year ended December 31, 1964, and all taxes and assessments for all neb periods finally determined and paid; provided, however, that the appropriate governmental authority has never audited either Perl-Tile Company or Versi Products, Inc. There are no agreements, waivers, or other arrangements providing for an extension of time with respect to the filing of any returns or the assessment of any tax or deficiency against Western or any Subsidiary, nor are there any actions, suits, proceedings, investigations or claims now pending against Western or any Subsidiary in respect of any tax or assessment or any matters under discussion with any federal, state or local authority relating to any taxes or assessments, or any claim* for additional taxes or assessments asserted by any such authority. The provisions made for taxes on the Balance Sheet are sufficient for the psyment of all unpaid federal, state and local taxes of Western and the respective Sub sidiaries for the period ended September 30, 1966, and all periods prior thereto. (j) The execution snd delivery of this Agreement and the consummation of the merger contemplated hereby will not (i) result in any breach of any of the terms or conditions of, or con stitute a default under, the Articles of Incorporation or hy-Laws of Western, or any mortgage, note, bond, indenture, agreement, license or other instrument or obligation to which Western is a party or by which Western or any of its properties or assets may be bound or affected, or (ii) violate any order, writ, injunction or decree of any court, administrative agency or governmental body. (k) Western has delivered to Grace a true and complete schedule (certified by the Treasurer of Western) Kiting forth (i) s complete description by metes and bounds or lot, block and section or by title registry reference of each and every parcel of red property owned by Western or by u>y Subsidiary, together with a summary description of the buildings and improvements thereon, (ii) a description of each and every lease of red property to which Western or any Sobddiary ia a party together with a summary description of the buildings and improvements thereon, and (iii) a description of all other interests, if any, in red property owned or claimed by Western or any Subsidiary. Western and each Subsidiary baa good and marketable title in fee simple ahoolnt* to ill red property which it purports to own and to the buildings and improvements thereon, and good and marketable title to all other interests in real property which it purports to own, in eaoh ease free and dear of all security interests, leases, liens, encumbrances, mortgages, assessments, covenants, restrictions, reservations, easements and other burdens of fcvtry nature except as set forth in the aforesaid schedule. All leases of red property under whieh Western or any Subsidiary purports to be a leasee are valid, binding and in full force and eifeot and there exists no default thereunder and all of said leases are assignable to Grace free and dear of all security interests, liens, encumbrances, mortgages, pledget, assessments, covenants, restrictions, reservations, easements and other burdens except as set forth in sdd schedule. Western and each Subsidiary has all easements and rights, including easements for power lines, water lines, sewers snd roadways, and other means of ingress snd egress necessary to conduct the business it now conducts. All building*, offices, shops and other structures owned or occupied by Western or say Sub sidiary, and all machinery, equipment, tools, dies, fixtures, motor vehicle* sad other properties owned or used by Western or say Sobddiary, are ia good operating condition and repair, ordinary wear and tear excepted, in accordance with standards generally accepted in the industry and are adequate snd sufficient for all current operations of Western or such Subsidiary. Neither the whole nor any portion of any real property owned or occupied by Western or any Subsidiary has been condemned or otherwiae taken by any public authority, nor is any such condemnation or taking threatened or contemplated. None of the properties owned or occupied by Western or any Subsidiary, or the occupancy or operation thereof, is in violation of any law, or any building, xoning or other ordinance, code or regulation applicable to it and no notice from any governmental body has been served upon Western or any Subsidiary or upon any property owned or occupied by Western or any Subadiary claiming any violation of any such law, ordinance, code or regulation or requiring, or calling attention to the need for, any work, repairs, construction, alterations or installation on or in connection with said properties which baa not beta complied with. Western and each Subsidiary has the right to ok its properties for the operations presently conducted. Western and each Subsidiary has good and marketable title to all personal property which it purports to own, including, but not limited to, thst reflected on the Balance Sheet (except as disposed of in the ordinary eoone of business since September 30, 1966), free and dear of all security interests, liens, encumbrances, mortgages, conditional tale and other title Retention agreements, pledges, assessments, covenants, restrictions, reservations and other burdens or charges of every nature. (1) Western has delivered to Grace a true and complete schedule (certified by the Treasurer of Western) setting forth all patents, trade-marks, trade names, brand names snd copyrights snd interests therein, snd all pending applications therefor, owned or used by or licensed to Western or any Subsidiary, together with a summary description and full information in rtapeet of the Sling, registration or issuance thereof. No licenses, soh-lieenaes, covenants or agreements have been granted or entered into by Western or any Subsidiary in respect of such patents, trade-marica, trade names, brand names, copyrights, applications or licenses except those described on the schedule heretofore delivered to Grace pursuant to Section 5 (m) hereof. No other patents, tradet&arks, trade names, brand names, copyrights or applications are necessary for the conduct of the holiness of Western or any Subsidiary as now conducted. Western and each Subsidiary validly owna or ia validly licensed under all inventions, processes, know-how, formulae and trade secrets *bieh are necessary for the conduct of its business ss now conducted, and all such rights and all 7 rights lifted oo the schedule heretofore delivered to Once pungent to tliie subsection (1) are valid end in good standing, and free and clear of all security interest*, liena and enetuabranoea of any Ba ton whatsoever and are not being challenged in any way or involved in any pendinf or threatened interference proceeding and are (in the case of tboae rigbta of Weatern) assignable to Grace. The operations of Weatern and each Subsidiary, the manofacture, oae and sale by it of its products, the oae by it of its machinery, equipment and processes, the oae of ita products by iU customers for the purpose for which sold, and the oae by it of ita patents, trade-marts, trade names, brand names and advertising, technical or other literatort do not involve infringement or claimed infringement of any patent, trade-mark, trade name or copyright, other than the poaaihle infringe ment of U. S. Patent No. 2727827 known u the Chertkof Patent, foil information aa to whieh has heretofore been given by Western to Graee. No director, officer or employee of Western or any Subsidiary owns, directly or indirectly, in whole or in part, any patents, trade-marks, trade namea, brand names or copyrights or applications therefor which Weatern or any Subsidiary is presently using or the oae of which is necessary for the holiness of Western or any Subsidiary aa now conducted. There art no new developments in the manufacture or marketing of the products of Western or any Subsidiary or any new or improved materials, products, pro cesses or methods of manufacture useful in connection with the business of Weatern or any Sub sidiary as now conducted which may materially adversely alfecl the assets, business or prospects of Western or any Subsidiary. (m) Western baa delivered to Grace a true and complete schedule (certified by the Treasurer of Western) of all of the following contracts, agreements, leases, licenses, plana, arrangements, commitments and other undertakings to whieh Weatern or any Subsidiary is a party or by which Western or any Subsidiary is in any way affected or boand: (i) All contracts, agreements or commitments in respect of the isle of products or services, or for the purchase of raw materials, supplies or other products or utilities, other than contracts, agreements or commitments involving payments or receipt* by Western and/or n Subsidiary of leas than $10,000 in any single ease and terminable by Western and/or such Subsidiary without penalty, or to be fully performed, within 6 months from the date hereof; (ii) All sales agency or distributorship agreements or franchises; (iii) All collective bargaining, union, employment or secrecy agreements or agreements providing for the services of an independent contractor; (iv) All stock option, profit sharing, pension, retirement, bonus, group life, health and accident insurance or other employee benefit plana, agreements, arrangementa or commitments, whether or not legally binding; (v) All contracts, agreements, commitments or licenses relating to patents, trade-marks, trade names, brand names, copyrights, inventions, processes, know-how, formulas or trad* secret*;' (vi) All leases or other contracts, agreements or commitments relating to or affecting real property or any interest therein; (vii) All loan agreements, indentures, mortgages, pledges, conditional sale or title reten tion agreements, and equipment obligations, lease and lease purchase agreement; and (viii) All contracts, agreements and commitments other than those of the types covered by paragraphs (i) through (vii), inclusive, above, (a) involving payments or receipts by Western and/or any Subsidiary of more than $10,000 in any single ease, or (b) not to be fully performed within 6 months from the date hereof or (e) otherwise affecting the condition (financial or other) of the properties, assets, business or prospects of Western or any such Subsidiary. Each and every of said contracts, agreements, leases, license*, plana, arrangements, commitments and undertakings ia valid, binding upon the parties thereto in accordance with its terms and in I fall fore* and effect tad is (in the cam of thoae to which Western is a party) assignable to Grace without the consent of any other party, tod there is no existing default thereunder. Copies of si] of the documents described in the aforesaid schedule have been made available by Western to tjrace and are true and complete and include all amendments, supplements or modifications thereto. (d) Western has delivered to Grace a true and oomplete schedule (certified by the Treasurer of Western) setting forth (i) the name of each bank in which Western or any Subaidiary has an account or aie deposit box and the names of all persona authorized to draw thereon or to hare aceess thereto; and (ii) the names of all persona, firms, associations, corporations or basiness organizations holding general or special power* of attorney from Western or any Subsidiary and a summary of the terms thereof. (o) There are no suits, actions, clsims or investigations by any governmental body, or legal, administrative or arbitration proceedings pending or threatened against or affecting Western or uuy Subsidiary or any of the properties, assets, business or prospects of Western or any Sub sidiary or to which Westero or any Subsidiary is or might become a party, except those jet forth <ni a schedule (certified by the Treasurer of Western) heretofore delivered to Grace, and in the upiuion of Western there are no bases or grounds for any such suit, action, elaim, investigation or proceeding. There is no outstanding order, writ, injunction or decree of any court, govern mental agency or arbitration tribunal against or affecting Western or any Subsidiary, or the properties, assets, business or prospects of Western or any Subsidiary. (p) Weatern has delivered to Grace a true and oomplete schedule (certified by the Treasurer of Western) setting forth all insurance policies (specifying the insurer, the amount of the coverage, the type of insurance, the policy number and any pending claims thereunder) maintained by Western and each Subsidiary on its respective properties, assets, business and personnel. Neither Western nor any Subsidiary is in default with respect to any provision contained in any insurance policies, nor has Western or any Subsidiary failed to give any notice or present any claim there under in due and timely fashion. (q) Western and each Subsidiary has all governmental licenses and permits (federal, state and local) necessary to conduct its business, and such licenses and permits are in full force and effect. N'o violations are or have been recorded in respect of any of such licensee or permits or any of them, and no proceeding is pending or threatened looking toward the revocation or limitation of any of them. (r) All notes and accounts receivable of Western and the Subsidiaries shown on the Balance Sheet and all notes and accounts receivable acquired by it subsequent to September 30, 1966 have arisen in the ordinary course of business and have been collected or are collectible in the aggregate recorded amounts thereof less (i) with respect to the notes and accounts receivable reflected on the Balance Sheet as of September 30,1966, the applicable reserves in respect thereof reflected on said Balance Sheet, and (ii) with respect to the notes and accounts receivable acquired subsequent (o September 30, 1966, the applicable reserves set up on the books of Western and of each Subsidiary >ubs<*quent to September 36, 1966 in respect thereof, which reserves are not in excess of an amount equal to the same proportion of the notes and accounts receivable acquired by Western or such Subsidiary subsequent to September 30, 1966 as the proportion wbieh the applicable reserves re flected on the Balance Sheet as of September 30, 1966 are of the aggregate recorded amounts of the note* and accounts receivable reflected on said Balance Sheet (s) The inventories of Western and of each Subsidiary shown on the Balance Sheet and the inventories acquired by it subsequent to September 30, 1966 consist of items of a quality and quantity usable and saleable in the normal course of its business, and the value of obsolete mxteriala and materials below standard quality has been written down on its book* of account to realizable market value, or adequate reserves have been provided therefor, and the values at wbieh such inventories are carried reflect the customary inventory valuation policy consistently applied by Western or neb Subsidiary of stating inventory at the lower of cost or estimated realisable market value, on a first-in, first-out basis, all in accordance with generally accepted ac counting principles. (t) The execution and delivery of this Agreement by Western and its Directors, or a majority thereof, and the consummation of the Merger contemplated hereby have been duly and validly authorised by all or a majority of the Board of Directors of Western, subject to the approval by the shareholders of Western, and upon approval by tbe holders of the outstanding shares of the common stock of Western in accordance with Section 301.42 of the Minnesota Statutes 1965, this Agreement and the consummation of the Merger will have been duly and validly authorised by all necessary and appropriate corporate action on the part of Westers and this Agreement trill be binding upon and enforceable against Western in accordance with ita terms. (u) Neither Western nor any Snbsidiary is in default, or alleged to be in default, under any agreement, eon tract, lease, commitment, license, instrument or obligation, and no other party to any agreement, contract, lease, commitment, license, or instrument to which Western or any Subsidiary ia a party is in default thereunder and there exists no oondiBon or event whieh, after notice or lapse of time or both, would ooustitute a default by any party to any such agreement, contract, lease, commitment, license, instrument or obligation. (v) Neither Western nor any Subsidiary baa, nor has it had ainee September 90, 1969, any employee benefit arrangementa of the types specified in Section 5 (m) (iv) hereof except for The Western Mineral Retirement Trust and the arrangementa set forth on the schedule heretofore delivered to Grace pursuant to said Section 5 (m) (iv). Western has made available for inspec tion by Grace copies of the above-mentioned arrangementa pursuant to Section 5 (m) and haa delivered to Grace a statement (certified by the Treasurer of Western) of the estimated current annual eoat (including current annual coat of funding past service benefits) of said arrangements and the extent to which such coat and any liability of Western under said Trust baa been funded, current financial reports showing the assets of all said funds, and currently effective United Btates Internal Revenue Service ruling or determination letters holding said Trust to be exempt from federal income tax, provided, however, that on or before the Closing said Trust shall be terminated and Grace shall aanune no obligation with respect to liabilities under said Trust There has been no subsequent amendment of said Trust which might affect the current validity of any toch ruling or determination letters. (w) Western haa delivered to Grace a true and complete schedule (certified by the Treasurer of Western) setting forth the name and current annual salary of each director and each officer of Western and of each Subsidiary and of each employee and each salesman thereof whose current annual salary and/or estimated current annual commission is $10,000 or more, and the profit sharing, bonna, or other form of compensation (other than salary) paid or payable to or for th.' benefit of each such person for tbe period ended September 90, 1966. m (x) No officer and, to the knowledge of Western or any of ita officers or directors, no empkyee of Western or any Subsidiary controls or is an employee of any corporation, firm, -- partnership or other boiinesa entity which is a competitor or a potential competitor of Western or any Subsidiary. With respect to this paragraph (x) the term "controls" shall have the mean ing assigned to it in Rule 405 of the General Rules and Regulations of the Securities and Exchange Commission under the Securities Act of 1933 in effect at the date of this Agreement (y) No representation or warranty by Western in this Agreement or in any statement (in cluding financial statements), deed, certificate, schedule, or other document furnished to Grace pursuant hereto or in connection with the transactions contemplated hereby contains or will con tain any untrue statement of a material fact or omits or will omit to state a material fact neces sary to make the statements contained herein or therein not mil*/tiwg 10 4. Representations ani Warrantfe* by Cracn. Gra represents and wurutt to Western as follows: '() Groce is i corporation duly organized, validly existing and in good standing under tha laws uf the State 0/ Connecticut (b) As of the close of business November 14, 1966, the outstanding capital atock of Grace consisted of 37,226 shares of Preferred Stock, par value $100 per share, 43,132 shares of Class A Preferred Stock, par value $100 per ahare, 37,951 shares of Clan B Preferred Stock, par taint $100 per share, and 17,323,103 shares of Common Stock, par taloe $1 per share. (e) Grace has delivered to Western copies of the following financial statements: (i) Consolidated Balance Sheet of Grace and subsidiary companies u at December tl, 1965, and Consolidated Statements of Income, Capita] Snrplna and Retained Baminga for the year then ended, certified by Price Waterhouse A Co. (ii) Third Quarter Report of Grace and subsidiary companies dated October 19, 1966 eon* taining unaudited results of the nine monthj period ended September 30, 1966. The above-certified Consolidated Balance Sheet and Consolidated Statements of Income, Capital Surplus and Retained Earnings present fairly the financial position of Grace and its con solidated subsidiary companies at December 31, 1965 and the results of their operations for the year then ended in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year. (d) Since December 31,1965 there has not been any material advene change in the condition (financial or otherwise), properties, assets, liabilities, basiness or prospects of Grace and its con solidated subsidiaries (taken as a single enterprise). (c) The shares of Common Stock, par value $1 per share, of Grace (herein called "Grace com mon atock") into which capital atock of Western is to be converted pursuant hereto will, when issued and delivered as herein provided, be duly and validly issued, fully paid and noQ-asaeaaable and duly authorised for listing on the New York Stock Exchange and the Midwest Stock Rxchange upon official notice of issuance. ?. Conduct of Western Business Prior to Merger. Western covenants, agrees, represents and warrants that, except as otherwise consented to in writing by Grace, pending the effectiveness of the Merger: (a) The business of Western and of each Subsidary will be conducted only in the ordinary course. (b) No change will be made in the Articles of Incorporation or by-laws of Western or of any Subsidiary. , (e) No change will be made in tbe authorized or issued capital atock of Western or of any Subsidiary, nor shall any rights, warrants, options or commitments relating thereto be granted, issued or exercised. (d) No dividend or other distribution or payment will be declared, set aside, paid or 00 or in respect of the eapital stock of Western or of any Subsidiary nor will Western or any Sub- "diary directly or indirectly redeem, retire, purchase or otherwise acquire any of such stock. (e) Western will use its best efforts to preserve the business organization of Western and each Subsidiary intact and to keep available to Grace the services of the present officers, employees, and agents thereof and will use its beet efforts to preserve for Grace the good will of suppliers, customers and others having basiness relations therewith. 11 3 (f) Except u set forth on a schedule (certified by the Treasurer of Wester) heretofore delivered to Once, no increase will be made in the compensation or rate of compensation or commissions payable or to become payable by Western und/or any Subsidiary to any director, officer, salaried employee earning $10,000 per annum or more, salesmun, distributor or agent, nor will there be made any general increase in compensation or rate of compensation payable or to become payable to hourly employees or salaried employees earning lea than $10,000 per annua ("general increase" shall have the meaning set forth in Section 5 (b) (hr) hereof), nor will any employee be hired at a salary in excea of $10,000 per annum, and no bonus, profit sharing or other extra ordinary compensation will be paid by Western or any Subsidiary, nor will any employee benefit arrangements of the types specified in Section 5 (m) (iv) hereof be adopted or entered into, or be amended, modified or changed in any reaped. (g) No contract, agreement, obligation, lease, license or commitment will be entered into or assumed by or on behalf of Western or any Subsidiary, except for nonqgl and ordinary contracts, agreements or commitments not involving payments or receipts by Western and/or tbs Bob' sidiaries of more than $10,000 in any aingle ease for the purchase of raw materials, supplia or other products or utilities or for the sale of their products or services; neither Western nor any Subsidiary will enter into or assume any security interest, lien, encumbrance, mortgage, conditional sale or other title retention agreement, pledge, or burden or eharge of any kind npon any of its properties or aseets whether now owned or hereafter acquired, or ereate or aiarume any obligation for borrowed money, or make any loans or advance* to or assume, guarantee, endorse or other* wise become liable with respect to the obligations, stock or dividends of any person, firm, *"*- tion, corporation or business organization or purchase or otherwise acquire any bonds or other securities of, or any proprietary interest in any person, firm, association, corporation or boa* ness organization or sell, lease, abandon, transfer, license or otherwise dispose of any real property, machinery, equipment or other operating properties, patent, trade-mark, trade name, brand name or copyright, pending application for any patent, trade-mark or copyright, invention, proems, know-how, formula, trade secret or other intangible ssset (h) No chsnge will be msde affecting the banking and safe deposit arrangements and powers of attorney referred to in Section 5 (n) hereof, no new bank accounts or safe deporit will be opened and no new powers of attorney will be granted. (i) Western and each Subsidiary will duly and timely file all reports or returns required to be filed with federal, state, local and other authorities and will promptly pay all federal, state and local taxes, assessments and governmental charges lawfully levied or amessed upon it or its prop erties or upon any part thereof, and will duly observe and conform to all lawful requirements of any governmental authority relative to any of its properties or to the operation and eonduet of its business and to all terms and conditions upon or under which any of ita properties an held. Neither Western nor any Subsidiary will enter into any agreements, waivers or arrange ments providing for in extension of time with respect to the filing* of any tax returns or the pay* ment or assessment of any tax or deficiency; provided that Western or any Subsidiary may contest in appropriate proceedings any and all such taxes, assessments, eharges or requirements which may be contested in good faith and for which adequate provision has been "'* (j) All buildingi, offices, shops and other structures and all machinery, equipment, tools, dies, fixtures, motor vehicles and other property owned or used by Western or any Subsidiary (whether under ita control or the control of other*) will be kept and maintained in good operating condition and repair. (k) Western and each Subsidiary will continue to maintain in full force and effect all potides of insurance now in effect or renewals thereof, and will give all notices and present all under all policies of insurance in due and timely fashion. 11 (l) Neither Waters Dor any Subsidiary will merge, amalgamate or consolidate with any other corporation or acquire all or aubatantially all of the atock or the buinea or assets of any other person, Arm, association, corporation or business organisation. (m) Western and each Subsidiary shall give, from and after the date hereof, to Grace and to Grace's counsel, accountants, engineers and other representatives, full access during normal business hours throughout the period prior to the effective date of the Vertex to all of its plants, offices, properties, hooka, contracts, commitments, records and affairs so that Grace may inspect and audit them and will furnish to Grace copies (certified, if requested) of all documents and information concerning the properties and affairs of Western and of each Subsidiary as Grace may reasonably request (n) None of the shareholder! of Western who are parties to the Agreement of Indemnity attached hereto will sell, transfer, assign, pledge or otherwise dispose of or encumber any right, title or interest in or to any of the capital atock of Western, nor enter into any agreement, trust or commitment relating to any such stock. (o) On or before the Closing Western will pay and satisfy in full the existing^mortgags on its Milwaukee plant building and will obtain a release of record from the lien thereof. S. Agreement from Certain Western Shareholders. Western shall obtain from sueh of its shareholder! as may be specified by Grace a written instrument, in form and substance satisfactory to Grace and its counsel, to the effect that sneh person covenants and agree* that he will not at any lime or times, directly or indirectly (except to the extent permitted under Buie 133 of the Securities and Exchange Commission), offer, sell, pledge, transfer, or otherwise dispose of the Common Stock, 91 par value of the Surviving Corporation, or any portion thereof which he is to receive on or in connection with the Merger (or aolieit any offers to buy, purchase, or otherwise acquire or to take a pledge of any of said stock) if under the Securities Act of 1933, u amended, and the applicable rules and regulations of the Securities and Exchange Commission, such person would be deemed to be an underwriter or to be engaged in a distribution with respect to sueh stock or Grace would for any reason be required to register any of such stock under the Securities Aet of 1933, as amended. In order to enable Grace and Priee Waterhouse 4 Co. to determine that treatment of the tranaactions contemplated hereby as a pooling of interest will be in accordance with generally accepted accounting principles, Western shall obtain from each of its shareholders specified by Grace, a written instrument, in fora satisfactory to Grace, to the effect that be has no present bnteatkm of disposing of any of the Common Stock, $1 par value of the Surviving Corporation, to be recerrad by him in connection with the Merger. 9. Conditions Precedent to Grace'* Obligations. All obligations of Grace under this Agree ment are subject, at Grace's option, to the fulfillment, prior to or at effectiveness of the Merger, f sack of ths following conditions: (a) Each and every representation and warranty of Western contained in this Agreement and in any statement (including financial statements), deed, certificate, schedule or other docu ment delivered pursuant hereto, or in connection with the transactions contemplated hereby, shall be true and accurate as of the date when made and shall be deemed to be made again at and as of the time of the effectiveness of the Merger and shall then be true and aeenrate in all respects. (b) Western Asll have performed and complied with all covenants, agreements and conditions required by this Agreement to be performed or complied with by it prior to or at the effective ness of the Merger. (e) Western ahall have delivered to Graee a certificate of the President and the Treasurer of Western, dated the dste of the effectiveness of the Merger, in form and sabstanee satisfactory to Graee, certifying to the fulfillment of the conditions set forth in Section 9(a) and (b) hereof. (d) Western have delivered to Grace an opinion of Messrs Bishop, Burdett, Falan 4 Erieaoa, Chicago, Illinois, counsel for Western, dated the date of the effectivenem of the Mergar, in form and nhstanee satiafaetory to Graee, that: 13 (i) The corporate existence, foreign qualification!, good standing and corporate power and authority of Western and of each Subsidiary are as represented and warranted in Sections 5(a) and (d) hereof. (ii) The capital etock of Western and of each Subsidiary is as represented and warranted in Sections 5(b) and (d) hereof. (iii) Western has foil power and authority to enter into the Merger as herein provided, all legal and corporate proceedings and actions necessary and appropriate to be taken by Western, its Directors, or a majority thereof, and its shareholders in connection with the Merger provided for herein and necessary to make the same effective have been doly and validly taken, and this Agreement baa been duly and validly authorized, executed and delivered by Western and constitutes a valid obligation binding on Western, in accordance with its terma. (iv) Such counsel does not know or have any reason to believe thil Western or any Sob* aidiary is a party to or affected by any pending suit, action, investigation by any governmental body, or legal, administrative or arbitration proceeding or that any such suit, action, investigation or proceeding to which Western or any Subsidiary might become a party or which might affect ill properties, assets, business or prospects has been threatened. (v) Such counsel does not know or have any reason to believe that any representation or warranty by Western in this Agreement or in any statement (including financial state ments), deed, certificate, schedule or other document delivered pursuant hereto or in connec tion with the Merger contemplated hereby is false or inaccurate in any respect, or that any statement of fact made by Western herein or therein contains any untrue statement of fact or omite to state any fact necessary in order to make the statements herein or therein contained not misleading. (vi) Such counsel does not know or have any reason to believe that Western has not performed or complied with all covenants, agreements and conditions required by this Agree ment to be performed or complied with by Western prior to or at the effectivencm of the Merger. (vii) Such counsel does not know or have any reason to believe that Western has any affiliate or subsidiary within the meaning of Bole 406 of tha General Rules and Regula tions of the Securities and Exchange Commission under the Securities Act of 1933 in effect at the date of said opinion other than shareholders and Subsidiaries as disclosed herein. Soch opinion shall opine favorably on such other matters incident to the transactions con templated hereby as Grace may reasonably request Insofar as it relates to real property owned by Western located outside of the State of Minnesota, such opinion may be bused upon the opinions of local counsel, in which event the opinion of Messrs Bishop, Burdett, Falaaz & Ericson thl) opine that Grace is justified in relying on such opinions of local counsel (e) Grace shall have received inch legal opinions, title insurance (or commitments therefor) or other evidence, in form and substance satisfactory to it and its counsel, as it may deem neces sary to establish that as of the effectiveness of the Merger, (he titles of Western and of eaeh Subsidiary to the real property referred to in Section 5(k) hereof are as represented in said Section 5(k). (f) All actions, corporate proceedings, instruments and documents required to carry out this Agreement, or incidental thereto, and all other related legal matters, shall have been approved by Leo A. Larkin, Esq., General Counsel of Grace. (g) Western shall haee delivered to Grace employment contracts signed by Messn. Lawrence J. Venard, Harvey W. Sleiff and Clarence A. Pratt whieh ihall be substantially in the form of those heretofore delivered by Grace to Western and initialed by said persona, respectively. r in led, by the tad ind nee ub* rnlOD, or ion itetee* hot ot ein not reethe llo* "fCt no* ned the son or) ceoach aid his by oee of _ (h) Qrtce ibsll hire received from Leo A. Larkin, Esq., Genera) Counsel of Grace, an opinion that the issue and delivery of the Grace common stock to Western stockholders are, under the circumstances contemplated by this Agreement, exempt from registration under the Securities Act of 1933. (i)'Tbc Common Stock, $1 par value of the Surviving Corporation, to be delivered to Western shareholders hereunder shall have been duly snthorised for listing on the New York Stock Exchange and the Midwest Stock Exchange upon official nodes of issuance and all Blue Sky filings and permits, if any, required to carry out tha transactions contemplated hereby shall have been made and received. . (j) The books and records of Western and each Subsidiary shall have been adequate to permit Price Waterhouse A Co. to determine the financial condition of Western and of eaeh Subsidiary and the results of their operations, all in accordance with generally accepted accounting principles, and there shall have been no changes made in accounting methods or practices. (k) Price Waterhouse ft Co. shall confirm in writing that the treatment of the transaction contemplated hereby u a pooling of interests would be in accordance with generally accepted accounting prineiplea. (l) No suit, action, investigation, inquiry or proceeding by any governmental body, or other legal or administrative proceeding shall have been instituted or threatened which questions the validity or legality of the transactions contemplated hereby. (m) Western and each Subsidiary shall have entered into written agreements, to which Grace shall succeed upon the effectivenes of the Merger, with all of its employees who perform services of a technical, professional or business nsture and who by reason of their t>ihnicl knowledge or their skills, training, background or capacity are in a position to make or contribute to the making of inventions or to have access to trade secrets requiring said persons to assign their entire right, title and interest in and to any inch inventions to Western or such Subsidiary and to keep secret and confidential all trade secrets of Western or such Subsidiary. (n) Western shall have delivered to Grace the instruments referred to in 8ection 8 hereof as provided therein. (o) Grace shall have received from its Chief Patent Counsel an opinion that (i) Western and the Subsidiaries own or are validly licensed under all patents, trsde-marka, trade name*, brand names, copyrights, applications for patents, trade-marks and copyrights, inventions, processes, know-how, formulae and trade secrets which are necessary for the conduct of Western's and the Subsidiaries' businesses as now conducted, and all such rights and all rights listed on the schedule delivered to Grace pursuant to Section 5 (1) of this Agreement art valid and in good standing and free and dear of all security interests, liens and encumbrances of ev?ry nature, are not being currently challenged in any way and are not involved in any pending or threatened interference proceeding and are, in the ease of all such rights of Western, validly assignable to Grace, and (ii) the operations of Western and the Subsidiaries, the manufacture, use and by Western and the Subsidiaries of their products, their ose of their machinery, equipment and processes, the use of their products by their customers for the purpose for which sold, and the use of their patents, trade-marks, trade names, brand names and advertising, or other literature do not involve infringement or claimed infringement of any patent, trade-mark, trade name or copyright. (p) Western shall have delivered to Grace sn Escrow Agreement signed by each of the share* holders of Western listed therein which shall be substantially in the form attached to an Agree* Bent of Indemnity of even date herewith entered into by Grace and such shareholders of Western. 10. Conditions Precedent to Western's Obligations. All obligatioca of Western under this Agreement an subject, at Western's option, to the fulfillment, prior to or at the eJTeetmneas of tho Merger, of eaeh of the following condition!: ir (a) All representations tad wamatin of Grace contained in this Agreement tad ia sap statement (including financial statements), certificate, schedule or other document delivered pur suant hereto, or in oonnection with the transactions contemplated hereby, shall be trae tad accurate u of the date when made and ahall be deemed to be made again at and aa of the time of the effectiveness of the Merger and ahall then be true and accurate in all respects. (b) Grace ahall have performed and complied with all covenants, agreements and condition required bp thia Agreement to be performed or complied with bp it prior to or at the effectiveneaa of the Merger. (o) Grace ahall have delivered to Western an opinion of Leo A. Larkin, Esq., General Counsel of Grace, dated the date of the effectiveness of the Merger, in form and subjtanee satisfaetorp to Western, that: (i) Grace's corporate existence and good standing are u represented and warranted in Section (6) (a) hereof. (ii) The shares of Common Stock, #1 par value of the Surviving Corporation, into which the Western capital stock is to be converted pursuant hereto will, when issued and delivered as herein provided, be dulp and vaiidlp issued, fully paid and non-aaaessable, and duly authorised for listing on the New York Stock Exchange and the Midwest Stock Exchange upon official notice of issuance. (iii) All legal and corporate proceedings necessary to be taken bp Grace in oonnection with the Merger contemplated herebj provided for bp thia Agreement and necessary to the same effective have been dulp and vaiidlp taken, and thia Agreement has been duly and vaiidlp authorised, executed and delivered bp Grace and constitutes a valid obligation binding on Grace in accordance with its terms. (d) Grace shall have executed and delivered to Western the employment contracts referred to in Section 9 (g) hereof. (e) Grace ahall have delivered to the shareholders of Western listed therein an Escrow Agreement signed bp Grace which shall be substantially in the form attached to an Agreement of Indemnity of even date herewith entered into bp Grace and neh stockholder! of Western. (f) Western ahall have received an opinion from its tax counsel to the effect that tOUUBlDA* tion of the Merger will constitute a reorganisation as defined in Section S6A of the Internal Revenue Code and that no gain or loss will be recognised upon the receipt of Grace common stock bp the shareholders of Western in exchange for their shares of Western common stock, except for such gain or loss recognised with respect to fractional interests which map be sold bp suck shareholders. 11. Nature of Statements of Western. All statements of fact contained in any statement (iaelnding finalist statements), deed, certificate, schedule or other document delivered bp or on behalf of Western punuant hereto or in connection with the transactions contemplated hereby ahall be deemed repre sentations and warranties bp Western hereunder. 12. Natan of Statements of Grace. All statements of fact contained in any statement (including financial statements), certificate, schedule or other document delivered by or on behalf of Grace pur suant hereto or in oonnection with the transactions contemplated hereby ahall be deemed representa tions and warranties bp Grace hereunder. IS. Broken. Western covenants and warrants that no broker or finder has acted for it in con nection with this Agreement or the transactions contemplated hereby and that no broker or finder is entitled to any brokerage commission, finder's fee or similar commission, fee or charge ia rspeet thereof based in any wap on agreements, arrangements, or understanding! bp it; and Westers agrees, with respect to any claim for any such commission, fee or ehargo based ia tap wap on sap ie fitfiarot, arrangement or understanding node or alleged to hare been made by it, to indemnify and bold Grace harmless from and against any claim for brokerage commission, finder's fee or any similar commission, fee or charge relative to this Agreement or to the Merger contemplated hi-reby and in respect of any and all expenses of any character (including reasonable attorney'i fees), incurred iu connection with the investigation or defense of any meh claim. Western covenants and tgrees that no soeh commission, fee, charge or expense will be paid prior to the effectiveness of the Merger from Western's asseta. |4. Westecu Financial Statements as at September 30, 1966. Grate hat, at its own expviue, caused Price Wsterboose 4 Co., independent accountants, to eondnet an examination and andit ,,f the books and accounts of Western and each Subsidiary as of tbe eloee of business September 30, \'Xi and to deliver to Grace the following financial statements: Consolidated Balance 8heet of Western end the Subsidiaries as at September 30, 1966 and related Consolidated Statement of Intern and Retained Earning! for the 9 months period then ended. The eforesaid Consolidated Balance Sheet has been certified by Price Waterhouse 4 Co. as proviitiiiir fairly the financial position of Western and Subsidiaries as at September 30, 1966 and tbe afrrsaiJ Consolidated Statement of Income and Retained Earnings has been certified by Price Wjirrhouse 4 Co. as presenting fairly the results of the operations of Western and the Subsidiaries f..r the 9 months period then ended in conformity with generally accepted accounting principles ap plied un a basis consistent wills prior periods, IS. Efforts of Grace and Western; Termination. Each of the Constituent Corporations agrees to use iu best efforts to enter into, execute, acknowledge, adopt, certify, file and deliver all documents, hold all meetings of their respective Boards of Directors end/or stockholders and take all action and do all things necessary, advisable or proper under the laws of the State of Connecticut and the 8tato of Minnesota, or either of such states, to consummate and make effective the Merger herein provided for and to carry out the purposes of this Agreement; provided, however, that anything herein contained t.< ike rontrary notwithstanding, this Agreement may be terminated whether before or after the sdupiiwo or approval of this Agreement by the shareholders of Western (a) by mutual consent in writme f the Boards of Directors of each of the Constituent Corporations at any tims prior to ths tivnirM of the Merger, or (b) by the Board of Directors of Grace at any time prior to the effeetmnem ike Merger if of the opinion that any of tbe conditions set forth in Section 9 hereof have not been fulfilled, or (e) by tbe Board of Directors of Western at any time prior to tbe effectiveness of the Mery.-r if of the opinion that any of the conditions set forth in Section 10 hereof have not been fulfilled. In the event that the Board of Directors of either Grace or Western shall elect to terminate thM AwTrrmrot because either Board of Directors is of the opinion that the conditions set forth in Section 9 -r Srvtiuo 10 hereof have not been fnlfilled, as the ease may be, then written notiee of soeh termination 4it.| ike rvasou therefor ahall be given by tbe party terminating this Agreement to the other party l"-r>>ui. In tbe event that the Boards of Directors of Grace and Western elect to terminate this Agrt*. U'Bt by mutual consent, then Grace and Western shall enter into a written instrument to that effect. In the eTent of the terminetion of the Merger pursuant to this Section IS, this Agreement kTl void and have no effect, without any liability on the part of either Graee or Western or their vkar.'h'ildrrs. directors or officers in respect of this Merger except that the obligation of Graee and " r*,*ra to pay their own expenses as provided in Section 16 hereof shall remain in effect C*P*o*e of Merger. If the Merger contemplated hereby ia consummated, all expenses incurred * ""'mmstiog tbe Merger shall, except aa otherwise agreed in writing between Graee and Western, >rne by the Surviving Corporation. If the Merger is not consummated, Graee and Western be liable for, and shall pay, the expenses incurred by it tv 17. Notice*. ID notices, request!, demands *nd other communications required or permitted to W 'fiveu hereunder, ih*D be in erritinf and (ball be deemed to bare been dulj fires if delieertd person ally, fiees by prepaid telegram or mailed fint-class, pottage prepaid, refiltered or certified mail at follow*: If to Grace -- W. R. Grace & Co. 7 Hasorer Square New York, New York 10006 Attention: Leo A. Larkin, Secretary If to Western -- Western Mineral Products Company 4725 Olson Highway Minneapolis, Minnesota 55422 Attention: Lawrence J. Venard, President a_ 18. CencrsL The section headings contained herein arc for reference purpose* only and shall not is any way affect the meaning or interpretation of this Agreement. This Agreement seta forth ths entire agreement and understanding of the parties in respect of the transactions contemplated hereby and supersedes all prior agreements, arrangement* and understandings relating to ths subject matter hereof. No representation, promise, inducement or statement of intention baa been made by Westers or Grace which is not embodied in this Agreement, the exhibit hereto or the written statements, deeds, certificates, schedules or other documents delivered pursuant hereto or in connection with the Merger' contemplated hereby, and neither Western nor Grace shall be boand by or liable for any alleged representation, promise, inducement or statement of intention not so set forth. AD the terms, coven ants, representations, warranties and conditions of this Agreement shall be binding upon, and inure to the benefit of and be enforceable by, tbe parties hereto and their respective successors, but this Agree ment and the rights and obligations hereunder shall not be assignable by either party. This Agreement may be amended, modified, superseded or cancelled, and any of the terms, covenants, representations, warranties or conditions hereof may be waived, only by a written instrument executed by both Grace end Western or, in the ease of a waiver, by the party waiving compliance. The failure of either party at any time or times to require performance of any provision hereof shall in no manner affect the right at a later time to enforce the same. No waiver by either party of any condition, or of the hreseh of any term, covenant, representation or warranty contained b this Agreement, whether by conduct or other wise, b any one or more instances shall be deemed to be or construed as a farther or continuing waiver of any such condition or breach or a waiver of any other condition or of the hreseh of any other term, covenant, representation or warranty of this Agreement U 13 Ik Witwbs Wanuop, the director*, or a majority thereof, of Grice and Western hire entered ibio this Agreement tad Plan of Merger under the eorporite eeala of their respectm oorporitiona anJ hove hereunto aet their binds and seals is of the diy ind year flrat shore written. Amort: W. R. GRACE A CO. F.Charles Dugan Assistant Secretary ]Seal) By A. T. Dajonault Viet President Lawrence J. McKay Eben W. Pyne John T. Madden Edgar Ainsworth Etre Roger Millixen (Beinf a majority of the Director* of W. R. Gnat A Co.) F. G. Kingslet G.Michael Phipps John H. Phipps F. E. Larkin A. S. RUPLET O. V. Tract Attest: V. S. Okerlund Secretary >Eai] - L. J. Venard C. A. Pratt Harvet W. Stepp____________ I-ins a majority of the Directors of "trna-v Mutual Piooocn Compant) WESTERN MINERAL PRODUCTS COMPANY By L. J. Yenarp President O. H. Johnson John H. Bishop I, V. 8. OxzKLOfD, Secretary of Wmu VurcaaL Pnoeocrt Coxpaxt, a corporation organised ood existing under the ltn of the 8ute of Vinneaota, hereby certify, u sueh secretary end under the leel of the corporation, that the Agreement and Plan of Verger to which thia certificate ia ap pended, after having been first duly signed by a majority of the directors of said corporation and b/ a majority of the directors of W. R Oaaca ft Co., a corporation organised and existing under the laws of the State of Connecticnt, was duly submitted for consideration to the shareholders of record of said Wetsxx Vxxdal Pbodocis Coxfakt at a special meeting held on December 16, 1966, notice of the time, place and object of which waa mailed at least two weeks before the meeting to sack shareholder of record, whether entitled to vote or not, at his last port-office address, as shown by the records of the Secretary of said Wktbx Vixxau. Piodocvs Couraxr, and that at said meeting the said Agreement and Plan of Verger waa considered and a ballot taken for the adoption or rejection of the tame, and the votes of the shareholders of said Wbtxxx Vdoxil Piodocti Coxpaxt holding shares in said corporation entitling them to exercise at least two-thirds of the voting power thereof were east in favor of the adoption of said Agreement end Plan of Verger. Ix Wrrxxaa Whxxsop, I have subscribed my name as Secretary of said Wbtzsn VixxaaL PaoDDcra Coxpsxt and affixed hereto its corporate teal thia 16th day of December, 1966. {Sxu] V. 8. OXIBLUND_________ Secretary of WisTtxx Vdoxal Psooocia Coxpaxt I. Cuailb F. Dwux, being an Assistant SeertUiy of W. R. Gases 4 Co., Connecticut oor* . |mriteo, hmby certify, u sack Amirtant Secretary tad oadcr the eeel of the corporation, that the Afiveuent cod'Plea of lferfer to which thia certificate is appended waa made, mined and delivered by the Director*, or a majority thereof, of W. R. Grace 4 Co. after laid Agreement and Plan of M.-rp r bad been approved by resolution adopted by the Board of Director* of W. R Grace 4 Ob. at turning thereof duly called, convened and held on December 1, 1966, for the purpoee of consider ing the same; and that the shareholders of W. R Qraee 4 Co. did not vote oa aaid Agreement sad I*bn of Merger sad, pursuant to Section 33466(h)(2) of the Connecticut 8lock Corporation Act, urh vote ni not required because said Agreement and Plea of Merger will not affect say change in ,.r aateodmeat to the Certificate of Incorporation of W. R Grace 4 Co., and tha shares to ha kauad under said Agreement and Plan of Merger eould have beta issued by tha Board of Director* of \V. JL Grace 4 Co. without further authorisation of the shareholders of W. R. Grace 4 Co. lx Wmasa WaExaor, I hereunto sign my name as an Assistant Secretary of said W. R. Grace 4 t*u. and affix hereto its corporate seal this 27th day of December, 1966. .14 >wt| F.Charles Dpoax Assistant Secretary 21 Tbo foregoing Agreement and PLu of Merger having bees duly executed by tbo directed, or a majority thereof, of W. R Gases 4 Co., a Connecticut corporation, aad Warmx Kwui Pnoooots Comtaxt, a Minnesota eorporatioa, aad having beea duly adopted by the aharehaldtd of 04U Wsmtax Ifooau Pioneers Coktaht ia aeeordaaee with the applicable provisions of the Minnesota Statetea 1965 and the fact of the adoption thereof hiring beea doly certified thereon by the Secretary of Wktxem HuocaLL Pioneers Coupamt, and baring been approved by reaolntion adopted by the Board of Directory of W. & Grace 4 Co. (approval by the stockholders of W. R. Qiacs 4 Co., not being required under the Connecticut Stock Corporation Act) and the fact of such approval having beea duly certified thereon by an Assistant Secretary of W. R. Qaacs 4 Co., all in aoeordaneo with lav, a Vice-President and an Assistant Secretary of W. R. Gases 4 Co. aad the President aad Secretary of Webteut MorauL Pionocra Coktaxt do now hereby sign said Agreement aad Plan of lferger under the respective corporate teals of each of said corporations, as the act, deed aad agreement of each of aid corporations, on this 2 7 C*day of December, 1966. W. R. GRACE 4 CO. A. T. Duqwapxt TicaPrarideni [8sal] Amur: Ceables F. Dpoaw iiiufMf 8tertiary (8ial] Amur: Cbaalm F. Doom AuisiarU Secretary WESTERN MINERAL PRODUCTS COMPANT L. J. VEWAAD Prtridrai m V. S. Okerlpwd Secretory V. S. OXAALUND 8tertiary prrsTi/.L Art rv.Tir^.TiM, TOi t. L, Taggart rROMl c. r. Bug an CCi R. V. Sterrett/ Peter hottic v J. r. Cabal ace BATH* Peoeober 5, 19^7 SlTCJTCT i Report of Trip to Kalienell. Meetasa Tbit It a report on ey trip to Montana la connection vith a hatring ha fora tiia Montana Industrial Aeeldent board on a claln by a fomtr ecplojree, L. r, Welsh, Tba defendants la the proceedings ( iooelite Division of V, R, Craca A Co* and Maryland Casualty Coop any, vara rapraaantad by C. X. Larrlck, Selth BloeV, Halier* 11, Montana who was retained by Maryland Casualty, The he art nr van held la Kali* pell oq Kovecber 29 before Robert T, Evanberr, Choi mao of the Ind\*trial Accident Beard, On Hovaxbar 28 after arrtrlnp'tt llbby 1 wct up to tbe operations vitl. Hr. Biel eh and Mr. Lori eh to observe the operations vbere !Ir. Vcltb bad been erplcyed. That eight Blelch, Lovlc>., Kujava and Z vent down to Halispell where ve net vith LtrrleJe to ditcusa the ease. The hearing van conducted on tbe 29th nnd concluded except for submission by us to the Boerd of all chest X rays of Mr, Walsh tal.en since institution of the repulsr X rey pregrea. The first purpose of s*y trip vaa to obsenrt the ealiber of representatleo being furnished by tbe counsel retained by Maryland Casualty. X fovmd Mr, Larrlek to be a very M and a,-rrt6siro trial lawyer vho van concerned with protection ef Oraer at ruen as representinr Maryland Casualty, The first point raised by Lis lo our discussion Tussdsy sight vas vhat he called the "bif plcturs" or poreiblt total exposure of Oreee, Ke pointed cut that prebel)ly our only defense in the particular case vas a technical one} nasely, that tbe dlsaoee vas contractsd beforv naetsect of the Montana Industrial Disease Act and veil before addition of tbs disease ef asbestosls or as industrial disease. If ve vert tc vln or. this technical point it secoed lively to hie tnct the elclrar.t could then brier a earxoo lav action vith a recovery tbtt could veil exceed reeevery under the Act, Kaxicvr ward under tbe Aet for one disabled by as industrial disease is $40.00 per vsek for 600 vests. In a recent Montana ease an employee vas held eot to have been covered by the Act in eoantetion w, L, Taggart 2 Cveeaber 5. 19C7 vith inhaling of Meant duet and he than recovered approxlaately $50,000 1b a cocacc lav actiee. Sinea our lut naeuol atrial tf X rays of eaployeea shoved approximately 3? eeployees (about 1 it 1) aa having lung coedltlaoa vbleh eight bt tha at art of aabaatoala, toa axtact of our exposure tadar the Aet could rue as uueh as $1,150,000, and at eorcon lav eould be a# aueh as 11,600,000, Vs concluded, hovcvvr, that our only count vaa to handle cacti east eo Its ncrlta, trying to Halt our liability at aueb as va eould in oaefc cast aa it earn along sad that va vould da feed tba Valsh case ob tba only technical ground available to us. At the barring cl ai east'a eounaal called (i) the elaiaant, (11) an oopleyee aaesd Baerkcn vbo bad Vaan erployed fr ena year, (ill) Arthur Bundrt>eb, tha secretary of the loeel labor uaien, (lv) Ray Xujava, our ehiaf aaglneer, and (v) K'r. Rleleh, our aaaaper. It vas brought out that lir. Valab ease te vorh for Zpr.ollte la iyl*9 aftor previous eeployreet as a logger, buteher and trainisen, fie verba d for Zenellte until Hovrnber 19uC when be vac retired b*cause of bia disability, (fir, Valab la bov fit years old.) Turing his esrleyBeat vlth Zar.elite he vorked for 37 days 1b the sill acd than drove a true! for army years, prienrily earryinr ore ecccentrate down the Must sin to tba railroad a 1 ding. About l?5u ha at arte A to vork in tba vanhouse vbera he rvs&Joed er.plovedir.tll bis rutireiaent. It vas brought cut, hcwver, that in his erpleyreiit lei the vareheuae bo did fra tiae to tlse pc te other plaeee in the operation, including the *111, Much testir.osy vas riven as to the qunr.tltiea of dust causae by the operation, Tha verst concentration* vere adrlttedly ir. the Bill and 1b tba truck bed vhan the or* vas loaded. Mr. Kujava'a testiaony, bovtwr, aboved that visible dust is net barc-ful and that only particles under 10 ciercoe Id si sc are hezardoue to health. It vas brought out in teetinony of the oeploytea that a dust eemittee vas Ibrsed about five years age and that the eosr.ittee dealt vlth tana parent and the ftatc hoard ef hee.lti rryordirr. dust eur.dltior.a at the operation, V.r, Veleh'e eondftlow v fir~t .?>* *. <\jeo*is vben he first coonultod doctors about 195?* It reera that as be a tool cannot b* definitely established unlear a biopey is dees on lunr tissue, f'r, Welsh subrjttod te ar. operation Inst *unc fer the purpurea ef ebtainiog. tiie tlasua for the biopsy vhler. definitely established aebestoais and that ves aekncvledped nr. tba roeord, Jt seoas dear, therefore, that he hts via tr acted totdly dlasbliar ar.bestosls and that his ar.ly exposure to esbestifers a!nerd vac during bis Zcr.ollte eeploynest. w. L. Taggart 3 Peeexbcr 3.19C7 Mr. Cujttva told of testa nidi at various let itlac* in the ope ration and at various tines to determine dust eontaet. He indi cated that Uclttd Ftatss Public Tiaalth standards haw established a aaxlcus of 20,000,000 parts of dust par cubic foot of air. Us studies indicated that the asbestlfern contort of the dust at libty vaa is the rang* of 122 indicating an asbestlfere contest of 2-3,000,000 parts per cubic foot. He stated that United Staten Tublic Health standards set a threshold limit of 3,000,000 parts per cubic foot before asbestlfore nate rial la the atnosphere is basardous to the health of a noreal peraoo. His etudiee sboved that the equip ment for obtaining a dust count could aot get a measurable count is the alU complex area outside the Bill lteelf. There appeared to have beer, reports free the State beard of Healtii respecting continuing etudies of the situation is one of vhich It vas stated that the asbestl fore contest ran as hi ^ as WC* although this statement vas unsupported by any evidence of scientific tost. At any rate reports of the State Hoard of Health are lnedslsslble by statute is acy legal proeeedisr.s dad, there fere, eould sot be ecsitted in this hearing. The purpose of calling Klelch van to attespt to establish an kdelcslon against lots rest made by hlcieb to the dust comlttee regarding the asbestl fora content but this attempt vas not successful. During the afternoon coffee breek f'r. fvaaberr, Oialrran of the Foard, Joined us and ruer.tlor.ed vbether sore settlement eould be made. Apparently be vor.ted tc be tehee off the hook in vhat is a nee and most difficult field. Hr. Larrick told hln that certainly Hr. Welsh had asbestos is sr.d that probably it vr.e contracted at Xceollt* but that It vas before the enactment of the Act and fvar.berr agreed that the Aet eould not be applied retroactively. ',r. Larrleh said he vould eceeldrr settlement but that the enn vhe eould sale any decision along this line vas trevellin? and not available (referar.ee to the fact that you vere er.route to Atlanta). To lusiariae, 2 think the record is dear that Welsh contracted asbectools free his employment vith u* but the Foard ruyv agree that ho vas not covered at the tlre the dlerase vas eoetraeted. The lrplientlcna of the ears are apparent* A reeori ha/ aev been sada that there Is danper of asbestoils incur operation. It above efforts to lEprove tbe picture sueh as aandator7 tat of respirators la eritlenl areas, periodic X ray ehackups, ladepecdeat seioatifle tests of dust conditions and lnstnllatiee of dust exhaust systec. Uafortwiately, howsrer, v* knov that there it a potentially layye group of esployeee vto Bay already- have the beginning* of the V. L. Taggart -k- heeeeber 5 19C7 .dliiui io that tnetuil liability euoot be readily forecast'. Undoubtedly ve- vlll be required to take further and nor* expeatlre was urea for Halting tba exposure. It 1> also true that a* more la learned about tbe dieease the atandarda may be tightened considerably. tee point that baa aet beee mentioned lo any of the diaeueaiona ao far ia tbe poaalblUty of liability to the general public, although thle it probably a eery minor axpoaure. Severer, It vaa brought out in tba teatlaooy by case of tha eeployeea that Icnollte bad permitted ertployee* to cut Chrletmna treea on the property but that after a couple of year* tbla vaa discontinued; the vitaeaa stated that tha reason for tba dlseontleuance vaa that tha purchaser of tbe trees refused to take any more because tbey vere so covered vlth dust* Also wmanticned in these dleeunalcna vaa any question of moral obligation apart froa legal liability. Bob Sterrett vlll ccaeult vlth J-K as to methods and eoata of protection again*t asbestosls is an nabestea operation auch as J-M conduct*. He vlll also efctck vlth Stevnrt and Skardoo regarding tha cineral content in tbe Couth Carolina operation, althour^ he le alcoat eertcin that as be a toe doe* not oecur there. I have aleo ashed Peter Kostic to look into the problem. CTD/MS C. T, Duffan