EXHIBIT 2.3
June 2,2004
Noveon International, Inc.
Attn: Xxxxxxxxxxx X. Xxxxx, Esq.
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxx, Xxxx 00000-0000
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
Attn: Xxxxxxxxxxx Xxxx, Esq.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Merger Agreement Payment Procedures
Ladies and Gentlemen:
This letter shall serve to set forth our agreement regarding the procedures
applicable to the payments to be made in respect of Merger Shares and Company
Options in connection with the Agreement and Plan of Merger, dated April 15,
2004 (the "Merger Agreement"), by and among The Lubrizol Corporation
("Lubrizol"), Lubrizol Acquisition Corporation and Noveon International, Inc.
("Noveon"). Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Merger Agreement.
The following procedures shall apply to payment of the Merger Consideration in
respect of Merger Shares pursuant to Sections 2.2(c) and 2.3 of the Merger
Agreement and amounts in respect of Company Options pursuant to Section 2.4 of
the Merger Agreement:
- Lubrizol has engaged, or will prior to the Effective Time engage,
KeyBank National Association ("KeyBank") to act as the Disbursing
Agent in connection with the Merger. KeyBank's engagement as
Disbursing Agent will end as of six months after the Effective Time.
Lubrizol and Noveon have entered into or will enter into an Escrow
and Disbursement Agency Services Agreement with KeyBank relating to
KeyBank's duties and obligations as Disbursing Agent (the
"Disbursement Agent Agreement").
- Noveon has provided Lubrizol with a schedule (the "List of Holders
and Amounts") that lists all of the holders of Merger Shares and/or
Company Options (each, a "Holder") and sets forth the number of
Merger Shares and/or Company Options held, and the amount of the
payment to be received, by each of them.
- Noveon has sent to each Holder a letter of transmittal pursuant to
which the Holders can surrender their Merger Shares for payment and
direct payment for their Company Options pursuant to the Merger
Agreement (the "Letter of Transmittal").
Noveon International Inc.
June 2,2004
Page 2
- Prior to the Effective Time, Noveon, and, after the Effective Time,
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP ("Xxxxx Xxxxx"), on
behalf of the Holders, will be responsible for receiving Letters of
Transmittal from the Holders, and will, in consultation with
Lubrizol and its counsel, verify that each submitted Letter of
Transmittal has been properly executed and is accompanied by all
documentation required by the Letter of Transmittal ("Required
Documentation"), which includes without limitation, in the case of
the surrender of Merger Shares, valid share certificates
representing the surrendered Merger Shares or affidavits in respect
of lost, stolen or destroyed certificates as provided for in Section
2.3(i) of the Merger Agreement.
- At least one day prior to the Effective Time, Noveon will provide to
Lubrizol and KeyBank a schedule of the Holders entitled to receive
payment in respect of Merger Shares and/or Company Options as of the
Effective Time and the amount entitled to be received by each Holder
(the "Closing Date Payment Schedule"). From time to time after the
Effective Time and prior to the date that is six months therefrom,
Lubrizol, based on Letters of Transmittal submitted to Xxxxx Xxxxx
and delivered to Lubrizol, may provide to KeyBank schedules of the
Holders not listed on the Closing Date Payment Schedule that become
entitled to receive payment in respect of Merger Shares and/or are
entitled to payment in respect of Company Options by having
delivered Letters of Transmittal and all Required Documentation (the
"Post-Closing Payment Schedules").
- KeyBank will not make any payments of Merger Consideration in
respect of Merger Shares or Company Options until 24 hours following
the delivery to Lubrizol and KeyBank of the Closing Date Payment
Schedule or delivery to KeyBank of any Post-Closing Payment
Schedule, as applicable, which relates to the payments.
- Noveon and Xxxxx Xxxxx, as applicable, shall provide Lubrizol with
copies and, upon the request of Lubrizol, originals of all Letters
of Transmittal and all Required Documentation of the Holders that
are listed on the Closing Date Payment Schedule or any Post-Closing
Payment Schedule, as applicable. If Lubrizol has reasonable grounds
to believe that any particular Holder is not entitled to the payment
set forth on the Closing Date Payment Schedule or any Post-Closing
Payment Schedule, as applicable, Lubrizol may, after giving notice
to Xxxxx Xxxxx, instruct KeyBank to withhold payment to the
applicable Holder until Lubrizol has been provided with evidence
reasonably satisfactory to it of the amount of the payment that the
applicable Holder is entitled to receive pursuant to the Merger
Agreement.
- With respect to payments relating to Company Options, the Closing
Date Payment Schedule and each Post-Closing Payment Schedule shall
specify the amount to be paid to the Holders net of all applicable
withholding taxes, which
Noveon International Inc.
June 2,2004
Page 3
shall be withheld by Noveon and paid by Noveon to the applicable
governmental authorities at the time and in the manner required by
applicable law.
- Noveon will not include any Holder or any payment on the Closing
Date Payment Schedule if: (a) the Holder and/or the amount of the
payment is not set forth on the List of Holders and Amounts, (b) the
applicable Holder has not delivered a properly executed Letter of
Transmittal and all Required Documentation; or (c) Noveon has
reasonable grounds to believe that the applicable Holder's Letter of
Transmittal or Required Documentation contains any material error or
misstatement of fact or that the applicable Holder is not entitled
to the payment set forth on the Closing Date Payment Schedule.
- On or prior to the Closing Date, Lubrizol will deposit with KeyBank
cash in an amount sufficient to pay the Merger Consideration in
respect of all Merger Shares and the payments in respect of all
Company Options required under the Merger Agreement. No funds will
be released by KeyBank to Holders until Lubrizol and Noveon have
given joint instructions to KeyBank that the Effective Time has
occurred. Subject to the disbursement of such funds under the terms
hereof, KeyBank will hold such funds for a period of six months from
the Effective Time in accordance with the terms and conditions of
the Disbursement Agent Agreement.
- Subject to the provisions of this letter, the Disbursement Agent
Agreement will instruct KeyBank to pay, on the Closing Date but
after notification to KeyBank as described above that the Effective
Time has occurred, to the Holders listed on the Closing Date Payment
Schedule the amounts set forth on the Closing Date Payment Schedule
by wire transfer in immediately available funds, direct deposit or
by check according to the Holder's instructions in the Letter of
Transmittal.
- Subject to the provisions of this letter, from time to time after
the Effective Time, KeyBank will promptly pay the Holders listed on
any Post-Closing Payment Schedule the amounts set forth on the
Post-Closing Payment Schedule by wire transfer in immediately
available funds, direct deposit or by check according to the
Holder's instructions in the Letter of Transmittal.
- KeyBank will serve as Disbursing Agent in accordance with the terms
and conditions of the Disbursement Agent Agreement for a period of
six months from the Effective Time. Thereafter, any cash remaining
with KeyBank shall be returned to the Surviving Corporation, and,
subject to the terms and conditions of the Merger Agreement, Holders
may look only to the Surviving Corporation for payment of the Merger
Consideration and in respect of Company Options.
- All interest and other earnings on the funds held by the Disbursing
Agent will accrue for the benefit of and be paid to Lubrizol, except
as provided in clause (ii)
Noveon International Inc.
June 2,2004
Page 4
of Section 7 of the Disbursement Agent Agreement. No Holder will be
entitled to receive interest or any other payment from KeyBank,
Noveon, Xxxxx Xxxxx or Lubrizol as a result of any delay in the
payment of any Merger Consideration in respect of Merger Shares or
any amount in respect of Company Options in connection with the
Merger.
To the extent it is inconsistent with the foregoing, the Merger Agreement is
hereby amended, but shall otherwise remain in full force and effect in
accordance with its terms. In the event of any conflict between the provisions
of this letter, on the one hand, and the terms and conditions of the Merger
Agreement or the Disbursement Agent Agreement, on the other hand, the provisions
of this letter shall control.
If you are in agreement with the provisions of this letter, please sign in the
space indicated below.
[signatures follow on the next page]
Noveon International Inc.
June 2,2004
Page 5
Sincerely,
The Lubrizol Corporation Lubrizol Acquisition Corporation
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxxx
------------------------- ------------------------------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxxxx
Title: Treasurer Title: Secretary
AGREED AND ACCEPTED:
Noveon International, Inc. Fried, Frank, Harris, Xxxxxxx
& Xxxxxxxx LLP
By: /s/ Xxxxxx X. Xxxxxxxxx /s/ Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx LLP
------------------------- ------------------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: President and Chief
Executive Officer
