EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
Among
ENVIROGEN, INC.,
XXXX ENVIRONMENTAL & INFRASTRUCTURE, INC.
and
TONIC ACQUISITION CORPORATION
Dated as of January 30, 2003
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of January 30, 2003, among ENVIROGEN, INC., a Delaware corporation (the
"Company"), XXXX ENVIRONMENTAL & INFRASTRUCTURE, INC., a Louisiana corporation
("Parent"), and TONIC ACQUISITION CORPORATION, a Delaware corporation and a
direct, wholly-owned subsidiary of Parent ("Merger Sub"; the Company and Merger
Sub sometimes being hereinafter together referred to as the "Constituent
Corporations").
RECITALS
WHEREAS, the respective Boards of Directors of each of Parent, Merger
Sub and the Company have approved the merger of Merger Sub with and into the
Company (the "Merger") and approved the Merger upon the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger; and
WHEREAS, at the effective time of such merger, each outstanding share
(a "Share" or the "Shares") of the common stock, par value $0.01, of the Company
(the "Common Stock") shall be converted into and become exchangeable for Ninety
Cents ($0.90) in cash without interest (the "Cash Exchange Price").
WHEREAS, the Company desires to solicit the approval of the holders of
the Shares (the "Shareholders") for the Merger and the other transactions
contemplated hereby;
NOW, THEREFOR, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER; CLOSING; EFFECTIVE TIME
1.1 The Merger. Upon the terms and subject to the conditions set forth
in this Agreement, at the Effective Time (as defined in Section 1.3) Merger Sub
shall be merged with and into the Company and the separate corporate existence
of Merger Sub shall thereupon cease. The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Delaware, and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Article II. The Merger shall have the
effects specified in Section 259 of the Delaware General Corporation Law
("DGCL"). Parent, as the sole stockholder of Merger Sub, hereby approves the
Merger and this Agreement.
1.2 Closing. Unless this Agreement shall have been terminated and the
Merger abandoned pursuant to Article VII hereof, the closing of the Merger (the
"Closing") shall take
place (i) at the offices of Parent, 0000 Xxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxxxx
00000 at 9:00 a.m., Central time, on the first Business Day after the day on
which the last to be fulfilled or waived of the conditions set forth in Article
VI (other than those conditions that by their nature are to be satisfied at the
Closing, but subject to the fulfillment or waiver of those conditions) shall be
satisfied or waived in accordance with this Agreement or (ii) at such other
place and time and/or on such other date as the Company and Parent may agree in
writing (the "Closing Date").
1.3 Effective Time. As soon as practicable following the Closing, the
Company and Parent will cause a Certificate of Merger consistent with this
Agreement (the "Certificate of Merger") to be executed, acknowledged and filed
with the Secretary of State of Delaware as provided in Section 251 of the DGCL.
The Merger shall become effective on the date and at the time that the
Certificate of Merger has been duly filed with the Secretary of State of
Delaware (the "Effective Time").
1.4 Options. The Company shall take all necessary action to provide
that, at the Effective Time, all of the Company's Stock Option Plans (as defined
in Section 4.1(b)) have been terminated and that each Company Option (as defined
in Section 4.1(b)) has been terminated with the written consent of the holder of
such Company Option.
1.5 Stock Credits. At or prior to the Effective Time, the Company shall
take the following actions in regard to the Company's Deferred Fee Plan for
Non-Employee Directors (the "Deferred Fee Plan"): (1) terminate the Deferred Fee
Plan; and (2) pay each director in lieu of each Share that would have been
distributed from the director's Stock Account (as defined in the Deferred Fee
Plan) upon the director's termination of service, an amount in cash equal to the
Cash Exchange Price multiplied by the number of Shares credited to each
director's Stock Account (less any applicable withholding tax).
ARTICLE II
CERTIFICATE OF INCORPORATION AND
BY-LAWS OF THE SURVIVING CORPORATION; OFFICERS AND
DIRECTORS OF THE SURVIVING CORPORATION
2.1 Certificate of Incorporation. The certificate of incorporation of
the Company as in effect immediately prior to the Effective Time shall be the
certificate of incorporation of the Surviving Corporation (the "Charter"), until
duly amended as provided therein or by applicable Law, except that Article
Fourth of the Charter shall be amended to read in its entirety as follows: "The
aggregate number of shares that the Corporation shall have the authority to
issue is 1,000 shares of Common Stock, par value $0.01 per share."
2.2 Bylaws. The bylaws of Merger Sub in effect at the Effective Time
shall be the by-laws of the Surviving Corporation (the "Bylaws"), until
thereafter amended as provided therein or by applicable Law.
2.3 Directors. The directors of Merger Sub at the Effective Time shall,
from and after the Effective Time, be the directors of the Surviving Corporation
until their successors have been duly elected or appointed and qualified or
until their earlier death, resignation or removal in accordance with the Charter
and Bylaws.
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2.4 Officers. The officers of the Company at the Effective Time shall,
from and after the Effective Time, be the officers of the Surviving Corporation
(except that X.X. Xxxxxxxx, Xx. shall be Chief Executive Officer and Xxxxxx X.
Xxxxxx shall be President) until their successors have been duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the Charter and Bylaws.
ARTICLE III
EFFECT OF THE MERGER ON CAPITAL STOCK; EXCHANGE OF
CERTIFICATES FOR MERGER CONSIDERATION
3.1 Effect on Capital Stock. At the Effective Time, as a result of the
Merger and without any action on the part of the holder of any Capital Stock (as
defined in Section 8.2) of the Company:
(a) Merger Consideration. Each Share issued and outstanding
immediately prior to the Effective Time shall be converted into, and become
exchangeable for, the Cash Exchange Price, without interest (the "Merger
Consideration"). At the Effective Time, all Shares shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and each
certificate (a "Certificate") formerly representing any of such Shares (other
than Dissenters' Shares, as defined in Section 3.3) shall thereinafter represent
only the right to receive the Merger Consideration.
(b) Merger Sub. At the Effective Time, each share of Common
Stock, par value $0.01 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock of the Surviving Corporation and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation.
3.2 Exchange of Certificates for Merger Consideration.
(a) Exchange Agent. As of the Effective Time, Parent shall
deposit, or shall cause to be deposited, with a bank, trust company or other
entity selected by Parent and reasonably acceptable to the Company (the
"Exchange Agent"), for the benefit of the holders of Shares, cash in U.S.
dollars in an amount equal to the Merger Consideration multiplied by the
aggregate outstanding Shares to be paid pursuant to Section 3.1(a) in exchange
for outstanding Shares upon due surrender of the Certificates (or compliance
with Section 3.2(f) of this Agreement) pursuant to the provisions of this
Article III (such aggregate cash amount when paid to the Exchange Agent being
hereinafter referred to as the "Merger Fund").
(b) Exchange Procedures. Promptly after the Effective Time
(and in any event within three Business Days thereafter), the Surviving
Corporation shall cause the Exchange Agent to mail to each holder of record of
Shares (i) a letter of transmittal (which shall, among other matters, specify
that delivery of the Certificates shall be effected, and risk of loss and title
to the Certificates shall pass, only upon actual receipt of the Certificates (or
compliance with Section 3.2(f) of this Agreement) by the Exchange Agent) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration due and payable to such holder. Upon
surrender of a Certificate for cancellation to the Exchange Agent together with
such letter of transmittal, duly executed, the holder of such Certificate shall
be
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entitled to receive in exchange therefor a check in the amount (after giving
effect to any required tax withholdings) of the Merger Consideration due and
payable in respect of such holder's Shares and the Certificate so surrendered
shall forthwith be canceled. No interest will be paid or accrued on any amount
payable upon due surrender of the Certificates. All Merger Consideration paid
upon surrender for exchange of Shares in accordance with the terms of this
Agreement shall be deemed to have been paid in full satisfaction of all rights
pertaining to such Shares. In the event of a transfer of ownership of Shares
that is not registered in the transfer records of the Company, a check for the
amount of cash to be paid upon due surrender of the Certificate may be delivered
to such a transferee if the Certificate formerly representing such Shares is
presented to the Exchange Agent, accompanied by all documents required by the
Exchange Agent to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.
(c) Transfers. After the Effective Time, there shall be no
transfers on the stock transfer books of the Company of the Shares that were
outstanding immediately prior to the Effective Time.
(d) Termination of Merger Fund. Any portion of the Merger
Fund (including the proceeds of any investments thereof) that remains unclaimed
by the Shareholders of the Company for one year after the Effective Time shall
be paid to Parent. Any Shareholders of the Company who have not theretofore
complied with this Article III shall thereafter look only to Parent for payment
of their Merger Consideration payable pursuant to Section 3.1 upon due surrender
of their Certificates (or affidavits of loss in lieu thereof), in each case,
without any interest thereon. Notwithstanding the foregoing, neither Parent, the
Surviving Corporation, the Exchange Agent nor any other Person shall be liable
to any former holder of Shares for any amount properly delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws.
(e) Return of Consideration. Any portion of the Merger
Fund representing Merger Consideration payable in respect of Dissenters' Shares
for which appraisal rights have been perfected (in accordance with the DGCL)
shall be returned to Parent, upon Parent's demand.
(f) Lost, Stolen or Destroyed Certificates. In the event
any Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such Person of a
bond in an amount determined by Parent as indemnity against any claim that may
be made against it with respect to such Certificate, the Exchange Agent will pay
to such Person the Merger Consideration payable pursuant to Section 3.1
represented by such Certificate.
(g) Investment of the Merger Fund. To the extent not
immediately required for payment on surrendered Shares, proceeds in the Merger
Fund shall be invested by the Exchange Agent, as directed by the Surviving
Corporation (as long as such directions do not impair the rights of holders of
Shares), in direct obligations of the United States of America, obligations for
which the faith and credit of the United States of America is pledged to provide
for the payment of principal and interest, commercial paper rated of the highest
investment
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quality by Xxxxx'x Investors Service, Inc. or Standards & Poor's Rating Group,
or certificates of deposit issued by a commercial bank having at least $5
billion in assets, and any net earnings with respect thereto shall be paid to
the Surviving Corporation as and when requested by the Surviving Corporation.
3.3 Dissenters' Shares. Notwithstanding Section 3.1, Shares outstanding
immediately prior to the Effective Time and held by a holder who has not voted
in favor of the Merger or consented thereto in writing and who has demanded
appraisal for such Shares in accordance with the DGCL ("Dissenters' Shares")
shall not be converted into a right to receive the Merger Consideration, unless
such holder fails to perfect or withdraws or otherwise loses such holder's right
to appraisal in accordance with the DGCL. If after the Effective Time such
holder fails to perfect or withdraws or loses such holder's right to appraisal
in accordance with the DGCL, such Dissenters' Shares shall be treated as if they
had been converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Dissenters' Shares, and Parent shall
have the right to participate (and after the Closing, to direct) in all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Merger Sub as follows:
(a) Organization, Good Standing, Corporate Power and
Qualification; Subsidiary and Other Interests.
(i) The Company has only one Subsidiary, MWR, Inc.,
a Michigan corporation. Each of the Company and its Subsidiary (x) is a
corporation duly organized, validly existing and in good standing under the laws
of its respective jurisdiction of organization, (y) has all requisite corporate
power and authority to own and operate its properties and assets and to carry on
its business as presently conducted and (z) is qualified to do business and is
in good standing as a foreign corporation in each jurisdiction where the
ownership or operation of its properties or conduct of its business requires
such qualification, except where the failure to be so qualified or in good
standing, individually or in the aggregate, has not had and is not reasonably
likely to have a Company Material Adverse Effect (as defined in Section 8.2).
The Disclosure Memorandum contains a correct and complete list of the
jurisdictions where each of the Company and its Subsidiary is organized and
authorized to conduct business. The Company has made available to Parent a
complete and correct copy of the Company's and its Subsidiary's certificates of
incorporation and bylaws, each as amended to the date hereof and each of which
are in full force and effect.
(ii) The Company owns all of the outstanding Capital
Stock of its Subsidiary and such Capital Stock is free and clear of all Liens
except for Permitted Liens (as
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defined in Section 8.2). Neither the Company nor its Subsidiary has any equity
investment or ownership interest in any other Person other than the Company's
interest in its Subsidiary.
(b) Capital Structure. The authorized Capital Stock of the
Company consists of (i) fifty-two million (52,000,000) Shares, of which
4,032,985 were outstanding and 9,917 were held in treasury as of the close of
business on January 30, 2003, and (ii) two million (2,000,000) shares of
Preferred Stock, par value $0.01 per share (the "Preferred Shares"), none of
which Preferred Shares is outstanding. All of the outstanding Shares have been
duly authorized and are validly issued, fully paid and nonassessable. The
Disclosure Memorandum contains a correct and complete list as of January 30,
2003 of each outstanding purchase right, or option (each a "Company Option") to
purchase Shares, including all Company Options issued under the Company's 1990
Incentive Stock Option and Non-Qualified Stock Option Plan, 2000 Incentive Stock
Option and Non-Qualified Stock Option Plan, and 1993 Director's Non-Qualified
Stock Option Plan, in each case as amended to the date hereof (collectively, the
"Stock Option Plans"), including the holder, date of grant, exercise price and
number of Shares subject thereto. The Disclosure Memorandum also contains a
correct and complete list as of January 30, 2003 of each outstanding right to
convert stock credits issued pursuant to the Deferred Fee Plan (the "Director
Conversion Rights") into Shares, including the name of each director and the
number of Shares to which he is entitled under the Deferred Fee Plan. The Stock
Option Plans and the Deferred Fee Plan are the only plans under which any
Company Options or conversion rights are outstanding. As of January 30, 2003,
other than the 766,409 Shares reserved for issuance upon exercise of outstanding
Company Options and the 168,536 Shares reserved for issuance upon exercise of
the Director Conversion Rights, there are no Shares reserved for issuance or any
commitments for the Company to issue Shares. Each of the outstanding shares of
Capital Stock of the Company's Subsidiary owned by the Company is duly
authorized, validly issued, fully paid and nonassessable and owned by the
Company, free and clear of any limitation or restriction (including any
restriction on the right to vote or sell the same except as may be provided as a
matter of Law). Except for Company Options and the Director Conversion Rights,
there are no preemptive or other outstanding rights, options, warrants,
conversion rights, stock appreciation rights, redemption rights, repurchase
rights, agreements or commitments to issue or sell any shares of Capital Stock
or other securities of the Company or its Subsidiary or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire from the Company, any shares of
Capital Stock or other securities of the Company or its Subsidiary, and no
securities or obligations evidencing such rights are authorized, issued or
outstanding. The Company does not have outstanding any bonds, debentures, notes
or other obligations the holders of which have the right to vote (or convertible
into or exercisable for securities having the right to vote) with the
Shareholders of the Company on any matter ("Voting Debt"). After the Effective
Time, the Surviving Corporation will have no obligation to issue, transfer or
sell any shares of Capital Stock or other securities of the Surviving
Corporation pursuant to the Stock Option Plans or the Deferred Fee Plan. The
Shares constitute the only class of securities of the Company or its Subsidiary
registered or required to be registered under the Exchange Act. The Company is
not the beneficial owner of any equity securities, except shares of Capital
Stock of its Subsidiary.
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(c) Corporate Authority; Approval and Fairness.
(i) The Company has all requisite corporate power and
authority and has taken all corporate action necessary in order to execute,
deliver and perform its obligations under this Agreement and to consummate the
Merger, subject only to approval of this Agreement by the holders of a majority
of the outstanding Shares (the "Company Requisite Vote"). Assuming due execution
and delivery by Parent and Merger Sub, this Agreement is a valid and binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy
laws or creditors' rights generally or by general principles of equity.
(ii) The Company's Board of Directors has unanimously
approved this Agreement and the Merger and the other transactions contemplated
by this Agreement, has received and reviewed the opinion of Xxxxxxx Xxxxx &
Associates, Inc., financial advisors to the Company's Board of Directors (the
"Financial Advisor"), that, as of the date of this Agreement, the consideration
to be received pursuant to this Agreement is fair to the Shareholders from a
financial point of view (the "Fairness Opinion") and has duly taken all other
actions described in Section 4.1(j).
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) with the
Delaware Secretary of State, (B) under the Securities Exchange Act of 1934 (the
"Exchange Act"), (C) to comply with state securities or "blue sky" laws, and (D)
with the National Association of Securities Dealers (the "NASD"), no other
notices, reports or other filings are required to be made nor are any consents,
registrations, approvals, permits or authorizations (collectively, "Government
Consents") required to be obtained by the Company from any court or other
governmental or regulatory authority, agency, commission, body or other
governmental entity (a "Governmental Entity"), in connection with the execution
and delivery of this Agreement by the Company and the consummation by the
Company of the Merger and the other transactions contemplated hereby.
(ii) The execution, delivery and performance of this
Agreement by the Company does not, and the consummation by the Company of the
Merger and the other transactions contemplated hereby will not, constitute or
result in (A) a breach or violation of, or a default under, the certificate of
incorporation or bylaws of the Company or of its Subsidiary, (B) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of any Lien on the assets of the Company or its Subsidiary (with or
without notice, lapse of time or both) pursuant to, any agreement, lease,
contract, note, mortgage, indenture or other obligation (a "Contract") binding
upon the Company or its Subsidiary or any order, writ, injunction, decree of any
court or any Law or governmental or non-governmental permit or license to which
the Company or its Subsidiary is subject or (C) any change in the rights or
obligations of any party under any Contract; except, in the case of clause (B)
or (C) above, for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, is not reasonably likely to
create a liability or obligation to the Company or its Subsidiary greater than
$25,000 or prevent, materially delay or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement. There are
no Contracts of the Company or its
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Subsidiary which are material to the Company and its Subsidiary, taken as a
whole, pursuant to which consents or waivers are or may be required prior to
consummation of the Merger and the other transactions contemplated by this
Agreement.
(e) Company Reports; Financial Statements and Matters. The
Company has made available to Parent each registration statement, report, proxy
statement or information statement filed with the SEC by it since December 31,
2001 (the "Audit Date") (collectively, including any such reports filed
subsequent to the date hereof, the "Company Reports"). As of their respective
dates, the Company Reports complied, and any Company Reports filed with the SEC
after the date hereof will comply, as to form in all material respects with the
applicable requirements of the Exchange Act and the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations thereunder. The
Company Reports did not, and any Company Reports filed with the SEC after the
date hereof will not, at the time of their filing, contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading. Each of the consolidated
balance sheets included in, or incorporated by reference into, the Company
Reports (including the related notes and schedules) fairly presents, or will
fairly present, the consolidated financial position of the Company and its
Subsidiary as of its date and each of the consolidated statements of operations,
cash flows and changes in shareholders equity, included in or incorporated by
reference into the Company Reports (including any related notes and schedules)
fairly presents, or will fairly present, the results of operations, cash flows,
shareholders' equity, as the case may be, of the Company and its Subsidiary for
the periods set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in amount
or effect), and complies with accounting principles generally accepted in the
United States, ("GAAP") consistently applied during the periods involved, except
as may be noted therein. The certifications required pursuant to the
Xxxxxxxx-Xxxxx Act of 2002 with respect to the Company Reports are true, correct
and complete and Parent and Merger Sub are entitled to rely thereon. The Company
has heretofore made available, or promptly will make available, to Parent a
complete and correct copy of all amendments or modifications (in draft or final
form) which are required to be filed with the SEC but have not yet been filed
with the SEC, the Company Reports, agreements, documents or other instruments
which previously had been filed by the Company with the SEC pursuant to the
Exchange Act. For purposes of this Agreement, "Balance Sheet" means the
consolidated balance sheet of the Company as of December 31, 2001 set forth in
the Company 10-K for the fiscal year ended, December 31, 2001. Except as set
forth in the Company Reports filed with the SEC prior to the date hereof,
neither the Company nor its Subsidiary has any material liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
which would be required under GAAP to be set forth on a consolidated balance
sheet of the Company and its Subsidiary taken as a whole. Except as set forth in
the Disclosure Memorandum, the accounts receivable of the Company are fully
collectible in the ordinary course of business within 180 days of the date upon
which an invoice therefor was tendered by the Company, net of reserves for
doubtful accounts. The Company has and maintains adequate records necessary to
support the amounts it invoices its customers and any claims for changes and
extra compensation for work performed. At Parent's request, the Company will
provide copies of any such available records to Parent. There shall not be
outstanding as of the Closing, and the Company has not entered into any
unterminated agreement providing for the extension or guarantee of any credit or
any indebtedness for borrowed money
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(including without limitation for working capital purposes) or for the purchase
or lease of goods or services having aggregate remaining payments greater than
$50,000. The Company has no liability to reimburse, and has not guaranteed, any
sums with respect to work that has been submitted by other consultants and
contractors (and similar third parties) for reimbursement under the PECFA
program except as disclosed in the Disclosure Memorandum. The reserves and
accruals on the Company's financial statements with respect to PECFA work,
present fairly and adequately and to the knowledge of the Company, fully provide
for all liabilities arising out of or related to such work, including guarantees
and warranties made with respect to such PECFA work.
(f) Absence of Certain Changes. Except as disclosed in the
Disclosure Memorandum or in the Company Reports filed prior to the date hereof,
since the Audit Date, the Company and its Subsidiary have conducted their
respective businesses in all material respects only in, and have not engaged in
any material transaction other than according to, the ordinary course of such
businesses consistent with past practices, and there has not been any (i) change
in the financial condition, properties, business or results of operations of the
Company and its Subsidiary; (ii) material damage, destruction or other casualty
loss with respect to any material asset or property owned, leased or otherwise
used by the Company or its Subsidiary, not covered by insurance; (iii)
declaration, setting aside or payment of any dividend or other distribution in
respect of the Capital Stock of the Company or its Subsidiary or any repurchase,
redemption or other acquisition by the Company or its Subsidiary of any
outstanding shares of Capital Stock or other securities of, or other ownership
interests in, the Company or its Subsidiary; (iv) amendment of any material term
of any outstanding security of the Company or its Subsidiary; (v) incurrence,
assumption or guarantee by the Company or its Subsidiary of any indebtedness;
(vi) creation or assumption by the Company or its Subsidiary of any Lien (other
than Permitted Liens) on any asset, except as disclosed in the Company Reports;
(vii) making of any loan, advance or capital contributions by the Company or its
Subsidiary to, or investment in, any Person other than (x) loans or advances to
employees in connection with business-related travel, and (y) loans, advances or
capital contributions to, or investments in, its Subsidiary, and in each case
made in the ordinary course of business consistent with past practices; (viii)
transaction or commitment made, or any contract or agreement entered into, by
the Company or its Subsidiary relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by the Company
or its Subsidiary of any contract or other right, in either case, material to
the Company and its Subsidiary, taken as a whole, other than transactions and
commitments in the ordinary course of business consistent with past practices
and those contemplated by this Agreement; (ix) labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or its
Subsidiary, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to such employees; or (x) change by the Company or
its Subsidiary in accounting principles, practices or methods. Since the Audit
Date, except as disclosed in the Disclosure Memorandum or in the Company Reports
filed prior to the date hereof, there has not been any increase in the
compensation payable or that could become payable by the Company or its
Subsidiary to (a) officers or employees of the Company or its Subsidiary or (b)
or any amendment of any of the Compensation and Benefit Plans (as defined in
Section 4.1(h)).
(g) Litigation and Liabilities. Except as disclosed in the
Disclosure Memorandum or in the Company Reports, there are no (i) civil,
criminal or administrative
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actions, suits, claims, hearings, investigations or proceedings pending or, to
the knowledge of the Company, threatened against the Company or its Subsidiary
(ii) obligations or liabilities, whether or not accrued, contingent or otherwise
and whether or not required to be disclosed, including those relating to matters
involving any Environmental Law (as defined in Section 4.1(k)), (iii) civil,
criminal or administrative actions, suits, claims, hearings, investigations or
proceedings pending or, to the knowledge of the Company, threatened against the
Company or its Subsidiary involving the manufacture, use, storage, disposal or
presence of asbestos, or (iv) other facts or circumstances of which the Company
has knowledge that are reasonably likely to result in any claims against, or
obligations or liabilities of, the Company or its Subsidiary.
(h) Employee Benefits.
(i) For purposes of this Agreement, "Compensation and
Benefit Plans" means, collectively, each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, employment, termination,
severance, compensation, medical, health, or other plan, agreement, policy or
arrangement maintained or contributed to by the Company or its Subsidiary that
covers employees or directors of the Company or its Subsidiary, or pursuant to
which former employees or directors of the Company or its Subsidiary are
entitled to current or future benefits. All Compensation and Benefit Plans are
in writing and there are no oral (or other) Compensation and Benefit Plans. The
Company has made available to Parent copies of all "employee pension benefit
plans" (as defined in Section 3(2) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")) (sometimes referred to herein as "Pension
Plans"), "employee welfare benefit plans" (as defined in Section 3(1) of ERISA)
and all other Compensation and Benefit Plans which are maintained pursuant to
written plan documents and are maintained, or contributed to, by the Company or
its Subsidiary or any person or entity that, together with the Company and its
Subsidiary, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Internal Revenue Code of 1986, as amended (the "Code") (the Company
and each such other person or entity, a "Commonly Controlled Entity") for the
benefit of any current employees, officers or directors of the Company or its
Subsidiary. The Compensation and Benefit Plans are listed in the Company's
Disclosure Memorandum. The Company has also made available to Parent true,
complete and correct copies of (1) the most recent annual report on Form 5500
filed with the Internal Revenue Service with respect to each Compensation and
Benefit Plan (if any such report was required), (2) the most recent summary plan
description for each Compensation and Benefit Plan for which such summary plan
description is required and (3) each trust agreement and group annuity contract
related to any Compensation and Benefit Plan. Each Compensation and Benefit Plan
has been administered in accordance with its terms. All the Compensation and
Benefit Plans are in material compliance with applicable provisions of ERISA and
the Code.
(ii) All Pension Plans have been the subject of determination
letters from the Internal Revenue Service to the effect that such Pension Plans
are qualified and that the related trusts are exempt from Federal income taxes
under Sections 401(a) and 501(a), respectively, of the Code (except to the
extent that the remedial amendment period under Section 401(b) of the Code with
respect to such Pension Plan or any amendment thereto has not closed), and no
such determination letter has been revoked nor has any event occurred since the
date of its most recent determination letter or application therefor that would
adversely affect its
-10-
qualification or materially increase its costs. Each Compensation and Benefit
Plan is in substantial compliance with all reporting and disclosure requirements
of ERISA and the Code, and the Company, its Subsidiary and each Commonly
Controlled Entity is, in respect of each such plan, in compliance with the
fiduciary responsibility provisions of ERISA.
(iii) Neither the Company, nor its Subsidiary, nor any
Commonly Controlled Entity has maintained, contributed or been obligated to
contribute to any Benefit Plan that is subject to Title IV of ERISA.
(iv) The Disclosure Memorandum lists all outstanding Stock
Options as of January 17, 2003, showing for each such option: (A) the number of
shares issuable, (B) the number of vested shares, (C) the date of expiration and
(D) the exercise price.
(v) All contributions required to be made under the terms
of any Compensation and Benefit Plan on or before the date hereof have been
timely made. Neither the Company, nor its Subsidiary, nor any Commonly
Controlled Entity nor any officer, director or employee of any of them has, in
respect of any Compensation and Benefit Plans, committed any prohibited
transaction under ERISA Section 406 or 407 or Code Section 4975 or otherwise
incurred excise tax liability under Chapters 43 and 47 under Subtitle D of the
Code.
(vi) Except as provided by this Agreement or in the
Disclosure Memorandum, no employee of the Company or its Subsidiary will be
entitled to any additional compensation or benefits or any acceleration of the
time of payment or vesting of any compensation or benefits under any
Compensation and Benefit Plan as a result of the transactions contemplated by
this Agreement.
(vii) Each Compensation and Benefit Plan complies in all
material respects with all applicable requirements of (A) the Age Discrimination
in Employment Act of 1967, as amended, and the regulations thereunder and (B)
Title VII of the Civil Rights Act of 1964, as amended, and the regulations
thereunder and all other applicable laws. All amendments and actions required to
bring each of the Employee Benefit Plans into conformity with all of the
applicable provisions of ERISA and other applicable laws have been made or taken
except to the extent that such amendments or actions are not required by law to
be made or taken until a date after the Closing Date.
(viii) Each group health plan as defined in Section
5000(b)(i) of the Code sponsored by the Company materially complies with the
health care continuation provisions of COBRA and the Medicare Secondary Payor
Provisions of Section 1826 (b) of the Social Security Act, and the regulations
promulgated thereunder.
(ix) Except as disclosed in the Disclosure Memorandum,
neither the Company nor its Subsidiary provides any welfare benefits including
health, life, or disability insurance, pursuant to a welfare benefit plan (as
defined in ERISA Section 3(1)) or otherwise to any former employee except
pursuant to Section 4980B of the Code.
(i) Compliance with Laws. The Company and its Subsidiary each has
in effect all permits (including any required under Environmental Laws)
necessary for it to own, lease, or operate its assets and to carry on its
business as now conducted, and there has
-11-
occurred no default under any such permit other than defaults which are not
reasonably likely to have, individually or in the aggregate, a Company Material
Adverse Effect. The businesses of each of the Company and its Subsidiary have
not been, and are not being, conducted in violation of any applicable law,
ordinance, regulation, judgment, order, injunction, decree, arbitration award,
license or permit of any Governmental Entity (collectively, "Laws"), except for
violations or possible violations that, individually or in the aggregate, have
not had and are not reasonably likely to have a Company Material Adverse Effect
or prevent, materially delay or materially impair the ability of the Company to
consummate the transactions contemplated by this Agreement. Since January 1,
1998, the Company and its Subsidiary each has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with any Governmental Entities, except for
the failure to file any such reports or statements that, individually or in the
aggregate, have not had and are not reasonably likely to have a Company Material
Adverse Effect or prevent, materially delay or materially impair the ability of
the Company to consummate the transactions contemplated by this Agreement. At
the time of filing (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing), each report and other document
or its Subsidiary, including financial statements, exhibits, and schedules
thereto, filed by the Company with any Governmental Entities complied in all
material respects with all applicable Laws. Except as set forth in the
Disclosure Memorandum or in the Company Reports filed prior to the date hereof,
no investigation or review by any Governmental Entity with respect to the
Company or it Subsidiary is pending or, to the knowledge of the Company,
threatened, nor has any Governmental Entity indicated an intention to conduct
the same.
(j) Takeover Statutes. No "fair price," "moratorium" or "control
share acquisition" anti-takeover statute or regulation of the States of
Delaware, New Jersey, or Louisiana (each a "Takeover Statute") is applicable to
the Company, the Shares, the Merger, this Agreement or any of the other
transactions contemplated by this Agreement. The Board of Directors of the
Company has approved the Merger and this Agreement, and such approval is
sufficient to render inapplicable to the Merger, this Agreement, and the
transactions contemplated by this Agreement the provisions of Section 203 of
DGCL to the extent, if any, such Section is applicable to Merger, this Agreement
and the transactions contemplated by this Agreement.
(k) Environmental Matters.
(i) The term "Environmental Laws" means any Federal, state,
local or foreign statute, treaty, ordinance, rule, regulation, policy, permit,
consent, approval, license, judgment, order, decree or injunction relating to:
(A) Releases (as defined in 42 U.S.C. (S)9601(22)) or threatened Releases of
Hazardous Material (as hereinafter defined) into the environment, (B) the
generation, treatment, storage, presence, disposal, use, handling,
manufacturing, transportation or shipment of Hazardous Material, (C) natural
resources, or (D) the environment, and includes the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, 42 U.S.C.(S)(S) 9601 et
seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C.(S)(S)6901
et seq., the Toxic Substances Control Act, 15 U.S.C.(S)(S)et seq., the
Hazardous Materials Transportation Act, 49 U.S.C.(S)(S)1801 et seq., the
Federal Water Pollution Prevention and Control Act, 33 U.S.C.(S)(S)1251 et
seq., the Oil Pollution Act of 1990, Pub. L. 101-380, August 18, 1990,
Industrial Site Recovery Act, (N.J.S.A. 13:1K-6, et seq.) ("ISRA");
-12-
Solid Waste Management Act (N.J.S.A. 13:1H-1 et seq.); N.J. Freshwater Wetlands
Act (N.J.S.A. 13:9B-1 et seq.); Xxxxxxxxxx and Contaminated Site Remediation Act
(N.J.S.A. 58:10B-1 et. seq.); Federal Water Pollution Control Act (33
U.S.C.(S)(S)1251 et seq. 1317, 1321); NJ Water Pollution Control Act (N.J.S.A.
58A: 10A-1 et seq.); Solid Waste Disposal Act (42 U.S.C.(S)(S)6901 et seq.);
N.J. Spill Compensation and Control Act (N.J.S.A. 58:10-23.11 et seq.); Atomic
Energy Act of 1954 (42 U.S.C.A.(S)(S)2011 et seq.) and NJ Underground Storage of
Hazardous Substance Act (N.J.S.A. 58: 10A et seq.), Wisconsin Petroleum
Environmental Cleanup Fund Act, Wis. Stat.(S) 101.43, and all "Environmental
Laws" as they are defined in any indemnification provision in any contract,
lease, or agreement to which the Company is a party. The term "Hazardous
Material" means (1) hazardous substances (as defined in 42 U.S.C. (S) 9601(14)),
(2) petroleum, including crude oil and any fractions thereof, (3) natural gas,
synthetic gas and any mixtures thereof, (4) asbestos and/or asbestos containing
materials, (5) PCBs or materials containing PCBs, (6) radioactive materials, (7)
medical waste, (8) naturally-occurring or genetically-modified microorganisms,
and (9) "Hazardous Substance" or "Hazardous Material" as those terms are defined
in any Federal, state, local or foreign statute, treaty, ordinance, rule,
regulation, policy, permit, consent, approval, license, judgment, order, decree
or injunction and in any indemnification provision in any contract, lease or
agreement to which the Company is a party.
(ii) The Company does not own, nor has it ever owned, any
real property. Except as set forth in the Disclosure Memorandum, during the
period of operation by the Company and its Subsidiary of any of their current or
previously leased real property, and to the knowledge of the Company there have
been no Releases of Hazardous Material by the Company or its Subsidiary in, on,
under or affecting such real property or any surrounding site, and neither the
Company nor its Subsidiary has disposed of any Hazardous Material in a manner
that has led, or could reasonably be anticipated to lead to a Release. There is
no material amount of exposed friable asbestos contained in or forming part of
any building, building component, structure or office space owned or leased by
Company or its Subsidiary and used in the conduct of their respective
businesses. Except as set forth in the Disclosure Memorandum, neither the
Company nor its Subsidiary has, at any time, manufactured, used, sold, or
distributed asbestos or any product containing any significant amount of
asbestos. There have been no Releases of Hazardous Material by the Company or
its Subsidiary in, on, under or affecting such real property or any surrounding
site at times outside of such periods of operation or lease or by any other
party. To the knowledge of the Company, no third party property is contaminated
with any Hazardous Substances that may subject the Company or its Subsidiary to
liability under any Environmental Laws. Except as disclosed in the Disclosure
Memorandum, the Company and its Subsidiary have not received any written notice
of, or entered into any order, settlement or decree relating to: (A) any
violation of any Environmental Laws or the institution or pendency of any suit,
action, claim, proceeding or investigation by any Governmental Entity or any
third party in connection with any alleged violation of Environmental Laws, (B)
the response to or remediation of Hazardous Material at or arising from any real
property operated or leased by the Company or its Subsidiary. To the knowledge
of the Company, the real property currently operated or leased by the Company or
its Subsidiary possesses all material permits, licenses, authorizations and
approvals required under applicable Environmental Laws with respect to the
conduct of business thereat, and are in compliance with all Environmental Laws.
-13-
(iii) Except as set forth in the Disclosure Memorandum, to
the knowledge of the Company, there are no circumstances or conditions involving
the Company, its Subsidiary or their respective employees that could reasonably
be expected to result in any claims, liability or investigations under any
Environmental Law or relating to Hazardous Substances arising out of the
ownership, operation or management of all or any portion of a facility, or out
of the arrangement for the treatment, transportation, or disposal of, or
ownership or possession or choice of the treatment, storage or disposal facility
for, any material with respect and to the extent to which the Company or its
Subsidiary provided services before the Closing.
(iv) Neither the Merger nor any of the other transactions
contemplated by this Agreement requires any permit or other consent, nor the
payment of any application fee, or other fee or charge under ISRA or similar Law
regulating property transfers.
(l) Intellectual Property.
(i) Items Included in Intellectual Property. "Intellectual
Property" shall include issued patents, pending patent applications, inventions,
discoveries, copyrights, software developed by the Company, trade secrets, know
how, confidential information, trade names, registered and unregistered
trademarks and service marks, trademark and service xxxx registration
applications, and Internet domain names owned or licensed by the Company that
are currently used or expected to be used in the operation of the Company's
business. The Company acknowledges that the Intellectual Property ("IP") shall
include not only IP assets specifically listed on the Disclosure Memorandum but
also all proprietary information of the Company that is directly related to the
IP assets listed on the Disclosure Memorandum.
(ii) Fees and Responses. Except as set forth in the
Disclosure Memorandum, the Company has paid all due maintenance, renewal, or
similar fees required by the applicable Governmental Entity to maintain the
Intellectual Property intended to be maintained in force by the Company. Except
as set forth in the Disclosure Memorandum, the Company has filed responses to
all actions from applicable Governmental Entities that have become due relating
to the Intellectual Property, both foreign and domestic, and has paid all costs
and charges, and taken all acts relating to such actions, including without
limitation, payment of attorney's fees necessary to maintain such patent, patent
application, trademark registration, service xxxx registration, domain name
registration, or copyright registration in force for Intellectual Property
intended to be maintained in force by the Company.
(iii) Ownership. Except as otherwise specified in the
Disclosure Memorandum, the Company is the sole owner of the Intellectual
Property within the United States or the country of registration in connection
with the goods or services offered by the Company, free and clear of liens,
licenses (express or implied), or any other claims of current or former
employees or third parties. Without limiting the generality of the foregoing,
except as listed in the Disclosure Memorandum, the Company has not entered into
any agreement or arrangement pursuant to which it has licensed or granted to any
customer or any other Person (including any Governmental Entity), rights in any
Intellectual Property, invention, development or improvement to pre-existing
Intellectual Property other than with respect to a customer's
-14-
implied right to use. The vesting in a customer of the rights to project data
and reports generated in the course of performing services for that customer
shall not constitute a violation of this subsection.
(iv) Ownership Claims by Others. Except as otherwise
specified in the Disclosure Memorandum, no written claim or demand has been
asserted or any proceeding instituted by a third party, including without
limitation any opposition proceeding in any foreign or domestic patent office,
copyright office, or trademark or service xxxx registration office, which
challenges any right, title or interest of the Company in any of the
Intellectual Property, nor, to the knowledge of the Company, is there any basis
upon which any such claim or challenge could be made.
(v) Royalties. Except as listed in the Disclosure
Memorandum, the Company is not obligated to and does not pay royalties or other
fees to anyone for the Company's ownership, use, license or transfer of any of
the Intellectual Property.
(vi) Infringement of the Company's Intellectual Property by
Others. Except as listed in the Disclosure Memorandum, the Company has no
knowledge that any entity, person or governmental entity is infringing or has
misappropriated any of the Company's Intellectual Property.
(vii) Record Owner. Except as listed in the Disclosure
Memorandum, the Company or its Subsidiary is the owner of record, or joint owner
where such joint ownership is set forth in the Disclosure Memorandum, of the
particular item of Intellectual Property.
(viii) Duties of Disclosure and Candor. With respect to each
application for patent, trademark, copyright, or other statutory protection, and
to the knowledge of the Company, the Company has endeavored to meet its duties
of disclosure and candor with respect to all such applications. The Company
knows of no prior act that would invalidate the Company's patents or pending
patent applications and, to the knowledge of the Company, all inventors were
correctly named for the Company's patents and patent applications.
(ix) Validity. Except as listed in the Disclosure
Memorandum, for each issued patent, pending patent application, trademark or
service xxxx registration, copyright registration, or domain name registration,
the Company has no knowledge of any basis for challenging the validity of the
item.
(x) Licenses. The Disclosure Memorandum accurately and
completely lists all unexpired licenses or other written agreements affecting
Intellectual Property to which the Company is a party. The Disclosure Memorandum
includes both (i) licenses under which the Company is granted Intellectual
Property rights by others and (ii) licenses under which the Company has granted
to others rights in any of the Company's Intellectual Property. Category (ii)
shall include sublicenses.
(xi) Transferability. Except as listed in the Disclosure
Memorandum, the Company has the right to assign the Company's rights under all
license agreements concerning Intellectual Property. Except as set forth in the
Disclosure
-15-
Memorandum, none of such licenses is or will on the Closing Date be subject to
termination or cancellation or change in terms or provisions of such license as
a consequence of this Agreement or consummation of the transactions provided for
herein. Except as set forth in the Disclosure Memorandum, the Company has not
granted any Person or Governmental Entity the right to sublicense or generally
distribute any of the Company's Intellectual Property.
(xii) Patent, Trademark, Service Xxxx, and Copyright
Infringement by the Company. Except as set forth in the Disclosure Memorandum,
(i) there are no pending claims or demands against the Company for infringement
or misappropriation of any patent, trademark, tradename, service xxxx,
copyright, trade secrets, domain names, technology or other proprietary rights
in connection with the Company, and (ii) to the knowledge of the Company, the
present conduct of the Company's business does not infringe and is not subject
to any claim of infringement or misappropriation of any patent, trademark, trade
name, service xxxx, copyright, or trade secrets and technology or other
proprietary right.
(xiii) Fluid Bed Reactor Design. Except as set forth
in the Disclosure Memorandum, the fluid bed reactors designed by the Company
which include a biomass separator feature are designed and built or operated in
accordance with claims of one or more of the Company's patents.
(xiv) Government Rights. Except as set forth in the
Disclosure Memorandum, there are no government rights in or to the Company's
patents or other IP which may have been created through government funding of
the Company's research efforts or through the performance of work for
Governmental Entities. By way of example, government funding may include
contracting with the United States for direct remediation research and work or
research done through the United States Small Business Innovation Research or
other similar grants. Specifically, there are no government rights to the
company's fluid bed reactor designs or any of the Company's technology used for
perchlorate remediation.
(m) Tax Matters. Except as set forth in the Disclosure
Memorandum, (i) the Company and its Subsidiary have timely filed or will timely
file all returns and reports required to be filed by them with any taxing
authority with respect to Taxes for any period ending on or before the date
hereof, taking into account any extension of time to file granted to or obtained
on behalf of the Company or its Subsidiary, and all such returns and reports are
correct and complete in all material respects; (ii) all Taxes shown to be
payable on such returns or reports that are due prior to the date hereof have
been timely paid; (iii) as of the date hereof, no deficiency for any amount of
Tax has been asserted or assessed or, to the knowledge of the Company, has been
threatened or is likely to be assessed by a taxing authority against the Company
or its Subsidiary other than deficiencies as to which adequate reserves have
been provided for in the Company's consolidated financial statements; (iv) the
Company has provided in accordance with GAAP adequate reserves in its
consolidated financial statements for any Taxes that have not been paid, whether
or not shown as being due on any returns; (v) no claim has ever been made by an
authority in a jurisdiction where the Company or its Subsidiary do not file Tax
Returns that any of the Company or its Subsidiary are or may be subject to
taxation by that jurisdiction; (vi) no contract of the Company or its Subsidiary
that is a long-term contract (for purposes of Section 460 of the Code) has been
reported on a method of tax accounting other than the percentage of completion
method for income tax purposes; (vii) neither the Company
-16-
nor any Subsidiary has been included in any consolidated, combined or unitary
Tax Return (other than for a group of which the Company is the common parent)
provided for under the laws of the United States, any state or locality with
respect to Taxes for any taxable period for which the statute of limitations has
not expired; and neither the Company nor any Subsidiary has any liability for
the Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign law) (other than for Persons in
the group of which the Company is the common parent), as a transferee or
successor, by contract, or otherwise; (viii) as of the Closing Date there will
be no excess loss accounts or deferred intercompany gains or losses pertaining
to the Company or its Subsidiary; (ix) neither the Company nor its Subsidiary
has entered into transfer pricing agreements or other like arrangements with
respect to any foreign jurisdiction; (x) neither the Company or its Subsidiary
has executed an extension or waiver of any statute of limitations on the
assessment or collection of any Tax due that is currently in effect; (xi) there
are no liens with respect to taxes upon any of the assets of the Company or its
Subsidiary; and (xii) neither the Company nor its Subsidiary has had a permanent
establishment in any foreign country, as defined in any applicable tax treaty or
convention between the United States and such foreign country. For purposes of
this Agreement, "Taxes" means any and all taxes, fees, levies, duties, tariffs,
imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any Governmental Entity or other taxing authority, including taxes or
other charges on or with respect to net or gross income, franchises, windfall or
other profits, gross receipts, property, sales, use, Capital Stock, payroll,
employment, social security, workers' compensation, unemployment compensation,
or net worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value added or gains taxes; license, registration and
documentation fees; and customers' duties, tariffs and similar charges. Neither
the Company nor its Subsidiary is subject to any Tax sharing agreement. No
payments to be made to any of the employees of the Company or its Subsidiary
will, as a direct or indirect result of the Merger, be subject to the deduction
limitations of Section 280G of the Code.
(n) Labor Matters. Neither the Company nor its Subsidiary
is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor is the Company or its Subsidiary the subject of any proceeding
asserting that the Company or its Subsidiary has committed an unfair labor
practice or is seeking to compel it to bargain with any labor union or labor
organization, nor is there pending or, to the knowledge of the Company,
threatened, any labor strike, dispute, walkout, work stoppage, slow-down or
lockout involving the Company or its Subsidiary.
(o) Insurance. The Company maintains insurance policies
(the "Insurance Policies") against all risks of a character and in such amounts
as are usually insured against by similarly situated companies in the same or
similar businesses. Each Insurance Policy is in full force and effect and is
valid, outstanding and enforceable, and all premiums due thereon have been paid
in full. None of the Insurance Policies will terminate or lapse (or be affected
in any other materially adverse manner) by reason of the transactions
contemplated by this Agreement. The Company and its Subsidiary have complied in
all material respects with the provisions of each Insurance Policy under which
it is the insured party. Except as disclosed in the Disclosure Memorandum, no
insurer under any Insurance Policy has canceled or generally disclaimed
liability under any such policy or, to the Company's knowledge, indicated any
intent
-17-
to do so or not to renew any such policy. All material claims under the
Insurance Policies have been filed in a timely fashion. The Disclosure
Memorandum provides a complete listing of all insurance policies that the
Company currently has in place.
(p) Brokers and Finders. Neither the Company nor its
Subsidiary, officers, directors, or employees or other Affiliates has employed
any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the Merger or the other
transactions contemplated by this Agreement, except that the Company has
employed the Financial Advisor, the arrangements with which have been disclosed
to Parent prior to the date hereof.
(q) Certain Business Practices. Neither the Company, its
Subsidiary nor any directors, officers, agents or employees of the Company or
its Subsidiary has (i) used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to political activity; (ii)
made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated
any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iii)
made any other payment prohibited by applicable Law.
(r) Customers. The documents and information supplied by
the Company to Parent, Merger Sub or any of their representatives in connection
with this Agreement with respect to relationships and volumes of business done
with significant customers was accurate in all material respects.
(s) Government Contracts. Except as disclosed in the
Disclosure Memorandum:
(i) With respect to each Government Contract or Bid
to which the Company and/or its Subsidiary is a party: (A) all representations
and certifications were current, accurate and complete when made, and the
Company and its Subsidiary have fully complied with all such representations and
certifications; (B) since January 1, 2000, no allegation has been made, either
orally or in writing, that the Company or its Subsidiary is in breach or
violation of any material statutory, regulatory or contractual requirement; (C)
since January 1, 2000, no termination for convenience, termination for default,
cure notice or show cause notice has been issued; (D) since January 1, 2000, no
cost in excess of $10,000 incurred by the Company, its Subsidiary or any of
their respective subcontractors has been questioned or disallowed; and (E) since
January 1, 2000, no money due to the Company or its Subsidiary has been (or has
threatened to be) withheld or set off.
(ii) Neither the Company nor its Subsidiary, nor any
of the Company's or its Subsidiary' directors, officers or employees, nor, to
the knowledge of the Company, any of the Company's agents or consultants is (or
for the last three years has been) (A) under administrative, civil or criminal
investigation, indictment or information, audit or internal investigation with
respect to any alleged irregularity, misstatement or omission regarding a
Government Contract or Bid; or (B) suspended or debarred (or threatened to be
suspended or debarred or otherwise prohibited) from doing business with any
governmental authority or declared nonresponsible or ineligible for government
contracting or participating in any
-18-
government program. None of the Company nor its Subsidiary has made a voluntary
disclosure to any governmental authority with respect to any alleged material
irregularity, misstatement or omission arising under or relating to any
Government Contract or Bid. The Company knows of no circumstances that would
warrant the institution of suspension or debarment proceedings or the finding of
nonresponsibility or ineligibility on the part of the Company or its Subsidiary
in the future.
(iii) Since January 1, 2000, no Governmental Entity
nor any prime contractor, subcontractor or vendor has asserted any claim or
initiated any dispute proceeding against the Company or its Subsidiary, nor has
the Company or its Subsidiary asserted any claim or initiated any dispute
proceeding, directly or indirectly, against any such party, concerning any
Government Contract or Bid, in each case involving an amount in excess of
$10,000. There are no facts of which the executive officers of the Company are
aware upon which such a claim or dispute proceeding may be based in the future.
(iv) Definitions. The following terms, as used
herein, shall have the following meanings:
"Bid" means any quotation, bid or proposal by the Company,
its Subsidiary or any of their respective Affiliates which, if accepted or
awarded, would lead to a contract with a governmental authority or any other
entity, including a prime contractor or a higher tier subcontractor to a
governmental authority, for the design, manufacture or sale of products or the
provision of services by the Company or its Subsidiary.
"Governmental Contract" means any prime contract,
subcontract, teaming agreement or arrangement, joint venture, basic ordering
agreement, letter contract, purchase order, delivery order, Bid, change order,
arrangement or other commitment of any kind relating to the business of the
Company or its Subsidiary between the Company and/or any of its Subsidiary and
(A) any governmental authority, (B) any prime contractor to a governmental
authority or (C) any subcontractor with respect to any contract described in
clause (A) or (B).
(t) Actions, Suits. The Company has no knowledge of (i)
any actions, suits, claims or proceedings, governmental or otherwise, pending or
threatened against the property surrounding or on which the Company's
Headquarters or any other office or facility owned or leased by the Company is
located, or any portion thereof; (ii) any condemnation, pending or threatened,
of any such property or any portion thereof, including any right of access to
property; (iii) any government plans for public improvements that might result
in a special assessment against any such property; or (iv) any pending or
threatened change in the zoning of any such property.
(u) Material Contracts. Except as listed in the Disclosure
Memorandum, none of the Companies, its Subsidiary nor any of their respective
assets, businesses, or operations, is a party to, or is bound or affected by, or
receives benefits under, (i) any employment, severance, termination, consulting,
or retirement Contract providing for aggregate payments to any Person in any
calendar year in excess of $20,000, (ii) any other Contract or amendment thereto
that would be required to be filed as an exhibit to a Form 10-K filed by the
Company with the SEC as of the date of this Agreement that has not been filed as
an
-19-
exhibit to a Company Report, or (iii) any other Contract (x) having a value or
projected revenues remaining over the term of the Contract greater than
$100,000, or (y) which as of the date of this Agreement, is executory as to both
the Company and its customer and has a value or total projected revenues over
the term of the Contract greater than $250,000 (Contracts referred to in this
section, "Company Contracts"). With respect to each Company Contract: (i) the
Contract is in full force and effect; (ii) neither the Company nor its
Subsidiary is in default thereunder in any material respect; (iii) neither the
Company nor its Subsidiary has repudiated or waived any material provision of
any such Contract; and (iv) no other party to any such Contract is, to the
knowledge of the Company or its Subsidiary, in default in any material respect.
(v) Derivatives. Neither the Company nor its Subsidiary is a
party to or has agreed to enter into an exchange-traded or over-the-counter
swap, forward, future, option, cap, floor, or collar financial contract, or any
other interest rate or foreign currency protection contract not included on its
balance sheet which is a financial derivative contract (including various
combinations thereof) and which might reasonably be expected to have a Company
Material Adverse Effect.
4.2 Representations and Warranties of Parent and Merger Sub. Parent and
Merger Sub each hereby represents and warrants to the Company as follows:
(a) Organization, Good Standing and Qualification. (i) Parent is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Louisiana (ii) has all requisite corporate or similar power
and authority to own and operate its properties and assets and to carry on its
business as presently conducted and (iv) is qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the ownership
or operation of its properties or conduct of its business requires such
qualification, except where the failure to be so qualified or in such good
standing, when taken together with all other such failures, has not had and is
not reasonably likely to have a Parent Material Adverse Effect (as defined in
Section 8.2).
(b) Ownership of Merger Sub. All of the issued and outstanding
Capital Stock of Merger Sub is, and at the Effective Time will be, owned by
Parent, and there are no (i) other outstanding shares of Capital Stock or other
voting securities of Merger Sub, (ii) securities of Merger Sub convertible into
or exchangeable for shares of Capital Stock or other voting securities of Merger
Sub or (iii) options or other rights to acquire from Merger Sub, and no
obligations of Merger Sub to issue, any Capital Stock, other voting securities
or securities convertible into or exchangeable for Capital Stock or other voting
securities of Merger Sub. Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated hereby, has engaged in no other
business activities and has conducted its operations only as contemplated
hereby.
(c) Corporate Authority.
(i) Each of Parent and Merger Sub has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and to
consummate the Merger. Assuming due execution and delivery by the Company, this
Agreement is a valid and binding agreement of
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Parent and Merger Sub, enforceable against each of them in accordance with its
terms, except as such enforceability may be limited by applicable bankruptcy
laws or creditors' rights generally or by general principles of equity.
(ii) The Boards of Directors of Parent and Merger Sub
have unanimously approved this Agreement and the Merger and the other
transactions contemplated hereby.
(d) Governmental Filings; No Violations.
(i) Other than the filings and/or notices (A) to
comply with state securities or "blue sky" laws, and (B) required to be made
with the NASD, no notices, reports or other filings are required to be made by
Parent or Merger Sub with, nor are any Government Consents required to be
obtained by Parent or Merger Sub from, any Governmental Entity, in connection
with the execution and delivery of this Agreement by Parent and Merger Sub, the
consummation by Parent and Merger Sub of the Merger and the other transactions
contemplated hereby, except those that the failure to make or obtain are not,
individually or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect or prevent, materially delay or materially impair the ability of
the Parent or Merger Sub to consummate the transactions contemplated by this
Agreement.
(ii) The execution, delivery and performance of this
Agreement by Parent and Merger Sub do not, and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated hereby will
not, constitute or result in (A) a breach or violation of, or a default under,
the certificate or bylaws of Parent or Merger Sub, (B) a breach or violation of,
or a default under, the acceleration of or the creation of a Lien, on the assets
of Parent or its Subsidiary (with or without notice, lapse of time or both)
pursuant to, any Contract binding upon Parent or its Subsidiary or any Law to
which Parent or its Subsidiary is subject or (C) any change in the rights or
obligations of any party under any such Contract, except, in the case of clause
(B) or (C) above, for any breach, violation, default, acceleration, creation or
change that, individually or in the aggregate, is not reasonably likely to have
a Parent Material Adverse Effect or prevent, materially delay or materially
impair the ability of the Parent or Merger Sub to consummate the transactions
contemplated by this Agreement.
(e) Brokers and Finders. Neither Parent nor Merger Sub, nor
any of their respective officers, directors, employees or other Affiliates, has
employed any broker or finder or incurred any liability for any brokerage fees,
commissions or finders' fees in connection with the Merger or the other
transactions contemplated by this Agreement.
(f) Funding. On the date hereof and at the Effective Time,
Parent and Merger Sub have and will have possession of, or have and will have
available, all the funds necessary for the acquisition of all Shares outstanding
as of the Effective Time and to perform their respective obligations under this
Agreement.
(g) No Ownership of Shares. Neither Parent nor Merger Sub
nor any of their respective affiliates beneficially owns any Shares.
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ARTICLE V
COVENANTS
5.1 Interim Operations. The Company covenants and agrees as to itself and
its Subsidiary that, after the date hereof and prior to the Effective Time,
unless Parent shall otherwise approve in writing, which approval shall not be
unreasonably withheld or delayed, it shall comply with all of the covenants
provided in this Section 5.1 (provided, however, with respect to the covenants
in subsections (c)(v), (f), (g), (k), (l), and (m) only, Company shall comply
with such covenant unless Parent shall otherwise approve in writing, which
approval shall not be unreasonably withheld or delayed, it being agreed that
Parent's approval shall be deemed to have been given if Parent does not provide
to the Company written notice of its objection within three(3) Business Days of
written notice from the Company), except as otherwise expressly contemplated by
this Agreement :
(a) the business of it and its Subsidiary shall be conducted in
the ordinary course consistent with past practices and, to the extent consistent
therewith, it and its Subsidiary shall use commercially reasonable efforts to
preserve its business organization intact and maintain its existing relations
and goodwill with customers, suppliers, distributors, creditors, lessors,
employees and business associates;
(b) it shall not, (i) issue, sell or otherwise dispose of or
subject to Lien (other than Permitted Liens) its Subsidiary's Capital Stock
owned by it; (ii) amend its charter or bylaws; (iii) split, combine or
reclassify its outstanding shares of Capital Stock; (iv) declare, set aside or
pay any dividend payable in cash, stock or property in respect of any Capital
Stock; (v) repurchase, redeem or otherwise acquire or permit its Subsidiary to
purchase or otherwise acquire, any shares of its Capital Stock or any securities
convertible into or exchangeable or exercisable for any shares of its Capital
Stock; (vi) form, organize or capitalize any Subsidiary; or (vii) adopt a plan
of complete or partial liquidation or dissolution, merger or otherwise
restructure or recapitalize or consolidate with any Person other than Merger
Sub;
(c) neither it nor its Subsidiary shall (i) authorize for
issuance or issue, sell or otherwise dispose of or subject to any Lien (other
than Permitted Liens) any shares of its Capital Stock, or securities convertible
into or exchangeable or exercisable for, options, warrants, calls, commitments
or rights of any kind to acquire, any shares of its Capital Stock of any class
or any Voting Debt (other than Shares issuable pursuant to Company Options
outstanding on the date hereof); (ii) transfer, lease, license, guarantee, sell
or otherwise dispose of or subject to any Lien (other than Permitted Liens) any
other property or assets or incur or modify any indebtedness or other liability;
(iii) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person; (iv) make any loans to any other Person (other than to the Subsidiary or
customary loans or advances to employees in connection with business-related
travel in the ordinary course of business consistent with past practices); or
(v) make any commitments for, make or authorize any capital expenditures other
than in amounts less than $10,000 individually and $50,000 in the aggregate
(unless and to the extent fully paid for in advance by a customer of the
Company) or, by any means, make any acquisition of, or investment in, assets or
stock of any other Person;
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(d) except as may be required to comply with applicable law or by
existing contractual commitments, neither it nor its Subsidiary shall (i) enter
into any new agreements or commitments for any severance or termination pay to,
or enter into any employment or severance agreement with, any of its directors,
officers or employees or consultants except for specific arrangements required
as a condition to closing of the Merger or (ii) terminate, establish, adopt,
enter into, make any new grants or awards under, amend or otherwise modify, any
Compensation and Benefit Plan or increase or accelerate the salary, wage, bonus
or other compensation of any employees or directors or consultants or pay or
agree to pay any pension, retirement allowance or other employee benefit not
required by any existing Compensation and Benefit Plan;
(e) neither it nor its Subsidiary shall, except as may be
required as a result of a change in law or in GAAP, change any of the accounting
principles or practices used by it;
(f) neither it nor its Subsidiary shall, except as may be
required under GAAP in connection with the audit of the 2002 Financial
Statements (as defined in Section 6.2(l)) or the preparation of the Company
Reports after the date hereof, in each case in the ordinary course of business
consistent with past practice, revalue in any respect any of its assets,
including writing-down the value of inventory or writing-off notes or accounts
receivable, or make any adjustment in any accrual or reserve other than in the
ordinary course of business consistent with past practices; provided, however,
no adjustments greater than $100,000 in the aggregate shall be made in the
Company's PECFA reserve;
(g) neither it nor its Subsidiary shall settle or compromise any
claims or litigation or terminate or amend or modify any of its material
Contracts or waive, release or assign any rights or claims, except (i) PECFA
claims where the difference between the claim value and the settlement amount is
less than $25,000 and (ii) other claims or litigation less than $10,000 if such
settlement or compromise would be in excess of any reserve or accrual on the
Balance Sheet with respect to such claim;
(h) neither it nor its Subsidiary shall make any Tax election or,
to the extent within the control of the Company or its Subsidiary, permit any
insurance policy naming it as a beneficiary or loss-payable payee to be canceled
or terminated;
(i) neither it nor its Subsidiary shall take any action or omit
to take any action that would cause any of its representations and warranties
herein to become untrue in any material respect;
(j) neither it nor its Subsidiary will authorize or enter into
any agreement to do any of the foregoing;
(k) neither it nor its Subsidiary shall enter into any agreement
to perform work reimbursable under the PECFA program unless, as a part of all
agreements for such work, it expressly disclaims in writing any obligation to
guarantee or reimburse any amounts not paid by the State of Wisconsin under such
program;
-23-
(l) neither it nor its Subsidiary shall enter into any agreement
to provide services having a value of, or with projected revenues over the life
of the project, greater than $100,000 and not on the Company's standard terms
and conditions; and
(m) neither it nor its Subsidiary shall enter into any agreement
or arrangement pursuant to which it grants any customer or any other person a
license or other rights in any Intellectual Property, invention, development or
improvement to pre-existing Intellectual Property. Nothing in this subsection
shall prevent the Company from vesting in a customer the rights to project data
and reports generated in the course of performing services for that customer.
5.2 Third Party Acquisitions.
(a) The Company agrees that neither it nor its Subsidiary nor any
of its or its Subsidiary's employees or directors shall, and it shall direct and
use its best efforts to cause its and its Subsidiary's agents and
representatives (including the Financial Advisor or any other investment banker
and any attorney or accountant retained by it or its Subsidiary (collectively,
"Company Advisors")) not to, directly or indirectly, initiate, solicit or
actively encourage any inquiries in respect of, or the making of any proposal
for, a Third Party Acquisition (as defined in Section 5.2(b)). The Company
further agrees that neither it nor its Subsidiary nor any of its or its
Subsidiary's employees or directors shall, and it shall direct and use its best
efforts to cause all Company Advisors not to, engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any Third Party (as defined in Section 5.2(b)) relating to the
proposal of a Third Party Acquisition, or otherwise attempt to make or implement
a Third Party Acquisition; provided, however, that if at any time prior to the
approval of the Merger by the Company Requisite Vote, the Company's Board
determines in good faith, after prompt written notice (but in no case less than
three (3) business days prior notice) to the Parent and after taking into
consideration the advice of its outside legal counsel that it is required in
order for its members to comply with their fiduciary duties under applicable
law, the Company may, in response to an inquiry, proposal or offer for a Third
Party Acquisition which was not solicited subsequent to the date hereof, (x)
furnish non-public information with respect to the Company to any such person
pursuant to a confidentiality agreement on terms substantially similar to the
confidentiality agreement entered into between the Company and Parent prior to
the execution of this Agreement and (y) participate in discussions and
negotiations regarding such inquiry, proposal or offer; and provided, further,
that nothing contained in this Agreement shall prevent the Company or the
Company's Board from (i) complying with Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any proposed Third Party Acquisition, if in the
good faith judgment of the Board of the Company upon the advice of outside legal
counsel, failure to so comply would be inconsistent with its members'
obligations under applicable law or (ii) withdrawing its recommendation of the
Merger pursuant to Section 5.2(b). The Company shall immediately cease and cause
to be terminated any existing activities, discussions or negotiations with any
Third Parties conducted heretofore with respect to any of the foregoing. The
Company shall take the necessary steps to promptly inform all Company Advisors
of the obligations undertaken in this Section 5.2(a). The Company agrees to
notify Parent as promptly as reasonably practicable in writing if (i) any
inquiries relating to or proposals for a Third Party Acquisition are received by
the Company, its Subsidiary or any of the
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Company Advisors, (ii) any confidential or other non-public information about
the Company or its Subsidiary is requested from the Company, its Subsidiary or
any of the Company Advisors, or (iii) any negotiations or discussions in
connection with a possible Third Party Acquisition are sought to be initiated or
continued with the Company, its Subsidiary or any of the Company Advisors
indicating, in connection with such notice, the principal terms and conditions
of any proposals or offers, and thereafter shall keep Parent informed in
writing, on a reasonably current basis, on the status and terms of any such
proposals or offers and the status of any such negotiations or discussions. The
Company also agrees promptly to request each Person that has heretofore executed
a confidentiality agreement in connection with its consideration of acquiring
the Company or its Subsidiary, if any, to return all confidential information
heretofore furnished to such Person by or on behalf of the Company or its
Subsidiary.
(b) Except as permitted by this Section 5.2(b), the Company's
Board shall not withdraw or modify, or propose publicly to withdraw or modify,
its recommendation of the Merger and the other transactions contemplated hereby
or approve or recommend, or cause the Company to enter into any agreement with
respect to, any Third Party Acquisition. Notwithstanding the preceding sentence,
if the Company's Board determines in its good faith judgment, after taking into
consideration the advice of its outside legal counsel that it is required in
order for its members to comply with their fiduciary duties under applicable
law, the Company's Board may withdraw its recommendation of the Merger and the
other transactions contemplated hereby, or approve or recommend or cause the
Company to enter into an agreement with respect to a Superior Proposal (as
defined below); provided, however, that the Company shall not be entitled to
enter into any agreement with respect to a Superior Proposal unless this
Agreement is concurrently terminated by its terms pursuant to Section 7.3(a).
For purposes of this Agreement, "Third Party Acquisition" means the occurrence
of any of the following events: (i) the acquisition of the Company by merger or
otherwise by any Person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Parent, Merger Sub or any
Affiliate thereof (a "Third Party"); (ii) the licensing or assignment to any
Third Party of any of the Intellectual Property in connection with a Third Party
Acquisition; (iii) the acquisition by a Third Party of 20% or more of the total
assets of the Company and its Subsidiary, taken as a whole (other than the
purchase of the Company's products in the ordinary course of business); (iv) the
acquisition by a Third Party of 20% or more of the outstanding Shares; (v) the
adoption by the Company of a plan of partial or complete liquidation or the
declaration or payment of an extraordinary dividend; (vi) the repurchase by the
Company or its Subsidiary of 20% or more of the outstanding Shares; or (vii) the
acquisition by the Company or its Subsidiary by merger, purchase of stock or
assets, joint venture or otherwise of a direct or indirect ownership interest or
investment in any business whose annual revenues, net income or assets is equal
to or greater than 20% of the annual revenues, net income or assets of the
Company and its Subsidiary, taken as a whole. For purposes of this Agreement, a
"Superior Proposal" means any bona fide proposal to acquire directly or
indirectly for consideration consisting of cash and/or securities more than 50%
of the Shares then outstanding or all or substantially all the assets of the
Company and its Subsidiary, taken as a whole, and otherwise on terms which the
Board of Directors of the Company by at least a majority vote determines in its
good faith judgment (after consultation with the Financial Advisor or another
financial adviser of nationally recognized reputation) to be capable of being
completed (taking into account all material legal, financial, regulatory and
other aspects of the proposal and the Third Party making the proposal, including
the availability of financing therefor) on terms that
-25-
would be reasonably be expected to be more favorable to the Company's
Shareholders from a financial point of view than the transactions contemplated
by this Agreement.
5.3 Filings; Other Actions; Notification.
(a) The Company shall promptly, following the execution of this
Agreement, prepare and file with the SEC the Proxy Statement, which shall
include the recommendation of the Company's Board that Shareholders of the
Company vote in favor of the approval and adoption of this Agreement and the
written opinion of the Financial Advisor that the cash consideration to be
received by the Shareholders of the Company pursuant to the Merger is fair to
such Shareholders from a financial point of view. The Company shall use its best
efforts to have the Proxy Statement cleared by the SEC as promptly as
practicable after such filing, and promptly thereafter mail the Proxy Statement
to the Shareholders of the Company. The Company shall also use its best efforts
to obtain all necessary state securities law or "blue sky" permits and approvals
required in connection with the Merger and to consummate the other transactions
contemplated by this Agreement and will pay all expenses incident thereto. The
Company shall provide for Merger Sub's and Parent's review, within a reasonable
time prior to filing with the SEC (and any other Governmental Entity), drafts of
(i) the preliminary and definitive proxy statements; (ii) correspondence to the
SEC, and all (iii) responses to any SEC comments and, promptly after receipt,
all correspondence and comments from the SEC.
(b) Upon and subject to the terms and conditions set forth in
this Agreement, the Company and Parent shall cooperate with each other and use
(and shall cause their respective Subsidiary to use) all reasonable efforts to
take or cause to be taken all actions, and do or cause to be done all things,
necessary, proper or advisable under this Agreement and applicable Laws to
consummate and make effective the Merger and the other transactions contemplated
by this Agreement as soon as practicable, including preparing and filing as
promptly as practicable all documentation to effect all necessary applications,
notices, petitions, filings and other documents and to obtain as promptly as
practicable all permits, consents, approvals and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental Entity in
order to consummate the Merger or any of the other transactions contemplated by
this Agreement; provided, however, that nothing in this Section 5.3 shall
require, or be construed to require, Parent or the Company to proffer to, or
agree to, sell or hold separate and agree to sell, before or after the Effective
Time, any material assets, businesses or any interest in any material assets or
businesses of Parent, the Company or any of their respective Affiliates (or to
consent to any sale, or agreement to sell, by the Company of any of its material
assets or businesses) or to agree to any material change in or material
restriction on the operations of any such assets or businesses; provided,
further, that nothing in this Section 5.3 shall require, or be construed to
require, a proffer or agreement that would, in the reasonable judgment of Parent
or the Company, be likely to have a material adverse effect on the anticipated
financial condition, properties, business or results of operations of the Parent
and its Subsidiary after the Merger, taken as a whole, in order to obtain any
necessary or advisable consent, registration, approval, permit or authorization
from any Governmental Agency. Subject to applicable Laws relating to the
exchange of information, Parent and the Company shall have the right to review
in advance, and to the extent practicable each will consult the other on, all
the information relating to Parent or the Company, as the case may be, and any
of their respective Subsidiaries, that appears in any filing made with, or
written materials submitted to, any third
-26-
party and/or any Governmental Entity in connection with the Merger and the other
transactions contemplated by this Agreement, including the Proxy Statement. In
exercising the foregoing right, the Company and Parent shall act reasonably and
as promptly as practicable.
(c) Each of the Company and Parent shall, upon request by the
other, furnish the other with all information concerning itself, its
Subsidiaries, directors, officers and shareholders and such other matters as may
be reasonably necessary or advisable in connection with the Proxy Statement or
any other statement, filing, notice or application made by or on behalf of
Parent, the Company or any of their respective Subsidiary to any Governmental
Entity or other Person (including the NASD) in connection with the Merger and
the other transactions contemplated by this Agreement.
(d) Each of the Company and Parent shall keep the other apprised
of the status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
their respective Subsidiaries, from any third party and/or any Governmental
Entity alleging that the consent of such third party or Governmental Entity is
or may be required with respect to the Merger and the other transactions
contemplated by this Agreement. Each of the Company and Parent shall give prompt
notice to the other of (i) the occurrence or non-occurrence of any fact or event
which would be reasonably likely (x) to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Effective Time or (y) to cause any
covenant, condition or agreement under this Agreement not to be complied with or
satisfied and (ii) any failure of the Company, Parent or Merger Sub, as the case
may be, to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder.
5.4 Information Supplied. Each of Parent and the Company agrees, as to
information provided by itself and its Subsidiary, that none of the information
included or incorporated by reference in the proxy statement delivered by the
Company to its Shareholders in connection with the Merger and any amendment or
supplement thereto (the "Proxy Statement") will, at the time the Proxy Statement
is cleared by the SEC, at the date of mailing to Shareholders of the Company,
and at the time of the Shareholders Meeting (as defined in Section 5.5), contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
5.5 Shareholders Meeting. The Company will, in accordance with applicable
Law and its certificate of incorporation and bylaws, take all action necessary
to convene a meeting of holders of Shares (the "Shareholders Meeting") as
promptly as practicable after the Proxy Statement is cleared by the SEC to
consider and vote upon the approval of this Agreement and the Merger. The Proxy
Statement shall include a statement that the Company's Board approved this
Agreement and recommended that the Company's Shareholders vote in favor of this
Merger, and the Company shall use all reasonable and customary efforts to
solicit such approval; provided, however, that if the Company's Board determines
in good faith, after taking into consideration the advice of its outside legal
counsel that the Proxy Statement should not contain such recommendation in order
for its members to comply with their fiduciary duties under
-27-
applicable law, then any failure of the Proxy Statement to contain such
recommendation shall not constitute a breach of this Agreement.
5.6 Access. Upon reasonable notice, and except as may otherwise be
required by applicable law or relevant contractual provisions contained in such
agreements, the Company shall (and shall cause its Subsidiary to) (i) afford
Parent's officers, employees, counsel, accountants and other authorized
representatives (collectively, "Representatives") access, during normal business
hours throughout the period prior to the Effective Time, to its properties,
books, contracts and records and, during such period, and (ii) furnish promptly
to Parent all information concerning its business, properties and personnel as
may reasonably be requested; provided, however, that no investigation pursuant
to this Section 5.6 shall affect or be deemed to modify any representation or
warranty made by the Company. All requests for information made pursuant to this
Section 5.6 shall be directed to an executive officer of the Company or such
Person as may be designated by its officers. All of the information provided to
or obtained by Parent, its Affiliates and Representatives shall be treated as
"Confidential Information" under, and the parties shall comply with, and shall
cause their respective Representatives to comply with, all their respective
obligations under, the Confidential Disclosure Agreement, dated December 2,
2002, between the Company and The Xxxx Group, Inc. (the "Confidentiality
Agreement"). Parent and Merger Sub shall be bound by the Confidentiality
Agreement as if original parties thereto.
5.7 Publicity. The initial press release concerning the Merger has been
approved by Parent and the Company and thereafter the Company and its
Subsidiary, on the one hand, and Parent and Merger Sub, on the other hand, shall
consult with each other prior to issuing any press releases or otherwise making
public announcements with respect to the Merger and the other transactions
contemplated by this Agreement and prior to making any filings with any
Governmental Entity or other Person (including the New York Stock Exchange,
NASDAQ or the NASD) with respect hereto, except as may be required by law, by
any rule under the Exchange Act or the Securities Act, or by obligations
pursuant to any listing agreement.
5.8 Status of Company Employees; Company Stock Options; Employee Benefits.
(a) Parent agrees that following the Effective Time, the
employees of the Company and its Subsidiary who are employed by the Surviving
Corporation or its Subsidiary ("Company Employees") shall become eligible to
participate in the employee benefit plans and arrangements maintained by Parent
or its Subsidiary ("Parent Benefit Plans") in the same manner as similarly
situated employees of Parent. Parent or its Subsidiary shall grant the Company
Employees credit for all service credited by the Company for purposes of
eligibility, vesting and the determination of benefits under vacation and
pension plans. Parent shall, and shall cause the Surviving Corporation to, honor
in accordance with their terms all employee benefit obligations to current
employees under the Compensation and Benefit Plans in existence on the date
hereof (including, without limitation, the plans and agreements listed on the
Disclosure Memorandum and all employment or severance agreements entered into by
the Company or adopted by the Company's Board prior to the Effective Date
(collectively, the "Employment and Severance Agreements"); it being understood
that nothing contained herein shall limit or restrict the ability of Parent to
modify or terminate any Compensation and Benefit
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Plan, or to merge any Compensation and Benefit Plan with any other plan, other
than the Employment and Severance Agreements, following the Effective Time.
(b) From and after the date hereof, the Company agrees that it
will not grant additional stock options under the Stock Option Plans.
(c) Any pre-existing condition exclusion under any Parent Benefit
Plan providing medical or dental benefits shall be waived for any Company
Employee who, immediately prior to commencing participation in such Parent
Benefit Plan, was participating in a Company Benefit Plan providing medical or
dental benefits and had satisfied any pre-existing condition provision under
such Company Benefit Plan. Any expenses that were taken into account under a
Company Benefit Plan providing medical or dental benefits in which the Company
Employee participated immediately prior to commencing participation in a Parent
Benefit Plan providing medical or dental benefits shall be taken into account to
the same extent under such Parent Benefit Plan, in accordance with the terms of
such Parent Benefit Plan, for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions and life-time benefit limits.
5.9 Expenses.
(a) Upon consummation of the Merger, (i) Parent shall pay
$370,000 of the Company Transaction Costs (as herein defined) incurred by the
Company in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement, all costs and expenses of the
Exchange Agent and one-half of the expenses for the printing and mailing of the
Proxy Statement; and (ii) the Surviving Corporation shall pay all Company
Transaction Costs in excess of the $370,000 of Company Transaction Costs payable
by Parent pursuant to subclause (i). "Company Transaction Costs" shall mean (i)
fees and expenses paid by the Company to the Financial Advisor and legal
counsel, (ii) costs incurred in connection with actions of the Company pursuant
to Sections 1.4 and 1.5 of this Agreement, and (iii) insurance premiums incurred
by the Company in connection with the requirements of Section 5.10(b) of this
Agreement.
(b) Except as otherwise provided in Section 7.5, if the Merger is
not consummated, all costs and expenses incurred in connection with this
Agreement and the Merger and the other transactions contemplated by this
Agreement shall be paid by the party incurring such expense.
5.10 Indemnification.
(a) From and after the Effective Time, the Surviving Corporation
shall fulfill, assume and honor in all respects the obligations of the Company
or its Subsidiary pursuant to the Company's or its Subsidiary's certificate of
incorporation and bylaws and any indemnification agreement which is set forth on
the Disclosure Memorandum between the Company or its Subsidiary and any of their
respective directors and officers (collectively, the "Indemnified Parties")
existing and in force immediately before the Effective Time. The Surviving
Corporation and Parent agree that the indemnification obligations set forth in
the Company's certificate of incorporation and bylaws, in each case as of the
date of this Agreement,
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shall survive the Merger (and, as of or prior to the Effective Time, Parent
shall cause the bylaws of Merger Sub to reflect such provisions). No subsequent
amendment of the provisions of the bylaws of the Surviving Corporation shall
affect the indemnification obligations of the Surviving Corporation and Parent
in any manner that would adversely affect the rights of the Indemnified Parties
under this Section 5.10.
(b) For a period of six (6) years commencing on the Closing Date,
the Surviving Corporation shall maintain in effect the current policies of
directors' and officers' liability insurance maintained by the Company and its
Subsidiary with respect to matters arising on or before the Effective Time
(provided that Parent may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions that are no less
advantageous to the Indemnified Parties, so long as such substitution does not
result in lapses of coverage).
(c) If the Surviving Corporation or any of its successors or
assigns (i) shall consolidate with or merge into any other Person and shall not
be the continuing or surviving corporation or Person of such consolidation or
merger or (ii) shall transfer all or substantially all of its properties and
assets to any Person, then and in each such case, proper provisions shall be
made so that the successors and assigns of the Surviving Corporation shall
assume all of the obligations set forth in this Section 5.10.
5.11 Other Actions by the Company and Parent. If any Takeover Statute is
or may become applicable to the Merger or the other transactions contemplated by
this Agreement, each of Parent and the Company and their respective Boards of
Directors shall grant such approvals and take such lawful actions as are
necessary so that such transactions may be consummated as promptly as
practicable on the terms contemplated by this Agreement or by the Merger and
otherwise act to eliminate or minimize the effects of such statute, and any
regulations promulgated thereunder, on such transactions. Company shall cause
the conditions set forth in Sections 6.1 and 6.2 which are within its control to
be satisfied and shall use commercially reasonable efforts to cause the
conditions set forth in Sections 6.1 and 6.2 which are not within its control to
be satisfied.
5.12 Key Man Insurance. The Company shall use commercially reasonable
efforts to have issued, at Merger Sub's expense, policies, effective as of the
Closing, of "key man" insurance on those Persons and with the policy limits
listed on Schedule 5.12 to this Agreement.
ARTICLE VI
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect Merger. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Closing of each of the following
conditions:
(a) Stockholder Approval. This Agreement shall have been duly
approved by holders of the number of Shares constituting at least the Company
Requisite Vote.
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(b) Regulatory Consents. Other than filing the Delaware
Certificate of Merger, all filings with any Governmental Entity required to be
made prior to the Effective Time by the Company or Parent or any of their
respective Subsidiaries, with, and all Government Consents required to be
obtained prior to the Effective Time by the Company or Parent or any of their
respective Subsidiaries in connection with the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby by the
Company, Parent and Merger Sub shall have been made or obtained (as the case may
be).
(c) Litigation. No court or other Governmental Entity of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, judgment, decree, injunction or other
order (whether temporary, preliminary or permanent) that is in effect and
restrains, enjoins or otherwise prohibits consummation of the transactions
contemplated by this Agreement (collectively, an "Order"), and no Governmental
Entity shall have instituted any proceeding seeking any such Order and such
proceeding remains unresolved.
6.2 Conditions to Obligations of Parent and Merger Sub. The obligations of
Parent and Merger Sub to effect the Merger are also subject to the satisfaction
or waiver by Parent prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
in all material respects as of the date of this Agreement and (except to the
extent such representations and warranties speak as of an earlier date) as of
the Closing Date as though made on and as of the Closing Date.
(b) Performance of Obligations of the Company. The Company shall
have performed all obligations required to be performed by it under this
Agreement at or prior to the Closing Date.
(c) CEO and CFO Certifications; Secretary's Certificate. Parent
and Merger Sub shall have received one or more certificates executed by the
chief executive officer and chief financial officer of Company, attesting to the
matters referenced in Sections 6.2(a) and (b), and a certificate of the
Company's secretary with respect to such documents, instruments and matters, as
Parent shall reasonably request.
(d) Opinion of Counsel. Parent and Merger Sub shall have received
an opinion of counsel to the Company, dated as of the Effective Time, in form
and substance reasonably satisfactory to Parent, that the termination of the
Company Options and the Company's Executive Severance Pay Plan (but not with
respect to the Company's Chief Financial Officer) all have been properly
terminated, the matters referenced in Section 4.1(j) of this Agreement with
regard to the DGCL and New Jersey law, and such other matters as Parent shall
reasonably request.
(e) Termination of USF-JV. On or before January 30, 2003, the
Company shall have executed and delivered to Envirex Inc. d/b/a U.S.
Filter/Envirex ("USF"), in the form previously reviewed and approved by Parent,
a written notice of termination under
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and as referenced in Section 5 of the Agreement dated September 2, 1998 by and
between USF and the Company (the "USF-JMA").
(f) Disposal of Hazardous Materials. Except as set forth in the
Disclosure Memorandum, the Company shall have removed from the Company's leased
premises at 0000 Xxxxxxxxxxxx Xxxx, Xxxxxxxxxxxxx, Xxx Xxxxxx 00000 (the
"Company's Headquarters") and disposed of in accordance with Environmental Laws,
all spent or unusable reagents, catalysts and chemicals; containerized Hazardous
Materials currently designated as waste or otherwise scheduled for disposal;
used protective clothing contaminated with Hazardous Materials; labware that
cannot be re-used, or is so contaminated with Hazardous Materials that it cannot
be re-used; medical wastes; spent filter media; and shall return to Company's
customers all samples upon which analyses have been performed and all materials
required to be removed pursuant to Section 6 of the Laboratory Facility Access
and Support Services Agreement dated October 18 and October 30, 2002 by and
between the Company and Environmental Resources Management, Inc. (the "ERM
Sublease").
(g) Retention Agreements. The Company and certain of the Company
employees listed on Schedule 6.2(g) annexed hereto shall have executed and
delivered an employment agreement, in the forms attached hereto as Exhibit
6.2(g) and with such changes thereto as may be mutually approved by Parent and
Company.
(h) Retention of Employees. As of the Closing, at least 16 of the
Company employees listed on Schedule 6.2(h) shall remain employees of the
Company, and shall not have given notice of resignation, or otherwise expressed
any intent to resign or otherwise terminate their employment with the Company,
and the Company shall employ as of the Closing at least eighty percent (80%) of
its full time employees who, as of the date hereof, are classified as "exempt"
for purposes of the Fair Labor Standards Act (other than those who retired or
were involuntarily terminated).
(i) Notice to Banks. The Company shall have delivered to each of
US Bank and State Bank of Xxxxxxx, written notice, in form and substance
satisfactory to Parent, that Company will not guarantee to, or reimburse, either
of such banks for any cost deemed ineligible, or otherwise unreimbursed, under
PECFA, with respect to contracts entered into after such notice, in each case
disclaiming any such obligations.
(j) Positive Cash Balance . As of the Closing, the Company shall
have in its possession cash and cash equivalents of at least One U.S. Dollar
($1.00) after payment (which payment shall be made on or before the Closing) of
all Company Transaction Costs (other than those payable by Parent pursuant to
Section 5.9 of this Agreement).
(k) No PECFA Judgments. The Company shall not, after the date of
this Agreement, have received or been subject to any verdict, judgment, decision
or binding arbitral award determining that the Company is liable for more than
$100,000 with respect to PECFA work.
(l) Audited Financial Statements. The Company shall have
delivered to Parent the Company's consolidated financial statements of and for
the year ended
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December 31, 2002 (the "2002 Financial Statements"), together with the report of
the Company's independent public accountants thereon which report shall be
unqualified except for any required "going concern" qualification.
6.3 Conditions to Obligations of the Company. The obligation of the
Company to effect the Merger is also subject to the satisfaction or waiver by
the Company prior to the Effective Time of the following conditions:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and
(except to the extent such representations and warranties speak as of an earlier
date) as of the Closing Date.
(b) Performance of Obligations of Parent and Merger Sub. Each of
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Closing Date.
(c) CEO and CFO Certifications; Secretary's Certificate. Company
shall have received one or more certifications executed by the chief executive
officer and chief financial officer of Parent and Merger Sub, respectively,
attesting to the matters referred in Sections 6.3(a) and (b) and certificates of
the secretaries of Parent and Merger Sub with respect to such documents,
instruments and other matters as Company shall reasonably request.
(d) Opinion of Counsel. The Company shall have received an
opinion of counsel to Parent and Merger Sub, dated as of the Effective Time, in
form reasonably satisfactory to the Company as such matters set as Company shall
reasonably request.
ARTICLE VII
TERMINATION
7.1 Termination by Mutual Consent. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time, whether
before or after its approval by the Shareholders of the Company, by mutual
written consent of the Company, Parent and Merger Sub, by action of their
respective Boards of Directors.
7.2 Termination by Either Parent or the Company. This Agreement may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time by either Parent or the Company, by action of their respective Boards of
Directors, if (a) any Order permanently restraining, enjoining or otherwise
prohibiting the Merger shall be entered (whether before or after the approval by
the Shareholders of the Company) and such Order is or shall have become
nonappealable, provided that the party seeking to terminate this Agreement shall
have used its reasonable efforts to remove or lift such Order, or (b) the Merger
is not completed by April 15, 2003 (the "Termination Date").
7.3 Termination by the Company. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after its approval by the Shareholders of the Company, by the Company if:
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(a) the Company enters into a binding written agreement with
respect to a Superior Proposal after fully complying with the procedures set
forth in Section 5.2 (and the termination of this Agreement by the Company
pursuant to this subsection (a) shall not be deemed a breach of any obligations
of the Company under this Agreement);
(b) there has been a material breach by Parent or Merger Sub of
any representation, warranty, covenant or agreement contained in this Agreement
that is not curable or, if curable, is not cured prior to the earlier of (i)
twenty (20) days after written notice of such breach (specifying such breach in
reasonable detail) is given by the Company to Parent and (ii) two (2) Business
Days before the Termination Date; or
(c) the Shareholders of the Company do not approve the Merger by
the Company Requisite Vote.
7.4 Termination by Parent and Merger Sub. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after its approval by the Shareholders of the Company, by Parent and
Merger Sub if:
(a) the Board of Directors of the Company shall have withdrawn or
modified its approval or recommendation of this Agreement in a manner materially
adverse to Parent;
(b) there has been a material breach by the Company of any
representation, warranty, covenant or agreement contained in this Agreement that
is not curable or, if curable, is not cured prior to the earlier of (i) twenty
(20) days after written notice of such breach (specifying such breach in
reasonable detail) is given by Parent to the Company and (ii) two (2) Business
Days before the Termination Date; or
(c) the Shareholders of the Company do not approve the Merger by
the Company Requisite Vote.
7.5 Effect of Termination and Abandonment.
(a) If this Agreement is terminated and the Merger abandoned
pursuant to this Article VII, this Agreement (other than as set forth in Section
8.1) shall become void and of no further effect with no liability of any party
hereto (or any of its directors, officers, employees, agents, shareholders,
legal, accounting and financial advisors or other representatives); provided,
however, that, except as otherwise provided herein, no such termination shall
relieve any party hereto of any liability or damages resulting from any breach
of this Agreement.
(b) In the event that the Company terminates this Agreement
pursuant to Section 7.3(a) or Parent or Merger Sub terminates this Agreement
pursuant to Sections 7.4(a) or 7.4(b) on account of any material breach by
Company of Section 5.2 of this Agreement (the date of termination in each of the
foregoing events shall be referred to in this Section 7.5 as the "Option Trigger
Date"), Parent shall have an irrevocable option (the "Option") (which Option
must be exercised within fifteen months (the "Option Period") after the Option
Trigger Date) to:
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(i) acquire all of the Company's right, title, and
interest in and to MTBE Technology (as defined below) for a purchase price
(payable in cash upon exercise of such Option) equal to the current fair market
value of the MTBE Technology (which the Company and Parent agree is $1,500,000),
provided that such purchase price shall be reduced by $300,000 if the Option is
exercised within six months of the Option Trigger Date; and
(ii) enter into a supply and services agreement with
Company on Company's standard terms which provides that Parent shall have the
right to purchase reactors from the Company at a purchase price such that the
Company attains a 15% gross margin on the sale of such reactors, and that
employees of the Company will assist Parent in marketing and developing
applications of the MTBE Technology at the Company's standard fees. . "Gross
margin" purposes of this subsection is applied to and calculated based on the
sum of direct labor, fringe, and direct costs only. Parent shall have the right
to audit such charges within one year after completion of the project involved.
Any over- or under-billing shall be paid to the party entitled thereto promptly
after completion of the audit with interest at Citibank, N.A.'s prime rate of
interest.
The Option and the Company's obligations in connection therewith shall be
collectively referred to as the "Break-up Arrangements".
(c) In the event that, upon expiration of the foregoing Option or
if at anytime during the Option Period, Parent elects to forfeit its rights
under the Option, the Company shall pay Parent $300,000 in cash in lieu of the
Option as a break-up fee.
(d) "MTBE Technology" means U.S. Patent Nos. 6,303,366 and
5,814,514, Canadian Application No. 2,262,770, European Application No. 97 933
446.3-2104, U.S. Application No. 09/608,368, and PCT Application No.
PCT/US01/41197, and all trade secrets and know how of the Company as of the date
of exercise of the Option necessary to practice the inventions claimed in the
foregoing patents and disclosed in the foregoing applications. Upon the exercise
by Parent of the Option and the assignment of the MTBE Technology to Parent, the
Company shall have a royalty free, paid up, license from Parent to use the MTBE
Technology to the extent necessary to practice the MTBE Technology other than in
the MTBE Remediation Field (as defined below).
(e) Upon the exercise by Parent of the Option, and along with the
assignment of the MTBE Technology to Parent, the Company shall also grant Parent
a royalty free, paid up, license (the "License") to use Company's fluidized bed
reactor designs (the "Licensed Designs") to the extent necessary to practice the
MTBE Technology in the MTBE Remediation Field. The grant of such License shall
be conditioned upon Parent entering into a confidentiality and non-disclosure
agreement with Company on customary terms and conditions necessary to protect
Company's trade secrets, know-how, confidential information and other
Intellectual Property rights related to the Licensed Designs. After Parent's
exercise of the Option and payment of the purchase price therefor, Company shall
be prohibited from using the Licensed Designs in the MTBE Remediation Field
other than in connection with agreements in effect as of such date and written
proposals made on or before such date. "MTBE Remediation Field" means the
remediation of MTBE in applications where MTBE and/or its persistent
transformation products such as TBA are co-contaminants and are the Primary
Targeted
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Contaminant(s) (as defined below), but ammonium perchlorate is not a primary
targeted contaminant. MTBE shall be considered the "Primary Targeted
Contaminant" if (i) MTBE is a significant contaminant of concern; (ii) MTBE
comprises more than 10% of the total mass of regulated contaminants of concern;
or (iii) MTBE is a significant contaminant of concern that is above State or
Federal regulatory approved levels in a contaminant plume.
(f) The obligations of the Company under the Option and, after
the exercise of the Option, the License itself shall extend to the assigns and
successors in interest of the Company or the Licensed Designs, and any such
assignees or successors shall take such interests subject to the License.
Additionally, Company agrees that in the event of the bankruptcy of Company, the
Option and, after the exercise of the Option, the License shall continue in
force as being granted to Parent for sufficient consideration.
(g) The Company acknowledges that the agreements contained in
this Section 7.5 are an integral part of the transactions contemplated by this
Agreement and that, without these agreements, Parent and Merger Sub would not
enter into this Agreement. Accordingly, if, in order to obtain the benefits of
the Break-up Arrangements, Parent or Merger Sub commences a suit which results
in a final nonappealable judgment against the Company for specific performance
of such Break-up Arrangements, the Company shall pay to Parent or Merger Sub its
reasonable costs and expenses (including reasonable attorneys' fees) in
connection with such suit; provided, that if such suit results in a final
nonappealable judgment in favor of the Company, Parent shall pay to Company its
reasonable costs and expenses (including reasonable attorneys' fees) in
connection with such suit.
7.6 Procedure for Termination. A termination of this Agreement pursuant to
this Article VII shall, in order to be effective, require in the case of Parent,
Merger Sub or the Company, action by its Board of Directors.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival. This Article VIII and the agreements of the Company, Parent
and Merger Sub contained in Sections 3.2 (Exchange, etc.), 3.3 (Dissenters'
Shares), 5.8 (Benefits), 5.9(a) (Expenses) and 5.10 (Indemnification) shall
survive the consummation of the Merger. This Article VIII and the agreements of
the Company, Parent and Merger Sub contained in Section 5.9(b) (Expenses),
Section 7.5 (Effect of Termination and Abandonment) and the Confidentiality
Agreement shall survive the termination of this Agreement. All other
representations, warranties, agreements and covenants in this Agreement and in
any certificate or schedule delivered pursuant hereto shall not survive the
consummation of the Merger or the termination of this Agreement.
8.2 Certain Definitions. For the purposes of this Agreement each of the
following terms shall have the meanings set forth below:
(a) "Affiliate" means a Person that, directly or indirectly,
through one or more intermediaries controls, is controlled by or is under common
control with the first-mentioned Person.
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(b) "Business Day" means any day other than a day on which banks
in the State of New York are authorized to close or the New York Stock Exchange
is closed.
(c) "Capital Stock" means common stock, preferred stock,
partnership interests, limited liability company interests or other ownership
interests entitling the holder thereof to vote with respect to matters involving
the issuer thereof.
(d) "Company" and "Subsidiary" shall each mean, when used in
Article IV of this Agreement, each such Person's predecessors, whether by merger
or otherwise by operation of Law, or by assumption of another Person's
obligations by agreement, arrangement or otherwise.
(e) "Company Material Adverse Effect" means a material adverse
effect on the financial condition, properties, business, results of operations
or prospects of the Company and its Subsidiary, taken as a whole (it being
understood that (i) any adverse effect that is caused by conditions affecting
the economy or security markets generally shall not be taken into account in
determining whether there has been a Company Material Adverse Effect and (ii)
any adverse effect that is caused by conditions affecting the primary industry
in which the Company currently competes shall not be taken into account in
determining whether there has been a Company Material Adverse Effect).
(f) "Disclosure Memorandum" means the Company's memorandum dated
the date hereof, disclosing certain matters referred to in Article IV of, and
elsewhere in, this Agreement.
(g) "knowledge" as used with respect to a Person shall mean the
actual knowledge, after diligent inquiry, of the chairman, president, chief
financial officer, chief accounting officer, or any vice president or more
senior officer of such Person.
(h) "Lien" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention,
or other security arrangement, or any ad-verse right or interest, charge, or
claim of any nature whatsoever of; on, or with respect to any property or
property interest, other than (i) Liens for current property or other Taxes not
yet due and payable, (ii) such imperfections of title and encumbrances, if any,
as do not materially detract from the value or materially interfere with the
present use of any of such Party's Assets, and (iii) Liens that arise by
operation of Law with respect to liabilities that are not delinquent or are
being contested in good faith.
(i) "Parent Material Adverse Effect" on a Party shall mean an
event, change, or occurrence which, together with any other event, change, or
occurrence, has a material adverse impact on (i) the financial position,
business, or results of operations of such Party and its Subsidiaries, taken as
a whole, or (ii) the ability of such Party to perform its obligations under this
Agreement or to consummate the Merger or the other transactions contemplated by
this Agreement, provided that "material adverse impact" shall not be deemed to
include the impact of (a) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(b) changes in GAAP or regulatory
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accounting principles generally applicable to banks and savings associations and
their holding companies, (c) actions and omissions of a Party (or any of its
Subsidiaries) taken with the prior informed consent of the other Party in
contemplation of the transactions contemplated hereby, and (d) the Merger and
compliance with the provisions of this Agreement on the operating performance of
the Parties.
(j) "PECFA" means the Petroleum Environmental Cleanup Fund Act,
administered by the State of Wisconsin, as the same may be or has been in effect
at any time.
(k) "Permitted Liens" means (i) Liens for Taxes or other
governmental assessments, charges or claims the payment of which is not yet due;
(ii) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and other similar Persons and other liens imposed by
applicable Law incurred in the ordinary course of business for sums not yet
delinquent or immaterial in amount and being contested in good faith; (iii)
Liens specifically identified as such in the Balance Sheet or the notes thereto;
and (iv) Liens constituting or securing executory obligations under any lease
that constitutes an "operating lease" under GAAP; provided, however, that, with
respect to each of the foregoing clauses (i) through (iv), to the extent that
any such lien relates to, or secures the payment of, a liability that is
required to be accrued under GAAP, such lien shall not be a Permitted Lien
unless accruals for such liability have been established therefor on the Balance
Sheet in conformity with GAAP. Notwithstanding the foregoing, no lien arising
under the Code or ERISA with respect to the operation, termination, restoration
or funding of any Compensation and Benefit Plan sponsored by, maintained by or
contributed to by the Company or any of its ERISA Affiliates or arising in
connection with any excise tax or penalty tax with respect to such Compensation
and Benefit Plan shall be a Permitted Lien.
(l) "Person" means an individual, corporation (including
not-for-profit), partnership, limited liability company, association, trust,
unincorporated organization, joint venture, estate, Governmental Entity or other
legal entity.
(m) "Subsidiary" or "Subsidiaries" of the Company, Parent, the
Surviving Corporation or any other Person means any corporation, partnership,
limited liability company, association, trust, unincorporated association or
other legal entity of which the Company, Parent, the Surviving Corporation or
any such other Person, as the case may be, either alone or through or together
with any other Subsidiary, owns, directly or indirectly, 50% or more of the
Capital Stock, the holders of which are generally entitled to vote for the
election of the Board of Directors or other governing body of such corporation
or other legal entity.
8.3 No Personal Liability. This Agreement shall not create or be deemed to
create any personal liability or obligation on the part of any direct or
indirect stockholder of the Company, Merger Sub or Parent, or any of their
respective officers, directors, employees, agents or representatives.
8.4 Modification or Amendment. Subject to the provisions of applicable Law,
at any time prior to the Effective Time, the parties hereto may modify or amend
this Agreement, by written agreement executed and delivered by duly authorized
officers of the respective parties.
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8.5 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable Law. The failure of any party hereto to exercise any right, power or
remedy provided under this Agreement or otherwise available in respect hereof at
law or in equity, or to insist upon strict compliance by any other party hereto
with its obligations hereunder, and any custom or practice of the parties at
variance with the terms hereof, shall not constitute a waiver by such party of
its rights to exercise any such or other right, power or remedy or to demand
such compliance.
8.6 Counterparts. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
8.7 GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL.
(a) THIS AGREEMENT SHALL BE DEEMED TO BE MADE IN, AND IN ALL
RESPECTS SHALL BE INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH
THE LAW OF THE STATE OF DELAWARE WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF. The parties hereby irrevocably submit to the jurisdiction of
the Federal courts of the United States of America located in the State of
Louisiana solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a Louisiana
Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section 8.8 or in such other
manner as may be permitted by applicable law, shall be valid and sufficient
service thereof.
(b) The parties agree that irreparable damage would occur and
that the parties would not have any adequate remedy at law in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions of this
Agreement in any Federal court located in the State of Louisiana , this being in
addition to any other remedy to which they are entitled at law or in equity.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION
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DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE INITIAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 8.7.
8.8 Notices. Any notice, request, instruction or other document to be
given hereunder by any party to the others shall be deemed given if in writing
and delivered personally or sent by registered or certified mail (return receipt
requested) or overnight courier (providing proof of delivery), postage prepaid,
or by facsimile (which is confirmed):
If to Parent or Merger Sub:
Xxxx Environmental & Infrastructure, Inc.
0000 Xxxxx Xxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
Attention: President
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxx, Arata, McCollam, Xxxxxxxxx & Xxxxx, LLP
0000 Xxx Xxxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxx 00000
Fax: (000) 000-0000
and
Xxxxx X. Xxxxxxx, Esq.
Xxxx Environmental & Infrastructure, Inc.
0000 Xxxxxxx Xxxx.
Xxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
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If to the Company:
Envirogen, Inc.
0000 Xxxxxxxxxxxx Xx.
Xxxxxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, President
Fax: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Drinker Xxxxxx & Xxxxx LLP
One Xxxxx Square
00xx xxx Xxxxxx Xxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Fax: (000) 000-0000
or to such other Persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
8.9 Entire Agreement. This Agreement (including any schedules, exhibits or
annexes hereto) and the Confidentiality Agreement constitute the entire
agreement, and supersede all other prior agreements, understandings,
representations and warranties, both written and oral, among the parties with
respect to the subject matter hereof.
8.10 No Third Party Beneficiaries. Except as provided in Section 5.8
(Status of Company Employees; Company Stock Options; Employee Benefits) and
Section 5.10 (Indemnification), this Agreement is not intended to confer upon
any Person other than the parties hereto any rights or remedies hereunder.
8.11 Obligations of the Company and Surviving Corporation. Whenever this
Agreement requires a Subsidiary of the Company or Parent to take any action,
such requirement shall be deemed to include an undertaking on the part of the
Company or the Parent, as the case may be, to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
8.12 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision hereof shall
not affect the validity or enforceability of any of the other provisions hereof.
If any provision of this Agreement, or the application thereof to any Person or
any circumstance, is illegal, invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
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8.13 Interpretation. The table of contents and Article, Section and
subsection headings herein are for convenience of reference only, do not
constitute a part of this Agreement and shall not be deemed to limit or
otherwise affect any of the provisions hereof. Where a reference in this
Agreement is made to a Section, Schedule or Exhibit, such reference shall be to
a Section of, or Schedule or Exhibit to, this Agreement, unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein. The definitions contained in this Agreement
are applicable to the singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns and, in
the case of an individual, to his or her heirs and estate, as applicable.
8.14 Assignment. This Agreement shall not be assignable by operation of law
or otherwise and any attempted assignment of this Agreement in violation of this
sentence shall be void; provided, however, that Parent may designate, by written
notice to the Company, another wholly-owned, direct subsidiary to be a
Constituent Corporation in lieu of Merger Sub, in the event of which, all
references herein to Merger Sub shall be deemed references to such other
Subsidiary except that all representations and warranties made herein with
respect to Merger Sub as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other Subsidiary as of
the date of such designation.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
duly authorized officers of the parties hereto as of the date hereof.
ENVIROGEN, INC.
/s/ Xxxxxx X. Xxxxxx
--------------------------------------
By: Xxxxxx X. Xxxxxx
Title: Chairman, President and CEO
XXXX ENVIRONMENTAL &
INFRASTRUCTURE, INC.
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------
By: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
TONIC ACQUISITION CORPORATION
/s/ Xxxxxx X. Xxxxxxx
--------------------------------------
By: Xxxxxx X. Xxxxxxx
Title: Executive Vice President
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SCHEDULES
Disclosure Memorandum
Schedule 5.12 - Key Man Insurance
Schedule 6.2(g) - Retention Agreements
Schedule 6.2(h) - Employees to be Retained as of Closing
EXHIBITS
Exhibit 6.2(g) - Form of Employment Agreements
