EXHIBIT 2.1
COMBINATION AGREEMENT
DATED AS OF JULY 1, 1997
AMONG
SONIC ENVIRONMENTAL SYSTEMS, INC.,
SONIC CANADA INC.
AND
TURBOTAK TECHNOLOGIES, INC.
CONTENTS
ARTICLE I DEFINITIONS.
1.1. Cross Reference Table of Certain
Defined Terms...................................................... 1
1.2. Definitions of Certain Additional Terms............................ 2
1.2.1. Code....................................................... 2
1.2.2. Effective Date............................................. 2
1.2.3. Exchange Date.............................................. 2
1.2.4. Turbotak Material Adverse Effect........................... 3
1.2.5. Sonic Material Adverse Effect.............................. 3
1.2.6. Securities Act............................................. 3
1.2.7. SEC........................................................ 3
1.2.8. Subsidiary................................................. 3
1.2.9. Tax........................................................ 3
ARTICLE II GENERAL.
2.1. Plan of Arrangement................................................ 3
2.1.1. Designation & Authorization of Class B Stock............... 3
2.1.2. Calculation of Share Exchange.............................. 4
2.1.3. Conversion of the Stock Option............................. 4
2.2. Voting & Exchange Trust Agreement.................................. 4
2.3. Support Agreement.................................................. 4
2.4. Closing, Closing Date, & Effective Time............................ 4
2.5. Contemporaneous Transactions....................................... 5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF TURBOTAK.
3.1. Due Organization, Authorization, and Good Standing of
Turbotak........................................................... 5
3.2. No Violation or Approval........................................... 6
3.3. Capital Stock...................................................... 6
3.4. Litigation......................................................... 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF
SONIC AND ACQUISITION.
4.1. Due Organization, Authorization, and Good
Standing of Sonic and Acquisition.................................. 7
4.2. No Violation or Approval........................................... 7
4.3. Capital Stock...................................................... 8
4.4. Litigation......................................................... 8
ARTICLE V CERTAIN COVENANTS.
5.1. Preparation of Proxy Statement and No Action Request;
Other Filings & Submissions........................................ 9
5.2. Shareholders' Meetings............................................. 9
5.3. Public Announcements............................................... 9
5.4. Notification of Certain Matters....................................10
5.5. Other Limitations on Conduct of Business Prior to the
Effective Date.....................................................10
5.6. Access to Information..............................................10
5.7. Amendment to Sonic Certificate of Incorporation....................10
5.8. Further Assurances.................................................11
ARTICLE VI CERTAIN COVENANTS.
6.1. Conditions Precedent to Turbotak's Obligation to Effect
the Arrangement....................................................11
6.1.1. Representations; Covenants; Certificate....................11
6.2. Conditions Precedent to Obligations of
Sonic..............................................................11
6.2.1. Representations; Covenants; Certificate....................11
6.3. Conditions Precedent to Obligations of Each Parties................12
6.3.1. Shareholder Approval.......................................12
6.3.2. Bankruptcy Court Approval..................................12
6.3.3. Canadian Securities Issues.................................12
6.3.4. Injunctions................................................12
6.3.5. CVF Option.................................................13
ARTICLE VII MISCELLANEOUS.
7.1. Termination........................................................13
7.2. Amendments & Supplements...........................................13
7.3. Survival of Representations, Warranties, and
Agreements.........................................................14
7.4. Expenses...........................................................14
7.5. Governing Law......................................................14
7.6. Notice.............................................................14
7.7. Entire Agreement, Assignability, Etc...............................15
7.8. Counterparts.......................................................15
EXHIBITS
Exhibit 2.1. Form of Plan of Arrangement
Exhibit 2.2. Form of Voting and Exchange Trust Agreement
Exhibit 2.3. Form of Support Agreement
COMBINATION AGREEMENT
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COMBINATION AGREEMENT (the "Agreement") dated as of July 1, 1997, by and
among Sonic Environmental Systems, Inc., a corporation incorporated under the
laws of the State of Delaware, Sonic Canada, Inc., a corporation incorporated
under the laws of Province of Ontario and a wholly owned subsidiary of Sonic
("Acquisition"), and Turbotak Technologies, Inc., a corporation incorporated
under the laws of the Province of Ontario("Turbotak").
WHEREAS, on September 16, 1996, Sonic consented to the entry of an Order
for Relief under Chapter 11 of the United States Bankruptcy Code in the United
States Bankruptcy Court for the District of New Jersey (the "Bankruptcy Court").
WHEREAS, the Bankruptcy Court confirmed by Order dated July 3, 1997 ("the
Bankruptcy Order"), the Debtor's First Amended Plan of Reorganization (the
"Plan");
WHEREAS, pursuant to the Plan, Sonic and Turbotak are to combine their
operations in a reorganized company called TurboSonic Technologies, Inc.
WHEREAS, the respective Boards of Directors of Sonic, Acquisition and
Turbotak approved the transactions contemplated by the Plan and this Agreement
and the Board of Directors of Turbotak has agreed to submit the Plan of
Arrangement (as defined in Section 2.1) and the other transactions contemplated
hereby to its shareholders for approval.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements set forth herein, and intending to be legally bound
hereby, Sonic, Acquisition and Turbotak hereby agree as follows:
ARTICLE I
DEFINITIONS
Certain terms are used in this Agreement as specifically defined herein.
1.1 Cross Reference Table of Certain Defined Terms. The following terms
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are defined in the Sections set forth below, and shall have the respective
meanings therein defined:
Term Section
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"Acquisition" Preamble
"Agreement" Preamble
"Arrangement" Section 2.1.
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"Bankruptcy Court" Preamble
"Bankruptcy Order" Preamble
"CVF" Section 2.1.3.
"CVF Option" Section 2.1.3.
"Charter Documents" Section 3.1.
"Class A Shares" Section 4.3.
"Closing" Section 2.4.
"Closing Date" Section 2.4.
"Code" Section 1.2.1.
"Contemporaneous Transactions" Section 2.5.
"Court" Section 2.1.
"Effective Date" Section 1.2.2.
"Effective Time" Section 2.4.
"Exchange Date" Section 1.2.3.
"Exchangeable Shares" Section 2.1.1.
"Final Order" Section 2.1.3.
"Interim Order" Section 2.1.
"Notice" Section 7.6.
"OBCA" Preamble
"Plan" Preamble
"Plan of Arrangement" Section 2.1.
"Replacement Option" Section 2.1.3.
"SEC" Section 1.2.7.
"Securities Act" Section 1.2.6.
"Shareholder Approval" Section 6.3.1.
"Shareholder Meetings" Section 5.2.
"Shareholder Meeting Date" Section 5.2.
"Sonic" Preamble
"Sonic Material Adverse Effect" Section 1.2.5.
"Subsidiary" Section 1.2.8.
"Survival of Representations,
Warranties, and Agreements" Section 7.3.
"Tax" Section 1.2.9.
"Total Turbotak Outstanding Shares" Section 2.1.2.
"Trustee" Section 2.2.
"Turbotak" Preamble
"Turbotak Material Adverse Effect" Section 1.2.4.
"TurboSonic Technologies, Inc." Section 5.7.
"Voting Share" Section 2.2.
"Voting Trust Agreement" Section 2.2.
1.2 Definitions of Certain Additional Terms. The following terms shall
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have the meanings set forth below:
1.2.1. "Code" means the United States Internal Revenue Code of 1986,
as amended.
1.2.2. "Effective Date" shall mean the date on which the "Effective
Time" occurs.
1.2.3. "Exchange Date" shall mean the date on which the Effective
Time occurs.
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1.2.4. "Turbotak Material Adverse Effect" shall mean an effect that
does or would reasonably be expected to have a material adverse effect on the
financial condition or results of operations of Turbotak.
1.2.5. "Sonic Material Adverse Effect" shall mean an effect that does
or would reasonably be expected to have a material adverse effect on the
financial condition or results of operations of Sonic.
1.2.6. "Securities Act" shall mean the United States Securities Act
of 1933, as amended.
1.2.7. "SEC" shall mean the United States Securities and Exchange
Commission.
1.2.8. "Subsidiary" shall mean, with respect to any corporation, any
other corporation, association, or other business entity a majority (by number
of votes) of the shares of capital stock (or other voting interests) of which is
owned directly or indirectly by such corporation.
1.2.9. "Tax" means any Canadian or United States Federal, provincial,
state or local tax or any foreign tax (including, without limitation, any net
income, gross income, profits, premium, estimated, excise, sales, value added,
services, use, occupancy, gross receipts, franchise, license, ad valorem,
severance, capital levy, production, stamp, transfer, withholding, employment,
unemployment, payroll or property tax, customs duty, or any other governmental
charge or assessment), together with any interest, addition to tax, or penalty.
ARTICLE 2
GENERAL
2.1 Plan of Arrangement. Turbotak agrees that it shall, as soon as
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reasonably practical, apply to the Ontario Court General Division (the "Court")
pursuant to Section 182 of the Ontario Business Corporations Act, as amended
(the "OBCA"), for an interim order in form and substance reasonably satisfactory
to Sonic and Turbotak (the "Interim Order") providing for, among other things,
the calling and holding of a special meeting of the holders of Common Shares and
holders of Class B Shares of Turbotak (voting separately as two classes) for the
purpose of considering and, if deemed advisable, approving a plan of arrangement
involving Turbotak and Acquisition substantially in the form attached as Exhibit
2.1 (the "Arrangement" or "Plan of Arrangement"), the principal terms of which
include:
2.1.1. the designation and authorization of a Class B Exchangeable
Stock of Acquisition (the "Exchangeable Shares") that will have the rights,
privileges and restrictions, and be subject to the conditions, set forth in
Appendix A of the Plan of Arrangement;
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2.1.2. an exchange of shares whereby each holder of outstanding
Common Shares and Class B Shares of Turbotak shall receive a number of
Exchangeable Shares equal to the product obtained by multiplying 8,200,000 by a
fraction, the numerator of which is the number of Turbotak Common Shares or
Class B Shares, as the case may be, owned by such holder at the Closing and the
denominator of which is the total number of outstanding Turbotak Common Shares
and Class B Shares at Closing (the "Total Turbotak Outstanding Shares"), each
Exchangeable Shares to be thereafter exchangeable for Sonic Common Shares on a
one-for-one basis (subject to certain adjustments pursuant to the Plan of
Arrangement), at the option of the holder, during the periods, at the times and
subject to the conditions set forth in Article 2 of the Plan of Arrangement;
2.1.3. Acquisition shall change its name to TurboSonic Canada, Inc.
The foregoing is only a summary of the Plan of Arrangement. The terms,
conditions and procedures for accomplishing the exchange of shares are set forth
in the Plan of Arrangement and the Appendices thereto and the foregoing is
qualified by reference thereto.
If approval of the Plan of Arrangement by the shareholders of Turbotak is
obtained, Turbotak shall promptly take the necessary steps to submit the
Arrangement to the Court and apply for a final order approving the Arrangement
(the "Final Order").
2.2 Voting and Exchange Trust Agreement. Prior to the Closing, Sonic,
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Acquisition and The Trust Company of Bank of Montreal or a bank ortrust company
to be selected by Turbotak (the "Trustee"), shall execute and deliver a Voting
and Exchange Trust Agreement in substantially the form set forth has Exhibit 2.2
hereto, with such changes and additions thereto as may be reasonably requested
by the Trustee (as so executed, the "Voting Trust Agreement"). Sonic shall
deposit with the Trustee one share of a newly created class of Sonic preferred
stock (the "Voting Share") to be held in accordance with the Voting Trust
Agreement having such voting rights, privileges and preferences as may be
required to secure the voting rights relating to the Sonic Common Shares granted
for the benefit of the holders of the Exchangeable Shares, as if the Sonic
Common Shares issuable on exchange of the Exchangeable Shares had been issued.
2.3 Support Agreement. Prior to the Closing, Sonic and Acquisition shall
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execute and deliver the Support Agreement (the "Support Agreement") in
substantially the form set forth as Exhibit 2.3.
2.4 Closing, Closing Date and Effective Time. The execution and delivery
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of the documents required to effectuate the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Ravin, Sarasohn,
Cook, Baumgarten, Xxxxx & Xxxxx, P.C., 000 Xxxxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx
Xxxxxx 00000, or at such other place
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and at such time as the parties hereto may agree; provided, however, such
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Closing shall take place no later than the fifth business day after satisfaction
or waiver of the last to be fulfilled of the conditions set forth in ARTICLE 6
that by their terms are not to occur at the Closing (the "Closing Date"). The
Arrangement shall become effective as provided for in the Plan of Arrangement
(the "Effective Time").
2.5 Contemporaneous Transactions. The parties hereby agree that each of
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the transactions contemplated by this Agreement that is in fact consummated
shall, to the extent permitted by applicable law and not otherwise provided for
herein or in the Plan of Arrangement, be deemed consummated substantially
contemporaneously with any other transaction that is in fact consummated
pursuant to this Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF TURBOTAK
In order to induce Sonic and Acquisition to enter into this Agreement,
Turbotak hereby represents and warrants as follows:
3.1 Due Organization, Authorization and Good Standing of Turbotak.
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Turbotak is a corporation duly organized, validly existing and in good standing
under the OBCA. Turbotak has the requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement and, upon
receipt of any approvals required by the Order, to consummate all transactions
contemplated hereby. The execution, delivery and performance by Turbotak of
this Agreement, and the consummation by Turbotak of the transactions
contemplated hereby, have been duly and validly authorized and approved by all
necessary corporate action in respect thereof on the part of Turbotak, subject
only to any approvals required by the Order. This Agreement constitutes the
valid and binding obligation of Turbotak, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, moratorium, reorganization and similar
laws of general applicability affecting the rights and remedies of creditors and
to general principles of equity, regardless of whether enforcement is sought in
proceeding in equity or at law. Turbotak has full corporate power and authority
to carry on its business as now conducted and to own or lease and to operate its
properties an assets where such properties and assets are now owned, leased or
operated by it and where such business is now conducted by it. Turbotak is duly
qualified to do business and is in good standing as a foreign corporation and
licensed or qualified to transact business in the jurisdictions where such
qualification is required by reason of the nature of the business conducted by
it or the properties or assets owned, operated or leased by it. True, complete
and correct copies of the charter, By-laws and other analogous organizational
documents (the "Charter Documents") of Turbotak as in effect on the date hereof
have heretofore been delivered to Sonic.
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3.2 No Violation or Approval. The execution, delivery and performance by
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Turbotak of this Agreement and the consummation of the transactions contemplated
hereby will not result in a breach or violation of, or a default under, or the
acceleration of any payment obligation pursuant to, any law, rule or regulation
applicable to Turbotak, its Charter Documents, any material agreement or
instrument to which it is a party or by which any its properties are bound, or
any order, judgment or decree of any court or any governmental agency or body
having jurisdiction over it or its properties. No consent, approval, order or
authorization of, declarations or filing with, any governmental authority or
entity or other party is required to be obtained or made by Turbotak in
connection with the execution and delivery of this Agreement or the consummation
by Turbotak of the transactions contemplated hereby other than (i) any approvals
required by the Interim Order or Final Order, (ii) filings with the Director
under the OBCA and any filings or approvals required by provincial securities
commissions, and (iii) such failures to obtain or make such other consents,
approvals, orders, authorizations, declarations or filings as in the aggregate
would not have a Turbotak Material Adverse Effect.
3.3 Capital Stock. The authorized capital stock of Turbotak consists of
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an unlimited number of Turbotak Common Shares and Class B Shares. As of July 1,
1997, there were ________ Turbotak Common Shares outstanding and _______
Turbotak Class B Shares, and 25,000 Turbotak Common Shares reserved for issuance
upon the exercise of the CVF Option. No Turbotak Common Shares or Class B
Shares are held as treasury stock. All of the outstanding Turbotak Common
Shares and Class B Shares have been, and any Turbotak Common Shares issued upon
exercise of the CVF Option will be, validly issued, fully paid and nonassessable
and free of preemptive rights. Except for the CVF Option, Turbotak has no
outstanding options, warrants, rights, other agreements or commitments
obligating it to issue or sell shares to its capital stock or any securities or
obligations convertible into, or exchangeable for, any shares of its capital
stock. Turbotak has no outstanding bonds, debentures, notes or other
indebtedness the holders of which have the right to vote (or that are
convertible or exercisable into securities having the right to vote) with
holders of Turbotak Common Shares on any matter. None of the outstanding shares
of capital stock of Turbotak have been issued in violation of Canadian
provincial securities laws, the Securities Act or the rules and regulations
promulgated thereunder or the securities or blue sky laws of any state or other
jurisdiction, which violations would have in the aggregate a Turbotak Material
Adverse Effect.
3.4 Litigation. There are no actions, claims, suits, investi gations or
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proceedings pending or to Turbotak's knowledge threatened against Turbotak that
question the validity of this Agreement or any action taken or to be taken
pursuant to or in connection with the provisions of this Agreement, nor to the
knowledge of Turbotak is there any basis for any such action, claim, suit,
proceeding or investigation.
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SONIC AND ACQUISITION
In order to induce Turbotak to enter into this Agreement, each of Sonic and
Acquisition jointly and severally represents and warrants as follows:
4.1 Due Organization, Authorization and Good Standing of Sonic and
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Acquisition. Sonic is a corporation duly organized, validly existing and in
-----------
good standing under the laws of the State of Delaware. Acquisition is a
corporation duly organized, validly existing and in good standing under the
OBCA. Each of Sonic and Acquisition has the requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and to consummate all transactions contemplated hereby. The execution, delivery
and performance of this Agreement by each of them, and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by all necessary corporate action in respect thereof on the part of
each of Sonic and Acquisition. This Agreement constitutes the valid and binding
obligation of each of Sonic and Acquisition, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, moratorium, reorganization and similar
laws of general applicability affecting the rights and remedies of creditors and
to general principles of equity, regardless of whether enforcement is sought in
proceedings in equity or at law. Each of Sonic and Acquisition has full
corporate or partnership power and authority to carry on its business as now
conducted and to own or lease and to operate its properties and assets where
such properties and assets are now owned, leased or operated by it and where
such business is now conducted by it. Sonic is duly qualified to do business
and in good standing as a foreign corporation and licensed or qualified to
transact business in each jurisdiction in which the nature of the business
conducted by it or the properties or assets owned, operated or leased by it
requires it to be so licensed or qualified, other than such failures to be so
licensed or qualified that, in the aggregate, would not have a Sonic Material
Adverse Effect. True, complete and correct copies of the Charter Documents of
Sonic and Acquisition as in effect on the date hereof have heretofore been
delivered to Turbotak.
4.2 No Violation or Approval. The execution, delivery and performance by
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Sonic and Acquisition of this Agreement and the consummation of the transactions
contemplated hereby will not result in a breach or violation of, or a default
under, any law, rule or regulation, order, judgment or decree applicable to
Sonic or Acquisition or any material agreement or instrument to which any of
them is a party or by which any of them or any of their respective properties
are bound, or any order, judgment or decree of any court or any governmental
agency or body having jurisdiction over any of them or their properties or under
their Charter documents other than any breach, violation or default that would
not have a Sonic Material Adverse Effect. No consent, approval, order or
authorization of, or declaration or filing with, any governmental authority or
entity or
7
other party is required to be made or obtained by Sonic or Acquisition in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby other than (i) any approvals required by
the Interim Order or Final Order, (ii) the Bankruptcy Order, (iii) filings with
and approvals required by provincial securities commissions, and (iv) such
failures to obtain or make consents, approvals, orders, authorizations,
declarations or filings as in the aggregate would not have a Sonic Material
Adverse Effect.
4.3 Capital Stock. The authorization capital stock of Sonic consists of
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(i) 30,000,000 shares of Sonic Common Shares, $.10 par value, of which, as of
July 1, 1997, approximately 9,847,374 shares are outstanding. Upon issuance of
the Sonic Common Shares in exchange for the Exchangeable Shares as provided in
the Plan of Arrangement, such shares shall be validly issued, fully paid and
nonassessable, free or preemptive rights and free of all Liens other than such
as arise under applicable securities laws. No class of capital stock of Sonic
is entitled to preemptive rights. As of the date hereof, there are no
outstanding options, warrants, rights or other agreements or commitments
obligating Sonic to issue or sell shares of its capital stock or any securities
or obligations convertible into or exchangeable for any shares of its capital
stock, except the Sonic Common Shares to be issued in exchange for the
Exchangeable Shares and as otherwise required under the Plan.
The authorized capital stock of Acquisition consists of 100 shares of
Common Shares (the "Class A Shares") and at the Effective Time such number of
shares of Class B Exchangeable Shares (the "Exchangeable Shares") as shall be
necessary to effect the Plan of Arrangement.
All of the outstanding Class A Shares have been, and any Exchangeable
Shares issued pursuant to the Plan of Arrangement will be, validly issued, fully
paid and nonassessable, and free of preemptive rights. The Exchangeable Shares
to be issued pursuant to the Plan of Arrangement will be issued in full
compliance with all applicable Canadian provincial securities laws and with the
Securities Act and the rules and regulations promulgated thereunder and all
other relevant securities or blue sky laws of any state. Acquisition does not
have any outstanding options, warrants, rights, other agreements or commitments
obligating Acquisition to issue or sell shares of its capital stock or any
securities or obligations convertible into, or exchangeable for, any shares of
its capital stock. None of the outstanding shares of capital stock of
Acquisition was issued in violation of any applicable Canadian provincial
securities laws, the Securities Act or the rules and regulations promulgated
thereunder or the securities or blue sky laws of any state which violation would
have a Sonic Material Adverse Effect.
4.4 Litigation. There are no actions, claims, suits, investigations or
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proceedings pending or to Sonic's knowledge
8
threatened against Sonic that question the validity of this Agreement or any
action taken or to be taken pursuant to or in connection with the provisions of
this Agreement, nor to the knowledge of Sonic is there any basis for any such
action, claim, suit, proceeding or investigation.
ARTICLE 5
CERTAIN COVENANTS
5.1. Preparation of Proxy Statement and No Action Request; Other Filings
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and Submissions. Sonic, Acquisition and Turbotak shall cooperate in (i) the
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preparation of any Proxy Circular, Information Circular, applications for orders
and any other documents reasonably deemed by Sonic or Turbotak to be necessary
to discharge their respective obligations under United States and Canadian
securities laws in connection with the Arrangement and the other transactions
contemplated hereby, (ii) the taking of all such action as may be required under
any applicable provincial laws in connection with the issuance of the
Exchangeable Shares and the Sonic Common Shares in the Arrangement; provided,
however, that with respect to Canadian provincial qualifications none of Sonic,
Acquisition or Turbotak shall be required to register or qualify as a foreign
corporation or to take any action that would subject it to service of process in
any jurisdiction where any such entity is not now so subject, except as to
matters and transactions arising solely from the offer and sale of the
Exchangeable Shares and the Sonic Common Shares, and (iii) the taking of all
such action as may be required under the OBCA in connection with the
transactions contemplated by this Agreement and the Plan of Arrangement.
5.2. Shareholders' Meeting. Turbotak shall duly call, give notice of,
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convene and hold a meeting of its Common and Class B shareholders as promptly as
practicable for the purpose of voting upon the Arrangement (the "Shareholder
Meeting"). Turbotak shall, through its Board of Directors, recommend to its
shareholders approval of the Arrangement and shall use all reasonable efforts to
hold such meeting as soon as practicable after the date hereof ("Shareholder
Meeting Date"), and shall use all reasonable efforts to secure the approval of
each class of its shareholders and the Court of the Arrangement.
5.3. Public Announcements. Neither Sonic nor Turbotak shall (and each
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party shall use all commercially reasonable efforts to cause its affiliates,
directors, officers, employees, agents and representatives not to), issue any
press release, make any public announcement or public filing or furnish any
written statement to its employees or shareholders generally concerning the
transactions contemplated by this Agreement without the consent of the other
party (which consent shall not be unreasonably withheld), except to the extent
required by the Plan, filings with the Court, Bankruptcy Court or provincial
securities commission, applicable law, rule or regulation or the applicable
requirements of the National Association of Securities Dealers, Inc. with
respect to the issuers whose securities are quoted
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on Nasdaq (and in any such case such party shall, to the extent consistent with
timely compliance with such requirement, consult with the other party prior to
making the required release, announcement, filing or statement).
5.4. Notification of Certain Matters. Between the date hereof and the
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Effective Time, each party shall give prompt notice in writing to the other
parties of: (1) any information that indicates that any of its representations
or warranties contained herein was not true and correct as of the date hereof or
will not be true and correct at and as of the Effective Time with the same force
and effect as if made at and as of the Effective Time (except for changes
permitted or contem plated by this Agreement); (ii) the occurrence of any event
that will result, or has a reasonable prospect of resulting, in the failure of
any condition specified in ARTICLE 6 hereof to be satisfied, and (iii) any
notice or other communication from any third party alleging the consent of such
third party is or may be required in connection with the transactions
contemplated by this Agreement or that such transactions otherwise may violate
the rights of or confer remedies upon such third party.
5.5. Other Limitations on Conduct of Business Prior to the
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Effective Time. Sonic hereby covenants and agrees with Turbotak that, prior to
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the Effective Time: (i) unless the prior written consent of Turbotak shall have
been obtained and except as otherwise contemplated herein, it shall operate its
business, only in the usual, regular and ordinary course of business consistent
with past practices; (ii) use its reasonable efforts to preserve intact its
business organization and assets and maintain their rights and franchises; (iii)
not authorize for issuance,issue or obligate itself to issue any shares of its
capital stock or any options, warrants or rights, or enter into any other
agreements or commitments obligating it to use or sell shares of its capital
stock or any securities or obligations convertible into, or exchangeable for,
any shares of its capital stock; and (iv) to take no action that would (a)
materially or adversely affect the ability of Sonic or Turbotak to obtain any
necessary approvals of any third parties or any governmental authorities
required for the transactions contemplated hereby or materially increase the
period of time necessary to obtain such approvals, or (b) materially or
adversely affect its ability to perform its covenants and agreements under this
Agreement.
5.6. Access to Information. Sonic shall, subject to applicable law, afford
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Turbotak and its accountants, counsel and other repre sentatives reasonable
access during the period prior to the Effective Time to (a) all of Sonic's
financial statement, properties, books, contracts, commitments and records, and
(b) all other information concerning the business, properties and personnel of
Sonic, as Turbotak may reasonably request.
5.7. Amendment of Sonic Certificate of Incorporation. At the Effective
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Time, Sonic will file an amendment to its certificate of
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incorporation changing its name to "TurboSonic Technologies, Inc." and creating
a class of preferred shares for purposes of issuing the Voting Share.
5.8. Further Assurances. Subject to the terms and conditions herein
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provided, and subject to its fiduciary obligations under law, each of the
parties agrees to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the Arrangement and the other transactions contemplated by this Agreement,
including without limitation the taking of all reasonable actions necessary to
satisfy each condition precedent set forth in ARTICLE 6, to comply promptly with
all legal requirements that may be imposed on any of them with respect to the
Arrangement or to procure any consent, approval, order or authorization of, or
any exemption by, any governmental entity, or other third party, required to be
obtained or made in connection with the Arrangement or the taking of any action
contemplated thereby or by this Agreement.
ARTICLE 6
CERTAIN COVENANTS
6.1. Conditions Precedent to Turbotak's Obligation to Effect the
---- -----------------------------------------------------------
Arrangement. The obligations of Turbotak to effect the Arrangement and other
-----------
transactions contemplated by this Agreement shall be subject to the
satisfaction, prior to or substantially contemporaneously with the Effective
Time, of the following conditions, compliance with which, or the occurrence of
which, may be waived in whole or in part by Turbotak in writing:
6.1.1. Representations; Covenants; Certificate. The representations
---------------------------------------
and warranties of Sonic contained in ARTICLE 4 hereof shall be true in all
material respects as of the date of this Agreement and as of the Effective
Date with the same effect as though made as of the Effective Time; Sonic
shall in all material respects have performed all obliga tions and complied
with all covenants required by this Agreement to be performed or complied
with by it to the Effective Time; and Sonic shall have delivered to
Turbotak a certificate, dated the Effective Date and signed by its
President or a Vice President, to each such effect.
6.2. Conditions Precedent to Obligations of Sonic. The obliga tions of
--------------------------------------------
Sonic to effect the Arrangement and the other transactions contemplated by this
Agreement shall be subject to the satisfaction, prior to or substantially
contemporaneously with the Effective Date, of the following conditions,
compliance with which, or the occurrence of which, may be waived in whole or in
part by Sonic in writing:
6.2.1. Representations; Covenants; Certificate. The representations
---------------------------------------
and warranties of Turbotak contained in
11
ARTICLE 3 hereof shall be true in all material respects as of the date of
this Agreement and as of the Effective Date with the same effect as though
made as of the Effective Time; Turbotak shall in all material respects have
performed all obligations and complied with all covenants required by this
Agreement to be performed or complied with by it to the Effective Time; and
Turbotak shall have delivered to Sonic a certificate, dated the Effective
Date and signed by its President or a Vice President, to each such effect.
6.3. Conditions Precedent to Obligations of Each Party. The obligations of
-------------------------------------------------
the parties to effect the Arrangement and the other transactions contemplated by
this Agreement shall be subject to the satisfaction, prior to or substantially
contemporaneously with the Effective Date, of the following additional
conditions, compliance with which, or the occurrence of which, may be waived in
whole or in part in a writing executed by each of Sonic and Turbotak:
6.3.1 Shareholder Approval. The holders of the requisite number, as
--------------------
specified by the Court in its Interim Order, of outstanding shares of
Turbotak's Common Shares and Class B Shares voting as separate classes
shall have duly approved the Plan of Arrangement and the transactions
contemplated thereby and hereby, all in accordance with the requirements of
the OBCA and such Interim Order.
6.3.2 Bankruptcy Court Approval. The Bankruptcy Order shall have
-------------------------
become final and non-appealable.
6.3.3 Canadian Securities Issues. Canadian provincial securities
--------------------------
regulators in those provinces of Canada considered necessary by Canadian
counsel to Turbotak shall have granted rulings or orders, satisfactory to
such counsel acting reasonably, so that the registration and prospectus
provisions of applicable Canadian securities laws will not be applicable to
any of the issuance of securities (included without limitation the Sonic
Common Shares issuable on exchange of any Exchangeable Shares) contemp
lated by the Arrangement and such securities subject to the terms and
conditions imposed by any such ruling or order, will be freely tradable by
holders resident in such provinces.
6.3.4 Injunctions. No temporary restraining order, preliminary or
-----------
permanent injunction or other order by any Canadian or United States
Federal or provincial or state court or governmental body prohibiting the
consummation of the transactions contemplated by this Agreement shall have
been issued and shall not have expired or been withdrawn or reversed and
there shall be no pendent or threatened litigation or other proceeding
seeking to prohibit or impose
12
any material limitations on the consummation of such transactions.
6.3.5. CVF Option. Canadian Venture Founders shall have exercised
----------
the option it holds to acquire 25,000 shares of Turbotak Common Shares.
ARTICLE 7
MISCELLANEOUS
7.1. Termination. Anything herein or elsewhere to the contrary
---- -----------
notwithstanding, this Agreement may be terminated and abandoned at any time
before the Effective Time, whether before or after adoption and approval of the
Arrangement by the shareholders of Turbotak as herein provided:
(a) By the mutual consent of Sonic and Turbotak;
(b) By either Sonic or Turbotak if (i) there has been a material
breach on the part of the other party of any repre sentation, warranty, covenant
or agreement contained herein that cannot be or has not been cured within ten
days after written notice of such breach to the breaching party or (ii)
Turbotak's shareholders or holder of the CVF Option fail to approve the Plan of
Arrangement, provided, however such failure is not due to Turbotak's breach of
-------- -------
its covenants contained in ARTICLE 5.
(c) By the Board of Directors of Turbotak, if the Effective Time shall
not have occurred by December 31, 1997 other than as a result of the failure of
Turbotak to satisfy its obligations.
(d) By the Board of Directors of Sonic, if the Effective Time shall
not have occurred by December 31, 1997 other than as a result of the failure of
Sonic to satisfy its obligations.
7.2. Amendments and Supplements. At any time before or after approval and
--------------------------
adoption of this Agreement and the Plan of Arrangement by the shareholders of
Turbotak and prior to the Effective Time, this Agreement and the Plan of
Arrangement may be amended or supplemented by a written instrument signed by
Turbotak, Sonic and Acquisition and approved by their respective Boards of
Directors, except that, after the shareholders of Turbotak shall have approved
the Plan of Arrangement, there shall be no amendment that (i) changes the
consideration to which the Turbotak Common Shares or Turbotak Class B Shares are
entitled to be converted upon consummation of the Arrangement as provided in the
Plan of Arrangement, (ii) otherwise would require the approval of the
shareholders of Turbotak in accordance with OBCA, or (iii) the approval of the
Bankruptcy Court or the Court.
13
7.3. Survival of Representations, Warranties and Agreements. The
------------------------------------------------------
respective representations, warranties and agreements of Turbotak, Sonic and
Acquisition contained in ARTICLES 3 and 4 hereof and their respective agreements
contained in ARTICLE 5 hereof shall expire with, and be terminated by, the
consummation of the Arrangement, and neither Sonic nor Turbotak shall have any
liability whatsoever with respect to such representations, warranties or
agreements after the Effective Time.
7.4. Expenses. All costs and expenses incurred in connection with this
--------
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such expenses; provided that Turbotak shall pay the fees and expenses
of Sonic's counsel in the preparation and negotiation of this Agreement, the
Plan of Arrangement and related documents and attendance at and preparation for
the Closing.
7.5. Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the domestic substantive laws of the province of Ontario without
giving effect to any choice or conflict laws rule or provision that would cause
the application of the domestic substantive laws of any other jurisdiction.
7.6. Notice. All notices and other communications required or permitted
------
hereunder shall be in writing (including any facsimile transmission or similar
writing), and shall be sent either by telecopy, hand delivery, or reputable
overnight courier, addressed as follows or to such other address or addresses of
which the respective party shall have notified the other party. Each such
notice or other communication shall be effective (i) if given by telecopy, when
such telecopy is transmitted and the appropriate answer back is received (ii) if
given by reputable overnight courier, one business day after being delivered to
such courier, or (iii) if given by any other means which received at the address
specified in this Section.
To Sonic or Acquisition:
Sonic Environmental Systems, Inc.
00 Xxxxxxx Xxxx
Xxxx 00-X
Xxxx Xxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxx, President
With a copy to:
Ravin, Sarasohn, Cook, Baumgarten, Xxxxx & Xxxxx
A Professional Corporation,
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, XX 00000
Telecopier: (000) 000-0000
Attention: Xxxx X. Press, Esq.
14
To Turbotak:
Turbotak Technologies, Inc.
000 Xxxxxxxx Xxxxx
Xxxxx X-00
Xxxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Telecopier: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Vice President
With a copy to:
Xxxxxxx, Xxxxxx
000 Xxxx Xxxxxx Xxxx
Xxxxx 0000
Xxxxxxx, Xxxxxx X0X 0X0
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx
7.7. Entire Agreement, Assignability, Etc. This Agreement (including the
------------------------------------
Schedules and Exhibits attached hereto) (i) constitutes the entire agreement,
and supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the Arrangement (ii) is
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder and (iii) shall not be assignable by operation of law or
otherwise.
7.8. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be deemed an original but all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their duly authorized officers and their respective corporate seals to
be affixed hereto, the day and year first above written.
SONIC ENVIRONMENTAL SYSTEMS, INC.
By:_____________________________
Name
Title:
SONIC CANADA, INC.
By:_____________________________
Name
Title:
15
TURBOTAK TECHNOLOGIES, INC.
By:_____________________________
Name
Title:
16
