AGREEMENT AND PLAN OF MERGER
Among
ACQUISITION HOLDINGS, INC.,
ACQUISITION CORP.
and
ATC GROUP SERVICES INC.
Dated as of November 26, 1997
TABLE OF CONTENTS
Page
ARTICLE I THE OFFER.........................................................
SECTION 1.01. The Offer...................................................
SECTION 1.02. Company Actions.............................................
ARTICLE II THE MERGER.......................................................
SECTION 2.01. The Merger...................................................
SECTION 2.02. Closing......................................................
SECTION 2.03. Effective Time...............................................
SECTION 2.04. Effects of the Merger........................................
SECTION 2.05. Certificate of Incorporation and By-laws.....................
SECTION 2.06. Directors....................................................
SECTION 2.07. Officers.....................................................
ARTICLE III EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES...............
SECTION 3.01. Effect on Capital Stock.....................................
SECTION 3.02. Exchange of Certificates....................................
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................
SECTION 4.01. Organization.................................................
SECTION 4.02. Subsidiaries.................................................
SECTION 4.03. Capitalization...............................................
SECTION 4.04. Authority....................................................
SECTION 4.05. Consents and Approvals; No Violations........................
SECTION 4.06. SEC Reports and Financial Statements.........................
SECTION 4.07. Absence of Certain Changes or Events.........................
SECTION 4.08. No Undisclosed Liabilities...................................
SECTION 4.09. Information Supplied.........................................
SECTION 4.10. Benefit Plans................................................
SECTION 4.11. Other Compensation Arrangements..............................
SECTION 4.12. Litigation...................................................
SECTION 4.13. Compliance with Applicable Law...............................
SECTION 4.14. Tax Matters..................................................
SECTION 4.15. State Takeover Statutes......................................
SECTION 4.16. Brokers; Fees and Expenses...................................
SECTION 4.17. Opinion of Financial Advisor.................................
SECTION 4.18. Intellectual Property........................................
SECTION 4.19. Labor Relations and Employment...............................
SECTION 4.20. Change of Control............................................
SECTION 4.21. Environmental Matters........................................
SECTION 4.22. Material Contracts...........................................
SECTION 4.23. Property.....................................................
SECTION 4.24. Insurance....................................................
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT
AND SUB.....................................
SECTION 5.01. Organization.................................................
SECTION 5.02. Authority....................................................
SECTION 5.03. Consents and Approvals; No Violations........................
SECTION 5.04. Information Supplied.........................................
SECTION 5.05. Interim Operations of Sub....................................
SECTION 5.06. Financing....................................................
SECTION 5.07. Brokers......................................................
ARTICLE VI COVENANTS...........................................................
SECTION 6.01. Conduct of Business of the Company...........................
SECTION 6.02. No Solicitation..............................................
SECTION 6.03. Other Actions................................................
SECTION 6.04. Notice of Certain Events.....................................
ARTICLE VII ADDITIONAL AGREEMENTS..............................................
SECTION 7.01. Stockholder Approval; Preparation of
Proxy Statement..................................
SECTION 7.02. Access to Information........................................
SECTION 7.03. Reasonable Efforts; Financing................................
SECTION 7.04. Options; Warrants............................................
SECTION 7.05. Directors....................................................
SECTION 7.06. Fees and Expenses............................................
SECTION 7.07. Indemnification; Insurance...................................
SECTION 7.08. Certain Litigation...........................................
SECTION 7.09. Solvency Opinion.............................................
ARTICLE VIII CONDITIONS........................................................
SECTION 8.01. Conditions to Each Party's Obligation To
Effect the Merger.....................
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER...................................
SECTION 9.01. Termination..................................................
SECTION 9.02. Effect of Termination........................................
SECTION 9.03. Amendment....................................................
SECTION 9.04. Extension; Waiver............................................
ARTICLE X MISCELLANEOUS........................................................
SECTION 10.01. Nonsurvival of Representations and
Warranties..................................................
SECTION 10.02. Notices
SECTION 10.03. Interpretation
SECTION 10.04. Counterparts
SECTION 10.05. Entire Agreement; Third Party ..............................
Beneficiaries...............................................
SECTION 10.06. Governing Law...............................................
SECTION 10.07. Publicity...................................................
SECTION 10.08. Assignment..................................................
SECTION 10.09. Enforcement.................................................
Exhibits
Exhibit A - Conditions of the Offer
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of November
26, 1997, is among ACQUISITION HOLDINGS, INC., a Delaware corporation
("Parent"), ACQUISITION CORP., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and ATC GROUP SERVICES INC., a Delaware
corporation (the "Company").
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have approved the acquisition of the Company by Parent on the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause Sub
to make a tender offer (as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all the outstanding shares of
Common Stock, par value $0.01 per share, of the Company (the "Company Common
Stock"; all the outstanding shares of Company Common Stock being hereinafter
collectively referred to as the "Shares" and each holder thereof, a "Company
Stockholder") at a purchase price of $12 per share (the "Offer Price"), net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in this Agreement; and the Board of Directors of the
Company has adopted resolutions approving the Offer and the Merger (as defined
below), recommending that the Company's stockholders accept the Offer and
approving the acquisition of Shares by Sub pursuant to the Offer;
WHEREAS the respective Boards of Directors of Parent, Sub and the Company
have each approved the merger of Sub into the Company (the "Merger"), upon the
terms and subject to the conditions set forth in this Agreement, whereby each
share of Company Common Stock, other than shares of Company Common Stock owned
directly or indirectly by Parent or the Company and Dissenting Shares (as
defined in Section 3.01(d)), will be converted into the right to receive the
price per share paid in the Offer; and
WHEREAS Parent, Sub and the Company desire to make certain representations,
warranties, covenants and agreements in connection with the Offer and the Merger
and also to prescribe various conditions to the Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
Parent, Sub and the Company hereby agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Subject to the provisions of this Agreement,
as promptly as practicable but in no event later than five business days after
the date of the public announcement by Parent and the Company of the execution
and delivery of this Agreement, Sub shall, and Parent shall cause Sub to,
commence the Offer. The obligation of Sub, and of Parent to cause Sub, to
commence the Offer and accept for payment, and pay for, any Shares tendered
pursuant to the Offer shall be subject to the conditions set forth in Exhibit A
(the "Offer Conditions") and to the terms and conditions of this Agreement;
provided, however, that paragraph (i) of the Offer Conditions shall apply only
to the obligation of Sub, and of Parent to cause Sub, to consummate the Offer.
Sub expressly reserves the right to modify the terms of the Offer, except that,
without the prior written consent of the Company, Sub shall not (i) reduce the
number of Shares subject to the Offer, (ii) reduce the Offer Price, (iii) add to
or modify (other than waive) the Offer Conditions, (iv) except as provided in
the next sentence, extend the Offer, (v) change the form of consideration
payable in the Offer, (vi) amend any other term of or add any new term to the
Offer in any manner materially adverse to the holders of the Shares or (vii)
waive the Minimum Condition (as defined in Exhibit A). Notwithstanding the
foregoing, Sub may, without the consent of the Company, (A) extend the Offer, if
at the scheduled or extended expiration date of the Offer any of the Offer
Conditions shall not be satisfied or waived, until such time as such conditions
are satisfied or waived, (B) extend the Offer for any period required by any
rule, regulation, interpretation or position of the Securities and Exchange
Commission (the "SEC") or the staff thereof applicable to the Offer, (C) extend
the Offer from time to time until two business days after the expiration of the
waiting period under the HSR Act (as defined in Section 4.05 below) and (D)
extend the Offer for a period not to exceed 15 business days, notwithstanding
that all conditions to the Offer are satisfied as of such expiration date of the
Offer, if, immediately prior to such expiration date (as it may be extended),
the Shares tendered and not withdrawn pursuant to the Offer equal less than 90%
of the outstanding Shares (on a fully diluted basis). In addition, Sub shall be
obligated to extend the Offer, if at the scheduled expiration date of the Offer
any of the Offer Conditions capable of satisfaction shall not have been
satisfied or waived, until the satisfaction or waiver thereof; provided,
however, that there shall be no such obligation to extend the Offer beyond the
60th business day after the commencement of the Offer. Subject to the terms and
conditions of the Offer and this Agreement, Sub shall, and Parent shall cause
Sub to, accept for payment, and pay for, all Shares validly tendered and not
withdrawn pursuant to the Offer that Sub becomes obligated to accept for
payment, and pay for, pursuant to the Offer promptly after the expiration of the
Offer; provided, however, that in no event shall the Offer expire prior to
January 21, 1998.
(b) Parent and Sub shall file with the SEC a Tender Offer Statement on
Schedule 14D-1 (the "Schedule 14D-1") with respect to the Offer acceptable in
form and substance to the Company and within the time period set forth in
subsection (a) above, which shall contain an offer to purchase and a related
letter of transmittal (the "Letter of Transmittal") and summary advertisement
(such Schedule 14D-1 and the documents included therein pursuant to which the
Offer will be made, together with any supplements or amendments thereto, the
"Offer Documents"). The Offer Documents shall be consistent with this Agreement,
shall add no conditions to the consummation of the Offer not set forth in
Exhibit A and shall add no provisions to the Offer materially adverse to the
Company Stockholders. Parent and Sub agree that the Offer Documents shall comply
as to form in all material respects with the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and the rules and regulations promulgated
thereunder and the Offer Documents, on the date first published, sent or given
to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by Parent or Sub with respect to written
information supplied by the Company or any of its stockholders specifically for
inclusion or incorporation by reference in the Offer Documents. Parent, Sub and
the Company each agrees promptly to correct any information provided by it for
use in the Offer Documents if and to the extent that such information shall have
become false or misleading in any material respect, and Parent and Sub further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected to
be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable securities laws. The Company and its counsel shall be given
reasonable opportunity to review and comment upon the Offer Documents prior to
their filing with the SEC or dissemination to the stockholders of the Company.
Parent and Sub agree to provide the Company and its counsel any comments Parent,
Sub or their counsel may receive from the SEC or its staff with respect to the
Offer Documents promptly after the receipt of such comments. Parent and Sub
shall also provide the Company and its counsel with copies of all written
responses filed by Parent or Sub with the SEC and a reasonable opportunity to
review and comment upon such responses prior to filing with the SEC.
(c) Parent shall provide or cause to be provided to Sub on a timely basis
the funds necessary to accept for payment, and pay for, all Shares that Sub
becomes obligated to accept for payment, and pay for, pursuant to the Offer.
(d) The Company agrees that neither the Offer nor purchases of Shares
thereunder breach the terms of the Confidentiality Agreement (as defined in
Section 7.02 below).
SECTION 1.02. Company Actions. (a) The Company hereby approves of and
consents to the Offer and represents that (i) the Board of Directors of the
Company (the "Board"), at a meeting duly called and held, upon recommendation of
a duly constituted special committee (the "Special Committee") of independent
directors, duly adopted resolutions approving this Agreement, the Offer and the
Merger, determining that the terms of the Offer and the Merger are fair to,
adequate and in the best interests of, the Company's stockholders and
recommending that the Company's stockholders accept the Offer, tender their
Shares pursuant to the Offer and approve and adopt this Agreement, and (ii)
Xxxxxx Brothers Inc. (the "Financial Advisor") has delivered to the Board its
opinion (the "Fairness Opinion") to the effect that, as of the date thereof and
based upon and subject to the matters set forth in such Fairness Opinion, the
consideration to be received by the Company Stockholders in the Offer and the
Merger is fair to the Company Stockholders from a financial point of view. The
Company represents that such approval constitutes approval of the Offer, this
Agreement and the transactions contemplated hereby, including the Merger, for
purposes of Section 203 of the Delaware General Corporation Law, as amended (the
"DGCL"), such that Section 203 of the DGCL will not apply to the transactions
contemplated by this Agreement.
(b) As promptly as practicable after the commencement of the Offer, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the Offer (such Schedule 14D-9, as amended from
time to time, the "Schedule 14D-9") containing the recommendation described in
paragraph (a) and shall mail the Schedule 14D-9 to the stockholders of the
Company. The Company will use its reasonable best efforts to cause the Schedule
14D-9 to be filed on the same date as Sub's Tender Offer Statement on Schedule
14D-1 is filed and mailed together with the Offer Documents; provided that in
any event the Schedule 14D-9 shall be filed and mailed no later than 10 business
days following the commencement of the Offer. The Schedule 14D-9 shall comply as
to form in all material respects with the requirements of the Exchange Act and
the rules and regulations promulgated thereunder and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, except that no representation or warranty is made by
the Company with respect to information supplied by Parent or Sub specifically
for inclusion in the Schedule 14D-9. Each of the Company, Parent and Sub agrees
promptly to correct any information provided by it for use in the Schedule 14D-9
if and to the extent that such information shall have become false or misleading
in any material respect, and the Company further agrees to take all steps
necessary to amend or supplement the Schedule 14D-9 and to cause the Schedule
14D-9 as so amended or supplemented to be filed with the SEC and disseminated to
the Company's stockholders, in each case as and to the extent required by
applicable Federal securities laws. Parent and its counsel shall be given
reasonable opportunity to review and comment upon the Schedule 14D-9 prior to
its filing with the SEC or dissemination to stockholders of the Company. The
Company agrees to provide Parent and its counsel any comments the Company or its
counsel may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt of such comments.
(c) In connection with the Offer and the Merger, the Company shall furnish
or cause its transfer agent to furnish Sub as promptly as practicable with
mailing labels containing the names and addresses of the record holders of
Shares as of a recent date and of those persons becoming record holders
subsequent to such date, together with copies of all lists of stockholders,
security position listings and computer files and all other information in the
Company's possession or control regarding the beneficial owners of Shares, and
shall furnish to Sub such information and assistance (including updated lists of
stockholders, security position listings and computer files) as Parent may
reasonably request in communicating the Offer to the Company's stockholders.
Subject to the requirements of applicable law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Sub and their agents shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger and,
if this Agreement shall be terminated, will, upon request, deliver, and will use
their best efforts to cause their agents to deliver, to the Company all copies
of such information then in their possession or control.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the DGCL, Sub shall be merged
with and into the Company at the Effective Time (as defined in Section 2.03).
Following the Effective Time, the separate corporate existence of Sub shall
cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation") and shall succeed to and assume all the rights and
obligations of Sub in accordance with the DGCL. At the election of Parent, any
direct or indirect wholly owned subsidiary (as defined in Section 10.03) of
Parent may be substituted for Sub as a constituent corporation in the Merger. In
such event, the parties agree to execute an appropriate amendment to this
Agreement in order to reflect the foregoing.
SECTION 2.02. Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. (New York City time) on a date to be specified by Parent or
Sub, which shall be no later than the second business day after satisfaction or
waiver of the conditions set forth in Article VIII (the "Closing Date"), at the
offices of Xxxxxxxxxx & Xxxxx LLP, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, unless another date, time or place is agreed to in writing by the parties
hereto.
SECTION 2.03. Effective Time. Subject to the provisions of this Agreement,
as soon as practicable on or after the Closing Date, the parties shall file with
the Secretary of State of Delaware a certificate of merger or other appropriate
documents as provided in Section 251 of the DGCL (in any such case, the
"Certificate of Merger") executed in accordance with the relevant provisions of
the DGCL and shall make all other filings or recordings required under the DGCL.
The Merger shall become effective at such time as the Certificate of Merger is
duly filed with the Delaware Secretary of State, or at such other time as Sub
and the Company shall agree should be specified in the Certificate of Merger
(the time the Merger becomes effective being hereinafter referred to as the
"Effective Time").
SECTION 2.04. Effects of the Merger. The Merger shall have the effects set
forth in Section 259 of the DGCL.
SECTION 2.05. Certificate of Incorporation and By-laws.
(a) The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended as of the Effective
Time so that ARTICLE FOURTH of such certificate of incorporation reads in its
entirety as follows: "The total number of shares of all classes of stock which
the corporation shall have authority to issue is 10,000 shares of Common Stock,
par value $.01 per share" and, as so amended, such certificate of incorporation
shall be the certificate of incorporation of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
(b) The By-Laws of the Company as in effect immediately prior to the
Effective Time shall be the By-Laws of the Surviving Corporation, until
thereafter changed or amended as provided therein or by applicable law.
SECTION 2.06. Directors. The directors of Sub immediately prior to the
Effective Time shall be the directors of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be, and the Company shall procure,
prior to and as a condition to the Closing, the resignation of each of its
directors effective as of the Closing.
SECTION 2.07. Officers. The officers of the Company immediately prior to
the Effective Time shall be the officers of the Surviving Corporation, until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 3.01. Effect on Capital Stock. As of the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any Shares or
any shares of capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of capital
stock of Sub shall be converted into and become one fully paid and nonassessable
share of Common Stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent Owned Stock. Each share of
Company Common Stock that is owned by the Company or by any subsidiary of the
Company and each Share that is owned by Parent, Sub or any other subsidiary of
Parent shall automatically be canceled and retired and shall cease to exist, and
no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section 3.01(d), each
Share issued and outstanding (other than Shares to be canceled in accordance
with Section 3.01(b)) shall be converted into the right to receive from the
Surviving Corporation in cash, without interest, the price paid in the Offer
(the "Merger Consideration"). As of the Effective Time, all such Shares shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each holder of a certificate representing any such Shares
shall cease to have any rights with respect thereto, except the right to receive
the Merger Consideration, without interest.
(d) Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding Shares held by a person (a
"Dissenting Stockholder") who complies with all the provisions of Delaware law
concerning the right of holders of Company Common Stock to dissent from the
Merger and require appraisal of their Shares ("Dissenting Shares") shall not be
converted as described in Section 3.01(c) but shall become the right to receive
such consideration as may be determined to be due to such Dissenting Stockholder
pursuant to the laws of the State of Delaware. If, after the Effective Time,
such Dissenting Stockholder withdraws his demand for appraisal or fails to
perfect or otherwise loses his right of appraisal, in any case pursuant to the
DGCL, his Shares shall be deemed to be converted as of the Effective Time into
the right to receive the Merger Consideration. The Company shall give Parent (i)
prompt notice of any demands for appraisal of Shares received by the Company and
(ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not, without the
prior written consent of Parent, make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands.
(e) Withholding Tax. Parent shall be entitled to deduct and withhold from
the consideration otherwise payable pursuant to this Agreement to any holder of
shares of Common Stock outstanding immediately prior to the Effective Time such
amounts as may be required to be deducted and withheld with respect to the
making of such payment under the Internal Revenue Code of 1986, as amended (the
"Code"), or any provision of state, local or foreign tax law. To the extent that
amounts are so withheld, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the holder of the shares of Common
Stock outstanding immediately prior to the Effective Time in respect of which
such deduction and withholding was made.
SECTION 3.02. Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
federally insured bank or trust company with assets of not less than
$1,000,000,000 satisfactory to the Company to act as paying agent in the Merger
(the "Paying Agent"), and, from time to time on, prior to or after the Effective
Time, Parent shall make available, or cause the Surviving Corporation to make
available, to the Paying Agent funds in amounts and at the times necessary for
the payment of the Merger Consideration upon surrender of certificates
representing Shares as part of the Merger pursuant to Section 3.01 (it being
understood that any and all interest earned on funds made available to the
Paying Agent pursuant to this Agreement shall be turned over to Parent).
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Paying Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented Shares (the "Certificates"), (i) a letter of transmittal in a form
mutually agreed upon by the Parent and Surviving Corporation (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Paying
Agent and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Paying Agent, Parent or the Surviving Corporation shall pay or cause to be paid
to the holder of such Certificate in exchange therefor the amount of cash into
which the Shares theretofore represented by such Certificate shall have been
converted pursuant to Section 3.01, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of Shares that is
not registered in the transfer records of the Company, payment may be made to a
person other than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise be in
proper form for transfer and the person requesting such payment shall pay any
transfer or other taxes required by reason of the payment to a person other than
the registered holder of such Certificate or establish to the satisfaction of
the Surviving Corporation that such tax has been paid or is not applicable.
Until surrendered as contemplated by this Section 3.02, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the amount of cash, without interest, into which the
Shares theretofore represented by such Certificate shall have been converted
pursuant to Section 3.01. No interest will be paid or will accrue on the cash
payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in Company Common Stock. All cash paid upon
the surrender of Certificates in accordance with the terms of this Article III
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the Shares theretofore represented by such Certificates. At the Effective
Time, the stock transfer books of the Company shall be closed, and there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares that were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation or the Paying Agent for any reason, they shall be
canceled and exchanged as provided in this Article III.
(d) Termination of Fund; No Liability. At any time following six months
after the Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any funds (including any interest received
with respect thereto) which had been made available to the Paying Agent and
which have not been disbursed to holders of Certificates, and thereafter such
holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors
thereof with respect to the Merger Consideration payable upon due surrender of
their Certificates, without any interest thereon. Notwithstanding the foregoing,
neither the Surviving Corporation nor the Paying Agent shall be liable to any
holder of a Certificate for Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the schedules delivered to Parent in connection with
the execution of this Agreement setting forth exceptions to the Company's
representations and warranties set forth herein (the "Company Disclosure
Schedules"), the Company represents and warrants to Parent and Sub as set forth
below. The Company Disclosure Schedules will be arranged in sections
corresponding to sections of this Agreement to be modified by such disclosure
schedule. As used in this Agreement, "knowledge" means with respect to matters
relating to the Company, actual knowledge of any executive officer of the
Company or any individual in an equivalent position of the Company, or, in the
reasonable exercise of duty in the ordinary course of business of any such
officer, reason to know.
SECTION 4.01. Organization. The Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not have a material adverse effect (as defined in Section
10.03) on the Company. The Company and each of its subsidiaries is duly
qualified or licensed to do business and in good standing in each jurisdiction
in which the property owned, leased or operated by it or the nature of the
business conducted by it makes such qualification or licensing necessary, except
in such jurisdictions where the failure to be so duly qualified or licensed and
in good standing would not have a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the Merger. The
Company has made available to Parent complete and correct copies of its
Certificate of Incorporation and By-laws and the certificates of incorporation
and By-Laws (or similar organizational documents) of its subsidiaries.
SECTION 4.02. Subsidiaries. The subsidiaries of the Company are as set
forth on Schedule 4.02. All the outstanding shares of capital stock of each such
subsidiary, other than director qualifying shares of foreign subsidiaries, are
owned by the Company, by another wholly owned subsidiary of the Company or by
the Company and another wholly owned subsidiary of the Company, free and clear
of all pledges, claims, liens, charges, encumbrances and security interests of
any kind or nature whatsoever (collectively, "Liens"), except for immaterial
Liens on outstanding shares of capital stock of foreign subsidiaries of the
Company, and are duly authorized, validly issued, fully paid and nonassessable.
Except for the capital stock of its subsidiaries, the Company does not own,
directly or indirectly, any capital stock or other ownership interest in any
corporation, partnership, joint venture or other entity.
SECTION 4.03. Capitalization. The authorized capital stock of the Company
consists of 20,000,000 shares of Company Common Stock. At the close of business
on November 12, 1997, (i) 7,930,107 shares of Company Common Stock were issued
and outstanding, (ii) no shares of Company Common Stock were held by the Company
in its treasury, (iii) except as set forth on Schedule 4.03, 750,070 shares of
Company Common Stock were reserved for issuance upon exercise of outstanding
Options (as defined in Section 7.04) and (iv) 1,090,407 shares of Company Common
Stock were reserved for issuance upon the exercise of certain outstanding
warrants. Except as set forth above and except for Shares issued upon the
exercise of Options or warrants, as of the date of this Agreement, no shares of
capital stock or other voting securities of the Company were issued, reserved
for issuance or outstanding. All outstanding shares of capital stock of the
Company are, and all shares which may be issued will be, when issued, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote (or convertible into, or exchangeable
for, securities having the right to vote) on any matters on which stockholders
of the Company may vote. Except as set forth above, and except for obligations
to grant options, subject to the approval of the Board of Directors of the
Company, as of the date of this Agreement, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its subsidiaries is a party or by
which any of them is bound obligating the Company or any of its subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its subsidiaries or obligating the Company or any of its subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. As of the date of this
Agreement, there are not any outstanding contractual obligations (i) of the
Company or any of its subsidiaries to repurchase, redeem or otherwise acquire
any shares of capital stock of the Company or (ii) of the Company to vote or to
dispose of any shares of the capital stock of any of its subsidiaries.
SECTION 4.04. Authority. The Company has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of the terms of this Agreement by the holders of a
majority of the Shares (the "Company Stockholder Approval")). The execution,
delivery and performance of this Agreement and the consummation by the Company
of the Merger and of the other transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated (in
each case, other than, with respect to the Merger, the Company Stockholder
Approval). This Agreement has been duly executed and delivered by the Company
and, assuming this Agreement constitutes a valid and binding obligation of
Parent and Sub, constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
SECTION 4.05. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act (including the filing with
the SEC of the Schedule 14D-9 and a proxy statement relating to any required
approval by the Company's stockholders of this Agreement (the "Proxy
Statement")), the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), Section 203 of the DGCL and the laws of other states in
which the Company is qualified to do or is doing business, state takeover laws
and foreign laws, neither the execution, delivery or performance of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or By-laws of the Company or of
the similar organizational documents of any of its subsidiaries, (ii) require
any filing with, or permit, authorization, consent or approval of, any Federal,
state or local government or any court, tribunal, administrative agency or
commission or other governmental or other regulatory authority or agency,
domestic, foreign or supranational (a "Governmental Entity") (except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings would not have a material adverse effect on the Company or prevent
or materially delay the consummation of the Offer and/or the Merger), (iii)
except as set forth on Schedule 4.05, result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which any of
them or any of their properties or assets may be bound; provided, however, that
certain contracts and agreements, the material ones of which have been made
available to Parent by the Company, (A) provide for their termination or require
consent upon a change of control of the Company or (B) contain provisions
restricting their assignment pursuant to a merger, or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to the Company,
any of its subsidiaries or any of their properties or assets, except in the case
of clauses (iii) or (iv) for violations, breaches or defaults that would not
have a material adverse effect on the Company or prevent or materially delay the
consummation of the Offer and/or the Merger.
SECTION 4.06. SEC Reports and Financial Statements. The Company has filed
with the SEC, and has heretofore made available to Parent true and complete
copies of, all forms, reports, schedules, statements and other documents
required to be filed by it since December 31, 1994, under the Exchange Act or
the Securities Act of 1933, as amended (the "Securities Act") (such forms,
reports, schedules, statements and other documents, including any financial
statements or schedules included therein, are referred to as the "Company SEC
Documents"). The Company SEC Documents, at the time filed, (a) did not contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (b) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as the case may be, and
the applicable rules and regulations of the SEC thereunder. Except to the extent
revised or superseded by a subsequently filed Company Filed SEC Document (as
defined in Section 4.07) (a copy of which has been made available to Parent
prior to the date hereof), the Company SEC Documents, considered as a whole as
of their date, do not contain an untrue statement of a material fact or omit to
state a material fact required to be stated or incorporated by reference therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that the foregoing does not cover future events resulting from public
announcement of the Offer and the Merger). The financial statements of the
Company included in the Company SEC Documents comply as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto or, in the case of the unaudited statements, as permitted by Forms 10-Q
and 8-K of the SEC) and fairly present (subject, in the case of the unaudited
statements, to normal, recurring audit adjustments) the consolidated financial
position of the Company and its consolidated subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended.
SECTION 4.07. Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "Company Filed SEC Documents"), and except as disclosed in the
Company's financial statements dated as of February 28, 1997 audited by Deloitte
& Touche LLP (the "Company Fiscal Year 1997 Financial Statements") (a copy of
which has been made available to Parent by the Company), and except as disclosed
on Schedule 4.07, since February 28, 1997, the Company and its subsidiaries have
conducted their respective businesses only in the ordinary course, and there has
not been any material adverse change (as defined in Section 10.03) with respect
to the Company. Except as disclosed in the Company Filed SEC Documents or the
Company Fiscal Year 1997 Financial Statements, and except as disclosed on
Schedule 4.07, since February 28, 1997, there has not been (i) any declaration,
setting aside or payment of any dividend or other distribution with respect to
its capital stock or any redemption, purchase or other acquisition of any of its
capital stock, (ii) any split, combination or reclassification of any of its
capital stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iii) (w) any granting by the Company or any of its subsidiaries
to any officer of the Company or any of its subsidiaries of any increase in
compensation, except in the ordinary course of business (including in connection
with promotions) consistent with past practice, (x) any granting by the Company
or any of its subsidiaries to any such officer of any increase in severance or
termination pay, except as part of a standard employment package to any person
promoted or hired (but not including the five most senior officers) (y) except
employment arrangements in the ordinary course of business consistent with past
practice with employees other than any executive officer of the Company, any
entry by the Company or any of its subsidiaries into any employment, severance
or termination agreement with any such employee or executive officer or (z) any
increase in or establishment of any bonus, insurance, deferred compensation,
pension, retirement, profit-sharing, stock option (including the granting of
stock options, stock appreciation rights, performance awards or restricted stock
awards or the amendment of any existing stock options, stock appreciation
rights, performance awards or restricted stock awards), stock purchase or other
employee benefit plan or agreement or arrangement, except in the ordinary course
of business consistent with past practice, (iv) any damage, destruction or loss,
whether or not covered by insurance, that has or reasonably could be expected to
have a material adverse effect on the Company, (v) any material payment to an
affiliate of the Company or any of its subsidiaries other than in the ordinary
course of business consistent with past practice, (vi) any revaluation by the
Company of any of its material assets, (vii) mortgage, lien, pledge,
encumbrance, charge, agreement, claim or restriction placed upon any of the
material properties or assets of the Company or any of its subsidiaries, (viii)
any material change in accounting methods, principles or practices by the
Company or (ix) (A) any licensing or other agreement with regard to the
acquisition or disposition of any material Intellectual Property Right (as
defined in Section 4.18) or rights thereto other than licenses or other
agreements in the ordinary course of business consistent with past practice or
(B) any amendment or consent with respect to any licensing agreement filed, or
required to be filed, by the Company with the SEC.
SECTION 4.08. No Undisclosed Liabilities. Except as set forth on Schedule
4.08 and except as and to the extent set forth in the Company Fiscal Year 1997
Financial Statements, as of February 28, 1997, and as disclosed in Company Filed
SEC Documents, neither the Company nor any of its subsidiaries had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, that would be required by generally accepted accounting principles to
be reflected on a consolidated balance sheet of the Company and its subsidiaries
(including the notes thereto). Since February 28, 1997, except as and to the
extent set forth in the Company Filed SEC Documents and Schedule 4.08, neither
the Company nor any of its subsidiaries has incurred any liabilities of any
nature, whether or not accrued, contingent or otherwise, that would have a
material adverse effect on the Company. The consolidated indebtedness on the
date hereof of the Company and its subsidiaries is as set forth on Schedule
4.08.
SECTION 4.09. Information Supplied. None of the written information
supplied or to be supplied by the Company specifically for inclusion or
incorporation by reference in (i) the Offer Documents, (ii) the Schedule 14D-9,
(iii) the information to be filed by the Company in connection with the Offer
pursuant to Rule 14f-1 promulgated under the Exchange Act (the "Information
Statement") or (iv) the Proxy Statement, will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
stockholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting (as defined in Section 7.01), contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Schedule 14D-9, the
Information Statement and the Proxy Statement will comply as to form in all
material respects with the requirements of the Exchange Act and the rules and
regulations thereunder, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Sub specifically for inclusion or
incorporation by reference therein.
SECTION 4.10. Benefit Plans. (a) Each "employee pension benefit plan" (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) (a "Pension Plan"), "employee welfare benefit plan" (as
defined in Section 3(1) of ERISA) (a "Welfare Plan") and each other plan,
pension or welfare arrangement or policy (written or oral) relating to stock
options, stock purchases, compensation, deferred compensation, bonuses,
severance, fringe benefits or other employee benefits, in each case maintained
or contributed to, or required to be maintained or contributed to, by the
Company or its subsidiaries for the benefit of any present or former employee,
officer or director (each of the foregoing, a "Benefit Plan") has been
administered in all material respects in accordance with its terms. The Company
and its subsidiaries and all the Benefit Plans are in compliance in all material
respects with the applicable provisions of ERISA, the Code, and all other
applicable laws.
(b) Schedule 4.10 attached hereto sets forth a complete list of each
Benefit Plan as well as each material employment, termination and severance
agreement, contract, binding arrangement and understanding (whether written or
oral) with employees of the Company and its subsidiaries.
(c) None of the Pension Plans is subject to Title IV of ERISA or Section
412 of the Code and none of the Company or any other person or entity that,
together with the Company, is treated as a single employer under Section 414
(b), (c), (m) or (o) of the Code (each, including the Company, a "Commonly
Controlled Entity"): (i) currently has an obligation to contribute to, or during
any time during the last six years had an obligation to contribute to, a Pension
Plan subject to Title IV of ERISA or Section 412 of the Code, or (ii) has
incurred any liability to the Pension Benefit Guaranty Corporation, which
liability has not been fully paid. All contributions and other payments required
to be made by the Company to any Pension Plan with respect to any period ending
before the Closing Date have been made or reserves adequate for such
contributions or other payments have been or will be set aside therefor and have
been or will be reflected in financial statements.
(d) Neither the Company nor any Commonly Controlled Entity is required to
contribute to any "multiemployer plan" (as defined in Section 4001(a)(3) of
ERISA) or has withdrawn from any multiemployer plan where such withdrawal has
resulted or would result in any "withdrawal liability" (within the meaning of
Section 4201 of ERISA) or "mass withdrawal liability" within the meaning of PBGC
Regulation 4219.2 that has not been fully paid.
(e) Each Benefit Plan (and its related trust) that is intended to be
qualified under Sections 401 and 501(a) of the Code has been determined by the
IRS to qualify under such sections and, to the knowledge of the Company, nothing
has occurred to cause the loss of such qualified status.
(f) Each Benefit Plan that is a Welfare Plan may be amended or terminated,
upon thirty (30) days notice, at any time after the Effective Time without
material liability to the Company or its subsidiaries.
(g) Except as set forth in Schedule 4.10, or as required under Section
4980B of the Code, the Company does not have any obligation to provide
post-retirement health benefits.
(h) The Company has heretofore made available to Parent correct and
complete copies of each of the following:
(1) All written, and descriptions of all binding oral, employment,
termination and severance agreements, contracts, arrangements and understandings
listed on Schedule 4.10;
(2) Each Benefit Plan and all amendments thereto; the trust instrument
and/or insurance contracts, if any, forming a part of such Benefit Plan and all
amendments thereto;
(3) The most recent IRS Form 5500 and all schedules thereto, if any;
(4) The most recent determination letter issued by the IRS regarding the
qualified status of each such Pension Plan;
(5) The most recent accountant's report, if any; and
(6) The most recent summary plan description, if any.
SECTION 4.11. Other Compensation Arrangements. Except as disclosed in the
Company Filed SEC Documents or on Schedule 4.11, or except as provided in this
Agreement, as of the date of this Agreement, neither the Company nor any of its
subsidiaries is a party to any oral or written (i) consulting agreement not
terminable on not more than 60 calendar days notice (except for third party
agreements for the development of, and assignment to, the Company of
Intellectual Property in the ordinary course of business) and involving the
payment of more than $100,000 per annum, (ii) agreement with any executive
officer or other key employee of the Company or any of its subsidiaries (x) the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving the Company of the nature
contemplated by this Agreement or (y) providing any term of employment or
compensation guarantee extending for a period longer than two years or the
payment of more than $100,000 per annum or (iii) agreement or plan, including
any stock option plan, stock appreciation right plan, restricted stock plan or
stock purchase plan, any of the benefits of which will be increased, or the
vesting of the benefits of which will be accelerated, by the occurrence of any
of the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement.
SECTION 4.12. Litigation. Except as set forth on Schedule 4.12, there is no
suit, claim, action, proceeding or investigation pending before any Governmental
Entity or, to the best knowledge of the Company, threatened against the Company
or any of its subsidiaries that could reasonably be expected to have a material
adverse effect on the Company. Neither the Company nor any of its subsidiaries
is subject to any outstanding order, writ, injunction or decree that could
reasonably be expected to have a material adverse effect on the Company.
SECTION 4.13. Compliance with Applicable Law. Except as set forth on
Schedule 4.13, the Company and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals of all Governmental Entities
necessary for the lawful conduct of their respective businesses (the "Company
Permits"), except for failures to hold such permits, licenses, variances,
exemptions, orders and approvals that would not have a material adverse effect
on the Company. Except as set forth on Schedule 4.13, the Company and its
subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply would not have a material adverse effect on the
Company. Except as disclosed in the Company Filed SEC Documents, and except as
set forth on Schedule 4.13, to the best knowledge of the Company, the businesses
of the Company and its subsidiaries are not being conducted in violation of any
law, ordinance or regulation of any Governmental Entity, except for possible
violations that would not have a material adverse effect on the Company or
prevent or materially delay the consummation of the Offer and/or the Merger.
Except as set forth on Schedule 4.13, as of the date of this Agreement, no
investigation or review by any Governmental Entity with respect to the Company
or any of its subsidiaries is pending or, to the best knowledge of the Company,
threatened, nor has any Governmental Entity indicated an intention to conduct
any such investigation or review, other than, in each case, those the outcome of
which would not be reasonably expected to have a material adverse effect on the
Company or prevent or materially delay the consummation of the Offer and/or the
Merger.
SECTION 4.14. Tax Matters. (a) Except as set forth on Schedule 4.14, the
Company and each of its subsidiaries (and any affiliated group of which the
Company or any of its subsidiaries is now or has ever been a member) has timely
filed all Federal income tax returns and all other material tax returns and
reports required to be filed by it. All such returns are complete and correct in
all material respects. Except as set forth on Schedule 4.14, each of the Company
and its subsidiaries (i) has paid (or the Company has paid on its subsidiaries'
behalf) to the appropriate authorities all taxes that are not immaterial and
that are required to be paid by it (without regard to whether a tax return is
required), except taxes for which an adequate reserve has been established on
the financial statements contained in the Company Filed SEC Documents or the
Company Fiscal Year 1997 Financial Statements, and (ii) has withheld and paid to
the appropriate authorities all material withholding taxes required to be
withheld by it. The most recent financial statements contained in the Company
Filed SEC Documents reflect an adequate reserve (in accordance with generally
accepted accounting principles consistently applied) for all taxes payable by
the Company and its subsidiaries for all taxable periods and portions thereof
through the date of such financial statements.
(b) Except as disclosed in the Company Filed SEC Documents or Schedule
4.14, no Federal income tax return or other material tax return of the Company
or any of its subsidiaries is under audit or examination by any taxing
authority, and no written or unwritten notice of such an audit or examination
has been received by the Company or any of its subsidiaries. Each material
deficiency resulting from any audit or examination relating to taxes by any
taxing authority has been paid, except for deficiencies being contested in good
faith. No material issues relating to taxes were raised in writing by the
relevant taxing authority in any completed audit or examination that can
reasonably be expected to recur in a later taxable period. The Federal income
tax returns of the Company and each of its subsidiaries do not contain any
positions that could give rise to a material substantial understatement penalty
within the meaning of Section 6662 of the Code.
(c) There is no agreement or other document extending, or having the effect
of extending, the period of assessment or collection of any taxes and no power
of attorney with respect to any taxes has been executed or filed with any taxing
authority.
(d) No material liens for taxes exist with respect to any assets or
properties of the Company or any of its subsidiaries, except for liens for taxes
not yet due.
(e) None of the Company or any of its subsidiaries is a party to or is
bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to taxes (including any advance
pricing agreement, closing agreement or other agreement relating to taxes with
any taxing authority).
(f) None of the Company or any of its subsidiaries shall be required to
include in a taxable period ending after the Effective Time taxable income
attributable to income that accrued in a prior taxable period but was not
recognized in any prior taxable period as a result of the installment method of
accounting, the completed contract method of accounting, the long-term contract
method of accounting, the cash method of accounting or Section 481 of the Code
or comparable provisions of state, local or foreign tax law.
(g) Neither the Company nor any of its subsidiaries (i) is a party to a
safe harbor lease within the meaning of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended and in effect prior to amendment by the Tax
Equity and Fiscal Responsibility Act of 1982, (ii) is a "consenting corporation"
under Section 341(f) of the Code, (iii) has agreed or is obligated to make any
payments for services which would not be deductible pursuant to Sections
162(a)(1), 162(m) or 280G of the Code, (iv) has participated in an international
boycott as defined in Section 999 of the Code, (v) is required to make any
adjustment under Section 481(a) of the Code by reason of a change in accounting
method or otherwise, (vi) owns any assets which directly or indirectly secure
any debt the interest on which is tax-exempt under Section 103(a) of the Code,
or (vii) owns any asset which is tax-exempt use property within the meaning of
Section 168(h) of the Code.
(h) None of the Company or any of its subsidiaries is a party to any joint
venture, partnership or other arrangement or contract which is treated as a
partnership for tax purposes, or has elected to be treated as a branch or a
partnership pursuant to Treasury Regulation Section 301.7701-3.
(i) Each of the Company and its subsidiaries is a United States person
within the meaning of Section 7701(a)(30) of the Code.
(j) As used in this Agreement, "taxes" shall include all Federal, state,
local and foreign income, property, sales, excise, withholding and other taxes,
tariffs or governmental charges of any nature whatsoever.
SECTION 4.15. State Takeover Statutes. The Board of Directors of the
Company has approved the Offer, the Merger, this Agreement and the acquisition
of Shares by Sub pursuant to the Offer and such approval is sufficient to render
inapplicable to the Offer, the Merger, this Agreement and the transactions
contemplated by this Agreement the provisions of Section 203 of the DGCL. To the
actual knowledge of the Company without investigation, no other state takeover
statute or similar statute or regulation applies or purports to apply to the
Offer, the Merger, this Agreement, or any of the transactions contemplated by
this Agreement.
SECTION 4.16. Brokers; Fees and Expenses. No broker, investment banker,
financial advisor or other person, other than Xxxxxx Brothers Inc., the fees and
expenses of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company. The estimated fees and expenses incurred
and to be incurred by the Company in connection with this Agreement and the
transactions contemplated by this Agreement (including the fees of the Company's
legal counsel, legal counsel for the Special Committee and the legal counsel for
its financial advisor) are set forth in a letter dated November 26, 1997 from
the Company to Parent.
SECTION 4.17. Opinion of Financial Advisor. The Special Committee has
received the opinion of Xxxxxx Brothers Inc., dated November 26, 1997, to the
effect that, as of that date, the consideration to be received by the holders of
Shares pursuant to the Offer and the Merger is fair to such holders from a
financial point of view, and a complete and correct signed copy of such opinion
has been, or promptly upon receipt thereof will be, delivered to Parent for
inclusion in the Offer Documents.
SECTION 4.18. Intellectual Property. Except as set forth on Schedule 4.18,
the Company and its subsidiaries own or possess adequate licenses or other
rights to use all Intellectual Property Rights necessary to conduct the
Business, except where failure to own or possess such licenses or rights,
individually or in the aggregate, has not had, and would not have a material
adverse effect on the Company. Except as set forth on Schedule 4.18, to the
knowledge of the Company, the Intellectual Property Rights of the Company and
its subsidiaries do not conflict with or infringe upon any Intellectual Property
Rights of others to the extent that, if sustained, such conflict or
infringement, individually or in the aggregate, would have a material adverse
effect on the Company. For purposes hereof, "Intellectual Property Right" means
any trademark, service xxxx, trade name, copyright, patent, software license,
other date base, invention, trade secret, know-how (including any registrations
or applications for registration of any of the foregoing) or any other similar
type of proprietary intellectual property right.
SECTION 4.19. Labor Relations and Employment.
(a) Except as set forth on Schedule 4.19, (i) there is no labor strike,
dispute, slowdown, stoppage or lockout actually pending, or, to the best
knowledge of the Company, threatened against the Company or any of its
subsidiaries, and during the past three years there has not been any such
action; (ii) no union claims to represent the employees of the Company or any of
its subsidiaries; (iii) neither the Company nor any of its subsidiaries is a
party to or bound by any collective bargaining or similar agreement with any
labor organization, or work rules or practices agreed to with any labor
organization or employee association applicable to employees of the Company or
any of its subsidiaries; (iv) none of the employees of the Company or any of its
subsidiaries is represented by any labor organization and the Company does not
have any knowledge of any current union organizing activities among the
employees of the Company or any of its subsidiaries, nor are there
representation or certification proceedings or petitions seeking a
representation proceeding presently pending or threatened to be brought or filed
with the National Labor Relations Board or any other labor relations tribunal;
(v) the Company and its subsidiaries are, and have at all times been, in
compliance with all applicable laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
law, ordinance or regulation except where the failure to be in compliance would
not have a material adverse effect on the Company; (vi) there is no unfair labor
practice charge or complaint against the Company or any of its subsidiaries
pending or, to the knowledge of the Company, threatened before the National
Labor Relations Board or any similar state or foreign agency; (vii) there is no
grievance with respect to or relating to the Company or any of its subsidiaries
arising out of any collective bargaining agreement or other grievance procedure;
(viii) no charges with respect to or relating to the Company or any of its
subsidiaries are pending before the Equal Employment Opportunity Commission or
any other agency responsible for the prevention of unlawful employment
practices; (ix) neither the Company nor any of its subsidiaries has received
notice of the intent of any federal, state, local or foreign agency responsible
for the enforcement of labor or employment laws to conduct an investigation with
respect to or relating to the Company or any of its subsidiaries and no such
investigation is in progress; and (x) there are no complaints, lawsuits or other
proceedings pending or to the knowledge of the Company threatened in any forum
by or on behalf of any present or former employee of the Company or any of its
subsidiaries alleging breach of any express or implied contract of employment,
any law or regulation governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship.
(b) To the knowledge of the Company, since the enactment of the Worker
Adjustment and Retraining Notification ("WARN") Act, there has not been (i) a
"plant closing" (as defined in the WARN Act) affecting any site of employment or
one or more facilities or operating units within any site of employment or
facility of the Company or any of its subsidiaries; or (ii) a "mass layoff" (as
defined in the WARN Act) affecting any site of employment or facility of the
Company or any of its subsidiaries; nor has the Company or any of its
subsidiaries been affected by any transaction or engaged in layoffs or
employment terminations sufficient in number to trigger application of any
similar state or local law. Except as set forth in Schedule 4.19, to the
knowledge of the Company, none of the employees of the Company or any of its
subsidiaries has suffered an "employment loss" (as defined in the WARN Act)
since three months prior to the date of this Agreement.
SECTION 4.20. Change of Control. Except as set forth on Schedule 4.20, the
transactions contemplated by this Agreement will not constitute a "change of
control" under, require the consent from or the giving of notice to a third
party pursuant to, permit a third party to terminate or accelerate vesting,
repayment or repurchase rights, or create any other detriment under the terms,
conditions or provisions of any note, bond, mortgage, indenture, license, lease,
contract, agreement or other instrument or obligation to which the Company or
any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, except where the adverse consequences
resulting from such change of control or where the failure to obtain such
consents or provide such notices would not, individually or in the aggregate,
have a material adverse effect on the Company.
SECTION 4.21. Environmental Matters.
(a) Except as set forth on Schedule 4.21, the Company and its subsidiaries
have been and are in compliance with all applicable Environmental Laws (as this
term and the other terms in this section are defined below), except for such
violations and defaults as would not, individually or in the aggregate, have a
material adverse effect on the Company.
(b) Except as set forth on Schedule 4.21, the Company and its subsidiaries
possess all required Environmental Permits; all such Environmental Permits are
in full force and effect; there are no pending or threatened proceedings to
revoke such Environmental Permits and the Company and its subsidiaries are in
compliance with all terms and conditions thereof, except where the failure to
possess or comply with such Environmental Permits or the failure for such
Environmental Permits to be in full force and effect would not, individually or
in the aggregate, have a material adverse effect on the Company.
(c) Except as set forth on Schedule 4.21, and except for matters which
would not, individually or in the aggregate, have a material adverse effect on
the Company, neither the Company nor any of its subsidiaries has received any
written notification that the Company or any subsidiary as a result of any of
the current or past operations of the Business, or any property currently or
formerly owned or leased or used in connection with the Business, is or may be
adversely affected by any proceeding, investigation, claim, lawsuit or order by
any Governmental Entity or other person relating to whether (i) any Remedial
Action is or may be needed to respond to a Release or threat of Release into the
environment of Hazardous Substances arising out of or caused by any current or
past operations of the Company or any of its subsidiaries, (ii) any
Environmental Liabilities and Costs imposed by, under or pursuant to
Environmental Laws as in effect on or prior to the date hereof shall be sought,
or proceeding commenced, arising from the current or past operations of the
Business or (iii) the Company or any subsidiary is or may be a "potentially
responsible party" for a Remedial Action, pursuant to any Environmental Law for
the costs of investigating or remediating Releases or threatened Releases into
the environment of Hazardous Substances, whether or not such Release or
threatened Release has occurred or is occurring at properties currently or
formerly owned or operated by the Company and its subsidiaries;
(d) Except as set forth on Schedule 4.21 and except for Environmental
Permits, none of the Company or its subsidiaries has entered into any written
agreement with any entity of persons including any Governmental Entity by which
the Company or any of its subsidiaries has assumed the responsibility, either
directly or by services rendered or as a guarantor or surety, to pay for the
remediation of any condition arising from or relating to a Release of Hazardous
Substances as defined under Environmental Laws as in effect on or prior to the
date hereof into the environment in connection with the Business, including for
cost recovery by third parties with respect to such Releases or threatened
Releases;
(e) Except as set forth on Schedule 4.21, there is not now and, to the
Company's knowledge, has not been at any time in the past, a Release in
connection with the current or former conduct of the Business of substances that
would constitute Hazardous Substances as regulated under Environmental Laws as
in effect on or prior to the date hereof for which the Company or any of its
subsidiaries is required or is reasonably likely to be required to perform, at
its own expense, or to pay for a Remedial Action pursuant to Environmental Laws
as currently in effect, or will incur Environmental Liabilities and
uncompensated costs that would, individually or in the aggregate, have a
material adverse effect on the Company.
(f) For purposes of hereof:
(i) "Business" means the current and former businesses of the
Company and its subsidiaries including, but not limited to, businesses
or subsidiaries that have been previously sold by the Company, its
subsidiaries or any predecessors thereto.
(ii) "Environmental Laws" means all Laws relating to the
protection of human health or the environment, or to any emission,
discharge, generation, processing, storage, holding, abatement,
existence, Release, threatened Release or transportation of any
chemical or substance, including, but not limited to, (i) CERCLA, the
Resource Conservation and Recovery Act, the Clean Water Act, the Clean
Air Act, the Toxic Substances Control Act, property transfer statutes
or requirements and (ii) all other requirements pertaining to
reporting, licensing, permitting, investigation or remediation of
Hazardous Substances in the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport or handling of
Hazardous Substances or relating to human health or safety from
exposure to Hazardous Substances.
(iii) "Environmental Liabilities and Costs" means all damages,
natural resource damages, claims, losses, expenses, costs, obligations,
and liabilities (collectively, "Losses"), whether direct or indirect,
known or unknown, current or potential, past, present or future,
imposed by, under or pursuant to Environmental Laws, including, but not
limited to, all Losses related to Remedial Actions, and all fees,
capital costs, disbursements, penalties, fines and expenses of counsel,
experts, contractors, personnel and consultants and the value of any
services that might be provided by the Company or any of its
subsidiaries in lieu thereof and expenditures necessary to cause any
such property or the Company or any subsidiary to be in compliance with
requirements of Environmental Laws.
(iv) "Environmental Permits" means any federal, state, provincial
or local permit, license, registration, consent, order, administrative
consent order, certificate, approval or other authorization necessary
for the conduct of the Business as currently conducted, and wherever it
is currently conducted, under any applicable Environmental Law.
(v) "Governmental Entity" means any government or subdivision
thereof, domestic, foreign or supranational or any administrative,
governmental or regulatory authority, agency, commission, tribunal or
body, domestic, foreign or supranational.
(vi) "Hazardous Substances" means any substance that (a) is
defined, listed or identified or otherwise regulated under any
Environmental Law (including, without limitation, radioactive
substances, polycholorinated-biphenyls, petroleum and petroleum
derivatives and products) or (b) requires investigation, removal or
remediation under applicable Environmental Law.
(vii) "Laws" means all (A) constitutions, treaties, statutes, laws
(including, but not limited to, the common law), rules, regulations,
ordinances or codes of any Governmental Entity, (B) Environmental
Permits, and (C) orders, decisions, injunctions, judgments, awards and
decrees of any Governmental Entity.
(viii) "Release" means as defined in CERCLA.
(ix) "Remedial Action" means all actions required by any
Governmental Entity pursuant to Environmental Law or otherwise taken as
necessary to comply with Environmental Law to (i) clean up, remove,
treat or in any other way remediate any Hazardous Substances; (ii)
prevent the release of Hazardous Substances so that they do not migrate
or endanger or threaten to endanger public health or welfare or the
environment; or (iii) perform studies, investigations or monitoring in
respect of any such matter.
SECTION 4.22. Material Contracts. (a) The Company has provided or made
available to Parent (i) true and complete copies of all written contracts and
agreements to which the Company or any subsidiary is a party and which are
material to the Company ("Material Contracts"), and(ii) with respect to such
Material Contracts that have not been reduced to writing, a written description
thereof which is listed on Schedule 4.22. Neither the Company nor any of its
subsidiaries is, or has received any notice or has any knowledge that any other
party is, in default in any respect under any such Material Contract, except for
those defaults which would not reasonably be likely, either individually or in
the aggregate, to have a material adverse effect with respect to the Company;
and there has not occurred any event that, with the lapse of time or the giving
of notice or both, would constitute such a material default.
(b) Except as set forth on Schedule 4.22, no officer or director of the
Company, no shareholder of the Company related to any such officer or director,
and no "associate" (as defined in Rule 14a-1 under the Exchange Act) of any of
them, has any interest in any material contract or agreement of, or other
business arrangement with, the Company, or in any material property (including
any real property and any material personal property, tangible or intangible),
used in or pertaining to the business of the Company.
SECTION 4.23. Property. Schedule 4.23 accurately identifies all real
property, leases and other rights in real property, structures and other
buildings of the Company and its subsidiaries. All properties and assets of the
Company and its subsidiaries, real and personal, material to the conduct of
their respective businesses are, except for changes in the ordinary course of
business since February 28, 1997, reflected in the balance sheet, and except as
set forth on Schedule 4.23, the Company and its subsidiaries have good and
marketable title to their respective real and personal property reflected on the
balance sheet or acquired by them since the date of the balance sheet, free and
clear of all mortgages, liens, pledges, encumbrances, charges, agreements,
claims, restrictions and defects of title. All real property, structures and
other buildings and material equipment of each of the Company and its
subsidiaries are currently used in the operation of the Business, are adequately
maintained and are in satisfactory operating condition and repair for the
requirements of the Business as presently conducted.
SECTION 4.24. Insurance. Schedule 4.24 accurately identifies each material
insurance policy (including policies providing property, casualty, environmental
liability, liability, malpractice and workers compensation insurance) and all
other material types of insurance maintained by the Company and its
subsidiaries, together with carriers and liability limits for each such policy.
Each such policy is duly in force and no notice has been received by the Company
or any of its subsidiaries from any insurance carrier purporting to cancel or
reduce coverage under any such policy. The Company and its subsidiaries are
current in all premiums or other payments due thereunder and no notice has been
received by the Company or any of its subsidiaries from any insurance carrier
purporting to increase any such premiums in any material respect. All insurance
coverage held for the benefit of the Company or its subsidiaries is adequate to
cover risks customarily insured against by similar companies in their industry.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the Company
as follows:
SECTION 5.01. Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to carry on its business as now being conducted, except where the
failure to be so organized, existing and in good standing or to have such power
and authority would not be reasonably expected to prevent or materially delay
the consummation of the Offer and/or the Merger.
SECTION 5.02. Authority. Parent and Sub have requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of Parent and
Sub and no other corporate proceedings on the part of Parent and Sub are
necessary to authorize this Agreement or to consummate such transactions. No
vote of Parent shareholders is required to approve this Agreement or the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by Parent and Sub, as the case may be, and, assuming this Agreement
constitutes a valid and binding obligation of the Company, constitutes a valid
and binding obligation of each of Parent and Sub enforceable against them in
accordance with its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors' rights generally and (ii) as limited by laws
relating to the availability of specific performance, injunctive relief or other
equitable remedies.
SECTION 5.03. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act (including the filing with
the SEC of the Offer Documents), the HSR Act, the DGCL, the laws of other states
in which Parent is qualified to do or is doing business, state takeover laws and
foreign laws, neither the execution, delivery or performance of this Agreement
by Parent and Sub nor the consummation by Parent and Sub of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the respective certificate of incorporation or By-Laws of Parent
and Sub, (ii) require any filing with, or permit, authorization, consent or
approval of, any Governmental Entity (except where the failure to obtain such
permits, authorizations, consents or approvals or to make such filings would not
be reasonably expected to prevent or materially delay the consummation of the
Offer and/or the Merger), (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, lease, contract, agreement or other instrument or obligation
to which Parent or any of its subsidiaries is a party or by which any of them or
any of their properties or assets may be bound or (iv) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
subsidiaries or any of their properties or assets, except in the case of clauses
(iii) and (iv) for violations, breaches or defaults which would not,
individually or in the aggregate, be reasonably expected to prevent or
materially delay the consummation of the Offer and/or the Merger.
SECTION 5.04. Information Supplied. None of the information supplied or to
be supplied by Parent or Sub specifically for inclusion or incorporation by
reference in (i) the Offer Documents, (ii) the Schedule 14D-9, (iii) the
Information Statement or (iv) the Proxy Statement will, in the case of the Offer
Documents, the Schedule 14D-9 and the Information Statement, at the respective
times the Offer Documents, the Schedule 14D-9 and the Information Statement are
filed with the SEC or first published, sent or given to the Company's
stockholders, or, in the case of the Proxy Statement, at the time the Proxy
Statement is first mailed to the Company's stockholders or at the time of the
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Offer Documents will comply as to form in all material
respects with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representation or warranty is made by Parent or Sub
with respect to statements made or incorporated by reference therein based on
information supplied by the Company specifically for inclusion or incorporation
by reference therein.
SECTION 5.05. Interim Operations of Sub. 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.
SECTION 5.06. Financing. The Parent, through its affiliate, WPG Corporate
Development Associates V., L.P., has received a "highly confident" letter from
BT Alex. Xxxxx Incorporated and a letter of commitment from Bankers Trust
Company with respect to the debt financing for the transactions contemplated
hereby (the "Financing Letters"). Executed copies of such letters are attached
hereto as Schedule 5.06. Assuming that the financing contemplated by the
Financing Letters is consummated in accordance with the terms thereof, the funds
to be borrowed and/or provided for thereunder, together with the equity to be
provided by Parent, its affiliates and management, will provide sufficient funds
to pay the Offer Price upon consummation of the Offer, the Merger Consideration,
the refinancing of certain indebtedness for borrowed money of the Company which
is required to be refinanced pursuant to the terms of such indebtedness in
connection with the Offer or the Merger, and all related fees and expenses. As
of the date of this Agreement, Parent is not aware of any facts or circumstances
that create a reasonable basis for Parent to believe that Parent will not be
able to obtain financing in accordance with the terms of the Financing Letters.
Parent agrees promptly to notify the Company if the statements in the
immediately preceding sentence are no longer true and correct.
SECTION 5.07. Brokers. None of Parent, Sub, or any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any broker or finder in connection with the transactions
contemplated herein.
ARTICLE VI
COVENANTS
SECTION 6.01. Conduct of Business of the Company. Except as contemplated by
this Agreement or as expressly agreed to in writing by Parent, during the period
from the date of this Agreement until such time as Parent's designees shall
constitute a majority of the members of the Board of Directors of the Company,
the Company will, and will cause each of its subsidiaries to, conduct its
operations according to its ordinary and usual course of business and consistent
with past practice and, subject to its obligations under Section 7.04(d), use
its and their respective reasonable best efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, advertisers, distributors and others having
business dealings with them and to preserve goodwill. Without limiting the
generality of the foregoing, and except as (x) otherwise expressly provided in
this Agreement, (y) required by law, or (z) set forth on Schedule 6.01, the
Company will not, and will cause its subsidiaries not to, without the consent of
Parent, which shall not be unreasonably withheld:
(i) except with respect to annual bonuses made in the ordinary course of
business consistent with past practice, adopt or amend in any material respect
any bonus, profit sharing, compensation, severance, termination, stock option,
stock appreciation right, pension, retirement, employment or other employee
benefit agreement, trust, plan or other arrangement for the benefit or welfare
of any director, officer or employee of the Company or any of its subsidiaries
or increase in any manner the compensation or fringe benefits of any director,
officer or employee of the Company or any of its subsidiaries (except, in each
case, for normal annual salary increases and cost of living increases for the
benefit of officers and employees of the Company with positions below the level
of vice president) or pay any benefit not required by any existing agreement or
place any assets in any trust for the benefit of any director, officer or
employee of the Company or any of its subsidiaries (in each case, except with
respect to employees and directors in the ordinary course of business consistent
with past practice);
(ii) incur any indebtedness for borrowed money in excess of $500,000, other
than in consultation with Parent;
(iii) expend funds for individual capital expenditures in excess of $50,000
or $2,000,000 in the aggregate for any 12-month period (to be apportioned
pro-rata over any period less than 12 months), other than in consultation with
Parent;
(iv) sell, lease, license, mortgage or otherwise encumber or subject to any
lien or otherwise dispose of any of its properties or assets other than
immaterial properties or assets (or immaterial portions of properties or
assets), except in the ordinary course of business consistent with past
practice;
(v) (x) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (z) purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its subsidiaries or any other securities thereof
or any rights, warrants or options to acquire any such shares or other
securities;
(vi) other than in connection with Options and warrants outstanding as of
the date hereof, authorize for issuance, issue, deliver, sell or agree or commit
to issue, sell or deliver (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise), pledge
or otherwise encumber any shares of its capital stock or the capital stock of
any of its subsidiaries, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities or any other securities or
equity equivalents (including without limitation stock appreciation rights)
other than issuances upon exercise of Options or Warrants;
(vii) amend its Certificate of Incorporation, By-Laws or equivalent
organizational documents or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
any material subsidiary of the Company;
(viii) make or agree to make any acquisition of assets which is material to
the Company and its subsidiaries, taken as a whole, except for (x) purchases of
inventory in the ordinary course of business, (y) pursuant to purchase orders
entered into in the ordinary course of business which do not call for payments
in excess of $50,000 per annum or (z) project-related expenditures which,
individually, do not exceed $250,000; or
(ix) settle or compromise any shareholder derivative suits arising out of
the transactions contemplated hereby or any other litigation (whether or not
commenced prior to the date of this Agreement) or settle, pay or compromise any
claims not required to be paid.
SECTION 6.02. No Solicitation.
(a) From the date hereof until such time as Parent's designees shall
constitute a majority of the members of the Board of Directors of the Company,
the Company shall not, and shall not permit any of its subsidiaries, or any of
its or their officers, directors, employees, representatives, agents or
affiliates (including, without limitation, any investment banker, attorney or
accountant retained by the Company or any of its subsidiaries) to, directly or
indirectly, solicit or initiate any discussions or negotiations with, any
corporation, partnership, person or other entity or group (each, a
"Person"),concerning any offer or proposal which constitutes or is reasonably
likely to lead to any Acquisition Proposal (as defined below). Information may
be provided in response to a bona fide inquiry subject to the confidentiality
agreement referred to below, and negotiations may be conducted in response to
such inquiry. Upon having received a bona fide proposal that the Board of
Directors, consistent with its fiduciary duties and after the receipt of advice
from such Delaware counsel as may be appointed by the Board of Directors
concludes if consummated would be a Superior Proposal, the Board of Directors
may withdraw or modify its approval or recommendation of the Offer, this
Agreement or the Merger, approve or recommend the Superior Proposal or terminate
this Agreement pursuant to Section 9.01(d) hereof and shall promptly notify
Parent in writing of any such determination. For five (5) business days after
Parent has been informed by the Company of the above conclusion with respect to
such Superior Proposal, Parent shall have the right to match (the
"Counterproposal") the economic value of any such Superior Proposal. The Company
shall negotiate in good faith with respect to such Counterproposal. Any
information furnished to any Person in connection with an Acquisition Proposal
shall be provided pursuant to a confidentiality agreement in customary form on
terms not more favorable to such Person than the terms contained in the
Confidentiality Agreement (as defined in Section 7.02). Subject to all of the
foregoing requirements, the Company will immediately notify Parent orally and in
writing if any discussions or negotiations are sought to be initiated, any
inquiry or proposal is made, or any information is requested by any Person with
respect to any Acquisition Proposal or which could lead to an Acquisition
Proposal and immediately notify Parent of all material terms of any proposal
which it may receive in respect of any such Acquisition Proposal, including the
identify of the Person making the Acquisition Proposal or the request for
information, if known, and thereafter shall inform Parent on a timely, ongoing
basis of the status and content of any discussions or negotiations with such a
third party, including immediately reporting any material changes to the terms
and conditions thereof.
(b) For purposes hereof:
(i) "Acquisition Proposal" means any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase of 15% or more
of any class of equity securities of the Company or any of its subsidiaries, any
tender offer or exchange offer that if consummated would result in any person
beneficially owning 15% or more of any class of equity securities of the Company
or any of its subsidiaries, any merger, consolidation, business combination,
sale of substantially all the assets, recapitalization, liquidation, dissolution
or similar transaction involving the Company or any of its subsidiaries, other
than the transactions contemplated by this Agreement, or any other transaction
the consummation of which could reasonably be expected to impede, interfere
with, prevent or materially delay the Offer and/or the Merger or which would
reasonably be expected to dilute materially the benefits to Parent of the
transactions contemplated hereby; and
(ii) "Superior Proposal" means any bona fide written offer made by a third
party that is either fully financed or with respect to which a highly confident
and/or a commitment letter from a financial institution of adequate
sophistication and capitalization has been issued to acquire, directly or
indirectly, for consideration consisting of cash and/or securities, more than
50% of the shares of Company Common Stock then outstanding or all or
substantially all the assets of the Company and otherwise on terms which the
Board of Directors of the Company determines (after consultation with a
nationally recognized investment bank) to be economically superior to the
transaction contemplated by this Agreement.
(c) Nothing contained in this Section 6.02 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule
14e-2(a) promulgated under the Exchange Act or from making any disclosure to the
Company's stockholders if, in the good faith judgment of the Board of Directors
of the Company, after consultation with outside counsel, failure so to disclose
would be inconsistent with its fiduciary duties to the Company's stockholders
under applicable law; provided, however, neither the Company nor its Board of
Directors nor any committee thereof shall, except as permitted by Section
6.02(a), withdraw or modify, or propose to withdraw or modify, its position with
respect to the Offer, this Agreement or the Merger or approve or recommend, or
propose to approve or recommend, an Acquisition Proposal.
SECTION 6.03. Other Actions. The Company shall not, and shall not permit
any of its subsidiaries to, take any action that would, or that could reasonably
be expected to, result in (i) any of the representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the Offer
Conditions not being satisfied (subject to the Company's right to take actions
specifically permitted by Section 6.02).
SECTION 6.04. Notice of Certain Events. The Company and Parent shall
promptly notify each other of:
(i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the transactions
contemplated by this Agreement;
(ii) any notice or other communication from any Government Entity in
connection with the transactions contemplated by this Agreement;
(iii)any action, suits, claims, investigations or proceedings commenced or,
to the actual knowledge of the executive officers of the notifying party,
threatened against, relating to or involving or otherwise affecting such party
or any of its subsidiaries;
(iv) an administrative or other order or notification relating to any
material violation or claimed violation of law;
(v) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at or prior to
the Closing Date; and
(vi) any material failure of any party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder;
provided, however, that the delivery of any notice pursuant to this Section 6.04
shall not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Stockholder Approval; Preparation of Proxy Statement. (a) If
the Company Stockholder Approval is required by law, the Company will, at
Parent's request, as soon as practicable following the acceptance for payment
of, and payment for, any Shares by Sub pursuant to the Offer and the expiration
of the Offer, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Stockholders Meeting") for the purpose of obtaining the
Company Stockholder Approval. The Company will, through its Board of Directors,
recommend to its stockholders that the Company Stockholder Approval be given.
Notwithstanding the foregoing, if Sub or any other subsidiary of Parent shall
acquire at least 90% of the outstanding Shares, the parties shall, at the
request of Parent, take all necessary and appropriate action to cause the Merger
to become effective as soon as practicable after the expiration of the Offer
without a Stockholders Meeting in accordance with Section 253 of the DGCL.
(b) If the Company Stockholder Approval is required by law, the Company
will, at Parent's request, as soon as practicable following the acceptance for
payment of, and payment for, any Shares by Sub pursuant to the Offer and the
expiration of the Offer, prepare and file a preliminary Proxy Statement with the
SEC and will use its best efforts to respond to any comments of the SEC or its
staff and to cause the Proxy Statement to be mailed to the Company's
stockholders as promptly as practicable after responding to all such comments to
the satisfaction of the staff. The Company will notify Parent promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Parent with copies of all correspondence
between the Company or any of its representatives, on the one hand, and the SEC
or its staff, on the other hand, with respect to the Proxy Statement or the
Merger. If at any time prior to the Stockholders Meeting there shall occur any
event that should be set forth in an amendment or supplement to the Proxy
Statement, the Company will promptly prepare and mail to its stockholders such
an amendment or supplement. The Company will not mail any Proxy Statement, or
any amendment or supplement thereto, to which Parent reasonably objects.
(c) Parent agrees to cause all Shares purchased pursuant to the Offer and
all other Shares owned by Parent or any subsidiary of Parent to be voted in
favor of the Company Stockholder Approval.
SECTION 7.02. Access to Information. From the date hereof until such time
as Parent's designees shall constitute a majority of the members of the Board of
Directors of the Company, the Company shall give Parent and Sub, their counsel,
financial advisors, auditors and other authorized representatives full access to
the offices, properties, books and record of the Company and its subsidiaries
during normal business hours, will furnish to Parent and Sub, their counsel,
financial advisors, financial institutions auditors and other authorized
representatives such financial and operating data and other information as such
may be reasonably requested and will instruct the employees of the Company and
its subsidiaries, their counsel and financial advisors to cooperate with Parent
and Sub in their investigation of the Business; provided, that no investigation
pursuant to this Section 7.02 shall affect any representation or warranty given
by the Company to Parent and Sub hereunder; and provided, further, that any
information provided to Parent and/or Sub pursuant to this Section 7.02 shall be
subject to the confidentiality agreement, dated as of November 5, 1997 (the
"Confidentiality Agreement"), the terms of which shall continue to apply, except
as otherwise agreed by the Company, unless and until Parent and Sub shall have
purchased a majority of the outstanding Shares pursuant to the Offer and
notwithstanding termination of this Agreement.
SECTION 7.03. Reasonable Efforts; Financing. (a) Each of the Company,
Parent and Sub agree to use its reasonable best efforts to take, or cause to be
taken, all actions necessary to comply promptly with all legal requirements
which may be imposed on itself with respect to the Offer and the Merger (which
actions shall include furnishing all information required under the HSR Act and
in connection with approvals of or filings with any other Governmental Entity)
and will promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
subsidiaries in connection with the Offer and the Merger. Each of the Company,
Parent and Sub will, and will cause its subsidiaries to, use its reasonable best
efforts to take all reasonable actions necessary to obtain (and will cooperate
with each other in obtaining) any consent, authorization, order or approval of,
or any exemption by, any Governmental Entity or other public or private third
party required to be obtained or made by Parent, Sub, the Company or any of
their subsidiaries in connection with the Offer and the Merger or the taking of
any action contemplated thereby or by this Agreement, except that no party need
waive any substantial rights or agree to any substantial limitation on its
operations or to dispose of any assets.
(b) Parent shall use reasonable efforts to cause the financing necessary
for satisfaction of the condition in subsection (i) of the Conditions of the
Offer on Exhibit A.
SECTION 7.04. Options; Warrants. (a) The Company shall amend (i) ATC Group
Services Inc. 1988 Incentive and Non-Statutory Stock Option Plan, (ii) ATC Group
Services Inc. 1993 Incentive and Non-Statutory Stock Option Plan, (iii) ATC
Group Services Inc. 1995 Nonqualified Stock Option Plan, and any other program
pursuant to which there are holders of options (the "Options") to purchase
Shares granted by the Company (collectively, the "Stock Option Plans") to
provide that all outstanding, unexercised Options shall be immediately
exercisable and that if the optionees do not exercise their unexercised Options,
each optionee shall receive, in settlement of each Option held by such optionee,
a "Cash Amount" (less any applicable withholding taxes) with respect to the
number of previously unexercised Shares underlying the Option immediately prior
to the Effective Time. The Company shall use its commercially reasonable efforts
to amend the Stock Option Plans to provide that each Option shall terminate as
of the Effective Time. The Cash Amount payable for each Option shall equal the
product of (i) the Merger Consideration minus the exercise price per Share of
each such Option and (ii) the number of previously unexercised Shares covered by
each such Option.
(b) The Company shall provide notice to participants in the Stock Option
Plans and other holders of Options to purchase Shares granted by the Company
that the Company proposes to merge into another corporation; that the Optionee
under the plans or program may exercise his Options in full for all shares not
theretofore purchased by him prior to the Effective Time; and that the plans and
program have been amended to provide that to the extent an optionee does not
exercise such Options prior to the Effective Time, the optionee shall receive,
in settlement of each Option held by the optionee, a "Cash Amount" (less any
applicable withholding taxes) with respect to the number of previously
unexercised Shares underlying the Option immediately prior to the Effective
Time; that each Option shall terminate as of the Effective Time; and that the
Cash Amount payable for each Option shall equal the product of (i) the Merger
Consideration minus the exercise price per Share of each such Option and (ii)
the number of previously unexercised Shares covered by each such Option.
(c) Except as may be otherwise agreed to by Parent or Sub and the Company,
the Company's Stock Option Plans shall terminate as of the Effective Time and
the provisions in any other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Company or any of its Subsidiaries shall be deleted as of the Effective Time.
(d) The Company shall use its commercially reasonable efforts so that
following the Effective Time no holder of employee stock options will have any
right to receive Shares upon exercise of an employee stock option.
(e) Pursuant to the terms of (i) the warrant agreement, dated October 15,
1990, relating to 568,207 Class C Redeemable Common Stock Purchase Warrants,
(ii) warrant agreements relating to 490,500 warrants issued pursuant to the
merger between the Company and Aurora Environmental Inc. and (iii) the
consulting agreement, dated March 14, 1997, relating to 35,000 warrants issued
to First Montauk Securities Corp., the Company has issued warrants
(collectively, the "Warrants") to certain persons. The holders of the Warrants
shall be entitled either to exercise their Warrants for Shares in accordance
with the applicable agreement under which such Warrants were issued and tender
such Shares in the Offer or upon execution and delivery to the Company of a
cancellation agreement in form and substance reasonably satisfactory to the
Company, to receive from the Company at the Effective Time a Cash Amount equal
to the product of (i) the Merger Consideration minus the exercise price per
share of each such Warrant and (ii) the number of unexercised Shares covered by
each such Warrant.
(f) Notwithstanding anything to the contrary herein, if it is determined
that compliance with any of the foregoing would cause any individual subject to
Section 16 of the Exchange Act to become subject to the profit recovery
provisions thereof, any Options or Warrants held by such individual will be
canceled or purchased, as the case may be, at the Effective Time or at such
later time as may be necessary to avoid application of such profit recovery
provisions and such individual will be entitled to receive from the Company or
the Surviving Corporation an amount in cash or other consideration satisfactory
to the Surviving Corporation and such individual equal to the excess, if any, of
the Merger Consideration over the per Share exercise price of such Option or
Warrant multiplied by the number of Shares subject thereto (less any applicable
withholding taxes), and the parties hereto will cooperate and take any and all
necessary actions so as to achieve the intent of the foregoing without giving
rise to such profit recovery.
SECTION 7.05. Directors. Promptly upon the acceptance for payment of, and
payment for, 50.1% of the Shares by Sub pursuant to the Offer, Sub shall be
entitled to designate such number of directors on the Board of Directors of the
Company as will give Sub, subject to compliance with Section 14(f) of the
Exchange Act, a majority of such directors, and the Company shall, at such time,
cause Sub's designees to be so elected by its existing Board of Directors;
provided, however, that in the event that Sub's designees are elected to the
Board of Directors of the Company, until the Effective Time such Board of
Directors shall have at least two directors who are directors on the date of
this Agreement and who are not officers of the Company (the "Independent
Directors"); and provided, further, that, in such event, if the number of
Independent Directors shall be reduced below two for any reason whatsoever, the
remaining Independent Director shall designate a person to fill such vacancy who
shall be deemed to be an Independent Director for purposes of this Agreement or,
if no Independent Directors then remain, the other directors shall designate two
persons to fill such vacancies who shall not be officers or affiliates of the
Company or any of its subsidiaries, or officers or affiliates of Parent or any
of its subsidiaries, and such persons shall be deemed to be Independent
Directors for purposes of this Agreement. Subject to applicable law, the Company
shall take all action requested by Parent necessary to effect any such election,
including mailing to its stockholders the Information Statement containing the
information required by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder, and the Company agrees to make such mailing with the
mailing of the Schedule 14D-9 (provided that Sub shall have provided to the
Company on a timely basis all information required to be included in the
Information Statement with respect to Sub's designees). In connection with the
foregoing, the Company will promptly, at the option of Parent, either increase
the size of the Company's Board of Directors and/or obtain the resignation of
such number of its current directors as is necessary to enable Sub's designees
to be elected or appointed to, and to constitute a majority of, the Company's
Board of Directors as provided above.
SECTION 7.06. Fees and Expenses. (a) In addition to any other amounts which
may be payable or become payable pursuant to any other paragraph of this Section
7.06, in the event that this Agreement is terminated for any reason other than a
material breach by Parent or Sub, the Company shall promptly reimburse the
Parent or Sub, as the case may be, upon receipt of reasonably satisfactory
back-up documentation, for all out-of-pocket expenses and fees (including,
without limitation, fees and expenses payable to all Governmental Entities,
banks, investment banking firms and other financial institutions, and their
respective agents and counsel, and all fees and expenses of counsel,
accountants, financial printers, proxy solicitors, exchange agents, experts and
consultants to Parent and its affiliates), whether incurred prior to, on or
after the date hereof, in connection with the Merger and the consummation of all
transactions contemplated by this Agreement, and the financing thereof, up to a
maximum of $2.5 million. Except as otherwise specifically provided for herein,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated by this
Agreement shall be paid by the party incurring such expenses.
(b) In the event that (i) this Agreement is terminated pursuant to Section
9.01(d) or (e), or (ii) any Person (other than Parent or any of its affiliates)
shall have consummated an Acquisition Proposal within twelve months following
the termination of the Offer at a value at or above $12 per share, then the
Company shall pay to Parent, in the case of an event under (i) above, promptly
upon any such termination, and, in the case of an event under (ii) above, at the
time of any such consummation, a termination fee of $4.5 million (the
"Termination Fee"); provided that in no event shall the aggregate payment by the
Company of fees and expenses and of the Termination Fee under this Section 7.06
exceed $6.0 million.
(c) The prevailing party in any legal action undertaken to enforce this
Agreement or any provision hereof shall be entitled to recover from the other
party the costs and expenses (including attorneys' and expert witness fees and
expenses) incurred in connection with such action.
SECTION 7.07. Indemnification; Insurance. (a) Parent and Sub agree that all
rights to indemnification for acts or omissions occurring prior to the Effective
Time now existing in favor of the current or former directors, officers,
employees, fiduciaries or agents (the "Indemnified Parties") of the Company and
its subsidiaries as provided in their respective certificates of incorporation
or by-laws (or similar organizational documents) or existing indemnification
contracts shall survive the Merger and shall continue in full force and effect
in accordance with their terms.
(b) It is understood and agreed that the Company shall, and from and after
the Effective Time, the Surviving Corporation and the Parent shall, indemnify,
defend and hold harmless the Indemnified Parties against all losses, claims,
damages, costs, expenses (including attorneys' fees and expenses), liabilities
or judgments, fines or amounts that are paid in settlement in connection with
any pending, threatened or actual claim, action, suit, proceeding or
investigation based in whole or in part or arising in whole or part out of the
fact that such person is or was a director, officer, employee or agent of the
Company or any of its subsidiaries or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise or
by reason of anything done or not done by such person in any such capacity
whether pertaining to any matter existing or occurring at or prior to the
Effective Time or any acts or omissions occurring or existing at or prior to the
Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities"), including all Indemnified
Liabilities based in whole or in part on, or arising in whole or in part out of,
or pertaining to this Agreement or the transactions contemplated hereby, in each
case to the fullest extent permitted by applicable law (and the Company, the
Surviving Corporation, and Parent, as the case may be, shall pay expenses in
advance of the final disposition of any such action or proceeding to each
Indemnified Party to the fullest extent permitted by applicable law). In
determining whether an Indemnified Party is entitled to indemnification under
this Section 7.07(b), if requested by such Indemnified Party such determination
shall be made by special, independent counsel selected by the Surviving
Corporation and the Parent and reasonably approved by the Indemnified Party, and
who has not otherwise performed services for the Surviving Corporation, Parent
or their respective affiliates within the last three years. Without limiting the
foregoing, in the event any such claim, action, suit, proceeding or
investigation is brought against any Indemnified Parties (whether arising before
or after the Effective Time), (i) the Indemnified Parties may retain Squadron,
Ellenoff, Plesent & Xxxxxxxxx, LLP or other counsel reasonably satisfactory to
the Company (or the Surviving Corporation after the Effective time), and the
Company (or, after the Effective Time, the Surviving Corporation and Parent)
shall pay all reasonable fees and expenses of such counsel for the Indemnified
Parties as promptly as statements therefor are received; and (ii) the Company
(or, after the Effective Time, the Surviving Corporation and the Parent) will
use all reasonable best efforts to assist in the vigorous defense of any such
matter; provided, that none of the Company, the Surviving Corporation or Parent
shall be liable for any settlement effected without its prior written consent,
which consent shall not be unreasonably withheld. Any Indemnified Party wishing
to claim indemnification under this Section 7.07(b), upon learning of any such
claim, action, suit, proceeding or investigation, shall notify the Company (or,
after the Effective Time, the Surviving Corporation and Parent) (but the failure
so to notify shall not relieve a party from any liability which it may have
under this Section 7.07(b) except to the extent such failure prejudices such
party's position with respect to such claims) and shall deliver to the Company
(or, after the Effective Time, the Surviving Corporation and the Parent) the
undertaking contemplated by Section 145(e) of the DGCL, but without any
requirement for the posting of the bond. The Indemnified Parties as a group may
retain one law firm (plus local counsel, if necessary) to represent them with
respect to each such matter unless the use of the counsel chosen to represent
the Indemnified Parties would present such counsel with a conflict of interest,
or the representation of all of the Indemnified Parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them, in which case such additional counsel as may be required (as shall be
reasonably determined by the Indemnified Parties and the Company, the Surviving
Corporation or Parent, as the case may be) and satisfactory to the Company, the
Surviving Corporation or Parent, as the case may be, may be retained by the
Indemnified Parties at the cost and expense of the Company, the Surviving
Corporation or Parent, as the case may be. The Company and Sub agree that the
foregoing rights to indemnification, including provisions relating to advances
of expenses incurred in defense of any action or suit, existing in favor of the
Indemnified Parties with respect to matters occurring through the Effective
Time, shall survive the Merger and shall continue in full force and effect for a
period of not less than six years after the Effective Time; provided, however
that all rights to indemnification (including rights relating to advances of
expenses) in respect of any Indemnified Liabilities asserted or made within such
period shall continue until the disposition of such Indemnified Liabilities.
Furthermore, the provisions with respect to indemnification set forth in the
Certificate of Incorporation or Bylaws of the Surviving Corporation shall not be
amended for a period of six years following the Effective Time to the extent
that such amendment would adversely affect the rights thereunder of individuals
who at any time prior to the Effective Time were directors, officers, employees
or agents of the Company in respect of actions or omissions occurring at or
prior to the Effective Time.
(c) The Company (or, after the Effective Time, the Surviving Corporation
and Parent) shall indemnify any Indemnified Party against all reasonable costs
and expenses (including attorneys' fees and expenses), such amounts to be
payable in advance upon request as provided in Section 7.07(b), relating to the
enforcement of such Indemnified Party's rights under this Section 7.07 or under
the documents referred to in this Section 7.07, but only to the extent that such
Indemnified Party is ultimately determined to be entitled to indemnification
hereunder or thereunder. Any amounts due pursuant to the preceding sentence
shall be payable upon request by the Indemnified Party.
(d) For six years from the Effective Time, Parent shall, unless Parent
agrees in writing to guarantee the indemnification obligations set forth in
Section 7.07(a), maintain in effect the Company's current directors' and
officers' liability insurance covering those persons who are currently covered
by the Company's directors' and officers' liability insurance policy (a copy of
which has been heretofore delivered to Parent); provided, however, that in no
event shall Parent be required to expend in any one year an amount in excess of
225% of the annual premiums currently paid by the Company for such insurance
(which the Company represents is currently not more than $98,250); and,
provided, further, that if the annual premiums of such insurance coverage exceed
such amount, Parent shall be obligated only to obtain a policy with the greatest
coverage available for a cost not exceeding such amount.
(e) This Section 7.07 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
(f) In the event the Company or the Surviving Corporation or any of their
respective successors or assigns (i) consolidates with or merges into any other
person and shall not be the continuing or surviving corporation of such
consolidation or merger, or (ii) transfers all or substantially all of its
properties to any person, then, and in each case, proper provision shall be made
so that the successors and assigns of the Company and the Surviving Corporation,
as the case may be, shall assume the obligations set forth in this Section 7.07.
SECTION 7.08. Certain Litigation. The Company agrees that it will not
settle any litigation commenced after the date hereof against the Company or any
of its directors by any stockholder of the Company relating to the Offer, the
Merger or this Agreement, without the prior written consent of Parent. In
addition, the Company will not voluntarily cooperate with any third party which
may hereafter seek to restrain or prohibit or otherwise oppose the Offer or the
Merger and will cooperate with Parent and Sub to resist any such effort to
restrain or prohibit or otherwise oppose the Offer or the Merger, unless the
Board of Directors of the Company determines in good faith, after consultation
with outside counsel, that failing so to cooperate with such third party or
cooperating with Parent or Sub, as the case may be, would constitute a breach of
the director's fiduciary duties under applicable law.
SECTION 7.09. Parent shall deliver to the Board any solvency letter from
any third party appraisal or similar form that Parent provides to the providers
of financing under the Financing Commitment.
ARTICLE VIII
CONDITIONS
SECTION 8.01. Conditions to Each Party's Obligation To Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject to
the satisfaction prior to the Closing Date of the following conditions:
(a) Company Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No statute, rule, regulation, executive
order, decree, temporary restraining order, preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or other
Governmental Entity or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect; provided, however, that each of
the parties shall have used reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered.
(c) Purchase of Shares. Sub shall have previously accepted for payment and
paid for Shares pursuant to the Offer.
(d) HSR Approvals. The applicable waiting periods under the HSR Act shall
have expired or been terminated.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the terms of
this Agreement by the stockholders of the Company:
(a) by mutual written consent of Parent and the Company, by action of their
respective Boards of Directors;
(b) by Parent or the Company if the Merger shall not have been consummated
on or before June 30, 1998; provided, however, that neither Parent nor the
Company may terminate this Agreement pursuant to this Section 9.01(b) if such
party shall have materially breached this Agreement;
(c) by Parent or the Company if any court of competent jurisdiction in the
United States or other United States Governmental Entity has issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall have
become final and nonappealable; provided, however, that the party seeking to
terminate this Agreement shall have used its reasonable best efforts to remove
or lift such order, decree, ruling or other action;
(d) by the Company if, prior to the consummation of the Offer, any person
has made a bona fide proposal relating to an Acquisition Proposal, or has
commenced a tender or exchange offer for the Shares, and the Company Board
concludes, consistent with its fiduciary duties and after the receipt of advice
from such Delaware counsel as may be appointed by the Board of Directors, that
such proposal if consummated would be a Superior Proposal;
(e) by Parent, if prior to the consummation of the Offer the Company Board
shall have (i) failed to recommend to the stockholders of the Company that they
accept the Offer, tender their Shares pursuant to the Offer and approve and
adopt this Agreement (the "Stockholder Acceptance"), (ii) withdrawn or
materially modified its approval or recommendation of this Agreement, the Offer
or the Merger, (iii) shall have approved or recommended a Superior Proposal,
(iv) shall have resolved to effect any of the foregoing or (v) shall have
otherwise taken steps to impede the Stockholder Acceptance;
(f) by the Parent, if prior to consummation of the Offer, there has been a
material violation or breach by the Company of any representation, warranty,
covenant or agreement contained in this Agreement (which violation or breach is
not cured by the Company within ten days after written notice reasonably
describing such breach); or
(g) by the Company, if prior to the consummation of the Offer, there has
been a material violation or breach by Parent or Sub of any representation,
warranty, covenant or agreement contained in this Agreement (which violation or
breach is not cured by Parent or Sub within ten days after written notice
reasonably describing such breach, other than the obligations contained in the
last sentence of Section 1.01(a), which shall have no cure period).
SECTION 9.02. Effect of Termination. In the event of a termination of this
Agreement pursuant to Section 9.01, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Sub or the
Company or their respective officers or directors, except with respect to the
last sentence of Section 1.02(c), Section 4.16, Section 5.07, the last clause of
Section 7.02, Section 7.06, this Section 9.02 and Article X; provided, however,
that nothing herein shall relieve any party for liability for any breach hereof.
SECTION 9.03. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after obtaining the Company Stockholder Approval (if
required by law), but, after any such approval, no amendment shall be made which
by law requires further approval by such shareholders without obtaining such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto. Following the election
or appointment of the Sub's designees pursuant to Section 7.05 and prior to the
Effective Time, the affirmative vote of a majority of the Independent Directors
then in office shall be required by the Company to (i) amend or terminate this
Agreement by the Company, (ii) exercise or waive any of the Company's rights or
remedies under this Agreement or (iii) extend the time for performance of Parent
and Sub's respective obligations under this Agreement.
SECTION 9.04. Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto or (iii) waive compliance
with any of this Agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party. The failure of
any party hereto to assert any of its rights hereunder or otherwise shall not
constitute a waiver of those rights.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Nonsurvival of Representations and Warranties. The
representations and warranties in this Agreement or in any instrument delivered
pursuant hereto shall terminate at the Effective Time or, in the case of the
Company, shall terminate upon the acceptance for payment of, and payment for,
Shares by Sub pursuant to the Offer, unless the survival thereof is provided for
by their terms.
SECTION 10.02. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to Parent or Sub, to:
Xxxxx, Xxxx & Xxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
and
(b) if to the Company, to:
ATC Group Services Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
with a copy to:
Squadron, Ellenoff, Plesent & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
SECTION 10.03. Interpretation. When a reference is made in this Agreement
to an Article or a Section, such reference shall be to an Article or a Section
of this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is to be
made available. As used in this Agreement, the term "subsidiary" of any person
means another person, an amount of the voting securities, other voting ownership
or voting partnership interests of which is sufficient to elect at least a
majority of its Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests of which) is owned
directly or indirectly by such first person. As used in this Agreement,
"material adverse change" or "material adverse effect" means, when used in
connection with the Company, any change or effect (or any development that,
insofar as can reasonably be foreseen, is likely to result in any change or
effect) that, individually or in the aggregate with any such other changes or
effects, is materially adverse to the business, financial condition or results
of operations of the Company and its subsidiaries taken as a whole.
Notwithstanding the foregoing, a material adverse change or material adverse
effect shall not include any material adverse change or material adverse effect
caused by any change resulting from the announcement of the Offer or the Merger.
SECTION 10.04. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
SECTION 10.05. Entire Agreement; Third Party Beneficiaries. This Agreement
(including the documents and the instruments referred to herein) (a) constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 7.07, is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder.
SECTION 10.06. Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York without regard to
any applicable conflicts of law, except to the extent the DGCL shall be held to
govern the terms of the Merger.
SECTION 10.07. Publicity. Except as otherwise required by law or the rules
of the Nasdaq National Market, for so long as this Agreement is in effect,
neither the Company nor Parent shall, or shall permit any of its subsidiaries
to, issue or cause the publication of any press release or other public
announcement with respect to the transactions contemplated by this Agreement
without the consent of the other party, which consent shall not be unreasonably
withheld.
SECTION 10.08. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to any
direct or indirect wholly owned subsidiary of Parent. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be
enforceable by the parties and their respective successors and assigns.
SECTION 10.09. Enforcement. The parties agree that irreparable damage would
occur 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 court of the United States
located in the State of New York or Delaware or in a New York or Delaware state
court, this being in addition to any other remedy to which they are entitled at
law or in equity. In addition, each of the parties hereto (i) consents to submit
to the personal jurisdiction of any Federal court located in the States of New
York or Delaware or any New York or Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated
hereby, (ii) agrees that such party will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that such party will not bring any action relating to this
Agreement or any of the transactions contemplated hereby in any court other than
a Federal court sitting in the State of New York or Delaware or a New York or
Delaware state court and (iv) waives any right to trial by jury with respect to
any claim or proceeding related to or arising out of this Agreement or any of
the transactions contemplated hereby.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized as of the
date first written above.
ACQUISITION HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Director and President
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Director and Treasurer
ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxxx
Title: Director and President
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Director and Treasurer
ATC GROUP SERVICES INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive
Officer
Approved:
/s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
Member of the Special Committee
/s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------
Xxxxxxx X. Xxxxxxxxx
Member of the Special Committee
EXHIBIT A
Conditions of the Offer
Notwithstanding any other term of the Offer or this Agreement, and in
addition to (and not in limitation of) Sub's right to extend and amend the Offer
at any time in its sole discretion (subject to the provisions of this
Agreement), Sub shall not be required to accept for payment or, subject to
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Sub's obligation to pay for or return tendered Shares
after the termination or withdrawal of the Offer), to pay for, and may delay the
acceptance for payment of or, subject to the restriction referred to above, the
payment for, any Shares tendered pursuant to the Offer unless (i) there shall
have been validly tendered and not withdrawn prior to the expiration of the
Offer such number of Shares that would constitute a majority of the outstanding
Shares (determined on a fully diluted basis for all outstanding stock options
and any other rights to acquire Shares) (the "Minimum Condition") and (ii) any
waiting period under the HSR Act applicable to the purchase of Shares pursuant
to the Offer shall have expired or been terminated. Furthermore, notwithstanding
any other term of the Offer or this Agreement, Sub shall not be required to
accept for payment or, subject as aforesaid, to pay for any Shares not
theretofore accepted for payment or paid for, and may terminate the Offer if, at
any time on or after the date of this Agreement and before the acceptance of
such Shares for payment or the payment therefor, any of the following conditions
exists:
(a) there shall be any action or proceeding commenced by any Governmental
Entity which has a reasonable likelihood of success and which, if decided
adversely to the Company, would have a material adverse effect on the Company,
(i) challenging the acquisition by Parent or Sub of any Shares under the Offer
or seeking to restrain or prohibit the making or consummation of the Offer or
the Merger or the performance of any of the other transactions contemplated by
this Agreement, or seeking to obtain from the Company, Parent or Sub any damages
that are material in relation to the Company and its subsidiaries taken as a
whole, (ii) seeking to prohibit or impose any material limitations on Parent's
or Sub's ownership or operation (or that of any of their respective Subsidiaries
or affiliates) of all or a material portion of the Company's businesses or
assets, or to compel Parent or Sub or their respective Subsidiaries and
affiliates to dispose of or hold separate any material portion of the business
or assets of the Company and its Subsidiaries taken as a whole, (ii) seeking to
impose material limitations on the ability of Sub, or render Sub unable, to
accept for payment, pay for or purchase some or all of the Shares pursuant to
the Offer and the Merger, (iii) seeking to impose material limitations on the
ability of Sub or Parent effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote the Shares purchased by
it on all matters properly presented to the Company's stockholders, or (iv)
which otherwise is reasonably likely to have a material adverse effect on the
Company;
(b) there shall be any statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable to the
Offer or the Merger, or any other action shall be taken by any Governmental
Entity or court, other than the application to the Offer or the Merger of
applicable waiting periods under the HSR Act that is reasonably likely to
result, directly or indirectly, in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above;
(c) there shall have occurred any events after the date of this Agreement
that, either individually or in the aggregate, have caused or are reasonably
likely to cause a material adverse change with respect to the Company other than
a change resulting from the announcement of the Offer or the Merger;
(d)(i) the Board of Directors of the Company or any committee thereof shall
have publicly (including by amendment of its Schedule 14D-9) withdrawn or
modified in a manner adverse to Parent or Sub its approval or recommendation of
the Offer, the Merger or this Agreement, or approved or recommended any
Acquisition Proposal, (ii) the Company shall have entered into any agreement
with respect to any Superior Proposal in accordance with Section 6.02(a) of this
Agreement or (iii) the Board of Directors of the Company or any committee
thereof shall have resolved to take any of the foregoing actions;
(e) any of the representations and warranties of the Company set forth in
this Agreement shall not be true and correct in any material respect, in each
case at the date of this Agreement and at the scheduled or extended expiration
of the Offer, except for such breaches that would, individually or in the
aggregate, not have a material adverse effect on the Company;
(f) the Company shall have failed to perform in any material respect any
material obligation or to comply in any material respect with any material
agreement or covenant of the Company to be performed or complied with by it
under this Agreement, except for such breaches that would, individually or in
the aggregate, not have a material adverse effect on the Company;
(g) this Agreement shall have been terminated in accordance with its terms;
(h) there shall have occurred (i) any general suspension of, or limitation
on prices for, trading in securities on the New York Stock Exchange or on
NASDAQ, (ii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States, (iii) a commencement of a war, armed
hostilities or other international or national calamity directly involving the
armed forces of the United States that materially and adversely affects the
financial markets in the United States, (iv) any material limitation (whether or
not mandatory) by any governmental authority on the extension of credit by banks
or other lending institutions, (v) in the case of any of the foregoing existing
at the time of the commencement of the Offer, a material acceleration or
worsening thereof; or
(i) the Company shall fail to receive the proceeds of financing pursuant to
the Financing Letters set forth on Schedule 5.06 or involving such other
financing sources, as Parent and the Company shall reasonably agree and are not
materially more onerous, in amounts sufficient to consummate the transactions
contemplated by this Agreement, including, without limitation (i) to pay, with
respect to all Common Stock in the Merger, the Offer Price pursuant to Section
1.01, (ii) to refinance the outstanding indebtedness of the Company, (iii) to
pay any fees and expenses in connection with the transactions contemplated by
this Agreement or the financing thereof and (iv) to provide for the working
capital needs of the Company following the Merger, including, without
limitation, if applicable, letters of credit.
The foregoing conditions are for the sole benefit of Parent and Sub, may be
asserted by Parent or Sub regardless of the circumstances giving rise to such
condition (including any action or inaction by Parent or Sub not in violation of
this Agreement) and may be waived by Parent or Sub in whole or in part at any
time and from time to time in the sole discretion of Parent or Sub, subject in
each case to the terms of this Agreement. The failure by Parent or Sub at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right and each such right shall be deemed an ongoing right which may be
asserted at any time and from time to time.
