Exhibit 1
__________________
AGREEMENT AND PLAN OF MERGER
AMONG
TYCO INTERNATIONAL LTD.,
T1 ACQUISITION CORP.
AND
THE EARTH TECHNOLOGY CORPORATION (USA),
DATED AS OF December 8, 1995
__________________
TABLE OF CONTENTS
PAGE
ARTICLE I THE OFFER
Section 1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Company Actions . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II THE MERGER
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Effects of the Merger . . . . . . . . . . . . . . . . . . 4
Section 2.4 Certificate of Incorporation and Bylaws; Directors and
Officers . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.5 Conversion of Securities . . . . . . . . . . . . . . . . 5
Section 2.6 Payment of Certificates . . . . . . . . . . . . . . . . . 6
Section 2.7 Dissenting Shares . . . . . . . . . . . . . . . . . . . . 7
Section 2.8 Merger Without Meeting of Stockholders . . . . . . . . . 7
Section 2.9 No Further Ownership Rights in Common Stock . . . . . . . 8
Section 2.10 Closing of Company Transfer Books . . . . . . . . . . . 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 3.1 Organization and Qualification . . . . . . . . . . . . . 8
Section 3.2 Authority Relative to this Agreement . . . . . . . . . . 8
Section 3.3 No Conflict; Required Filings and Consents . . . . . . . 8
Section 3.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.5 Ownership of Sub; No Prior Activities . . . . . . . . . . 9
Section 3.6 Financing . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 3.7 Full Disclosure . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Organization and Qualification; Subsidiaries . . . . . . 10
Section 4.2 Certificate of Incorporation and Bylaws . . . . . . . . . 11
Section 4.3 Capitalization . . . . . . . . . . . . . . . . . . . . . 11
Section 4.4 Authority Relative to this Agreement . . . . . . . . . . 12
Section 4.5 Contracts; No Conflict; Required Filings and Consents . . 12
Section 4.6 Compliance; Permits . . . . . . . . . . . . . . . . . . . 13
Section 4.7 SEC Filings; Financial Statements . . . . . . . . . . . . 13
Section 4.8 Absence of Certain Changes or Events . . . . . . . . . . 14
Section 4.9 No Undisclosed Liabilities . . . . . . . . . . . . . . . 14
Section 4.10 Absence of Litigation . . . . . . . . . . . . . . . . . 15
Section 4.11 Employee Benefit Plans; Employment Agreements . . . . . 15
Section 4.12 Labor Matters . . . . . . . . . . . . . . . . . . . . . 17
Section 4.13 Limitation on Business Conduct . . . . . . . . . . . . . 17
Section 4.14 Title to Property . . . . . . . . . . . . . . . . . . . 17
Section 4.15 Real Property; Leased Premises. . . . . . . . . . . . . 18
Section 4.16 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 18
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Section 4.17 Environmental Matters . . . . . . . . . . . . . . . . . 19
Section 4.18 Intellectual Property . . . . . . . . . . . . . . . . . 20
Section 4.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.20 Accounts Receivable. . . . . . . . . . . . . . . . . . . 21
Section 4.21 Customers. . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.22 Interested Party Transactions . . . . . . . . . . . . . 22
Section 4.23 Absence of Certain Payments. . . . . . . . . . . . . . . 22
Section 4.24 Takeover Statute. . . . . . . . . . . . . . . . . . . . 22
Section 4.25 Opinion of Financial Advisor . . . . . . . . . . . . . . 22
Section 4.26 Brokers . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.27 Full Disclosure . . . . . . . . . . . . . . . . . . . . 23
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 Conduct of Business by the Company Pending the Merger . . 23
Section 5.2 Acquisition Proposals . . . . . . . . . . . . . . . . . . 25
Section 5.3 Annual Meeting of Stockholders . . . . . . . . . . . . . 26
Section 5.4 Conduct of Business of Sub Pending the Merger . . . . . . 26
ARTICLE VI ADDITIONAL AGREEMENTS
Section 6.1 Company Stockholder Approval; Proxy Statement . . . . . . 26
Section 6.2 Access to Information; Confidentiality . . . . . . . . . 28
Section 6.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . 28
Section 6.4 Stock Plans and Warrants . . . . . . . . . . . . . . . . 29
Section 6.5 Reasonable Best Efforts . . . . . . . . . . . . . . . . . 29
Section 6.6 Public Announcements . . . . . . . . . . . . . . . . . . 30
Section 6.7 Indemnification; Directors and Officers Insurance . . . . 30
Section 6.8 Board Representation . . . . . . . . . . . . . . . . . . 30
Section 6.9 Notification of Certain Matters . . . . . . . . . . . . . 31
Section 6.10 Employment and Benefit Arrangements . . . . . . . . . . . 31
ARTICLE VII CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligation to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 32
Section 8.2 Effect of Termination . . . . . . . . . . . . . . . . . . 34
Section 8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 8.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE IX GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties . . . . . 34
Section 9.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 9.3 Interpretation . . . . . . . . . . . . . . . . . . . . . 36
Section 9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . 36
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Section 9.5 Entire Agreement; No Third-Party Beneficiaries . . . . . 36
Section 9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.7 Assignment. . . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.8 Severability . . . . . . . . . . . . . . . . . . . . . . 36
Section 9.9 Enforcement of this Agreement; Attorneys Fees . . . . . . 36
EXHIBIT A Conditions of the Offer
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of December 8, 1995 (this
"Agreement"), among Tyco International Ltd., a Massachusetts corporation
("Parent"), T1 Acquisition Corp., a Delaware corporation ("Sub") and a wholly
owned subsidiary of Parent, and The Earth Technology Corporation (USA), a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Sub and the Company
each have approved the acquisition of the Company by Parent pursuant to a tender
offer (the "Offer") by Sub for all of the outstanding shares of Common Stock,
par value $.10 per share ("Common Stock"), of the Company at a price of $8.00
per share, net to the seller in cash, without interest, followed by a merger
(the "Merger") of Sub with and into the Company, all upon the terms and subject
to the conditions set forth herein;
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving the Offer and the Merger and recommending that the Company's
stockholders accept the Offer; and
WHEREAS, pursuant to the Merger, each issued and outstanding share of
Common Stock not owned directly or indirectly by Parent or the Company, except
shares of Common Stock held by holders who comply with the provisions of
Delaware law regarding the right of stockholders to dissent from the Merger and
require appraisal of their shares of Common Stock, will be converted into the
right to receive the per share consideration paid pursuant to the Offer.
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, Parent, Sub and the
Company hereby agree as follows:
ARTICLE I
THE OFFER
Section 1.1 The Offer. (a) Subject to the provisions of this Agreement,
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within five business days after the first public announcement of this Agreement,
Sub shall, and Parent shall cause Sub to, commence, within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (including the rules
and regulations promulgated thereunder, the "Exchange Act"), the Offer. The
obligation of Sub to, and of Parent to cause Sub to, commence the Offer and
accept for payment, and pay for, any shares of Common Stock tendered pursuant to
the Offer shall be subject to the conditions set forth in Exhibit A (the "Offer
Conditions"). The Offer shall initially expire twenty (20) business days after
the date of its commencement, unless this Agreement is terminated in accordance
with Article VIII, in which case the Offer (whether or not previously extended
in accordance
with the terms hereof) shall expire on such date of termination. Without the
prior written consent of the Company, Sub shall not (i) impose conditions to the
Offer in addition to the Offer Conditions, (ii) modify or amend the Offer
Conditions or any other term of the Offer in a manner adverse to the holders of
shares of Common Stock, (iii) waive or amend the Minimum Condition (as defined
in Exhibit A), (iv) reduce the number of shares of Common Stock subject to the
Offer, (v) reduce the price per share of Common Stock to be paid pursuant to the
Offer, (vi) except as provided in the following sentence, extend the Offer, if
all of the Offer Conditions are satisfied or waived, or (vii) change the form of
consideration payable in the Offer. Notwithstanding the foregoing, Sub may,
without the consent of the Company, extend the Offer at any time, and from time
to time, (i) if at the then scheduled expiration date of the Offer any of the
conditions to Sub's obligation to accept for payment and pay for shares of
Common Stock shall not have been satisfied or waived, until such time as such
conditions are satisfied or waived; (ii) for any period required by any rule,
regulation, interpretation or position of the Securities and Exchange Commission
(the "SEC") or its staff applicable to the Offer; or (iii) if all Offer
Conditions are satisfied or waived but the number of shares of Common Stock
tendered is less than 90% of the then outstanding number of shares of Common
Stock, for an aggregate period of not more than 10 business days (for all such
extensions) beyond the latest expiration date that would be permitted under
clause (i) or (ii) of this sentence. So long as this Agreement is in effect and
the Offer Conditions have not been satisfied or waived, Sub shall, and Parent
shall cause Sub to, cause the Offer not to expire. Subject to the terms and
conditions of the Offer (but subject to the right of termination in accordance
with Article VIII), Sub shall, and Parent shall cause Sub to, pay for all shares
of Common Stock validly tendered and not withdrawn pursuant to the Offer as soon
as practicable after the expiration of the Offer.
(b) On the date of commencement of the Offer, Parent and Sub shall
file with the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the
Offer, which shall contain an offer to purchase and a related letter of
transmittal (such Schedule 14D-1 and the documents therein pursuant to which the
Offer will be made, together with any supplements or amendments thereto, the
"Offer Documents"). The Company and its counsel shall be given an opportunity
to review and comment upon the Offer Documents prior to the filing thereof with
the SEC. The Offer Documents shall comply as to form in all material respects
with the requirements of the Exchange Act, and, on the date filed with the SEC
and on the date first published, sent or given to the Company's stockholders,
the Offer Documents 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 is made by Parent
or Sub with respect to information supplied by the Company in writing for
inclusion in the Offer Documents. Each of Parent, Sub and the Company 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 each of Parent and Sub further agrees to
take all steps necessary to cause the Offer Documents as so corrected to be
filed with the SEC and to be disseminated to holders of shares of Common Stock,
in each case as and to the extent required by applicable federal securities
laws. Parent and Sub agree to provide the Company and its counsel in writing
with any comments Parent, Sub or their counsel may receive from
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the SEC or its staff with respect to the Offer Documents promptly upon receipt
of such comments.
Section 1.2 Company Actions. (a) The Company hereby approves of and
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consents to the Offer and represents that the Board of Directors of the Company
at a meeting duly called and held has duly adopted resolutions (i) approving
this Agreement, the Offer and the Merger, (ii) determining that the terms of the
Offer and Merger are fair to, and in the best interests of, the Company and its
stockholders, and (iii) recommending that the Company's stockholders accept the
Offer and tender their shares of Common Stock and approve the Merger and this
Agreement. The Company hereby consents to the inclusion in the Offer Documents
of such recommendation of the Board of Directors of the Company. The Company
represents that its Board of Directors has received the written opinion (the
"Fairness Opinion") of Alex. Xxxxx & Sons Incorporated (the "Financial Advisor")
that the proposed consideration to be received by the holders of shares of
Common Stock pursuant to the Offer and the Merger is fair to such holders from a
financial point of view. The Company has been authorized by the Financial
Advisor to permit, subject to the prior review and consent by the Financial
Advisor (such consent not to be unreasonably withheld), the inclusion of the
Fairness Opinion (or a reference thereto) in the Offer Documents, the Schedule
14D-9 (as hereinafter defined) and the Proxy Statement (as hereinafter defined).
(b) On the date the Offer Documents are filed with the SEC, 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, including the exhibits thereto, the "Schedule 14D-9") containing
the recommendations described in paragraph (a) of Section 1.2 above and shall
mail the Schedule 14D-9 to the stockholders of the Company as required by Rule
14D-9 promulgated under the Exchange Act. Parent and its counsel shall be given
an opportunity to review and comment upon the Schedule 14D-9 prior to the filing
thereof with the SEC. The Schedule 14D-9 shall comply as to form in all material
respects with the requirements of the Exchange Act 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 is made by the Company
with respect to information supplied by Parent or Sub in writing 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
cause the Schedule 14D-9 as so corrected to be filed with the SEC and
disseminated to the holders of shares of Common Stock, in each case as and to
the extent required by applicable federal securities laws. The Company agrees to
provide Parent and Sub and their counsel in writing with 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, the Company shall cause its
transfer agent to promptly furnish Sub with a list, as of a recent date, of the
holders of Common Stock and
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mailing labels containing the names and addresses of the record holders of
Common Stock and of those persons becoming record holders subsequent to such
date, together with copies of all lists of stockholders, security position
listings (including shares of Common Stock held by depositories) and computer
files and all other information in the Company's possession or control regarding
the beneficial owners of Common Stock, and shall furnish to Sub such information
and assistance (including updated lists of stockholders, security position
listings and computer files) as Sub may reasonably request in communicating the
Offer to the Company's stockholders.
ARTICLE II
THE MERGER
Section 2.1 The Merger. Upon the terms and subject to the conditions
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hereof, and in accordance with the General Corporation Law of the State of
Delaware, as amended (the "DGCL"), Sub shall be merged with and into the Company
at the Effective Time (as hereinafter defined). Following the Merger, 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.
Section 2.2 Effective Time. The Merger shall become effective when the
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Certificate of Merger or, if applicable, the Certificate of Ownership and Merger
(each, the "Certificate of Merger"), executed in accordance with the relevant
provisions of the DGCL, are accepted for record by the Secretary of State of the
State of Delaware. When used in this Agreement, the term "Effective Time" shall
mean the later of the date and time at which the Certificate of Merger is
accepted for record or such later time established by the Certificate of Merger.
The filing of the Certificate of Merger shall be made as soon as reasonably
practicable (but not later than the third business day) after the satisfaction
or waiver of the conditions to the Merger set forth herein.
Section 2.3 Effects of the Merger. The Merger shall have the effects set
---------------------
forth in the DGCL.
Section 2.4 Certificate of Incorporation and Bylaws; Directors and
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Officers.
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(a) The Certificate of Incorporation of the Company, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter changed or amended as provided therein or
by applicable law, except that ARTICLE Sixth of such Certificate of
Incorporation shall be amended and restated to provide that the number of
directors of the Surviving Corporation shall be not less than three (3) or more
than nine (9), and all such directors shall constitute a single class. The
Bylaws of Sub, as in effect immediately prior to the Effective Time, shall be
the Bylaws of the Surviving Corporation until thereafter changed or amended as
provided therein or by applicable law.
(b) The directors of Sub at the Effective Time shall, from and after
the Effective Time, be the directors of the Surviving Corporation until their
successors have been
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duly elected or appointed and qualified or until their earlier death,
resignation or removal, in accordance with the Surviving Corporation's
Certificate of Incorporation and Bylaws.
(c) The officers of the Company at the Effective Time and such other
persons as designated by Parent shall, from and after the Effective Time, be the
officers of the Surviving Corporation until their successors have been duly
elected or appointed and qualified or until their earlier death, resignation or
removal, in accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws.
Section 2.5 Conversion of Securities. As of the Effective Time, by virtue
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of the Merger and without any action on the part of any stockholder of the
Company:
(a) All shares of Common Stock that are held in the treasury of the
Company or by any wholly owned subsidiary of the Company and any shares of
Common Stock owned by Parent, Sub or any other wholly owned subsidiary of
Parent shall be canceled and no consideration shall be delivered in
exchange therefor.
(b) Each share of Common Stock issued and outstanding immediately
prior to the Effective Time, including any "restricted" stock issued
pursuant to the 1987 Stock Option and Restricted Stock Plan (as defined
below), all of the vesting requirements of which are hereby waived without
the need for any action on the part of any person (other than shares to be
canceled in accordance with Section 2.5(a) and other than Dissenting Shares
(as defined in Section 2.7)) shall be converted into the right to receive
from Parent in cash, without interest, the per share consideration in the
Offer (the "Merger Consideration"). All such shares of Common Stock, when
so converted, shall no longer be outstanding and shall automatically be
canceled and retired and each holder of a certificate or certificates (the
"Certificates") representing any such shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
for such shares upon surrender of such Certificates.
(c) Each issued and outstanding share of the capital stock of Sub
shall be converted into and become one fully paid and nonassessable share
of Common Stock of the Surviving Corporation.
(d) Each option outstanding at the Effective Time to purchase shares
of Common Stock (a "Stock Option") granted under (i) The Earth Technology
Corporation (USA) 1987 Stock Plan (the "1987 Stock Plan"), (ii) The Earth
Technology Corporation (USA) Director Option Plan (the "Director Option
Plan") and (iii) any other stock plan or agreement of the Company, whether
vested or unvested, shall be converted into an option (a "Parent Option")
to purchase that number of shares of Parent common stock, par value $.50
per share ("Parent Common Stock"), equal to the product of (A) the quotient
of (i) the fair market value of a share of Common Stock as of the Effective
Time divided by (ii) the fair market value of a share of Parent Common
Stock as of the Effective Time (the "Stock Ratio") and (B) the number of
shares of Common Stock subject to such Stock Option (rounded to the nearest
whole share) at an exercise price equal to the per share
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exercise price of such Stock Option divided by the Stock Ratio (rounded
to the nearest cent), which Parent Option shall be subject to the same
terms and conditions (including vesting schedule) as the Stock Option.
As soon as practicable after the Effective Time, Parent shall deliver to
each holder of a Stock Option outstanding immediately prior to the
Effective Time an appropriate notice setting forth such holder's rights
pursuant hereto.
(e) Each stock purchase warrant outstanding at the Effective Time to
purchase shares of Common Stock, issued by Summit Environmental Group, Inc.
as of August 29, 1990 and assumed by the Company (a "Warrant"), shall
represent the right to receive, upon payment of the exercise price therefor
in accordance with its terms, cash in an amount equal to the product of (x)
the number of shares issuable upon exercise of such Warrant immediately
prior to the Effective Time and (y) the Merger Consideration.
Section 2.6 Payment of Certificates. (a) Paying Agent. Prior to the
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Effective Time, Parent shall appoint First Interstate Bank of California or such
other commercial bank or trust company designated by Parent and reasonably
acceptable to the Company to act as paying agent hereunder (the "Paying Agent")
for the payment of the Merger Consideration upon surrender of Certificates. All
of the fees and expenses of the Paying Agent shall be borne by Parent.
(b) Surviving Corporation to Provide Funds. Parent shall take all
--------------------------------------
steps necessary to enable and cause the Surviving Corporation to provide the
Paying Agent with cash in amounts necessary to pay for all of the shares of
Common Stock pursuant to Section 2.5 (determined as though there are no
Dissenting Shares (as hereinafter defined)), when and as such amounts are needed
by the Paying Agent.
(c) Payment Procedures. As soon as practicable after the Effective
------------------
Time, the Paying Agent shall mail to each holder of record of a Certificate,
other than Parent, the Company and any wholly owned subsidiary of Parent or the
Company, (i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
actual delivery of the Certificates to the Paying Agent and shall be in a form
and have such other provisions as Parent may reasonably specify) and
(ii) instructions for the use thereof 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 the Surviving Corporation, together with such
letter of transmittal, duly executed and completed in accordance with the
instructions thereto, and such other documents as may reasonably be required by
the Paying Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor the amount of cash into which the shares of Common Stock
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.5, and the Certificates so surrendered shall forthwith be canceled.
No interest will be paid or will accrue on the cash payable upon the surrender
of any Certificate. If payment is to be made to a person other than the person
in whose name the Certificate so surrendered is registered, it shall be a
condition of payment that such Certificate shall be properly endorsed or
otherwise in proper
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form for transfer and that the person requesting such payment shall pay any
transfer or other taxes required by reason of the transfer 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 2.6, each Certificate (other than Certificates representing Dissenting
Shares and Certificates representing any shares of Common Stock owned by Parent
or any wholly owned subsidiary of Parent or held in the treasury of the Company
or by any wholly owned subsidiary of the Company) 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 of Common
Stock theretofore represented by such Certificate shall have been converted
pursuant to Section 2.5. Notwithstanding the foregoing, none of the Paying
Agent, the Surviving Corporation or any party hereto shall be liable to a former
stockholder of the Company for any cash or interest delivered to a public
official pursuant to applicable abandoned property, escheat or similar laws. In
the event any Certificate shall have been lost, stolen or destroyed, Parent may,
in its discretion and as a condition precedent to the payment of the Merger
Consideration in respect of the shares represented by such Certificate, require
the owner of such lost, stolen or destroyed Certificate to deliver a bond in
such sum as it may reasonably direct as indemnity against any claim that may be
made against Parent or the Paying Agent.
Section 2.7 Dissenting Shares. Notwithstanding any provision of this
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Agreement to the contrary, if required by the DGCL (but only to the extent
required thereby), shares of Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by holders of such
shares of Common Stock who have properly exercised appraisal rights with respect
thereto in accordance with Section 262 of the DGCL (the "Dissenting Shares")
will not be exchangeable for the right to receive the Merger Consideration, and
holders of such shares of Common Stock will be entitled to receive payment of
the appraised value of such shares of Common Stock in accordance with the
provisions of such Section 262 unless and until such holders fail to perfect or
effectively withdraw or lose their rights to appraisal and payment under the
DGCL. If, after the Effective Time, any such holder fails to perfect or
effectively withdraws or loses such right, such shares of Common Stock will
thereupon be treated as if they had been converted into and have become
exchangeable for, at the Effective Time, the right to receive the Merger
Consideration, without any interest thereon. The Company will give Parent
prompt notice of any demands received by the Company for appraisals of shares of
Common Stock, and Parent shall have the right to participate in all negotiations
and proceedings with respect to any such demands. Neither the Company nor the
Surviving Corporation shall, except with the prior written consent of Parent,
make any payment with respect to any demands for appraisal or offer to settle or
settle any such demands.
Section 2.8 Merger Without Meeting of Stockholders. Notwithstanding the
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foregoing in this Article II, in the event that Sub, or any other direct or
indirect subsidiary of Parent, shall acquire at least 90 percent of the
outstanding shares of Common Stock, the parties hereto agree to 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 meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
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Section 2.9 No Further Ownership Rights in Common Stock. From and after
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the Effective Time, the holders of shares of Common Stock which were outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such shares of Common Stock except as otherwise provided in this
Agreement or by applicable law. All cash paid upon the surrender of Certificates
in accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to the shares of Common Stock.
Section 2.10 Closing of Company Transfer Books. At the Effective Time,
---------------------------------
the stock transfer books of the Company shall be closed and no transfer of
shares of Common Stock shall thereafter be made. If, after the Effective Time,
Certificates are presented to the Surviving Corporation, they shall be canceled
and exchanged as provided in this Article II.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub hereby represent and warrant to the Company as follows:
Section 3.1 Organization and Qualification. Each of Parent and Sub is a
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corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority necessary to own, lease and operate the properties it purports to
own, operate or lease and to carry on its business as it is now being conducted,
except as would not reasonably be expected to prevent or delay consummation of
the Merger, or otherwise materially and adversely affect the ability of Parent
or Sub to perform their respective obligations under this Agreement.
Section 3.2 Authority Relative to this Agreement. Each of Parent and Sub
------------------------------------
has all necessary corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Sub and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Parent and Sub, and no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. The Board of
Directors of Parent has determined that it is advisable and in the best interest
of Parent's stockholders for Parent to enter into this Agreement and to
consummate, upon the terms and subject to the conditions of this Agreement, the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Parent and Sub and, assuming the due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of Parent and Sub.
Section 3.3 No Conflict; Required Filings and Consents. The execution and
------------------------------------------
delivery of this Agreement by Parent and Sub do not, and the performance of this
Agreement by Parent and Sub will not, (i) conflict with or violate the Articles
of Organization (or Certificate of Incorporation) or Bylaws of Parent or Sub,
(ii) conflict with or violate any law,
- 8 -
rule, regulation, order, judgment or decree applicable to Parent or any of its
subsidiaries or by which its or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or
impair Parent's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Parent
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which Parent or any of its subsidiaries is a party or by which
Parent or any of its subsidiaries or its or any of their respective properties
are bound or affected, except in any such case for any such conflicts,
violations, breaches, defaults or other occurrences that would not reasonably be
expected to prevent or delay consummation of the Merger, or otherwise materially
and adversely affect the ability of Parent or Sub to perform their respective
obligations under this Agreement.
(b) The execution and delivery of this Agreement by Parent and Sub
does not, and the performance of this Agreement by Parent and Sub will not,
require any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements, if any, of the Exchange Act, the pre-
merger notification requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder (the "HSR
Act"), and the filing and recordation of appropriate merger or other documents
as required by the DGCL, and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not reasonably be expected to prevent or delay consummation of the Merger,
or otherwise materially and adversely affect the ability of Parent or Sub to
perform their respective obligations under this Agreement.
Section 3.4 Brokers. No broker, finder or investment banker (other than
-------
The Environmental Financial Consulting Group, Inc., the fees and expenses of
which will be paid by Parent) is entitled to any brokerage, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or Sub.
Section 3.5 Ownership of Sub; No Prior Activities. (a) Sub is a direct,
-------------------------------------
wholly-owned subsidiary of Parent and was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement.
(b) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation or
organization and the transactions contemplated by this Agreement and except for
this Agreement and any other agreements or arrangements contemplated by this
Agreement, Sub has not and will not have incurred, directly or indirectly,
through any subsidiary or affiliate, any obligations or liabilities or engaged
in any business activities of any type or kind whatsoever or entered into any
agreements or arrangements with any person.
- 9 -
Section 3.6 Financing. Parent or Sub have sufficient funds available to
---------
enable Sub to purchase all outstanding shares, on a fully diluted basis, of
Common Stock and to pay all fees and expenses related to the transactions
contemplated by this Agreement.
Section 3.7 Full Disclosure. No statement contained in any certificate or
---------------
schedule furnished or to be furnished by Parent or Sub to the Company in, or
pursuant to the provisions of, this Agreement contains or shall contain any
untrue statement of a material fact or omits or will omit to state any material
fact necessary, in the light of the circumstances under which it was made, in
order to make the statements herein or therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Sub as follows:
Section 4.1 Organization and Qualification; Subsidiaries. Each of 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 the requisite corporate power and authority necessary to
own, lease and operate the properties it purports to own, operate or lease and
to carry on its business as it is 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 reasonably be expected to have a material adverse effect on
the business, assets (including intangible assets), financial condition,
prospects or results of operations of the Company and its subsidiaries taken as
a whole or on the ability of the Company to perform its obligations under this
Agreement (a "Material Adverse Effect"). Each of the Company and each of its
subsidiaries is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned, leased or operated by it or the nature of its activities
makes such qualification or licensing necessary, except for such failures to be
so duly qualified or licensed and in good standing that would not reasonably be
expected to have a Material Adverse Effect. A true and complete list of all of
the Company's subsidiaries, together with the jurisdiction of incorporation of
each subsidiary and the percentage of each subsidiary's outstanding capital
stock owned by the Company or another subsidiary, is set forth in Section 4.1 of
the written disclosure schedule previously delivered by the Company to Parent
(the "Disclosure Schedule"). Except as set forth in Section 4.1 of the
Disclosure Schedule or the SEC Reports (as defined below), the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity, with respect to which interest the Company has invested
or is required to invest $100,000 or more, excluding securities in any publicly
traded company held for investment by the Company and comprising less than five
percent of the outstanding stock of such company.
- 10 -
Section 4.2 Certificate of Incorporation and Bylaws. The Company has
---------------------------------------
heretofore furnished to Parent a complete and correct copy of its Certificate of
Incorporation and Bylaws as most recently restated and subsequently amended to
date, and has furnished or made available to Parent the Certificate of
Incorporation and Bylaws (or equivalent organizational documents) of each of its
subsidiaries (the "Subsidiary Documents"). Such Certificate of Incorporation,
Bylaws and Subsidiary Documents are in full force and effect. Neither the
Company nor any of its subsidiaries is in violation of any of the provisions of
its Certificate of Incorporation or Bylaws or Subsidiary Documents, except for
immaterial violations of the Subsidiary Documents which may exist.
Section 4.3 Capitalization. The authorized capital stock of the Company
--------------
consists of 20,000,000 shares of Common Stock and 5,000,000 shares of Preferred
Stock, par value $.10 per share (the "Preferred Stock"). As of December 1,
1995, (i) 8,751,636 shares of Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable (except that 60,707 of
such shares were restricted shares issued pursuant to the 1987 Stock Plan), and
78,989 shares were held in treasury, (ii) no shares of Preferred Stock were
outstanding or held in treasury, (iii) no shares of Common Stock or Preferred
Stock were held by subsidiaries of the Company, (iv) 880,908 shares of Common
Stock were reserved for future issuance pursuant to outstanding stock options
granted under the 1987 Stock Plan and 328,955 shares were reserved for future
grants under such plan, (v) 79,624 shares of Common Stock were reserved for
future issuance upon exercise of options granted under the Director Option Plan
and 110,762 shares were reserved for future grants under such Plan, (vi) 30,572
shares of Common Stock were reserved for future issuance under The Earth
Technology Corporation (USA) 1994 Employee Stock Purchase Plan (the "Employee
Stock Purchase Plan"), (vii) 166,500 shares of Common Stock were reserved for
issuance upon exercise of the Warrants, (viii) 146,843 shares of Common Stock
were reserved for issuance pursuant to options issued by Summit Environmental
Group, Inc. and assumed by the Company, and (ix) 74,063 shares of Common Stock
were reserved for issuance pursuant to options issued by HazWaste Industries
Incorporated and assumed by the Company. No material change in such
capitalization has occurred between December 1, 1995 and the date hereof.
Except as set forth in Section 4.1, this Section 4.3 or Section 4.11 or in
Section 4.3 or Section 4.11 of the Disclosure Schedule or the SEC Reports, there
are no options, warrants or other rights, agreements, arrangements or
commitments of any character relating to the issued or unissued capital stock of
the Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any of its subsidiaries. All shares of Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be duly authorized, validly issued, fully paid and nonassessable. Except
as disclosed in Section 4.3 of the Disclosure Schedule or the SEC Reports, there
are no obligations, contingent or otherwise, of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of Common
Stock or the capital stock of any subsidiary or to provide funds to or make any
investment (in the form of a loan, capital contribution or otherwise) in any
such subsidiary or any other entity other than guarantees of bank obligations of
subsidiaries entered into in the ordinary course of business. Except as set
forth in Sections 4.1 and 4.3 of the Disclosure Schedule, all of the outstanding
shares of capital stock (other than directors' qualifying shares) of each
- 11 -
of the Company's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable, and all such shares (other than directors' qualifying shares and
a de minimis number of shares owned by employees of such subsidiaries) are owned
by the Company or another subsidiary free and clear of all security interests,
liens, claims, pledges, agreements, limitations in the Company's voting rights,
charges or other encumbrances of any nature whatsoever.
Section 4.4 Authority Relative to this Agreement. The Company has all
------------------------------------
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action,
and no other corporate proceedings on the part of the Company are necessary to
authorize this Agreement or to consummate the transactions so contemplated
(other than the adoption of this Agreement by the holders of at least a majority
of the outstanding shares of Common Stock entitled to vote in accordance with
the DGCL and the Company's Certificate of Incorporation and Bylaws). The Board
of Directors of the Company has determined that it is advisable and in the best
interest of the Company's stockholders for the Company to enter into this
Agreement and to consummate, upon the terms and subject to the conditions of
this Agreement, the transaction contemplated hereby. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Sub, as applicable,
constitutes a legal, valid and binding obligation of the Company.
Section 4.5 Contracts; No Conflict; Required Filings and Consents. (a)
-----------------------------------------------------
Section 4.5(a) of the Disclosure Schedule includes a list of (i) all loan
agreements, indentures, mortgages, pledges, conditional sale or title retention
agreements, security agreements, equipment obligations, guaranties, standby
letters of credit, equipment leases or lease purchase agreements, each in an
amount equal to or exceeding $200,000, to which the Company or any of its
subsidiaries is a party or by which any of them is bound; and (ii) all
agreements which, as of the date hereof, are required to be filed as "material
contracts" pursuant to the requirements of the Exchange Act, as amended, and the
SEC's rules thereunder (each of the foregoing and any contract or agreement of
the Company or any of its subsidiaries with any customer listed on Schedule 4.21
of the Disclosure Schedule, being referred to as a "Material Contract"). Except
as set forth in Section 4.5(a) of the Disclosure Schedule, neither the Company
nor any of its subsidiaries is in default or violation (and no event has
occurred which with notice or lapse of time or both would constitute a default
or violation) of any Material Contract, nor, to the knowledge of the Company, is
any other party to any Material Contract in default or violation thereof (and no
event has occurred which with notice or lapse of time or both would constitute
such a default or violation), except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Except as set forth in Section 4.5(b) of the Disclosure Schedule,
the execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of
- 12 -
Incorporation or Bylaws of the Company, (ii) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or affected, or (iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default), or
impair the Company's or any of its subsidiaries' rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of the
Company or any of its subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or its or any of their
respective properties is bound or affected, except for any such conflicts,
violations, breaches, defaults or other occurrences that would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(c) The execution and delivery of this Agreement by the Company does
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Exchange Act, the pre-merger
notification requirements of the HSR, and the filing and recordation of
appropriate merger or other documents as required by the DGCL, and (ii) where
the failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications, would not reasonably be expected to prevent
or delay consummation of the Merger, or otherwise prevent or delay the Company
from performing its obligations under this Agreement, or would not otherwise
reasonably be expected to have a Material Adverse Effect.
Section 4.6 Compliance; Permits. (a) Except as disclosed in Section
-------------------
4.6 of the Disclosure Schedule, neither the Company nor any of its subsidiaries
is in conflict with, or in default or violation of, any law, rule, regulation,
order, judgment or decree applicable to the Company or any of its subsidiaries
or by which its or any of their respective properties is bound or affected,
except for any such conflicts, defaults or violations which would not reasonably
be expected to have a Material Adverse Effect.
(b) Except as disclosed in Section 4.6 of the Disclosure Schedule or
the SEC Reports, the Company and its subsidiaries hold all franchises, grants,
authorization, permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals which are material to the operation of the
business of the Company and its subsidiaries taken as a whole as it is now being
conducted ("Permits"). The Company and its subsidiaries are in compliance with
the terms of the Permits, except where the failure to so comply would not
reasonably be expected to have a Material Adverse Effect.
Section 4.7 SEC Filings; Financial Statements. (a) The Company has filed
---------------------------------
all forms, reports and documents required to be filed with the SEC since August
27, 1993 and has made available to Parent (i) its Annual Reports on Form 10-K
for the fiscal years ended August 27, 1993, August 26, 1994 and August 25, 1995,
(ii) all proxy statements relating to
- 13 -
the Company's meetings of stockholders (whether annual or special) held since
August 27, 1993, (iv) all other reports or registration statements filed by the
Company with the SEC since August 27, 1993, and (v) all amendments and
supplements to all such reports and registration statements filed by the Company
with the SEC (collectively, the "SEC Reports"). Except as disclosed in Section
4.7 of the Disclosure Schedule or the SEC Reports, the SEC Reports (i) were
prepared in all material respects in accordance with the requirements of the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder, or the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) 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 the light of
the circumstances under which they were made, not misleading. None of the
Company's subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the SEC Reports and the Company's
1995 Annual Report on Form 10-K was prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated in the notes thereto), and each
fairly in all material respects presents the consolidated financial position of
the Company and its subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount.
Section 4.8 Absence of Certain Changes or Events. Except as set forth in
------------------------------------
Section 4.8 of the Disclosure Schedule or the SEC Reports, since August 25, 1995
the Company has conducted its business in the ordinary course and there has not
occurred: (i) any Material Adverse Effect; (ii) any amendments or changes in
the Certificate of Incorporation or Bylaws of the Company; (iii) any damage to,
destruction or loss of any asset of the Company (whether or not covered by
insurance) that would reasonably be expected to have a Material Adverse Effect;
(iv) any material change by the Company in its accounting methods, principles or
practices; (v) any material revaluation by the Company of any of its assets,
including writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; (vi) any other action
or event that would have required the consent of Parent pursuant to Section 5.1
had such action or event occurred after the date of this Agreement; or (vii) any
sale of a material amount of property of the Company, except in the ordinary
course of business.
Section 4.9 No Undisclosed Liabilities. Except as set forth in Section
--------------------------
4.9 of the Disclosure Schedule or the SEC Reports, neither the Company nor any
of its subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise), except liabilities (a) in the aggregate adequately provided for in
the Company's audited balance sheet (including any related notes thereto) for
the fiscal year ended August 25, 1995 included in the Company's 1995 Annual
Report on Form 10-K (the "1995 Balance Sheet"), (b) incurred in the ordinary
course of business and not required under GAAP to be reflected on the 1995
Balance Sheet, (c) incurred since August 25, 1995 in the ordinary course of
business consistent with past
- 14 -
practice, (d) incurred in connection with this Agreement, or (e) which would not
reasonably be expected to have a Material Adverse Effect.
Section 4.10 Absence of Litigation. Except as set forth in Section 4.10
---------------------
of the Disclosure Schedule or the SEC Reports, there are no claims, actions,
suits, proceedings or investigations pending or, to the knowledge of the
Company, overtly threatened against the Company or any of its subsidiaries, or
any properties or rights of the Company or any of its subsidiaries, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign, that would reasonably be expected to have a Material
Adverse Effect. Except as set forth in Section 4.10 of the Disclosure Schedule
or the SEC Reports, since August 27, 1993, there have been no actions, suits or
proceedings made or pending against the Company or any of its subsidiaries
alleging (x) any Environmental Claims (as defined in Section 4.17) or (y) any
breach by the Company or any of its subsidiaries of applicable standards of
conduct in rendering any engineering, construction, design, operation,
maintenance, management, assessment, cleanup or remediation services, except for
such actions, suits or proceedings which, in the case of either clause (x) or
(y) above, would not reasonably be expected to result in liability to the
Company or any of its subsidiaries of $50,000, in any individual case, or
$500,000 in the aggregate.
Section 4.11 Employee Benefit Plans; Employment Agreements. (a) Section
---------------------------------------------
4.11(a) of the Disclosure Schedule lists all employee pension plans (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")), all material employee welfare plans (as defined in Section
3(1) of ERISA), and all other material bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar fringe or employee benefit plans, programs or arrangements, and any
employment, executive compensation or severance agreements, written or
otherwise, as amended, modified or supplemented, for the benefit of, or relating
to, any former or current employee, officer or consultant (or any of their
beneficiaries) of the Company or any other entity (whether or not incorporated)
which is a member of a controlled group including the Company or which is under
common control with the Company (an "ERISA Affiliate") within the meaning of
Section 414 of the Code or Section 4001 of ERISA, or any subsidiary of the
Company (together, the "Employee Plans"). None of the Employee Plans is subject
to Title IV of ERISA, and neither the Company nor any ERISA affiliate has any
liability (whether actual or contingent) with respect to any employee pension
plan under Section 4069 or 4212(c) of ERISA or Section 412 of the Code. There
have been made available to Parent copies of (i) each such written Employee Plan
and all related trust agreements, insurance and other contracts (including
policies), summary plan descriptions, summaries of material modifications and
communications distributed to plan participants, (ii) the three most recent
annual reports on Form 5500 series, with accompanying schedules and attachments,
filed with respect to each Employee Plan required to make such a filing, (iii)
the latest reports which have been filed with the Department of Labor with
respect to each Employee Plan required to make such filing and (iv) favorable
determination letters issued for each Employee Plan and related trust that are
intended to satisfy the qualification requirements of Section 401(a) and Section
501(a) of the Code (or, if pending, a copy of the application for such
determination). For purposes of this Section 4.11, the term "material," when
used with respect to (i) any Employee Plan, shall mean that the Company or an
ERISA Affiliate has incurred or may incur obligations in an amount exceeding
$100,000 with respect to such Employee Plan, and (ii) any liability, obligation,
breach or non-compliance, shall mean that the Company or an ERISA Affiliate has
- 15 -
incurred or may incur obligations in an amount exceeding $50,000, with respect
to any one such or series of related liabilities, obligations, breaches,
defaults, violations or instances of non-compliance.
(b) (i) Except as set forth in Section 4.11(b) of the Disclosure
Schedule, none of the Employee Plans promises or provides retiree medical or
other retiree welfare benefits to any person, and none of the Employee Plans is
a "multiemployer plan" as such term is defined in Section 3(37) of ERISA; (ii)
no party in interest or disqualified person (as defined in Section 3(14) of
ERISA and Section 4975 of the Code) has at any time engaged in a transaction
with respect to any Employee Plan which would reasonably be expected to subject
the Company or any ERISA Affiliate, directly or indirectly, to a material tax,
penalty or other material liability for prohibited transactions under ERISA or
Section 4975 of the Code; (iii) no fiduciary of any Employee Plan has breached
any of the responsibilities or obligations imposed upon fiduciaries under Title
I of ERISA, which breach would reasonably be expected to result in any material
liability to the Company or any ERISA Affiliate; (iv) all Employee Plans have
been established and maintained substantially in accordance with their terms and
have operated in compliance in all material respects with the requirements
prescribed by any and all statutes (including ERISA and the Code), orders, or
governmental rules and regulations currently in effect with respect thereto
(including all applicable requirements for notification to participants or the
Department of Labor, Internal Revenue Service (the "IRS") or Secretary of the
Treasury), and the Company and each of its subsidiaries have performed all
material obligations required to be performed by them under, are not in any
material respect in default under or violation of, and have no knowledge of any
default or violation by any other party to, any of the Employee Plans; (v) each
Employee Plan intended to qualify under Section 401(a) of the Code and each
trust intended to qualify under Section 501(a) of the Code is the subject of a
favorable determination letter from the IRS, and nothing has occurred which
would reasonably be expected to impair such determination; (vi) all
contributions required to be made with respect to any Employee Plan pursuant to
the terms of the Employee Plan or any collective bargaining agreement, have been
made on or before their due dates; and (vii) neither the Company nor any ERISA
Affiliate has incurred, nor reasonably expects to incur, any liability under
Title IV of ERISA (other than liability for premium payments to the Pension
Benefit Guaranty Corporation arising in the ordinary course).
(c) Section 4.11(c) of the Disclosure Schedule sets forth a true and
complete list of each current or former employee, officer or director of the
Company or any of its subsidiaries who holds (i) any option to purchase Common
Stock as of the date hereof, together with the number of shares of Common Stock
subject to such option, the option price of such option (to the extent
determined as of the date hereof), whether such option is intended to qualify as
an incentive stock option within the meaning of Section 422(b) of the Code (an
"ISO"), and the expiration date of such option; (ii) any other right, directly
or indirectly, to acquire Common Stock, together with the number of shares of
Common Stock subject to such right; and (iii) any restricted shares of Common
Stock, as to which the restrictions relevant thereto have not lapsed. Section
4.11(c) of the Disclosure Schedule also
- 16 -
sets forth the total number of such ISOs, such nonqualified options and
such restricted shares.
(d) Section 4.11(d) of the Disclosure Schedule sets forth a true and
complete list of (i) all employment agreements with officers of the Company or
any of its subsidiaries; (ii) all agreements with consultants who are
individuals obligating the Company or any of its subsidiaries to make annual
cash payments in an amount exceeding $50,000; (iii) all officers of the Company
or any of its subsidiaries who have executed a non-competition agreement with
the Company or any of its subsidiaries; (iv) all severance agreements, programs
and policies of the Company or any of its subsidiaries with or relating to its
employees, in each case with outstanding commitments exceeding $100,000,
excluding programs and policies required to be maintained by law; and (v) all
Employee Plans which contain change in control provisions.
(e) The Company has fiduciary liability insurance of at least
$1,000,000 in effect covering the fiduciaries of the Employee Plans (including
the Company) with respect to whom the Company may have liability.
Section 4.12 Labor Matters. Except as set forth in Section 4.12 of the
-------------
Disclosure Schedule or the SEC Reports, (i) there are no controversies pending
or, to the knowledge of the Company or any of its subsidiaries, threatened,
between the Company or any of its subsidiaries and any of their respective
employees, which controversies would reasonably be expected to have a Material
Adverse Effect; (ii) neither the Company nor any of its subsidiaries is a party
to any material collective bargaining agreement or other labor union contract
applicable to persons employed by the Company or its subsidiaries, nor does the
Company or any of its subsidiaries know of any activities or proceedings of any
labor union to organize any such employees; and (iii) neither the Company nor
any of its subsidiaries has any knowledge of any strikes, slowdowns, work
stoppages, lockouts, or threats thereof, by or with respect to any employees of
the Company or any of its subsidiaries which would reasonably be expected to
have a Material Adverse Effect.
Section 4.13 Limitation on Business Conduct. Except as set forth in
------------------------------
Section 4.13 of the Disclosure Schedule or the SEC Reports, neither the Company
nor its subsidiaries is a party to, or has any obligation under, any contract or
agreement, written or oral, which contains any covenants currently or
prospectively limiting in any material respect the freedom of the Company or any
of its subsidiaries to engage in any line of business or to compete with any
entity.
Section 4.14 Title to Property. Except as set forth in Section 4.14 of
-----------------
the Disclosure Schedule or the SEC Reports, each of the Company and each of its
subsidiaries owns the properties and assets that it purports to own free and
clear of all liens, charges, mortgages, security interests or encumbrances of
any kind ("Liens"), except for Liens which arise in the ordinary course of
business and do not materially impair the Company's or its subsidiaries'
ownership or use of such properties or assets or Liens for taxes not yet due.
With respect to the property and assets it leases, the Company, its
subsidiaries, and to the best of the Company's knowledge each of the other
parties thereto, is in material compliance with such
- 17 -
leases and the Company or its subsidiaries, as the case may be, hold a valid
leasehold interest free of any Liens. The rights, properties and assets
presently owned, leased or licensed by the Company and its subsidiaries include
all rights, properties and assets necessary to permit the Company and its
subsidiaries to conduct their business in all material respects in the same
manner as their businesses have been conducted prior to the date hereof.
Section 4.15 Real Property; Leased Premises. (a) Each of the buildings,
------------------------------
improvements and structures located upon any real property and land owned by the
Company or any of its subsidiaries (collectively, the "Real Property"), and each
of the buildings, structures and premises leased by the Company or any of its
subsidiaries (the "Leased Premises"), is in reasonably good repair and operating
condition, except as would not reasonably be expected to have a Material Adverse
Effect.
(b) Except as set forth in Section 4.15 of the Disclosure Schedule,
the Company has not received any notice of or writing referring to any
requirements by any insurance company that has issued a policy covering any part
of any Real Property or Leased Premises or by any board of fire underwriters or
other body exercising similar functions, requiring any repairs or work to be
done on any part of any Real Property or Leased Premises, except as would not
reasonably be expected to have a Material Adverse Effect.
(c) Except as set forth in Section 4.15 of the Disclosure Schedule,
all public utilities used in the operation of each Real Property or Leased
Premises in the manner currently operated are installed and operating, and all
installation and connection charges have been paid in full or provided for; and
the plumbing, electrical, heating, air conditioning, ventilating, septic and all
other structural or material mechanical systems in the buildings upon the Real
Property and Leased Properties are in good working order and working condition,
so as to be adequate for the operation of the business of the Company and its
subsidiaries as heretofore conducted, except as would not reasonably be expected
to have a Material Adverse Effect.
Section 4.16 Taxes. (a) For purposes of this Agreement, "Tax" or "Taxes"
-----
shall mean taxes, fees, levies, duties, tariffs, imposts, and governmental
impositions or charges of any kind in the nature of (or similar to) taxes,
payable to any federal, state, local or foreign taxing authority, including (i)
income, franchise, profits, gross receipts, ad valorem, net worth, value added,
----------
sales, use, service, real or personal property, special assessments, capital
stock, license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production, excise,
stamp, occupation, premiums, windfall profits, transfer and gains taxes, and
(ii) interest, penalties, additional taxes and additions to tax imposed with
respect thereto; and "Tax Returns" shall mean returns, reports, and information
statements with respect to Taxes required to be filed with the IRS or any other
taxing authority, domestic or foreign, including consolidated, combined and
unitary tax returns (and including returns required in connection with any
Employee Plan).
(b) Other than as disclosed in Section 4.16(b) of the Disclosure
Schedule or the SEC Reports: The Company and its subsidiaries have filed all
United States federal
- 18 -
income Tax Returns and all other material Tax Returns required to be filed by
them, and the Company and its subsidiaries have paid and discharged all material
Taxes due in connection with or with respect to the periods or transactions
covered by such Tax Returns and have paid all other material Taxes as are due,
except such as are being contested in good faith by appropriate proceedings (to
the extent that any such proceedings are required) and with respect to which the
Company is maintaining reserves to the extent currently required, unless the
failure to do so would not reasonably be expected to have a Material Adverse
Effect. Except as does not involve or would not result in liability to the
Company or any of its subsidiaries that would reasonably be expected to have a
Material Adverse Effect, (i) there are no Tax liens on any assets of the Company
or any subsidiary thereof except in respect of Taxes not yet due; and
(ii) neither the Company nor any of its subsidiaries has granted any waiver of
any statute of limitations with respect to, or any extension of a period for the
assessment of, any Tax. To the best knowledge of the Company, there are no
pending or threatened audits, investigations or claims for or relating to any
liability of or in respect of material Taxes of the Company or any of its
subsidiaries. The accruals and reserves for Taxes (including deferred taxes)
reflected in the 1995 Balance Sheet are in all material respects adequate to
cover all Taxes accruable through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with GAAP.
Section 4.17 Environmental Matters. (a) Except as set forth in Section
---------------------
4.17(a) of the Disclosure Schedule or the SEC Reports, the Company and its
subsidiaries are in material compliance with the Environmental Laws (as
hereinafter defined), which compliance includes the possession by the Company
and its subsidiaries of all permits and governmental authorizations required
under applicable Environmental Laws, and compliance in all respects with the
terms and conditions thereof, except in each case where such non-compliance
would not reasonably be expected to have a Material Adverse Effect. Except as
set forth in Section 4.17(a) of the Disclosure Schedule, neither the Company nor
any of its subsidiaries has received any communication (written or oral),
whether from a governmental authority, citizens group, employee or otherwise,
that alleges that the Company or any of its subsidiaries is not in such material
compliance, and there are no circumstances that may prevent or interfere with
such compliance in the future, except where such non-compliance would not
reasonably be expected to have a Material Adverse Effect. Except as set forth
in Section 4.17(a) of the Disclosure Schedule, there are no permits or other
governmental authorizations currently held by the Company or any of its
subsidiaries pursuant to the Environmental Laws.
(b) There are no Environmental Claims (as hereinafter defined),
including claims based on "arranger liability," pending or, to the best
knowledge of the Company, threatened against the Company or any of its
subsidiaries or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has retained or
assumed either contractually or by operation of law, except for such
Environmental Claims that would not reasonably be expected to have a Material
Adverse Effect.
(c) To the best knowledge of the Company, except as set forth in
Section 4.17(c) of the Disclosure Schedule, there are no past or present
actions, inactions, activities,
- 19 -
circumstances, conditions, events or incidents, including the release, emission,
discharge, presence or disposal of any Material of Environmental Concern (as
hereinafter defined), that would form the basis of any Environmental Claim
against the Company or any of its subsidiaries or against any person or entity
whose liability for any Environmental Claim the Company or any of its
subsidiaries have retained or assumed either contractually or by operation of
law, except for such Environmental Claims that would not reasonably be expected
to have a Material Adverse Effect.
(d) Without in any way limiting the generality of the foregoing,
Section 4.17(d) of the Disclosure Schedule sets forth (i) all on-site and off-
site locations where the Company or any of its subsidiaries has stored, disposed
or arranged for the disposal of Materials of Environmental Concern for itself
(but not on behalf of others) and (ii) any underground storage tanks, and the
capacity and contents of such tanks, located on property owned or leased by the
Company or any of its subsidiaries. Except as set forth in Section 4.17(d) of
the Disclosure Schedule, there is no asbestos contained in or forming part of
any building, building component, structure or office space owned or leased by
the Company or any of its subsidiaries. Except as set forth in Section 4.17(d)
of the Disclosure Schedule, no polychlorinated biphenyls (PCB's) or PCB-
containing items are used or stored at any property owned or leased by the
Company or any of its subsidiaries.
(e) For purposes of this Agreement:
(i) "Environmental Claim" means any claim, action, cause of action,
investigation or notice (written or oral) by any person or entity alleging
potential liability (including potential liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on
or resulting from (x) the presence, or release into the environment, of any
Material of Environmental Concern at any location, whether or not owned or
operated by the Company or any of its subsidiaries, or (y) circumstances
forming the basis of any violation, or alleged violation, of any
Environmental Law.
(ii) "Environmental Laws" means all Federal, state, local and foreign
laws or regulations relating to pollution or protection of human health and
the environment (including ambient air, surface water, ground water, land
surface or sub-surface strata), including laws and regulations relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern.
(iii) "Materials of Environmental Concern" means chemicals,
pollutants, contaminants, hazardous materials, hazardous substances and
hazardous wastes, toxic substances, petroleum and petroleum products.
Section 4.18 Intellectual Property. (a) The Company and/or each of its
---------------------
subsidiaries owns, or is licensed or otherwise possesses legally enforceable
rights to use all patents,
- 20 -
trademarks, trade names, service marks, copyrights, and any applications
therefor, technology, know-how, computer software programs or applications, and
tangible or intangible proprietary information or material that are used in the
business of the Company and its subsidiaries as currently conducted, except as
would not reasonably be expected to have a Material Adverse Effect.
(b) To the best knowledge of the Company, there are no valid grounds
for any bona fide claims (i) to the effect that the business of the Company or
any of its subsidiaries infringes on any copyright, patent, trademark, service
xxxx or trade secret; (ii) against the use by the Company or any of its
subsidiaries, of any trademarks, trade names, trade secrets, copyrights,
patents, technology, know-how or computer software programs and applications
used in the business of the Company or any of its subsidiaries as currently
conducted or as proposed to be conducted; (iii) challenging the ownership,
validity or effectiveness of any of the patents, registered and material
unregistered trademarks and service marks, registered copyrights, trade names
and any applications therefor owned by the Company or any of its subsidiaries
(the "Company Intellectual Property Rights") or other trade secret material to
the Company; or (iv) challenging the license or legally enforceable right to use
of any third-party patents, trademarks, service marks and copyrights by the
Company or any of its subsidiaries, except, in each case, for claims that, if
determined adversely to the Company, would not reasonably be expected to have a
Material Adverse Effect.
(c) To the best knowledge of the Company, all material patents,
registered trademarks, service marks and copyrights held by the Company are
valid and subsisting. Except as set forth in Section 4.18(c) of the Disclosure
Schedule or the SEC Reports, to the Company's knowledge, there is no material
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property by any third party, including any employee or former
employee of the Company or any of its subsidiaries.
Section 4.19 Insurance. All material fire and casualty, general
---------
liability, professional liability, business interruption, product liability and
sprinkler and water damage insurance policies maintained by the Company or any
of its subsidiaries are with reputable insurance carriers, are in full force and
effect with no premium delinquencies, provide full and adequate coverage for all
normal risks incident to the business of the Company and its subsidiaries and
their respective properties and assets and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except as would not reasonably be
expected to have a Material Adverse Effect.
Section 4.20 Accounts Receivable. The accounts receivable of the Company
-------------------
and its subsidiaries as reflected in the most recent financial statements
contained in the SEC Reports, to the extent uncollected on the date hereof, and
the accounts receivable reflected on the books of the Company and its
subsidiaries are valid and existing and represent monies due, and the Company
has made reserves reasonably considered adequate for receivables not collectible
in the ordinary course of business, and (subject to the aforesaid reserves) are
subject to no refunds or other adjustments and to no defenses, rights of setoff,
assignments,
- 21 -
restrictions, encumbrances or conditions enforceable by third parties on or
affecting any thereof, except for such refunds, adjustments, defenses, rights of
setoff, assignments, restrictions, encumbrances or conditions as would not
reasonably be expected to have a Material Adverse Effect.
Section 4.21 Customers. Section 4.21 of the Disclosure Schedule sets
---------
forth a list of the Company's twenty five (25) largest customers (detailed, in
the case of government agencies, by separate government agency) in terms of
gross sales for the fiscal year ended August 25, 1995. Except as set forth in
Section 4.21 of the Disclosure Schedule, since August 25, 1995 there have not
been any changes in the business relationships of the Company with any of the
customers named therein that would constitute a Material Adverse Effect.
Section 4.22 Interested Party Transactions. Except as set forth in
-----------------------------
Section 4.22 of the Disclosure Schedule or the SEC Reports, since the date of
the Company's proxy statement dated January 19, 1995, no event has occurred that
would be required to be reported as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC,
except for contracts entered into in the ordinary course of business of the
Company, on an arms-length basis, with terms no less favorable to the Company
than would reasonably be expected in a similar transaction with an unaffiliated
third party.
Section 4.23 Absence of Certain Payments. None of the Company, any of
---------------------------
its subsidiaries, or any of their affiliates or any of their respective
officers, directors, employees or agents or other people acting on behalf of any
of them have (i) engaged in any activity prohibited by the United States Foreign
Corrupt Practices Act of 1977 or any other similar law, regulation, decree,
directive or order of any other country and (ii) without limiting the generality
of the preceding clause (i), used any corporate or other funds for unlawful
contributions, payments, gifts or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others.
None of the Company, any of its subsidiaries or any of their affiliates or any
of their respective directors, officers, employees or agents of other persons
acting on behalf of any of them, has accepted or received any unlawful
contributions, payments, gifts or expenditures.
Section 4.24 Takeover Statute. The Board of Directors of the Company has
----------------
taken all appropriate action so that neither Parent nor Sub will be an
"interested stockholder" within the meaning of Section 203 of the DGCL.
Section 4.25 Opinion of Financial Advisor. The Company has been advised
----------------------------
by its financial advisor, Alex. Xxxxx & Sons Incorporated that in its opinion,
as of the date hereof, the Merger Consideration is fair to the holders of the
Common Stock.
Section 4.26 Brokers. No broker, finder or investment banker (other than
-------
Alex. Xxxxx & Sons Incorporated, the fees and expenses of whom will be paid by
the Company) is entitled to any brokerage, finder's or other fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company. The Company has heretofore
furnished to Parent a complete and correct
- 22 -
copy of all agreements between the Company and Alex. Xxxxx & Sons Incorporated
pursuant to which such firm would be entitled to any payment relating to the
transactions contemplated hereunder.
Section 4.27 Full Disclosure. (i) No statement contained in any
---------------
certificate or schedule furnished or to be furnished by the Company or its
subsidiaries to Parent or Sub in, or pursuant to the provisions of, this
Agreement and (ii) none of the monthly consolidated financial statements for
September 1995 and October 1995 furnished by the Company to Parent, including
the accompanying commentary, contains or shall contain any untrue statement of a
material fact or omits or will omit to state any material fact necessary, in the
light of the circumstances under which it was made, in order to make the
statements herein or therein not misleading.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 5.1 Conduct of Business by the Company Pending the Merger. Except
-----------------------------------------------------
as otherwise expressly contemplated by this Agreement or consented to in advance
by Parent (which consent is subsequently confirmed in writing), which consent
shall not be unreasonably withheld, during the period from the date of this
Agreement through the earlier of the time that the change in composition of the
Board of Directors of the Company contemplated by Section 6.8 has occurred and
the Effective Time, the Company shall, and shall cause its subsidiaries to, in
all material respects carry on their respective businesses in, and not enter
into any material transaction other than in accordance with, the regular and
ordinary course and, to the extent consistent therewith, use its 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 and others having business dealings with
them. Without limiting the generality of the foregoing, and except as otherwise
expressly contemplated by this Agreement (including the time period specified
above), the Company shall not, and shall not permit any of its subsidiaries to,
without the prior consent of Parent (which consent is subsequently confirmed in
writing), which consent shall not be unreasonably withheld:
(a) (i) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its
capital stock, or otherwise make any payments to stockholders of the
Company in their capacity as such, other than dividends payable to the
Company declared by any of the Company's subsidiaries, (ii) 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 (iii) 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;
- 23 -
(b) issue, deliver, sell, pledge, dispose of or otherwise encumber
any shares of its capital stock, any other voting securities or equity
equivalent or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, voting securities or convertible
securities or equity equivalent (other than, in the case of the Company,
the issuance of Common Stock during the period from the date of this
Agreement through the Effective Time upon the exercise of Stock Options or
Warrants outstanding on the date of this Agreement in accordance with their
current terms);
(c) amend or change its Certificate of Incorporation or Bylaws;
(d) acquire or agree to acquire by merging or consolidating with, or
by purchasing a substantial portion of the assets of or equity in, or by
any other manner, any business or any corporation, partnership, association
or other business organization or division thereof or otherwise acquire or
agree to acquire any assets, in each case that are material, individually
or in the aggregate, to the Company and its subsidiaries taken as a whole;
(e) sell, lease or otherwise dispose of, or agree to sell, lease or
otherwise dispose of, any of its assets that are material, individually or
in the aggregate, to the Company and its subsidiaries taken as a whole;
(f) make any commitment or enter into any contract or agreement
except (i) in the ordinary course of business consistent with past practice
or (ii) for capital expenditures to be made in fiscal 1996 as identified in
a capital expenditure budget previously delivered to Parent;
(g) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others, except for borrowings or guarantees incurred in the
ordinary course of business consistent with past practice under financing
arrangements in existence on the date hereof, or make any loans, advances
or capital contributions to, or investments in, any other person, other
than to the Company or any wholly owned subsidiary of the Company and other
than in the ordinary course of business consistent with past practice;
(h) alter through merger, liquidation, reorganization, restructuring
or in any other fashion the corporate structure or ownership of any
subsidiary of the Company;
(i) except as may be required as a result of a change in law or
pursuant to GAAP, change any of the accounting principles or practices used
by it;
(j) make any tax election or settle or compromise any material income
tax liability;
- 24 -
(k) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business and consistent with past practice of liabilities reflected or
reserved against in, or contemplated by, the financial statements (or the
notes thereto) of the Company or incurred in the ordinary course of
business consistent with past practice;
(l) increase in any manner the compensation or fringe benefits of any
of its directors, officers and other key employees or pay any pension or
retirement allowance not required by any existing plan or agreement to any
such employees, or become a party to, amend or commit itself to any
pension, retirement, profit-sharing or welfare benefit plan or agreement or
employment agreement with or for the benefit of any employee, other than
increases in the compensation of employees who are not officers or
directors of the Company made in the ordinary course of business consistent
with past practice, or (except pursuant to the terms of preexisting plans
or agreements) accelerate the vesting of any compensation or benefit;
(m) except in connection with the exercise of its fiduciary duties by
the Board of Directors of the Company as set forth in Section 5.2, waive,
amend or allow to lapse any term or condition of any confidentiality or
"standstill" agreement to which the Company or any subsidiary is a party;
or
(n) take, or agree in writing or otherwise to take, any of the
foregoing actions or any action which would make any of the representations
or warranties of the Company contained in this Agreement untrue or
incorrect at or prior to the Effective Time.
Section 5.2 Acquisition Proposals. From and after the date of this
---------------------
Agreement and prior to the Effective Time, except as provided below, the Company
agrees (i) that neither the Company nor its subsidiaries shall, and the Company
shall direct and use its reasonable best efforts to cause its officers,
directors, employees and authorized agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
subsidiaries) not to, initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer
(including any proposal or offer to its stockholders) with respect to a merger,
acquisition, consolidation or similar transaction involving, or any purchase of,
any equity securities or all or any significant portion of the assets of, the
Company or its subsidiaries (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal"; provided, however, that for purposes
-------- -------
of Section 6.3 only, the term "Acquisition Proposal" shall not include a
proposal to acquire equity securities of the Company in an amount, when added to
all other equity securities of the Company then held by the person or group of
persons making such Acquisition Proposal, less than 20% of the equity securities
of the Company then outstanding) or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions with,
any person or entity relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition Proposal;
(ii) that it will immediately cease and cause to be terminated any existing
activities, discussions or negotiations with any person or
- 25 -
entity conducted heretofore with respect to any of the foregoing and will take
the necessary steps to inform the person or entity referred to above of the
obligations undertaken in this Section 5.2; and (iii) that it will notify Parent
immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it (but the Company shall not be
required to disclose the names of any party making or the terms of any such
proposal); provided, however, that nothing contained in this Section 5.2 shall
-------- -------
prohibit the Board of Directors of the Company from (x) furnishing information
to, or entering into discussions or negotiations with, any person or entity that
makes an unsolicited bona fide proposal in writing to engage in an Acquisition
Proposal transaction which the Board of Directors of the Company in good faith
determines represents a financially superior transaction for the stockholders of
the Company as compared to the Offer and the Merger if, and only to the extent
that, (A) the Board of Directors determines, after consultation with Skadden,
Arps, Slate, Xxxxxxx & Xxxx, or such other outside counsel of national
reputation for its expertise in corporate and securities law matters as the
Company shall select ("Company Counsel"), that failure to take such action would
be inconsistent with the compliance by the Board of Directors with its fiduciary
duties to stockholders imposed by law, (B) prior to or concurrently with
furnishing such information to, or entering into discussions or negotiations
with, such a person or entity, the Company provides written notice to Parent to
the effect that it is furnishing information to, or entering into discussions or
negotiations with, such a person or entity, and (C) the Company keeps Parent
informed of the status (excluding, however, the identity of such person or
entity and the terms of any proposal) of any such discussions or negotiations;
and (y) to the extent applicable, complying with Rule 14e-2 promulgated under
the Exchange Act with regard to an Acquisition Proposal. Nothing in this
Section 5.2 shall (t) permit the Company to terminate this Agreement (except as
contemplated by Section 8.1(b)(ii)), (u) permit the Company to enter into any
agreement with respect to an Acquisition Proposal during the term of this
Agreement, or (v) affect any other obligation of any party under this Agreement.
Section 5.3 Annual Meeting of Stockholders. The Company shall defer
------------------------------
and/or postpone the holding of its Annual Meeting of Stockholders (the "Annual
Meeting") indefinitely pending consummation of the Merger unless the Company is
otherwise required to hold the Annual Meeting by an order from a court of
competent jurisdiction.
Section 5.4 Conduct of Business of Sub Pending the Merger. During the
---------------------------------------------
period from the date of this Agreement through the Effective Time, Sub shall not
engage in any activities of any nature except as provided in or contemplated by
this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1 Company Stockholder Approval; Proxy Statement. (a) If
---------------------------------------------
approval or action in respect of the Merger by the stockholders of the Company
is required by applicable law, the Company shall (i) if appropriate, call a
meeting of its stockholders (the "Stockholder
- 26 -
Meeting") for the purpose of voting upon the Merger and shall use its reasonable
best efforts to obtain stockholder approval of the Merger, (ii) hold the
Stockholder Meeting as soon as practicable following the purchase of shares of
Common Stock pursuant to the Offer, (iii) recommend to its stockholders the
approval of the Merger through its Board of Directors, and (iv) use its
reasonable best efforts to obtain the necessary approvals by its stockholders of
the Merger, this Agreement and the transactions contemplated hereby, but subject
in each case to the fiduciary duties of its Board of Directors under applicable
law as determined by the Board of Directors in good faith after consultation
with Company Counsel. The record date for the Stockholder Meeting shall be a
date subsequent to the date Parent or Sub becomes a record holder of Common
Stock purchased pursuant to the Offer.
(b) If required by applicable law, the Company will, as soon as
practicable following the expiration of the Offer, prepare and file a
preliminary version of the proxy statement to be sent to the stockholders of the
Company in connection with the Stockholders Meeting (the "Proxy Statement"), or,
if applicable, an information statement in lieu of a proxy statement pursuant to
Rule 14C under the Exchange Act (with all references herein to the Proxy
Statement being deemed to refer to such information statement, to the extent
applicable) with the SEC with respect to the Stockholders Meeting and will use
its reasonable best efforts to respond to any comments of the SEC or its staff
and to cause the Proxy Statement to be cleared by the SEC. The Company will
notify Parent 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. The Company shall give Parent and its counsel the
opportunity to review the Proxy Statement prior to its being filed with the SEC
and shall give Parent and its counsel the opportunity to review all amendments
and supplements to the Proxy Statement and all responses to requests for
additional information and replies to comments prior to their being filed with,
or sent to, the SEC. Each of the Company and Parent agrees to use its reasonable
best efforts, after consultation with the other parties hereto, to respond
promptly to all such comments of and requests by the SEC. As promptly as
practicable after the Proxy Statement has been cleared by the SEC, the Company
shall mail the Proxy Statement to the stockholders of the Company. If at any
time prior to the approval of this Agreement by the Company's stockholders there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Company will prepare and mail to its stockholders such
an amendment or supplement. The Company represents and warrants to Parent and
Sub that the Proxy Statement (x) will not, on the date the Proxy Statement (or
any amendment or supplement thereto) is first mailed to stockholders, at the
time of the Stockholders Meeting, or at the Effective Time, 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 the
light of the circumstances under which they are made, not misleading; and (y)
will comply in all material respects with the requirements of the Exchange Act.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by Parent or Sub in writing for
inclusion in the Proxy Statement.
- 27 -
(c) Parent agrees to cause all shares of Common Stock purchased
pursuant to the Offer and all other shares of Common Stock owned by Sub or any
other subsidiary or affiliate of Parent to be voted in favor of the approval of
the Merger.
(d) Parent and Sub represent and warrant to the Company that the
information supplied by Parent or Sub in writing for inclusion in the Proxy
Statement (or any amendment or supplement thereto) will not, on the date the
Proxy Statement is first mailed to stockholders, at the time of the Stockholders
Meeting or at the Effective Time 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 the light of the circumstances under
which they were made, not misleading.
Section 6.2 Access to Information; Confidentiality. The Company shall,
--------------------------------------
and shall cause each of its subsidiaries to, afford to Parent, and to Parent's
accountants, counsel, financial advisers and other representatives, reasonable
access and permit them to make such inspections as they may reasonably require
during normal business hours during the period from the date of this Agreement
through the Effective Time to all their respective properties, books, contracts,
commitments and records and, during such period, the Company shall, and shall
cause each of its subsidiaries to, furnish promptly to Parent (i) a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of federal or state securities laws and
(ii) all other information concerning its business, properties and personnel as
Parent may reasonably request.
Section 6.3 Fees and Expenses. (a) Except as provided in subsection (b)
-----------------
below, whether or not the Merger is consummated, all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such costs and expenses.
(b) The Company agrees that if this Agreement is terminated pursuant
to (i) Section 8.1(d) (iv) and (x) the Offer has remained open for a minimum of
-
twenty (20) business days, (y) the Minimum Condition has not been satisfied and
(z) an Acquisition Proposal existed; (ii) Section 8.1(b)(ii); (iii) Section
-- ---
8.1(c)(i); (iv) Section 8.1(c)(iii); or (v) Section 8.1(d)(i) or (iv) and, with
-- -
respect to this clause (v), at the time of such termination any person, entity
-
or group (as defined in Section 13(d)(3) of the Exchange Act) (other than Parent
or any of its affiliates) shall have become the beneficial owner of more than
20% of the outstanding shares of Common Stock and such person, entity or group
(or any affiliate of such person, entity or group) thereafter (x) shall make an
Acquisition Proposal, and, in the case of a consensual transaction with the
Company, shall substantially have negotiated the terms thereof, at any time on
or prior to the date which is six months after such termination of this
Agreement, and (y) shall consummate such Acquisition Proposal at any time on or
prior to the date which is one year after termination of this Agreement, in the
case of a consensual transaction, or six months after termination of this
Agreement, in the case of a non-consensual transaction, in each case with a
value per share of Common Stock of at least $8.00 (with appropriate adjustments
for reclassifications of capital stock, stock dividends, stock splits, reverse
stock splits and similar events), then the Company shall pay to Parent the sum
of (a) $2.4 million, plus (b) the amount of all documented out-of-pocket costs
and
- 28 -
expenses incurred by Parent, Sub or their affiliates in an aggregate amount not
to exceed $200,000 in connection with this Agreement or the transactions
contemplated hereby. Such payment shall be made as promptly as practicable but
in no event later than two business days following termination of this Agreement
pursuant to the immediately preceding sentence, or, in the case of clause (v) of
-
the immediately preceding sentence, upon consummation of such Acquisition
Proposal, and shall be made by wire transfer of immediately available funds to
an account designated by Parent.
Section 6.4 Stock Plans and Warrants. Prior to the Effective Time, the
------------------------
Company shall adopt any such amendments to its plans under which any Stock
Options have been granted, shall use its reasonable best efforts to obtain any
such consents of the holders of such Stock Options and shall cause the
committees of the Board of Directors that are responsible for the administration
of such plans to take such action as shall be necessary to effectuate the
provisions of Section 2.5(d). The Company shall terminate the 1987 Stock Plan,
the Director Option Plan and the Employee Stock Purchase Plan, with respect to
any further grants, as of the Effective Time. The Company shall give written
notice of the Merger to each registered holder of the Warrants at least twenty
(20) days prior to the Effective Time.
Section 6.5 Reasonable Best Efforts. Upon the terms and subject to the
-----------------------
conditions set forth in this Agreement, each of the parties agrees to use its
reasonable best efforts to take, or cause to be taken, all actions (including
entering into transactions), and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Merger, and the other transactions contemplated by this
Agreement, including (a) the prompt making of their respective filings
(including under the HSR Act) and thereafter the making of any other required
submission with respect to the Offer and the Merger, (b) the obtaining of all
additional necessary actions or non-actions, waivers, consents and approvals
from any applicable federal, state, foreign or supranational court, commission,
governmental body, regulatory or administrative agency, authority or tribunal
of competent jurisdiction (a "Governmental Entity") and the making of all
necessary registrations and filings (including filings with Governmental
Entities) and the taking of all reasonable steps as may be necessary to obtain
an approval or waiver from any Governmental Entity, (c) the obtaining of all
necessary consents, approvals or waivers from third parties, (d) the defending
of any lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transactions contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or other Governmental Entity vacated or reversed, and (e)
the execution and delivery of any additional instruments necessary to consummate
the transactions contemplated by this Agreement; provided, however, that neither
-------- -------
Parent, Sub nor the Company shall be required to take any action pursuant to
clauses (b), (c), (d) or (e) above that would in any event have a Material
Adverse Effect, in the case of the Company, or any similar effect on Parent
and/or its subsidiaries; and provided further that neither Parent, Sub nor any
-------- -------
of their affiliates shall be required to enter into any transaction or take any
other action that would require a waiver of, or that is inconsistent with
satisfaction of, the conditions of the Offer set forth in clauses (a)(iii), (iv)
or (v) in Exhibit A hereto.
- 29 -
Section 6.6 Public Announcements. Parent and Sub, on the one hand, and
--------------------
the Company, on the other hand, will consult with each other before issuing any
press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by applicable law or by obligations pursuant to any listing
agreement with any national securities exchange.
Section 6.7 Indemnification; Directors and Officers Insurance. (a) From
-------------------------------------------------
and after the Effective Time, the Surviving Corporation shall indemnify and hold
harmless all past and present officers and directors (the "Indemnified Parties")
of the Company and of its subsidiaries to the full extent such persons may be
indemnified by the Company pursuant to Delaware law, the Company's Certificate
of Incorporation and Bylaws as in effect from time to time for acts and
omissions occurring at or prior to the Effective Time and shall advance
reasonable litigation expenses incurred by such persons in connection with
defending any action arising out of such acts or omissions, provided that such
persons provide the requisite affirmations and undertaking, as set forth in
Section 145(e) of the DGCL.
(b) In addition, Parent will provide, or cause the Surviving
Corporation to provide, for a period of not less than six years after the
Effective Time, the Company's current directors and officers an insurance and
indemnification policy that provides coverage for events occurring at or prior
to the Effective Time (the "D&O Insurance") that is no less favorable than the
existing policy or, if substantially equivalent insurance coverage is
unavailable, the best available coverage; provided, however, that Parent and the
-------- -------
Surviving Corporation shall not be required to pay an annual premium for the D&O
Insurance in excess of 200% of the annual premium currently paid by the Company
for such insurance, but in such case shall purchase as much such coverage as
possible for such amount.
(c) This Section 6.7 is intended to benefit the Indemnified Parties
and shall be binding on all successors and assigns of Parent, Sub, the Company
and the Surviving Corporation. Parent hereby guarantees the performance by the
Surviving Corporation of the indemnified obligations pursuant to this Section
6.7, which guaranty is absolute and unconditional and shall not be affected by
any circumstance whatsoever, including the bankruptcy or insolvency of the
Surviving Corporation or any other person. The Indemnified Parties shall be
intended third-party beneficiaries of this Section 6.7.
Section 6.8 Board Representation. (a) Promptly upon the purchase of
--------------------
shares of Common Stock pursuant to the Offer, Parent shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors of the Company as will give Parent, subject to compliance
with Section 14(f) of the Exchange Act, representation on the Board of Directors
equal to the product of (a) the total number of directors on the Board of
Directors and (b) the percentage that the number of shares of Common Stock
purchased by Sub bears to the number of shares of Common Stock outstanding, and
the Company shall, upon request by Parent, promptly increase the size of the
Board of Directors and/or exercise its reasonable best efforts to secure the
resignations of such number of directors as is necessary to enable Parent's
designees to be elected to the Board of Directors and shall cause Parent's
designees to be so elected. The Company shall
- 30 -
take, at its expense, all action required pursuant to Section 14(f) and Rule
14f-1 in order to fulfill its obligations under this Section 6.8 and shall
include in the Schedule 14D-9 or otherwise timely mail to its stockholders such
information with respect to the Company and its officers and directors as is
required by Section 14(f) and Rule 14f-1 in order to fulfill its obligations
under this Section 6.8. Parent will supply to the Company in writing and be
solely responsible for any information with respect to itself and its nominees,
officers, directors and affiliates required by Section 14(f) and Rule 14f-1.
(b) Following the election of designees of Parent pursuant to this
Section 6.8, prior to the Effective Time, any amendment of this Agreement or the
Certificate of Incorporation or Bylaws of the Company, any termination of this
Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Sub or waiver
of any of the Company's rights or obligations hereunder shall require the
concurrence of a majority of the directors of the Company then in office who are
directors as of the date hereof or persons designated by such directors and
neither were designated by Parent nor are employees of the Company ("Continuing
Directors"). Prior to the Effective Time, the Company and Parent shall use all
reasonable efforts to ensure that the Company's Board of Directors at all times
includes at least three Continuing Directors.
Section 6.9 Notification of Certain Matters. The Company shall give
-------------------------------
prompt notice to Parent and Sub, and Parent and Sub shall give prompt notice to
the Company, of (i) the occurrence or nonoccurrence of any event the occurrence
or nonoccurrence of which would be likely to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at or prior to the Effective Time, or (ii) any material failure of the
Company, Parent or Sub, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
-------- -------
Section 6.9 shall not cure such breach or non-compliance or limit or otherwise
affect the remedies available hereunder to the party receiving such notice.
Section 6.10 Employment and Benefit Arrangements. (a) From and after the
-----------------------------------
Effective Time, Parent shall cause the Surviving Corporation to honor all
employment, severance, termination and retirement agreements to which the
Company is a party, as such agreements are in effect on the date hereof.
(b) For a one-year period following the Effective Time, Parent shall
cause the Surviving Corporation to provide those employees who are employees of
the Surviving Corporation at the Effective Time with benefits that are, in the
aggregate, no less favorable to such employees as are the benefits of the
Company available to such employees immediately prior to the Effective Time.
(c) The provisions of this Section 6.10 are not intended to create
rights of third party beneficiaries.
- 31 -
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of the following
conditions:
(a) Stockholder Approval. If approval of the Merger by the holders
--------------------
of the Common Stock is required by applicable law, the Merger shall have
been approved by the requisite vote of such holders.
(b) No Order. No court or other Governmental Entity shall have
--------
enacted, issued, promulgated, enforced or entered any law, rule,
regulation, executive order, decree or injunction which prohibits or has
the effect of prohibiting the consummation of the Merger; provided,
--------
however, that, prior to invoking this provision, the Company, Parent and
-------
Sub shall use their reasonable best efforts (subject to the other terms and
conditions of this Agreement) to have any such order, decree or injunction
vacated.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, whether before or after any approval by the
stockholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by the Company if:
(i) the Offer has not been timely commenced (except as a result
of actions or omissions by the Company) in accordance with Section
1.1(a); or
(ii) there is an Acquisition Proposal which the Board of
Directors of the Company in good faith determines represents a
financially superior transaction for the stockholders of the Company
as compared to the Offer and the Merger, and the Board of Directors of
the Company determines, after consultation with Company Counsel, that
failure to terminate this Agreement would be inconsistent with the
compliance by the Board of Directors with its fiduciary duties to
stockholders imposed by law; provided, however, that the right to
-------- -------
terminate this Agreement pursuant to this clause shall not be
available (x) if the Company has breached in any material respect its
obligations under Section 5.2, or (y) if, prior to or concurrently
with any purported termination pursuant to this clause, the Company
shall not have paid the fees and expenses contemplated by Section
6.3(b); or
- 32 -
(iii) any representation or warranty of Parent or Sub shall not
have been true and correct in all material respects when made or shall
have ceased at any later date to be true and correct in all material
respects as if made at such later date; or
(iv) Parent or Sub fails to comply in any material respect with
any of its material obligations or covenants contained herein,
including the obligation of Sub to purchase shares of Common Stock
pursuant to the Offer;
(c) by Parent if:
(i) the Board of Directors of the Company shall have failed to
recommend, or shall have withdrawn, modified or amended in any
material respect its approval or recommendations of the Offer or the
Merger or shall have resolved to do any of the foregoing; or
(ii) any representation or warranty of the Company shall not have
been true and correct in all material respects when made or shall have
ceased at any later date to be true and correct in all material
respects as if made at such later date; provided, however, that the
-------- -------
right to terminate this Agreement pursuant to this clause shall not be
available to Parent if Sub or any affiliate of Sub shall acquire
shares of Common Stock pursuant to the Offer; or
(iii) the Company shall have failed to comply in any material
respect with any of its material obligations or covenants contained
herein; provided, however, that the right to terminate this Agreement
-------- -------
pursuant to this clause shall not be available to Parent if Sub or any
affiliate of Sub shall acquire shares of Common Stock pursuant to the
Offer;
(d) by either Parent or the Company if:
(i) the Merger has not been effected on or prior to the close of
business on April 30, 1996; provided, however, that the right to
-------- -------
terminate this Agreement pursuant to this clause shall not be
available (x) to Parent, if Sub or any affiliate of Sub acquires
Shares pursuant to the Offer, or (y) to any party whose failure to
fulfill any obligation of this Agreement has been the cause of, or
resulted in, the failure of the Merger to have occurred on or prior to
the aforesaid date; or
(ii) any court of competent jurisdiction or any governmental,
administrative or regulatory authority, agency or body shall have
issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree,
ruling or other action shall have become final and nonappealable; or
- 33 -
(iii) upon a vote at a duly held meeting or upon any adjournment
thereof, the stockholders of the Company shall have failed to give any
approval required by applicable law; or
(iv) either (x) as the result of the failure of the Minimum
Condition or any of the other conditions set forth in Exhibit A
hereto, the Offer shall have terminated or expired in accordance with
its terms without Sub having purchased any shares of Common Stock
pursuant to the Offer, or (y) the Offer shall not have been
consummated on or before February 15, 1996; provided, however, that
-------- -------
the right to terminate this Agreement pursuant to this clause shall
not be available to any party whose failure to fulfill any of its
obligations under this Agreement results in the failure of any such
condition.
Section 8.2 Effect of Termination. In the event of termination of this
---------------------
Agreement by either Parent or the Company, as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability hereunder
on the part of the Company, Parent or Sub or their respective officers or
directors (except for Section 6.3, which shall survive the termination);
provided, however, that nothing contained in this Section 8.2 shall relieve any
-------- -------
party hereto from any liability for any willful and material breach of this
Agreement.
Section 8.3 Amendment. This Agreement may be amended by the parties
---------
hereto, by or pursuant to action taken by their respective Boards of Directors,
at any time before or after any approval of the Merger by the stockholders of
the Company but, after the purchase of shares of Common Stock pursuant to the
Offer, no amendment shall be made which decreases the Merger Consideration or
which in any way materially adversely affects the rights of such stockholders,
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.4 Waiver. At any time prior to the Effective Time, the parties
------
hereto may (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 the agreements or
conditions contained herein which may legally be waived. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Non-Survival of Representations and Warranties. None of the
----------------------------------------------
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the termination of this Agreement in
accordance with Article VIII or the Effective Time; provided, however, that
-------- -------
termination of this Agreement shall not
- 34 -
relieve any party hereto from any liability for any willful and material breach
by such party of any such representations or warranties.
Section 9.2 Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed given if delivered personally, sent by
overnight courier or telecopied (with a confirmatory copy sent by overnight
courier) 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:
Tyco International Ltd.
Xxx Xxxx Xxxx
Xxxxxx, Xxx Xxxxxxxxx 00000
Attn: General Counsel
Fax: (000) 000-0000
Conf: (000) 000-0000
with a copy to:
Kramer, Levin, Naftalis, Nessen,
Xxxxx & Xxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Conf: (000) 000-0000
(b) if to the Company to:
The Earth Technology Corporation (USA)
000 Xxxx Xxxxxxxx
Xxxx Xxxxx, Xxxxxxxxxx 00000
Attn: General Counsel
Fax: (000) 000-0000
Conf: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax: (000) 000-0000
Conf: (000) 000-0000
- 35 -
Section 9.3 Interpretation. When a reference is made in this Agreement to
--------------
a Section, such reference shall be to 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." As used in this Agreement, (i)
"business day" shall have the meaning ascribed thereto in Rule 14d-1(c)(6) under
the Exchange Act, and (ii) "subsidiary" shall have the meaning ascribed thereto
in Rule 12b-2 under the Exchange Act.
Section 9.4 Counterparts. This Agreement may be executed in counterparts,
------------
each such counterpart being deemed to be an original instrument and all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties.
Section 9.5 Entire Agreement; No Third-Party Beneficiaries. This
----------------------------------------------
Agreement, including the documents and 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 for the provisions of Section 6.7 is not
intended to confer upon any person other than the parties any rights or remedies
hereunder.
Section 9.6 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 9.7 Assignment. Neither this Agreement nor any of the rights,
----------
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any of or all its rights, interests and
obligations under this Agreement to Parent or to any direct or indirect wholly
owned subsidiary of Parent, but no such assignment shall relieve Sub of any of
its obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
Section 9.8 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party.
Section 9.9 Enforcement of this Agreement; Attorneys Fees. (a) 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
- 36 -
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.
(b) The prevailing party in any judicial action shall be entitled to
receive from the other party reimbursement for the prevailing party's reasonable
attorneys' fees and disbursements, and court costs. The provisions of this
Section 9.9(b) shall survive the termination of this Agreement in accordance
with Article VIII.
[SIGNATURE PAGE FOLLOWS]
- 37 -
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized all as of
the date first written above.
TYCO INTERNATIONAL LTD.
By:______________________________
Name:
Title:
T1 ACQUISITION CORP.
By:______________________________
Name:
Title:
THE XXXX CORPORATION
By:______________________________
Name:
Title:
- 38 -
EXHIBIT A
CONDITIONS OF THE OFFER
Notwithstanding any other term of the Offer or this Agreement, Sub shall
not be required to accept for payment or pay for, subject to any applicable
rules and regulations of the SEC, including Rule 14e-1(c) of the Exchange Act,
any shares of Common Stock not theretofore accepted for payment or paid for and
may terminate or amend the Offer as to such shares of Common Stock, unless (i)
there shall have been validly tendered and not withdrawn prior to the expiration
of the Offer that number of shares of Common Stock which would represent at
least a majority of the outstanding shares of Common Stock on a fully diluted
basis (the "Minimum Condition"), and (ii) any waiting period under the HSR Act
applicable to the purchase of shares of Common Stock 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 of Common Stock not theretofore
accepted for payment or paid for, and may terminate or amend the Offer if at any
time on or after the date of this Agreement and before the acceptance of such
shares of Common Stock for payment or the payment therefor, any of the following
conditions exist or shall occur and remain in effect:
(a) there shall have been instituted, pending or threatened any
action or proceeding by any court or other Governmental Entity, which (i)
seeks to challenge the acquisition by Parent or Sub (or any of its
affiliates) of shares of Common Stock pursuant to the Offer, restrain,
prohibit or delay the making or consummation of the Offer or the Merger, or
obtain damages in connection therewith in an amount which would reasonably
be expected to have a Material Adverse Effect, (ii) seeks to make the
purchase of or payment for some or all of the shares of Common Stock
pursuant to the Offer or the Merger illegal, (iii) seeks to impose
limitations on the ability of Parent (or any of its affiliates) effectively
to acquire or hold, or to require Parent or the Company or any of their
respective affiliates or subsidiaries to dispose of or hold separate, any
portion of the assets or the business of Parent and its affiliates or any
material portion of the assets or the business of the Company and its
subsidiaries taken as a whole, (iv) seeks to impose material limitations on
the ability of Parent (or its affiliates) to exercise full rights of
ownership of the shares of Common Stock purchased by it, including, without
limitation, the right to vote the shares purchased by it on all matters
properly presented to the stockholders of the Company, or (v) seeks to
restrict any future business activity by Parent (or any of its affiliates),
including, without limitation, requiring the prior consent of any person or
entity (including any Governmental Entity) to future transactions by Parent
(or any of its affiliates); or
(b) there shall have been promulgated, enacted, entered, enforced or
deemed applicable to the Offer or the Merger, by any statute, rule,
regulation, judgment, decree, order or injunction, that is reasonably
likely to directly or indirectly result in any of the consequences referred
to in clauses (i) through (v) of subsection (a) above; or
(c) the Merger Agreement shall have been terminated in accordance
with its terms; or
(d) any of the representations and warranties made by the Company in
the Merger Agreement shall not have been true and correct in all material
respects when made, or shall thereafter have ceased to be true and correct
in all material respects as if made as of such later date (other than
representations and warranties made as of a specified date), or the Company
shall not in all material respects have performed in a timely manner each
obligation and agreement and complied in a timely manner with each covenant
to be performed and complied with by it under the Merger Agreement; or
(e) the Company's Board of Directors shall have modified or amended
its recommendation of the Offer in any manner adverse to Parent or shall
have withdrawn its recommendation of the Offer, or shall have recommended
acceptance of any Acquisition Proposal or shall have resolved to do any
of the foregoing; or
(f) (i) any corporation, entity or "group" (as defined in Section
13(d)(3) of the Exchange Act) ("person"), other than Parent and Sub, shall
have acquired beneficial ownership of more than 20% of the outstanding
shares of Common Stock, or shall have been granted any options or rights,
conditional or otherwise, to acquire a total of more than 20% of the
outstanding shares of Common Stock; (ii) any new group shall have been
formed which beneficially owns more than 20% of the outstanding shares of
Common Stock; or (iii) any person (other than Parent or one or more of its
affiliates) shall have entered into an agreement in principle or definitive
agreement with the Company with respect to a tender or exchange offer for
any shares of Common Stock or a merger, consolidation or other business
combination with or involving the Company; or
(g) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the New York Stock
Exchange, the American Stock Exchange or The Nasdaq Stock Market, (ii) a
declaration of a banking moratorium or any suspension of payments in
respect of banks in the United States (whether or not mandatory), (iii) a
commencement or escalation of a war, armed hostilities or other inter-
national or national calamity directly involving the United States, (iv)
any material limitation (whether or not mandatory) by any Governmental
Entity on, or any other event that is reasonably likely materially and
adversely to affect the extension of credit by banks or other lending
institutions in the United States, (v) any decline in either the Dow Xxxxx
Industrial Average or the Standard and Poor's 500 Index by an amount in
excess of 15% measured from the close of business on the date of this
Agreement, or (vi) 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
- 2 -
(h) any change, development, effect or circumstance shall have
occurred or be threatened that would reasonably be expected to have a
Material Adverse Effect; or
(i) the Company shall commence a case under any chapter of Title XI
of the United States Code or any similar law or regulation; or a petition
under any chapter of Title XI of the United States Code or any similar law
or regulation is filed against the Company which is not dismissed within 2
business days.
The foregoing conditions are for the sole benefit of Parent and Sub and may
be asserted by Parent or Sub regardless of the circumstances giving rise to any
such condition 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. The failure by
Parent or Sub at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any right, the waiver of such right with respect to any
particular facts or circumstances shall not be deemed a waiver with respect to
any other facts or circumstances, and each right shall be deemed an ongoing
right which may be asserted at any time and from time to time.
Should the Offer be terminated pursuant to the foregoing provisions, all
tendered shares of Common Stock not theretofore accepted for payment shall
forthwith be returned by the Paying Agent to the tendering stockholders.
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