EXHIBIT 3
Execution Copy
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AGREEMENT AND PLAN OF MERGER
Among
OHM CORPORATION,
INTERNATIONAL TECHNOLOGY CORPORATION
and
IT-OHIO, INC.
Dated as of January 15, 1998
TABLE OF CONTENTS
Page
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RECITALS
ARTICLE I
The Tender Offer and the Stock Purchase
1.1. Tender Offer................................................................................2
1.2. Company Action..............................................................................3
1.3. The Share Repurchase........................................................................4
1.4. Directors; Committees.......................................................................5
ARTICLE II
The Merger; Closing; Effective Time
2.1. The Merger..................................................................................6
2.2. Closing.....................................................................................6
2.3. Effective Time..............................................................................6
ARTICLE III
Articles of Incorporation, Regulations and
Officers and Directors of the Surviving Corporation
3.1. The Articles of Incorporation...............................................................7
3.2. The Regulations.............................................................................7
3.3. Officers and Directors......................................................................7
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock.....................................................................7
4.2. Exchange of Certificates....................................................................9
4.3. Dissenters' Rights.........................................................................12
4.4. Adjustments to Prevent Dilution............................................................13
4.5. Treatment of Warrants and WH Options.......................................................13
4.6. Treatment of the Debentures................................................................13
4.7. NSC Spinoff................................................................................13
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Page
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ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company..............................................14
5.2. Representations and Warranties of Parent
and Merger Sub........................................................................28
ARTICLE VI
Covenants
6.1. Company Interim Operations.................................................................41
6.2. Parent Interim Operations..................................................................44
6.3. Acquisition Proposals......................................................................45
6.4. Meeting of the Company's Shareholders......................................................46
6.5. Meeting of Parent's Stockholders...........................................................47
6.6. Proxy Statement; Registration Statement....................................................47
6.7. Filings; Other Action; Notification........................................................48
6.8. Access.....................................................................................50
6.9. Stock Exchange Listing and De-listing......................................................50
6.10. Publicity..................................................................................50
6.11. Benefits...................................................................................51
6.12. Expenses...................................................................................54
6.13. Indemnification; Directors' and
Officers' Insurance...................................................................55
6.14. Debentures.................................................................................57
6.15. Takeover Statutes..........................................................................58
6.16. Agreement of Affiliates....................................................................58
6.17. Legal Opinion..............................................................................58
ARTICLE VII
Conditions
7.1. Conditions to Obligations of Parent
and Merger Sub........................................................................59
7.2. Conditions to Obligations of the Company...................................................61
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent..............................................................63
8.2. Termination by Either Parent or the Company................................................63
8.3. Termination by Parent......................................................................63
8.4. Termination by the Company.................................................................63
8.5. Effect of Termination and Abandonment......................................................64
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Page
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ARTICLE IX
Miscellaneous and General
9.1. Survival...................................................................................65
9.2. Modification or Amendment..................................................................66
9.3. Waiver of Conditions.......................................................................66
9.4. Counterparts...............................................................................66
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL..............................................66
9.6. Notices....................................................................................67
9.7. Entire Agreement; No Other Representations.................................................68
9.8. No Third Party Beneficiaries...............................................................69
9.9. Obligations of Parent and of the Company...................................................69
9.10. Severability...............................................................................69
9.11. Interpretation.............................................................................69
9.12. Assignment.................................................................................70
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (hereinafter called this "Agreement"),
dated as of January 15, 1998, among OHM CORPORATION, an Ohio corporation (the
"Company"), INTERNATIONAL TECHNOLOGY CORPORATION, a Delaware corporation
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("Parent"), and IT-OHIO, INC., an Ohio corporation and a wholly-owned subsidiary
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of Parent ("Merger Sub"), the Company and Merger Sub sometimes being hereinafter
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collectively referred to as the "Constituent Corporations."
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RECITALS
WHEREAS, the Boards of Directors of Parent and the Company each have
determined that it is in the best interests of their respective shareholders for
Parent and the Company to combine their respective businesses upon the terms and
subject to the conditions set forth herein; and
WHEREAS, in furtherance of such combination, it is proposed that
Merger Sub shall make a cash tender offer (the "Offer") to acquire 13,933,000
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Shares (as defined in Section 1.1(a)) for $11.50 per Share, net to the seller in
cash, upon the terms and subject to the conditions set forth herein; and
WHEREAS, also in furtherance of such combination, the Boards of
Directors of Parent, Merger Sub and the Company have each approved the merger
(the "Merger") of Merger Sub with and into the Company in accordance with the
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applicable provisions of the Ohio General Corporation Law (the "OGCL"), and upon
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the terms and subject to the conditions set forth herein; and
WHEREAS, the Boards of Directors of Parent and the Company wish, as a
part of the transactions contemplated by this Agreement, to provide for the
purchase by the Company of 5,235,381 Shares (as defined in Section 1.1(a)) from
Waste Management, Inc., a Delaware corporation ("WMX"), concurrently with the
payment to BankBoston, N.A., as Depositary for the Offer on behalf of holders of
Shares tendering into the Offer, of the aggregate purchase price for all Shares
purchased in the Offer in a manner that will increase the aggregate number of
Shares acquired for cash and make it possible for the Merger Consideration (as
defined in Section 4.1(a)) to consist solely or primarily of
shares of Parent Common Stock (as defined in Section 4.1(a)); and
WHEREAS, certain shareholders of Parent have entered into agreements
with the Company and Parent providing that such shareholders will vote or cause
all shares of 6% Preferred Shares (as defined in Section 5.2(c)) controlled by
them to be voted in favor of the issuance of shares of Parent Common Stock in
the Merger (as defined in Section 2.1); and
WHEREAS, certain shareholders of the Company have entered into
agreements with the Company and Parent providing that such shareholders will
tender or cause to be tendered in the Offer all or a specified number of Shares
controlled by them, and will vote or cause to be voted all Shares controlled by
them in favor of the Merger; and
WHEREAS, the Company, Parent and Merger Sub desire to make certain
representations, warranties, covenants and agreements in connection with this
Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein the
parties hereto hereby agree as follows:
ARTICLE I
The Tender Offer and the Stock Purchase
1.1. Tender Offer. (a) Provided that this Agreement shall not have
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been terminated in accordance with Article VIII hereof and none of the events
set forth in Annex A hereto shall have occurred or be existing, within five
business days of the date hereof, Merger Sub will commence the Offer for
13,933,000 Shares at a price of $11.50 per Share, net to the seller in cash,
subject to the conditions set forth in Annex A hereto. Subject to the conditions
of the Offer set forth in Annex A hereto, Merger Sub will promptly accept for
payment and pay for all Shares that are validly tendered and not withdrawn as
soon as practicable after the later of 9:00 a.m. e.s.t. on February 17, 1998 and
the twentieth business day of the Offer. Merger Sub shall not, without the prior
written consent of the Company (such consent to be authorized by the Board of
Directors of the Company), decrease the price per Share or
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change the form of consideration payable in the Offer, decrease the number of
Shares sought, change the conditions to the Offer, impose additional conditions
to the Offer or amend any other term of the Offer in any manner adverse to the
holders of Shares or extend the Offer if all of the conditions to the Offer are
satisfied or waived or waive the condition set forth in paragraph (f) of Annex A
to this Agreement. So long as this Agreement is in effect and the conditions to
the Offer have not been satisfied or waived, at the request of the Company from
time to time, Merger Sub shall extend the Offer for a period not to exceed 10
business days after the previously scheduled expiration date of the Offer;
provided, however, in no event shall Parent be obligated to extend the Offer
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beyond March 31, 1998.
(b) Parent agrees that the Offer to Purchase and related Letter of
Transmittal relating to the Offer (which together constitute the "Offer
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Documents") shall, in all material respects, comply with the requirements of the
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Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
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and regulations thereunder and other applicable laws. The Company and its
counsel shall be given an opportunity to review and comment on the Offer
Documents prior to their being filed with the SEC.
1.2. Company Action
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(a) The Company hereby approves of and consents to the Offer and
represents that its Board of Directors, at a meeting duly called and held on
January 14, 1998, (i) unanimously determined that the transactions contemplated
by this Agreement, including without limitation the Offer and the Merger, are
fair to and in the best interests of the Company and its shareholders and
unanimously approved and adopted this Agreement and the Offer, the Merger and
the other transactions contemplated hereby (the "Transactions"), and (ii)
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unanimously recommended that the shareholders of the Company accept the Offer
and adopt this Agreement.
(b) On the date of commencement of the Offer, the Company shall file
with the Securities and Exchange Commission (the "SEC") a
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Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing the
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recommendation of the Company's Board of Directors described in Section 1.2(a);
provided, however, that if the Board of Directors of the Company determines in
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good faith,
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taking into consideration the advice of outside legal counsel, that
the amendment or withdrawal of such recommendation is likely to be required in
order for its members to comply with their fiduciary duties under applicable
law, then any such amendment or withdrawal, and any related amendment of the
Schedule 14D-9, shall not constitute a breach of this Agreement. The Company
shall disseminate the Schedule 14D-9 to the extent required by Rule 14d-9
promulgated under the Exchange Act and any other applicable federal securities
laws. The Schedule 14d-9 shall, in all material respects, comply with the
requirements of the Exchange Act and the rules and regulations thereunder and
other applicable laws. Merger Sub and its counsel shall be given an opportunity
to review and comment on the Schedule 14D-9 and any amendment thereto prior to
their being filed with the SEC.
(c) In connection with the Offer, the Company will cause its transfer
agent to furnish promptly to Merger Sub a list, as of a recent date, of the
shareholders of record of Shares and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Shares and lists of
security positions of Shares held in stock depositories. The Company will
furnish Merger Sub with such additional information (including, but not limited
to, updated lists of holders of Shares and their addresses, mailing labels and
lists of security positions) and such other assistance as Parent or Merger Sub
or their agents may reasonably request in communicating the Offer to the record
and beneficial holders of Shares.
1.3. The Share Repurchase. The Company agrees that it shall,
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concurrently with the payment to BankBoston, N.A., as Depositary for the Offer
on behalf of holders of Shares tendering into the Offer, of the aggregate
purchase price for all Shares purchased in the Offer, purchase from WMX, at a
price of $11.50 per Share in cash, 5,235,381 Shares, all pursuant to the Share
Repurchase Agreement, dated the date hereof (the "Share Repurchase Agreement"),
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between the Company and WMX (the "Share Repurchase").
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1.4. Directors; Committees.
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(a) If requested by Parent, the Company will, promptly following the
purchase by Merger Sub of Shares pursuant to the Offer, take all actions
necessary to cause persons designated by Parent to become directors of the
Company so that the total number of such persons equals not
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less than the product of the total number of directors on the Board (giving
effect to the directors elected pursuant to this sentence) multiplied by the
percentage that the aggregate number of Shares beneficially owned by the Parent
Companies (as hereinafter defined) bears to the total number of Shares then
issued and outstanding rounded up to the next greatest nearest whole number. In
furtherance thereof, the Company will increase the size of the Board, or use its
reasonable best efforts to secure the resignation of directors, or both, as is
necessary to permit Parent's designees to be elected to the Company's Board of
Directors; provided that at all times prior to the Effective Time, the Company's
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Board of Directors shall consist of at least two members who are neither
officers, stockholders, designees nor affiliates of the Parent Companies
("Parent Representatives"). At such time, the Company, if so requested, will use
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its reasonable best efforts to cause persons designated by Parent to constitute
the same percentage of each committee of such board, each board of directors of
each Subsidiary (as hereinafter defined) of the Company and each committee of
each such board (in each case to the extent of the Company's ability to elect
such persons). The Company's obligations to appoint designees of Parent to the
Board of Directors of the Company shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to such Section and Rule in order to fulfill
its obligations under this Section 1.4(a) and shall include in the Schedule 14D-
9, or in a separate Rule 14f-1 information statement provided to shareholders,
such information with respect to the Company and its officers and directors and
the Parent Representatives as is required under Section 14(f) and Rule 14f-1 to
fulfill its obligations under this Section 1.4(a). Parent and Merger Sub will
supply to the Company and will be solely responsible for any information with
respect to either of them and their nominees, officers, directors and affiliates
required by Section 14(f) and Rule 14f-1.
(b) No action taken by the Board of Directors of the Company prior to
the Effective Time pursuant to Article VIII or Sections 9.2 or 9.3 shall be
effective unless such action is approved by the affirmative vote of at least a
majority of the directors of the Company who are not Parent Representatives.
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ARTICLE II
The Merger; Closing; Effective Time
2.1. The Merger. Subject to the terms and conditions of this
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Agreement, at the Effective Time (as defined in Section 2.3) Merger Sub shall be
merged with and into the Company and the separate corporate existence of Merger
Sub shall thereupon cease (the "Merger"). The Company shall be the surviving
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corporation in the Merger (sometimes hereinafter referred to as the "Surviving
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Corporation") and shall continue to be governed by the laws of the State of
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Ohio, and the separate corporate existence of the Company with all its rights,
privileges, immunities, powers and franchises shall continue unaffected by the
Merger, except as set forth in Section 3.1. The Merger shall have the effects
specified in the OGCL.
2.2. Closing. The closing of the Merger (the "Closing") shall take
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place (i) at the offices of Xxxxxx, Xxxx & Xxxxxxxx, LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx at 10:00 A.M. on the first business day following the day on
which the last to be fulfilled or waived of the conditions set forth in Article
VII hereof shall be fulfilled or waived in accordance with this Agreement or
(ii) at such other place and time and/or on such other date as the Company and
Parent may agree. The date on which the Closing occurs is hereinafter referred
to as the "Closing Date."
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2.3. Effective Time. As soon as practicable following the Closing,
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the Company and Parent will cause a Certificate of Merger (the "Ohio Certificate
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of Merger") to be executed and filed with the Secretary of State of the State of
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Ohio as provided in Section 1701.81 of the OGCL. The Merger shall become
effective on the date on which the Ohio Certificate of Merger has been duly
filed with the Secretary of State of the State of Ohio, and such time is
hereinafter referred to as the "Effective Time."
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ARTICLE III
Articles of Incorporation, Regulations and
Officers and Directors of the Surviving Corporation
3.1. The Articles of Incorporation. Unless otherwise determined by
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Parent prior to the Effective Time, the articles of incorporation of Merger Sub
(the "Articles") in effect at the Effective Time shall be the articles of
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incorporation of the Surviving Corporation, until duly amended in accordance
with the terms thereof and the OGCL, except that Article FIRST of the Articles
shall be amended to read in its entirety as follows:
"The name of the Corporation shall be OHM Corporation."
3.2. The Regulations. Unless otherwise determined by Parent prior
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to the Effective Time, the regulations of Merger Sub in effect at the Effective
Time shall be the Regulations of the Surviving Corporation, until duly amended
in accordance with the terms thereof and the OGCL.
3.3. Officers and Directors. The directors of Merger Sub and the
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officers of the Company at the Effective Time shall, from and after the
Effective Time, be the directors and officers, respectively, 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 Articles and the Surviving Corporation's regulations.
ARTICLE IV
Effect of the Merger on Capital Stock;
Exchange of Certificates
4.1. Effect on Capital Stock. At the Effective Time, as a result
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of the Merger and without any action on the part of the holders of any shares of
capital stock of the Company or Merger Sub:
(a) Merger Consideration. Each share of Common Stock, par value $0.10
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per share, of the Company (each, a "Share" and, collectively, the "Shares")
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issued and outstanding immediately prior to the Effective Time (other than (x)
Shares purchased in the Offer or otherwise owned by Parent, Merger Sub or any
other direct or indirect Subsidiary of Parent (collectively, the "Parent
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Companies"), (y) Shares that are owned by the Company or any direct or indirect
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Subsidiary of the Company and in each case not held on behalf of third parties,
or (z) Shares ("Dissenting Shares") that are owned by shareholders ("Dissenting
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Shareholders") that have properly exercised appraisal rights pursuant to
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Sections 1701.84 et seq. of the OGCL (collectively, "Excluded Shares")) shall be
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converted into,
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and become exchangeable for the right to receive (i) 1.394 (the
"Exchange Ratio") fully paid and non-assessable shares of Common Stock, $.01 par
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value per share, of Parent (the "Parent Common Stock"); provided, however, that
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if the aggregate number of Shares accepted for payment and paid for pursuant to
the Offer and purchased from WMX pursuant to the Repurchase Agreement is less
than 19,168,381 Shares (the "Cash Share Number") (the number of Shares so paid
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for and purchased being referred to herein as the "Purchased Share Number"),
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then the Exchange Ratio shall be adjusted (the "Adjusted Exchange Ratio") and
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shall be equal to the product obtained by multiplying the Exchange Ratio by a
fraction, (A) the numerator of which is equal to (x) the number of Shares issued
and outstanding immediately prior to the Effective Time (excluding Excluded
Shares other than Dissenting Shares) (the "Final Outstanding Number") plus (y)
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the Purchased Share Number minus (z) the Cash Share Number and (B) the
denominator of which is the Final Outstanding Number and (ii) if the Exchange
Ratio has been adjusted pursuant to the immediately preceding proviso, an amount
in cash equal to a fraction, (A) the numerator of which is the product of
$11.50 and the amount by which the Cash Share Number exceeds the Purchased Share
Number and (B) the denominator of which is the Final Outstanding Number. The
consideration referred to in clauses (i) and (ii) of this Section 4.1(a) is
hereafter referred to collectively as the "Merger Consideration." At the
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Effective Time, all Shares shall no longer be outstanding and shall be cancelled
and retired and shall cease to exist (in the case of Excluded Shares other than
Dissenting Shares, without the payment of any consideration therefor), and each
certificate (a "Certificate") formerly representing any of such Shares, other
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than Excluded Shares, shall thereafter represent only the right to receive the
Merger Consideration and the right, if any, to receive cash in lieu of
fractional shares pursuant to Section 4.2(e) and any distribution or dividends
pursuant to Section 4.2(c).
(b) Capital Stock of Merger Sub. At the Effective Time, each share
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of Common Stock, par value $0.10 per share, of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into one share of
common stock of the Surviving Corporation.
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4.2. Exchange of Certificates.
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(a) Exchange Agent. As of the Effective Time, Parent shall deposit,
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or shall cause to be deposited, with an exchange agent selected by Parent with
the Company's prior approval, which shall not be unreasonably withheld (the
"Exchange Agent"), for the benefit of the holders of Shares (other than Excluded
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Shares), certificates representing Parent Common Stock and (if applicable) cash
comprising the aggregate Merger Consideration payable in accordance with Section
4.1(a) and, after the Effective Time, if applicable, any cash, dividends or
other distributions with respect to the Parent Common Stock to be issued or paid
pursuant to the last sentence of Section 4.2(c) in exchange for Shares
outstanding immediately prior to the Effective Time (other than Excluded Shares)
upon due surrender of the Certificates (or affidavits of loss in lieu thereof)
pursuant to the provisions of this Article IV (such certificates for shares of
Parent Common Stock and cash (if any) comprising the Merger Consideration,
together with the amount of any dividends or other distributions payable with
respect thereto, being hereinafter referred to as the "Exchange Fund").
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(b) Exchange Procedures. As soon as reasonably practicable following
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the Effective Time, the Surviving Corporation shall cause the Exchange Agent to
mail to each holder of record of Shares (other than holders of Excluded Shares)
(i) a letter of transmittal specifying that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the
Certificates (or affidavits of loss in lieu thereof) to the Exchange Agent, such
letter of transmittal to be in such form and have such other provisions as
Parent and the Company may reasonably agree, and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for (A) certificates
representing shares of Parent Common Stock comprising the Merger Consideration,
(B) if applicable, cash comprising the Merger Consideration, and (C) any unpaid
dividends and other distributions and cash in lieu of fractional shares.
Subject to Section 4.2(g), upon surrender of a Certificate for cancellation to
the Exchange Agent together with such letter of transmittal, duly executed, the
holder of such Certificate shall be entitled to receive in exchange therefor (x)
a certificate representing that number of whole shares of Parent Common Stock
that such holder is entitled to receive pursuant to
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this Article IV, (y) a check in the amount (after giving effect to any required
tax withholdings) of (A) any cash comprising the Merger Consideration, plus (B)
any cash in lieu of fractional shares, plus (C) any unpaid non-stock dividends
and any other dividends or other distributions that such holder has the right to
receive pursuant to the provisions of this Article IV, and the Certificate so
surrendered shall forthwith be cancelled. No interest will be paid or accrued on
any amount payable upon due surrender of the Certificates. In the event of a
transfer of ownership of Shares that is not registered in the transfer records
of the Company, a certificate representing the proper number of shares of Parent
Common Stock, together with a check for any cash to be paid upon due surrender
of the Certificate and any other dividends or distributions in respect thereof,
may be issued and/or paid to such a transferee if the Certificate formerly
representing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid, in form and substance reasonably
satisfactory to Parent and the Exchange Agent. If any check or any certificate
for shares of Parent Common Stock is to be issued in a name other than that in
which the Certificate surrendered in exchange therefor is registered, it shall
be a condition of such exchange that the Person (as defined below) requesting
such exchange shall pay any transfer or other taxes required by reason of the
issuance of certificates for shares of Parent Common Stock in a name other than
that of the registered holder of the Certificate surrendered, or shall establish
to the satisfaction of Parent and the Exchange Agent that such tax has been paid
or is not applicable.
For the purposes of this Agreement, the term "Person" shall mean any
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individual, corporation (including not-for-profit), general or limited
partnership, limited liability company, joint venture, estate, trust,
association, organization, Governmental Entity (as defined in Section 5.1(d)) or
other entity of any kind or nature.
(c) Distributions with Respect to Unexchanged Shares; Voting. No
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dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate until the holder of such
Certificate shall surrender such Certificate. Subject to the effect of
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applicable laws, following surrender of any Certificate, there shall be issued
and/or paid to the former holder of such Certificate, without interest, the
dividends or other distributions payable with respect to whole shares of Parent
Common Stock with a record date on or after the Effective Time but with a
payment date prior to surrender.
(d) No Further Ownership Right in Shares. All shares of Parent Common
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Stock issued upon the surrender for exchange of Certificates in accordance with
the terms of this Article IV (including any cash paid pursuant to this Article
IV) will be deemed, to the fullest extent permitted by applicable law, to have
been issued (and paid) in full satisfaction of all rights pertaining to the
Shares theretofore represented by such Certificates. After the Effective Time,
there shall be no transfers on the stock transfer books of the Company of the
Shares that were outstanding immediately prior to the Effective Time.
(e) Fractional Shares. Notwithstanding any other provision of this
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Agreement, no fractional shares of Parent Common Stock will be issued and any
holder of Shares entitled to receive a fractional share of Parent Common Stock
but for this Section 4.2(e) shall be entitled to receive a cash payment in lieu
thereof, which payment shall represent such holder's proportionate interest in a
share of Parent Common Stock based on the average closing price per share of
Parent Common Stock on the New York Stock Exchange, Inc. (the "NYSE") for the
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ten trading days immediately prior to the Effective Time, as reported in the New
York City edition of The Wall Street Journal.
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(f) Termination of Exchange Fund. Any portion of the Exchange Fund
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(including the proceeds of any investments thereof and any Parent Common Stock)
that remains unclaimed by the shareholders of the Company for six months
following the Effective Time shall be paid to Parent. Any shareholders of the
Company who have not theretofore complied with this Article IV shall thereafter
look only to Parent for payment of their shares of Parent Common Stock and any
cash, dividends and other distributions in respect thereof payable and/or
issuable pursuant to Section 4.1 and Section 4.2(c) upon due surrender of their
Certificates (or affidavits of loss in lieu thereof), in each case, without any
interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving
Corporation, the Exchange Agent or any other Person shall be liable to any
former holder of Shares for any amount properly delivered to a public
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official pursuant to applicable abandoned property, escheat or similar laws.
(g) Lost, Stolen or Destroyed Certificates. In the event any
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Certificate shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the Person claiming such Certificate to be lost,
stolen or destroyed and, if required by Parent, the posting by such Person of a
bond in customary amount as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange
for such lost, stolen or destroyed Certificate the shares of Parent Common Stock
and any cash, cash in lieu of fractional shares and any unpaid dividends or
other distributions in respect of the Shares represented by such Certificate
pursuant to this Agreement.
4.3. Dissenters' Rights. No Dissenting Shareholder shall be
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entitled to any portion of the Merger Consideration or cash in lieu of
fractional shares thereof or any dividends or other distributions pursuant to
this Article IV unless and until such Dissenting Shareholder shall have failed
to perfect or shall have effectively withdrawn or lost such holder's right to
dissent from the Merger under the OGCL, and any Dissenting Shareholder shall be
entitled to receive only the payment provided by Sections 1701.85 et seq. of the
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OGCL with respect to Shares owned by such Dissenting Shareholder. If any Person
who otherwise would be deemed a Dissenting Shareholder shall have failed to
properly perfect or shall have effectively withdrawn or lost the right to
dissent with respect to any Shares, such Shares shall thereupon be treated as
though such Shares had been converted into the right to receive the Merger
Consideration with respect to such Shares as provided in this Article IV. The
Company shall give Parent (i) prompt notice of any written demands for
appraisal, attempted withdrawals of such demands, and any other instruments
served pursuant to applicable law received by the Company relating to
shareholders rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demand for appraisal under the
OGCL. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
Dissenting Shares, offer to settle or settle any such demands or approve any
withdrawal of any such demands.
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4.4. Adjustments to Prevent Dilution. In the event that the
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Company changes the number of Shares or securities convertible or exchangeable
into or exercisable for Shares, or Parent changes the number of shares of Parent
Common Stock or securities convertible or exchangeable into or exercisable for
shares of Parent Common Stock, issued and outstanding prior to the Effective
Time as a result of a reclassification, stock split (including a reverse split),
stock dividend or distribution, recapitalization, merger, subdivision, issuer
tender or exchange offer, or other similar transaction, the Merger Consideration
shall be equitably adjusted.
4.5. Treatment of Warrants and WH Options. In consideration of the
------------------------------------
parties' respective agreements to consummate the Transactions, the Company,
Parent and Merger Sub hereby agree as follows:
(a) Pursuant to the Share Repurchase Agreement, at the Effective Time,
the Warrants (as hereinafter defined) shall be cancelled and the Warrant
Agreement (as hereinafter defined) shall be terminated.
(b) Pursuant to that certain letter agreement, dated the date hereof,
between the Company and the holder of the WH Options (the "Option Termination
Agreement"), the WH Options shall be terminated on the earliest to occur of (i)
the acceptance by Merger Sub of Shares for payment in the Offer, or (ii) the
Effective Time, in exchange for the payment by the Company to such holder of
$1,500,000 in cash.
4.6. Treatment of the Debentures. The Company"s 8% Convertible
---------------------------
Subordinated Debentures due October 1, 2006 (the "Debentures") shall be treated
----------
as set forth in Section 6.13.
4.7. NSC Spinoff. Concurrently with the acceptance by Merger Sub
-----------
of Shares for payment in the Offer, the Company shall pay a pro rata taxable
--- ----
distribution (the "NSC Distribution"), to holders of record of the Shares as of
----------------
the close of business on the date immediately prior to the date Merger Sub
accepts Shares for payment in the Offer, of all of the shares of common stock,
par value $0.01 per share, of NSC Corporation held by the Company in a manner
reasonably satisfactory to Parent, and the Offer Documents shall not contain any
terms or conditions requiring holders of Shares to deliver NSC Corporation
shares to Parent. All corporate action on the part of the Company necessary to
-13-
effect the NSC Distribution shall be taken prior to the date on which Merger Sub
accepts Shares for payment pursuant to the Offer. The NSC Distribution is an
integral part of the plan of acquisition of the Company by Parent, with the
result that for federal income tax purposes the NSC Distribution will be treated
as a redemption of a pro rata portion of the Shares held by each holder of
--- ----
Shares under the principle of Xxxx x. Xxxxxxxxx, 213 F.2d 914 (6th Cir. 1954).
---- ---------
ARTICLE V
Representations and Warranties
5.1. Representations and Warranties of the Company. Except as set
---------------------------------------------
forth in the corresponding sections or subsections of the disclosure letter
delivered to Parent by the Company on or prior to entering into this Agreement
(the "Company Disclosure Letter"), the Company hereby represents and warrants to
-------------------------
Parent and Merger Sub that:
(a) Organization, Good Standing and Qualification. Each of the
---------------------------------------------
Company and its Subsidiaries is a corporation duly organized, validly existing
and in good standing under the laws of its respective jurisdiction of
organization and has all requisite corporate or similar power and authority to
own and operate its properties and assets and to carry on its business as
presently conducted and is qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership or operation of its
properties or conduct of its business requires such qualification, except where
any failure to be so qualified or in good standing, individually or when taken
together with all other such failures, is not reasonably likely to have a
Company Material Adverse Effect (as defined below). The Company has made
available to Parent a complete and correct copy of the Company's and its
Subsidiaries' articles or certificates of incorporation and by-laws or
regulations, each as amended to the date hereof. The Company's and its
Subsidiaries' articles or certificates of incorporation and by-laws or
regulations so delivered are in full force and effect.
As used in this Agreement, the term (i) "Subsidiary" means, with
----------
respect to the Company, Parent or Merger Sub, as the case may be, any entity,
whether incorporated or unincorporated, of which at least a majority
-14-
of the securities or ownership interests having by their terms ordinary voting
power to elect a majority of the board of directors or other persons performing
similar functions is directly or indirectly owned or controlled by such party or
by one or more of its respective Subsidiaries or by such party and any one or
more of its respective Subsidiaries, and (ii) "Company Material Adverse Effect"
-------------------------------
means a material adverse effect on the financial condition, properties, business
or results of operations of the Company and its Subsidiaries taken as a whole;
provided, however, that to the extent that any such effect results directly from
-------- -------
the public announcement of the transactions contemplated by this Agreement or
actions taken by Parent or its Subsidiaries after the date of this Agreement,
such effect shall not be considered when determining if a Company Material
Adverse Effect has occurred.
(b) Capital Structure. The authorized capital stock of the Company
-----------------
consists of 50,000,000 Shares, of which 27,554,547 Shares were outstanding as of
the close of business on January 14, 1998, 1,000,000 shares of Class A Preferred
Stock, par value $10.00 per share, of which no shares were outstanding as of the
date of this Agreement, and 1,000,000 shares of Class B Preferred Stock, par
value $10.00 per share, of which no shares were outstanding as of the date of
this Agreement. All of the outstanding Shares have been duly authorized and are
validly issued, fully paid and nonassessable. The Company has no Shares or
shares of Class A Preferred Stock or Class B Preferred Stock reserved for
issuance, except that, as of January 14, 1998, there were 4,950,000 Shares
reserved for issuance pursuant to the Company's 1986 Stock Option Plan,
Incentive Stock Plan and Nonqualified Stock Option Plan for Directors, and
Shares having a maximum aggregate offering price of $2,400,000 reserved for
issuance pursuant to the Company's Directors' Deferred Fee Plan (such plan,
collectively with such 1986 Stock Option Plan, Incentive Stock Plan and
Nonqualified Stock Option Plan for Directors, the "Stock Plans"), 700,000 Shares
-----------
subject to issuance upon exercise of the warrants (the "Warrants") issued under
--------
the Warrant Agreement, dated May 30, 1995, among the Company, WMX and Rust
International Inc., 1,000,000 Shares subject to issuance upon exercise of the
options set forth in the First Option Agreement and Second Option Agreement,
each dated as of March 28, 1995, between the Company and H. Xxxxx Xxxxxxxx (the
"WH Options"), and 2,395,834 Shares subject to issuance pursuant to the
Debentures. The Company Disclosure Letter contains a correct and complete list
of each outstanding option to
-15-
purchase Shares under the Stock Plans (each a "Company Option"), including the
--------------
holder (each of whom is a current or former director, officer or employee of the
Company or its Subsidiaries), date of grant, exercise price and number of Shares
subject thereto. Each of the outstanding shares of capital stock or other
securities of each of the Company's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and, except for directors' qualifying
shares, owned by a direct or indirect wholly owned subsidiary of the Company,
free and clear of any lien, pledge, security interest, claim or other
encumbrance. Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock appreciation
rights, redemption rights, repurchase rights, agreements, arrangements or
commitments to issue or sell any shares of capital stock or other securities of
the Company or any of its Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of the Company or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. Except for the Warrants, the WH Options and
the Debentures, the Company does not have outstanding any bonds, debentures,
notes or other obligations the holders of which have the right to vote (or
convertible into or exercisable for securities having the right to vote) with
the stockholders of the Company on any matter ("Voting Debt"). The Company is
-----------
not the beneficial owner of any equity securities, except shares of capital
stock of the Company's Subsidiaries.
(c) Corporate Authority; Approval and Fairness. (i) The Company has
------------------------------------------
all requisite corporate power and authority and has taken all corporate action
necessary in order to execute, deliver and perform its obligations under this
Agreement and to consummate, subject only to adoption of this Agreement by the
holders of a majority of the outstanding Shares (the "Company Requisite Vote"),
----------------------
the Merger. This Agreement is a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles (the "Bankruptcy and Equity Exception").
-------------------------------
(ii) The board of directors of the Company has received the opinion
of its financial advisor, BT Alex.
-16-
Xxxxx Incorporated, to the effect that the aggregate consideration to be
received by the holders of the Shares in the Offer, the Merger and the NSC
Distribution is fair from a financial point of view to such holders.
(d) Governmental Filings; No Violations. (i) Other than the filings
-----------------------------------
and/or notices (A) under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), the Securities Act of 1933, as amended (the
-------
"Securities Act")and the Exchange Act, (B) to comply with state securities or
---------------
"blue sky" laws, including, without limitation, the filing required by Section
1707.041 of the Ohio Revised Code, and (C) required to be made with the NYSE, no
notices, reports or other filings are required to be made by the Company with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by the Company from, any governmental or regulatory
authority, agency, commission, body or other governmental entity (each, a
"Governmental Entity"), in connection with the execution and delivery of this
--------------------
Agreement by the Company and the Merger and the other transactions contemplated
hereby, except those that the failure to make or obtain are not, individually or
in the aggregate, reasonably likely to have a Company Material Adverse Effect or
prevent, materially delay or materially impair the ability of the Company to
consummate transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by the
Company do not, and the consummation by the Company of the Merger and the other
transactions contemplated hereby will not, constitute or result in (A) a breach
or violation of, or a default under, the articles of incorporation or the
regulations of the Company or the comparable governing instruments of any of its
Subsidiaries, (B) a breach or violation of, or a default under, the acceleration
of any obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of the Company or any of its Subsidiaries (with or
without notice, lapse of time or both) pursuant to, any agreement, lease,
contract, note, mortgage, indenture, arrangement or other obligation reasonably
likely to result in payments made by any party of $1,000,000 or more in any
calendar year and not otherwise terminable by the other party thereto on 90
days' or less notice ("Contracts") binding upon the Company or any of its
---------
Subsidiaries or any Law (as defined in Section 5.1(i)) or governmental or non-
governmental permit or license to which the Company or any of its Subsidiaries
-17-
is subject or (C) any change in the rights or obligations of any party under any
such Contract, except, in the case of clause (B) or (C) above, for any breach,
violation, default, acceleration, creation or change that, individually or in
the aggregate, is not reasonably likely to have a Company Material Adverse
Effect or prevent, materially delay or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement. Section
5.1(d) of the Company Disclosure Letter sets forth, to the knowledge of the
executive officers of the Company, a correct and complete list of Contracts of
the Company and its Subsidiaries pursuant to which consents or waivers are or
may be required prior to consummation of the transactions contemplated by this
Agreement (whether or not subject to the exception set forth with respect to
clauses (B) and (C) above).
(e) Company Reports; Financial Statements. The Company has delivered
-------------------------------------
to Parent each registration statement, report, proxy statement or information
statement prepared by it since December 31, 1996, including (i) the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, (ii) the
Company's Quarterly Reports on Form 10-Q for the periods ended March 31, 1997,
June 30, 1997, and September 30, 1997, and (iii) the Company's two Current
Reports on Form 8-K dated June 17, 1997, each in the form (including exhibits,
annexes and any amendments thereto) filed with the SEC (collectively, including
any such reports filed subsequent to the date hereof, the "Company Reports").
---------------
As of their respective dates, the Company Reports did not, and any Company
Reports filed with the SEC subsequent to the date hereof will not, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements made therein, in light of
the circumstances in which they were made, not misleading. Each of the
consolidated balance sheets included in or incorporated by reference into the
Company Reports (including the related notes and schedules) fairly presents, or
will fairly present, the consolidated financial position of the Company and its
Subsidiaries as of its date and each of the consolidated statements of income
and of cash flows included in or incorporated by reference into the Company
Reports (including any related notes and schedules) fairly presents, or will
fairly present, the results of operations, retained earnings and changes in
financial position, as the case may be, of the Company and its Subsidiaries for
the periods set forth therein (subject, in the case of unaudited statements, to
notes and normal
-18-
year-end audit adjustments that will not be material in amount or effect), in
each case in accordance with generally accepted accounting principles ("GAAP")
----
consistently applied during the periods involved, except as may be noted
therein.
(f) Absence of Certain Changes. Except as disclosed in the Company
--------------------------
Reports filed prior to the date hereof, and except for the NSC Distribution and
the Share Repurchase and the transactions incident thereto, since September 30,
1997 the Company and its Subsidiaries have conducted their respective businesses
only in, and have not engaged in any material transaction other than according
to, the ordinary and usual course of such businesses and there has not been (i)
any change in the financial condition, properties, business or results of
operations of the Company and its Subsidiaries or any development or combination
of developments of which the executive officers of the Company have knowledge
that, individually or in the aggregate, has had or is reasonably likely to have
a Company Material Adverse Effect; (ii) any material damage, destruction or
other casualty loss with respect to any material asset or property owned, leased
or otherwise used by the Company or any of its Subsidiaries, whether or not
covered by insurance; (iii) any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock of the Company,
except for dividends or other distributions on its capital stock publicly
announced prior to the date hereof; or (iv) any change by the Company in
accounting principles, practices or methods. Since September 30, 1997, except
as provided for herein or as disclosed in the Company Reports filed prior to the
date hereof, there has not been any increase in the compensation payable or that
could become payable by the Company or any of its Subsidiaries to any of their
respective officers or any amendment of any of the Compensation and Benefit
Plans other than increases or amendments in the ordinary course of business.
(g) Litigation and Liabilities. Except as disclosed in the Company
--------------------------
Reports filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the executive officers of the Company,
threatened against the Company or any of its Subsidiaries or (ii) obligations or
liabilities of the Company or any of its Subsidiaries, whether or not accrued,
contingent or otherwise and whether or not required to be disclosed, including
those relating to matters
-19-
involving any Environmental Law (as defined in Section 5.1(j)), or any other
facts or circumstances of which the executive officers of the Company have
knowledge that could result in any claims against, or obligations or liabilities
of, the Company or any of its Subsidiaries, except for those that are not,
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect or prevent or materially burden or materially impair the ability
of the Company to consummate the transactions contemplated by this Agreement.
(h) Employee Benefits.
-----------------
(i) A copy of each bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, severance,
compensation, medical, health or other plan, agreement, policy or arrangement
that covers employees, directors, former employees or former directors of the
Company and its Subsidiaries (the "Compensation and Benefit Plans") and any
------------------------------
trust agreement or insurance contract forming a part of such Compensation and
Benefit Plans has been made available to Parent prior to the date hereof. The
Compensation and Benefit Plans are listed in Section 5.1(h) of the Company
Disclosure Letter and any "change of control" or similar provisions therein are
specifically identified in Section 5.1(h) of the Company Disclosure Letter.
(ii) Except for such instances as would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect: (w)
all Compensation and Benefit Plans are in compliance with all applicable law,
including the Internal Revenue Code of 1986, as amended (the "Code") and the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"); (x) each
-----
Compensation and Benefit Plan that is an "employee pension benefit plan" within
the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is intended to
------------
be qualified under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (the "IRS"), and the
---
Company is not aware of any circumstances likely to result in revocation of any
such favorable determination letter; (y) as of the date hereof, there is no
pending or, to the knowledge of the executive officers of the Company,
threatened material litigation relating to the Compensation and Benefit Plans;
and (z) neither the Company nor any of its Subsidiaries has engaged in a
transaction
-20-
with respect to any Compensation and Benefit Plan that, assuming the taxable
period of such transaction expired as of the date hereof, would subject the
Company or any of its Subsidiaries to a tax or penalty imposed by either Section
4975 of the Code or Section 502 of ERISA.
(iii) As of the date hereof, no liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by the Company or any
Subsidiary with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the single-employer plan of any entity which is
considered one employer with the Company under Section 4001 of ERISA or Section
414 of the Code (an "ERISA Affiliate"), except for such instances as are not,
---------------
individually or in the aggregate, reasonably likely to have a Company Material
Adverse Effect. The Company and its Subsidiaries have not incurred and do not
expect to incur any withdrawal liability with respect to a multiemployer plan
under Subtitle E to Title IV of ERISA that would have, individually or in the
aggregate, a Company Material Adverse Effect. No notice of a "reportable
event", within the meaning of Section 4043 of ERISA for which the 30-day
reporting requirement has not been waived, has been required to be filed for any
Pension Plan or by any ERISA Affiliate within the 12-month period ending on the
date hereof or will be required to be filed in connection with the transactions
contemplated by this Agreement.
(iv) The consummation of the Merger and the other transactions
contemplated by this Agreement will not (x) entitle any employees of the Company
or its Subsidiaries to severance pay, (y) accelerate the time of payment or
vesting or trigger any payment of compensation or benefits under, increase the
amount payable or trigger any other material obligation pursuant to, any of the
Compensation and Benefit Plans or (z) result in any breach or violation of, or a
default under, any of the Compensation and Benefit Plans.
(v) Except for such instances as would not, individually or in the
aggregate, be reasonably likely to have a Company Material Adverse Effect: (x)
no compensation payable by the Company or its Subsidiaries to any of its
employees under any existing Compensation and Benefit Plan (including by reason
of the transactions contemplated hereby) will be subject to disallowance under
Section 162(m) of the Code; and (y) any amount that could be received
-21-
(whether in cash or property or the vesting of property) by any employee,
officer, director or independent contractor of the Company or any of its
Subsidiaries who is a "disqualified individual" (as such term is defined in
proposed Treasury Regulation Section 1.280G-1) under any employment arrangement
would not be characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code).
(vi) except as specifically identified in Section 5.1(h) of the
Company Disclosure Letter, no Compensation and Benefit Plan provides or will
provide welfare benefits to former employees of the Company or any or its
Subsidiaries except as required under Code Section 4980B.
(i) Compliance with Laws; Permits. Except as set forth in the
-----------------------------
Company Reports filed prior to the date hereof, the businesses of each of the
Company and its Subsidiaries have not been, and are not being, conducted in
violation of any federal, state, local or foreign law, statute, ordinance, rule,
regulation, judgment, order, injunction, decree, arbitration award, agency
requirement, license or permit of any Governmental Entity (collectively,
"Laws"), except for violations or possible violations that, individually or in
----
the aggregate, are not reasonably likely to have a Company Material Adverse
Effect or prevent or materially burden or materially impair the ability of the
Company to consummate the transactions contemplated by this Agreement. No
material change is required in the Company's or any of its Subsidiaries'
processes, properties or procedures in connection with any such Laws, and the
Company has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date hereof.
The Company and its Subsidiaries each has all permits, licenses, trademarks,
patents, trade names, copyrights, service marks, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct its business as presently conducted except those the
absence of which are not, individually or in the aggregate, reasonably likely to
have a Company Material Adverse Effect or prevent or materially burden or
materially impair the ability of the Company to consummate the Merger and the
other transactions contemplated by this Agreement.
(j) Environmental Matters. Except as disclosed in the Company Reports
---------------------
and except for such instances as
-22-
would not, individually or in the aggregate, be reasonably likely to have a
Company Material Adverse Effect: (i) the properties currently owned or operated
by the Company and its Subsidiaries are in compliance with all applicable
Environmental Laws; (ii) the properties currently owned or operated by the
Company or any of its Subsidiaries are not the subject of any pending or, to the
knowledge of the executive officers of the Company, threatened investigation or
notice from any Governmental Entity alleging the violation of any applicable
Environmental Law; (iii) the Company and its Subsidiaries have not received any
notice of violation concerning the operation of the business that has not been
resolved; (iv) neither the Company nor any Subsidiary is currently subject to
any court order, administrative order or consent decree in connection with any
Environmental Law; (v) to the knowledge of the executive officers of the
Company, the properties currently owned or operated by the Company or any of its
Subsidiaries have not been used for the disposal of Hazardous Substances; (vi)
to the knowledge of the executive officers of the Company, the properties
currently owned or operated by the Company and its Subsidiaries have not had any
emissions or discharges of any Hazardous Substances except as permitted under
applicable Environmental Laws; (vii) the properties currently owned or operated
by the Company or any of its Subsidiaries possess all material permits,
licenses, authorizations and approvals required under applicable Environmental
Laws with respect to the present conduct of the business; (viii) there are no
circumstances that would reasonably be expected to subject the Company or any of
its Subsidiaries to liability under any Environmental Law for the assessment,
cleanup, response or removal of any Hazardous Substance at any location; and
(ix) in the 12 months prior to the date of this Agreement, the Company and its
Subsidiaries have substantially complied at all times with the terms and
conditions contained in the "Waste Handling Activities" Section of the Company's
June 1997 Contracts Manual. As used herein the term "Environmental Law" means
-----------------
any federal, state or local law, statute, ordinance, rule, regulation, code,
license, permit, order, decree or injunction enacted for the protection of the
environment, (including air, water, soil and natural resources) or otherwise
regulating the use, storage, handling, release or disposal of any hazardous or
toxic substance and the term "Hazardous Substance" means any hazardous substance
-------------------
within the meaning of 101(14) of CERCLA, 42 U.S.C. ' 9601(14) or any other
substance listed, defined,
-23-
designated or classified as hazardous, toxic or radioactive pursuant to any
applicable Environmental Law.
(k) Taxes. Except for such instances as would not, individually or in
-----
the aggregate, be reasonably likely to have a Company Material Adverse Effect:
(i) The Company and its subsidiaries have filed completely and correctly in all
material respects all Tax Returns which are required by all applicable laws to
be filed by them, and have paid, or made adequate provision for the payment of,
all material Taxes which have or may become due and payable pursuant to said Tax
Returns and all other Taxes, governmental charges and assessments received to
date other than those Taxes being contested in good faith for which adequate
provision has been made on the most recent consolidated balance sheet of the
Company set forth in the Company Reports. The Tax Returns of the Company and
its Subsidiaries have been prepared, in all material respects, in accordance
with all applicable laws and generally accepted principles applicable to
taxation consistently applied; (ii) all material Taxes which the Company and its
Subsidiaries are required by law to withhold and collect have been duly withheld
and collected, and have been paid over, in a timely manner, to the proper taxing
authorities to the extent due and payable; (iii) the Company and its
Subsidiaries have not executed any waiver to extend, or otherwise taken or
failed to take any action that would have the effect of extending, the
applicable statute of limitations in respect of any Tax liabilities of the
Company or any of its Subsidiaries for the fiscal years prior to and including
the most recent fiscal year; (iv) neither the Company nor any of its
Subsidiaries is a "consenting corporation" within the meaning of Section 341(f)
of the Code; (v) the Company has at all times been taxable as a Subchapter C
corporation under the Code; (vi) the Company has never been a member of any
consolidated group (other than with the Company and its Subsidiaries) for Tax
purposes; (vii) the Company is not a party to any tax sharing agreement or
arrangement, other than with its Subsidiaries; (viii) no liens for Taxes exist
with respect to any of the assets or properties of the Company, except for
statutory liens for Taxes not yet due or payable or that are being contested in
good faith; (ix) all of the U.S. Federal income Tax Returns filed by or on
behalf of each of the Company and its Subsidiaries have been examined by and
settled with the Internal Revenue Service, or the statute of limitations with
respect to the relevant Tax liability expired, for all taxable periods through
and including the period ending on the date on which the
-24-
Effective Time occurs; (x) all Taxes due with respect to any completed and
settled audit, examination or deficiency litigation with any taxing authority
have been paid in full; (xi) there is no audit, examination, deficiency, or
refund litigation pending with respect to any Taxes and during the past three
years no taxing authority has given written notice of the commencement of any
audit, examination or deficiency litigation, with respect to any Taxes; (xii)
neither the Company nor any of its Subsidiaries is bound by any currently
effective private ruling, closing agreement or similar agreement with any taxing
authority relating to a material amount of Taxes; (xiii) except with respect to
like-kind exchanges pursuant to Section 1031 of the Code, the Company shall not
be required to include in a taxable period ending after the Effective Time, any
taxable income attributable to income that economically accrued in a prior
taxable period as a result of Section 481 of the Code, the installment method of
accounting or any comparable provision of state or local Tax law; (xiv) (A) no
material amount of property of the Company is "tax exempt property" within the
meaning of Section 168(h) of the Code, (B) no material amount of assets of the
Company is subject to a lease under Section 7701(h) of the Code, and (C) the
Company is not a party to any material lease made pursuant to Section 168(f)(8)
of the Internal Revenue Code of 1954, as amended and in effect prior to the date
of enactment of the Tax Equity and Fiscal Responsibility Act of 1982; and (xv)
immediately following the Merger, the Company will not have any material amount
of income or gain that has been deferred under Treasury Regulation Section
1.1502-13, or any material excess loss account in a Subsidiary under Treasury
Regulation Section 1.1502-19.
As used in this Agreement, (i) the term "Tax" (including, with
---
correlative meaning, the terms "Taxes", and "Taxable") includes all federal,
----- -------
state, local and foreign income, profits, franchise, gross receipts,
environmental, customs duty, capital stock, severances, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect of such penalties and
additions, and (ii) the term "Tax Return" includes all returns and reports
----------
(including elections, declarations, disclosures, schedules, estimates and
information returns) required to be supplied to a Tax authority relating to
Taxes.
-25-
(l) Labor Matters. Neither the Company nor any of its Subsidiaries
-------------
is, as of the date hereof, a party to or otherwise bound by any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor organization, nor, as of the date hereof, is the Company or any
of its Subsidiaries the subject of any material proceeding asserting that the
Company or any of its Subsidiaries has committed an unfair labor practice or is
seeking to compel it to bargain with any labor union or labor organization nor,
except as would not, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect, is there pending or, to the knowledge of
the executive officers of the Company, threatened, any material labor strike,
dispute, walk-out, work stoppage, slow-down or lockout involving the Company or
any of its Subsidiaries.
(m) Takeover Statutes. Assuming the accuracy of Parent's
-----------------
representations and warranties contained in Section 5.2(n), the board of
directors of the Company has taken all necessary action so that no "fair price,"
"moratorium," "control share acquisition" or other similar anti-takeover statute
or regulation (including the control share acquisition provisions codified in
Sections 1701.831 et seq. of the OGCL and the moratorium provisions codified in
-- ---
Sections 1704.02 et seq. of the OGCL (each a "Takeover Statute")) or any
-- --- ----------------
applicable anti-takeover provision in the Company's articles of incorporation or
regulations is applicable to the Company, the Shares or the Transactions, except
for the filing required by Section 1707.041 of the Ohio Revised Code.
(n) Vote Requirements. The affirmative vote of the holders of a
-----------------
majority of the outstanding Shares at the Company Meeting to approve this
Agreement and the Merger is the only vote of the holders of any class or series
of the Company's capital stock necessary to approve or adopt this Agreement and
the transactions contemplated hereby.
(o) Information Supplied. None of the information supplied or to be
--------------------
supplied by the Company specifically for inclusion or incorporation by reference
in (i) the Offer Documents, at the time such documents are first published, sent
or given to the holders of Shares, and at any time they are amended or
supplemented, (ii) the Registration Statement (as defined in Section 6.6) to be
filed with the SEC by Parent in connection with the issuance of Parent Common
Stock in the Merger, at the time the
-26-
Registration Statement is filed with the SEC or at the time it becomes effective
under the Securities Act, or (iii) the Proxy Statement (as defined in Section
6.6), at the date it is first mailed to the Company shareholders and Parent
stockholders or at the time of the Company Meeting or the Parent Meeting will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
thereunder, except that no representations and warranties are made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent or Merger Sub specifically for inclusion
or incorporation by reference in the Proxy Statement or contained in the Parent
Reports incorporated by reference in the Offer Documents, the Registration
Statement or the Proxy Statement.
(p) Available Funds. The Company has availability under the Revolving
---------------
Credit Agreement, dated as of May 31, 1995, among the Company, OHM Remediation
Services Corp., Citicorp USA, Inc., as administrative agent, Bank of America
Illinois, as issuing and paying agent, and the financial institutions listed
therein (the "Credit Agreement") to consummate the transactions contemplated by
the Share Repurchase Agreement, and has obtained all consents and approvals to
permit the transactions contemplated by the Share Repurchase Agreement, and all
consents and approvals of the lenders under the Credit Agreement required to
permit the transactions contemplated by this Agreement and the Transactions.
(q) Brokers and Finders. Neither the Company nor any of its officers,
-------------------
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated in this Agreement except
that the Company has employed Union Bancaire Privee International, Inc. and BT
Alex. Xxxxx Incorporated as its financial advisors, the arrangements with which
have been disclosed to Parent prior to the date hereof.
5.2. Representations and Warranties of Parent and Merger Sub.
-------------------------------------------------------
Except as set forth in the corresponding
-27-
sections or subsections of the disclosure letter delivered to the Company by
Parent on or prior to entering into this Agreement (the "Parent Disclosure
-----------------
Letter"), Parent and Merger Sub each hereby represents and warrants to the
-------
Company that:
(a) Capitalization of Merger Sub. The authorized capital stock of
----------------------------
Merger Sub consists of 1,000 shares of Common Stock, par value $0.10 per share,
all of which are validly issued and outstanding. All of the issued and
outstanding capital stock of Merger Sub is, and at the Effective Time will be,
owned by Parent, and there are (i) no other shares of capital stock or voting
securities of Merger Sub, (ii) no securities of Merger Sub convertible into or
exchangeable for shares of capital stock or voting securities of Merger Sub and
(iii) no options or other rights to acquire from Merger Sub, and no obligations
of Merger Sub to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of
Merger Sub. Merger Sub has not conducted any business prior to the date hereof
and has no, and prior to the Effective Time will have no, assets, liabilities or
obligations of any nature other than those incident to its formation and
pursuant to this Agreement and the Merger and the other transactions
contemplated by this Agreement.
(b) Organization, Good Standing and Qualification. Each of Parent and
---------------------------------------------
the Subsidiaries of Parent listed in Section 5.2(b) of the Parent Disclosure
Letter is a corporation duly organized, validly existing and in good standing
under the laws of its respective jurisdiction of organization and has all
requisite corporate or similar power and authority to own and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its properties or conduct
of its business requires such qualification, except where any failure to be so
qualified or in such good standing, individually or when taken together with all
other such failures, is not reasonably likely to have a Parent Material Adverse
Effect (as defined below). Parent has made available to the Company a complete
and correct copy of Parent's and its Subsidiaries' articles or certificates of
incorporation and by-laws or regulations, each as amended to the date hereof.
Parent's and its Subsidiaries' articles or certificates of
-28-
incorporation and by-laws or regulations so delivered are in full force and
effect.
As used in this Agreement, the term "Parent Material Adverse Effect"
------------------------------
means a material adverse effect on the financial condition, properties, business
or results of operations of the Parent and its Subsidiaries taken as a whole
provided, however, that to the extent that any such effect results directly from
-------- -------
the public announcement of the transactions contemplated by this Agreement or
actions taken by the Company or its Subsidiaries after the date of this
Agreement, such effect shall not be considered when determining if a Parent
Material Adverse Effect has occurred.
(c) Capital Structure. The authorized capital stock of Parent
-----------------
consists of 50,000,000 shares of Parent Common Stock, of which 9,733,288 shares
were outstanding as of the close of business on January 13, 1998, 45,000 shares
of 6% Cumulative Convertible Participating Preferred Stock, par value $100 per
share (the "6% Preferred Shares"), of which 45,000 shares were outstanding as of
-------------------
the close of business on January 13, 1998, and 2,055,692 depositary shares, each
representing a 1/100th interest in a share of Parent's 7% Cumulative Convertible
Exchangeable Preferred Stock, par value $100 (the "7% Preferred Shares" and,
-------------------
collectively with the 6% Preferred Shares, the "Parent Preferred Shares"), of
-----------------------
which 20,556 were outstanding as of the close of business on January 13, 1998.
All of the outstanding Parent Common Stock and Parent Preferred Shares have been
duly authorized and are validly issued, fully paid and nonassessable. Parent
has no Parent Common Stock or Parent Preferred Shares reserved for issuance,
except that, as of January 1, 1998, there were 870,253 shares of Parent Common
Stock reserved for issuance pursuant to the Parent Compensation and Benefit
Plans, 5,625,000 shares of Parent Common Stock subject to issuance upon
conversion of the 6% Preferred Shares, 1,889,677 shares of Parent Common Stock
subject to issuance upon conversion of the 7% Preferred Shares and 1,889,677
shares of Parent Common Stock subject to issuance pursuant to Parent's 7%
Convertible Subordinated Debentures due 2008 (the "Parent Debentures"),
-----------------
1,250,000 shares of Parent Common Stock purchasable upon exercise of the
Warrants issued November 20, 1996 to purchasers affiliated with the Carlyle
Group, 65,157 shares of Parent Common Stock issuable pursuant to a litigation
settlement and 117,915 shares of Parent Common Stock issuable under an
acquisition agreement. Each of the outstanding shares of capital stock of each
of Parent's Subsidiaries is duly
-29-
authorized, validly issued, fully paid and nonassessable and, except for
directors' qualifying shares, owned by a direct or indirect wholly owned
subsidiary of Parent, free and clear of any lien, pledge, security interest,
claim or other encumbrance. Except as set forth above, there are no preemptive
or other outstanding rights, options, warrants, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or to sell any shares of capital stock or
other securities of Parent or any of its Subsidiaries or any securities or
obligations convertible or exchangeable into or exercisable for, or giving any
Person a right to subscribe for or acquire, any securities of the Company or any
of its Subsidiaries, and no securities or obligation evidencing such rights are
authorized, issued or outstanding. Except for the Parent Debentures, Parent does
not have outstanding any bonds, debentures, notes or other obligations the
holders of which have the right to vote (or convertible into or exercisable for
securities having the right to vote) with the stockholders of Parent on any
matter ("Parent Voting Debt").
------------------
(d) Corporate Authority.
-------------------
(i) Each of the Parent and Merger Sub has all requisite corporate
power and authority and has taken all corporate action necessary in order to
execute, deliver and perform its obligations under this Agreement and to
consummate, subject only to any stockholder approval necessary to permit the
issuance of the shares of Parent Common Stock required to be issued pursuant to
Article IV (the "Parent Requisite Vote"), the Merger. This Agreement is a valid
---------------------
and binding agreement of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy
and Equity Exception.
(ii) The board of directors of Parent (A) has unanimously approved
this Agreement, the Offer, the Merger and the other transactions contemplated
hereby, and (B) has received the opinion of its financial advisor, Xxxxxxxxx
Xxxxxx & Xxxxxxxx Securities Corporation, to the effect that the consideration
to be paid by Parent pursuant to this Agreement is fair to the Company from a
financial point of view.
(iii) Prior to the Effective Time and subject to obtaining the
stockholder approval contemplated by Section 6.4, Parent will have taken all
necessary corporate
-30-
action to permit it to issue the number of shares of Parent Common Stock
required to be issued pursuant to Article IV. The Parent Common Stock, when
issued, will be validly issued, fully paid and nonassessable, and no stockholder
of Parent will have any preemptive right of subscription or purchase in respect
thereof. The Parent Common Stock, when issued, will be registered under the
Securities Act and Exchange Act and registered or exempt from registration under
any applicable state securities or "blue sky" laws.
(e) Governmental Filings; No Violations. (i) Other than the filings
-----------------------------------
and/or notices (A) under the HSR Act, the Securities Act and the Exchange Act,
(B) to comply with state securities or "blue sky" laws, including, without
limitation, the filing required by Section 1707.041 of the Ohio Revised Code,
and (C) required to be made with the NYSE, no notices, reports or other filings
are required to be made by Parent or Merger Sub with, nor are any consents,
registrations, approvals, permits or authorizations required to be obtained by
Parent or Merger Sub from, any Governmental Entity, in connection with the
execution and delivery of this Agreement by Parent and Merger Sub and the Offer,
the Merger and the other transactions contemplated hereby, except those that the
failure to make or obtain are not, individually or in the aggregate, reasonably
likely to have a Parent Material Adverse Effect or prevent, materially delay or
materially impair the ability of Parent or Merger Sub to consummate the
transactions contemplated by this Agreement.
(ii) The execution, delivery and performance of this Agreement by
Parent and Merger Sub do not, and the making or consummation by Parent and
Merger Sub of the Offer, the Merger and the other transactions contemplated
hereby will not, constitute or result in (A) a breach or violation of, or a
default under, the certificate or by-laws of Parent and Merger Sub or the
comparable governing instruments of any of its Subsidiaries, (B) a breach or
violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on the assets
of Parent or any of its Subsidiaries (with or without notice, lapse of time or
both) pursuant to, any Contracts binding upon Parent or any of its Subsidiaries
or any Law or governmental or non-governmental permit or license to which Parent
or any of its Subsidiaries is subject or (C) any change in the rights or
obligations of any party under any such Contract, except, in the case of clause
(B) or (C) above, for breach, violation,
-31-
default, acceleration, creation or change that, individually or in the
aggregate, is not reasonably likely to have a Parent Material Adverse Effect or
prevent, materially delay or materially impair the ability of Parent or Merger
Sub to consummate the transactions contemplated by this Agreement. Section
6.2(e) of the Parent Disclosure Letter sets forth, to the knowledge of the
executive officers of Parent, a correct and complete list of Contracts of Parent
and its Subsidiaries pursuant to which consents or waivers are or may be
required prior to consummation of the transactions contemplated by this
Agreement (whether or not subject to the exception set forth with respect to
clauses (B) and (C) above).
(f) Parent Reports; Financial Statements. Parent has delivered to the
------------------------------------
Company each registration statement, report, proxy statement or information
statement prepared by it since March 28, 1997, including (i) Parent's Annual
Report on Form 10-K for the year ended Xxxxx 00, 0000, (xx) Parent's Amendment
on Form 10-K/A dated July 28, 1997, (iii) Parent's Quarterly Reports on Form 10-
Q for the periods ended June 27, 1997 and September 26, 1997, (iv) Parent's
Current Reports on Form 8-K, dated January 17, 1997 and June 19, 1997, (iv)
Parent's registration statement on Form S-4 (File No. 333-32219); and (v)
Parent's Amendment No. 1 to registration statement on Form S-4 (File No. 333-
32219); each in the form (including exhibits, annexes and any amendments
thereto) filed with the SEC (collectively, including any such reports filed
subsequent to the date hereof, the "Parent Reports"). As of their respective
--------------
dates, the Parent Reports did not, and any Parent Reports filed with the SEC
subsequent to the date hereof will not, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in light of the circumstances in
which they were made, not misleading. Each of the consolidated balance sheets
included in or incorporated by reference into the Parent Reports (including the
related notes and schedules) fairly presents, or will fairly present, the
consolidated financial position of Parent and its Subsidiaries as of its date
and each of the consolidated statements of income and of cash flows included in
or incorporated by reference into the Parent Reports (including any related
notes and schedules) fairly presents, or will fairly present, the results of
operations, retained earnings and changes in financial position, as the case may
be, of Parent and its Subsidiaries for the periods set forth therein (subject,
in the case of unaudited statements, to
-32-
notes and normal year-end audit adjustments that will not be material in amount
or effect), in each case in accordance with GAAP consistently applied during the
periods involved, except as may be noted therein.
(g) Absence of Certain Changes. Except as disclosed in the Parent
--------------------------
Reports filed prior to the date hereof, since September 26, 1997 Parent and its
Subsidiaries have conducted their respective businesses only in, and have not
engaged in any material transaction other than according to, the ordinary and
usual course of such businesses and there has not been (i) any change in the
financial condition, properties, business or results of operations of Parent and
its Subsidiaries or any development or combination of developments of which the
executive officers of Parent have knowledge that, individually or in the
aggregate, has had or is reasonably likely to result in a Parent Material
Adverse Effect; (ii) any material damage, destruction or other casualty loss
with respect to any material asset or property owned, leased or otherwise used
by Parent or any of its Subsidiaries, whether or not covered by insurance; (iii)
any declaration, setting aside or payment of any dividend or other distribution
in respect of the capital stock of Parent, except for dividends or other
distributions on its capital stock publicly announced prior to the date hereof;
or (iv) any change by Parent in accounting principles, practices or methods.
(h) Litigation and Liabilities. Except as disclosed in the Parent
--------------------------
Reports filed prior to the date hereof, there are no (i) civil, criminal or
administrative actions, suits, claims, hearings, investigations or proceedings
pending or, to the knowledge of the executive officers of Parent, threatened
against Parent or any of its Subsidiaries or (ii) obligations or liabilities of
Parent or any of its Subsidiaries, whether or not accrued, contingent or
otherwise and whether or not required to be disclosed, including those relating
to matters involving any Environmental Law, or any other facts or circumstances
of which the executive officers of Parent have knowledge that could result in
any claims against, or obligations or liabilities of, Parent or any of its
Subsidiaries, except for those that are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect or prevent or
materially burden or materially impair the ability of Parent or Merger Sub to
consummate the transactions contemplated by this Agreement.
-33-
(i) Employee Benefits.
-----------------
(i) A copy of each bonus, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock, stock option, employment, termination, severance,
compensation, medical, health or other plan, agreement, policy or arrangement
that covers employees, directors, former employees or former directors of Parent
and its Subsidiaries (the "Parent Compensation and Benefit Plans") and any trust
-------------------------------------
arrangement or insurance contract forming a part of such Parent Compensation and
Benefits Plans has been made available to the Company prior to the date hereof.
The Parent Compensation and Benefit Plans are listed in Section 5.2(i) of the
Parent Disclosure Letter and any "change of control" or similar provision
therein are specifically identified in Section 5.2(i) of the Parent Disclosure
Letter.
(ii) Except for such instances as would not, individually or in the
aggregate, be reasonably likely to have a Parent Material Adverse Effect: (w)
all Parent Compensation and Benefit Plans are in compliance with all applicable
law, including the Code and ERISA; (x) each Parent Compensation and Benefit Plan
that is an "employee pension benefit plan" within the meaning of Section 3(2) of
ERISA (a "Parent Pension Plan") and that is intended to be qualified under
-------------------
Section 401(a) of the Code has received a favorable determination letter from
the IRS, and Parent is not aware of any circumstances likely to result in
revocation of any such favorable determination letter; (y) as of the date
hereof, there is no pending or, to the knowledge of the executive officers of
Parent, threatened material litigation relating to the Parent Compensation and
Benefit Plans; and (z) neither Parent nor any of its Subsidiaries has engaged in
a transaction with respect to any Parent Compensation and Benefit Plan that,
assuming the taxable period of such transaction expired as of the date hereof,
would subject Parent or any of its Subsidiaries to a material tax or penalty
imposed by either Section 4975 of the Code or Section 502 of ERISA.
(iii) As of the date hereof, no liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by Parent or any
Subsidiary with respect to any ongoing, frozen or terminated "single-employer
plan", within the meaning of Section 4001(a)(15) of ERISA, currently or formerly
maintained by any of them, or the
-34-
single-employer plan of any entity which is considered an ERISA Affiliate of
Parent, except for such instances as are not, individually or in the aggregate,
reasonably likely to have a Parent Material Adverse Effect. Parent and its
Subsidiaries have not contributed, or been obligated to contribute, to a
multiemployer plan under Subtitle E of Title IV of ERISA at any time since
September 26, 1980, except for such instances as are not, individually or in the
aggregate, reasonably likely to have a Parent Material Adverse Effect. No notice
of a "reportable event", within the meaning of Section 4043 of ERISA for which
the 30-day reporting requirement has not been waived, has been required to be
filed for any Parent Pension Plan or by any ERISA Affiliate within the 12-month
period ending on the date hereof or will be required to be filed in connection
with the transactions contemplated by this Agreement.
(iv) The consummation of the Merger and the other transactions
contemplated by this Agreement will not (x) entitle any employees of Parent or
its Subsidiaries to severance pay, (y) accelerate the time of payment or vesting
or trigger any payment of compensation or benefits under, increase the amount
payable or trigger any other material obligation pursuant to, any of the Parent
Compensation and Benefit Plans or (z) result in any breach or violation of, or
default under, any of the Parent Compensation and Benefit Plans.
(v) Except for such instances as would not, individually or in the
aggregate, be reasonably likely to have a Parent Material Adverse Effect: (x) no
compensation payable by Parent or its Subsidiaries to any of its employees under
any existing Parent Compensation and Benefit Plan (including by reason of the
transactions contemplated hereby) will be subject to disallowance under Section
162(m) of the Code; and (y) any amount that could be received (whether in cash
or property or the vesting of property) as a result of any of the transactions
contemplated by this Agreement by any employee, officer director or independent
contractor of Parent or any of its Subsidiaries who is a "disqualified
individual" (as such term is defined in proposed Treasury Regulation Section
1.280G-1) under any employment arrangement would not be characterized as an
"excess parachute payment" (as such term is defined in Section 280G(b)(1) of the
Code).
(vi) Except as specifically identified in Section 5.2(i) of the Parent
Disclosure Letter, no Parent
-35-
Compensation and Benefit Plan provides or will provide welfare benefits to
former employees of Parent or any of its Subsidiaries except as required under
the Code.
(j) Compliance with Laws; Permits. Except as set forth in the Parent
-----------------------------
Reports filed prior to the date hereof, the businesses of each of Parent and its
Subsidiaries have not been, and are not being, conducted in violation of any
Laws, except for violations or possible violations that, individually or in the
aggregate, are not reasonably likely to have a Parent Material Adverse Effect or
prevent or materially burden or materially impair the ability of Parent or
Merger Sub to consummate the transactions contemplated by this Agreement. No
material change is required in Parent's or any of its Subsidiaries' processes,
properties or procedures in connection with any such Laws, and Parent has not
received any notice or communication of any material noncompliance with any such
Laws that has not been cured as of the date hereof. Parent and its Subsidiaries
each has all permits, licenses, trademarks, patents, trade names, copyrights,
service marks, franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its business as
presently conducted except those the absence of which are not, individually or
in the aggregate, reasonably likely to have a Parent Material Adverse Effect or
prevent or materially burden or materially impair the ability of Parent or
Merger Sub to consummate the Merger and the other transactions contemplated by
this Agreement.
(k) Environmental Matters. Except as disclosed in the Parent Reports
---------------------
and except for such instances as would not, individually or in the aggregate, be
reasonably likely to have a Parent Material Adverse Effect: (i) the properties
currently owned or operated by Parent and its Subsidiaries are in compliance
with all applicable Environmental Laws; (ii) the properties currently owned or
operated by Parent or any of its Subsidiaries are not the subject of any pending
or, to the knowledge of the executive officers of the Parent, threatened
investigation or notice from any Governmental Entity alleging the violation of
any applicable Environmental Law; (iii) Parent and its Subsidiaries have not
received any notice of violation concerning the operation of the business that
has not been resolved; (iv) neither Parent nor any Subsidiary is currently
subject to any court order, administrative order or consent decree in connection
with any Environmental Law; (v) to the knowledge of the executive officers of
Parent, the
-36-
properties currently owned or operated by Parent or any of its Subsidiaries have
not been used for the disposal of Hazardous Substances; (vi) to the knowledge of
the executive officers of Parent, the properties currently owned or operated by
Parent and its Subsidiaries have not had any emissions or discharges of any
Hazardous Substances except as permitted under applicable Environmental Laws;
(vii) the properties currently owned or operated by Parent or any of its
Subsidiaries possess all material permits, licenses, authorizations and
approvals required under applicable Environmental Laws with respect to the
present conduct of the business; and (viii) there are no circumstances that
would reasonably be expected to subject Parent or any of its Subsidiaries to
liability under any Environmental Law for the assessment, cleanup, response or
removal of any Hazardous Substance at any location.
(l) Taxes. Except for such instances as would not, individually or in
-----
the aggregate, be reasonably likely to have a Parent Material Adverse Effect:
(i) Parent and its Subsidiaries have filed completely and correctly in all
material respects all Tax Returns which are required by all applicable laws to
be filed by them, and have paid, or made adequate provision for the payment of,
all material Taxes which have or may become due and payable pursuant to said Tax
Returns and all other Taxes, governmental charges and assessments received to
date other than those Taxes being contested in good faith for which adequate
provision has been made on the most recent consolidated balance sheet of Parent
set forth in the Parent Reports. The Tax Returns of Parent and its Subsidiaries
have been prepared, in all material respects, in accordance with all applicable
laws and generally accepted principles applicable to taxation consistently
applied; (ii) all material Taxes which Parent and its Subsidiaries are required
by law to withhold and collect have been duly withheld and collected, and have
been paid over, in a timely manner, to the proper taxing authorities to the
extent due and payable; (iii) Parent and its Subsidiaries have not executed any
waiver to extend, or otherwise taken or failed to take any action that would
have the effect of extending, the applicable statute of limitations in respect
of any Tax liabilities of Parent or any of its Subsidiaries for the fiscal years
prior to and including the most recent fiscal year; (iv) neither Parent nor any
of its Subsidiaries is a "consenting corporation" within the meaning of Section
341(f) of the Code; (v) Parent has at all times been taxable as a Subchapter C
corporation under the Code; (vi) Parent has never been a member of any
-37-
consolidated group (other than with Parent and its Subsidiaries) for Tax
purposes; (vii) Parent is not a party to any tax sharing agreement or
arrangement, other than with its Subsidiaries; (viii) no liens for Taxes exist
with respect to any of the assets or properties of Parent, except for statutory
liens for Taxes not yet due or payable or that are being contested in good
faith; (ix) all of the U.S. Federal income Tax Returns filed by or on behalf of
each of Parent and its Subsidiaries have been examined by and settled with the
Internal Revenue Service, or the statute of limitations with respect to the
relevant Tax liability expired, for all taxable periods through and including
the period ending on the date on which the Effective Time occurs; (x) all Taxes
due with respect to any completed and settled audit, examination or deficiency
litigation with any taxing authority have been paid in full; (xi) there is no
audit, examination, deficiency, or refund litigation pending with respect to any
Taxes and during the past three years no taxing authority has given written
notice of the commencement of any audit, examination or deficiency litigation,
with respect to any Taxes; (xii) neither Parent nor any of its Subsidiaries is
bound by any currently effective private ruling, closing agreement or similar
agreement with any taxing authority relating to a material amount of Taxes;
(xiii) except with respect to like-kind exchanges pursuant to Section 1031 of
the Code, Parent shall not be required to include in a taxable period ending
after the Effective Time, any taxable income attributable to income that
economically accrued in a prior taxable period as a result of Section 481 of the
Code, the installment method of accounting or any comparable provision of state
or local Tax law; (xiv) (A) no material amount of property of Parent is "tax
exempt property" within the meaning of Section 168(h) of the Code, (B) no
material amount of assets of Parent is subject to a lease under Section 7701(h)
of the Code, and (C) Parent is not a party to any material lease made pursuant
to Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in
effect prior to the date of enactment of the Tax Equity and Fiscal
Responsibility Act of 1982; and (xv) immediately following the Merger, Parent
will not have any material amount of income or gain that has been deferred under
Treasury Regulation Section 1.1502-13, or any material excess loss account in a
Subsidiary under Treasury Regulation Section 1.1502-19.
(m) Labor Matters. Neither Parent nor any of its Subsidiaries is, as
-------------
of the date hereof, a party to or otherwise bound by any collective bargaining
agreement,
-38-
contract or other agreement or understanding with a labor union or
labor organization, nor, as of the date hereof, is Parent or any of its
Subsidiaries the subject of any material proceeding asserting that Parent or any
of its Subsidiaries has committed an unfair labor practice or is seeking to
compel it to bargain with any labor union or labor organization nor, except as
would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect, is there pending or, to the knowledge of the
executive officers of Parent, threatened, any material labor strike, dispute,
walk-out, work stoppage, slow-down or lockout involving Parent or any of its
Subsidiaries.
(n) Ownership of Shares. Neither Parent nor any of its Subsidiaries
-------------------
is the beneficial owner (as such terms is used for purposes of Rule 13d-3 under
the Exchange Act) of any Shares.
(o) Takeover Statutes. Assuming that neither the Company nor any of
-----------------
its Subsidiaries is the beneficial owner (as such term is used for purposes of
Rule 13d-3 under the Exchange Act) of any shares of Parent Common Stock or
Parent Preferred Shares, the board of directors of Parent has taken all
necessary action to be taken by Parent so that no Takeover Statute or any
applicable anti-takeover provision in the Parent's certificate of incorporation
or bylaws is applicable to Parent, the Parent Common Stock or the Transactions,
except for the filing required by Section 1707.041 of the Ohio Revised Code.
(p) Vote Requirements. The affirmative vote of the holders of a
-----------------
majority of the shares of Parent Common Stock and 6% Preferred Stock,
represented in person or by proxy and voting together as a single class at the
Parent Meeting to approve the issuance of shares of Parent Common Stock pursuant
to this Agreement, is the only vote of the holders of any class or series of
Parent's capital stock necessary in connection with the Transactions.
(q) Information Supplied. None of the information supplied or to be
--------------------
supplied by Parent specifically for inclusion or incorporation by reference in
(i) the Schedule 14D-9, at the time such document is first published, sent or
given to the holders of Shares, and at any time it is amended or supplemented,
(ii) the Registration Statement (as defined in Section 6.6) to be filed with the
SEC by Parent in connection with the issuance of Parent Common Stock in
-39-
the Merger, at the time the Registration Statement is filed with the SEC or at
the time it becomes effective under the Securities Act, or (iii) the Proxy
Statement (as defined in Section 6.6), at the date it is first mailed to the
Company shareholders and Parent stockholders or at the time of the Company
Meeting or the Parent Meeting will contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they are made, not misleading. The Registration Statement will
comply as to form in all material respects with the requirements of the
Securities Act and the rules and regulations thereunder, except that no
representations and warranties are made by Parent with respect to statements
made or incorporated by reference therein based on information supplied by the
Company specifically for inclusion or incorporation by reference in the
Registration Statement or the Proxy Statement or contained in the Company
Reports incorporated by reference in the Schedule 14D-9, the Registration
Statement or the Proxy Statement.
(r) Available Funds. Parent has available working capital and a
---------------
commitment from one or more financial institutions that, when funded in
accordance with its terms, will in the aggregate provide to Parent the funds
necessary to consummate the Offer and the Merger and to pay all fees, expenses
and costs in connection with its negotiation, execution and performance of this
Agreement.
(s) Brokers and Finders. Neither Parent nor any of its officers,
-------------------
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders' fees in connection
with the Merger or the other transactions contemplated by this Agreement, except
that Parent has employed Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation as
its financial advisor, the arrangements with which have been disclosed in
writing to the Company prior to the date hereof.
ARTICLE VI
Covenants
6.1. Company Interim Operations. The Company covenants and agrees
--------------------------
as to itself and its Subsidiaries that, after the date hereof and prior to the
date on which
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Purchaser Representatives are elected to the Board of Directors of
the Company in accordance with Section 1.3(a) hereof and represent at least a
majority of such directors (unless Parent or the Company, as the case may be,
shall otherwise approve in writing, which approval shall not be unreasonably
withheld or delayed, except as otherwise expressly contemplated by this
Agreement and except as set forth in Section 6.1 of the Company Disclosure
Letter):
(a) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course consistent with past practice and it and its
Subsidiaries shall use all reasonable best efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, distributors, creditors, lessors, employees and business
associates;
(b) it shall not (i) issue, sell, pledge, dispose of or encumber any
capital stock in any of its Subsidiaries; (ii) amend the articles or certificate
of incorporation or regulations or bylaws of the Company or any of its
Subsidiaries; (iii) split, combine or reclassify the outstanding shares of
capital stock of the Company or any of its Subsidiaries; (iv) declare, set aside
or pay any dividend payable in cash, stock or property in respect of any capital
stock other than dividends from its direct or indirect wholly-owned
Subsidiaries; or (v) amend the terms of, repurchase, redeem or otherwise
acquire, or permit any of its Subsidiaries to purchase or otherwise acquire,
except in connection with the Stock Plans or pursuant to the Share Repurchase
Agreement, any shares of its capital stock or any securities convertible into or
exchangeable or exercisable for any shares of its capital stock;
(c) neither it nor any of its Subsidiaries shall (i) issue, sell,
pledge, dispose of or encumber any shares of, or securities convertible into or
exchangeable or exercisable for, or options, warrants, calls, commitments or
rights of any kind to acquire, any shares of its capital stock of any class or
any Voting Debt or any other property or assets (other than Shares issuable
pursuant to options outstanding on the date hereof under the Stock Plans or upon
conversion of the Debentures or exercise of the Warrants); (ii) other than in
the ordinary and usual course of business consistent with past practice,
transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of or
encumber any other property or assets (including capital stock of any of its
Subsidiaries) or incur or modify any indebtedness or
-41-
other liability in excess of $1,000,000; (iii) make any loans or advances to any
person, except to employees in the ordinary course of business consistent with
past practice; or (iv) make or authorize or commit for any capital expenditures
other than in the ordinary and usual course of business consistent with past
practice or in amounts less than $200,000 individually and $1,000,000 in the
aggregate or, by any means, make any acquisition of, or investment in, assets or
stock of any other Person or entity;
(d) neither it nor any of its Subsidiaries shall terminate, establish,
adopt, enter into, make any new grants or awards under, amend or otherwise
modify, any Compensation and Benefit Plans or increase the salary, wage, bonus
or other compensation of any employees except increases occurring in the
ordinary and usual course of business consistent with past practice (which shall
include normal periodic performance reviews and related compensation and benefit
increases) or enter into any new employment or severance agreement with any
director, officer or other employee of the Company or of any of its Subsidiaries
except (i) with respect to the individuals listed in Section 6.1(d) of the
Company Disclosure Letter or (ii) with respect to the renewal of any existing
agreement by operation of its terms in the ordinary and usual course of business
consistent with past practice;
(e) neither it nor any of its Subsidiaries shall settle or compromise
any material claims or litigation, except for settlements or compromises made in
the ordinary course of business consistent with past practice involving payments
by the Company or any of its Subsidiaries not in excess of $200,000 individually
or $1,000,000 in the aggregate, or, except in the ordinary and usual course of
business consistent with past practice, modify, amend or terminate any of its
material Contracts or waive, release or assign any material rights or claims;
(f) neither it nor any of its Subsidiaries shall make any Tax
election or agree to an extension of a statute of limitations for any
assessments of federal income tax or material state corporate income or
franchise tax or permit any insurance policy naming it as a beneficiary or loss-
payable payee to be canceled or terminated except in the ordinary and usual
course of business;
(g) neither it nor its Subsidiaries shall take any action, other than
as required by GAAP, to change
-42-
accounting policies or procedures or cash maintenance policies or procedures;
(h) neither it nor its Subsidiaries shall take any action that would
be reasonably likely to impede or delay the Transactions or adversely affect the
parties' ability to consummate the Transactions;
(i) neither it nor its Subsidiaries shall take any action that would
be reasonably likely to diminish the value to the Company of the net operating
losses set forth in the September 30, 1997 financial statements included in the
Company Reports, except for the consummation of the Transactions; and
(j) neither it nor any of its Subsidiaries shall authorize or enter
into an agreement to do any of the foregoing.
6.2. Parent Interim Operations. Parent covenants and agrees as to
-------------------------
itself and its Subsidiaries that, after the date hereof and prior to the
Effective Time (unless the Company shall otherwise approve in writing, which
approval shall not be unreasonably withheld or delayed, and except as otherwise
expressly contemplated by this Agreement or in Section 6.2 of the Parent
Disclosure Letter):
(a) the business of it and its Subsidiaries shall be conducted in the
ordinary and usual course consistent with past practice and it and its
Subsidiaries shall use all reasonable best efforts to preserve its business
organization intact and maintain its existing relations and goodwill with
customers, suppliers, distributors, creditors, lessors, employees and business
associates;
(b) it shall not (i) amend the articles or certificate of
incorporation or regulations or bylaws of Parent or any of its Subsidiaries;
(ii) split, combine or reclassify the outstanding shares of capital stock of
Parent or any of its Subsidiaries; or (iii) declare, set aside or pay any
dividend payable in cash, stock or property in respect of any capital stock
other than dividends from its direct or indirect wholly owned Subsidiaries and
other than regular quarterly cash or "payment in kind" dividends on the Parent
Preferred Shares;
(c) neither it nor its Subsidiaries will take any action that would be
reasonably likely to impede or delay
-43-
the Transactions or adversely affect the parties' ability to consummate the
Transactions; and
(d) neither it nor any of its Subsidiaries will authorize or enter
into an agreement to do any of the foregoing.
6.3. Acquisition Proposals. The Company agrees that neither it nor
---------------------
any of its Subsidiaries nor any officer, director or employee of the Company or
its Subsidiaries shall, and that it shall direct and use its best efforts to
cause its and its Subsidiaries' agents and representatives (including any
investment banker, attorney or accountant retained by it or any of its
Subsidiaries) not to, directly or indirectly through another person, initiate,
solicit, encourage or otherwise facilitate any inquiries or the making of any
proposal or offer with respect to a merger, reorganization, share exchange,
consolidation or similar transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, the Company or
any of its Subsidiaries (any such proposal or offer being hereinafter referred
to as an "Acquisition Proposal"). The Company further agrees that neither it nor
--------------------
any of its Subsidiaries nor any of their respective officers, directors or
employees shall, and that it shall direct and use its best efforts to cause its
and its Subsidiaries' agents and representatives (including any investment
banker, attorney or accountant retained by it or any of its Subsidiaries) not
to, directly or indirectly through another person, engage or participate in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any Person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal; provided, however, that nothing contained in this Agreement shall
-------- -------
prevent either the Company or its Board of Directors at any time prior to the
purchase of Shares pursuant to the Offer from (A) complying with Rule 14e-2
promulgated under the Exchange Act with regard to an Acquisition Proposal; (B)
providing information in response to a request therefor by a Person who has made
an unsolicited bona fide written Acquisition Proposal if the Board of Directors
receives from the Person so requesting such information an executed
confidentiality agreement on terms substantially similar to those contained in
the Confidentiality Agreement (as defined in Section 9.7); (C) engaging in any
negotiations or discussions with any Person who has made an unsolicited bona
fide written
-44-
Acquisition Proposal; or (D) recommending such an Acquisition Proposal to the
shareholders of the Company, as the case may be, if and only to the extent that,
in each such case referred to in clause (B), (C) or (D) above, the Board of
Directors of the Company (x) determines in good faith, taking into consideration
the advice of outside legal counsel, that such action is likely to be required
in order for its members to comply with their fiduciary duties under applicable
law and (y) determines in good faith, after consultation with its financial
advisor, that such Acquisition Proposal is reasonably likely to be consummated,
taking into account all legal, financial and regulatory aspects of the proposal
and the person making the proposal and would, if consummated, result in a
transaction more favorable to the Company's shareholders from a financial point
of view than the transaction contemplated by this Agreement (any such
Acquisition Proposal being referred to herein as a "Superior Proposal"). The
Company agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. The Company agrees that it will
take the necessary steps to promptly inform the individuals or entities referred
to in the first sentence hereof of the obligations undertaken in this Section
6.2 and in the Confidentiality Agreement. The Company will notify Parent as
promptly as reasonably practicable (and in any event not later than one business
day after an inquiry or proposal is made) if any such inquiries or proposals
(including the identity of the party making such inquiry or proposal and the
terms thereof) are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated or continued with,
the Company or such representatives.
6.4. Meeting of the Company's Shareholders. The Company will take,
-------------------------------------
consistent with applicable law and the Company's articles of incorporation and
regulations, all action necessary to convene a meeting of holders of Shares (the
"Company Meeting") as promptly as practicable to consider and vote upon the
---------------
adoption of this Agreement. The Board of Directors of the Company shall
recommend such approval and the Company shall take all lawful action to solicit
such approval; provided, however, that if the Board of Directors of the Company
determines in good faith, taking into consideration the advice of outside legal
counsel, that not recommending or soliciting such approval is likely to be
required in order for its members to comply
-45-
with their fiduciary duties under applicable law, then any failure by the Board
of Directors of the Company to recommend or solicit such approval shall not
constitute a breach of this Agreement. At any such meeting of the Company,
Parent and Merger Sub shall cause all of the Shares acquired in the Offer and
any other Shares then owned by the Parent Companies to be voted in favor of this
Agreement.
6.5. Meeting of Parent's Stockholders. If approval of the issuance
--------------------------------
of shares of Parent Common Stock is required under the rules of the NYSE, Parent
will take, consistent with applicable law and its certificate of incorporation
and bylaws, all action necessary to convene a meeting of its shareholders (the
"Parent Meeting") as promptly as practicable to consider and vote upon such
--------------
issuance. The Board of Directors of Parent shall recommend such approval and
Parent shall take all lawful action to solicit such approval; provided, however,
-------- -------
that if the Board of Directors of Parent determines in good faith, taking into
consideration the advice of outside legal counsel, that not recommending or
soliciting such approval is likely to be required in order for its members to
comply with their fiduciary duties under applicable law, then any failure by the
Board of Directors of Parent to recommend or solicit such approval shall not
constitute a breach of this Agreement.
6.6. Proxy Statement; Registration Statement. As promptly as
---------------------------------------
practicable following the date of this Agreement, the Company and Parent shall
prepare and file with the SEC under the Securities Act and the Exchange Act and
shall use all reasonable efforts to have cleared by the SEC, a proxy
statement/prospectus or information statement/prospectus, as appropriate (the
"Proxy Statement"), with respect to the Company Meeting and/or the Parent
---------------
Meeting, including a registration statement (together with any amendments
thereto, the "Registration Statement") for the purpose of registering the shares
----------------------
of Parent Common Stock to be issued in connection with the Merger. As promptly
as practicable after the Proxy Statement has been cleared by the SEC and the
Registration Statement has been declared effective, the Company and Parent shall
mail the Proxy Statement to their respective shareholders as of the record date
for the Company Meeting or the Parent Meeting, as the case may be. Parent shall
take such action as may be required to be taken under applicable state
securities or "blue sky" laws in connection with issuance of the shares of
Parent Common Stock to be issued in connection with the
-46-
Merger; provided that Parent shall not be required to become qualified as a
--------
foreign corporation in any jurisdiction. The Proxy Statement shall contain the
recommendation of the Board of Directors of the Company in favor of and adoption
of this Agreement; provided, however, that if the Board of Directors of the
Company determines in good faith, taking into consideration the advice of
outside legal counsel, that for the Proxy Statement not to contain such
recommendation is likely to be required in order for its members to comply with
their fiduciary duties under applicable law, then any failure of the Proxy
Statement to contain such recommendation shall not constitute a breach of this
Agreement.
6.7. Filings; Other Action; Notification. (a) Subject to the terms
-----------------------------------
and conditions herein provided, the Company and Parent shall promptly make their
respective filings and thereafter make any other required submissions under (i)
the HSR Act, (ii) Section 1707.041 of the Ohio Revised Code, and (iii) the other
regulatory filings necessary or appropriate in connection with the Offer, the
Merger and the other transactions contemplated hereby. The Company and Parent
shall cooperate with each other and use (and shall cause their respective
Subsidiaries to use) their respective best efforts to take or cause to be taken
all actions, and do or cause to be done all things, necessary, proper or
advisable on its part under this Agreement and applicable Laws to consummate and
make effective the Merger and the other transactions contemplated by this
Agreement as soon as practicable, including preparing and filing as promptly as
practicable all documentation to effect all necessary notices, reports and other
filings and to obtain as promptly as practicable all consents, registrations,
approvals, permits and authorizations necessary or advisable to be obtained from
any third party and/or any Governmental Entity in order to consummate the Offer,
the Merger or any of the other transactions contemplated by this Agreement;
provided, however, that nothing in this Section 6.7 shall require Parent to
offer to, or agree to, sell or hold separate and agree to sell, before or after
the Effective Time, any material assets, businesses or any interest in any
material assets or businesses of Parent, the Company or any of their respective
affiliates (or to consent to any sale or agreement to sell by the Company of any
of its material assets or businesses), or to agree to any material change in or
restriction on the operations of any such assets or businesses, or to require,
or be construed to require, an offer or agreement that would, in the reasonable
judgment of
-47-
Parent, be likely to have a material adverse effect on the anticipated financial
condition, properties, business or results of operations of the Parent and its
Subsidiaries after the Merger, taken as a whole in order to obtain any necessary
or advisable consent, registration, approval, permit or authorization from any
Governmental Entity. Subject to applicable laws relating to the exchange of
information, Parent and the Company shall have the right to review in advance,
and to the extent practicable each will consult the other on, all the
information relating to Parent or the Company, as the case may be, and any of
their respective Subsidiaries, that appear in any filing made with, or written
materials submitted to, any third party and/or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the Company and Parent shall act reasonably and as
promptly as practicable.
(b) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Transactions or any statement,
filing, notice or application made by or on behalf of Parent, the Company or any
of their respective Subsidiaries to any third party and/or any Governmental
Entity in connection with the Offer, the Merger or the other transactions
contemplated by this Agreement.
(c) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Transactions.
(d) Except as required by applicable law and except as expressly
contemplated by this Agreement, neither the Company, on the one hand, nor Parent
or Merger Sub, on the other hand, will, and they will not permit any of their
respective Subsidiaries to, take any action a purpose of which is to cause (i)
any of the representations or warranties of such party set forth in this
Agreement that are qualified as to materiality to become untrue, (ii) any of
such representations and warranties that are not so qualified to be untrue in
any material respect, or (iii) any
-48-
of the conditions to the Merger set forth in Article VII not to be satisfied.
6.8. Access. Upon reasonable notice, and except as may otherwise
------
be required by applicable law, the Company and Parent each shall (and shall
cause its Subsidiaries to) afford the other's officers, employees, counsel,
accountants and other authorized representatives (collectively,
"Representatives") access, during normal business hours throughout the period
---------------
prior to the Effective Time, to its properties, books, contracts and records
and, during such period, each shall (and shall cause its Subsidiaries to)
furnish promptly to the other all information concerning its business,
properties and personnel as may reasonably be requested, provided that no
--------
investigation pursuant to this Section shall affect or be deemed to modify any
representation or warranty made by the Company, Parent or Merger Sub, and
provided, further, that the foregoing shall not require the Company or Parent to
-------- -------
permit any inspection, or to disclose any information, that in the reasonable
judgment of the Company or Parent, as the case may be, would result in the
disclosure of any trade secrets of third parties or violate any of its
obligations with respect to confidentiality if the Company or Parent, as the
case may be, shall have used reasonable efforts to obtain the consent of such
third party to such inspection or disclosure. All requests for information made
pursuant to this Section shall be directed to an executive officer of the
Company or Parent, as the case may be, or such Person as may be designated by
either of its officers, as the case may be. All such information shall be
governed by the terms of the Confidentiality Agreement.
6.9. Stock Exchange Listing and De-listing. Parent shall use its
-------------------------------------
best efforts to cause the shares of Parent Common Stock to be issued in the
Merger to be approved for listing on the NYSE subject to official notice of
issuance, prior to the Closing Date. The Surviving Corporation shall use its
best efforts to cause the Shares to be de-listed from the NYSE and de-registered
under the Exchange Act as soon as practicable following the Effective Time.
6.10. Publicity. The initial press release pertaining to the
---------
transactions contemplated by this Agreement shall be a joint press release and
thereafter the Company and Parent each shall consult with each other prior to
issuing any press releases or otherwise making public
-49-
announcements with respect to the Merger and the other transactions contemplated
by this Agreement and prior to making any filings with any third party and/or
any Governmental Entity (including any national securities exchange) with
respect thereto, except as may be required by law or by obligations pursuant to
any listing agreement with or rules of any national securities exchange.
6.11. Benefits.
--------
(a) Stock Options. Prior to the Effective Time, each holder of a
-------------
Company Option shall be required to elect between the treatment of their Company
Options under the provisions of either paragraph (i) or paragraph (ii) below.
(i) Prior to the Effective Time, the Company shall take all corporate
action necessary to cause each Company Option, whether vested or unvested,
exercisable or unexercisable, without any action on the part of the holder
(other than an election to be treated under this paragraph) to be converted into
the right to receive an amount in cash equal to the product of (x) (1) the
excess of $11.50 over (2) the exercise price per Share subject to such Company
Option and (y) the number of Shares subject to such Company Option, payable to
the holder of such Company Option at any time during the period commencing on
the date hereof and ending immediately prior to the Effective Time; provided,
--------
that the Company shall be entitled to withhold from such cash payment any
amounts required to be withheld by applicable law. Each Company Option to which
this paragraph applies will be cancelled and shall cease to exist by virtue of
such payment.
(ii) (A) At the Effective Time, each Company Option, whether vested
or unvested, exercisable or unexercisable, shall be deemed to constitute an
option to acquire, on the same terms and conditions as were applicable under
such Company Option, a number of shares of Parent Company Stock equivalent to
the number of Shares that could have been purchased immediately prior to the
Effective Time under such Company Option multiplied by the Exchange Ratio
(without regard to any adjustment thereof and rounded up to the nearest whole
number of shares of Parent Company Stock), at a price per share of Parent
Company Stock (rounded up to the nearest whole cent) equal to (y) the aggregate
exercise price for the Shares otherwise purchasable pursuant to such Company
Option divided by (z) the Exchange Ratio (without regard to any adjustment
thereof); provided, however, that
-------- -------
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in the case of any Company Option to which Section 422 of the Code applies, the
option price, the number of shares purchasable pursuant to such option and the
terms and conditions of exercise of such option shall be determined in
accordance with the foregoing, subject to such adjustments as are necessary in
order to satisfy the requirements of Section 424(a) of the Code. At or prior to
the Effective Time, the Company shall make all necessary arrangements with
respect to the Stock Plans to permit the assumption of the unexercised Company
Options to which this paragraph (ii) of this Section 6.11 applies by Parent.
(B) Effective at the Effective Time, Parent shall assume each Company
Option to which this paragraph (ii) of this Section 6.11 applies in accordance
with the terms of the Stock Plans under which it was issued and the stock option
agreement by which it is evidenced. As soon as practicable after the Effective
Time, Parent shall deliver to each holder of a Company Option to which paragraph
(ii) of this Section 6.11 applies appropriate notices setting forth such
holders' rights pursuant to the Stock Plans, and the agreements evidencing the
grants of such Company Options shall continue in effect on the same terms and
conditions (subject to the conversion required by this Section 6.11 after giving
effect to the Merger and the assumption by Parent as set forth above). To the
extent necessary to effectuate the provisions of this Section 6.11, Parent may
deliver new or amended agreements reflecting the terms of each Company Option
assumed by Parent.
(C) At or prior to the Effective Time, Parent shall take all corporate
action necessary to reserve for issuance a sufficient number of shares of Parent
Common Stock for delivery upon exercise of Company Options assumed by it in
accordance with this Section 6.11. Promptly, but in no event later than three
business days after the Effective Time, Parent shall file a registration
statement on Form S-3 or Form S-8, as the case may be (or any successor or other
appropriate forms), or another appropriate form, or shall cause such Company
Option to be deemed an option issued pursuant to a Parent Stock Plan for which
shares of Parent Common Stock have been previously registered pursuant to an
appropriate registration form, with respect to the Parent Common Stock subject
to such Company Options, and shall use its best efforts to maintain the
effectiveness of such registration statements (and maintain the current status
of the prospectus or prospectuses contained therein) for so long as such Company
Options remain outstanding.
-51-
(b) Employee Compensation and Benefits. (i) Parent agrees that
----------------------------------
following the Effective Time, the employees of the Company and its Subsidiaries
who are employed by the Surviving Corporation or its Subsidiaries ("Company
-------
Employees") shall become eligible to participate in the employee benefit plans
---------
and arrangements maintained by Parent or its Subsidiaries ("Parent Benefit
--------------
Plans") including, without limitation, severance plans, in the same manner as
similarly situated employees of Parent. Parent or its Subsidiaries shall grant
the Company Employees credit for all service credited by the Company for
purposes of eligibility, vesting and the determination of benefits under
vacation and severance pay plans. Parent shall, and shall cause the Surviving
Corporation to, honor in accordance with their terms all employee benefit
obligations to current and former employees under the Compensation and Benefit
Plans in existence on the date hereof (including, without limitation, the plans
and agreements listed in Section 5.1(h)(i) of the Company Disclosure Letter) and
all employment or severance agreements entered into by the Company or adopted by
the board of directors of the Company prior to the Effective Date; it being
-- -----
understood that nothing contained herein shall limit or restrict the ability of
----------
Parent to modify or terminate any Compensation and Benefit Plan, or to merge any
Compensation and Benefit Plan with any other plan, following the Effective Time.
(ii) Any pre-existing condition exclusion under any Parent Benefit
Plan providing medical or dental benefits shall be waived for any Company
Employee who, immediately prior to commencing participation in such Parent
Benefit Plan, was participating in a Company Benefit Plan providing medical or
dental benefits and had satisfied any pre-existing condition provision under
such Company Benefit Plan. Any expenses that were taken into account under a
Company Benefit Plan providing medical or dental benefits in which the Company
Employee participated immediately prior to commencing participation in a Parent
Benefit Plan providing medical or dental benefits shall be taken into account to
the same extent under such Parent Benefit Plan, in accordance with the terms of
such Parent Benefit Plan, for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions and life-time benefit limits.
(iii) Parent and the Company agree that, as soon as practicable
following the date hereof, for purposes of Section 5(a)(ii) of each employment
agreement entered into
-52-
between the Company and the executives listed in paragraph 12 of Section
5.1(h)(i) of the Company Disclosure Letter (collectively, the "Employment
----------
Agreements"), Price Waterhouse, LLP, who is independent of both Parent and the
----------
Company, will be appointed as tax counsel ("Tax Counsel") to make all relevant
-----------
determinations required by Section 5(a) of the Agreements. It is further agreed
that Tax Counsel shall take into account and consider all information provided
by the parties, including the assumptions used and the valuations previously
prepared by Ernst & Young in connection with Section 5(a) of the Employment
Agreements (inclusive of the valuation of the non-competition agreements
contained in each Employment Agreement), in making his or her determinations.
The determinations of Tax Counsel shall be binding upon the executives and the
Company. All fees and expenses of Tax Counsel shall be borne solely by the
Company and the Company shall enter into any agreement requested by Tax Counsel
in connection with the performance of services under the Employment Agreements.
Parent also agrees that, effective as of the Effective Date, Section 5(a) of the
Employment Agreements will be amended in the manner set forth in the Company
Disclosure Letter.
(c) Election to Parent's Board of Directors. At the Effective Time of
---------------------------------------
the Merger, Parent shall promptly increase the size of its Board of Directors or
exercise its reasonable best efforts to secure the resignation of present
directors in order to cause Xxxxxxx X. Xxxx and Xxxxxxx X. Xxxxx (the
"Nominees") to be appointed to Parent's board of directors and, subject to
--------
fiduciary obligations under applicable law, shall use its reasonable best
efforts to cause the Nominees to be elected (or remain in office) as directors
of Parent (divided as evenly as is possible among classes of directors) at the
first annual meeting of stockholders of Parent with a proxy mailing date after
the Effective Time.
6.12. Expenses. The Surviving Corporation shall pay all charges
--------
and expenses, including those of the Exchange Agent, in connection with the
transactions contemplated in Article IV, and Parent shall reimburse the
Surviving Corporation for such charges and expenses. Except as otherwise
provided in Section 8.5, whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the Merger and the other
transactions contemplated by this Agreement shall be paid by the party incurring
such expense, except that expenses incurred in connection with the filing fee
for the Proxy
-53-
Statement and the Registration Statement and printing and mailing such documents
shall be borne by Parent.
6.13. Indemnification; Directors' and Officers' Insurance. (a) From
---------------------------------------------------
and after the Effective Time, Parent shall indemnify and hold harmless, to the
fullest extent permitted under applicable law (and Parent shall also advance
expenses as incurred to the fullest extent permitted under applicable law,
provided the Person to whom expenses are advanced provides an undertaking to
repay such advances if it is ultimately determined that such Person is not
entitled to indemnification), each present and former director and officer of
the Company and its Subsidiaries (collectively, the "Indemnified Parties")
-------------------
against any costs or expenses (including reasonable attorneys' fees), judgments,
fines, losses, claims, damages or liabilities (collectively, "Costs") incurred
-----
in connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, including
the transactions contemplated by this Agreement, which is based in whole or in
part on, or arises in whole or in part out of the fact that such person is or
was a director or officer of the Company or any of its Subsidiaries.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 6.13, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify Parent thereof, but the
failure to so notify shall not relieve Parent of any liability it may have to
such Indemnified Party if such failure does not materially prejudice Parent. In
the event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) Parent shall have the right to
assume the defense thereof with counsel reasonably acceptable to the Indemnified
Party and Parent shall not be liable to any Indemnified Party for any legal
expenses of other counsel thereafter incurred in connection with the defense
thereof, (ii) the Indemnified Party will cooperate in all respects as reasonably
requested by Parent in the defense of any such matter, and in connection
therewith shall be entitled to reimbursement by Parent of expenses incurred in
connection therewith, and (iii) Parent shall not be liable for any settlement
effected without its prior written consent, which consent shall not be
unreasonably withheld or delayed; provided, however, that Parent shall not have
-------- -------
any obligation
-54-
hereunder to any Indemnified Party if a court shall ultimately determine, and
such determination shall have become final and nonappealable, that the
indemnification of such Indemnified Party in the matter contemplated hereby is
prohibited by law. If such indemnity is not available with respect to any
Indemnified Party, then Parent and the Indemnified Party shall contribute to the
amount payable in such proportion as is appropriate to reflect relative faults
and benefits.
(c) Parent and the Surviving Corporation shall maintain the Company's
and its Subsidiaries' existing officers' and directors' liability insurance
("D&O Insurance") for a period of six years after the Effective Time so long as
---------------
the annual premium therefor is not in excess of 200% of the last annual premium
paid prior to the date hereof (the "Current Premium"); provided, however, that
--------------- -------- -------
if the existing D&O Insurance expires, is terminated or canceled during such
six-year period, the Surviving Corporation will use its commercially reasonable
efforts to obtain as much D&O Insurance as can be obtained for the remainder of
such period for a premium not in excess (on an annualized basis) of 200% of the
Current Premium; provided further, that, in lieu of maintaining such existing
-------- -------
D&O Insurance as provided above, Parent may cause coverage to be provided under
any policy maintained for the benefit of Parent or any of its Subsidiaries, so
long as the terms are no less advantageous to the intended beneficiaries thereof
than the existing D&O Insurance. In lieu of the maintenance or purchase of such
insurance by Parent or the Surviving Corporation, the Parent or the Surviving
Corporation may purchase a six-year extended reporting period endorsement
("reporting tail coverage") under the Company's existing directors' and
officers' liability insurance coverage, provided that the total cost of the
reporting tail coverage shall not exceed $420,000, and provided that such
reporting tail coverage shall extend the director and officer liability coverage
in force as of the date hereof for a period of six years from the Effective Time
for any claims based upon, arising out of, directly or indirectly resulting
from, in consequence of, or in any way involving wrongful acts or omissions
occurring on or prior to the Effective Time, including without limitation all
claims based upon, arising out of, directly or indirectly resulting from, in
consequence of, or in any way involving the Offer, the Merger and any and all
related transactions or related events.
-55-
(d) The provisions of this Section 6.13 are intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties and
their respective heirs and estates. Nothing in this Section 6.13 shall limit in
any way any other rights to indemnification that any current or former director
or officer of the Company or any of its Subsidiaries may have by contract or
otherwise.
(e) From and after the Effective Time, the Surviving Corporation shall
fulfill, assume and honor in all respects the obligations of the Company
pursuant to the Company's articles of incorporation, regulations and any
indemnification agreement between the Company and any of the Company's directors
and officers existing and in force as of the date of this Agreement. The
Company agrees that the indemnification obligations set forth in the Company's
articles of incorporation and regulations, in each case as of the date of this
Agreement, shall survive the Merger with respect to any matter which is based in
whole or in part on, or arises in whole or in part out of the fact that an
individual is or was a director or officer of the Company or any of its
Subsidiaries prior to the Effective Time.
(f) If the Surviving Corporation or any of its successors or assigns
(i) shall consolidate with or merge into any other corporation or entity and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) shall transfer all or substantially all of its
properties and assets to any individual, corporation or other entity, then, and
in each such case, proper provisions shall be made so that the respective
successors and assigns of the Parent and the Surviving Corporation shall assume
all of the obligations set forth in this Section.
6.14. Debentures. Prior to the Effective Time, the Company and
----------
Parent shall enter into a supplemental indenture with the Trustee (as defined in
the Debentures) pursuant to the indenture under which the Debentures were issued
to provide, among other things, that on and after the Effective Time the
Debentures will be convertible only into the Merger Consideration.
6.15. Takeover Statutes. If any Takeover Statute is or may become
-----------------
applicable to the Transactions, each of Parent and the Company and its board of
directors shall grant such approvals and take such actions as are reasonably
necessary so that such transactions may be consummated as
-56-
promptly as practicable on the terms contemplated by this Agreement or by the
Merger and otherwise act to eliminate or minimize the effects of such statute or
regulation on such transactions.
6.16. Agreement of Affiliates. The Company shall deliver to Parent,
-----------------------
prior to the date the Registration Statement becomes effective under the
Securities Act, a letter (the "Affiliate Letter") identifying all Persons who
----------------
are, or may be deemed to be, "affiliates" of the Company for purposes of Rule
145 under the Securities Act. The Company shall use its reasonable best efforts
to cause each such Person who is identified as an "affiliate" in the Affiliate
Letter to deliver to Parent, prior to the Effective Time, a written agreement
(the "Affiliate Agreement") in substantially the form of Annex B hereto.
-------------------
6.17. Legal Opinion. The Company shall use its reasonable efforts
-------------
to cause its Ohio counsel to render to the lenders designated by Parent a (i)
written "due incorporation", "due authorization" and "enforceability" opinion
with respect to the Company, of this Agreement, the Share Repurchase Agreement
and the Option Termination Agreement, (ii) written opinion that Chapter 1704 of
the Ohio Revised Code is not applicable to the Transactions and (iii) written
"due authorization" opinion by the Company with respect to those certain voting
agreements to which the Company and certain shareholders of Parent and the
Company are parties, which opinions shall contain assumptions, qualifications
and exceptions customarily contained in legal opinions of such firm concerning
such matters and shall be limited to the laws of the State of Ohio.
ARTICLE VII
Conditions
7.1. Conditions to Obligations of Parent and Merger Sub. (a) If
--------------------------------------------------
Merger Sub shall have purchased Shares pursuant to the Offer, the respective
obligations of Parent and Merger Sub to consummate the Merger shall be subject
to the fulfillment of each of the following conditions, any or all of which may
be waived in whole or in part by Parent or Merger Sub, as the case may be, to
the extent permitted by applicable law:
(i) Injunction. No United States or state court or other Governmental
----------
Entity of competent jurisdiction
-57-
shall have enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and prohibits
consummation of the transactions contemplated by this Agreement
(collectively, an "Order").
-----
(ii) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose and no similar proceeding in respect of the Proxy
Statement shall have been initiated or threatened by the SEC.
(iii) Stockholder Approval. (1) This Agreement and the Merger shall
--------------------
have been approved and adopted by the holders of a majority of the Shares,
and (2) if required, the issuance of the Parent Common Stock in the Merger
shall have been approved by the requisite vote of the stockholders of
Parent.
(iv) NYSE Listing. The Parent Common Stock to be issued in the Merger,
------------
upon exercise of the Company Options assumed by Parent in connection with
the Merger and the Debentures have been approved for listing, subject to
official notice of issuance, on the NYSE.
(b) If Merger Sub shall not have purchased Shares pursuant to the
Offer, the respective obligations of Parent and Merger Sub to consummate the
Merger shall be subject to the fulfilment of each of the following conditions,
any or all of which may be waived in whole or in part by Parent or Merger Sub,
as the case may be, to the extent permitted by applicable law:
(i) Representations and Warranties. The representations and
------------------------------
warranties of the Company set forth in this Agreement shall have been true
and complete in all material respects when made and as of the Effective
Time, and Parent shall have received a certificate of the chief executive
officer and chief financial officer of the Company to such effect.
(ii) Performance of Obligations. The Company shall have performed in
--------------------------
all material respects all obligations to be performed by it under this
Agreement
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at or prior to the Effective Time, and Parent shall have received a
certificate of the chief executive officer and chief financial officer of
the Company to such effect.
(iii) HSR Act. The waiting period applicable to the
-------
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(iv) Order. There shall be in effect no Order.
-----
(v) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose and no similar proceeding in respect of the Proxy
Statement shall have been initiated or threatened by the SEC.
(vi) Stockholder Approval. (1) This Agreement and the Merger shall
--------------------
have been approved and adopted by the holders of a majority of the Shares,
and (2) if required, the issuance of the Parent Common Stock in the Merger
shall have been approved by the requisite vote of the stockholders of
Parent.
(vii) NYSE Listing. The Parent Common Stock to be issued in the
------------
Merger, upon exercise of the Company Options assumed by Parent in
connection with the Merger and the Debentures shall have been approved for
listing, subject to official notice of issuance, on the NYSE.
7.2. Conditions to Obligations of the Company. (a) If Merger Sub
----------------------------------------
shall have purchased Shares pursuant to the Offer, the obligations of the
Company to consummate the Merger shall be subject to the fulfillment of each of
the following conditions, any or all of which may be waived in whole or in part
by the Company to the extent permitted by applicable law:
(i) Order. There shall be in effect no Order.
-----
(ii) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration
-59-
Statement shall have been issued by the SEC and no proceedings for that
purpose and no similar proceeding in respect of the Proxy Statement shall
have been initiated or threatened by the SEC.
(iii) Stockholder Approval. (1) This Agreement and the Merger shall
--------------------
have been approved and adopted by the holders of a majority of the Shares,
and (2) if required, the issuance of the Parent Common Stock in the Merger
shall have been approved by the requisite vote of the stockholders of
Parent.
(iv) NYSE Listing. The Parent Common Stock to be issued in the Merger,
------------
upon exercise of the Company Options assumed by Parent in connection with
the Merger and the Debentures shall have been approved for listing, subject
to official notice of issuance, on the NYSE.
(b) If Merger Sub shall not have purchased Shares pursuant to the
Offer, the obligations of the Company to consummate the Merger shall be subject
to the fulfillment of each of the following conditions, any or all of which may
be waived in whole or in part by the Company, as the case may be, to the extent
permitted by applicable law:
(i) Representations and Warranties. The representations and
------------------------------
warranties of Parent set forth in this Agreement shall have been true and
complete in all material respects when made and as of the Effective Time,
and the Company shall have received a certificate of the Chief Executive
Officer and chief financial officer of Parent to such effect.
(ii) Performance of Obligations. Parent and Merger Sub shall have
--------------------------
performed in all material respects all obligations to be performed by them
under this Agreement at or prior to the Effective Time, and the Company
shall have received a certificate of the chief executive officer and chief
financial officer of Parent to such effect.
(iii) HSR Act. The waiting period applicable to the consummation of
-------
the Merger under the HSR Act shall have expired or been terminated.
(iv) Order. There shall be in effect no Order.
-----
-60-
(v) Effectiveness of Registration Statement. The Registration
---------------------------------------
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose and no similar proceeding in respect of the Proxy
Statement shall have been initiated or threatened by the SEC.
(vi) Stockholder Approval. (1) This Agreement and the Merger shall
--------------------
have been approved and adopted by the holders of a majority of the Shares,
and (2) if required, the issuance of the Parent Common Stock in the Merger
shall have been approved by the requisite vote of the stockholders of
Parent.
(vii) NYSE Listing. The Parent Common Stock to be issued in the
------------
Merger, upon exercise of the Company Options assumed by Parent in
connection with the Merger and the Debentures shall have been approved for
listing, subject to official notice of issuance, on the NYSE.
ARTICLE VIII
Termination
8.1. Termination by Mutual Consent. This Agreement may be
-----------------------------
terminated and the Merger may be abandoned at any time prior to the expiration
or termination of the Offer, before or after the approval by holders of Shares,
by the mutual consent of Parent and the Company, by action of their respective
Boards of Directors.
8.2. Termination by Either Parent or the Company. This Agreement
-------------------------------------------
may be terminated and the Merger may be abandoned by action of the Board of
Directors of either Parent or the Company after June 15, 1998 if, prior thereto,
Merger Sub shall not have purchased Shares pursuant to the Offer and the
Effective Time shall not have occurred; provided, the party seeking termination
--------
shall not have breached its obligations under this Agreement.
8.3. Termination by Parent. This Agreement may be terminated and
---------------------
the Merger may be abandoned at any time prior to the acceptance for payment of
Shares pursuant to the Offer, by action of the Board of Directors of Parent, if
-61-
(x) the Company shall have failed to comply in any material respect with any of
the covenants or agreements contained in this Agreement to be complied with or
performed by the Company at or prior to the expiration or termination of the
Offer; or (y) the Board of Directors of the Company shall have withdrawn or
modified in a manner adverse to Parent or Merger Sub its approval or
recommendation of the Offer, this Agreement or the Merger or the Board of
Directors of the Company, upon request by Parent, shall fail to reaffirm such
approval or recommendation; or (z) the condition set forth in Section 7.1(b)(i)
shall be incapable of being satisfied prior to June 15, 1998; provided that
--------
Parent shall not have breached its obligations under this Agreement.
8.4. Termination by the Company. This Agreement may be terminated
--------------------------
and the Merger may be abandoned at any time prior to the acceptance for payment
of Shares pursuant to the Offer, by action of the Board of Directors of the
Company, (x) prior to the expiration or termination of the Offer, if (i) (A)
Parent or Merger Sub shall have failed to comply in any material respect with
any of the covenants or agreements contained in this Agreement to be complied
with or performed by Parent or Merger Sub at or prior to the expiration or
termination of the Offer, or (B) any representation or warranty of Parent or
Merger Sub set forth in this Agreement shall be inaccurate or incomplete in any
material respect when made or thereafter and remains inaccurate or incomplete in
any material respect, or (C) there shall have occurred any event or events that,
individually or in the aggregate, have or are reasonably likely to have a Parent
Material Adverse Effect, or (ii) Parent or Merger Sub shall have failed to
commence the Offer within the time required in Section 1.1; or (y) if (i) the
Board of Directors of the Company receives an unsolicited written offer with
respect to a merger, consolidation or sale of all or substantially all of the
Company's assets or an unsolicited tender or exchange offer for the Shares is
commenced, and the Board of Directors of the Company (A) determines in good
faith, taking into consideration the advice of outside legal counsel, that
approval, acceptance or recommendation of such transaction is likely to be
required in order for the members of the Company's Board of Directors to comply
with their fiduciary duties under applicable law, and (B) determines in good
faith, after consultation with its financial advisor, that such transaction is a
Superior Proposal, and (ii) the Company pays the fee required by Section 8.5(b);
or (z) the condition set forth in Section 7.2(b)(i) shall be incapable
-62-
of being satisfied prior to June 15, 1998; provided that the Company shall not
have breached its obligations under this Agreement. Upon the termination of this
Agreement pursuant to this Section, Parent and Merger Sub shall immediately
terminate the Offer.
8.5. Effect of Termination and Abandonment. (a) In the event of
-------------------------------------
termination of this Agreement and abandonment of the Merger pursuant to this
Article VIII, no party hereto (or any of its directors or officers) shall have
any liability or further obligation to any other party to this Agreement, except
as provided in Section 8.5(b) below and Section 9.2 and except that nothing
herein will relieve any party from liability for any breach of this Agreement.
(b) If (x)(i) after the date hereof any corporation, partnership,
person, other entity or group (as defined in Section 13(d)(3) of the Exchange
Act) other than Parent or Merger Sub or any of their respective subsidiaries or
affiliates (collectively, a "13(d)(3) Person") shall have become the beneficial
---------------
owner of a majority or more of the outstanding Shares or any 13(d)(3) Person
shall have commenced, or shall have publicly announced an intention to commence,
a bona fide tender offer or exchange offer for one third or more of the
---- ----
outstanding Shares, (ii) the Share Number Condition (as defined in Annex A)
shall not have been satisfied and the Offer is terminated without the purchase
of any Shares thereunder, and (iii) within one year following such termination,
the Company shall have entered into an agreement with respect to an Acquisition
Proposal with any person or other entity other than Parent or any Person or
other entity becomes the beneficial owner of a majority or more of the
outstanding Shares, in either case at a price per Share of $11.50 or more, or
(y) Parent shall have terminated this Agreement pursuant to Section 8.3(y), or
(z) the Company shall have terminated this Agreement pursuant to Section 8.4(y),
then (if such fee has not already been paid) the Company shall promptly, but in
no event later than two days after the date of such agreement or the effective
time of such termination, as the case may be, pay Parent a fee of $15,000,000;
provided that no fee shall be paid pursuant to this Section 8.5(b) if Parent
--------
shall have materially breached any of its obligations hereunder. The Company
acknowledges that the agreements contained in this Section 8.5(b) are an
integral part of the transactions contemplated in this Agreement, and that,
without these agreements, Parent and Merger Sub would not enter
-63-
into this Agreement; accordingly, if the Company fails to promptly pay the
amounts due pursuant to this Section 8.5(b), and, in order to obtain such
payment, Parent or Merger Sub commences a suit which results in a judgment
against the Company for the fee set forth in this Section 8.5(b), the Company
shall pay to Parent or Merger Sub its costs and expenses (including attorneys'
fees) in connection with such suit, together with interest on the amount of the
fee at the prime rate of Citibank, N.A. on the date such payment was required to
be made.
ARTICLE IX
Miscellaneous and General
9.1. Survival. This Article IX and the agreements of the Company,
--------
Parent and Merger Sub contained in Sections 6.9 (Stock Exchange Listing and De-
listing), 6.11 (Benefits), 6.12 (Expenses) and 6.13 (Indemnification; Directors'
and Officers' Insurance) shall survive the consummation of the Merger. This
Article IX, the agreements of the Company, Parent and Merger Sub contained in
Section 6.12 (Expenses), Section 8.5 (Effect of Termination and Abandonment) and
the Confidentiality Agreement shall survive the termination of this Agreement.
All other representations, warranties, covenants and agreements in this
Agreement shall not survive the consummation of the Merger or the termination of
this Agreement.
9.2. Modification or Amendment. Subject to the provisions of
-------------------------
applicable law, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
9.3. Waiver of Conditions. The conditions to each of the parties'
--------------------
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
9.4. Counterparts. This Agreement may be executed in any number of
------------
counterparts, each such counterpart being deemed to be an original instrument,
and all such counterparts shall together constitute the same agreement.
-64-
9.5. GOVERNING LAW AND VENUE; WAIVER OF JURY TRIAL. (a) THIS
---------------------------------------------
AGREEMENT SHALL BE DEEMED TO BE MADE IN AND IN ALL RESPECTS SHALL BE
INTERPRETED, CONSTRUED AND GOVERNED BY AND IN ACCORDANCE WITH THE LAW OF THE
STATE OF OHIO WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF. The
parties hereby irrevocably submit to the jurisdiction of the courts of the State
of Ohio and the Federal courts of the United States of America located in the
State of Ohio solely in respect of the interpretation and enforcement of the
provisions of this Agreement and of the documents referred to in this Agreement,
and in respect of the transactions contemplated hereby, and hereby waive, and
agree not to assert, as a defense in any action, suit or proceeding for the
interpretation or enforcement hereof or of any such document, that it is not
subject thereto or that such action, suit or proceeding may not be brought or is
not maintainable in said courts or that the venue thereof may not be appropriate
or that this Agreement or any such document may not be enforced in or by such
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such an Ohio State or
Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or proceeding in the manner provided in Section 9.5 or in such other
manner as may be permitted by law shall be valid and sufficient service thereof.
(b) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (ii) EACH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (iii) EACH PARTY
MAKES THIS WAIVER VOLUNTARILY, AND (iv) EACH PARTY HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 9.5.
-65-
9.6. Notices. Any notice, request, instruction or other document
-------
to be given hereunder by any party to the others shall be in writing and
delivered personally or sent by registered or certified mail, postage prepaid,
or by facsimile:
if to Parent or Merger Sub:
--------------------------
Xxxxx X. Xxxx
International Technology Corporation
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000-0000
Telecopier: (000) 000-0000
with a copy to:
Xxxxx X. Xxxxxxx
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
if to the Company:
-----------------
Xxxxxx X. Xxxxxxx
OHM Corporation
0000 Xxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx 00000
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier: (000) 000-0000
and a copy to:
Xxxxxx X. Xxxxxxx
Xxxxx Day Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Telecopier: (000) 000-0000
-66-
or to such other persons or addresses as may be designated in writing by the
party to receive such notice as provided above.
9.7. Entire Agreement; No Other Representations. This Agreement
------------------------------------------
(including any exhibits hereto), the Company Disclosure Letter, the Parent
Disclosure Letter, the Share Repurchase Agreement, the Company Voting Agreement
and Parent Voting Agreement, and the Option Termination Agreement and the
Confidentiality Agreement, dated September 25, 1997, between Parent and the
Company (the "Confidentiality Agreement") constitute the entire agreement, and
supersede all other prior agreements, understandings, representations and
warranties both written and oral, among the parties, with respect to the subject
matter hereof. EACH PARTY HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT, NEITHER PARENT AND MERGER SUB NOR THE
COMPANY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS
ANY OTHER REPRESENTATIONS OR WARRANTIES MADE BY ITSELF OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISORS OR OTHER
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE
TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
9.8. No Third Party Beneficiaries. Except as provided in Section
----------------------------
6.13 (Indemnification; Directors' and Officers' Insurance), this Agreement is
not intended to confer upon any Person other than the parties hereto any rights
or remedies hereunder.
9.9. Obligations of Parent and of the Company. Whenever this
----------------------------------------
Agreement requires a Subsidiary of Parent to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause such
Subsidiary to take such action. Whenever this Agreement requires a Subsidiary of
the Company to take any action, such requirement shall be deemed to include an
undertaking on the part of the Company to cause such Subsidiary to take such
action and, after the Effective Time, on the part of the Surviving Corporation
to cause such Subsidiary to take such action.
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9.10. Severability. The provisions of this Agreement shall be
------------
deemed severable and the invalidity or unenforceability of any provision shall
not affect the validity or enforceability or the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
9.11. Interpretation. The table of contents and headings herein
--------------
are for convenience of reference only, do not constitute part of this Agreement
and shall not be deemed to limit or otherwise affect any of the provisions
hereof. Where a reference in this Agreement is made to Section or Exhibit, such
reference shall be to a Section of or Exhibit to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
9.12. Assignment. This Agreement shall not be assignable by
----------
operation of law or otherwise; provided, however, that Parent may designate, by
-------- -------
written notice to the Company, another wholly-owned direct or indirect
Subsidiary to be a Constituent Corporation in lieu of Merger Sub, in which event
all references herein to Merger Sub shall be deemed references to such other
Subsidiary, except that all representations and warranties made herein with
respect to Merger Sub as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other Subsidiary as of
the date of such designation.
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IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of the parties hereto as of the date
first written above.
OHM CORPORATION
By: __________________________
Name: Xxxxx X. Xxxx
Title: Chairman, President and
Chief Executive Officer
INTERNATIONAL TECHNOLOGY CORPORATION
By: __________________________
Name: Xxxxxxx X. XxXxxx
Title: President
IT-OHIO, INC.
By: __________________________
Name: Xxxxxxx X. XxXxxx
Title: President
Annex A
Certain Conditions of the Offer
-------------------------------
Notwithstanding any other provision of the Offer and provided that (i)
the Share Repurchase shall have been completed subject only to the condition
that Merger Sub shall have paid for Shares pursuant to the Offer and (ii) Merger
Sub shall not be obligated to accept for payment any Shares until expiration or
termination of all applicable waiting periods under the HSR Act, Merger Sub
shall not be required to accept for payment, or may delay the acceptance for
payment for any tendered Shares, or may, subject to the terms and conditions of
the Merger Agreement, terminate or amend the Offer as to any Shares not then
accepted for payment if 13,933,000 Shares shall not have been properly and
validly tendered pursuant to the Offer and not withdrawn prior to the expiration
of the Offer (the "Share Number Condition"), or, if on or after January 15, 1998
and prior to the time of acceptance for payment for any of such Shares, any of
the following events shall occur:
(a) the Company shall have breached or failed to perform in any
material respect its obligations, covenants or agreements under the Merger
Agreement and, with respect to any such failure that can be remedied, the
failure shall not have been remedied within five business days after Parent
has furnished the Company written notice of such failure, or any
representation or warranty of the Company set forth in the Merger Agreement
shall have been inaccurate or incomplete in any material respect when made
or thereafter shall become and remain inaccurate or incomplete in any
material respect;
(b) there shall be instituted or pending any action, litigation,
proceeding, investigation or other application (hereinafter, an "Action")
------
before any court of competent jurisdiction or other governmental or
regulatory authority, agency or commission in the United States (each a
"Governmental Entity") by any Governmental Entity: (i) seeking to prohibit
--------------------
the consummation of the transactions contemplated by the Offer or the
Merger; (ii) seeking to prohibit, or impose any material limitations on
Parent's or Merger Sub's ownership or operation of all or a material
portion of the Company's
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business or assets, or to compel Parent or Merger Sub to dispose of or hold
separate all or a material portion of the Company's business or assets; or
(iii) seeking to make the acceptance for payment of, purchase of, or
repayment for, some or all of the Shares illegal;
(c) any statute, rule, regulation, order or injunction shall be
enacted, promulgated, entered, enforced or deemed to or become applicable
to the Offer or the Merger that results in any of the consequences referred
to in clauses (i) through (iii) of paragraph (b) above;
(d) it shall have been publicly disclosed or Parent shall have
otherwise learned that any person or "group" (as defined in Section
13(d)(3) of the Exchange Act), other than Parent and its Subsidiaries or
any group of which any of them is a member, shall have acquired beneficial
ownership (determined pursuant to Rule 13d-3 under the Exchange Act) or
more than 50% of the outstanding shares, or any person, entity or group
shall have entered into a definitive written agreement with the Company
with respect to a tender offer or exchange offer for some portion or all of
the Shares or a merger, consolidation or other business combination with or
involving the Company;
(e) there shall have occurred any event or events that, individually
or in the aggregate, have or are reasonably likely to have a Company
Material Adverse Effect;
(f) the Merger Agreement shall have been terminated by the Company or
Parent or Merger Sub in accordance with its terms or Parent or Merger Sub
shall have reached an agreement or understanding in writing with the
Company providing for a termination or amendment of the Offer or a delay in
the acceptance for payment for the Shares; or
(g) there shall have occurred (i) any general suspension of, or
limitation on prices for, trading in securities on the NYSE (other than a
shortening of trading hours or any coordinated trading halt triggered
solely as a result of a specified increase or decrease in a market index),
(ii) the declaration of any banking moratorium or any suspension of
payments in respect of
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banks, or any limitation (whether or not mandatory) by any Governmental
Entity on, or other event materially adversely affecting, the extension of
credit by lending institutions in the United States, or (iii) a
commencement of a war or armed hostilities directly or indirectly involving
the United States;
which, in the reasonable judgment of Parent and Merger Sub, in any such case,
make it inadvisable to proceed with the Offer and/or with the acceptance for
payment for Shares.
The conditions set forth in this paragraph 1 are for the sole benefit
of Parent and Merger Sub and may be asserted by Parent or Merger Sub regardless
of the circumstances giving rise to such condition or may be waived by Parent or
Merger Sub, by express and specific action to that effect, in whole or in part
at any time and from time to time in their sole discretion, except as otherwise
provided in the Merger Agreement.
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Annex B
FORM OF AFFILIATE AGREEMENT
---------------------------
February __, 1998
International Technology Corporation
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Ladies and Gentlemen:
Reference is made to the provisions of the Agreement and Plan of
Merger, dated as of January 15, 1998 (together with any amendments thereto, the
"Merger Agreement"), among OHM Corporation, an Ohio corporation (the "Company"),
International Technology Corporation, a Delaware corporation ("Parent"), and IT-
Ohio, Inc., an Ohio corporation and a wholly owned subsidiary of Parent ("Merger
Sub"), pursuant to which, among other things, Merger Sub will be merged with and
into the Company, with the Company continuing as the surviving corporation (the
"Merger"). This agreement constitutes the undertakings of the undersigned
contemplated by Section 6.16 of the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the Company,
as such term is defined for purposes of Rule 145 ("Rule 145") promulgated under
the Securities Act of 1933, as amended (the "Securities Act"), and that the
transferability of the shares of common stock, par value $0.01 per share, of
Parent (the "Parent Common Stock") which I will receive upon the consummation of
the Merger in exchange for my shares of common stock, par value $0.10 per share,
of the Company (the "Shares") may be restricted. Nothing herein shall be
construed as an admission that I am an affiliate.
I hereby represent, warrant and covenant to Parent that:
(a) I have the full power to execute and deliver this agreement and to
make the representations and warranties herein and to perform the obligations
hereunder;
(b) I will not sell, transfer or otherwise dispose of any of the
shares of Parent Common Stock except (i) pursuant to an effective registration
statement under the Securities Act or (ii) as permitted by, and in accordance
with, Rule 145, if applicable, or another applicable exemption under the
Securities Act; and
(c) I will not exercise appraisal rights in connection with the
Merger.
Parent agrees to cause either or both of the conditions set forth in
Rule 144(c) under the Securities Act to be satisfied at all times during the
period prior to the second anniversary of the Effective Time (as defined in the
Merger Agreement).
I hereby acknowledge that except as otherwise provided in the Merger
Agreement or in the previous paragraph, Parent is under no obligation to
register the sale, transfer or other disposition of the shares of Parent Common
Stock or to take any other action necessary for the purpose of making an
exemption from registration available.
I understand that Parent will issue stop transfer instructions to its
transfer agent with respect to the shares of Parent Common Stock that I receive
upon consummation of the Merger and that a restrictive legend will be placed on
the certificates delivered to me evidencing the shares of Parent Common Stock in
substantially the following form:
"This certificate and the shares represented hereby have been issued
pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and
may not be sold or otherwise disposed of unless registered under the
Securities Act pursuant to a Registration Statement in effect at the time
or unless the proposed sale or disposition can be made in compliance with
Rule 145 or without registration in reliance on another exemption from
registration. Reference is made to that certain agreement dated February
__, 1998 between the Holder and the Issuer, a copy of which is on file in
the principal office of the Issuer.
Parent agrees to release such stop transfer instructions and to cause
this legend to be removed from the certificates delivered to me evidencing the
shares of Parent Common Stock free of charge to the holder thereof promptly
after the restrictions on transferability of the shares of Parent
B-2
Common Stock imposed by Rule 145 are no longer applicable or Parent breaches its
obligations set forth in the first sentence of the fourth paragraph of this
agreement, and after I surrender such certificates to the transfer agent with a
request for such removal.
This agreement shall be binding on successors to Parent and on my
heirs, executors and estate.
I hereby acknowledge that the receipt of this agreement by Parent is
an inducement and a condition to Parent's obligation to consummate the Merger
under the Merger Agreement and this agreement shall be governed by the laws of
the State of Delaware.
Very truly yours,
AGREED:
INTERNATIONAL TECHNOLOGY CORPORATION
By: _________________________
Name:
Title:
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