Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
DATED AS OF AUGUST 16, 1998
BY AND AMONG
WASTE MANAGEMENT, INC.
OCHO ACQUISITION CORPORATION
AND
EASTERN ENVIRONMENTAL SERVICES, INC.
TABLE OF CONTENTS
Page No.
--------
ARTICLE I
THE MERGER
Section 1.1 The Merger....................................................1
Section 1.2 Effective Time of the Merger..................................1
ARTICLE II THE SURVIVING AND PARENT CORPORATIONS
Section 2.1 Certificate of Incorporation................................. 2
Section 2.2 By-Laws...................................................... 2
Section 2.3 Directors.................................................... 2
Section 2.4 Officers..................................................... 2
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Company Shares in the Merger................... 2
Section 3.2 Conversion of Subsidiary Shares.............................. 3
Section 3.3 Exchange of Certificates..................................... 3
Section 3.4 No Fractional Shares......................................... 5
Section 3.5 Closing...................................................... 6
Section 3.6 Closing of the Company's Transfer Books...................... 6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY
Section 4.1 Organization and Qualification............................... 7
Section 4.2 Capitalization............................................... 7
Section 4.3 Subsidiaries................................................. 8
Section 4.4 Authority; Non-Contravention; Approvals...................... 8
Section 4.5 Reports and Financial Statements.............................10
Section 4.6 Absence of Undisclosed Liabilities...........................11
Section 4.7 Absence of Certain Changes or Events.........................11
Section 4.8 Litigation...................................................11
Section 4.9 Registration Statement and Proxy Statement...................12
Section 4.10 Violation of Law.............................................12
ii
Section 4.11 Reorganization and Pooling of Interests......................13
Section 4.12 Brokers and Finders..........................................13
Section 4.13 Ownership of Company Common Stock............................13
Section 4.14 Subsidiary...................................................13
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization and Qualification...............................14
Section 5.2 Capitalization...............................................14
Section 5.3 Subsidiaries.................................................15
Section 5.4 Authority; Non-Contravention; Approvals......................15
Section 5.5 Reports and Financial Statements.............................17
Section 5.6 Absence of Undisclosed Liabilities...........................17
Section 5.7 Absence of Certain Changes or Events.........................18
Section 5.8 Litigation...................................................18
Section 5.9 Registration Statement and Proxy Statement...................18
Section 5.10 No Violation of Law..........................................19
Section 5.11 Compliance with Agreements...................................19
Section 5.12 Taxes........................................................20
Section 5.13 Employee Benefit Plans; ERISA................................21
Section 5.14 Labor Controversies..........................................23
Section 5.15 Environmental Matters........................................23
Section 5.16 Non-Competition Agreements...................................24
Section 5.17 Title to Assets..............................................25
Section 5.18 Reorganization and Pooling of Interests......................25
Section 5.19 Company Stockholders' Approval...............................25
Section 5.20 Brokers and Finders..........................................25
Section 5.21 Opinion of Financial Advisor.................................26
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger........26
Section 6.2 Conduct of Business by Parent and Subsidiary Pending
the Merger...................................................29
Section 6.3 Control of the Company's Operations..........................30
Section 6.4 Control of Parent's Operations...............................30
Section 6.5 Acquisition Transactions.....................................30
iii
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information........................................31
Section 7.2 Registration Statement and Proxy Statement...................32
Section 7.3 Stockholders' Approvals......................................33
Section 7.4 Compliance with the Securities Act...........................33
Section 7.5 Exchange Listing.............................................33
Section 7.6 Expenses and Fees............................................33
Section 7.7 Agreement to Cooperate.......................................34
Section 7.8 Public Statements............................................36
Section 7.9 Option Plans.................................................36
Section 7.10 Notification of Certain Matters..............................37
Section 7.11 Directors' and Officers' Indemnification.....................37
Section 7.12 Corrections to the Proxy Statement/Prospectus
and Registration Statement...................................39
Section 7.13 Assumption of Registration Rights Agreements.................39
Section 7.14 Company Employees............................................39
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger...39
Section 8.2 Conditions to Obligation of the Company to Effect the
Merger.......................................................41
Section 8.3 Conditions to Obligations of Parent and Subsidiary to
Effect the Merger............................................41
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination..................................................42
Section 9.2 Effect of Termination........................................44
Section 9.3 Amendment....................................................44
Section 9.4 Waiver.......................................................44
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations and Warranties...............45
Section 10.2 Notices......................................................45
Section 10.3 Interpretation...............................................46
iv
Section 10.4 Miscellaneous................................................46
Section 10.5 Counterparts.................................................46
Section 10.6 Parties in Interest..........................................46
v
GLOSSARY OF DEFINED TERMS
Term Page No.
---- --------
Acquisition Proposal......................................................31
Acquisition Transaction...................................................31
Affiliate Agreement.......................................................33
Agreement................................................................. 1
Antitrust Division........................................................34
APB No. 16................................................................27
Business Combination......................................................34
Closing................................................................... 6
Closing Date.............................................................. 6
Code...................................................................... 1
Company................................................................... 1
Company Certificates...................................................... 4
Company Common Stock...................................................... 3
Company Disclosure Schedule...............................................14
Company Financial Statements..............................................17
Company Options...........................................................36
Company Permits...........................................................19
Company Plans.............................................................21
Company Preferred Stock...................................................14
Company Representatives...................................................32
Company Required Statutory Approvals......................................17
Company SEC Reports.......................................................17
Company Stockholders' Approval............................................33
DGCL...................................................................... 1
Effective Time............................................................ 1
Environmental Law.........................................................23
ERISA.....................................................................21
Excess Shares............................................................. 5
Exchange Act..............................................................10
Exchange Agent............................................................ 3
Exchange Ratio............................................................ 3
Existing Credit Facilities................................................27
FTC.......................................................................34
Hazardous Substance.......................................................24
HSR Act................................................................... 9
indemnified Parties.......................................................37
indemnified Party.........................................................37
vi
Merger.................................................................... 1
Merger Filing............................................................. 1
NYSE...................................................................... 5
Parent.................................................................... 1
Parent Common Stock....................................................... 3
Parent Financial Statements...............................................10
Parent Permits............................................................13
Parent Preferred Stock.................................................... 7
Parent Representatives....................................................31
Parent Required Statutory Approvals.......................................10
Parent SEC Reports........................................................10
Pooling Transaction.......................................................13
Potential Acquirer........................................................31
Proxy Statement...........................................................12
Proxy Statement/Prospectus................................................12
Registration Statement....................................................12
SEC.......................................................................10
Securities Act............................................................10
Subsidiary................................................................ 1
Subsidiary Common Stock................................................... 3
Superior Proposal.........................................................31
Surviving Corporation..................................................... 1
Tax Return................................................................21
Taxes.....................................................................20
Termination Date..........................................................43
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of August 16, 1998 (this
"Agreement"), is made and entered into by and among Waste Management, Inc., a
----------
Delaware corporation ("Parent"), Ocho Acquisition Corporation, a Delaware
------
corporation and a wholly owned subsidiary of Parent ("Subsidiary"), and Eastern
----------
Environmental Services, Inc., a Delaware corporation (the "Company").
-------
WITNESSETH:
WHEREAS, the Boards of Directors of Parent, Subsidiary and the Company
have approved the merger of Subsidiary with and into the Company on the terms
set forth in this Agreement (the "Merger");
------
WHEREAS, Parent, Subsidiary and the Company intend the Merger to
qualify as a tax-free reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
----
thereunder and to be considered a pooling of interests for financial accounting
purposes; and
WHEREAS, certain officers of the Company owning stock of the Company
have entered into shareholder support agreements dated as of the date hereof.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
Section 1.1 The Merger. Upon the terms and subject to the conditions
----------
of this Agreement, at the Effective Time (as defined in Section 1.2) in
accordance with the General Corporation Law of the State of Delaware (the
"DGCL"), Subsidiary shall be merged with and into the Company and the separate
----
existence of Subsidiary shall thereupon cease. The Company shall be the
surviving corporation in the Merger and is hereinafter sometimes referred to as
the "Surviving Corporation."
---------------------
Section 1.2 Effective Time of the Merger. The Merger shall become
----------------------------
effective at such time (the "Effective Time") as shall be stated in a
--------------
certificate of merger, in a form mutually acceptable to Parent and the Company,
to be filed with the Secretary of State of the State of Delaware in accordance
with the DGCL (the "Merger Filing"). The Merger Filing shall be made
-------------
simultaneously with or as soon as practicable after the closing of the
transactions contemplated by this Agreement in accordance with Section 3.5. The
parties acknowledge that it is their
2
mutual desire and intent to consummate the Merger as soon as practicable after
the date hereof. Accordingly, the parties shall, subject to the provisions
hereof and to the fiduciary duties of their respective boards of directors, use
all reasonable efforts to consummate, as soon as practicable, the transactions
contemplated by this Agreement in accordance with Section 3.5.
ARTICLE II
THE SURVIVING AND PARENT CORPORATIONS
Section 2.1 Certificate of Incorporation. The Certificate of
----------------------------
Incorporation of the Company except for Article One shall be amended as of the
Effective Time to be identical to the Certificate of Incorporation of
Subsidiary, as in effect immediately prior to the Effective Time, and shall be
the Certificate of Incorporation of the Surviving Corporation after the
Effective Time, and thereafter may be amended in accordance with its terms and
as provided in the DGCL, except that no amendment shall be made to, nor shall
any provision be included which is inconsistent with, Article Nine of the
Certificate of Incorporation of the Company.
Section 2.2 By-Laws. The By-laws of Subsidiary as in effect
-------
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation after the Effective Time and (subject to Section 7.11 hereof)
thereafter may be amended in accordance with their terms and as provided by the
Certificate of Incorporation of the Surviving Corporation and the DGCL.
Section 2.3 Directors. The directors of Subsidiary in office
---------
immediately prior to the Effective Time shall be the directors of the Surviving
Corporation after the Effective Time, and such directors shall serve in
accordance with the By-laws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
Section 2.4 Officers. The officers of Subsidiary in office
--------
immediately prior to the Effective Time shall be the officers of the Surviving
Corporation after the Effective Time, and such officers shall serve in
accordance with the By-laws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Conversion of Company Shares in the Merger. At the
------------------------------------------
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of Parent or the Company:
3
(a) each share of the common stock, par value $.01 per share, of the
Company (the "Company Common Stock") shall, subject to Sections 3.3 and
--------------------
3.4, be converted into the right to receive, without interest, 0.6406 (the
"Exchange Ratio") shares of the common stock, par value $.01 per share, of
--------------
Parent ("Parent Common Stock");
-------------------
(b) each share of capital stock of the Company, if any, owned by
Parent or any subsidiary of Parent or held in treasury by the Company or
any subsidiary of the Company immediately prior to the Effective Time shall
be canceled and no consideration shall be paid in exchange therefor and
shall cease to exist from and after the Effective Time; and
(c) each unexpired warrant to purchase Company Common Stock that is
outstanding at the Effective Time, whether or not exercisable, shall
automatically and without any action on the part of the holder thereof be
converted into a warrant to purchase a number of shares of Parent Common
Stock equal to the number of shares of Company Common Stock that could be
purchased under such warrant multiplied by the Exchange Ratio, at a price
per share of Parent Common Stock equal to the per share exercise price of
such warrant divided by the Exchange Ratio.
Section 3.2 Conversion of Subsidiary Shares. At the Effective Time,
-------------------------------
by virtue of the Merger and without any action on the part of Parent as the sole
stockholder of Subsidiary, each issued and outstanding share of common stock,
par value $.01 per share, of Subsidiary ("Subsidiary Common Stock") shall be
-----------------------
converted into one share of common stock, par value $.01 per share, of the
Surviving Corporation.
Section 3.3 Exchange of Certificates. (a) From and after the
------------------------
Effective Time, each holder of an outstanding certificate which immediately
prior to the Effective Time represented shares of Company Common Stock shall be
entitled to receive in exchange therefor, upon surrender thereof to an exchange
agent reasonably satisfactory to Parent and the Company (the "Exchange Agent"),
--------------
a certificate or certificates representing the number of whole shares of Parent
Common Stock to which such holder is entitled pursuant to Section 3.1(a).
Notwithstanding any other provision of this Agreement, (i) until holders or
transferees of certificates theretofore representing shares of Company Common
Stock have surrendered them for exchange as provided herein, no dividends or
other distributions shall be paid with respect to any shares represented by such
certificates and no payment for fractional shares shall be made and (ii) without
regard to when such certificates representing shares of Company Common Stock are
surrendered for exchange as provided herein, no interest shall be paid on any
dividends or other distributions or any payment for fractional shares. Upon
surrender of a certificate which immediately prior to the Effective Time
represented shares of Company Common Stock, there shall be paid to the holder of
such certificate the amount of any dividends or other distributions which
theretofore became payable, but which were not paid by reason of the foregoing,
with respect to the number of whole shares of Parent Common Stock represented by
the certificate or certificates issued upon such surrender.
4
(b) If any certificate for shares of Parent Common Stock is to be
issued in a name other than that in which the certificate for shares of Company
Common Stock surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the person requesting such exchange shall pay
any applicable transfer or other taxes required by reason of such issuance.
(c) Within five days after the Effective Time, Parent shall make
available to the Exchange Agent the certificates representing shares of Parent
Common Stock required to effect the exchanges referred to in paragraph (a) above
and cash for payment of any fractional shares referred to in Section 3.4.
(d) Within five days after the Effective Time, Parent shall cause the
Exchange Agent to mail to each holder of record of a certificate or certificates
that immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (the "Company Certificates") (i) a letter of transmittal
--------------------
satisfactory to the Company and approved by it prior to Closing (which shall
specify that delivery shall be effected, and risk of loss and title to the
Company Certificates shall pass, only upon actual delivery of the Company
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Company Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of Company
Certificates for cancellation to the Exchange Agent, together with a duly
executed letter of transmittal and such other documents as the Exchange Agent
shall reasonably require, the holder of such Company Certificates shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Parent Common Stock into which the shares of Company Common
Stock theretofore represented by the Company Certificates so surrendered shall
have been converted pursuant to the provisions of Section 3.1(a), and the
Company Certificates so surrendered shall be canceled. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of shares of Company Common Stock for any shares of Parent Common Stock
or dividends or distributions thereon delivered to a public official pursuant to
applicable abandoned property, escheat or similar laws.
(e) Promptly following the date which is nine months after the
Effective Time, the Exchange Agent shall deliver to Parent all cash,
certificates (including any Parent Common Stock) and other documents in its
possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a Company
Certificate may surrender such Company Certificate to the Surviving Corporation
and (subject to applicable abandoned property, escheat and similar laws) receive
in exchange therefor the Parent Common Stock, without any interest thereon.
Notwithstanding the foregoing, none of the Exchange Agent, Parent, Subsidiary,
the Company or the Surviving Corporation shall be liable to a holder of shares
of Company Common Stock for any shares of Parent Common Stock delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
5
(f) In the event any Company Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person
claiming such Company Certificate to be lost, stolen or destroyed, the Surviving
Corporation shall issue in exchange for such lost, stolen or destroyed Company
Certificate the Parent Common Stock deliverable in respect thereof determined in
accordance with this Article III. When authorizing such issuance in exchange
therefor, the Board of Directors of the Surviving Corporation may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Company Certificate to give the
Surviving Corporation such indemnity as it may reasonably direct as protection
against any claim that may be made against the Surviving Corporation with
respect to the Company Certificate alleged to have been lost, stolen or
destroyed.
Section 3.4 No Fractional Shares. (a) No certificates or scrip
--------------------
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Company Certificates, no dividend or distribution with
respect to Parent Common Stock shall be payable on or with respect to any
fractional share and such fractional share interests will not entitle the owner
thereof to any rights of a stockholder of Parent.
(b) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (x) the number of full shares of
Parent Common Stock delivered to the Exchange Agent by Parent over (y) the
aggregate number of full shares of Parent Common Stock to be distributed to
holders of Company Common Stock (such excess being herein called the "Excess
------
Shares"). As soon after the Effective Time as practicable, the Exchange Agent,
------
as agent for such holders of Parent Common Stock, shall sell the Excess Shares
at then prevailing prices on the New York Stock Exchange, Inc. (the "NYSE"), all
----
in the manner provided in paragraph (c) of this Section 3.4.
(c) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE through one or more member firms of the NYSE and shall be
executed in round lots to the extent practicable. The Exchange Agent shall use
all reasonable efforts to complete the sale of the Excess Shares as promptly
following the Effective Time as, in the Exchange Agent's reasonable judgment, is
practicable consistent with obtaining the best execution of such sales in light
of prevailing market conditions. Until the net proceeds of any such sale or
sales have been distributed to such holders of Company Common Stock, the
Exchange Agent will hold such proceeds in trust for such holders of Company
Common Stock. Parent shall pay all commissions, transfer taxes and other out-
of-pocket transaction costs of the Exchange Agent incurred in connection with
such sale or sales of Excess Shares. In addition, Parent shall pay the Exchange
Agent's compensation and expenses in connection with such sale or sales. The
Exchange Agent shall determine the portion of such net proceeds to which each
holder of Company Common Stock shall be entitled, if any, by multiplying the
amount of the aggregate net proceeds by a fraction the numerator of which is the
amount of the fractional
6
share interest to which such holder of Company Common Stock is entitled (after
taking into account all shares of Company Common Stock then held by such holder)
and the denominator of which is the aggregate amount of fractional share
interests to which all holders of Certificates representing Company Common Stock
are entitled.
(d) Notwithstanding the provisions of this Section 3.4, Parent may
elect, at its option exercised prior to the Effective Time and in lieu of the
issuance and sale of Excess Shares and the making of the payments contemplated
in such subsections, to pay to the Exchange Agent an amount in cash sufficient
for the Exchange Agent to pay each holder of Company Common Stock an amount in
cash equal to the product obtained by multiplying (x) the fractional share
interest to which such holder would otherwise be entitled (after taking into
account all shares of Company Common Stock held at the Effective Time by such
holder) by (y) the closing price for a share of Parent Common Stock on the NYSE
on the first business day immediately following the Effective Time and, in such
case, all references herein to the cash proceeds of the sale of the Excess
Shares and similar references shall be deemed to mean and refer to the payments
calculated as set forth in this Section 3.4(d)).
(e) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Company Common Stock with respect to any
fractional share interests, the Exchange Agent shall promptly pay such amounts
to such holders of Company Common Stock.
Section 3.5 Closing. The closing (the "Closing") of the transactions
------- -------
contemplated by this Agreement shall take place at a location mutually agreeable
to Parent and the Company as promptly as practicable (but in any event within
five business days) following the date on which the last of the conditions set
forth in Article VIII is fulfilled or waived, or at such other time and place as
Parent and the Company shall agree. The date on which the Closing occurs is
referred to in this Agreement as the "Closing Date."
------------
Section 3.6 Closing of the Company's Transfer Books. At and after
---------------------------------------
the Effective Time, holders of Company Certificates shall cease to have any
rights as stockholders of the Company, except for the right to receive shares of
Parent Common Stock pursuant to Section 3.1 and the right to receive cash for
payment of fractional shares pursuant to Section 3.4. At the Effective Time,
the stock transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock which were outstanding immediately prior to the
Effective Time shall thereafter be made. If, after the Effective Time, subject
to the terms and conditions of this Agreement, Company Certificates formerly
representing shares of Company Common Stock are presented to the Surviving
Corporation, they shall be canceled and exchanged for shares of Parent Common
Stock in accordance with this Article III.
7
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUBSIDIARY
Parent and Subsidiary each represent and warrant to the Company that:
Section 4.1 Organization and Qualification. Each of Parent and
------------------------------
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted. Each of Parent and
Subsidiary is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing will not, when
taken together with all other such failures, have a material adverse effect on
the business, operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a whole. True,
accurate and complete copies of each of Parent's and Subsidiary's charters and
By-laws, in each case as in effect on the date hereof, including all amendments
thereto, have heretofore been delivered to the Company.
Section 4.2 Capitalization. (a) As of August 10, 1998, the
--------------
authorized capital stock of Parent consisted of 1,500,000,000 shares of Parent
Common Stock and 10,000,000 shares of preferred stock, par value $.01 per share
("Parent Preferred Stock"). As of August 10, 1998, (i) 579,687,096 shares of
----------------------
Parent Common Stock were issued and outstanding, all of which were validly
issued and are fully paid, nonassessable and free of preemptive rights, (ii) no
shares of Parent Preferred Stock were issued and outstanding, (iii) 23,485
shares of Parent Common Stock and no shares of Parent Preferred Stock were held
in the treasury of Parent, (iv) 37,600,799 shares of Parent Common Stock were
reserved for issuance upon exercise of outstanding options and warrants to
purchase Parent Common Stock and (v) 31,552,845 shares of Parent Common Stock
were reserved for issuance upon conversion of outstanding convertible debentures
and outstanding convertible notes. Assuming the conversion of all outstanding
convertible debentures and outstanding convertible notes of Parent and the
exercise of all outstanding options, warrants and rights to purchase Parent
Common Stock, as of August 10, 1998, there would be 648,840,740 shares of Parent
Common Stock issued and outstanding. In addition, as of the date hereof, no
more than 12,373,067 shares of Parent Common Stock were reserved for issuance in
connection with pending acquisitions.
(b) The authorized capital stock of Subsidiary consists of 1,000
shares of Subsidiary Common Stock, of which 100 shares are issued and
outstanding, which shares are owned beneficially and of record by Parent.
(c) Except as disclosed in the Parent SEC Reports (as defined in
Section 4.5) or in Section 4.2(a) or as otherwise contemplated by this
Agreement, as of the date hereof, there
8
are no outstanding subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants, including any
right of conversion or exchange under any outstanding security, instrument or
other agreement and also including any rights plan or other anti-takeover
agreement, obligating Parent or any subsidiary of Parent to issue, deliver or
sell or repurchase or redeem, or cause to be issued, delivered or sold,
additional shares of the capital stock of Parent or obligating Parent or any
subsidiary of Parent to grant, extend or enter into any such agreement or
commitment. Except as otherwise disclosed in the Parent SEC Reports, there are
no voting trusts, proxies or other agreements or understandings to which Parent
or any subsidiary of Parent is a party or is bound with respect to the voting of
any shares of capital stock of Parent, other than voting agreements executed in
connection with this Agreement. The shares of Parent Common Stock issued to
stockholders of the Company in the Merger will be at the Effective Time duly
authorized, validly issued, fully paid and nonassessable, free of preemptive
rights and will be issued in compliance with all applicable securities and other
laws.
Section 4.3 Subsidiaries. Each direct and indirect corporate
------------
subsidiary of Parent is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the requisite power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted and each subsidiary of Parent is
qualified to do business, and is in good standing, in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary; except in all cases where
the failure to be so qualified and in good standing would not, when taken
together with all such other failures, have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a whole. All of
the outstanding shares of capital stock of each corporate subsidiary of Parent
are validly issued, fully paid, nonassessable and free of preemptive rights, and
are owned directly or indirectly by Parent, free and clear of any liens, claims,
encumbrances, security interests, equities and options of any nature whatsoever,
except that such shares are pledged to secure Parent's credit facilities. There
are no subscriptions, options, warrants, rights, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements relating to the issuance, sale, voting, transfer, ownership or
other rights with respect to any shares of capital stock of or interest in any
subsidiary of Parent, including any right of conversion or exchange under any
outstanding security, instrument or agreement. As used in this Agreement, the
term "subsidiary" shall mean, when used with reference to any person or entity,
any corporation, partnership, joint venture or other entity of which such person
or entity (either acting alone or together with its other subsidiaries) owns,
directly or indirectly, 50% or more of the stock or other voting interests, the
holders of which are entitled to vote for the election of a majority of the
board of directors or any similar governing body of such corporation,
partnership, joint venture or other entity.
Section 4.4 Authority; Non-Contravention; Approvals. (a) Parent and
---------------------------------------
Subsidiary each have full corporate power and authority to enter into this
Agreement and, subject to the
9
Parent Required Statutory Approvals (as defined in Section 4.4(c)), to
consummate the transactions contemplated hereby. This Agreement has been
approved by the Boards of Directors of Parent and Subsidiary and the sole
stockholder of Subsidiary, and no other corporate proceedings on the part of
Parent or Subsidiary are necessary to authorize the execution and delivery of
this Agreement or, the consummation by Parent and Subsidiary of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by each
of Parent and Subsidiary, and, assuming the due authorization, execution and
delivery hereof by the Company, constitutes a valid and legally binding
agreement of each of Parent and Subsidiary enforceable against each of them in
accordance with its terms, except that such enforcement may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally and (ii)
general equitable principles.
(b) The execution and delivery of this Agreement by each of Parent and
Subsidiary do not violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Parent or any of
its subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or by-laws of Parent or any of its subsidiaries, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to
Parent or any of its subsidiaries or any of their respective properties or
assets or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Parent or any of its subsidiaries is now a
party or by which Parent or any of its subsidiaries or any of their respective
properties or assets may be bound or affected. The consummation by Parent and
Subsidiary of the transactions contemplated hereby will not result in any
violation, conflict, breach, termination, acceleration or creation of liens
under any of the terms, conditions or provisions described in clauses (i)
through (iii) of the preceding sentence, subject (x) in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Parent Required Statutory Approvals. Excluded from the
foregoing sentences of this paragraph (b), insofar as they apply to the terms,
conditions or provisions described in clauses (ii) and (iii) of the first
sentence of this paragraph (b) (and whether resulting from such execution and
delivery or consummation), are such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances that would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition (financial or other)
or results of operations of Parent and its subsidiaries, taken as a whole.
(c) Except for (i) the filings by Parent required by the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (ii) the
-------
filing of the Registration Statement and Proxy Statement/ Prospectus (as such
10
terms are defined in Section 4.9) with the Securities and Exchange Commission
(the "SEC") pursuant to the Securities Exchange Act of 1934, as amended (the
---
"Exchange Act"), and the Securities Act of 1933, as amended (the "Securities
------------- ----------
Act"), and the declaration of the effectiveness thereof by the SEC and filings
with various state blue sky authorities, (iii) the making of the Merger Filing
with the Secretary of State of the State of Delaware in connection with the
Merger, and (iv) any required filings with or approvals from the NYSE NYSE,
applicable state environmental authorities, public service commissions and
public utility commissions (the filings and approvals referred to in clauses (i)
through (iv) are collectively referred to as the "Parent Required Statutory
-------------------------
Approvals"), no declaration, filing or registration with, or notice to, or
---------
authorization, consent or approval of, any governmental or regulatory body or
authority is necessary for the execution and delivery of this Agreement by
Parent or Subsidiary or the consummation by Parent or Subsidiary of the
transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of Parent and its subsidiaries,
taken as a whole.
Section 4.5 Reports and Financial Statements. Since January 1, 1995,
--------------------------------
Parent has filed with the SEC all forms, statements, reports and documents
(including all exhibits, post-effective amendments and supplements thereto)
required to be filed by it under each of the Securities Act, the Exchange Act
and the respective rules and regulations thereunder, all of which, as amended if
applicable, complied when filed (or, in the case of filing under the Securities
Act, at the time of effectiveness) in all material respects with all applicable
requirements of the appropriate act and the rules and regulations thereunder.
Parent has previously delivered or made available to the Company copies
(including all exhibits, post-effective amendments and supplements thereto) of
its (a) Annual Reports on Form 10-K for the fiscal year ended December 31, 1997
and for the immediately preceding fiscal year, as filed with the SEC, (b) proxy
and information statements relating to (i) all meetings of its stockholders
(whether annual or special) and (ii) actions by written consent in lieu of a
stockholders' meeting from January 1, 1996, until the date hereof, and (c) all
other reports, including quarterly reports, and registration statements filed by
Parent with the SEC since January 1, 1996 (other than registration statements
filed on Form S-8) (the documents referred to in clauses (a), (b) and (c) filed
prior to the date hereof are collectively referred to as the "Parent SEC
----------
Reports"). As of their respective dates (or, in the case of filing under the
Securities Act, at the time of effectiveness), the Parent SEC Reports did 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 therein, in
the light of the circumstances under which they were made, not misleading. The
audited consolidated financial statements of Parent included in the Parent's
Annual Report on Form 10-K for the year ended December 31, 1997 and the
unaudited consolidated interim financial statements included in Parent's
Quarterly Report on Form 10-Q for the quarter ending June 30, 1998
(collectively, the "Parent Financial Statements") have been prepared in
---------------------------
accordance with generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes thereto) and fairly
present the
11
financial position of Parent and its subsidiaries as of the dates thereof and
the results of their operations and changes in financial position for the
periods then ended (subject, in the case of unaudited interim financial
statements to normal year-end adjustments, none of which, individually or in the
aggregate, would have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
Parent and its subsidiaries, taken as a whole).
Section 4.6 Absence of Undisclosed Liabilities. Except as disclosed
----------------------------------
in the Parent SEC Reports or as heretofore disclosed to the Company in writing
with respect to acquisitions or potential transactions or commitments, neither
Parent nor any of its subsidiaries had at December 31, 1997, or has incurred
since that date and as of the date hereof, any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature, except: (a)
liabilities, obligations or contingencies (i) which are accrued or reserved
against in the Parent Financial Statements or reflected in the notes thereto or
(ii) which were incurred after December 31, 1997, and were incurred in the
ordinary course of business and consistent with past practices; (b) liabilities,
obligations or contingencies which (i) would not, in the aggregate, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole or (ii) have been discharged or paid in full
prior to the date hereof; and (c) liabilities and obligations which are of a
nature not required to be reflected in the consolidated financial statements of
Parent and its subsidiaries prepared in accordance with generally accepted
accounting principles consistently applied and which were incurred in the
ordinary course of business.
Section 4.7 Absence of Certain Changes or Events. Since the date of
------------------------------------
the most recent Parent SEC Report that contains consolidated financial
statements of Parent, there has not been any material adverse change in the
business, operations, properties, assets, liabilities, condition (financial or
other) or results of operations of Parent and its subsidiaries, taken as a
whole, except for changes that affect the industries in which Parent and its
subsidiaries operate generally.
Section 4.8 Litigation. Except as disclosed in the Parent SEC
----------
Reports, there are no claims, suits, actions or proceedings pending or, to the
knowledge of Parent, threatened against, relating to or affecting Parent or any
of its subsidiaries or any of their respective directors or officers, before any
court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator that seek to restrain or enjoin the consummation of
the Merger or which if adversely determined would reasonably be expected, either
alone or in the aggregate with all such claims, actions or proceedings, to
materially and adversely affect the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole. Except as set forth in the Parent SEC Reports,
neither Parent nor any of its subsidiaries is subject to any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or authority or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby or would have
12
any material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole.
Section 4.9 Registration Statement and Proxy Statement. None of the
------------------------------------------
information to be supplied by Parent or its subsidiaries for inclusion in (a)
the Registration Statement on Form S-4, as amended or supplemented from time to
time, to be filed under the Securities Act with the SEC by Parent in connection
with the Merger for the purpose of registering the shares of Parent Common Stock
to be issued in the Merger (such registration statement, together with any
amendments thereof, being the "Registration Statement") or (b) the proxy
----------------------
statement, as amended or supplemented from time to time, to be distributed in
connection with the Company's meeting of stockholders to vote upon this
Agreement and the transactions contemplated hereby (the "Proxy Statement" and,
---------------
together with the prospectus included in the Registration Statement, the "Proxy
-----
Statement/Prospectus") will, in the case of the Proxy Statement or any
--------------------
amendments thereof or supplements thereto, at the time of the mailing of the
Proxy Statement and any amendments or supplements thereto, and at the time of
the meetings of stockholders of the Company to be held in connection with the
transactions contemplated by this Agreement, or, in the case of the Registration
Statement, as amended or supplemented, at the time it becomes effective and at
the time of such meetings of the stockholders of the Company and Parent, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading. The Proxy Statement/Prospectus will, as of its mailing date, comply
as to form in all material respects with all applicable laws, including the
provisions of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation is made by
Parent or Subsidiary with respect to information supplied by the Company or the
stockholders of the Company for inclusion therein.
Section 4.10 Violation of Law. Except as disclosed in the Parent SEC
----------------
Reports, neither Parent nor any of its subsidiaries is or at any time since
December 31, 1997, has been in violation of, or has been given notice or been
charged with any violation of, any law, statute, order, rule, regulation,
ordinance, or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental or regulatory
body or authority, except for violations which, in the aggregate, could not
reasonably be expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole. Except as
disclosed in the Parent SEC Reports, as of the date of this Agreement, to the
knowledge of Parent, no investigation or review by any governmental or
regulatory body or authority is pending or threatened, nor has any governmental
or regulatory body or authority indicated an intention to conduct the same,
other than, in each case, those the outcome of which, as far as reasonably can
be foreseen, will not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole. Parent and its
subsidiaries have all permits, licenses, franchises, variances, exemptions,
13
orders and other governmental authorizations, consents and approvals necessary
to conduct their businesses as presently conducted (collectively, the "Parent
------
Permits"), except for permits, licenses, franchises, variances, exemptions,
-------
orders, authorizations, consents and approvals the absence of which, alone or in
the aggregate, would not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole. Parent and its
subsidiaries are not in violation of the terms of any Parent Permit, except for
delays in filing reports or violations which, alone or in the aggregate, would
not have a material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of Parent and
its subsidiaries, taken as a whole.
Section 4.11 Reorganization and Pooling of Interests. To the
---------------------------------------
knowledge of Parent, none of the Parent, Subsidiary or any of their affiliates
has taken or agreed or intends to take any action or has any knowledge of any
fact or circumstance that would prevent the Merger from (a) constituting a
reorganization within the meaning of Section 368(a) of the Code or (b) being
treated for financial accounting purposes as a "pooling of interests" in
accordance with generally accepted accounting principles and the rules,
regulations and interpretations of the SEC (a "Pooling Transaction"). As of the
-------------------
date hereof, other than directors and officers of Parent, to the knowledge of
Parent, there are no "affiliates" of Parent, as that term is used in paragraphs
(c) and (d) of Rule 145 under the Securities Act.
Section 4.12 Brokers and Finders. Except for the fees and expenses
-------------------
payable to Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, which fees are
reflected in its agreement with Parent, Parent has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Parent to pay any finder's fees, brokerage or agent
commissions or other like payments in connection with the transactions
contemplated hereby. Except for the fees and expenses paid or payable to
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, there is no claim for
payment by Parent of any investment banking fees, finder's fees, brokerage or
agent commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
Section 4.13 Ownership of Company Common Stock. Parent and its
---------------------------------
subsidiaries beneficially own an aggregate of 655,000 shares of Company Common
Stock as of the date hereof.
Section 4.14 Subsidiary. Subsidiary was formed solely for the
----------
purposes of engaging in the transactions contemplated hereby, and has engaged in
no other business activities and has conducted its operations only as
contemplated hereby.
14
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subsidiary that,
except as set forth in the disclosure schedule dated as of the date hereof and
signed by an authorized officer of the Company (the "Company Disclosure
------------------
Schedule"), it being agreed that disclosure of any item on the Company
Disclosure Schedule shall be deemed disclosure with respect to all Sections of
this Agreement if the relevance of such item is apparent from the face of the
Company Disclosure Schedule.
Section 5.1 Organization and Qualification. The Company is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
own, lease and operate its assets and properties and to carry on its business as
it is now being conducted. The Company is qualified to do business and is in
good standing in each jurisdiction in which the properties owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified and in good
standing will not, when taken together with all other such failures, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. True, accurate and complete copies of the
Company's Certificate of Incorporation and By-laws, in each case as in effect on
the date hereof, including all amendments thereto, have heretofore been
delivered to Parent.
Section 5.2 Capitalization. (a) The authorized capital stock of the
--------------
Company consists of 150,000,000 shares of Company Common Stock and 50,000,000
shares of preferred stock, par value $.01 per share ("Company Preferred Stock").
-----------------------
As of August 11, 1998, (i) 36,129,103 shares of Company Common Stock were issued
and outstanding, all of which were validly issued and are fully paid,
nonassessable and free of preemptive rights, and no shares of Company Preferred
Stock were issued and outstanding, (ii) 39,100 shares of Company Common Stock
and no shares of Company Preferred Stock were held in the treasury of the
Company, and (iii) 3,889,846 shares of Company Common Stock were reserved for
issuance upon exercise of warrants and options issued and outstanding pursuant
to the Company's 1997 Stock Option Plan, 1996 Stock Option Plan and 1991 Stock
Option Plan. Assuming the exercise of all outstanding options, rights and
warrants to purchase Company Common Stock, as of August 11, 1998 there would be
40,018,949 shares of Company Common Stock issued and outstanding.
(b) Except as disclosed in Section 5.2(b) of the Company Disclosure
Schedule, the Company SEC Reports (as defined in Section 5.5) or in Section
5.2(a), as of the date hereof there were no outstanding subscriptions, options,
calls, contracts, commitments, understandings, restrictions, arrangements,
rights or warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement and also including any
rights plan or
15
other anti-takeover agreement, obligating the Company or any subsidiary of the
Company to issue, deliver or sell or repurchase or redeem, or cause to be
issued, delivered or sold, additional shares of the capital stock of the Company
or obligating the Company or any subsidiary of the Company to grant, extend or
enter into any such agreement or commitment. Except as disclosed in the Company
SEC Reports, there are no voting trusts, proxies or other agreements or
understandings to which the Company or any subsidiary of the Company is a party
or is bound with respect to the voting of any shares of capital stock of the
Company, other than voting agreements executed in connection with this
Agreement.
Section 5.3 Subsidiaries. Each direct and indirect corporate
------------
subsidiary of the Company is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted and each
subsidiary of the Company is qualified to do business, and is in good standing,
in each jurisdiction in which the properties owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary;
except in all cases where the failure to be so qualified and in good standing
will not, when taken together with all such other failures, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. All of the outstanding shares of capital stock
of each corporate subsidiary of the Company are validly issued, fully paid,
nonassessable and free of preemptive rights and are owned directly or indirectly
by the Company free and clear of any liens, claims, encumbrances, security
interests, equities, and options of any nature whatsoever, except that such
shares are pledged to secure the Company's credit facilities. There are no
subscriptions, options, warrants, rights, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions or arrangements
relating to the issuance, sale, voting, transfer, ownership or other rights with
respect to any shares of capital stock of or interest in any subsidiary of the
Company, including any right of conversion or exchange under any outstanding
security, instrument or agreement.
Section 5.4 Authority; Non-Contravention; Approvals. (a) The
---------------------------------------
Company has full corporate power and authority to enter into this Agreement and,
subject to the Company Stockholders' Approval (as defined in Section 7.3) and
the Company Required Statutory Approvals (as defined in Section 5.4(c)), to
consummate the transactions contemplated hereby. This Agreement has been
approved by the Board of Directors of the Company and no other corporate
proceedings on the part of the Company are necessary to authorize the execution
and delivery of this Agreement or, except for the Company Stockholders'
Approval, the consummation by the Company of the transactions contemplated
hereby. This Agreement has been duly executed and delivered by the Company,
and, assuming the due authorization, execution and delivery hereof by Parent and
Subsidiary, constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to (a) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (b)
16
general equitable principles. Without limitation of the foregoing, each of the
covenants and obligations of the Company set forth in Sections 6.1, 6.5, 7.1,
7.2, 7.3, 7.6, 7.7, 7.8, 7.10 and 7.12 is valid, legally binding and enforceable
(subject as aforesaid) notwithstanding the absence of the Company Stockholders'
Approval.
(b) Except as disclosed in Section 5.4(b) of the Company Disclosure
Schedule, the execution and delivery of this Agreement by the Company do not
violate, conflict with or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company or any of its
subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or by-laws of the Company or any of its subsidiaries, (ii)
any statute, law, ordinance, rule, regulation, judgment, decree, order,
injunction, writ, permit or license of any court or governmental authority
applicable to the Company or any of its subsidiaries or any of their respective
properties or assets, or (iii) any note, bond, mortgage, indenture, deed of
trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Company or any of
its subsidiaries is now a party or by which the Company or any of its
subsidiaries or any of their respective properties or assets may be bound or
affected. The consummation by the Company of the transactions contemplated
hereby will not result in any violation, conflict, breach, termination,
acceleration or creation of liens under any of the terms, conditions or
provisions described in clauses (i) through (iii) of the preceding sentence,
subject (x) in the case of the terms, conditions or provisions described in
clause (ii) above, to obtaining (prior to the Effective Time) the Company
Required Statutory Approvals and the Company Stockholders' Approval and (y) in
the case of the terms, conditions or provisions described in clause (iii) above,
to obtaining (prior to the Effective Time) consents required from commercial
lenders, lessors or other third parties as specified in Section 5.4(b) of the
Company Disclosure Schedule. Excluded from the foregoing sentences of this
paragraph (b), insofar as they apply to the terms, conditions or provisions
described in clauses (ii) and (iii) of the first sentence of this paragraph (b)
(and whether resulting from such execution and delivery or consummation), are
such violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that would not,
in the aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole.
(c) Except for (i) the filings by the Company required by the HSR Act,
(ii) the filing of the Proxy Statement/Prospectus with the SEC pursuant to the
Exchange Act, (iii) the making of the Merger Filing with the Secretary of State
of the State of Delaware in connection with the Merger and (iv) any required
filings with or approvals from applicable state environmental authorities,
public service commissions or similar governmental regulatory agencies (e.g. New
York Trade Waste Commission) and public utility commissions (the filings and
17
approvals referred to in clauses (i) through (iv) are collectively referred to
as the "Company Required Statutory Approvals"), no declaration, filing or
------------------------------------
registration with, or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals which, if not made
or obtained, as the case may be, would not, in the aggregate, have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
Section 5.5 Reports and Financial Statements. Since January 1, 1995,
--------------------------------
the Company has filed with the SEC all material forms, statements, reports and
documents (including all exhibits, post-effective amendments and supplements
thereto) required to be filed by it under each of the Securities Act, the
Exchange Act and the respective rules and regulations thereunder, all of which,
as amended if applicable, complied when filed (or, in the case of filing under
the Securities Act, at the time of effectiveness) in all material respects with
all applicable requirements of the appropriate act and the rules and regulations
thereunder, except as disclosed in Section 5.5 of the Company Disclosure
Schedule. The Company has previously delivered or made available to Parent
copies (including all exhibits, post-effective amendments and supplements
thereto) of its (a) Annual Report on Form 10-K for the year ended June 30, 1997,
as filed with the SEC, (b) Transition Report on Form 10-K for the six months
ended December 31, 1997, (c) proxy and information statements relating to (i)
all meetings of its stockholders (whether annual or special) and (ii) actions by
written consent in lieu of a stockholders' meeting from January 1, 1997, until
the date hereof, and (d) all other reports, including quarterly reports, and
registration statements filed by the Company with the SEC since January 1, 1996
(other than registration statements filed on Form S-8) (the documents referred
to in clauses (a), (b), (c) and (d) filed prior to the date hereof are
collectively referred to as the "Company SEC Reports"). As of their respective
-------------------
dates (or, in the case of filing under the Securities Act, at the time of
effectiveness), the Company SEC Reports did 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 therein, in the light of the circumstances
under which they were made, not misleading. The audited consolidated financial
statements of the Company included in the Company's Transition Report on Form
10-K for the six months ended December 31, 1997 (collectively, the "Company
-------
Financial Statements"), have been prepared in accordance with generally accepted
--------------------
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
the Company and its subsidiaries as of the dates thereof and the results of
their operations and changes in financial position for the periods then ended.
Section 5.6 Absence of Undisclosed Liabilities. Except as disclosed
----------------------------------
in Section 5.6 of the Company Disclosure Schedule, the Company SEC Reports or as
heretofore disclosed to Parent in writing with respect to acquisitions or
potential transactions or commitments, neither the Company nor any of its
subsidiaries had at December 31, 1997, or has incurred since that date and as of
18
the date hereof, any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) of any nature, except (a) liabilities, obligations or
contingencies (i) which are accrued or reserved against in the Company Financial
Statements or reflected in the notes thereto or (ii) which were incurred after
December 31, 1997, and were incurred in the ordinary course of business and
consistent with past practices, (b) liabilities, obligations or contingencies
which (i) would not, in the aggregate, have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole or
(ii) have been discharged or paid in full prior to the date hereof, and (c)
liabilities and obligations which are of a nature not required to be reflected
in the consolidated financial statements of the Company and its subsidiaries
prepared in accordance with generally accepted accounting principles
consistently applied and which were incurred in the ordinary course of business.
Section 5.7 Absence of Certain Changes or Events. Since the date of
------------------------------------
the most recent Company SEC Report that contains consolidated financial
statements of the Company, there has not been any material adverse change in the
business, operations, properties, assets, liabilities, condition (financial or
other) or results of operations of the Company and its subsidiaries, taken as a
whole, except for changes that affect the industries in which the Company and
its subsidiaries operate generally.
Section 5.8 Litigation. Except as referred to in Section 5.8 of the
----------
Company Disclosure Schedule or the Company SEC Reports, there are no claims,
suits, actions or proceedings pending or, to the knowledge of the Company,
threatened against, relating to or affecting the Company or any of its
subsidiaries or any of their respective directors or officers, before any court,
governmental department, commission, agency, instrumentality or authority, or
any arbitrator that seek to restrain the consummation of the Merger or which if
adversely determined would reasonably be expected, either alone or in the
aggregate with all such claims, actions or proceedings, to materially and
adversely affect the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. Except as referred to in the Company SEC
Reports, neither the Company nor any of its subsidiaries is subject to any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or authority, or any arbitrator
which prohibits or restricts the consummation of the transactions contemplated
hereby or would have any material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole.
Section 5.9 Registration Statement and Proxy Statement. None of the
------------------------------------------
information to be supplied by the Company or its subsidiaries for inclusion in
(a) the Registration Statement or (b) the Proxy Statement will, in the case of
the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the meetings of stockholders of the Company to be
held in connection with the transactions contemplated by this Agreement or, in
19
the case of the Registration Statement, as amended or supplemented, at the time
it becomes effective and at the time of such meetings of the stockholders of the
Company, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are made,
not misleading. The Proxy Statement/Prospectus will comply, as of its mailing
date, as to form in all material respects with all applicable laws, including
the provisions of the Securities Act and the Exchange Act and the rules and
regulations promulgated thereunder, except that no representation is made by the
Company with respect to information supplied by Parent, Subsidiary or any
stockholder of Parent for inclusion therein.
Section 5.10 No Violation of Law. Except as disclosed in the Company
-------------------
SEC Reports, neither the Company nor any of its subsidiaries is or at any time
since December 31, 1997, has been in violation of or has been given notice or
been charged with any violation of, any law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental or regulatory
body or authority, except for violations which, in the aggregate, could not
reasonably be expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole. Except as
disclosed in the Company SEC Reports, as of the date of this Agreement, to the
knowledge of the Company, no investigation or review by any governmental or
regulatory body or authority is pending or threatened, nor has any governmental
or regulatory body or authority indicated an intention to conduct the same,
other than, in each case, those the outcome of which, as far as reasonably can
be foreseen, will not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole. The Company
and its subsidiaries have all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently conducted (collectively, the
"Company Permits"), except for permits, licenses, franchises, variances,
---------------
exemptions, orders, authorizations, consents and approvals the absence of which,
alone or in the aggregate, would not have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole.
The Company and its subsidiaries are not in violation of the terms of any
Company Permit, except for delays in filing reports or violations which, alone
or in the aggregate, would not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations of the Company and its subsidiaries, taken as a whole.
Section 5.11 Compliance with Agreements. Except as disclosed in the
--------------------------
Company SEC Reports, the Company and each of its subsidiaries are not in breach
or violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party, would result in a default under, (a) the respective charter, by-
laws or similar organizational instruments of the Company or any of its
subsidiaries or (b) any contract, commitment, agreement, indenture, mortgage,
20
loan agreement, note, lease, bond, license, approval or other instrument to
which the Company or any of its subsidiaries is a party or by which any of them
is bound or to which any of their property is subject, other than, in the case
of clause (b) of this Section 5.11, breaches, violations and defaults which
would not have, in the aggregate, a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole.
Section 5.12 Taxes. (a) The Company and its subsidiaries have (i)
-----
duly filed with the appropriate governmental authorities all Tax Returns
required to be filed by them for all periods ending on or prior to the Closing
Date, other than those Tax Returns the failure of which to file would not have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole, and such Tax Returns are true, correct and
complete in all material respects, and (ii) duly paid in full or made adequate
provision in accordance with generally accepted accounting principles for the
payment of all Taxes for all past and current periods. The liabilities and
reserves for Taxes reflected in the Company balance sheet included in the latest
Company SEC Report to cover all Taxes for all periods ending at or prior to the
date of such balance sheet have been determined in accordance with generally
accepted accounting principles and there is no material liability for Taxes for
any period beginning after such date other than Taxes arising in the ordinary
course of business. There are no material liens for Taxes upon any property or
asset of the Company or any subsidiary thereof, except for liens for Taxes not
yet due or Taxes contested in good faith and adequately reserved against in
accordance with generally accepted accounting principles. There are no
unresolved issues of law or fact arising out of a notice of deficiency, proposed
deficiency or assessment from the Internal Revenue Service or any other
governmental taxing authority with respect to Taxes of the Company or any of its
subsidiaries which, singly or in the aggregate, would reasonably be expected to
have a material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. Neither the Company nor its subsidiaries has
waived any statute of limitations in respect of a material amount of Taxes or
agreed to any extension of time with respect to a material Tax assessment or
deficiency other than waivers and extensions which are no longer in effect.
Neither the Company nor any of its subsidiaries is a party to any agreement
providing for the allocation or sharing of Taxes with any entity that is not,
directly or indirectly, a wholly-owned corporate subsidiary of Company other
than agreements the consequences of which are fully and adequately reserved for
in the Company Financial Statements. Neither the Company nor any of its
corporate subsidiaries has, with regard to any assets or property held, acquired
or to be acquired by any of them, filed a consent to the application of Section
341(f) of the Code.
(b) For purposes of this Agreement, the term "Taxes" shall mean all
-----
taxes, including, without limitation, income, gross receipts, excise, property,
sales, withholding, social security, occupation, use, service, license, payroll,
franchise, transfer and recording taxes, fees and charges, windfall profits,
severance, customs, import, export, employment or similar taxes,
21
charges, fees, levies or other assessments imposed by the United States, or any
state, local or foreign government or subdivision or agency thereof, whether
computed on a separate, consolidated, unitary, combined or any other basis, and
such term shall include any interest, fines, penalties or additional amounts and
any interest in respect of any additions, fines or penalties attributable or
imposed or with respect to any such taxes, charges, fees, levies or other
assessments.
(c) For purposes of this Agreement, the term "Tax Return" shall mean
----------
any return, report or other document required to be supplied to a taxing
authority in connection with Taxes.
Section 5.13 Employee Benefit Plans; ERISA. (a) Except as disclosed
-----------------------------
in Section 5.13(a) of the Company Disclosure Schedule or the Company SEC
Reports, at the date hereof, the Company and its subsidiaries do not maintain or
contribute to or have any obligation or liability to or with respect to any
material employee benefit plans, programs, arrangements or practices, including
employee benefit plans within the meaning set forth in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or other
-----
similar material arrangements for the provision of benefits (excluding any
"Multi-employer Plan" within the meaning of Section 3(37) of ERISA or a
"Multiple Employer Plan" within the meaning of Section 413(c) of the Code) (such
plans, programs, arrangements or practices of the Company and its subsidiaries
being referred to as the "Company Plans"). Section 5.13 of the Company
-------------
Disclosure Schedule lists all Multi-employer Plans to which any of them makes
contributions or has any obligation or liability to make material contributions.
Neither the Company nor any of its subsidiaries maintains or has any material
liability with respect to any Multiple Employer Plan. Neither the Company nor
any of its subsidiaries has any obligation to create or contribute to any
additional such plan, program, arrangement or practice or to amend any such
plan, program, arrangement or practice so as to increase benefits or
contributions thereunder, except as required under the terms of the Company
Plans, under existing collective bargaining agreements or to comply with
applicable law.
(b) Except as disclosed in the Company SEC Reports, (i) there have
been no prohibited transactions within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code with respect to any of the Company Plans that
could result in penalties, taxes or liabilities which, singly or in the
aggregate, could have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole, (ii) except for premiums
due, there is no outstanding material liability, whether measured alone or in
the aggregate, under Title IV of ERISA with respect to any of the Company Plans,
(iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the Company Plans
subject to Title IV of ERISA other than in a "standard termination" described in
Section 4041(b) of ERISA, (iv) none of the Company Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether
22
or not waived, as of the last day of the most recent fiscal year of each of the
Company Plans ended prior to the date of this Agreement, (v) the current present
value of all projected benefit obligations under each of the Company Plans which
is subject to Title IV of ERISA did not, as of its latest valuation date, exceed
the then current value of the assets of such plan allocable to such benefit
liabilities by more than the amount, if any, disclosed in the Company SEC
Reports as of December 31, 1997, based upon reasonable actuarial assumptions
currently utilized for such Company Plan, (vi) each of the Company Plans has
been operated and administered in accordance with applicable laws during the
period of time covered by the applicable statute of limitations, except for
failures to comply which, singly or in the aggregate, would not reasonably be
expected to have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole, (vii) each of the Company
Plans which is intended to be "qualified" within the meaning of Section 401(a)
of the Code has been determined by the Internal Revenue Service to be so
qualified and such determination has not been modified, revoked or limited by
failure to satisfy any condition thereof or by a subsequent amendment thereto or
a failure to amend, except that it may be necessary to make additional
amendments retroactively to maintain the "qualified" status of such Company
Plans, and the period for making any such necessary retroactive amendments has
not expired, (viii) with respect to Multi-employer Plans, neither the Company
nor any of its subsidiaries has made or suffered a "complete withdrawal" or a
"partial withdrawal, as such terms are respectively defined in Sections 4203,
4204 and 4205 of ERISA and, to the best knowledge of the Company and its
subsidiaries, no event has occurred or is expected to occur which presents a
material risk of a complete or partial withdrawal under said Sections 4203, 4204
and 4205, (ix) to the best knowledge of the Company and its subsidiaries, there
are no material pending, threatened or anticipated claims involving any of the
Company Plans other than claims for benefits in the ordinary course, (x) the
Company and its subsidiaries have no current material liability under Title IV
of ERISA, and the Company and its subsidiaries do not reasonably anticipate that
any such liability will be asserted against the Company or any of its
subsidiaries, and (xi) no act, omission or transaction (individually or in the
aggregate) has occurred with respect to any Company Plan that has resulted or
could result in any material liability (direct or indirect) of the Company or
any subsidiary under Sections 409 or 502(c) of ERISA or Chapter 43 of Subtitle
(A) of the Code. None of the Company Plans has an "accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of the Code) or
is required to provide security to a Company Plan pursuant to Section 401(a)(29)
of the Code.
(c) The Company SEC Reports contain a true and complete summary or
list of or otherwise describe all material employment contracts and other
employee benefit arrangements with "change of control" or similar provisions and
all severance agreements with executive officers.
(d) Except as disclosed in Section 5.13(d) of the Company Disclosure
Schedule, there are no agreements which will or may provide payments to any
current or former officer, employee, stockholder, or highly compensated
individual which will be "parachute
23
payments" under Code Section 280G that will be nondeductible to the Company or
subject to the excise tax imposed under Code Section 4999.
Section 5.14 Labor Controversies. Except as disclosed in the Company
-------------------
SEC Reports as of the date hereof, (a) there are no significant controversies
pending or, to the knowledge of the Company, threatened between the Company or
its subsidiaries and any representatives of any of their employees and (b) to
the knowledge of the Company, there are no material organizational efforts
presently being made involving any of the presently unorganized employees of the
Company or its subsidiaries, except for such controversies and organizational
efforts, which, singly or in the aggregate, could not reasonably be expected to
materially and adversely affect the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
Section 5.15 Environmental Matters. (a) Except as disclosed in the
---------------------
Company SEC Reports, (i) the Company and its subsidiaries have conducted their
respective businesses in compliance with all applicable Environmental Laws,
including, without limitation, having all permits, licenses and other approvals
and authorizations necessary for the operation of their respective businesses as
presently conducted, (ii) none of the properties owned by the Company or any of
its subsidiaries contain any Hazardous Substance as a result of any activity of
the Company or any of its subsidiaries in amounts exceeding the levels permitted
by applicable Environmental Laws, (iii) since January 1, 1995, neither the
Company nor any of its subsidiaries has received any notices, demand letters or
requests for information from any Federal, state, local or foreign governmental
entity indicating that the Company or any of its subsidiaries may be in
violation of, or liable under, any Environmental Law in connection with the
ownership or operation of their businesses, (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened, against the Company or any of its
subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (v) no Hazardous Substance has been disposed of, released or
transported in violation of any applicable Environmental Law from any properties
owned by the Company or any of its subsidiaries as a result of any activity of
the Company or any of its subsidiaries during the time such properties were
owned, leased or operated by the Company or any of its subsidiaries, and (vi)
neither the Company, its subsidiaries nor any of their respective properties are
subject to any material liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order, administrative order, regulatory
requirement, judgment or claim asserted or arising under any Environmental Law,
except for violations of the foregoing clauses (i) through (vi) that, singly or
in the aggregate, would not reasonably be expected to have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of the Company and its subsidiaries, taken as a
whole.
(b) As used herein, "Environmental Law" means any Federal, state,
-----------------
local or foreign law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, legal doctrine, order, judgment,
decree, injunction, requirement or agreement with any
24
governmental entity relating to (x) the protection, preservation or restoration
of the environment (including, without limitation, air, water vapor, surface
water, groundwater, drinking water supply, surface land, subsurface land, plant
and animal life or any other natural resource) or to human health or safety or
(y) the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of Hazardous Substances, in each case as amended and as in effect on the Closing
Date. The term "Environmental Law" includes, without limitation, (i) the Federal
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal Act and
the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Occupational Safety and Health Act of 1970,
each as amended and as in effect on the Closing Date, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of, effects of or exposure to any Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any substance
-------------------
presently or hereafter listed, defined, designated or classified as hazardous,
toxic, radioactive, or dangerous, or otherwise regulated, under any
Environmental Law. Hazardous Substance includes any substance to which exposure
is regulated by any government authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos, or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
Section 5.16 Non-Competition Agreements. Except as disclosed in the
--------------------------
Company SEC Reports, neither the Company nor any subsidiary of the Company is a
party to any agreement which (i) purports to restrict or prohibit in any
material respect any of them or any corporation affiliated with any of them
from, directly or indirectly, engaging in any business involving the collection,
interim storage, transfer, recovery, processing, recycling, marketing or
disposal of rubbish, garbage, paper, textile wastes, chemical or hazardous
wastes, liquid and other wastes or any other material business currently engaged
in by Parent or the Company, or any corporations affiliated with either of them
and (ii) would restrict or prohibit Parent or any subsidiary of the Parent
(other than the Company and its subsidiaries that are currently so restricted or
prohibited) from engaging in such business. None of the Company's officers,
directors or key employees is a party to any agreement which, by virtue of such
person's relationship with the Company, restricts in any material respect the
Company or any subsidiary or affiliate of the Company from, directly or
indirectly, engaging in any of the businesses described above.
25
Section 5.17 Title to Assets. The Company and each of its
---------------
subsidiaries has good and marketable title in fee simple to all its real
property and good title to all its leasehold interests and other properties, as
reflected in the most recent balance sheet included in the Company Financial
Statements, except for properties and assets that have been disposed of in the
ordinary course of business since the date of such balance sheet, free and clear
of all mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever, except (i) the lien for current taxes, payments of which are not yet
delinquent, (ii) such imperfections in title and easements and encumbrances, if
any, as are not substantial in character, amount or extent and do not materially
detract from the value, or interfere with the present use of the property
subject thereto or affected thereby, or otherwise materially impair the
Company's business operations (in the manner presently carried on by the
Company) or (iii) as disclosed in the Company SEC Reports, and except for such
matters which, singly or in the aggregate, could not reasonably be expected to
materially and adversely affect the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. All leases under which the Company leases any
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing default or event which with notice or lapse of time or both
would become a default other than failures to be in good standing, valid and
effective and defaults under such leases which in the aggregate will not
materially and adversely affect the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
Section 5.18 Reorganization and Pooling of Interests. To the
---------------------------------------
knowledge of the Company, neither the Company nor any of its affiliates has
taken or agreed or intends to take any action or has any knowledge of any fact
or circumstance that would prevent the Merger from (a) constituting a
reorganization within the meaning of Section 368(a) of the Code or (b) being
treated for financial accounting purposes as a Pooling Transaction. As of the
date hereof, other than directors and officers of the Company, to the knowledge
of the Company, there are no "affiliates" of the Company, as that term is used
in paragraphs (c) and (d) of Rule 145 under the Securities Act.
Section 5.19 Company Stockholders' Approval. The affirmative vote of
------------------------------
stockholders of the Company required for approval and adoption of this Agreement
and the Merger is a majority of the outstanding shares of Company Common Stock
entitled to vote thereon.
Section 5.20 Brokers and Finders. Except for the fees and expenses
-------------------
payable to Xxxxxxx Xxxxx Xxxxxx, which fees are reflected in its agreement with
the Company, the Company has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of the
Company to pay any finder's fees, brokerage or agent commissions or other like
payments in connection with the transactions contemplated hereby. Except for
the fees and expenses paid or payable to Xxxxxxx Xxxxx Barney, there is no claim
26
for payment by the Company of any investment banking fees, finder's fees,
brokerage or agent commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the transactions
contemplated hereby.
Section 5.21 Opinion of Financial Advisor. The financial advisor of
----------------------------
the Company, Xxxxxxx Xxxxx Xxxxxx, has rendered an opinion to the Board of
Directors of the Company to the effect that, as of the date thereof, the
Exchange Ratio is fair to the holders of Company Common Stock from a financial
point of view; it being understood and acknowledged by Parent and Subsidiary
that such opinion has been rendered for the benefit of the Board of Directors of
the Company and is not intended to, and may not, be relied upon by Parent, its
affiliates or their respective subsidiaries.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
Except as otherwise permitted by Section 6.1 of the Company Disclosure Schedule
or otherwise contemplated by this Agreement, after the date hereof and prior to
the Closing Date or earlier termination of this Agreement, unless Parent shall
otherwise agree in writing, the Company shall, and shall cause its subsidiaries
to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charter or by-
laws (except that the Company may amend its charter to increase the number
of authorized shares of Company Common Stock), (ii) split, combine or
reclassify their outstanding capital stock or (iii) declare, set aside or
pay any dividend or distribution payable in cash, stock, property or
otherwise, except for the payment of dividends or distributions to the
Company by a wholly-owned subsidiary of the Company;
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of, or any options, warrants or
rights of any kind to acquire any shares of their capital stock of any
class or any debt or equity securities convertible into or exchangeable for
such capital stock, except that (i) the Company may issue shares upon
exercise of options and warrants, (ii) the Company may issue shares of
Company Common Stock (or warrants or options to acquire up to an aggregate
of 120,000 shares of Company Common Stock) in connection with acquisitions
of assets or businesses pursuant to the proviso of Section 6.1(d), (iii)
the Company may grant options with an exercise price per share of Company
Common Stock no less than the closing price
27
of a share of Company Common Stock on the day prior to grant of such option
with respect to up to an aggregate of 100,000 shares of Company Common
Stock; provided, however, that such grants may not be made to any current
-------- -------
executive officer or director of the Company and may only be made in the
ordinary course of business, to employees of the Company and its
subsidiaries consistent with past practice; and (iv) after December 31,
1998, the Company may issue options to executive officers and directors in
an amount consistent with past practice and after delivery to Parent of a
letter from Ernst & Young LLP in a form reasonably satisfactory to Parent
to the effect that the issuance of such options would not prevent the
Merger from being treated as a "pooling of interests" for financial
accounting purposes.
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings in the ordinary
course of business (other than pursuant to credit facilities) or borrowings
under the existing credit facilities of the Company or any of its
subsidiaries as such facilities may be amended in a manner that does not
have a material adverse effect on the Company (the "Existing Credit
---------------
Facilities") up to the existing borrowing limit on the date hereof or
----------
extensions of the Existing Credit Facilities to finance acquisitions
pursuant to the proviso of this Section 6.1(d), (B) borrowings to refinance
existing indebtedness on terms which are reasonably acceptable to Parent,
(C) assumption of loans of certain leases of equipment in connection with
acquisitions or rollovers of certain leases of equipment in the ordinary
course of business consistent with past practice in amount or (D)
borrowings in connection with acquisitions as set forth in the proviso in
this Section 6.1(d), (ii) redeem, purchase, acquire or offer to purchase or
acquire any shares of its capital stock or any options, warrants or rights
to acquire any of its capital stock or any security convertible into or
exchangeable for its capital stock, (iii) notwithstanding any other
provision of this Section 6.1, take any action that would jeopardize the
treatment of the Merger as a pooling of interests under Opinion No. 16 of
the Accounting Principles Board ("APB No. 16"), (iv) notwithstanding any
----------
other provision of this Section 6.1, take or fail to take any action which
action or failure to take action would cause the Company or its
stockholders (except to the extent that any stockholders receive cash in
lieu of fractional shares and except to the extent of Stockholders in
special circumstances) to recognize gain or loss for federal income tax
purposes as a result of the consummation of the Merger or would otherwise
cause the Merger not to qualify as a reorganization under Section 368(a) of
the Code, (v) make any acquisition of any assets or businesses other than
expenditures for current assets in the ordinary course of business and
expenditures for fixed or capital assets in the ordinary course of business
and other than as set forth in the proviso in this Section 6.1(d), (vi)
sell, pledge, dispose of or encumber any material assets or businesses
other than (a) sales of businesses or assets in the ordinary course of
business, (b) sales of businesses or assets disclosed in Section 6.1 of the
Company Disclosure Schedule, (c) sales of businesses or assets with
aggregate 1997 revenues less than $5.0 million, and (d) pledges or
encumbrances pursuant to Existing Credit Facilities or other permitted
borrowings, or (vii)
28
except as contemplated by the following proviso, enter into any binding
contract, agreement, commitment or arrangement with respect to any of the
foregoing; provided, however, that notwithstanding the foregoing (other
-------- -------
than subsections (iii) and (iv) of this Section 6.1(d)), the Company shall
not be prohibited from acquiring any assets or businesses or incurring or
assuming indebtedness in connection with acquisitions of assets or
businesses so long as (A) such acquisitions are disclosed in Section 6.1 of
the Company Disclosure Schedule, or (B) the aggregate revenue projected to
be earned from acquisitions (other than those acquisitions disclosed in
Section 6.1 of the Company Disclosure Schedule) for the twelve months
following each acquisition does not exceed $150 million prior to December
31, 1998 or $250 million thereafter, and the aggregate value of
consideration paid or payable for any one such acquisition (other than
those acquisitions disclosed in Section 6.1 of the Company Disclosure
Schedule), including any funded indebtedness assumed and any Company Common
Stock issued in connection with such acquisition (valued for purposes of
this limitation at a price per share equal to the price of the Company
Common Stock on the date the agreement in respect of such acquisition is
entered into) does not exceed $60 million. For purposes of the foregoing,
any contingent, royalty and similar payments made in connection with
acquisitions of businesses or assets shall be included as acquisition
consideration and shall be deemed to have a value equal to their present
value assuming an 8% per annum discount rate and assuming that all amounts
payable for the first five years following consummation of the acquisitions
(but not thereafter) are paid. Notwithstanding anything herein to the
contrary (A) the Company will not acquire or agree to acquire any assets or
businesses if such acquisition or agreement may reasonably be expected to
delay the consummation of the Merger, (B) the Company will not acquire or
agree to acquire any assets or businesses if such assets or businesses are
not in industries in which the Company currently operates, unless such
assets or businesses are acquired incidental to an acquisition of
businesses or assets that are in industries in which the Company currently
operates and it is reasonable to acquire such incidental businesses or
assets in connection with such acquisition, and (C) the Company will not
acquire or agree to acquire all or substantially all of the business,
assets, properties or capital stock of any entity with securities
registered under the Securities Act or the Exchange Act;
(e) use all reasonable efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill
and business relationships with customers and others having business
relationships with them;
29
(f) subject to restrictions imposed by applicable law, confer with one
or more representatives of Parent to report operational matters of
materiality and the general status of ongoing operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees,
except in the ordinary course of business and consistent with past
practice; provided, however, that the Company and its subsidiaries shall in
-------- -------
no event enter into or amend any written employment agreement providing for
annual base salary in excess of $75,000 per annum, except for employment
agreements entered into with the sellers of businesses acquired in
accordance with this Agreement;
(h) not adopt, enter into or amend any pension or retirement plan,
trust or fund, except as required to comply with changes in applicable law
and not adopt, enter into or amend in any material respect any bonus,
profit sharing, compensation, stock option, deferred compensation, health
care, employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any employees or retirees
generally, other than in the ordinary course of business, except (i) as
contemplated by Section 6.1(c), (ii) as required to comply with changes in
applicable law, (iii) to increase the number of shares of Company Common
Stock available for grant or award under the Company's 1997 Stock Option
Plan, 1996 Stock Option Plan, 1991 Stock Option Plan and the 1988 Employee
Stock Bonus Plan, (iv) any of the foregoing involving any such then
existing plans, agreements, trusts, funds or arrangements of any company
acquired after the date hereof or (v) as required pursuant to an existing
contractual arrangement or agreement;
(i) use commercially reasonable efforts to maintain with financially
responsible insurance companies insurance on its tangible assets and its
businesses in such amounts and against such risks and losses as are
consistent with past practice;
(j) not make, change or revoke any material Tax election or make any
material agreement or settlement regarding Taxes with any taxing authority;
and
(k) not change its accounting principles or practices other than as
required by United States generally accepted accounting principles.
Section 6.2 Conduct of Business by Parent and Subsidiary Pending the
--------------------------------------------------------
Merger. Except as otherwise contemplated by this Agreement, after the date
------
hereof and prior to the Closing Date or earlier termination of this Agreement,
unless the Company shall otherwise agree in writing, Parent shall, and shall
cause its subsidiaries to:
30
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charter (except
for any amendments by Parent of its Certificate of Incorporation to
increase the number of authorized shares of Parent Common Stock so as to be
able to consummate the Merger) or by-laws, (ii) split, combine or
reclassify (whether by stock dividend or otherwise) their outstanding
capital stock, or (iii) declare, set aside or pay any dividend or
distribution payable in cash, stock, property or otherwise, except for the
payment of quarterly cash dividends, or dividends or distributions to
Parent by a wholly-owned subsidiary of Parent;
(c) not (i) take any action that would jeopardize the treatment of the
Merger as a pooling of interests under APB No. 16, (ii) take or fail to
take any action which action or failure to take action would cause Parent
or its stockholders to recognize gain or loss for federal income tax
purposes as a result of the consummation of the Merger or would otherwise
cause the Merger not to qualify as a reorganization under Section 368(a) of
the Code;
(d) not intentionally delist the Parent Common Stock from trading on
the NYSE; and
(e) not change its accounting principles or practices other than as
required by United States generally accepted accounting principles.
Section 6.3 Control of the Company's Operations. Nothing contained
-----------------------------------
in this Agreement shall give to Parent, directly or indirectly, rights to
control or direct the Company's operations prior to the Effective Time. Prior
to the Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
Section 6.4 Control of Parent's Operations. Nothing contained in
------------------------------
this Agreement shall give to the Company, directly or indirectly, rights to
control or direct Parent's operations prior to the Effective Time. Prior to the
Effective Time, Parent shall exercise, consistent with the terms and conditions
of this Agreement, complete control and supervision of its operations.
Section 6.5 Acquisition Transactions. (a) After the date hereof and
------------------------
prior to the Effective Time or earlier termination of this Agreement, the
Company shall not, and shall not permit any of its subsidiaries to, initiate,
solicit, negotiate, encourage or provide confidential information to facilitate,
and the Company shall, and shall use its reasonable efforts to cause any
officer, director or employee of the Company, or any attorney, accountant,
investment banker, financial advisor or other agent retained by it or any of its
subsidiaries, not to initiate, solicit, negotiate, encourage or provide
nonpublic or confidential information to facilitate, any proposal
31
or offer to acquire all or any substantial part of the business or properties of
the Company or any capital stock of the Company, whether by merger, purchase of
assets, tender offer or otherwise, (other than a transaction permitted pursuant
to Section 6.1(d)) whether for cash, securities or any other consideration or
combination thereof (any such transactions being referred to herein as an
"Acquisition Transaction").
------------------------
(b) Notwithstanding the provisions of paragraph (a) above, (i) the
Company may, in response to an unsolicited written offer or proposal with
respect to a potential or proposed Acquisition Transaction ("Acquisition
-----------
Proposal") which the Company's Board of Directors determines, in good faith and
--------
after consultation with its independent financial advisor, could result (if
consummated pursuant to its terms) in an Acquisition Transaction more favorable
to the Company's stockholders than the Merger (any such offer or proposal being
referred to as a "Superior Proposal"), furnish (subject to the execution of a
-----------------
confidentiality agreement substantially similar to the confidentiality
provisions of this Agreement), confidential or nonpublic information to a
financially capable corporation, partnership, person or other entity or group (a
"Potential Acquirer") and negotiate with such Potential Acquirer if the Board of
------------------
Directors of the Company, after consulting with its outside legal counsel,
determines in good faith that the failure to provide such confidential or
nonpublic information to or negotiate with such Potential Acquirer would be
reasonably likely to constitute a breach of its fiduciary duty to the Company's
stockholders and (ii) the Company's Board of Directors may take and disclose to
the Company's stockholders a position contemplated by Rule 14e-2 under the
Exchange Act. It is understood and agreed that negotiations and other
activities conducted in accordance with this paragraph (b) shall not constitute
a violation of paragraph (a) of this Section 6.5.
(c) The Company shall promptly (but in any event within 48 hours)
notify Parent after receipt of any Acquisition Proposal, indication of interest
or request for nonpublic information relating to the Company or its subsidiaries
in connection with an Acquisition Proposal or for access to the properties,
books or records of the Company or any subsidiary by any person or entity that
informs the Board of Directors of the Company or such subsidiary that it is
considering making, or has made, an Acquisition Proposal. Such notice to Parent
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal, inquiry
or contact.
ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access to Information. (a) Subject to applicable law,
---------------------
the Company and its subsidiaries shall afford to Parent and Subsidiary and their
respective accountants, counsel, financial advisors and other representatives
(the "Parent Representatives") and Parent and its subsidiaries shall afford to
----------------------
the Company and its accountants, counsel, financial advisors and other
32
representatives (the "Company Representatives") reasonable access during normal
-----------------------
business hours with reasonable notice throughout the period prior to the
Effective Time to all of their respective properties, books, contracts,
commitments and records (including, but not limited to, Tax Returns) and, during
such period, shall furnish promptly to one another (i) a copy of each report,
schedule and other document filed or received by any of them pursuant to the
requirements of federal or state securities laws or filed by any of them with
the SEC and (ii) such other information concerning their respective businesses,
properties and personnel as Parent or Subsidiary or the Company, as the case may
be, shall reasonably request; provided, however, that no investigation pursuant
-------- -------
to this Section 7.1 shall amend or modify any representations or warranties made
herein or the conditions to the obligations of the respective parties to
consummate the Merger. Parent and its subsidiaries shall hold and shall use
their reasonable best efforts to cause the Parent Representatives to hold, and
the Company and its subsidiaries shall hold and shall use their reasonable best
efforts to cause the Company Representatives to hold, in strict confidence all
nonpublic documents and information furnished to Parent and Subsidiary or to the
Company, as the case may be, in connection with the transactions contemplated by
this Agreement, except that (i) Parent, Subsidiary and the Company may disclose
such information as may be necessary in connection with seeking the Parent
Required Statutory Approvals and Parent Stockholders' Approval, the Company
Required Statutory Approvals and the Company Stockholders' Approval and (ii)
each of Parent, Subsidiary and the Company may disclose any information that it
is required by law or judicial or administrative order to disclose.
(b) In the event that this Agreement is terminated in accordance with
its terms, each party shall promptly redeliver to the other all nonpublic
written material provided pursuant to this Section 7.1 and shall not retain any
copies, extracts or other reproductions in whole or in part of such written
material. In such event, all documents, memoranda, notes and other writings
prepared by Parent or the Company based on the information in such material
shall be destroyed (and Parent and the Company shall use their respective
reasonable best efforts to cause their advisors and representatives to similarly
destroy their documents, memoranda and notes), and such destruction (and
reasonable best efforts) shall be certified in writing by an authorized officer
supervising such destruction.
Section 7.2 Registration Statement and Proxy Statement. Parent and
------------------------------------------
the Company shall file with the SEC as soon as is reasonably practicable after
the date hereof the Registration Statement and shall use all reasonable efforts
to have the Registration Statement declared effective by the SEC as promptly as
practicable. Parent shall also take any action required to be taken under
applicable state blue sky or securities laws in connection with the issuance of
Parent Common Stock pursuant hereto. Parent and the Company shall promptly
furnish to each other all information, and take such other actions, as may
reasonably be requested in connection with any action by any of them in
connection with the preceding sentence. The information provided and to be
provided by Parent and the Company, respectively, for use in the Proxy
Statement/Prospectus shall not contain any untrue statement of a material fact
or omit to
33
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Section 7.3 Stockholders' Approvals. Subject to the fiduciary duties
-----------------------
of the Board of Directors of the Company under applicable law and to the terms
of this Agreement, the Company shall, as promptly as practicable, submit this
Agreement and the transactions contemplated hereby for the approval of its
stockholders at a meeting of stockholders and shall use its reasonable best
efforts to obtain stockholder approval and adoption (the "Company Stockholders'
---------------------
Approval") of this Agreement and the transactions contemplated hereby. Subject
--------
to the fiduciary duties of the Board of Directors of the Company under
applicable law and to the terms of this Agreement, such meeting of stockholders
shall be held as soon as practicable following the date upon which the
Registration Statement becomes effective. Subject to the fiduciary duties of
the Board of Directors of the Company under applicable law and to the terms of
this Agreement, the Company shall, through its Board of Directors, recommend to
its stockholders approval of the transactions contemplated by this Agreement.
Section 7.4 Compliance with the Securities Act. Parent and the
----------------------------------
Company shall each use its commercially reasonable efforts to cause each
officer, each director and each other person who is an "affiliate," as that term
is used in paragraphs (c) and (d) of Rule 145 under the Securities Act, of
Parent or the Company, as the case may be, to deliver to Parent and the Company
on or prior to the Effective Time a written agreement (an "Affiliate Agreement")
-------------------
to the effect that such person will not offer to sell, sell or otherwise dispose
of any shares of Parent Common Stock issued in the Merger, except, in each case,
pursuant to an effective registration statement or in compliance with Rule 145,
as amended from time to time, or in a transaction which, in the opinion of legal
counsel satisfactory to Parent, is exempt from the registration requirements of
the Securities Act and, in any case, until after the results covering 30 days of
post-Merger combined operations of Parent and the Company have been filed with
the SEC, sent to stockholders of Parent or otherwise publicly issued.
Section 7.5 Exchange Listing. Parent shall use its reasonable best
----------------
efforts to effect, at or before the Effective Time, authorization for listing on
the NYSE, upon official notice of issuance, of the shares of Parent Common Stock
to be issued pursuant to the Merger or to be reserved for issuance upon exercise
of stock options or warrants.
Section 7.6 Expenses and Fees. (a) All costs and expenses incurred
-----------------
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, except that those expenses
incurred in connection with printing and filing the Proxy Statement/Prospectus
shall be shared equally by Parent and the Company.
(b) The Company agrees to pay to Parent a fee equal to $35 million if:
34
(i) the Company terminates this Agreement pursuant to clause (iv) or
(v) of Section 9.1(a);
(ii) Parent terminates this Agreement pursuant to clause (iv) of
Section 9.1(b); or
(iii) (A) Parent terminates this Agreement pursuant to clause (vi) of
Section 9.1(b); (B) prior to the time of such termination a proposal
relating to a Acquisition Transaction had been made; and (C) on or prior to
the six month anniversary of the termination of this Agreement the Company
or any of its subsidiaries or affiliates (x) enters into an agreement or
letter of intent (or if the Company's Board of Directors resolves or
announces an intention to do) with respect to any Business Combination with
any person, entity or group or (y) consummates any Business Combination
with any person, entity or group.
For purposes of this Section 7.6, "Business Combination" means (i) a
--------------------
merger, consolidation, share exchange, business combination or similar
transaction involving the Company as a result of which the Company stockholders
prior to such transaction in the aggregate cease to own at least 70% of the
voting securities of the entity surviving or resulting from such transaction (or
the ultimate parent entity thereof), (ii) a sale, lease, exchange, transfer or
other disposition of more than 30% of the assets of the Company and its
subsidiaries, taken as a whole, in a single transaction or a series of related
transactions, or (iii) the acquisition, by a person (other than Parent or any
affiliate thereof), group or entity of beneficial ownership (as defined in Rule
13d-3 under the Exchange Act) of more than 30% of the Company Common Stock
whether by tender or exchange offer or otherwise.
Section 7.7 Agreement to Cooperate. (a) Subject to the terms and
----------------------
conditions herein provided and subject to the fiduciary duties of the respective
boards of directors of the Company and Parent, each of the parties hereto shall
use all reasonable efforts to take, or cause to be taken, all action and to do,
or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the transactions
contemplated by this Agreement, including using its reasonable efforts to obtain
all necessary or appropriate waivers, consents or approvals of third parties
required in order to preserve material contractual relationships of Parent and
the Company and their respective subsidiaries, all necessary or appropriate
waivers, consents and approvals and SEC "no-action" letters to effect all
necessary registrations, filings and submissions and to lift any injunction or
other legal bar to the Merger (and, in such case, to proceed with the Merger as
expeditiously as possible).
(b) Without limitation of the foregoing, each of Parent and the
Company undertakes and agrees to file as soon as practicable, and in any event
prior to 15 days after the date hereof, a Notification and Report Form under the
HSR Act with the Federal Trade Commission (the "FTC") and the Antitrust Division
---
of the Department of Justice (the "Antitrust Division"). Each of Parent and the
------------------
Company shall (i) respond as promptly as practicable to any
35
inquiries received from the FTC or the Antitrust Division for additional
information or documentation and to all inquiries and requests received from any
State Attorney General or other governmental authority in connection with
antitrust matters and (ii) not extend any waiting period under the HSR Act or
enter into any agreement with the FTC or the Antitrust Division not to
consummate the transactions contemplated by this Agreement, except with the
prior written consent of the other parties hereto. Parent shall take all
reasonable steps necessary to avoid or eliminate impediments under any
antitrust, competition, or trade regulation law that may be asserted by the FTC,
the Antitrust Division, any State Attorney General or any other governmental
entity with respect to the Merger so as to enable the Closing to occur as soon
as reasonably possible. Without limiting the foregoing, Parent shall propose,
negotiate, commit to and effect, by consent decree, hold separate order, or
otherwise, the sale, divestiture or disposition of such assets or businesses of
Parent or, effective as of the Effective Time, the Surviving Corporation as may
be required in order to avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any suit or
proceeding, which would otherwise have the effect of preventing or delaying the
Closing; provided, however, that Parent shall not be required to take any such
-------- -------
actions if such action would be reasonably likely, in the aggregate, to have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries taken as a whole, in the case of a sale divestiture, holding
separate or other disposition of assets of the Company or its subsidiaries, or,
in the case of a sale, divestiture, holding separate or other disposition of
assets of the Parent or its subsidiaries, such action with respect to a
comparable amount of assets of the Company would be reasonably likely, in the
aggregate, to have such a material adverse effect. Parent or the Company, as
applicable, shall take promptly, in the event that any permanent or preliminary
injunction or other order is entered or becomes reasonably foreseeable to be
entered in any proceeding that would make consummation of the transactions
contemplated hereby in accordance with the terms of this Agreement unlawful or
that would prevent or delay consummation of the transactions contemplated
hereby, any and all steps necessary to vacate, modify or suspend such injunction
or order so as to permit such consummation prior to the deadline specified in
Section 9.1(a)(ii) or Section 9.1(b)(ii). The parties hereto will consult and
cooperate with one another, and consider in good faith the views of one another,
in connection with any analyses, appearances, presentations, memoranda, briefs,
arguments, opinions and proposals made or submitted by or in behalf of any party
hereto in connection with proceedings under or relating to the HSR Act or any
other federal, state or foreign antitrust or fair trade law. The parties hereto
will provide to the other copies of all correspondence between it (or its
advisors) and the FTC, the Antitrust Division or any State Attorney General
relating to this Agreement or any of the matters described in this Section
7.7(b). The parties hereto agree that all material telephonic calls and
meetings with the FTC, the Antitrust Division or any State Attorney General
regarding the transactions contemplated hereby or any of the matters described
in this Section 7.7(b) shall include representatives of each of Parent and the
Company. Parent shall coordinate and be the principal spokesperson in
connection with any proceedings or negotiations with any
36
governmental entity relating to any of the foregoing, provided that it shall
afford the Company a reasonable opportunity to participate therein.
(c) In the event any litigation is commenced by any person or entity
relating to the transactions contemplated by this Agreement, or any Acquisition
Transaction, Parent shall have the right, at its own expense, to participate
therein, and the Company will not settle any such litigation without the consent
of Parent, which consent will not be unreasonably withheld.
Section 7.8 Public Statements. The parties shall consult with each
-----------------
other prior to issuing any press release or any written public statement with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or written public statement prior to such
consultation.
Section 7.9 Option Plans. (a) The Company shall use commercially
------------
reasonable efforts and shall take all necessary actions, including but not
limited to obtaining the consent of the option holders, if necessary, to ensure
that, at the Effective Time, all rights with respect to the Company Common Stock
pursuant to each stock option ("Company Options") granted under stock option
---------------
plans of the Company or otherwise which is outstanding on the Effective Date,
whether or not such Company Option has previously vested or become exercisable,
shall be cancelled in exchange for a number of shares of Parent Common Stock
equal in market value (based upon the average of the closing prices of the
Parent Common Stock on the NYSE for the 10 trading days immediately prior to the
Closing Date) to the fair value of such Company Option as determined by
independent third party experts, mutually agreed upon by Parent and the Company.
The parties hereto have agreed that the value determined using the methodology
proposed by such independent third party experts will represent the fair value
of the Company Options as of the Effective Time.
(b) At the Effective Time, automatically and without any action on the
part of the holder thereof, each outstanding Company Option that was not
canceled in accordance with Section 7.9(a) above shall be assumed by Parent and
become an option to purchase that number of shares of Parent Common Stock
obtained by multiplying the number of shares of Company Common Stock issuable
upon the exercise of such option by the Exchange Ratio at an exercise price per
share equal to the per share exercise price of such option divided by the
Exchange Ratio, and otherwise upon the same terms and conditions as such
outstanding Company Options; provided, however, that in the case of any Company
-------- -------
Option to which Section 421 of the Code applies by reason of the qualifications
under Section 422 or 423 of such Code, the exercise price, the number of shares
purchasable pursuant to such Company Option be determined in order to comply
with Section 424(a) of the Code.
(c) Parent shall take all corporate actions necessary to reserve for
issuance a sufficient number of shares of Parent Common Stock for delivery upon
exercise of the Company Options assumed by Parent, if any, pursuant to Section
7.9(b) above.
37
(d) As promptly as practicable after the Effective Time, Parent shall
file a Registration Statement on Form S-8 (or any successor or other appropriate
forms) with respect to the shares of Parent Common Stock subject to the Company
Options and shall use its reasonable efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
Company Options remain outstanding.
(e) Except as provided herein or as otherwise agreed to by the
parties, each of the Company stock option plans providing for the issuance or
grant of Company Options shall be assumed as of the Effective Time by Parent
with such amendments thereto as may be required to reflect the Merger.
Section 7.10 Notification of Certain Matters. Each of the Company,
-------------------------------
Parent and Subsidiary agrees to give prompt notice to each other of, and to use
commercially reasonable efforts to remedy, (i) the occurrence or failure to
occur of any event which occurrence or failure to occur would be likely to cause
any of its representations or warranties in this Agreement to be untrue or
inaccurate in any material respect at the Effective Time and (ii) any material
failure on its part to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it hereunder; provided, however,
-------- -------
that the delivery of any notice pursuant to this Section 7.10 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
Section 7.11 Directors' and Officers' Indemnification. (a) The
----------------------------------------
indemnification provisions of the Certificate of Incorporation and By-Laws of
the Surviving Corporation as in effect at the Effective Time shall not be
amended, repealed or otherwise modified for a period of six years from the
Effective Time in any manner that would adversely affect the rights thereunder
of individuals who at the Effective Time were directors, officers, employees or
agents of the Company. Parent shall assume, be jointly and severally liable
for, and honor, guaranty and stand surety for, and shall cause the Surviving
Corporation to honor, in accordance with their respective terms each of the
covenants contained in this Section 7.11 and each of the indemnification
agreements listed on Section 7.11 of the Company Disclosure Schedule without
limit as to time; provided, however, in the event of a conflict between the
-------- -------
provisions of this Section 7.11 and the provisions of an indemnification
agreement listed on Section 7.11 of the Company Disclosure Schedule, the
provisions of such indemnification agreement shall govern.
(b) After the Effective Time, each of Parent and the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
indemnify and hold harmless, each present and former director, officer, employee
and agent of the Company or any of its subsidiaries (each, together with such
person's heirs, executors or administrators, an "indemnified Party" and
-----------------
collectively, the "indemnified Parties") against any costs or expenses
-------------------
(including attorneys fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any actual or
threatened claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of, relating to or in
38
connection with any action or omission occurring or alleged to occur prior to
the Effective Time (including, without limitation, acts or omissions in
connection with this Agreement and the consummation of transactions contemplated
hereunder and acts or omissions in connection with such persons serving as an
officer, director or other fiduciary in any entity if such service was at the
request or for the benefit of the Company) or arising out of or pertaining to
the transactions contemplated by this Agreement. In the event of any such
actual or threatened claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Company or Parent and the
Surviving Corporation, as the case may be, shall pay the reasonable fees and
expenses of counsel selected by the indemnified Parties, which counsel shall be
reasonably satisfactory to the Parent and the Surviving Corporation, promptly
after statements therefor are received and shall pay all other reasonable
expenses in advance of the final disposition of such action, (ii) the Parent and
the Surviving Corporation will cooperate and use all reasonable efforts to
assist in the vigorous defense of any such matter, and (iii) to the extent any
determination is required to be made with respect to whether an indemnified
Party's conduct complies with the standards set forth under the DGCL and the
Parent's or the Surviving Corporation's respective charters or by-laws such
determination shall be made by independent legal counsel acceptable to the
Parent or the Surviving Corporation, as the case may be, and the indemnified
Party; provided, however, that neither the Parent nor the Surviving Corporation
-------- -------
shall be liable for any settlement effected without its written consent (which
consent shall not be unreasonably withheld) and provided further that if Parent
or the Surviving Corporation advances or pays any amount to any person under
this paragraph (b) and if it shall thereafter be finally determined by a court
of competent jurisdiction that such person was not entitled to be indemnified
hereunder for all or any portion of such amount, to the extent required by law,
such person shall repay such amount or such portion thereof, as the case may be,
to Parent or the Surviving Corporation, as the case may be. The indemnified
Parties as a group may not retain more than one law firm to represent them with
respect to each matter unless there is, under applicable standards of
professional conduct, a conflict on any significant issue between the positions
of any two or more indemnified Parties.
(c) In the event the Surviving Corporation or Parent or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation or Parent shall assume the obligations of the Surviving Corporation
or the Parent, as the case may be, as set forth in this Section 7.11.
(d) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company and its subsidiaries
(provided that Parent may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions that are no less
advantageous to the indemnified Parties and which coverages and amounts shall be
no less than the coverages and amounts provided at that time for Parent's
directors and officers provided that there shall be no lapse of coverage) with
respect to matters arising on or before the Effective Time and acts or
39
omissions in connection with this Agreement and the consummation of the
transactions contemplated hereunder.
(e) Parent shall pay all reasonable expenses, including reasonable
attorneys' fees, that may be incurred by any indemnified Party in enforcing the
indemnity and other obligations provided in this Section 7.11.
(f) The rights of each indemnified Party hereunder shall be in
addition to, and not in limitation of, any other rights such indemnified Party
may have under the charter or bylaws of the Company, any indemnification
agreement, under the DGCL or otherwise. The provisions of this Section 7.11
shall survive the consummation of the Merger and expressly are intended to
benefit each of the indemnified Parties.
Section 7.12 Corrections to the Proxy Statement/Prospectus and
-------------------------------------------------
Registration Statement. Prior to the date of approval of the Merger by their
----------------------
respective stockholders, each of the Company, Parent and Subsidiary shall
correct promptly any information provided by it to be used specifically in the
Proxy Statement/Prospectus and Registration Statement that shall have become
false or misleading in any material respect and shall take all steps necessary
to file with the SEC and have declared effective or cleared by the SEC any
amendment or supplement to the Proxy Statement/Prospectus or the Registration
Statement so as to correct the same and to cause the Proxy Statement/Prospectus
as so corrected to be disseminated to the stockholders of the Company and
Parent, in each case to the extent required by applicable law.
Section 7.13. Assumption of Registration Rights Agreements. The
--------------------------------------------
Company will use reasonable best efforts to ensure that Parent and Subsidiary
shall have no obligation to register any securities of the Surviving Corporation
after the Effective Time.
Section 7.14. Company Employees. Prior to the Effective Time,
-----------------
neither Parent nor any subsidiary of Parent or any affiliate of Parent or any of
its subsidiaries shall offer to employ or employ any salaried managerial or
professional employee of Company or any of its subsidiaries, if such employment
would begin prior to the Effective Time, without the prior written consent of
Company.
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
------
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
40
(a) this Agreement and the transactions contemplated hereby shall have
been approved and adopted by the requisite vote of the stockholders of the
Company under applicable law and applicable listing requirements;
(b) the shares of Parent Common Stock issuable in the Merger and those
to be reserved for issuance upon exercise of stock options or warrants
shall have been authorized for listing on the NYSE upon official notice of
issuance;
(c) the waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated;
(d) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in effect
and no proceeding for that purpose shall have been instituted by the SEC or
any state regulatory authorities;
(e) no preliminary or permanent injunction or other order or decree by
any federal or state court which prevents the consummation of the Merger
shall have been issued and remain in effect (each party agreeing to use its
reasonable efforts to have any such injunction, order or decree lifted);
(f) no statute, rule or regulation shall have been enacted by any
state or federal government or governmental agency in the United States
which would prevent the consummation of the Merger or make the Merger
illegal;
(g) all governmental waivers, consents, orders and approvals legally
required for the consummation of the Merger and the transactions
contemplated hereby shall have been obtained and be in effect at the
Effective Time, except where the failure to obtain the same would not be
reasonably likely, individually or in the aggregate, to have a material
adverse effect on the business, operations, properties, assets,
liabilities, condition (financial or other) or results of operations of the
Company and its subsidiaries, taken as a whole, following the Effective
Time;
(h) the certified public accountants for Parent, shall have delivered
a letter, dated the Closing Date, addressed to Parent, in form and
substance reasonably satisfactory to Parent, to the effect that the Merger
will qualify for a pooling of interests accounting treatment if consummated
in accordance with this Agreement; and
(i) each of the parties to the Agreement shall have received a letter
dated the Closing Date, addressed to the Company, from Ernst & Young LLP
regarding such firm's concurrence with the Company's management's
conclusions that no conditions exist related to the Company that would
preclude the Parent's accounting for the Merger with
41
the Company as a pooling of interests under Accounting Principles Board
Opinion No. 16 if closed and consummated in accordance with this Agreement.
Section 8.2 Conditions to Obligation of the Company to Effect the
-----------------------------------------------------
Merger. Unless waived by the Company, the obligation of the Company to effect
------
the Merger shall be subject to the fulfillment at or prior to the Closing Date
of the following additional conditions:
(a) Parent and Subsidiary shall have performed their agreements
contained in this Agreement required to be performed on or prior to the
Closing Date and the representations and warranties of Parent and
Subsidiary contained in this Agreement shall be true and correct on and as
of the date made and (except to the extent that such representations and
warranties speak as of an earlier date) on and as of the Closing Date as if
made at and as of such date except for such failures to perform or to be
true and correct that have not and would not, in the aggregate, reasonably
be expected to have a material adverse effect on the business operations,
properties, assets, condition (financial or other) or results of operations
of Parent and its subsidiaries considered as a whole (except for
representations and warranties that contain materiality or material adverse
effect qualifications which representations and warranties shall be true
and correct in all respects), and the Company shall have received a
certificate of the Chairman of the Board and Chief Executive Officer, the
President or a Vice President of Parent and of the President and Chief
Executive Officer or a Vice President of Subsidiary to that effect;
(b) the Company shall have received an opinion of Drinker Xxxxxx &
Xxxxx LLP, in form and substance reasonably satisfactory to the Company,
dated the Closing Date, substantially to the effect that, on the basis of
facts, representations and assumptions set forth in such opinion, which are
consistent with the state of facts existing at the Effective Time: (i) the
Merger will constitute a reorganization within the meaning of Section
368(a) of the Code, (ii) no gain or loss will be recognized by Parent, the
Company or Subsidiary as a result of the Merger, and (iii) no gain or loss
will be recognized by the holders of Company Common Stock upon the exchange
of their Company Common Stock solely for shares of Parent Common Stock
(except with respect to cash received in lieu of fractional shares of
Parent Common Stock). In rendering such opinion, such counsel may rely
upon representations contained in certificates of officers and certain
stockholders of Parent, the Company and Subsidiary.
Section 8.3 Conditions to Obligations of Parent and Subsidiary to
-----------------------------------------------------
Effect the Merger. Unless waived by Parent and Subsidiary, the obligations of
-----------------
Parent and Subsidiary to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the additional following conditions:
(a) the Company shall have performed its agreements contained in this
Agreement required to be performed on or prior to the Closing Date and the
representations and warranties of the Company contained in this Agreement
shall be true
42
and correct on and as of the date made and (except to the extent that such
representations and warranties speak as of an earlier date) on and as of
the Closing Date as if made at and as of such date, except for such
failures to perform and to be true and correct that have not and would not,
in the aggregate, reasonably be expected to have a material adverse effect
on the business, operations, properties, assets, condition (financial or
other) or results of operations of the Company and its subsidiaries
considered as a whole (except for representations and warranties that
contain materiality or material adverse effect qualifications which
representations and warranties shall be true and correct in all respects),
and Parent shall have received a Certificate of the President and Chief
Executive Officer or of a Vice President of the Company to that effect;
(b) Parent shall have received an opinion of Shearman & Sterling, in
form and substance reasonably satisfactory to Parent, dated the Closing
Date, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion, which are
consistent with the state of facts, existing at the Effective Time: (i)
the Merger will constitute a reorganization within the meaning of Section
368 of the Code and (ii) Parent and Subsidiary will recognize no gain or
loss for federal income tax purposes as a result of consummation of the
Merger. In rendering such opinion, such counsel may rely upon
representations contained in certificates of officers and certain
stockholders of Parent, the Company and Subsidiary; and
(c) all consents, approvals or waivers from the Company's lenders
required to consummate the Merger, shall have been obtained and be in
effect at the Effective Time, except where the failure to obtain the same
would not be reasonably likely, individually or in the aggregate, to have a
material adverse effect on the business, operations, properties, assets,
liabilities, condition (financial or other) or results of operations of the
Company and its subsidiaries, taken as a whole, following the Effective
Time.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
Section 9.1 Termination. This Agreement may be terminated at any
-----------
time prior to the Closing Date, whether before or after approval by the
stockholders of the Company or Parent, by the mutual written consent of the
Company and Parent or as follows:
(a) The Company shall have the right to terminate this Agreement:
(i) upon a material breach of a representation or warranty of
Parent contained in this Agreement which has not been cured in all material
respects and which has caused any of the conditions set forth in section
8.2(a) to be incapable of being satisfied by the Termination Date;
43
(ii) if the Merger is not completed by March 31, 1999 (the
"Termination Date") (unless due to a delay or default on the part of the
-----------------
Company);
(iii) if the Merger is enjoined by a final, unappealable
court order not entered at the request or with the support of the Company
and if the Company shall have used reasonable efforts to prevent the entry
of such order;
(iv) if the Company receives a Superior Proposal, resolves to
accept such Superior Proposal, and the Company shall have given Parent two
days' prior written notice of its intention to terminate pursuant to this
provision; provided, however, that such termination shall not be effective
-------- -------
until such time as the payment required by Section 7.6(b) shall have been
received by Parent;
(v) if (A) a tender or exchange offer is commenced by a Potential
Acquirer (excluding any affiliate of the Company or any group of which any
affiliate of the Company is a member) for all outstanding shares of Company
Common Stock, (B) the Company's Board of Directors determines, in good
faith and after consultation with an independent financial advisor, that
such offer constitutes a Superior Proposal and resolves to accept such
Superior Proposal or recommend to the stockholders that they tender their
shares in such tender or exchange offer and (C) the Company shall have
given Parent two days' prior written notice of its intention to terminate
pursuant to this provision; provided, however, that such termination shall
-------- -------
not be effective until such time as the payment required by Section 7.6(b)
shall have been received by Parent; or
(vi) if Parent (A) fails to perform in any material respect any
of its material covenants in this Agreement and (B) does not cure such
default in all material respects within 30 days after written notice of
such default specifying such default in reasonable detail is given to
Parent by the Company.
(b) Parent shall have the right to terminate this Agreement:
(i) upon a material breach of a representation or warranty of the
Company contained in this Agreement which has not been cured in all
material respects and which has caused any of the conditions set forth in
Section 8.3(a) to be incapable of being satisfied by the Termination Date;
(ii) if the Merger is not completed by March 31, 1999 (unless due
to a delay or default on the part of Parent);
44
(iii) if the Merger is enjoined by a final, unappealable
court order not entered at the request or with the support of Parent and if
Parent shall have used reasonable efforts to prevent the entry of such
order;
(iv) if the Board of Directors of the Company shall have resolved
to accept a Superior Proposal or shall have recommended to the stockholders
of the Company that they tender their shares in a tender or an exchange
offer commenced by a third party (excluding any affiliate of Parent or any
group of which any affiliate of Parent is a member);
(v) if the Company (A) fails to perform in any material respect
any of its material covenants in this Agreement and (B) does not cure such
default in all material respects within 30 days after written notice of
such default specifying such default in reasonable detail is given to the
Company by Parent; or
(vi) if the stockholders of the Company fail to approve the
Merger at a duly held meeting of stockholders called for such purpose or
any adjournment or postponement thereof.
(c) As used in this Section 9.1, (i) "affiliate" has the meaning
---------
assigned to it in Section 7.4 and (ii) "group" has the meaning set forth in
-----
Section 13(d) of the Exchange Act and the rules and regulations thereunder.
Section 9.2 Effect of Termination. In the event of termination of
---------------------
this Agreement by either Parent or the Company pursuant to the provisions of
Section 9.1, this Agreement shall forthwith become void and there shall be no
liability or further obligation on the part of the Company, Parent, Subsidiary
or their respective officers or directors (except in this Section 9.2, the
second sentence of Section 7.1(a), Section 7.1(b), Section 7.6 and Section 10.4
shall survive the termination). Nothing in this Section 9.2 shall relieve any
party from liability for any willful and intentional breach of any covenant or
agreement of such party contained in this Agreement.
Section 9.3 Amendment. This Agreement may not be amended except by
---------
action taken by the parties' respective Boards of Directors or duly authorized
committees thereof and then only by an instrument in writing signed on behalf of
each of the parties hereto and in compliance with applicable law. Such
amendment may take place at any time prior to the Closing Date, and, subject to
applicable law, whether before or after approval by the stockholders of the
Company, Parent or Subsidiary.
Section 9.4 Waiver. At any time prior to the Effective Time, the
------
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any
45
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Non-Survival of Representations and Warranties. No
----------------------------------------------
representations, warranties or agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger, and after
effectiveness of the Merger neither the Company, Parent, Subsidiary or their
respective officers or directors shall have any further obligation with respect
thereto except for the representations, warranties and agreements contained in
Articles II, III and X, Section 7.9, Section 7.11, and Section 7.13.
Section 10.2 Notices. All notices and other communications hereunder
-------
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via facsimile to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Parent or Subsidiary to:
Waste Management, Inc.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxx
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Xx.
(b) If to the Company, to:
Eastern Environmental Services, Inc.
0000 Xxxxxxxx Xxxxx
Xx. Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxx
46
with a copy to:
Drinker Xxxxxx & Xxxxx LLP
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, XX 00000-0000
Attn: H. Xxxx Xxxxxx, Xx.
Section 10.3 Interpretation. The headings contained in this
--------------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision.
Section 10.4 Miscellaneous. This Agreement (including the documents
-------------
and instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral,
among the parties, or any of them, with respect to the subject matter hereof,
(b) shall not be assigned by operation of law or otherwise, except that
Subsidiary may assign this Agreement to any other wholly-owned subsidiary of
Parent. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY,
INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO
CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE. THE EXCLUSIVE
VENUE FOR THE ADJUDICATION OF ANY DISPUTE OR PROCEEDING ARISING OUT OF THIS
AGREEMENT OR THE PERFORMANCE THEREOF SHALL BE THE COURTS LOCATED IN THE STATE OF
DELAWARE AND THE PARTIES HERETO AND THEIR AFFILIATES EACH CONSENT TO AND HEREBY
SUBMIT TO THE JURISDICTION OF ANY COURT LOCATED IN THE STATE OF DELAWARE.
Section 10.5 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
Section 10.6 Parties in Interest. This Agreement shall be binding
-------------------
upon and inure solely to the benefit of each party hereto, and except as set
forth in Sections 2.1, 2.2, 3.3, 7.9, 7.11 and 7.13 (which are intended to and
shall create third party beneficiary rights if the Merger is consummated),
nothing in this Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever under or by reason
of this Agreement. The rights of any third party beneficiary hereunder are not
subject to any defense, offset or counterclaim.
47
IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused
this Agreement to be signed by their respective officers and attested to as of
the date first written above.
WASTE MANAGEMENT, INC.
Attest:
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------
Secretary By: /s/ Xxxx X. Xxxxx
-------------------------------------
Name: Xxxx X. Xxxxx
Title: Chairman and Chief Executive
Officer
OCHO ACQUISITION CORPORATION
Attest:
/s/ Xxxx XxXxxxxx
-------------------------
Secretary By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title:
EASTERN ENVIRONMENTAL SERVICES, INC.
Attest:
/s/ Xxxxxx X. Xxxxxx
-------------------------
Secretary By: /s/ Xxxxx X. Xxxxxxx, Xx.
-------------------------------------
Name: Xxxxx X. Xxxxxxx, Xx.
Title: Chairman, President and Chief
Executive Officer
