EXHIBIT A
THIS STOCKHOLDERS AGREEMENT (this "Agreement"), dated as of
October 17, 1997, is among Acquisition Holdings, Inc., a Delaware corporation
("Holdco"), and the stockholders (the "Stockholders") of ATC Group Services
Inc. (the "Company") signatory hereto.
RECITALS
WHEREAS, Holdco has simultaneously herewith delivered to the
Company an offer letter, dated October 17, 1997, from Xxxxx, Xxxx & Xxxxx,
L.L.C., attached hereto as Exhibit A, pursuant to which Holdco through a
subsidiary would enter into a business combination with the Company (the
"Transaction") pursuant to an agreement and plan of merger in the form attached
hereto as Exhibit B (as the same may be negotiated and entered into by Holdco
and/or its affiliates and the Company, the "Merger Agreement") in accordance
with which Holdco would acquire the entire equity interest in the Company for
$12 per share of Common Stock; and
WHEREAS, the Stockholders have agreed to vote 14.99% in the
aggregate of the Common Stock of the Company in favor of the Transaction and
Holdco and the Stockholders desire to memorialize certain other agreements, all
as set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
mutual covenants and agreements herein contained and for other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree
as follows:
AGREEMENT
1. Certain Definitions. For purposes of this Agreement:
"Acquisition Proposal" shall mean any inquiry, proposal or offer
from any Person relating to any direct or indirect acquisition or purchase of
15% or more of the assets of the Company and its subsidiaries or 15% or more of
any class of equity securities of the Company or any of its subsidiaries, any
tender offer or exchange offer that if consummated would result in any Person
beneficially owning 15% or more of any class of equity securities of the
Company or any of its subsidiaries, any merger, consolidation, business
combination, sale of substantially all the assets, recapitalization,
liquidation, dissolution or similar transaction involving the Company or any of
its subsidiaries, other than the Transaction, or any other transaction the
consummation of which could reasonably be expected to impede, interfere with,
prevent or materially delay the Transaction or which would reasonably be
expected to dilute materially the benefits to Holdco of the Transaction.
"Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), including pursuant to any agreement, arrangement
or understanding, whether or not in writing. Without duplicative counting of
the same securities by the same holder, securities Beneficially Owned by a
Person shall include securities Beneficially Owned by all other Persons with
whom such Person would constitute a "group" within the meaning of Section 13(d)
of the Exchange Act.
"Closing Date" shall mean the date set forth in the Merger
Agreement, if executed and delivered, as the closing date for the Transaction.
"Common Stock" shall mean at any time the Common Stock, par
value $.01 per share, of the Company.
"Existing Shares" shall mean the shares of Common Stock owned by
the Stockholders on the date hereof.
"Permitted Transfer" means a sale, transfer, assignment or other
disposition to a Permitted Transferee.
"Permitted Transferee" means any person who is (A) the spouse or
former spouse of, or any lineal descendent of, or any spouse of such lineal
descendant of, or the grandparent, parent, brother or sister of, or spouse of
such brother or sister of, either of the Stockholders or of a Permitted
Transferee; (B) upon the death of any of the Stockholders or any Permitted
Transferee of such person, the executors of the estate of such Stockholder or
such Permitted Transferee, and any of such Stockholder's or such Permitted
Transferee's heirs, testamentary trustees, devisees, or legatees; (C) any trust
for the benefit of one or more of the Stockholders or Permitted Transferees;
(D) upon the disability of either of the Stockholders or any Permitted
Transferee, any guardian or conservator of such Stockholder or such Permitted
Transferee; (E) any corporation, partnership or other entity if at least 95%
of the beneficial ownership is held by either Stockholder individually or by
the Stockholders in the aggregate or Permitted Transferees, or (F) a lending
institution in whose favor either of the Stockholders pledges or otherwise
grants a security interest in any or all of the Proxy Shares (as defined
herein) for the purpose of obtaining one or more bona fide loans or advances
for the exercise of options, warrants or other rights held by either
Stockholder to acquire shares of Common Stock; provided, that in each case
such transferee (in the case of a transferee under clause (F) above, on behalf
of itself and any transferee of the collateral) assumes and agrees to perform
and becomes a party to this Agreement, agrees not to make an Acquisition
Proposal, and agrees not to dissent in the Transaction, all on terms reasonably
acceptable to Holdco. For purposes of this Agreement, when a Permitted
Transferee has
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acquired Shares in accordance herewith, such person shall be
deemed a "Stockholder" hereunder.
"Person" shall mean an individual, corporation, limited
liability company, partnership, joint venture, association, trust,
unincorporated organization or other entity.
"Shares" shall mean the Existing Shares and any right to acquire
shares of Common Stock owned on the date hereof and any shares of Common Stock
or rights to acquire shares of Common Stock acquired by any Stockholder in any
capacity after the date hereof and prior to the termination of this Agreement.
"Shares" shall include (i) shares of Common Stock acquired upon the exercise of
options, warrants or other rights to acquire shares; (ii) shares of Common
Stock acquired upon the conversion or exchange of convertible or exchangeable
securities; (iii) shares of Common Stock acquired by means of purchase,
dividend, distribution, gift, bequest, inheritance or as a successor in
interest in any capacity or otherwise; and (iv) rights to acquire shares of
Common Stock, vested or not, presently exercisable or not, including, but not
limited to, options and warrants. In the event of a stock dividend or
distribution, or any change in the Common Stock by reason of any stock
dividend, split-up, recapitalization, reclassification, combination, exchange
of shares or the like, the term "Shares" shall be deemed to refer to and
include the Shares as well as all such stock dividends and distributions and
any shares into which or for which any or all of the Shares may be changed,
reclassified or exchanged and appropriate adjustments shall be made to the
terms and provisions of this Agreement. "Shares" shall also include voting
trust certificates issued in respect of any Shares.
2. Voting of Shares; No Inconsistent Agreements.
(a) With respect to the Shares identified as Proxy Shares on
Exhibit C attached hereto (the "Proxy Shares"), each Stockholder, subject to
the terms of this Agreement, hereby irrevocably grants to, and appoints, Holdco
and any other Person who shall hereafter be designated by Holdco, such
Stockholder's proxy and attorney-in-fact (with full power of substitution), for
and in the name, place and stead of such Stockholder, to vote such
Stockholder's Proxy Shares, or grant a consent or approval in respect of such
Proxy Shares, at any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, (i) in favor of (A) the Transaction, (B)
the Merger Agreement and (C) the transactions contemplated by the Merger
Agreement, including, but not limited to, the amendments to the Certificate of
Incorporation of the Company contemplated thereby and (ii) against (other than
in connection with the Transaction) (A) any extraordinary corporate
transaction, such as a merger, consolidation or other business combination
involving the Company or any of its subsidiaries (other than the Transaction);
(B) any sale, lease or transfer by the Company of a material amount of
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assets (including stock) of the Company or any of its subsidiaries, or a
reorganization, restructuring, recapitalization, special dividend, dissolution
or liquidation of the Company or any of its subsidiaries; and (C)(1) any change
in a majority of the persons who constitute the board of directors of the
Company or any of its subsidiaries; (2) any change in the present
capitalization of the Company or any of its subsidiaries including any proposal
to sell a substantial equity interest in the Company or any of its
subsidiaries; (3) any amendment of the Company or any of its subsidiaries'
charters or by-laws; (4) any other change in the Company or any of its
subsidiaries' corporate structure or business; and (5) any other action which,
in the case of each of the matters referred to in clauses (C)(1), (2), (3) or
(4), is intended, or could reasonably be expected, to impede, interfere with,
delay, postpone, or materially adversely affect the Transaction and the
transactions contemplated by this Agreement and the Merger Agreement.
(b) Such Stockholder represents that any proxies previously
given in respect of such Stockholder's Proxy Shares are not irrevocable, and
that any such proxies are hereby revoked.
(c) Such Stockholder hereby affirms that the irrevocable proxy
set forth in this Section 2 is given to secure the performance of the duties of
the Stockholder under this Agreement. Such Stockholder hereby further affirms
that such irrevocable proxy is coupled with an interest and may under no
circumstances be revoked, except in connection with the termination of this
Agreement pursuant to Section 7 hereof. Such Stockholder hereby ratifies and
confirms all that such irrevocable proxy may lawfully do or cause to be done by
virtue hereof. Such irrevocable proxy is executed and intended to be
irrevocable in accordance with the provisions of Section 212(e) of the Delaware
General Corporation Law.
(d) Each Stockholder severally and not jointly agrees that it
shall not enter into any agreement or understanding with any Person the effect
of which would be inconsistent with or violative of the provisions and
agreements contained herein, including in this Section 2. Further, from the
date hereof until such time as Holdco's designees shall constitute a majority
of the members of the Board of Directors of the Company, each Stockholder
severally and not jointly agrees that it will, if the Board of Directors of the
Company fails or refuses to submit the Transaction to the Company stockholders,
vote all Proxy Shares held of record or Beneficially Owned by such Stockholder
to (i) call or cause to be called a special meeting of stockholders of the
Company (or effect a written consent) to remove the directors of the Company
who have so failed or refused, or to increase the size of the Board of
Directors and elect a majority of new directors who will submit the Transaction
to the stockholders of the Company for a vote, and (ii) use its reasonable
efforts to vote such Proxy Shares to effect
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such removal and replacement, or increase and election, and the submission of
the Transaction to the stockholders of the Company; and (iii), at any time
after initial approval by the stockholders of the Company of the Transaction,
if so requested by Holdco, vote such Proxy Shares to approve all or any actions
incident to the Transaction or the other matters referred to in this Section 2
by stockholder written consent.
3. Other Stockholder Covenants.
(a) Restriction on Transfer; Proxies and Non-interference. From
the date hereof through the Closing Date or the earlier termination of this
Agreement in accordance with its terms, and except for Permitted Transfers as
expressly permitted herein and subject to Section 3(f), each Stockholder
severally and not jointly agrees that it shall not directly or indirectly:
(i) offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to, or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of (collectively, "transfer"), any or all of the Proxy Shares or
any interest therein;
(ii) grant any proxies or powers of attorney with respect
to the Proxy Shares, deposit the Proxy Shares into a voting trust or enter into
a voting agreement with respect to the Proxy Shares; or
(iii) take any action that would make any representation
or warranty of such Stockholder contained herein untrue or incorrect or would
result in a breach by such Stockholder of its obligations under this Agreement.
(b) No Solicitation. Subject to Section 3(f), from the date
hereof until the Closing Date, or the earlier termination of this Agreement in
accordance with Section 7 hereof, each Stockholder severally and not jointly
agrees that such Stockholder shall not, and shall not permit any of such
Stockholder's representatives, agents or affiliates (including, without
limitation, any investment banker, attorney or accountant retained by any
Stockholder) to, directly or indirectly, enter into, solicit, initiate or
continue any discussions or negotiations with, or provide any information to,
or otherwise cooperate in any other way with, any Person or group, other than
Holdco and its affiliates, concerning any offer or proposal which constitutes
or is reasonably likely to lead to an Acquisition Proposal. Each Stockholder
severally and not jointly agrees that it will immediately notify Holdco orally
and in writing if any discussions or negotiations are sought to be initiated,
any
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inquiry or proposal is made, or any information is requested with respect
to any Acquisition Proposal or which could lead to an Acquisition Proposal, and
immediately notify Holdco of all material terms of any proposal which it may
receive in respect of any such Acquisition Proposal, including the identity of
the prospective purchaser or soliciting party if known, and thereafter shall
inform Holdco on a timely, ongoing basis of the status and content of any
discussions or negotiations with such a third party, including immediately
reporting any material changes to the terms and conditions thereof.
(c) Reliance. Each Stockholder understands and acknowledges
that Holdco is proposing to enter into the Transaction in reliance upon each
Stockholder's execution and delivery of this Agreement.
(d) Further Assurances. From time to time, at Holdco's request
and without further consideration, each Stockholder severally and not jointly
agrees that it shall execute and deliver such additional documents and take all
such further lawful action as may be necessary or desirable to consummate and
make effective, in the most expeditious manner practicable, the purposes of
this Agreement.
(e) Stockholder Termination Fee. In the event that any
Acquisition Proposal is consummated, then each Stockholder shall pay to Holdco
as soon as practicable, but in no event longer than two business days after
receipt of the consideration paid to such Stockholder in connection with such
Acquisition Proposal an amount (the "Stockholder Termination Fee") equal to the
product of (x) the number of Shares Beneficially Owned by such Stockholder,
multiplied by (y) the excess of the per share value of consideration paid or
payable in consequence of consummation of the Acquisition Proposal (with the
value of any non-cash consideration being determined by agreement of Holdco and
such Stockholder or, failing such agreement within 10 business days of
consummation of such Acquisition Proposal, as provided below) over $12. In the
case of options on Shares, to the extent the same are cancelled for a payment
in cash (the "Option Payment"), the amount due hereunder shall be the amount by
which the Option Payment exceeds the product of (a) the number of Shares
underlying such options and (b) $12. In the event that the consideration paid
or payable in consequence of consummation of the Acquisition Proposal: (i)
consists solely of cash, then the Stockholder Termination Fee shall be payable
solely in cash, or (ii) consists of cash and other non-cash property, or solely
non-cash property, then the Stockholder Termination Fee shall be payable in
cash and such non-cash property in the same proportion as the cash bears to the
value of the non-cash property issued or issuable in consequence of
consummation of the Acquisition Proposal (as such value is determined herein).
If Holdco and such Stockholder fail to agree promptly on the
value of such non-cash consideration, then the parties shall
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appoint an independent investment banking firm reasonably acceptable to Holdco
and such Stockholder to act as arbitrator (the "Arbitrator"). Upon the
selection of the Arbitrator, Holdco on the one hand and such Stockholder on the
other shall deliver to the Arbitrator and to each other their last and final
offer concurrently in writing (the "Certified Offers"). The Certified Offers
shall list one amount which the submitting party asserts is the appropriate
valuation of such non-cash consideration as of the date of submittal. The
Arbitrator's sole role shall be to select which one of the two Certified Offers
most closely approximates the valuation the Arbitrator would have determined
for such non-cash consideration, taking into account current market valuations
of any publicly traded securities which constitute such non-cash consideration.
The Arbitrator shall notify the parties of such determination. The
determination of the Arbitrator shall be binding on the parties. All costs and
expenses of the Arbitrator shall be borne by the parties whose Certified Offer
is not selected.
Each Stockholder acknowledges that the agreements contained in
this Section 3(e) are an integral part of the transactions contemplated by this
Agreement and the Transaction. Accordingly, if the Stockholder shall fail to
pay when due any amounts which shall become due under Section 3(e) hereof, the
Stockholder shall in addition hereto pay to Holdco all costs and expenses
(including fees and disbursements of counsel) incurred in collecting such
overdue amounts, together with interest on such overdue amounts from the date
such payment was required to be made until the date such payment is received at
a rate per annum equal to the Prime Rate as announced from time to time by
Citibank, N.A. as its "prime rate," "reference rate," "base rate" or other
similar rate. Any payment required to be made pursuant to this Section 3(e)
shall be made when due by wire transfer of immediately available funds to an
account designated by Holdco.
The parties agree and acknowledge that in the event that any
Acquisition Proposal is consummated, it would be impracticable and extremely
difficult to ascertain with certainty the amount of damages to Holdco.
Therefore, the parties agree that payment of the Stockholder Termination Fee
pursuant to this Section 3(e) shall represent full liquidated damages. The
parties agree that no party shall be liable for special, indirect, incidental
or consequential damages of any nature arising from this Agreement.
(f) Fiduciary Duty of Directors. Holdco agrees and acknowledges
that each Stockholder is a director of the Company, and, in such capacity, has
fiduciary duties to the stockholders of Company. Nothing in this Agreement
(including, without limitation, Section 3(b)) shall be deemed to limit or
affect the obligation of each Stockholder, as a director of the Company, to
take any and all action as may be necessary in the exercise of his fiduciary
duty to the stockholders of the Company.
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4. Representations and Warranties of Stockholders. Each
Stockholder hereby severally and not jointly (and solely with respect to itself
and the Shares held of record or Beneficially Owned by such Stockholder)
represents and warrants to Holdco as follows:
(a) Ownership of Shares. Such Stockholder is the record and/or
Beneficial Owner of the Existing Shares set forth on Exhibit C hereto. On the
date hereof, the Existing Shares constitute all of the Shares owned of record
or Beneficially Owned by such Stockholder. With respect to the number of shares
set forth opposite such Stockholder's name on Exhibit C hereto, and with the
exceptions noted thereon, if any, such Stockholder has sole voting power and
sole power to issue instructions with respect to the matters set forth in
Sections 2 and 3 hereof, sole power of disposition, sole power of conversion,
sole power to demand appraisal rights and sole power to agree to all of the
matters set forth in this Agreement, in each case with respect to all of the
Existing Shares with no limitations, qualifications or restrictions on such
rights, subject to applicable securities laws and the terms of this Agreement.
(b) Due Authorization. Such Stockholder has all requisite
capacity, power and authority to execute and deliver this Agreement and perform
its obligations hereunder. This Agreement has been duly and validly executed
and delivered by such Stockholder and constitutes a valid and binding agreement
enforceable against such Stockholder in accordance with its terms except to the
extent (i) such enforcement may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors rights and (ii) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) No Conflicts. Except for filings, authorizations, consents
and approvals contemplated by the Transaction and necessary for the
consummation of the transactions contemplated hereby and thereby, (i) no filing
with, and no permit, authorization, consent or approval of, any state or
federal public body or authority is necessary for the execution of this
Agreement by such Stockholder and the consummation by such Stockholder of the
transactions contemplated hereby and (ii) none of the execution and delivery of
this Agreement by such Stockholder, the consummation by such Stockholder of the
transactions contemplated hereby or compliance by such Stockholder with any of
the provisions hereof shall (A) result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or
give rise to any third party right of termination, cancellation, material
modification or acceleration) under any of the terms, conditions or provisions
of any note, loan agreement, bond, mortgage, indenture, license, contract,
commitment, arrangement, understanding, agreement or other instrument or
obligation of any kind to which
8
such Stockholder is a party or by which such Stockholder or any of its
properties or assets may be bound, or (B) violate any order, writ, injunction,
decree, judgment, statute, rule or regulation applicable to such Stockholder or
any of its properties or assets.
(d) No Encumbrances. Except as set forth on Exhibit C or as
otherwise permitted herein, the Shares and the certificates representing such
Shares are now, and at all times during the term hereof, will be, held by such
Stockholder, or by a nominee, custodian or trust for the benefit of such
Stockholder, free and clear of all liens, claims, security interests, proxies,
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such arising hereunder.
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf
of such Stockholder.
5. Representations and Warranties of Holdco. Holdco
represents and warrants to the Stockholders as follows:
(a) Organization. Holdco is a corporation duly organized,
validly existing and in good standing under the laws of its state of
incorporation, and has all requisite corporate power or other power and
authority to execute and deliver this Agreement and perform its obligations
hereunder. The execution and delivery by Holdco of this Agreement and the
performance by Holdco of its obligations hereunder have been duly and validly
authorized by its Board of Directors and, except as contemplated in the
Transaction, no other corporate proceedings on the part of Holdco are necessary
to authorize the execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
(b) Agreement. This Agreement has been duly and validly
executed and delivered by Holdco and constitutes a valid and binding agreement
of Holdco enforceable against Holdco in accordance with its terms, except that
(i) such enforcement may be subject to applicable bankruptcy, insolvency, or
other similar laws, now or hereafter in effect, affecting creditors' rights
generally, and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought.
(c) No Conflicts. Except for filings, authorizations,
consents, and approvals contemplated by the Transaction and necessary for the
consummation of the transactions contemplated hereby and thereby, (i) no filing
with, and no permit, authorization, consent or approval of, any state or
federal public body or authority is necessary for the execution of this
Agreement
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by Holdco and the consummation by Holdco of the transactions contemplated
hereby, and (ii) none of the execution and delivery of this Agreement by
Holdco, the consummation by Holdco of the transaction contemplated hereby or
compliance by Holdco with any of the provisions hereof shall (A) conflict with
or result in any breach of the charter or bylaws of Holdco, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third-party right of termination,
cancellation, material modifications or acceleration) under any of the terms,
conditions or provisions of any note, loan agreement, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or obligation of any kind to which Holdco is a party or by
which Holdco of its properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, statute, rule or regulation
applicable to Holdco or its respective properties or assets.
6. Legend.
(a) Each Stockholder severally and not jointly agrees with, and
covenants to, Holdco that such Stockholder shall not request that the Company
register the transfer (by book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Proxy Shares, unless such
transfer is in compliance with this Agreement.
(b) Each Stockholder severally and not jointly agrees that it
shall promptly after the date hereof surrender to Holdco all certificates
representing the Proxy Shares held by such Stockholder, and Holdco shall place
the following legend on such certificates, which legend, except as otherwise
expressly provided in this Agreement, shall remain on such certificates until
the termination of this Agreement:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
AGREEMENT, DATED AS OF OCTOBER 17, 1997 AMONG CERTAIN
STOCKHOLDERS AND ACQUISITION HOLDINGS, INC. THE SHARES ARE
SUBJECT TO RESTRICTIONS ON TRANSFER OR ENCUMBRANCE AND VOTING.
A COPY OF THE AGREEMENT IS AVAILABLE AT THE PRINCIPAL OFFICE OF
THE COMPANY."
7. Termination. This Agreement shall terminate upon the
earlier to occur of (i) the Closing Date and (ii) that date which is one year
after the date hereof; provided, however, if Holdco shall have breached its
obligations under this Agreement or the Merger Agreement, then this Agreement
shall terminate in all respects (including, without limitation, Section 3(e))
150 days after the date hereof unless Holdco breaches its obligations under
Section 10(a), in which case this Agreement shall terminate immediately upon
such breach. Notwithstanding the immediately
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preceding sentence, the parties hereto agree that the provisions of Section
3(e) (but only to the extent an Acquisition Proposal is made, proposed,
communicated, disclosed or consummated prior to termination hereunder) and
Section 8 shall survive any termination of this Agreement, and that no such
termination shall relieve any party of liability for a breach hereof prior to
termination.
8. Confidentiality and Public Announcements. The parties
recognize that successful consummation of the transactions contemplated by this
Agreement may be dependent upon confidentiality with respect to the matters
referred to herein. In this connection, pending public disclosure thereof, each
of the parties hereto severally and not jointly agrees not to disclose or
discuss such matters with anyone not a party to this Agreement (other than its
counsel, advisors, corporate parents and affiliates) without the prior written
consent of the other parties hereto, except for filings required pursuant to
the Exchange Act and the rules and regulations thereunder or disclosures its
counsel advises are necessary in order to fulfill its obligations imposed by
law or the requirements of any securities exchange. At all times during the
term of this Agreement, the parties hereto will consult with each other before
issuing or making any reports, statements or releases to the public with
respect to this Agreement or the transactions contemplated hereby and will use
good faith efforts to agree on the text of public reports, statements or
releases.
9. Severance and Consulting Agreements. Holdco and the
Stockholders agree to enter into severance, consulting and non-competition
agreements in the forms attached hereto as Exhibits D-1 and D-2 on and as of
the effective date of the merger under the Merger Agreement.
10. General Provisions.
(a) Commercially Reasonable Efforts to Consummate the
Transaction. Holdco agrees that if the Merger Agreement, in the form attached
hereto (the "Form Merger Agreement"), is acceptable to the Special Committee of
Independent Directors of the Company's Board of Directors (the "Special
Committee"), Holdco will execute the Form Merger Agreement; provided, however,
that Holdco will not be required to execute the Form Merger Agreement if the
Company discloses on the Company Disclosure Schedule (as such term is defined
in the Form Merger Agreement) an event or circumstance of which Holdco has no
knowledge as of the date hereof that would cause the representations and
warranties in the Form Merger Agreement to fail to be true and correct without
regard to the Company Disclosure Schedule. If such an event or circumstance is
disclosed on the Company Disclosure Schedule or if the Special Committee
requests changes to the Form Merger Agreement, Holdco agrees to negotiate the
Merger Agreement in good faith and to use its commercially reasonable efforts
to consummate the Transaction on terms mutually acceptable to the Special
Committee and Holdco.
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(b) Expenses. Whether or not the transactions contemplated
hereby are consummated, 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 as otherwise specifically noted herein or in
the Merger Agreement.
(c) Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic
or digital transmission method; the day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
(i) if to Holdco, to:
Acquisition Holdings, Inc.
c/x Xxxxx, Xxxx & Xxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with copies to:
Xxxxxxxxxx & Xxxxx LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(ii) if to the Stockholders, to the respective addresses
set forth on Exhibit C.
(d) Interpretation. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. Headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the word "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". This Agreement shall not be construed for or against either party
by reason of the authorship or alleged authorship of any provision hereof or by
reason of the status of the respective parties. All terms defined in this
Agreement in the
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singular shall have comparable meanings when used in the plural, and vice
versa, unless otherwise specified.
(e) Entire Agreement; No Third-Party Beneficiaries. This
Agreement constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereof and is not intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
(f) Assignment. Except in connection with Permitted Transfers,
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned (whether by operation of law or otherwise) by any
Stockholder without the consent of Holdco. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
(g) Governing Law. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the
laws of the State of New York (without reference to the choice of law
provisions), except with respect to matters of law concerning the internal
corporate affairs of any corporate entity which is a party to or the subject of
this Agreement, and as to those matters the law of the jurisdiction under which
the respective entity derives its powers shall govern.
(h) Severability. Each party agrees that, should any court or
other competent authority hold any provision of this Agreement or part hereof
to be null, void or unenforceable, or order any party to take any action
inconsistent herewith or not to take an action consistent herewith or required
hereby, the validity, legality and enforceability of the remaining provisions
and obligations contained or set forth herein shall not in any way be affected
or impaired thereby. Upon any such holding that any provision of this Agreement
is null, void or unenforceable, the parties will negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that the transactions
contemplated by this Agreement are consummated to the extent possible. Except
as otherwise contemplated by this Agreement, to the extent that a party hereto
took an action inconsistent herewith or failed to take action consistent
herewith or required hereby pursuant to an order or judgment of a court or
other competent authority, such party shall incur no liability or obligation
unless such party did not in good faith seek to resist or object to the
imposition or entering of such order or judgment.
(i) Injunctive Relief. Subject to the last paragraph of Section
3(e), the parties acknowledge that it will be impossible to measure in money
the damages that would be suffered if the parties fail to comply with any of
the obligations herein imposed on them and that in the event of any such
failure, an aggrieved
13
Person or entity will be irreparably damaged and will not have an adequate
remedy at law. Subject to the last paragraph of Section 3(e), any such Person
or entity shall, therefore, be entitled to injunctive relief, including
specific performance, to enforce such obligations, and if any action should be
brought in equity to enforce any of the provisions of this Agreement, none of
the parties shall raise the defense that there is an adequate remedy at law.
(j) Attorneys' Fees. If any party to this Agreement brings an
action to enforce its rights under this Agreement, the prevailing party shall
be entitled to recover its costs and expenses, including without limitation
reasonable attorneys' fees, incurred in connection with such action, including
any appeal of such action.
(k) Cumulative Remedies. Subject to the last paragraph of
Section 3(e), all rights and remedies of either party hereto are cumulative of
each other and of every other right or remedy such party may otherwise have at
law or in equity, and the exercise of one or more rights or remedies shall not
prejudice or impair the concurrent or subsequent exercise of other rights or
remedies.
(l) Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same instrument and
shall become effective when executed and delivered by each of the parties.
(m) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(n) Binding Agreement. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to the Shares and shall be
binding upon any Person or entity to which legal or Beneficial Ownership of
such shares shall pass, whether by operation of law or otherwise, including,
without limitation, such Stockholder's heirs, distributees, guardians,
administrators, executors, legal representatives, or successors or other
transferees (for value or otherwise) and any other successors in interest.
Notwithstanding any transfer of Shares the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(o) Capacity. For purposes of this Agreement and the
representations, covenants and promises contained herein, each of the
Stockholders is acting solely in his capacity as a stockholder of, and not as a
director, officer, employee, representative or agent of, the Company.
(p) Obligations of the Stockholders. The liabilities and
obligations of each Stockholder under any provision of this
14
Agreement are several and not joint and apply solely to such Stockholder and to
the Shares held of record or Beneficially Owned by such Stockholder. No
Stockholder shall have any liability or obligation under this Agreement for any
act, omission or breach by any other Stockholder.
(q) Consent and Jurisdiction. Each party irrevocably and
unconditionally agrees and consents that any suit, action or other legal
proceeding arising out of or related to this Agreement shall be brought and
heard in New York County, State of New York and each party irrevocably consents
to personal jurisdiction in any and all tribunals in said County.
15
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
Acquisition Holdings, Inc.
By: /s/ Xxxxxx X. Xxxxxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxxxxx
President
/s/ Xxxxx X. Xxxxx
-------------------------
Xxxxx X. Xxxxx
/s/ Xxxxxx Xxxxx
-------------------------
Xxxxxx Xxxxx
16
Exhibit C
Stockholder Existing Shares (#) Proxy Shares (#)
----------- ------------------- ----------------
Xxxxxx Xxxxx 1,022,042 720,035
c/o ATC Group Services Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxxx 638,739 449,995
c/o ATC Group Services Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxxx, Esq.
Total 1,660,781 1,170,030
Total Outstanding* 7,805,407
-------------------------------
* As of August 18, 1997.
Exhibit D-1
SEVERANCE, CONSULTING AND NON-COMPETITION AGREEMENT
THIS SEVERANCE, CONSULTING AND NON-COMPETITION AGREEMENT (this
"Agreement"), dated as of , 199 is by and between ATC Group Services Inc. with
its principal office at 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 (the "Company") and Xxxxxx Xxxxx [address] ("Employee").
RECITALS
WHEREAS, Employee serves as a Director and Chairman of the Board
and is employed by the Company as Secretary;
WHEREAS, Employee is currently compensated at the rate of
$300,000 per year with a bonus equal to 2.5% of the Company's pre-tax profits
(in the aggregate, the "Compensation");
WHEREAS, the Employee desires to resign his employment with the
Company and his position as Director as of the effective date of the proposed
merger between Acquisition Holdings, Inc. or an affiliate thereof and the
Company (the "Effective Date");
WHEREAS, the parties desire to set forth their respective rights
and obligations in respect of Employee's resignation from the above positions;
and
WHEREAS, the Company and Employee desire to enter into a
consulting agreement as set forth herein.
NOW, THEREFORE, in consideration of the covenants and conditions
set forth herein, the parties, intending to be legally bound, agree as follows:
AGREEMENT
1. Resignation.
(a) Employee hereby resigns from his employment with the
Company with effect on and as of the Effective Date. It is agreed by the
parties that, on and as of the Effective Date, all rights and obligations of
Employee and the Company with respect to such employment shall terminate.
(b) Employee hereby resigns as Director and Chairman of the
Board of the Company with effect on and as of the Effective Date.
2. Consulting Services. For a period of three (3) years after
the Effective Date, Employee agrees to make himself available at reasonable
times and locations (taking
necessary account of Employee's business commitments) to perform consulting
services as reasonably requested by the Company provided, (i) the Employee
shall be given at least 48 hours prior written notice of the requested
services, (ii) all such consulting services shall be rendered in The City of
New York and (iii) Employee shall not be required to devote more than 10 hours
per month to the business of the Company. All consulting services rendered to
the Company by Employee shall be performed as an independent contractor, and
Employee shall not for any purpose be deemed to be an employee of the Company.
3. Benefits.
(a) Payment. In consideration of the agreements of Employee
herein and without diminution because of the ability or inability of Employee
to perform any consulting services that may be requested by the Company, the
Company agrees to pay Employee (or his assigns or, in the event of his death,
his executor) the aggregate sum of three million two hundred ten thousand two
hundred ninety dollars ($3,210,290), less applicable withholdings for federal,
state and local taxes, to be paid as follows: (i) $1,550,000 shall be paid on
the Effective Date and (ii) $276,715 shall be paid on each January 1, April 1,
July 1, and October 1, commencing on the first such day that occurs at least
one month following the Effective Date and ending with the sixth such payment.
Any tax liability incurred by Employee in respect of consideration received
hereunder hereof shall be borne by him. The parties hereto agree that (x)
$986,000 of the aggregate amount payable hereunder shall be allocated to
severance payments; (y) $300,000 shall be allocated as a pro rata bonus for the
fiscal year ending February 28, 1998; and (z) $1,924,290 of the aggregate
amount payable hereunder shall be allocated to Employee's covenant not to
compete in Section 6 herein.
(b) ealth Insurance. For the three (3) year period commencing
on the Effective Date, Employee and the members of his immediate family shall
be entitled to participate in and receive benefits under: (i) ATC Management
Inc.'s health coverage plan with Unicare or any health insurance plan
subsequently adopted by the Company in its place; and (ii) the Executive
Supplement Plan to ATC Management Inc.'s health coverage plan with Unicare as
long as the Company is able to obtain coverage for Employee under the
supplemental plan; provided, that, the Company shall use commercially
reasonable efforts to maintain substantially similar coverage during the term
of this Agreement. During such period, Employee shall pay all premiums,
deductibles and other charges arising out of or associated with the coverage of
Employee and his immediate family under the insurance plans described in
clauses (i) and (ii) hereof; provided, that, such premiums, deductibles and
other charges do not increase
2
disproportionately for Employee as compared with other senior executives of the
Company.
(c) Car Lease. On the Effective Date, Employee shall return to
the Company the Range Rover vehicle leased by the Company and used by the
Employee.
4. Expenses. All reasonable expenses incurred by Employee in
connection with the provision of consulting services requested hereunder,
including for airfare, hotel accommodations, meals and the like, shall be
reimbursed by the Company within seven (7) days after presentation by Employee
of receipts and other supporting documentation, provided that such expense had
been approved in advance by the Company.
5. No Solicitation of Employees. Employee hereby represents
and warrants that he has not solicited for employment or induced any person
employed by the Company to terminate employment during the sixty-day period
preceding the date hereof.
6. Covenant Not to Compete.
(a) Employee hereby covenants and agrees that Employee shall
not, alone or in conjunction with any other person or entity, whether as a
principal, agent, stockholder, director, officer, manager, trustee,
representative, employee, executive or consultant or in any other capacity, for
whatever reason, directly or indirectly: (i) for a period of four (4) years
after the Effective Date, compete or assist any person or entity in competing
with the Company in all aspects of the business as conducted by the Company on
the Effective Date in any manner in the United States, except as permitted in
clauses (iii) and (iv) below; provided, that, upon written notice by the
Company of Employee's breach of this Section 6(a)(i), Employee shall have 10
(ten) business days from the date of notice to cure any such breach; (ii) for a
period of four (4) years after the Effective Date, request or cause any person
employed by the Company on or after the date hereof to terminate employment,
subject to clauses (iii) and (iv) below; (iii) for a period three (3) years
after the Effective Date, compete or assist any person or entity in competing
with ATC InSys Technology Inc. ("InSys") or 3D Information Services Inc. ("3D")
or assist any person or entity in competing with InSys or 3D anywhere within
the legal boundaries of the State of New Jersey; or (iv) for a period three (3)
years after the Effective Date, solicit on behalf of himself or any other
person or entity, within The City of New York, any of the following customers
of InSys: (A) X.X. Xxxxxx & Co. Incorporated, (B) Xxxxxxx, Xxxxx & Co. (C) The
Long Island Rail Road Co. and (D) The Chase Manhattan Bank; provided, however,
that the immediately preceding clause (iv) shall apply only to products or
services that are competitive with those of InSys. This Section 6 shall not be
deemed to
3
prohibit the Employee from owning up to 5% of the outstanding voting securities
of any issuer whose securities are listed or traded on a U.S. national stock
exchange, the Nasdaq National Market System or a comparable foreign exchange or
system.
(b) If the scope of any restriction contained in this
Agreement is too broad to permit enforcement of such restriction to its fullest
extent, then such restriction shall be enforced to the maximum extent permitted
by law, and Employee hereby consents and agrees that such scope may be
judicially modified accordingly in any proceeding brought to enforce such
restriction. Employee acknowledges and agrees that the covenants contained
herein are necessary for the protection of the Company's legitimate business
interests and are reasonable in scope and content. Employee further
acknowledges and understands that the remedy at law for any breach by him of
this Section 6 will be inadequate, and that the damages flowing from such
breach are not readily susceptible to being measured in monetary terms.
Accordingly, it is acknowledged that upon Employee's violation of any provision
of this Section 6, the Company shall be entitled to immediate injunctive relief
and may obtain a temporary order restraining any threatened or further breach.
Nothing in this Section 6 shall be deemed to limit the Company's remedies at
law or in equity for any breach by Employee of any of the provisions of Section
6 which may be pursued or availed of by the Company.
7. Release. The Company hereby releases the Employee and the
Employee hereby releases the Company and its affiliates and its and their
present and former stockholders, directors, officers, employees, agents,
attorneys, successors and assigns (together, the "Company Released Parties"),
from any and all claims that each of the Employee or the Company Released
Parties has or may have arising in any way out of Employee's employment with
the Company and service as Director and Chairman of the Board and the cessation
thereof, including, but not limited to, any and all claims each of the Employee
or the Company had, has or may have with respect to the Compensation.
Notwithstanding the above, this provision is not intended to release any claims
that may arise after the date Employee executes this Agreement, including
claims to enforce this Agreement.
8. Retained Property. Employee represents that he has returned
all property of the Company in his possession, including but not limited to
credit cards, security key cards, telephone cards, car service cards, computer
software or hardware, company identification cards, Company records and copies
of records, correspondence and copies of correspondence and other books or
manuals issued by the Company. Employee also warrants that he has no debts to
or loans from the Company. Notwithstanding the foregoing, Employee shall have
the right to retain (i) duplicate photocopies of books and
4
records of the Company that do not fall within the category of "Confidential
Information" (as defined below) and (ii) all personal property of the Employee
located on the premises of the Company.
9. Confidentiality. Employee acknowledges that he has had and
may in the performance of consulting services hereunder continue to have access
to Confidential Information (as hereinafter defined) of the Company. Employee
agrees not to disclose, communicate or divulge to, or use for the direct or
indirect benefit of, any person (including Employee), firm, association or
other entity (other than the Company or its affiliates) any Confidential
Information. "Confidential Information" includes, but is not limited to,
business methods, business policies, procedures, techniques, research or
development projects or results, trade secrets (which Employee agrees include
the Company's customer and prospective customer lists), pricing policies,
business plans, computer software, intellectual property, and other such
information not otherwise available to the general public, unless the
information is disclosed to Employee without confidential or proprietary
restriction by the Company or a third party who rightfully possesses the
information (without confidential or proprietary restriction) and did not learn
of it, directly or indirectly, from the Company. If any person (including any
government employee) requests the disclosure or release of Confidential
Information, Employee shall (i) promptly notify the Company of such request so
that the Company may pursue any available remedies to prevent the disclosure or
release of such Confidential Information and (ii) furnish the Company a copy of
all written materials pertaining to such request for Confidential Information
as the Company shall deem appropriate.
10. No Claims. Employee represents and warrants that he has
not filed any charges, claims or complaints against the Company Released
Parties, and he represents and warrants that he will not initiate or
voluntarily participate or assist in any charge, claim, or complaint against
the Company Released Parties, it being understood that this provision does not
affect Employee's right to enforce this Agreement, or legal obligation, if any,
to appear as a witness if subpoenaed for examination before trial or subpoenaed
for trial or hearing or, if required, to provide information to the Equal
Employment Opportunity Commission or to an equivalent state or local
administrative agency in response to a demand for information.
11. Benefits Terminated. Employee acknowledges that he is not
entitled to receive benefits from the Company other than as set forth in
Section 3 of this Agreement, except for any vested benefits to which Employee
is entitled in the Company's 401(k) Plan and except for any other benefits
afforded Employee by applicable law.
5
12. No Inducements. Employee warrants that he is entering into
this Agreement voluntarily, and that, except as set forth herein, no promises
or inducements for this Agreement have been made, and he is entering into this
Agreement without reliance upon any statement or representation by any of the
Company Released Parties or any other person, concerning any fact material
hereto.
13. Integration. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes any and all prior agreements or understandings between the parties
arising out of or relating to the Employee's employment and the cessation
thereof. This Agreement may only be changed by written agreement executed by
the parties.
14. Governing Law. This Agreement shall be governed by the
laws of the State of New York, without giving effect to the conflicts of law
principles thereof.
6
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ATC GROUP SERVICES INC.
----------------------
By:
Name:
EMPLOYEE
----------------------
Xxxxxx Xxxxx
7
Exhibit D-2
SEVERANCE, CONSULTING AND NON-COMPETITION AGREEMENT
THIS SEVERANCE, CONSULTING AND NON-COMPETITION AGREEMENT (this
"Agreement"), dated as of , 199 is by and between ATC Group Services Inc. with
its principal office at 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000 (the "Company") and Xxxxx X. Xxxxx [address] ("Employee").
RECITALS
WHEREAS, Employee serves as a Director and is employed by the
Company as President and Chief Executive Officer;
WHEREAS, Employee is currently compensated at the rate of
$300,000 per year with a bonus equal to 2.5% of the Company's pre-tax profits
(in the aggregate, the "Compensation");
WHEREAS, the Employee desires to resign his employment with the
Company and his position as Director as of the effective date of the proposed
merger between Acquisition Holdings, Inc. or an affiliate thereof and the
Company (the "Effective Date");
WHEREAS, the parties desire to set forth their respective rights
and obligations in respect of Employee's resignation from the above positions;
and
WHEREAS, the Company and Employee desire to enter into a
consulting agreement as set forth herein.
NOW, THEREFORE, in consideration of the covenants and conditions
set forth herein, the parties, intending to be legally bound, agree as follows:
AGREEMENT
1. Resignation.
(a) Employee hereby resigns from his employment with the
Company with effect on and as of the Effective Date. It is agreed by the
parties that, on and as of the Effective Date, all rights and obligations of
Employee and the Company with respect to such employment shall terminate.
(b) Employee hereby resigns as Director of the Company with
effect on and as of the Effective Date.
2. Consulting Services. For a period of three (3) years after
the Effective Date, Employee agrees to make
himself available at reasonable times and locations (taking necessary account
of Employee's business commitments) to perform consulting services as
reasonably requested by the Company provided, (i) the Employee shall be given
at least 48 hours prior written notice of the requested services, (ii) all such
consulting services shall be rendered in The City of New York and (iii)
Employee shall not be required to devote more than 10 hours per month to the
business of the Company. All consulting services rendered to the Company by
Employee shall be performed as an independent contractor, and Employee shall
not for any purpose be deemed to be an employee of the Company.
3. Benefits.
(a) Payment. In consideration of the agreements of Employee
herein and without diminution because of the ability or inability of Employee
to perform any consulting services that may be requested by the Company, the
Company agrees to pay Employee (or his assigns or, in the event of his death,
his executor) the aggregate sum of three million two hundred ten thousand two
hundred ninety dollars ($3,210,290), less applicable withholdings for federal,
state and local taxes, to be paid as follows: (i) $1,550,000 shall be paid on
the Effective Date and (ii) $276,715 shall be paid on each January 1, April 1,
July 1, and October 1, commencing on the first such day that occurs at least
one month following the Effective Date and ending with the sixth such payment.
Any tax liability incurred by Employee in respect of consideration received
hereunder hereof shall be borne by him. The parties hereto agree that (x)
$722,000 of the aggregate amount payable hereunder shall be allocated to
severance payments; (y) $300,000 shall be allocated as a pro rata bonus for the
fiscal year ending February 28, 1998; and (z) $2,188,290 of the aggregate
amount payable hereunder shall be allocated to Employee's covenant not to
compete in Section 6 herein.
(b) Health Insurance. For the three (3) year period commencing
on the Effective Date, Employee and the members of his immediate family shall
be entitled to participate in and receive benefits under: (i) ATC Management
Inc.'s health coverage plan with Unicare or any health insurance plan
subsequently adopted by the Company in its place; and (ii) the Executive
Supplement Plan to ATC Management Inc.'s health coverage plan with Unicare as
long as the Company is able to obtain coverage for Employee under the
supplemental plan; provided, that, the Company shall use commercially
reasonable efforts to maintain substantially similar coverage during the term
of this Agreement. During such period, Employee shall pay all premiums,
deductibles and other charges arising out of or associated with the coverage of
Employee and his immediate family under the insurance plans described in
clauses (i) and (ii) hereof; provided, that, such premiums, deductibles and
other charges do not increase
2
disproportionately for Employee as compared with other senior executives of the
Company.
(c) Car Lease. On the Effective Date, Employee shall return to
the Company the BMW automobile leased by the Company and used by the Employee.
4. Expenses. All reasonable expenses incurred by Employee in
connection with the provision of consulting services requested hereunder,
including for airfare, hotel accommodations, meals and the like, shall be
reimbursed by the Company within seven (7) days after presentation by Employee
of receipts and other supporting documentation, provided that such expense had
been approved in advance by the Company.
5. No Solicitation of Employees. Employee hereby represents
and warrants that he has not solicited for employment or induced any person
employed by the Company to terminate employment during the sixty-day period
preceding the date hereof.
6. Covenant Not to Compete.
(a) Employee hereby covenants and agrees that Employee shall
not, for a period of three (3) years after the Effective Date, alone or in
conjunction with any other person or entity, whether as a principal, agent,
stockholder, director, officer, manager, trustee, representative, employee,
executive or consultant or in any other capacity, for whatever reason, directly
or indirectly: (i) compete or assist any person or entity in competing with the
Company in all aspects of the business as conducted by the Company on the
Effective Date in any manner in the United States, except as permitted in
clauses (iii) and (iv) below; provided, that, upon written notice by the
Company of Employee's breach of this Section 6(a)(i), Employee shall have 10
(ten) business days from the date of notice to cure any such breach; (ii)
request or cause any person employed by the Company on or after the date hereof
to terminate employment; (iii) compete or assist any person or entity in
competing with ATC InSys Technology Inc. ("InSys") or 3D Information Services
Inc. ("3D") or assist any person or entity in competing with InSys or 3D
anywhere within the legal boundaries of the State of New Jersey; or (iv)
solicit on behalf of himself or any other person or entity, within The City of
New York, any of the following customers of InSys: (A) X.X. Xxxxxx & Co.
Incorporated, (B) Xxxxxxx, Xxxxx & Co. (C) The Long Island Rail Road Co. and
(D) The Chase Manhattan Bank; provided, however, that the immediately preceding
clause (iv) shall apply only to products or services that are competitive with
those of InSys. This Section 6 shall not be deemed to prohibit the Employee
from owning up to 5% of the outstanding voting securities of any issuer whose
securities are listed or traded on a U.S. national stock exchange, the
3
Nasdaq National Market System or a comparable foreign exchange or system.
(b) If the scope of any restriction contained in this Agreement
is too broad to permit enforcement of such restriction to its fullest extent,
then such restriction shall be enforced to the maximum extent permitted by law,
and Employee hereby consents and agrees that such scope may be judicially
modified accordingly in any proceeding brought to enforce such restriction.
Employee acknowledges and agrees that the covenants contained herein are
necessary for the protection of the Company's legitimate business interests and
are reasonable in scope and content. Employee further acknowledges and
understands that the remedy at law for any breach by him of this Section 6 will
be inadequate, and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly, it is
acknowledged that upon Employee's violation of any provision of this Section 6,
the Company shall be entitled to immediate injunctive relief and may obtain a
temporary order restraining any threatened or further breach. Nothing in this
Section 6 shall be deemed to limit the Company's remedies at law or in equity
for any breach by Employee of any of the provisions of Section 6 which may be
pursued or availed of by the Company.
7. Release. The Company hereby releases the Employee and the
Employee hereby releases the Company and its affiliates and its and their
present and former stockholders, directors, officers, employees, agents,
attorneys, successors and assigns (together, the "Company Released Parties"),
from any and all claims that each of the Employee or the Company Released
Parties has or may have arising in any way out of Employee's employment with
the Company and service as Director and the cessation thereof, including, but
not limited to, any and all claims each of the Employee or the Company had, has
or may have with respect to the Compensation. Notwithstanding the above, this
provision is not intended to release any claims that may arise after the date
Employee executes this Agreement, including claims to enforce this Agreement.
8. Retained Property. Employee represents that he has returned
all property of the Company in his possession, including but not limited to
credit cards, security key cards, telephone cards, car service cards, computer
software or hardware, company identification cards, Company records and copies
of records, correspondence and copies of correspondence and other books or
manuals issued by the Company. Employee also warrants that he has no debts to
or loans from the Company. Notwithstanding the foregoing, Employee shall have
the right to retain (i) duplicate photocopies of books and records of the
Company that do not fall within the category of "Confidential Information"
(as defined below) and (ii) all
4
personal property of the Employee located on the premises of the Company.
9. Confidentiality. Employee acknowledges that he has had and
may in the performance of consulting services hereunder continue to have access
to Confidential Information (as hereinafter defined) of the Company. Employee
agrees not to disclose, communicate or divulge to, or use for the direct or
indirect benefit of, any person (including Employee), firm, association or
other entity (other than the Company or its affiliates) any Confidential
Information. "Confidential Information" includes, but is not limited to,
business methods, business policies, procedures, techniques, research or
development projects or results, trade secrets (which Employee agrees include
the Company's customer and prospective customer lists), pricing policies,
business plans, computer software, intellectual property, and other such
information not otherwise available to the general public, unless the
information is disclosed to Employee without confidential or proprietary
restriction by the Company or a third party who rightfully possesses the
information (without confidential or proprietary restriction) and did not
learn of it, directly or indirectly, from the Company. If any person (including
any government employee) requests the disclosure or release of Confidential
Information, Employee shall (i) promptly notify the Company of such request so
that the Company may pursue any available remedies to prevent the disclosure or
release of such Confidential Information and (ii) furnish the Company a copy of
all written materials pertaining to such request for Confidential Information
as the Company shall deem appropriate.
10. No Claims. Employee represents and warrants that he has not
filed any charges, claims or complaints against the Company Released Parties,
and he represents and warrants that he will not initiate or voluntarily
participate or assist in any charge, claim, or complaint against the Company
Released Parties, it being understood that this provision does not affect
Employee's right to enforce this Agreement, or legal obligation, if any, to
appear as a witness if subpoenaed for examination before trial or subpoenaed
for trial or hearing or, if required, to provide information to the Equal
Employment Opportunity Commission or to an equivalent state or local
administrative agency in response to a demand for information.
11. Benefits Terminated. Employee acknowledges that he is not
entitled to receive benefits from the Company other than as set forth in
Section 3 of this Agreement, except for any vested benefits to which Employee
is entitled in the Company's 401(k) Plan and except for any other benefits
afforded Employee by applicable law.
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12. No Inducements. Employee warrants that he is entering into
this Agreement voluntarily, and that, except as set forth herein, no promises
or inducements for this Agreement have been made, and he is entering into this
Agreement without reliance upon any statement or representation by any of the
Company Released Parties or any other person, concerning any fact material
hereto.
13. Integration. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes any and all prior agreements or understandings between the parties
arising out of or relating to the Employee's employment and the cessation
thereof. This Agreement may only be changed by written agreement executed by
the parties.
14. Governing Law. This Agreement shall be governed by the
laws of the State of New York, without giving effect to the conflicts of law
principles thereof.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
ATC GROUP SERVICES INC.
--------------------------
By:
Name:
EMPLOYEE
--------------------------
Xxxxx X. Xxxxx
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