EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
dated as of
March 7, 1999
among
XXXXXXXX-XXXXXX INDUSTRIES, INC.
ALLIED WASTE INDUSTRIES, INC.
and
AWIN I ACQUISITION CORPORATION
TABLE OF CONTENTS
PAGE
ARTICLE I THE MERGER..................................................................................1
SECTION 1.01. The Merger............................................................1
SECTION 1.02. Conversion of Shares..................................................2
SECTION 1.03. Payment of Shares.....................................................2
SECTION 1.04. Stock Options.........................................................4
SECTION 1.05. Dissenting Shares.....................................................5
ARTICLE II THE SURVIVING CORPORATION; DIRECTORS AND OFFICERS...........................................5
SECTION 2.01. Certificate of Incorporation..........................................5
SECTION 2.02. Bylaws................................................................6
SECTION 2.03. Directors and Officers................................................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY.............................6
SECTION 3.01 Organization and Qualification........................................6
SECTION 3.02 Authority; Non-Contravention; Approvals...............................7
SECTION 3.03 Proxy Statement.......................................................8
SECTION 3.04 Ownership of Company Common Stock.....................................8
SECTION 3.05 Financing.............................................................9
SECTION 3.06 Reports, Financial Statements, etc....................................9
SECTION 3.07 Brokers and Finders...................................................9
SECTION 3.08 Absence of Undisclosed Liabilities...................................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY..............................................10
SECTION 4.01 Organization and Qualification.......................................10
SECTION 4.02 Capitalization.......................................................11
SECTION 4.03 Subsidiaries.........................................................12
SECTION 4.04 Authority; Non-Contravention; Approvals..............................13
SECTION 4.05 Reports and Financial Statements.....................................14
SECTION 4.06 Absence of Undisclosed Liabilities...................................15
SECTION 4.07 Absence of Certain Changes or Events.................................15
SECTION 4.08 Litigation...........................................................15
SECTION 4.09 Proxy Statement......................................................16
SECTION 4.10 No Violation of Law..................................................16
SECTION 4.11 Compliance with Agreements...........................................16
SECTION 4.12 Taxes................................................................17
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SECTION 4.13 Employee Benefit Plans; ERISA........................................18
SECTION 4.14 Labor Controversies..................................................20
SECTION 4.15 Environmental Matters................................................20
SECTION 4.16 Non-competition Agreements...........................................21
SECTION 4.17 Title to Assets......................................................21
SECTION 4.18 Company Stockholders' Approval.......................................22
SECTION 4.19 Opinion of Financial Advisor.........................................22
SECTION 4.20 Brokers and Finders..................................................22
ARTICLE V COVENANTS..................................................................................23
SECTION 5.01 Conduct of Business by the Company Pending the Merger................23
SECTION 5.02 Control of the Company's Operations..................................27
SECTION 5.03 Acquisition Transactions.............................................27
SECTION 5.04. Access to Information................................................28
SECTION 5.05. Notices of Certain Events............................................29
SECTION 5.06. Merger Subsidiary....................................................30
SECTION 5.07. Employee Benefits....................................................30
SECTION 5.08. Meeting of the Company's Stockholders................................34
SECTION 5.09. Proxy Statement......................................................34
SECTION 5.10. Public Announcements.................................................35
SECTION 5.11 Expenses and Fees....................................................35
SECTION 5.12 Agreement to Cooperate...............................................37
SECTION 5.13 Directors' and Officers' Indemnification.............................39
ARTICLE VI CONDITIONS TO THE MERGER...................................................................41
SECTION 6.01. Conditions to the Obligations of Each Party..........................41
SECTION 6.02. Conditions to Obligation of the Company to Effect the Merger.........42
SECTION 6.03 Conditions to Obligations of Parent and Subsidiary to
Effect the Merger....................................................43
ARTICLE VII TERMINATION................................................................................44
SECTION 7.01. Termination..........................................................44
ARTICLE VIII MISCELLANEOUS..............................................................................46
SECTION 8.01. Effect of Termination................................................46
SECTION 8.02. Non-Survival of Representations and Warranties.......................46
SECTION 8.03 Notices..............................................................46
SECTION 8.04 Interpretation.......................................................47
SECTION 8.05 Miscellaneous........................................................47
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SECTION 8.06 Counterparts.........................................................48
SECTION 8.07. Amendments; No Waivers...............................................48
SECTION 8.08. Entire Agreement.....................................................48
SECTION 8.09. Severability.........................................................49
SECTION 8.10. Specific Performance.................................................49
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of
March 7, 1999, among Xxxxxxxx-Xxxxxx Industries, Inc., a Delaware corporation
(the "Company"), Allied Waste Industries, Inc., a Delaware corporation
("Parent"), and AWIN I Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Subsidiary").
Whereas, the respective Boards of Directors of Parent, Merger
Subsidiary and the Company have each approved the merger of Merger Subsidiary
with and into the Company on the terms and subject to the conditions set forth
in this Agreement (the "Merger").
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. (a) Upon the terms and subject to
the conditions hereof, and in accordance with the relevant provisions of the
Delaware General Corporation Law ("Delaware Law"), Merger Subsidiary shall be
merged with and into the Company. Following the Merger, the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
continue its existence under the laws of the State of Delaware, and the separate
corporate existence of Merger Subsidiary shall cease. At the election of Parent,
any wholly owned subsidiary of Parent may be substituted for Merger Subsidiary
as a constituent corporation in the Merger (provided that such election shall
not delay the consummation of the Merger or adversely affect the benefits of the
Merger to the Company and its stockholders). As a condition of such an election,
the parties and such additional subsidiary shall execute an appropriate
amendment to this Agreement in order to reflect such election and the provisions
of Section 5.06 shall apply with respect to such subsidiary instead of Merger
Subsidiary.
(b) The Merger shall be consummated by filing with the
Secretary of State of the State of Delaware a certificate of merger (the
"Certificate of Merger") in accordance with Delaware Law. The Merger shall
become effective at such time as the Certificate of Merger is duly filed, or at
such other time as Merger Subsidiary and the Company shall specify in the
Certificate of Merger (the time the Merger becomes effective being the
"Effective Time").
(c) The Merger shall have the effect specified under Delaware
Law. As of the Effective Time, the Company shall be a wholly-owned subsidiary of
Parent.
SECTION 1.02. Conversion of Shares. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Merger Subsidiary, the
Company or the holders of any of the following securities:
(a) each issued and outstanding share of the
Company's Common Stock, par value $.16-2/3 per share ("Company
Common Stock") held by the Company as treasury stock and each
issued and outstanding share of Company Common Stock owned by
any subsidiary of the Company, Parent, Merger Subsidiary or
any other subsidiary of Parent shall be cancelled and retired
and shall cease to exist, and no payment or consideration
shall be made with respect thereto;
(b) each issued and outstanding share of Company
Common Stock, other than (i) shares of Company Common Stock
referred to in paragraph (a) above and (ii) Dissenting Shares
(as defined in Section 1.05) shall be converted into the right
to receive an amount in cash, without interest, equal to
$45.00 (the "Merger Consideration"). At the Effective Time,
all such shares of Company Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall
cease to have any rights with respect thereto, except the
right to receive the Merger Consideration, without interest;
and
(c) each issued and outstanding share of capital
stock of Merger Subsidiary shall be converted into one fully
paid and nonassessable share of common stock, par value
$.16-2/3, of the Surviving Corporation.
SECTION 1.03. Payment of Shares. (a) Prior to the Effective
Time, Parent shall appoint a bank or trust company reasonably satisfactory to
the Company to act as disbursing agent (the "Disbursing Agent") for the payment
of Merger Consideration upon surrender of certificates representing the shares
of Company Common Stock. Parent will enter into a disbursing agent agreement
with the Disbursing Agent, in form and substance reasonably acceptable to the
Company. At or prior to the Effective Time, Parent shall deposit or cause to be
deposited with the Disbursing Agent in trust for the benefit of the Company's
stockholders cash in an aggregate amount necessary to make the payments pursuant
to Section 1.02 to holders of shares of Company Common Stock (such amounts being
hereinafter referred to as the "Exchange Fund"). The Disbursing Agent shall
invest the Exchange Fund, as the Surviving Corporation directs, in direct
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obligations of the United States of America, obligations for which the full
faith and credit of the United States of America is pledged to provide for the
payment of all principal and interest or commercial paper obligations receiving
the highest rating from either Xxxxx'x Investors Service, Inc. or Standard &
Poor's, a division of The McGraw Hill Companies, or a combination thereof,
provided that, in any such case, no such instrument shall have a maturity
exceeding three months. Any net profit resulting from, or interest or income
produced by, such investments shall be payable to the Surviving Corporation. The
Exchange Fund shall not be used for any other purpose except as provided in this
Agreement.
(b) Promptly after the Effective Time, the Surviving
Corporation shall cause the Disbursing Agent to mail to each person who was a
record holder as of the Effective Time of an outstanding certificate or
certificates which immediately prior to the Effective Time represented shares of
Company Common Stock (the "Certificates"), and whose shares were converted into
the right to receive Merger Consideration pursuant to Section 1.02, a form of
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon proper delivery
of the Certificates to the Disbursing Agent) and instructions for use in
effecting the surrender of the Certificates in exchange for payment of the
Merger Consideration. Upon surrender to the Disbursing Agent of a Certificate,
together with such letter of transmittal duly executed and such other documents
as may be reasonably required by the Disbursing Agent, the holder of such
Certificate shall be paid promptly in exchange therefor cash in an amount equal
to the product of the number of shares of Company Common Stock represented by
such Certificate multiplied by the Merger Consideration, and such Certificate
shall forthwith be canceled. No interest will be paid or accrued on the cash
payable upon the surrender of the Certificates. If payment is to be made to a
person other than the person in whose name the Certificate surrendered is
registered, it shall be a condition of payment that the Certificate so
surrendered be properly endorsed or otherwise be in proper form for transfer and
that the person requesting such payment pay any transfer or other taxes required
by reason of the payment to a person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
in accordance with the provisions of this Section 1.03, each Certificate (other
than Certificates representing shares of Company Common Stock owned by any
subsidiary of the Company, Parent, Merger Subsidiary or any other subsidiary of
Parent and shares of Company Common Stock held in the treasury of the Company,
which have been canceled, and Dissenting Shares) shall represent for all
purposes only the right to receive the Merger Consideration in cash multiplied
by the number of shares of Company Common Stock evidenced by such Certificate,
without any interest thereon.
(c) At and after the Effective Time, there shall be no
registration of transfers of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time on the stock transfer books
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of the Surviving Corporation. From and after the Effective Time, the holders of
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares of Company
Common Stock except as otherwise provided in this Agreement or by applicable
law. All cash paid upon the surrender of Certificates in accordance with the
terms of this Article I shall be deemed to have been paid in full satisfaction
of all rights pertaining to the shares of Company Common Stock previously
represented by such Certificates. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, such Certificates shall
be cancelled and exchanged for cash as provided in this Article I. At the close
of business on the day of the Effective Time the stock ledger of the Company
shall be closed.
(d) At any time more than six months after the Effective Time,
the Surviving Corporation shall be entitled to require the Disbursing Agent to
deliver to it any funds which had been made available to the Disbursing Agent
and not disbursed in exchange for Certificates (including, without limitation,
all interest and other income received by the Disbursing Agent in respect of all
such funds). Thereafter, holders of shares of Company Common Stock shall look
only to Parent (subject to the terms of this Agreement, abandoned property,
escheat and other similar laws) as general creditors thereof with respect to any
Merger Consideration that may be payable, without interest, upon due surrender
of the Certificates held by them. If any Certificates shall not have been
surrendered prior to five years after the Effective Time (or immediately prior
to such time on which any payment in respect hereof would otherwise escheat or
become the property of any governmental unit or agency), the payment in respect
of such Certificates shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto. Notwithstanding the
foregoing, none of Parent, the Company, the Surviving Corporation nor the
Disbursing Agent shall be liable to any holder of a share of Company Common
Stock for any Merger Consideration delivered in respect of such share of Company
Common Stock to a public official pursuant to any abandoned property, escheat or
other similar law.
SECTION 1.04. Stock Options. The Company shall (a) terminate
the Company's Restated 1990 Stock Option Plan, Restated 1993 Non-Employee
Director Stock Plan, Restated 1993 Stock Incentive Plan, Restated 1996 Stock
Incentive Plan and 1987 Stock Option Plan (collectively, the "Company Option
Plans") immediately prior to the Effective Time without prejudice to the rights
of the holders of options (the "Options") awarded pursuant thereto and (b)
following such termination grant no additional Options under the Company Option
Plans. Prior to the Effective Time, the Company will take all actions necessary,
including, without limitation, using its reasonable efforts to obtain any
consents necessary or desirable from holders of Options, to provide that, upon
the Effective Time, each outstanding Option shall be canceled automatically and
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at the Effective Time, Parent or the Surviving Corporation shall provide such
holder with a lump sum cash payment (less any applicable withholding) equal to
the product of (i) the total number of shares of Company Common Stock subject to
the Option immediately prior to the Effective Time and (ii) the excess of the
Merger Consideration over the exercise price per share of Company Common Stock
subject to such Company Option.
SECTION 1.05. Dissenting Shares. (a) Notwithstanding anything
in this Agreement to the contrary, shares of Company Common Stock that are held
by any record holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal rights in accordance with
Section 262 of Delaware Law (the "Dissenting Shares") shall not be converted
into the right to receive the Merger Consideration but shall become the right to
receive such consideration as may be determined to be due in respect of such
Dissenting Shares pursuant to Delaware Law; provided, however, that any holder
of Dissenting Shares who shall have failed to perfect or shall have withdrawn or
lost his rights to appraisal of such Dissenting Shares, in each case under
Delaware Law, shall forfeit the right to appraisal of such Dissenting Shares,
and such Dissenting Shares shall be deemed to have been converted into the right
to receive, as of the Effective Time, the Merger Consideration without interest.
Parent and the Surviving Corporation shall comply with all of their obligations
under Delaware Law with respect to holders of Dissenting Shares.
(b) The Company shall give Parent (i) prompt notice of any
demands for appraisal, and any withdrawals of such demands, received by the
Company and any other related instruments served pursuant to Delaware Law and
received by the Company and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under Delaware Law. The
Company shall not, except with the prior written consent of Parent, make any
payment with respect to any demands for appraisal or offer to settle or settle
any such demands.
ARTICLE II
THE SURVIVING CORPORATION; DIRECTORS AND OFFICERS
SECTION 2.01. Certificate of Incorporation. The Restated
Certificate of Incorporation of the Company in effect at the Effective Time
shall be the certificate of incorporation of the Surviving Corporation until
amended in accordance with applicable law and the terms of this Agreement;
provided, however, that at the Effective Time, such certificate shall be amended
by virtue of this Agreement as follows:
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(i) Article Fourth shall be amended by deleting the
existing language in its entirety and replacing it with the
following:
The total number of shares of capital stock
which the Corporation shall be authorized to
issue shall be 1,000 shares, $.16-2/3 par
value, of common stock.
(ii) Article Ninth shall be amended by deleting the
existing language in its entirety and replacing it with the
following:
Directors shall have terms expiring at the
annual meeting of stockholders. Directors
shall continue in office until their
successors are elected or appointed.
(iii) Articles Eleventh, Twelfth and Thirteenth shall
be deleted and Articles Fourteenth and Fifteenth shall be
renumbered to become Articles Eleventh and Twelfth.
SECTION 2.02. Bylaws. The bylaws of Merger Subsidiary in
effect at the Effective Time shall be the bylaws of the Surviving Corporation
except that such bylaws shall include the provisions set forth in Article X of
the Company's bylaws until amended in accordance with applicable law and the
terms of this Agreement.
SECTION 2.03. Directors and Officers. The directors of Merger
Subsidiary immediately prior to the Effective Time shall be the directors of the
Surviving Corporation as of the Effective Time. The officers of the Company
(together with the persons designated by Parent and notified to the Company in
writing at least two business days prior to the Effective Time) shall be the
officers of the Surviving Corporation as of the Effective Time subject to the
right of the Board of Directors of the Surviving Corporation to appoint or
replace officers.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY
Parent and Merger Subsidiary jointly and severally represent
and warrant to the Company that, except as set forth in the Disclosure Schedule
dated as of the date hereof and signed by an authorized officer of Parent (the
"Parent Disclosure Schedule"), it being agreed that disclosure of any item on
the Parent Disclosure Schedule shall be deemed disclosure with respect to all
Sections of this Agreement if the relevance of such item is reasonably apparent
from the face of the Parent Disclosure Schedule:
SECTION 3.01 Organization and Qualification. Each of Parent
and Merger 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 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. Each of
Parent and Merger Subsidiary is qualified to transact 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
would not reasonably be expected to have a material adverse effect on the
business, financial condition or results of operations of Parent and its
subsidiaries, taken as a whole (a "Parent Material Adverse Effect").
SECTION 3.02 Authority; Non-Contravention; Approvals. (a)
Parent and Merger Subsidiary each have full corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby, including without limitation, the consummation of the financing of the
Merger pursuant to the Financing Commitments (as defined in Section 3.05) (the
"Financing"). This Agreement has been approved by the Boards of Directors of
Parent and Merger Subsidiary and the sole stockholder of Merger Subsidiary, and
no other corporate proceedings on the part of Parent or Merger Subsidiary are
necessary to authorize the execution and delivery of this Agreement or the
consummation by Parent and Merger Subsidiary of the transactions contemplated
hereby, including without limitation, the Financing. This Agreement has been
duly executed and delivered by each of Parent and Merger 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 Merger
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.
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(b) The execution, delivery and performance of this Agreement
by each of Parent and Merger Subsidiary and the consummation of the Merger and
the transactions contemplated hereby, including without limitation the
Financing, do not and will 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, other than in the case of the
Financing, result in the creation of any lien, security interest 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 certificates of
incorporation or bylaws 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,
subject, in the case of consummation, to obtaining (prior to the Effective Time)
the Parent Required Statutory Approvals (as defined in Section 3.02(c)), 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 (each a "Contract" and collectively "Contracts") 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, subject, in the case of consummation, to obtaining (prior to the
Effective Time) consents required from commercial lenders, lessors or other
third parties as specified in Section 3.02(b) of the Parent Disclosure Schedule.
Excluded from the foregoing sentence of this paragraph (b), insofar as it
applies to the terms, conditions or provisions described in clauses (ii) and
(iii) of this paragraph (b), are such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests or
encumbrances that would not reasonably be expected to have a Parent Material
Adverse Effect and would not prevent or materially delay the consummation of the
Merger.
(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) applicable filings, if any, with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (iii) filing of the Certificate of Merger with the
Secretary of State of the State of Delaware in connection with the Merger, (iv)
any required filings with or approvals from authorities of any foreign country
or Puerto Rico in which the Company or its subsidiaries conduct any business or
own any assets and (v) any required filings with or approvals from applicable
environmental authorities, public service commissions and public utility
commissions (the filings and approvals referred to in clauses (i) through (v)
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
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necessary for the execution and delivery of this Agreement by Parent or Merger
Subsidiary or the consummation by Parent or Merger Subsidiary of the
transactions contemplated hereby, including without limitation, the Financing,
other than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be, would
not reasonably be expected to have a Parent Material Adverse Effect and would
not prevent or materially delay the consummation of the Merger.
SECTION 3.03 Proxy Statement. None of the information to be
supplied by Parent or its subsidiaries for inclusion in any proxy statement or
information statement 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") will, at the time of the mailing of the Proxy
Statement and any amendments or supplements thereto, and at the time of the
meeting of stockholders of the Company to be held in connection with the
transactions contemplated by this Agreement, 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.
SECTION 3.04 Ownership of Company Common Stock. Neither Parent
nor any of its subsidiaries beneficially owns any shares of Company Common Stock
as of the date hereof.
SECTION 3.05 Financing. Parent has obtained written
commitments (which commitments, as they may be amended or replaced from time to
time in a manner which does not (i) adversely impact the solvency or viability
of the Company after the Effective Time relative to the impact of financing in
accordance with the existing written commitments, (ii) adversely affect the
ability of Parent to consummate the Merger or (iii) add or adversely modify any
conditions to the financing set forth in the written commitments delivered to
the Company prior to the execution of this Agreement, are referred to herein as
the "Financing Commitments") for the debt and equity financing necessary to
consummate the Merger and to pay all associated costs and expenses (including
any refinancing of indebtedness of Parent or the Company required in connection
therewith) and has provided true, accurate and complete copies of such
commitments (and any amendment or replacement thereof) to the Company.
SECTION 3.06 Reports, Financial Statements, etc. Since January
1, 1996, through the date of this Agreement, Parent has filed with the SEC all
material forms, statements, reports and documents (including all exhibits,
post-effective amendments and supplements thereto) (the "Parent SEC Reports")
required to be filed by it under each of the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act and the respective rules and
regulations thereunder, all of which, as amended if applicable, complied when
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filed in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. As of their respective
dates, 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
and unaudited financial statements of Parent included in Parent's Annual Report
on Form 10-K for the twelve months ended December 31, 1997 and Parent's
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, June 30
and September 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 in all material respects the 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 any unaudited interim financial statements, to normal
year-end adjustments). Since the date of the most recent Parent SEC Report that
contains consolidated financial statements of Parent through the date of this
Agreement, there has not been any Parent Material Adverse Effect.
SECTION 3.07 Brokers and Finders. Except as disclosed in the
Parent Disclosure Schedule, Parent 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 investment banking fees, finder's fees,
brokerage or agent commissions or other like payments in connection with the
transactions contemplated hereby.
SECTION 3.08 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,
to the knowledge of Parent as of the date of this Agreement, neither Parent nor
any of its subsidiaries has incurred since December 31, 1997, 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 in the ordinary
course of business and consistent with past practices, (b) liabilities,
obligations or contingencies which (i) would not reasonably be expected to have
a Parent Material Adverse Effect, or (ii) have been discharged or paid in full
prior to the date hereof, and (c) liabilities, obligations and contingencies
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.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger
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 reasonably apparent
from the face of the Company Disclosure Schedule:
SECTION 4.01 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 transact 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 would not reasonably be expected to have a material adverse effect on
the business, financial condition or results of operations of the Company and
its subsidiaries, taken as a whole (a "Company Material Adverse Effect"). True,
accurate and complete copies of the Company's Restated Certificate of
Incorporation and bylaws, in each case as in effect on the date hereof,
including all amendments thereto, have heretofore been delivered to Parent.
SECTION 4.02 Capitalization. (a) The authorized capital stock
of the Company consists of 400,000,000 shares of Company Common Stock and
25,000,000 shares of preferred stock ("Company Preferred Stock"). As of March 4,
1999, (i) 156,750,795 shares of Company Common Stock, including the associated
Rights (as defined in Section 4.02(b)), were issued and outstanding, all of
which shares of Company Common Stock 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) 51,977,130 shares of Company Common
Stock and no shares of Company Preferred Stock were held in the treasury of the
Company, (iii) 17,688,200 shares of Company Common Stock were reserved for
issuance upon exercise of options issued and outstanding and 1,250,000 shares of
Company Common Stock were reserved for issuance pursuant to existing awards
under the Company's Long Term Incentive Plan (the "LTIP"), (iv) no shares of
Company Common Stock were reserved for issuance upon exercise of outstanding
warrants, including the associated Rights, and (v) 4,000,000 shares of Company
Preferred Stock were designated as Series B Junior Participating Preferred Stock
reserved for issuance under the Rights Agreement (as defined in Section
4.02(b)). Assuming the exercise of all outstanding options, warrants and rights
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(other than the Rights) to purchase Company Common Stock and the vesting of all
awards under the LTIP, as of March 4, 1999, there would be 175,688,995 shares of
Company Common Stock issued and outstanding. Since March 4, 1999, except as
permitted by the Agreement, (i) no shares of capital stock of the Company have
been issued except in connection with the exercise of the instruments referred
to in the second sentence of this Section 4.02(a) and except for shares of
Company Common Stock required to be issued in connection with the Company's
existing Dividend Reinvestment Plan ("DRP") and Employee Stock Ownership and
Savings Plan (the "401-K Plan") and (ii) no options, warrants, securities
convertible into, or commitments with respect to the issuance of shares of
capital stock of the Company have been issued, granted or made, except Rights in
accordance with the terms of the Rights Agreement.
(b) Except for the Preferred Stock Purchase Rights (the
"Rights") issued pursuant to the Rights Agreement (the "Rights Agreement"),
dated as of June 3, 1998, between the Company and First Chicago Trust Company of
New York (the "Rights Agent"), or as set forth in Section 4.02(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 other
anti-takeover agreement, obligating the Company or any subsidiary of the Company
to issue, deliver or sell, 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. There are no obligations, contingent or otherwise, of the Company to
(i) repurchase, redeem or otherwise acquire any shares of Company Common Stock
or other capital stock of the Company, or the capital stock or other equity
interests of any subsidiary of the Company except in connection with the
exercise of options pursuant to the terms of the Company Option Plans; or (ii)
(other than advances to subsidiaries in the ordinary course of business) provide
material funds to, or make any material investment in (in the form of a loan,
capital contribution or otherwise), or provide any guarantee with respect to the
obligations of, any subsidiary of the Company or any other person. There are no
outstanding stock appreciation rights or similar derivative securities or rights
of the Company or any of its subsidiaries. There are no bonds, debentures, notes
or other indebtedness of the Company having the right to vote (or convertible
into, or exchangeable for, securities having the right to vote) on any matters
on which stockholders of the Company may vote. Except as disclosed in the
Company SEC Reports or as otherwise contemplated by this Agreement, there are no
voting trusts, irrevocable 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. The Board
of Directors of the Company has taken all action to amend the Rights Agreement
(subject only to the execution of such amendment by the Rights Agent, which
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execution the Company shall cause to take place as promptly as reasonably
practicable following the date of this Agreement) to provide that (i) none of
the Parent and its subsidiaries shall become an "Acquiring Person" and no
"Triggering Event" shall occur as a result of the execution, delivery and
performance of this Agreement and the consummation of the Merger, (ii) no
"Distribution Date" shall occur as a result of the announcement of or the
execution of this Agreement or any of the transactions contemplated hereby and
(iii) the Rights will expire without any further force or effect as of
immediately prior to the consummation of the Merger. Upon execution of the
Rights Agreement by the Rights Agent, the amendment to the Rights Agreement
shall become effective and shall remain in full force and effect until
immediately following the termination of this Agreement in accordance with its
terms. The Company has not otherwise amended the Rights Agreement to exempt any
person or entity from the potential application of the Rights Agreement, other
than Parent and its subsidiaries.
(c) The Company has previously made available to Parent
complete and correct copies of the Company Option Plans, including all
amendments thereto. The forms of Options are consistent in all material respects
with the terms of the Company Option Plans. The Company has previously made
available to Parent a complete and correct list setting forth as of December 31,
1998, (i) the number of Options outstanding and (ii) the weighted average
exercise price for all outstanding Options.
SECTION 4.03 Subsidiaries. Each direct and indirect 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 transact 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 organized, existing, qualified and in good standing
would not reasonably be expected to have a Company Material Adverse Effect. All
of the outstanding shares of capital stock of each 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 (other
than liens arising by operation of law), 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 any subsidiary of the Company,
including any right of conversion or exchange under any outstanding security,
instrument or agreement.
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SECTION 4.04 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 6.01(a))
with respect solely to the Merger, 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 with respect solely to the Merger, 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 Merger
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 (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, delivery and performance of this Agreement
by the Company and the consummation of the Merger and the transactions
contemplated hereby do not and will 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, contractually require any offer to
purchase or any prepayment of any debt, or result in the creation of any lien,
security interest 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 certificates of incorporation or bylaws 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, subject, in the
case of consummation, to obtaining (prior to the Effective Time) the Company
Required Statutory Approvals (as defined in Section 4.04(c)) and the Company
Stockholders' Approval, or (iii) any Contract 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,
subject, in the case of consummation, to obtaining (prior to the Effective Time)
consents required from commercial lenders, lessors or other third parties as
specified in Section 4.04(b) of the Company Disclosure Schedule. Excluded from
the foregoing sentence of this paragraph (b), insofar as it applies to the
terms, conditions or provisions described in clauses (ii) and (iii) of this
paragraph (b), are such violations, conflicts, breaches, defaults, terminations,
accelerations or creations of liens, security interests or encumbrances that
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would not reasonably be expected to have a Company Material Adverse Effect and
would not prevent or materially delay the consummation of the Merger.
(c) Except for (i) the filings by the Company required by the
HSR Act, (ii) the filing of the Proxy Statement with the SEC pursuant to the
Exchange Act, (iii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware in connection with the Merger, (iv) any
filings with or approvals from authorities required solely by virtue of the
jurisdictions in which Parent or its subsidiaries conduct any business or own
any assets and (v) any required filings with or approvals from applicable
domestic or foreign environmental authorities, public service commissions and
public utility commissions (the filings and approvals referred to in clauses (i)
through (v) and those disclosed in Section 4.04(c) of the Company Disclosure
Schedule 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 reasonably be expected to have a Company Material Adverse
Effect and would not prevent or materially delay the consummation of the Merger.
SECTION 4.05 Reports and Financial Statements. Since January
1, 1996, the Company has filed with the SEC all material forms, statements,
reports and documents (including all exhibits, post-effective amendments and
supplements thereto) (the "Company SEC Reports") 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 in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. As of their respective
dates, 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 and unaudited financial statements of the Company included in the
Company's Annual Report on Form 10-K for the twelve months ended September 30,
1998 and the Company's Quarterly Report on Form 10-Q for the quarterly period
ended December 31, 1998 (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 in all material respects 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 (subject, in the case of any unaudited interim financial statements,
to normal year-end adjustments).
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SECTION 4.06 Absence of Undisclosed Liabilities. Except as
disclosed in 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 September 30, 1998, 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 Company Financial Statements or reflected in the notes
thereto or (ii) which were incurred after September 30, 1998 in the ordinary
course of business and consistent with past practices, (b) liabilities,
obligations or contingencies which (i) would not reasonably be expected to have
a Company Material Adverse Effect, or (ii) have been discharged or paid in full
prior to the date hereof, and (c) liabilities, obligations and contingencies
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.
SECTION 4.07 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 Company Material Adverse
Effect.
SECTION 4.08 Litigation. Except as referred to in 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, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that would
reasonably be expected to have a Company Material Adverse Effect. Except as
referred to in the Company SEC Reports or as may be entered into with Parent's
prior written consent in connection with Section 5.12(b), 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 the consummation
of the transactions contemplated hereby or would reasonably be expected to have
a Company Material Adverse Effect.
SECTION 4.09 Proxy Statement. None of the information to be
supplied by the Company or its subsidiaries for inclusion in the Proxy Statement
will, at the time of the mailing thereof and any amendments or supplements
thereto, and at the time of the meeting of stockholders of the Company to be
held in connection with the transactions contemplated by this Agreement, 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 will comply, as of its mailing date, as to form
in all material respects with all applicable laws, including the provisions of
the Exchange Act and the rules and regulations promulgated thereunder, except
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that no representation is made by the Company with respect to information
supplied by Parent, Merger Subsidiary or any stockholder of Parent for inclusion
therein.
SECTION 4.10 No Violation of Law. Except as disclosed in the
Company SEC Reports, neither the Company nor any of its subsidiaries is in
violation of or has been given written notice of 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 would
not reasonably be expected to have a Company Material Adverse Effect. 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, would not reasonably be expected to have a Company Material Adverse
Effect. 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 would not reasonably be expected to have a Company Material
Adverse Effect. 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 would not reasonably be expected to have a Company Material Adverse
Effect.
SECTION 4.11 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
certificates of incorporation, bylaws or similar organizational instruments of
the Company or any of its subsidiaries, or (b) any Contract 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 4.11, breaches, violations and defaults which would not reasonably
be expected to have a Company Material Adverse Effect.
SECTION 4.12 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, and such Tax Returns are true, correct and
complete in all material respects, and (ii) duly paid in full or reserved in
accordance with generally accepted accounting principles on the Company
Financial Statements all Taxes required to be paid, except, in each case, as
would not, individually or in the aggregate, have a Company Material Adverse
-17-
Effect. 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 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 (the "IRS") or any other governmental taxing authority with
respect to Taxes of the Company or any of its subsidiaries which would
reasonably be expected to have a Company Material Adverse Effect. Neither the
Company nor its subsidiaries has agreed to an extension of time with respect to
a material Tax deficiency other than 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 material Taxes with any entity that
is not, directly or indirectly, a wholly-owned corporate subsidiary of the
Company other than agreements the consequences of which are fully and adequately
reserved for in the Company Financial Statements.
(b) The Company is not, and will not be as of the Effective
Time, a United States Real Property Holding Corporation within the meaning of
Section 897 of the Internal Revenue Code of 1986, as amended (the "Code"),
assuming for this purpose that the date hereof and the Effective Time constitute
"determination dates" within the meaning of Treas. Reg. ss. 1.897-2(c).
(c) The Company and each of its subsidiaries have withheld or
collected and have paid over to the appropriate governmental entities (or are
properly holding for such payment) all material Taxes required to be collected
or withheld.
(d) For purposes of this Agreement, "Tax" (including, with
correlative meaning, the terms "Taxes") includes all federal, state, local and
foreign income, profits, franchise, gross receipts, environmental, customs duty,
capital stock, communications services, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of any
nature whatsoever, together with all interest, penalties and additions imposed
with respect to such amounts and any interest in respect to such penalties and
additions, and includes any liability for Taxes of another person by contract,
as a transferee or successor, under Treas. Reg. 1.1502-6 or analogous state,
local or foreign law provision or otherwise, and "Tax Return" means any return,
report or similar statement (including attached schedules) required to be filed
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with respect to any Tax, including without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
SECTION 4.13 Employee Benefit Plans; ERISA. (a) Except as
disclosed in 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 severance plans or policies and 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"). Neither the Company nor any of its
subsidiaries maintains or has any material liability with respect to any
Multiple Employer Plan or contributes to or is obligated to contribute to any
Multi-employer Plan. Neither the Company nor any of its subsidiaries has any
obligation to create or contribute to any additional, material 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 would reasonably be
expected to have a Company Material Adverse Effect, (ii) except for premiums
due, there is no outstanding liability, whether measured alone or in the
aggregate, under Title IV of ERISA with respect to any of the Company Plans,
which would reasonably be expected to have a Company Material Adverse Effect,
(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 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) to the best knowledge of the Company, with respect to Company
Plans subject to Title IV of ERISA, there has been no material change in the
funded status of such plans from the status set forth most recently in the
Company SEC Reports, (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 would not reasonably be expected to have a Company Material Adverse
Effect, (vii) each of the Company Plans which is intended to be "qualified"
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within the meaning of Section 401(a) of the Code has been determined by the IRS
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 such Sections
4203, 4204 and 4205, (ix) to the knowledge of the Company and its subsidiaries,
there are no pending, threatened or anticipated claims involving any of the
Company Plans other than claims for benefits in the ordinary course or claims
which would not reasonably be expected to have a Company Material Adverse
Effect, (x) except for premiums due, the Company and its subsidiaries have no
current 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, except for liabilities or anticipated
liabilities which would not reasonably be expected to have a Company Material
Adverse Effect, 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 liability (direct or indirect) of the Company or any
subsidiary under Sections 409 or 502(c)(1) or (l) of ERISA or Chapter 43 of
Subtitle (A) of the Code, except for liabilities or anticipated liabilities
which would not reasonably be expected to have a Company Material Adverse
Effect.
(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" provisions and all
severance agreements with executive officers.
(d) There are no agreements which will or would be reasonably
expected to provide payments to any officer, employee, stockholder, or highly
compensated individual which will be "parachute payments" under Code Section
280G that are nondeductible to the Company or subject to tax under Code Section
4999 for which the Company or any ERISA Affiliate would have withholding
liability.
SECTION 4.14 Labor Controversies. Except as disclosed in the
Company SEC Reports, (a) there are no significant controversies pending or, to
the knowledge of the Company, threatened between the Company or its subsidiaries
and any representatives (including unions) 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
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Company or its subsidiaries, except for such controversies and organizational
efforts which would not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 4.15 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,
1997, 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 would not
reasonably be expected to have a Company Material Adverse Effect.
(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 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 at the
Effective Time. 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
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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 at the Effective Time,
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 4.16 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 to the
extent that such restriction or prohibition could reasonably be expected to have
a Parent Material Adverse Effect.
SECTION 4.17 Title to Assets. The Company and each of its
subsidiaries has good and valid 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
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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
would not reasonably be expected to have a Company Material Adverse Effect. All
leases under which the Company or any of its subsidiaries 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 would not reasonably be expected to have a
Company Material Adverse Effect.
SECTION 4.18 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 4.19 Opinion of Financial Advisor. The Company's
financial advisor, Xxxxxxx, Xxxxx & Co. (the "Company Financial Advisor"), has
delivered to the Board of Directors of the Company an oral opinion, to be
confirmed in writing (the "Fairness Opinion") to the effect that, as of the date
of this Agreement, the consideration to be received by the holders of Company
Common Stock in the Merger is fair to such holders from a financial point of
view. Subject to the prior review and consent by the Company Financial Advisor,
the Fairness Opinion shall be included in the Proxy Statement.
SECTION 4.20 Brokers and Finders. 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 investment banking fees,
finder's fees, brokerage or agent commissions or other like payments in
connection with the transactions contemplated hereby, other than fees payable to
the Company Financial Advisor or as disclosed in Section 4.20 of the Company
Disclosure Schedule. An accurate copy of any fee agreement with the Company
Financial Advisor has been provided to Parent.
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ARTICLE V
COVENANTS
SECTION 5.01 Conduct of Business by the Company Pending the
Merger. Except as otherwise contemplated by this Agreement or disclosed in
Section 5.01 of the Company Disclosure Schedule, after the date hereof and prior
to the Effective Time 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
certificates of incorporation or bylaws or equivalent constitutional documents,
(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 or a wholly-owned subsidiary of the Company by a direct or indirect
wholly-owned subsidiary of the Company and regular quarterly dividends on
Company Common Stock not in excess of $0.19 per share declared and payable at
times consistent with past practice (it being understood and agreed that the
record dates for any such quarterly dividends shall be at least 90 days apart);
(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 (A) upon exercise of
Options outstanding on the date hereof or hereafter granted in accordance with
the provisions of subclause (iv) of this clause (c) or pursuant to awards
existing as of the date of this Agreement under the LTIP and (B) in accordance
with the DRP and the Company's 401-K Plan as in effect on the date of this
Agreement, (ii) the Company may (with Parent's prior written consent, which
consent shall not be unreasonably withheld) issue shares of Company Common Stock
(or warrants or options to acquire Company Common Stock) in connection with
acquisitions of assets or businesses pursuant to the proviso of Section 5.01(d),
(iii) the Company may issue shares of Company Common Stock pursuant to earnouts
from previously completed transactions in accordance with the existing terms of
the agreements relating thereto, and (iv) subject to the proviso below, the
Company may grant Options to purchase shares of Company Common Stock in
accordance with the terms of the Company Option Plans to persons who are not
currently directors, officers or employees of the Company or its subsidiaries
and are hired by the Company or its subsidiaries after the date of this
Agreement and such grants are made consistent with past practice and have an
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exercise price per share of Company Common Stock no less than the fair market
value of a share of Company Common Stock as of the date of grant, provided that
the number of Options granted pursuant to this subclause (iv) shall not exceed
the number of Options which are outstanding as of the date of this Agreement and
which are thereafter canceled or forfeited without exercise and (v) the Company
may grant Options and LTIP awards in accordance with the description set forth
in Section 5.01 of the Company Disclosure Schedule;
(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
or borrowings under the credit facilities to be entered into substantially on
the terms set forth in Section 5.01 of the Company Disclosure Schedule 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, (B) borrowings to refinance existing
indebtedness on terms which are reasonably acceptable to Parent, or (C)
borrowings in connection with acquisitions as set forth in the proviso in this
Section 5.01(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 other than in connection with the exercise of outstanding
Options pursuant to the terms of the Company Option Plans, (iii) 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 5.01(d), (iv) sell, pledge, dispose of or encumber any
assets or businesses other than (A) sales of businesses or assets disclosed in
Section 5.01 of the Company Disclosure Schedule, (B) pledges or encumbrances
pursuant to Existing Credit Facilities or other permitted borrowings, (C) sales
or dispositions of businesses or assets consented to in writing by Parent (which
consent shall not be unreasonably withheld) or for which consent is not denied
within 24 hours after the Company notifies Parent (such notice to be delivered
during business hours on a business day) in writing that it desires to effect
such sale or disposition, (D) sales of real estate, assets or facilities for
cash consideration (including any debt assumed by the buyer of such real estate,
assets or facilities) of less than $100,000 in each such case and (E) sales or
dispositions of businesses or assets as may be required by applicable law, or
(v) 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, (I) the
Company shall not be prohibited from acquiring any assets or business for cash
in one or more transactions in which the aggregate revenues of such businesses
and assets do not exceed $80 million in the aggregate and the value of the
consideration paid (as determined in accordance with clause II(B)) in each such
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acquisition satisfies the internal rate of return criteria of the Company's
existing acquisition policy as disclosed to Parent and (II) 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 5.01 of the Company
Disclosure Schedule, or (B) the aggregate value (determined at the time of
execution of the agreement pursuant to which such business or asset is acquired)
of consideration paid or payable in connection with any such acquisition (other
than those acquisitions disclosed in Schedule 5.01 of the Company Disclosure
Schedule) including any funded indebtedness assumed and any Company Common Stock
issued with Parent's prior written consent (which consent shall not be
unreasonably withheld) in connection with such acquisitions (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 any such acquisition is entered
into) does not exceed 1.5 times the revenues generated by such business or
assets for the preceding twelve month period for which financial statements are
available and also does not exceed 5.5 times projected earnings before interest,
taxes, depreciation and amortization on a pro forma basis for the twelve month
period immediately following the expected closing date of the acquisition
reflecting reasonably anticipated cost reductions and synergies to be generated
by such business or assets. 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 a 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,
and will cause its subsidiaries not to, 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, and will cause its subsidiaries not to, 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 other than as expressly permitted by the terms of this
Agreement;
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(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 or with
any other persons, except pursuant to (i) applicable law, (ii) previously
existing contractual arrangements or policies disclosed pursuant to this
Agreement or (iii) employment agreements entered into with a person who is hired
by the Company or one of its subsidiaries to replace an employee who is
terminated or voluntarily resigns and who, at the time of termination, was party
to an employment agreement with the Company or one of its subsidiaries, provided
that such new employment agreement shall be on terms (including salary and
benefits) comparable in all material respects to the contract covering the
terminated employee and shall not contain a change of control provision and
shall not be for a term of more than one year or provide for severance pay or
benefits (other than base salary and benefits payable if such contract had not
been terminated prior to the expiration of its term).
(h) not increase the salary or monetary compensation of any
person except for increases consistent with past practice as reflected in the
Company's Annual Budget for fiscal 1999 or except pursuant to applicable law or
previously existing contractual arrangements;
(i) not adopt, enter into or amend to increase benefits or
obligations any pension or retirement plan, trust or fund 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 required to comply with changes in applicable law, (ii)
any of the foregoing involving any such then existing plans, agreements, trusts,
funds or arrangements of any company acquired after the date hereof, or (iii) as
required pursuant to an existing contractual arrangement or agreement;
(j) not make expenditures, including, but not limited to,
capital expenditures, or enter into any binding commitment or contract to make
expenditures, except (i) as included in, or consistent with, the Company's
Annual Budget for fiscal 1999, (ii) for emergency repairs and other expenditures
necessary in light of circumstances not anticipated as of the date of this
Agreement which are necessary to avoid significant disruption to the Company's
business or operations consistent with past practice (and, if reasonably
practicable, after consultation with Parent), (iii) for repairs and maintenance
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in the ordinary course of business consistent with past practice or (iv) as
expressly permitted by paragraph (d) of this Section 5.01;
(k) not enter into any contract or commitment (i) providing
for the provision of services (including, but not limited to, waste disposal,
waste hauling, or landfill use) by the Company or any of its subsidiaries that
has a term of more than three years and which is reasonably expected to generate
more than $15 million in revenues over its term or (ii) providing for the
purchase of services by the Company or any of its subsidiaries that has a term
of more than one year and which is reasonably expected to involve payments of
more than $1 million over its term;
(l) not make, change or revoke any material Tax election
unless required by law or make any agreement or settlement with any taxing
authority regarding any material amount of Taxes or which would reasonably be
expected to materially increase the obligations of the Company or the Surviving
Corporation to pay Taxes in the future.
SECTION 5.02 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 5.03 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 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
non-public or confidential information to facilitate, any proposal or offer to
acquire all or any substantial part of the business, properties or capital stock
of the Company, whether by merger, purchase of assets, tender offer or
otherwise, 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, prior to receipt of the Company Stockholders' Approval, in
response to an unsolicited bona fide written offer or proposal with respect to a
potential or proposed Acquisition Transaction ("Acquisition Proposal") from a
corporation, partnership, person or other entity or group (a "Potential
Acquirer") which the Company's Board of Directors determines, in good faith and
after consultation with its independent financial advisor, could reasonably be
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expected to result (if consummated pursuant to its terms) in an Acquisition
Transaction more favorable to the Company's stockholders than the Merger (a
"Qualifying Proposal"), furnish (subject to the execution of a confidentiality
agreement substantially similar to the confidentiality provisions of the
Confidentiality Agreement (as defined in Section 5.04)) confidential or
non-public information to, 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 consideration of the Acquisition Proposal
is reasonably necessary for the Board of Directors to act in a manner consistent
with its fiduciary duties or that the failure to provide such confidential or
non-public information to or negotiate with such Potential Acquirer would be
reasonably likely to constitute a breach of its fiduciary duties to the
Company's stockholders, and, upon termination of this Agreement in accordance
with Section 7.01(v) or (vi) and after payment to Parent of the fee pursuant to
Section 5.11(b), resolve to accept, or recommend, or enter into agreements
relating to, a Qualifying Proposal as to which the Company's Board of Directors,
in good faith, has determined is reasonably likely to be consummated (such
Qualifying Proposal being a "Superior Proposal") 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 or otherwise make disclosure
required by the federal securities laws. 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 5.03.
(c) The Company shall promptly notify Parent after receipt of
any Acquisition Proposal, indication of interest or request for non-public
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 material terms and conditions of such proposal, inquiry or
contact.
(d) After the date hereof and prior to the Effective Time or
earlier termination of this Agreement, the Parent shall promptly notify the
Company after receipt of any proposal or offer to acquire all or any substantial
part of the business, properties or capital stock of Parent, whether by merger,
purchase of assets, tender offer or otherwise, whether for cash, securities or
any other consideration or combination thereof and shall indicate in reasonable
detail the identity of the offeror or person and the material terms and
conditions of such proposal or offer and the financing arrangements, if any,
relating thereto.
SECTION 5.04. Access to Information. Subject to applicable
law, the Company and its subsidiaries shall afford to Parent and Merger
Subsidiary and their respective accountants, counsel, financial advisors,
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sources of financing and other representatives (the "Parent 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 (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 in connection with the transactions contemplated by this Agreement,
and (ii) such other information concerning its businesses, properties and
personnel as Parent or Merger Subsidiary shall reasonably request and will use
reasonable efforts to obtain the reasonable cooperation of the Company's
officers, employees, counsel, accountants, consultants and financial advisors in
connection with the investigation of the Company by Parent and the Parent
Representatives; provided, however, that no investigation pursuant to this
Section 5.04 shall amend or modify any representations or warranties made herein
or the conditions to the obligations of the respective parties to consummate the
Merger. All nonpublic information provided to, or obtained by, Parent in
connection with the transactions contemplated hereby shall be "Information" for
purposes of the Confidentiality Agreement dated February 24, 1999 between Parent
and the Company (the "Confidentiality Agreement"), provided that (i) Parent,
Merger Subsidiary and the Company may disclose such information as may be
necessary in connection with seeking the Parent Required Statutory Approvals,
the Company Required Statutory Approvals and the Company Stockholders' Approval,
and (ii) each of Parent, Merger Subsidiary and the Company may disclose any
information that it is required by law or judicial or administrative order to
disclose. Notwithstanding the foregoing, the Company shall not be required to
provide any information which it reasonably believes it may not provide to
Parent by reason of applicable law, rules or regulations, which constitutes
information protected by attorney/client privilege, or which the Company or any
subsidiary is required to keep confidential by reason of contract, agreement or
understanding with third parties.
SECTION 5.05. Notices of Certain Events. (a) The Company shall
promptly as reasonably practicable after executive officers of the Company
acquire knowledge thereof, notify Parent of: (i) any notice or other
communication from any person alleging that the consent of such person (or
another person) is or may be required in connection with the transactions
contemplated by this Agreement which consent relates to a material Contract to
which the Company or any of its subsidiaries is a party or the failure of which
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to obtain would materially delay consummation of the Merger; (ii) any notice or
other communication from any governmental or regulatory agency or authority in
connection with the transactions contemplated by this Agreement; and (iii) any
actions, suits, claims, investigations or proceedings commenced or, to the best
of its knowledge threatened against, relating to or involving or otherwise
affecting the Company or any of its subsidiaries that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Sections 4.08 or 4.10 or which relate to the consummation of the transactions
contemplated by this Agreement.
(b) Each of Parent and Merger Subsidiary shall promptly as
reasonably practicable after executive officers of the Parent acquire knowledge
thereof, notify the Company of: (i) any notice or other communication from any
person alleging that the consent of such person (or other person) is or may be
required in connection with the transactions contemplated by this Agreement
which consent relates to a material Contract to which Parent or its subsidiaries
are a party or the failure of which to obtain would materially delay the Merger,
(ii) any notice or other communication from any governmental or regulatory
agency or authority in connection with the transactions contemplated by this
Agreement, and (iii) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened, against Parent or Merger
Subsidiary, which relate to consummation of the transactions contemplated by
this Agreement.
(c) Subject to the provisions of Section 5.03, each of the
Company, Parent and Merger 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 at the Effective Time unless such failure or occurrence
would not have a Company Material Adverse Effect or a Parent Material Adverse
Effect, as the case may be, and (ii) any failure on its part to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied by
it hereunder unless such failure or occurrence would not have a Company Material
Adverse Effect or a Parent Material Adverse Effect, as the case may be;
provided, however, that the delivery of any notice pursuant to this Section
5.05(c) shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
SECTION 5.06. Merger Subsidiary. Parent will take all action
necessary (a) to cause Merger Subsidiary to perform its obligations under this
Agreement and to consummate the Merger on the terms and conditions set forth in
this Agreement and (b) to ensure that, prior to the Effective Time, Merger
Subsidiary shall not conduct any business or make any investments other than as
specifically contemplated by this Agreement, or incur or guarantee any
indebtedness (other than as contemplated by the financing required for the
Merger and related transactions).
SECTION 5.07. Employee Benefits. (a) Parent shall assume and
honor, or shall cause the Surviving Corporation to assume and honor, all Company
Plans pursuant to the terms of the Company Plans (provided, that, except as
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expressly provided by this Agreement, Parent shall have no obligation under this
Agreement to continue to provide benefits thereunder in respect of periods
following the Effective Time and nothing herein shall prevent termination of
such plans). Prior to the Effective Time, the Company may take all action
necessary to terminate the Company's Deferred Compensation Plan, Grandfathered
Benefit Restoration Plan and Benefit Restoration Plan and to permit participants
in such plans to receive lump sum payments of their accrued benefits (as
determined under the provisions of the plan as in effect on the date hereof)
under such plans at the Effective Time. Prior to the Effective Time, the Company
shall take all action necessary to amend the Company's Retirement Plan to
provide that (i) as of the Effective Time, the accrued benefit of participants
in the Retirement Plan is frozen as of such date (including without limitation
with respect to the crediting of accruals following the Effective Time) and
consistent with the current provisions of the plan, a credit for 1999 accruals
is made under the cash balance portion of the plan through the Effective Time
and (ii) following the Effective Time, no individuals shall commence to
participate in such plan; provided, however, that participants as of the
Effective Time shall, following the Effective Time, continue (x) to vest in
their accrued benefit, (y) to receive annual interest credits under the cash
balance portion of the plan at the rate provided pursuant to the existing terms
of the plan and (z) to have compensation considered for purposes of calculation
of "Final Average Compensation" under the "Old Plan Benefit" portion of the plan
(to the extent so considered as of the date hereof). The Company shall, as
required by law, provide participants with notice of the amendments required by
this Section 5.07(a). Nothing herein shall prevent Parent, in its sole
discretion, from terminating such plan in compliance with applicable law at any
time after the Effective Time.
(b) Parent acknowledges that for purposes of the Company
Plans, the consummation of the Merger will constitute a "Change in Control" of
the Company, and the Company's Annual Management Incentive Plan and Long-Term
Incentive Plan shall be terminated effective as of the Effective Time, and the
Company shall make payments to participants in accordance with the terms of such
plans at the Effective Time or as soon as reasonably practicable thereafter. The
Company shall take all steps necessary to ensure that no portion of any payments
to be received by any individual on or following the Effective Time (whether
pursuant to this Section 5.07(b), or otherwise) will be eligible for conversion
under the Company's Convertible Annual Incentive Award Plan.
(c) Parent currently intends, or intends to cause the
Surviving Corporation to, provide for a period of at least 1 year following the
Effective Time, employee benefits and incentive compensation to active employees
of the Company and its subsidiaries employed as of the Effective Time who are
not covered by any collective bargaining agreement ("Company Employees") that
are no less favorable in the aggregate than those provided to similarly situated
employees of Parent and its subsidiaries (excluding, however, severance payments
for employees covered by paragraph (d) hereof).
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(d) Parent agrees to provide Company Employees who do not have
employment agreements and who would not otherwise receive severance pay upon
termination of employment greater than the severance pay provided under this
Section 5.07(d) with severance benefits if such employee's employment is
involuntarily terminated without cause (including termination of employment by
reason of "Constructive Discharge" which, for purposes of this Agreement, means
a reduction of base salary or wages or forced relocation of more than thirty
miles) during the period commencing upon the Effective Time and ending twelve
months after the Effective Time. The Company may, with the prior consent of
Parent (which consent shall not be unreasonably withheld), establish such
severance plan prior to the Effective Time. The plan to be established pursuant
to this Section 5.07(d) shall provide that an eligible Company Employee shall
receive a lump sum amount of severance pay equal to two weeks of weekly base
salary or wages (as in effect immediately prior to termination) for each whole
year of service with the Company or its subsidiaries, with a minimum amount of
severance pay equal to one week of weekly base salary or wages (so long as such
Company Employee has at least six months of service as of the date of
termination) and a maximum amount of severance pay equal to fifty-two weeks of
weekly base salary or wages. Severance pay to a Company Employee (i) shall be
net of withholding taxes, (ii) shall not be included as compensation in any
other employee benefit plan or program unless required by such plan or program,
(iii) shall be payable only upon execution by the Company Employee of a general
release in the favor of Parent, the Company, and their respective subsidiaries
in accordance with the Company's current practices and (iv) subject to clause
(iii), shall be paid reasonably promptly after a qualifying termination of
employment. Any severance pay to which a Company Employee is entitled hereunder
shall be reduced by the severance pay such Company Employee receives from any
other source.
(e) Parent and the Company each hereby acknowledge and agree
that (i) at the Effective Time, each of the executives listed in Section 5.07(e)
of the Company Disclosure Schedule will be deemed to have terminated his or her
employment with the Company under circumstances which entitle such executive to
the severance pay required by the contracts listed in Section 5.07(e) of the
Company Disclosure Schedule; (ii) each such executive will become entitled to
receive the severance pay (and other payments) required by such contracts upon a
termination of employment following a "change of control" at the Effective Time;
and (iii) any severance pay to which such executives are entitled shall be paid
at the Effective Time or as soon as practicable after the Effective Time. The
Company shall, prior to the Effective Time, use its reasonable efforts to take
all action necessary such that each executive to whom this Section 5.07(e)
applies shall be deemed to have consented to the payment of severance pay in
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accordance with this Section 5.07(e), notwithstanding any provision to the
contrary in such contracts. The executives listed in Section 5.07(e) of the
Company Disclosure Schedule shall receive the coverage set forth in Section
5.07(f), subject to applicable law and to the extent permitted by applicable
insurance policies.
(f) Parent shall use reasonable efforts to cause any Company
Employee (i) whose employment is involuntarily terminated without cause
(including by reason of Constructive Discharge) during the twelve months
following the Effective Time and (ii) who is age fifty or older on the date of
termination to be provided with continued medical, dental and vision coverage
for such Company Employee and his or her dependents from the date of termination
until age sixty-five at such Company Employee's expense; provided, however, that
the obligation of Parent set forth in this Section 5.07(f) (x) shall cease if
the Company Employee becomes eligible for coverage under any other employee
benefit plan providing substantially similar benefits and (y) shall in any event
be subject to applicable law. Coverage required by this Section 5.07(f) shall
commence upon termination of the coverage required by Section 5.07(g).
(g) Subject to applicable law and to the extent permitted by
applicable insurance policies, Parent shall cause any Company Employee whose
employment is involuntarily terminated without cause (including by reason of
Constructive Discharge) during the twelve months following the Effective Time to
be provided with health insurance coverage at no cost to such Company Employee
equal to the number of weeks based on the calculation of severance pay in
Section 5.07(d) hereof, up to a maximum of fifty-two weeks. To the extent
permitted by applicable existing insurance policies of Parent, the COBRA
continuation coverage period shall commence thereafter with coverage at Company
Employee's cost.
(h) Parent (i) shall cause outplacement services to be
provided to Company Employees based in the Houston corporate offices as of the
Effective Time whose employment is involuntarily terminated without cause
(including by reason of Constructive Discharge) within twelve months following
the Effective Time and (ii) shall use reasonable efforts to cause outplacement
services to be provided, whenever it deems the provision of such services to be
desirable, to Company Employees whose employment is terminated as part of a
significant concentration of workplace reductions. Such outplacement services
shall be at the Company's expense, equal to the number of weeks based on the
calculation of severance pay under Section 5.07(d) hereof, up to a maximum of
fifty-two weeks.
(i) For purposes of all employee benefit plans maintained by
or contributed to by the Parent or its subsidiaries in which Company Employees
participate, Parent shall cause each such plan to treat the prior service with
the Company and its subsidiaries of each Company Employee as service rendered to
Parent or its subsidiaries, as the case may be, for purposes of eligibility to
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participate, vesting, benefit accrual and levels of benefits under such plans,
provided, that the foregoing shall not apply to the extent that its application
would result in duplication of accrual of benefits or to newly established plans
and programs for which prior service of Parent employees is not taken into
account.
(j) Parent shall (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Company Employees under any welfare
benefits plans that such Company Employees may be eligible to participate in
after the Effective Time, whether pursuant to the provisions of this Section
5.07 or otherwise, except to the extent that any Company Employees were subject
to such preexisting conditions, exclusions and waiting periods under the Company
plans, and (ii) provide each Company Employee with credit for any co-payments
and deductibles paid prior to the Effective Time (in the calendar year of the
Effective Time) in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time.
(k) For so long after the Effective Time as the Company
maintains the cash or deferred arrangement under Section 401(k) of the Code in
which Company Employees participate immediately prior to the Effective Time and
Parent's 401(k) plans have a loan feature, Parent shall cause the plan to retain
the loan feature of such plan.
SECTION 5.08. Meeting of the Company's Stockholders. The
Company shall as promptly as practicable after the date of this Agreement take
all action necessary in accordance with Delaware Law and its Restated
Certificate of Incorporation and bylaws to convene a meeting of the Company's
stockholders (the "Company Stockholders' Meeting") to act on this Agreement. The
Board of Directors of the Company shall, subject to its fiduciary duties,
recommend that the Company's stockholders vote to approve the Merger and adopt
this Agreement, and use its reasonable best efforts to solicit from stockholders
of the Company proxies in favor of the Merger and to take all other action in
its judgment necessary and appropriate to secure the vote of stockholders
required by Delaware Law to effect the Merger.
Between the date hereof and the Effective Time, neither Parent
nor any of its subsidiaries shall acquire, or agree to acquire, whether in the
open market or otherwise, any rights in any equity securities of the Company
other than pursuant to the Merger.
SECTION 5.09. Proxy Statement. As promptly as practicable
after execution of this Agreement, the Company shall prepare the Proxy
Statement, file it with the SEC under the Exchange Act, and use all reasonable
efforts to have the Proxy Statement cleared by the SEC. Parent, Merger
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Subsidiary and the Company shall cooperate with each other in the preparation of
the Proxy Statement, and the Company shall notify Parent of the receipt of any
comments of the SEC with respect to the Proxy Statement and of any requests by
the SEC for any amendment or supplement thereto or for additional information
and shall provide to Parent promptly copies of all correspondence between the
Company or any representative of the Company and the SEC. The Company shall give
Parent and its counsel the opportunity to review the Proxy Statement prior to
its being filed with the SEC and shall give Parent and its counsel the
opportunity to review all amendments and supplements to the Proxy Statement and
all responses to requests for additional information and replies to comments
prior to their being filed with, or sent to, the SEC. Each of the Company,
Parent and Merger Subsidiary agrees to use its reasonable best efforts, after
consultation with the other parties hereto to respond promptly to all such
comments of and requests by the SEC. As promptly as practicable after the Proxy
Statement has been cleared by the SEC, the Company shall mail the Proxy
Statement to the stockholders of the Company. Prior to the date of approval of
the Merger by the Company's stockholders, each of the Company, Parent and Merger
Subsidiary shall correct promptly any information provided by it to be used
specifically in the Proxy Statement that shall have become false or misleading
in any material respect and the Company shall take all steps necessary to file
with the SEC and cleared by the SEC any amendment or supplement to the Proxy
Statement so as to correct the same and to cause the Proxy Statement as so
corrected to be disseminated to the stockholders of the Company, in each case to
the extent required by applicable law.
SECTION 5.10. Public Announcements. Parent and the Company
will consult with each other before issuing any press release or making any
public statement with respect to this Agreement and the transactions
contemplated hereby and, except as may be required by applicable law or any
listing agreement with the NYSE, will not issue any such press release or make
any such public statement prior to such consultation.
SECTION 5.11 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
shall be shared equally by Parent and the Company.
(b) The Company agrees to pay to Parent a fee equal to $225 million if: (i)
the Company terminates this Agreement pursuant to clause (v) or (vi) of Section
7.01;
(ii) Parent terminates this Agreement pursuant to
clause (vii) of Section 7.01, which fee shall be payable within two business
days of such termination;
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(iii) this Agreement is terminated for any reason at
a time at which Parent was not in material breach
of its covenants contained in this Agreement and was entitled to terminate this
Agreement pursuant to clause (viii) of Section 7.01, and (i) prior to the time
of the Company Stockholders' Meeting a proposal by a third party relating to an
Acquisition Transaction had been made, and (ii) on or prior to the nine month
anniversary of the termination of this Agreement (x) the Company or any of its
subsidiaries or affiliates enters into an agreement or letter of intent (or
resolves or announces an intention to do) with respect to an Acquisition
Transaction involving a person, entity or group if such person, entity, group
(or any member of such group, or any affiliate of any of the foregoing) made a
proposal with respect to an Acquisition Transaction on or after the date hereof
and prior to the Company Stockholders' Meeting and such Acquisition Transaction
is consummated or (y) an Acquisition Transaction shall otherwise occur with any
person who shall have made a proposal with respect to an Acquisition Transaction
no later than 90 days after termination of this Agreement. Such fee shall be
payable upon the first occurrence of any such event.
(c) Parent shall pay to the Company a fee equal to $225
million if this Agreement is terminated pursuant to clause (ii) of Section 7.01
and at such time (i) Parent or its subsidiaries have not received funds pursuant
to the Financing sufficient to consummate the Merger and related transactions,
(ii) all conditions to Parent's obligation to consummate the Merger shall have
been satisfied, other than conditions relating to the HSR Act or any law,
regulation, order, judgment, injunction or decree relating to antitrust or
competition matters and except insofar as any condition requires the delivery of
officers certificates, (iii) Parent is not in breach of any of its
representations, warranties, covenants or agreements set forth in this Agreement
except for breaches which did not result in a failure to satisfy the conditions
to Parent obtaining funds pursuant to the definitive agreement relating to the
debt financing for the Merger (the "Definitive Debt Agreement") or to Parent's
obligations to consummate the Merger, (iv) the Company is not in breach of any
of its representations, warranties, covenants or agreements set forth in this
Agreement except for breaches which did not result in a failure to satisfy the
conditions to Parent obtaining funds pursuant to the Definitive Debt Agreement
and (v) at the time the Definitive Debt Agreement was executed, Parent was not
in breach of any of its representations and warranties in such agreement with
respect to Parent and its subsidiaries and, to the best of Parent's knowledge at
such time, Parent was not in breach of Parent's representations and warranties
in such agreement with respect to the Company and its subsidiaries, in either
case, except for breaches which would not result in a failure to satisfy the
conditions to Parent obtaining funds pursuant to the Definitive Debt Agreement.
Parent shall have no liability for the failure of Parent to obtain funds
pursuant to the Definitive Debt Agreement and consummate the Merger as a result
of a breach by the Company of any of its covenants, agreements, representations
or warranties set forth in this Agreement. If all of the requirements of the
first sentence of this paragraph (c) for the payment of a fee are satisfied
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other than that set forth in clause (iii) or clause (v) of such sentence, then
Parent shall be obligated to pay such $225 million fee (which amount shall be
credited against any amount for which Parent may be held liable in connection
with the failure to consummate the Merger).
(d) Parent agrees to pay to the Company a fee equal to $225
million if this Agreement is terminated pursuant to clause (ii) of Section 7.01
or clause (iii) of Section 7.01 (only to the extent such termination under
clause (iii) relates to antitrust or competition matters) and at such time (i)
the waiting period under the HSR Act shall not have expired or been terminated
or any injunction, order or decree relating to antitrust or competition matters
shall prohibit or restrain consummation of the Merger, and (ii) all of the other
conditions to Parent's obligation to consummate the Merger have been satisfied
or would be satisfied absent the occurrence or failure to occur of the events
described in sub-clause (i) of this clause (d), except conditions insofar as
they relate to the delivery of officers certificates and conditions which are
not (or would not be) so satisfied as a result of Parent's breach of this
Agreement.
(e) Only one fee aggregating $225 million shall be payable
pursuant to paragraphs (c) and (d) even if the circumstances giving rise to the
obligation to pay a fee exists under both such paragraphs. Such fee shall be
payable at the time Parent so terminates this Agreement or within two business
days after the Company so terminates this Agreement.
SECTION 5.12 Agreement to Cooperate. (a) Subject to the terms
and conditions of this Agreement, including Section 5.03, each of the parties
hereto shall use all reasonable best 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 best
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). In addition, 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, none of the parties hereto shall
knowingly take or cause to be taken any action (including, but not limited to,
in the case of Parent, (x) the incurrence of material debt financing, other than
the financing in connection with the Merger and related transactions and other
than debt financing incurred in the ordinary course of business, and (y) the
acquisition of businesses or assets) which would reasonably be expected to
materially delay or prevent consummation of the Merger. Parent shall use its
reasonable best efforts to cause the satisfaction of the conditions to the
receipt of funds pursuant to the Financing Commitments.
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(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 United States Federal Trade Commission (the "FTC")
and the Antitrust Division of the United States Department of Justice (the
"Antitrust Division"). Each of Parent and the Company shall (i) respond as
promptly as practicable to any 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 offer to take (and if such offer is accepted, commit to take) all
steps which it is capable of taking 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 Effective Time to occur
prior to September 15, 1999 (the "Outside Date") and shall defend through
litigation on the merits any claim asserted in any court by any party, including
appeals. Without limiting the foregoing, Parent shall propose, negotiate, offer
to commit and effect (and if such offer is accepted, 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, or their respective subsidiaries or
otherwise offer to take or offer to commit to take any action which it is
capable of taking and if the offer is accepted, take or commit to take such
action that limits its freedom of action with respect to, or its ability to
retain, any of the businesses, services or assets of Parent, the Surviving
Corporation or their respective subsidiaries, 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 Effective Time beyond the Outside Date. At the
request of Parent, the Company shall agree to divest, hold separate or otherwise
take or commit to take any action that limits its freedom of action with respect
to, or its ability to retain, any of the businesses, services, or assets of the
Company or any of its subsidiaries, provided that any such action may be
conditioned upon the consummation of the Merger and the transactions
contemplated hereby. Each party shall (i) promptly notify the other party of any
written communication to that party from the FTC, the Antitrust Division, any
State Attorney General or any other governmental entity and, subject to
applicable law, permit the other party to review in advance any proposed written
communication to any of the foregoing; (ii) not agree to participate in any
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substantive meeting or discussion with any governmental authority in respect of
any filings, investigation or inquiry concerning this Agreement or the Merger
unless it consults with the other party in advance and, to the extent permitted
by such governmental authority, gives the other party the opportunity to attend
and participate thereat; and (iii) furnish the other party with copies of all
correspondence, filings, and communications (and memoranda setting forth the
substance thereof) between them and their affiliates and their respective
representatives on the one hand, and any government or regulatory authority or
members or their respective staffs on the other hand, with respect to this
Agreement and the Merger. If Parent shall have complied with all of its
obligations under this Section 5.12, but there is no action that Parent or the
Company can undertake or offer to undertake that would eliminate the impediment
asserted by the FTC, Antitrust Division, or State Attorney General or other
order in any suit or proceeding, in order for the Effective Time to occur prior
to the applicable date specified in Section 7.01(ii), assuming all conditions
other than those relating to such impediment or order have been satisfied or
waived, then Parent shall not be deemed to have breached its obligations under
this Section 5.12.
(c) In the event any litigation is commenced by any person or
entity relating to the transactions contemplated by this Agreement, including
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.
(d) In connection with the consummation of the financing
contemplated by the Financing Commitments, at the reasonable request of Parent,
the Company (i) agrees to enter into such agreements, to use reasonable best
efforts to deliver such officers certificates and opinions as are customary in
financing of this type and as are, in the good faith determination of the
persons executing such officers certificates or opinions, accurate, and agrees
to pledge, grant security interests in, and otherwise grant liens on, its assets
pursuant to such agreements as may be reasonably requested, provided that no
obligation of the Company under any such agreement, pledge, or grant shall be
effective until the Effective Time and (ii) will provide to the lenders
specified in the Financing Commitments financial and other information in the
Company's possession with respect to the Merger, make the Company's senior
officers available to assist the lenders specified in the Financing Commitments,
and otherwise cooperate in connection with the consummation of the Financing, it
being understood and agreed that if the Company fails to deliver such accurate
officers certificates and opinions described in sub-clause (i) of this clause
(d) and, as a result thereof, the conditions set forth in Sections 6.01(d) or
6.01(e) are not satisfied, Parent shall have no liability under this Agreement
(including Section 5.11) for, or for the failure to satisfy, such conditions.
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(e) The Company shall, jointly with the banks providing the
Financing, retain a nationally recognized independent evaluation firm reasonably
satisfactory to the Company and the banks providing the debt financing to render
a solvency letter (the "Solvency Letter") immediately prior to the Effective
Time to the banks and the Company with respect to the solvency of Parent and its
subsidiaries after giving effect to the Merger and the financing contemplated by
the Financing Commitments. Parent and the Company shall cooperate with any
reasonable requests for information by such firm.
(f) Parent shall provide the Company any certificates from
Parent relating to the solvency and adequate capitalization of Parent and
Parent's ability to pay its debts that are given to any banks, other lenders in
connection with the Financing or the independent evaluation firm as may be
reasonably requested by the Company. Any such certificate, opinion or other
statement will be provided to the Company at the time it is provided to such
banks or other lenders.
SECTION 5.13 Directors' and Officers' Indemnification. (a) The
indemnification provisions of the certificate of incorporation and bylaws of the
Company 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 5.13 without limit as to time.
(b) Without limiting Section 5.13(a), 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 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 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) and the Merger and the other transactions
contemplated by this Agreement 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
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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 Delaware Law and
the Parent's or the Surviving Corporation's respective certificate of
incorporation or bylaws, 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 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, set forth in this Section 5.13.
(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) with respect to matters arising on or before the
Effective Time.
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(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 5.13.
(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 Delaware Law or otherwise. The provisions of this Section
5.13 shall survive the consummation of the Merger and expressly are intended to
benefit each of the Indemnified Parties.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to the Obligations of Each Party. The obligations
of the Company, Parent and Merger Subsidiary to consummate the Merger are
subject to the satisfaction of the following conditions:
(a) this Agreement and the Merger shall have been
adopted by the requisite vote of the stockholders of the
Company in accordance with Delaware Law (the "Company
Stockholders' Approval");
(b) no provision of any applicable domestic (whether
federal, state or local) or foreign law or regulation and no
judgment, injunction, order or decree of a court or
governmental agency or authority of competent jurisdiction
shall be in effect which has the effect of making the Merger
or the Financing illegal or shall otherwise restrain or
prohibit the consummation of the Merger or the Financing (each
party agreeing to use its best efforts, including appeals to
higher courts, to have any judgment, injunction, order or
decree lifted), except for any law or regulation the violation
of which would not, singly or in the aggregate, reasonably be
expected to (i) have a Parent Material Adverse Effect (after
giving effect to the Merger), (ii) result in a criminal
violation (other than a misdemeanor the only penalty for which
is a monetary fine), or (iii) result in Parent or its
subsidiaries failing to meet the standards for licensing,
suitability or character set by any foreign, federal, state or
local authority relating to the conduct of Parent's or the
Company's business which (after taking into account the
anticipated impact of such failure to so meet such standards
on other authorities) could reasonably be expected to have a
Parent Material Adverse Effect (after giving effect to the
Merger); and
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(c) the waiting period applicable to consummation of
the Merger and the Financing under the HSR Act shall have
expired or been terminated.
SECTION 6.02. 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
Effective Time of the following additional conditions:
(a) Parent and Merger Subsidiary shall have performed their
agreements contained in this Agreement required to be performed on or prior to
the Effective Time and the representations and warranties of Parent and Merger
Subsidiary contained in this Agreement shall be true and correct on and as of
the Effective Time as if made at and as of such date (except to the extent that
such representations and warranties speak as of an earlier date), except for
such failures to perform or to be true and correct that would not reasonably be
expected to have a Parent Material Adverse Effect, and the Company shall have
received a certificate of the Chief Executive Officer, the President or a Vice
President of Parent and of the Chief Executive Officer, the President or a Vice
President of Merger Subsidiary to that effect.
(b) Parent shall have delivered a certificate to the Company,
in form and substance reasonably satisfactory to the Company, to the effect
that, at the Effective Time, after giving effect to the Merger and the
transactions contemplated hereby, including without limitation, the Financing,
Parent and its subsidiaries, taken as a whole, will not (i) be insolvent (either
because its financial condition is such that the sum of its debts is greater
than the fair value of its assets or because the present fair saleable value of
its assets will be less than the amount required to pay its probable liability
on its debts as they become absolute and matured), (ii) have unreasonably small
capital with which to engage in its business or (iii) have incurred or plan to
incur debts beyond its ability to pay as they become absolute and matured.
(c) The Company shall have received the Solvency Letter in form and
substance reasonably satisfactory to the Company.
SECTION 6.03 Conditions to Obligations of Parent and
Subsidiary to Effect the Merger. Unless waived by Parent and Merger Subsidiary,
the obligations of Parent and Merger 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 Effective Time and
the representations and warranties of the Company contained in this Agreement
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shall be true and correct on and as of the Effective Time as if made at and as
of such date (except to the extent that such representations and warranties
speak as of an earlier date), except for such failures to perform and to be true
and correct that would not reasonably be expected to have a Company Material
Adverse Effect, and Parent shall have received a Certificate of the Chief
Executive Officer, the President or a Vice President of the Company to that
effect;
(b) all Parent Statutory Approvals and Company Statutory
Approvals required to be obtained in order to permit consummation of the Merger
under applicable law shall have been obtained, except for any such Parent
Statutory Approvals or Company Statutory Approvals the failure of which to
obtain would not, singly or in the aggregate, reasonably be expected to (i) have
a Parent Material Adverse Effect (after giving effect to the Merger), (ii)
result in a criminal violation (other than a misdemeanor the only penalty for
which is a monetary fine), or (iii) result in Parent or its subsidiaries failing
to meet the standards for licensing, suitability or character set by any
foreign, federal, state or local authority relating to the conduct of Parent's
or the Company's business which (after taking into account the anticipated
impact of such failure to so meet such standards on other authorities) could
reasonably be expected to have a Parent Material Adverse Effect (after giving
effect to the Merger); and
(c) all consents, approvals or authorizations required to be
obtained pursuant to any Contract or permit to which the Company or its
subsidiaries are a party or of which the Company or its subsidiaries are a
beneficiary in order to avoid a Parent Material Adverse Effect (after giving
effect to the Merger) shall have been obtained.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated and the Merger
may be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the stockholders of the Company):
(i) by mutual written consent of the Company and
Parent;
(ii) by either the Company or Parent, if the Merger
has not been consummated by September 15, 1999, provided that
such date shall automatically be extended until December 31,
1999 if, on September 15, 1999, the waiting period under the
HSR Act has not expired or been terminated or any injunction,
order or decree shall prohibit or restrain consummation of the
Merger and provided further that the right to terminate this
Agreement under this clause (ii) shall not be available to any
party whose failure to fulfill any of its obligations under
this Agreement has been the cause of or resulted in the
failure to consummate the Merger by such date;
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(iii) by either the Company or Parent if any
judgment, injunction, order or decree of a court or
governmental agency or authority of competent jurisdiction
shall restrain or prohibit the consummation of the Merger, and
such judgment, injunction, order or decree shall become final
and nonappealable and was not entered at the request of the
terminating party;
(iv) by either the Company or Parent, if (x) there
has been a breach by the other party of any representation or
warranty contained in this Agreement which would reasonably be
expected to have a Company Material Adverse Effect or a Parent
Material Adverse Effect, as the case may be, or prevent or
delay the consummation of the Merger beyond the date specified
in Section 7.01(ii), and which has not been cured in all
material respects within 30 days after written notice of such
breach by the terminating party, or (y) there has been a
breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which would
reasonably be expected to have a Parent Material Adverse
Effect or a Company Material Adverse Effect, as the case may
be, or prevent or delay the consummation of the Merger beyond
the date specified in Section 7.01(ii), and which breach is
not curable or, if curable, is not cured within 30 days after
written notice of such breach is given by the terminating
party to the other party;
(v) by the Company if, prior to receipt of the
Company Stockholders' Approval, 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 5.11(b) shall have been received by Parent;
(vi) by the Company if, prior to receipt of the
Company Stockholders' Approval, (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
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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 5.11(b) shall have been
received by Parent;
(vii) by the Parent, if the Board of Directors of the
Company shall have failed to recommend, or shall have
withdrawn, modified or amended in any material respects its
approval or recommendation of the Merger or shall have
resolved to do any of the foregoing, or shall have recommended
another Acquisition Proposal or 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); or
(viii) by Parent or the Company 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.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company pursuant to the
provisions of Section 7.01, this Agreement shall forthwith become void and there
shall be no liability or further obligation on the part of the Company, Parent,
Merger Subsidiary or their respective officers or directors (except as set forth
in this Section 8.01, in the second sentence of Section 5.04 and in Sections
5.11 and 8.05 all of which shall survive the termination). Nothing in this
Section 8.01 shall relieve any party from liability for any breach of any
representation, warranty, covenant or agreement of such party contained in this
Agreement except that payment of the fees contemplated by Section 5.11(c) (if,
at the time of termination of this Agreement under circumstances giving rise to
the obligation to pay a fee pursuant to such Section 5.11(c), the requirements
set forth in clauses (iii) and (v) of the first sentence of Section 5.11(c) are
satisfied) or Section 5.11(d) (unless such failure resulted from Parent's breach
of Section 5.12) shall relieve Parent and Merger Subsidiary from all liability
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arising out of failure of the Merger to occur on or prior to the Outside Date
(or on or prior to the last day of any extension thereof).
SECTION 8.02. 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, Merger Subsidiary
nor their respective officers or directors shall have any further obligation
with respect thereto except for the agreements contained in Articles I, II and
VIII and Sections 5.07 and 5.13.
SECTION 8.03 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):
If to Parent or Merger Subsidiary, to:
Allied Waste Industries, Inc.
00000 Xxxxxxxx-Xxxxxx Xxxx
Xxxxx 000, Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxx, Esq.,
Vice President, Legal
Facsimile: (000) 000-0000
with copies to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
If to the Company, to:
Xxxxxxxx-Xxxxxx Industries, Inc.
000 X. Xxxxxxxx
Xxxxxxx, XX 00000
Attention: Corporate Secretary
Facsimile: (000) 000-0000
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with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Xxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
SECTION 8.04 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, (ii) "knowledge" shall mean
actual knowledge of the executive officers of the Company or Parent, as the case
may be, and (iii) 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. For purposes of determining whether any fact or
circumstance involves a material adverse effect on the results of operations of
a party, any special transaction charges incurred by such party as a result of
the consummation of transactions contemplated by this Agreement shall not be
considered.
SECTION 8.05 Miscellaneous. This Agreement (including the
documents and instruments referred to herein): shall not be assigned by
operation of law or otherwise except that Merger Subsidiary may assign its
obligations under this Agreement to any other wholly-owned subsidiary of Parent
subject to the terms of this Agreement. 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 8.06 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.
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SECTION 8.07. Amendments; No Waivers. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, Parent and Merger Subsidiary or, in the case of a
waiver, by the party against whom the waiver is to be effective; provided that
any waiver or amendment shall be effective against a party only if the board of
directors of such party approves such waiver or amendment.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 8.08. Entire Agreement. This Agreement and the
Confidentiality Agreement constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter of this Agreement. No representation, inducement,
promise, understanding, condition or warranty not set forth herein has been made
or relied upon by either party hereto. Neither this Agreement nor any provision
hereof is intended to confer upon any person other than the parties hereto any
rights or remedies hereunder except for the provisions of Section 5.13, which
are intended for the benefit of the Company's former and present officers,
directors, employees and agents, the provisions of Articles I and II, which are
intended for the benefit of the Company's stockholders, including holders of
Options, the provisions of Section 5.07, which are intended for the benefit of
the parties to the agreements or participants in the plans referred to therein.
SECTION 8.09. Severability. If any term or other provision of
this Agreement is invalid, illegal or unenforceable, all other provisions of
this Agreement shall remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party.
SECTION 8.10. Specific Performance. The parties hereto agree
that irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedies at law or in equity.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officers as of the
day and year first above written.
XXXXXXXX-XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxx
-----------------------------------------
Title: President and Chief Executive
Officer
ALLIED WASTE INDUSTRIES, INC.
By: /s/ Xxxxxx X. Xxx Xxxxxxx
-------------------------------------------
Title: Chairman and Chief Executive
Officer
AWIN I ACQUISITION CORPORATION
By: /s/ Xxxxx X. Xxxx
--------------------------------------------
Title: President
