1
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 18, 1995
BY AND AMONG
USA WASTE SERVICES, INC.,
RIVIERA ACQUISITION CORPORATION
AND
WESTERN WASTE INDUSTRIES
2
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 18, 1995 (the
"Agreement"), by and among USA Waste Services, Inc., a Delaware corporation
("Parent"), Riviera Acquisition Corporation, a California corporation and a
wholly owned subsidiary of Parent ("Subsidiary"), and Western Waste Industries,
a California corporation (the "Company");
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Subsidiary and the Company
have approved the merger of Subsidiary with and into the Company on the terms
set forth in the Agreement (the "Merger"); and
WHEREAS, Parent, Subsidiary and the Company intend the Merger to
qualify as a tax-free reorganization under the provisions of Section 368 of the
Internal Revenue Code of 1986, as amended (the "Code"), and the regulations
thereunder;
WHEREAS, in connection with the Merger and as an inducement to the
Company to enter into this Agreement, the Company, Parent and certain
shareholders of Parent have executed as of the date hereof a voting agreement
in favor of the Company with respect to, among other things, the voting of
shares of capital stock of Parent held or to be held by them in favor of the
Merger; and
WHEREAS, in connection with the Merger and as an inducement to Parent
to enter into this Agreement, Parent, the Company and a principal shareholder
of the Company have executed as of the date hereof a voting agreement in favor
of Parent with respect to, among other things, the voting of shares of capital
stock of the Company held or to be held by such shareholder in favor of the
Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound, agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in Section 1.2)
in accordance with the California Corporations Code (the "CCC"), Subsidiary
shall be merged with and into the Company and the separate existence of
Subsidiary shall thereupon cease. The Company shall be the surviving
corporation in the Merger and is hereinafter sometimes referred to as the
"Surviving Corporation."
SECTION 1.2. EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at such time (the "Effective Time") as shall be stated in a
certified copy of the Agreement, in a form mutually acceptable to Parent and
the Company, to be filed with the Secretary of State of the State of California
in accordance with the CCC (the "Merger Filing"). The Merger Filing shall be
made simultaneously with or as soon as practicable after the closing of the
transactions contemplated by this Agreement in accordance with Section 3.5.
The parties acknowledge that it is their mutual desire and intent to
3
consummate the Merger as soon as practicable after the date hereof.
Accordingly, the parties shall use all reasonable efforts to consummate, as
soon as practicable, the transactions contemplated by this Agreement in
accordance with Section 3.5.
ARTICLE II
THE SURVIVING AND PARENT CORPORATIONS
SECTION 2.1. ARTICLES OF INCORPORATION. The Articles of
Incorporation of Subsidiary as in effect immediately prior to the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation after
the Effective Time, and thereafter may be amended in accordance with its terms
and as provided in the CCC.
SECTION 2.2. BY-LAWS. The By-laws of Subsidiary as in effect
immediately prior to the Effective Time shall be the By-laws of the Surviving
Corporation after the Effective Time, and thereafter may be amended in
accordance with their terms and as provided by the Articles of Incorporation of
the Surviving Corporation and the CCC.
SECTION 2.3. DIRECTORS. The Board of Directors of Parent shall take
such corporate action as may be necessary to cause Parent's Board of Directors
immediately following the Effective Time to be expanded to include three (3)
members designated by the Board of Directors of the Company, one of whom shall
be appointed by the Board of Directors of Parent to the Executive Committee of
the Board of Directors of Parent. The directors of the Surviving Corporation
shall be as designated in Schedule 2.3, and such directors shall serve in
accordance with the By-laws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
SECTION 2.4. OFFICERS. The officers of the Surviving Corporation
shall be as designated in Schedule 2.4, and such officers shall serve in
accordance with the By-laws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1. CONVERSION OF COMPANY SHARES IN THE MERGER. At the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of the Company:
(a) each share of the Company's Common Stock, no par value (the
"Company Common Stock"), shall, subject to Sections 3.3 and 3.4, be
converted into the right to receive, without interest, 1.50 (the
"Exchange Ratio") shares of the common stock, par value $.01 per
share, of Parent ("Parent Common Stock");
(b) each share of capital stock of the Company, if any,
owned by Parent or any subsidiary of Parent or held in treasury by the
Company or any subsidiary of the Company immediately prior to the
Effective Time shall be cancelled and shall cease to exist from and
after the Effective Time; and
Page 2
4
(c) subject to and as more fully provided in Section 7.9,
each unexpired option to purchase Company Common Stock that is
outstanding at the Effective Time, whether or not exercisable,
shall automatically and without any action on the part of the
holder thereof be converted into an option to purchase a number of
shares of Parent Common Stock equal to the number of shares of
Company Common Stock that could be purchased under such option
multiplied by the Exchange Ratio, at a price per share of Parent
Common Stock equal to the per share exercise price of such option
divided by the Exchange Ratio.
SECTION 3.2. CONVERSION OF SUBSIDIARY SHARES. At the Effective
Time, by virtue of the Merger and without any action on the part of Parent as
the sole stockholder of Subsidiary, each issued and outstanding share of common
stock, par value $.01 per share, of Subsidiary ("Subsidiary Common Stock")
shall be converted into one share of common stock, no par value, of the
Surviving Corporation.
SECTION 3.3. EXCHANGE OF CERTIFICATES. (a) From and after the
Effective Time, each holder of an outstanding certificate which immediately
prior to the Effective Time represented shares of Company Common Stock shall be
entitled to receive in exchange therefor, upon surrender thereof to an exchange
agent reasonably satisfactory to Parent and the Company (the "Exchange Agent"),
a certificate or certificates representing the number of whole shares of Parent
Common Stock to which such holder is entitled pursuant to Section 3.1(a).
Notwithstanding any other provision of this Agreement, (i) until holders or
transferees of certificates theretofore representing shares of Company Common
Stock have surrendered them for exchange as provided herein, no dividends shall
be paid with respect to any shares represented by such certificates and no
payment for fractional shares shall be made and (ii) without regard to when
such certificates representing shares of Company Common Stock are surrendered
for exchange as provided herein, no interest shall be paid on any dividends or
any payment for fractional shares. Upon surrender of a certificate which
immediately prior to the Effective Time represented shares of Company Common
Stock, there shall be paid to the holder of such certificate the amount of any
dividends which theretofore became payable, but which were not paid by reason
of the foregoing, with respect to the number of whole shares of Parent Common
Stock represented by the certificate or certificates issued upon such
surrender.
(b) If any certificate for shares of Parent Common Stock is to be
issued in a name other than that in which the certificate for shares of Company
Common Stock surrendered in exchange therefor is registered, it shall be a
condition of such exchange that the person requesting such exchange shall pay
any applicable transfer or other taxes required by reason of such issuance.
(c) Promptly after the Effective Time, Parent shall make available to
the Exchange Agent the certificates representing shares of Parent Common Stock
required to effect the exchanges referred to in paragraph (a) above and cash
for payment of any fractional shares referred to in Section 3.4.
(d) Promptly after the Effective Time, the Exchange Agent shall mail
to each holder of record of a certificate or certificates that immediately
prior to the Effective Time represented outstanding shares of Company Common
Stock (the "Company Certificates") (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Company Certificates shall pass, only upon actual delivery of the Company
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Company Certificates in exchange for certificates
representing shares of Parent Common Stock. Upon surrender of Company
Certificates for cancellation to the Exchange Agent, together with a duly
executed letter of transmittal and such other documents as the Exchange Agent
shall reasonably require, the holder of such Company Certificates shall be
entitled to receive in exchange therefor a certificate representing that number
of whole shares of Parent Common Stock into which the shares of Company Common
Stock theretofore represented by the Company Certificates so surrendered shall
have been converted pursuant to the provisions of Section 3.1(a), and the
Company Certificates so surrendered shall be cancelled. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of shares of Company Common Stock for any shares of Parent Common
Page 3
5
Stock or dividends or distributions thereon delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(e) Promptly following the date which is nine (9) months after the
Effective Date, the Exchange Agent shall deliver to Parent all cash,
certificates (including any Parent Common Stock) and other documents in its
possession relating to the transactions described in this Agreement, and the
Exchange Agent's duties shall terminate. Thereafter, each holder of a Company
Certificate may surrender such Company Certificate to the Surviving Corporation
and (subject to applicable abandoned property, escheat and similar laws)
receive in exchange therefor the Parent Common Stock, without any interest
thereon. Notwithstanding the foregoing, none of the Exchange Agent, Parent,
Subsidiary, the Company or the Surviving Corporation shall be liable to a
holder of Company Common Stock for any Parent Common Stock delivered to a
public official pursuant to applicable abandoned property, escheat and similar
laws.
(f) In the event any Company Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Company Certificate to be lost, stolen or destroyed, the
Surviving Corporation shall issue in exchange for such lost, stolen or
destroyed Company Certificate the Parent Common Stock deliverable in respect
thereof determined in accordance with this Article III. When authorizing such
payment in exchange therefor, the Board of Directors of the Surviving
Corporation may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed Company
Certificate to give the Surviving Corporation such indemnity as it may
reasonably direct as protection against any claim that may be made against the
Surviving Corporation with respect to the Company Certificate alleged to have
been lost, stolen or destroyed.
SECTION 3.4. NO FRACTIONAL SECURITIES. Notwithstanding any other
provision of this Agreement, no certificates or scrip for fractional shares of
Parent Common Stock shall be issued in the Merger and no Parent Common Stock
dividend, stock split or interest shall relate to any fractional security, and
such fractional interests shall not entitle the owner thereof to vote or to any
other rights of a security holder. In lieu of any such fractional shares, each
holder of Company Common Stock who would otherwise have been entitled to
receive a fraction of a share of Parent Common Stock upon surrender of Company
Certificates for exchange pursuant to this Article III shall be entitled to
receive from the Exchange Agent a cash payment equal to such fraction
multiplied by the average closing price per share of Parent Common Stock on the
New York Stock Exchange, as reported by the Wall Street Journal, during the 10
trading days immediately preceding the Effective Time.
SECTION 3.5. CLOSING. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at a location
mutually agreeable to Parent and the Company on the fifth business day
immediately following the date on which the last of the conditions set forth in
Article VIII is fulfilled or waived, or at such other time and place as Parent
and the Company shall agree (the date on which the Closing occurs is referred
to in this Agreement as the "Closing Date").
SECTION 3.6. CLOSING OF THE COMPANY'S TRANSFER BOOKS. At and after
the Effective Time, holders of Company Certificates shall cease to have any
rights as stockholders of the Company, except for the right to receive shares
of Parent Common Stock pursuant to Section 3.1 and the right to receive cash
for payment of fractional shares pursuant to Section 3.4. At the Effective
Time, the stock transfer books of the Company shall be closed and no transfer
of shares of Company Common Stock which were outstanding immediately prior to
the Effective Time shall thereafter be made. If, after the Effective Time,
subject to the terms and conditions of this Agreement, Company Certificates
formerly representing Company Common Stock are presented to the Surviving
Corporation, they shall be cancelled and exchanged for Parent Common Stock in
accordance with this Article III.
Page 4
6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
Parent and Subsidiary each 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 "Disclosure Schedule"), each of
which exceptions shall specifically identify the relevant Section hereof to
which it relates:
SECTION 4.1. ORGANIZATION AND QUALIFICATION. Each of Parent and
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation and has the requisite
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted. Each of Parent and
Subsidiary is qualified to do business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing will not, when
taken together with all other such failures, have a material adverse effect on
the business, operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a whole. True,
accurate and complete copies of each of Parent's and Subsidiary's charters and
By-laws, in each case as in effect on the date hereof, including all amendments
thereto, have heretofore been delivered to the Company.
SECTION 4.2. CAPITALIZATION. (a) The authorized capital stock of
Parent consists of (i) 150,000,000 shares of Parent Common Stock, of which
60,659,184 shares were outstanding as of November 10, 1995, and (ii) 10,000,000
shares of preferred stock, par value $.01 per share, none of which was issued
and outstanding as of November 10, 1995. All of the issued and outstanding
shares of Parent Common Stock are validly issued and are fully paid,
nonassessable and free of preemptive rights.
(b) The authorized capital stock of Subsidiary consists of 1,000
shares of Subsidiary Common Stock, of which 100 shares are issued and
outstanding, which shares are owned beneficially and of record by Parent.
(c) Except as disclosed in the Parent SEC Reports (as defined in
Section 4.5), as of the date hereof, there are no outstanding subscriptions,
options, calls, contracts, commitments, understandings, restrictions,
arrangements, rights or warrants, including any right of conversion or exchange
under any outstanding security, instrument or other agreement and also
including any rights plan or other anti-takeover agreement, obligating Parent
or any subsidiary of Parent to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of the capital stock of Parent or
obligating Parent or any subsidiary of Parent to grant, extend or enter into
any such agreement or commitment. There are no voting trusts, proxies or other
agreements or understandings to which Parent or any subsidiary of Parent is a
party or is bound with respect to the voting of any shares of capital stock of
Parent other than voting agreements executed in connection with this
Agreement. The shares of Parent Common Stock issued to stockholders of the
Company in the Merger will be at the Effective Time duly authorized, validly
issued, fully paid and nonassessable and free of preemptive rights.
SECTION 4.3. SUBSIDIARIES. Each direct and indirect corporate
subsidiary of Parent is duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation and has the requisite power
and authority to own, lease and operate its assets and properties and to carry
on its business as it is now being conducted. Each subsidiary of Parent is
qualified to do business, and is in good standing, in each jurisdiction in
which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified and in good standing would not, when taken together
with all such other failures, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole. All of the
outstanding shares of capital stock
Page 5
7
of each corporate subsidiary of Parent are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned directly or
indirectly by Parent, free and clear of any liens, claims or encumbrances
except that such shares are pledged to secure Parent's credit facilities.
There are no subscriptions, options, warrants, rights, calls, contracts, voting
trusts, proxies or other commitments, understandings, restrictions or
arrangements relating to the issuance, sale, voting, transfer, ownership or
other rights with respect to any shares of capital stock of any corporate
subsidiary of Parent, including any right of conversion or exchange under any
outstanding security, instrument or agreement. As used in this Agreement, the
term "subsidiary" shall mean, when used with reference to any person or entity,
any corporation, partnership, joint venture or other entity of which such
person or entity (either acting alone or together with its other subsidiaries)
owns, directly or indirectly, 50% or more of the stock or other voting
interests, the holders of which are entitled to vote for the election of a
majority of the board of directors or any similar governing body of such
corporation, partnership, joint venture or other entity.
SECTION 4.4. AUTHORITY; NON-CONTRAVENTION; APPROVALS. (a) Parent
and Subsidiary each have full corporate power and authority to enter into this
Agreement and, subject to the Parent Stockholders' Approval (as defined in
Section 7.3(b)) and the Parent Required Statutory Approvals (as defined in
Section 4.4(c)), to consummate the transactions contemplated hereby. This
Agreement has been approved by the Boards of Directors of Parent and
Subsidiary, and no other corporate proceedings on the part of Parent or
Subsidiary are necessary to authorize the execution and delivery of this
Agreement or, except for the Parent Stockholders' Approval, the consummation by
Parent and Subsidiary of the transactions contemplated hereby. This Agreement
has been duly executed and delivered by each of Parent and Subsidiary, and,
assuming the due authorization, execution and delivery hereof by the Company,
constitutes a valid and legally binding agreement of each of Parent and
Subsidiary enforceable against each of them in accordance with its terms,
except that such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) general equitable
principles. Without limitation of the foregoing, each of the covenants and
obligations of Parent set forth in Sections 6.2, 6.5, 7.1, 7.2, 7.3, 7.6, 7.7,
7.8, 7.10 and 7.12 is valid, legally binding and enforceable notwithstanding
the absence of the Parent Stockholders' Approval.
(b) The execution and delivery of this Agreement by each of Parent and
Subsidiary do not violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Parent or any of
its subsidiaries under any of the terms, conditions or provisions of (i) the
respective charters or by-laws of Parent or any of its subsidiaries, (ii) any
statute, law, ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority applicable to
Parent or any of its subsidiaries or any of their respective properties or
assets or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind to which Parent or any of its subsidiaries is now a
party or by which Parent or any of its subsidiaries or any of their respective
properties or assets may be bound or affected. The consummation by Parent and
Subsidiary of the transactions contemplated hereby will not result in any
violation, conflict, breach, termination, acceleration or creation of liens
under any of the terms, conditions or provisions described in clauses (i)
through (iii) of the preceding sentence, subject (x) in the case of the terms,
conditions or provisions described in clause (ii) above, to obtaining (prior to
the Effective Time) the Parent Required Statutory Approvals and the Parent
Stockholder's Approval and (y) in the case of the terms, conditions or
provisions described in clause (iii) above, to obtaining (prior to the
Effective Time) consents required from commercial lenders, lessors or other
third parties. Excluded from the foregoing sentences of this paragraph (b),
insofar as they apply to the terms, conditions or provisions described in
clauses (ii) and (iii) of the first sentence of this paragraph (b), are such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances that would not,
in the aggregate, have a material adverse effect on the
Page 6
8
business, operations, properties, assets, condition (financial or other)
results of operations or prospects of Parent and its subsidiaries, taken as a
whole.
(c) Except for (i) the filings by Parent and the Company required by
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the filing of the Joint Proxy Statement/Prospectus (as defined in
Section 4.9) with the Securities and Exchange Commission (the "SEC") pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
the Securities Act of 1933, as amended (the "Securities Act"), and the
declaration of the effectiveness thereof by the SEC and filings with various
state blue sky authorities, (iii) the making of the Merger Filing with the
Secretary of State of the State of California in connection with the Merger,
and (iv) any required filings with or approvals from applicable state
environmental authorities, public service commissions and public utility
commissions (the filings and approvals referred to in clauses (i) through (iv)
are collectively referred to as the "Parent Required Statutory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by Parent or
Subsidiary or the consummation by Parent or Subsidiary of the transactions
contemplated hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made or obtained,
as the case may be, would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition (financial or other)
or results of operations of Parent and its subsidiaries, taken as a whole.
SECTION 4.5. REPORTS AND FINANCIAL STATEMENTS. Since January 1,
1993, Parent has filed with the SEC all forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto) required
to be filed by it under each of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. Parent has
previously delivered to the Company copies of its (a) Annual Reports on Form
10-K for the fiscal year ended December 31, 1994 and for each of the two
immediately preceding fiscal years, as filed with the SEC, (b) proxy and
information statements relating to (i) all meetings of its stockholders
(whether annual or special) and (ii) actions by written consent in lieu of a
stockholders' meeting from January 1, 1993, until the date hereof, and (c) all
other reports, including quarterly reports, or registration statements filed by
Parent with the SEC since January 1, 1993 (other than Registration Statements
filed on Form S-8) (collectively, the "Parent SEC Reports"). 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 light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited interim consolidated financial
statements of Parent included in such reports (collectively, the "Parent
Financial Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the 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 the unaudited interim financial statements, to normal
year-end and audit adjustments and any other adjustments described therein.
SECTION 4.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed
in the Parent SEC Reports or with respect to acquisitions or potential
transactions or commitments heretofore disclosed to the Company in writing,
neither Parent nor any of its subsidiaries had at September 30, 1995, or has
incurred since that date, 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 September 30, 1995, and were incurred in the ordinary
course of business and consistent with past practices; (b) liabilities,
obligations or contingencies which (i) would not, in the aggregate, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole, or (ii) have been discharged or paid in full
Page 7
9
prior to the date hereof; and (c) liabilities and obligations which are of a
nature not required to be reflected in the consolidated financial statements of
Parent and its subsidiaries prepared in accordance with generally accepted
accounting principles consistently applied and which were incurred in the
ordinary course of business.
SECTION 4.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of
the most recent Parent SEC Report, there has not been any material adverse
change in the business, operations, properties, assets, liabilities, condition
(financial or other) or results of operations of Parent and its subsidiaries,
taken as a whole.
SECTION 4.8. LITIGATION. Except as disclosed in the Parent SEC
Reports, there are no claims, suits, actions or proceedings pending or, to the
knowledge of Parent, threatened against, relating to or affecting Parent or any
of its subsidiaries, before any court, governmental department, commission,
agency, instrumentality or authority, or any arbitrator that seek to restrain
or enjoin the consummation of the Merger or which could reasonably be expected,
either alone or in the aggregate with all such claims, actions or proceedings,
to materially and adversely affect the business, operations, properties,
assets, condition (financial or other) or results of operations of Parent and
its subsidiaries, taken as a whole. Except as set forth in the Parent SEC
Reports, neither Parent nor any of its subsidiaries is subject to any judgment,
decree, injunction, rule or order of any court, governmental department,
commission, agency, instrumentality or authority or any arbitrator which
prohibits or restricts the consummation of the transactions contemplated hereby
or would have any material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
Parent and its subsidiaries, taken as a whole.
SECTION 4.9. REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by Parent or its subsidiaries for inclusion in (a)
the Registration Statement on Form S-4 to be filed under the Securities Act
with the SEC by Parent in connection with the Merger for the purpose of
registering the shares of Parent Common Stock to be issued in the Merger (the
"Registration Statement") or (b) the proxy statement to be distributed in
connection with the Company's and Parent's meetings of their respective
stockholders to vote upon this Agreement and the transactions contemplated
hereby (the "Proxy Statement" and, together with the prospectus included in the
Registration Statement, the "Joint Proxy Statement/Prospectus") will, in the
case of the Proxy Statement or any amendments thereof or supplements thereto,
at the time of the mailing of the Proxy Statement and any amendments or
supplements thereto, and at the time of the meetings of stockholders of the
Company and Parent to be held in connection with the transactions contemplated
by this Agreement, or, in the case of the Registration Statement, as amended or
supplemented, at the time it becomes effective and at the time of such meetings
of the stockholders of the Company and Parent, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will, as of its mailing date, comply as to form in all
material respects with all applicable laws, including the provisions of the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by Parent or Subsidiary with
respect to information supplied by the Company or the stockholders of the
Company for inclusion therein.
SECTION 4.10. NO VIOLATION OF LAW. Except as disclosed in the Parent
SEC Reports, neither Parent nor any of its subsidiaries is in violation of, or
has been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance, or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the aggregate,
could not reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a whole. Except
as disclosed in the Parent SEC Reports, as of the date of this Agreement, to
the knowledge of Parent, no investigation or review by any governmental or
regulatory body or authority is pending or threatened, nor has any governmental
or
Page 8
10
regulatory body or authority indicated an intention to conduct the same, other
than, in each case, those the outcome of which, as far as reasonably can be
foreseen, will not have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Parent and its subsidiaries, taken as a whole. Parent 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 "Parent Permits"), except
for permits, licenses, franchises, variances, exemptions, orders,
authorizations, consents and approvals the absence of which, alone or in the
aggregate, would not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of the Parent and its subsidiaries, taken as a whole. Parent and
its subsidiaries are not in violation of the terms of any Parent Permit, except
for delays in filing reports or violations which, alone or in the aggregate,
would not have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Parent and its subsidiaries, taken as a whole.
SECTION 4.11. COMPLIANCE WITH AGREEMENTS. Except as disclosed in the
Parent SEC Reports, Parent 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, could result in a default under (a) the respective charters,
by-laws or other similar organizational instruments of Parent or any of its
subsidiaries or (b) any contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which Parent 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, which breaches, violations
and defaults, in the case of clause (b) of this Section 4.11, would have, in
the aggregate, a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
Parent and its subsidiaries, taken as a whole.
SECTION 4.12. TAXES. (a) Parent and its subsidiaries have (i) duly
filed with the appropriate governmental authorities all Tax Returns (as defined
in Section 4.12(c)) required to be filed by them for all periods ending on or
prior to the Effective Time, other than those Tax Returns the failure of which
to file would not have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
Parent and its subsidiaries, taken as a whole, and such Tax Returns are true,
correct and complete in all material respects and (ii) duly paid in full or
made adequate provision for the payment of all Taxes (as defined in Section
4.12(b)) for all periods ending at or prior to the Effective Time. The
liabilities and reserves for Taxes reflected in the Parent balance sheet
included in the latest Parent SEC Report are adequate to cover all Taxes for
all periods ending at or prior to the Effective Time and there are no material
liens for Taxes upon any property or assets of Parent or any subsidiary
thereof, except for liens for Taxes not yet due. 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 Parent or any
of its subsidiaries which, if decided adversely, singly or in the aggregate,
would have a material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of Parent and
its subsidiaries, taken as a whole. Neither Parent nor any of its subsidiaries
is a party to any agreement providing for the allocation or sharing of Taxes
with any entity that is not, directly or indirectly, a wholly-owned corporate
subsidiary of Parent other than agreements the consequences of which are fully
and adequately reserved for in the Parent Financial Statements. Neither Parent
nor any of its corporate subsidiaries has, with regard to any assets or
property held, acquired or to be acquired by any of them, filed a consent to
the application of Section 341(f) of the Code.
(b) For purposes of this Agreement, the term "Taxes" shall mean
all taxes, including, without limitation, income, gross receipts, excise,
property, sales, withholding, social security, occupation, use, service,
service use, license, payroll, franchise, transfer and recording taxes, fees
and charges, windfall profits, severance, customs, import, export, employment
or similar taxes, charges, fees, levies or other assessments imposed by the
United States, or any state, local or foreign government or subdivision or
agency thereof, whether computed on a separate, consolidated, unitary, combined
or any other basis, and
Page 9
11
such term shall include any interest, fines, penalties or additional amounts
and any interest in respect of any additions, fines or penalties attributable
or imposed or with respect to any such taxes, charges, fees, levies or other
assessments.
(c) For purposes of this Agreement, the term "Tax Return" shall mean
any return, report or other document or information required to be supplied to
a taxing authority in connection with Taxes.
SECTION 4.13. EMPLOYEE BENEFIT PLANS; ERISA. (a) Except as set forth
in the Parent SEC Reports, at the date hereof, Parent and its subsidiaries do
not maintain or contribute to any material employee benefit plans, programs,
arrangements or practices (such plans, programs, arrangements or practices of
Parent and its subsidiaries being referred to as the "Parent Plans"), including
employee benefit plans within the meaning set forth in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or other
similar material arrangements for the provision of benefits (excluding any
"Multi-employer Plan" within the meaning of Section 3(37) of ERISA or a
"Multiple Employer Plan" within the meaning of Section 413(c) of the Code). The
Parent Disclosure Schedule lists all Multi-employer Plans and Multiple Employer
Plans which any of Parent or its subsidiaries maintains or to which any of them
makes contributions. Neither Parent nor its subsidiaries has any obligation to
create any additional such plan or to amend any such plan so as to increase
benefits thereunder, except as required under the terms of the Parent Plans,
under existing collective bargaining agreements or to comply with applicable
law.
(b) Except as disclosed in the Parent 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 Parent Plans that could
result in penalties, taxes or liabilities which, singly or in the aggregate,
could have a material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of Parent and
its subsidiaries, taken as a whole, (ii) except for premiums due, there is no
outstanding material liability, whether measured alone or in the aggregate,
under Title IV of ERISA with respect to any of the Parent Plans, (iii) neither
the Pension Benefit Guaranty Corporation nor any plan administrator has
instituted proceedings to terminate any of the Parent Plans subject to Title IV
of ERISA other than in a "standard termination" described in Section 4041(b) of
ERISA, (iv) none of the Parent 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 Parent Plans ended prior to the date of this Agreement, (v) the
current present value of all projected benefit obligations under each of the
Parent Plans which is subject to Title IV of ERISA did not, as of its latest
valuation date, exceed the then current value of the assets of such plan
allocable to such benefit liabilities by more than the amount, if any,
disclosed in the Parent SEC Reports as of June 30, 1995, based upon reasonable
actuarial assumptions currently utilized for such Parent Plan, (vi) each of the
Parent Plans has been operated and administered in all material respects in
accordance with applicable laws during the period of time covered by the
applicable statute of limitations, (vii) each of the Parent Plans which is
intended to be "qualified" within the meaning of Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and such
determination has not been modified, revoked or limited by failure to satisfy
any condition thereof or by a subsequent amendment thereto or a failure to
amend, except that it may be necessary to make additional amendments
retroactively to maintain the "qualified" status of such Parent Plans, and the
period for making any such necessary retroactive amendments has not expired,
(viii) with respect to Multi-employer Plans, neither Parent 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 Parent and its subsidiaries, no
event has occurred or is expected to occur which presents a material risk of a
complete or partial withdrawal under said Sections 4203, 4204 and 4205, (ix) to
the best knowledge of Parent and its subsidiaries, there are no material
pending, threatened or anticipated claims involving any of the Parent Plans
other than claims for benefits in the ordinary course, and (x) Parent and its
subsidiaries have no current material liability for plan termination or
withdrawal (complete or partial) under Title IV of ERISA based on any plan to
which any entity that would be deemed one employer with Parent and its
subsidiaries
Page 10
12
under Section 4001 of ERISA or Section 414 of the Code contributed during the
period of time covered by the applicable statute of limitations (a "Parent
Controlled Group Plan"), and Parent and its subsidiaries do not reasonably
anticipate that any such liability will be asserted against Parent or any of
its subsidiaries. None of the Parent Controlled Group Plans has an
"accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code).
(c) The Parent SEC Reports contain a true and complete summary or list
of or otherwise describe all material employment contracts and other employee
benefit arrangements with "change of control" or similar provisions and all
severance agreements with executive officers.
SECTION 4.14. LABOR CONTROVERSIES. Except as set forth in the Parent
SEC Reports, (a) there are no significant controversies pending or, to the
knowledge of Parent, threatened between Parent or its subsidiaries and any
representatives of any of their employees and (b) to the knowledge of Parent,
there are no material organizational efforts presently being made involving any
of the presently unorganized employees of Parent and its subsidiaries except
for such controversies and organizational efforts which, singly or in the
aggregate, could not reasonably be expected to materially and adversely affect
the business, operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a whole.
SECTION 4.15. ENVIRONMENTAL MATTERS. (a) Except as set forth in the
Parent SEC Reports, (i) Parent 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 Parent or any of
its subsidiaries contain any Hazardous Substance as a result of any activity of
Parent or any of its subsidiaries in amounts exceeding the levels permitted by
applicable Environmental Laws, (iii) neither Parent nor any of its
subsidiaries has received any notices, demand letters or requests for
information from any Federal, state, local or foreign governmental entity or
third party indicating that Parent 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 Parent or any of its subsidiaries
relating to any violation, or alleged violation, of any Environmental Law, (v)
no reports have been filed, or are required to be filed, by Parent or any of
its subsidiaries concerning the release of any Hazardous Substance or the
threatened or actual violation of any Environmental Law, (vi) no Hazardous
Substance has been disposed of, released or transported in violation of any
applicable Environmental Law from any properties owned by Parent or any of its
subsidiaries as a result of any activity of parent or any of its subsidiaries
during the time such properties were owned, leased or operated by Parent or any
of its subsidiaries, (vii) there have been no environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance or
noncompliance with any applicable Environmental Law conducted by or which are
in the possession of Parent or its subsidiaries relating to the activities of
Parent or its subsidiaries which have not been delivered to Parent prior to the
date hereof, (viii) there are no underground storage tanks on, in or under any
properties owned by Parent or any of its subsidiaries and no underground
storage tanks have been closed or removed from any of such properties during
the time such properties were owned, leased or operated by Parent or any of its
subsidiaries, (ix) there is no asbestos or asbestos containing material present
in any of the properties owned by Parent and its subsidiaries, and no asbestos
has been removed from any of such properties during the time such properties
were owned, leased or operated by Parent or any of its subsidiaries, and (x)
neither Parent, 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 (x) that, singly or
in the aggregate, would not reasonably be expected to have a material adverse
effect on the business, operations, properties, assets, condition (financial or
other) or results of operations of Parent and its subsidiaries considered as
one enterprise,
Page 11
13
(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 on the Closing Date. The
term "Environmental Law" includes, without limitation, (i) the Federal
Comprehensive Environmental Response Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act,
the Federal Resource Conservation and Recovery Act of 1976 (including the
Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal
Act and the Federal Toxic Substances Control Act, the Federal Insecticide,
Fungicide and Rodenticide Act, and the Federal Occupational Safety and Health
Act of 1970, each as amended and as in effect on the Closing Date, and (ii) any
common law or equitable doctrine (including, without limitation, injunctive
relief and tort doctrines such as negligence, nuisance, trespass and strict
liability) that may impose liability or obligations for injuries or damages due
to, or threatened as a result of, the presence of, effects of or exposure to
any Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any substance
presently or hereafter listed, defined, designated or classified as hazardous,
toxic, radioactive, or dangerous, or otherwise regulated, under any
Environmental Law. Hazardous Substance includes any substance to which
exposure is regulated by any government authority or any Environmental Law
including, without limitation, any toxic waste, pollutant, contaminant,
hazardous substance, toxic substance, hazardous waste, special waste,
industrial substance or petroleum or any derivative or by-product thereof,
radon, radioactive material, asbestos, or asbestos containing material, urea
formaldehyde foam insulation, lead or polychlorinated biphenyls.
SECTION 4.16. NON-COMPETITION AGREEMENTS. Neither Parent nor any
subsidiary of Parent is a party to any agreement which purports to restrict or
prohibit in any material respect 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 the Parent or the Company,
or any corporations affiliated with either of them. None of Parent's officers,
directors or key employees is a party to any agreement which, by virtue of such
person's relationship with Parent, restricts in any material respect Parent or
any subsidiary of Parent from, directly or indirectly, engaging in any of the
businesses described above.
SECTION 4.17. TITLE TO ASSETS. Parent and each of its subsidiaries
has good and marketable title in fee simple to all its real property and good
title to all its leasehold interests and other properties as reflected in the
most recent balance sheet included in the Parent Financial Statements, except
for such properties and assets that have been disposed of in the ordinary
course of business since the date of such balance sheet, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any nature whatsoever,
except (i) the lien for current taxes, payments of which are not yet
delinquent, (ii) such imperfections in title and easements and encumbrances, if
any, as are not substantial in character, amount or extent and do not
materially detract from the value or interfere with the present use of the
property subject thereto or affected thereby, or otherwise materially impair
the Parent's business operations (in the manner presently carried on by the
Parent), or (iii) as disclosed in the Parent SEC Reports, and except for such
matters which, singly or in the aggregate, could not reasonably be expected to
materially and adversely affect the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole. All leases under which Parent 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
Page 12
14
or both would become a default other than defaults under such leases which in
the aggregate will not materially and adversely affect the Parent and its
subsidiaries, taken as a whole.
SECTION 4.18. POOLING OF INTERESTS. None of the Parent, Subsidiary
or, to their knowledge, any of their affiliates has taken or agreed to take any
action that would prevent the Merger from (a) constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code or (b) being
treated for financial accounting purposes as a "pooling of interests" in
accordance with generally accepted accounting principles and the rules,
regulations and interpretations of the SEC (a "Pooling Transaction").
SECTION 4.19. PARENT STOCKHOLDERS' APPROVAL. The affirmative vote of
stockholders of Parent required for approval and adoption of this Agreement and
the Merger is a majority of the shares of Parent Common Stock present in person
or by proxy at a meeting of such stockholders and entitled to vote thereat.
SECTION 4.20. BROKERS AND FINDERS. Except for the fees and expenses
payable to Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation ("DLJ"), which
fees are reflected in its agreement with Parent (a copy of which has been
delivered to the Company), Parent has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of Parent to pay any finder's fees, brokerage or agent commissions
or other like payments in connection with the transactions contemplated hereby.
Except for the fees and expenses paid or payable to DLJ, there is no claim for
payment by Parent of any investment banking fees, finder's fees, brokerage or
agent commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
Section 4.21. OPINION OF FINANCIAL ADVISOR. The financial advisor of
Parent, DLJ, has rendered a written opinion to Parent to the effect that the
Exchange Ratio is fair from a financial point of view to the Parent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subsidiary that,
except as set forth in the disclosure schedule dated as of the date hereof and
signed by an authorized officer of the Company (the "Company Disclosure
Schedule"), each of which exceptions shall specifically identify the relevant
Section hereof to which it relates:
SECTION 5.1. ORGANIZATION AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of California and has the requisite corporate power and
authority to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. The Company is qualified to do
business and is in good standing in each jurisdiction in which the properties
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be so qualified
and in good standing will not, when taken together with all other such
failures, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole. True, accurate and
complete copies of the Company's Articles of Incorporation and By-laws, in each
case as in effect on the date hereof, including all amendments thereto, have
heretofore been delivered to Parent.
SECTION 5.2. CAPITALIZATION. (a) The authorized capital stock of
the Company consists of 50,000,000 shares of Company Common Stock and 2,000,000
shares of preferred stock. As of October 31, 1995, 14,658,301 shares of
Company Common Stock and no shares of preferred stock were issued and
outstanding. All of such issued and outstanding shares are validly issued and
are fully paid,
Page 13
15
nonassessable and free of preemptive rights. No subsidiary of the Company
holds any shares of the capital stock of the Company.
(b) Except as disclosed in the Company SEC Reports, 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 voting trusts, proxies or other
agreements or understandings to which the Company or any subsidiary of the
Company is a party or is bound with respect to the voting of any shares of
capital stock of the Company other than voting agreements executed in
connection with this Agreement.
SECTION 5.3. SUBSIDIARIES. Each direct and indirect corporate
subsidiary of the Company is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has the
requisite power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each
subsidiary of the Company is qualified to do business, and is in good standing,
in each jurisdiction in which the properties owned, leased or operated by it or
the nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing will not, when
taken together with all such other failures, have a material adverse effect on
the business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a whole.
All of the outstanding shares of capital stock of each corporate subsidiary of
the Company are validly issued, fully paid, nonassessable and free of
preemptive rights and are owned directly or indirectly by the Company free and
clear of any liens, claims, encumbrances, security interests, equities, charges
and options of any nature whatsoever. 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 corporate subsidiary of the Company, including
any right of conversion or exchange under any outstanding security, instrument
or agreement.
SECTION 5.4. AUTHORITY; NON-CONTRAVENTION; APPROVALS. (a) The
Company has full corporate power and authority to enter into this Agreement
and, subject to the Company Stockholders' Approval (as defined in Section
7.3(a)) and the Company Required Statutory Approvals (as defined in Section
5.4(c)), to consummate the transactions contemplated hereby. This Agreement
has been approved by the Board of Directors of the Company, and no other
corporate proceedings on the part of the Company are necessary to authorize the
execution and delivery of this Agreement or, except for the Company
Stockholders' Approval, the consummation by the Company of the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
the Company, and, assuming the due authorization, execution and delivery hereof
by Parent and Subsidiary, constitutes a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its terms,
except that such enforcement may be subject to (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating to
enforcement of creditors' rights generally and (b) general equitable
principles. Without limitation of the foregoing, each of the covenants and
obligations of the Company set forth in Sections 6.1, 6.5, 7.1, 7.2, 7.3, 7.6,
7.7, 7.8, 7.10 and 7.12 is valid, legally binding and enforceable
notwithstanding the absence of the Company Stockholders' Approval.
(b) The execution and delivery of this Agreement by the Company do
not violate, conflict with or result in a breach of any provision of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Company
Page 14
16
or any of its subsidiaries under any of the terms, conditions or provisions of
(i) the respective charters or by-laws of the Company or any of its
subsidiaries, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to the Company or any of its subsidiaries or any of their
respective properties or assets, or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract, lease or other
instrument, obligation or agreement of any kind to which the Company or any of
its subsidiaries is now a party or by which the Company or any of its
subsidiaries or any of their respective properties or assets may be bound or
affected. The consummation by the Company of the transactions contemplated
hereby will not result in any violation, conflict, breach, termination,
acceleration or creation of liens under any of the terms, conditions or
provisions described in clauses (i) through (iii) of the preceding sentence,
subject (x) in the case of the terms, conditions or provisions described in
clause (ii) above, to obtaining (prior to the Effective Time) the Company
Required Statutory Approvals and the Company Stockholder's Approval and (y) in
the case of the terms, conditions or provisions described in clause (iii)
above, to obtaining (prior to the Effective Time) consents required from
commercial lenders, lessors or other third parties. Excluded from the
foregoing sentences of this paragraph (b), insofar as they apply to the terms,
conditions or provisions described in clauses (ii) and (iii) of the first
sentence of this paragraph (b), are such violations, conflicts, breaches,
defaults, terminations, accelerations or creations of liens, security
interests, charges or encumbrances that would not, in the aggregate, have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
(c) Except for (i) the filings by Parent, the Company and the
Company's principal shareholder required by the HSR Act, (ii) the filing of the
Joint Proxy Statement/Prospectus with the SEC pursuant to the Exchange Act and
the Securities Act and the declaration of the effectiveness thereof by the SEC
and filings with various state blue sky authorities, (iii) the making of the
Merger Filing with the Secretary of State of the State of California in
connection with the Merger and (iv) any required filings with or approvals from
applicable state environmental authorities, public service commissions and
public utility commissions (the filings and approvals referred to in clauses
(i) through (iv) are collectively referred to as the "Company Required
Statutory Approvals"), no declaration, filing or registration with, or notice
to, or authorization, consent or approval of, any governmental or regulatory
body or authority is necessary for the execution and delivery of this Agreement
by the Company or the consummation by the Company of the transactions
contemplated hereby, other than such declarations, filings, registrations,
notices, authorizations, consents or approvals which, if not made or obtained,
as the case may be, would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition (financial or other)
or results of operations of the Company and its subsidiaries, taken as a whole.
SECTION 5.5. REPORTS AND FINANCIAL STATEMENTS. Since July 1, 1993,
the Company has filed with the SEC all material forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto) required
to be filed by it under each of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder, all of which, as amended if
applicable, complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder. The Company
has previously delivered to Parent copies of its (a) Annual Reports on Form
10-K for the fiscal year ended June 30, 1995, and for each of the two
immediately preceding fiscal years, as filed with the SEC, (b) proxy and
information statements relating to (i) all meetings of its stockholders
(whether annual or special) and (ii) actions by written consent in lieu of a
stockholders' meeting from July 1, 1993, until the date hereof, and (c) all
other reports, including quarterly reports, or registration statements filed by
the Company with the SEC since July 1, 1993 (other than Registration Statements
filed on Form S-8) (the documents referred to in clauses (a), (b) and (c) are
collectively referred to as the "Company SEC Reports"). 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 light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited interim consolidated financial statements of the
Company included in such reports (collectively, the "Company Financial
Page 15
17
Statements") have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
therein or in the notes thereto) and fairly present the financial position of
the Company and its subsidiaries as of the dates thereof and the results of
their operations and changes in financial position for the periods then ended,
subject, in the case of the unaudited interim financial statements, to normal
year- end and audit adjustments and any other adjustments described therein.
SECTION 5.6. ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed
in the Company SEC Reports, neither the Company nor any of its subsidiaries had
at September 30, 1995, or has incurred since that date, 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, 1995, and were
incurred in the ordinary course of business and consistent with past practices,
(b) liabilities, obligations or contingencies which (i) would not, in the
aggregate, have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole, or (ii) have been
discharged or paid in full prior to the date hereof, and (c) liabilities and
obligations which are of a nature not required to be reflected in the
consolidated financial statements of the Company and its subsidiaries prepared
in accordance with generally accepted accounting principles consistently
applied and which were incurred in the ordinary course of business.
SECTION 5.7. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of
the most recent Company SEC Report, there has not been any material adverse
change in the business, operations, properties, assets, liabilities, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
SECTION 5.8. 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 seek
to restrain the consummation of the Merger or which could reasonably be
expected, either alone or in the aggregate with all such claims, actions or
proceedings, to materially and adversely affect the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole. Except as referred to in
the Company SEC Reports or in Schedule 5.8, neither the Company nor any of its
subsidiaries is subject to any judgment, decree, injunction, rule or order of
any court, governmental department, commission, agency, instrumentality or
authority, or any arbitrator which prohibits or restricts the consummation of
the transactions contemplated hereby or would have any material adverse effect
on the business, operations, properties, assets, condition (financial or other)
or results of operations of the Company and its subsidiaries, taken as a whole.
SECTION 5.9. REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by the Company or its subsidiaries for inclusion in
(a) the Registration Statement or (b) the Proxy Statement will, in the case of
the Proxy Statement or any amendments thereof or supplements thereto, at the
time of the mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the meetings of stockholders of the Company and
Parent to be held in connection with the transactions contemplated by this
Agreement or, in the case of the Registration Statement, as amended or
supplemented, at the time it becomes effective and at the time of such meetings
of the stockholders of the Company and Parent, contain any untrue statement of
a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Joint Proxy
Statement/Prospectus will comply, as of its mailing date, as to form in all
material respects with all applicable laws, including the provisions of the
Securities Act and the Exchange Act and the rules and regulations promulgated
Page 16
18
thereunder, except that no representation is made by the Company with respect
to information supplied by Parent or Subsidiary for inclusion therein.
SECTION 5.10. NO VIOLATION OF LAW. Except as disclosed in the Company
SEC Reports or in Schedule 5.8, neither the Company nor any of its subsidiaries
is in violation of or has been given notice or been charged with any violation
of, any law, statute, order, rule, regulation, ordinance or judgment
(including, without limitation, any applicable environmental law, ordinance or
regulation) of any governmental or regulatory body or authority, except for
violations which, in the aggregate, could not reasonably be expected to have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. Except as disclosed in the Company SEC
Reports, as of the date of this Agreement, to the knowledge of the Company, no
investigation or review by any governmental or regulatory body or authority is
pending or threatened, nor has any governmental or regulatory body or authority
indicated an intention to conduct the same, other than, in each case, those the
outcome of which, as far as reasonably can be foreseen, will not have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries taken as a whole. The Company and its subsidiaries have all
permits, licenses, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to conduct their
businesses as presently conducted (collectively, the "Company Permits"), except
for permits, licenses, franchises, variances, exemptions, orders,
authorizations, consents and approvals the absence of which, alone or in the
aggregate, would not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole. The Company
and its subsidiaries are not in violation of the terms of any Company Permit,
except for delays in filing reports or violations which, alone or in the
aggregate, would not have a material adverse effect on the business,
operations, properties, assets, condition (financial or other), results of
operations or prospects of the Company and its subsidiaries, taken as a whole.
SECTION 5.11. COMPLIANCE WITH AGREEMENTS. Except as disclosed in the
Company SEC Reports, the Company and each of its subsidiaries are not in breach
or violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by
a third party, could result in a default under, (a) the respective charters,
by-laws or similar organizational instruments of the Company or any of its
subsidiaries or (b) any contract, commitment, agreement, indenture, mortgage,
loan agreement, note, lease, bond, license, approval or other instrument to
which the Company or any of its subsidiaries is a party or by which any of them
is bound or to which any of their property is subject, which breaches,
violations and defaults, in the case of clause (b) of this Section 5.11, would
have, in the aggregate, a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole.
SECTION 5.12. TAXES. The Company and its subsidiaries have (i) duly
filed with the appropriate governmental authorities all Tax Returns required to
be filed by them for all periods ending on or prior to the Effective Time,
other than those Tax Returns the failure of which to file would not have a
material adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole, and such Tax Returns are true, correct and
complete in all material respects, and (ii) duly paid in full or made adequate
provision for the payment of all Taxes for all periods ending at or prior to
the Effective Time. The liabilities and reserves for Taxes reflected in the
Company balance sheet included in the latest Company SEC Report are adequate to
cover all Taxes for all periods ending at or prior to the Effective Time and
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. There are
no unresolved issues of law or fact arising out of a notice of deficiency,
proposed deficiency or assessment from the IRS or any other governmental taxing
authority with respect to Taxes of the Company or any of its subsidiaries
which, if decided adversely, singly or in the aggregate, would have a material
adverse effect on the business, operations, properties, assets, condition
(financial or other)
Page 17
19
or results of operations of the Company and its subsidiaries, taken as a whole.
Neither the Company nor any of its subsidiaries is a party to any agreement
providing for the allocation or sharing of Taxes with any entity that is not,
directly or indirectly, a wholly-owned corporate subsidiary of Company.
Neither the Company nor any of its corporate subsidiaries has, with regard to
any assets or property held, acquired or to be acquired by any of them, filed a
consent to the application of Section 341(f) of the Code.
SECTION 5.13. EMPLOYEE BENEFIT PLANS; ERISA. (a) Except as set forth
in the Company SEC Reports, at the date hereof, the Company and its
subsidiaries do not maintain or contribute to any material employee benefit
plans, programs, arrangements and practices (such plans, programs, arrangements
and practices of the Company and its subsidiaries being referred to as the
"Company Plans"), including employee benefit plans within the meaning set forth
in Section 3(3) of 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). The Company Disclosure Schedule lists all
Multi-employer Plans and Multiple Employer Plans which any of the Company or
its subsidiaries maintains or to which any of them makes contributions.
Neither the Company nor its subsidiaries has any obligation to create any
additional such plan or to amend any such plan so as to increase benefits
thereunder, except as required under the terms of the Company Plans, under
existing collective bargaining agreements or to comply with applicable law.
(b) Except as disclosed in the Company SEC Reports, (i) there have
been no prohibited transactions within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code with respect to any of the Company Plans that
could result in penalties, taxes or liabilities which, singly or in the
aggregate, could have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole, (ii) except for premiums
due, there is no outstanding material liability, whether measured alone or in
the aggregate, under Title IV of ERISA with respect to any of the Company
Plans, (iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the Company Plans
subject to Title IV of ERISA other than in a "standard termination" described
in Section 4041(b) of ERISA, (iv) none of the Company Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and
Section 412 of the Code), whether or not waived, as of the last day of the most
recent fiscal year of each of the Company Plans ended prior to the date of this
Agreement, (v) the current present value of all projected benefit obligations
under each of the Company Plans which is subject to Title IV of ERISA did not,
as of its latest valuation date, exceed the then current value of the assets of
such plan allocable to such benefit liabilities by more than the amount, if
any, disclosed in the Company SEC Reports as of September 30, 1994, based upon
reasonable actuarial assumptions currently utilized for such Company Plan, (vi)
each of the Company Plans has been operated and administered in all material
respects in accordance with applicable laws during the period of time covered
by the applicable statute of limitations, (vii) each of the Company Plans which
is intended to be "qualified" within the meaning of Section 401(a) of the Code
has been determined by the Internal Revenue Service to be so qualified and such
determination has not been modified, revoked or limited by failure to satisfy
any condition thereof or by a subsequent amendment thereto or a failure to
amend, except that it may be necessary to make additional amendments
retroactively to maintain the "qualified" status of such Company Plans, and the
period for making any such necessary retroactive amendments has not expired,
(viii) with respect to Multi-employer Plans, neither the Company nor any of its
subsidiaries has, made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in Sections 4203, 4204 and
4205 of ERISA and, to the best knowledge of the Company and its subsidiaries,
no event has occurred or is expected to occur which presents a material risk of
a complete or partial withdrawal under said Sections 4203, 4204 and 4205, (ix)
to the best knowledge of the Company and its subsidiaries, there are no
material pending, threatened or anticipated claims involving any of the Company
Plans other than claims for benefits in the ordinary course, and (x) the
Company and its subsidiaries have no current material liability, whether
measured alone or in the aggregate, for plan termination or withdrawal
(complete or partial) under Title IV of ERISA based on any plan to which any
entity that would be deemed one employer with the Company and its subsidiaries
under Section 4001 of ERISA or
Page 18
20
Section 414 of the Code contributed during the period of time covered by the
applicable statute of limitations (the "Company Controlled Group Plans"), 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.
None of the Company Controlled Group Plans has an "accumulated funding
deficiency" (as defined in Section 302 of ERISA and 412 of the Code).
(c) The Company SEC Reports contain a true and complete summary or
list of or otherwise describe all material employment contracts and other
employee benefit arrangements with "change of control" or similar provisions
and all severance agreements with executive officers.
(d) There are no agreements which will or may 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 5.14. LABOR CONTROVERSIES. Except as set forth 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 of any of their employees and (b) to the knowledge of
the Company, there are no material organizational efforts presently being made
involving any of the presently unorganized employees of the Company or its
subsidiaries, except for such controversies and organizational efforts, which,
singly or in the aggregate, could not reasonably be expected to materially and
adversely affect the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
SECTION 5.15. ENVIRONMENTAL MATTERS. Except as set forth 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) 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 or
third party 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 reports have been filed, or are required to be filed,
by the Company or any of its subsidiaries concerning the release of any
Hazardous Substance or the threatened or actual violation of any Environmental
Law, (vi) 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, (vii) there have
been no environmental investigations, studies, audits, tests, reviews or other
analyses regarding compliance or noncompliance with any applicable
Environmental Law conducted by or which are in the possession of the Company or
its subsidiaries relating to the activities of the Company or its subsidiaries
which have not been delivered to Parent prior to the date hereof, (viii) there
are no underground storage tanks on, in or under any properties owned by the
Company or any of its subsidiaries and no underground storage tanks have been
closed or removed from any of such properties during the time such properties
were owned, leased or operated by the Company or any of its subsidiaries, (ix)
there is no asbestos or asbestos containing material present in any of the
properties owned by the Company and its subsidiaries, and no asbestos has been
removed from any of such properties during the time such properties were owned,
leased or operated by the Company or any of its subsidiaries, and (x) neither
the Company, its subsidiaries nor any of their
Page 19
21
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 (x) that, singly or in the aggregate, would not reasonably
be expected to have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of operations of
the Company and its subsidiaries considered as one enterprise.
SECTION 5.16. NON-COMPETITION AGREEMENTS. Neither the Company nor any
subsidiary of the Company is a party to any agreement which purports to
restrict or prohibit in any material respect 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 the Parent or the
Company, or any corporations affiliated with either of them. None of the
Company's officers, directors or key employees is a party to any agreement
which, by virtue of such person's relationship with the Company, restricts in
any material respect the Company or any subsidiary of the Company from,
directly or indirectly, engaging in any of the businesses described above.
SECTION 5.17. TITLE TO ASSETS. The Company and each of its
subsidiaries has good and marketable title in fee simple to all its real
property and good title to all its leasehold interests and other properties, as
reflected in the most recent balance sheet included in the Company Financial
Statements, except for properties and assets that have been disposed of in the
ordinary course of business since the date of such balance sheet, free and
clear of all mortgages, liens, pledges, charges or encumbrances of any nature
whatsoever, except (i) the lien of current taxes, payments of which are not yet
delinquent, (ii) such imperfections in title and easements and encumbrances, if
any, as are not substantial in character, amount or extent and do not
materially detract from the value, or interfere with the present use of the
property subject thereto or affected thereby, or otherwise materially impair
the Company's business operations (in the manner presently carried on by the
Company) or (iii) as disclosed in the Company SEC Reports, and except for such
matters which, singly or in the aggregate, could not reasonably be expected to
materially and adversely affect the business, operations, properties, assets,
condition (financial or other) or results of operations of the Company and its
subsidiaries, taken as a whole. All leases under which the Company leases any
substantial amount of real or personal property have been delivered to Parent
and 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 defaults under such leases which in the aggregate will not
materially and adversely affect the condition of the Company.
SECTION 5.18. POOLING OF INTERESTS. Neither the Company nor, to the
knowledge of the Company, any of its affiliates has taken or agreed to take any
action that would prevent the Merger from (a) constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code or (b) being
treated for financial accounting purposes as a Pooling Transaction.
SECTION 5.19. COMPANY STOCKHOLDERS' APPROVAL. The affirmative vote of
stockholders of the Company required for approval and adoption of this
Agreement and the Merger is (i) a majority of the shares of Company Common
Stock present in person or by proxy at a meeting of such stockholders and
entitled to vote thereat.
SECTION 5.20. BROKERS AND FINDERS. Except for the fees and expenses
payable to Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated ("Merrill"),
which fees are reflected in its agreement with the Company (a copy of which has
been delivered to Parent), the Company has not entered into any contract,
arrangement or understanding with any person or firm which may result in the
obligation of the Company to pay any finder's fees, brokerage or agent
commissions or other like payments in connection with the transactions
contemplated hereby. Except for the fees and expenses paid or payable to
Merrill, there is no claim for payment by the Company of any investment banking
fees, finder's fees, brokerage
Page 20
22
or agent commissions or other like payments in connection with the negotiations
leading to this Agreement or the consummation of the transactions contemplated
hereby.
Section 5.21. OPINION OF FINANCIAL ADVISOR. The financial advisor of
the Company, Merrill, has rendered a written opinion to the Company to the
effect that the Exchange Ratio is fair from a financial point of view to the
shareholders of the Company (other than Parent and its affiliates).
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
Except as otherwise contemplated by this Agreement or disclosed in Section 6.1
of the Company Disclosure Schedule, after the date hereof and prior to the
Closing Date or earlier termination of this Agreement, unless Parent shall
otherwise agree in writing, the Company shall, and shall cause its
subsidiaries, to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective charters or
by-laws, (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 by a wholly-owned subsidiary of the
Company;
(c) not issue, sell, pledge or dispose of, or agree to issue,
sell, pledge or dispose of, any additional shares of, or any options,
warrants or rights of any kind to acquire any shares of their capital
stock of any class or any debt or equity securities convertible into
or exchangeable for such capital stock, except that (i) Company may
issue shares upon conversion of convertible securities and exercise of
options outstanding on the date hereof and (ii) Company may issue
shares and warrants to acquire shares pursuant to the proviso of
Section 6.1(d) below;
(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 or (B) borrowings to refinance existing
indebtedness on terms which are reasonably acceptable to Parent or (C)
except as set forth in this Section 6.1(d), (ii) redeem, purchase,
acquire or offer to purchase or acquire any shares of its capital
stock or any options, warrants or rights to acquire any of its capital
stock or any security convertible into or exchangeable for its capital
stock, (iii) take any action which would jeopardize the treatment of
the Merger as a pooling of interests under Opinion No. 16 of the
Accounting Principles Board ("APB No. 16"), (iv) take or fail to take
any action which action or failure to take action would cause the
Company or its stockholders (except to the extent that any
stockholders receive cash in lieu of fractional shares) to recognize
gain or loss for federal income tax purposes as a result of the
consummation of the Merger, (v) make any acquisition of any assets or
businesses other than expenditures for fixed or capital assets in the
ordinary course of business and consistent with the Company's capital
budget disclosed in Section 6.1 of the Company Disclosure Schedule and
other than as set forth in the proviso in this Section 6.1(d), (vi)
sell, pledge, dispose of or encumber any assets or businesses other
than sales in the ordinary course of business or (vii) enter into any
contract, agreement, commitment or arrangement with respect to any of
the foregoing; provided, however, notwithstanding the foregoing, the
Company shall not be prohibited from acquiring any assets or
businesses or issuing capital stock (or warrants or options to acquire
capital stock) or incurring or assuming indebtedness in connection
with such acquisitions so long as (x) the aggregate value of
consideration paid or payable in connection with all such
acquisitions, including any funded indebtedness assumed and any
Company Common Stock does not exceed $40 million, (y) the aggregate
value of consideration paid or payable for
Page 21
23
any one such acquisition does not exceed $10 million, including any
indebtedness assumed and any Common Common Stock issued or issuable
and (z) the Company will not acquire or agree to acquire any assets or
business if such acquisition or agreement may reasonably be expected
to delay the consummation of the Merger;
(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 and not engage in any
action, directly or indirectly, with the intent to adversely impact
the transactions contemplated by this Agreement;
(f) subject to restrictions imposed by applicable law,
confer on a regular and frequent basis with one or more
representatives of Parent to report operational matters of materiality
and the general status of ongoing operations;
(g) not enter into or amend any employment, severance,
special pay arrangement with respect to termination of employment or
other similar arrangements or agreements with any directors, officers
or key employees, except in the ordinary course and consistent with
past practice; provided, however, that the Company and its
subsidiaries shall in no event enter into any written employment
agreement;
(h) not adopt, enter into or amend any bonus, profit
sharing, compensation, stock option, pension, retirement, deferred
compensation, health care, employment or other employee benefit plan,
agreement, trust, fund or arrangement for the benefit or welfare of
any employee or retiree, except as required to comply with changes in
applicable law; and
(i) use commercially reasonable efforts to maintain with
financially responsible insurance companies insurance on its tangible
assets and its businesses in such amounts and against such risks and
losses as are consistent with past practice.
SECTION 6.2. CONDUCT OF BUSINESS BY PARENT AND SUBSIDIARY PENDING THE
MERGER. Except as otherwise contemplated by this Agreement, after the date
hereof and prior to the Closing Date or earlier termination of this Agreement,
unless the Company shall otherwise agree in writing, Parent shall, and shall
cause its subsidiaries, to:
(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
charters or by-laws, (ii) split, combine or reclassify (whether by
stock dividend or otherwise) their outstanding capital stock, or (iii)
declare, set aside or pay any dividend or distribution payable in
cash, stock, property or otherwise, except for the payment of
dividends or distributions by a wholly-owned subsidiary of Parent;
(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) Parent may
issue shares upon conversion of convertible securities and exercise of
options outstanding on the date hereof, (ii) Parent may issue options
(and shares upon exercise of such options) pursuant to its employee
stock option plans in effect on the date hereof in the ordinary course
of business and consistent with past practices and (iii) Parent may
issue shares and warrants to acquire shares pursuant to the proviso of
Section 6.2(d) below;
Page 22
24
(d) (i) incur or become contingently liable with respect to
any indebtedness for borrowed money other than (A) borrowings in
the ordinary course of business, (B) borrowings to refinance
existing indebtedness on terms which are reasonably acceptable to
the Company, or (C) as set forth in Section 6.2(d) below, (ii)
redeem, purchase, acquire or offer to purchase or acquire any
shares of its capital stock or any options, warrants or rights to
acquire any of its capital stock or any security convertible into
or exchangeable for its capital stock, (iii) not (A) take any
action which would jeopardize the treatment of the Merger as a
pooling of interests under APB No. 16, or (B) take or fail to take
any action which action or failure to take action would cause
Parent or its stockholders (except to the extent that any
stockholders receive cash in lieu of fractional shares) to
recognize gain or loss for federal income tax purposes as a result
of the consummation of the Merger, (iv) make any acquisition of
any assets or businesses other than as set forth in the proviso of
this Section 6.2(d), (v) sell, pledge, dispose of or encumber any
assets or businesses other than sales in the ordinary course of
business or (vi) enter into any contract, agreement, commitment or
arrangement with respect to any of the foregoing; provided,
however, notwithstanding the foregoing, Parent shall not be
prohibited from acquiring any assets or businesses or issuing
capital stock (or warrants or options to acquire capital stock) or
incurring or assuming indebtedness in connection with such
acquisitions so long as (w) the number of shares of Parent Common
Stock issued or issuable in connection with such transactions does
not exceed 6.0 million shares, (x) the aggregate value of
consideration paid or payable in connection with all such
acquisitions, including any funded indebtedness assumed and any
Parent Common Stock (valued for purposes of this limitation at $20
per share) does not exceed $120 million, (y) the aggregate value
of consideration paid or payable for any one such acquisition does
not exceed $25 million, including any indebtedness assumed and any
Parent Common Stock issued or issuable (valued for purposes of
this limitation at $20 per share) and (z) the Parent will not
acquire or agree to acquire any assets or business is such
acquisition or agreement may reasonably be expected to delay the
consummation of the Merger;
(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 and
not engage in any action, directly or indirectly, with the intent
to adversely impact the transactions contemplated by this
Agreement;
(f) subject to restrictions imposed by applicable law,
confer on a regular and frequent basis with one or more
representatives of the Company to report operational matters of
materiality and the general status of ongoing operations; and
(g) use commercially reasonable efforts to maintain with
financially responsible insurance companies insurance on its
tangible assets and its businesses in such amounts and against
such risks and losses as are consistent with past practice.
SECTION 6.3. CONTROL OF THE COMPANY'S OPERATIONS. Nothing contained
in this Agreement shall give to Parent, directly or indirectly, rights to
control or direct the Company's operations prior to the Effective Time. Prior
to the Effective Time, the Company shall exercise, consistent with the terms
and conditions of this Agreement, complete control and supervision of its
operations.
SECTION 6.4. CONTROL OF PARENT'S OPERATIONS. Nothing contained in
this Agreement shall give to the Company, directly or indirectly, rights to
control or direct Parent's operations prior to the Effective Time. Prior to
the Effective Time, Parent shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
Page 23
25
SECTION 6.5. ACQUISITION TRANSACTIONS. (a) After the date hereof
and prior to the Effective Time or earlier termination of this Agreement, the
Company shall not, and shall not permit any of its subsidiaries to, initiate,
solicit, negotiate, encourage or provide confidential information to
facilitate, and the Company shall, and shall cause each of its subsidiaries to,
cause any officer, director or employee of, or any attorney, accountant,
investment banker, financial advisor or other agent retained by it, 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 and properties of the Company or any 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
"Acquisition Transactions").
(b) Notwithstanding the provisions of paragraph (a) above, the
Company may, in response to an unsolicited written proposal with respect to an
Acquisition Transaction ("Acquisition Proposal"), furnish (subject to the
execution of a confidentiality agreement and standstill agreement containing
provisions substantially similar to the confidentiality and standstill
provisions of the Confidentiality Agreement, as hereinafter defined)
confidential or non- public information concerning its business, properties or
assets to a financially capable corporation, partnership, person or other
entity or group (a "Potential Acquirer") and negotiate with such Potential
Acquirer if (i) the Board of Directors of the Company after consulting with one
or more of its independent financial advisors, concludes that such Acquisition
Proposal (if consummated pursuant to its terms) would result in a transaction
more favorable to the Company's stockholders than the Merger and (ii) based
upon advice of its outside legal counsel, its board of directors determines in
good faith that the failure to provide such confidential or non-public
information to such Potential Acquirer would constitute a breach of its
fiduciary duty to its stockholders (any such Acquisition Proposal meeting the
conditions of clauses (i) and (ii) being referred to as a "Superior Proposal.")
(c) The Company shall immediately notify Parent after receipt of any
Acquisition Proposal or any request for nonpublic information relating to the
Company or its subsidiaries in connection with an Acquisition Proposal or for
access to the properties, books or records of the Company or any subsidiary by
any person or entity that informs the Board of Directors of the Company or such
subsidiary that it is considering making, or has made, an Acquisition
Proposal. Such notice to Parent shall be made orally and in writing and shall
indicate in reasonable detail the identity of the offeror and the terms and
conditions of such proposal, inquiry or contact.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. ACCESS TO INFORMATION. (a) The Company and its
subsidiaries shall afford to Parent and Subsidiary and their respective
accountants, counsel, financial advisors and other representatives (the "Parent
Representatives") and Parent and its subsidiaries shall afford to the Company
and its accountants, counsel, financial advisors and other representatives (the
"Company Representatives") full access during normal business hours throughout
the period prior to the Effective Time to all of their respective properties,
books, contracts, commitments and records (including, but not limited to, Tax
Returns) and, during such period, shall furnish promptly to one another (i) a
copy of each report, schedule and other document filed or received by any of
them pursuant to the requirements of federal or state securities laws or filed
by any of them with the SEC in connection with the transactions contemplated by
this Agreement or which may have a material effect on their respective
businesses, properties or personnel and (ii) such other information concerning
their respective businesses, properties and personnel as Parent or Subsidiary
or the Company, as the case may be, shall reasonably request; provided that no
investigation pursuant to this Section 7.1 shall amend or modify any
representations or warranties made herein or the conditions to the obligations
of the respective parties to consummate the Merger. Parent and its
subsidiaries shall hold and shall use their reasonable best efforts to cause
the Parent Representatives to
Page 24
26
hold, and the Company and its subsidiaries shall hold and shall use their
reasonable best efforts to cause the Company Representatives to hold, in strict
confidence all non-public documents and information furnished to Parent and
Subsidiary or to the Company, as the case may be, in connection with the
transactions contemplated by this Agreement, except that (i) Parent, Subsidiary
and the Company may disclose such information as may be necessary in connection
with seeking the Parent Required Statutory Approvals and Parent Stockholders'
Approval, the Company Required Statutory Approvals and the Company
Stockholders' Approval and (ii) each of Parent, Subsidiary and the Company may
disclose any information that it is required by law or judicial or
administrative order to disclose.
(b) In the event that this Agreement is terminated in accordance
with its terms, each party shall promptly redeliver to the other all non-public
written material provided pursuant to this Section 7.1 and shall not retain any
copies, extracts or other reproductions in whole or in part of such written
material. In such event, all documents, memoranda, notes and other writings
prepared by Parent or the Company based on the information in such material
shall be destroyed (and Parent and the Company shall use their respective
reasonable best efforts to cause their advisors and representatives to
similarly destroy their documents, memoranda and notes), and such destruction
(and reasonable best efforts) shall be certified in writing by an authorized
officer supervising such destruction.
(c) The Company shall promptly advise Parent and Parent shall
promptly advise the Company in writing of any change or the occurrence of any
event after the date of this Agreement having, or which, insofar as can
reasonably be foreseen, in the future may have, any material adverse effect on
the business, operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries or Parent and its
subsidiaries, as the case may be, taken as a whole.
SECTION 7.2. REGISTRATION STATEMENT AND PROXY STATEMENT. Parent and
the Company shall file with the SEC as soon as is reasonably practicable after
the date hereof the Joint Proxy Statement/Prospectus and shall use all
reasonable efforts to have the Registration Statement declared effective by the
SEC as promptly as practicable. Parent shall also take any action required to
be taken under applicable state blue sky or securities laws in connection with
the issuance of Parent Common Stock pursuant hereto. Parent and the Company
shall promptly furnish to each other all information, and take such other
actions, as may reasonably be requested in connection with any action by any of
them in connection with the preceding sentence. The information provided and
to be provided by Parent and the Company, respectively, for use in the Joint
Proxy Statement/Prospectus shall be true and correct in all material respects
without omission of any material fact which is required to make such
information not false or misleading as of the date thereof and in light of the
circumstances under which given or made.
SECTION 7.3. STOCKHOLDERS' APPROVALS. (a) The Company shall, as
promptly as practicable, submit this Agreement and the transactions
contemplated hereby for the approval of its stockholders at a meeting of
stockholders and, subject to the fiduciary duties of the Board of Directors of
the Company under applicable law, shall use its reasonable best efforts to
obtain stockholder approval and adoption (the "Company Stockholders' Approval")
of this Agreement and the transactions contemplated hereby. Such meeting of
stockholders shall be held as soon as practicable following the date upon which
the Registration Statement becomes effective. Subject to the fiduciary duties
of the Board of Directors of the Company under applicable law, the Company
shall, through its Board of Directors, recommend to its stockholders approval
of the transactions contemplated by this Agreement.
(b) Parent shall, as promptly as practicable, submit this
Agreement and the transactions contemplated hereby for the approval of its
stockholders at a meeting of stockholders and, subject to the fiduciary duties
of the Board of Directors of Parent under applicable law, shall use its
reasonable best efforts to obtain stockholder approval and adoption (the
"Parent Stockholders' Approval") of this Agreement and the transactions
contemplated hereby. Such meeting of stockholders shall be held as soon as
practicable following the date on which the Registration Statement becomes
effective. Parent shall, through its Board of Directors, but subject to the
fiduciary duties of the members thereof, (i) recommend
Page 25
27
to its stockholders approval of the transactions contemplated by this Agreement
and (ii) authorize and cause an officer of Parent to vote Parent's shares of
Subsidiary Common Stock for adoption and approval of this Agreement and the
transactions contemplated hereby and shall take all additional actions as the
sole stockholder of Subsidiary necessary to adopt and approve this Agreement
and the transactions contemplated hereby.
SECTION 7.4. COMPLIANCE WITH THE SECURITIES ACT. Parent and the
Company shall each use its reasonable best efforts to cause each principal
executive officer, each director and each other person who is an "affiliate,"
as that term is used in paragraphs (c) and (d) of Rule 145 under the Securities
Act, of Parent or the Company, as the case may be, to deliver to Parent and the
Company on or prior to the Effective Time a written agreement (an "Affiliate
Agreement") to the effect that such person will not offer to sell, sell or
otherwise dispose of any shares of Parent Common Stock issued in the Merger,
except, in each case, pursuant to an effective registration statement or in
compliance with Rule 145, as amended from time to time, or in a transaction
which, in the opinion of legal counsel satisfactory to Parent, is exempt from
the registration requirements of the Securities Act and, in any case, until
after the results covering 30 days of post-Merger combined operations of Parent
and the Company have been filed with the SEC, sent to stockholders of Parent or
otherwise publicly issued.
SECTION 7.5. EXCHANGE LISTING. Parent shall use its reasonable best
efforts to effect, at or before the Effective Time, authorization for listing
on the New York Stock Exchange Inc. (the "NYSE"), upon official notice of
issuance, of the shares of Parent Common Stock to be issued pursuant to the
Merger.
SECTION 7.6. EXPENSES AND FEES. (a) All costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby
shall be paid by the party incurring such expenses, except that those expenses
incurred in connection with printing and filing the Joint Proxy
Statement/Prospectus shall be shared equally by Parent and the Company.
(b) The Company agrees to pay to Parent a fee equal to Eighteen
Million Dollars ($18,000,000); (i) if the Company terminates this Agreement
pursuant to clause (iii) or (iv) of Section 9.1(a); or (ii) if Parent
terminates this Agreement pursuant to clause (iv) of Section 9.1(b).
(c) Parent agrees to pay to the Company a fee equal to Eighteen
Million Dollars ($18,000,000) if the Company terminates this Agreement pursuant
to clause (v) of Section 9.1(a).
SECTION 7.7. AGREEMENT TO COOPERATE. (a) Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using its reasonable efforts to obtain all necessary
or appropriate waivers, consents or approvals of third parties required in
order to preserve material contractual relationships of the Company and its
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),
subject, however, to the requisite votes of the stockholders and boards of
directors of the Company and Parent.
(b) Without limitation of the foregoing, each of Parent and the
Company undertakes and agrees to file (and, in the case of the Company, shall
use its best efforts to cause its principal shareholder to file) as soon as
practicable after the date hereof a Notification and Report Form under the HSR
Act with the Federal Trade Commission (the "FTC") and the Antitrust Division of
the Department of Justice (the "Antitrust Division"). Each of Parent and the
Company shall (and the Company shall use its best efforts to cause its
principal shareholder to) (i) use its reasonable efforts to comply as
expeditiously as possible with all lawful requests of the FTC or the Antitrust
Division for additional information and
Page 26
28
documents 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.
(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.
SECTION 7.8. PUBLIC STATEMENTS. The parties shall consult with each
other prior to issuing any press release or any written public statement with
respect to this Agreement or the transactions contemplated hereby and shall not
issue any such press release or written public statement prior to such
consultation.
SECTION 7.9. OPTION PLANS. Prior to the Effective Time, the Company
and Parent shall take such action as may be necessary to cause each unexpired
and unexercised option (each a "Company Option") to be automatically converted
at the Effective Time into an option (each a "Parent Option") to purchase a
number of shares of Parent Common Stock equal to the number of shares of
Company Common Stock that could have been purchased under the Company Option
multiplied by the Exchange Ratio, at a price per share of Parent Common Stock
equal to the option exercise price determined pursuant to the Company Option
divided by the Exchange Ratio. At the Effective Time, all references in the
stock option agreements to the Company shall be deemed to refer to Parent.
Parent shall assume all of the Company's obligations with respect to Company
Options as so amended and shall, from and after the Effective Time, make
available for issuance upon exercise of the Parent Options all shares of Parent
Common Stock covered thereby and amend its Registration Statement on Form S-8
to cover the additional shares of Parent Common Stock subject to Parent Options
granted in replacement of Company Options.
SECTION 7.10. NOTIFICATION OF CERTAIN MATTERS. Each of the Company,
Parent and Subsidiary agrees to give prompt notice to each other of, and to use
their respective reasonable best efforts to prevent or promptly remedy, (i) the
occurrence or failure to occur or the impending or threatened occurrence or
failure to occur, of any event which occurrence or failure to occur would be
likely to cause any of its representations or warranties in this Agreement to
be untrue or inaccurate in any material respect at any time from the date
hereof to the Effective Time and (ii) any material failure on its part to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 7.10 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
SECTION 7.11. DIRECTORS' AND OFFICERS' INDEMNIFICATION. (a) The
indemnification provisions of the Articles of Incorporation of the Surviving
Corporation as in effect at the Effective Time shall not be amended, repealed
or otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers, employees or agents of the
Company, unless such modification is required by law.
(b) After the Effective Time, each of Parent and the Surviving
Corporation shall, to the fullest extent permitted under applicable law,
indemnify and hold harmless, each present and former director, officer,
employee and agent of the Company or any of its subsidiaries (each, together
with such person's heirs, executors or administrators, an "indemnified Party"
and collectively, the "indemnified Parties") against any costs or expenses
(including attorneys fees), judgments, fines, losses, claims, damages,
liabilities and amounts paid in settlement in connection with any 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 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) or arising out
Page 27
29
of or pertaining to the transactions contemplated by this Agreement. In the
event of any such claim, action, suit, proceeding or investigation (whether
arising before or after the Effective Time), (i) the Company or Parent and the
Surviving Corporation, as the case may be, shall pay the reasonable fees and
expenses of counsel selected by the indemnified Parties, which counsel shall be
reasonably satisfactory to the Parent and the Surviving Corporation, promptly
after statements therefor are received, (ii) the Parent and the Surviving
Corporation will cooperate in the defense of any such matter, and (iii) any
determination required to be made with respect to whether an indemnified
Party's conduct complies with the standards set forth under the CCC and the
Parent's or the Surviving Corporation's respective charters or By-Laws 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).
(b) 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 set forth in this Section
7.11.
SECTION 7.12. CORRECTIONS TO THE JOINT PROXY STATEMENT/PROSPECTUS AND
REGISTRATION STATEMENT. Prior to the date of approval of the Merger by their
respective stockholders, each of the Company, Parent and Subsidiary shall
correct promptly any information provided by it to be used specifically in the
Joint Proxy Statement/Prospectus and Registration Statement that shall have
become false or misleading in any material respect and shall take all steps
necessary to file with the SEC and have declared effective or cleared by the
SEC any amendment or supplement to the Joint Proxy Statement/Prospectus or the
Registration Statement so as to correct the same and to cause the Joint Proxy
Statement/Prospectus as so corrected to be disseminated to the stockholders of
the Company and Parent, in each case to the extent required by applicable law.
SECTION 7.13. CERTAIN OTHER MATTERS. The Board of Directors of the
Company has approved the implementation of each of the items on Section 7.13 of
the Company Disclosure Schedule (the "Pre-Closing Items"). The Company shall
use its best efforts to accomplish and effectuate each of the Pre-Closing Items
as promptly as practicable after the date hereof and in any event, no later
than the Effective Time. Notwithstanding any other term or provision hereof,
the Company may effectuate and consummate the Pre-Closing Items without
Parent's consent.
SECTION 7.14. EFFECT ON ACCOUNTING TREATMENT. Each of the parties
hereto agrees that, notwithstanding anything to the contrary contained in the
Agreement, nothing contained in or contemplated by this Agreement shall require
any of the parties hereto to take any action which would jeopardize the
treatment of the Merger as a pooling of interests under XXX Xx. 00.
ARTICLE VIII
CONDITIONS
SECTION 8.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) this Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the
stockholders of the Company and Parent under applicable law and
applicable listing requirements;
Page 28
30
(b) the shares of Parent Common Stock issuable in the Merger shall
have been authorized for listing on the NYSE upon official notice of
issuance;
(c) the waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated;
(d) the Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop
order suspending such effectiveness shall have been issued and remain
in effect and no proceeding for that purpose shall have been
instituted by the SEC or any state regulatory authorities;
(e) no preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation
of the Merger shall have been issued and remain in effect (each party
agreeing to use its reasonable efforts to have any such injunction,
order or decree lifted);
(f) no action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government
or governmental agency in the United States which would prevent the
consummation of the Merger or make the consummation of the Merger
illegal;
(g) all governmental waivers, consents, orders and approvals
legally required for the consummation of the Merger and the
transactions contemplated hereby, and all consents from lenders
required to consummate the Merger, shall have been obtained and be in
effect at the Effective Time;
(h) Coopers & Xxxxxxx, certified public accountants for Parent,
shall have delivered a letter, dated the Closing Date, addressed to
Parent, in form and substance reasonably satisfactory to Parent, to
the effect that the Merger will qualify for a pooling of interests
accounting treatment if consummated in accordance with this Agreement;
and
(i) Ernst & Young LLP, certified public accountants for the
Company, shall have delivered a letter dated the Closing Date,
addressed to the Company, in form and substance reasonably
satisfactory to the Company, stating that the Merger will qualify for
a pooling of interests accounting treatment if consummated in
accordance with this Agreement.
SECTION 8.2. CONDITIONS TO OBLIGATION OF THE COMPANY TO EFFECT THE
MERGER. Unless waived by the Company, the obligation of the Company to effect
the Merger shall be subject to the fulfillment at or prior to the Closing Date
of the following additional conditions:
(a) Parent and Subsidiary shall have performed in all
material respects their agreements contained in this Agreement
required to be performed on or prior to the Closing Date and the
representations and warranties of Parent and Subsidiary contained in
this Agreement shall be true and correct in all material respects on
and as of the date made and on and as of the Closing Date as if made
at and as of such date, and the Company shall have received a
certificate of the Chairman of the Board and Chief Executive Officer,
the President or a Vice President of Parent and of the President and
Chief Executive Officer or a Vice President of Subsidiary to that
effect;
(b) the Company shall have received an opinion of Sheppard,
Mullin, Xxxxxxx & Xxxxxxx, in form and substance reasonably
satisfactory to the Company, dated the Closing Date, to the effect
that the Company and holders of Company Common Stock (except to the
extent any stockholders receive cash in lieu of fractional shares)
will recognize no gain or loss for federal income tax purposes as a
result of consummation of the Merger;
Page 29
31
(c) since the date hereof, there shall have been no changes
that constitute, and no event or events shall have occurred which have
resulted in or constitute, a material adverse change in the business,
operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a
whole; and
(d) all governmental waivers, consents, orders, and approvals
legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and be in
effect at the Closing Date, and no governmental authority shall have
promulgated any statute, rule or regulation which, when taken together
with all such promulgations, would materially impair the value to
Parent of the Merger.
SECTION 8.3. CONDITIONS TO OBLIGATIONS OF PARENT AND SUBSIDIARY TO
EFFECT THE MERGER. Unless waived by Parent and Subsidiary, the obligations of
Parent and Subsidiary to effect the Merger shall be subject to the fulfillment
at or prior to the Effective Time of the additional following conditions:
(a) the Company shall have performed in all material respects its
agreements contained in this Agreement required to be performed on or
prior to the Closing Date and the representations and warranties of
the Company contained in this Agreement shall be true and correct in
all material respects on and as of the date made and on and as of the
Closing Date as if made at and as of such date, and Parent shall have
received a Certificate of the President and Chief Executive Officer or
of a Vice President of the Company to that effect;
(b) Parent shall have received an opinion of Xxxxxxx & Xxxxx
L.L.P., in form and substance reasonably satisfactory to Parent, dated
the Closing Date, to the effect that Parent and Subsidiary will
recognize no gain or loss for federal income tax purposes as a result
of consummation of the Merger;
(c) the Affiliate Agreements required to be delivered to
Parent pursuant to Section 7.4 shall have been furnished as required
by Section 7.4;
(d) since the date hereof, there shall have been no changes that
constitute, and no event or events shall have occurred which have
resulted in or constitute, a material adverse change in the business,
operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as a
whole; and
(e) all governmental waivers, consents, orders and approvals
legally required for the consummation of the Merger and the
transactions contemplated hereby shall have been obtained and be in
effect at the Closing Date, and no governmental authority shall have
promulgated any statute, rule or regulation which, when taken together
with all such promulgations, would materially impair the value to
Parent of the Merger.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1. TERMINATION. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval by the
stockholders of the Company or Parent, as follows:
(a) The Company shall have the right to terminate this
Agreement:
(i) if the Merger is not completed by June 30, 1996
(provided that the right to terminate this Agreement under this
Section 9.1(a)(i) shall not be available to the Company if the
failure
Page 30
32
of the Company to fulfill any obligation to Parent under or in
connection with this Agreement has been the cause of or resulted
in the failure of the Merger to occur on or before such date);
(ii) if the Merger is enjoined by a final, unappealable court
order;
(iii) if (A) the Company receives an offer from any third
party (excluding any affiliate of the Company or any group of
which any affiliate of the Company is a member) with respect to a
merger, sale of substantial assets or other business combination
involving the Company, and (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 a Superior Proposal
and (C) the Company shall have given Parent two (2) days' prior
written notice of its intention to terminate pursuant to this
provision, provided that such termination shall not be effective
until such time as the payment required by Section 7.6(b) shall
have been received by Parent;
(iv) if (A) a tender or exchange offer is commenced by a
third party (excluding any affiliate of the Company or any group
of which any affiliate of the Company is a member) for all
outstanding shares of Company Common Stock, (B) the Company's
Board of Directors determines, in good faith and after
consultation with an independent financial advisor, that such
offer constitutes a Superior Proposal and resolves to accept such
Superior Proposal or recommend to the stockholders that they
tender their shares in such tender or exchange offer and (C) the
Company shall have given Parent two (2) days' prior written notice
of its intention to terminate pursuant to this provision, provided
that such termination shall not be effective until such time as
the payment required by Section 7.6(b) shall have been received by
Parent; or
(v) if Parent (A) fails to perform in any material respect
any of its material covenants in this Agreement and (B) does not
cure such default in all material respects within 30 days after
notice of such default is given to Parent by the Company.
(b) Parent shall have the right to terminate this Agreement:
(i) if the Merger is not completed by June 30, 1996
(provided that the right to terminate this Agreement under this
Section 9.1(b)(i) shall not be available to Parent if the failure
of Parent to fulfill any obligation to the Company under or in
connection with this Agreement has been the cause of or resulted
in the failure of the Merger to occur on or before such date);
(ii) if the Merger is enjoined by a final, unappealable court
order;
(iii) 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
(iv) if the Company (A) fails to perform in any material
respect any of its material covenants in this Agreement and (B)
does not cure such default in all material respects within 30 days
after notice of such default is given to the Company by Parent.
(c) As used in this Section 9.1, (i) "affiliate" has the meaning
assigned to it in Section 7.4 and (ii) "group" has the meaning set
forth in Section 13(d) of the Exchange Act and the rules and
regulations thereunder.
Page 31
33
SECTION 9.2. EFFECT OF TERMINATION. In the event of termination of
this Agreement by either Parent or the Company pursuant to the provisions of
Section 9.1, this Agreement shall forthwith become void and there shall be no
further obligation on the part of the Company, Parent, Subsidiary or their
respective officers or directors (except as set forth in this Section 9.2 and
in Sections 7.1 and 7.6, all of which shall survive the termination). Nothing
in this Section 9.2 shall relieve any party from liability for any willful or
intentional breach of this Agreement.
SECTION 9.3. AMENDMENT. This Agreement may not be amended except by
action taken by the parties' respective Boards of Directors or duly authorized
committees thereof and then only by an instrument in writing signed on behalf
of each of the parties hereto and in compliance with applicable law.
SECTION 9.4. WAIVER. At any time prior to the Effective Time, the
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties in this Agreement shall not survive the Merger,
and after effectiveness of the Merger neither the Company, Parent, Subsidiary
or their respective officers or directors shall have any further obligation
with respect thereto.
SECTION 10.2. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed
by registered or certified mail (return receipt requested) or sent via
facsimile to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) If to Parent or Subsidiary to:
USA Waste Services, Inc.
0000 XXX Xxxxxxx
Xxxxx 000 - Xxxxx Xxx
Xxxxxx, Xxxxx 00000
Attention: Chief Executive Officer
Telecopy: 000-000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxx
0000 XXX Xxxxxxx
Xxxxx 000 - Tower One
Xxxxxx, Xxxxx 00000
Telecopy: 000-000-0000
(b) If to the Company, to:
Western Waste Industries
00000 Xxxxx Xxxxxxx Xxxxxx
Page 32
34
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy: 000-000-0000
with copies to:
Xxxxxx Xxxxxxxxxxxxx
Western Waste Industries
00000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telecopy: 000-000-0000
Xxxxx X. Xxxxx
Sheppard, Mullin, Xxxxxxx
& Hampton
000 Xxxxx Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx,Xxxxxxxxxx 00000
SECTION 10.3. INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. In this Agreement, unless a
contrary intention appears, (i) the words "herein", "hereof" and "hereunder"
and other words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No provision of this
Agreement shall be interpreted or construed against any party hereto solely
because such party or its legal representative drafted such provision.
SECTION 10.4. MISCELLANEOUS. This Agreement (including the documents
and instruments referred to herein) (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof (including the provisions of that certain Agreement dated December 9,
1995 by and between the Company and Parent concerning confidentiality and
related matters (the "Confidentiality Agreement"), except that the provisions
of Sections 3 and 4 thereof shall remain in effect), (b) is not intended to
confer upon any other person any rights or remedies hereunder, except for
rights of indemnified Parties under Section 7.11 and (c) shall not be assigned
by operation of law or otherwise, except that Subsidiary may assign this
Agreement to any other wholly-owned subsidiary of Parent. THIS AGREEMENT SHALL
BE GOVERNED IN ALL RESPECTS, INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY
THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE
PERFORMED WHOLLY WITHIN SUCH STATE, EXCEPT TO THE EXTENT THAT THE LAWS OF THE
STATE OF CALIFORNIA MANDATORILY APPLY.
SECTION 10.5. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 10.6. PARTIES IN INTEREST. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto, and except
as set forth in Section 7.11, nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
Page 33
35
IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused
this Agreement to be signed by their respective officers and attested to as of
the date first written above.
USA WASTE SERVICES, INC.
Attest:
/s/ XXXXXXX X. XXXXXXXX By: /s/ XXXX X. XXXXX
----------------------- -------------------------------------------
Secretary Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
RIVIERA ACQUISITION CORPORATION
Attest:
/s/ XXXXXXX X. XXXXXXXX By: /s/ XXXX X. XXXXX
----------------------- -------------------------------------------
Secretary Name: Xxxx X. Xxxxx
Title: Chief Executive Officer
WESTERN WASTE INDUSTRIES
Attest:
/s/ XXXXX XXXXXXXXX By: /s/ XXXXX XXXXXXXXXX
----------------------- -------------------------------------------
Secretary Name: Xxxxx Xxxxxxxxxx
Title: President and Chief Executive Officer
Page 34
