SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (earliest event reported) August 10, 1999
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TECHNICAL ENVIRONMENT SOLUTIONS, INC.
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(Exact name of registrant as specified in its charter)
Colorado 0-23779 98-0149351
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
25 Impler Strasse, Munich, 81371, Germany
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(Address of principal executive offices)
Registrant's telephone number, including area code 11-49-89-72015100
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(Former name or former address, if changed since last report.)
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Item. 2. ACQUISITION OR DISPOSITION OF ASSETS
At a special meeting of its shareholders duly called and held on July 30,
1999, the shareholders of Environmental Technologies and Software Solutions,
Inc., a Colorado corporation ("ENTECS"), approved (a) an agreement and plan of
merger between Technical Environment Solutions, Inc., a Colorado corporation
("TES"), TES Acquisition Corp., a Colorado corporation and a wholly owned
subsidiary of TES ("TES Acquisition"), and ENTECS, and (b) the merger of TES
Acquisition with and into ENTECS whereby, among other things, ENTECS would
become a wholly-owned subsidiary of TES and each outstanding share of ENTECS
common stock, no par value per share, would be converted, without any action on
the part of the shareholder, into the right to receive seven shares of TES
common stock. Based upon the number of shares of ENTECS common stock outstanding
immediately prior to the merger, the shareholders of ENTECS received an
aggregate of approximately 11,467,974 shares of TES common stock upon
consummation of the merger. As a result, ENTECS shareholders own approximately
68.7% of the TES common stock issued and outstanding after the merger. On August
10, 1999, the Articles of Merger by which the merger would be effected were
filed with the Colorado Secretary of State to evidence the consummation of the
merger.
Item. 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
Financial statements relating to the merger will be filed by amendment
to this form 8-K within 60 days of July 30, 1999.
(b) Pro Forma Financial Information.
The pro forma financial information will be filed by amendment to this
form 8-K within 60 days of July 30, 1999.
(c) Exhibits
Exhibit 2.1 Agreement and Plan of Merger dated June 22, 1999 by and among
Environmental Technologies and Software Solutions, Inc., a
Colorado corporation, Technical Environment Solutions, Inc., a
Colorado corporation, and TES Acquisition Corp., a Colorado
corporation and a wholly-owned subsidiary of Technical
Environment Solutions, Inc. (filed with Registration Statement on
Form S-4 on June 22, 1999 and incorporated herein by reference).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TECHNICAL ENVIRONMENT SOLUTIONS, INC.
(Registrant)
Date: August 20, 1998 /s/ Gerd Behrens
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(Signature)
Gerd Behrens, President
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(Printed name and Title)
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INDEX TO EXHIBITS
Exhibit Description
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Exhibit 2.1 Agreement and Plan of Merger dated June 22, 1999 by and among
Environmental Technologies and Software Solutions, Inc., a
Colorado corporation, Technical Environment Solutions, Inc., a
Colorado corporation, and TES Acquisition Corp., a Colorado
corporation and a wholly-owned subsidiary of Technical
Environment Solutions, Inc. (filed with Registration Statement on
Form S-4 on June 22, 1999 and incorporated herein by reference).
4
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
(Reverse Triangular Merger)
among
ENVIRONMENTAL TECHNOLOGIES AND SOFTWARE SOLUTIONS, INC.
TECHNICAL ENVIRONMENTAL SOLUTIONS, INC.
and
TES ACQUISITION CORP.
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
ARTICLE II
THE MERGER
Section 2.01 The Merger
Section 2.02 Effects of the Merger
Section 2.03 Certificate of Incorporation and Bylaws
Section 2.04 Directors
Section 2.05 Conversion
Section 2.06 Tax Consequences
ARTICLE III
EXCHANGE OF SHARES
Section 3.01 Exchange of Certificates
Section 3.02 Dissenting Shares
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ENTECS
Section 4.01 Organization
Section 4.02 Capitalization
Section 4.03 Authority Relative to this Agreement
Section 4.04 Consents and Approvals; No Violations
Section 4.05 Reports
Section 4.06 Absence of Certain Changes
Section 4.07 No Undisclosed Liabilities
Section 4.08 Information in Disclosure Documents
and Registration Statement
Section 4.09 No Default
Section 4.10 Litigation
Section 4.11 Compliance with Applicable Law
Section 4.12 Taxes
Section 4.13 ERISA
Section 4.14 Intellectual Property
Section 4.15 Change in Control
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
TES AND ACQUISITION SUB
Section 5.01 Organization
Section 5.02 Capitalization
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Section 5.03 Authority Relative to this Agreement
Section 5.04 Consents and Approvals; No Violations
Section 5.05 Reports
Section 5.06 Absence of Certain Changes
Section 5.07 No Undisclosed Liabilities
Section 5.08 Information in Disclosure Documents and Registration
Statement
Section 5.09 No Default
Section 5.10 Litigation
Section 5.11 Compliance with Applicable Law
Section 5.12 Taxes
Section 5.13 ERISA
Section 5.14 Intellectual Property
Section 5.15 Interim Operations of Acquisition Sub
Section 5.16 Change in Control
ARTICLE VI
COVENANTS
Section 6.01 Covenants of ENTECS and TES
Section 6.02 Additional Covenants of ENTECS
Section 6.03 No Solicitation
Section 6.04 Access to Information
Section 6.05 Best Efforts
Section 6.06 Stockholders Meetings
Section 6.07 Letters of Accountants
Section 6.08 Affiliates
Section 6.09 Indemnification and Insurance
Section 6.10 Certain Benefits
Section 6.11 Brokers or Finders
ARTICLE VII
CONDITIONS
Section 7.01 Conditions to Each Party's Obligation to Effect the Merger
Section 7.02 Conditions of Obligations of TES and Acquisition Sub
Section 7.03 Conditions of Obligations of ENTECS
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.01 Termination
Section 8.02 Effect of Termination
Section 8.03 Amendment
Section 8.04 Extension; Waiver
ARTICLE IX
POST CLOSING COVENANTS
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ARTICLE X
MISCELLANEOUS
Section 10.01 Nonsurvival of Representations and Warranties
Section 10.02 Notices
Section 10.03 Descriptive Headings
Section 10.04 Counterparts
Section 10.05 Entire Agreement; Assignment
Section 10.06 Governing Law
Section 10.07 Specific Performance
Section 10.08 Expenses
Section 10.09 Publicity
Section 10.10 Parties in Interest
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER, dated as of February ____, 1999, by and among
Environmental Technologies and Software Solutions, Inc., a Colorado corporation
("ENTECS"), Technical Environment Solutions, Inc. a Colorado corporation
("TES"), and TES Acquisition Sub, Inc., a Colorado corporation and a wholly
owned subsidiary of TES ("Acquisition Sub").
ARTICLE I
DEFINITIONS
"Code". Shall mean the Internal Revenue Code of 1986, as amended.
ARTICLE II
THE MERGER
Section 2.01 The Merger. Upon the terms and subject to the conditions
hereof, as promptly as practicable following the satisfaction or waiver of the
conditions set forth in Article VI hereof, but in no event later than two days
thereafter, unless the parties shall otherwise agree, Articles of Merger (the
"Articles of Merger") providing for the merger of Acquisition Sub with and into
ENTECS (the "Merger") shall be duly prepared, executed and filed by ENTECS, as
the surviving corporation (sometimes the "Surviving Corporation"), in accordance
with the relevant provisions of the Colorado Business Corporation Act(the
"Colorado Act") and the parties hereto shall take any other actions required by
law to make the Merger effective.
Following the Merger, ENTECS, with all its purposes, objects, rights,
privileges, powers and franchises, shall continue, and Acquisition Sub shall
cease to exist. The time the Merger becomes effective is referred to herein as
the "Effective Time" and the date on which the Effective Time occurs is referred
to as the "Closing Date." Prior to the filing of the Articles of Merger, a
closing shall take place at the offices of Schlueter & Associates, P.C., 1050
Seventeenth Street, Suite 1700, Denver, Colorado 80202.
Section 2.02 Effects of the Merger. The Merger shall have the effects
set forth in the Colorado Act. As of the Effective Time, the Surviving
Corporation shall be a wholly owned subsidiary of TES.
Section 2.03 Certificate of Incorporation and Bylaws. The Certificate
of Incorporation of the Surviving Corporation shall be as set forth in Exhibit
2.03(a). The Bylaws of the Surviving Corporation shall be as set forth in
Exhibit 2.03(b).
Section 2.04 Directors. The directors and officers of Acquisition Sub
immediately prior to the Effective Time shall be the initial directors and
officers of the Surviving Corporation until their successors shall have been
duly elected or appointed and shall have qualified or until their earlier death,
resignation or removal in accordance with the Certificate of Incorporation and
Bylaws of the Surviving Corporation.
Section 2.05 Conversion. At the Effective Time, by virtue of the
Merger and without any action on the part of TES, Acquisition Sub, ENTECS or the
holder of any of the following securities:
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(a) Subject to Section 2.01(e), each issued and outstanding share of
common stock, no par value, of ENTECS (an "ENTECS Share") (other than shares to
be cancelled in accordance with Section 2.05(b) hereof) shall be converted into
the right to receive 5.7 fully paid and nonassessable shares of common stock, no
par value, of TES (the "TES Shares").
(b) Each ENTECS Share which is held in the treasury of ENTECS and each
ENTECS Share held by TES or any subsidiary of TES shall be cancelled and retired
and cease to exist.
(c) Each issued and outstanding share of the capital stock of
Acquisition Sub shall be converted into and become one fully paid and
nonassessable share of common stock of the Surviving Corporation.
Section 2.06 Tax Consequences. It is intended that the Merger shall
constitute a reorganization within the meaning of Section 368(a) of the Code and
that this Agreement shall constitute a "plan of reorganization" for the purposes
of Section 368 of the Code.
ARTICLE III
EXCHANGE OF SHARES
Section 3.01 Exchange of Certificates. a. At the Effective Time, TES
shall deposit with Corporate Stock Transfer, Inc. (the "Exchange Agent"), in
trust for the benefit of the holders of ENTECS Shares for exchange in accordance
with this Article II, certificates representing the aggregate number of TES
Shares issuable pursuant to Section 2.06 in exchange for ENTECS Shares.
(b) Promptly after the Effective Time, the Exchange Agent shall mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented ENTECS Shares (the "Certificates") a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as TES and ENTECS may reasonably specify) and instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing TES Shares and cash in lieu of fractional shares, if applicable.
Upon surrender of a Certificate to the Exchange Agent, together with such letter
of transmittal, duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor the certificates representing whole TES Shares
and cash in lieu of fractional shares, if applicable, which such holder has the
right to receive pursuant to the provisions of this Agreement, and the
Certificate so surrendered shall forthwith be cancelled. If a certificate
representing TES Shares is to be issued in a name other than that in which the
Certificate surrendered in exchange therefore is registered, it shall be a
condition to the issuance that such Certificate be properly endorsed (or
accompanied by an appropriate instrument of transfer) and accompanied by
evidence that any applicable stock transfer taxes have been paid or provided
for. Until surrendered as contemplated by this Section, each Certificate shall
be deemed at any time after the Effective Time to represent only the right to
receive the consideration specified herein; provided that in the event any
holder exercises his appraisal rights, if any, under Section 7-113-102 of the
Colorado Act and becomes entitled to receive the appraised value of his shares
instead of the TES Shares into which such shares shall have been converted, TES
shall pay such holder the appraised value of such shares, together with any
other sums which it may owe him as a result of the appraisal proceeding, upon
his surrender to the Exchange Agent of the certificate or certificates which
immediately prior to the Effective Time represented the shares so appraised, and
the Exchange Agent shall not thereafter be required to deliver to such holder
any TES Shares.
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Any certificates of TES Shares which remain unclaimed by the holders of
Certificates for twelve months after the Effective Time shall be returned by the
Exchange Agent to TES, and any holders of Certificates who have not theretofore
complied with Section 3.01 shall thereafter receive delivery (subject to
abandoned property, escheat or other similar laws) of the TES Shares issuable
upon the conversion of their Certificates and any dividends payable on such
Shares, without any interest thereon only after delivering their Certificates
and letters of transmittal to TES, and otherwise complying with Section 2.01(b).
(c) No dividends or other distributions declared or made after the
Effective Time with respect to TES Shares with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Certificate with respect
to the TES Shares represented thereby and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 3.01(e) until the
holder of record of such Certificate shall surrender such Certificate. Following
surrender of any such Certificate, there shall be paid to the record holder of
the certificates representing whole TES Shares issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional TES Share to which such holder is entitled
pursuant to Section 3.01(e) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole TES Shares and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole TES Shares.
(d) Following the Effective Time, there shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of ENTECS Shares which were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, they shall be cancelled and exchanged as
provided in this Article III.
(e) No certificate or scrip representing fractional TES Shares shall
be issued upon the surrender for exchange of Certificates, and such fractional
share interests will not entitle the owner thereof to vote or to any rights of a
stockholder of TES In lieu of any such fractional share, TES shall pay to each
former stockholder of ENTECS who otherwise would be entitled to receive a
fraction of a TES Share an amount in cash determined by multiplying (i) the
amount of $4.00 by (ii) the fraction of a TES Share to which such holder would
otherwise be entitled. As promptly as practicable after any determination of the
amount of cash to be paid to holders of ENTECS Shares in lieu of any fractional
share interests, TES shall deposit funds sufficient to pay such amount with the
Exchange Agent and the Exchange Agent shall pay such amounts to such holders of
ENTECS Shares in accordance with the terms of this Article III.
Section 3.02 Dissenting Shares. If any holder of Shares shall be
entitled to be paid the "fair value" of his Shares, as provided in Section
7-113-102 of the Colorado Act, ENTECS shall give TES notice thereof and TES
shall have the right to participate in all negotiations and proceedings with
respect to any such demands. ENTECS shall not, except with the prior written
consent of TES, voluntarily make any payment with respect to, or settle or offer
to settle, any such demand for payment
Section 3.03 Adjustments. If, between the date of this Agreement and
the Effective Time, the Shares shall have been exchanged into a different number
of shares or a different class by reason of any reclassification,
recapitalization, split-up, combination, exchange of shares or readjustment, or
a stock dividend thereon shall be declared with a record date within such
period, the amount into which the Shares will be converted in the Merger shall
be correspondingly adjusted.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF ENTECS
ENTECS represents and warrants to TES and Acquisition Sub as follows:
Section 4.01 Organization. ENTECS is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite power and authority to own, lease and
operate its properties and to carry on its business as now being conducted.
ENTECS is duly qualified or licensed and in good standing to do business in each
jurisdiction in which the property owned, leased or operated by it or the nature
of the business conducted by it makes such qualification or licensing necessary,
except in such jurisdictions where the failure to be so duly qualified or
licensed and in good standing would not in the aggregate have a material adverse
effect on the business, operations or financial condition of ENTECS taken as a
whole. ENTECS has heretofore delivered to TES accurate and complete copies of
the Certificate of Incorporation and Bylaws, as currently in effect, of ENTECS
and each of its subsidiaries.
Section 4.02 Capitalization. (a) The authorized capital stock of
ENTECS consists of 50,000,000 ENTECS Shares of which, as of December 31, 1998,
1,456,182 were issued and outstanding. All the issued and outstanding ENTECS
Shares are validly issued, fully paid and nonassessable and free of preemptive
rights. Since December 31, 1998, ENTECS has not issued any shares of its capital
stock.
Except as set forth above or in Section 4.02 of ENTECS disclosure schedule
previously delivered by ENTECS to TES (the "ENTECS Disclosure Schedule"), or as
contemplated hereby, there are not now, and at the Effective Time there will not
be, any shares of capital stock (or securities substantially equivalent to
capital stock) of ENTECS issued or outstanding or any subscriptions, options,
warrants, calls, rights, convertible securities or other agreements or
commitments of any character obligating ENTECS to issue, transfer or sell any of
its securities.
(b) Section 4.02 of ENTECS Disclosure Schedule sets forth the name,
jurisdiction of incorporation and capitalization of each subsidiary of ENTECS.
Except as disclosed in Section 4.02 of ENTECS Disclosure Schedule, ENTECS does
not own, directly or indirectly, any capital stock or other equity securities of
any corporation or have any direct or indirect equity or ownership interest in
any business. All of the outstanding shares of capital stock of each of ENTECS's
subsidiaries have been validly issued and are fully paid and nonassessable and,
except as set forth in Section 4.02 of ENTECS Disclosure Schedule, are owned by
either ENTECS or another of its subsidiaries free and clear of all liens,
charges, claims or encumbrances. There are not now, and at the Effective Time
there will not be, any outstanding subscriptions, options, warrants, calls,
rights, convertible securities or other agreements or commitments of any
character relating to the issued or unissued capital stock or other securities
of any of ENTECS's subsidiaries, or otherwise obligating ENTECS or any such
subsidiary to issue, transfer or sell any such securities. There are not now,
and at the Effective Time there will not be, any voting trusts or other
agreements or understandings to which ENTECS or any of its subsidiaries is a
party or is bound with respect to the voting of the capital stock of ENTECS or
any of ENTECS's subsidiaries. Except as set forth above or in Section 4.02 of
ENTECS Disclosure Schedule, there are no persons or entities (other than
subsidiaries of ENTECS) in which ENTECS or any of its subsidiaries has any
voting rights or equity interests.
Section 4.03 Authority Relative to This Agreement. ENTECS has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly and validly authorized by the Board of Directors of ENTECS and no
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other corporate proceedings on the part of ENTECS are necessary to authorize
this Agreement or to consummate the transactions so contemplated (other than,
with respect to the Merger, the approval and adoption of this Agreement by the
holders of a majority of the outstanding ENTECS Shares). This Agreement has been
duly and validly executed and delivered by ENTECS and constitutes a valid and
binding agreement of ENTECS, enforceable against ENTECS in accordance with its
terms.
Section 4.04 Consents and Approvals; No Violations. Except for
applicable requirements of the Securities Exchange Act of 1934 (the "Exchange
Act"), the Securities Act of 1933 (the "Securities Act"), state Blue Sky laws,
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and the filing and recordation of Articles of Merger, as required by the
Colorado Act, no filing with, and no permit, authorization, consent or approval
of, any public body or authority, including courts of competent jurisdiction,
domestic or foreign ("Governmental Entity"), is necessary for the consummation
by ENTECS of the transactions contemplated by this Agreement. Except as set
forth in Section 4.04 of ENTECS Disclosure Schedule, neither the execution and
delivery of this Agreement by ENTECS nor the consummation by ENTECS of the
transactions contemplated hereby nor compliance by ENTECS with any of the
provisions hereof will (i) conflict with or result in any breach of any
provision of the Certificate of Incorporation or Bylaws of ENTECS or any of its
subsidiaries, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which ENTECS or any of
its subsidiaries is a party or by which any of them or any of their properties
or assets may be bound or (iii) violate any order, writ, injunction, decree,
statute, treaty, rule or regulation applicable to ENTECS, any of its
subsidiaries or any of their properties or assets, except in the case of (ii) or
(iii) for violations, breaches or defaults which are not in the aggregate
material to the business, operations or financial condition of ENTECS and its
subsidiaries taken as a whole and which will not prevent or delay the
consummation of the transactions contemplated hereby.
Section 4.05 Reports. As of the Effective Date, ENTECS has not been
required to file any reports with the U.S. Securities and Exchange Commission.
Section 4.06 Absence of Certain Changes. Except as set forth in
Section 4.06 of ENTECS Disclosure Schedule, since December 31, 1998, neither
ENTECS nor any of its subsidiaries has taken any of the actions set forth in
Sections 6.01(b) to (h), suffered any adverse changes in its business,
operations or financial condition which are material to ENTECS and its
subsidiaries taken as a whole (other than changes generally affecting the
industries in which ENTECS operates, including changes due to actual or proposed
changes in law or regulation, or changes relating to the transactions
contemplated by this Agreement, including the change in control contemplated
hereby) or entered into any transaction, or conducted its business or
operations, other than in the ordinary and usual course of business and
consistent with past practice and other than in connection with ENTECS's
exploration of alternatives leading to the execution of this Agreement.
Section 4.07 No Undisclosed Liabilities. Except as and to the extent
set forth in Section 4.07 of ENTECS Disclosure Schedule, neither ENTECS nor any
of its subsidiaries had at December 31, 1998, any liabilities not reflected on a
consolidated balance sheet of ENTECS and its subsidiaries. Except as and to the
extent set forth in such Schedule, since December 31, 1998, neither ENTECS nor
any of its subsidiaries has incurred any liabilities material to the business,
operations or financial condition of ENTECS and its subsidiaries taken as a
whole, except liabilities incurred in the ordinary and usual course of business
and consistent with past practice and liabilities incurred in connection with
this Agreement.
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Section 4.08 Information in Disclosure Documents and Registration
Statement. None of the information supplied in writing by ENTECS for inclusion
or incorporation by reference in (i) the registration statement on Form S-4 to
be filed with the SEC by TES in connection with the issuance of TES Shares
pursuant to the transactions contemplated hereby (the "S-4") will, at the time
the S-4 is filed with the SEC and at the time it becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and (ii) the joint proxy statement relating to
the meetings of ENTECS's and TES's stockholders to be held in connection with
the Merger (the "Proxy Statement") will, at the date mailed to stockholders and
at the times of the meetings of stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder, except
that no representation is made by ENTECS with respect to statements made therein
based on information supplied by TES or Acquisition Sub in writing for inclusion
or incorporation by reference in the Proxy Statement.
Section 4.09 No Default. Except as set forth in Section 4.09 of ENTECS
Disclosure Schedule, neither ENTECS nor any of its subsidiaries is in default or
violation (and no event has occurred which with notice or the lapse of time or
both would constitute a default or violation) of any term, condition or
provision of (i) its Certificate of Incorporation or its Bylaws, (ii) any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation to which ENTECS or any of its subsidiaries is a party or by which
they or any of their properties or assets may be bound or (iii) any order, writ,
injunction, decree, statute, rule or regulation applicable to ENTECS or any of
its subsidiaries, which defaults or violations would, in the aggregate, have a
material adverse effect on the business, operations or financial condition of
ENTECS and its subsidiaries taken as a whole or which would prevent or delay the
consummation of the transactions contemplated hereby.
Section 4.10 Litigation. Except as disclosed in Section 4.10 of ENTECS
Disclosure Schedule, there is no action, suit, proceeding, review or, to the
best knowledge of ENTECS, investigation pending or, to the best knowledge of
ENTECS, threatened involving ENTECS or any of its subsidiaries, at law or in
equity, or before any Governmental Entity which in the aggregate are reasonably
likely to have a material adverse effect on the business, operations or
financial condition of ENTECS and its subsidiaries taken as a whole.
Section 4.11 Compliance with Applicable Law. ENTECS and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "ENTECS Permits"), except for failures to hold such
ENTECS Permits which would not, in the aggregate, have a material adverse effect
on the business, operations or financial condition of ENTECS and its
subsidiaries taken as a whole. ENTECS and its subsidiaries are in compliance
with the terms of ENTECS Permits, except where the failure so to comply would
not have a material adverse effect on the business, operations or financial
condition of ENTECS and its subsidiaries taken as a whole. The businesses of
ENTECS and its subsidiaries are not being conducted in violation of any
applicable law, ordinance, rule, regulation, decree or order of any Governmental
Entity, except for violations which in the aggregate do not and would not have a
material adverse effect on the business, operations or financial condition of
ENTECS and its subsidiaries taken as a whole.
Section 4.12 Taxes. ENTECS and each of its subsidiaries has duly filed
all material federal, state, local and foreign tax returns required to be filed
by it, and ENTECS has duly paid, caused to be paid or made adequate provision
for the payment of all Taxes (as hereinafter defined) required to be paid in
respect of the periods covered by such returns and has made adequate provision
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for payment of all Taxes anticipated to be payable in respect of all calendar
periods since the periods covered by such returns. The federal income tax
returns required to be filed by ENTECS have been examined by the IRS, or the
period during which any assessments may be made by the IRS has expired, for all
taxable years through 1998. All deficiencies and assessments asserted as a
result of such examinations or other audits by federal, state, local or foreign
taxing authorities have been paid, fully settled or adequately provided for in
the financial statements submitted by ENTECS to TES for the purposes of
inclusion in the S-4 to be filed with the SEC as a result of the transactions
contemplated herein, and no issue or claim has been asserted for Taxes by any
taxing authority for any prior period, the adverse determination of which would
result in a deficiency which would have a material adverse effect on the
business, financial condition or results of operations of ENTECS and its
subsidiaries taken as a whole, other than those heretofore paid or provided for.
Except as set forth in Section 4.12 of ENTECS Disclosure Schedule, there are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any federal or foreign income tax return of ENTECS or its
subsidiaries. For purposes of this Section 4.12 and Section 5.12 below, "Taxes"
shall mean all taxes, assessments and governmental charges imposed by any
federal, state, county, local or foreign government, taxing authority,
subdivision or agency thereof, including interest, penalties or additions
thereto.
Section 4.13 Employee Benefit Plans. (a) With respect to each employee
benefit plan, and any material bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, insurance or other plan, arrangement or understanding
(whether or not legally binding) (all the foregoing being herein called the
"ENTECS Benefit Plans"), maintained or contributed to by ENTECS or any of its
subsidiaries, ENTECS has made available to TES a true and correct copy of, where
applicable, (i) such ENTECS Benefit Plan, and (ii) each trust agreement and
group annuity contract, if any, relating to such ENTECS Benefit Plan.
(b) With respect to ENTECS Benefit Plans, in the aggregate, no event
has occurred, and to the knowledge of ENTECS or any of its subsidiaries there
exists no condition or set of circumstances which are reasonably likely to occur
in connection with which ENTECS or any of its subsidiaries would be subject to
any liability, that would have a material adverse effect on ENTECS and its
subsidiaries, taken as a whole (except liability for benefits claims and funding
obligations payable in the ordinary course), under any applicable law.
(c) Except as set forth in Section 4.13 of ENTECS Disclosure Schedule,
with respect to ENTECS Benefit Plans, in the aggregate, there are no funded
benefit obligations for which contributions have not been made or properly
accrued and there are no unfunded benefit obligations which have not been
accounted for by reserves, or otherwise properly footnoted in accordance with
generally accepted accounting principles, on the financial statements of ENTECS
or any of its subsidiaries, which obligations are reasonably likely to have a
material adverse effect on ENTECS and its subsidiaries, taken as a whole.
Section 4.14 Intellectual Property. Except as set forth in Section
4.14 of ENTECS Disclosure Schedule, no claim is pending or, to the knowledge of
ENTECS, threatened to the effect that the present or past operations of ENTECS
or any subsidiary of ENTECS infringes upon or conflicts with the rights of
others with respect to any intellectual property (including, without limitation,
patents, patent rights, patent applications, trademarks, trademark applications,
trade names, copyrights, drawings, trade secrets, know-how and computer
software) necessary to permit ENTECS and its subsidiaries to conduct their
businesses as now operated (the "Intellectual Property") and no claim is pending
or threatened to the effect that any of the Intellectual Property is invalid or
unenforceable. No contract, agreement or understanding with any party exists
which would impede or prevent the continued use by ENTECS and its subsidiaries
of the entire right, title and interest of ENTECS and its subsidiaries in and to
the Intellectual Property.
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Section 4.15 Change in Control. Except as set forth in Section 4.16 of
ENTECS Disclosure Schedule, neither ENTECS nor any of its subsidiaries is a
party to any contract, agreement or understanding which contains a "change in
control" provision or "potential change in control" provision.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
TES AND ACQUISITION SUB
TES and Acquisition Sub represent and warrant to ENTECS as follows:
Section 5.01 Organization. Each of TES and its subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. Each of TES and its subsidiaries is duly qualified or
licensed and in good standing to do business in each jurisdiction in which the
property owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not in the aggregate have a material adverse effect on the
business, operations or financial condition of TES and its subsidiaries taken as
a whole. TES has heretofore delivered to ENTECS accurate and complete copies of
the TES's charter and bylaws, as currently in effect, of TES and each of its
subsidiaries.
Section 5.02 Capitalization. (a) The authorized capital stock of TES
consists of 20,000,000 TES Shares of which, as of December 31, 1998, 5,224,830
TES Shares were issued and outstanding. All the issued and outstanding TES
Shares are validly issued, fully paid and nonassessable and free of preemptive
rights. Section 5.02 of the disclosure schedule previously delivered by TES to
ENTECS (the "TES Disclosure Schedule") sets forth each other share of capital
stock (or security substantially equivalent to capital stock) of TES issued or
outstanding and each other subscription, option, warrant, call, right,
convertible security or other agreement or commitment of any character
obligating TES to issue, transfer or sell any security, and, as to each such
security, agreement or commitment, the average conversion or exercise price
thereof, a range of the conversion or exercise prices and the effects of the
Merger and the other transactions contemplated hereby on such security,
agreement or commitment, including pursuant to antidilution provisions thereof.
All TES Shares which are to be issued pursuant to the Merger or the other
transactions contemplated hereby, will be, when issued in accordance with the
respective terms thereof, duly authorized, validly issued, fully paid and
nonassessable and free of any preemptive rights in respect thereto. Since
December 31, 1998, TES has not issued any shares of its capital stock (or
securities substantially equivalent to capital stock). Except as set forth above
or in Section 5.02 of the TES Disclosure Schedule or as contemplated hereby,
there are not now, and at the Effective Time there will not be, any shares of
capital stock (or securities substantially equivalent to capital stock) of TES
issued or outstanding or any subscriptions, options, warrants, calls, rights,
convertible securities or other agreements or commitments of any character
obligating TES to issue, transfer or sell any of its securities.
(b) Section 5.02 of the TES Disclosure Schedule sets forth the name,
jurisdiction of incorporation and capitalization of each subsidiary of TES.
Except as disclosed in Section 5.02 of the TES Disclosure Schedule, TES does not
own, directly or indirectly, any capital stock or other equity securities of any
corporation or have any direct or indirect equity or ownership interest in any
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business. All of the outstanding shares of capital stock of each of TES's
subsidiaries have been validly issued and are fully paid and nonassessable and,
except as set forth in Section 5.02 of the TES Disclosure Schedule, are owned
either by TES or another of its subsidiaries free and clear of all liens,
charges, claims or encumbrances. There are not now, and at the Effective Time
there will not be, any outstanding subscriptions, options, warrants, calls,
rights, convertible securities or other agreements or commitments of any
character relating to the issued or unissued capital stock or other securities
of any of TES's subsidiaries, or otherwise obligating TES or any such subsidiary
to issue, transfer or sell any such securities. There are not now, and at the
Effective Time there will not be, any voting trusts or other agreements or
understandings to which TES or any of its subsidiaries is a party or is bound
with respect to the voting of the capital stock of TES or any of TES's
subsidiaries. Except as set forth above or in Section 5.02 of the TES Disclosure
Schedule, there are no persons or entities (other than subsidiaries of TES) in
which TES or any of its subsidiaries has any voting rights or equity interests.
Section 5.03 Authority Relative to this Agreement. Each of TES and
Acquisition Sub has full corporate power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by the
Board of Directors of TES and Acquisition Sub and by TES as the sole stockholder
of Acquisition Sub and no other corporate proceedings on the part of TES or
Acquisition Sub are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the affirmative vote of a majority of
the TES Shares present at the stockholders meeting to be held in connection with
this Agreement and entitled to vote). This Agreement has been duly and validly
executed and delivered by each of TES and Acquisition Sub and constitutes a
valid and binding agreement of each of TES and Acquisition Sub, enforceable
against each of TES and Acquisition Sub in accordance with its terms.
Section 5.04 Consents and Approvals; No Violations. Except for
applicable requirements of the Exchange Act, Securities Act, state Blue Sky
laws, the HSR Act, and the filing and recordation of Articles of Merger, as
required by the Colorado Act, no filing with, and no permit, authorization,
consent or approval of, any Governmental Entity, is necessary for the
consummation by TES of the transactions contemplated by this Agreement. Except
as set forth in Section 5.04 of the TES Disclosure Schedule, neither the
execution and delivery of this Agreement by TES or Acquisition Sub nor the
consummation by TES or Acquisition Sub of the transactions contemplated hereby
nor compliance by TES or Acquisition Sub with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the charter or
bylaws of TES or any of its subsidiaries or Acquisition Sub, (ii) result in a
violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, cancellation
or acceleration) under, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, agreement or other instrument or
obligation to which TES or any of its subsidiaries is a party or by which any of
them or any of their properties or assets may be bound or (iii) violate any
order, writ, injunction, decree, statute, treaty, rule or regulation applicable
to TES, any of its subsidiaries or any of their properties or assets, except in
the case of (ii) or (iii) for violations, breaches or defaults which are not in
the aggregate material to the business, operations or financial condition of TES
and its subsidiaries taken as a whole and which will not prevent or delay the
consummation of the transactions contemplated hereby.
Section 5.05 Reports. TES has filed all required forms, reports and
documents with the SEC since February 11, 1998 (collectively, the "TES SEC
Reports"), all of which have complied in all material respects with all
applicable requirements of the Securities Act and the Exchange Act. Except as
set forth in Section 5.05 of the TES Disclosure Schedule, none of such TES SEC
Reports, including without limitation any financial statements or schedules
included therein, contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading. Each of the balance sheets
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(including the related notes) included in the TES SEC Reports fairly presents
the consolidated financial position of TES and its subsidiaries as of the
respective dates thereof, and the other related statements (including the
related notes) included therein fairly present the results of operations and the
changes in financial position of TES and its subsidiaries for the respective
fiscal years, except, in the case of interim financial statements, for year-end
audit adjustments, consisting only of normal recurring accruals. Each of the
financial statements (including the related notes) included in the TES SEC
Reports has been prepared in accordance with generally accepted accounting
principles consistently applied during the periods involved, except as otherwise
noted therein.
Section 5.06 Absence of Certain Changes. Except as set forth in the
TES SEC Reports or Section 5.06 of the TES Disclosure Schedule, since December
31, 1998 neither TES nor any of its subsidiaries has taken any of the actions
set forth in Sections 6.01(a) to (h), suffered any adverse changes in its
business, operations or financial condition which are material to TES and its
subsidiaries taken as a whole (other than changes generally affecting the
industries in which TES operates, including changes due to actual or proposed
changes in law or regulation) or entered into any transaction, or conducted its
business or operations, other than in the ordinary and usual course of business
and consistent with past practice.
Section 5.07 No Undisclosed Liabilities. Except as and to the extent
set forth in the TES SEC Reports, neither TES nor any of its subsidiaries had at
December 31, 1998 any liabilities required by generally accepted accounting
principles to be reflected on a consolidated balance sheet of TES and its
subsidiaries. Except as and to the extent set forth in such TES SEC Reports,
since December 31, 1998 neither TES nor any of its subsidiaries has incurred any
liabilities material to the business, operations or financial condition of TES
and its subsidiaries taken as a whole, except liabilities incurred in the
ordinary and usual course of business and consistent with past practice and
liabilities incurred in connection with this Agreement.
Section 5.08 Information in Disclosure Documents and Registration
Statement. None of the information supplied by TES or Acquisition Sub in writing
for inclusion or incorporation by reference in the Proxy Statement will, at the
date mailed to stockholders and at the times of the meetings of stockholders to
be held in connection with the Merger, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply in all material respects with the provisions of the Exchange Act and
the rules and regulations thereunder, and the S-4 will comply in all material
respects with the provisions of the Securities Act and the rules and regulations
thereunder (including that it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make statements therein not misleading), except that no
representation is made by TES with respect to statements made therein based on
information supplied by ENTECS in writing for inclusion or incorporation by
reference in the Proxy Statement or the S-4.
Section 5.09 No Default. Except as set forth in Section 5.09 of the
TES Disclosure Schedule, neither TES nor any of its subsidiaries is in default
or violation (and no event has occurred which with notice or the lapse of time
or both would constitute a default or violation) of any term, condition or
provision of (i) its charter or its bylaws, (ii) any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which TES or any of its subsidiaries is a party or by which they or any of their
properties or assets may be bound or (iii) any order, writ, injunction, decree,
statute, rule or regulation applicable to TES or any of its subsidiaries, which
defaults or violations would, in the aggregate, have a material adverse effect
on the business, operations or financial condition of TES and its subsidiaries
taken as a whole or which would prevent or delay the consummation of the
transactions contemplated hereby.
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Section 5.10 Litigation. Except as disclosed in the TES SEC Reports or
in Section 5.10 of the TES Disclosure Schedule, there is no action, suit,
proceeding, review or, to the best knowledge of TES or Acquisition Sub,
investigation pending or, to the best knowledge of TES or Acquisition Sub,
threatened involving TES or any of its subsidiaries, at law or in equity, or
before any Governmental Entity which in the aggregate are reasonably likely to
have a material adverse effect on the business, operations or financial
condition of TES and its subsidiaries taken as a whole.
Section 5.11 Compliance with Applicable Law. TES and its subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
business (the "TES Permits"), except for failures to hold such TES Permits which
would not, in the aggregate, have a material adverse effect on the business,
operations or financial condition of TES and its subsidiaries taken as a whole.
TES and its subsidiaries are in compliance with the terms of the TES Permits,
except where the failure so to comply would not have a material adverse effect
on the business, operations or financial condition of TES and its subsidiaries
taken as a whole. The businesses of TES and its subsidiaries are not being
conducted in violation of any applicable law, ordinance, rule, regulation,
decree or order of any Governmental Entity, except for violations which or in
the aggregate do not and would not have a material adverse effect on the
business, operations or financial condition of TES and its subsidiaries taken as
a whole.
Section 5.12 Taxes. TES and each of its subsidiaries has duly filed
all material federal, state, local and foreign tax returns required to be filed
by it, and TES has duly paid, caused to be paid or made adequate provision for
the payment of all Taxes required to be paid in respect of the periods covered
by such returns and has made adequate provision for payment of all Taxes
anticipated to be payable in respect of all calendar periods since the periods
covered by such returns. The federal income tax returns required to be filed by
TES have been examined by the IRS, or the period during which any assessments
may be made by the IRS has expired, for all taxable years through 1997. All
deficiencies and assessments asserted as a result of such examinations or other
audits by federal, state, local or foreign taxing authorities have been paid,
fully settled or adequately provided for in the financial statements contained
in the TES SEC Reports, and no issue or claim has been asserted for Taxes by any
taxing authority for any prior period, the adverse determination of which would
result in a deficiency which would have a material adverse effect on the
business, financial condition or results of operations of TES and its
subsidiaries taken as a whole, other than those heretofore paid or provided for.
Except as set forth in Section 5.12 of the TES Disclosure Schedule, there are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any federal or foreign income tax return of TES or its
subsidiaries.
Section 5.13 Employee Benefit Plans. (a) With respect to each employee
benefit plan, and any material bonus, pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, insurance or other plan, arrangement or understanding
(whether or not legally binding) (all the foregoing being herein called the "TES
Benefit Plans"), maintained or contributed to by TES or any of its subsidiaries,
TES has made available to ENTECS a true and correct copy of, where applicable,
(i) such TES Benefit Plan, and (ii) each trust agreement and group annuity
contract, if any, relating to such TES Benefit Plan.
(b) With respect to TES Benefit Plans, in the aggregate, no event has
occurred, and to the knowledge of TES or any of its subsidiaries there exists no
condition or set of circumstances which are reasonably likely to occur in
connection with which TES or any of its subsidiaries would be subject to any
liability, that would have a material adverse effect on TES and its
subsidiaries, taken as a whole (except liability for benefits claims and funding
obligations payable in the ordinary course), under any applicable law.
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(c) Except as set forth in Section 4.13 of TES Disclosure Schedule,
with respect to TES Benefit Plans, in the aggregate, there are no funded benefit
obligations for which contributions have not been made or properly accrued and
there are no unfunded benefit obligations which have not been accounted for by
reserves, or otherwise properly footnoted in accordance with generally accepted
accounting principles, on the financial statements of TES or any of its
subsidiaries, which obligations are reasonably likely to have a material adverse
effect on TES and its subsidiaries, taken as a whole.
Section 5.14 Intellectual Property. Except as set forth in Section
5.14 of the TES Disclosure Schedule, no claim is pending or, to the knowledge of
TES, threatened to the effect that the present or past operations of the TES or
any subsidiary of TES infringes upon or conflicts with the rights of others with
respect to any intellectual property (including, without limitation, patents,
patent rights, patent applications, trademarks, trademark applications, trade
names, copyrights, drawings, trade secrets, know-how and computer software)
necessary to permit TES and its subsidiaries to conduct their businesses as now
operated (the "Intellectual Property") and no claim is pending or threatened to
the effect that any of the Intellectual Property is invalid or unenforceable. No
contract, agreement or understanding with any party exists which would impede or
prevent the continued use by TES and its subsidiaries of the entire right, title
and interest of TES and its subsidiaries in and to the Intellectual Property.
Section 5.15 Interim Operations of Acquisition Sub. Acquisition Sub
was formed solely for the purpose of engaging in the transactions contemplated
hereby, has engaged in no other business activities and has conducted its
operations only as contemplated hereby.
Section 5.16 Change in Control. Except as set forth in Section 5.17 of
the TES Disclosure Schedule, neither TES nor any of its subsidiaries is a party
to any contract, agreement or understanding which contains a "change in control"
or "potential change in control" provision. Except as set forth in the TES SEC
Reports or Section 5.17 of the TES Disclosure Schedule, there are no agreements
or understandings between TES and its subsidiaries, on the one hand, and any
affiliates of TES (other than subsidiaries of TES), on the other hand.
ARTICLE VI
COVENANTS
Section 6.01 Covenants of ENTECS and TES. During the period from the
date of this Agreement and continuing until the Effective Time, ENTECS and TES
each agree as to itself and its subsidiaries that (except as expressly
contemplated or permitted by this Agreement, Section 5.01 of ENTECS Disclosure
Schedule or the TES Disclosure Schedule, as the case may be, or to the extent
that the other party shall otherwise consent in writing):
(a) Each party and its subsidiaries shall carry on their respective
businesses in the usual, regular and ordinary course, consistent with past
practice, and use its best efforts to preserve intact their present business
organizations, keep available the services of their present officers and
employees and preserve their relationships with customers, suppliers and others
having business dealings with them.
Each party will, and will cause each of its subsidiaries to, (i) use its best
efforts to preserve its business intact, keep available the services of all of
its present officers, employees, agents and representatives, and preserve the
goodwill of all suppliers, customers, clients and others having business
relations with it or any of its subsidiaries; (ii) maintain its corporate
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existence and good standing in its state of incorporation; (iii) keep and
maintain in good condition, repair and working order all buildings, offices,
stores and other structures and all machinery, tools, equipment, fixtures and
other property of it and its subsidiaries and observe and conform to all
material terms and conditions upon or under which any of their properties is
held; and (iv) continue and maintain in full force and effect all insurance now
maintained and promptly proceed with the repair, restoration or replacement of
any asset or property damaged or destroyed by fire or other casualty after the
date hereof, whether insured or uninsured, subject to the rights, if any, of the
lessors or mortgagees thereof, covenant, consider the following:
(b) No party shall, nor shall any party permit any of its subsidiaries
to, nor shall any party or subsidiary propose to, (i) declare, set aside or pay
any dividend or other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock, (ii) split, combine
or reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock or (iii) repurchase, redeem or otherwise
acquire, or permit any subsidiary to repurchase, redeem or otherwise acquire,
any of its securities or any securities of its subsidiaries.
(c) No party shall, nor shall any party permit any of its subsidiaries
to, authorize for issuance, issue, sell, deliver or agree or commit to issue,
sell or deliver (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise) any stock of any
class or any other securities (including indebtedness having the right to vote)
or equity equivalents (including, without limitation, stock appreciation
rights), except as required pursuant to the agreements and instruments
outstanding on the date hereof and disclosed in Sections 4.02 and 5.02, or amend
in any material respect any of the terms of any such securities or agreements
outstanding on the date hereof, other than the issuance of shares of ENTECS
Shares or TES Shares, as the case may be, upon the exercise of stock options
pursuant to ENTECS Stock Plans or TES Stock Plans and upon the exercise or
conversion of other ENTECS options, warrants or rights, in each case outstanding
on the date of this Agreement and in accordance with their present terms.
(d) No party shall amend or propose to amend its charter or bylaws.
(e) No party shall, nor shall any party permit any of its subsidiaries
to, acquire, sell, lease, encumber, transfer or dispose of any assets outside
the ordinary course of business, consistent with past practice, or any assets
which are material to such party and its subsidiaries taken as a whole, except
pursuant to obligations in effect on the date hereof, or enter into any
commitment or transaction outside the ordinary course of business, consistent
with past practice.
(f) No party shall, nor shall any party permit any of its subsidiaries
to, incur (which shall not be deemed to include entering into credit agreements,
lines of credit or similar arrangements until borrowings are made under such
arrangements) any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of such party or any of its subsidiaries or
guarantee (or become liable for) any debt of others or make any loans, advances
or capital contributions or mortgage, pledge or otherwise encumber any material
assets or create or suffer any material lien thereupon other than in each case
in the ordinary course of business consistent with prior practice.
(g) No party shall, nor shall any party permit any of its subsidiaries
to pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction in the ordinary course of business consistent
with past practice or in accordance with their terms, of liabilities reflected
or reserved against in, or contemplated by, the consolidated financial
statements (or the notes thereto) of any party and its consolidated subsidiaries
or incurred in the ordinary course of business consistent with past practice.
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(h) No party shall change any of the accounting principles or
practices used by it (except as required by generally accepted accounting
principles).
(i) No party shall, nor shall any party permit any of its subsidiaries
to, agree to take any of the foregoing actions or take or agree to take any
action that would or is reasonably likely to result in any of its
representations and warranties set forth in this Agreement being untrue or in
any of the conditions to the Merger set forth in Article VII not being
satisfied.
(j) Each of the parties shall give prompt notice to the other party
of: (a) any notice of, or other communication relating to, a default or event
which, with notice or the lapse of time or both, would become a default,
received by it or any of its subsidiaries subsequent to the date of this
Agreement and prior to the Effective Time, under any agreement, indenture or
instrument material to the financial condition, properties, businesses or
results of operations of it and its subsidiaries, taken as a whole, to which it
or any of its subsidiaries is a party or is subject; (b) any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement, which consent, if required, would breach the representations
contained in Articles IV and V; and (c) any material adverse change in the
financial condition, properties, businesses, results of operations or prospects
of it and its subsidiaries, taken as a whole.
(k) The parties shall consult with each other before issuing any press
releases or otherwise making public statements with respect to the transactions
contemplated hereby and in making any filings with any federal or state
governmental or regulatory agency or with any national securities exchange with
respect thereto.
Section 6.02 Additional Covenants of ENTECS. During the period from
the date of this Agreement and continuing until the Effective Time, ENTECS
agrees as to itself and its subsidiaries that it will not, without the prior
written consent of TES, except as contemplated by this Agreement, including
Section 6.11 hereof, or required by law (i) enter into, adopt, amend or
terminate any ENTECS Benefit Plan or other employee benefit plan or any
agreement, arrangement, plan or policy between ENTECS and one or more of its
directors or executive officers or (ii) except for normal increases in the
ordinary course of business consistent with past practice that, in the
aggregate, do not result in a material increase in benefits or compensation
expense to ENTECS, increase in any manner the compensation or fringe benefits of
any director, officer or employee or pay any benefit not required by any plan
and arrangement as in effect as of the date hereof or enter into any contract,
agreement, commitment or arrangement to do any of the foregoing.
Section 6.03 No Solicitation. Neither ENTECS nor any of its
subsidiaries, affiliates, officers, directors, representatives or agents shall,
directly or indirectly, solicit, initiate or encourage (including by way of
furnishing information) any person, entity or group concerning any merger, sale
of substantial assets outside the ordinary course of business, sale of shares of
capital stock or similar transaction involving ENTECS or any of its subsidiaries
or divisions (other than the transactions contemplated by this Agreement),
provided that ENTECS may participate in negotiations with or furnish information
to a third party if the Board of Directors of ENTECS believes, after
consultation with its outside counsel, that the failure to do so would be a
breach of its fiduciary duty under applicable law. ENTECS shall promptly advise
TES of any such inquiries or proposals.
Section 6.04 Access to Information. Upon reasonable notice and subject
to restrictions contained in confidentiality agreements to which such party is
subject (from which such party shall use reasonable efforts to be released),
ENTECS and TES shall each (and shall cause each of their respective subsidiaries
to) afford to the officers, employees, accountants, counsel and other
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representatives of the other, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, each of ENTECS and TES shall
(and shall cause each of their respective subsidiaries to) furnish promptly to
the other all information concerning its business, properties and personnel as
such other party may reasonably request. Unless otherwise required by law or
court order, the parties will hold any such information which is nonpublic in
confidence until such time as such information otherwise becomes publicly
available through no wrongful act of either party, and in the event of
termination of this Agreement for any reason each party shall promptly return
all nonpublic documents obtained from any other party, and any copies or
summaries made of such documents, to such other party.
Section 6.05 Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all actions, 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, without limitation, (i) the prompt preparation and filing with the
SEC of the S-4 and the Proxy Statement, (ii) such actions as may be required to
have the S-4 declared effective under the Securities Act and to have the Proxy
Statement cleared by the SEC, in each case as promptly as practicable, including
by consulting with each other as to, and responding promptly to, any SEC
comments with respect thereto, (iii) such actions as may be required to be taken
under applicable state securities or Blue Sky laws in connection with the
issuance of TES Shares contemplated hereby, (iv) the preparation and filing of
all applicable forms under the HSR Act, and (v) the preparation and filing of
all other forms, registrations and notices required to be filed to consummate
the transactions contemplated hereby and the taking of such actions as are
necessary to obtain any requisite approvals, consents, orders, exemptions,
waivers by any public or private third party. Each party shall promptly consult
with the other with respect to, provide any necessary information with respect
to and provide the other (or its counsel) copies of, all filings made by such
party with any Governmental Entity in connection with this Agreement and the
transactions contemplated hereby.
Section 6.06 Stockholders Meetings. Each of ENTECS and TES shall duly
call, give notice of, convene and hold a meeting of its stockholders as promptly
as practicable for the purpose of voting, in the case of ENTECS, upon this
Agreement and related matters and, in the case of TES, upon the issuance of TES
Shares pursuant hereto. TES and ENTECS will, through their respective Board of
Directors, recommend to their respective stockholders approval of such matters
and will coordinate and cooperate with respect to the timing of such meetings
and shall use their best efforts to hold such meetings on the same day and as
soon as practicable after the date hereof, and shall use their best efforts to
secure the approval of their stockholders for the transactions contemplated
herein, subject, in the case of ENTECS, to its fiduciary duties under applicable
law.
Section 6.07 Letters of Accountant. Each of TES and ENTECS shall use
its respective best efforts to cause to be delivered to the other a letter of
Schiefley & Associates, P.C., independent public accountant to both parties,
dated a date within two business days before the date on which the S-4 shall
become effective and addressed to the other, in form and substance reasonably
satisfactory to the other and customary in scope and substance for letters
delivered by independent public accountants in connection with registration
statements similar to the S-4.
Section 6.08 Affiliates. Prior to the Closing Date, ENTECS shall
deliver to TES a letter identifying all persons who are, at the time this
Agreement is submitted for approval to the stockholders of ENTECS, "affiliates"
of ENTECS for purposes of Rule 145 under the Securities Act. ENTECS shall use
its best efforts to cause each such person to deliver to TES on or prior to the
Closing Date a written agreement, substantially in the form attached as Exhibit
6.08 hereto.
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Section 6.09 Indemnification and Insurance. b. In the event of any
threatened or actual claim, action, suit, proceeding or investigation, whether
civil, criminal or administrative, including, without limitation, any such
claim, action, suit, proceeding or investigation in which any of the present or
former officers or directors (the "Managers") of ENTECS is, or is threatened to
be, made a party by reason of the fact that he is or was a director, officer,
employee or agent of ENTECS, or is or was serving at the request of ENTECS as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, whether before or after the Effective Time,
the parties hereto agree to cooperate and use their best efforts to defend
against and respond thereto. It is understood and agreed that ENTECS shall
indemnify and hold harmless, and from and after the Effective Time each of the
Surviving Corporation and TES shall indemnify and hold harmless, as and to the
full extent permitted by applicable law (including by advancing expenses
promptly as statements therefor are received), each such Manager against any
losses, claims, damages, liabilities, costs, expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement in connection with any
such claim, action, suit, proceeding or investigation, and in the event of any
such claim, action, suit, proceeding or investigation (whether arising before or
after the Effective Time), (i) the Managers may retain counsel satisfactory to
them, and ENTECS, or the Surviving Corporation and TES after the Effective Time,
shall pay all fees and expenses of such counsel for the Managers promptly, as
statements therefore are received, and (ii) ENTECS, or the Surviving Corporation
and TES after the Effective Time, will use their respective best efforts to
assist in the vigorous defense of any such matter; provided that neither ENTECS
nor the Surviving Corporation or TES shall be liable for any settlement effected
without its prior written consent (which consent shall not be unreasonably
withheld); and provided further that the Surviving Corporation and TES shall
have no obligation hereunder to any Manager when and if a court of competent
jurisdiction shall ultimately determine, and such determination shall have
become final and non-appealable, that indemnification of such Manager in the
manner contemplated hereby is prohibited by applicable law. Any Manager wishing
to claim indemnification under this Section 6.09(a), upon learning of any such
claim, action, suit, proceeding or investigation, shall notify ENTECS and, after
the Effective Time, the Surviving Corporation and TES, thereof (provided that
the failure to give such notice shall not affect any obligations hereunder,
unless the indemnifying party is actually and materially prejudiced thereby).
(b) TES and Acquisition Sub agree that all rights to indemnification
existing in favor of the Managers as provided in ENTECS's Certificate of
Incorporation or Bylaws or similar documents of any of ENTECS's subsidiaries as
in effect as of the date hereof, and in any agreement between ENTECS or any
subsidiary and any Manager with respect to matters occurring prior to the
Effective Time shall survive the Merger and shall continue in full force and
effect for a period of not less than six years. TES shall cause to be maintained
in effect for not less than six years after the Effective Time, policies of
directors' and officers' liability insurance (of at least the same coverage and
amounts containing terms and conditions which are no less advantageous than the
terms and conditions contained in similar policies maintained by TES for TES's
directors and officers) with respect to claims arising from facts or events
which occurred before the Effective Time to the extent available.
(c) The provisions of this Section 6.09 are intended to be for the
benefit of, and shall be enforceable by, each indemnified party and his or her
heirs and representatives.
Section 6.10 Certain Benefits. (a) Each of TES and Acquisition
Sub acknowledges that consummation of the transactions contemplated by this
Agreement will constitute a change in control of ENTECS (to the extent such
concept is applicable) for the purposes of all agreements, contracts, plans,
programs, policies or arrangements of ENTECS described in Section 6.10 of ENTECS
Disclosure Schedule or ENTECS SEC Reports. From and after the Effective Time,
TES and its subsidiaries (including the Surviving Corporation) will honor in
accordance with their terms all employee benefit plans and employment, severance
and consulting agreements described in Section 6.10 of ENTECS Disclosure
Schedule or in ENTECS SEC Reports between ENTECS or any of its subsidiaries and
any officer, director, or employee of ENTECS or any of its subsidiaries in
effect prior to the Effective Time; provided, however, that nothing herein shall
preclude any changes effected on a prospective basis to any employee benefit
plan.
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(b) TES and Acquisition Sub agree that, for at least one year from the
Effective Time, subject to applicable law, the Surviving Corporation and its
subsidiaries will provide benefit plans to employees employed as of the
Effective Time which will, in the aggregate, be no less favorable than those
currently provided by ENTECS and its subsidiaries to their employees and,
thereafter, will provide benefits no less favorable than those provided by TES
and its other subsidiaries to their employees.
(c) The covenants set forth in Section 6.10 of ENTECS Disclosure
Schedule shall have the same force and effect as if they were set forth in this
Section 6.10.
Section 6.11 Brokers or Finders. Each of TES and ENTECS represents, as
to itself, its subsidiaries and its affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement. Each
of TES and ENTECS agree to indemnify and hold the other harmless from and
against any and all claims, liabilities or obligations with respect to any fees,
commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or its affiliate.
ARTICLE VII
CONDITIONS
Section 7.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction at or prior to the Closing Date of the following
conditions:
(a) This Agreement shall have been approved and adopted by the
affirmative vote of the holders of a majority of the outstanding ENTECS Shares
and the issuance of TES Shares pursuant to the Merger and the other terms of
this Agreement shall have been approved by the affirmative vote of the holders
of a majority of the TES Shares present at the meeting and entitled to vote.
(b) Other than the filing provided for by Section 1.01, all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations or terminations of waiting periods (including the waiting
period under the HSR Act) imposed by, any Governmental Entity, and all required
third party consents, the failure to obtain which would have a material adverse
effect on TES and its subsidiaries, including the Surviving Corporation and its
subsidiaries, taken as a whole, shall have been filed, occurred or been
obtained. TES shall have received all state securities or "Blue Sky" permits and
other authorizations necessary to issue the TES Shares pursuant to the Merger
and the other terms of this Agreement.
(c) The S-4 shall have become effective under the Securities Act and
shall not be the subject of any stop order or proceedings seeking a stop order.
(d) No statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental authority which prohibits the consummation of the Merger
and shall be in effect.
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Section 7.02 Conditions of Obligations of TES and Acquisition Sub. The
obligations of TES and Acquisition Sub to effect the Merger are further subject
to the satisfaction at or prior to the Closing Date of the following conditions,
unless waived by TES and Acquisition Sub:
(a) The representations and warranties of ENTECS set forth in this
Agreement shall be true and correct as of the date of this Agreement, and shall
also be true in all material respects (except for such changes as are
contemplated by the terms of this Agreement and such changes as would be
required to be made in the exhibits to this Agreement if such schedules were to
speak as of the Closing Date) on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date, except if and to the
extent any failures to be true and correct would not, in the aggregate, have a
material adverse effect on ENTECS and its subsidiaries taken as a whole.
(b) From the date of this Agreement through the Closing Date, except
as set forth in Section 4.06 of ENTECS Disclosure Schedule, ENTECS shall not
have suffered any adverse changes in its business, operations or financial
condition which are material to ENTECS and its subsidiaries taken as a whole
(other than changes generally affecting the industries in which ENTECS operates,
including changes due to actual or proposed changes in law or regulation, or
changes relating to the transactions contemplated by this Agreement, including
the change in control contemplated hereby).
(c) ENTECS shall have performed all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, except
where any failures to perform would not, in the aggregate, have a material
adverse effect on ENTECS and its subsidiaries taken as a whole.
(d) At the Closing, ENTECS shall have furnished TES with copies of (i)
resolutions duly adopted by the Board of Directors of ENTECS approving the
execution and delivery of this Agreement and all other necessary or proper
corporate action to enable ENTECS to comply with the terms of this Agreement,
and (ii) the resolution duly adopted by the holders of Shares approving and
adopting this Agreement and the Merger, such resolutions to be certified by the
Secretary or Assistant Secretary of ENTECS.
(e) Opinion of ENTECS's Counsel. At the Closing, ENTECS shall have
furnished TES with an opinion, dated the Closing Date, of counsel to ENTECS, in
form and substance satisfactory to TES and its counsel, to the effect that:
(i) ENTECS is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Colorado;
(ii) each of ENTECS's subsidiaries is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation;
(iii) each of ENTECS and each of its subsidiaries have the
corporate power to carry on its businesses as they are being conducted on the
Closing Date;
(iv) the authorized capital stock of ENTECS consists of
50,000,000 Shares, and the 1,456,182 Shares issued and outstanding on the date
hereof are validly issued and outstanding, fully paid and nonassessable and that
between the date hereof and the Closing Date no additional Shares have been
issued and none of such issued and outstanding Shares were issued in violation
of any preemptive rights of shareholders of ENTECS;
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(v) ENTECS has taken all required corporate action to approve and
adopt this Agreement and this Agreement is a valid and binding obligation of
ENTECS enforceable against ENTECS in accordance with its terms, subject as to
enforcement to bankruptcy, reorganization, moratorium, insolvency and other laws
of general applicability relating to or affecting creditors' rights and to
general equity principles;
(vi) the execution and delivery of this Agreement by ENTECS do
not, and the consummation of the transactions contemplated by this Agreement by
ENTECS will not, constitute (i) a breach or violation of, or a default under,
the charter or bylaws of ENTECS or any of its subsidiaries, or (ii) a breach,
violation or impairment of, or a default under, any judgment, decree, order,
statute, law, ordinance, rule or regulation now in effect applicable to ENTECS
or any of its subsidiaries or their respective properties known to such counsel,
or any agreement, indenture, mortgage, lease or other instrument of ENTECS or
any of its subsidiaries or to which ENTECS or any of its subsidiaries is subject
and in each case known to such counsel;
(vii) All filings required to be made by ENTECS prior to the
Effective Time with, and all consents, approvals, permits or authorizations
required to be obtained by ENTECS prior to the Effective Time from, governmental
and regulatory authorities of Germany, the United States and the State of
Colorado in connection with the execution and delivery of this Agreement by
ENTECS and the consummation of the transactions contemplated by this Agreement
by ENTECS, have been so made or obtained, as the case may be;
(viii) All actions, proceedings, instruments and documents
required to carry out this Agreement, or incidental hereto, and all other legal
matters shall have been approved by counsel to TES, and such counsel shall have
received all documents, certificates and other papers reasonably requested by it
in connection therewith.
In rendering the foregoing opinion (the "Primary Opinion"), such
counsel may rely on certificates of officers and other agents of ENTECS and
public officials as to matters of fact and, as to matters relating to the law of
jurisdictions other than Colorado, upon opinions of counsel of such other
jurisdictions reasonably satisfactory to Parent and its counsel, provided such
reliance is expressly noted in the Primary Opinion and the opinions of such
other counsel and the certificates of such officers, agents and public officials
relied on are attached to the Primary Opinion;
Section 7.03 Conditions of Obligations of ENTECS. The obligation of
ENTECS to effect the Merger is further subject to the satisfaction at or prior
to the Closing Date of the following conditions, unless waived by ENTECS:
(a) The representations and warranties of TES set forth in this
Agreement shall be true and correct as of the date of this Agreement, and shall
also be true in all material respects (except for such changes as are
contemplated by the terms of this Agreement and such changes as would be
required to be made in the exhibits to this Agreement if such schedules were to
speak as of the Closing Date) on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date, except if and to the
extent any failures to be true and correct would not, in the aggregate, have a
material adverse effect on TES and its subsidiaries taken as a whole.
(b) From the date of this Agreement through the Closing Date, except
as set forth in Section 5.06 of the TES Disclosure Schedule, TES shall not have
suffered any adverse changes in its business, operations or financial condition
which are material to TES and its subsidiaries taken as a whole (other than
changes generally affecting the industries in which TES operates, including
changes due to actual or proposed changes in law or regulation).
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(c) TES shall have performed all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, except where any
failures to perform would not, in the aggregate, have a material adverse effect
on TES and its subsidiaries taken as a whole.
(d) The opinion, based on representations of ENTECS and TES, of
Schlueter & Associates, P.C. or Brinkerhoph & Revnig, P.C., counsel to ENTECS,
to the effect that the Merger will be treated for federal income tax purposes as
a reorganization within the meaning of Section 368(a) of the Code, and that TES,
Acquisition Sub and ENTECS will each be a party to that reorganization within
the meaning of Section 368(b) of the Code, dated on or about the date that is
two business days prior to the date the Proxy Statement is first mailed to
stockholders of ENTECS and TES, shall not have been withdrawn or modified in any
material respect.
(e) At the Closing, TES and Acquisition Sub shall have furnished
ENTECS with copies of (i) resolutions duly adopted by their respective Boards of
Directors approving the execution and delivery of this Agreement and all other
necessary or proper corporate action to enable them to comply with the terms of
this Agreement, and (ii) the resolutions duly adopted by the holders of TES
Shares approving the issuance of TES Shares, such resolutions to be certified by
the Secretary or Assistant Secretary of TES.
(f) At the Closing, the TES shall have furnished ENTECS with an
opinion, dated the Closing Date, of counsel to the TES and Acquisition Sub, in
form and substance satisfactory to ENTECS and its counsel, to the effect that:
(i) Each of TES and Acquisition Sub is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Colorado;
(ii) each has the corporate power to carry on its businesses as
they are being conducted on the Closing Date;
(iii) the authorized capital stock of TES consists of 20,000,000
Shares, and the 5,224,830 Shares issued and outstanding on the date hereof are
validly issued and outstanding, fully paid and nonassessable and that between
the date hereof and the Closing Date no additional Shares have been issued and
none of such issued and outstanding Shares were issued in violation of any
preemptive rights of shareholders of TES;
(iv) TES and Acquisition Sub has each taken all required
corporate action to approve and adopt this Agreement and this Agreement is a
valid and binding obligation of the each, enforceable in accordance with its
terms, subject as to enforcement to bankruptcy, reorganization, moratorium,
insolvency and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles;
(v) the execution and delivery of this Agreement by each of the
TES and Acquisition Sub do not, and the consummation of the transactions
contemplated by this Agreement by each will not, constitute (i) a breach or
violation of, or a default under, the charter or bylaws of either, or (ii) a
breach, violation or impairment of, or a default under, any judgment, decree,
order, statute, law, ordinance, rule or regulation now in effect applicable to
either or their respective properties known to such counsel, or any agreement,
indenture, mortgage, lease or other instrument of either or to which either is
subject and in each case known to such counsel;
(vi) all filings required to be made by each prior to the
Effective Time with, and all consents, approvals, permits or authorizations
required to be obtained by each prior to the Effective Time from, governmental
and regulatory authorities of the Germany, United States and the State of
Colorado in connection with the execution and delivery of this Agreement by
ENTECS and the consummation of the transactions contemplated by this Agreement
by each, have been so made or obtained, as the case may be.
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In rendering the foregoing opinion (the "Primary Opinion"), such
counsel may rely on certificates of officers and other agents of TES or
Acquisition Sub and public officials as to matters of fact and, as to matters
relating to the law of jurisdictions other than Colorado, upon opinions of
counsel of such other jurisdictions reasonably satisfactory to Parent and its
counsel, provided such reliance is expressly noted in the Primary Opinion and
the opinions of such other counsel and the certificates of such officers, agents
and public officials relied on are attached to the Primary Opinion.
All actions, proceedings, instruments and documents required to carry
out this Agreement, or incidental hereto, and all other legal matters shall have
been approved by counsel to ENTECS, and such counsel shall have received all
documents, certificates and other papers reasonably requested by it in
connection therewith.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.01 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the stockholders of ENTECS or TES:
(a) by mutual consent of TES and ENTECS;
(b) by either TES or ENTECS if the Merger shall not have been
consummated before June 30, 1999 (unless the failure to consummate the Merger by
such date shall be due to the action or failure to act of the party seeking to
terminate this Agreement);
(c) by either TES or ENTECS if (i) the conditions to such party's
obligations shall have become impossible to satisfy or (ii) any permanent
injunction or other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and non-appealable;
(d) by ENTECS if it shall have received a proposal from a
third party which contemplates a transaction which the Board of Directors
determines, after consultation with its legal and financial advisors, is more
favorable than the transactions contemplated hereby, unless, within five days of
receipt by TES of notice of such third-party transaction, TES and ENTECS agree
to a transaction which the Board of Directors determines, after such
consultation, is more favorable than such third-party transaction; or
(e) by either party if any required approval of the stockholders
of TES or ENTECS shall not have been obtained by reason of the failure to obtain
the required vote upon a vote held at a duly held meeting of stockholders or at
any adjournment thereof for the purpose of obtaining such vote.
Section 8.02 Effect of Termination. In the event of the termination
and abandonment of this Agreement pursuant to Section 8.01 hereof, this
Agreement shall forthwith become void and have no effect, without any liability
on the part of any party hereto or its affiliates, directors, officers or
stockholders, other than the provisions of Sections 6.04 and 6.12. Nothing
contained in this Section 8.02 shall relieve any party from liability for any
breach of this Agreement.
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Section 8.03 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of ENTECS or of TES, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.04 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto may, to the extent legally allowed, (i) extend the time
for the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) 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 only if set forth in a written instrument signed on behalf of such party.
ARTICLE IX
POST CLOSING COVENANTS
In filing federal tax returns at any time, each of TES, ENTECS and New
Acquisition Sub will take consistent filing positions to the effect that for
federal income tax purposes (i) the Merger qualifies as a "reorganization"
within the meaning of Section 368(a)(1)(A) of the Code, and no Shareholder is
required to recognize income gain or loss with respect thereto; (ii) a
Shareholder is not required to recognize any income or gain with respect to his
right, if any, to receive payments under such Shareholder's employment
agreement.
ENTECS will provide assistance to the Shareholders in determining their
basis in ENTECS's common stock.
ARTICLE X
MISCELLANEOUS
Section 10.01 Nonsurvival of Representations and Warranties. The
representations and warranties made herein shall not survive beyond the
Effective Time.
Section 10.02 Notices. All notices and other communications hereunder
shall be in writing (and shall be deemed given upon receipt) if delivered
personally, telecopied (which is confirmed) or mailed by registered or certified
mail (return receipt requested) 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 TES or Acquisition Sub, to
Gerd Behrens, President
25 Impler Strasse
Munich, 81371
Germany
with a copy to
Henry F. Schlueter
Schlueter & Associates, P.C.
1050 17th Street, Suite 1700
Denver, Colorado 80265
and
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(b) if to ENTECS, to
Gerd Behrens, President
Karl-B(hm-Sta(e 2
85598 Baldham
Germany
with a copy to
Paul Maricle
Rossi & Maricle, P.C.
370 17th Street, Suite 4250
Denver, Colorado 80202
Section 10.03 Descriptive Headings. The descriptive headings herein
are inserted for convenience only and are not intended to be part of or to
affect the meaning or interpretation of this Agreement.
Section 10.04 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
Section 10.05 Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof (other than any confidentiality agreement between the
parties; any provisions of such agreements which are inconsistent with the
transactions contemplated by this Agreement being waived hereby) and (b) shall
not be assigned by operation of law or otherwise, provided that TES may cause
Acquisition Sub to assign its rights and obligations to TES or any other wholly
owned subsidiary of TES, but no such assignment shall relieve Acquisition Sub of
its obligations hereunder if such assignee does not perform such obligations.
Section 10.06 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Colorado without regard to
any applicable principles of conflicts of law.
Section 10.07 Specific Performance. The parties hereto agree that if
any of the provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached, irreparable damage would occur,
no adequate remedy at law would exist and damages would be difficult to
determine, and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.
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Section 10.08 Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
and expenses.
Section 10.09 Publicity. Except as otherwise required by law, for so
long as this Agreement is in effect, neither ENTECS nor TES shall, or shall
permit any of its subsidiaries to, issue or cause the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without prior consultation with the other party.
Section 10.10 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person or persons any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement, except pursuant to Sections 5.09, 5.10 and
5.11 hereof. TES shall cause Acquisition Sub to perform its obligations
hereunder.
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IN WITNESS WHEREOF, ENTECS, TES and Acquisition Sub have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
ENVIRONMENTAL TECHNOLOGIES
AND SOFTWARE SOLUTIONS, INC.
By:
----------------------------------
Name:
Title:
TECHNICAL ENVIRONMENT
SOLUTIONS, INC.
By:
-----------------------------------
Name:
Title:
TES ACQUISITON CORP.
By:
-----------------------------------
Name:
Title:
