SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 15, 1999 (March 7, 1999)
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BROWNING-FERRIS INDUSTRIES, INC.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-6805 74-1673682
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(State or Other (Commission File Number) IRS Employer
Jurisdiction of Identification
Incorporation) Number
747 N. Eldridge, Houston, Texas 77079
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (281) 870-8100
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 4
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Item 5. Other Events.
On March 8, 1999, Browning-Ferris Industries, Inc.
("Browning-Ferris") and Allied Waste Industries, Inc. ("Allied Waste")
announced that they have entered into an Agreement and Plan of Merger, dated as
of March 7, 1999 (the "Merger Agreement"), pursuant to which AWIN I Acquisition
Corporation, a newly formed wholly owned subsidiary of Allied Waste, will be
merged with and into Browning-Ferris.
The Merger Agreement and the joint press release announcing
the entering into of the Merger Agreement are attached hereto as exhibits and
are incorporated herein by reference. The foregoing description of the Merger
Agreement is qualified in its entirety by reference to exhibit 2 hereof.
Item 7. Exhibits.
2. Merger Agreement and Plan of Merger, dated as of March 7,
1999, among Browning-Ferris Industries, Inc., Allied Waste
Industries, Inc., and AWIN I Acquisition Corporation.
99. Browning-Ferris Industries, Inc. and Allied Waste Industries,
Inc. Joint Press Release dated March 8, 1999.
Page 2 of 4
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SIGNATURE
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, thereunto duly authorized.
Dated: March 15, 1999
BROWNING-FERRIS INDUSTRIES, INC.
By /s/ Jeffrey Curtiss
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Name: Jeffrey Curtiss
Title: Senior Vice President and
Chief Financial Officer
Page 3 of 4
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EXHIBIT LIST
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2. Merger Agreement, and Plan of Merger, dated as of March 7,
1999, among Browning-Ferris Industries, Inc., Allied Waste
Industries, Inc., and AWIN I Acquisition Corporation.
99. Browning-Ferris Industries, Inc. and Allied Waste Industries,
Inc. Joint Press Release dated March 8, 1999.
Page 4 of 4
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
dated as of
March 7, 1999
among
BROWNING-FERRIS INDUSTRIES, INC.
ALLIED WASTE INDUSTRIES, INC.
and
AWIN I ACQUISITION CORPORATION
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TABLE OF CONTENTS
PAGE
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ARTICLE I THE MERGER.....................................................1
SECTION 1.01. The Merger......................................1
SECTION 1.02. Conversion of Shares............................2
SECTION 1.03. Payment of Shares...............................2
SECTION 1.04. Stock Options...................................4
SECTION 1.05. Dissenting Shares...............................5
ARTICLE II THE SURVIVING CORPORATION; DIRECTORS AND OFFICERS..............5
SECTION 2.01. Certificate of Incorporation....................5
SECTION 2.02. Bylaws..........................................6
SECTION 2.03. Directors and Officers..........................6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUBSIDIARY ....................................................7
SECTION 3.01 Organization and Qualification..................7
SECTION 3.02 Authority; Non-Contravention; Approvals.........7
SECTION 3.03 Proxy Statement.................................9
SECTION 3.04 Ownership of Company Common Stock...............9
SECTION 3.05 Financing.......................................9
SECTION 3.06 Reports, Financial Statements, etc.............10
SECTION 3.07 Brokers and Finders............................10
SECTION 3.08 Absence of Undisclosed Liabilities.............10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................11
SECTION 4.01 Organization and Qualification.................11
SECTION 4.02 Capitalization.................................11
SECTION 4.03 Subsidiaries...................................13
SECTION 4.04 Authority; Non-Contravention; Approvals........14
SECTION 4.05 Reports and Financial Statements...............15
SECTION 4.06 Absence of Undisclosed Liabilities.............16
SECTION 4.07 Absence of Certain Changes or Events...........16
SECTION 4.08 Litigation.....................................16
SECTION 4.09 Proxy Statement................................17
SECTION 4.10 No Violation of Law............................17
SECTION 4.11 Compliance with Agreements.....................18
SECTION 4.12 Taxes..........................................18
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SECTION 4.13 Employee Benefit Plans; ERISA..................19
SECTION 4.14 Labor Controversies............................21
SECTION 4.15 Environmental Matters..........................21
SECTION 4.16 Non-competition Agreements.....................23
SECTION 4.17 Title to Assets................................23
SECTION 4.18 Company Stockholders' Approval.................24
SECTION 4.19 Opinion of Financial Advisor...................24
SECTION 4.20 Brokers and Finders............................24
ARTICLE V COVENANTS.....................................................24
SECTION 5.01 Conduct of Business by the Company Pending
the Merger ....................................24
SECTION 5.02 Control of the Company's Operations............29
SECTION 5.03 Acquisition Transactions.......................29
SECTION 5.04. Access to Information..........................30
SECTION 5.05. Notices of Certain Events......................31
SECTION 5.06. Merger Subsidiary..............................32
SECTION 5.07. Employee Benefits..............................32
SECTION 5.08. Meeting of the Company's Stockholders..........36
SECTION 5.09. Proxy Statement................................36
SECTION 5.10. Public Announcements...........................37
SECTION 5.11 Expenses and Fees..............................37
SECTION 5.12 Agreement to Cooperate.........................39
SECTION 5.13 Directors' and Officers' Indemnification.......42
ARTICLE VI CONDITIONS TO THE MERGER......................................44
SECTION 6.01. Conditions to the Obligations of Each Party....44
SECTION 6.02. Conditions to Obligation of the Company to
Effect the Merger .............................45
SECTION 6.03 Conditions to Obligations of Parent and
Subsidiary to Effect the Merger................45
ARTICLE VII TERMINATION...................................................46
SECTION 7.01. Termination....................................46
ARTICLE VIII MISCELLANEOUS.................................................48
SECTION 8.01. Effect of Termination..........................48
SECTION 8.02. Non-Survival of Representations and
Warranties ....................................49
SECTION 8.03 Notices........................................49
SECTION 8.04 Interpretation.................................50
SECTION 8.05 Miscellaneous..................................50
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SECTION 8.06 Counterparts...................................50
SECTION 8.07. Amendments; No Waivers.........................51
SECTION 8.08. Entire Agreement...............................51
SECTION 8.09. Severability...................................51
SECTION 8.10. Specific Performance...........................51
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of March 7,
1999, among Browning-Ferris Industries, Inc., a Delaware corporation (the
"Company"), Allied Waste Industries, Inc., a Delaware corporation ("Parent"),
and AWIN I Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Subsidiary").
Whereas, the respective Boards of Directors of Parent, Merger
Subsidiary and the Company have each approved the merger of Merger Subsidiary
with and into the Company on the terms and subject to the conditions set forth
in this Agreement (the "Merger").
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGER
SECTION 1.01. The Merger. (a) Upon the terms and subject to the
conditions hereof, and in accordance with the relevant provisions of the
Delaware General Corporation Law ("Delaware Law"), Merger Subsidiary shall be
merged with and into the Company. Following the Merger, the Company shall
continue as the surviving corporation (the "Surviving Corporation") and shall
continue its existence under the laws of the State of Delaware, and the separate
corporate existence of Merger Subsidiary shall cease. At the election of Parent,
any wholly owned subsidiary of Parent may be substituted for Merger Subsidiary
as a constituent corporation in the Merger (provided that such election shall
not delay the consummation of the Merger or adversely affect the benefits of the
Merger to the Company and its stockholders). As a condition of such an election,
the parties and such additional subsidiary shall execute an appropriate
amendment to this Agreement in order to reflect such election and the provisions
of Section 5.06 shall apply with respect to such subsidiary instead of Merger
Subsidiary.
(b) The Merger shall be consummated by filing with the Secretary of
State of the State of Delaware a certificate of merger (the "Certificate of
Merger") in accordance with Delaware Law. The Merger shall become effective at
such time as the Certificate of Merger is duly filed, or at such other time as
Merger Subsidiary and the Company shall specify in the Certificate of Merger
(the time the Merger becomes effective being the "Effective Time").
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(c) The Merger shall have the effect specified under Delaware Law. As
of the Effective Time, the Company shall be a wholly-owned subsidiary of Parent.
SECTION 1.02. Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of Parent, Merger Subsidiary,
the Company or the holders of any of the following securities:
(a) each issued and outstanding share of the Company's Common
Stock, par value $.16-2/3 per share ("Company Common Stock") held by
the Company as treasury stock and each issued and outstanding share of
Company Common Stock owned by any subsidiary of the Company, Parent,
Merger Subsidiary or any other subsidiary of Parent shall be cancelled
and retired and shall cease to exist, and no payment or consideration
shall be made with respect thereto;
(b) each issued and outstanding share of Company Common Stock,
other than (i) shares of Company Common Stock referred to in paragraph
(a) above and (ii) Dissenting Shares (as defined in Section 1.05)
shall be converted into the right to receive an amount in cash,
without interest, equal to $45.00 (the "Merger Consideration"). At the
Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired
and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to
have any rights with respect thereto, except the right to receive the
Merger Consideration, without interest; and
(c) each issued and outstanding share of capital stock of Merger
Subsidiary shall be converted into one fully paid and nonassessable
share of common stock, par value $.16-2/3, of the Surviving
Corporation.
SECTION 1.03. Payment of Shares. (a) Prior to the Effective Time,
Parent shall appoint a bank or trust company reasonably satisfactory to the
Company to act as disbursing agent (the "Disbursing Agent") for the payment of
Merger Consideration upon surrender of certificates representing the shares of
Company Common Stock. Parent will enter into a disbursing agent agreement with
the Disbursing Agent, in form and substance reasonably acceptable to the
Company. At or prior to the Effective Time, Parent shall deposit or cause to be
deposited with the Disbursing Agent in trust for the benefit of the Company's
stockholders cash in an aggregate amount necessary to make the payments pursuant
to Section 1.02 to holders of shares of Company Common Stock (such amounts being
hereinafter referred to as the "Exchange Fund"). The Disbursing Agent shall
invest the Exchange Fund, as the Surviving Corporation directs, in direct
obligations
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of the United States of America, obligations for which the full faith and credit
of the United States of America is pledged to provide for the payment of all
principal and interest or commercial paper obligations receiving the highest
rating from either Moody's Investors Service, Inc. or Standard & Poor's, a
division of The McGraw Hill Companies, or a combination thereof, provided that,
in any such case, no such instrument shall have a maturity exceeding three
months. Any net profit resulting from, or interest or income produced by, such
investments shall be payable to the Surviving Corporation. The Exchange Fund
shall not be used for any other purpose except as provided in this Agreement.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Disbursing Agent to mail to each person who was a record holder as of
the Effective Time of an outstanding certificate or certificates which
immediately prior to the Effective Time represented shares of Company Common
Stock (the "Certificates"), and whose shares were converted into the right to
receive Merger Consideration pursuant to Section 1.02, a form of letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Disbursing Agent) and instructions for use in effecting the
surrender of the Certificates in exchange for payment of the Merger
Consideration. Upon surrender to the Disbursing Agent of a Certificate, together
with such letter of transmittal duly executed and such other documents as may be
reasonably required by the Disbursing Agent, the holder of such Certificate
shall be paid promptly in exchange therefor cash in an amount equal to the
product of the number of shares of Company Common Stock represented by such
Certificate multiplied by the Merger Consideration, and such Certificate shall
forthwith be canceled. No interest will be paid or accrued on the cash payable
upon the surrender of the Certificates. If payment is to be made to a person
other than the person in whose name the Certificate surrendered is registered,
it shall be a condition of payment that the Certificate so surrendered be
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such payment pay any transfer or other taxes required by
reason of the payment to a person other than the registered holder of the
Certificate surrendered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
in accordance with the provisions of this Section 1.03, each Certificate (other
than Certificates representing shares of Company Common Stock owned by any
subsidiary of the Company, Parent, Merger Subsidiary or any other subsidiary of
Parent and shares of Company Common Stock held in the treasury of the Company,
which have been canceled, and Dissenting Shares) shall represent for all
purposes only the right to receive the Merger Consideration in cash multiplied
by the number of shares of Company Common Stock evidenced by such Certificate,
without any interest thereon.
(c) At and after the Effective Time, there shall be no registration of
transfers of shares of Company Common Stock which were outstanding immediately
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prior to the Effective Time on the stock transfer books of the Surviving
Corporation. From and after the Effective Time, the holders of shares of Company
Common Stock outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such shares of Company Common Stock except as
otherwise provided in this Agreement or by applicable law. All cash paid upon
the surrender of Certificates in accordance with the terms of this Article I
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Company Common Stock previously represented by such
Certificates. If, after the Effective Time, Certificates are presented to the
Surviving Corporation for any reason, such Certificates shall be cancelled and
exchanged for cash as provided in this Article I. At the close of business on
the day of the Effective Time the stock ledger of the Company shall be closed.
(d) At any time more than six months after the Effective Time, the
Surviving Corporation shall be entitled to require the Disbursing Agent to
deliver to it any funds which had been made available to the Disbursing Agent
and not disbursed in exchange for Certificates (including, without limitation,
all interest and other income received by the Disbursing Agent in respect of all
such funds). Thereafter, holders of shares of Company Common Stock shall look
only to Parent (subject to the terms of this Agreement, abandoned property,
escheat and other similar laws) as general creditors thereof with respect to any
Merger Consideration that may be payable, without interest, upon due surrender
of the Certificates held by them. If any Certificates shall not have been
surrendered prior to five years after the Effective Time (or immediately prior
to such time on which any payment in respect hereof would otherwise escheat or
become the property of any governmental unit or agency), the payment in respect
of such Certificates shall, to the extent permitted by applicable law, become
the property of the Surviving Corporation, free and clear of all claims or
interest of any person previously entitled thereto. Notwithstanding the
foregoing, none of Parent, the Company, the Surviving Corporation nor the
Disbursing Agent shall be liable to any holder of a share of Company Common
Stock for any Merger Consideration delivered in respect of such share of Company
Common Stock to a public official pursuant to any abandoned property, escheat or
other similar law.
SECTION 1.04. Stock Options. The Company shall (a) terminate the
Company's Restated 1990 Stock Option Plan, Restated 1993 Non-Employee Director
Stock Plan, Restated 1993 Stock Incentive Plan, Restated 1996 Stock Incentive
Plan and 1987 Stock Option Plan (collectively, the "Company Option Plans")
immediately prior to the Effective Time without prejudice to the rights of the
holders of options (the "Options") awarded pursuant thereto and (b) following
such termination grant no additional Options under the Company Option Plans.
Prior to the Effective Time, the Company will take all actions necessary,
including, without limitation, using its reasonable efforts to obtain any
consents necessary or desirable from holders of Options, to provide that, upon
the Effective Time, each outstanding Option shall be canceled
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automatically and at the Effective Time, Parent or the Surviving Corporation
shall provide such holder with a lump sum cash payment (less any applicable
withholding) equal to the product of (i) the total number of shares of Company
Common Stock subject to the Option immediately prior to the Effective Time and
(ii) the excess of the Merger Consideration over the exercise price per share of
Company Common Stock subject to such Company Option.
SECTION 1.05. Dissenting Shares. (a) Notwithstanding anything in this
Agreement to the contrary, shares of Company Common Stock that are held by any
record holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal rights in accordance with Section 262 of
Delaware Law (the "Dissenting Shares") shall not be converted into the right to
receive the Merger Consideration but shall become the right to receive such
consideration as may be determined to be due in respect of such Dissenting
Shares pursuant to Delaware Law; provided, however, that any holder of
Dissenting Shares who shall have failed to perfect or shall have withdrawn or
lost his rights to appraisal of such Dissenting Shares, in each case under
Delaware Law, shall forfeit the right to appraisal of such Dissenting Shares,
and such Dissenting Shares shall be deemed to have been converted into the right
to receive, as of the Effective Time, the Merger Consideration without interest.
Parent and the Surviving Corporation shall comply with all of their obligations
under Delaware Law with respect to holders of Dissenting Shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal, and any withdrawals of such demands, received by the Company and any
other related instruments served pursuant to Delaware Law and received by the
Company and (ii) the opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under Delaware Law. The Company shall not,
except with the prior written consent of Parent, make any payment with respect
to any demands for appraisal or offer to settle or settle any such demands.
ARTICLE II
THE SURVIVING CORPORATION; DIRECTORS AND OFFICERS
SECTION 2.01. Certificate of Incorporation. The Restated Certificate
of Incorporation of the Company in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law and the terms of this Agreement; provided,
however, that at the Effective Time, such certificate shall be amended by virtue
of this Agreement as follows:
(i) Article Fourth shall be amended by deleting the existing
language in its entirety and replacing it with the following:
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The total number of shares of capital stock which the
Corporation shall be authorized to issue shall be 1,000
shares, $.16-2/3 par value, of common stock.
(ii) Article Ninth shall be amended by deleting the existing
language in its entirety and replacing it with the following:
Directors shall have terms expiring at the annual meeting of
stockholders. Directors shall continue in office until their
successors are elected or appointed.
(iii) Articles Eleventh, Twelfth and Thirteenth shall be deleted
and Articles Fourteenth and Fifteenth shall be renumbered to become
Articles Eleventh and Twelfth.
SECTION 2.02. Bylaws. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation except that such
bylaws shall include the provisions set forth in Article X of the Company's
bylaws until amended in accordance with applicable law and the terms of this
Agreement.
SECTION 2.03. Directors and Officers. The directors of Merger
Subsidiary immediately prior to the Effective Time shall be the directors of the
Surviving Corporation as of the Effective Time. The officers of the Company
(together with the persons designated by Parent and notified to the Company in
writing at least two business days prior to the Effective Time) shall be the
officers of the Surviving Corporation as of the Effective Time subject to the
right of the Board of Directors of the Surviving Corporation to appoint or
replace officers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUBSIDIARY
Parent and Merger Subsidiary jointly and severally represent and
warrant to the Company that, except as set forth in the Disclosure Schedule
dated as of the date hereof and signed by an authorized officer of Parent (the
"Parent Disclosure Schedule"), it being agreed that disclosure of any item on
the Parent Disclosure Schedule shall be deemed disclosure with respect to all
Sections of this Agreement if the relevance of such item is reasonably apparent
from the face of the Parent Disclosure Schedule:
SECTION 3.01 Organization and Qualification. Each of Parent and Merger
Subsidiary is a corporation duly organized, validly existing and in good
standing
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under the laws of the state of its incorporation and has the requisite corporate
power and authority to own, lease and operate its assets and properties and to
carry on its business as it is now being conducted. Each of Parent and Merger
Subsidiary is qualified to transact business and is in good standing in each
jurisdiction in which the properties owned, leased or operated by it or the
nature of the business conducted by it makes such qualification necessary,
except where the failure to be so qualified and in good standing would not
reasonably be expected to have a material adverse effect on the business,
financial condition or results of operations of Parent and its subsidiaries,
taken as a whole (a "Parent Material Adverse Effect").
SECTION 3.02 Authority; Non-Contravention; Approvals. (a) Parent and
Merger Subsidiary each have full corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby, including
without limitation, the consummation of the financing of the Merger pursuant to
the Financing Commitments (as defined in Section 3.05) (the "Financing"). This
Agreement has been approved by the Boards of Directors of Parent and Merger
Subsidiary and the sole stockholder of Merger Subsidiary, and no other corporate
proceedings on the part of Parent or Merger Subsidiary are necessary to
authorize the execution and delivery of this Agreement or the consummation by
Parent and Merger Subsidiary of the transactions contemplated hereby, including
without limitation, the Financing. This Agreement has been duly executed and
delivered by each of Parent and Merger Subsidiary and, assuming the due
authorization, execution and delivery hereof by the Company, constitutes a valid
and legally binding agreement of each of Parent and Merger Subsidiary
enforceable against each of them in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles.
(b) The execution, delivery and performance of this Agreement by each
of Parent and Merger Subsidiary and the consummation of the Merger and the
transactions contemplated hereby, including without limitation the Financing, do
not and will not violate, conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or, other than in the case of the Financing, result in the
creation of any lien, security interest or encumbrance upon any of the
properties or assets of Parent or any of its subsidiaries under any of the
terms, conditions or provisions of (i) the respective certificates of
incorporation or bylaws of Parent or any of its subsidiaries, (ii) any statute,
law, ordinance, rule, regulation, judgment, decree, order, injunction, writ,
permit or license of any court or governmental authority applicable to Parent or
any of its subsidiaries or any of their respective properties or assets,
subject, in the case of consummation, to obtaining (prior to the
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Effective Time) the Parent Required Statutory Approvals (as defined in Section
3.02(c)), or (iii) any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, contract, lease or other instrument, obligation
or agreement of any kind (each a "Contract" and collectively "Contracts") to
which Parent or any of its subsidiaries is now a party or by which Parent or any
of its subsidiaries or any of their respective properties or assets may be bound
or affected, subject, in the case of consummation, to obtaining (prior to the
Effective Time) consents required from commercial lenders, lessors or other
third parties as specified in Section 3.02(b) of the Parent Disclosure Schedule.
Excluded from the foregoing sentence of this paragraph (b), insofar as it
applies to the terms, conditions or provisions described in clauses (ii) and
(iii) of this paragraph (b), are such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests or
encumbrances that would not reasonably be expected to have a Parent Material
Adverse Effect and would not prevent or materially delay the consummation of the
Merger.
(c) Except for (i) the filings by Parent required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) applicable filings, if any, with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (iii) filing of the Certificate of Merger with the
Secretary of State of the State of Delaware in connection with the Merger, (iv)
any required filings with or approvals from authorities of any foreign country
or Puerto Rico in which the Company or its subsidiaries conduct any business or
own any assets and (v) any required filings with or approvals from applicable
environmental authorities, public service commissions and public utility
commissions (the filings and approvals referred to in clauses (i) through (v)
are collectively referred to as the "Parent Required Statutory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by Parent or Merger
Subsidiary or the consummation by Parent or Merger Subsidiary of the
transactions contemplated hereby, including without limitation, the Financing,
other than such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case may be, would
not reasonably be expected to have a Parent Material Adverse Effect and would
not prevent or materially delay the consummation of the Merger.
SECTION 3.03 Proxy Statement. None of the information to be supplied
by Parent or its subsidiaries for inclusion in any proxy statement or
information statement to be distributed in connection with the Company's meeting
of stockholders to vote upon this Agreement and the transactions contemplated
hereby (the "Proxy Statement") will, at the time of the mailing of the Proxy
Statement and any amendments or supplements thereto, and at the time of the
meeting of stockholders of the Company to be held in connection with the
transactions contemplated by this Agreement, contain any
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untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading.
SECTION 3.04 Ownership of Company Common Stock. Neither Parent nor any
of its subsidiaries beneficially owns any shares of Company Common Stock as of
the date hereof.
SECTION 3.05 Financing. Parent has obtained written commitments (which
commitments, as they may be amended or replaced from time to time in a manner
which does not (i) adversely impact the solvency or viability of the Company
after the Effective Time relative to the impact of financing in accordance with
the existing written commitments, (ii) adversely affect the ability of Parent to
consummate the Merger or (iii) add or adversely modify any conditions to the
financing set forth in the written commitments delivered to the Company prior to
the execution of this Agreement, are referred to herein as the "Financing
Commitments") for the debt and equity financing necessary to consummate the
Merger and to pay all associated costs and expenses (including any refinancing
of indebtedness of Parent or the Company required in connection therewith) and
has provided true, accurate and complete copies of such commitments (and any
amendment or replacement thereof) to the Company.
SECTION 3.06 Reports, Financial Statements, etc. Since January 1,
1996, through the date of this Agreement, Parent has filed with the SEC all
material forms, statements, reports and documents (including all exhibits,
post-effective amendments and supplements thereto) (the "Parent SEC Reports")
required to be filed by it under each of the Securities Act of 1933, as amended
(the "Securities Act"), the Exchange Act and the respective rules and
regulations thereunder, all of which, as amended if applicable, complied when
filed in all material respects with all applicable requirements of the
appropriate act and the rules and regulations thereunder. As of their respective
dates, the Parent SEC Reports did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading. The audited consolidated financial statements
and unaudited financial statements of Parent included in Parent's Annual Report
on Form 10-K for the twelve months ended December 31, 1997 and Parent's
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, June 30
and September 30, 1998 (collectively, the "Parent Financial Statements") have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly present in all material respects the financial
position of Parent and its subsidiaries as of the dates thereof and the results
of their operations and changes in financial position for the periods then ended
(subject, in the case of any unaudited interim financial statements, to normal
year-end adjustments).
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Since the date of the most recent Parent SEC Report that contains consolidated
financial statements of Parent through the date of this Agreement, there has not
been any Parent Material Adverse Effect.
SECTION 3.07 Brokers and Finders. Except as disclosed in the Parent
Disclosure Schedule, Parent has not entered into any contract, arrangement or
understanding with any person or firm which may result in the obligation of the
Company to pay any investment banking fees, finder's fees, brokerage or agent
commissions or other like payments in connection with the transactions
contemplated hereby.
SECTION 3.08 Absence of Undisclosed Liabilities. Except as disclosed
in the Parent SEC Reports or as heretofore disclosed to the Company in writing
with respect to acquisitions or potential transactions or commitments, to the
knowledge of Parent as of the date of this Agreement, neither Parent nor any of
its subsidiaries has incurred since December 31, 1997, any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature,
except (a) liabilities, obligations or contingencies (i) which are accrued or
reserved against in the Parent Financial Statements or reflected in the notes
thereto or (ii) which were incurred after December 31, 1997 in the ordinary
course of business and consistent with past practices, (b) liabilities,
obligations or contingencies which (i) would not reasonably be expected to have
a Parent Material Adverse Effect, or (ii) have been discharged or paid in full
prior to the date hereof, and (c) liabilities, obligations and contingencies
which are of a nature not required to be reflected in the consolidated financial
statements of Parent and its subsidiaries prepared in accordance with generally
accepted accounting principles consistently applied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Subsidiary
that, except as set forth in the disclosure schedule dated as of the date hereof
and signed by an authorized officer of the Company (the "Company Disclosure
Schedule"), it being agreed that disclosure of any item on the Company
Disclosure Schedule shall be deemed disclosure with respect to all Sections of
this Agreement if the relevance of such item is reasonably apparent from the
face of the Company Disclosure Schedule:
SECTION 4.01 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has the requisite corporate power and authority to
own, lease and operate its assets and properties and to carry on its business as
it is now being conducted. The Company is qualified to transact business and is
in good standing in each jurisdiction
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in which the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary, except where the
failure to be so qualified and in good standing would not reasonably be expected
to have a material adverse effect on the business, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole (a
"Company Material Adverse Effect"). True, accurate and complete copies of the
Company's Restated Certificate of Incorporation and bylaws, in each case as in
effect on the date hereof, including all amendments thereto, have heretofore
been delivered to Parent.
SECTION 4.02 Capitalization. (a) The authorized capital stock of the
Company consists of 400,000,000 shares of Company Common Stock and 25,000,000
shares of preferred stock ("Company Preferred Stock"). As of March 4, 1999, (i)
156,750,795 shares of Company Common Stock, including the associated Rights (as
defined in Section 4.02(b)), were issued and outstanding, all of which shares of
Company Common Stock were validly issued and are fully paid, nonassessable and
free of preemptive rights, and no shares of Company Preferred Stock were issued
and outstanding, (ii) 51,977,130 shares of Company Common Stock and no shares of
Company Preferred Stock were held in the treasury of the Company, (iii)
17,688,200 shares of Company Common Stock were reserved for issuance upon
exercise of options issued and outstanding and 1,250,000 shares of Company
Common Stock were reserved for issuance pursuant to existing awards under the
Company's Long Term Incentive Plan (the "LTIP"), (iv) no shares of Company
Common Stock were reserved for issuance upon exercise of outstanding warrants,
including the associated Rights, and (v) 4,000,000 shares of Company Preferred
Stock were designated as Series B Junior Participating Preferred Stock reserved
for issuance under the Rights Agreement (as defined in Section 4.02(b)).
Assuming the exercise of all outstanding options, warrants and rights (other
than the Rights) to purchase Company Common Stock and the vesting of all awards
under the LTIP, as of March 4, 1999, there would be 175,688,995 shares of
Company Common Stock issued and outstanding. Since March 4, 1999, except as
permitted by the Agreement, (i) no shares of capital stock of the Company have
been issued except in connection with the exercise of the instruments referred
to in the second sentence of this Section 4.02(a) and except for shares of
Company Common Stock required to be issued in connection with the Company's
existing Dividend Reinvestment Plan ("DRP") and Employee Stock Ownership and
Savings Plan (the "401-K Plan") and (ii) no options, warrants, securities
convertible into, or commitments with respect to the issuance of shares of
capital stock of the Company have been issued, granted or made, except Rights in
accordance with the terms of the Rights Agreement.
(b) Except for the Preferred Stock Purchase Rights (the "Rights")
issued pursuant to the Rights Agreement (the "Rights Agreement"), dated as of
June 3, 1998, between the Company and First Chicago Trust Company of New York
(the "Rights Agent"), or as set forth in Section 4.02(a), as of the date hereof
there were no outstanding
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subscriptions, options, calls, contracts, commitments, understandings,
restrictions, arrangements, rights or warrants, including any right of
conversion or exchange under any outstanding security, instrument or other
agreement and also including any rights plan or other anti-takeover agreement,
obligating the Company or any subsidiary of the Company to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of the capital
stock of the Company or obligating the Company or any subsidiary of the Company
to grant, extend or enter into any such agreement or commitment. There are no
obligations, contingent or otherwise, of the Company to (i) repurchase, redeem
or otherwise acquire any shares of Company Common Stock or other capital stock
of the Company, or the capital stock or other equity interests of any subsidiary
of the Company except in connection with the exercise of options pursuant to the
terms of the Company Option Plans; or (ii) (other than advances to subsidiaries
in the ordinary course of business) provide material funds to, or make any
material investment in (in the form of a loan, capital contribution or
otherwise), or provide any guarantee with respect to the obligations of, any
subsidiary of the Company or any other person. There are no outstanding stock
appreciation rights or similar derivative securities or rights of the Company or
any of its subsidiaries. There are no bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote. Except as disclosed in the Company SEC
Reports or as otherwise contemplated by this Agreement, there are no voting
trusts, irrevocable proxies or other agreements or understandings to which the
Company or any subsidiary of the Company is a party or is bound with respect to
the voting of any shares of capital stock of the Company. The Board of Directors
of the Company has taken all action to amend the Rights Agreement (subject only
to the execution of such amendment by the Rights Agent, which execution the
Company shall cause to take place as promptly as reasonably practicable
following the date of this Agreement) to provide that (i) none of the Parent and
its subsidiaries shall become an "Acquiring Person" and no "Triggering Event"
shall occur as a result of the execution, delivery and performance of this
Agreement and the consummation of the Merger, (ii) no "Distribution Date" shall
occur as a result of the announcement of or the execution of this Agreement or
any of the transactions contemplated hereby and (iii) the Rights will expire
without any further force or effect as of immediately prior to the consummation
of the Merger. Upon execution of the Rights Agreement by the Rights Agent, the
amendment to the Rights Agreement shall become effective and shall remain in
full force and effect until immediately following the termination of this
Agreement in accordance with its terms. The Company has not otherwise amended
the Rights Agreement to exempt any person or entity from the potential
application of the Rights Agreement, other than Parent and its subsidiaries.
(c) The Company has previously made available to Parent complete and
correct copies of the Company Option Plans, including all amendments thereto.
The forms of Options are consistent in all material respects with the terms of
the Company
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Option Plans. The Company has previously made available to Parent a complete and
correct list setting forth as of December 31, 1998, (i) the number of Options
outstanding and (ii) the weighted average exercise price for all outstanding
Options.
SECTION 4.03 Subsidiaries. Each direct and indirect subsidiary of the
Company is duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has the requisite power and authority
to own, lease and operate its assets and properties and to carry on its business
as it is now being conducted and each subsidiary of the Company is qualified to
transact business, and is in good standing, in each jurisdiction in which the
properties owned, leased or operated by it or the nature of the business
conducted by it makes such qualification necessary; except in all cases where
the failure to be so organized, existing, qualified and in good standing would
not reasonably be expected to have a Company Material Adverse Effect. All of the
outstanding shares of capital stock of each subsidiary of the Company are
validly issued, fully paid, nonassessable and free of preemptive rights and are
owned directly or indirectly by the Company free and clear of any liens (other
than liens arising by operation of law), claims, encumbrances, security
interests, equities and options of any nature whatsoever, except that such
shares are pledged to secure the Company's credit facilities. There are no
subscriptions, options, warrants, rights, calls, contracts, voting trusts,
proxies or other commitments, understandings, restrictions or arrangements
relating to the issuance, sale, voting, transfer, ownership or other rights with
respect to any shares of capital stock of any subsidiary of the Company,
including any right of conversion or exchange under any outstanding security,
instrument or agreement.
SECTION 4.04 Authority; Non-Contravention; Approvals. (a) The Company
has full corporate power and authority to enter into this Agreement and, subject
to the Company Stockholders' Approval (as defined in Section 6.01(a)) with
respect solely to the Merger, to consummate the transactions contemplated
hereby. This Agreement has been approved by the Board of Directors of the
Company, and no other corporate proceedings on the part of the Company are
necessary to authorize the execution and delivery of this Agreement or, except
for the Company Stockholders' Approval with respect solely to the Merger, the
consummation by the Company of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Company, and, assuming the
due authorization, execution and delivery hereof by Parent and Merger
Subsidiary, constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement of
creditors' rights generally and (ii) general equitable principles.
(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the Merger and the transactions contemplated
hereby
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do not and will not violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
of, or accelerate the performance required by, or result in a right of
termination or acceleration under, contractually require any offer to purchase
or any prepayment of any debt, or result in the creation of any lien, security
interest or encumbrance upon any of the properties or assets of the Company or
any of its subsidiaries under any of the terms, conditions or provisions of (i)
the respective certificates of incorporation or bylaws of the Company or any of
its subsidiaries, (ii) any statute, law, ordinance, rule, regulation, judgment,
decree, order, injunction, writ, permit or license of any court or governmental
authority applicable to the Company or any of its subsidiaries or any of their
respective properties or assets, subject, in the case of consummation, to
obtaining (prior to the Effective Time) the Company Required Statutory Approvals
(as defined in Section 4.04(c)) and the Company Stockholders' Approval, or (iii)
any Contract to which the Company or any of its subsidiaries is now a party or
by which the Company or any of its subsidiaries or any of their respective
properties or assets may be bound or affected, subject, in the case of
consummation, to obtaining (prior to the Effective Time) consents required from
commercial lenders, lessors or other third parties as specified in Section
4.04(b) of the Company Disclosure Schedule. Excluded from the foregoing sentence
of this paragraph (b), insofar as it applies to the terms, conditions or
provisions described in clauses (ii) and (iii) of this paragraph (b), are such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests or encumbrances that would not reasonably
be expected to have a Company Material Adverse Effect and would not prevent or
materially delay the consummation of the Merger.
(c) Except for (i) the filings by the Company required by the HSR Act,
(ii) the filing of the Proxy Statement with the SEC pursuant to the Exchange
Act, (iii) the filing of the Certificate of Merger with the Secretary of State
of the State of Delaware in connection with the Merger, (iv) any filings with or
approvals from authorities required solely by virtue of the jurisdictions in
which Parent or its subsidiaries conduct any business or own any assets and (v)
any required filings with or approvals from applicable domestic or foreign
environmental authorities, public service commissions and public utility
commissions (the filings and approvals referred to in clauses (i) through (v)
and those disclosed in Section 4.04(c) of the Company Disclosure Schedule are
collectively referred to as the "Company Required Statutory Approvals"), no
declaration, filing or registration with, or notice to, or authorization,
consent or approval of, any governmental or regulatory body or authority is
necessary for the execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices, authorizations, consents or
approvals which, if not made or obtained, as the case may be, would not
reasonably be expected to have a Company Material Adverse Effect and would not
prevent or materially delay the consummation of the Merger.
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SECTION 4.05 Reports and Financial Statements. Since January 1, 1996,
the Company has filed with the SEC all material forms, statements, reports and
documents (including all exhibits, post-effective amendments and supplements
thereto) (the "Company SEC Reports") required to be filed by it under each of
the Securities Act, the Exchange Act and the respective rules and regulations
thereunder, all of which, as amended if applicable, complied when filed in all
material respects with all applicable requirements of the appropriate act and
the rules and regulations thereunder. As of their respective dates, the Company
SEC Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited financial statements of the Company included in the Company's Annual
Report on Form 10-K for the twelve months ended September 30, 1998 and the
Company's Quarterly Report on Form 10-Q for the quarterly period ended December
31, 1998 (collectively, the "Company Financial Statements") have been prepared
in accordance with generally accepted accounting principles applied on a
consistent basis (except as may be indicated therein or in the notes thereto)
and fairly present in all material respects the financial position of the
Company and its subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then ended
(subject, in the case of any unaudited interim financial statements, to normal
year-end adjustments).
SECTION 4.06 Absence of Undisclosed Liabilities. Except as disclosed
in the Company SEC Reports or as heretofore disclosed to Parent in writing with
respect to acquisitions or potential transactions or commitments, neither the
Company nor any of its subsidiaries had at September 30, 1998, or has incurred
since that date and as of the date hereof, any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature, except (a)
liabilities, obligations or contingencies (i) which are accrued or reserved
against in the Company Financial Statements or reflected in the notes thereto or
(ii) which were incurred after September 30, 1998 in the ordinary course of
business and consistent with past practices, (b) liabilities, obligations or
contingencies which (i) would not reasonably be expected to have a Company
Material Adverse Effect, or (ii) have been discharged or paid in full prior to
the date hereof, and (c) liabilities, obligations and contingencies which are of
a nature not required to be reflected in the consolidated financial statements
of the Company and its subsidiaries prepared in accordance with generally
accepted accounting principles consistently applied.
SECTION 4.07 Absence of Certain Changes or Events. Since the date of
the most recent Company SEC Report that contains consolidated financial
statements of the Company, there has not been any Company Material Adverse
Effect.
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SECTION 4.08 Litigation. Except as referred to in the Company SEC
Reports, there are no claims, suits, actions or proceedings pending or, to the
knowledge of the Company, threatened against, relating to or affecting the
Company or any of its subsidiaries, before any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator that would
reasonably be expected to have a Company Material Adverse Effect. Except as
referred to in the Company SEC Reports or as may be entered into with Parent's
prior written consent in connection with Section 5.12(b), neither the Company
nor any of its subsidiaries is subject to any judgment, decree, injunction, rule
or order of any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator which prohibits the consummation
of the transactions contemplated hereby or would reasonably be expected to have
a Company Material Adverse Effect.
SECTION 4.09 Proxy Statement. None of the information to be supplied
by the Company or its subsidiaries for inclusion in the Proxy Statement will, at
the time of the mailing thereof and any amendments or supplements thereto, and
at the time of the meeting of stockholders of the Company to be held in
connection with the transactions contemplated by this Agreement, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. The
Proxy Statement will comply, as of its mailing date, as to form in all material
respects with all applicable laws, including the provisions of the Exchange Act
and the rules and regulations promulgated thereunder, except that no
representation is made by the Company with respect to information supplied by
Parent, Merger Subsidiary or any stockholder of Parent for inclusion therein.
SECTION 4.10 No Violation of Law. Except as disclosed in the Company
SEC Reports, neither the Company nor any of its subsidiaries is in violation of
or has been given written notice of any violation of, any law, statute, order,
rule, regulation, ordinance or judgment (including, without limitation, any
applicable environmental law, ordinance or regulation) of any governmental or
regulatory body or authority, except for violations which would not reasonably
be expected to have a Company Material Adverse Effect. Except as disclosed in
the Company SEC Reports, as of the date of this Agreement, to the knowledge of
the Company, no investigation or review by any governmental or regulatory body
or authority is pending or threatened, nor has any governmental or regulatory
body or authority indicated an intention to conduct the same, other than, in
each case, those the outcome of which, as far as reasonably can be foreseen,
would not reasonably be expected to have a Company Material Adverse Effect. The
Company and its subsidiaries have all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents and approvals
necessary to conduct their businesses as presently conducted (collectively, the
"Company Permits"), except for permits, licenses, franchises, variances,
exemptions,
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orders, authorizations, consents and approvals the absence of which would not
reasonably be expected to have a Company Material Adverse Effect. The Company
and its subsidiaries are not in violation of the terms of any Company Permit,
except for delays in filing reports or violations which would not reasonably be
expected to have a Company Material Adverse Effect.
SECTION 4.11 Compliance with Agreements. Except as disclosed in the
Company SEC Reports, the Company and each of its subsidiaries are not in breach
or violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by a
third party, would result in a default under, (a) the respective certificates of
incorporation, bylaws or similar organizational instruments of the Company or
any of its subsidiaries, or (b) any Contract to which the Company or any of its
subsidiaries is a party or by which any of them is bound or to which any of
their property is subject, other than, in the case of clause (b) of this Section
4.11, breaches, violations and defaults which would not reasonably be expected
to have a Company Material Adverse Effect.
SECTION 4.12 Taxes. (a) The Company and its subsidiaries have (i) duly
filed with the appropriate governmental authorities all Tax Returns required to
be filed by them, and such Tax Returns are true, correct and complete in all
material respects, and (ii) duly paid in full or reserved in accordance with
generally accepted accounting principles on the Company Financial Statements all
Taxes required to be paid, except, in each case, as would not, individually or
in the aggregate, have a Company Material Adverse Effect. The liabilities and
reserves for Taxes reflected in the Company balance sheet included in the latest
Company SEC Report to cover all Taxes for all periods ending at or prior to the
date of such balance sheet have been determined in accordance with generally
accepted accounting principles, and there is no material liability for Taxes for
any period beginning after such date other than Taxes arising in the ordinary
course of business. There are no material liens for Taxes upon any property or
asset of the Company or any subsidiary thereof, except for liens for Taxes not
yet due or Taxes contested in good faith and reserved against in accordance with
generally accepted accounting principles. There are no unresolved issues of law
or fact arising out of a notice of deficiency, proposed deficiency or assessment
from the Internal Revenue Service (the "IRS") or any other governmental taxing
authority with respect to Taxes of the Company or any of its subsidiaries which
would reasonably be expected to have a Company Material Adverse Effect. Neither
the Company nor its subsidiaries has agreed to an extension of time with respect
to a material Tax deficiency other than extensions which are no longer in
effect. Neither the Company nor any of its subsidiaries is a party to any
agreement providing for the allocation or sharing of material Taxes with any
entity that is not, directly or indirectly, a wholly-owned corporate subsidiary
of the Company other than agreements the consequences of which are fully and
adequately reserved for in the Company Financial Statements.
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(b) The Company is not, and will not be as of the Effective Time, a
United States Real Property Holding Corporation within the meaning of Section
897 of the Internal Revenue Code of 1986, as amended (the "Code"), assuming for
this purpose that the date hereof and the Effective Time constitute
"determination dates" within the meaning of Treas. Reg. ss. 1.897-2(c).
(c) The Company and each of its subsidiaries have withheld or
collected and have paid over to the appropriate governmental entities (or are
properly holding for such payment) all material Taxes required to be collected
or withheld.
(d) For purposes of this Agreement, "Tax" (including, with correlative
meaning, the terms "Taxes") includes all federal, state, local and foreign
income, profits, franchise, gross receipts, environmental, customs duty, capital
stock, communications services, severance, stamp, payroll, sales, employment,
unemployment, disability, use, property, withholding, excise, production, value
added, occupancy and other taxes, duties or assessments of any nature
whatsoever, together with all interest, penalties and additions imposed with
respect to such amounts and any interest in respect to such penalties and
additions, and includes any liability for Taxes of another person by contract,
as a transferee or successor, under Treas. Reg. 1.1502-6 or analogous state,
local or foreign law provision or otherwise, and "Tax Return" means any return,
report or similar statement (including attached schedules) required to be filed
with respect to any Tax, including without limitation, any information return,
claim for refund, amended return or declaration of estimated Tax.
SECTION 4.13 Employee Benefit Plans; ERISA. (a) Except as disclosed in
the Company SEC Reports, at the date hereof, the Company and its subsidiaries do
not maintain or contribute to or have any obligation or liability to or with
respect to any material employee benefit plans, programs, arrangements or
practices, including severance plans or policies and employee benefit plans
within the meaning set forth in Section 3(3) of (the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or other similar material
arrangements for the provision of benefits (excluding any "Multi-employer Plan"
within the meaning of Section 3(37) of ERISA or a "Multiple Employer Plan"
within the meaning of Section 413(c) of the Code) (such plans, programs,
arrangements or practices of the Company and its subsidiaries being referred to
as the "Company Plans"). Neither the Company nor any of its subsidiaries
maintains or has any material liability with respect to any Multiple Employer
Plan or contributes to or is obligated to contribute to any Multi-employer Plan.
Neither the Company nor any of its subsidiaries has any obligation to create or
contribute to any additional, material plan, program, arrangement or practice or
to amend any such plan, program, arrangement or practice so as to increase
benefits or contributions thereunder, except as required under the terms of the
Company Plans, under existing collective bargaining agreements or to comply with
applicable law.
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(b) Except as disclosed in the Company SEC Reports, (i) there have
been no prohibited transactions within the meaning of Section 406 or 407 of
ERISA or Section 4975 of the Code with respect to any of the Company Plans that
could result in penalties, taxes or liabilities which would reasonably be
expected to have a Company Material Adverse Effect, (ii) except for premiums
due, there is no outstanding liability, whether measured alone or in the
aggregate, under Title IV of ERISA with respect to any of the Company Plans,
which would reasonably be expected to have a Company Material Adverse Effect,
(iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of the Company Plans
subject to Title IV of ERISA other than in a "standard termination" described in
Section 4041(b) of ERISA, (iv) none of the Company Plans has incurred any
"accumulated funding deficiency" (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, as of the last day of the most recent
fiscal year of each of the Company Plans ended prior to the date of this
Agreement, (v) to the best knowledge of the Company, with respect to Company
Plans subject to Title IV of ERISA, there has been no material change in the
funded status of such plans from the status set forth most recently in the
Company SEC Reports, (vi) each of the Company Plans has been operated and
administered in accordance with applicable laws during the period of time
covered by the applicable statute of limitations, except for failures to comply
which would not reasonably be expected to have a Company Material Adverse
Effect, (vii) each of the Company Plans which is intended to be "qualified"
within the meaning of Section 401(a) of the Code has been determined by the IRS
to be so qualified and such determination has not been modified, revoked or
limited by failure to satisfy any condition thereof or by a subsequent amendment
thereto or a failure to amend, except that it may be necessary to make
additional amendments retroactively to maintain the "qualified" status of such
Company Plans, and the period for making any such necessary retroactive
amendments has not expired, (viii) with respect to Multi-employer Plans, neither
the Company nor any of its subsidiaries has made or suffered a "complete
withdrawal" or a "partial withdrawal," as such terms are respectively defined in
Sections 4203, 4204 and 4205 of ERISA and, to the best knowledge of the Company
and its subsidiaries, no event has occurred or is expected to occur which
presents a material risk of a complete or partial withdrawal under such Sections
4203, 4204 and 4205, (ix) to the knowledge of the Company and its subsidiaries,
there are no pending, threatened or anticipated claims involving any of the
Company Plans other than claims for benefits in the ordinary course or claims
which would not reasonably be expected to have a Company Material Adverse
Effect, (x) except for premiums due, the Company and its subsidiaries have no
current liability under Title IV of ERISA, and the Company and its subsidiaries
do not reasonably anticipate that any such liability will be asserted against
the Company or any of its subsidiaries, except for liabilities or anticipated
liabilities which would not reasonably be expected to have a Company Material
Adverse Effect, and (xi) no act, omission or transaction (individually or in the
aggregate) has occurred with respect to any Company
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Plan that has resulted or could result in any liability (direct or indirect) of
the Company or any subsidiary under Sections 409 or 502(c)(1) or (l) of ERISA or
Chapter 43 of Subtitle (A) of the Code, except for liabilities or anticipated
liabilities which would not reasonably be expected to have a Company Material
Adverse Effect.
(c) The Company SEC Reports contain a true and complete summary or
list of or otherwise describe all material employment contracts and other
employee benefit arrangements with "change of control" provisions and all
severance agreements with executive officers.
(d) There are no agreements which will or would be reasonably expected
to provide payments to any officer, employee, stockholder, or highly compensated
individual which will be "parachute payments" under Code Section 280G that are
nondeductible to the Company or subject to tax under Code Section 4999 for which
the Company or any ERISA Affiliate would have withholding liability.
SECTION 4.14 Labor Controversies. Except as disclosed in the Company
SEC Reports, (a) there are no significant controversies pending or, to the
knowledge of the Company, threatened between the Company or its subsidiaries and
any representatives (including unions) of any of their employees, and (b) to the
knowledge of the Company, there are no material organizational efforts presently
being made involving any of the presently unorganized employees of the Company
or its subsidiaries, except for such controversies and organizational efforts
which would not reasonably be expected to have a Company Material Adverse
Effect.
SECTION 4.15 Environmental Matters. (a) Except as disclosed in the
Company SEC Reports, (i) the Company and its subsidiaries have conducted their
respective businesses in compliance with all applicable Environmental Laws,
including, without limitation, having all permits, licenses and other approvals
and authorizations necessary for the operation of their respective businesses as
presently conducted, (ii) none of the properties owned by the Company or any of
its subsidiaries contain any Hazardous Substance as a result of any activity of
the Company or any of its subsidiaries in amounts exceeding the levels permitted
by applicable Environmental Laws, (iii) since January 1, 1997, neither the
Company nor any of its subsidiaries has received any notices, demand letters or
requests for information from any Federal, state, local or foreign governmental
entity indicating that the Company or any of its subsidiaries may be in
violation of, or liable under, any Environmental Law in connection with the
ownership or operation of their businesses, (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings, investigations or
proceedings pending or threatened, against the Company or any of its
subsidiaries relating to any violation, or alleged violation, of any
Environmental Law, (v) no Hazardous Substance has been disposed of, released or
transported in violation of any applicable Environmental Law from any properties
owned
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by the Company or any of its subsidiaries as a result of any activity of the
Company or any of its subsidiaries during the time such properties were owned,
leased or operated by the Company or any of its subsidiaries, and (vi) neither
the Company, its subsidiaries nor any of their respective properties are subject
to any material liabilities or expenditures (fixed or contingent) relating to
any suit, settlement, court order, administrative order, regulatory requirement,
judgment or claim asserted or arising under any Environmental Law, except for
violations of the foregoing clauses (i) through (vi) that would not reasonably
be expected to have a Company Material Adverse Effect.
(b) As used herein, "Environmental Law" means any federal, state,
local or foreign law, statute, ordinance, rule, regulation, code, license,
permit, authorization, approval, consent, legal doctrine, order, judgment,
decree, injunction, requirement or agreement with any governmental entity
relating to (x) the protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water, groundwater,
drinking water supply, surface land, subsurface land, plant and animal life or
any other natural resource) or to human health or safety, or (y) the exposure
to, or the use, storage, recycling, treatment, generation, transportation,
processing, handling, labeling, production, release or disposal of Hazardous
Substances, in each case as amended and as in effect at the Effective Time. The
term "Environmental Law" includes, without limitation, (i) the Federal
Comprehensive Environmental Response Compensation and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal Act and
the Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Occupational Safety and Health Act of 1970,
each as amended and as in effect at the Effective Time, and (ii) any common law
or equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of, effects of or exposure to any Hazardous Substance.
(c) As used herein, "Hazardous Substance" means any substance
presently or hereafter listed, defined, designated or classified as hazardous,
toxic, radioactive, or dangerous, or otherwise regulated, under any
Environmental Law. Hazardous Substance includes any substance to which exposure
is regulated by any government authority or any Environmental Law including,
without limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste, industrial substance
or petroleum or any derivative or by-product thereof, radon, radioactive
material, asbestos, or asbestos containing material, urea formaldehyde foam
insulation, lead or polychlorinated biphenyls.
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SECTION 4.16 Non-competition Agreements. Except as disclosed in the
Company SEC Reports, neither the Company nor any subsidiary of the Company is a
party to any agreement which (i) purports to restrict or prohibit in any
material respect any of them or any corporation affiliated with any of them
from, directly or indirectly, engaging in any business involving the collection,
interim storage, transfer, recovery, processing, recycling, marketing or
disposal of rubbish, garbage, paper, textile wastes, chemical or hazardous
wastes, liquid and other wastes or any other material business currently engaged
in by Parent or the Company, or any corporations affiliated with either of them,
and (ii) would restrict or prohibit Parent or any subsidiary of the Parent
(other than the Company and its subsidiaries that are currently so restricted or
prohibited) from engaging in such business to the extent that such restriction
or prohibition could reasonably be expected to have a Parent Material Adverse
Effect.
SECTION 4.17 Title to Assets. The Company and each of its subsidiaries
has good and valid title in fee simple to all its real property and good title
to all its leasehold interests and other properties, as reflected in the most
recent balance sheet included in the Company Financial Statements, except for
properties and assets that have been disposed of in the ordinary course of
business since the date of such balance sheet, free and clear of all mortgages,
liens, pledges, charges or encumbrances of any nature whatsoever, except (i) the
lien for current taxes, payments of which are not yet delinquent, (ii) such
imperfections in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially detract from
the value, or interfere with the present use of the property subject thereto or
affected thereby, or otherwise materially impair the Company's business
operations (in the manner presently carried on by the Company), or (iii) as
disclosed in the Company SEC Reports, and except for such matters which would
not reasonably be expected to have a Company Material Adverse Effect. All leases
under which the Company or any of its subsidiaries leases any real or personal
property are in good standing, valid and effective in accordance with their
respective terms, and there is not, under any of such leases, any existing
default or event which with notice or lapse of time or both would become a
default other than failures to be in good standing, valid and effective and
defaults under such leases which would not reasonably be expected to have a
Company Material Adverse Effect.
SECTION 4.18 Company Stockholders' Approval. The affirmative vote of
stockholders of the Company required for approval and adoption of this Agreement
and the Merger is a majority of the outstanding shares of Company Common Stock
entitled to vote thereon.
SECTION 4.19 Opinion of Financial Advisor. The Company's financial
advisor, Goldman, Sachs & Co. (the "Company Financial Advisor"), has delivered
to the Board of Directors of the Company an oral opinion, to be confirmed in
writing (the
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"Fairness Opinion") to the effect that, as of the date of this Agreement, the
consideration to be received by the holders of Company Common Stock in the
Merger is fair to such holders from a financial point of view. Subject to the
prior review and consent by the Company Financial Advisor, the Fairness Opinion
shall be included in the Proxy Statement.
SECTION 4.20 Brokers and Finders. The Company has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of the Company to pay any investment banking fees, finder's
fees, brokerage or agent commissions or other like payments in connection with
the transactions contemplated hereby, other than fees payable to the Company
Financial Advisor or as disclosed in Section 4.20 of the Company Disclosure
Schedule. An accurate copy of any fee agreement with the Company Financial
Advisor has been provided to Parent.
ARTICLE V
COVENANTS
SECTION 5.01 Conduct of Business by the Company Pending the Merger.
Except as otherwise contemplated by this Agreement or disclosed in Section 5.01
of the Company Disclosure Schedule, after the date hereof and prior to the
Effective Time or earlier termination of this Agreement, unless Parent shall
otherwise agree in writing, the Company shall, and shall cause its subsidiaries
to:
(a) conduct their respective businesses in the ordinary and usual
course of business and consistent with past practice;
(b) not (i) amend or propose to amend their respective certificates of
incorporation or bylaws or equivalent constitutional documents, (ii) split,
combine or reclassify their outstanding capital stock or (iii) declare, set
aside or pay any dividend or distribution payable in cash, stock, property or
otherwise, except for the payment of dividends or distributions to the Company
or a wholly-owned subsidiary of the Company by a direct or indirect wholly-owned
subsidiary of the Company and regular quarterly dividends on Company Common
Stock not in excess of $0.19 per share declared and payable at times consistent
with past practice (it being understood and agreed that the record dates for any
such quarterly dividends shall be at least 90 days apart);
(c) not issue, sell, pledge or dispose of, or agree to issue, sell,
pledge or dispose of, any additional shares of, or any options, warrants or
rights of any kind to acquire any shares of their capital stock of any class or
any debt or equity securities convertible into or exchangeable for such capital
stock, except that (i) the Company may
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issue shares (A) upon exercise of Options outstanding on the date hereof or
hereafter granted in accordance with the provisions of subclause (iv) of this
clause (c) or pursuant to awards existing as of the date of this Agreement under
the LTIP and (B) in accordance with the DRP and the Company's 401-K Plan as in
effect on the date of this Agreement, (ii) the Company may (with Parent's prior
written consent, which consent shall not be unreasonably withheld) issue shares
of Company Common Stock (or warrants or options to acquire Company Common Stock)
in connection with acquisitions of assets or businesses pursuant to the proviso
of Section 5.01(d), (iii) the Company may issue shares of Company Common Stock
pursuant to earnouts from previously completed transactions in accordance with
the existing terms of the agreements relating thereto, and (iv) subject to the
proviso below, the Company may grant Options to purchase shares of Company
Common Stock in accordance with the terms of the Company Option Plans to persons
who are not currently directors, officers or employees of the Company or its
subsidiaries and are hired by the Company or its subsidiaries after the date of
this Agreement and such grants are made consistent with past practice and have
an exercise price per share of Company Common Stock no less than the fair market
value of a share of Company Common Stock as of the date of grant, provided that
the number of Options granted pursuant to this subclause (iv) shall not exceed
the number of Options which are outstanding as of the date of this Agreement and
which are thereafter canceled or forfeited without exercise and (v) the Company
may grant Options and LTIP awards in accordance with the description set forth
in Section 5.01 of the Company Disclosure Schedule;
(d) not (i) incur or become contingently liable with respect to any
indebtedness for borrowed money other than (A) borrowings in the ordinary course
of business (other than pursuant to credit facilities) or borrowings under the
existing credit facilities of the Company or any of its subsidiaries or
borrowings under the credit facilities to be entered into substantially on the
terms set forth in Section 5.01 of the Company Disclosure Schedule as such
facilities may be amended in a manner that does not have a material adverse
effect on the Company (the "Existing Credit Facilities") up to the existing
borrowing limit on the date hereof, (B) borrowings to refinance existing
indebtedness on terms which are reasonably acceptable to Parent, or (C)
borrowings in connection with acquisitions as set forth in the proviso in this
Section 5.01(d), (ii) redeem, purchase, acquire or offer to purchase or acquire
any shares of its capital stock or any options, warrants or rights to acquire
any of its capital stock or any security convertible into or exchangeable for
its capital stock other than in connection with the exercise of outstanding
Options pursuant to the terms of the Company Option Plans, (iii) make any
acquisition of any assets or businesses other than expenditures for current
assets in the ordinary course of business and expenditures for fixed or capital
assets in the ordinary course of business and other than as set forth in the
proviso in this Section 5.01(d), (iv) sell, pledge, dispose of or encumber any
assets or businesses other than (A) sales of businesses or assets disclosed in
Section 5.01 of the Company
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Disclosure Schedule, (B) pledges or encumbrances pursuant to Existing Credit
Facilities or other permitted borrowings, (C) sales or dispositions of
businesses or assets consented to in writing by Parent (which consent shall not
be unreasonably withheld) or for which consent is not denied within 24 hours
after the Company notifies Parent (such notice to be delivered during business
hours on a business day) in writing that it desires to effect such sale or
disposition, (D) sales of real estate, assets or facilities for cash
consideration (including any debt assumed by the buyer of such real estate,
assets or facilities) of less than $100,000 in each such case and (E) sales or
dispositions of businesses or assets as may be required by applicable law, or
(v) except as contemplated by the following proviso, enter into any binding
contract, agreement, commitment or arrangement with respect to any of the
foregoing; provided, however, that notwithstanding the foregoing, (I) the
Company shall not be prohibited from acquiring any assets or business for cash
in one or more transactions in which the aggregate revenues of such businesses
and assets do not exceed $80 million in the aggregate and the value of the
consideration paid (as determined in accordance with clause II(B)) in each such
acquisition satisfies the internal rate of return criteria of the Company's
existing acquisition policy as disclosed to Parent and (II) the Company shall
not be prohibited from acquiring any assets or businesses or incurring or
assuming indebtedness in connection with acquisitions of assets or businesses so
long as (A) such acquisitions are disclosed in Section 5.01 of the Company
Disclosure Schedule, or (B) the aggregate value (determined at the time of
execution of the agreement pursuant to which such business or asset is acquired)
of consideration paid or payable in connection with any such acquisition (other
than those acquisitions disclosed in Schedule 5.01 of the Company Disclosure
Schedule) including any funded indebtedness assumed and any Company Common Stock
issued with Parent's prior written consent (which consent shall not be
unreasonably withheld) in connection with such acquisitions (valued for purposes
of this limitation at a price per share equal to the price of the Company Common
Stock on the date the agreement in respect of any such acquisition is entered
into) does not exceed 1.5 times the revenues generated by such business or
assets for the preceding twelve month period for which financial statements are
available and also does not exceed 5.5 times projected earnings before interest,
taxes, depreciation and amortization on a pro forma basis for the twelve month
period immediately following the expected closing date of the acquisition
reflecting reasonably anticipated cost reductions and synergies to be generated
by such business or assets. For purposes of the foregoing, any contingent,
royalty and similar payments made in connection with acquisitions of businesses
or assets shall be included as acquisition consideration and shall be deemed to
have a value equal to their present value assuming a 8% per annum discount rate
and assuming that all amounts payable for the first five years following
consummation of the acquisitions (but not thereafter) are paid. Notwithstanding
anything herein to the contrary: (A) the Company will not acquire or agree to
acquire any assets or businesses if such acquisition or agreement may reasonably
be expected to delay the consummation of the Merger; (B) the Company will not,
and will
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cause its subsidiaries not to, acquire or agree to acquire any assets or
businesses if such assets or businesses are not in industries in which the
Company currently operates, unless such assets or businesses are acquired
incidental to an acquisition of businesses or assets that are in industries in
which the Company currently operates and it is reasonable to acquire such
incidental businesses or assets in connection with such acquisition; and (C) the
Company will not, and will cause its subsidiaries not to, acquire or agree to
acquire all or substantially all of the business, assets, properties or capital
stock of any entity with securities registered under the Securities Act or the
Exchange Act;
(e) use all reasonable efforts to preserve intact their respective
business organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve the goodwill and
business relationships with customers and others having business relationships
with them other than as expressly permitted by the terms of this Agreement;
(f) subject to restrictions imposed by applicable law, confer with one
or more representatives of Parent to report operational matters of materiality
and the general status of ongoing operations;
(g) not enter into or amend any employment, severance, special pay
arrangement with respect to termination of employment or other similar
arrangements or agreements with any directors, officers or key employees or with
any other persons, except pursuant to (i) applicable law, (ii) previously
existing contractual arrangements or policies disclosed pursuant to this
Agreement or (iii) employment agreements entered into with a person who is hired
by the Company or one of its subsidiaries to replace an employee who is
terminated or voluntarily resigns and who, at the time of termination, was party
to an employment agreement with the Company or one of its subsidiaries, provided
that such new employment agreement shall be on terms (including salary and
benefits) comparable in all material respects to the contract covering the
terminated employee and shall not contain a change of control provision and
shall not be for a term of more than one year or provide for severance pay or
benefits (other than base salary and benefits payable if such contract had not
been terminated prior to the expiration of its term).
(h) not increase the salary or monetary compensation of any person
except for increases consistent with past practice as reflected in the Company's
Annual Budget for fiscal 1999 or except pursuant to applicable law or previously
existing contractual arrangements;
(i) not adopt, enter into or amend to increase benefits or obligations
any pension or retirement plan, trust or fund and not adopt, enter into or amend
in any material respect any bonus, profit sharing, compensation, stock option,
deferred
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compensation, health care, employment or other employee benefit plan, agreement,
trust, fund or arrangement for the benefit or welfare of any employees or
retirees generally, other than in the ordinary course of business, except (i) as
required to comply with changes in applicable law, (ii) any of the foregoing
involving any such then existing plans, agreements, trusts, funds or
arrangements of any company acquired after the date hereof, or (iii) as required
pursuant to an existing contractual arrangement or agreement;
(j) not make expenditures, including, but not limited to, capital
expenditures, or enter into any binding commitment or contract to make
expenditures, except (i) as included in, or consistent with, the Company's
Annual Budget for fiscal 1999, (ii) for emergency repairs and other expenditures
necessary in light of circumstances not anticipated as of the date of this
Agreement which are necessary to avoid significant disruption to the Company's
business or operations consistent with past practice (and, if reasonably
practicable, after consultation with Parent), (iii) for repairs and maintenance
in the ordinary course of business consistent with past practice or (iv) as
expressly permitted by paragraph (d) of this Section 5.01;
(k) not enter into any contract or commitment (i) providing for the
provision of services (including, but not limited to, waste disposal, waste
hauling, or landfill use) by the Company or any of its subsidiaries that has a
term of more than three years and which is reasonably expected to generate more
than $15 million in revenues over its term or (ii) providing for the purchase of
services by the Company or any of its subsidiaries that has a term of more than
one year and which is reasonably expected to involve payments of more than $1
million over its term;
(l) not make, change or revoke any material Tax election unless
required by law or make any agreement or settlement with any taxing authority
regarding any material amount of Taxes or which would reasonably be expected to
materially increase the obligations of the Company or the Surviving Corporation
to pay Taxes in the future.
SECTION 5.02 Control of the Company's Operations. Nothing contained in
this Agreement shall give to Parent, directly or indirectly, rights to control
or direct the Company's operations prior to the Effective Time. Prior to the
Effective Time, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision of its
operations.
SECTION 5.03 Acquisition Transactions. (a) After the date hereof and
prior to the Effective Time or earlier termination of this Agreement, the
Company shall not, and shall not permit any of its subsidiaries to, initiate,
solicit, negotiate, encourage or provide confidential information to facilitate,
and the Company shall use its reasonable efforts to cause any officer, director
or employee of the Company, or any attorney,
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accountant, investment banker, financial advisor or other agent retained by it
or any of its subsidiaries, not to initiate, solicit, negotiate, encourage or
provide non-public or confidential information to facilitate, any proposal or
offer to acquire all or any substantial part of the business, properties or
capital stock of the Company, whether by merger, purchase of assets, tender
offer or otherwise, whether for cash, securities or any other consideration or
combination thereof (any such transactions being referred to herein as an
"Acquisition Transaction").
(b) Notwithstanding the provisions of paragraph (a) above, (i) the
Company may, prior to receipt of the Company Stockholders' Approval, in response
to an unsolicited bona fide written offer or proposal with respect to a
potential or proposed Acquisition Transaction ("Acquisition Proposal") from a
corporation, partnership, person or other entity or group (a "Potential
Acquirer") which the Company's Board of Directors determines, in good faith and
after consultation with its independent financial advisor, could reasonably be
expected to result (if consummated pursuant to its terms) in an Acquisition
Transaction more favorable to the Company's stockholders than the Merger (a
"Qualifying Proposal"), furnish (subject to the execution of a confidentiality
agreement substantially similar to the confidentiality provisions of the
Confidentiality Agreement (as defined in Section 5.04)) confidential or
non-public information to, and negotiate with, such Potential Acquirer if the
Board of Directors of the Company, after consulting with its outside legal
counsel, determines in good faith that consideration of the Acquisition Proposal
is reasonably necessary for the Board of Directors to act in a manner consistent
with its fiduciary duties or that the failure to provide such confidential or
non-public information to or negotiate with such Potential Acquirer would be
reasonably likely to constitute a breach of its fiduciary duties to the
Company's stockholders, and, upon termination of this Agreement in accordance
with Section 7.01(v) or (vi) and after payment to Parent of the fee pursuant to
Section 5.11(b), resolve to accept, or recommend, or enter into agreements
relating to, a Qualifying Proposal as to which the Company's Board of Directors,
in good faith, has determined is reasonably likely to be consummated (such
Qualifying Proposal being a "Superior Proposal") and (ii) the Company's Board of
Directors may take and disclose to the Company's stockholders a position
contemplated by Rule 14e-2 under the Exchange Act or otherwise make disclosure
required by the federal securities laws. It is understood and agreed that
negotiations and other activities conducted in accordance with this paragraph
(b) shall not constitute a violation of paragraph (a) of this Section 5.03.
(c) The Company shall promptly notify Parent after receipt of any
Acquisition Proposal, indication of interest or request for non-public
information relating to the Company or its subsidiaries in connection with an
Acquisition Proposal or for access to the properties, books or records of the
Company or any subsidiary by any person or entity that informs the Board of
Directors of the Company or such subsidiary that it is considering making, or
has made, an Acquisition Proposal. Such notice to Parent
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shall be made orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the material terms and conditions of such proposal,
inquiry or contact.
(d) After the date hereof and prior to the Effective Time or earlier
termination of this Agreement, the Parent shall promptly notify the Company
after receipt of any proposal or offer to acquire all or any substantial part of
the business, properties or capital stock of Parent, whether by merger, purchase
of assets, tender offer or otherwise, whether for cash, securities or any other
consideration or combination thereof and shall indicate in reasonable detail the
identity of the offeror or person and the material terms and conditions of such
proposal or offer and the financing arrangements, if any, relating thereto.
SECTION 5.04. Access to Information. Subject to applicable law, the
Company and its subsidiaries shall afford to Parent and Merger Subsidiary and
their respective accountants, counsel, financial advisors, sources of financing
and other representatives (the "Parent Representatives") reasonable access
during normal business hours with reasonable notice throughout the period prior
to the Effective Time to all of their respective properties, books, contracts,
commitments and records (including, but not limited to, Tax Returns) and, during
such period, shall furnish promptly (i) a copy of each report, schedule and
other document filed or received by any of them pursuant to the requirements of
federal or state securities laws or filed by any of them with the SEC in
connection with the transactions contemplated by this Agreement, and (ii) such
other information concerning its businesses, properties and personnel as Parent
or Merger Subsidiary shall reasonably request and will use reasonable efforts to
obtain the reasonable cooperation of the Company's officers, employees, counsel,
accountants, consultants and financial advisors in connection with the
investigation of the Company by Parent and the Parent Representatives; provided,
however, that no investigation pursuant to this Section 5.04 shall amend or
modify any representations or warranties made herein or the conditions to the
obligations of the respective parties to consummate the Merger. All nonpublic
information provided to, or obtained by, Parent in connection with the
transactions contemplated hereby shall be "Information" for purposes of the
Confidentiality Agreement dated February 24, 1999 between Parent and the Company
(the "Confidentiality Agreement"), provided that (i) Parent, Merger Subsidiary
and the Company may disclose such information as may be necessary in connection
with seeking the Parent Required Statutory Approvals, the Company Required
Statutory Approvals and the Company Stockholders' Approval, and (ii) each of
Parent, Merger Subsidiary and the Company may disclose any information that it
is required by law or judicial or administrative order to disclose.
Notwithstanding the foregoing, the Company shall not be required to provide any
information which it reasonably believes it may not provide to Parent by reason
of applicable law, rules or regulations, which constitutes information protected
by attorney/client privilege, or which the Company or
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any subsidiary is required to keep confidential by reason of contract, agreement
or understanding with third parties.
SECTION 5.05. Notices of Certain Events. (a) The Company shall
promptly as reasonably practicable after executive officers of the Company
acquire knowledge thereof, notify Parent of: (i) any notice or other
communication from any person alleging that the consent of such person (or
another person) is or may be required in connection with the transactions
contemplated by this Agreement which consent relates to a material Contract to
which the Company or any of its subsidiaries is a party or the failure of which
to obtain would materially delay consummation of the Merger; (ii) any notice or
other communication from any governmental or regulatory agency or authority in
connection with the transactions contemplated by this Agreement; and (iii) any
actions, suits, claims, investigations or proceedings commenced or, to the best
of its knowledge threatened against, relating to or involving or otherwise
affecting the Company or any of its subsidiaries that, if pending on the date of
this Agreement, would have been required to have been disclosed pursuant to
Sections 4.08 or 4.10 or which relate to the consummation of the transactions
contemplated by this Agreement.
(b) Each of Parent and Merger Subsidiary shall promptly as reasonably
practicable after executive officers of the Parent acquire knowledge thereof,
notify the Company of: (i) any notice or other communication from any person
alleging that the consent of such person (or other person) is or may be required
in connection with the transactions contemplated by this Agreement which consent
relates to a material Contract to which Parent or its subsidiaries are a party
or the failure of which to obtain would materially delay the Merger, (ii) any
notice or other communication from any governmental or regulatory agency or
authority in connection with the transactions contemplated by this Agreement,
and (iii) any actions, suits, claims, investigations or proceedings commenced
or, to the best of its knowledge threatened, against Parent or Merger
Subsidiary, which relate to consummation of the transactions contemplated by
this Agreement.
(c) Subject to the provisions of Section 5.03, each of the Company,
Parent and Merger Subsidiary agrees to give prompt notice to each other of, and
to use commercially reasonable efforts to remedy, (i) the occurrence or failure
to occur of any event which occurrence or failure to occur would be likely to
cause any of its representations or warranties in this Agreement to be untrue or
inaccurate at the Effective Time unless such failure or occurrence would not
have a Company Material Adverse Effect or a Parent Material Adverse Effect, as
the case may be, and (ii) any failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder unless such failure or occurrence would not have a Company Material
Adverse Effect or a Parent Material Adverse Effect, as the case may be;
provided, however, that the delivery of any notice pursuant to this Section
5.05(c) shall
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not limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
SECTION 5.06. Merger Subsidiary. Parent will take all action necessary
(a) to cause Merger Subsidiary to perform its obligations under this Agreement
and to consummate the Merger on the terms and conditions set forth in this
Agreement and (b) to ensure that, prior to the Effective Time, Merger Subsidiary
shall not conduct any business or make any investments other than as
specifically contemplated by this Agreement, or incur or guarantee any
indebtedness (other than as contemplated by the financing required for the
Merger and related transactions).
SECTION 5.07. Employee Benefits. (a) Parent shall assume and honor, or
shall cause the Surviving Corporation to assume and honor, all Company Plans
pursuant to the terms of the Company Plans (provided, that, except as expressly
provided by this Agreement, Parent shall have no obligation under this Agreement
to continue to provide benefits thereunder in respect of periods following the
Effective Time and nothing herein shall prevent termination of such plans).
Prior to the Effective Time, the Company may take all action necessary to
terminate the Company's Deferred Compensation Plan, Grandfathered Benefit
Restoration Plan and Benefit Restoration Plan and to permit participants in such
plans to receive lump sum payments of their accrued benefits (as determined
under the provisions of the plan as in effect on the date hereof) under such
plans at the Effective Time. Prior to the Effective Time, the Company shall take
all action necessary to amend the Company's Retirement Plan to provide that (i)
as of the Effective Time, the accrued benefit of participants in the Retirement
Plan is frozen as of such date (including without limitation with respect to the
crediting of accruals following the Effective Time) and consistent with the
current provisions of the plan, a credit for 1999 accruals is made under the
cash balance portion of the plan through the Effective Time and (ii) following
the Effective Time, no individuals shall commence to participate in such plan;
provided, however, that participants as of the Effective Time shall, following
the Effective Time, continue (x) to vest in their accrued benefit, (y) to
receive annual interest credits under the cash balance portion of the plan at
the rate provided pursuant to the existing terms of the plan and (z) to have
compensation considered for purposes of calculation of "Final Average
Compensation" under the "Old Plan Benefit" portion of the plan (to the extent so
considered as of the date hereof). The Company shall, as required by law,
provide participants with notice of the amendments required by this Section
5.07(a). Nothing herein shall prevent Parent, in its sole discretion, from
terminating such plan in compliance with applicable law at any time after the
Effective Time.
(b) Parent acknowledges that for purposes of the Company Plans, the
consummation of the Merger will constitute a "Change in Control" of the Company,
and the Company's Annual Management Incentive Plan and Long-Term Incentive Plan
shall
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be terminated effective as of the Effective Time, and the Company shall make
payments to participants in accordance with the terms of such plans at the
Effective Time or as soon as reasonably practicable thereafter. The Company
shall take all steps necessary to ensure that no portion of any payments to be
received by any individual on or following the Effective Time (whether pursuant
to this Section 5.07(b), or otherwise) will be eligible for conversion under the
Company's Convertible Annual Incentive Award Plan.
(c) Parent currently intends, or intends to cause the Surviving
Corporation to, provide for a period of at least 1 year following the Effective
Time, employee benefits and incentive compensation to active employees of the
Company and its subsidiaries employed as of the Effective Time who are not
covered by any collective bargaining agreement ("Company Employees") that are no
less favorable in the aggregate than those provided to similarly situated
employees of Parent and its subsidiaries (excluding, however, severance payments
for employees covered by paragraph (d) hereof).
(d) Parent agrees to provide Company Employees who do not have
employment agreements and who would not otherwise receive severance pay upon
termination of employment greater than the severance pay provided under this
Section 5.07(d) with severance benefits if such employee's employment is
involuntarily terminated without cause (including termination of employment by
reason of "Constructive Discharge" which, for purposes of this Agreement, means
a reduction of base salary or wages or forced relocation of more than thirty
miles) during the period commencing upon the Effective Time and ending twelve
months after the Effective Time. The Company may, with the prior consent of
Parent (which consent shall not be unreasonably withheld), establish such
severance plan prior to the Effective Time. The plan to be established pursuant
to this Section 5.07(d) shall provide that an eligible Company Employee shall
receive a lump sum amount of severance pay equal to two weeks of weekly base
salary or wages (as in effect immediately prior to termination) for each whole
year of service with the Company or its subsidiaries, with a minimum amount of
severance pay equal to one week of weekly base salary or wages (so long as such
Company Employee has at least six months of service as of the date of
termination) and a maximum amount of severance pay equal to fifty-two weeks of
weekly base salary or wages. Severance pay to a Company Employee (i) shall be
net of withholding taxes, (ii) shall not be included as compensation in any
other employee benefit plan or program unless required by such plan or program,
(iii) shall be payable only upon execution by the Company Employee of a general
release in the favor of Parent, the Company, and their respective subsidiaries
in accordance with the Company's current practices and (iv) subject to clause
(iii), shall be paid reasonably promptly after a qualifying termination of
employment. Any severance pay to which a Company Employee is entitled hereunder
shall be reduced by the severance pay such Company Employee receives from any
other source.
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(e) Parent and the Company each hereby acknowledge and agree that (i)
at the Effective Time, each of the executives listed in Section 5.07(e) of the
Company Disclosure Schedule will be deemed to have terminated his or her
employment with the Company under circumstances which entitle such executive to
the severance pay required by the contracts listed in Section 5.07(e) of the
Company Disclosure Schedule; (ii) each such executive will become entitled to
receive the severance pay (and other payments) required by such contracts upon a
termination of employment following a "change of control" at the Effective Time;
and (iii) any severance pay to which such executives are entitled shall be paid
at the Effective Time or as soon as practicable after the Effective Time. The
Company shall, prior to the Effective Time, use its reasonable efforts to take
all action necessary such that each executive to whom this Section 5.07(e)
applies shall be deemed to have consented to the payment of severance pay in
accordance with this Section 5.07(e), notwithstanding any provision to the
contrary in such contracts. The executives listed in Section 5.07(e) of the
Company Disclosure Schedule shall receive the coverage set forth in Section
5.07(f), subject to applicable law and to the extent permitted by applicable
insurance policies.
(f) Parent shall use reasonable efforts to cause any Company Employee
(i) whose employment is involuntarily terminated without cause (including by
reason of Constructive Discharge) during the twelve months following the
Effective Time and (ii) who is age fifty or older on the date of termination to
be provided with continued medical, dental and vision coverage for such Company
Employee and his or her dependents from the date of termination until age
sixty-five at such Company Employee's expense; provided, however, that the
obligation of Parent set forth in this Section 5.07(f) (x) shall cease if the
Company Employee becomes eligible for coverage under any other employee benefit
plan providing substantially similar benefits and (y) shall in any event be
subject to applicable law. Coverage required by this Section 5.07(f) shall
commence upon termination of the coverage required by Section 5.07(g).
(g) Subject to applicable law and to the extent permitted by
applicable insurance policies, Parent shall cause any Company Employee whose
employment is involuntarily terminated without cause (including by reason of
Constructive Discharge) during the twelve months following the Effective Time to
be provided with health insurance coverage at no cost to such Company Employee
equal to the number of weeks based on the calculation of severance pay in
Section 5.07(d) hereof, up to a maximum of fifty-two weeks. To the extent
permitted by applicable existing insurance policies of Parent, the COBRA
continuation coverage period shall commence thereafter with coverage at Company
Employee's cost.
(h) Parent (i) shall cause outplacement services to be
provided to Company Employees based in the Houston corporate offices as of the
Effective Time whose employment is involuntarily terminated without cause
(including by reason of
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Constructive Discharge) within twelve months following the Effective Time and
(ii) shall use reasonable efforts to cause outplacement services to be provided,
whenever it deems the provision of such services to be desirable, to Company
Employees whose employment is terminated as part of a significant concentration
of workplace reductions. Such outplacement services shall be at the Company's
expense, equal to the number of weeks based on the calculation of severance pay
under Section 5.07(d) hereof, up to a maximum of fifty-two weeks.
(i) For purposes of all employee benefit plans maintained by or
contributed to by the Parent or its subsidiaries in which Company Employees
participate, Parent shall cause each such plan to treat the prior service with
the Company and its subsidiaries of each Company Employee as service rendered to
Parent or its subsidiaries, as the case may be, for purposes of eligibility to
participate, vesting, benefit accrual and levels of benefits under such plans,
provided, that the foregoing shall not apply to the extent that its application
would result in duplication of accrual of benefits or to newly established plans
and programs for which prior service of Parent employees is not taken into
account.
(j) Parent shall (i) waive all limitations as to preexisting
conditions, exclusions and waiting periods with respect to participation and
coverage requirements applicable to the Company Employees under any welfare
benefits plans that such Company Employees may be eligible to participate in
after the Effective Time, whether pursuant to the provisions of this Section
5.07 or otherwise, except to the extent that any Company Employees were subject
to such preexisting conditions, exclusions and waiting periods under the Company
plans, and (ii) provide each Company Employee with credit for any co-payments
and deductibles paid prior to the Effective Time (in the calendar year of the
Effective Time) in satisfying any applicable deductible or out-of-pocket
requirements under any welfare plans that such employees are eligible to
participate in after the Effective Time.
(k) For so long after the Effective Time as the Company maintains the
cash or deferred arrangement under Section 401(k) of the Code in which Company
Employees participate immediately prior to the Effective Time and Parent's
401(k) plans have a loan feature, Parent shall cause the plan to retain the loan
feature of such plan.
SECTION 5.08. Meeting of the Company's Stockholders. The Company shall
as promptly as practicable after the date of this Agreement take all action
necessary in accordance with Delaware Law and its Restated Certificate of
Incorporation and bylaws to convene a meeting of the Company's stockholders (the
"Company Stockholders' Meeting") to act on this Agreement. The Board of
Directors of the Company shall, subject to its fiduciary duties, recommend that
the Company's stockholders vote to approve the Merger and adopt this Agreement,
and use its reasonable
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best efforts to solicit from stockholders of the Company proxies in favor of the
Merger and to take all other action in its judgment necessary and appropriate to
secure the vote of stockholders required by Delaware Law to effect the Merger.
Between the date hereof and the Effective Time, neither Parent nor any
of its subsidiaries shall acquire, or agree to acquire, whether in the open
market or otherwise, any rights in any equity securities of the Company other
than pursuant to the Merger.
SECTION 5.09. Proxy Statement. As promptly as practicable after
execution of this Agreement, the Company shall prepare the Proxy Statement, file
it with the SEC under the Exchange Act, and use all reasonable efforts to have
the Proxy Statement cleared by the SEC. Parent, Merger Subsidiary and the
Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify Parent of the receipt of any comments of
the SEC with respect to the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information and shall
provide to Parent promptly copies of all correspondence between the Company or
any representative of the Company and the SEC. The Company shall give Parent and
its counsel the opportunity to review the Proxy Statement prior to its being
filed with the SEC and shall give Parent and its counsel the opportunity to
review all amendments and supplements to the Proxy Statement and all responses
to requests for additional information and replies to comments prior to their
being filed with, or sent to, the SEC. Each of the Company, Parent and Merger
Subsidiary agrees to use its reasonable best efforts, after consultation with
the other parties hereto to respond promptly to all such comments of and
requests by the SEC. As promptly as practicable after the Proxy Statement has
been cleared by the SEC, the Company shall mail the Proxy Statement to the
stockholders of the Company. Prior to the date of approval of the Merger by the
Company's stockholders, each of the Company, Parent and Merger Subsidiary shall
correct promptly any information provided by it to be used specifically in the
Proxy Statement that shall have become false or misleading in any material
respect and the Company shall take all steps necessary to file with the SEC and
cleared by the SEC any amendment or supplement to the Proxy Statement so as to
correct the same and to cause the Proxy Statement as so corrected to be
disseminated to the stockholders of the Company, in each case to the extent
required by applicable law.
SECTION 5.10. Public Announcements. Parent and the Company will
consult with each other before issuing any press release or making any public
statement with respect to this Agreement and the transactions contemplated
hereby and, except as may be required by applicable law or any listing agreement
with the NYSE, will not issue any such press release or make any such public
statement prior to such consultation.
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SECTION 5.11 Expenses and Fees. (a) All costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses, except that those expenses incurred
in connection with printing and filing the Proxy Statement shall be shared
equally by Parent and the Company.
(b) The Company agrees to pay to Parent a fee equal to $225 million
if:
(i) the Company terminates this Agreement pursuant to clause (v)
or (vi) of Section 7.01;
(ii) Parent terminates this Agreement pursuant to clause (vii) of
Section 7.01, which fee shall be payable within two business days of such
termination;
(iii) this Agreement is terminated for any reason at a time at
which Parent was not in material breach of its covenants contained in this
Agreement and was entitled to terminate this Agreement pursuant to clause (viii)
of Section 7.01, and (i) prior to the time of the Company Stockholders' Meeting
a proposal by a third party relating to an Acquisition Transaction had been
made, and (ii) on or prior to the nine month anniversary of the termination of
this Agreement (x) the Company or any of its subsidiaries or affiliates enters
into an agreement or letter of intent (or resolves or announces an intention to
do) with respect to an Acquisition Transaction involving a person, entity or
group if such person, entity, group (or any member of such group, or any
affiliate of any of the foregoing) made a proposal with respect to an
Acquisition Transaction on or after the date hereof and prior to the Company
Stockholders' Meeting and such Acquisition Transaction is consummated or (y) an
Acquisition Transaction shall otherwise occur with any person who shall have
made a proposal with respect to an Acquisition Transaction no later than 90 days
after termination of this Agreement. Such fee shall be payable upon the first
occurrence of any such event.
(c) Parent shall pay to the Company a fee equal to $225 million if
this Agreement is terminated pursuant to clause (ii) of Section 7.01 and at such
time (i) Parent or its subsidiaries have not received funds pursuant to the
Financing sufficient to consummate the Merger and related transactions, (ii) all
conditions to Parent's obligation to consummate the Merger shall have been
satisfied, other than conditions relating to the HSR Act or any law, regulation,
order, judgment, injunction or decree relating to antitrust or competition
matters and except insofar as any condition requires the delivery of officers
certificates, (iii) Parent is not in breach of any of its representations,
warranties, covenants or agreements set forth in this Agreement except for
breaches which did not result in a failure to satisfy the conditions to Parent
obtaining funds pursuant to the definitive agreement relating to the debt
financing for the Merger (the "Definitive Debt Agreement") or to Parent's
obligations to consummate the Merger, (iv) the Company is
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not in breach of any of its representations, warranties, covenants or agreements
set forth in this Agreement except for breaches which did not result in a
failure to satisfy the conditions to Parent obtaining funds pursuant to the
Definitive Debt Agreement and (v) at the time the Definitive Debt Agreement was
executed, Parent was not in breach of any of its representations and warranties
in such agreement with respect to Parent and its subsidiaries and, to the best
of Parent's knowledge at such time, Parent was not in breach of Parent's
representations and warranties in such agreement with respect to the Company and
its subsidiaries, in either case, except for breaches which would not result in
a failure to satisfy the conditions to Parent obtaining funds pursuant to the
Definitive Debt Agreement. Parent shall have no liability for the failure of
Parent to obtain funds pursuant to the Definitive Debt Agreement and consummate
the Merger as a result of a breach by the Company of any of its covenants,
agreements, representations or warranties set forth in this Agreement. If all of
the requirements of the first sentence of this paragraph (c) for the payment of
a fee are satisfied other than that set forth in clause (iii) or clause (v) of
such sentence, then Parent shall be obligated to pay such $225 million fee
(which amount shall be credited against any amount for which Parent may be held
liable in connection with the failure to consummate the Merger).
(d) Parent agrees to pay to the Company a fee equal to $225 million if
this Agreement is terminated pursuant to clause (ii) of Section 7.01 or clause
(iii) of Section 7.01 (only to the extent such termination under clause (iii)
relates to antitrust or competition matters) and at such time (i) the waiting
period under the HSR Act shall not have expired or been terminated or any
injunction, order or decree relating to antitrust or competition matters shall
prohibit or restrain consummation of the Merger, and (ii) all of the other
conditions to Parent's obligation to consummate the Merger have been satisfied
or would be satisfied absent the occurrence or failure to occur of the events
described in sub-clause (i) of this clause (d), except conditions insofar as
they relate to the delivery of officers certificates and conditions which are
not (or would not be) so satisfied as a result of Parent's breach of this
Agreement.
(e) Only one fee aggregating $225 million shall be payable pursuant to
paragraphs (c) and (d) even if the circumstances giving rise to the obligation
to pay a fee exists under both such paragraphs. Such fee shall be payable at the
time Parent so terminates this Agreement or within two business days after the
Company so terminates this Agreement.
SECTION 5.12 Agreement to Cooperate. (a) Subject to the terms and
conditions of this Agreement, including Section 5.03, each of the parties hereto
shall use all reasonable best efforts to take, or cause to be taken, all action
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable best
efforts to obtain all necessary or appropriate waivers,
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consents or approvals of third parties required in order to preserve material
contractual relationships of Parent and the Company and their respective
subsidiaries, all necessary or appropriate waivers, consents and approvals and
SEC "no-action" letters to effect all necessary registrations, filings and
submissions and to lift any injunction or other legal bar to the Merger (and, in
such case, to proceed with the Merger as expeditiously as possible). In
addition, subject to the terms and conditions herein provided and subject to the
fiduciary duties of the respective boards of directors of the Company and
Parent, none of the parties hereto shall knowingly take or cause to be taken any
action (including, but not limited to, in the case of Parent, (x) the incurrence
of material debt financing, other than the financing in connection with the
Merger and related transactions and other than debt financing incurred in the
ordinary course of business, and (y) the acquisition of businesses or assets)
which would reasonably be expected to materially delay or prevent consummation
of the Merger. Parent shall use its reasonable best efforts to cause the
satisfaction of the conditions to the receipt of funds pursuant to the Financing
Commitments.
(b) Without limitation of the foregoing, each of Parent and the
Company undertakes and agrees to file as soon as practicable, and in any event
prior to 15 days after the date hereof, a Notification and Report Form under the
HSR Act with the United States Federal Trade Commission (the "FTC") and the
Antitrust Division of the United States Department of Justice (the "Antitrust
Division"). Each of Parent and the Company shall (i) respond as promptly as
practicable to any inquiries received from the FTC or the Antitrust Division for
additional information or documentation and to all inquiries and requests
received from any State Attorney General or other governmental authority in
connection with antitrust matters, and (ii) not extend any waiting period under
the HSR Act or enter into any agreement with the FTC or the Antitrust Division
not to consummate the transactions contemplated by this Agreement, except with
the prior written consent of the other parties hereto. Parent shall offer to
take (and if such offer is accepted, commit to take) all steps which it is
capable of taking to avoid or eliminate impediments under any antitrust,
competition, or trade regulation law that may be asserted by the FTC, the
Antitrust Division, any State Attorney General or any other governmental entity
with respect to the Merger so as to enable the Effective Time to occur prior to
September 15, 1999 (the "Outside Date") and shall defend through litigation on
the merits any claim asserted in any court by any party, including appeals.
Without limiting the foregoing, Parent shall propose, negotiate, offer to commit
and effect (and if such offer is accepted, commit to and effect), by consent
decree, hold separate order, or otherwise, the sale, divestiture or disposition
of such assets or businesses of Parent or, effective as of the Effective Time,
the Surviving Corporation, or their respective subsidiaries or otherwise offer
to take or offer to commit to take any action which it is capable of taking and
if the offer is accepted, take or commit to take such action that limits its
freedom of action with respect to, or its ability to retain, any of the
businesses, services or assets of Parent, the Surviving Corporation or their
respective
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subsidiaries, in order to avoid the entry of, or to effect the dissolution of,
any injunction, temporary restraining order or other order in any suit or
proceeding, which would otherwise have the effect of preventing or delaying the
Effective Time beyond the Outside Date. At the request of Parent, the Company
shall agree to divest, hold separate or otherwise take or commit to take any
action that limits its freedom of action with respect to, or its ability to
retain, any of the businesses, services, or assets of the Company or any of its
subsidiaries, provided that any such action may be conditioned upon the
consummation of the Merger and the transactions contemplated hereby. Each party
shall (i) promptly notify the other party of any written communication to that
party from the FTC, the Antitrust Division, any State Attorney General or any
other governmental entity and, subject to applicable law, permit the other party
to review in advance any proposed written communication to any of the foregoing;
(ii) not agree to participate in any substantive meeting or discussion with any
governmental authority in respect of any filings, investigation or inquiry
concerning this Agreement or the Merger unless it consults with the other party
in advance and, to the extent permitted by such governmental authority, gives
the other party the opportunity to attend and participate thereat; and (iii)
furnish the other party with copies of all correspondence, filings, and
communications (and memoranda setting forth the substance thereof) between them
and their affiliates and their respective representatives on the one hand, and
any government or regulatory authority or members or their respective staffs on
the other hand, with respect to this Agreement and the Merger. If Parent shall
have complied with all of its obligations under this Section 5.12, but there is
no action that Parent or the Company can undertake or offer to undertake that
would eliminate the impediment asserted by the FTC, Antitrust Division, or State
Attorney General or other order in any suit or proceeding, in order for the
Effective Time to occur prior to the applicable date specified in Section
7.01(ii), assuming all conditions other than those relating to such impediment
or order have been satisfied or waived, then Parent shall not be deemed to have
breached its obligations under this Section 5.12.
(c) In the event any litigation is commenced by any person or entity
relating to the transactions contemplated by this Agreement, including any
Acquisition Transaction, Parent shall have the right, at its own expense, to
participate therein, and the Company will not settle any such litigation without
the consent of Parent, which consent will not be unreasonably withheld.
(d) In connection with the consummation of the financing contemplated
by the Financing Commitments, at the reasonable request of Parent, the Company
(i) agrees to enter into such agreements, to use reasonable best efforts to
deliver such officers certificates and opinions as are customary in financing of
this type and as are, in the good faith determination of the persons executing
such officers certificates or opinions, accurate, and agrees to pledge, grant
security interests in, and otherwise grant liens on, its assets pursuant to such
agreements as may be reasonably requested, provided
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that no obligation of the Company under any such agreement, pledge, or grant
shall be effective until the Effective Time and (ii) will provide to the lenders
specified in the Financing Commitments financial and other information in the
Company's possession with respect to the Merger, make the Company's senior
officers available to assist the lenders specified in the Financing Commitments,
and otherwise cooperate in connection with the consummation of the Financing, it
being understood and agreed that if the Company fails to deliver such accurate
officers certificates and opinions described in sub-clause (i) of this clause
(d) and, as a result thereof, the conditions set forth in Sections 6.01(d) or
6.01(e) are not satisfied, Parent shall have no liability under this Agreement
(including Section 5.11) for, or for the failure to satisfy, such conditions.
(e) The Company shall, jointly with the banks providing the Financing,
retain a nationally recognized independent evaluation firm reasonably
satisfactory to the Company and the banks providing the debt financing to render
a solvency letter (the "Solvency Letter") immediately prior to the Effective
Time to the banks and the Company with respect to the solvency of Parent and its
subsidiaries after giving effect to the Merger and the financing contemplated by
the Financing Commitments. Parent and the Company shall cooperate with any
reasonable requests for information by such firm.
(f) Parent shall provide the Company any certificates from Parent
relating to the solvency and adequate capitalization of Parent and Parent's
ability to pay its debts that are given to any banks, other lenders in
connection with the Financing or the independent evaluation firm as may be
reasonably requested by the Company. Any such certificate, opinion or other
statement will be provided to the Company at the time it is provided to such
banks or other lenders.
SECTION 5.13 Directors' and Officers' Indemnification. (a) The
indemnification provisions of the certificate of incorporation and bylaws of the
Company as in effect at the Effective Time shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who at
the Effective Time were directors, officers, employees or agents of the Company.
Parent shall assume, be jointly and severally liable for, and honor, guaranty
and stand surety for, and shall cause the Surviving Corporation to honor, in
accordance with their respective terms each of the covenants contained in this
Section 5.13 without limit as to time.
(b) Without limiting Section 5.13(a), after the Effective Time, each
of Parent and the Surviving Corporation shall, to the fullest extent permitted
under applicable law, indemnify and hold harmless, each present and former
director, officer, employee and agent of the Company or any of its subsidiaries
(each, together with such person's heirs, executors or administrators, an
"Indemnified Party" and collectively, the "Indemnified Parties") against any
costs or expenses (including attorneys' fees),
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judgments, fines, losses, claims, damages, liabilities and amounts paid in
settlement in connection with any actual or threatened claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of, relating to or in connection with any action or
omission occurring or alleged to occur prior to the Effective Time (including,
without limitation, acts or omissions in connection with such persons serving as
an officer, director or other fiduciary in any entity if such service was at the
request or for the benefit of the Company) and the Merger and the other
transactions contemplated by this Agreement or arising out of or pertaining to
the transactions contemplated by this Agreement. In the event of any such actual
or threatened claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) the Company or Parent and the Surviving
Corporation, as the case may be, shall pay the reasonable fees and expenses of
counsel selected by the Indemnified Parties, which counsel shall be reasonably
satisfactory to the Parent and the Surviving Corporation, promptly after
statements therefor are received and shall pay all other reasonable expenses in
advance of the final disposition of such action, (ii) the Parent and the
Surviving Corporation will cooperate and use all reasonable efforts to assist in
the vigorous defense of any such matter, and (iii) to the extent any
determination is required to be made with respect to whether an Indemnified
Party's conduct complies with the standards set forth under the Delaware Law and
the Parent's or the Surviving Corporation's respective certificate of
incorporation or bylaws, such determination shall be made by independent legal
counsel acceptable to the Parent or the Surviving Corporation, as the case may
be, and the Indemnified Party; provided, however, that neither Parent nor the
Surviving Corporation shall be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld) and, provided
further, that if Parent or the Surviving Corporation advances or pays any amount
to any person under this paragraph (b) and if it shall thereafter be finally
determined by a court of competent jurisdiction that such person was not
entitled to be indemnified hereunder for all or any portion of such amount, to
the extent required by law, such person shall repay such amount or such portion
thereof, as the case may be, to Parent or the Surviving Corporation, as the case
may be. The Indemnified Parties as a group may not retain more than one law firm
to represent them with respect to each matter unless there is, under applicable
standards of professional conduct, a conflict on any significant issue between
the positions of any two or more Indemnified Parties.
(c) In the event the Surviving Corporation or Parent or any of their
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger, or (ii) transfers all or substantially all of its
properties and assets to any person, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation or Parent shall assume the obligations of the Surviving Corporation
or the Parent, as the case may be, set forth in this Section 5.13.
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(d) For a period of six years after the Effective Time, Parent shall
cause to be maintained in effect the current policies of directors' and
officers' liability insurance maintained by the Company and its subsidiaries
(provided that Parent may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions that are no less
advantageous to the Indemnified Parties, and which coverages and amounts shall
be no less than the coverages and amounts provided at that time for Parent's
directors and officers) with respect to matters arising on or before the
Effective Time.
(e) Parent shall pay all reasonable expenses, including reasonable
attorneys' fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations provided in this Section 5.13.
(f) The rights of each Indemnified Party hereunder shall be in
addition to, and not in limitation of, any other rights such Indemnified Party
may have under the charter or bylaws of the Company, any indemnification
agreement, under the Delaware Law or otherwise. The provisions of this Section
5.13 shall survive the consummation of the Merger and expressly are intended to
benefit each of the Indemnified Parties.
ARTICLE VI
CONDITIONS TO THE MERGER
SECTION 6.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) this Agreement and the Merger shall have been adopted by the
requisite vote of the stockholders of the Company in accordance with
Delaware Law (the "Company Stockholders' Approval");
(b) no provision of any applicable domestic (whether federal,
state or local) or foreign law or regulation and no judgment,
injunction, order or decree of a court or governmental agency or
authority of competent jurisdiction shall be in effect which has the
effect of making the Merger or the Financing illegal or shall
otherwise restrain or prohibit the consummation of the Merger or the
Financing (each party agreeing to use its best efforts, including
appeals to higher courts, to have any judgment, injunction, order or
decree lifted), except for any law or regulation the violation of
which would not, singly or in the aggregate, reasonably be expected to
(i) have a Parent Material Adverse Effect (after giving effect to the
Merger), (ii) result in a criminal violation (other than a misdemeanor
the
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only penalty for which is a monetary fine), or (iii) result in Parent
or its subsidiaries failing to meet the standards for licensing,
suitability or character set by any foreign, federal, state or local
authority relating to the conduct of Parent's or the Company's
business which (after taking into account the anticipated impact of
such failure to so meet such standards on other authorities) could
reasonably be expected to have a Parent Material Adverse Effect (after
giving effect to the Merger); and
(c) the waiting period applicable to consummation of the Merger
and the Financing under the HSR Act shall have expired or been
terminated.
SECTION 6.02. Conditions to Obligation of the Company to Effect the
Merger. Unless waived by the Company, the obligation of the Company to effect
the Merger shall be subject to the fulfillment at or prior to the Effective Time
of the following additional conditions:
(a) Parent and Merger Subsidiary shall have performed their agreements
contained in this Agreement required to be performed on or prior to the
Effective Time and the representations and warranties of Parent and Merger
Subsidiary contained in this Agreement shall be true and correct on and as of
the Effective Time as if made at and as of such date (except to the extent that
such representations and warranties speak as of an earlier date), except for
such failures to perform or to be true and correct that would not reasonably be
expected to have a Parent Material Adverse Effect, and the Company shall have
received a certificate of the Chief Executive Officer, the President or a Vice
President of Parent and of the Chief Executive Officer, the President or a Vice
President of Merger Subsidiary to that effect.
(b) Parent shall have delivered a certificate to the Company, in form
and substance reasonably satisfactory to the Company, to the effect that, at the
Effective Time, after giving effect to the Merger and the transactions
contemplated hereby, including without limitation, the Financing, Parent and its
subsidiaries, taken as a whole, will not (i) be insolvent (either because its
financial condition is such that the sum of its debts is greater than the fair
value of its assets or because the present fair saleable value of its assets
will be less than the amount required to pay its probable liability on its debts
as they become absolute and matured), (ii) have unreasonably small capital with
which to engage in its business or (iii) have incurred or plan to incur debts
beyond its ability to pay as they become absolute and matured.
(c) The Company shall have received the Solvency Letter in form and
substance reasonably satisfactory to the Company.
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<PAGE>
SECTION 6.03 Conditions to Obligations of Parent and Subsidiary to
Effect the Merger. Unless waived by Parent and Merger Subsidiary, the
obligations of Parent and Merger Subsidiary to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the additional
following conditions:
(a) the Company shall have performed its agreements contained in this
Agreement required to be performed on or prior to the Effective Time and the
representations and warranties of the Company contained in this Agreement shall
be true and correct on and as of the Effective Time as if made at and as of such
date (except to the extent that such representations and warranties speak as of
an earlier date), except for such failures to perform and to be true and correct
that would not reasonably be expected to have a Company Material Adverse Effect,
and Parent shall have received a Certificate of the Chief Executive Officer, the
President or a Vice President of the Company to that effect;
(b) all Parent Statutory Approvals and Company Statutory Approvals
required to be obtained in order to permit consummation of the Merger under
applicable law shall have been obtained, except for any such Parent Statutory
Approvals or Company Statutory Approvals the failure of which to obtain would
not, singly or in the aggregate, reasonably be expected to (i) have a Parent
Material Adverse Effect (after giving effect to the Merger), (ii) result in a
criminal violation (other than a misdemeanor the only penalty for which is a
monetary fine), or (iii) result in Parent or its subsidiaries failing to meet
the standards for licensing, suitability or character set by any foreign,
federal, state or local authority relating to the conduct of Parent's or the
Company's business which (after taking into account the anticipated impact of
such failure to so meet such standards on other authorities) could reasonably be
expected to have a Parent Material Adverse Effect (after giving effect to the
Merger); and
(c) all consents, approvals or authorizations required to be obtained
pursuant to any Contract or permit to which the Company or its subsidiaries are
a party or of which the Company or its subsidiaries are a beneficiary in order
to avoid a Parent Material Adverse Effect (after giving effect to the Merger)
shall have been obtained.
ARTICLE VII
TERMINATION
SECTION 7.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(i) by mutual written consent of the Company and Parent;
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<PAGE>
(ii) by either the Company or Parent, if the Merger has not been
consummated by September 15, 1999, provided that such date shall
automatically be extended until December 31, 1999 if, on September 15,
1999, the waiting period under the HSR Act has not expired or been
terminated or any injunction, order or decree shall prohibit or
restrain consummation of the Merger and provided further that the
right to terminate this Agreement under this clause (ii) shall not be
available to any party whose failure to fulfill any of its obligations
under this Agreement has been the cause of or resulted in the failure
to consummate the Merger by such date;
(iii) by either the Company or Parent if any judgment,
injunction, order or decree of a court or governmental agency or
authority of competent jurisdiction shall restrain or prohibit the
consummation of the Merger, and such judgment, injunction, order or
decree shall become final and nonappealable and was not entered at the
request of the terminating party;
(iv) by either the Company or Parent, if (x) there has been a
breach by the other party of any representation or warranty contained
in this Agreement which would reasonably be expected to have a Company
Material Adverse Effect or a Parent Material Adverse Effect, as the
case may be, or prevent or delay the consummation of the Merger beyond
the date specified in Section 7.01(ii), and which has not been cured
in all material respects within 30 days after written notice of such
breach by the terminating party, or (y) there has been a breach of any
of the covenants or agreements set forth in this Agreement on the part
of the other party, which would reasonably be expected to have a
Parent Material Adverse Effect or a Company Material Adverse Effect,
as the case may be, or prevent or delay the consummation of the Merger
beyond the date specified in Section 7.01(ii), and which breach is not
curable or, if curable, is not cured within 30 days after written
notice of such breach is given by the terminating party to the other
party;
(v) by the Company if, prior to receipt of the Company
Stockholders' Approval, the Company receives a Superior Proposal,
resolves to accept such Superior Proposal, and the Company shall have
given Parent two days' prior written notice of its intention to
terminate pursuant to this provision; provided, however, that such
termination shall not be effective until such time as the payment
required by Section 5.11(b) shall have been received by Parent;
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<PAGE>
(vi) by the Company if, prior to receipt of the Company
Stockholders' Approval, (A) a tender or exchange offer is commenced by
a Potential Acquirer (excluding any affiliate of the Company or any
group of which any affiliate of the Company is a member) for all
outstanding shares of Company Common Stock, (B) the Company's Board of
Directors determines, in good faith and after consultation with an
independent financial advisor, that such offer constitutes a Superior
Proposal and resolves to accept such Superior Proposal or recommend to
the stockholders that they tender their shares in such tender or
exchange offer, and (C) the Company shall have given Parent two days'
prior written notice of its intention to terminate pursuant to this
provision; provided, however, that such termination shall not be
effective until such time as the payment required by Section 5.11(b)
shall have been received by Parent;
(vii) by the Parent, if the Board of Directors of the Company
shall have failed to recommend, or shall have withdrawn, modified or
amended in any material respects its approval or recommendation of the
Merger or shall have resolved to do any of the foregoing, or shall
have recommended another Acquisition Proposal or if the Board of
Directors of the Company shall have resolved to accept a Superior
Proposal or shall have recommended to the stockholders of the Company
that they tender their shares in a tender or an exchange offer
commenced by a third party (excluding any affiliate of Parent or any
group of which any affiliate of Parent is a member); or
(viii) by Parent or the Company if the stockholders of the
Company fail to approve the Merger at a duly held meeting of
stockholders called for such purpose or any adjournment or
postponement thereof.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Effect of Termination. In the event of termination of
this Agreement by either Parent or the Company pursuant to the provisions of
Section 7.01, this Agreement shall forthwith become void and there shall be no
liability or further obligation on the part of the Company, Parent, Merger
Subsidiary or their respective officers or directors (except as set forth in
this Section 8.01, in the second sentence of Section 5.04 and in Sections 5.11
and 8.05 all of which shall survive the termination).
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<PAGE>
Nothing in this Section 8.01 shall relieve any party from liability for any
breach of any representation, warranty, covenant or agreement of such party
contained in this Agreement except that payment of the fees contemplated by
Section 5.11(c) (if, at the time of termination of this Agreement under
circumstances giving rise to the obligation to pay a fee pursuant to such
Section 5.11(c), the requirements set forth in clauses (iii) and (v) of the
first sentence of Section 5.11(c) are satisfied) or Section 5.11(d) (unless such
failure resulted from Parent's breach of Section 5.12) shall relieve Parent and
Merger Subsidiary from all liability arising out of failure of the Merger to
occur on or prior to the Outside Date (or on or prior to the last day of any
extension thereof).
SECTION 8.02. Non-Survival of Representations and Warranties. No
representations, warranties or agreements in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger, and after
effectiveness of the Merger neither the Company, Parent, Merger Subsidiary nor
their respective officers or directors shall have any further obligation with
respect thereto except for the agreements contained in Articles I, II and VIII
and Sections 5.07 and 5.13.
SECTION 8.03 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally, mailed by
registered or certified mail (return receipt requested) or sent via facsimile to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to Parent or Merger Subsidiary, to:
Allied Waste Industries, Inc.
15880 Greenway-Hayden Loop
Suite 100, Scottsdale, AZ 85260
Attention: Steven Helm, Esq.,
Vice President, Legal
Facsimile: (602) 627-2703
with copies to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Peter Golden, Esq.
Facsimile: (212) 859-4000
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<PAGE>
If to the Company, to:
Browning-Ferris Industries, Inc.
757 N. Eldridge
Houston, TX 77075
Attention: Corporate Secretary
Facsimile: (281) 870-7825
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019-6150
Attention: Richard D. Katcher, Esq.
Eric S. Robinson, Esq.
Facsimile: (212) 403-2000
SECTION 8.04 Interpretation. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. In this Agreement, unless a contrary intention
appears, (i) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision, (ii) "knowledge" shall mean actual
knowledge of the executive officers of the Company or Parent, as the case may
be, and (iii) reference to any Article or Section means such Article or Section
hereof. No provision of this Agreement shall be interpreted or construed against
any party hereto solely because such party or its legal representative drafted
such provision. For purposes of determining whether any fact or circumstance
involves a material adverse effect on the results of operations of a party, any
special transaction charges incurred by such party as a result of the
consummation of transactions contemplated by this Agreement shall not be
considered.
SECTION 8.05 Miscellaneous. This Agreement (including the documents
and instruments referred to herein): shall not be assigned by operation of law
or otherwise except that Merger Subsidiary may assign its obligations under this
Agreement to any other wholly-owned subsidiary of Parent subject to the terms of
this Agreement. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS, INCLUDING
VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE STATE OF DELAWARE
APPLICABLE TO CONTRACTS EXECUTED AND TO BE PERFORMED WHOLLY WITHIN SUCH STATE.
THE EXCLUSIVE VENUE FOR THE ADJUDICATION OF ANY DISPUTE OR PROCEEDING ARISING
OUT OF THIS AGREEMENT OR THE PERFORMANCE THEREOF SHALL BE THE COURTS LOCATED IN
THE STATE OF DELAWARE AND THE PARTIES
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<PAGE>
HERETO AND THEIR AFFILIATES EACH CONSENT TO AND HEREBY SUBMIT TO THE
JURISDICTION OF ANY COURT LOCATED IN THE STATE OF DELAWARE.
SECTION 8.06 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 8.07. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company, Parent and Merger Subsidiary or, in the case of a waiver, by the
party against whom the waiver is to be effective; provided that any waiver or
amendment shall be effective against a party only if the board of directors of
such party approves such waiver or amendment.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.08. Entire Agreement. This Agreement and the Confidentiality
Agreement constitute the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior agreements, understandings and
negotiations, both written and oral, between the parties with respect to the
subject matter of this Agreement. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by either party hereto. Neither this Agreement nor any provision
hereof is intended to confer upon any person other than the parties hereto any
rights or remedies hereunder except for the provisions of Section 5.13, which
are intended for the benefit of the Company's former and present officers,
directors, employees and agents, the provisions of Articles I and II, which are
intended for the benefit of the Company's stockholders, including holders of
Options, the provisions of Section 5.07, which are intended for the benefit of
the parties to the agreements or participants in the plans referred to therein.
SECTION 8.09. Severability. If any term or other provision of this
Agreement is invalid, illegal or unenforceable, all other provisions of this
Agreement shall remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party.
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<PAGE>
SECTION 8.10. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof and that
the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedies at law or in equity.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
BROWNING-FERRIS INDUSTRIES, INC.
By: /s/ Bruce E. Ranck
-----------------------------------
Title: President and Chief
Executive Officer
ALLIED WASTE INDUSTRIES, INC.
By: /s/ Thomas H. Van Weelden
-----------------------------------
Title: Chairman and Chief
Executive Officer
AWIN I ACQUISITION CORPORATION
By: /s/ Larry D. Henk
-----------------------------------
Title: President
EXHIBIT 99
FOR IMMEDIATE RELEASE
---------------------
ALLIED WASTE TO ACQUIRE BROWNING-FERRIS
FOR $45.00 IN CASH PER SHARE
-- SECOND AND THIRD LARGEST COMPANIES IN
SOLID WASTE SERVICES INDUSTRY TO COMBINE --
-- SIGNIFICANT SYNERGIES WILL TRANSLATE INTO EARNINGS ACCRETION FOR
ALLIED WASTE EARNINGS PER SHARE: EXPECTED
$1.60 IN 2000 AND $2.10 IN 2001 --
-- INVESTOR GROUP LED BY APOLLO AND BLACKSTONE TO PURCHASE
$1 BILLION IN NEWLY ISSUED ALLIED WASTE SECURITIES --
SCOTTSDALE, ARIZONA and HOUSTON, TEXAS, March 8, 1999 - Allied Waste Industries,
Inc. (NYSE: AW) and Browning-Ferris Industries, Inc. (NYSE: BFI) today announced
that they have entered into a definitive merger agreement under which Allied
Waste will acquire Browning-Ferris for $45.00 in cash per share, as well as
assume approximately $1.8 billion in debt, in a transaction valued at
approximately $9.1 billion.
The transaction, which was approved unanimously by the Boards of Directors of
both companies, will create the second largest solid waste services company in
North America, with approximately $6.6 billion in annual revenues and an
exceptional national network of landfill, collection, transfer, recycling and
other operating assets. The combined company, which will be called Allied Waste
Industries, Inc., will be led by Allied Waste's current senior management team,
including Mr. Van Weelden as Chairman and CEO. The company will be headquartered
in Scottsdale, AZ.
"The combination of Allied Waste and Browning-Ferris will create an efficient
and highly competitive leader in the solid waste services industry," said Thomas
H. Van Weelden, Chairman, President and Chief Executive Officer of Allied Waste
Industries, Inc. "We believe the application of our proven, successful
vertical-integration strategy and decentralized operating structure to the
combined asset base will put Allied Waste in a position to be the low-cost
operator in the areas it serves."
Browning-Ferris President and Chief Executive Officer, Bruce E. Ranck, said:
"The combination of BFI and Allied Waste creates a strong and competitive force
in an integrating waste services industry. The merger of these two companies
provides financial and contractual considerations that protect and reward our
shareholders and our employees. BFI has been distinguished by its dedicated and
talented workforce and strong customer and asset base, and I know our employees
will contribute all of their efforts to make this transaction successful."
<PAGE>
SYNERGIES EXPECTED TO TRANSLATE TO EARNINGS ACCRETION
Allied Waste expects it will achieve $290 million of synergies and cost savings
in the initial 12 months after close of the transaction (and $360 million total)
by reducing corporate overhead costs, and by enhancing operating efficiencies
and internalization. In the first year, Allied Waste anticipates that it will
sell certain non-strategic businesses and complete required divestitures. The
proceeds of these sales are expected to be more than $900 million, which,
together with more than $200 million of free cash flow generated by the
company's operations, will be used to reduce debt.
Excluding charges, Allied Waste expects the transaction to be accretive to
earnings in calendar year 2000 and beyond. The company anticipates operating
earnings per share to be $1.60 in 2000, and $2.10 in 2001. These estimates
include approximately $0.70 per share from additional goodwill created by this
purchase-accounting transaction, as well as significantly lower capitalized
interest.
FINANCING IN PLACE
"The manner in which we have structured the financing of this acquisition,
combined with the significant synergies we expect to realize from the
integration of the two businesses, gives Allied Waste substantial flexibility to
continue to execute its business plan and deliver value to customers and
shareholders," said Mr.
Van Weelden.
Commitments to purchase an aggregate of $1 billion of convertible preferred
stock have been obtained from an investor group led by affiliates of Allied
Waste's two largest shareholders, Apollo Management IV, L.P. and Blackstone
Capital Partners III. Other investors include DLJ Merchant Banking Partners II,
L.P. and Greenwich Street Capital Partners (an affiliate of Citigroup). The
preferred stock to be issued will pay a 6.5% dividend and, following the receipt
of any necessary stockholder approval, will be convertible into Allied Waste
common stock at a price of $18.00 per share.
Along with the equity commitments described above, Allied Waste has obtained
commitments from a bank group led by The Chase Manhattan Bank for $9.5 billion
in senior financing to provide funds to complete the acquisition, and to provide
working capital for Allied Waste following consummation of the acquisition. The
commitments are subject to customary conditions and final documentation.
Allied Waste's financing commitments consist of a $7.0 billion senior secured
facility and a $2.5 billion senior unsecured increasing rate note facility
provided by The Chase Manhattan Bank, Citibank, N.A., and DLJ Capital Funding,
Inc. Chase Securities Inc. will serve as administrative agent and co-lead
arranger. Salomon Smith Barney Inc. will serve as syndication agent and co-lead
arranger. DLJ Capital Funding, Inc. will serve as documentation agent.
<PAGE>
Following completion of the acquisition, it is currently intended that Allied
Waste's $1.7 billion of Senior Notes and substantially all of Browning-Ferris'
debt (other than its bank and commercial paper loans) will be kept outstanding
and will be equally and ratably secured by those assets of Browning-Ferris,
which will be pledged to the banks under the new senior secured credit
facilities.
The transaction is subject to approval by Browning-Ferris shareholders,
expiration of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act, and other customary closing conditions. It is
expected that the transaction will be completed in the third quarter of 1999.
Donaldson, Lufkin & Jenrette served as financial adviser to Allied Waste
Industries, Inc. and Goldman Sachs served as financial adviser to
Browning-Ferris Industries, Inc. Chase Securities Inc. served as financial
advisor to Allied Waste, and provided an opinion to the Board of Directors that
both the transaction and the terms of the preferred stock, considered together,
are fair from a financial point of view. Allied Waste also engaged Salomon Smith
Barney Inc. to serve in an advisory capacity on the transaction.
Allied Waste Industries, Inc., a leading North American waste services company,
provides collection, recycling and disposal services for residential, commercial
and industrial customers.
Browning-Ferris Industries, Inc., a leading North American waste services
company, provides collection, recycling and disposal services for residential,
commercial, industrial and medical waste customers.
Certain matters discussed in this press release are "forward-looking statements"
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements can generally be identified as such because the context of the
statement will include words such as the company "believes," "anticipates,"
"expects" or words of similar import. Similarly, statements that describe the
company's future plans, objectives or goals are forward-looking statements. Such
forward-looking statements are subject to certain risks and uncertainties which
could cause actual results to differ materially from those currently
anticipated. Examples of such risks and uncertainties include, without
limitation, the ability of Allied to continue its vertical integration business
strategy in a successful manner; the ability of Allied to successfully pursue
and continue a disciplined market development program, the ability of Allied to
successfully integrate the acquired operations, to exit certain regional markets
and certain non-strategic businesses, whether and when the transaction is
concluded or completed will be accretive to Allied's earnings, and the amount of
consideration to be paid and timing of the closing of the potential transaction
currently under definitive agreement. Other factors which could materially
affect such forward-looking statements can be found in the company's periodic
reports filed with the Securities and Exchange Commission. Shareholders,
potential investors and other readers are urged to consider these factors
carefully in evaluating the forward-looking statements and are cautioned not to
place undue reliance on such forward-looking statements. The forward-looking
statements made herein are only made as of the date of this press release and
the company undertakes no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstances.
Contacts: For Allied Waste For BFI
---------------- -------
Pete Hathaway (Analysts) Elizabeth Ivers (Analysts)
602-423-2946 281-870-7161
Todd Fogarty (Media) Eric Graves (Media)
212-521-4800 281-870-7854
<PAGE>
ALLIED WASTE INDUSTRIES, INC. (NYSE: AW)
o Third largest solid waste services company in North America
o Annualized revenues of approximately $1.7 billion
o MARKET PRESENCE IN 28 STATES
o Collection companies: 130
o Transfer stations: 76
o Landfills: 76
o Recycling facilities: 22
o Customers: 2.6 million
- --------------------------------------------------------------------------------
BUSINESS HIGHLIGHTS
Headquarters: Scottsdale, AZ
Employees: 7,500
Management:
o Thomas Van Weelden Chairman, President and Chief Executive Officer
o Larry Henk Vice President, Chief Operating Officer
o Henry Hirvela Vice President, Chief Financial Officer
o Peter Hathaway Vice President, Chief Accounting Officer
o Steve Helm Vice President, Legal
o Don Slager Vice President, Operations
FINANCIAL HIGHLIGHTS
FY 1998
-------
Revenues $1.6 billion
EBITDA* $527.5 million
Operating Income* $347.5 million
*Excluding charges
- --------------------------------------------------------------------------------
REVENUE MIX (4Q 1998)
Collection 55%
Disposal 31%
Transfer 8%
Recycling 4%
Other 2%
o Pure solid waste company
o Domestic operations only
o Internalization rate 69%
o Solid waste disposed of annually at Allied landfills 25.1 million tons
o Internal growth 8%
<PAGE>
BROWNING-FERRIS INDUSTRIES, INC. (NYSE: BFI)
o Second largest solid waste services company in North America
o Annualized revenues of approximately $4.2 billion
o 450 operating locations in the United States, Canada, and Puerto Rico
o Commercial and industrial accounts 740,000
o Collection locations 250
o Solid waste residential accounts 6,400,000
o Recycling curbside residential accounts 5,000,000
o Medical waste accounts 200,000
o Solid waste disposed annually at BFI landfills 34 million tons
o Owned or operated landfills 94
o Recyclables processed annually at BFI recycleries 3 million tons
o Recycleries 90
o Transfer stations 90
o Medical waste treatment facilities 25
- --------------------------------------------------------------------------------
BUSINESS HIGHLIGHTS
Headquarters: Houston, TX
Employees: 26,000
Management:
o Bruce E. Ranck President and Chief Executive Officer
o J. Gregory Muldoon Executive Vice President and Chief Operating Officer
o Norman Myers Executive Vice President and Chief Development Officer
o Jeffrey E. Curtiss Senior Vice President and Chief Financial Officer
o Rufus Wallingford Senior Vice President and General Counsel
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
FY 1998 - TOTAL COMPANY* FY 1998 - NORTH AMERICA*
------------------------ ------------------------
Revenues $4.7 billion $4.1 billion
EBITDA* $1.1 billion $990 million
Operating Income* $630 million $581 million
*Before special charges, extraordinary items, and cumulative effects of changes
in accounting principles and excludes severance of $5.2 million.
- --------------------------------------------------------------------------------
BUSINESS MIX (1Q99)
Collection 68% Transfer and Disposal 14%
Medical Waste 5% Recycling 10%
Services and Other 3%
o Equity ownership in American Ref-Fuel and SITA
o North American operations only
o Internalization rate 49%
o Landfill volume 33.9 million gateyards
o Internal growth 4%
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