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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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RESOURCE RECYCLING TECHNOLOGIES, INC.
(NAME OF SUBJECT COMPANY)
RESOURCE RECYCLING TECHNOLOGIES, INC.
(NAME OF PERSON(S) FILING STATEMENT)
COMMON STOCK, PAR VALUE $1.00 PER SHARE
(TITLE OF CLASS OF SECURITIES)
760930 10 7
(CUSIP NUMBER OF CLASS OF SECURITIES)
LAWRENCE J. SCHORR
PRESIDENT AND CHIEF EXECUTIVE OFFICER
300 PLAZA DRIVE
VESTAL, NEW YORK 13850
(607) 798-7137
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICE AND COMMUNICATIONS ON BEHALF OF THE PERSON(S) FILING STATEMENT).
WITH A COPY TO:
DEAN H. CANNON, ESQUIRE
BEVERIDGE & DIAMOND, P.C.
1350 I STREET, N.W.
SUITE 700
WASHINGTON, D.C. 20005
(202) 789-6000
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ITEM 1. SECURITY AND SUBJECT COMPANY.
The name of the subject company is Resource Recycling Technologies,
Inc., a Delaware corporation (the "Company"), and the address of the Company is
300 Plaza Drive, Vestal, New York 13850. The title of the class of equity
securities to which this statement relates is the Common Stock, $1.00 par value
(the "Shares").
ITEM 2. TENDER OFFER OF BIDDER.
This Statement relates to a tender offer from WMI Acquisition Sub,
Inc., a Delaware corporation ("Purchaser"), and a wholly owned subsidiary of
Waste Management, Inc. ("Parent"), disclosed in a Tender Offer Statement on
Schedule 14D-1, dated March 23, 1995 (the "Schedule 14D-1") to purchase all the
outstanding Shares, at a price of $11.50 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated March 23, 1995 (the "Offer to Purchase") and the related Letter of
Transmittal (which together constitute the "Offer" and are contained within the
Schedule 14D-1). Parent is controlled by WMX Technologies, Inc. ("WMX").
The Offer is being made pursuant to an Agreement and Plan of Merger,
dated March 17, 1995 (the "Merger Agreement"), among Parent, Purchaser and the
Company. The Merger Agreement provides, among other things, that as soon as
practicable after the consummation of the Offer and verification or waiver of
all remaining conditions, Purchaser will be merged with and into the Company
(the "Merger") and the Company will continue as the surviving corporation (the
"Surviving Corporation"). A copy of the Merger Agreement has been filed as
Exhibit 1 and is incorporated herein by reference.
Based on information in the Schedule 14D-1, the principal executive
offices of Purchaser and Parent are located at 3003 Butterfield Road, Oak Brook,
Illinois 60521.
ITEM 3. IDENTITY AND BACKGROUND.
(a) The name and address of the Company, which is the person filing
this statement, are set forth in Item 1 above.
(b) Each material contract, agreement, arrangement and understanding
and actual or potential conflict of interest between the Company or its
affiliates and (i) the Company, its executive officers, directors or affiliates
or (ii) Purchaser, its executive officers, directors or affiliates, is described
in the attached Schedule I or set forth below.
THE MERGER AGREEMENT
The summary of the Merger Agreement contained in the Offer to Purchase
which has been filed with the Securities and Exchange Commission (the
"Commission") as an exhibit to the Schedule 14D-1, a copy of which is enclosed
with this Schedule 14D-9, is incorporated herein by reference. Such summary
should be read in its entirety for a more complete description of the terms and
provisions of the Merger Agreement. The following is a summary of certain
portions of the Merger Agreement which relate to arrangements among the Company,
Parent and the Company's executive officers and directors.
BOARD REPRESENTATION. The Merger Agreement provides that promptly
upon the purchase by Parent or Purchaser of at least a majority of the
outstanding Shares, Purchaser and Parent shall be entitled to designate such
number of directors (but in no event more than one less than the total number of
directors) on the Board of Directors (the "Board") of the Company, rounded up to
the next whole number (the "Purchaser Designees") such that Purchaser and
Parent, subject to compliance with Section 14(f) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), will have representation on the Board
equal to the product of (i) the number of directors on the Board and (ii) the
percentage that the number of Shares so purchased bears to the total number of
Shares outstanding, and the Company and its Board shall, at such time, take any
and all such action as Purchaser may
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reasonably request (including increasing the size of the Board) to cause the
Purchaser's Designees to be elected to the Company's Board.
AGREEMENT WITH RESPECT TO DIRECTOR AND OFFICER INDEMNIFICATION AND
INSURANCE. The Merger Agreement provides that Parent acknowledges that all
rights to indemnification or limitations on liability currently existing in
favor of the present or former employees, agents, directors or officers of the
Company as provided in its certificate of incorporation, by-laws, agreements or
pursuant to applicable law in effect on the date of the Merger Agreement shall
survive the Merger and shall continue in full force and effect for a period of
not less than the applicable statutes of limitations; however, in the event any
claim or claims are asserted or made within such applicable period, all rights
to indemnification in respect of such claim or claims shall continue until
disposition of any and all such claims. If any action, suit, proceeding or
other investigation relating to the Merger Agreement or to the transactions
contemplated thereby is commenced, whether before or after the Merger becomes
effective, the parties shall cooperate with each other and use all reasonable
efforts to defend against and respond to any such action, suit, proceeding or
investigation.
The Merger Agreement also provides that Purchaser and Parent will
maintain in effect the Company's current directors' and officers' insurance
policy for the remainder of its term and purchase a policy providing continued
coverage relating to actions, alleged actions, omissions and alleged omissions
occurring at or prior to the time of the Merger (the "Effective Time") for a
period of at least three years from and after the Effective Time, provided that
the total amount Parent and Purchaser are required to expend for such coverage
shall not exceed 250% of the 1994 premium for such current policy.
STOCK TENDER AGREEMENTS
Upon the execution of the Merger Agreement, three stockholders of the
Company entered into Stock Tender Agreements (the "Stock Tender Agreements")
with Parent and Purchaser. The three stockholders are Allen & Company
Incorporated ("Allen & Co."), Paul A. Gould and Andrew T. Dwyer. Allen & Co. is
the Company's largest stockholder, Paul A. Gould is a director of the Company
and a Managing Director of Allen & Co., and Andrew Dwyer is Chairman of the
Company's Board of Directors. Pursuant to the Stock Tender Agreements, so long
as the Board of Directors of the Company has not withdrawn its recommendation of
the Offer in accordance with the Merger Agreement, those stockholders will
validly tender (and not thereafter withdraw) the Shares beneficially owned by
each of them pursuant to and in accordance with the terms of the Offer. As of
March 20, 1995, these stockholders (with members of their families) beneficially
owned a total of 1,082,506 Shares, representing approximately 33% of the then
outstanding Shares, on a fully diluted basis. See "Security Ownership" in
Schedule I hereto.
These stockholders may decline to tender, or withdraw, their Shares
only if: (1) the amount or form of consideration to be paid for their Shares is
less than cash in the amount of $11.50 per Share, net to the stockholder in
cash, (ii) the Merger Agreement is terminated, or (iii) the Board of Directors
of the Company withdraws its recommendation of the Offer in accordance with the
Merger Agreement, provided, that if the Company's Board subsequently recommends
an offer by Purchaser or an affiliate of Purchaser for a consideration per Share
greater than $11.50 per Share, the stockholders have agreed to re-tender any
Shares that were withdrawn.
In connection with the Stock Tender Agreements, the parties thereto
have made certain customary representations, warranties and covenants, including
with respect to (i) ownership of the Shares, (ii) their authority to enter into
and perform their obligations under the Stock Tender Agreements, (iii) the
ability of the parties to enter into the Stock Tender Agreements without
violating other agreements to which they are party, (iv) the absence of liens
and encumbrances on and in respect of the stockholder parties' Shares and (v)
restrictions on the transfer of the stockholder parties' Shares.
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CERTAIN CONFLICTS
STOCK OPTIONS. As of the date of filing of this Schedule 14D-9, the
current directors and executive officers of the Company as a group hold stock
options granted under the Company's Incentive Stock Option Plan As Amended and
Restated June 8, 1990 and under the Company's Non-Qualified Stock Option Plan
(collectively, the "Option Plans") to purchase an aggregate of 406,500 Shares at
exercise prices ranging from $3.42 to $8.50 per Share. In accordance with the
terms of the Merger Agreement, prior to consummation of the Merger, the Company
will have made arrangements with each holder of a stock option the effect of
which shall be that a stock option granted under the Option Plans which is
outstanding immediately prior to the consummation of the Offer will be cancelled
and the holder thereof will receive an amount in cash equal to the excess, if
any, of the price paid for each Share pursuant to the Merger over the per share
exercise price of such option multiplied by the number of Shares issuable
pursuant to any such option, net of any income tax withholding and payroll taxes
applicable to such payment.
EMPLOYMENT AND CONSULTING AGREEMENTS. The Company maintains an
employment agreement (the "Schorr Agreement") with Lawrence Schorr, its
President and Chief Executive Officer, described under the section captioned
"Compensation of Executive Officers and Directors" in Schedule I hereto. The
Schorr Agreement contains provisions allowing Mr. Schorr to terminate the
agreement in exchange for a lump sum payment equal to all salary payments owed
to him for the balance of the agreement term, in the event of a change of
control (as defined therein), unless the new controlling entity (i) has a net
worth equal to or greater than the net worth of the Company immediately prior to
the change of control and (ii) guarantees the Company's obligations under the
agreement. The acquisition of Shares pursuant to the Offer and Merger will
constitute a change of control for purpose of the Schorr Agreement. The lump
sum amount that would be payable to Mr. Schorr if the Schorr Agreement were
terminated in accordance with this provision at March 31, 1995 is approximately
$384,000.
Mr. Schorr and Purchaser have agreed to new employment arrangements
(the "New Schorr Agreement") between Mr. Schorr and the Company that will be
effective upon consummation of the Merger to replace the existing Schorr
Agreement. The New Schorr Agreement provides that Mr. Schorr will be employed
by the Company for a period of two years after the Effective Time, and
thereafter on an at-will basis, for an annual base salary of $280,000. The New
Schorr Agreement also provides that Mr. Schorr will be granted options to
purchase WMX common stock during 1995 and 1996 with a value equal to 100% of his
base salary, prorated for 1995. If the Merger is not consummated, the New
Schorr Agreement will not become effective.
The Company also maintains employment agreements (the "Koffman
Agreements") with Burton Koffman, a director of the Company, and Richard
Koffman, a former director and the brother of Burton Koffman, described under
the section captioned "Compensation of Executive Officers and Directors" in
Schedule I hereto. The Koffman Agreements contain provisions identical to the
provisions in the Schorr Agreement regarding a change of control of the Company.
The lump sum amounts that would be payable to Burton Koffman and Richard Koffman
if the Koffman Agreements were terminated in accordance with these provisions at
March 31, 1995 are approximately $413,000 and $78,000, respectively.
The Company has entered into a Consulting Agreement with Andrew Dwyer,
Chairman of the Board of Directors, that is described under the section
captioned "Compensation of Executive Officers and Directors" in Schedule I
hereto. Purchaser has informed the Company that it expects to propose an
extension by the Company of this Consulting Agreement, for a period of one year
after the Merger, at its current rate of $100,000 per annum.
Parent has indicated that it may wish to seek employment agreements
with other Company employees.
LADENBURG WARRANT. There is presently outstanding a warrant (the
"Warrant") to purchase an aggregate of 113,363 Shares for $9.13 per share,
issued to Ladenburg, Thalmann & Co. Inc. ("Ladenburg"), exercisable through 5:00
P.M., New York City time, on April 10, 1995. Jay Petschek, a director of the
Company, is a Managing Director of Ladenburg. The Company and Ladenburg, with
the consent of Purchaser, have agreed that (i) in full
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settlement of the Warrant, Ladenburg will be entitled to receive immediately
after the Effective Time a cash payment from the Company in an amount equal to
the excess of the price paid for each Share pursuant to the Merger over the per
share exercise price of the Warrant, multiplied by 113,363 (the number of Shares
issuable upon exercise of the Warrant), and (ii) if the Merger is not
consummated, the Warrant will be extended for sixty days beyond the date on
which a registration statement filed by the Company covering the Shares issuable
upon exercise of the Warrant becomes effective. Assuming the consideration paid
for each Share pursuant to the Offer and Merger is $11.50 per Share, net to the
seller in cash, the cash payment to be paid to Ladenburg for settlement of the
Warrant pursuant to the Merger would be $268,670.
FINANCIAL ADVISOR. The Company retained Allen & Co. to act as one of
its financial advisors in connection with the Offer and Merger, and to evaluate
and render an opinion regarding the fairness, from a financial point of view, of
the consideration to be paid pursuant to the Offer and Merger to the Company's
stockholders.
As indicated previously, Paul A. Gould, a director of the Company, is
a Managing Director of Allen & Co., and Allen & Co. is the Company's largest
stockholder. See "Information Concerning Members of the Board of Directors,"
"Security Ownership" and "1994 Change of Control of the Company" in Schedule I
hereto. Allen & Co. will be paid a fee of $300,000 for its services to the
Company in connection with the Offer and Merger, such fee to be paid by the
Company upon the acquisition by Purchaser of a majority of the Shares. In the
event of the consummation of any alternative transaction which would entail
financial advisory services for the Company other than those contemplated in
connection with the Offer and Merger, Allen & Co. will be paid such
consideration as may be agreed by Allen & Co. and the Company. The Company has
also agreed to reimburse Allen & Co. for certain out-of-pocket expenses, and to
indemnify Allen & Co. for certain liabilities that may arise as a result of the
engagement. See "Item 5. Persons Retained, Employed or to be Compensated."
The Company has been informed that Allen & Co. has not been previously
retained by and does not have any other contract, agreement, arrangement,
understanding or actual or potential conflict of interest, with the Company,
Purchaser, Parent, or any of their respective directors, executive officers or
affiliates.
LEGAL COUNSEL. Beveridge & Diamond, P.C. ("B&D") has served as
corporate legal counsel to the Company for various matters since 1983, and was
retained by the Company to provide legal services on behalf of the Company in
connection with the Offer and Merger. Dean H. Cannon, a principal of B&D, is a
director of the Company. B&D also provides legal services to Parent and to
other subsidiaries of WMX in connection with various environmental matters
unrelated to the Offer and Merger.
The Board of Directors of the Company also retained Skadden, Arps,
Slate, Meagher & Flom ("Skadden, Arps") to advise it regarding certain legal
matters relating to the Offer and Merger. Skadden, Arps has represented from
time to time subsidiaries of WMX in matters unrelated to the Offer and Merger.
OTHER MATTERS. Certain other transactions have occurred, or
relationships exist, between the Company and its directors, executive officers
or affiliates. See "Transactions with Executive Officers and Directors" in
Schedule I hereto.
ITEM 4. SOLICITATION OR RECOMMENDATION.
(A) RECOMMENDATION OF THE BOARD OF DIRECTORS.
The Board of Directors has unanimously approved the Merger Agreement
and the transactions contemplated thereby and unanimously recommends that all
holders of Shares tender such Shares pursuant to the Offer.
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(B) BACKGROUND; REASONS FOR THE RECOMMENDATION.
In late spring 1994, Andrew T. Dwyer, Chairman of the Company,
contacted Phillip B. Rooney, President of Parent, to discuss jointly pursuing
certain project opportunities using the Company's technology and experience in
designing, constructing and operating material recycling facilities and Parent's
operating and capital resources. This discussion led to a meeting on June 1,
1994 among Mr. Dwyer, Mr. Rooney and Joseph M. Holsten, Chief Financial Officer
of Parent, at which these possible cooperative efforts were further explored.
At this meeting, Mr. Rooney also expressed an interest in having Parent acquire
the Company, indicating that on the basis of a preliminary valuation analysis of
publicly available information regarding the Company which Parent had performed,
Parent might be willing to consider paying a price of $7.50 per Share in such an
acquisition. Noting the recent improvement in the Company's financial
performance, Mr. Dwyer declined to discuss a possible acquisition of the Company
at that price. He did, however, suggest that a price of at least $10.00 per
Share might be of interest to him personally. Parent's representatives
indicated their view that such a higher price was not warranted and the
discussion of a possible acquisition terminated. Although Messrs. Dwyer and
Rooney had continuing dialogue from time to time regarding possible project
opportunities or joint ventures, there were no further discussions between
Messrs. Dwyer and Rooney regarding Parent's possible acquisition of the Company
until the discussions in March 1995 described below.
In October 1994, the Company and Parent entered into a confidentiality
agreement pursuant to which Parent would have access to technical information to
determine whether there was interest in Parent retaining the Company to render
technical advisory services in connection with Parent's material recovery
facility operations. On October 27, 1994, William A. Rodgers, Jr., then Vice
President-Business Development of Parent's Mid-Atlantic Group and two other
representatives of Parent, toured the Company's Ocean County, New Jersey
material recycling facility. Accompanying these officials at various times were
Mr. Dwyer, Lawrence J. Schorr, the Company's President and Chief Executive
Officer, and the Ocean County facility manager. During this tour, Mr. Rodgers
again broached the subject of a possible acquisition of the Company by Parent,
but Mr. Dwyer indicated that there was no interest from his standpoint in
discussing such a transaction at that time.
On January 24, 1995, the Company publicly released its financial results
for the year ended December 31, 1994. Subsequently, Mr. Rooney contacted Mr.
Dwyer's office and Paul A. Gould, a director of the Company and a Managing
Director of Allen & Co., the Company's largest stockholder, and arranged for a
meeting on March 2, 1995, for the principal purpose of discussing a possible
acquisition of the Company by the Parent or considering another form of business
combination between them. After it was scheduled but prior to this meeting, Mr.
Dwyer furnished Parent's representatives with certain information regarding the
Company's results of operations and financial position, cash position and a
summary of the Company's "best case" operating budget for 1995. See "Certain
1995 Financial and Budget Information" in Section 8 of the Offer to Purchase
that is enclosed with this Schedule 14D-9. This meeting was attended by Messrs.
Rooney, Holsten and Rodgers, from Parent, and by Messrs. Dwyer and Gould.
At the March 2 meeting, the Company's management and its ongoing
projects were discussed and the budget and underlying assumptions were reviewed.
Parent's representatives proposed an acquisition of the Company by the Parent on
the basis of a cash price of $10.00 per Share. Mr. Dwyer initially indicated an
interest in a cash price of $14.00 per share, but after negotiations among the
Parent representatives, Mr. Dwyer and Mr. Gould, it was generally agreed that a
per share price of $11.50 would be mutually acceptable to the meeting
participants. The participants further generally agreed that the Parent would
offer to acquire all of the Company's outstanding shares for a cash price of
$11.50 per share, and Messrs. Dwyer and Gould, and Allen & Co., would tender
their Shares to Parent upon such offer, subject to negotiation and execution of
a definitive acquisition agreement containing typical terms and conditions, and
in the case of Messrs. Dwyer and Gould, and Allen, to the approval of the
Company's Board, and in the case of Parent, to its completion of due diligence.
A break-up fee was also discussed and Messrs. Dwyer and Gould indicated that
they were amenable to such a fee if a definitive agreement could be reached and
approved by the Company's Board.
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On March 3, 1995, Mr. Dwyer informed Mr. Schorr of the proposed Parent
offer, and between March 3 and March 8, Mr. Schorr informed Company Board
members and retained legal counsel. On March 9, 1995, the Company retained Allen
& Co. and Gilford Securities Incorporated ("Gilford") to act as financial
advisors (the "Financial Advisors"), and the Financial Advisors began conducting
their reviews of the Company. During the two weeks beginning March 6, as
representatives of Parent conducted various due diligence activities,
representatives of Parent and the Company (including outside counsel for all
parties) negotiated the terms of the Merger Agreement and the Stock Tender
Agreements.
On March 14, 1995, the Company's Board of Directors held an
informational meeting with the Financial Advisors and the Company's legal
counsel in New York City. At this meeting, the Board was informed of the
background leading up to the Parent's proposed offer and current status of the
negotiations and due diligence. The Company's legal counsel summarized the
terms and conditions of the proposed Merger Agreement and the Stock Tender
Agreements, and provided advice to the Board members with respect to certain
legal matters, including their fiduciary obligations in connection with a sale
of the Company. Representatives of the Financial Advisors provided a
preliminary report to the Board based on their review of the Company,
summarizing the items reviewed and analyzed. The Financial Advisors indicated
at that time that their preliminary views were that the consideration for the
Shares to be paid pursuant to the Offer and Merger was fair, from a financial
point of view, to the Company's stockholders. During this meeting, the Board
discussed the Offer and Merger in detail. The Company's management and counsel
generally were authorized to continue their negotiations with Parent and a
second Board meeting was scheduled for March 17.
On March 17, 1995, the Company's Board of Directors met by telephone
conference call to consider the final terms of the proposed transaction and
receive the final report of the Financial Advisors. The written analysis
prepared by Allen & Co. had been provided to the Board members on March 16, and
drafts of the various agreements were provided as well. The Company's legal
counsel summarized the changes to the Merger Agreement that had been agreed to
since the previous meeting, and reviewed the terms of the Stock Tender
Agreements and the New Schorr Agreement. Counsel also described certain
modifications to outstanding options, the Ladenburg Warrant and the Company's
convertible preferred stock that needed to be made in connection with the Offer
and Merger.
Representatives of the Financial Advisors then made a presentation to
the Board of Directors and delivered the oral opinions of Allen & Co. and
Gilford that, as of March 17, 1995 and based upon and subject to the matters
reviewed with the Board, the $11.50 per Share cash consideration to be received
by the holders of the Shares in the Offer and the Merger was fair to such
holders from a financial point of view.
The Board then analyzed and discussed the Offer, the Merger Agreement,
the Stock Tender Agreements, the New Schorr Agreement, and the modifications to
be made to the options, the Ladenburg Warrant and the preferred stock. The
Board of Directors unanimously approved the Merger Agreement, the Stock Tender
Agreements, and the transactions contemplated thereby, as well as the New Schorr
Agreement, and the modifications to the options, the Ladenburg Warrant, and the
preferred stock. The Board also unanimously resolved to recommend acceptance of
the Offer and approval and adoption of the Merger and the Merger Agreement by
the Company's stockholders.
In approving the Merger Agreement and the transactions contemplated
thereby and recommending that all holders of Shares tender such Shares pursuant
to the Offer, the Board of Directors considered a number of factors, including:
(i) the terms of the Merger;
(ii) presentations by management and the Financial Advisors regarding,
among other things, the financial condition, results of operations,
business and prospects of the Company, including consideration of
commodity price fluctuations, the declining number of municipal
projects, the
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amount of capital that may be needed to expand the Company's
operations in the future, particularly for privately financed
projects, the potential negative effects on recycling because of the
inability of municipal governments to enforce flow control, and the
increase in competition arising from high commodity pricing;
(iii) that the $11.50 per Share price in the Offer represented (a) a
premium of approximately 51% over the closing price of the Shares on
March 13, 1995 (three days prior to the meeting), (b) a premium of
approximately 156% over the closing price of the shares on December
30, 1994, and (c) a price higher than the Shares have traded in the
last five years;
(iv) the oral opinions of Allen & Co. and Gilford delivered at the meeting
on March 17, and subsequently confirmed in writing and attached
hereto as Exhibits 8 and 9, respectively, to the effect that, as of
such date and based upon and subject to the matters reviewed with the
Board, the $11.50 per Share cash consideration to be received by the
holders of the Shares pursuant to the Offer and the Merger was fair
to such holders from a financial point of view;
(v) that the Merger Agreement permits the Company to furnish information
to (pursuant to appropriate confidentiality agreements), and
negotiate or participate in discussions with, any third party if
required by the fiduciary duties of its directors after consulting
with outside counsel to the Company;
(vi) the fact that the Company and its representatives did not solicit
possible acquisition interest from third parties, including the
following considerations (among other things) that led to the Board
decision that a "public" auction of the Company was not the
appropriate course: (1) the uncertainties and potential adverse
effect that a "public" auction of the Company could have on the
business, employees and prospects of the Company, including its
relationships with third parties, (2) the Board's belief, after
considering the preliminary presentations of the Financial Advisors,
that the price per Share in the Offer and Merger was sufficiently
attractive that it did not need to solicit other offers, (3) the
terms of the Merger Agreement, described above, that permit the
Company, if required by the fiduciary duties of its directors, to
negotiate or participate in discussions with third parties, (4) the
size of the break-up fee (referred to below) and the Board's belief
that it would not deter alternative bidders, and (5) the limited
number of possible alternative third party bidders that would be
willing and able to pay a higher price for the Shares than the
consideration offered in the Offer and Merger, without additional
conditions to consummation, in light of current recycling industry
conditions and activities;
(vii) the termination provisions of the Merger Agreement, which were a
condition to the Offer, providing that Parent would be entitled to a
fee of $1,000,000 if (a) any person, corporation, partnership or
other entity (other than Parent, Purchaser or any of their
affiliates) ("Third Person") acquires more than 33% of the
outstanding Shares, (b) a Third Person acquires more than 50% of the
Company's total assets, (c) the Company consummates a plan of
liquidation relating to more than 50% of its total assets, (d) the
Company repurchases more than 50% of the outstanding Shares, (e) the
Company consummates a merger of the Company with, the sale of all or
substantially all of the assets of the Company to, or any other
business combination involving the Company with, a Third Person, or
(f) Parent and Purchaser terminate the Merger Agreement because more
than 50.1% of the shares (assuming exercise and conversion of all
outstanding options and convertible securities) have not been validly
tendered and not withdrawn, and within one year from the date of such
termination a transaction contemplated by (a), (b) or (e) is
consummated with a Third Person, so long as such transaction is
accomplished so as to provide a yield to holders of Company Common
Stock of at least the equivalent of $11.50 per share, and there was a
public announcement or written proposal to effect such transaction by
or with such Third Person while the Merger Agreement was in effect,
or (g) the Board withdraws or amends in
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any material respect adverse to consummation of the Offer its
recommendation that the Offer be accepted by the Company's
stockholders and that stockholders tender their Shares in the Offer,
unless such withdrawal or amendment results from a material breach
by Parent or Purchaser of any representations or warranties in the
Merger Agreement or a failure by Parent or Purchaser to fulfill any
material covenant in the Merger Agreement;
(viii) the limited number of conditions to the obligations of Parent and
Purchaser to consummate the Offer and the Merger, including the fact
that the Offer is not conditioned on financing;
(ix) the request by Purchaser and Parent for the Stock Tender Agreements,
which were executed upon the execution of the Merger Agreement, and
the fact that the Shares owned by the selling stockholders
thereunder could only be purchased by Purchaser pursuant to the
terms of the Offer whereby all stockholders of the Company have the
same right to participate, it being recognized by the Board of
Directors that the Stock Tender Agreements did not preclude an
alternative offer for the Company or its outstanding Shares; and
(x) the anticipated benefits of the Merger to the employees and
management of the Company.
The Board of Directors did not assign relative weights to the foregoing
factors or determine that any factor was of particular importance. Rather, the
Board of Directors viewed its position and recommendations as being based on the
totality of the information presented to and considered by it.
Copies of the written opinions of Allen & Co. and Gilford are attached
hereto as Exhibits 8 and 9, respectively, and incorporated herein by reference.
STOCKHOLDERS ARE URGED TO READ THE OPINIONS OF ALLEN & CO. AND GILFORD IN THEIR
ENTIRETY.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The Company has retained Allen & Co. by letter agreement dated March 9,
1995 to act as financial advisor to assist it in evaluating the fairness to the
stockholders of the Company from a financial point of view of the Proposed
Transaction (as defined in the letter agreement), including a potential business
combination pursuant to which the Company would be acquired by Purchaser, and to
assist it in negotiations between the Company and any potential acquirors,
investors, or other interested parties. The engagement will last for the
shorter of one year from its inception unless extended for certain specified
reasons, consummation of the Proposed Transaction, or abandonment thereof.
The Company has agreed to pay Allen & Co. $300,000 upon acquisition by
Purchaser of a majority of the Shares. In the event of the consummation of an
alternative transaction that would entail financial advisory services for the
Company, Allen & Co. will receive such compensation as may be agreed between the
parties. The Company has also agreed to pay out-of-pocket expenses, including
the expenses of counsel for Allen & Co., and to indemnify Allen & Co. for
certain liabilities arising out of the Proposed Transaction or the retention of
Allen & Co. pursuant to, or its performance under, the letter agreement,
including liabilities arising under the federal securities laws.
Allen & Co. owns 664,806 shares of the Company and Paul A. Gould, a
director of the Company and a Managing Director of Allen & Co. owns an
additional 150,000 shares. Allen & Co. and Mr. Gould agreed on March 17, 1995
to tender their Shares to the Purchaser and not to withdraw the Shares except as
set forth in their respective Stock Tender Agreements. See "Item 3. Identity
and Background."
In the ordinary course of its business, Allen & Co. may actively trade the
securities of the Company and WMX for the accounts of its customers and,
accordingly, may at any time hold a long or short position in such securities.
-9-
<PAGE>
By letter agreement dated March 9, 1995, the Company engaged Gilford to
provide it with an opinion whether or not the proposed consideration to be
received in connection with the Offer and Merger is fair to the Company's
stockholders from a financial point of view. The Company has agreed to pay
Gilford $62,500, one-half of which was paid by the Company upon delivery of the
opinion and the balance of which is payable upon consummation of the Merger. In
addition, the Company has agreed to pay Gilford's reasonable out-of-pocket
expenses, including the reasonable fees and expenses of its counsel, and to
indemnify Gilford for certain liabilities arising out of Gilford's engagement
pursuant to the letter agreement, including liabilities arising under the
federal securities laws.
In the ordinary course of its business, Gilford may actively trade the
securities of the Company and WMX for its own account and for the accounts of
its customers and, accordingly, may at any time hold a long or short position in
such securities. The Company has been informed that Gilford has not been
previously retained by and does not have any other contract, agreement,
arrangement, understanding or actual or potential conflict of interest, with the
Company, Purchaser, Parent, or any of their respective directors, executives
officers or affiliates.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES.
(a) Except as set forth in Schedule II hereto, no transactions in the
Shares have been effected during the past 60 days by the Company or, to the best
of the Company's knowledge, by any executive officer, director, affiliate or
subsidiary of the Company.
(b) To the best of the Company's knowledge, to the extent permitted by
applicable securities laws, rules or regulations, each executive officer,
director, affiliate and subsidiary of the Company currently intends to tender
all Shares to the Purchaser which are held of record or beneficially by such
person or over which he, she or it has sole dispositive power.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY.
(a) Except as set forth in this Schedule 14D-9, no negotiation is being
undertaken or is underway by the Company in response to the Offer which relates
to or would result in (i) an extraordinary transaction, such as a merger or
reorganization, involving the Company or any subsidiary of the Company; (ii) a
purchase, sale or transfer of a material amount of assets by the Company or any
subsidiary of the Company; (iii) a tender offer for or other acquisition of
securities by or of the Company; or (iv) any material change in the present
capitalization or dividend policy of the Company.
(b) None.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED.
(A) DGCL 203.
Section 203 of the General Corporation Law of Delaware ("DGCL") purports to
regulate certain business combinations of a corporation organized under Delaware
law, such as the Company, with a stockholder beneficially owning 15% or more of
the voting stock of such corporation after the date the relevant person or
entity first becomes a 15% stockholder. Section 203 provides that the
corporation shall not engage for a period of three years in any business
combination with such a stockholder without approval of the holders of two-
thirds of the outstanding shares (other than the shares owned by the 15%
stockholder), with certain exceptions, including (i) prior approval by the board
of directors of the corporation, either of the business combination or the
transaction which results in a stockholder becoming a 15% stockholder, or (ii)
the ownership by the 15% stockholder of at least 85% of the outstanding voting
shares of the corporation, exclusive of shares acquired in a transaction not
approved by the board of directors. The Company's Board of Directors has
approved the Merger Agreement and the transactions
-10-
<PAGE>
contemplated thereby, including the Offer, the Stock Tender Agreements, and the
Merger, and, therefore, Section 203 of the DGCL is inapplicable to the Offer and
the Merger.
(B) INFORMATION STATEMENT.
The Information Statement attached as Schedule I hereto is being furnished
in connection with the possible designation by Purchaser, pursuant to the Merger
Agreement, of certain persons to be appointed to the Board of Directors of the
Company other than at a meeting of the Company's stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No.
- -----------
Exhibit 1 Agreement and Plan of Merger dated March 17, 1995 among Waste
Management, Inc., WMI Acquisition Sub, Inc. and Resource Recycling
Technologies, Inc.
Exhibit 2 Stock Tender Agreement dated March 17, 1995 among Allen & Company
Incorporated, Waste Management, Inc. and WMI Acquisition Sub, Inc.
Exhibit 3 Stock Tender Agreement dated March 17, 1995 among Paul A. Gould,
Waste Management, Inc. and WMI Acquisition Sub, Inc.
Exhibit 4 Stock Tender Agreement dated March 17, 1995 among Andrew T. Dwyer,
Waste Management, Inc. and WMI Acquisition Sub, Inc.
Exhibit 5 Employment Agreement dated March 17, 1995 between Resource
Recycling Technologies, Inc. and Lawrence J. Schorr.
Exhibit 6 Press Release issued jointly by Waste Management, Inc. and Resource
Recycling Technologies, Inc. dated March 17, 1995.
Exhibit 7 Letter to Stockholders of Andrew T. Dwyer and Lawrence J. Schorr
dated March 23, 1995.*
Exhibit 8 Opinion of Allen & Company Incorporated dated March 17, 1995.*
Exhibit 9 Opinion of Gilford Securities Incorporated dated March 17, 1995.*
Exhibit 10 Press Release issued jointly by Waste Management, Inc. and Resource
Recycling Technologies, Inc. dated March 23, 1995.
- -----------------
* Included in copies mailed to stockholders.
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: March 23, 1995 RESOURCE RECYCLING TECHNOLOGIES, INC.
By: /s/ LAWRENCE J. SCHORR
---------------------------------
Name: Lawrence J. Schorr
Title: President and Chief Executive Officer
-11-
<PAGE>
SCHEDULE I
RESOURCE RECYCLING TECHNOLOGIES, INC.
300 PLAZA DRIVE
VESTAL, NEW YORK 13850
INFORMATION STATEMENT PURSUANT TO
SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
This Information Statement is being mailed on or about March 23, 1995 as
part of the Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") of Resource Recycling Technologies, Inc. (the "Company") to
the holders of record of shares of Common Stock, par value $1.00 per share, of
the Company (the "Shares"). You are receiving this Information Statement in
connection with the possible election of persons designated by the Purchaser (as
defined below) to a majority of the seats on the Board of Directors of the
Company.
On March 17, 1995, the Company, WMI Acquisition Sub, Inc., a Delaware
corporation ("Purchaser"), and Waste Management, Inc., an Illinois corporation
("Parent"), entered into an Agreement and Plan of Merger (the "Merger
Agreement") in accordance with the terms and subject to the conditions of which
(i) Parent will cause the Purchaser to commence a tender offer (the "Offer") for
all outstanding Shares, at a price of $11.50 per Share net to the seller in
cash, and (ii) Purchaser will be merged with and into the Company (the
"Merger"). As a result of the Offer and the Merger, the Company will become a
wholly owned subsidiary of Parent. Parent is controlled by WMX Technologies,
Inc.
The Merger Agreement requires the Company to take such action as Purchaser
may reasonably request to cause Purchaser's designees to be elected to the Board
of Directors under the circumstances described therein. See "Board of Directors
and Executive Officers--Right to Designate Directors; Purchaser Designees."
You are urged to read this Information Statement carefully. You are not,
however, required to take any action. Capitalized terms used herein and not
otherwise defined herein shall have the meanings set forth in the Schedule
14D-9.
Pursuant to the Merger Agreement, Purchaser commenced the Offer on March
23, 1995. The Offer is scheduled to expire at 12:00 midnight, New York City
Time, on Wednesday, April 19, 1995, unless the Offer is extended.
The information contained in this Information Statement concerning
Purchaser and Parent has been furnished to the Company by Purchaser and Parent,
and the Company assumes no responsibility for the accuracy or completeness of
such information.
I-1
<PAGE>
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
GENERAL
The Shares are the only class of voting securities of the Company
outstanding. Each Share has one vote. As of March 20, 1995, there were
2,675,773 Shares outstanding. The Board of Directors currently consists of six
members. At each annual meeting of stockholders, directors are elected to hold
office for one year terms, until the next annual meeting of stockholders.
RIGHT TO DESIGNATE DIRECTORS; PURCHASER DESIGNEES
The Merger Agreement provides that promptly upon the purchase by Parent or
Purchaser of at least a majority of the outstanding Shares, Purchaser and Parent
shall be entitled to designate such number of directors (but in no event more
than one less than the total number of directors) on the Board of Directors (the
"Board") of the Company, rounded up to the next whole number (the "Purchaser
Designees") such that Purchaser and Parent, subject to compliance with Section
14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
will have representation on the Board equal to the product of (i) the number of
directors on the Board and (ii) the percentage that the number of Shares so
purchased bears to the total number of Shares outstanding, and the Company and
its Board shall, at such time, take any and all such action as Purchaser may
reasonably request (including increasing the size of the Board) to cause the
Purchaser Designees to be elected to the Company's Board.
Purchaser has informed the Company that it will choose the Purchaser
Designees from the executive officers listed on Schedule I to the Offer to
Purchase, a copy of which is being mailed to the Company's stockholders together
with this Information Statement. The information on such Schedule I is
incorporated herein by reference. No determination has yet been made as to
which of the current directors of the Company who are not officers of the
Company will continue as directors following the purchase of Shares pursuant to
the Offer.
None of the Purchaser Designees (i) is currently a director of, or holds
any position with, the Company, (ii) has a familial relationship with any
directors or executive officers of the Company, or (iii) to the best knowledge
of the Purchaser, beneficially owns any securities (or rights to acquire such
securities) of the Company. The Company has been advised by Purchaser that, to
the best of Purchaser's knowledge, none of the Purchaser Designees has been
involved in any transactions with the Company or any of its directors, executive
officers or affiliates which are required to be disclosed pursuant to the rules
and regulations of the Commission, except as may be disclosed herein or in the
Schedule 14D-9.
It is expected that the Purchaser Designees may assume office at any time
following the acceptance for payment of, and payment for, any Shares pursuant to
the Offer, and that, upon assuming office, the Purchaser Designees will
thereafter constitute at least a majority of the Board of Directors.
Biographical information concerning each of the Company's current directors
and executive officers is presented on the following pages.
I-2
<PAGE>
INFORMATION CONCERNING MEMBERS
OF THE BOARD OF DIRECTORS
CERTAIN BACKGROUND AND OTHER INFORMATION CONCERNING DIRECTORS AND NOMINEES
Unless otherwise indicated, each person listed below has been employed at
his or her present principal occupation for the past five years or prior
thereto. Each individual listed below is a citizen of the United States. There
are no family relationships among directors, nominees for election as directors
or executive officers of the Company.
Andrew T. Dwyer, 46, has been a director of the Company since October 1991
and has been Chairman of the Board of Directors since May 1993. Mr. Dwyer is a
consultant, and has entered into a Consulting Agreement with the Company. See
"Executive Compensation." Mr. Dwyer was Chairman of the Board of Directors of
JWP INC. (now known as EMCOR Group, Inc., referred to herein as "JWP") from
April 1987 until July 1993. Mr. Dwyer also served as Chief Executive Officer of
JWP from 1987 until April 1993 and as President of JWP from 1985 until January
1992. On December 21, 1993, an involuntary petition under Chapter 11 of the
U.S. Bankruptcy Code was filed against JWP. This proceeding was converted to a
voluntary action on February 14, 1994, when JWP consented to the entry of an
order for relief under Chapter 11. JWP was discharged from bankruptcy in
approximately December 1994 and its name was changed to EMCOR Group, Inc. Mr.
Dwyer was a director of JWP at the time of the filings. Mr. Dwyer has also
received a letter from the staff of the Securities and Exchange Commission (the
"SEC") indicating that an enforcement action is being recommended against him in
connection with certain alleged financial irregularities involving JWP occurring
prior to the bankruptcy. The Company has been informed that enforcement actions
are being recommended against JWP, Mr. Dwyer and other individuals who are or
were officers or directors of JWP. JWP, Mr. Dwyer and other officers and
directors of JWP are also defendants in lawsuits brought by JWP shareholders and
bondholders alleging violations of the federal securities laws, breaches of
fiduciary duty under state law and related matters. None of the alleged
financial irregularities, shareholder or bondholder litigation, or potential SEC
enforcement actions involve the Company. However, the SEC indicated in its
letter to Mr. Dwyer that an order barring Mr. Dwyer from serving as an officer
or director of any publicly held company may be sought. Mr. Dwyer has denied
any wrongdoing in connection with the matters involving JWP.
Lawrence J. Schorr, 40, is President and Chief Executive Officer of the
Company. Mr. Schorr was elected Chief Executive Officer effective May 4, 1993
and has served as President and Chief Operating Officer since October 1988. He
has been a director of the Company since November 1988. He also serves as an
officer and/or director of various subsidiaries of the Company.
Paul A. Gould, 49, has been a director of the Company since June 16, 1994.
Mr. Gould is a Managing Director of Allen & Company Incorporated ("Allen &
Co."), an investment banking firm that is the largest stockholder of the
Company. He also serves as a member of the Board of Directors of National
Patent Development Corp.
Burton I. Koffman, 68, has been a director of the Company since May 1986.
Between May 1986 and October 1991, Mr. Koffman served as Chief Executive Officer
and Chairman of the Board of Directors of the Company. He is also Chairman and
President of PLC Enterprises, Inc. ("PLC") and Great American Industries, Inc.
("Great American"), companies headquartered in Vestal, New York, that engage,
through subsidiaries, in the manufacture and distribution of foam and related
products and building materials. PLC and Great American are owned and
controlled by members of the Koffman family. Mr. Koffman also serves as
Chairman of Apparel America, Inc. ("Apparel"), Senior Vice President and a
director of Poloron Products, Inc. ("Poloron") and Centuri, Inc. ("Centuri"),
the principal stockholder of Poloron. Apparel, Poloron and Centuri are publicly
held companies in which members of the Koffman family and affiliated companies
hold substantial ownership interests. During 1991, Centuri, its then wholly
owned subsidiary, Outdoor Sports Headquarters, Inc. ("OSHI"), and Poloron Homes
of Pennsylvania, Inc. ("Poloron Homes"), a wholly owned subsidiary of Poloron,
filed voluntary petitions for
I-3
<PAGE>
reorganization under Chapter 11 of the U.S. Bankruptcy Code. Mr. Koffman was an
officer and/or director of such companies at the time of such filings. The
Chapter 11 case of Poloron Homes is pending at the present time. Plans of
reorganization for OSHI and Centuri were approved by the bankruptcy court in
June 1992 and November 1993, respectively.
Jay R. Petschek, 36, has been a director of the Company since 1990. Mr.
Petschek is a Managing Director, Corporate Finance of Ladenburg, Thalmann & Co.
Inc. ("Ladenburg"), an investment banking firm.
Dean H. Cannon, 37, has been a director of the Company since February 1994.
Ms. Cannon is a principal of the law firm of Beveridge & Diamond, P.C.,
Washington, D.C. Beveridge & Diamond, P.C. serves as corporate counsel to the
Company.
Jeffrey M. Young, 44, is Senior Vice President-Operations of the Company
and has served as a Vice President of the Company since June 1991. He has
served as an officer and director of RRT Empire Returns Corporation ("RRT
Empire," a subsidiary of the Company) for more than five years and also serves
as an officer and/or director of other subsidiaries of the Company.
David H. Weitzman, 44, is Senior Vice President-Marketing and has been a
Vice President of the Company since June 1991. He has served as an officer of
RRT Empire for more than five years and also serves as an officer of other
subsidiaries of the Company.
Nathiel G. Egosi, 36, is Vice President-Engineering of the Company and has
served in such capacity since June 1991. He has been President of RRT Design &
Construction Corp. ("RRT Design," a subsidiary of the Company) since 1989.
Robert C. Nolt, 47, has been Vice President-Finance since June 1994,
Secretary since January 1995 and Treasurer and Controller of the Company since
March 1993. Mr. Nolt was Controller of U.S. Commstruct Inc., Vestal, New York,
for approximately one year prior to March 1993, and Vice President-Finance of
Ozalid Corporation, Vestal, New York, for more than two years prior to such
time. Mr. Nolt also serves as an officer and director of certain of the
Company's subsidiaries.
Jake Vigoda, 31, has been Vice President-Business Development since January
1995 and was the Company's Director of Business Development from January 1994
until January 1995. Mr. Vigoda was a Director of NK Intercon and its affiliates
for more than four years prior to December 1993.
COMMITTEES AND MEETINGS
The Board of Directors has established three standing committees to assist
in the discharge of its responsibilities. These are the Executive, Audit, and
Compensation and Incentive Stock Option Committees. The Board as a whole
nominates directors for election.
During the year ended December 31, 1994, the Board of Directors held four
meetings. The Audit Committee held one meeting (by telephone conference call),
and the Incentive Stock Option Committee (which became the Compensation and
Incentive Stock Option Committee on June 16, 1994) held two meetings. All
incumbent directors attended seventy-five percent (75%) or more of the Board and
Committee meetings held during the period during which they were directors or
Committee members.
Jay Petschek and Alan Jablon served as the Audit Committee from January 1,
1994 until Mr. Jablon's resignation from the Board effective March 7, 1994. Jay
Petschek and Dean H. Cannon served as the Audit Committee from March 15, 1994
through June 16, 1994, at which time Burton Koffman was added to the Committee
for the balance of the year. The Audit Committee meets with the Company's
independent accountants and reviews the results of their audit and management's
response thereto, inquires into various financial accounting
I-4
<PAGE>
matters affecting the Company and reviews the non-audit services performed by
the independent auditors, considering the effect, if any, on their independence.
Andrew Dwyer, Alan Jablon, and Jay Petschek served as the members of the
Compensation Committee and as the members of the Incentive Stock Option
Committee for 1994 until Mr. Jablon's resignation from the Board effective March
7, 1994 (after which the membership of these Committees was Andrew Dwyer and Jay
Petschek). On June 16, 1994, these two committees were merged and Andrew Dwyer,
Paul Gould and Jay Petschek were elected as the members of the Compensation and
Incentive Stock Option Committee. The Compensation and Incentive Stock Option
Committee periodically reviews the compensation, including fringe benefits, of
officers and management personnel of the Company. This Committee also
administers the Incentive Stock Option Plan and, subject to the provisions of
the Plan and applicable law, has full authority to interpret the Plan, determine
the terms and provisions of the respective option agreements and make all other
determinations necessary or advisable for the administration of the Plan.
The Company did not have an Executive Committee until September 27, 1994,
when Andrew Dwyer, Paul Gould and Lawrence Schorr were elected as the members of
the Executive Committee. The Executive Committee generally has the authority to
exercise all powers of the Board, to the extent permitted by law, in the
management of the Company between Board meetings. Although the Executive
Committee held no formal meetings during the balance of 1994, it consulted
informally on several occasions.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of the 1994 Compensation and Incentive Stock Option Committee (or
of the previous Compensation Committee) was, during 1994 or previously, an
officer or employee of the Company or any of its subsidiaries, and no member had
any relationship with the Company other than as a director, except that Andrew
Dwyer, who is the Chairman of the Board, has a Consulting Agreement with the
Company. See "Compensation of Executive Officers and Directors." No executive
officer of the Company served as a member of the compensation committee (or
other board committee performing equivalent functions) of any other entity
during 1994.
I-5
<PAGE>
SECURITY OWNERSHIP
The following table sets forth, as of March 20, 1995 (except as set forth
in Notes 6 and 7), certain information with respect to each stockholder known by
the Company to be the beneficial owner of more than 5% of its Common Stock, each
director, each executive officer and all executive officers and directors as a
group. Unless otherwise indicated, the stockholders have sole voting and
investment power with respect to Shares beneficially owned by them.
<TABLE>
<CAPTION>
NAME OF PERSON OR ENTITY COMMON
AND ADDRESS OF 5% OR MORE STOCK PERCENT OF
BENEFICIAL OWNER OWNED OUTSTANDING (1)
- -------------------------------------- ------- ---------------
<S> <C> <C>
Allen & Company Incorporated 664,806 24.8 %
711 Fifth Avenue
New York, New York 10022
Paul A. Gould (2) 150,000 5.6 %
c/o Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022
Andrew T. Dwyer (3)(4)(5) 267,700 9.7 %
c/o Airlie Group
115 E. Putnam Street
Greenwich, Connecticut 06830
Kennedy Capital Management, Inc. (6) 233,400 8.7 %
425 N. New Ballas Road., #181
St. Louis, Missouri 63141
Dimensional Fund Advisors Inc. (7) 135,623 5.1 %
1299 Ocean Avenue, 11th Floor
Santa Monica, California 90401
Lawrence J. Schorr (4)(5)(8) 182,218 6.3 %
Burton I. Koffman (4) 5,000 (9)
Jay R. Petschek (4)(10) 16,000 (9)
Dean H. Cannon (4) 2,500 (9)
Nathiel G. Egosi (4)(5) 36,000 1.3 %
Jeffrey M. Young (4)(5) 40,675 1.3 %
David H. Weitzman (4)(5) 44,583 1.3 %
All Directors and Executive
Officers as a Group
(11 persons)
(2)(3)(4)(5)(8)(10) 1,429,482 43.4 %
__________________________
</TABLE>
I-6
<PAGE>
(1) Percent of outstanding Shares is computed on the basis of 2,675,773 Shares
of Common Stock outstanding as of March 20, 1995.
(2) The Shares listed do not include 664,806 Shares owned by Allen & Co. Mr.
Gould is a Managing Director of Allen & Co. Mr. Gould disclaims beneficial
ownership of the Shares owned by Allen & Co.
(3) The Shares listed include (1) 13,600 Shares owned by Mr. Dwyer's wife, (2)
18,000 Shares owned by each of Mr. Dwyer's three minor children (for a
total of 54,000 Shares), and (3) 3,300 Shares owned by a family trust of
which Mr. Dwyer is a trustee and beneficiary. Mr. Dwyer disclaims
beneficial ownership of the Shares owned by his wife and minor children.
(4) The number of Shares listed as beneficially owned by the directors,
executive officers and All Directors and Executive Officers as a Group
includes the following number of Shares not presently owned but as to which
such listed beneficial owner has the right to acquire beneficial ownership
by exercise of stock options that are exercisable on March 20, 1995 (or
within 60 days of such date): Andrew T. Dwyer--40,000 Shares; Lawrence J.
Schorr--125,920 Shares; Burton I. Koffman--5,000 Shares; Jay R. Petschek--
15,000 Shares; Dean H. Cannon--2,500 Shares; Nathiel G. Egosi--27,740
Shares; Jeffrey M. Young--27,830 Shares; David Weitzman--26,920 Shares; and
All Directors and Executive Officers as a Group (11 persons)--284,110
Shares.
(5) The number of Shares listed as beneficially owned by the directors,
executive officers and All Directors and Executive Officers as a Group
includes the following number of Shares not presently owned but as to which
such listed beneficial owner has the right to acquire beneficial ownership
by exercise of stock options that are not exercisable on March 20, 1995 (or
within 60 days of such date), but which become exercisable upon
consummation of the Offer: Andrew T. Dwyer--40,000 Shares; Lawrence J.
Schorr--52,580 Shares; Nathiel G. Egosi--8,260 Shares; Jeffrey M. Young--
7,670 Shares; David Weitzman--7,080 Shares; and All Directors and Executive
Officers as a Group (11 persons)--122,390 Shares.
(6) Kennedy Asset Management, Inc., a registered investment advisor, is deemed
to have beneficial ownership of 233,400 Shares as of December 31, 1994, all
of which Shares are held in discretionary accounts for investment purposes.
(7) Dimensional Fund Advisors Inc. ("Dimensional"), a registered investment
advisor, is deemed to have beneficial ownership of 135,623 Shares as of
December 31, 1994, all of which Shares are held in portfolios of DFA
Investment Dimensions Group Inc., a registered open-end investment company,
or in series of the DFA Investment Trust Company, a Delaware business
trust, or the DFA Group Trust and DFA Participation Group Trust, investment
vehicles for qualified employee benefit plans, for all of which Dimensional
Fund Advisors Inc. serves as investment manager. Dimensional disclaims
beneficial ownership of all such Shares.
(8) The Shares listed include 3,718 Shares owned by the Levene, Gouldin &
Thompson Retirement Plan for the benefit of Lawrence J. Schorr.
(9) The percentage constitutes less than one percent of the total outstanding
Shares.
(10) The Shares listed include 1,000 Shares owned by the wife of Jay R.
Petschek. The Shares listed do not include 113,363 Shares that may be
issued upon the exercise of a stock warrant granted to Ladenburg. Mr.
Petschek is a Managing Director, Corporate Finance of Ladenburg.
I-7
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation of the Company's President
and Chief Executive Officer and the Company's four most highly compensated
executive officers other than the President and Chief Executive Officer who were
serving as executive officers as of December 31, 1994. In each case,
compensation for services rendered in all capacities to the Company and its
subsidiaries is included for the specified time periods.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION (1) COMPENSATION
------------------------- --------------
<S> <C> <C> <C> <C> <C>
Awards of All Other
Salary Options Compensation
Name and Principal Position Year ($) (2) Bonus($) (Shares) (3) ($) (4)
- --------------------------- ----- ------- ------- ------------ ------------
Lawrence J. Schorr, 1994 266,405 109,646 137,000 3,642
President and Chief Executive Officer (5) 1993 225,000 0 0 3,374
1992 229,326 6,000 0 3,323
David C. Jones, 1994 146,875 20,000 22,500 2,838
Executive Vice President & Secretary (6) 1993 163,578 0 0 3,066
1992 170,723 5,000 0 3,032
Nathiel G. Egosi, 1994 146,909 27,000 21,000 2,288
Vice President--Engineering (7) 1993 140,000 22,803 0 2,565
1992 136,346 46,232 0 2,381
Jeffrey M. Young, 1994 125,481 30,108 19,500 2,309
Vice President--Operations (8) 1993 100,000 0 0 2,000
1992 101,923 0 0 1,957
David H. Weitzman, 1994 108,847 23,000 18,000 2,077
Vice President--Marketing (8) 1993 100,000 0 0 2,000
1992 101,923 0 0 2,035
- --------------------
</TABLE>
(1) Does not include the value of certain non-cash compensation to the named
individuals which did not exceed the lesser of $50,000 or 10% of such
individuals' total annual salary and bonus shown in the Table. The Company
provides an automobile to each of the named executives for use in
connection with Company business but does not believe the value of such
automobiles and other non-cash compensation (if any) exceeds the lesser of
$50,000 or 10% of the executive's total annual salary and bonus.
(2) Includes salary and/or bonus deferred pursuant to Section 401(k) of the
Internal Revenue Code.
(3) The numbers shown in the table represent options for the purchase of Shares
granted to the named persons under the Company's Incentive Stock Option
Plan As Amended and Restated June 8, 1990 (the "Incentive Plan") and under
the Non-Qualified Stock Option Plan (the "Non-Qualified Plan"). There were
no long-term incentive payouts during any of the three years covered in the
table.
I-8
<PAGE>
(4) Reflects nondiscretionary contributions made on behalf of the named
executive officer pursuant to the provisions of the Company's 401(k) Plan.
(5) Mr. Schorr was elected Chief Executive Officer on May 4, 1993. Between
October 1988 and May 4, 1993, Mr. Schorr served as the Company's President
and Chief Operating Officer and, as Chief Operating Officer, acted in a
capacity similar to that of a Chief Executive Officer.
The Company entered into an Employment Agreement with Lawrence J. Schorr
effective October 3, 1988. The agreement was amended effective May 6, 1991
and expires on October 1, 1996. The agreement, as amended, provides for an
annual base salary of $225,000 for the twelve months ended September 30,
1992, with annual five percent (5%) increases thereafter, and for
additional cash bonuses in the discretion of the Board of Directors. The
agreement also provides that in the event of a change of control of the
Company during the term of the agreement, Mr. Schorr has the right to
terminate the agreement in exchange for a lump sum payment by the Company
of an amount equal to the balance of all salary payments due to him until
the regular termination date, unless the new controlling entity has a net
worth equal to or greater than the net worth of the Company immediately
prior to the change of control and guarantees the Company's performance of
its obligations under the employment agreement. The acquisition by JWP on
October 1, 1991 of 34% of the outstanding Shares, as well as the
acquisition by Allen & Co. on January 6, 1994 of 29% of the outstanding
Shares, triggered these change of control provisions; however, no JWP or
Allen & Co. guarantee was provided.
(6) The Company entered into an Employment Agreement with David C. Jones
effective November 28, 1988. The agreement was amended effective November
15, 1993 with an expiration date of October 31, 1995. The agreement, as
amended, provided for an annual base salary at the rate of $133,500 per
annum for the period November 15, 1993 through October 31, 1994, and an
annual base salary at the rate of $125,000 per annum for the period
November 1, 1994 through October 31, 1995. The agreement also provided for
additional cash bonuses in the discretion of the Board of Directors. In
1994, the Company also made a lump sum payment of $8,500 to Mr. Jones for
compensation earned during the period November 1, 1992 through December 31,
1993 that had previously been deferred. Mr. Jones' employment agreement
could be terminated voluntarily by the Company or Mr. Jones upon 30 days'
notice and, if so terminated, Mr. Jones was entitled to payment of six
months salary or the balance due under the employment agreement, whichever
was less. In the event the agreement was terminated by the Company with an
effective termination date that was prior to November 1, 1994, termination
payments were to be paid at the rate of $181,912.50 per annum for any
months remaining under the agreement prior to November 1, 1994 (up to 6
months), with the balance (if any) of the termination payments at the rate
payable under the agreement. The agreement was terminated effective January
2, 1995, when Mr. Jones resigned as an officer, director and employee of
the Company. The agreement also contained change of control provisions
identical to those contained in Mr. Schorr's employment agreement
(described in note 5, above). Neither JWP nor Allen & Co. guaranteed Mr.
Jones' agreement.
(7) RRT Design, a subsidiary of the Company, entered into an Employment
Agreement with Nathiel G. Egosi effective June 1, 1989. Upon termination
of that agreement, RRT Design entered into a new agreement with Mr. Egosi
effective June 1, 1992 and expiring on May 31, 1995. The agreement
provides for an annual base salary of $140,000, for an incentive bonus
annually equal to five percent (5%) of RRT Design's net income before taxes
and bonuses or pursuant to a new bonus program to be adopted by the
Company, and for additional compensation in the discretion of RRT Design's
Board of Directors. (The bonus amounts shown in the Table reflect amounts
actually paid each year as a result of RRT Design's net income for the
prior year.)
(8) Effective July 31, 1991, the Company entered into Employment Agreements
that expired on July 1, 1994 with Jeffrey M. Young and David H. Weitzman.
Messrs. Young and Weitzman previously had been employees of RRT Empire
pursuant to agreements effective August 1, 1988. The agreements with the
I-9
<PAGE>
Company provided for annual base salaries of $100,000 each and for
additional compensation in the discretion of the Board of Directors.
Messrs. Young and Weitzman have remained officers and employees although
their employment agreements have terminated.
The Company has also entered into Employment Agreements with Burton I.
Koffman and Richard E. Koffman expiring on January 1, 2001 and January 1, 1996,
respectively. Each agreement provides for a base annual salary of $50,000 for
the 12 months ended January 1, 1992, with annual five percent increases
thereafter, and each agreement contains change of control provisions identical
to those in Mr. Schorr's employment agreement (described in note 5, above).
Neither JWP nor Allen & Co. guaranteed the agreements with Messrs. Koffman. In
connection with the sale of stock to JWP in October 1991, the Company's interest
in a certain promissory note was sold to a company affiliated with the Koffman
family. Payments due to the Company in connection with that transaction were
delinquent and were offset against payments owed Messrs. Koffman under the
employment agreements during 1992, 1993 and 1994. See "Transactions With
Executive Officers and Directors."
Effective March 1, 1994, the Company entered into a Consulting Agreement with
Andrew T. Dwyer, Chairman of the Board, pursuant to which Mr. Dwyer will provide
specified consulting services to the Company. The Consulting Agreement is for
an initial term of six months, and is automatically renewed on a month-to-month
basis at the end of the term. The Consulting Agreement can be terminated by the
Company or Mr. Dwyer on 30 days' written notice. Compensation under the
Consulting Agreement is paid to Mr. Dwyer on a monthly basis at the rate of
$100,000 per annum.
DIRECTOR COMPENSATION
Cash directors' fees were not paid for service in 1994, but stock options
under the Non-Qualified Plan were granted to the non-employee directors in early
1994. Non-qualified stock options to purchase 5,000 Shares were granted to Alan
Jablon, Innis O'Rourke, Jay Petschek and Burton Koffman, and non-qualified stock
options to purchase 2,500 Shares were granted to Dean H. Cannon. Messrs. Jablon
and O'Rourke served as members of the Board of Directors during 1993 but
resigned in 1994. The exercise price for all such options is $3.42 per share,
which was in excess of the market price of $2.75 of the Company's Common Stock
on the date of the grants. All of such options vested in full on August 23,
1994.
Officers and employees who serve as directors are not compensated for their
service as directors. All directors are reimbursed for expenses incurred in
attending Board and committee meetings.
I-10
<PAGE>
OPTION GRANTS IN 1994
The following table sets forth certain information concerning individual
grants of stock options during the year ended December 31, 1994 under the
Incentive Plan and under the Non-Qualified Plan to the executive officers named
in the table under the caption "Summary Compensation Table." There were no
grants of free standing stock appreciation rights during the year ended
December 31, 1994.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (3)
----------------------------------------------------------------------- --------------------------------
% OF TOTAL OPTIONS
NUMBER OF SHARES GRANTED TO EMPLOYEES EXERCISE
UNDERLYING IN YEAR ENDED PRICE EXPIRATION
NAME OPTIONS GRANTED (1) DECEMBER 31, 1994 ($/SHARE) DATE (2) 0% ($) 5% ($) 10% ($)
- ---- ------------------- -------------------- --------- ----------- ------ ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Lawrence J. Schorr 37,000 (4) 15.2% $3.42 2/23/04 0 $ 39,200 $137,373
35,000 (5) 14.4% $3.45 3/15/04 0 $ 43,157 $140,245
25,000 (5) 10.3% $4.00 3/15/04 0 $ 17,090 $ 86,425
20,000 (5) 8.2% $4.60 3/15/04 0 $ 1,661 $ 57,140
20,000 (5) 8.2% $5.25 3/15/04 0 $ (11,339) $ 44,140
David C. Jones 15,000 (4) 6.2% $3.42 2/23/04 (6) 0 $ 15,892 $ 55,692
7,500 (5) 3.1% $3.45 3/15/04 (6) 0 $ 9,248 $ 30,052
Nathiel G. Egosi 14,000 (4) 5.8% $3.42 2/23/04 0 $ 14,832 $ 51,979
7,000 (5) 2.9% $3.45 3/15/04 0 $ 8,631 $ 28,049
Jeffrey M. Young 13,000 (4) 5.3% $3.42 2/23/04 0 $ 13,773 $ 48,266
6,500 (5) 2.7% $3.45 3/15/04 0 $ 8,015 $ 26,046
David H. Weitzman 12,000 (4) 4.9% $3.42 2/23/04 0 $ 12,713 $ 44,553
6,000 (5) 2.5% $3.45 3/15/04 0 $ 7,398 $ 24,042
</TABLE>
(1) Options granted during 1994 become exercisable upon a change of control
of the Company, as defined in the option plans and option agreements.
Options are non-transferrable other than by will or the laws of descent
and distribution.
(2) Options were granted for a term of ten years, subject to earlier
termination in certain events related to termination of employment.
(3) The amounts under the columns labeled "5%" and "10%" are included by the
Company pursuant to certain rules promulgated by the Securities and
Exchange Commission and are not intended to forecast future appreciation,
if any, in the price of the Company's stock. Such amounts are based on
the assumption that the named persons hold the options granted for their
full ten year term. The actual value of the options will vary in accordance
with the market price of the Shares. The column headed "0%" is included to
demonstrate that the options were granted at prices in excess of the fair
market value at the time of the grants and optionees will not recognize any
gain without an increase in the stock price, which increase benefits all
stockholders commensurately. The Company did not use an alternative formula
to attempt to
I-11
<PAGE>
value options at the date of grant, as management is not aware of any
formula that determines with reasonable accuracy a present value of options
of the type granted to the optionees.
(4) Options became exercisable as to 33% of the Shares covered thereby on and
after August 23, 1994 (six months from the date of the grant), as to an
additional 33% of the Shares covered thereby on and after January 1, 1995,
and become exercisable as to the full amount of the Shares on and after
January 1, 1996.
(5) Options became exercisable as to 25% of the Shares covered thereby on and
after September 15, 1994 (six months from the date of the grant), and
become exercisable as to an additional 25% on each March 15 thereafter.
(6) Mr. Jones resigned as an officer and employee of the Company effective
January 2, 1995. Options to purchase an aggregate of 10,625 Shares had not
vested on such date and were terminated, and the expiration date for the
remaining options was accelerated to April 2, 1995. Mr. Jones exercised
options to purchase 41,875 Shares and 1,500 Shares on approximately March 3
and 20, 1995, respectively.
UNEXERCISED STOCK OPTIONS AT DECEMBER 31, 1994
The following table sets forth certain information concerning unexercised
options granted prior to December 31, 1994 under the Incentive Stock Option Plan
and the Non-Qualified Stock Option Plan to the executive officers named in the
table under the caption "Summary Compensation Table." There were no employee
stock options or stand alone stock appreciation rights exercised during the year
ended December 31, 1994. There were no stand alone stock appreciation rights
outstanding as of December 31, 1994.
<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
STOCK OPTIONS AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1994 DECEMBER 31, 1994 (1)
---------------------- -----------------------
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ---- ---------------------- -----------------------
<S> <C> <C>
Lawrence J. Schorr 88,710/89,790 $49,937/$39,273
David C. Jones 38,375/15,625 $ 7,369/$16,706
Nathiel G. Egosi 21,370/14,630 $ 6,827/$15,643
Jeffrey M. Young 21,915/13,585 $ 6,339/$14,526
David H. Weitzman 21,460/12,540 $ 5,852/$13,408
</TABLE>
(1) In-the-money stock options are options for which the exercise price is less
than the market price of the underlying stock on a particular date. These
values are based on a price of $4.50 per Share, the closing price of the
Shares on the American Stock Exchange on December 30, 1994. Such values
were determined by subtracting the applicable exercise price in each case.
TRANSACTIONS WITH EXECUTIVE OFFICERS AND DIRECTORS
Reference is made to Item 3 of the Schedule 14D-9, the foregoing
discussion, the discussion set forth below and Schedule II.
I-12
<PAGE>
In October 1991, six stockholders of the Company who owned in the aggregate
914,806 Shares, representing 34.7% of the then-outstanding Shares, sold their
Shares to JWP in a private transaction. Pursuant to the agreement with JWP
covering the sale, Richard Koffman, Milton Koffman and David Koffman, each of
whom was a seller or affiliated with the sellers, resigned from their respective
positions as officers and/or directors of the Company upon the closing of the
transaction. Burton Koffman, upon the closing, resigned as Chairman and Chief
Executive Officer but continued as a director of the Company. Burton and
Richard Koffman also continue to be employed by the Company pursuant to the
terms of the Koffman Agreements. In connection with the sale, the Company
entered into an agreement with JWP that required the Company to elect certain
JWP designees to the Company's Board of Directors upon the resignations of
Messrs. Koffman, to cause the JWP designees to be nominated to be elected to
the Board at annual Company stockholders' meetings, to elect JWP designees to
Board committees and subsidiary boards of directors, and to take related
actions. In January 1994, JWP sold all Shares owned by it to Allen & Co. and
Paul Gould. The Company's obligations to JWP regarding directors and committee
members terminated upon such sale, and there are no similar obligations to Allen
& Co. or Mr. Gould.
In connection with the October 1991 sale of stock to JWP, Milbar
Consultants Corp. ("Milbar"), a company affiliated with the selling
stockholders, agreed to purchase from the Company, the Company's interest in a
promissory note (the "Chase Eastern Note") evidencing a loan made by the Company
to Chase Eastern Co., Inc., for cash of $181,585 and a promissory note payable
by Milbar in the principal amount of $544,755 (the "Milbar Note"), which amounts
aggregated the then unpaid principal balance on the Company's interest in the
Chase Eastern Note, plus accrued and unpaid interest. The Company was entitled
to monthly payments from Milbar on the Milbar Note in an amount equal to the
greater of (a) $30,000, or (b) the aggregate of all sums actually received
during such month by Milbar on the Chase Eastern Note, until the Milbar Note was
paid in full. All obligations of Milbar under the Milbar Note and related
Purchase Agreement were guaranteed by Burton Koffman, Richard Koffman and
affiliated corporations. As of December 31, 1992, the balance due under the
Milbar Note was $310,000, all of which was delinquent. Interest of $23,000
accrued during 1993, and $100,000 was paid in cash on the Milbar Note during
1993. In addition, payments aggregating $233,000 owed by the Company to Burton
and Richard Koffman under their employment agreements were withheld during 1992,
1993, and 1994, as a result of this delinquency. Pursuant to an agreement among
the parties, the amount was offset against the amounts owed under the Milbar
Note and no amounts remained outstanding under the Milbar Note at December 31,
1994.
The Company leases from two members of the Koffman family the facilities
used by the Company as its executive offices in Vestal, New York pursuant to a
Lease Agreement, as amended, expiring December 31, 1998. Effective January 1,
1994, the Lease Agreement was amended to require fixed rental payments of
$28,800 and $36,000 for the years ended December 31, 1994 and 1995,
respectively, and increased fixed payments for future years, and the Company
agreed to pay fifty percent (50%) of the cost of utilities and trash collection
expenses for the building. The Lease Agreement may be terminated by the Company
or the landlords at any time on 30 days' written notice, so long as the date of
termination is on or after January 1, 1996.
In April 1990, the Company sold 1,000,000 Shares in an underwritten public
offering in which Ladenburg acted as managing underwriter, and granted to
Ladenburg a stock Warrant. The Warrant is exercisable through April 10, 1995
for 113,363 shares at an exercise price of $9.13 per share. Jay Petschek, a
director of the Company, is a Managing Director of Ladenburg. If the Merger is
consummated, Ladenburg will receive a cash payment in settlement of the Warrant.
See "Item 3. Identity and Background" in the Schedule 14D-9.
In December 1994, the Company engaged Ladenburg as exclusive placement
agent in connection with the proposed offer and private placement by the Company
of approximately $10,500,000 of debt securities of the Company for the financing
(the "Financing") of a material recycling facility in Lake County, Illinois. If
the Financing is consummated within thirty six months after Ladenburg was
engaged with an investor introduced to the Company by Ladenburg, or contacted by
Ladenburg or the Company within a year after Ladenburg was engaged, the Company
will pay to Ladenburg a fee equal to the greater of (i) 3% of the purchase price
paid by the purchaser of the securities issued in connection with the Financing,
or (ii) $250,000. The Company also agreed to reimburse Ladenburg for reasonable
out-of-pocket expenses incurred in connection with the engagement, and to
indemnify
I-13
<PAGE>
Ladenburg for certain liabilities that could arise as a result of the
engagement, including liabilities arising under the federal securities laws. As
of the date of this Statement, no sales of securities under the engagement have
occurred.
1994 CHANGE OF CONTROL OF THE COMPANY
Pursuant to an Agreement dated as of December 30, 1993 (the "Agreement"),
JWP, the then-owner of 914,806 Shares, sold its Shares to Allen & Co. and Paul
A. Gould. The transaction closed on January 6, 1994. The Shares sold to Allen
& Co. and to Mr. Gould constituted in the aggregate 34.7% of the then-
outstanding Shares. Allen & Co. acquired 764,806 Shares (29.0%) and Mr. Gould
acquired 150,000 Shares (5.7%).
The aggregate purchase price paid by Allen & Co. and Mr. Gould for the
Shares that were sold by JWP was $2,391,365.75. This amount was equal to $2.625
per Share, less a $10,000 allowance for costs. Allen & Co. funded the purchase
from working capital and Mr. Gould funded the purchase from personal funds.
In connection with the sale of the Shares, rights previously granted by the
Company to JWP to nominate certain members of the Company's Board of Directors
and committees of the Board, and certain related rights, were terminated. In
consideration of the termination of such rights, and the payment by JWP to the
Company of an expense allowance of $91,481 ($.10 per share), the Company agreed
to register the Shares purchased from JWP on behalf of Allen & Co. and Mr. Gould
in a shelf registration statement.
On February 22, 1994, Andrew Dwyer, the Company's Chairman, and members of
his family purchased an aggregate of 100,000 Shares from Allen & Co. for $2.625
per share. Funds for the purchase came from personal funds of Mr. Dwyer and his
family. The registration rights for those Shares were transferred to Mr. Dwyer
upon the sale.
Andrew Dwyer is the former Chairman and Chief Executive Officer of JWP.
Innis O'Rourke, a director of the Company at the time of the sale by JWP, was
also a director of JWP.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Effective May 1, 1991, the Commission promulgated new rules under Section
16 of the Exchange Act. The Company believes that during the year ended
December 31, 1994, its executive officers and directors have complied with all
Section 16 filing requirements.
I-14
<PAGE>
SCHEDULE II
CERTAIN TRANSACTIONS IN SHARES OF COMMON STOCK OF
RESOURCE RECYCLING TECHNOLOGIES, INC. DURING THE PAST 60 DAYS
A former director and executive officer of the Company exercised outstanding
stock options previously granted under the Incentive Plan and the Non-Qualified
Plan to purchase an aggregate of 41,875 Shares and an aggregate of 1,500 Shares
on approximately March 3 and 20, 1995, respectively. The Company used Shares
held in its treasury to fund such option exercises. The Shares were purchased
at exercise prices of $3.42 for 10,000 Shares, $3.45 for 1,875 Shares, $5.75 for
30,000 Shares and $8.50 for 1,500 Shares.
II-1
<PAGE>
Exhibit 1
AGREEMENT AND PLAN OF MERGER
March 17, 1995
WASTE MANAGEMENT, INC.
WMI ACQUISITION SUB, INC.
RESOURCE RECYCLING TECHNOLOGIES, INC.
<PAGE>
TABLE OF CONTENTS
Page
----
1. The Offer................................................................ 1
1.1 General............................................................. 1
1.2 Company Actions..................................................... 3
1.3 Directors; Section 14(f)............................................ 4
2. The Merger and Related Matters........................................... 4
2.1 The Merger.......................................................... 4
2.2 Conversion of Stock................................................. 5
2.3 Dissenting Shares................................................... 5
2.4 Payment............................................................. 6
2.5 No Further Rights or Transfers...................................... 7
2.6 Certificate of Incorporation of the Surviving Corporation........... 8
2.7 By-Laws of the Surviving Corporation................................ 8
2.8 Directors and Officers of the Surviving Corporation................. 8
2.9 Closing............................................................. 8
2.10 Stock Options, Warrants and Convertible Securities.................. 8
2.11 Special Meeting..................................................... 9
2.12 Merger Without Meeting of Stockholders.............................. 9
3. Representations and Warranties........................................... 9
3.1 Representations and Warranties of the Company....................... 9
3.2 Representations and Warranties of the Parent and the Sub............ 9
4. Covenants................................................................ 11
4.1 Disclosure Documents................................................ 11
4.2 Access to Information Concerning Properties and Records............. 11
4.3 Confidentiality..................................................... 11
4.4 Interim Operations of the Company................................... 12
4.5 Consents............................................................ 13
4.6 No Solicitation..................................................... 13
4.7 Filings............................................................. 14
4.8 All Reasonable Efforts.............................................. 14
4.9 Public Announcements................................................ 14
4.10 Notification of Certain Matters..................................... 14
4.11 Directors' and Officers' Indemnification............................ 14
4.12 Expenses............................................................ 15
5. Conditions to Consummation of the Merger................................. 15
5.1 Conditions to Each Party's Obligation to Effect the Merger.......... 15
5.2 Additional Condition to Obligations of the Parent and the
Sub to Effect the Merger.......................................... 15
i
<PAGE>
6. Termination.............................................................. 16
6.1 Termination......................................................... 16
6.2 Notice and Effect of Termination.................................... 17
6.3 Extension; Waiver................................................... 17
6.4 Amendment and Modification.......................................... 17
7. Miscellaneous............................................................ 17
7.1 Fees................................................................ 17
7.2 Survival of Representations and Warranties.......................... 18
7.3 Notices............................................................. 18
7.4 Entire Agreement; Assignment........................................ 19
7.5 Binding Effect; Benefit............................................. 19
7.6 Headings............................................................ 19
7.7 Counterparts........................................................ 19
7.8 Governing Law....................................................... 20
7.9 Severability........................................................ 20
7.10 Certain Definitions................................................. 20
ANNEX A......................................................................A-1
ANNEX B......................................................................B-1
ii
<PAGE>
AGREEMENT AND PLAN OF MERGER
March 17, 1995
The parties to this Agreement and Plan of Merger are Waste Management,
Inc., an Illinois corporation (the "Parent"), WMI Acquisition Sub, Inc., a
Delaware corporation, and a wholly-owned subsidiary of the Parent (the "Sub"),
and Resource Recycling Technologies, Inc., a Delaware corporation (the
"Company").
The parties wish to provide for the merger of the Sub with and into
the Company on the terms and conditions set forth in this agreement.
Accordingly, the parties agree as follows:
1. The Offer.
1.1 General.
(a) As promptly as practicable (but in no event later than five
business days after the date of this Agreement), the Parent shall cause the Sub
to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") an offer (the "Offer") to purchase all
the outstanding shares of common stock, par value $1.00 per share (the "Company
Common Stock"), of the Company at a price of $11.50 per share, net to the seller
in cash (the "Offer Price"), and, subject to the conditions of the Offer, shall
use all reasonable efforts to consummate the Offer as promptly as permitted by
law. The obligation of the Parent and the Sub to consummate the Offer and to
accept for payment and to pay for any shares of Company Common Stock tendered
pursuant to the Offer (i) shall be subject to the condition that such number of
shares of Company Common Stock shall have been validly tendered and not
withdrawn prior to the expiration date of the Offer that, together with the
shares of Company Common Stock beneficially owned by the Parent and any
affiliate of the Parent on that date, constitute more than 50.1% of Company
Common Stock, assuming exercise and conversion of all outstanding options and
convertible securities of the Company (the "Minimum Condition") and (ii) shall
be subject to the other conditions set forth in Annex A to this Agreement.
(b) Neither the Parent nor the Sub shall, without the consent of the
Company, waive the Minimum Condition. Otherwise, the conditions of the Offer
are for the sole benefit of the Sub and the Parent regardless of the
circumstances giving rise to the non-fulfillment of any such conditions and may
be waived by the Sub and the Parent in whole or in part. The Company agrees
that no shares of Company Common Stock held by the Company shall be tendered
pursuant to the Offer. Parent and Sub may modify the terms of the Offer, except
that, without the consent of the Company, they shall not (i) reduce the number
of shares of Company Common Stock to be purchased in the Offer, (ii) reduce the
Offer Price, (iii) modify or add to the conditions set forth in Annex A, (iv)
except as provided in the next sentence, extend the Offer, (v) change the form
of consideration payable in the Offer, or (vi) amend any other term of the
<PAGE>
Offer in a manner adverse to the holders of Company Common Stock.
Notwithstanding the foregoing, Parent and Sub may, without the consent of the
Company, (i) extend the Offer beyond any scheduled expiration date (the initial
scheduled expiration date being 20 business days following commencement of the
Offer) for a period not to exceed 20 business days, if at any scheduled
expiration date of the Offer, any of the conditions to Sub's obligation to
accept for payment, and pay for, shares of Company Common Stock shall not be
satisfied or waived, until such time as such conditions are satisfied or waived,
(ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or the staff thereof applicable to the Offer, and (iii) extend the Offer for an
aggregate period of not more than 15 business days beyond the latest expiration
date that would otherwise be permitted under clause (i) or (ii) of this sentence
if there shall not have been tendered sufficient shares of Company Common Stock
so that the Merger could be effected as provided in Section 2.12. Subject to the
terms and conditions of the Offer and this Agreement, Sub shall, and Parent
shall cause Sub to, accept for payment, and pay for, all shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Offer that Sub
becomes obligated to accept for payment, and pay for, pursuant to the Offer as
soon as practicable after expiration of the Offer.
(c) As soon as practicable on the date of commencement of the Offer,
the Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer, which will contain the offer to purchase and form of the
related letter of transmittal (which, together with any supplements or
amendments to those documents, are collectively referred to as the "Offer
Documents"). The Sub and the Parent shall cause the Offer Documents to comply
in all material respects with the provisions of applicable federal securities
laws and, on the date filed with the SEC and on the date first published, sent
or given to the Company's stockholders, not to contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading (except that neither the
Parent nor the Sub shall be responsible with respect to information supplied by
the Company in writing for inclusion in the Offer Documents). Each of the
Parent, the Sub and the Company shall promptly correct any information provided
by it for use or used in the Offer Documents, if and to the extent such
information shall have become false or misleading in any material respect, and
the Sub and the Parent shall take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment upon the Offer
Documents and all amendments and supplements thereto prior to their filing with
the SEC or dissemination to stockholders of the Company. Parent and Sub agree
to provide the Company and its counsel any comments Parent, Sub or their counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments and shall provide the Company and
its counsel an opportunity to participate, including by way of discussion with
the SEC or its staff, in the response of Parent and/or Sub to such comments.
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(d) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any shares of
Company Common Stock that Sub accepts for payment, and becomes obligated to pay
for, pursuant to the Offer.
1.2 Company Actions. The Company hereby consents to the Offer and
represents and warrants to the Parent and the Sub that its board of directors
(at a meeting duly called and held) has unanimously (i) determined that as of
the date of such meeting the Offer and the Merger (as defined in Section 2.1(a))
are fair to, and in the best interests of, the Company's stockholders, (ii)
approved this Agreement and the transactions contemplated by this Agreement,
including the Offer, the Stock Tender Agreements (as defined in Section 21 of
Annex A) and the Merger, and (iii) resolved, subject to its fiduciary duties
under applicable law, to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by the stockholders of the Company.
The Company shall file with the SEC contemporaneously with the commencement of
the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") containing that recommendation in favor of the Offer and the
Merger. The Company shall cause the Schedule 14D-9 to comply in all material
respects with the provisions of applicable federal securities laws. The Company
shall cause the Schedule 14D-9, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, not to contain any
untrue statement of a material fact or to omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
(except that the Company shall not be responsible with respect to information
supplied by the Parent or the Sub in writing for inclusion in the Schedule 14D-
9). The Company shall take all steps necessary to cause the Schedule 14D-9 to
be filed with the SEC and mailed to the Company's stockholders to the extent
required by applicable federal securities laws. The Company shall include in
the Schedule 14D-9, on the date first published, sent or given to the Company's
stockholders, such information with respect to the Company's officers and
directors as is required under Section 14(f) of the Exchange Act and Rule 14f-1
thereunder in order to fulfill its obligations under Section 1.3. The Parent
and the Sub shall supply the Company with, and be solely responsible for, any
information with respect to themselves and their nominees, officers, directors
and affiliates required by Section 14(f) and Rule 14f-1. Each of the Company,
Parent and Sub agrees promptly to correct any information provided by it for use
in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9 as so amended or supplemented to be filed with the
SEC and disseminated to the Company's stockholders, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given a reasonable opportunity to review and comment upon the Schedule
14D-9 and all amendments and supplements thereto prior to their filing with the
SEC or dissemination to stockholders of the Company. The Company agrees to
provide Parent and its counsel with any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments and shall provide Parent and its counsel an
opportunity to participate, including by way of discussions with the SEC or its
staff, in the response of the Company to such comments. In connection with the
Offer, the Company shall promptly furnish the Sub with mailing labels, security
position listings and any available listing or computer file containing the
names and addresses of the record
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holders of the Company Common Stock as of a recent date, and shall furnish the
Sub with such information and assistance as the Sub or its agents may reasonably
request in communicating the Offer to the stockholders of the Company. Subject
to the requirements of law, and except for such steps as are necessary to
disseminate the documents constituting the Offer and any other documents
necessary to consummate the Merger, the Parent and the Sub shall, and shall
cause each of their affiliates and associates to, hold in confidence the
information contained in any such labels, lists and other documents, to use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, to deliver to the Company all copies of such
information then in their possession.
1.3 Directors; Section 14(f). Promptly upon the purchase by the Parent or
the Sub of at least a majority of the outstanding shares of Company Common Stock
and from time to time thereafter, the Parent and the Sub shall be entitled to
designate such number of directors, rounded up to the next whole number but in
no event more than one less than the total number directors of the board of
directors of the Company as will give the Parent and the Sub, subject to
compliance with Section 14(f) of the Exchange Act, representation on the board
of directors of the Company equal to the product of the number of directors on
the board of directors of the Company and the percentage that such number of
shares of Company Common Stock so purchased bears to the number of shares of
Company Common Stock outstanding, and the Company shall, upon request by the
Parent and the Sub, promptly increase the size of the board of directors of the
Company or exercise all reasonable efforts to secure the resignations of such
number of directors as is necessary to enable the Parent's and the Sub's
designees to be elected to the board of directors of the Company and shall cause
such designees to be so elected. At the request of the Parent and the Sub, the
Company shall take, at its expense, all action necessary to effect any such
election, including mailing to its stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. From and after the
date that such designees to the board of directors of the Company constitute a
majority of the board of directors of the Company, any action taken by the
Company under Section 5 or 6 of this Agreement shall require the approval of a
majority of the members of the board of directors, if any, who are not designees
or affiliates of the Parent and the Sub.
2. The Merger and Related Matters.
2.1 The Merger.
(a) Upon the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 2.1(b)), the Sub shall be merged with and into the
Company (the "Merger") in accordance with the provisions of the General
Corporation Law of the State of Delaware (the "GCL") and the separate corporate
existence of the Sub shall cease, and the Company shall continue as the
surviving corporation under the laws of the State of Delaware with its current
corporate name (the "Surviving Corporation").
(b) The Merger shall become effective at the time of filing of a
certificate of merger with the Secretary of State of the State of Delaware in
accordance with the provisions of Section 251 of the GCL (the "Certificate of
Merger"), or at the time specified as the effective
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time in the Certificate of Merger (it being understood that such specified
effective time shall be within a reasonable period, not to exceed five business
days, after the date the Certificate of Merger is filed). The Certificate of
Merger shall be filed at the time of the Closing Date (as defined in Section
2.9). The date and time when the Merger shall become effective is referred to as
the "Effective Time."
(c) The separate corporate existence of the Company, as the Surviving
Corporation, with all its purposes, objects, rights, privileges, powers,
certificates and franchises, shall continue unimpaired by the Merger. At the
Effective Time, the separate corporate existence of the Sub shall cease and the
Surviving Corporation shall succeed to all the properties and assets of the
Company and the Sub and to all the debts, choses in action and other interests
due or belonging to the Company and the Sub and shall be subject to, and
responsible for, all the debts, liabilities and duties of the Company with the
effect set forth under the GCL.
2.2 Conversion of Stock. At the Effective Time:
(a) Each share of Company Common Stock then issued and outstanding
(other than Dissenting Shares (as defined in Section 2.3) and any shares of
Company Common Stock held by the Parent or the Sub or any corporate affiliate of
either of them) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and represent the right to
receive, and shall be exchangeable for, the highest price paid pursuant to the
Offer, subject to applicable withholding or back-up withholding taxes, if any,
payable to the holder thereof, without any interest thereon (the "Merger
Consideration"), upon surrender of the certificates representing such shares of
Company Common Stock.
(b) Each share of common stock of the Sub (the "Sub Common Stock")
then issued and outstanding shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and become one fully
paid and nonassessable share of common stock of the Surviving Corporation, which
thereafter will constitute all of the issued and outstanding shares of common
stock of the Surviving Corporation.
(c) Each share of Company Common Stock then held in the treasury of
the Company shall, by virtue of the Merger, be cancelled without payment of any
consideration therefor and without any conversion thereof.
(d) Each share of Company Common Stock then held by the Sub or the
Parent (or any corporate affiliate of either of them) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be cancelled
without payment of any consideration therefor and without any conversion
thereof.
2.3 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, none of the shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and that are held by stockholders (other
than the Parent or the Sub or any corporate affiliate of either of them) who
shall not have voted those shares of Company Common Stock in favor of the Merger
and who are entitled by applicable Delaware law to appraisal rights, and who
shall have delivered a written demand for appraisal of those shares of Company
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Common Stock in the manner provided in Section 262 of the GCL ("Dissenting
Shares") shall be converted into the right to receive, or be exchangeable for,
the Merger Consideration; however, (a) if any holder of Dissenting Shares shall
subsequently deliver a written withdrawal of his demand for appraisal of those
shares of Company Common Stock (with the written approval of the Company, if
such withdrawal is not tendered within 60 days after the Effective Time), or (b)
if any holder fails to establish his entitlement to appraisal rights as provided
in Section 262 of the GCL or (c) if neither any holder of Dissenting Shares nor
the Surviving Corporation has filed a petition demanding a determination of the
value of all Dissenting Shares within the time provided in Section 262 of the
GCL, such holder or holders shall forfeit the right to appraisal of those shares
of Company Common Stock and each such share shall thereupon be deemed to have
been converted into the right to receive, and to have become exchangeable for,
as of the Effective Time, the Merger Consideration.
2.4 Payment.
(a) Prior to the Effective Time, the Parent and the Sub shall
designate a bank or trust company reasonably acceptable to the Company to act as
exchange agent in the Merger (the "Exchange Agent"). At or immediately prior to
the Effective Time, the Parent and the Sub shall take all steps necessary to
provide the Exchange Agent with funds necessary to make the payments
contemplated by Section 2.2.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Exchange Agent to mail to each record holder, as of the Effective
Time, of a certificate or certificates that, immediately prior to the Effective
Time, represented outstanding shares of Company Common Stock (each, a
"Certificate"), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to a Certificate shall
pass, only upon proper delivery of a Certificate to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificate and payment
therefor. Upon surrender to the Exchange Agent of a Certificate, together with
the letter of transmittal duly executed, the holder of the Certificate shall be
entitled to receive in exchange therefor an amount equal to the product of the
number of shares of Company Common Stock represented by the Certificate
multiplied by the amount of the Merger Consideration and the Certificate shall
then be cancelled. No interest will be paid or accrued on the cash payable upon
the surrender of the Certificate. If payment is to be made to a person other
than a person in whose name the surrendered Certificate is registered, it shall
be a condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
payment shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the surrendered Certificate or
establish to the satisfaction of the Surviving Corporation that the tax has been
paid or is not applicable. The Exchange Agent may invest any cash deposited
with it as the Surviving Corporation directs; however, substantially all such
investments shall be in obligations of or guaranteed by the United States of
America, in commercial paper obligations receiving the highest rating from
either Moody's Investors Service, Inc. or Standard and Poor's Corporation, or in
certificates of deposit, bank repurchase agreements or bankers' acceptances of
commercial banks with capital exceeding $100,000,000 (collectively, "Permitted
Investments") or in money market funds invested solely in Permitted Investments,
and the maturities of
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Permitted Investments shall be such as to permit the Exchange Agent to make
prompt payment of the Merger Consideration to former stockholders of the Company
entitled thereto. Any net profit resulting from, or interest or income produced
by, Permitted Investments shall be payable to the Surviving Corporation. In the
event that at any time there shall be a net loss from such investments, the
Surviving Corporation shall immediately pay over to the Exchange Agent
additional funds in an amount sufficient to make all payments contemplated by
Section 2.2 of this Agreement. At any time after the 180th day following the
Effective Time, the Surviving Corporation shall be entitled to require the
Exchange Agent to deliver to it any funds (including any interest received with
respect thereto) that have been made available to the Exchange Agent for the
purpose of paying the Merger Consideration to holders of Company Common Stock
and that have not been disbursed to holders of Certificates, and thereafter
those holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors of
the Surviving Corporation with respect to the cash payable upon due surrender of
their Certificates. The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the exchange
of cash for shares of Company Common Stock. Until surrendered in accordance with
the provisions of this Section 2.4(b), each Certificate (other than Certificates
representing shares of Company Common Stock held by the Parent, the Sub, the
Company or any corporate affiliate of any of them and Dissenting Shares) shall
represent for all purposes the right to receive the Merger Consideration in cash
multiplied by the number of shares of Company Common Stock evidenced by that
Certificate, without any interest thereon.
(c) From and after the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be cancelled and exchanged for cash as provided in this
Section 2.4.
(d) In the event any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the Certificate to be lost, stolen or destroyed, the Surviving Corporation shall
issue in exchange for the lost, stolen or destroyed Certificate, the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Section 2. When authorizing the delivery of the Merger Consideration in
exchange therefor, the board of directors of the Surviving Corporation may, in
its discretion and as a condition to the delivery thereof, require the owner of
the lost, stolen or destroyed Certificate to give the Surviving Corporation a
bond in such sum as it may direct (not greater than the product of the number of
Shares represented by such certificate and the Merger Consideration) as
indemnity against any claim that may be made against the Surviving Corporation
with respect to the Certificate alleged to have been lost, stolen or destroyed.
2.5 No Further Rights or Transfers. At and after the Effective Time, the
holder of a Certificate or of Dissenting Shares shall cease to have any rights
as a stockholder of the Company, except for, in the case of the holder of a
Certificate, the right to surrender his Certificate in exchange for payment of
the Merger Consideration, or, in the case of the holder of Dissenting Shares, to
perfect his right to receive payment for his Dissenting Shares pursuant to
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Section 262 of the GCL, if the holder has validly exercised and not withdrawn
his right to receive payment for his shares, and no transfer of those shares
shall be made on the stock transfer books of the Surviving Corporation.
2.6 Certificate of Incorporation of the Surviving Corporation. The
certificate of incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the certificate of incorporation of the Surviving
Corporation from and after the Effective Time, with Article Fourth amended to
read in its entirety that the authorized capital stock of the Surviving
Corporation shall consist of 1,000 shares of common stock, $1.00 par value.
2.7 By-Laws of the Surviving Corporation. The by-laws of the Sub, as in
effect immediately prior to the Effective Time, shall be the by-laws of the
Surviving Corporation until thereafter amended as provided in those by-laws or
by law.
2.8 Directors and Officers of the Surviving Corporation. At the Effective
Time, the directors of the Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation, each to hold office, subject to the
provisions of the certificate of incorporation and by-laws of the Surviving
Corporation, until their respective successors shall be duly elected or
appointed. At the Effective Time, the officers of the Company immediately prior
to the Effective Time shall, subject to the provisions of the certificate of
incorporation and by-laws of the Surviving Corporation, be the officers of the
Surviving Corporation, until their respective successors shall be duly elected
or appointed.
2.9 Closing. The closing of the Merger shall take place (a) at the
offices of Beveridge & Diamond, P.C., 1350 I Street, N.W., Washington, D.C., at
10:00 am., local time, on the later of (i) the day of the Special Meeting
provided for in Section 2.11, if required by law, or (ii) the day on which the
last of the conditions set forth in Sections 5.1 and 5.2 is fulfilled or waived
(subject to applicable law), or (b) at such other time and place and on such
other date as the Parent, the Sub and the Company shall agree (the "Closing
Date").
2.10 Stock Options, Warrants and Convertible Securities. At or prior to
the consummation of the Offer, the Company shall have made arrangements the
effect of which shall be that no shares of Company Common Stock or capital stock
of the Surviving Corporation shall be issuable after the Effective Time pursuant
to options or warrants to purchase shares, or securities convertible into
shares, of Company Common Stock. The Company will cause any outstanding shares
of its 8.25% cumulative convertible redeemable preferred stock to be redeemed or
converted prior to consummation of the Offer. In full settlement of all options
and warrants, each holder thereof shall receive or be entitled to receive
immediately after the Effective Time a cash payment from the Company in an
amount equal to the excess, if any, of the price paid for each share of Company
Common Stock pursuant to the Merger over the per share exercise price of such
option or warrant multiplied by the number of shares of Company Common Stock
issuable pursuant to any such option or warrant, net, in the case of stock
options, of any income tax withholding and payroll taxes applicable to such
payment. Prior to consummation of the
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Offer, the Company shall have furnished to the Parent and the Sub evidence
satisfactory to the Parent confirming compliance by the Company with its
obligations under the first and second sentences of this Section 2.10.
2.11 Special Meeting. If required by applicable law in order to
consummate the Merger, the Company, acting through its board of directors,
shall, in accordance with applicable law:
(a) duly call, give notice of, convene and hold a special meeting (the
"Special Meeting") of its stockholders as soon as practicable following the
expiration of the Offer for the purpose of approving and adopting this
Agreement;
(b) subject to its fiduciary duties under applicable law, include in
the proxy statement for, or any information statement with respect to, the
Special Meeting the recommendation of its board of directors that stockholders
of the Company vote in favor of the approval and adoption of this Agreement; and
(c) use all reasonable efforts (i) to obtain and furnish the
information required to be included by it in the proxy statement or the
information statement, and, after consultation with the Sub and the Parent,
respond promptly to any comments made by the SEC with respect to the proxy
statement or the information statement and any preliminary version of the proxy
statement or the information statement and cause the proxy statement or the
information statement to be mailed to its stockholders at the earliest
practicable time following the expiration of the Offer, and (ii) subject to the
fiduciary duties of the board of directors under applicable law, to obtain the
necessary approval of the Merger by its stockholders. The Parent and the Sub
shall cause all the shares of Company Common Stock acquired pursuant to the
Offer or otherwise by the Parent, the Sub or any other subsidiary of the Parent
to be voted in favor of the Merger.
2.12 Merger Without Meeting of Stockholders. Notwithstanding anything to
the contrary in this Agreement, in the event that the Sub, or any other direct
or indirect subsidiary of the Parent, acquires at least 90% of the outstanding
shares of each class of capital stock of the Company, at the request of the
Parent or the Sub, the parties shall take all necessary and appropriate action
to cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the Company in
accordance with Section 253 of the GCL.
3. Representations and Warranties.
3.1 Representations and Warranties of the Company. The Company represents
and warrants to the Parent and the Sub as set forth in Annex B to this
Agreement.
3.2 Representations and Warranties of the Parent and the Sub. The Parent
and the Sub jointly and severally represent and warrant to the Company as
follows:
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(a) Due Organization; Good Standing and Corporate Power. Each of the
Parent and the Sub is a corporation duly incorporated, validly existing and in
good standing under the law of the state of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to conduct its business as now being conducted.
(b) Authorization and Validity of Agreement. Each of the Parent and
the Sub has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this Agreement.
The execution, delivery and performance by each of the Parent and the Sub of
this Agreement, and the consummation of the transactions contemplated by this
Agreement, have been duly authorized by the board of directors of the Parent and
the board of directors of the Sub, and this Agreement has been duly approved and
adopted by the sole stockholder of the Sub. No other corporate action on the
part of the Parent or the Sub is necessary to authorize the execution and
delivery of this Agreement by the Sub or the Parent, or the consummation by the
Parent and the Sub of the transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by the Parent and the Sub and is
a valid and binding obligation of the Parent and the Sub enforceable against the
Parent and the Sub in accordance with its terms.
(c) Brokers and Finders. Neither the Parent nor the Sub, nor any of
their officers, directors or employees, on behalf of the Company or any of its
subsidiaries, has incurred any financial advisory, brokerage or finders' fees,
commissions or other similar obligations or liabilities in connection with the
transactions contemplated by this Agreement.
(d) No Contravention. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
conflict with or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, any provision of the certificate of incorporation or by-laws of the
Parent or the Sub or any loan or credit agreement, note, bond, mortgage,
indenture, lease, or other agreement, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Parent or the Sub or their respective properties or assets,
other than any such conflicts, violations, defaults, terminations,
cancellations, accelerations or losses which individually or in the aggregate do
not have a material adverse effect on the Parent or the Sub taken as a whole
together with the other subsidiaries of the Parent. No consent, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required by or with respect to the
Parent or the Sub in connection with the execution and delivery of this
Agreement by the Parent and the Sub or the consummation by the Parent and the
Sub of the transactions contemplated hereby, except for (a) the filing of a
notification and report form by or on behalf of the Parent under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (b) the
filing with the SEC of a Tender Offer Statement on Schedule 14D-1 relating to
the Offer and (c) the filing of such other documents with, and the obtaining of
such orders from, the SEC and various state securities or "blue sky" authorities
as may be required in connection with the transactions contemplated by this
Agreement, (d) the filing of the Certificate of Merger with the Secretary of
State of the State
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of Delaware and (e) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the law of any
foreign country in which the Company or any of its Subsidiaries conducts any
business or owns any property or assets.
(e) Availability of Funds. The Parent currently has and will continue
to have through the Effective Time sufficient available cash, cash equivalents
or immediately available financing through existing unsecured financing
arrangements with sufficient currently available borrowing capacity in order to
pay all amounts which may be payable to stockholders of the Company pursuant to
the Offer and the Merger.
4. Covenants.
4.1 Disclosure Documents. The Company shall supply to the Parent and the
Sub the necessary information in writing, or cause the necessary information to
be supplied in writing (other than the information supplied in writing by the
Parent or the Sub), for inclusion in the Offer Documents and any other documents
to be filed with the SEC or any regulatory agency in connection with the
transactions contemplated by this Agreement.
4.2 Access to Information Concerning Properties and Records. During the
period prior to the Closing Date, the Company shall, upon reasonable notice,
afford the Parent and the Sub and their counsel, accountants and other
authorized representatives, full access during normal business hours to the
properties, books and records of the Company in order that they may have the
opportunity to make such reasonable investigation as they wish of the affairs of
the Company, and the Company shall cause its officers and employees to furnish
such additional financial and operating data and other information and respond
to such inquiries as the Parent and the Sub and other persons shall from time to
time reasonably request.
4.3 Confidentiality.
(a) Except as may be reasonably necessary to carry out this Agreement
and the transactions contemplated by this Agreement, the Parent and the Sub
shall, and shall require their respective officers, directors, employees and
authorized representatives to, hold in confidence prior to the Effective Time
and for two years from any termination of this Agreement all data and
information obtained by them from the Company (unless required to disclose such
information by judicial or administrative process, as otherwise required by law,
or unless such information (i) is or becomes generally available to the public
other than as a result of a disclosure by the Parent, any subsidiary of the
Parent or any of their representatives, (ii) is independently acquired or
developed by, the Parent, any subsidiary of the Parent or any of their
representatives without violating any confidentiality agreement between any such
person and the Company or any of its representatives, or (iii) is, or becomes,
available to the Parent, any subsidiary of the Parent or any of their
representatives from a source other than the Company or its representatives,
provided that such source is not known by the Parent, any subsidiary of the
Parent or any of their representatives to be bound by a confidentiality
agreement with the Company or any of its representatives or by any other legal,
contractual or fiduciary duty not to
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disclose such information) and shall not, and shall use all reasonable efforts
to cause such officers, directors, employees and authorized representatives not
to, disclose such information to others without the prior written consent of the
Company.
(b) If this Agreement is terminated, the Parent and the Sub shall, if
so requested by the Company, promptly return every document furnished to them or
their affiliates in connection with the transactions contemplated by this
Agreement and any copies of such documents that may have been made and shall use
all reasonable efforts to cause the representatives to whom such documents were
furnished promptly to return such documents and any copies of such documents,
other than documents filed with the SEC or otherwise publicly available.
4.4 Interim Operations of the Company. During the period from the date of
this Agreement and continuing until the Effective Time, the Company agrees
(except as expressly contemplated by this Agreement or to the extent that the
Parent and the Sub shall otherwise consent in writing) that:
(a) Ordinary Course. The Company shall carry on its business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent with such business, use all
reasonable efforts to preserve intact its present business organization, keep
available the services of its present officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that their goodwill and on-going businesses shall be unimpaired at
the Effective Time.
(b) Dividends; Changes in Stock. The Company shall not and shall not
propose to (i) declare or pay any dividend on, or make other distributions in
respect of, any of its capital stock (except regular dividends on the Preferred
Stock), (ii) split, combine or reclassify any of its capital stock or issue,
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of capital stock of the Company or (iii)
repurchase or otherwise acquire any shares of capital stock of the Company
(other than pursuant to the terms of its Preferred Stock).
(c) Issuance of Securities. The Company shall not sell, issue,
authorize or propose the sale or issuance of, or purchase or propose the
purchase of, any shares of its capital stock of any class or securities
convertible into, or rights, warrants or options to acquire, any such shares or
other convertible securities (other than the issuance of Common Stock upon the
exercise or conversion of currently outstanding stock options or warrants or
convertible securities).
(d) Governing Documents. The Company shall not amend its certificate
of incorporation or by-laws.
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(e) No Acquisition. The Company shall not acquire or agree to acquire
by merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the Company.
(f) No Dispositions. The Company shall not sell, lease or otherwise
dispose of, or agree to sell, lease or otherwise dispose of, any of its assets,
which are material, individually or in the aggregate, to the Company, except in
the ordinary course of business consistent with prior practice.
(g) Indebtedness. The Company shall not incur any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell any debt
securities of the Company or guarantee any debt securities of others other than
in the ordinary course of business consistent with prior practice.
(h) Benefit Plans, Etc. The Company shall not adopt or amend in any
material respect any collective bargaining agreement or Employee Benefit Plan
(as that term is defined in Annex B) other than in the ordinary course of
business consistent with prior practice.
(i) Executive Compensation. The Company shall not grant to any
executive officer any increase in compensation or in severance or termination
pay, or enter into any employment agreement with any executive officer, except
as may be required under employment or termination agreements in effect on the
date of this Agreement or in the ordinary course of business consistent with
prior practice.
4.5 Consents. The Company, the Parent and the Sub shall cooperate and use
all reasonable efforts to obtain, prior to the Closing Date, all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company as are
necessary for the consummation of the transactions contemplated by this
Agreement; however, no loan agreement or contract for borrowed money shall be
repaid and no contract shall be amended materially to increase the amount
payable thereunder or otherwise to be materially more burdensome to the Company
in order to obtain any such consent, approval or authorization without first
obtaining the written approval of the Parent.
4.6 No Solicitation. The Company shall not, and shall use all reasonable
efforts to cause its affiliates, officers, directors, employees, representatives
and agents not to, directly or indirectly, solicit, initiate, or knowingly
promote discussions or negotiations with, any corporation, partnership, person
or other entity or group (other than the Parent or any of its affiliates or
representatives) concerning any merger, tender offer, sale of any material
assets, sale of shares of capital stock or similar transaction involving the
Company or any division of the Company. Notwithstanding the foregoing, the
Company may, if required by the fiduciary duties of its directors after
consulting with outside counsel to the Company, (i) furnish information to any
corporation, partnership, person or other entity or group pursuant to
appropriate confidentiality agreements, and (ii) negotiate or participate in
discussions with such entity or
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group. The Company shall immediately advise the Parent of the terms of any
proposal, the fact of any negotiation, discussion or inquiry and the identity of
the party making such proposal or inquiry or involved in such discussion or
negotiation.
4.7 Filings. The Parent, the Sub and the Company shall as promptly as
practicable make any required filings, and the Parent, the Sub and the Company
shall promptly make any other required submissions, under any law, statute,
order, rule or regulation with respect to the Merger and shall cooperate with
each other with respect to the foregoing.
4.8 All Reasonable Efforts. Subject to the terms and conditions of this
Agreement and to the fiduciary duties and obligations of the board of directors
of the Company, each of the parties to this Agreement shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to consummate the Merger and the other transactions contemplated
by this Agreement.
4.9 Public Announcements. The Company, the Parent and the Sub shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Offer and the Merger, this Agreement or
the other transactions contemplated by this Agreement and shall not issue any
other press release or make any other public statement without prior
consultation with the other parties, except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange.
4.10 Notification of Certain Matters. The Company shall give prompt
notice to the Parent, and the Parent and the Sub shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would cause any of its representations or warranties
in this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time and (b) any material failure of the Company, on the one
hand, or the Parent or the Sub, on the other hand, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; however, the delivery of any notice
pursuant to this Section 4.10 shall not limit or otherwise affect the remedies
available to the party receiving such notice under this Agreement.
4.11 Directors' and Officers' Indemnification.
(a) The Parent acknowledges that all rights to indemnification or
limitations on liability now existing in favor of the present or former
employees, agents, directors or officers of the Company as provided in its
certificate of incorporation, by-laws, agreements or pursuant to applicable law
in effect on this date shall survive the Merger and shall continue in full force
and effect for a period of not less than the applicable statutes of limitations;
however, in the event any claim or claims are asserted or made within such
applicable period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims.
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(b) If any action, suit, proceeding or investigation relating to this
Agreement or to the transactions contemplated by this Agreement is commenced,
whether before or after the Effective Time, the parties shall cooperate with
each other and use all reasonable efforts to defend against and respond to any
such action, suit, proceeding or investigation.
(c) The Parent and the Surviving Corporation agree to maintain in
effect the Company's current directors' and officers' insurance policy for the
remainder of its term and to purchase a policy providing continued coverage
relating to actions, alleged actions, omissions and alleged omissions occurring
at or prior to the Effective Time for a period of at least three years from and
after the Effective Time; provided that the total amount the Parent and the
Surviving Corporation are required to expend for such coverage shall not exceed
250% of the premium for such current policy.
4.12 Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Offer or the Merger is consummated.
5. Conditions to Consummation of the Merger.
5.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) If required by the GCL, this Agreement shall have been approved
and adopted by the affirmative vote of the stockholders of the Company by the
requisite vote in accordance with the GCL.
(b) No statute, rule, regulation, executive order, decree, injunction
or restraining order shall have been enacted, entered, promulgated or enforced
by any court of competent jurisdiction or governmental authority that prohibits
or restricts the consummation of the Merger.
(c) Any waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated.
5.2 Additional Condition to Obligations of the Parent and the Sub to
Effect the Merger. The obligations of the Parent and the Sub to consummate the
transactions contemplated by this Agreement are also subject to the
satisfaction, at or prior to the Effective Time, of the condition that the Sub
shall have accepted for payment and paid for shares of Company Common Stock
tendered pursuant to the Offer; however, this condition shall be deemed
satisfied if the Sub fails to accept for payment and pay for shares of Company
Common Stock pursuant to the Offer in violation of the terms of the Offer.
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<PAGE>
6. Termination.
6.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval of the Merger:
(a) by mutual written consent of the boards of directors of the
Company, the Parent and the Sub;
(b) by any of the Company, the Parent or the Sub:
(i) if a purchase of shares of Company Common Stock pursuant to
the Offer shall not have occurred on or before June 30, 1995; however, the right
to terminate this Agreement under this Section 6.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of a purchase of shares of Company
Common Stock pursuant to the Offer to occur on or before that date; or
(ii) if any court of competent jurisdiction, or any governmental
body, regulatory or administrative agency or commission having appropriate
jurisdiction shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable;
(c) by the Company:
(i) if the Sub shall have (A) failed to commence the Offer within
five business days following the date of this Agreement, (B) terminated the
Offer or (C) failed to pay (by deposit with the depository for the Offer) for
shares of Company Common Stock pursuant to the Offer within five business days
following the expiration of the Offer; or
(ii) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the board of directors of the Company shall have (A)
withdrawn (or modified in a manner adverse to the Sub) its recommendation to the
Company's stockholders to accept the Offer in order to permit the Company, in
response to an offer as to which the Company has not contravened Section 4.6
hereof, to execute a definitive agreement providing for the acquisition of the
Company, or to approve a tender offer for all the outstanding Company Common
Stock, in either case on terms determined by the Company's board of directors,
after consultation with outside legal and financial advisors, to be more
favorable to the stockholders of the Company than the acquisition of the Company
contemplated by this Agreement, or (B) recommended another such offer; or
(d) by the Parent and the Sub:
(i) if due to an occurrence that would result in a failure to
satisfy any of the conditions set forth in Annex A, the Sub shall have (A)
failed to commence the Offer within five business days following the date of
this Agreement, or (B) terminated the Offer; or
16
<PAGE>
(ii) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the board of directors of the Company shall have
withdrawn (or modified in a manner adverse to the Sub) its approval or
recommendation of the Offer, this Agreement or the Merger, or shall have
recommended another offer; or
(iii) if the Company deliberately fails to perform in any material
respect any of its obligations under this Agreement, and, at the time of such
failure, the Parent's and the Sub's designees on the board of directors of the
Company do not constitute a majority of the members of the board of directors of
the Company.
6.2 Notice and Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
pursuant to which such termination is made, and this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
or its directors, officers or stockholders, except for the provisions of this
Section 6.2 and Sections 4.3, 4.11(b), 4.12 and 7. Nothing contained in this
Section 6.2 shall relieve any party from liability for any breach of this
Agreement. Sections 4.3, 4.11(b), 4.12 and 7 shall survive any termination of
this Agreement.
6.3 Extension; Waiver. Any time prior to the Effective Time, the parties
may (a) extend the time for the performance of any of the obligations or other
acts of any other party, (b) waive any inaccuracies in the representations and
warranties by any other party or (c) waive compliance with any of the agreements
of any other party or with any conditions to its own obligations. Any agreement
on the part of any other party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
6.4 Amendment and Modification. This Agreement may be amended, whether
before or after the vote of the stockholders of the Company contemplated by
Section 2.11, by written agreement of the Company, the Parent and the Sub;
however, after the approval of this Agreement by the stockholders of the
Company, no such amendment shall reduce or change the Merger Consideration to be
delivered to the stockholders pursuant to Sections 2.2 and 2.4 or shall
otherwise adversely affect the rights under this Agreement of the Company's
stockholders without the approval of such stockholders. This Agreement may not
be amended except by an instrument in writing signed on behalf of all the
parties.
7. Miscellaneous.
7.1 Fees. If at any time while this Agreement is in effect (a) any
person, corporation, partnership or other entity (other than the Parent, the Sub
or any of their affiliates) ("Third Person") acquires more than 33% of the
outstanding shares of Common Stock, (b) a Third Person acquires more than 50% of
the Company's total assets, (c) the Company consummates a plan of liquidation
relating to more than 50% of its total assets, (d) the Company repurchases more
than 50% of the outstanding shares of the Company's Common Stock, (e) the
Company consummates a merger of the Company with, the sale of all or
substantially all of the assets of the Company to, or any other business
combination involving the Company with a Third Person, or (f) Parent and Sub
terminate this Agreement because of the failure to satisfy the Minimum Condition
and
17
<PAGE>
within one year from the date of such termination a transaction contemplated by
Subsections (a), (b) or (e) of this Section 7.1 is consummated with a Third
Person, provided (i) that such transaction is accomplished so as to provide a
yield to holders of Company Common Stock of at least the equivalent of $11.50
per share, and (ii) there was a public announcement or written proposal to
effect such transaction by or with such Third Person while this Agreement is in
effect, or (g) the board of directors of the Company withdraws or amends in any
material respect adverse to consummation of the Offer its recommendation that
the Offer be accepted by the Company's stockholders and that stockholders tender
their shares of Company Common Stock in the Offer, unless such withdrawal or
amendment results from a material breach by Parent or Sub of any representations
or warranties herein or a failure by Parent or Sub to fulfill any material
covenant herein, then the Company shall, within five days after the first of
such events has occurred, pay the Parent a fee of $1,000,000.
Nothing in this Section 7.1 shall relieve the Company from its obligation
(subject to the fiduciary responsibility of its directors) to recommend that the
Company's stockholders accept the Offer and approve this Agreement pursuant to
Section 1.2 of this Agreement.
7.2 Survival of Representations and Warranties. The respective
representations and warranties of the Company, the Parent and the Sub shall not
be deemed waived or otherwise affected by any investigation made by any party.
Each representation and warranty in this Agreement and each covenant of the
Company in Annex B shall expire with, and be terminated and extinguished by, the
first purchase of shares of Company Common Stock under the Offer and thereafter
the Company, the Parent and the Sub shall have no liability with respect to any
such representation or warranty. This Section 7.2 shall have no effect upon any
other obligation of the parties, whether to be performed before or after the
first purchase of shares of Company Common Stock under the Offer.
7.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or when received
by telex, telegram or telecopier, as follows:
(a) if to the Company, to it at:
Resource Recycling Technologies, Inc.
200 Plaza Drive
Vestal, New York 13850
Attention: Lawrence J. Schorr, President
Facsimile: 607-798-0503
18
<PAGE>
with a copy to:
Beveridge & Diamond, P.C.
1350 I Street, N.W.
Washington, D.C. 20005
Attention: Dean H. Cannon, Esq.
Facsimile: 202-789-6190
(b) if to the Parent or the Sub, to it at:
Waste Management, Inc.
3003 Butterfield Road
Oak Brook, Illinois 60529
Attention: General Counsel
Facsimile: 708-684-7050
with a copy to:
Bell, Boyd & Lloyd
Three First National Plaza, Room 3300
Chicago, Illinois 60602
Attention: John H. Bitner, Esq.
Facsimile: 312-372-2098
7.4 Entire Agreement; Assignment. This Agreement, including all Annexes,
exhibits and schedules hereto, (a) constitutes the entire agreement among the
parties with respect to its subject matter and supersedes all prior agreements
and understandings, both written and oral, among the parties or any of them with
respect to such subject matter and (b) shall not be assigned by operation of law
or otherwise, provided that, subject to any approvals required by applicable
law, the Parent or the Sub may assign its respective rights and obligations to
any majority-owning or owned, direct or indirect, parent, subsidiary or
subsidiaries of the Parent, but no such assignment shall relieve the Parent or
the Sub of its obligations under this Agreement.
7.5 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors and assigns.
Nothing in this Agreement is intended to confer on any person other than the
parties to this Agreement or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
7.6 Headings. The descriptive headings of the sections of this Agreement
are inserted for convenience only, do not constitute a part of this Agreement
and shall not affect in any way the meaning or interpretation of this Agreement.
7.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
19
<PAGE>
7.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Delaware, without regard to the
conflicts of laws rules of Delaware.
7.9 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
7.10 Certain Definitions. As used herein:
(a) "affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act;
(b) "Company," when used in the context of a covenant, undertaking,
representation or warranty made by the Company, unless the context otherwise
requires, shall also be deemed to be made by the Company with respect to its
subsidiaries, provided that materiality shall in all cases be measured with
respect to the Company and its subsidiaries considered as a whole. For example,
a representation that the Company is duly incorporated shall be deemed to be a
representation that each of the Company's subsidiaries is also duly
incorporated, but the materiality of the failure of a subsidiary to be so
incorporated shall be measured with respect to the Company and its subsidiaries
taken as a whole (and not with respect to that subsidiary alone);
(c) "Material Adverse Effect" shall mean any adverse effect on the
business, financial condition or results of operations of the Company and its
subsidiaries which is material to the Company and its subsidiaries taken as a
whole, excluding any change which generally affects the recycling industry as a
whole in the United States (such as changes in commodity prices and changes in
legal requirements); and
(d) "subsidiary" shall mean, when used with reference to an entity,
any corporation, a majority of the outstanding voting securities of which is
owned directly or indirectly, or a majority of the board of directors of which
may be elected, by such entity.
20
<PAGE>
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
RESOURCE RECYCLING TECHNOLOGIES,
INC.
/s/ LAWRENCE J. SCHORR
By:___________________________
Title: President and Chief Executive
Officer
WASTE MANAGEMENT, INC.
/s/ JOSEPH M. HOLSTEN
By:___________________________
Title: Executive Vice President
WMI ACQUISITION SUB, INC.
/s/ JOSEPH M. HOLSTEN
By:___________________________
Title: Vice President
21
<PAGE>
ANNEX A
TO
AGREEMENT AND PLAN OF MERGER
Conditions of the Offer. Notwithstanding any other provisions of the
Offer, and in addition to (and not in limitation of) the Sub's right to amend
the Offer at any time in its sole discretion, but nevertheless subject to the
provisions of the Agreement (capitalized terms used herein and not otherwise
defined herein having the meanings ascribed to such terms in the Agreement) the
Sub shall not be required to accept for payment, or pay for, and may delay the
acceptance for payment, or the payment, of, any tendered shares of Company
Common Stock, if (i) the Minimum Condition shall not have been satisfied, or
(ii) at any time on or after the date of the Agreement and at or before the time
of payment for any such shares of Company Common Stock (whether or not any
shares of Company Common Stock have theretofore been accepted for payment or
paid for pursuant to the Offer), any of the following events shall occur:
(a) any Material Adverse Effect shall have occurred or be threatened;
or
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange or
the American Stock Exchange (excluding any coordinated trading halt triggered
solely as a result of a specified decrease in a market index), (2) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (3) any material limitation (whether
or not mandatory) imposed by any governmental authority on the extension of
credit by banks or other lending institutions in the United States that
materially and adversely affects the ability of the Parent and the Sub to obtain
extensions of credit, or (4) from the date of the Agreement through the date of
termination or expiration of the Offer, a decline of at least 33% in either the
Dow Jones Average of Industrial Stocks or the Standard & Poor's 500 Index; or
(c) any of the representations and warranties made by the Company in
the Agreement shall not be true and correct in any material respect, or the
Company shall have breached in any material respect any covenant contained in
the Agreement or the Agreement shall have been terminated in accordance with its
terms; or
(d) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, enacted, entered or
enforced, by any state, federal or foreign government or governmental authority
or by any court, domestic or foreign, that could reasonably be expected to (i)
make the acceptance for payment of, or the payment for, some or all of the
shares of Company Common Stock illegal or otherwise prohibited, (ii) impose
material limitations on the ability of the Parent or the Sub to acquire or hold
or to exercise effectively all rights of ownership of Company Common Stock,
including, without limitation, the right to vote any shares of Company Common
Stock purchased by either of them on all matters properly presented to the
stockholders of the Company, or (iii) prohibit or impose any material limitation
on the Parent's or the Sub's ownership or operation of all or a material portion
of the assets or business of the Company or any of its subsidiaries or
affiliates; or
A-1
<PAGE>
(e) the Company, the Parent or the Sub shall have failed to receive
any or all governmental consents and approvals to consummation of the Offer,
which, if not received, could reasonably be expected to have a Material Adverse
Effect; or
(f) the board of directors of the Company shall have publicly
(including by amendment of its Schedule 14D-9) withdrawn or amended in any
respect its recommendation of the Offer or shall have resolved to do so, unless
such withdrawal or amendment results from a material breach by Parent or Sub of
any representations or warranties herein or a failure by Parent or Sub to
fulfill any material covenant herein.
The foregoing conditions are for the sole benefit of the Parent and
the Sub and may be asserted by the Parent or the Sub regardless of the
circumstance giving rise to such condition and, subject to the terms of the
Agreement, may be waived by the Parent and the Sub, in whole or in part at any
time and from time to time, in their sole discretion (except that the Minimum
Condition may not be waived by the Purchaser without the consent of the
Company). The failure by the Parent and the Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right, which may be asserted at any time
and from time to time. Any determination by the Parent and the Sub shall be
final and binding upon all parties, including tendering stockholders.
A-2
<PAGE>
ANNEX B
TO
AGREEMENT AND PLAN OF MERGER
For purposes hereof, capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to such terms in the Agreement.
Any representations and warranties contained herein shall be qualified
by the contents of a writing delivered by the Company to the Parent prior to the
date of this Agreement which specifically references the Sections of this Annex
B intended to be so qualified (the "Writing").
SECTION 1. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate powers and,
except for such the absence of which would not have a Material Adverse Effect,
all governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has heretofore delivered
to the Parent true and complete copies of the Company's certificate of
incorporation and by-laws as currently in effect.
SECTION 2. Corporate Authorization. The execution, delivery and
performance by the Company of the Agreement and the consummation by the Company
of the transactions contemplated thereby are within the Company's corporate
powers and, except for any required approval by the Company's stockholders in
connection with the consummation of the Merger, have been duly authorized by all
necessary corporate action. The Agreement constitutes a valid and binding
Agreement of the Company, enforceable in accordance with its terms.
SECTION 3. No Contravention. The execution and delivery of the
Agreement does not, and the consummation of the transactions contemplated
thereby will not, conflict with or result in any violation of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any right or obligation or to loss
of a material benefit under, any provision of the certificate of incorporation
or by-laws of the Company or any loan or credit agreement, note, bond, mortgage,
indenture, lease, or other agreement, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or its properties or assets, except for agreements,
contracts or instruments which do not provide for a payment to or from the
Company in excess of $100,000, or result in the creation or imposition of any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind
("Lien") on any asset of the Company. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
B-1
<PAGE>
instrumentality, domestic or foreign, is required by or with respect to the
Company in connection with the execution and delivery of the Agreement by the
Company or the consummation by the Company of the transactions contemplated
thereby, except for (a) the filing of a notification and report form by or on
behalf of the Company under the HSR Act, (b) the filing with the SEC of a
Solicitation/Recommendation Statement on Schedule 14D-9 relating to the Offer
(the "Schedule 14D-9") and (c) the filing with the SEC and the distribution to
stockholders of a proxy statement relating to any meeting of the Company's
stockholders required in connection with the Merger (as that term is defined in
the Agreement) (the "Proxy Statement") or any information statement required in
connection with the Merger (the "Information Statement"), as the case may be,
(d) the filing of such other documents with, and the obtaining of such orders
from, the SEC and various state securities or "blue sky" authorities as may be
required in connection with the transactions contemplated by the Agreement, and
(e) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware.
SECTION 4. Capitalization. The authorized capital stock of the
Company consists of 5,000,000 shares of Common Stock of the Company (the
"Shares") and 500,000 preferred shares. As of March 9, 1995, there were
outstanding (i) 2,675,773 Shares, (ii) 7,813 shares of 8.25% cumulative
convertible redeemable preferred stock, no par value, convertible into an
aggregate of 6,509 Shares ("Preferred Stock"), (iii) employee and director stock
options to purchase an aggregate of 435,500 Shares (all of which options are or
by virtue of the Merger, will be exercisable), (iv) a warrant dated April 11,
1990 to purchase 113,363 Shares at an adjusted exercise price of $9.13 per
share, and (v) an option dated August 26, 1992 to purchase 25,000 Shares at an
exercise price of $3.00 per share. All outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in this Section 4 and except for changes
since March 9, 1995, resulting from the exercise of employee or other stock
options and warrants and the conversion of Preferred Stock outstanding on such
date, there are outstanding (A) no shares of capital stock or other voting
securities of the Company, (B) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
and (C) no options or other rights to acquire from the Company, and no
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company (the items in clauses (i), (ii), (iii), (iv) and (v)
being referred to collectively as the "Company Securities"). There are no
outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any Company Securities, other than Preferred Stock. Except for the
subsidiaries identified in the Writing, the Company does not own any stock of
any corporation or other entity.
SECTION 5. SEC Filings. (a) The Company has delivered to the Parent
(i) its annual reports on Form 10-K for its fiscal years ended December 31,
1991, 1992 and 1993, (ii) its quarterly reports on Form 10-Q for its fiscal
quarters ended March 31, June 30 and September 30, 1994, (iii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held since January 1, 1991 and (iv)
all of its other reports, statements, schedules and registration statements
filed by the Company with the SEC since January 1, 1991, but including only such
pre-effective amendments to such registration statements as contain material
information not fully reflected in any subsequent
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amendment to such registration statements (or to any prospectus included
therein) delivered to the Parent pursuant to this Section 5. The Company will
file with SEC by not later than March 31, 1995 (or such later date as is in
compliance with SEC Rule 12b-25) its annual report on Form 10-K for the year
ended December 31, 1994, and deliver a copy thereof to Parent at or before such
filing.
(b) As of its filing date, each such report or statement filed
pursuant to the Exchange Act did not (or will not) contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.
(c) Each such registration statement, as amended or supplemented if
applicable, filed pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), as of the date such statement or amendment became effective,
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
SECTION 6. Financial Statements. The audited consolidated financial
statements at and for the year ended December 31, 1994 delivered to the Parent
and the audited consolidated financial statements and unaudited consolidated
interim financial statements of the Company included in its annual reports on
Form 10-K and its quarterly reports on Form 10-Q referred to in Section 5 fairly
present, in conformity with generally accepted accounting principles applied on
a consistent basis, the consolidated financial position of the Company as of the
dates thereof and its consolidated results of operations and changes in
financial position or cash flows, as the case may be, for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements).
SECTION 7. Disclosure Documents. Each document required to be filed
by the Company with the SEC in connection with the transactions contemplated by
this Agreement (the "Company Disclosure Documents") and any amendment or
supplements thereto will, when filed, comply as to form in all material respects
with the applicable requirements of the Exchange Act.
SECTION 8. Absence of Certain Changes. Except for transactions
contemplated by the Agreement, since December 31, 1994 (the "Balance Sheet
Date"), the Company has conducted its business in the ordinary course consistent
with past practice and there has not been:
(a) any event, occurrence or development of a state of circumstances
or facts which has had or reasonably could be expected to have a Material
Adverse Effect;
(b) any declaration, setting aside or payment of any dividend (except
for any regular dividends on the Preferred Stock) or other distribution with
respect to any shares of capital stock of the Company or any repurchase,
redemption or other acquisition by the Company of any outstanding shares of
capital stock or other securities of, or other ownership interests in, the
Company;
(c) any amendment of any term of any outstanding security of the
Company;
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(d) any incurrence, assumption or guarantee by the Company of any
indebtedness for borrowed money other than in the ordinary course of business
consistent with past practice;
(e) any creation or assumption by the Company of any Lien on any
material asset other than in the ordinary course of business consistent with
past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any Person other than loans or advances made in the ordinary
course of business consistent with past practice;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company which,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by the Company
of any contract or other right, in either case, material to the Company, other
than transactions and commitments in the ordinary course of business consistent
with past practice and those contemplated by the Agreement;
(i) any change in any method of accounting or accounting practice by
the Company, except for any such change required by reason of a concurrent
change in generally accepted accounting principles;
(j) other than in the ordinary course of business consistent with past
practice, any (i) grant of any severance or termination pay to any director,
officer or employee of the Company, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any such
existing Agreement) with any director, officer or employee of the Company, (iii)
increase in benefits payable under any existing severance or termination pay
policies or employment agreements or (iv) increase in compensation, bonus or
other benefits payable to directors, officers or employees of the Company;
(k) any (i) labor dispute (other than routine individual grievances),
lockout, strike, slowdown, work stoppage or threat thereof by or with respect to
any employees of the Company, or (ii) activity or proceeding by a labor union or
representative thereof to organize any such employees.
SECTION 9. Properties. (a) The Company has good and marketable title
to, or in the case of leased property has valid leasehold interests in, all
properties and assets (whether real, personal, tangible or intangible) reflected
on the December 31, 1994 balance sheet or in the notes thereto (the "December
Balance Sheet") or acquired after the Balance Sheet Date, except for properties
and assets sold since the Balance Sheet Date in the ordinary course of business
consistent with past practice. None of such owned properties or assets is
subject to any Liens and, to the best knowledge of the Company, no leased
property is subject to any Liens incurred by the Company, except:
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(i) Liens disclosed in the December Balance Sheet;
(ii) Liens for taxes not yet due or being contested in good faith
(and for which adequate reserves have been established on the December Balance
Sheet);
(iii) Liens arising under financing agreements of the Company
identified in the December Balance Sheet;
(iv) Statutory or common law Liens relating to obligations of the
Company that are not delinquent or are being contested in good faith;
(v) Purchase money security interests securing obligations of the
Company that are not delinquent for the purchase of goods in the ordinary course
of business consistent with past practice; or
(vi) Liens which do not materially detract from the value of such
property or assets as now used, or materially interfere with any present or
intended use of such property or assets.
(b) No violation of any law, regulation or ordinance (including,
without limitation, laws, regulations or ordinances relating to zoning, city
planning or similar matters) relating to any of the properties or assets of the
Company exists or has existed at any time since January 1, 1989 other than for
violations which have not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. There are no
developments affecting any of such properties or assets pending or, to the
knowledge of the Company, threatened, which could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
SECTION 10. No Undisclosed Material Liabilities. There are no
material liabilities of the Company of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances known to the Company which
could reasonably be expected to result in such a liability, other than:
(i) liabilities disclosed or provided for in the December Balance
Sheet;
(ii) liabilities incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date, which in the
aggregate are not materially greater than those reflected in the December
Balance Sheet;
(iii) liabilities arising under or in connection with the Agreement.
SECTION 11. Litigation. There is no action, suit, investigation or
proceeding (or to the Company's knowledge, any basis therefor) pending against,
or to the knowledge of the Company threatened against or affecting, the Company,
its subsidiaries or any of their properties before any court or arbitrator or
any governmental body, agency or official which, if determined
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or resolved adversely to the Company or a subsidiary, could reasonably be
expected to have a Material Adverse Effect or which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the Offer or Merger or any
of the other transactions contemplated hereby.
SECTION 12. Taxes. The Company and its subsidiaries have filed all
federal income and other tax returns required to be filed by any of them and
have paid (or the Company has paid on behalf of its subsidiaries), or have set
up an adequate reserve (in accordance with generally accepted accounting
principles) for the payment of, all taxes shown to be due on such returns and
the December Balance Sheet reflects an adequate reserve for all taxes payable by
the Company accrued through December 31, 1994. The Company is not delinquent in
the payment of any material tax, assessment or governmental charge. No material
deficiencies for any taxes have been proposed, asserted or assessed in writing
against the Company or its subsidiaries. For the purposes of this Agreement,
the term "tax" shall include all federal, state, local and foreign income,
property, sales, excise and other taxes of any nature whatsoever. Neither the
Company nor any member of any affiliated or combined group of which the Company
is or has been a member has granted any extension or waiver of the limitation
period applicable to any tax returns. There are no Liens for taxes upon the
assets of the Company, except Liens for current taxes not yet due. The Company
will not be required under Section 481(c) of the Internal Revenue Code of 1986,
as amended (the "Code"), to include any adjustment in taxable income for any
period subsequent to the Merger. The Company has delivered to the Parent copies
of its federal, state and local income and franchise tax returns for the years
ended December 31, 1991, 1992 and 1993. The Company has not been a United
States real property holding corporation within the meaning of Code Sec.
897(c)(2) during the applicable period specified in Code Sec. 897(c)(1)(A)(ii).
Each of the Company and its subsidiaries has disclosed on its federal income tax
returns all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Code Sec. 6662. None
of the Company or its subsidiaries is a party to any tax allocation or sharing
agreement. None of the Company or its subsidiaries (A) has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was the Company or a subsidiary of the Company)
or (B) has any liability for the taxes of any person (other than any of the
Company and its subsidiaries) under Treas. Reg. (S) 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
SECTION 13. ERISA. (a) The Writing identifies each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which (i) is subject to any
provision of ERISA, (ii) is maintained, administered or contributed to by the
Company or any affiliate (as defined below) and (iii) covers any employee or
former employee of the Company or any affiliate or under which the Company or
any affiliate has any liability. Copies of such plans (and, if applicable,
related trust agreements) and all amendments thereto and any written
interpretations thereof have been furnished to the Parent together, if
applicable, with (x) the three most recent annual reports (Form 5500 including,
if applicable, Schedule B thereto) prepared in connection with any such plan and
(y) the most recent actuarial valuation report prepared in connection with any
such plan. Such plans are referred to collectively herein as the "Employee
Plans." For purposes of this Section, "affiliate" of any Person means any other
Person which, together with such Person, would be treated as a
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single employer under Section 414 of the Code. For purposes of this Annex B,
"Person" means any individual, corporation, partnership, association, trust, or
other entity or organization, including a governmental or political subdivision
or an agency or institution thereof.
(b) There are no Employee Plans subject to Title IV of ERISA, other
than multiemployer plans as defined in Section 4001(a)(3) of ERISA
("Multiemployer Plans"). The Company has provided the Parent with a list of all
Multiemployer Plans to which the Company or any active subsidiary presently has
any obligation to contribute. Neither the Company nor any affiliate has any
outstanding liability to any Multiemployer Plan for delinquent contributions, or
for withdrawal liability pursuant to Section 4201 of ERISA.
(c) There are no Employee Plans which are intended to be qualified
under Section 401(a) of the Code. Each Employee Plan has been maintained in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, which are
applicable to such Plan.
(d) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company or any affiliate that, individually
or collectively, could give rise to the payment of any amounts that would not be
deductible pursuant to the provisions of Section 280G of the Code.
(e) The Writing contains a list of each employment, severance or other
similar contract, arrangement or policy and each plan or arrangement (written or
oral) providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation rights
or other forms of incentive compensation or post-retirement insurance,
compensation or benefits which (i) is not an Employee Plan, (ii) is entered
into, maintained or contributed to, as the case may be, by the Company or any of
its affiliates and (iii) covers any employee or former employee of the Company
or any of its affiliates. Such contracts, plans and arrangements as are
described above, copies or descriptions of all of which have been furnished
previously to the Parent, are referred to collectively herein as the "Benefit
Arrangements." Each Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations that are applicable to such Benefit
Arrangement.
(f) Neither the Company nor any affiliate has or maintains or has
maintained any Employee Plan or Benefit Arrangement providing post-retirement
health or medical benefits in respect of any active or former employee of the
Company or any affiliate or former affiliate.
(g) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its affiliates
relating to, or change in employee participation or coverage under, any Employee
Plan or Benefit Arrangement which would increase materially the expense of
maintaining such Employee Plan or Benefit Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended on the Balance
Sheet Date.
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(h) The Company is not a party to or subject to any union contract or
any express employment contract or arrangement providing for annual future
compensation of, or benefits or other similar payments to, any officer,
consultant, director or employee in excess of $50,000.
SECTION 14. Material Contracts. (a) Except for agreements,
contracts, plans, leases, arrangements or commitments disclosed in the Company's
SEC filings referred to in Section 5 or as previously disclosed in the Writing,
the Company is not a party to or subject to:
(i) any lease relating to real property or any other lease
providing for annual rentals in excess of $100,000;
(ii) any agreement for the purchase of materials, supplies, goods,
services, equipment or other assets providing for annual payments by the Company
in excess of $100,000, other than in the ordinary course of business consistent
with past practice;
(iii) any sales, distribution or other similar agreement providing
for the sale by the Company of materials, supplies, goods, services, equipment
or other assets that provides for annual payments to the Company in excess of
$100,000, other than in the ordinary course of business consistent with past
practice;
(iv) any partnership, joint venture, or other similar contract,
arrangement or agreement;
(v) any contract relating to indebtedness for borrowed money or the
deferred purchase price of property (whether incurred, assumed, guaranteed or
secured by any asset) in excess of $100,000, except in the ordinary course of
business consistent with past practice;
(vi) any license agreements, franchise agreements or agreements in
respect of similar rights granted to or held by the Company;
(vii) any agency, dealer, sales representative or other similar
agreement;
(viii) any contract or other document that substantially limits the
freedom of the Company to compete in any line of business or with any Person or
in any area or which would so limit the freedom of the Company after the
Effective Time (as that term is defined in the Agreement); or
(ix) any other contract or commitment not made in the ordinary
course of business which is material to the Company.
(b) All agreements, contracts, plans, leases, arrangements and
commitments disclosed in the Company's SEC filings referred to in Section 5 or
disclosed or required to be disclosed pursuant to this Annex (the "Material
Contracts") are valid and binding agreements of the Company, are in full force
and effect, and neither the Company nor, to the knowledge of the
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Company, any other party thereto is in default in any respect under the terms of
any such agreement, contract, plan, lease, arrangement or commitment, except, in
all cases, such as could not reasonably be expected to have a Material Adverse
Effect.
SECTION 15. Insurance Coverage. The Company has made available to
the Parent true and complete copies of, all insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company. There is no claim by the
Company pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds. All premiums due and payable under all such policies and bonds have been
paid and the Company is otherwise in full compliance with the terms and
conditions of all such policies and bonds. Such policies of insurance and bonds
(or other policies and bonds providing substantially similar insurance coverage)
are in full force and effect. Except as previously disclosed by the Company to
the Parent in writing, the Company does not know of any threatened termination
of, or premium increase with respect to, any of such policies or bonds.
SECTION 16. Compliance with Laws. The Company is not in violation
of, and has not materially violated, any applicable provisions of any laws,
statutes, ordinances or regulations material to the conduct of the business of
the Company as currently conducted, except in all cases, such as could not
reasonably be expected to have a Material Adverse Effect.
SECTION 17. Investment Banking Fees. There is no investment banker,
broker, finder or other similar intermediary which has been retained by, or is
authorized by, the Company to act on behalf of the Company who might be entitled
to any fee or commission from the Company, the Parent and the Sub or any of
their respective affiliates upon consummation of the transactions contemplated
by this Agreement, except Allen & Company Incorporated and Guilford Securities,
Inc. Copies of the Company's agreements with these firms have been furnished to
Parent.
SECTION 18. Intellectual Property. (a) The Company has listed in
the Writing all inventions which are the subject of issued letters patent or an
application therefor, all trade and service marks which have been registered or
for which an application for registration is pending and all writings for which
a claim for copyright has been recorded or is pending, in each case which are
owned by and used or held for use by the Company (collectively, the
"Intellectual Property Rights"), specifying as to each, as applicable: (i) the
nature of such Intellectual Property Right; (ii) the owner of such Intellectual
Property Right; (iii) the jurisdictions by or in which such Intellectual
Property Right has been issued or registered or in which an application for such
issuance or registration has been filed, including the respective registration
or application numbers; and (iv) material licenses, sublicenses and other
agreements as to which the Company or any of its affiliates is a party and
pursuant to which any Person is authorized to use such Intellectual Property
Right including the identity of all parties thereto, a description of the nature
and subject matter thereof, the applicable royalty and the term thereof.
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(b) The Company holds all licenses for Intellectual Property Rights
owned by another Person materially necessary to the conduct of its business as
currently conducted, except such as could not reasonably be expected to have a
Material Adverse Effect.
(c) The Company (i) during the three years preceding the date of this
Agreement has not been sued or charged in writing with or been a defendant in
any claim, suit, action or proceeding relating to its business which has not
been finally terminated prior to the date hereof and which involves a claim of
infringement of any patents, trademarks, service marks or copyrights, (ii) has
no knowledge of any other claim or infringement by the Company or (iii) has no
knowledge of any continuing infringement by any other Person of any Intellectual
Property Rights. No Intellectual Property Right is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting the use thereof by
the Company or restricting the licensing thereof by the Company to any Person.
The Company has not entered into any agreement to indemnify any other Person
against any charge of infringement of any patent, trademark, service mark or
copyright.
SECTION 19. Environmental Compliance. Except in all cases as in the
aggregate have not had and could not reasonably be expected to have a Material
Adverse Effect, the Company and each of its subsidiaries (i) have obtained all
permits, licenses and other authorizations which are required under Federal,
state or local laws relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic materials or wastes
into ambient air, surface water, ground water, or land or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes; (ii) are in compliance with all terms and conditions of
such required permits, licenses and authorizations, and also are in compliance
with other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in such laws or
contained in any regulation, code, order, decree or judgment, issued, entered or
promulgated thereunder; (iii) as of the date of the Agreement, are not aware of
nor have received notice of any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued compliance or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding, based on or resulting from the Company's or any of its subsidiary's
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, or release into the
environment, of any pollutant, contaminant, or hazardous or toxic material or
waste; and (iv) have taken all actions necessary under applicable requirements
of Federal, state or local laws, rules or regulations to register any products
or materials required to be registered thereunder.
SECTION 20. Information Supplied. None of the information supplied
or to be supplied by the Company for inclusion in (i) the Schedule 14D-9 and
(ii), insofar as it relates to the Company, the Offer, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
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SECTION 21. Delaware Corporation Law, etc. The board of directors of
the Company has unanimously approved the Offer, the Merger, the agreements of
any stockholders to tender Shares (the "Stock Tender Agreements") and the
consummation of the transactions contemplated hereby and thereby and such
approval is sufficient to render inapplicable the prohibitions of Section 203 of
the General Corporation Law of the State of Delaware with respect to the Offer
and the Merger. To the best of the Company's knowledge, no other state takeover
statute applies to the Offer, the Merger or the Stock Tender Agreements (and the
Company covenants to use all reasonable efforts to take all action necessary to
ensure that the same are inapplicable to the Offer, the Merger and the Stock
Tender Agreements and the transactions contemplated thereby).
SECTION 22. Real Estate. Except as disclosed in the Writing,
(a) The real estate owned ("Real Estate") or leased (the "Leasehold
Premises") by the Company is as described in the Company's Annual Report on Form
10-K for the year ended December 31, 1993.
(b) The buildings located on the Real Estate and the Leasehold
Premises are each in good operating condition, normal wear, tear and maintenance
down-time excepted, and are in the aggregate sufficient to satisfy the Company's
current operating levels.
(c) Each parcel of the Real Estate and the Leasehold Premises: (i)
has direct access to public roads or access to public roads by means of a
perpetual access easement, such access being sufficient to satisfy the current
and reasonably anticipated normal transportation requirements of the Company's
business as presently conducted at such parcel; and (ii) is served by all
utilities, including but not limited to water, electricity, natural gas, sewer
and telephone, in such quantity and quality as are sufficient to satisfy the
current normal production levels and business activities of the Company's
business as conducted at such parcel.
(d) The Company has received no notice of: (i) any condemnation
proceeding with respect to any portion of the Real Estate or the Leasehold
Premises, and to the best of its knowledge no proceeding is contemplated by any
governmental authority; or (ii) any special assessment which may affect the Real
Estate or the Leasehold Premises, and to the best of its knowledge no such
special assessment is contemplated by any governmental authority.
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Exhibit 2
STOCK TENDER AGREEMENT
STOCK TENDER AGREEMENT, dated as of March 17, 1995 (the "Agreement"), among
Allen & Company Incorporated, a New York corporation (the "Stockholder"), Waste
Management, Inc., an Illinois corporation ("Parent") and WMI Acquisition Sub,
Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Buyer").
WHEREAS, Buyer, and Resource Recycling Technologies, Inc., a Delaware
corporation (the "Company") propose to enter into an Agreement and Plan of
Merger dated the date hereof (the "Acquisition Agreement") which provides, among
other things, that Buyer shall commence an all cash tender offer to purchase any
and all shares of common stock of the Company at a purchase price of $11.50 per
share (the "Offer", which term shall include any amendment thereof not in
violation of the Acquisition Agreement), to purchase any and all of the issued
and outstanding shares of Company's Common Stock, par value $1.00 per share
("Common Stock"), and shall merge Buyer with and into the Company (the
"Merger"), in each case upon the terms and subject to the conditions set forth
in the Acquisition Agreement (any term used herein without definition shall have
the definition ascribed thereto in the Acquisition Agreement);
WHEREAS, as of the date hereof, the Stockholder beneficially owns 664,806
shares of Common Stock (the "Stockholder's Shares");
WHEREAS, as a condition to the willingness of the Company and Buyer to
enter into the Acquisition Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Company and Buyer to tender the
Stockholder's Shares, and any other shares of Common Stock at any time during
the term of this Agreement held by Stockholder, in response to the Offer on the
terms and conditions contained in this Agreement; and
WHEREAS, the Board of Directors of the Company has approved the Acquisition
Agreement, the Offer, the Merger and this Agreement.
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement the parties hereby agree as
follows:
ARTICLE 1
TENDER OFFER
SECTION 1.1. Tender of Shares. (a) Within five (5) business days of the
commencement by the Buyer of the Offer the Stockholder shall tender to the
depositary (the "Depositary") designated in the Offer to Purchase (the "Offer to
Purchase") distributed by the Buyer in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder's Shares and any other shares of
Common Stock held by the Stockholder (such shares being referred to herein as
the "Shares"), complying with the terms of the Offer to Purchase, together
<PAGE>
with instructions directing the Depositary to make payment for such Shares
directly to the Stockholder (but if such Shares are not accepted for payment and
are to be returned pursuant to the Offer to Purchase, to return such Shares to
Stockholder), (ii) the certificates representing the Shares and/or (iii) all
other documents or instruments required to be delivered pursuant to the terms of
the Offer to Purchase (such documents in clauses (i) through (iii) collectively
being hereinafter referred to as the "Tender Documents").
(b) The Stockholder will not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1.(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares if (A)
the amount or form of consideration to be paid for such Shares is less than cash
in the amount of $11.50 per Share, net to the Stockholder in cash, (B) the
Acquisition Agreement is terminated, or (C) the Board of Directors of the
Company has withdrawn its recommendation of the Offer pursuant to Section
6.1(c)(ii) of the Acquisition Agreement, provided that if such withdrawal of a
recommendation occurs and the Board of Directors subsequently recommends an
offer by Buyer or an affiliate of Buyer for a consideration per Share greater
than $11.50 per Share, the Stockholder agrees to re-tender any Shares it has
withdrawn, whereupon all the terms of this Agreement shall be revived and
applicable to such Shares.
SECTION 1.2. Additional Shares. Any Shares of Common Stock acquired by
the Stockholder after the date hereof and prior to the termination of this
Agreement, whether upon the exercise of options or by means of purchase,
distribution, dividend or otherwise, shall be immediately tendered by the
Stockholder and shall constitute "Shares" subject to the terms of this
Agreement.
SECTION 1.3. No Purchase. Buyer may allow the Offer to expire without
accepting for payment or paying for any Shares, as set forth in the Offer to
Purchase, without purchasing all or any Shares pursuant thereto. If any Shares
are not accepted for payment in accordance with the terms of the Offer to
Purchase, they shall be returned to Stockholder, whereupon they shall continue
to be held by Stockholder subject to the terms and conditions of this Agreement.
SECTION 1.4. Restrictions. Except as contemplated by Section 1.1 hereof
and so long as the Board of Directors of the Company has not withdrawn its
recommendation of the Offer pursuant to Section 6.1(c)(ii) of the Acquisition
Agreement, Stockholder shall not, directly or indirectly: (i) offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of Stockholder's
Shares or any interest therein; (ii) grant any proxies or powers of attorney,
deposit any Shares into a voting trust or enter into a voting agreement with
respect to any Shares; or (iii) other than as may be permitted to the Company by
Section 4.6 of the Acquisition Agreement, solicit, initiate or knowingly promote
any party other than Buyer or an affiliate of Buyer to acquire or offer to
acquire the Company, any of its Common Stock or a material portion of the assets
or business of the Company or any of its subsidiaries.
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ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS OF STOCKHOLDER
Stockholder represents, warrants and covenants to the Buyer that:
SECTION 2.1. Ownership. The Stockholder is the sole, true, lawful and
beneficial owner of the Stockholder's Shares with no restriction on voting
rights or rights of disposition pertaining to the Shares, and does not currently
beneficially own any other Shares. Stockholder will convey good and valid title
to the Shares being purchased pursuant to the Offer or the Merger, as the case
may be, free and clear of any and all claims, liens, charges, encumbrances and
security interests. Except as contemplated hereby, none of the Shares is
subject to any voting trust or other agreement or arrangement with respect to
the voting of such Shares.
SECTION 2.2. Non-Contravention. The execution, delivery and performance
by Stockholder of this Agreement and the consummation of the transactions
contemplated hereby (i) is within Stockholder's powers, have been duly
authorized by all necessary action (including any consultation, approval or
other action by or with any other person), (ii) require no action in respect of,
or filing with, any governmental body, agency, official or authority (except as
may be required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
or the Securities Exchange Act of 1934), and (iii) do not and will not
contravene or constitute a default under, or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Stockholder or to a loss of any benefit of Stockholder under any provision of
applicable law or regulation or of any agreement, judgment, injunction, order,
decree, or other instrument binding on Stockholder or result in the imposition
of any lien on any asset of Stockholder.
SECTION 2.3. Binding Effect. This Agreement has been duly executed and
delivered by Stockholder and is the valid and binding agreement of Stockholder,
enforceable against Stockholder in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents, warrants and covenants to Stockholder that:
SECTION 3.1. Corporate Power and Authority. Buyer has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Buyer and no other
corporate action on the part of Buyer is necessary to authorize the execution,
delivery and performance by Buyer of this Agreement and the consummation by
Buyer of the transactions contemplated hereby.
3
<PAGE>
SECTION 3.2. Binding Effect. This Agreement has been duly executed and
delivered by Buyer and is a valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally.
SECTION 3.3. Acquisition for Buyer's Account. Any Shares to be acquired
upon consummation of the Offer will be acquired by Buyer for its own account and
not with a view to the public distribution thereof and will not be transferred
except in compliance with the Securities Act of 1933.
ARTICLE 4
MISCELLANEOUS
SECTION 4.1. Expenses. Each party will pay its own costs and expenses
incurred in connection with this Agreement.
SECTION 4.2. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 4.3. Notice. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 4.4. Amendments; Termination. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties thereto. This Agreement will
terminate upon the termination of the Acquisition Agreement in accordance with
its terms.
SECTION 4.5. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided, however, that Buyer may assign its
rights and obligations to another wholly owned subsidiary of Buyer who is the
assignee of Buyer's rights under the Acquisition Agreement, and provided,
further, that except as set forth in the prior clause, a party may not assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
SECTION 4.6. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
4
<PAGE>
SECTION 4.7. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WASTE MANAGEMENT, INC.
/s/ JOSEPH M. HOLSTEN
By:____________________________________
Name: Joseph M. Holsten
Title: Executive Vice President
3003 Butterfield Road
Oak Brook, Illinois 60521
Attention: General Counsel
WMI ACQUISITION SUB, INC.
/s/ JOSEPH M. HOLSTEN
By:____________________________________
Name: Joseph M. Holsten
Title: Vice President
c/o Waste Management, Inc.
3003 Butterfield Road
Oak Brook, Illinois 60521
Attention: General Counsel
ALLEN & COMPANY INCORPORATED
/s/ STEVEN J. GREENFIELD
By:____________________________________
Name: Steven J. Greenfield
Title: Vice President
711 Fifth Avenue
New York, New York 10022
5
<PAGE>
Exhibit 3
STOCK TENDER AGREEMENT
STOCK TENDER AGREEMENT, dated as of March 17, 1995 (the "Agreement"), among
Paul A. Gould (the "Stockholder"), Waste Management, Inc., an Illinois
corporation ("Parent") and WMI Acquisition Sub, Inc., a Delaware corporation and
a wholly owned subsidiary of Parent ("Buyer").
WHEREAS, Buyer, and Resource Recycling Technologies, Inc., a Delaware
corporation (the "Company") propose to enter into an Agreement and Plan of
Merger dated the date hereof (the "Acquisition Agreement") which provides, among
other things, that Buyer shall commence an all cash tender offer to purchase any
and all shares of common stock of the Company at a purchase price of $11.50 per
share (the "Offer", which term shall include any amendment thereof not in
violation of the Acquisition Agreement), to purchase any and all of the issued
and outstanding shares of Company's Common Stock, par value $1.00 per share
("Common Stock"), and shall merge Buyer with and into the Company (the
"Merger"), in each case upon the terms and subject to the conditions set forth
in the Acquisition Agreement (any term used herein without definition shall have
the definition ascribed thereto in the Acquisition Agreement);
WHEREAS, as of the date hereof, the Stockholder beneficially owns 150,000
shares of Common Stock (the "Stockholder's Shares");
WHEREAS, as a condition to the willingness of the Company and Buyer to
enter into the Acquisition Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Company and Buyer to tender the
Stockholder's Shares, and any other shares of Common Stock at any time during
the term of this Agreement held by Stockholder, in response to the Offer on the
terms and conditions contained in this Agreement; and
WHEREAS, the Board of Directors of the Company has approved the Acquisition
Agreement, the Offer, the Merger and this Agreement.
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement the parties hereby agree as
follows:
ARTICLE 1
TENDER OFFER
SECTION 1.1. Tender of Shares. (a) Within five (5) business days of the
commencement by the Buyer of the Offer the Stockholder shall tender to the
depositary (the "Depositary") designated in the Offer to Purchase (the "Offer to
Purchase") distributed by the Buyer in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder's Shares and any other shares of
Common Stock held by the Stockholder (such shares being referred to herein as
the "Shares"), complying with the terms of the Offer to Purchase, together
<PAGE>
with instructions directing the Depositary to make payment for such Shares
directly to the Stockholder (but if such Shares are not accepted for payment and
are to be returned pursuant to the Offer to Purchase, to return such Shares to
Stockholder), (ii) the certificates representing the Shares and/or (iii) all
other documents or instruments required to be delivered pursuant to the terms of
the Offer to Purchase (such documents in clauses (i) through (iii) collectively
being hereinafter referred to as the "Tender Documents").
(b) The Stockholder will not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1.(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares if (A)
the amount or form of consideration to be paid for such Shares is less than cash
in the amount of $11.50 per Share, net to the Stockholder in cash, (B) the
Acquisition Agreement is terminated, or (C) the Board of Directors of the
Company has withdrawn its recommendation of the Offer pursuant to Section
6.1(c)(ii) of the Acquisition Agreement, provided that if such withdrawal of a
recommendation occurs and the Board of Directors subsequently recommends an
offer by Buyer or an affiliate of Buyer for a consideration per Share greater
than $11.50 per Share, the Stockholder agrees to re-tender any Shares it has
withdrawn, whereupon all the terms of this Agreement shall be revived and
applicable to such Shares.
SECTION 1.2. Additional Shares. Any Shares of Common Stock acquired by
the Stockholder after the date hereof and prior to the termination of this
Agreement, whether upon the exercise of options or by means of purchase,
distribution, dividend or otherwise, shall be immediately tendered by the
Stockholder and shall constitute "Shares" subject to the terms of this
Agreement.
SECTION 1.3. No Purchase. Buyer may allow the Offer to expire without
accepting for payment or paying for any Shares, as set forth in the Offer to
Purchase, without purchasing all or any Shares pursuant thereto. If any Shares
are not accepted for payment in accordance with the terms of the Offer to
Purchase, they shall be returned to Stockholder, whereupon they shall continue
to be held by Stockholder subject to the terms and conditions of this Agreement.
SECTION 1.4. Restrictions. Except as contemplated by Section 1.1 hereof
and so long as the Board of Directors of the Company has not withdrawn its
recommendation of the Offer pursuant to Section 6.1(c)(ii) of the Acquisition
Agreement, Stockholder shall not, directly or indirectly: (i) offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of Stockholder's
Shares or any interest therein; (ii) grant any proxies or powers of attorney,
deposit any Shares into a voting trust or enter into a voting agreement with
respect to any Shares; or (iii) other than as may be permitted to the Company by
Section 4.6 of the Acquisition Agreement, solicit, initiate or knowingly promote
any party other than Buyer or an affiliate of Buyer to acquire or offer to
acquire the Company, any of its Common Stock or a material portion of the assets
or business of the Company or any of its subsidiaries.
2
<PAGE>
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS OF STOCKHOLDER
Stockholder represents, warrants and covenants to the Buyer that:
SECTION 2.1. Ownership. The Stockholder is the sole, true, lawful and
beneficial owner of the Stockholder's Shares with no restriction on voting
rights or rights of disposition pertaining to the Shares, and does not currently
beneficially own any other Shares. Stockholder will convey good and valid title
to the Shares being purchased pursuant to the Offer or the Merger, as the case
may be, free and clear of any and all claims, liens, charges, encumbrances and
security interests. Except as contemplated hereby, none of the Shares is
subject to any voting trust or other agreement or arrangement with respect to
the voting of such Shares.
SECTION 2.2. Non-Contravention. The execution, delivery and performance
by Stockholder of this Agreement and the consummation of the transactions
contemplated hereby (i) is within Stockholder's powers, have been duly
authorized by all necessary action (including any consultation, approval or
other action by or with any other person), (ii) require no action in respect of,
or filing with, any governmental body, agency, official or authority (except as
may be required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
or the Securities Exchange Act of 1934), and (iii) do not and will not
contravene or constitute a default under, or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Stockholder or to a loss of any benefit of Stockholder under any provision of
applicable law or regulation or of any agreement, judgment, injunction, order,
decree, or other instrument binding on Stockholder or result in the imposition
of any lien on any asset of Stockholder.
SECTION 2.3. Binding Effect. This Agreement has been duly executed and
delivered by Stockholder and is the valid and binding agreement of Stockholder,
enforceable against Stockholder in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents, warrants and covenants to Stockholder that:
SECTION 3.1. Corporate Power and Authority. Buyer has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Buyer and no other
corporate action on the part of Buyer is necessary to authorize the execution,
delivery and performance by Buyer of this Agreement and the consummation by
Buyer of the transactions contemplated hereby.
3
<PAGE>
SECTION 3.2. Binding Effect. This Agreement has been duly executed and
delivered by Buyer and is a valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally.
SECTION 3.3. Acquisition for Buyer's Account. Any Shares to be acquired
upon consummation of the Offer will be acquired by Buyer for its own account and
not with a view to the public distribution thereof and will not be transferred
except in compliance with the Securities Act of 1933.
ARTICLE 4
MISCELLANEOUS
SECTION 4.1. Expenses. Each party will pay its own costs and expenses
incurred in connection with this Agreement.
SECTION 4.2. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 4.3. Notice. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
SECTION 4.4. Amendments; Termination. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties thereto. This Agreement will
terminate upon the termination of the Acquisition Agreement in accordance with
its terms.
SECTION 4.5. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided, however, that Buyer may assign its
rights and obligations to another wholly owned subsidiary of Buyer who is the
assignee of Buyer's rights under the Acquisition Agreement, and provided,
further, that except as set forth in the prior clause, a party may not assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
SECTION 4.6. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
4
<PAGE>
SECTION 4.7. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WASTE MANAGEMENT, INC.
/s/ JOSEPH M. HOLSTEN
By:____________________________________
Name: Joseph M. Holsten
Title: Executive Vice President
3003 Butterfield Road
Oak Brook, Illinois 60521
Attention: General Counsel
WMI ACQUISITION SUB, INC.
/s/ JOSEPH M. HOLSTEN
By:____________________________________
Name: Joseph M. Holsten
Title: Vice President
3003 Butterfield Road
Oak Brook, Illinois 60521
Attention: General Counsel
STOCKHOLDER
/s/ PAUL A. GOULD
By:____________________________________
Name: Paul A. Gould
Allen & Company Incorporated
711 Fifth Avenue
New York, New York 10022
5
<PAGE>
Exhibit 4
STOCK TENDER AGREEMENT
STOCK TENDER AGREEMENT, dated as of March 17, 1995 (the "Agreement"), among
Andrew T. Dwyer (the "Stockholder"), Waste Management, Inc., an Illinois
corporation ("Parent") and WMI Acquisition Sub, Inc., a Delaware corporation and
a wholly owned subsidiary of Parent ("Buyer").
WHEREAS, Buyer, and Resource Recycling Technologies, Inc., a Delaware
corporation (the "Company") propose to enter into an Agreement and Plan of
Merger dated the date hereof (the "Acquisition Agreement") which provides, among
other things, that Buyer shall commence an all cash tender offer to purchase any
and all shares of common stock of the Company at a purchase price of $11.50 per
share (the "Offer", which term shall include any amendment thereof not in
violation of the Acquisition Agreement), to purchase any and all of the issued
and outstanding shares of Company's Common Stock, par value $1.00 per share
("Common Stock"), and shall merge Buyer with and into the Company (the
"Merger"), in each case upon the terms and subject to the conditions set forth
in the Acquisition Agreement (any term used herein without definition shall have
the definition ascribed thereto in the Acquisition Agreement);
WHEREAS, as of the date hereof, the Stockholder beneficially owns
267,700/1/ shares of Common Stock (the "Stockholder's Shares");
WHEREAS, as a condition to the willingness of the Company and Buyer to
enter into the Acquisition Agreement, and as an inducement to them to do so, the
Stockholder has agreed for the benefit of the Company and Buyer to tender the
Stockholder's Shares, and any other shares of Common Stock at any time during
the term of this Agreement held by Stockholder, in response to the Offer on the
terms and conditions contained in this Agreement; and
WHEREAS, the Board of Directors of the Company has approved the Acquisition
Agreement, the Offer, the Merger and this Agreement.
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement the parties hereby agree as
follows:
- -------------------
/1/ Consists of 116,800 Shares owned directly, 13,600 Shares owned by
Stockholder's wife, 18,000 Shares owned by each of his three minor children,
3,300 Shares owned by a family trust of which he is a trustee and beneficiary
and 80,000 Shares subject to stock options (40,000 of which are currently
exercisable and 40,000 of which will be exercisable on consummation of the
Offer). Stockholder need only initially tender the non-option Shares.
<PAGE>
ARTICLE 1
TENDER OFFER
SECTION 1.1. Tender of Shares. (a) Within five (5) business days of the
commencement by the Buyer of the Offer the Stockholder shall tender to the
depositary (the "Depositary") designated in the Offer to Purchase (the "Offer to
Purchase") distributed by the Buyer in connection with the Offer (i) a letter of
transmittal with respect to the Stockholder's Shares and any other shares of
Common Stock held by the Stockholder (such shares being referred to herein as
the "Shares"), complying with the terms of the Offer to Purchase, together with
instructions directing the Depositary to make payment for such Shares directly
to the Stockholder (but if such Shares are not accepted for payment and are to
be returned pursuant to the Offer to Purchase, to return such Shares to
Stockholder), (ii) the certificates representing the Shares and/or (iii) all
other documents or instruments required to be delivered pursuant to the terms of
the Offer to Purchase (such documents in clauses (i) through (iii) collectively
being hereinafter referred to as the "Tender Documents").
(b) The Stockholder will not, subject to applicable law, withdraw the
tender effected in accordance with Section 1.1.(a); provided, however, that the
Stockholder may decline to tender, or may withdraw, any and all Shares if (A)
the amount or form of consideration to be paid for such Shares is less than cash
in the amount of $11.50 per Share, net to the Stockholder in cash, (B) the
Acquisition Agreement is terminated, or (C) the Board of Directors of the
Company has withdrawn its recommendation of the Offer pursuant to Section
6.1(c)(ii) of the Acquisition Agreement, provided that if such withdrawal of a
recommendation occurs and the Board of Directors subsequently recommends an
offer by Buyer or an affiliate of Buyer for a consideration per Share greater
than $11.50 per Share, the Stockholder agrees to re-tender any Shares it has
withdrawn, whereupon all the terms of this Agreement shall be revived and
applicable to such Shares.
SECTION 1.2. Additional Shares. Any Shares of Common Stock acquired by
the Stockholder after the date hereof and prior to the termination of this
Agreement, whether upon the exercise of options or by means of purchase,
distribution, dividend or otherwise, shall be immediately tendered by the
Stockholder and shall constitute "Shares" subject to the terms of this
Agreement.
SECTION 1.3. No Purchase. Buyer may allow the Offer to expire without
accepting for payment or paying for any Shares, as set forth in the Offer to
Purchase, without purchasing all or any Shares pursuant thereto. If any Shares
are not accepted for payment in accordance with the terms of the Offer to
Purchase, they shall be returned to Stockholder, whereupon they shall continue
to be held by Stockholder subject to the terms and conditions of this Agreement.
SECTION 1.4. Restrictions. Except as contemplated by Section 1.1 hereof
and so long as the Board of Directors of the Company has not withdrawn its
recommendation of the Offer pursuant to Section 6.1(c)(ii) of the Acquisition
Agreement, Stockholder shall not, directly or indirectly: (i) offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to or
2
<PAGE>
consent to the offer for sale, sale, transfer, tender, pledge, encumbrance,
assignment or other disposition of, any or all of Stockholder's Shares or any
interest therein; (ii) grant any proxies or powers of attorney, deposit any
Shares into a voting trust or enter into a voting agreement with respect to any
Shares; or (iii) other than as may be permitted to the Company by Section 4.6 of
the Acquisition Agreement, solicit, initiate or knowingly promote any party
other than Buyer or an affiliate of Buyer to acquire or offer to acquire the
Company, any of its Common Stock or a material portion of the assets or business
of the Company or any of its subsidiaries.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS OF STOCKHOLDER
Stockholder represents, warrants and covenants to the Buyer that:
SECTION 2.1. Ownership. The Stockholder is the sole, true, lawful and
beneficial owner of the Stockholder's Shares with no restriction on voting
rights or rights of disposition pertaining to the Shares, and does not currently
beneficially own any other Shares. Stockholder will convey good and valid title
to the Shares being purchased pursuant to the Offer or the Merger, as the case
may be, free and clear of any and all claims, liens, charges, encumbrances and
security interests. Except as contemplated hereby, none of the Shares is
subject to any voting trust or other agreement or arrangement with respect to
the voting of such Shares.
SECTION 2.2. Non-Contravention. The execution, delivery and performance
by Stockholder of this Agreement and the consummation of the transactions
contemplated hereby (i) is within Stockholder's powers, have been duly
authorized by all necessary action (including any consultation, approval or
other action by or with any other person), (ii) require no action in respect of,
or filing with, any governmental body, agency, official or authority (except as
may be required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
or the Securities Exchange Act of 1934), and (iii) do not and will not
contravene or constitute a default under, or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Stockholder or to a loss of any benefit of Stockholder under any provision of
applicable law or regulation or of any agreement, judgment, injunction, order,
decree, or other instrument binding on Stockholder or result in the imposition
of any lien on any asset of Stockholder.
SECTION 2.3. Binding Effect. This Agreement has been duly executed and
delivered by Stockholder and is the valid and binding agreement of Stockholder,
enforceable against Stockholder in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally.
3
<PAGE>
ARTICLE 3
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER
Buyer represents, warrants and covenants to Stockholder that:
SECTION 3.1. Corporate Power and Authority. Buyer has all requisite
corporate power and authority to enter into this Agreement and to perform its
obligations hereunder. The execution, delivery and performance by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated hereby
have been duly authorized by the Board of Directors of Buyer and no other
corporate action on the part of Buyer is necessary to authorize the execution,
delivery and performance by Buyer of this Agreement and the consummation by
Buyer of the transactions contemplated hereby.
SECTION 3.2. Binding Effect. This Agreement has been duly executed and
delivered by Buyer and is a valid and binding agreement of Buyer, enforceable
against Buyer in accordance with its terms, except as enforcement may be limited
by bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally.
SECTION 3.3. Acquisition for Buyer's Account. Any Shares to be acquired
upon consummation of the Offer will be acquired by Buyer for its own account and
not with a view to the public distribution thereof and will not be transferred
except in compliance with the Securities Act of 1933.
ARTICLE 4
MISCELLANEOUS
SECTION 4.1. Expenses. Each party will pay its own costs and expenses
incurred in connection with this Agreement.
SECTION 4.2. Additional Agreements. Subject to the terms and conditions
of this Agreement, each of the parties hereto agrees to use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations and which may be required under any agreements, contracts,
commitments, instruments, understandings, arrangements or restrictions of any
kind to which such party is a party or by which such party is governed or bound,
to consummate and make effective the transactions contemplated by this
Agreement.
SECTION 4.3. Notice. All notices, requests, claims, demands and other
communications hereunder shall be deemed to have been duly given when delivered
in person, by telecopy, or by registered or certified mail (postage prepaid,
return receipt requested) to such party at its address set forth on the
signature page hereto.
4
<PAGE>
SECTION 4.4. Amendments; Termination. This Agreement may not be modified,
amended, altered or supplemented, except upon the execution and delivery of a
written agreement executed by the parties thereto. This Agreement will
terminate upon the termination of the Acquisition Agreement in accordance with
its terms.
SECTION 4.5. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided, however, that Buyer may assign its
rights and obligations to another wholly owned subsidiary of Buyer who is the
assignee of Buyer's rights under the Acquisition Agreement, and provided,
further, that except as set forth in the prior clause, a party may not assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto.
SECTION 4.6. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of Delaware without giving effect to the
principles of conflicts of laws thereof.
SECTION 4.7. Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WASTE MANAGEMENT, INC.
/s/ JOSEPH M. HOLSTEN
By:____________________________________
Name: Joseph M. Holsten
Title: Executive Vice President
3003 Butterfield Road
Oak Brook, Illinois 60521
Attention: General Counsel
WMI ACQUISITION SUB, INC.
/s/ JOSEPH M. HOLSTEN
By:____________________________________
Name: Joseph M. Holsten
Title: Vice President
3003 Butterfield Road
Oak Brook, Illinois 60521
Attention: General Counsel
STOCKHOLDER
/s/ ANDREW T. DWYER
By:____________________________________
Name: Andrew T. Dwyer
c/o Airlie Group
115 E. Putnam Street
Greenwich, CT 06830
6
<PAGE>
Exhibit 5
EMPLOYMENT AGREEMENT
--------------------
THIS EMPLOYMENT AGREEMENT is entered into as of March 17, 1995 between
Resource Recycling Technologies, Inc., a Delaware corporation (the "Employer"),
and Lawrence J. Schorr, a resident of the State of New York (the "Employee").
1. On the terms and conditions hereinafter set forth, Employer employs
Employee and Employee accepts such employment.
2. The term of this Agreement shall be for a period of two (2) years
beginning at the Effective Time as such term is defined in the Agreement and
Plan of Merger dated March 17, 1995 (the "Merger Agreement") among Waste
Management, Inc., WMI Acqusition Sub, Inc., and Employer ("Initial Period of
Employment") and shall continue on an at-will basis thereafter (collectively the
"Term of Employment"), subject to the provisions of Paragraph 6. If the Merger
Agreement is terminated for any reason, this Agreement shall not become
effective and shall be deemed to be null and void. Upon the effectiveness of
this Agreement at the Effective Time, the Employment Agreement dated as of
October 3, 1988, as amended by amendment No. 1 thereto dated as of May 6, 1991,
between the Employer (formerly known as Resource Recovery Technologies, Inc.)
and the Employee shall be terminated.
3. The general scope of Employee's employment shall be to serve in a
management capacity for Employer and to perform such other duties in accordance
therewith as Employer may request.
4. During the Term of Employment, Employee shall devote his full time and
use his best efforts to advance the business and welfare of Employer, its
subsidiaries and affiliates, and to discharge any other management duties
assigned to him hereafter. He shall not intentionally take any action against
the best interests of Employer or of any subsidiary or affiliate of Employer.
He shall perform faithfully and competently such management duties as may be
assigned to him hereunder.
5. Employer agrees to pay or cause to be paid to Employee for his services
hereunder during the Term of Employment a salary at the rate of two hundred
eighty thousand dollars ($280,000) per year (the "Base Salary") so long as
Employee continues in the employment of Employer hereunder, payable in
installments at least as frequently as monthly and subject to the usual payroll
deductions. Employee shall be entitled to the same employee benefits as other
similarly situated management employees of Waste Management, Inc. and its
subsidiaries in the Philadelphia metropolitan area, except that Employee shall
be entitled to the grant of options to purchase common stock of WMX
Technologies, Inc. with a value equal, for the 1995 and 1996 calendar years
(prorated for 1995), to 100 percent of the Base Salary, in accordance with the
option program in which employees of Waste Management, Inc. participate.
<PAGE>
6. (a) During the Initial Period of Employment, this Agreement may be
terminated by Employer only as follows:
(1) Upon the death of Employee;
(2) If Employee for any reason becomes unable to carry out all or
substantially all of his duties and remains so incapacitated for
a period of six months or more; or
(3) For cause, upon (a) (i) any fraud or felonious conduct by the
Employee, or (ii) embezzlement or misappropriation of funds or
property of the Employer by the Employee, in the case of each of
(a)(i) and (ii), upon written notice to the Employee specifying
the cause for termination; or (b) (i) any material breach of this
Agreement by the Employee, (ii) gross negligence by the Employee,
or (iii) the Employee's material failure to discharge the duties
required hereunder or consistent refusal to perform, or willful
misconduct in the performance of his duties and obligations, in
the case of each of (b)(i), (ii), and (iii), after written notice
to the Employee specifying the cause for termination and the
passage of not less than thirty (30) days after such notice,
during which time the Employee shall have the right to respond to
the Employer's notice and cure the breach or other event giving
rise to the termination.
(b) After the Initial Period of Employment, this Agreement may be
terminated by either party with or without cause upon 90 days notice.
7. Employer may not relocate the Employee to a geographic location other
than Binghamton (Vestal), New York during the Term of Employment without the
Employee's prior written consent unless any such relocation has a legitimate
business purpose and Employer pays in the first instance or reimburses Employee
for all of Employee's reasonable relocation expenses.
8. Employer may direct that Employee's duties hereunder be performed for
and the compensation of Employee hereunder be paid by, and Employer may assign
this Agreement in its entirety to, one or more of Employer's subsidiaries or
affiliates. If Employer is consolidated with or merged into, or if all or a
part of its assets are transferred to, another corporation carrying on all or a
substantial part of the business of Employer, this Agreement may be assigned to
such successor. Neither the Guarantee of this Agreement provided by Waste
Management, Inc., nor the provisions of Paragraph 7 of this Agreement
prohibiting the relocation of the Employee, shall be modified or affected by any
such assignment.
2
<PAGE>
9. Employee acknowledges that his promised services hereunder are of
special, unique, unusual and extraordinary character which gives them peculiar
value, the loss of which cannot adequately be compensated in damages in an
action at law, and Employee further acknowledges that in his employment
hereunder he will be making use of, acquiring and adding to confidential
information of special and unique value relating to such matters as lists of
customers of Employer, its subsidiaries and affiliates and costs of providing
the offered services. In addition to and not in limitation of any other
restrictive covenants which may be binding upon Employee, Employee agrees that
he will not (except for the benefit of or with the written consent of Employer,
its successors or assigns):
(a) During or after the Term of Employment, disclose any of said
information to any person, firm or corporation for any purpose whatsoever,
unless disclosure is required by law; or
(b) During the Term of Employment, or within two years thereafter in any
geographical area in which duties have at any time been assigned to him
hereunder during the Term of Employment, engage (as an individual or as a
stockholder, trustee, partner, financier, agent, employee or representative
of any person, firm, corporation or association), or have any interest,
direct or indirect, in any business in competition with the business of
Employer; provided that this paragraph shall not prevent the Employee from
acquiring and holding shares of stock of WMX Technologies, Inc. and not to
exceed two percent (2%) of the outstanding shares of stock of any other
corporation which engages in such a competitive business if such shares are
available to the general public on a national securities exchange.
10. In the event of a breach of any covenant contained in Paragraph 9 of
this Agreement, Employer shall be entitled to an injunction restraining such
breach in addition to any other remedies provided by law or equity.
11. Employee agrees that:
(a) He will assign to Employer any improvements, inventions or discoveries
conceived or reduced to practice by him during the Term of Employment and
related to the business of Employer or any of its subsidiaries or
affiliates;
(b) He will execute all papers and perform all acts which Employer deems
necessary or advisable for the preparation, prosecution, issuance,
procurement or maintenance of patent applications and patents of the United
States or foreign countries for said improvements, inventions or
discoveries;
(c) He will execute any and all papers and documents which shall be
required or necessary to vest title in Employer to said improvements,
inventions, discoveries, patent applications and patents; and
3
<PAGE>
(d) All models, drawings, memoranda and other materials or records made or
used by Employee in connection with his duties shall be the property of
Employer and shall be left with Employer at the termination of the Term of
Employment.
12. The provisions of paragraphs 9, 10 and 11 hereof shall survive the
termination of this Agreement.
13. The provisions of this Agreement shall be deemed severable and the
invalidity or unenforceability of any provision shall not affect the validity
and enforceability of the other provisions hereof. If any provision of this
Agreement is unenforceable for any reason whatsoever, such provision shall be
appropriately limited and given effect to the extent that it may be enforceable.
RESOURCE RECYCLING
TECHNOLOGIES, INC.
EMPLOYEE
By: /s/ Andrew T. Dwyer
________________________________
[Name] Andrew T. Dwyer
__________________________
/s/ Lawrence J.Schorr Chairman
________________________________
4
<PAGE>
Exhibit 6
WASTE MANAGEMENT, INC.
3003 Butterfield Road
Oak Brook, Illinois 60521
(708) 572-8800
for further information contact:
Analyst Contact: Media Contact: RRT Contact:
Jim Koenig Chris Combs Lawrence J. Schorr
708-572-8822 708-572-3074 607-798-7137, ext. 223
WASTE MANAGEMENT, INC. AGREES TO ACQUIRE
RESOURCE RECYCLING TECHNOLOGIES, INC.
Oak Brook, Illinois, and Vestal, New York, March 17, 1995 -- Waste
Management, Inc. and Resource Recycling Technologies, Inc. jointly announced
today that they have signed a definitive agreement pursuant to which WMI has
agreed to commence a tender offer for any and all outstanding shares of common
stock of RRT at a price of $11.50 net per share in cash. On March 16, 1995, the
closing sale price for RRT on the American Stock Exchange composite tape was
$8.375 per share.
The offer will be subject to certain conditions including, among other
things, the tender of a minimum of 50.1 percent of the outstanding shares of RRT
(assuming the exercise of all outstanding stock options and warrants and the
conversion of all convertible securities) and the termination or expiration of
applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements
Act. If the conditions to the offer are met, the tender offer will be followed
by a merger in which non-tendering stockholders will receive the right to obtain
$11.50 net per share in cash. RRT has approximately 2,675,773 shares, options
and warrants to purchase 573,863 shares, and securities convertible into 6,509
shares outstanding. Stockholders beneficially owning approximately 33 percent of
the shares on a fully diluted basis have agreed to tender their shares.
WMI said the offer would be made only by an Offer to Purchase and related
Letter of Transmittal, copies of which will first be mailed to RRT's
stockholders on or about March 23, 1995.
RRT owns and/or operates several material recycling facilities primarily in
the northeast and one in Florida. The company also designs and manages
construction of solid waste recycling facilities and systems and provides
processing and administrative services to regional retailers and beverage
wholesalers subject to the New York State Bottle Bill. For 1994, RRT reported
revenues of $41,793.000.
Waste Management, Inc., a subsidiary of WMX Technologies, Inc., is the
nation's leading provider of recycling and integrated solid waste management
services in North America. The Company provides recycling services to 6.4
million households in 860 communities and serves more than 119,000 commercial
customers. WMI also operates 120 material recovery facilities.
####
<PAGE>
Exhibit 7
[LOGO] Letter to Stockholders
March 23, 1995
Dear Stockholder:
We are pleased to inform you that Resource Recycling Technologies, Inc.
("RRT") has entered into an Agreement and Plan of Merger (the "Merger
Agreement") with Waste Management, Inc. ("Parent") and WMI Acquisition Sub, Inc.
("Purchaser"). Pursuant to the Merger Agreement, Purchaser today commenced a
tender offer to purchase all outstanding shares of RRT at $11.50 per share in
cash. Under the Merger Agreement, the tender offer will be followed by a merger
of Purchaser and RRT. In the merger, each common share outstanding will be
converted into $11.50 in cash (other than shares held by dissenting
stockholders).
Your Board of Directors has unanimously approved the Merger Agreement, the
tender offer and the merger and determined that the tender offer and merger are
fair to, and in the best interest of, the stockholders, Accordingly, the Board
of Directors recommends that stockholders accept the offer and tender their
shares.
In arriving at its recommendation, the Board of Directors gave careful
consideration to a number of factors which are described in the enclosed
Schedule 14D-9, including the opinions of Allen & Company Incorporated and
Gilford Securities Incorporated, that the cash consideration of $11.50 per share
to be received by stockholders pursuant to the offer and the merger is fair to
such stockholders from a financial point of view.
Additional information with respect to the transaction is contained in the
enclosed Schedule 14D-9, and we urge you to consider this information carefully.
Sincerely,
[Sig of Andrew T. Dwyer] [Sig of Lawrence J. Schorr]
Andrew T. Dwyer Lawrence J. Schorr
Chairman of the Board President and Chief Executive Officer
[Recycled Paper LOGO]
<PAGE>
Exhibit 8
March 17, 1995
The Members of the Board of Directors
Resource Recycling Technologies, Inc.
300 Plaza Drive
Vestal, New York 13850
Gentlemen:
You have requested our opinion, as of this date, as to the fairness, from a
financial point of view, to the holders of the outstanding shares of Common
Stock, par value $1.00 per share (the "Company's Common Stock"), of Resource
Recycling Technologies, Inc., a Delaware corporation (the "Company"), of the
consideration to be received by such holders in connection with the proposed
Offer and Merger hereinafter referred to.
Pursuant to the draft Agreement and Plan of Merger (the "Merger
Agreement"), dated as of March 17, 1995 among the Company, Waste Management,
Inc., an Illinois corporation, and Acquisition Sub, Inc. a Delaware corporation
and wholly owned subsidiary of Acquiror ("MergerCo"), the Company and MergerCo
will enter into a business combination transaction pursuant to which, on the
terms and subject to the conditions contained in the Merger Agreement, MergerCo
will commence a tender offer (the "Offer") to purchase for cash any and all
shares of the Company's Common Stock. Pursuant to the Offer, among other
things, MergerCo will offer to pay net to the seller in cash and without
interest, $11.50 per share of the Company's Common Stock. The Merger Agreement
provides that following the successful completion of the Offer, MergerCo will be
merged with and into the Company (the "Merger") in accordance with the
applicable provisions of Delaware law and the terms of the Merger Agreement.
Pursuant to the Merger Agreement, the Company's Common Stock not tendered to
MergerCo pursuant to the Offer that remains issued and outstanding immediately
prior to the effective time of the Merger would be converted into the right to
receive the same consideration payable pursuant to the Offer for the Company's
Common Stock.
<PAGE>
Members of the Board of Directors
March 17, 1995
Page 2
As you know, (i) Allen & Company Incorporated, the owner of 664,806 shares
of the Company's Common Stock (or approximately 23% of the Company's fully
diluted shares of outstanding Common Stock), has acted as financial advisor to
the Company in connection with the Offer and Merger and will receive a fee for
its services to the Company pursuant to the Engagement Letter Agreement dated
March 9, 1995 by and between the Company and Allen & Company Incorporated; and
(ii) Mr. Paul A. Gould, who owns 150,000 shares of the Company's Common Stock
(or approximately 5% of the Company's fully diluted shares outstanding) and
serves as a Director of the Company, is also a Managing Director of Allen &
Company Incorporated. At the Company's request, each of Allen and Mr. Gould will
execute an Agreement with Acquiror and MergerCo pursuant to which they have
agreed to tender their Company Common Stock pursuant to the Offer.
In arriving at our opinion, we have among other things:
(i) reviewed the terms and conditions of the Merger Agreement and
related agreements;
(ii) analyzed certain historical business and financial information
relating to the Company, including all publicly available
documents filed with the Securities and Exchange Commission over
the last five years;
(iii) reviewed certain internal management reports since 1990 and
recent presentations to the Board of Directors regarding the
financial performance and condition of the Company;
(iv) reviewed certain budgetary data provided to us by the Company
relating to its business, earnings, assets and financial
forecasts for 1995;
(v) conducted discussions with members of the senior management of
the Company with respect to the financial condition, business,
operations, strategic objectives and prospects of the Company,
including the effect of commodity prices on the Company's
financial results;
<PAGE>
Members of the Board of Directors
March 17, 1995
Page 3
(vi) reviewed and analyzed public information, including certain stock
market data and financial information relating to selected public
companies which we deemed generally comparable to the Company;
(vii) reviewed the liquidity of the Company's Common Stock, including
the market reaction to public announcements regarding the
Company;
(viii) reviewed the trading history of the Company's Common Stock,
including its performance in comparison to market indices,
commodity prices, and to selected companies in comparable
businesses;
(ix) reviewed public financial and transaction information relating to
merger and acquisition transactions we deemed to be comparable to
the Offer and Merger; and
(x) conducted such other financial analyses and investigations as we
deemed necessary or appropriate for the purposes of the opinion
expressed herein.
In rendering our opinion, we have assumed and relied upon the accuracy and
completeness of the financial and other information provided by the Company to
us and the representations contained in the Merger Agreement, and we have not
undertaken any independent verification of such information or any independent
valuation or appraisal of any of the assets of the Company. With respect to the
financial forecasts referred to above, we have assumed that they have been
reasonably prepared on a basis reflecting the best currently available judgments
of the management of the Company as to the future financial performance of the
Company.
We understand that the Board of Directors of the Company is to receive, in
addition to but independent of the opinion expressed herein, the opinion of
Gilford Securities, Inc. as to the fairness to the holders of the Company's
Common Stock, from a financial point of view, of the consideration to be
received in the Offer and the Merger.
<PAGE>
Members of the Board of Directors
March 17, 1995
Page 4
In addition to our review and analysis of the specific information sent
forth above, our opinion herein reflects and gives effect to our assessment of
general economic, monetary and market conditions existing as of the date hereof
as they may affect the business and prospects of the Company.
In connection with the preparation of this opinion, we have not been
authorized by the Company or its Board of Directors to solicit, nor have we
solicited, third party indications of interest for the acquisition of all or any
part of the Company.
The opinion rendered herein does not constitute a recommendation of the
Offer and Merger over any other alternative transactions which may be available
to the Company. Furthermore, the opinion rendered herein does not constitute a
recommendation by our firm that any stockholder of the Company accept the offer.
Based on and subject to the foregoing, we are of the opinion that, as of
this date, the consideration to be received by the holders of the Company's
Common Stock pursuant to the Offer and the Merger is fair to such holders from a
financial point of view.
Very truly yours,
ALLEN & COMPANY INCORPORATED
By: /s/ JOHN A. SCHNEIDER
-----------------------
John A. Schneider
Managing Director
<PAGE>
Exhibit 9
March 17, 1995
The Board of Directors
Resource Recycling Technologies, Inc.
300 Plaza Drive
Vestal, NY 13850
Ladies & Gentlemen:
Resource Recycling Technologies, Inc. (the "Company"), Waste Management,
Inc. (the "Acquiror"), and WMI Acquisition Sub, Inc., a wholly-owned subsidiary
of the Acquiror (the "Acquisition Sub"), propose to enter into an Agreement and
Plan of Merger (the "Agreement") pursuant to which the Acquisition Sub will make
a tender offer (the "Offer") to purchase all the outstanding shares of common
stock, par value $1.00 per share (the "Company Common Stock"), at a price of
$11.50 per share (the "Consideration"), net to the seller in cash. The
Agreement also provides that, following consummation of the Offer, Acquisition
Sub will be merged with and into the Company (the "Merger") in accordance with
the applicable provisions of Delaware law and terms of the Agreement. Pursuant
to the Agreement, the Company's Common Stock not tendered to Acquisition Sub
pursuant to the Offer that remains issued and outstanding immediately prior to
the effective time of the Merger would be converted into the right to receive
the same consideration payable pursuant to the Offer for the Company's Common
Stock.
You have asked our opinion, as investment bankers, as to the fairness from
a financial point of view, on March 17, 1995, of the consideration to be
received by the Company's stockholders in connection with the sale of shares of
the Company's Common Stock at a per share price of $11.50.
In preparing this letter, we have relied solely upon information provided
by or on behalf of the Company. We have not independently verified any of such
information and have relied on it being complete and accurate in all material
respects. This Opinion is based on the business and operations of the Company
as represented to us as of March 16, 1995, and does not purport to take into
consideration any information or event arising subsequent to such date.
The information contained in this Opinion may not be used for any other
purpose, or reproduced, disseminated, quoted, referred to or disclosed or
otherwise made available to, or relied upon by any other party nor may reference
be made hereto or to Gilford, without the prior consent of Gilford; provided,
however, that although the Opinion is
<PAGE>
The Board of Directors
March 17, 1995
Page 2
solely for the use of the Board of Directors of the Company, it is acknowledged
that such Opinion will be included in filings required by the Securities and
Exchange Commission and other applicable regulatory agencies approving the Offer
and Merger, and mailed to the Company's stockholders. The Opinion will be
reproduced in such documents in full, and any description of or reference to
Gilford or summary of the Opinion in such documents will be in the form
reasonably satisfactory to Gilford and its counsel.
In connection with the Opinion, to date we have, among other things:
(i) reviewed certain financial and operating data of the business and
operations of the Company, including publicly available documents
filed with the Securities and Exchange Commission over the last
five years;
(ii) reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, and prospects of
the Company furnished to us by the Company;
(iii) conducted discussions with members of senior management of the
Company concerning its businesses and prospects;
(iv) compared the financial position and operating results of the
Company with companies we deemed comparable;
(v) Reviewed a draft dated March 13, 1995 of the Agreement;
(vi) Reviewed such other financial studies, analyses and
investigations as we deemed necessary to prepare this Opinion.
We have not appraised nor undertaken any valuation of any assets, property,
plant and equipment, owned by or used in the Company's operations nor made any
solvency analysis of the Company.
Our opinion necessarily is based upon regulatory, economic, market and
other conditions as they exist, and the information made available to us, as of
the date hereof. Subsequent developments may affect this opinion, and we do not
have any obligation to update, revise or reaffirm this opinion.
Gilford will receive a fee for its services to the Company in connection
with rendering this opinion pursuant to a March 9, 1995 engagement letter
entered into between Gilford and the Company. In addition, the Company has
agreed to reimburse Gilford for certain out-of-pocket expenses, and to indemnify
Gilford for certain liabilities that could arise from the delivery of this
opinion.
<PAGE>
The Board of Directors
March 17, 1995
Page 3
Based upon and subject to the foregoing, it is our opinion as investment
bankers that the proposed cash consideration to be received by the holders of
the Company's Common Stock pursuant to the Offer and the Merger is fair from a
financial point of view.
In connection with the preparation of this opinion, we have not been
authorized by the Company or its Board of Directors to solicit, nor have we
solicited, third party indications of interest for the acquisition of all or any
part of the Company.
The opinion rendered herein does not constitute a recommendation of the
Offer and Merger over any other alternative transactions which may be available
to the Company. Furthermore, the opinion rendered herein does not constitute a
recommendation by our firm that any stockholder of the Company accept the Offer.
Very truly yours,
GILFORD SECURITIES
INCORPORATED
By: /s/ N. SCOTT FINE
------------------------------
N. Scott Fine
Managing Director
<PAGE>
EXHIBIT 10
WASTE MANAGEMENT, INC.
3003 Butterfield Road
Oak Brook, Illinois 60521
(708) 572-8800
for further information contact:
Analyst Contact: Media Contact: RRT Contact:
Bruce Tobecksen Chris Combs Lawrence J. Schorr
708-572-8968 708-572-3074 607-798-7137, ext. 223
WMX TECHNOLOGIES' WASTE MANAGEMENT UNIT COMMENCES
TENDER OFFER FOR RESOURCE RECYCLING TECHNOLOGIES, INC.
Oak Brook, Illinois, and Vestal, New York, March 23, 1995 -- Waste Management,
Inc., the North American solid waste services unit of WMX Technologies, Inc.,
and Resource Recycling Technologies, Inc. jointly announced today that a wholly
owned Waste Management subsidiary has commenced a tender offer for any and all
outstanding shares of common stock of RRT at a price of $11.50 net per share in
cash. On March 22, 1995, the closing sale price for RRT on the American Stock
Exchange composite tape was $11.25 per share.
The offer will be subject to certain conditions including, among other things,
the tender of a minimum of 50.1 percent of the outstanding shares of RRT
(assuming the exercise of all outstanding rights to acquire common stock) and
the termination or expiration of applicable waiting periods under the Hart-
Scott-Rodino Antitrust Improvements Act. Unless extended, the tender offer will
expire at 12:00 midnight, New York City time, on April 19, 1995. If the
conditions to the offer are met, the tender offer will be followed by a merger
in which non-tendering stockholders will receive the right to obtain $11.50 net
per share in cash. RRT has approximately 2,675,773 shares, and rights to
acquire an additional 580,372 shares, outstanding. Stockholders beneficially
owning approximately 33 percent of the shares on a fully diluted basis have
agreed to tender their shares.
WMI said the offer would be made only by an Offer to Purchase and related
Letter of Transmittal, copies of which will first be mailed to RRT's
stockholders on or about March 23, 1995. Morrow & Co., Inc. is acting as the
Information Agent for the offer. Copies of the Offer to Purchase and the Letter
of Transmittal can be obtained from, and questions concerning the offer can be
directed to, Morrow & Co., Inc.
RRT owns and/or operates several material recycling facilities primarily in
the northeast and one in Florida. The company also designs and manages
construction of solid waste recycling facilities and systems and provides
processing and administrative services to regional retailers and beverage
wholesalers subject to the New York State Bottle Bill.
Waste Management, Inc. is the leading provider of recycling and integrated
solid waste management services in North America.
####
