SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 17, 1996
Allied Waste Industries, Inc.
(Exact name of registrant as specified in charter)
Delaware
(State or other jurisdiction of incorporation)
0-19285 88-0228636
(Commission File Number) (IRS Employer Identification No.)
7201 East Camelback Road, Suite 375
Scottsdale, Arizona 85251
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 423-2946
Not Applicable
(Former name or former address, if changed since last report)
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Item 2. Acquisition of Assets
On May 17, 1996, Allied Waste Industries, Inc. ("the Company") entered
into an Agreement and Plan of Merger (the "Agreement") for Container
Corporation of Carolina, a waste collection, transfer and recycling service
company ("CCC"). Pursuant to the Agreement, the Company will acquire all of
the stock of CCC by means of a merger of CCC with a subsidiary of the Company.
The acquisition will be accounted for as a pooling-of-interests. The closing
of this acquisition is scheduled for June 30, 1996, subject to regulatory
approvals. Consideration for the transaction consists of 6,842,105 shares of
the Company's common stock, subject to adjustment as provided in the
Agreement. CCC has annual revenues of approximately $40 million and serves
34,000 customers in North Carolina, South Carolina and Georgia.
Item 7. Financial Statement, Pro Forma Financial Statements and Exhibits
(a)Financial Statement for Business Acquired
Pursuant to Instruction 4 of Item 7(a) of Form 8-K, financial statements of
Container Corporation of Carolina are not provided as provision of such
statements is impractical at this time. Such required financial statements
will be filed no later than July 31, 1996.
(b) Pro Forma Financial Statements
Pursuant to Instruction 2 of Item 7(b) of Form 8-K, pro forma financial
statements of the Company relative to Container Corporation of Carolina are
not provided as provision of such statements are impractical at this time.
Such required financial statements will be filed no later than July 31, 1996.
(c) Exhibits and Schedules
The following exhibits and schedules are filed with this report on Form
8-K:
10.1 Agreement and Plan of Merger among Allied Waste Industries, Inc.,
AWI Delaware, Inc., Container Corporation of Carolina and Brian O'Leary dated
May 17, 1996. (The Agreement omits certain exhibits and schedules as set
forth in this Current Report.The Company will provide a copy of any omitted
exhibit or schedule upon request of the Securities and Exchange Commission,
subject to the Company's right to request confidential treatment of any
requested exhibit or schedule. A brief description of the omitted exhibits
and schedules appears following the Exhibit List.)
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALLIED WASTE INDUSTRIES, INC.
Date: June 3, 1995 /s/Peter S. Hathaway
Peter S. Hathaway
Chief Accounting Officer
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Exhibits and Schedules
Exhibit
10.0 *Agreement and Plan of Merger among Allied Waste Industries, Inc., AWI
Delaware, Inc., Container Corporation of Carolina and Brian O'Leary dated May
17, 1996.
_____________________________
* The Agreement omits certain exhibits and schedules as set forth in
this Current Report. The Company will provide a copy of any omitted exhibits
and schedules upon request of the Securities and Exchange Commission, subject
to the Company's right to request confidential treatment of any requested
exhibit or schedule.
Brief Description of Omitted Exhibits and Schedules
Exhibit 1.4 Officers and Board of Directors of Surviving Company
Schedule 2.1 Shareholders of Container Corporation of Carolina and
Conversion of Shares
Schedule 3.2 Equity, Partnership, Joint Venture Interests of
Container Corporation of Carolina
Schedule 3.5 Contravention of Agreements
Schedule 3.7 Contingent and Other Liabilities
Schedule 3.8 Changes or Events Since March 31, 1996
Schedule 3.9 Government Approvals
Schedule 3.10 Actions Pending
Schedule 3.11 Title to Properties
Schedule 3.12 Leases
Schedule 3.13 Labor Matters
Schedule 3.14 Severance Arrangements
Schedule 3.15 Taxes
Schedule 3.16 Compliance with Law
Schedule 3.17 Employee Benefit Plans
Schedule 3.18 Environmental
Schedule 3.19 Material Contracts
Schedule 3.20 Operating Activities
Schedule 3.21 Interests of Affiliates
Schedule 3.23 Finder's Fee
Schedule 4.2 AWI Subsidiaries Wholly Owned by AWI
Schedule 4.3 Capitalization
Schedule 4.8 Absence of Certain Changes or Events
Schedule 4.12 Title to Properties
Schedule 4.19 Environmental Matters
Exhibit 6.9 Term Note
Exhibit 7.1(f) Pending permits, approval and consents
Exhibit 7.1(g) Approvals of private persons, financial
institutions or corporations
Exhibit 7.1(h) Executive Employment Agreement
Exhibit 7.2(c) Proposed Opinion of Porter & Hedges, L.L.P.
Opinion for Container Corporation of Carolina Merger
Exhibit 7.3(d) Proposed Opinion of Robinson, Bradshaw & Henson Opinion
for Container Corporation of Carolina Merger
Exhibit 7.3(f) Agreement by Affiliates
Schedule 7.3(g) Container Corporation of Carolina Adjusted Profit &
Loss Statement 1995
Schedule 9.1 Container Corporation of Carolina Comparison of Current
Assets/Liabilities
Schedule 10.10 Cash Surrender Value of Life Insurance
AGREEMENT AND PLAN OF MERGER
Among
ALLIED WASTE INDUSTRIES, INC.,
AWI DELAWARE, INC.,
CONTAINER CORPORATION OF CAROLINA
and
BRIAN O'LEARY
Dated as of May 17, 1996
TABLE OF CONTENTS
SECTION PAGE
ARTICLE 1. THE MERGER 2
SECTION 1.1. The Merger 2
SECTION 1.2. Effect of the Merger 2
SECTION 1.3. Consummation of the Merger 3
SECTION 1.4. Charter; By-Laws; Directors and Officers 3
SECTION 1.5. Further Assurances 3
ARTICLE 2. CONVERSION OF SECURITIES 4
SECTION 2.1. Conversion of Securities of the Company 4
SECTION 2.2. Adjustment for Indebtedness 4
SECTION 2.3. Exchange of Certificates 5
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY 7
SECTION 3.1. Organization and Qualification 7
SECTION 3.2. Subsidiaries 7
SECTION 3.3. Capitalization 7
SECTION 3.4. Authority Relative to Agreement 8
SECTION 3.5. Non-Contravention 8
SECTION 3.6. SEC Filings 9
SECTION 3.7. Financial Statements 9
SECTION 3.8. Absence of Certain Changes or Events 10
SECTION 3.9. Governmental Approvals 10
SECTION 3.10 Actions Pending 11
SECTION 3.11. Title to Properties 11
SECTION 3.12. Leasehold Interests 12
SECTION 3.13. Labor Matters 12
SECTION 3.14. Severance Arrangements 12
SECTION 3.15. Taxes 13
SECTION 3.16. Compliance with Law 15
SECTION 3.17. Employee Benefit Plans 16
SECTION 3.18. Environmental Matters 19
SECTION 3.19. Material Contracts 22
SECTION 3.20. Certain Operating Activities 22
SECTION 3.21. Interests of Certain Affiliates 23
SECTION 3.22. State Takeover Statute 23
SECTION 3.23. Finder's Fees 23
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF AWI 23
SECTION 4.1. Organization and Qualification 23
SECTION 4.2. Subsidiaries 24
SECTION 4.3. Capitalization 25
SECTION 4.4. Authority Relative to Agreement 25
SECTION 4.5. Non-Contravention 26
SECTION 4.6. SEC Filings 26
SECTION 4.7. Financial Statements 26
SECTION 4.8. Absence of Certain Changes or Events 27
SECTION 4.9. Governmental Approvals 28
SECTION 4.10. Certain Information 28
SECTION 4.11. Actions Pending 28
SECTION 4.12. Title to Properties 28
SECTION 4.13. Leasehold Interests 29
SECTION 4.14. Labor Matters 29
SECTION 4.15. Severance Arrangements 30
SECTION 4.16. Taxes 30
SECTION 4.17. Compliance with Law 31
SECTION 4.18. Employee Benefit Plans 32
SECTION 4.20. Interests of Certain Affiliates 36
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF AWI SUB 36
SECTION 5.1. Organization and Qualification 36
SECTION 5.2. Capitalization 37
SECTION 5.3. Authority Relative to Agreement 37
SECTION 5.4. Non-Contravention 37
SECTION 5.5. Governmental Consents 38
SECTION 5.6. Other Matters 38
ARTICLE 6. COVENANTS 39
SECTION 6.1. Conduct of the Company's Business 39
SECTION 6.2. Conduct of AWI's Business 42
SECTION 6.3. Stockholder Approval; Registration Statements; Etc. 43
SECTION 6.4. Access to Information 43
SECTION 6.5. Further Assurances 44
SECTION 6.6. Notification of Certain Matters 45
SECTION 6.7. Employee Matters 45
SECTION 6.8. Indemnification 45
SECTION 6.9. Company's Taxed Earnings Distributions 46
SECTION 6.10. Antitrust Matters 47
SECTION 6.11. Agreement to Defend 47
SECTION 6.12. Expenses 47
SECTION 6.13. No Solicitation by the Company 48
SECTION 6.14. Pooling Treatment; Section 338 Election 49
ARTICLE 7. CONDITIONS TO THE MERGER 49
SECTION 7.1. Conditions to Each Party's Obligation to Effect
the Merger 49
SECTION 7.2. Conditions to the Obligations of Company to
Effect the Merger 50
SECTION 7.3. Conditions to the Obligation of AWI and AWI Sub to
Effect the Merger 52
ARTICLE 8. TERMINATION AND ABANDONMENT 53
SECTION 8.1. Termination 53
SECTION 8.2. Effect of Termination 55
ARTICLE 9. INDEMNIFICATION 55
SECTION 9.1. Indemnification by Stockholder. 55
SECTION 9.2. Demands for Indemnification by AWI 56
SECTION 9.3. Security for Stockholder's Indemnification Obligation 57
SECTION 9.4. Voting of and Dividends on the Held Back Shares 59
SECTION 9.5. Delivery of Held Back Shares 59
SECTION 9.6. Adjustment to Merger Consideration 60
SECTION 9.7. No Bar 60
SECTION 9.8. Agreement by AWI to Indemnify 60
SECTION 9.9. Independence of Representations and Warranties 61
ARTICLE 10. MISCELLANEOUS 62
SECTION 10.1. Publicity 62
SECTION 10.2. Execution in Counterparts 62
SECTION 10.3. Notices 62
SECTION 10.4. Waivers 63
SECTION 10.5. Entire Agreement 64
SECTION 10.6. Applicable Law 64
SECTION 10.7. Binding Effect, Benefits 64
SECTION 10.8. Assignability 65
SECTION 10.9. Amendments 65
SECTION 10.10 Insurance Policy 65
SECTION 10.11. Release of Guarantees 65
SECTION 10.12. Stub Period Return 65
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of May 17, 1996,
among ALLIED WASTE INDUSTRIES, INC., a Delaware corporation ("AWI"), AWI
DELAWARE, INC., a Delaware corporation and a wholly-owned subsidiary of AWI
("AWI Sub"), CONTAINER CORPORATION OF CAROLINA, a Delaware corporation (the
"Company"), and Brian O'Leary, the principal stockholder of the Company (the
"Stockholder"). The Company and AWI Sub are hereinafter sometimes referred to
as the "Constituent Corporations" and the Company as the "Surviving
Corporation."
WHEREAS AWI, AWI Sub and the Company desire that the Company merge with
and into AWI Sub (the "Merger"), upon the terms and conditions set forth
herein and in accordance with the General Corporation Law of the State of
Delaware (the "Delaware GCL") with the result that the Company shall continue
as the surviving corporation and the separate existence of AWI Sub (except as
it may be continued by operation of law) shall cease;
WHEREAS AWI, AWI Sub and the Company desire that upon the Merger, at the
Effective Time (as hereinafter defined), all outstanding shares of the capital
stock of the Company be converted into the right to receive fully paid and
nonassessable shares of common stock, $.01 par value, of AWI ("AWI Common
Stock") as hereinafter provided;
WHEREAS AWI, AWI Sub and the Company desire that, immediately after the
Effective Time and solely as a result of the Merger, AWI will own all the
issued and outstanding shares of the capital stock of the Surviving
Corporation;
WHEREAS, for federal income tax purposes, it is intended that the Merger
qualify as a reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Internal
Revenue Code");
WHEREAS, the respective Boards of Directors of the Company, AWI and AWI
Sub and the shareholders of the Company have approved the Merger and the
shareholders of the Company will be asked to approve the Merger;
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in
order to set forth the terms and conditions of the Merger and the mode of
carrying the same into effect, the parties hereto hereby agree as follows:
ARTICLE 1.
THE MERGER
ARTICLE 1.SECTION 1. The Merger. Subject to the terms and conditions of
this Agreement, at the Effective Time, in accordance with this Agreement, the
Delaware GCL, the Company shall be merged with and into AWI Sub, the separate
existence of AWI Sub (except as it may be continued by operation of law) shall
cease, and the Company shall continue as the surviving corporation.
ARTICLE 1.SECTION 2. Effect of the Merger. Upon the effectiveness of
the Merger, the Surviving Corporation shall succeed to and assume all the
rights and obligations of the Company and AWI Sub in accordance with the
Delaware GCL and the Merger shall otherwise have the effects set forth in
Section 259 of the Delaware GCL.
ARTICLE 1.SECTION 3. Consummation of the Merger. As soon as practicable
after the satisfaction or waiver of the conditions to the obligations of the
parties to effect the Merger set forth herein, provided that this Agreement
has not been terminated previously, the parties hereto will cause the Merger
to be consummated by filing with the Secretary of State of the State of
Delaware a properly executed certificate of merger in accordance with the
Delaware GCL, which shall be effective on June 30, 1996, or at such other date
occurring on or before August 15, 1996 as the parties may agree to (the time
of such effectiveness being the "Effective Time").
ARTICLE 1.SECTION 4. Charter; By-Laws; Directors and Officers. As of
the Effective Time, the Certificate of Incorporation of AWI Sub shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended in accordance with the provisions thereof and as provided by the
Delaware GCL. As of the Effective Time, the By-Laws of AWI Sub, and, as so
amended, shall be the By-Laws of the Surviving Corporation until thereafter
amended in accordance with the provisions thereof and the Certificate of
Incorporation of the Surviving Corporation and as provided by the Delaware GCL.
The initial directors and officers of the Surviving Corporation shall be as
shown on Exhibit 1.4, in each case until their respective successors are duly
elected and qualified.
ARTICLE 1.SECTION 5. Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other acts or things
are necessary, desirable or proper (i) to vest, perfect or confirm, of record
or otherwise, in the Surviving Corporation, its right, title or interest in,
to or under any of the rights, privileges, powers, franchises, properties or
assets of the Constituent Corporations, or (ii) otherwise to carry out the
purposes of this Agreement, the Surviving Corporation and its proper officers
and directors or their designees shall be authorized to execute and deliver,
in the name and on behalf of any of the Constituent Corporations, all such
deeds, bills of sale, assignments and assurances and do, in the name and on
behalf of such Constituent Corporation, all such other acts and things
necessary desirable or proper to vest, perfect or confirm its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of such Constituent Corporation and otherwise to carry
out the purposes of this Agreement.
ARTICLE 2.
CONVERSION OF SECURITIES
ARTICLE 2.SECTION 1. Conversion of Securities of the Company. By virtue
of the Merger and without any action on the part of the holders of the capital
stock of the Company, at the Effective Time all outstanding shares of the
capital stock of the Company (subject to Section 2.4(b)) shall be converted
into an aggregate of 6,842,105 shares of AWI Common Stock (the "Final
Shares"), subject to adjustment as provided in Section 2.2 below, to be
allocated amongst the stockholders of the Company as set forth on Exhibit 2.1
hereto, and each share of capital stock, if any, that is held in the treasury
of the Company shall be canceled and retired and no capital stock of AWI or
other consideration shall be paid or delivered in exchange therefor. If,
prior to the Effective Time, AWI should combine or split the outstanding
shares of AWI Common Stock, or pay a stock dividend or other stock
distribution in AWI Common Stock, then the number of shares to be issued set
forth in the preceding sentence shall be appropriately adjusted to reflect
such split, consideration, or other distribution.
ARTICLE 2.SECTION 2. Adjustment for Indebtedness. If the "Company
Indebtedness" (defined below) at the Effective Time is not equal to the sum of
$16.4 million plus the amount of all distributions paid to the stockholders
after the date of this Agreement and before the Effective Time as permitted by
Section 6.9 hereof up to maximum of $600,000 (the "Debt Cap"), then the number
of Final Shares to be issued at the Effective Time shall be adjusted (i) in
the case that the Company Indebtedness is greater than the Debt Cap, by
subtracting from the Final Shares that number of shares of AWI Common Stock
equal to the excess of the Company Indebtedness over the Debt Cap divided by
9.50 and (ii) in the case that the Company Indebtedness is less than Debt Cap,
by adding to the Final Shares that number of shares of AWI Common Stock equal
to the Debt Cap minus the Company Indebtedness divided by 9.50. The amount of
Company Indebtedness at the Effective Time shall be determined jointly by the
parties and their respective accounting firms in accordance with generally
accepted accounting principles consistently applied and consistent with prior
periods. For purposes hereof, "Company Indebtedness" shall mean all
indebtedness of the Company of any kind for borrowed money, excluding (i) any
borrowings of any kind against any life insurance policies owned by the
Company, and (ii) any new borrowings from banks or financial institutions
after the execution of this Agreement but prior to the Effective Time, which
in the case of borrowings referenced in subparagraph (ii) are not prohibited
by this Agreement and which are used to buy fixed assets at prices consistent
with the Company's ordinary purchasing practices and which are owned by the
Company at the Effective Time.
ARTICLE 2.SECTION 3. Exchange of Certificates.
(a) The closing shall take place at the offices of Robinson, Bradshaw
& Hinson, P.A., 101 North Tyron Street, Suite 1900, Charlotte, North Carolina
28246 at the Effective Time or at such other location, date or time as may be
agreed by AWI and the Company.
(b) At the Closing, the shareholders of the Company shall deliver
the certificates representing all of the issued and outstanding shares of
capital stock of the Company to AWI for cancellation and AWI shall deliver the
certificates representing the Final Shares issued pursuant to the Merger in
the following manner: (i) AWI shall deliver to the Stockholder one or more
certificates evidencing ninety percent (90%) of such Final Shares of AWI
Common Stock to be issued to the Stockholder, (ii) AWI shall set aside and
hold in accordance with Article IX the certificates evidencing the balance of
such Final Shares of AWI Common Stock to be issued to the Stockholder (the
"Held Back Shares"), and (iii) AWI shall deliver to the stockholders of the
Company other than the Stockholder one or more certificates representing one
hundred percent (100%) of the Final Shares to be issued to them.
(c) No certificates or scrip representing fractional shares of AWI
Common Stock shall be issued upon the surrender for exchange of share
certificates representing capital stock of the Company, and such fractional
share interests will not entitle the owner thereof to vote or to any rights of
a stockholder of AWI. Each holder of shares of capital stock of the Company
who would otherwise have been entitled to receive in the Merger a fraction of
a share of AWI Common Stock (after taking into account all certificates
surrendered by such holder) shall be entitled to receive, in lieu thereof, a
check in an amount equal to such fractional part of a share of AWI Common
Stock multiplied by the Fair Market Value. If, prior to the Effective Time,
AWI should split or combine the outstanding shares of AWI Common Stock, or pay
a stock dividend or other stock distribution in AWI Common Stock, then the
amount computed in the foregoing sentence shall be appropriately adjusted to
reflect such split, combination, dividend or other distribution. All
fractional shares of AWI Common Stock otherwise due a holder of capital stock
of the Company shall be aggregated so that such holder shall receive
additional whole shares of AWI Common Stock to the extent the sum of such
fractional parts equals or exceeds a whole number, and such shareholder shall
receive cash for any net fractional shares less than one whole share.
Additionally, the aggregate cash paid to all holders of capital stock of any
of the Company shall not exceed one percent (1%) of the AWI Common Stock
delivered as consideration for such Company in the Merger.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to AWI and AWI Sub as follows:
ARTICLE 3.SECTION 1. Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own or lease and operate its properties and assets and to carry
on its business as it is now being conducted. The Company is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary (including without
limitation, North Carolina, South Carolina and Georgia), except where the
failure to be so qualified would not have a Material Adverse Effect (as
hereinafter defined) on the Company. As used herein, "Material Adverse
Effect" shall mean, with respect to any party, a material adverse effect on
the assets, financial condition or business of such party and its
subsidiaries, taken as a whole.
ARTICLE 3.SECTION 2. Subsidiaries. Except as set forth on Schedule 3.2
hereto, the Company does not own of record or beneficially, directly or
indirectly, (a) any shares of outstanding capital stock or securities
convertible into capital stock of any other corporation or (b) any
participating interest in any partnership, joint venture or other
non-corporate business enterprise. The Company has no subsidiaries.
ARTICLE 3.SECTION 3. Capitalization. The authorized capital stock of
the Company consists of 1,000 shares of common stock, no par value, of the
Company ("Company Common Stock"). As of the date hereof 110.78 shares of
Company Common Stock are issued and outstanding, all of which are duly and
validly issued, fully paid and nonassessable, and no holder thereof is
entitled to preemptive rights. All of such shares of issued and outstanding
Company Common Stock are owned by the stockholders in the amounts set forth on
Exhibit 2.1 free and clear of all liens, claims, options, encumbrances,
security interests or rights or restrictions of any type. No subscription,
warrant, option, convertible security, stock appreciation or other right
(contingent or other) to purchase of acquire any shares of any class of
capital stock of the Company is authorized or outstanding and there is not any
commitment of the Company to issue any shares, warrants, options or other such
rights or to distribute to holders of any class of its capital stock any
evidences of indebtedness or assets. The Company does not have any obligation
(contingent or other) to purchase, redeem or otherwise acquire any shares of
their capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof. The Company is not a party to any
voting agreement, voting trust or similar agreement or arrangement relating to
any of its capital stock, or any agreement or arrangement relating to or
providing for registration rights with respect to any of its capital stock.
ARTICLE 3.SECTION 4. Authority Relative to Agreement. The Company has
all requisite corporate power and authority to execute and deliver this
Agreement and to perform their obligations hereunder. The execution, delivery
and performance of this Agreement by the Company and the consummation by it of
the transactions contemplated hereby have been duly authorized by the
Company's Board of Directors and shareholders and no other corporate
proceedings on the part of the Company is necessary to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms.
ARTICLE 3.SECTION 5. Non-Contravention. Except as set forth on
Schedule 3.5, the execution and delivery of this Agreement by the Company does
not and the consummation by the Company of the transactions contemplated
hereby will not (i) conflict with any provision of the Certificate of
Incorporation or By-Laws of the Company or (ii) result (with the giving of
notice or the lapse of time or both) in any violation of or default or loss of
a benefit under, or permit the acceleration of any obligation under, any
mortgage, indenture, lease, agreement or other instrument, permit, concession,
grant, franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company, other than any such violation,
default, loss or acceleration that would not have a Material Adverse Effect on
the Company.
ARTICLE 3.SECTION 6. SEC Filings. The Company is not required to file
any forms, reports or other documents with the United States Securities and
Exchange Commission (the "SEC").
ARTICLE 3.SECTION 7. Financial Statements. The Company has delivered to
AWI the audited financial statements for the Company for the fiscal years
ended December 31, 1993 and December 31, 1994 including the related notes
hereto (the "Historical Financials"), and will deliver (i) on or before May
24, 1996, the audited financial statements for the fiscal year ended December
31, 1995, and (ii) on or before May 31, 1996 the unaudited financial
statements for the three months ended March 31, 1996, including in each case
the related notes thereto (the collectively, the financial statements
referenced in subparagraph (i) and (ii) are referred to herein as"Current
Financials"). Except as set forth on Schedule 3.7, the Historical Financials
fairly present and the Current Financials when delivered will fairly present,
in all material respects the financial position and the results of operations
of the Company as of their respective dates and for the respective periods
then ended, in accordance with generally accepted accounting principles
consistently applied and consistent with prior periods, subject, in the case
of unaudited interim financial statements, to year-end adjustments (which
consist of normal recurring accruals) and the absence of footnotes. Except as
set forth on Schedule 3.7, as of the date hereof, the Company has no material
liabilities, absolute or contingent, which will not be reflected in the
Current Financials except for liabilities incurred in the ordinary course of
business consistent with prior practice. Except as set forth on Schedule 3.7,
all accounts receivable of the Company which will be set forth in the Current
Financials are fully collectible in the ordinary course of business, except as
reserved for in such financial statements, and to the knowledge of the Company
are not subject to setoff or similar defenses.
ARTICLE 3.SECTION 8. Absence of Certain Changes or Events. Except as
set forth on Schedule 3.8 hereto, since March 31, 1996, the Company has not
(i) issued any stock, bonds or other corporate securities, (ii) borrowed any
amount or incurred any material liabilities (absolute or contingent), except
in the ordinary course of business, (iii) incurred or paid any obligation or
liability (absolute or contingent) other than current liabilities shown on the
balance sheet of the Company as of March 31, 1996 and current liabilities
incurred in the ordinary course of business, (iv) declared or made any payment
or distribution to shareholders or purchased or redeemed any shares of its
capital stock or other securities, (v) mortgaged, pledged or subjected to lien
any of its assets, tangible or intangible, other than liens for current real
property taxes not yet due and payable, (vi) sold, assigned or transferred any
of its tangible assets, or canceled any debts or claims, except in the
ordinary course of business or as otherwise contemplated hereby, (vii) sold,
assigned or transferred any patents, trademarks, trade names, copyrights,
trade secrets or other intangible assets, (viii) made any changes in officer
or executive compensation, (ix) agreed, in writing or otherwise, to take any
of the actions listed in clauses (i) through (viii) above, (x) suffered any
Material Adverse Effect or waived any rights of substantial value, whether or
not in the ordinary course of business, or (xi) entered into any transaction,
except in the ordinary course of business or as otherwise contemplated hereby.
ARTICLE 3.SECTION 9. Governmental Approvals. Except as set forth on
Schedule 3.9, no consent, approval, order or authorization of, or
registration, declaration or filing with, any Federal, state, local or foreign
overnmental or regulatory authority is required to be made or obtained by the
Company in connection with the execution and delivery of this Agreement by the
Company or the consummation by the Company of the transactions contemplated
hereby, except for (i) compliance by the Company with the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), (ii) the filing of a
certificate of merger with the Secretary of State of Delaware in accordance
with the Delaware GCL, and (iii) such consents, approvals, orders or
authorizations which if not obtained, or registrations, declarations or
filings which if not made, would not materially adversely affect the ability
of the Company to consummate the transactions contemplated hereby or the
ability of the Company to conduct its businesses after the Effective Time.
ARTICLE 3.SECTION 10. Actions Pending. Except as set forth on
Schedule 3.10 hereto, there is no action, suit, investigation, proceeding or
claim pending or, to the best knowledge of the Company, threatened against or
affecting the Company, or its properties or rights, before any governmental
body or arbitration board or tribunal, the outcome of which might have a
Material Adverse Effect on the Company.
ARTICLE 3.SECTION 11. Title to Properties. The Company has good and
valid title to the material properties and assets reflected on the balance
sheet of the Company as of March 31, 1996 (other than properties and assets
disposed of in the ordinary course of business since the date of such balance
sheet which in the aggregate are not material), and all such properties and
assets are free and clear of mortgages, pledges, security interests, liens,
charges and other encumbrances, except (i) as described on Schedule 3.11
hereto, (ii) liens for current taxes not yet due and (iii) minor imperfections
of title, if any, not materially detracting from the value or materially
impairing the use of the property subject thereto or materially impairing the
operations or proposed operations of the Company. The Company enjoys full,
free and exclusive use and quiet enjoyment of such assets. Such assets are
adequate for the conduct of the Company's business, and are in good condition,
usable for their intended purpose, ordinary wear and tear excepted.
ARTICLE 3.SECTION 12. Leasehold Interests. Set forth on Schedule 3.12
is a true, correct and complete list of all leases to which the Company is a
party as of the date of this Agreement. Except as set forth on Schedule 3.12
hereto, each lease or agreement to which the Company is a party under which it
is a lessee of any property, real or personal, owned by any third party is a
valid and subsisting agreement, without any default of the Company thereunder
that would have a Material Adverse Effect on the Company. The Company's
possession of such property has not been disturbed nor, to the best knowledge
of the Company, has any claim been asserted against the Company materially
adverse to its rights in such leasehold interests.
ARTICLE 3.SECTION 13. Labor Matters. Except as set forth on
Schedule 3.13, the Company is not a party to any collective bargaining
agreement, and no such agreement is applicable to any employees of the
Company. There are not any controversies between the Company and any of such
employees that might have a Material Adverse Effect on the Company, or any
unresolved labor union grievances or unfair labor practice or labor
arbitration proceedings pending, or, to the best knowledge of the Company,
threatened relating to the business of the Company. To the best knowledge of
the Company, there are no organizational efforts presently being made or
threatened involving any of such employees. The Company has not received
notice of any claim that the Company has not complied with any laws relating
to the employment of labor, including any provisions thereof relating to
wages, hours, collective bargaining, the payment of social security and
similar taxes, equal employment opportunity, employment discrimination and
employment safety, or that the Company is liable for any arrears of wages or
any taxes or penalties for failure to comply with any of the foregoing.
Schedule 3.13 sets forth a list of all employees of the Company as of the date
of this Agreement and their current salary or wage rate and other material
compensation arrangements.
ARTICLE 3.SECTION 14. Severance Arrangements. Except as set forth on
Schedule 3.14 hereto, the Company is not party to any agreement with any
employee (i) the benefits of which (including, without limitation, severance
benefits) are contingent, or the terms of which are materially altered, upon
the occurrence of a transaction involving the Company of the nature of any of
the transactions contemplated by this Agreement or (ii) providing severance
benefits in excess of those generally available under the Company's severance
policies as in effect on the date hereof (which are described on
Schedule 3.17), or which are conditioned upon a change of control, after the
termination of employment of such employees regardless of the reason for such
termination of employment.
ARTICLE 3.SECTION 15. Taxes.
(a) Except as set forth on Schedule 3.15 hereto, the Company has
(i) timely filed all Federal, state, local and foreign returns, declarations,
reports, estimates, information returns and statements ("Returns") required to
be filed by it in respect of any Taxes (as hereinafter defined), which Returns
correctly reflect the facts regarding the income, business, assets,
operations, activities and status of the Company (including without limitation
the status of the Company as an S corporation under the Internal Revenue
Code), (ii) timely paid, withheld and/or deposited all Taxes that are due
and/or payable with respect to the Returns referred to in clause (i) (other
than Taxes that are being contested in good faith by appropriate proceedings
and are adequately reserved for in the Company's most recent financial
statements), (iii) adequately accrued or reserved against on its balance sheet
as of March 31, 1996 all income tax liabilities of the Company with respect to
the results of operations of the Company through such date in accordance with
generally accepted accounting principles consistently applied and consistent
with prior periods, (iv) complied in all material respects with all applicable
laws, rules and regulations relating to the preparation and filing of all
Returns, and (v) complied in all material respects with all applicable laws,
rules and regulations relating to the payment and withholding of Taxes and has
timely withheld from employee compensation wages and paid over to the proper
governmental authorities all amounts required to be so withheld and paid over.
(b) Except as set forth on Schedule 3.15 hereto, (i) all Returns filed
with respect to Tax years of the Company through the Tax year ended
December 31, 1992 have been examined and closed or are Returns with respect to
which the applicable period for assessment under applicable law, after giving
effect to extensions and waivers, has expired; (ii) the Company is not
delinquent in the payment of any material Taxes or has requested any extension
of time within which to file or send any Return, which Return has not since
been filed or sent; (iii) there is no deficiency, claim, audit, action, suit,
proceeding, or investigation now pending or threatened against or with respect
to the Company in respect of any Taxes; (iv) there are no requests for rulings
or determinations in respect of any Taxes pending between the Company and any
Taxing authority.
(c) Except as set forth on Schedule 3.15, the Company has not executed
or entered into with the Internal Revenue Service or any taxing authority
(i) any agreement or other document extending or having the effect of
extending the period for assessments or collection of any Taxes for which the
Company would be liable or (ii) a closing agreement pursuant to Section 7121
of the Internal Revenue Code, or any predecessor provision thereof or any
similar provision of foreign, state or local Tax law that relates to the
assets or operations of the Company.
(d) Except as set forth on Schedule 3.15, the Company has not executed
or entered into any Tax sharing agreement with any person, including each
other.
(e) Except as set forth on Schedule 3.15, the Company (i) made an
effective, valid and binding S election pursuant to Section 1362 of the
Internal Revenue Code, (ii) has maintained its status as an S corporation
pursuant to Section 1361 of the Internal Revenue Code without lapse or
interruption since its initial election, and (iii) made and has continuously
maintained elections similar to the federal S election in each state and local
jurisdiction where such Company does business or is required to file a Return
to the extent such states and jurisdictions permit such elections.
(f) Except as set forth on Schedule 3.15, the Company is not, nor will
it or can it be subject to the built in gains tax under Section 1374 of the
Internal Revenue Code, or any similar corporate level tax imposed on the
Company by any Taxing authority, particularly as a result of the Merger.
Except as set forth on Schedule 3.15, the Company (i) has not adopted or
utilized LIFO as a method of accounting for inventory, (ii) has no other Tax
item, election, agreement or adjustment which will accelerate or trigger
income or defer deductions of the Company as a result of the Merger or the
termination of a Company's status as an S corporation.
(g) For purposes of this Agreement, "Tax" (and with correlative meaning,
"Taxes") shall mean all federal, state, local, foreign or other taxing
authority net income, franchise, sales, use, ad valorem, property, payroll,
withholding, excise, severance, transfer, employment, alternative or add-on
minimum, stamp, occupation, premium, environmental or windfall profits taxes,
and other taxes, charges, fees, levies, imposts, customs, duties, licenses or
other assessments, together with any interest and any penalties, additions to
tax or additional amounts imposed by any taxing authority.
ARTICLE 3.SECTION 16. Compliance with Law.
(a) The Company is not in default under any order of any court,
governmental authority or arbitration board or tribunal. The business of the
Company is being conducted in compliance in all material respects with all
applicable laws, ordinances and governmental rules and regulations to which
the Company is subject (including without limitation federal securities and
banking laws). As of the date of this Agreement, the Company has not received
notice of any alleged violation of any of the foregoing. The Company has not
failed to obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of their properties or to the
conduct of their businesses, except where the failure to obtain such licenses,
permits, franchises or other governmental authorizations would not have a
Material Adverse Effect on the Company.
(b) Except as set forth on Schedule 3.16 hereto, the Company will not be
required, as a result of the consummation of the transactions contemplated
hereby, to obtain or renew any licenses, permits, franchises or other
governmental authorizations necessary to the ownership of the properties of
the Company or to the conduct of its business after the Effective Time, other
than where the failure to obtain or renew any such licenses, permit,
franchises or other government authorizations would not have a Material
Adverse Effect on the Company. A list of all licenses, permits, franchise and
governmental authorizations held by the Company as of the date of this
Agreement is set forth on Schedule 3.16.
ARTICLE 3.SECTION 17. Employee Benefit Plans.
(a) Schedule 3.17 hereto sets forth (i) each "employee benefit plan" (as
defined under Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")) with respect to which the Company may have any
liability, other than a "multiemployer plan" (as defined in Section 3(37) of
ERISA), and (ii) each employment agreement of the Company ("Company's Plans").
The Company has complied, and currently is in compliance, both as to form and
operation, in all material respects, with the applicable provisions of ERISA
and the Internal Revenue Code with respect to each of the Company's Plans.
(b) With respect to each of the Company's Plans which is intended to
qualify under Section 401(a) of the Internal Revenue Code, the Internal
revenue Service has determined that each such Company's Plan so qualifies, and
its related trust is exempt from taxation pursuant to Section 501(a) of the
Internal Revenue Code, and the Company has received favorable and unrevoked
determination letters from the Internal Revenue Service to that effect.
(c) Except as set forth on Schedule 3.17, the Company has not at any
time maintained, adopted, or established, contributed to or been required to
contribute to, otherwise participated in or been required to participate in,
or had any liability with respect to, any employee benefit plan or other
program or arrangement subject to Title IV of ERISA (including, without
limitation, a multiemployer plan and a "defined benefit plan" (as defined in
Section 3(35) of ERISA)).
(d) Notwithstanding anything else set forth herein, the Company has not
incurred any material liability with respect to any Company's Plan under ERISA
(including, without limitation, Title I or Title IV of ERISA), the Internal
Revenue Code or other applicable law, which has not been satisfied in full on
a timely basis, and no event has occurred, and there exists no condition or
set of circumstances which could be reasonably expected to result in the
imposition of any material liability under ERISA (including, without
limitation, Title I or Title IV of ERISA), the Internal Revenue Code or other
applicable law with respect to any of the Company's Plans.
(e) No Company Plan, other than a Company Plan which is an employee
pension benefit plan (within the meaning of Section 3(2)(A) of ERISA),
provides benefits, including without limitation, death, health or medical
benefits (whether or not insured), with respect to current or former employees
of the Company beyond their retirement or other termination of service with
the Company (other than (i) coverage mandated by applicable law, (ii) deferred
compensation benefits accrued as liabilities on the books of the Company,
(iii) disability benefits or (iv) benefits the full cost of which is borne by
the current or former employee (or his or her beneficiary)).
(f) Except as otherwise set forth in this Agreement or within
Schedule 3.17, the consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former employee or officer of
the Company, to severance pay, unemployment compensation or any other payment,
or (ii) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or officer.
(g) As a result of the transactions contemplated hereby, no portion of
any amount paid or payable by the Company to a "disqualified individual"
(within the meaning of Section 280G(c) of the Internal Revenue Code and the
regulations promulgated thereunder), whether paid or payable in cash,
securities of the Company or otherwise and whether considered alone or in
conjunction with any other amount paid or payable to such a "disqualified
individual", constitutes an "excess parachute payment" within the meaning of
Section 280G(b) of the Internal Revenue Code (without regard to
subsection (b)(4) thereof) and the regulations promulgated thereunder.
(h) The Company has provided to AWI true and complete copies of the
following, to the extent the same exist: (i) each of the Company's Plans;
(ii) summary plan descriptions of each of the Company's Plans; (iii) each
trust agreement, insurance policy or other instrument relating to the funding
of each of the Company's Plans; (iv) the two most recent Annual Reports (Form
5500 series) and accompanying schedules filed with the Internal Revenue
Service or United States Department of Labor with respect to each of the
Company's Plans; (v) the most recent audited financial statement for each of
the Company's Plans; (vi) each policy of fiduciary liability insurance (and
agreements related thereto) maintained in connection with the Company's Plans,
and (vii) the most recent determination letter issued by the Internal Revenue
Service with respect to each of the Company's Plans that is intended to
qualify under Section 401(a) of the Code.
ARTICLE 3.SECTION 18. Environmental Matters.
(a) Except as set forth on Schedule 3.18 hereto, and except as would not
have a Material Adverse Effect on the Company:
(i) The business, operations and facilities (whether owned or
leased) of the Company, and all existing uses of and activities on or at any
of the properties or facilities (whether owned or leased) of the Company are
in compliance with all Environmental Laws in effect as of the date hereof, and
no condition exists or event has occurred which, with or without notice or the
passage of time or both, would constitute a violation of or give rise to any
Lien under any Environmental Law;
(ii) the Company is in possession of all Permits necessary for the
conduct or operation of its business (or any part thereof), and is in
compliance with all of the requirements, conditions and limitations included
in such Permits;
3.(iii) the Company has not received any written notice from any
Governmental Authority or any other Person nor is it aware that any past or
present aspect of the business, operations or facilities (whether owned or
leased) of the Company is in violation of any Environmental Law or material
Permit, or that the Company is responsible or liable for the investigation,
cleanup or remediation of any Hazardous Materials at any location;
(iii) the Company has not at any time deposited or incorporated
any Hazardous Material into, on, beneath, or adjacent to any property in
violation of any Environmental Law;
(iv) the Company is not a party to any litigation or proceedings
in any forum, judicial or administrative, involving a demand for damages,
injunctive relief, penalties, or other potential liability with respect to
violations of or liability under any Environmental Law;
(v) the Company has timely filed all reports and notifications
required to be filed with respect to all of its operations, properties and
facilities (whether owned or leased) and has generated and maintained all
required records and data in compliance with all applicable Environmental
Laws; and
(vi) no condition exists or event has occurred with respect to any
property that is owned or leased by the Company which, with or without notice,
passage of time or both, would give rise to any present or future liability of
the Company pursuant to any Environmental Law.
(b) "Environmental Law" shall mean any Law which relates to or otherwise
imposes liability or standards of conduct concerning mining or reclamation of
mined land, discharges, emissions, releases or threatened releases of noises,
odors or any pollutants, contaminants or hazardous or toxic wastes, substances
or materials, whether as matter or energy, into ambient air, water, or land,
or otherwise relating to the manufacture, processing, generation,
distribution, use, treatment, storage, disposal, cleanup, transport or
handling of pollutants, contaminants, or hazardous or toxic wastes, substances
or materials, including the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 and the Superfund Amendments and Reauthorization Act
of 1986 (together, as amended, "CERCLA"), the Resource Conservation and
Recovery Act of 1976, as amended, the Toxic Substances Control Act of 1976, as
amended, the Federal Water Pollution Control Act Amendments of 1972, the Clean
Water Act of 1977, as amended, any so-called "Superlien" Law, and any other
similar Federal, state or local Law, or the issuance of Permits or Licenses
concerning any of the foregoing.
(c) "Governmental Authority" shall mean any public body, governmental,
administrative or regulatory authority, agency, instrumentality or commission,
including courts of competent jurisdiction and arbitral tribunals, whether
Federal, state, local or foreign.
(d) "Hazardous Material" shall mean (i) any "hazardous substance", as
defined by CERCLA; (ii) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended; (iii) any petroleum product or
fractions thereof; or (iv) any pollutant or contaminant or hazardous,
dangerous or toxic chemical, material or substance within the meaning of any
other applicable Federal, state or local Law, regulation, ordinance or
requirement (including consent decrees and administrative orders) relating to
or imposing liability or standards of conduct concerning any hazardous, toxic
or dangerous waste, substance or material, all as now in effect.
(e) "Law" shall mean any law, statute, regulation, ordinance, rule,
order, decree, judgment, consent decree, settlement agreement or governmental
requirement enacted, promulgated entered into, agreed or imposed by any
Governmental Authority.
(f) "Licenses" shall mean any permit, authorization, license, variance,
exemption, order, consent or approval of, any Governmental Authority.
(g) "Lien" shall mean any mortgage, lien (except for any lien for Taxes
not yet due and payable), charge restriction, pledge, security interest,
option, lease or sublease, claim, right of any third party, easement,
encroachment or encumbrance.
(h) "Permits" shall mean permits for the gathering, handling, treatment
and disposal of solid waste from all relevant governmental authorities
(federal, state, county and/or municipal). Without limiting the generality of
the foregoing, Permits shall include all Licenses, certificates, franchises,
consents, permits, waivers and authorizations of any Governmental Authority
necessary or useful for operation of the current or contemplated business of
any of the parties under any Environmental Law.
(i) "Person" shall mean any individual, corporation, proprietorship,
firm, partnership, limited partnership, limited liability company, trust,
association or other entity, including a government department, agency or
instrumentality.
ARTICLE 3.SECTION 19. Material Contracts. Set forth on Schedule 3.19 is
a true, correct and complete copy of all contracts, agreements and commitments
of the Company as of the date of this Agreement, not otherwise disclosed
pursuant to this Article 3, which (i) involve or may involve payments by the
Company of more than $25,000 after the Effective Time, (ii) are not terminable
by the Company without penalty on 60 or fewer days notice, (iii) purport to
prohibit or restrict the ability of the Company or any other person to compete
in any line of business or with any person, or (iv) are otherwise material to
the Company's business. Except as set forth in Schedule 3.19, all of the such
contracts are valid, binding and enforceable agreements of the Company and the
Company is not in default thereunder.
ARTICLE 3.SECTION 20. Certain Operating Activities. Set forth on
Schedule 3.20 a true, complete and accurate list (in each case as of the date
of this Agreement) of (a) all of the Company's commercial, industrial and
residential accounts (including a copy of the Company's standard form of
service agreement), (b) all service marks, trademarks, tradenames, assumed
names, and copyrights used, owned or licensed by the Company, (c) all
insurance policies maintained by the Company of any type, all of which are in
full force and effect and are not the subject of a notification of
cancellation or premium increase, (d) the name and address of each customer of
the Company which provides 1% or more of the Company's reserves, (e) the
containers, compactors and rolling stock owned or leased by the Company and
approximate years in service of each, and (f) locations (identified by
address, owner/operator, type of facility, type of waste, and period of time
the facility was used) to which the Company has ever transported, or ever
caused to be transported, allowed or arranged for any third party to
transport, any type of waste material, generated by the Company's customers or
the Company, for storage, treatment, burning, recycling or disposal.
ARTICLE 3.SECTION 21. Interests of Certain Affiliates. No officer,
director or employee of the Company (or their family members or affiliates)
(i) has any interest in any material property, real or personal, tangible or
intangible, used in or pertaining to the business of the Company or (ii) is a
party to any agreement with the Company, other than as set forth in
Schedule 3.21.
ARTICLE 3.SECTION 22. State Takeover Statute. The Company have taken
all requisite action to render inapplicable to this Agreement, and the
transactions contemplated hereby and thereby, the provisions of Section 203 of
the Delaware GCL and such action is effective as of the date hereof.
ARTICLE 3.SECTION 23. Finder's Fees. Except as set forth on Schedule
3.23, there is no investment banker, broker, finder or other intermediary who
has been retained by the Company or its affiliates who might be entitled to
any fee or commission upon consummation of the Merger.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF AWI
AWI represents and warrants to the Company as follows:
ARTICLE 4.SECTION 1. Organization and Qualification. AWI is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own or lease and operate its properties and assets and to carry
on its business as it is now being conducted. AWI is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not have a Material Adverse Effect on AWI.
ARTICLE 4.SECTION 2. Subsidiaries. Except as set forth in the AWI SEC
Filings (as hereinafter defined) or on Schedule 4.2 hereto, AWI does not own
of record or beneficially, directly or indirectly, (a) any shares of
outstanding capital stock or securities convertible into capital stock of any
other corporation or (b) any participating interest in any partnership, joint
venture or other non-corporate business enterprise. Each subsidiary of AWI is
a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all requisite corporate
power and authority to own or lease and operate its properties and to carry on
its business as it is now being conducted. Each subsidiary is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary except where the
failure to be so qualified would not have a Material Adverse Effect on AWI.
All the outstanding shares of capital stock of AWI's subsidiaries are validly
issued, fully paid and nonassessable and, except as set forth in the AWI SEC
Filings or on Schedule 4.2 hereto, are owned by AWI or by a wholly owned
subsidiary of AWI, free and clear of any liens, claims, charges or
encumbrances, and there are no proxies outstanding with respect to any such
shares. For purposes of this Agreement, the term "subsidiary", when used with
respect to any such entity, shall mean any corporation or other business
entity a majority of whose outstanding voting stock or the equivalent entitled
to vote for the election of directors is at the time owned by such entity
and/or one or more of its subsidiaries.
ARTICLE 4.SECTION 3. Capitalization. The authorized capital stock of
the AWI consists of (i) 100,000,000 shares of AWI Common Stock, and
(ii) 10,000,000 shares of Preferred Stock, $.10 par value, of AWI ("AWI
Preferred Stock"). As of March 31, 1996, 50,431,128 shares of AWI Common
stock are issued and outstanding, and 14,943 shares of AWI Preferred Stock are
issued and outstanding, all of which were duly and validly issued, fully paid
and nonassessable and no holder thereof is entitled to preemptive rights.
Except as set forth in the AWI SEC Filings or Schedule 4.3, no subscription,
warrant, option, convertible security, stock appreciation or other right
(contingent or other) to purchase or acquire any shares of any class of
capital stock of AWI or any of its subsidiaries is authorized or outstanding
and there is not any commitment of AWI or any of its subsidiaries to issue any
shares, warrants, options or other such rights or to distribute to holders of
any class of its capital stock any evidences of indebtedness or assets. Except
as set forth in the AWI SEC Filings, neither AWI nor any of its subsidiaries
has any obligation (contingent or other) to purchase, redeem or otherwise
acquire any shares of its capital stock or any interest therein or to pay any
dividend or make any other distribution in respect thereof. Except as set
forth in the AWI SEC Filings, AWI is not a party to any voting agreement,
voting trust or similar agreement or arrangement relating to its capital stock
or any agreement or arrangement relating to or providing for registration
rights with respect to its capital stock.
ARTICLE 4.SECTION 4. Authority Relative to Agreement. AWI has all
requisite corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by AWI and the consummation by it of the
transactions contemplated hereby have been duly authorized by AWI's Board of
Directors and no other corporate proceedings on the part of AWI are necessary
to authorize this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by AWI and constitutes the
legal, valid and binding obligation of AWI, enforceable against AWI in
accordance with its terms.
ARTICLE 4.SECTION 5. Non-Contravention. The execution and delivery of
this Agreement by AWI do not and the consummation by AWI of the transactions
contemplated hereby will not (i) conflict with any provision of the Amended
and Restated Certificate of Incorporation or By-Laws of AWI or (ii) result
(with the giving of notice or the lapse of time or both) in any violation of
or default or loss of a benefit under, or permit the acceleration of any
obligation under, any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to AWI or any
of its subsidiaries or their respective properties, other than any such
violation, default, loss or acceleration that would not have a Material
Adverse Effect on AWI.
ARTICLE 4.SECTION 6. SEC Filings. AWI has filed all forms, reports and
documents required to be filed with the SEC since May 15, 1996, the date on
which the registration statement of AWI on Form S-4 (No. 333-5585) became
effective (the "Registration Statement"), and AWI has made available to the
Company true and complete copies of (i) the Annual Report of AWI on Form 10-K
for the year ended December 31, 1995, and (ii) all other reports, statements
and registration statements (including Current Reports on Form 8-K) filed by
AWI with the SEC since December 31, 1995 (collectively, the "AWI SEC
Filings"). The AWI SEC Filings (including, without limitation, any financial
statements or schedules included therein) (i) were prepared in compliance in
all material respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time of filing (or
if amended, supplemented or superseded by a filing prior to the date hereof,
on the date of that filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
ARTICLE 4.SECTION 7. Financial Statements. The consolidated balance
sheets of AWI included in the AWI SEC Filings fairly present in all material
respects the consolidated financial position of AWI and its subsidiaries as of
their respective dates and consolidated results of operations of AWI and its
subsidiaries for the respective periods then ended, in accordance with
generally accepted accounting principles consistently applied and consistent
with prior periods, subject, in the case of unaudited interim financial
statements, to year-end adjustments (which consist of normal recurring
accruals) and the absence of certain footnote disclosures. As of the date
hereof, AWI and its subsidiaries have no material liabilities, absolute or
contingent, not reflected in the AWI SEC Filings except for liabilities
incurred in the ordinary course of business consistent with prior practice and
not relating to the borrowing of money.
ARTICLE 4.SECTION 8. Absence of Certain Changes or Events. Except as
set forth in the AWI SEC Filings or on Schedule 4.8 hereto, since March 31,
1996, neither AWI nor any of its subsidiaries has (i) issued any stock, bonds
or other corporate securities, (ii) borrowed any amount or incurred any
material liabilities (absolute or contingent), except in the ordinary course
of business, (iii) incurred or paid any obligation or liability (absolute or
contingent) other than current liabilities shown on the balance sheet of AWI
as of March 31, 1996 and current liabilities incurred in the ordinary course
of business, (iv) declared or made any payment or distribution to stockholders
or purchased or redeemed any shares of its capital stock or other securities,
(v) mortgaged, pledged or subjected to lien any of its assets, tangible or
intangible, other than liens for current real property taxes not yet due and
payable, other than in the ordinary course of business (vi) sold, assigned or
transferred any of its tangible assets or canceled any debts or claims, except
in the ordinary course of business or as otherwise contemplated hereby,
(vii) sold, assigned or transferred any patents, trademarks, trade names,
copyrights, trade secrets or other intangible assets, (viii) made any changes
in officer or executive compensation, (ix) agreed, in writing or otherwise, to
take any of the actions listed in clauses (i) through (viii) above,
(x) suffered any Material Adverse Effect or waived any rights of substantial
value, whether or not in the ordinary course of business, or (xi) entered into
any transaction, except in the ordinary course of business or as otherwise
contemplated hereby.
ARTICLE 4.SECTION 9. Governmental Approvals. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
Federal, state, local or foreign governmental or regulatory authority is
required to be made or obtained by AWI in connection with the execution and
delivery of this Agreement by AWI or the consummation by AWI of the
transactions contemplated hereby, except for (i) compliance by AWI with the
HSR Act, (ii) filings with the SEC pursuant to the Securities Act of 1933, as
amended, and the Exchange Act and the rules and regulations promulgated by the
SEC thereunder as contemplated by Section 6.3 hereof, (iii) the filing of a
certificate of merger with the Secretary of State of the State of Delaware in
accordance with the Delaware GCL and (iv) such consents, approvals, orders or
authorizations which if not obtained, or registrations, declarations or
filings which if not made, would not materially adversely affect the ability
of AWI to consummate the transactions contemplated hereby or the ability of
AWI or any of its subsidiaries to conduct its business after the Effective
Time.
ARTICLE 4.SECTION 10. Certain Information. The Registration Statement
will not, at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE 4.SECTION 11. Actions Pending. Except as set forth in the AWI
SEC Filings, there is no action, suit, investigation, proceeding or claim
pending or, to the best knowledge of AWI, threatened against or affecting AWI
or any of its subsidiaries, or their respective properties or rights, before
any governmental body or arbitration board or tribunal, either alone or
together with other similar actions the outcome of which might have a Material
Adverse Effect on the AWI.
ARTICLE 4.SECTION 12. Title to Properties. AWI and its subsidiaries
have good and valid title to the material properties and assets reflected on
the consolidated balance sheet of AWI and its subsidiaries as of December 31,
1995 (other than properties and assets disposed of in the ordinary course of
business since the date of such balance sheet), and all such properties and
assets are free and clear of mortgages, pledges, security interests, liens,
charges and other encumbrances, except (i) as described in the AWI SEC Filings
or Schedule 4.12, (ii) liens for current taxes not yet due and (iii) minor
imperfections of title, if any, not materially detracting from the value or
materially impairing the use of the property subject thereto or materially
impairing the operations or proposed operations of AWI or any of its
subsidiaries.
ARTICLE 4.SECTION 13. Leasehold Interests. Except as set forth in the
AWI SEC Filings, each material lease or agreement to which AWI or any of its
subsidiaries is a party under which it is a lessee of any property, real or
personal, owned by any third party is a valid and subsisting agreement,
without any default of AWI or any such subsidiary thereunder that would have a
Material Adverse Effect on AWI. AWI's or any such subsidiary's possession of
property has not been disturbed nor, to the best knowledge of AWI, has any
claim been asserted against AWI or such subsidiary materially adverse to its
rights in such leasehold interests.
ARTICLE 4.SECTION 14. Labor Matters. There are not any controversies
between AWI or any of its subsidiaries and any of such employees that might
have a Material Adverse Effect on AWI, or any unresolved labor union
grievances or unfair labor practice or labor arbitration proceedings pending,
or, to the best knowledge of AWI, threatened relating to the business of AWI
or any of its subsidiaries. To the best knowledge of AWI, there are not any
organizational efforts presently being made or threatened involving any of
such employees. Neither AWI nor any of its subsidiaries has received notice
of any claim that AWI or any of its subsidiaries has not complied with any
laws relating to the employment of labor, including any provisions thereof
relating to wages, hours, collective bargaining, the payment of social
security and similar taxes, equal employment opportunity, employment
discrimination and employment safety, or that AWI or any of its subsidiaries
is liable for any arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing.
ARTICLE 4.SECTION 15. Severance Arrangements. Except as set forth in
the AWI SEC Filings, neither AWI nor any of its subsidiaries is party to any
agreement with any employee (i) the benefits of which (including, without
limitation, severance benefits) are contingent, or the terms of which are
materially altered, upon the occurrence of a transaction involving AWI or any
of its subsidiaries of the nature of any of the transactions contemplated by
this Agreement or (ii) providing severance benefits in excess of those
generally available under AWI's severance policies as in effect on the date
hereof (which are described in the AWI SEC Filings), or which are conditioned
upon a change of control, after the termination of employment of such
employees regardless of the reason for such termination of employment.
ARTICLE 4.SECTION 16. Taxes. (a) Except as set forth in the AWI SEC
Filings, each of AWI, its subsidiaries and any affiliated, combined or unitary
group of which any such corporation is or was a member has (i) timely filed
all Returns required to be filed by it in respect of any Taxes, which Returns
correctly reflect the facts regarding the income, business, assets,
operations, activities and status of AWI and its subsidiaries, (ii) timely
paid or withheld all Taxes that are due or payable with respect to the Returns
referred to in clause (i) (other than Taxes that are being contested in good
faith by appropriate proceedings and are adequately reserved for in AWI's most
recent consolidated financial statements contained in AWI SEC Filings),
(iii) established reserves that are adequate for the payment of all Taxes not
yet due and payable with respect to the results of operations of AWI and its
subsidiaries through the date hereof, and (iv) complied in all material
respects with all applicable laws, rules and regulations relating to the
preparation and filing of all Returns, and (v) complied in all material
respects with all applicable laws, rules and regulations relating to the
payment and withholding of Taxes and has timely withheld from employee wages
and paid over to the proper governmental authorities all amounts required to
be so withheld and paid over.
(b) Except as set forth in the AWI SEC Filings, (i) all Returns filed
with respect to Tax years of AWI and its subsidiaries through the Tax year
ended December 31, 1990 have been examined and closed or are Returns with
respect to which the applicable period for assessment under applicable law,
after giving effect to extensions and waivers, has expired; (ii) neither AWI
nor any of its subsidiaries is delinquent in the payment of any material Taxes
or has requested any extension of time within which to file or send any
Return, which Return has not since been filed or sent (other than an extension
filed for AWI's federal income tax return for the year ended December 31,
1995); (iii) there is no deficiency, claim, audit, action, suit, proceeding,
or investigation now pending or threatened against or with respect to AWI or
any of its subsidiaries in respect of any Taxes; (iv) there are no requests
for rulings or determinations in respect of any Taxes pending between AWI or
any of its subsidiaries and any taxing authority.
(c) Except as set forth in the AWI SEC Filings, neither AWI nor any of
its subsidiaries has executed or entered into with the Internal Revenue
Service or any taxing authority (i) any agreement or other document extending
or having the effect of extending the period for assessments or collection of
any Taxes for which AWI or any of its subsidiaries would be liable or (ii) a
closing agreement pursuant to Section 7121 of the Internal Revenue Code, or
any predecessor provision thereof or any similar provision of foreign, state
or local Tax law that relates to the assets or operations of AWI or any of its
subsidiaries
ARTICLE 4.SECTION 17. Compliance with Law. (a) Neither AWI nor any of
its subsidiaries is in default under any order of any court, governmental
authority or arbitration board or tribunal. The business of AWI and its
subsidiaries is being conducted in compliance in all material respects with all
applicable laws, ordinances and governmental rules and regulations to
which AWI or any of such subsidiaries is subject (including without limitation
federal securities and banking laws). As of the date of this Agreement,
neither AWI nor any subsidiary has received notice of any alleged violation of
any of the foregoing. Neither AWI nor any of its subsidiaries has failed to
obtain any licenses, permits, franchises or other governmental authorizations
necessary to the ownership of its properties or to the conduct of its
business, except where the failure to obtain such licenses, permits,
franchises or other governmental authorizations would not have a Material
Adverse Effect on AWI.
(b) Except as set forth in the AWI SEC Filings, neither AWI nor any of
its subsidiaries will be required, as a result of the consummation of the
transactions contemplated hereby, to obtain or renew any licenses, permits,
franchises or other governmental authorizations necessary to the ownership of
the properties of AWI or any of its subsidiaries or to the conduct of their
business after the Effective Time, other than where the failure to obtain or
renew any such licenses, permits, franchises or other government
authorizations would not have a Material Adverse Effect on AWI.
ARTICLE 4.SECTION 18. Employee Benefit Plans. (a) The AWI SEC Filings
set forth (i) each "employee benefit plan" (as defined under Section 3(3) of
ERISA) with respect to which AWI or its subsidiaries may have any liability,
other than a "multiemployer plan" (as defined in Section 3(37) or ERISA), and
(ii) each employment agreement of AWI or its subsidiaries (the "AWI Plans").
AWI and each of its subsidiaries have complied, and currently are in
compliance, both as to form and operation, in all material respects, with the
applicable provisions of ERISA and the Internal Revenue Code with respect to
each of the AWI Plans.
(b) With respect to each of the AWI Plans which is intended to qualify
under Section 401(a) of the Internal Revenue Code, the Internal Revenue
Service has determined that each such AWI Plan so qualifies, and its related
trust is exempt from taxation pursuant to Section 501(a) of the Internal
Revenue Code, and AWI has received favorable and unrevoked determination
letters from the Internal Revenue Service to that effect.
(c) Neither AWI nor any of its subsidiaries has at any time maintained,
adopted, or established, contributed to or been required to contribute to,
otherwise participated in or been required to participate in, or had any
liability with respect to, any employee benefit plan or other program or
arrangement subject to Title IV of ERISA (including, without limitation, a
multiemployer plan and a "defined benefit plan" (as defined in Section 3(35)
of ERISA)). No employee of AWI or any of its subsidiaries participates in a
multiemployer plan.
(d) Notwithstanding anything else set forth herein, neither AWI nor any
of its subsidiaries has incurred any material liability with respect to any
AWI Plan under ERISA (including, without limitation, Title I or Title IV or
ERISA), the Internal Revenue Code or other applicable law, which has not been
satisfied in full on a timely basis, and no event has occurred, and there
exists no condition or set of circumstances which could be reasonably expected
to result in the imposition of any material liability under ERISA (including,
without limitation, Title I or Title IV of ERISA), the Internal Revenue Code
or other applicable law with respect to any of the AWI Plans.
(e) No AWI Plan, other than an AWI Plan which is an employee pension
benefit plan (within the meaning of Section 3(2)(A) of ERISA), provides
benefits, including, without limitation, death, health or medical benefits
(whether or not insured), with respect to current or former employees of AWI
or any of its subsidiaries beyond their retirement or other termination of
service with AWI or any of its subsidiaries (other than (i) coverage mandated
by applicable law, (ii) deferred compensation benefits accrued as liabilities
on the books of AWI, (iii) disability benefits or (iv) benefits the full cost
of which is borne by the current or former employee (or his or her
beneficiary)).
(f) Except as otherwise set forth in this Agreement, the consummation
of the transactions contemplated by this Agreement will not (i) entitle any
current or former employee or officer of AWI, to severance pay, unemployment
compensation or any other payment, or (ii) accelerate the time of payment or
vesting, or increase the amount of compensation due any such employee or
officer.
(g) As a result of the transactions contemplated hereby, no portion of
any amount paid or payable by AWI or any of its subsidiaries to a
"disqualified individual" (within the meaning of Section 280G(c) of the
Internal Revenue Code and the regulations promulgated thereunder), whether
paid or payable in cash, securities of AWI or otherwise and whether considered
alone or in conjunction with any other amount paid or payable to such a
"disqualified individual", constitutes an "excess parachute payment" within
the meaning of Section 280G(b) of the Internal Revenue Code (without regard
to subsection (b)(4) thereof) and the regulations promulgated thereunder.
(h) AWI has provided to the Company true and complete copies of the
following, to the extent the same exist: (i) each of the AWI Plans;
(ii) summary plan descriptions of each of the AWI Plans; (iii) each trust
agreement, insurance policy or other instrument relating to the funding of
each of the AWI Plans; (iv) the two most recent Annual Reports (Form 5500
series) and accompanying schedules filed with the Internal Revenue Service or
United States Department of Labor with respect to each of the AWI Plans; (v)
the most recent audited financial statement for each of the AWI Plans; (vi)
the most recent actuarial report of each of the AWI Plans; (vii) each policy
of fiduciary liability insurance (and agreements related thereto) maintained
in connection with the AWI Plans, and (viii) the most recent determination
letter issued by the Internal Revenue Service with respect to each of the AWI
Plans that is intended to qualify under Section 401(a) of the Code.
4.Section 19. Environmental Matters. Except as set forth in the AWI SEC
Filings or Schedule 4.19 and except as would not have a Material Adverse Effect
on AWI:
(i) The business, operations and facilities (whether owned or
leased) of AWI and its subsidiaries, and all existing uses of and activities
on or at any of the properties or facilities (whether owned or leased) or AWI
and its subsidiaries, are in compliance with all Environmental Laws in effect
as of the date hereof, and no condition exists or event has occurred which,
with or without notice or the passage of time or both, would constitute a
violation of or give rise to any Lien under any Environmental Law;
(ii) AWI and its subsidiaries are in possession of all Permits
necessary for the conduct or operation of their business (or any part
thereof), is in compliance with all of the requirements, conditions and
limitations included in such Permits;
4.(iii) AWI and its subsidiaries have not received any written
notice from any Governmental Authority or any other Person nor are they aware
that any past or present aspect of the business, operations or facilities
(whether owned or leased) of AWI and its subsidiaries are in violation of any
Environmental Law or material Permit, or that AWI and its subsidiaries are
responsible or liable (or potentially responsible or liable) for the
investigation, cleanup or remediation of any Hazardous Materials at any
location;
(iii) AWI and its subsidiaries have not at any time deposited or
incorporated any Hazardous Material into, on, beneath, or adjacent to any
property in violation of any Environmental Law;
(iv) AWI and its subsidiaries are not parties to any litigation or
proceedings in any forum, judicial or administrative, involving a demand for
damages, injunctive relief, penalties, or other potential liability with
respect to violations of or liability under any Environmental Law;
(v) AWI and its subsidiaries have timely filed all reports and
notifications required to be filed with respect to all of its operations,
properties and facilities (whether owned or leased) and have generated and
maintained all required records and data in compliance with all applicable
Environmental Laws; and
(vi) no condition exists or event has occurred with respect to any
property that is owned or leased by AWI and its subsidiaries which, with or
without notice, passage of time or both, would give rise to any present or
future liability of AWI and its subsidiaries pursuant to any Environmental
Law.
ARTICLE 4.SECTION 20. Interests of Certain Affiliates. No officer or
director of AWI or any of its subsidiaries (i) has any interest in any
material property, real or personal, tangible or intangible, used in or
pertaining to the business of AWI or any of its subsidiaries or (ii) is a
party to any agreement with AWI or any of its subsidiaries, other than as
disclosed in AWI SEC Filings.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF AWI SUB
AWI Sub represents and warrants to the Company as follows:
ARTICLE 5.SECTION 1. Organization and Qualification. AWI Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and
authority to own or lease and operate its properties and assets and to carry
on its business as it is now being conducted. AWI Sub is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction in which the character of its properties owned or leased or the
nature of its activities makes such qualification necessary, except where the
failure to be so qualified would not have a material adverse effect on the
financial condition, operating results or business of AWI Sub.
ARTICLE 5.SECTION 2. Capitalization. The authorized capital stock of
AWI Sub consists of 1,000 shares of Common Stock, $.01 par value. As of the
date hereof, 1,000 shares of Common Stock are validly issued and outstanding,
fully paid and nonassessable and are owned of record and beneficially by AWI,
and no shares of Common Stock are held in the treasury of AWI Sub. AWI Sub
has no commitments to issue or sell any shares of its capital stock or any
securities or obligations convertible into or exchangeable for, or giving any
person any right to subscribe for or acquire from AWI Sub, any shares of its
capital stock, and no securities or obligations evidencing any such rights are
outstanding.
ARTICLE 5.SECTION 3. Authority Relative to Agreement. AWI Sub has all
requisite corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this
Agreement by AWI Sub and the consummation by AWI Sub of the transactions
contemplated hereby have been duly authorized by the Board of Directors of AWI
Sub and by AWI as its sole stockholder, and no other corporate proceedings on
the part of AWI Sub are necessary to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by AWI Sub and constitutes the legal, valid and binding obligation
of AWI Sub, enforceable against AWI Sub in accordance with its terms.
ARTICLE 5.SECTION 4. Non-Contravention. The execution and delivery of
this Agreement by AWI Sub and the consummation by AWI Sub of the transactions
contemplated hereby will not (i) conflict with any provision of the
Certificate of Incorporation or By-Laws of AWI Sub or (ii) result (with the
giving of notice or the lapse of time or both) in any violation of or default
or loss of a benefit under, or permit the acceleration of any obligation
under, any mortgage, indenture, lease, agreement, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to AWI Sub or
its properties, other than any such violation, default, loss or acceleration
that would not materially adversely affect the ability of AWI Sub to
consummate the transactions contemplated hereby.
ARTICLE 5.SECTION 5. Governmental Consents. No consent, approval, order
or authorization of, or registration, declaration or filing with, any Federal,
state, local or foreign governmental or regulatory authority is required to be
made or obtained by AWI Sub in connection with the execution and delivery of
this Agreement by AWI Sub or the consummation by AWI Sub of the transactions
contemplated hereby, except for (i) compliance by AWI Sub with the HSR Act,
(ii) the filing of a certificate of merger with the Secretary of State of the
State of Delaware in accordance with the Delaware GCL, (iii) any licenses,
permits, franchises or other governmental authorizations pertaining to the
business of the Company that are required as a result of the consummation of
the transactions contemplated hereby and (iv) such consents, approvals, orders
or authorizations which if not obtained, or registrations, declarations or
filings which if not made, would not materially adversely affect the ability
of AWI Sub to consummate the transactions contemplated hereby.
ARTICLE 5.SECTION 6. Other Matters. AWI Sub has been formed for the
sole purpose of effecting the Merger and, except as contemplated by this
Agreement, AWI Sub has not conducted any business activities and does not have
any material liabilities or obligations.
ARTICLE 6.
COVENANTS
ARTICLE 6.SECTION 1. Conduct of the Company's Business. The Company
covenants and agrees that, prior to the Effective Time, unless AWI shall
otherwise consent in writing or as otherwise expressly contemplated by this
Agreement:
(a) the business of the Company shall be conducted only in, and the
Company shall not take any action except in, the ordinary course of business
and consistent with past practice and except as otherwise permitted herein;
and
(b) the Company shall not directly or indirectly, do any of the
following: (i) sell, pledge, dispose of or encumber any assets of the Company
(except for encumbrances on assets which may be purchased in accordance with
this Section 6), (ii) amend or propose to amend its Certificate of
Incorporation or By-Laws; (iii) split, combine or reclassify any outstanding
shares of its capital stock, or declare, set aside or pay any dividend payable
in cash, stock, property or otherwise with respect to such shares (except for
any dividends paid in the ordinary course to the Company); (iv) redeem,
purchase, acquire or offer to acquire any shares of its capital stock; or
(v) enter into any contract, agreement, commitment or arrangement with respect
to any of the matters set forth in this paragraph (b);
(c) the Company shall not (i) issue, sell, pledge or dispose of, or
agree to issue, sell, pledge or dispose of, any additional shares of, or
securities convertible or exchangeable for, or any options, warrants or rights
of any kind to acquire any shares of, its capital stock of any class or other
property or assets; (ii) incur any indebtedness for borrowed money or issue
any debt securities or incur any loans against life insurance policies
referenced on Schedule 10.10, (iii) enter into or modify any material
contract, lease, agreement or commitment, except in the ordinary course of
business and consistent with past practice; (iv) obligate itself to pay or
expend any amount in excess of an aggregate of $250,000 for the purchase of
assets and capital expenditures except as in accordance with a plan previously
approved by AWI; (v) terminate, modify, assign, waive, release or relinquish
any material contract rights or amend any material rights or claims; (vi)
purchase or otherwise acquire any business or its assets or stock unless AWI
shall expressly consent thereto or fail to object within five business days of
receipt of written notice from the Company regarding such acquisitions, which
notice specifies the terms and conditions of such acquisitions; (vii) settle
or compromise any material claim, action, suit or proceeding pending or
threatened against the Company, or, if the Company may be liable or obligated
to provide indemnification, against the Company's directors or officers,
before any court, governmental agency or arbitrator; provided that nothing
herein shall require any action that might impair or otherwise affect the
obligation of any insurance carrier under any insurance policy maintained by
the Company; or (viii) take any of the actions specified in Sections 3.15(c)
and (d) hereof or take any action to alter its S election in any jurisdiction
where such election has been made;
(d) The Company shall not grant any increase in the salary or other
compensation of its employees except (i) pursuant to the terms of employment
agreements in effect on the date hereof, and (ii) in the case of employees who
are not executive officers of the Company, in the ordinary course of business
and consistent with past practice, enter into any employment agreement or
enter into any material transaction of any other nature with any employee of
the Company;
(e) the Company shall not take any action to institute any new severance
or termination pay practices with respect to any directors, officers or
employees of the Company or to increase the benefits payable under their
severance or termination pay practices;
(f) the Company shall not (except for salary increases for employees who
are not executive officers of the Company in the ordinary course of business
and consistent with past practice) adopt or amend, in any respect, except as
contemplated hereby or as may be required by applicable law or regulation, any
collective bargaining, bonus, profit sharing, compensation, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, fund, plan, or arrangement for the benefit or welfare of any
directors, officers or employees;
(g) the Company shall use its best efforts, to the extent not prohibited
by the foregoing provisions of this Section 6.1, (i) to preserve intact its
business organization, (ii) to maintain in effect any material franchises,
authorizations or similar rights of the Company, (iii) to keep available the
services of the current officers and key employees of the Company, (iv) to
preserve its goodwill with those having material business relationships with
the Company, (v) to maintain and keep the material properties of the Company
in as good a repair and condition as presently exists, except for
deterioration due to ordinary wear and tear and damage due to casualty, and
(vi) to maintain in full force and effect insurance comparable in amount and
scope of coverage to that currently maintained by the Company, and if and as
requested by AWI or AWI Sub, (x) the Company shall use their best efforts to
make reasonable arrangements for representatives of AWI or AWI Sub to meet
with customers and suppliers of the Company and (y) the Company shall
schedule, and the management of the Company shall participate in, meetings of
representatives of AWI or AWI Sub with employees of the Company;
(h) subject to the terms and conditions of this Agreement, the Company
shall use its best efforts to cause the conditions of the Merger to be
satisfied and to cause the Merger to occur on or before June 30, 1996; and
(i) the Company shall not authorize any action, or commit or agree to
take any action, in contravention of any of the foregoing actions.
ARTICLE 6.SECTION 2. Conduct of AWI's Business. AWI covenants and
agrees that, prior to the Effective Time, unless the Company shall otherwise
consent in writing or as otherwise expressly contemplated by this Agreement:
(a) the business of AWI and its subsidiaries shall be conducted only in,
and AWI and its subsidiaries shall not take any action except in, the ordinary
course of business and consistent with past practice; and
(b) neither AWI nor any of its subsidiaries shall, directly or
indirectly, do any of the following: (i) amend or propose to amend its
Certificate of Incorporation or By-Laws; (ii) split, combine or reclassify any
outstanding shares of its capital stock, or declare, set aside or pay any
dividend payable in cash, stock, property or otherwise with respect to such
shares (except for any dividends paid in the ordinary course to AWI or to any
wholly-owned subsidiary of AWI); or (iii) redeem, purchase, acquire or offer
to acquire (or permit any of its subsidiaries to redeem, purchase, acquire or
offer to acquire) any shares of its capital stock;
(c) Subject to the terms and conditions of this Agreement, AWI shall use
its best efforts to cause the conditions of the Merger to be satisfied and to
cause the Merger to occur on or before June 30, 1996; and
(d) AWI shall not, nor shall it permit any of its subsidiaries to,
authorize any action, or commit or agree to take any action, in contravention
of the foregoing actions.
ARTICLE 6.SECTION 3. Stockholder Approval; Registration Statements; Etc.
(a) As soon as reasonably practicable after the date hereof, the Company
shall take all action necessary in accordance with the Delaware GCL and its
Certificate of Incorporation and Bylaws to obtain the approval and adoption of
this Agreement and the Merger by its stockholders. The Board of Directors of
the Company has determined that the Merger is advisable and in the best
interests of its stockholders and shall recommend that they vote to approve
and adopt this Agreement and the Merger and any other matters to be submitted
to stockholders of the Company in connection therewith.
(b) AWI shall take all actions necessary to insure that the Registration
Statement remains effective and that the shares of AWI Common Stock to be
issued in the Merger will be issued pursuant to the Registration Statement.
(c) AWI shall use its best efforts to cause AWI Common Stock to be
issued in the Merger to be listed on The Nasdaq National Market, subject to
official notice of issuance.
ARTICLE 6.SECTION 4. Access to Information.
(a) The Company shall, and shall cause its officers, directors,
employees, representatives and agents to, afford, from the date hereof to the
Effective Time, the officers, employees, representatives and agents of AWI
reasonable access during regular business hours to their officers, employees,
agents, properties, books, records and workpapers, and shall furnish AWI all
financial, operating and other information and data as AWI, through its
officers, employees or agents, may reasonably request.
(b) AWI shall, and shall cause its subsidiaries, officers, directors,
employees, representatives and agents to, afford, from the date hereof to the
Effective Time, the officers, employees, representatives and agents of the
Company reasonable access during regular business hours to its officers,
employees, agents, properties, books, records and workpapers, and shall
furnish the Company all financial, operating and other information and data as
the Company, through their officers, employees or agents, may reasonably
request.
(c) Except as required by law, the Company and AWI shall hold, and will
cause its respective officers, employees, representatives and agents to hold,
any confidential information in accordance with the Confidentiality Agreement
dated March 6, 1996 between the Company and AWI (the "Confidentiality
Agreement").
(d) No investigation pursuant to this Section 6.4 or otherwise conducted
shall affect, add to or subtract from any representations or warranties of the
parties hereto or the conditions to the obligations of the parties hereto to
effect the Merger.
ARTICLE 6.SECTION 5. Further Assurances. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement, including, without limitation, using all best efforts to obtain all
necessary waivers, consents and approvals and to effect all necessary
registrations and filings (including, without limitation any necessary filings
under the HSR Act); provided that the foregoing shall not require AWI to agree
to make, or to permit the Company to make, any divestiture of a significant
asset in order to obtain any waiver, consent or approval.
ARTICLE 6.SECTION 6. Notification of Certain Matters. The Company shall
give prompt notice to AWI and AWI Sub, and AWI and AWI Sub shall give prompt
notice to the Company, of (i) the occurrence, or failure to occur, of any
event that such party believes would be likely to cause any of its
representations or warranties contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the date hereof to the
Effective Time and (ii) any material failure of the Company, AWI or AWI Sub,
as the case may be, or any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it hereunder; provided, however, that failure to give
such notice shall not constitute a waiver of any defense that may be validly
asserted.
ARTICLE 6.SECTION 7. Employee Matters. AWI agrees that, as of the
Effective Time, participation in the AWI Benefit Plans, as then in effect,
shall be made available to all AWI employees, including employees who were
employees of the Company. If participation in any AWI Benefit Plan is made
available to employees of the Company, all service with the Company prior to
the Effective Time and any other service recognized under the applicable
Benefit Plans of the Company for vesting and eligibility purposes shall be
credited to such employees and all waiting periods and pre-existing condition
limitations shall be waived under such AWI Benefit Plan. Notwithstanding the
foregoing, AWI shall not be obligated to offer employment to or retain the
employees of the Company on or after the Effective Time.
ARTICLE 6.SECTION 8. Indemnification.
(a) The Certificate of Incorporation and By-Laws of the Surviving
Corporation shall contain provisions with respect to indemnification and
exculpation from liability, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who,
on or prior to the Effective Time, were directors, officers, employees or
agents of the Company (collectively, the "Indemnified Parties"), unless such
modification is required by law. Such provisions grant the Indemnified
Parties the greatest level of indemnification and exculpation from liability
permitted under Delaware law. AWI shall guarantee the obligations of the
Surviving Corporation with respect to indemnification of the Indemnified
Parties under such provisions.
(b) For a period of six years after the Effective Time, the Surviving
Corporation shall use its best efforts to maintain in effect director and
officer liability insurance for the benefit of the Indemnified Parties in
comparable amounts, with comparable deductibles or retained amounts and with
comparable coverages and exclusions as currently maintained by the Company;
provided, however, that if the Surviving Corporation is unable to obtain
insurance for such period for an aggregate premium of $25,000 or less or if
such insurance otherwise cannot be obtained or maintained by the Surviving
Corporation, then the Surviving Corporation's obligation pursuant hereto shall
only be to seek to be obtained the best possible coverage under the
circumstances subject to the foregoing limitation on premiums.
(c) This Section 6.8 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, AWI, the Surviving
Corporation and the Indemnified Parties, and shall be binding on the
successors and assigns of the Surviving Corporation.
ARTICLE 6.SECTION 9. Company's Taxed Earnings Distributions.
Notwithstanding any other provision of this Agreement, on or before the
termination of the Company's status as an S corporation under Section 1361 of
the Internal Revenue Code (which will terminate on the Effective Date), the
Company may distribute to its shareholders an amount necessary to pay federal
income taxes relating to operations of the Company through the Effective Time.
Additionally, on or before the Effective Time the Stockholder will execute a
Note in the form attached hereto as Exhibit 6.9 to reflect the $1,306,000 owed
to the Stockholder by the Company as of the date of this Agreement.
ARTICLE 6.SECTION 10. Antitrust Matters. The obligations of each of the
parties to this Agreement shall include the following:
(a) each of the parties hereto shall file a premerger notification and
report form pursuant to the HSR Act with respect to the Merger as promptly as
reasonably possible following execution and delivery of this Agreement. Each
of the parties agrees to use best efforts to promptly respond to any request
for additional information pursuant to Section (e)(1) of the HSR Act; and
(b) each party hereto will furnish to the other copies of all
correspondence, filings or communications between that party, or any of its
representatives, on the one hand, and any governmental agency or authority, on
the other hand, with respect to pre-notification obligations under any
antitrust law with respect to this Agreement or the Merger; provided, however,
that with respect to any documents that the party reasonably believes should
not be disclosed to the other party, the party shall instead furnish those
documents to counsel for the other party pursuant to a mutually satisfactory
confidentiality agreement.
ARTICLE 6.SECTION 11. Agreement to Defend. In the event any claim,
action, suit, investigation or other proceeding by any governmental body or
other person or other legal or administrative proceeding is commenced that
questions the validity or legality of the transactions contemplated hereby or
seeks damages in connection therewith, whether before or after the Effective
Time, the parties hereto agree to cooperate and use their reasonable efforts
to defend against and respond thereto.
ARTICLE 6.SECTION 12. Expenses. Subject to the terms and conditions set
forth in Articles VIII and IX hereof and except as otherwise agreed to in
writing by the parties, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expenses.
ARTICLE 6.SECTION 13. No Solicitation by the Company. The Company shall
not on or before the Effective Time, nor shall they authorize or permit any
officer, director, stockholder, employee, investment banker, attorney or other
advisor, agent or representative of the Company to, directly or indirectly,
(i) solicit, initiate or encourage the submission of any Takeover Proposal (as
hereinafter defined), (ii) enter into any agreement or understanding, formal
or informal, with respect to any Takeover Proposal, or (iii) participate in
any discussions or negotiations regarding, or furnish to any person any
information with respect to, the making of any proposal that constitutes, or
may reasonably be expected to lead to, any Takeover Proposal. The Company
shall immediately notify AWI of any action or communication relating to a
Takeover Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding sentence by any
officer, director, stockholder or employee of the Company or any investment
banker, attorney or other advisor, agent or representative of the Company,
whether or not such person is purporting to act on behalf of the Company or
otherwise, shall be deemed to be a material breach of this provision.
"Takeover Proposal" means (i) any proposal or offer for a merger or other
business combination involving the Company, (ii) any proposal or offer to
acquire from the Company or any of its affiliates in any manner, directly or
indirectly, more than 20% of the voting stock of the Company or a material
amount of the assets of the Company or (iii) any proposal or offer to acquire
from the stockholders of the Company by tender offer, exchange offer or
otherwise more than 20% of the outstanding voting stock of the Company.
ARTICLE 6.SECTION 14. Pooling Treatment; Section 338 Election. The
Company and AWI acknowledge and agree that the transactions contemplated by
this Agreement shall be accounted for as a "pooling of interest," and the
Company and AWI represent that they will not knowingly take any actions that
would impair or prohibit such accounting treatment. At the election of AWI,
AWI and the Company will timely make a joint election pursuant to
Section 338(h)(10) of the Code for federal, state and local income tax
purposes, and AWI will provide the appropriate allocation of deemed purchase
price among the assets of the Company.
ARTICLE 7.
CONDITIONS TO THE MERGER
ARTICLE 7.SECTION 1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall
be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) this Agreement and the Merger shall have been approved and adopted
by the requisite vote of the stockholders of the Company;
(b) the expiration or early termination of any waiting period under the
HSR Act shall have occurred;
(c) no preliminary or permanent injunction or other order, decree or
ruling issued by any court of competent jurisdiction nor any statute, rule,
regulation or order entered, promulgated or enacted by any governmental,
regulatory or administrative agency or authority shall be in effect that would
prevent the consummation of the Merger as contemplated hereby;
(d) the Registration Statement shall remain effective and no stop order
with respect thereto shall be in effect at the Effective Time;
(e) the shares of AWI Common Stock to be issued in the Merger shall have
been approved for listing on The Nasdaq National Market, subject to official
notice of issuance;
(f) There shall have been obtained any and all permits, approvals and
consents set forth on Exhibit 7.1(f) hereto;
(g) All approvals of private persons, financial institutions or
corporations set forth on Exhibit 7.1(g) hereto shall have been obtained; and
(h) AWI and the Stockholder shall have executed and delivered the
Employment and Noncompetition Agreement substantially in the form of
Exhibit 7.1(h), to take effect as of the Effective Time.
ARTICLE 7.SECTION 2. Conditions to the Obligations of Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of the following
additional conditions:
(a) The representations and warranties of AWI and AWI Sub contained in
Section 4.19 shall be accurate, and the representations and warranties of AWI
and AWI Sub contained in all other Sections of Article IV shall be accurate in
all material respects (except to the extent qualified by materiality, in which
case such representations and warranties shall be accurate), as of the
Effective Time as though such representations and warranties had been made at
and as of that time (except where any such representation or warranty is made
as of a date specifically set forth therein); all of the terms, covenants and
conditions of this Agreement to be complied with and performed by AWI and AWI
Sub on or before the Effective Time shall have been duly complied with and
performed in all material respects; and a certificate of AWI to the foregoing
effect dated the Effective Time and signed by the chief executive officer of
AWI shall have been delivered to the Company;
(b) Since the date of this Agreement, no event which would have a
Material Adverse Effect on AWI shall have occurred, and the Company shall have
received a certificate of AWI signed by the chief executive officer of AWI
dated the Effective Time to such effect;
(c) the Company shall have received the opinion of Porter & Hedges,
L.L.P., counsel to AWI and AWI Sub, substantially in form of Exhibit 7.2(c);
(d) the Company shall have received the opinion of Robinson, Bradshaw &
Hinson, P.A., counsel to the Company, in form and substance reasonably
satisfactory to the Company, substantially to the effect that (i) the Merger
will constitute a reorganization for United States Federal income tax purposes
within the meaning of Section 368(a) of the Internal Revenue Code, (ii) AWI,
AWI Sub and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Internal Revenue Code, (iii) no gain or loss
will be recognized by AWI, AWI Sub or the Company pursuant to the Merger and
(iv) no gain or loss will be recognized by shareholders of the Company to the
extent their shares of the capital stock of the Company are converted into and
exchanged for solely AWI Common Stock (except to the extent that cash is
received in lieu of a fractional share interest. In rendering such opinion,
such counsel may require and rely upon representations contained in
certificates of officers of AWI, AWI Sub, the Company and others;
ARTICLE 7.SECTION 3. Conditions to the Obligation of AWI and AWI Sub to
Effect the Merger. The obligation of AWI and AWI Sub to effect the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following additional conditions:
(a) The representations and warranties of the Company contained in
Section 3.18 hereof shall be accurate and the representations and warranties
of the Company contained in all other Sections of Article III shall be
accurate in all material respects (except to the extent qualified by
materiality, in which case such representations and warranties shall be
accurate), as of the Effective Time as though such representations and
warranties had been made at and as of that time (except where any such
representation or warranty is made as of a date specifically set forth
therein); all of the terms, covenants and conditions of this Agreement to be
complied with and performed by the Company on or before the Effective Time
shall have been duly complied with and performed in all material respects; and
a certificate of the Company to the foregoing effect dated the Effective Time
and signed by the chief executive officer of the Company shall have been
delivered to AWI; (b) Since the date of this Agreement, no event which would
have a Material Adverse Effect on the Company shall have occurred, and AWI
shall have received a certificate of the Company signed by the chief executive
officer of the Company dated the Effective Time to such effect;
(c) AWI shall have received from Robinson, Bradshaw & Hinson, P.A.,
counsel to the Company, an opinion dated the Effective Time in the form set
forth in Exhibit 7.3(d) hereto;
(d) Each of the stockholders of the Company shall have entered into
Affiliate's Agreements in the form attached hereto as Exhibit 7.3(f).
(e) None of the stockholders of the Company shall have exercised
dissenter's rights under the Delaware GCL or applicable law;
(f) AWI shall have received from its auditors assurances satisfactory
to it that the Merger and the transactions contemplated by this Agreement may
be accounted for as a "pooling of interests."
(g) The Company shall have delivered to AWI (i) the Current
Financials relating to the fiscal year ended December 31, 1995 on or before
May 24, 1996 which (x) will be accompanied by an opinion from Coopers &
Lybrand that does not contain a "going concern" or other qualification, and
(y) will present the results of operation for the Company for the periods set
forth therein in conformance in all material respects with Schedule 7.3(g)
attached hereto; provided that AWI agrees to cooperate with the Company and
Coopers & Lybrand to provide information which will cause the opinion
referenced in (x) above to be unqualified; and (ii) the Current Financials
relating to the three month period ended March 31, 1996 on or before May 31,
1996.
ARTICLE 8.
TERMINATION AND ABANDONMENT
ARTICLE 8.SECTION 1. Termination. Anything contained in this Agreement
to the contrary notwithstanding, this Agreement may be terminated and the
transactions contemplated hereby abandoned at any time before the Effective
Time:
(a) By mutual written consent of AWI and the Company.
(b) By AWI, if the Company has failed to perform in a material respect
any agreement set forth in Article VI hereof.
(c) By the Company, if AWI has failed to perform in a material respect
any agreement set forth in Article VI hereof.
(d) By either AWI or the Company if any suit, action, or other
proceeding shall be pending or threatened before any court or governmental
agency, in which it is sought to restrain, prohibit, or enjoin the Merger;
provided, however, that if the action is threatened there must, in the opinion
of legal counsel to the terminating party, be a reasonable possibility of a
materially adverse outcome on the merits against the other party to this
Agreement, and, provided further, that neither party may terminate this
Agreement pursuant to this Section 8.1(d) on account of any suit, action or
other proceeding initiated by or with the support of such party or any of its
affiliates or associates.
(e) By AWI or the Company, in their respective absolute discretion, if
the Effective Date shall not have occurred on or before August 15, 1996
otherwise than on account of delay or default on its part or on the part of any
of its affiliates or associates. As used in this Section 8.1, (i)
"affiliate" has the meaning assigned to it in paragraphs (c) and (d) of Rule
145 under the Securities Act and (ii) "group" has the meaning set forth in
Section 13(d) of the Exchange Act and the rules and regulations thereunder.
(f) By AWI or the Company if on the Effective Time, the "Fair Market
Value" is less than $8.00. For purposes hereof, the term "Fair Market Value"
shall be equal to the average per share closing price for AWI Common Stock on
The Nasdaq National Market for the ten trading days ending on the fifth
trading day immediately preceding the Effective Time.
ARTICLE 8.SECTION 2. Effect of Termination. Each party's right of
termination under Section 8.1 is in addition to any other rights it may have
under this Agreement or otherwise, and the exercise of a right of termination
will not be an election of remedies. If this Agreement is terminated pursuant
to Section 8.1, all further obligations of the parties under this Agreement
will terminate; provided, however, that if this Agreement is terminated by a
party because of the breach of the Agreement by the other party or because one
or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's failure to comply
with its obligations under this Agreement, the terminating party's right to
pursue all legal remedies will survive such termination unimpaired.
ARTICLE 9.
INDEMNIFICATION
ARTICLE 9.SECTION 1. Indemnification by Stockholder. Subject to the
other provisions of this Agreement, the Stockholder shall indemnify and hold
harmless AWI and its officers, directors, employees and agents against any and
all losses, expenses, fines, penalties, judgments, costs (including attorney's
fees), amounts paid in settlement, and liabilities (collectively, "Losses")
(i) arising as a result of the breach of the Company's representations and
warranties set forth in Article III of this Agreement, (ii) to the extent that
the deficit in the "Working Capital" (defined below) of the Company at the
Effective Time is more than $2,557,866, (iii) to the extent that the Company
has any liability pursuant to that certain Stock Purchase Agreement dated
October 31, 1995 by and among the Company, Nationswaste, Inc., Continental
Waste Industries, Inc., and the stockholders of Northeast Sanitary Landfill,
Inc. (the "Landfill Agreement"); and (iv) to the extent the Company is
obligated to pay after the Effective Time any amounts to Paul M. Felix or
Thomas E. Hamilton pursuant to the effect of change of control or similar
provisions that obligate the Company to make such payments upon occurrence of
the Merger as set forth in the employment agreements with Paul M. Felix or
Thomas E. Hamilton. For purposes hereof, Working Capital shall be determined
as of the Effective Time jointly by the parties using the Company's existing
method of calculating Working Capital as reflected on Schedule 9.1 hereto
consistently applied and consistent with prior periods which determination
will be made on or before September 30, 1996, and the current liabilities in
Working Capital shall (i) be increased by fees or expenses paid or accrued by
the Company in connection with the Merger, and (ii) shall not include amounts
due under any retirement or deferred compensation plans as a result of the
occurrence of the Merger.
ARTICLE 9.SECTION 2. Demands for Indemnification by AWI. The
Stockholder shall not be obligated to indemnify AWI hereunder with respect to
any Losses arising under Section 9.1 unless a written demand for
indemnification ("Demand") is given to the Stockholder prior to the Cut-Off
Date (defined below). For purposes hereof, the Cut-Off Date shall be defined
as follows: (a) for any Losses arising under Section 9.1(i), the Cut-Off Date
shall be the third anniversary of the Effective Time except that with respect
to the representations and warranties set forth in Section 3.7 hereof, the
Cut-Off Date shall be the first anniversary of the Effective Time and that
with respect to the representations and warranties set forth in Section 3.15
the Cut-Off Date shall be the expiration of the statute of limitations
applicable to the assertion of claims by taxing authorities related to the
matters addressed in Section 3.15; (b) for any Losses arising under Section
9.1(ii) the Cut Off Date shall be September 30, 1996 unless the parties are
unable to agree on the amount of Working Capital as of the Effective Time in
which case the Cut Off Date will not apply to such Losses; (c) for any Losses
arising under Section 9.1(iii) the Cut-Off Date shall be the expiration date
of any and all statutes of limitation relating to liability of the Company
under the Landfill Agreement; and (d) for any Losses arising under Section
9.1(iv) the Cut Off Date will be December 31, 1996. No Demand for recovery of
Losses may be asserted by AWI against Stockholder after the applicable Cut-Off
Date, provided that Demands asserted on or before the applicable Cut-Off Date
shall not thereafter be barred. With respect to Losses asserted by AWI
relating to Section 9.1(i), AWI will be entitled to indemnity only for Losses
exceeding $50,000. The Stockholder's liability to AWI for Losses pursuant to
Section 9.1(i) shall be limited to $15,000,000; and, with respect to Losses
first asserted after the first anniversary of the Effective Time, shall be
limited to $10,000,000 (minus the amount of any Losses first asserted on or
before such first anniversary); and, with respect to Losses first asserted
after the second anniversary of the Effective Time, shall be limited to
$5,000,000 (minus the amount of any Losses first asserted on or before such
second anniversary).
ARTICLE 9.SECTION 3. Security for Stockholder's Indemnification
Obligation. As security for the agreement by the Stockholder to indemnify and
hold AWI harmless as described in this Article IX at the Closing, AWI shall
set aside and hold certificates representing the Held Back Shares issued
pursuant to this Agreement. AWI may set off against the Held Back Shares any
Losses or other damages hereunder for which the Stockholder may be responsible
pursuant to this Agreement subject, however, to the following terms and
conditions:
(a) AWI shall send a Demand to the Stockholder of any claim for
Losses, which notice shall set forth (i) the amount of Losses or other damages
hereunder which AWI claims to have sustained by reason thereof, (ii) the basis
of such claim and (iii) copies of all documentation and other evidence in
support of such claim;
(b) Unless the Losses arise from a claim of a third party with
respect to which the Stockholder has elected to assume the defense of and pay
any resulting liability, judgment or settlement thereof, such set off shall be
effected on the later to occur on the expiration of 30 days from the date of
such Demand (the "Notice of Contest Period") or, if such claim is contested,
the date the dispute is resolved in accordance with paragraph (c) below, and
such set off shall be charged proportionally against the shares set aside. If
the Stockholder does assume the defense of any such claim of a third party,
the Stockholder will select counsel reasonably acceptable to AWI, the
Stockholder will not compromise or settle the claim without the consent of AWI
(which will not be unreasonably withheld) and AWI may be allowed to
participate in the defense at its expense. Each of AWI and Stockholder will
cooperate in the others defense of any such claim;
(c) If, prior to the expiration of the Notice of Contest Period, the
Stockholder shall notify AWI in writing of an intention to dispute the claim
and if such dispute is not resolved within 30 days after expiration of such
period (the "Resolution Period"), then AWI shall submit such dispute to
arbitration which shall be conducted in Atlanta, Georgia by a committee of
three arbitrators (one appointed by the Stockholder, one appointed by AWI and
one appointed by the two arbitrators so appointed), who shall be appointed
within 60 days after the expiration of the Resolution Period. The arbitrators
shall permit discovery in accordance with the Federal Rules of Civil Procedure
and shall abide by the commercial arbitration rules of the American
Arbitration Association and their decision shall be made within 45 days of
being appointed and shall be final and binding on all parties. If the
judgment of the arbitrators is adverse to the Stockholder, the amount thereof
shall be paid by the Stockholder within ten (10) days of the written decision
of the arbitrators, which when aggregated with all Losses shall not exceed the
applicable limitations set forth at the end of Section 9.2. In the event the
Stockholder does not pay within such ten day period, then AWI shall within
five (5) days thereafter, set off against such portion of the Held Back Shares
as shall have an aggregate value equal to the amount of the final judgment of
the arbitrators based on the average per share closing price for AWI Common
Stock on The Nasdaq National Market for the ten trading days ending on the
fifth trading day immediately preceding the date of such final judgment.
(d) After any restrictions on sale of the Held Back Shares imposed
under the "poolings of interest" accounting rules are terminated, the
Stockholder may instruct AWI to sell some or all of the Held Back Shares (but
only in compliance with any restrictions imposed under Rule 145(d) promulgated
under the Securities Act of 1933) and the net proceeds thereof shall be
substituted for such Held Back Shares in any set off to be made by AWI
pursuant to any claim hereunder subject to continued compliance with any
applicable SEC and other regulations. The Stockholder may direct that such
proceeds be reinvested in investment grade securities subject to the security
interest contemplated herein;
ARTICLE 9.SECTION 4. Voting of and Dividends on the Held Back Shares.
Except with respect to shares transferred pursuant to the foregoing right of
setoff (and in the case of such shares, until the same are transferred), all
Held Back Shares shall be deemed to be owned by the Stockholder and the
Stockholder shall be entitled to vote the same; provided, however, that, there
shall also be deposited with AWI subject to the terms of this Article, all
shares of AWI Common Stock issued to the Stockholder as a result of any stock
dividend or stock split and all cash issuable to the Stockholder as a result
of any cash dividend, with respect to the Held Back Shares. All stock and
cash issued or paid upon Held Back Shares shall be distributed to the person
or entity entitled to receive such Held Back Shares together with such Held
Back Shares.
ARTICLE 9.SECTION 5. Delivery of Held Back Shares. AWI agrees to
deliver to the Stockholder no later than the first anniversary of the
Effective Time any Held Back Shares then held by it (or proceeds from the Held
Back Shares) unless there then remains unresolved any claim for Losses or
other damages hereunder as to which a Demand has been given, in which event
any Held Back Shares remaining on deposit (or proceeds from the sale of Held
Back Shares) after such claim shall have been satisfied shall be returned to
the Stockholder promptly after the time of satisfaction.
ARTICLE 9.SECTION 6. Adjustment to Merger Consideration. All setoffs
of Held Back Shares or other payments for Losses made pursuant to this
Article IX shall be treated as adjustments to the consideration granted in the
Merger under this Agreement.
ARTICLE 9.SECTION 7. No Bar. If the Held Back Shares are
insufficient to set off any claim for Losses or other damages made hereunder
(or have been delivered to the Stockholder prior to the making or resolution
of such claim), then AWI may take any action or exercise any remedy available
to it by appropriate legal proceedings to collect the Losses; provided,
however, after the Effective Time, a claim for Losses pursuant to this Article
IX shall be AWI's sole and exclusive remedy for any Losses arising out of the
Merger or this Agreement, and in consideration of such limitation, the
Stockholder agrees to waive any and all rights of contribution or other claims
he may have against the Company with respect to the breach of any of the
Company's representations and warranties.
ARTICLE 9.SECTION 8. Agreement by AWI to Indemnify. After the
Effective Time, AWI agrees to indemnify and hold the Stockholder harmless from
and against the aggregate of all Losses incurred or suffered by the
stockholder arising out of or resulting from any breach of a representation or
warranty made by AWI or AWI Sub in this Agreement. Each of the
representations and warranties made by AWI in this Agreement shall survive for
a period of three years after the Effective Time, except that the
representations and warranties set forth in Section 4.7 shall survive for one
year and the representations and warranties set forth in Section 4.17 shall
survive until the expiration of the statute of limitations applicable to the
assertion of claims by taxing authorities related to the matters addressed in
Section 4.17, and no claim for indemnification for a breach of a
representation or warranty made by AWI Sub may be asserted by the Stockholder
against AWI after such representations and warranties shall thus expire;
provided, however, that claims for indemnification first asserted in writing
within such periods shall not thereafter be barred. Notwithstanding the
foregoing, AWI shall not be liable to the Stockholder with respect to any
claim for indemnification for a breach of a representation or warranty made by
AWI Sub unless all such claims incurred by the Shareholders exceed an
aggregate of $50,000, in which case AWI shall be liable only for the amount in
excess of $50,000, and further provided that AWI shall not be liable to the
Stockholder with respect to any such claims in excess of $15,000,000 in the
aggregate; provided, however, that the maximum amount of Losses which AWI may
be liable for will be further reduced in the same manner as Losses subject to
indemnification by the Stockholder may be limited as set forth in Section 9.2
above. AWI will satisfy any obligation of indemnification under this Section
9.8 by delivery of shares of AWI Common Stock only. In determining the number
of shares of AWI Common Stock to be delivered to satisfy any indemnification
obligation by AWI, the value of such AWI Common Stock shall be determined by
the Fair Market Value on the date the determination is made. A claim by
Stockholder pursuant to this Section 9.8 shall be his sole and exclusive
remedy against AWI for any Losses arising out of the Merger or this Agreement
after the Effective Time. The provisions set forth in Section 9.3(a), (b) and
(c) shall apply identically to the assertion, defense and resolution of claims
for indemnification for Losses by Stockholder
against AWI.
ARTICLE 9.SECTION 9. Independence of Representations and Warranties.
Notwithstanding any facts determinable by any party by investigation, each
party shall have the right to fully rely on the representations, warranties,
covenants and agreements of the other parties contained in the Agreement or in
any documents delivered in connection therewith. Each representation,
warranty, covenant and agreement is independent of the other representation,
warranty, covenant or agreement
ARTICLE 10.
MISCELLANEOUS
ARTICLE 10.SECTION 1. Publicity. The Company and AWI agree that they
will not issue any press release or make any other public announcement
concerning this Agreement or the transactions contemplated hereby without the
prior consent of the other party, except that the Company or AWI may make such
public disclosure that it believes in good faith to be required by law (in
which event such party shall consult with the other prior to making such
disclosure).
ARTICLE 10.SECTION 2. Execution in Counterparts. For the convenience of
the parties, this Agreement may be executed in one or more counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
ARTICLE 10.SECTION 3. Notices. All notices that are required or may be
given pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if given in writing and delivered by hand or
national overnight courier service, transmitted by telecopy or mailed by
registered or certified mail, postage prepaid, as follows:
If to AWI to:
Allied Waste Industries, Inc.
7201 E. Camelback Road
Suite 375
Scottsdale, Arizona 85251
Attention: President
with a copy to:
Porter & Hedges, L.L.P.
700 Louisiana, 35th Floor
Houston, Texas 77002
Attention: Robert G. Reedy
If to Company or Stockholder to:
3358 Highway 51 North
Fort Mill, South Carolina 29715
Attention: Brian O'Leary
with a copy to:
Robinson, Bradshaw & Hinson, P.A.
101 North Tryon Street, Suite 1900
Charlotte, North Carolina 28246
Attention: Robert Griffin
or such other address or addressed as any party hereto shall have designated
by notice in writing to the other parties hereto.
ARTICLE 10.SECTION 4. Waivers. The Company, on the one hand, and AWI
and AWI Sub, on the other hand, may, by written notice to the other, (i)
extend the time for the performance of any of the obligations or other actions
of the other under this Agreement; (ii) waive any inaccuracies in the
representations or warranties of the other contained in this Agreement or in
any document delivered pursuant to this Agreement; (iii) waive compliance with
any of the conditions of the other contained in this Agreement; or (iv) waive
performance of any of the obligations of the other under this Agreement.
Except as provided in the preceding sentence, no action taken pursuant to this
Agreement, including, without limitation, any investigation by or on behalf of
any party, shall be deemed to constitute a waiver by the party taking such
action of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as
a waiver of any subsequent breach.
ARTICLE 10.SECTION 5. Entire Agreement. This Agreement, its Schedules,
the documents executed at the Effective Time in connection herewith and the
Confidentiality Agreement constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and supersede all prior
agreements and understandings, oral and written, among the parties hereto with
respect to the subject matter hereof. No representation, warranty, promise,
inducement or statement of intention has been made by any party that is not
embodied in this Agreement or such other documents, and none of the parties
shall be bound by, or be liable for, any alleged representation, warranty,
promise, inducement or statement of intention not embodied herein or therein.
ARTICLE 10.SECTION 6. Applicable Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Delaware, without
regard to principles of conflict of laws.
ARTICLE 10.SECTION 7. Binding Effect, Benefits. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective permitted successors and assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the
parties hereto, the shareholders of the Company immediately prior to the
Effective Time or their respective permitted successors and assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement; provided, however, that the provisions of Section 6.9 hereof shall
accrue to the benefit of, and shall be enforceable by, each of the current and
former directors and officers of the Company.
ARTICLE 10.SECTION 8. Assignability. Neither this Agreement nor any of
the parties' rights hereunder shall be assignable by any party hereto without
the prior written consent of the other parties hereto.
ARTICLE 10.SECTION 9. Amendments. This Agreement may only be amended,
varied or supplemented by an instrument in writing, signed by the parties
hereto.
ARTICLE 10.SECTION 10. Insurance Policy. Within 90 days after the
Effective Time, the Stockholder will acquire from the Company all of the life
insurance policies set forth in Schedule 10.10 hereto for a purchase price
equal to the aggregate face value of said policies, which price will be paid
by the assumption by the Stockholder of all loans outstanding against said
policies and the payment in cash of any additional portion of the face value
of these policies which is not the subject of any assumed loan. Stockholder
will also reimburse AWI for any premiums required to be paid after the
Effective Time and before the purchase occurs.
ARTICLE 10.SECTION 11. Release of Guarantees. After the Effective Time,
AWI will hold the Stockholder harmless for any liability relating to the
personal guarantees of the Stockholder of the Company's indebtedness to First
Union National Bank, and AWI shall, within 30 days after the Effective Time,
cause the full release of such guarantee.
ARTICLE 10.SECTION 12. Stub Period Return. Stockholder agrees to file
the "stub period" federal tax return (the "Stub Return") of the Company for
the short year ending on the Effective Time, not later than the 150 day period
immediately following closing of the Merger and to give AWI not less than 30
days' opportunity to review the Stub Return for tax treatment which could
affect tax liability in subsequent tax periods. In the event AWI disputes the
tax treatment in the Stub Return, it shall give Stockholder notice to that
effect and the parties agree to meet within the 10 day period following the
date of such notice to attempt to resolve the dispute. In the event the
parties are unable to resolve the dispute within the aforesaid 10 day period,
each shall name a certified public accountant and the two certified public
accountants shall mutually select a third certified public accountant and the
unresolved dispute shall be submitted to these three accountants for
arbitration. All disputes shall be resolved by the arbitration in a timely
manner such that Stockholder shall meet its obligation to file the Stub Return
within the aforesaid 150 day period.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement and Plan of Merger as of the day and year first above written.
ALLIED WASTE INDUSTRIES, INC.
By: /s/ T.H. Van Weelden
Name: T.H. Van Weelden
Title: President
AWI DELAWARE, INC.
By: /s/ T.H. Van Weelden
Name: T.H. Van Weelden
Title: President
CONTAINER CORPORATION OF CAROLINA
By: /s/ Brian A. O'Leary
Name: Brian A. O'Leary
Title: Chief Executive Officer
STOCKHOLDER /s/ Brian O'Leary
(..continued)
