<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ________)
ALLIED WASTE INDUSTRIES, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock ($.01 par value)
- --------------------------------------------------------------------------------
(Title of Class of Securities)
019589 30 8
- --------------------------------------------------------------------------------
(CUSIP Number)
Roger A. Ramsey, Allied Waste Industries, Inc., 7201 East Camelback Road,
Suite 375, Scottsdale, AZ 85251, (602) 423-2946
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 1, 1996
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ] .
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
<PAGE> 2
SCHEDULE 13D
<TABLE>
<S> <C>
CUSIP NO. 019589 30 8 PAGE 2 OF 4 PAGES
----------- --------- ---------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Brian A. O'Leary
- -----------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
- -----------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- -----------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(3) [ ]
- -----------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -----------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
5,898,561
------------------------------------------------------------------------------------------------
8 SHARED VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY
OWNED BY ------------------------------------------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON
WITH 5,898,561
------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
Of the total Shares identified in Section 9, the Issuer is entitled to hold
663,505 of such Shares until June 30, 1997 and to exercise rights of offset in
the event of certain contractual indemnification claims that the Issuer may
have against the Reporting Person.
- -----------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,898,561
- -----------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- -----------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10.0%
- -----------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 3
Item 1. Security and Issuer.
This statement on Schedule 13D (this "Statement") is filed with respect
to Common Shares, $.01 par value per share ("Shares"), of Allied Waste
Industries, Inc., a Delaware corporation (the "Issuer"). The address of the
principal executive offices of the Issuer is 7201 East Camelback Road, Suite
375, Scottsdale, AZ 85251.
Item 2. Identity and Background.
This Statement is filed by Brian A. O'Leary, (the "Filing Person"). The
business address of the Filing Person is P.O. Box 219, Pineville, North Carolina
28134. The Filing Person's current principal occupation is Executive Vice
President of the Southeast Region of the Issuer and Chief Executive Officer of
Container Corporation of Carolina, Inc., a Delaware Corporation ("CCC"). During
the past five years, the Filing Person has not been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors). During the
past five years, the Filing Person was not a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction that as a result of
which subjects or subjected him to a judgement, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws. The
Filing Person is a citizen of the United States.
Item 3. Source and Amount of Funds or Other Consideration.
The Filing Person has acquired all Shares beneficially owned by him
through an exchange of all of the Filing Person's shares of common stock of CCC
for the Shares upon the merger of CCC with AWI Delaware, Inc., a Delaware
corporation and wholly-owned subsidiary of the Issuer ("AWI Delaware").
Item 4. Purpose of Transaction.
As noted above in Item 3, the Filing Person has acquired beneficial
ownership of all Shares he beneficially owns as the result of the merger of CCC
with AWI Delaware. The Filing Person has no plans or proposals relating to the
acquisition or disposition of additional Shares of the Issuer or regarding any
extraordinary corporate transaction or any material change to the Issuer or its
business. The Filing Person has become an Executive Vice President for the
Southeast Region of the Issuer and desires to become a director of the Issuer
but does not desire to make any material change to the Issuer's board of
directors, management or corporate structure.
Item 5. Interest in Securities of the Issuer.
(a) The Filing Person reports beneficial ownership of 5,898,561 Shares,
or 10.0% of the outstanding Shares (based on 59,268,476 Shares outstanding as
reported by the Company to the Filing Person as of June 2, 1996).
(b) The Filing Person has sole voting power as to all 5,898,561 Shares.
The Filing Person has sole power to dispose of all 5,898,561 Shares, except that
the Issuer has retained possession of 663,505 Shares until June 30, 1997 and has
certain contractual rights to offset such Shares against potential contractual
indemnification claims against the Filing Person.
(c) Not applicable.
(d) The Issuer has certain rights to hold and offset up to 663,505
Shares as described in Item 5(b) above.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to
Securities of the Issuer.
The Agreement and Plan of Merger among the Issuer, AWI Delaware, CCC and
the Filing Person, dated as of May 17, 1996 and amended pursuant to a First
Amendment dated as of June 28, 1996, pursuant to which the Filing Person has
obtained the Shares, includes standard transfer restrictions to allow the merger
transaction to be accounted for as a "pooling of interests." Such agreement
also sets forth the rights of the Issuer to retain the 663,505 Shares as
described in Item 5(b) above. The Filing Person also has executed an Agreement
by Affiliates to the Issuer, dated as of June 28, 1996, that includes an
acknowledgement of transfer restrictions under Rule 145 and under the "pooling
of interests" accounting rules.
Item 7. Material to be Filed as Exhibits.
2. Agreement and Plan of Merger among the Issuer, AWI Delaware, CCC and
the Filing Person, dated as of May 17, 1996.
2.1 First Amendment to Agreement and Plan of Merger, dated as of June
28, 1996.
2.2 Agreement by Affiliates, dated as of June 28, 1996.
Page 3 of 4 pages
<PAGE> 4
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: July 10, 1996 Signature: /s/ Brian A. O'Leary
------------------------------
Name: Brian A. O'Leary
Page 4 of 4 pages
<PAGE> 1
EXHIBIT 2
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
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
SECTION PAGE
<S> <C>
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
</TABLE>
i
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<TABLE>
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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
</TABLE>
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<TABLE>
<S> <C>
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
</TABLE>
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<TABLE>
<S> <C>
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
</TABLE>
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<TABLE>
<S> <C>
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
</TABLE>
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<PAGE> 7
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;
1
<PAGE> 8
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
SECTION 1.1. 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.
SECTION 1.2. 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.
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SECTION 1.3. 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").
SECTION 1.4. 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.
SECTION 1.5. 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
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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
SECTION 2.1. 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.
SECTION 2.2. 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
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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.
SECTION 2.3. 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%)
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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.
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to AWI and AWI Sub as follows:
SECTION 3.1. 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.
SECTION 3.2. 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.
SECTION 3.3. 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
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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.
SECTION 3.4. 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.
SECTION 3.5. 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
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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.
SECTION 3.6. 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").
SECTION 3.7. 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 thereto
(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
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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.
SECTION 3.8. 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.
SECTION 3.9. 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 governmental
or regulatory authority is required to be made or obtained by the Company in
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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.
SECTION 3.10. 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.
SECTION 3.11. 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.
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SECTION 3.12. 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.
SECTION 3.13. 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.
SECTION 3.14. 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
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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.
SECTION 3.15. 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.
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(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
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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.
SECTION 3.16. 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
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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.
SECTION 3.17. 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
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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)).
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(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.
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SECTION 3.18. 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;
(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;
(iv) 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;
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(v) 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;
(vi) 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
(vii) 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.
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(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
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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.
SECTION 3.19. 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.
SECTION 3.20. 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
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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.
SECTION 3.21. 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.
SECTION 3.22. 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.
SECTION 3.23. 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:
SECTION 4.1. 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
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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.
SECTION 4.2. 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.
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SECTION 4.3. 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.
SECTION 4.4. 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.
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SECTION 4.5. 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.
SECTION 4.6. 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.
SECTION 4.7. 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
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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.
SECTION 4.8. 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.
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SECTION 4.9. 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.
SECTION 4.10. 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.
SECTION 4.11. 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.
SECTION 4.12. 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
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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.
SECTION 4.13. 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.
SECTION 4.14. 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.
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SECTION 4.15. 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.
SECTION 4.16. 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.
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(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
SECTION 4.17. 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
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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.
SECTION 4.18. 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.
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(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
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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.
Section 4.19. 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:
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(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;
(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;
(iv) 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;
(v) 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;
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(vi) 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
(vii) 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.
SECTION 4.20. 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:
SECTION 5.1. 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
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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.
SECTION 5.2. 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.
SECTION 5.3. 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.
SECTION 5.4. 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
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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.
SECTION 5.5. 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.
SECTION 5.6. 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.
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ARTICLE 6.
COVENANTS
SECTION 6.1. 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
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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;
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(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
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(i) the Company shall not authorize any action, or commit or agree to
take any action, in contravention of any of the foregoing actions.
SECTION 6.2. 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.
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SECTION 6.3. 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.
SECTION 6.4. 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.
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(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.
SECTION 6.5. 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.
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SECTION 6.6. 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.
SECTION 6.7. 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.
SECTION 6.8. 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"),
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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.
SECTION 6.9. 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.
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SECTION 6.10. 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.
SECTION 6.11. 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.
SECTION 6.12. 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.
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SECTION 6.13. 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.
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SECTION 6.14. 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
SECTION 7.1. 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
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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.
SECTION 7.2. 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
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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
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and rely upon representations contained in certificates of officers of AWI, AWI
Sub, the Company and others;
SECTION 7.3. 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;
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(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
SECTION 8.1. 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:
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<PAGE> 60
(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
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<PAGE> 61
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.
SECTION 8.2. 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
SECTION 9.1. 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
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<PAGE> 62
(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.
SECTION 9.2. 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
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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).
SECTION 9.3. 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
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<PAGE> 64
(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.
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<PAGE> 65
(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;
SECTION 9.4. 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.
SECTION 9.5. 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.
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<PAGE> 66
SECTION 9.6. 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.
SECTION 9.7. 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.
SECTION 9.8. 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
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<PAGE> 67
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.
SECTION 9.9. 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
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ARTICLE 10.
MISCELLANEOUS
SECTION 10.1. 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).
SECTION 10.2. 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.
SECTION 10.3. 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
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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.
SECTION 10.4. 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
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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.
SECTION 10.5. 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.
SECTION 10.6. 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.
SECTION 10.7. 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.
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SECTION 10.8. 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.
SECTION 10.9. Amendments. This Agreement may only be amended, varied
or supplemented by an instrument in writing, signed by the parties hereto.
SECTION 10.10. 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.
SECTION 10.11. 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.
SECTION 10.12. 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
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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/ Roger A. Ramsey
----------------------------------
Name: Roger A. Ramsey
----------------------------------
Title: Chairman of the Board of Directors
----------------------------------
AWI DELAWARE, INC.
By: /s/ Roger A. Ramsey
----------------------------------
Name: Roger A. Ramsey
----------------------------------
Title: Chairman of the Board of Directors
----------------------------------
CONTAINER CORPORATION OF CAROLINA
By: /s/ Brian A. O'Leary
----------------------------------
Name: Brian A. O'Leary
----------------------------------
Title: Chief Executive Officer
----------------------------------
STOCKHOLDER
/s/ Brian O'Leary
----------------------------------------
Brian O'Leary
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<PAGE> 1
EXHIBIT 2.1
FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This FIRST AMENDMENT (the "Amendment") to the 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").
WHEREAS the parties have entered into the Agreement and now desire to
amend the Agreement in certain respects.
NOW, THEREFORE, in consideration of the foregoing, the parties hereby
agree as follows:
1. Section 9.3(c) of the Agreement is hereby amended by adding
the following proviso at the end of the fourth sentence of such section:
"; provided, however, that if the indemnification obligation arises
under Section 9.1(ii), any set off shall be based on the per share
price for AWI Common Stock of $9.50."
2. Section 9.8 of the Agreement is hereby amended to provide that
the fifth sentence of such section is amended to read as follows in its
entirety:
"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 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 on which such indemnification obligation is due or
scheduled to be paid."
3. Section 10.10 is hereby amended to read as follows in its
entirety:
"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 cash surrender 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 cash surrender value of these policies which
is not the subject of any assumed loan. Stockholder will also
<PAGE> 2
reimburse AWI for any premiums required to be paid after the Effective
Time and before the purchase occurs."
4. Debt. The Company has projected its Company Indebtedness to
be $16,232,000 for purposes of Section 2.2; accordingly, the number of shares
to be issued pursuant to the Merger will be increased by 17,684. The parties
agree that the amount of the Company Indebtedness is appropriately calculated
by inclusion of only the "net" debt to Brian Barry, and not the gross debt.
5. Transaction costs. The following fees and expenses arising
from the Merger will be paid by AWI:
<TABLE>
<S> <C>
Joseph E. Anton Incorporated $1,640,000
Coopers & Lybrand, LLP 82,000
Robinson, Bradshaw & Hinson, P.A. 115,000
Martin Felix 248,000
Thomas Hamilton 50,000
----------
Total $2,135,000
</TABLE>
and the number of shares to be issued will be reduced by 224,737.
6. Working Capital. In computing Working Capital as of the
Effective Time for purposes of Section 9.1:
a. Retro Insurance. The Company adjusted its financial
statements, after the preparation of Schedule 9.1, to eliminate
$500,000 of "retro insurance," and the elimination of this amount from
the current assets will not be taken into account in calculating the
Working Capital.
b. Transfer Station Remediation. The Company adjusted its
financial statements, after the preparation of Schedule 9.1, to accrue
a $420,000 liability for fines and remediation costs, and this
liability will not be taken into account in calculating the Working
Capital.
c. Tax Distribution. To the extent that the Company reduces its
working capital to fund the distribution to pay taxes contemplated in
Section 6.9, such reduction will not be taken into account in
calculating the Working Capital.
d. Asset Purchase. To the extent that the Company's working
capital has been reduced to fund the purchase of assets that are
suitable (in the opinion of AWI) to the current operation of the
business and that were not purchased in violation of Section 6.1(c),
such reduction will not be taken into account in calculating the
Working Capital.
e. Transaction Costs. The transaction costs listed in Paragraph
2 above will not be included as current liabilities
-2-
<PAGE> 3
in Working Capital (although any other such fees and expenses will be
so included, as provided in the last sentence of Section 9.1) or in
the amounts referred to in clause (iv) of Section 9.1.
f. Adjustment. If the Company's deficit in Working Capital at
the Effective Time is less than $2,557,866, the number of Final Shares
will be increased by the amount of such difference, divided by $9.50.
g. Shareholder receivables. The Company's books shall reflect
that a distribution has been made as of the date hereof to the
shareholders of the Company, other than the Stockholder, in an amount
equal to the receivables from such shareholders to the Company. Such
amount distributed has been repaid to the Company in satisfaction of
such receivables, and the cancellation of such receivables will
thereby increase the Working Capital deficit.
7. The Company and Stockholder acknowledge receipt of the letter
dated June 27, 1996 from Roger A. Ramsey to the Stockholder and accept the
information disclosed therein as supplemental information to the
representations and warranties of AWI in the Agreement.
8. Capitalized terms used but not defined herein shall have the
meanings set forth in the Agreement.
9. Except as otherwise amended by this Amendment, the Agreement
shall remain in full force and effect.
-3-
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
28th day of June, 1996.
ALLIED WASTE INDUSTRIES, INC.
AWI DELAWARE, INC.
/s/ Roger A. Ramsey
----------------------------------------------
Roger A. Ramsey, Chairman of the Board
CONTAINER CORPORATION OF CAROLINA
/s/ Brian A. O'Leary
----------------------------------------------
Brian A. O'Leary, Chief Executive Officer
STOCKHOLDER
/s/ Brian A. O'Leary
----------------------------------------------
Brian A. O'Leary
-4-
<PAGE> 1
EXHIBIT 2.2
AGREEMENT BY AFFILIATES
Allied Waste Industries, Inc.
7201 East Camelback Road, Suite 375
Scottsdale, Arizona 85251
Gentlemen:
The undersigned, Brian A. O'Leary, a holder of shares of common stock,
no par value ("Company Common Stock"), of Container Corporation of Carolina, a
Delaware corporation (the "Company"), is entitled to receive in connection with
the merger (the "Merger") of AWI Delaware, Inc., a Delaware corporation (the
"Sub"), into the Company, common stock, par value $.01 per share (the "AWI
Common Stock"), of Allied Waste Industries, Inc., a Delaware corporation
("AWI"). The undersigned acknowledges that he may be deemed an "affiliate" of
the Company within the meaning of Rule 145 ("Rule 145") promulgated under the
Securities Act of 1933, as amended (the "Act"), although nothing contained
herein is to be construed as an admission of such fact. Capitalized terms used
but not defined herein will have the meaning set forth in the Agreement and Plan
of Merger dated May 17, 1996 regarding the Merger.
1. Restrictions under Rule 145. If in fact the undersigned were an
affiliate under the Act, the undersigned's ability to sell, assign or transfer
the AWI Common Stock issued pursuant to the Merger may be restricted unless
such transaction is registered under the Act or an exemption from such
registration is available. The undersigned hereby represents to and covenants
with AWI that he will not sell, assign or transfer any of the shares of AWI
Common Stock issued to him pursuant to the Merger except (i) pursuant to an
effective registration statement under the Act, (ii) in conformity with the
volume and other limitations of Rule 145(d) promulgated under the Act (which
limitation may limit resales of AWI Common Stock for two years after the date
of consummation of the Merger) or (iii) in a transaction which, in the opinion
of independent counsel reasonably satisfactory to AWI or as described in a
"no-action" or interpretive letter from the Staff of the Securities and
Exchange Commission ("SEC"), is not required to be registered under the Act.
In the event of a sale or other disposition pursuant to Rule 145(d), the
undersigned will supply AWI with evidence of compliance with such Rule, in the
form of a letter satisfactory to AWI. The undersigned represents to the extent
the undersigned felt necessary, he has obtained advice of counsel as to the
nature and conditions of such exemptions, including information with respect to
the applicability to the sale of such securities of Rule 145(d) promulgated
under the Act.
2. "Pooling" Accounting. The undersigned hereby represents and
acknowledges that he will not sell or transfer any shares of AWI Common Stock
prior to the publication and dissemination by AWI of financial statements of
AWI following the consummation of the Merger covering a period of at least 30
days of combined, post acquisition results of AWI and the Company, in
compliance
<PAGE> 2
with SEC Accounting Series Releases 130 and 135. The undersigned further
acknowledges that such results may not be released prior to the filing of a
Quarterly Report on Form 10-Q by AWI covering a period of at least one complete
fiscal quarter subsequent to the Merger.
3. Restrictive Legends. The undersigned acknowledges and agrees that
appropriate restrictive legends will be placed on certificates representing AWI
Common Stock received by the undersigned in the Merger as to the restriction on
resales set forth above. AWI agrees to remove said legends on receipt of
evidence reasonably satisfactory to it, including an opinion of counsel, that
the legends may be removed in accordance with applicable laws and "pooling"
requirements, including 144(k) promulgated under the Act.
The undersigned acknowledges that (i) he has carefully read this
letter and understands the requirements hereof and the limitations imposed on
the distribution, sale, transfer or other disposition of shares of AWI Common
Stock and (ii) the receipt of AWI of this letter is an inducement and a
condition to AWI's obligations to consummate the Merger.
Very truly yours,
/s/ Brian A. O'Leary
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Dated: June 28, 1996
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Accepted and Agreed to:
ALLIED WASTE INDUSTRIES, INC.
By:
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Name:
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Title:
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