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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
FILED BY THE REGISTRANT [X] FILED BY A PARTY OTHER THAN THE REGISTRANT [ ]
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Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
(Name of Person(s) Filing Proxy Statement)
PAYMENT OF FILING FEE (CHECK THE APPROPRIATE BOX):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies: Common
Stock, par value $.01 per share
2) Aggregate number of securities to which transaction applies: 4,205,122
shares, plus options to purchase 524,850 shares
3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined): $6.40 per share, plus $2.55
(average) per option
4) Proposed maximum aggregate value of transaction: $28,251,148.30
5) Total fee paid: $5,650.22
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
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GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
NOTICE OF SPECIAL MEETING
IN LIEU OF
ANNUAL MEETING OF STOCKHOLDERS
November 9, 2000
Notice is hereby given that a Special Meeting in Lieu of Annual Meeting of
Stockholders of GZA GeoEnvironmental Technologies, Inc., a Delaware corporation
(the "Company"), will be held on Thursday, November 9, 2000 at 10 a.m., Eastern
standard time, at the Sheraton Needham Hotel, 100 Cabot Street, Needham,
Massachusetts (the "Special Meeting"), for the purpose of considering and voting
upon the following matters:
1. To approve the Agreement and Plan of Merger dated August 16, 2000
among the Company, Futureco Environmental, Inc. and its subsidiary
GeoEnvironmental Acquisition, Inc. (the "Merger Agreement").
2. To elect three persons to the Board of Directors, each to serve as
a Class II director for a three-year term in the event that the foregoing
merger is not approved;
3. To transact such further business as may properly come before the
Special Meeting or any adjournment thereof.
As of the date of this notice, the Board of Directors has no knowledge of
any other business to be transacted at the Special Meeting.
The Board of Directors has fixed the close of business on September 25,
2000 as the record date for the determination of stockholders entitled to notice
of and to vote at the Special Meeting and at any adjournments thereof.
By order of the Board of Directors,
ROBERT W. SWEET, JR.
Secretary
October 9, 2000
Newton Upper Falls, Massachusetts
WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE PROMPTLY
COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE.
IF MORE THAN ONE PROXY IS ENCLOSED, PLEASE COMPLETE AND RETURN ALL OF THEM.
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GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
320 NEEDHAM STREET
NEWTON UPPER FALLS, MASSACHUSETTS 02464
PROXY STATEMENT
FOR THE SPECIAL MEETING IN LIEU OF THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 9, 2000.
This Proxy Statement and the enclosed Notice of Meeting and form of proxy
are being mailed to stockholders, on or about October 9, 2000, in connection
with the solicitation of proxies by the Board of Directors of GZA
GeoEnvironmental Technologies, Inc. ("GZA" or "the Company") for use at the
Special Meeting in Lieu of Annual Meeting of the Company, to be held at the
Sheraton Needham Hotel, 100 Cabot Street, Needham, Massachusetts at 10 a.m.,
Eastern Standard Time, on Thursday, November 9, 2000, and at any and all
adjournments thereof (the "Special Meeting").
On September 25, 2000, the record date for the determination of
stockholders entitled to notice of and to vote at the Special Meeting, there
were outstanding and entitled to vote [ ] shares of the Company's common
stock, $.01 par value ("Common Stock"). Each share of Common Stock entitles its
record holder to one vote on each matter considered at the Special Meeting.
PROXIES
Each copy of this Proxy Statement is accompanied by a form of proxy that is
being solicited by the Board of Directors of the Company (sometimes referred to
as the "Board" or the "Board of Directors"). Please complete the proxy form,
sign it, date it, and return it promptly in the enclosed envelope. At the
Special Meeting, the persons who are named as proxies in properly executed
proxies in this form will vote the proxy shares in accordance with the
instructions indicated in the proxies. If you do not specify a choice in your
proxy, then the shares covered by the proxy will be voted as recommended by the
Board of Directors: that is, FOR the approval of the merger and FOR the election
of William S. Zoino, William R. Beloff and Lewis Mandell as the Class II
directors of the Company.
We do not expect to ask you to vote on any other matters at the Special
Meeting. However, if any other matters are properly presented at the meeting for
consideration, the holder of the proxies will have discretion to vote on these
matters in accordance with their best judgment, which may include voting to
adjourn the meeting in order to solicit additional proxies. Proxies voting
against a specific proposal may not be used by the holder to vote for
adjournment of the meeting for the purpose of giving the holder additional time
to solicit votes in favor of that proposal.
If you return a signed and dated proxy, you may revoke the proxy at any
time before it is voted by (i) notifying the Company's Secretary in writing,
(ii) signing and duly delivering a proxy bearing a later date or (iii) attending
the Special Meeting and voting in person. The Company's principal executive
offices are located at 320 Needham Street, Newton Upper Falls, Massachusetts
02464.
QUORUM AND TABULATION OF VOTES
Under the Company's Amended and Restated By-Laws, the holders of a majority
of the shares of Common Stock issued, outstanding and entitled to vote at the
Special Meeting will constitute a quorum for the transaction of business at the
Special Meeting. Shares of Common Stock present in person or represented by
proxy (including shares that abstain or do not vote with respect to the matter
presented for stockholder approval) will be counted for the purpose of
determining whether a quorum exists at the Special Meeting. Holders of Common
Stock are entitled to one vote for each share held on each matter submitted to a
vote. The following shares will not be counted as votes cast in favor of a given
matter: (i) shares that abstain from voting as to that matter; and (ii) shares
held in "street name" by brokers or nominees who indicate on their proxies that
they do not have discretionary authority to vote the shares as to that matter
("broker non-votes"). Each matter will be tabulated separately. Votes will be
tabulated by the Company's transfer agent and registrar, American Stock Transfer
& Trust Company.
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PROPOSAL ONE: MERGER
SUMMARY TERM SHEET
This Summary Term Sheet highlights selected information contained in this
Proxy Statement and may not contain all of the information that is important to
you. We urge you to read this entire Proxy Statement carefully, including the
appendices. When we refer to "GZA" or the "Company" in this Proxy Statement we
mean to include (unless it doesn't fit the context), GZA GeoEnvironmental
Technologies, Inc. and its direct and indirect subsidiaries, including GZA
GeoEnvironmental, Inc. ("GZA GeoEnvironmental") and GZA Drilling, Inc. ("GZA
Drilling").
- Stockholder vote: You are being asked to approve and adopt the merger
agreement and the transactions contemplated by the merger agreement, by
which GeoEnvironmental Acquisition, Inc. will be merged with and into GZA
(the "Merger Agreement"). See "THE MERGER AGREEMENT". The Merger
Agreement must be approved and adopted by the affirmative vote of a
majority of the outstanding shares of GZA Common Stock, and by the
holders of at least 66 2/3% of the outstanding shares of GZA Common Stock
that are not owned by Futureco Environmental, Inc. (as ownership for that
purpose is defined in Section 203 of the Delaware General Corporation
Law). See "THE SPECIAL MEETING."
- Payment: In the merger, each share of GZA Common Stock owned by GZA's
current stockholders (other than certain shares owned by participating
employees and selling stockholders, as described in more detail later in
this Proxy Statement) will be converted into the right to receive $6.40
in cash, without interest or other payment thereon. You will not own any
GZA Common Stock after completion of the merger. See "THE MERGER
AGREEMENT."
- Parties: The parties to the Merger Agreement are GZA, Futureco
Environmental, Inc. and GeoEnvironmental Acquisition, Inc., which is
sometimes referred to in this Proxy Statement as the "Merger Subsidiary."
The Merger Subsidiary is a newly-formed Delaware corporation wholly owned
by Futureco Environmental, Inc., which is sometimes referred to in this
Proxy Statement as "Futureco." Futureco is a newly-formed Delaware
corporation whose officers, directors and stockholders are also officers,
directors or stockholders of GZA. See "SUMMARY--The Companies," and
"INFORMATION ABOUT FUTURECO."
- Participating executives and employees: Five members of GZA's
management, William R. Beloff, Joseph P. Hehir, Lawrence Feldman, William
E. Hadge and M. Joseph Celi, are stockholders of Futureco. Messrs. Celi
and Hadge are also directors of GZA. We refer to the members of GZA's
management who are stockholders of Futureco as the "participating
executives." We expect that a number of existing employees of GZA
(including the participating executives) will also invest in Futureco
prior to the effective time of the merger. Depending upon the number of
shares of GZA Common Stock and options to acquire GZA Common Stock that
each employee owns, he or she may elect to make the investment in
Futureco at least in part by an exchange of GZA shares for Futureco
shares and/or an exchange of GZA options for Futureco options. Those GZA
shares that will be exchanged for Futureco shares are called "excluded
shares" and the options that will be exchanged for Futureco options are
referred to as "excluded options." Neither the excluded shares nor the
excluded options will be converted into cash. Those employees who
exchange GZA shares or options are referred to as "participating
employees." Participating employees may own both excluded shares and
excluded options as well as shares and options which are converted into
the cash merger consideration. The participating executives and
participating employees may have interests that are different from, or in
addition to, your interests as a GZA stockholder generally. See "SPECIAL
FACTORS -- Interests of Certain GZA Directors, Officers and Stockholders
in the Merger."
- Selling stockholders: In addition, three GZA stockholders, including
Donald T. Goldberg, who is the Chairman of our Board of Directors,
William S. Zoino, who is a nominee for election as a Director at this
Special Meeting, and John E. Ayres, who is an executive officer of GZA,
have agreed to sell an aggregate of approximately 612,893 shares of GZA
Common Stock to Futureco in connection with the
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merger at a purchase price equal to $5.76 per share, and have also agreed
to vote their shares in favor of the merger. These stockholders are
sometimes referred to in this Proxy Statement as the "selling
stockholders." The selling stockholders may also have interests that are
different from your interests as a GZA stockholder generally. See
"SPECIAL FACTORS -- Interests of Certain GZA Directors, Officers and
Stockholders in the Merger."
- Tax consequences: Generally, the merger will be taxable for U.S. Federal
income tax purposes. You will recognize taxable gain or loss in the
amount of the difference between $6.40 and your adjusted tax basis for
each share of GZA Common Stock that you own that is exchanged for cash in
the merger. See "SPECIAL FACTORS -- Material Federal Income Tax
Consequences to Stockholders."
- Conditions: The Merger Agreement and the transactions contemplated by
the Merger Agreement are subject to GZA stockholder approval as well as
other conditions, including Futureco's obtaining the necessary financing
to complete the merger and the parties' obtaining necessary consents and
approvals. See "THE MERGER AGREEMENT -- Closing Conditions."
- After the merger: Upon completion of the merger, Futureco will own 100%
of GZA. The participating executives will own approximately 24% of
Futureco, on a fully diluted basis. And the other participating employees
will own the remaining shares of Futureco. See "SPECIAL FACTORS --
Interests of Certain GZA Directors, Officers and Stockholders in the
Merger."
QUESTIONS AND ANSWERS ABOUT THE MERGER
The following questions and answers are for your convenience only, and
briefly address some commonly asked questions about the merger. You should still
carefully read this entire Proxy Statement, including the attached appendices.
Q: WHAT AM I BEING ASKED TO VOTE UPON?
A: You are being asked to approve and adopt a merger agreement that provides
for the Merger Subsidiary to be merged with and into GZA. The Merger
Subsidiary is a newly formed Delaware corporation wholly owned by Futureco.
Futureco is a newly formed Delaware corporation whose officers, directors
and stockholders are also officers, directors or stockholders of GZA. If
this merger agreement (the "Merger Agreement") is approved and adopted, we
will no longer be a publicly-held corporation and you will no longer own GZA
Common Stock.
Q: WHAT WILL I RECEIVE FOR MY GZA COMMON STOCK IF THE MERGER IS COMPLETED?
A: You will be entitled to receive $6.40 per share in cash for each share of
GZA Common Stock you hold at the time of the merger. If you have
certificates for your GZA shares, you will be required to turn them in to
qualify for the payment. The paying agent or the surviving corporation will
be entitled to deduct and withhold certain taxes. If you hold shares in
"street name," your broker should help you with the paperwork to obtain your
payment. If you exercise your appraisal rights under Delaware law (see "WHAT
RIGHTS DO I HAVE TO DISSENT FROM THE MERGER?"), you may be entitled to the
appraised value of your shares, which may be more or less than the merger
price.
Q: WHY IS THE BOARD OF DIRECTORS RECOMMENDING THAT I VOTE IN FAVOR OF THE
MERGER AGREEMENT?
A: Acting upon the unanimous recommendation of a special committee of the Board
of Directors consisting solely of directors who are not officers or
employees of GZA and who have no financial interest in the proposed merger
that is different from that of GZA stockholders generally (the "Special
Committee"), the Board of Directors has unanimously determined that the
terms of the merger are advisable, and are fair to, and in the best
interests of, GZA stockholders. The Board of Directors and the Special
Committee unanimously recommend that you vote FOR the approval and adoption
of the Merger Agreement and the transactions contemplated by the Merger
Agreement.
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Q: WHAT WILL HAPPEN TO PRESENT MEMBERS OF MANAGEMENT?
A: We expect most members of our current management to continue to be employed
by GZA. However, immediately following the merger, the officers of the
Merger Subsidiary will become the officers of GZA, and the directors of the
Merger Subsidiary will become the directors of GZA. Members of GZA
management will be entitled to receive $6.40 per share in cash for each of
their shares of GZA Common Stock, other than any excluded shares held by the
participating executives or shares that the selling stockholders have agreed
to sell to Futureco in connection with the merger. GZA employees will
receive an amount equal to the difference, if any, between $6.40 per share
and the per share exercise price for any outstanding options that they hold,
other than excluded options, which will be converted into options to
purchase Futureco common stock. The paying agent or the surviving
corporation will be entitled to deduct and withhold certain taxes for those
entitled to payment. Upon completion of the merger, Futureco will own 100%
of GZA. The participating executives will own approximately 24% of Futureco,
and the other participating employees will own the remaining shares of
Futureco.
Q. IS THE MERGER SUBJECT TO ANY CONDITIONS OTHER THAN RECEIVING THE REQUISITE
STOCKHOLDER APPROVAL?
A: Yes. Before completion of the transactions contemplated by the Merger
Agreement, GZA, Futureco and the Merger Subsidiary must fulfill or waive
several closing conditions. These conditions include, among others,
Futureco's obtaining all financing necessary to complete the transactions
contemplated by the Merger Agreement, on terms acceptable to Futureco. If
these conditions are not satisfied or waived, the merger will not be
completed even if the stockholders vote to approve and adopt the Merger
Agreement.
Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?
A: We are working toward completing the merger as quickly as possible. If the
conditions to the merger are satisfied or waived, we hope to complete the
merger in November 2000.
Q: WILL I OWE ANY U.S. FEDERAL INCOME TAX AS A RESULT OF THE MERGER?
A: The receipt of cash for shares of GZA Common Stock in the merger will be a
taxable transaction for U.S. Federal income tax purposes and may also be a
taxable transaction under applicable state, local, foreign or other tax
laws. Generally, you will recognize gain or loss for these purposes equal to
the difference between $6.40 per share and your tax basis for the shares of
GZA Common Stock that you owned immediately before the merger. For U.S.
Federal income tax purposes, this gain or loss generally would be a capital
gain or loss if you held the shares as a capital asset. The receipt of cash
for shares of GZA Common Stock acquired by GZA employees through the
exercise of stock options may result in recognition by such employees of
ordinary income depending on how long the shares have been held by the
employee.
TAX MATTERS ARE COMPLICATED AND THE TAX CONSEQUENCES OF THE MERGER TO YOU
WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR TAX
ADVISOR FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER TO
YOU.
Q: WHEN AND WHERE IS THE SPECIAL MEETING?
A: The Special Meeting of GZA stockholders will be held at 10:00 a.m., Eastern
Standard Time, on Thursday, November 9, 2000 at the Sheraton Needham Hotel,
100 Cabot Street, Needham, Massachusetts.
Q: WHO CAN VOTE ON THE MERGER AGREEMENT?
A: Holders of GZA Common Stock at the close of business on September 25, 2000,
the record date for the Special Meeting, may vote in person or by proxy at
the Special Meeting.
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Q: WHAT VOTE IS REQUIRED TO APPROVE AND ADOPT THE MERGER AGREEMENT AND THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT?
A: The Merger Agreement and the transactions contemplated by the Merger
Agreement must be approved and adopted by the affirmative vote of at least a
majority of the outstanding shares of GZA Common Stock, and at least 66 2/3%
of the outstanding shares of GZA Common Stock that are not owned by
Futureco, within the meaning of Section 203 of the Delaware General
Corporation Law. At the record date for the Special Meeting, [ ] shares
of GZA Common Stock were outstanding. GZA has been informed that
[ ] of those shares are owned by Futureco
within the meaning of Section 203.
Q: WHAT DO I NEED TO DO NOW?
A: After you have carefully reviewed this Proxy Statement, including the
attached appendices, please mark your vote on your proxy card and sign and
mail it in the enclosed return envelope as soon as possible. This will
ensure that your shares will be represented at the Special Meeting. If you
sign and send in the proxy card and do not indicate how you want to vote,
your proxy will be voted FOR the approval and adoption of the Merger
Agreement and the transactions contemplated by the Merger Agreement. If you
do not vote by either sending in your proxy card or voting in person at the
Special Meeting, it will have the same effect as a vote AGAINST the approval
and adoption of the Merger Agreement and the transactions contemplated by
the Merger Agreement.
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Your broker will vote your shares only if you provide your broker with
written instructions as to how to vote your shares. You should follow the
directions provided by your broker regarding how to instruct your broker to
vote your shares. Without instructions, your shares will not be voted by
your broker and the failure to vote will have the same effect as a vote
AGAINST the approval and adoption of the Merger Agreement and the
transactions contemplated by the Merger Agreement. If you wish to attend the
Special Meeting and vote in person, you must first obtain a legal proxy from
your broker.
Q. WHAT RIGHTS DO I HAVE TO DISSENT FROM THE MERGER?
A: If you wish, you may dissent from the merger and seek an appraisal of the
fair value of your shares, but only if you comply with all requirements of
Delaware law summarized in "SPECIAL FACTORS--Dissenters' Rights of
Appraisal" and attached as Appendix C of this Proxy Statement. Based on the
determination of the Delaware Court of Chancery, the appraised fair value of
your GZA shares of Common Stock, which will be paid to you if you seek an
appraisal, may be more than, less than or equal to the $6.40 per share to be
paid in the merger.
Q: CAN I CHANGE MY VOTE AFTER I HAVE MAILED MY SIGNED PROXY CARD?
A: Yes. You can change your vote at any time before the vote is taken at the
Special Meeting. If you are the record holder of your shares, you can do
this in one of the following three ways:
- You can send a written notice dated later than your proxy card stating
that you would like to revoke your current proxy.
- You can complete and submit a new proxy card dated later than your
original proxy card.
If you choose either of the above two methods, you must submit your
notice of revocation or your new proxy card to the Secretary of GZA at
320 Needham Street, Newton Upper Falls, Massachusetts 02464. GZA must
receive the notice or new proxy card before the vote is taken at the
Special Meeting.
- You can attend the Special Meeting and vote in person. Simply attending
the Special Meeting and not voting, however, will not revoke your proxy.
If you hold your shares in "street name" and have instructed a broker to
vote your shares, you must follow the directions received from your broker
as to how to change your vote.
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Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. If the merger is completed, we will promptly send you written
instructions for how you should send in your stock certificates in exchange
for the $6.40 per share cash payment for your shares.
Q: WHO CAN HELP ANSWER MY QUESTIONS?
A: The information provided above in "question and answer" format is for your
convenience only and is merely a summary of the information contained in
this Proxy Statement. You should carefully read this entire Proxy Statement,
including the attached appendices.
If you have more questions about the merger or how to vote your shares you
should contact our proxy solicitor:
D.F. King & Co., Inc.
Banks and brokers call: [(212) 269-5500]
All others call toll-free: [(800) 949-2583]
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SUMMARY
This summary highlights selected information contained elsewhere in this
Proxy Statement and may not contain all of the information that is important to
you. You should carefully read this entire Proxy Statement, including the
attached appendices, and the other documents to which we refer in this Proxy
Statement. See "WHERE YOU CAN FIND MORE INFORMATION".
THE COMPANIES
GZA GeoEnvironmental Technologies, Inc.
320 Needham Street
Newton Upper Falls, MA 02464
Telephone: (617) 969-0500
GZA is a multidisciplinary consulting and engineering firm offering
environmental, geo-civil and remediation services, as well as regulatory
compliance, solid waste management, and various support services. Founded in
1964 as Goldberg-Zoino & Associates, Inc., GZA now employs approximately 425
engineers, scientists, and technical support staff in 17 offices nationwide. The
firm has completed over 60,000 projects in all 50 states and in 21 foreign
countries. GZA was reorganized as a Delaware corporation in 1989. GZA's
corporate headquarters are located at 320 Needham Street, Newton Upper Falls, MA
02464. See "WHERE YOU CAN FIND MORE INFORMATION."
Futureco Environmental, Inc.
9 Bridie Lane
Norfolk, MA 02056
Futureco was incorporated in Delaware on March 6, 2000 and is qualified as
a foreign corporation in Massachusetts. Futureco has not carried on any
activities to date other than those activities incident to its formation and in
furtherance of the merger, including but not limited to, entering into certain
stock purchase agreements and the Merger Agreement, as described herein. See
"INFORMATION ABOUT FUTURECO."
GeoEnvironmental Acquisition, Inc.
9 Bridie Lane
Norfolk, MA 02056
The Merger Subsidiary, a newly formed Delaware corporation, was formed
solely for the purpose of completing the merger. The Merger Subsidiary is wholly
owned by Futureco. It has not carried on any activities to date other than those
activities incident to its formation and as contemplated by the Merger
Agreement.
We sometimes refer to Futureco, the Merger Subsidiary, and certain persons
who may be considered to control these companies, identified in "INFORMATION
ABOUT FUTURECO" collectively as the "Futureco Parties."
THE MERGER
In the merger, each issued and outstanding share of GZA Common Stock will
be canceled and converted automatically into the right to receive $6.40 in cash,
without interest or any other payment thereon, with the following exceptions:
shares of GZA Common Stock held by Futureco, including any such shares acquired
from the participating employees and the selling stockholders, will remain
outstanding; treasury shares and shares of GZA Common Stock owned by any of
GZA's subsidiaries will be canceled; and shares held by dissenting stockholders
will be subject to appraisal in accordance with Delaware law.
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OUR RECOMMENDATIONS TO STOCKHOLDERS; FAIRNESS OF THE MERGER
The Board of Directors formed a special committee (the "Special
Committee"), which was given exclusive authority to evaluate acquisition and
other proposals from Futureco or other parties that might enhance the value of
GZA's Common Stock, to negotiate the terms of any proposed transaction, to
advise the Board of Directors as to whether or not to engage in the transaction
proposed by Futureco or any other transaction and to retain its own financial
advisor and its own legal counsel. The Special Committee has unanimously
determined that the terms of the merger are advisable, and are fair to, and in
the best interests of, GZA stockholders, and has recommended to the Board of
Directors that the Merger Agreement and the transactions contemplated by the
Merger Agreement be approved and adopted. The Special Committee consists solely
of directors who are not officers or employees of GZA, and who have no financial
interest in the proposed merger that is different from that of GZA stockholders
generally. The Board of Directors has also unanimously determined that the terms
of the merger are advisable, and are fair to, and in the best interests of, GZA
stockholders. THE BOARD OF DIRECTORS AND THE SPECIAL COMMITTEE TOGETHER
UNANIMOUSLY RECOMMEND THAT YOU VOTE FOR THE APPROVAL AND ADOPTION OF THE MERGER
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT. For
additional information regarding these recommendations, including the factors
upon which they were based, see "SPECIAL FACTORS -- Background of the Merger"
and "-- Recommendations of the Special Committee and Board of Directors;
Fairness of the Merger."
FAIRNESS OPINION
On August 14, 2000, the Special Committee received an oral opinion from
Houlihan Lokey Howard & Zukin Capital that, based upon and subject to the
limitations, assumptions and qualifications set forth in their opinion, as of
the date of their opinion, the $6.40 per share cash consideration to be received
in the merger by GZA stockholders was fair, from a financial point of view. This
opinion was confirmed in writing on August 16, 2000. The full text of this
opinion dated August 16, 2000, is attached as Appendix B to this Proxy
Statement. We urge you to read this entire opinion carefully. We will sometimes
refer to Houlihan Lokey Howard & Zukin Capital in this Proxy Statement as
"Houlihan Lokey."
INTERESTS OF GZA DIRECTORS AND OFFICERS IN THE MERGER
When considering the recommendation of GZA's Board of Directors with
respect to the merger, you should be aware that some of GZA's directors and
officers have interests that are different from, or in addition to, your
interests as a GZA stockholder. For example, the participating executives are
stockholders of Futureco and thus will retain an indirect equity interest in GZA
after completion of the merger. After the merger, the participating executives
are expected to own 100% of Futureco.
Under the terms of the Merger Agreement, all outstanding stock options of
GZA granted to employees, consultants or directors of GZA, except excluded
options, will vest and, on completion of an option exercise agreement, each
option holder will receive an amount of cash equal to the difference between
$6.40 per share and the option exercise price. Excluded options held by the
participating employees will be exchanged for options to purchase Futureco
common stock.
For more information on the interests of GZA officers and directors in the
merger, which may be different from, or in addition to, your interests as a GZA
stockholder, see "SPECIAL FACTORS -- Interests of Certain GZA Directors,
Officers and Stockholders in the Merger."
FINANCING FOR THE MERGER
Futureco estimates that approximately $15 million of third-party financing
will initially be required to complete the merger and to pay its related fees
and expenses. Futureco has received and accepted a commitment letter to finance
the merger from KeyBank National Association, in an aggregate amount sufficient
to fund these requirements. The commitment is in the amount of $19.5 million,
$9.5 million of which is structured as a term loan facility and $10 million of
which is a revolving credit facility which can be borrowed, repaid and
re-borrowed. The borrowers of the loans will initially be Futureco and the
Merger Subsidiary. Upon the completion of the merger, GZA will assume these
liabilities of the Merger Subsidiary.
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For additional information regarding the financing for the merger, see "SPECIAL
FACTORS -- Financing for the Merger."
RECORD DATE; VOTING POWER
At the Special Meeting to be held on November 9, 2000, you will be entitled
to one vote for each share of GZA Common Stock you hold of record as of
September 25, 2000.
The Merger Agreement must be approved and adopted by the affirmative vote
of at least a majority of the outstanding shares of GZA Common Stock, and of at
least 66 2/3% of the outstanding shares of GZA Common Stock not owned by
Futureco within the meaning of Section 203 of the Delaware General Corporation
Law. On the record date, there were [ ] shares of GZA Common Stock
entitled to vote at the Special Meeting. GZA has been advised by Futureco that
[ ] of those shares are owned by Futureco within the meaning of Section
203. For additional information concerning the effect of Section 203 of the
Delaware General Corporation Law on the merger, see "THE SPECIAL
MEETING -- Delaware Law Considerations."
The selling stockholders and all GZA directors and executive officers have
indicated that they intend to vote all of their GZA Common Stock FOR the
approval and adoption of the Merger Agreement and the transactions contemplated
by the Merger Agreement.
Futureco has entered into a purchase agreement with each of Donald T.
Goldberg, William S. Zoino, and John E. Ayres (the "selling stockholders"). As
amended, the agreements give Futureco the right to purchase a total of
approximately 612,893 shares of GZA Common Stock from them (together the
"Purchase Agreements"). The Purchase Agreements include commitments from the
selling stockholders to vote in favor of any merger proposed by Futureco.
As of the record date for the Special Meeting, the selling stockholders and
GZA directors and executive officers held an aggregate of [ ] shares of
GZA Common Stock, representing approximately [ ]% of the total number of
shares of Common Stock entitled to vote at the Special Meeting. That total
includes [ ] shares that are not owned by Futureco within the meaning
of Section 203 of the Delaware law, or approximately [ ]% of the total
shares that are not owned by Futureco.
THE MERGER AGREEMENT
The Merger Agreement, including the significant conditions to the closing
of the merger, is described in "THE MERGER AGREEMENT" and is attached as
Appendix A to this Proxy Statement. We encourage you to read carefully the
entire Merger Agreement, as it is the legal document that governs the merger.
APPRAISAL RIGHTS
GZA is a corporation organized under Delaware law. Under Delaware law, if
you do not vote in favor of the merger and you follow all of the procedures for
demanding appraisal rights described in "SPECIAL FACTORS -- Dissenters' Rights
of Appraisal" and attached in Appendix C, you will receive a cash payment for
the "fair value" of your shares of Common Stock, as determined by the Delaware
Court of Chancery, instead of the $6.40 cash payment to be received by the
Public Stockholders of GZA (as defined in "SPECIAL FACTORS -- Summary of
Financial Analyses Performed by Houlihan Lokey") in connection with the merger.
The price determined by the Delaware Court of Chancery may be more than, the
same as or less than the $6.40 in cash you would have received for each of your
shares in the merger if you had not exercised your appraisal rights. Generally,
in order to exercise appraisal rights, among other things:
- You must NOT vote in favor of the Merger Agreement and the transactions
contemplated by the Merger Agreement; and
- You must make a written demand for appraisal in compliance with Delaware
law BEFORE the vote on the Merger Agreement and the transactions
contemplated by the Merger Agreement.
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<PAGE> 12
Merely voting against the Merger Agreement will not preserve your appraisal
rights under Delaware law. Appendix C to this Proxy Statement contains the
Delaware statute relating to your appraisal rights. IF YOU WANT TO EXERCISE YOUR
APPRAISAL RIGHTS, YOU ARE URGED TO READ AND CAREFULLY FOLLOW THE PROCEDURES
DESCRIBED IN "SPECIAL FACTORS -- Dissenters' Rights of Appraisal" AND ATTACHED
IN APPENDIX C. FAILURE TO TAKE ALL OF THE STEPS REQUIRED UNDER DELAWARE LAW MAY
RESULT IN THE LOSS OF YOUR APPRAISAL RIGHTS.
EFFECTS OF THE MERGER
Upon completion of the merger, Futureco will own 100% of GZA. The
participating executives will own approximately 24% of Futureco, and Futureco
expects that other participating employees will own the remaining shares of
Futureco. You will no longer be a stockholder of GZA following the merger. GZA's
current stockholders, other than Futureco, will not participate in any future
earnings or losses and growth or decline of GZA. After the merger, GZA will be a
closely-held corporation. As a result, there will be no public market for GZA
Common Stock, and the GZA Common Stock will cease to be quoted on The Nasdaq
Stock Market. The registration of GZA Common Stock under the Securities Exchange
Act of 1934, as amended, which we refer to as the "Exchange Act," will be
terminated.
CONDITIONS TO THE MERGER
We will complete the merger only if a number of conditions are satisfied or
waived, including, but not limited to, the following:
- the Merger Agreement and the transactions contemplated by the Merger
Agreement are affirmatively approved by the holders of a majority of the
outstanding GZA Common Stock and by at least 66 2/3% of the shares of our
outstanding Common Stock not owned by Futureco;
- no injunctions or legal restraints prevent the completion of the merger
and the transactions contemplated by the Merger Agreement;
- the representations and warranties made by the parties must be materially
true and correct as of the Closing Date (as defined in "THE MERGER
AGREEMENT -- Closing of the Merger");
- the parties have materially performed their respective obligations under
the Merger Agreement;
- GZA has not experienced any material adverse changes since the date of
the Merger Agreement;
- each of GZA and Futureco has delivered an opinion of counsel to the other
that is satisfactory to the other;
- Futureco has obtained the financing necessary to complete the merger and
transactions contemplated in the Merger Agreement on terms acceptable to
Futureco; Futureco has advised us that the terms of the financing
commitment already obtained (except for certain financial covenants that
have not yet been negotiated) are acceptable to Futureco. See "SPECIAL
FACTORS -- Financing for the Merger";
- at least one business day before the Closing Date, we have received duly
executed stock option exercise agreements from all GZA stock option
holders other than holders of excluded options; and
- we have obtained all necessary consents and waivers from third parties.
If all of the other conditions are not either satisfied or waived, the
merger will not be completed even if our stockholders vote to approve the merger
and there are no other legal restraints hindering its completion.
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<PAGE> 13
TERMINATION OF THE MERGER AGREEMENT
GZA and Futureco may mutually agree in writing to terminate the Merger
Agreement at any time before the Certificate of Merger is accepted by the
Secretary of State of Delaware. In addition, either party may terminate the
Merger Agreement if, among other things:
- the other party breaches certain conditions;
- a government entity with legal authority prevents the completion of the
merger in a non-appealable manner;
- the closing conditions are not met by December 14, 2000. See "The MERGER
AGREEMENT -- Closing Conditions;"
- the merger is not completed, and the party seeking to terminate did not
proximately contribute to the failure;
- our stockholders do not approve the merger at the Special Meeting; or
- our Board withdraws or modifies its approval of the merger in connection
with a superior acquisition proposal. See "THE MERGER AGREEMENT -- GZA
Covenants."
In addition, Futureco may terminate the Merger Agreement if, among other
things:
- we enter into a definitive agreement with respect to any other
acquisition proposal. See "The MERGER AGREEMENT -- GZA Covenants;" or
- more than five percent of our record stockholders are dissenting
stockholders, as defined by Delaware law, as of the effective time.
Termination of the Merger Agreement by either party may be before or after
stockholder approval. For additional information about termination, see "THE
MERGER AGREEMENT -- Termination, Amendment and Waiver."
WHAT HAPPENS IF GZA RECEIVES A BETTER OFFER
The Merger Agreement provides that neither GZA nor any of its officers,
directors, employees, representatives or other agents will encourage, directly
or indirectly, any inquiries or proposals with respect to a merger, acquisition,
tender offer, or any other acquisition proposal other than the one contemplated
in the Merger Agreement, or provide any confidential information or otherwise
facilitate any acquisition proposal other than the one contemplated in the
Merger Agreement.
However, the Special Committee or our Board of Directors may continue to
discuss acquisition proposals and to cooperate with any party initially
contacted by GZA before GZA entered into the Merger Agreement, provided that
such talks could lead to a "superior acquisition proposal;" and the Board or the
Special Committee may discuss unsolicited acquisition proposals and cooperate
with the parties making such proposals if the unsolicited acquisition proposals
could become "superior acquisition proposals," and if it would be a breach of
fiduciary duty not to pursue such discussions. In such instances GZA must notify
Futureco of the acquisition proposals and give Futureco a reasonable amount of
time in which to respond. "Superior acquisition proposals" are bona fide
acquisition proposals made by third parties, which the Special Committee
determines in good faith could be more financially favorable to GZA stockholders
than the merger and are capable of being completed within a reasonable period of
time. For additional information about how acquisition proposals will be handled
under the Merger Agreement, see "THE MERGER AGREEMENT -- GZA Covenants."
EXPENSE REIMBURSEMENT UPON TERMINATION
If the Merger Agreement is terminated because our Board has withdrawn or
modified its approval or recommendation of the merger or has approved or
recommended, or we have entered into a definitive agreement with respect to,
another acquisition proposal, then we will be required to reimburse Futureco for
its
11
<PAGE> 14
reasonable, actual expenses in connection with the proposed merger, up to a
maximum of $750,000. For additional information with respect to this expense
reimbursement and the conditions upon which they would be payable, see "THE
MERGER AGREEMENT -- Termination, Amendment and Waiver."
AMENDING THE MERGER AGREEMENT
GZA, Futureco and the Merger Subsidiary may amend the Merger Agreement by
mutual written consent by action of the parties' boards of directors at any time
before the Certificate of Merger is filed with the Delaware Secretary of State.
However, following our stockholders' approval of the Merger Agreement, we cannot
amend the Merger Agreement without the further approval of our stockholders if
applicable law requires that our stockholders approve that amendment.
PRICE RANGE OF COMMON STOCK
GZA Common Stock is quoted on The Nasdaq Stock Market. On March 30, 2000,
the last trading day before GZA's public announcement that it had received a
preliminary acquisition proposal from a management group, GZA's Common Stock
closed at $5.00 per share. On May 15, 2000, the last day of trades before GZA's
public announcement that it had entered into a nonbinding letter of intent with
Futureco regarding the proposed merger, GZA's Common Stock closed at $5.875 per
share. On August 16, 2000, the last trading day before GZA's public announcement
of the Merger Agreement, GZA Common Stock closed at $5.6719 per share.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this Proxy Statement that are
not historical facts but rather reflect current expectations concerning future
results and events. When used in this Proxy Statement, the words "believes,"
"expects," "intends," "plans," "anticipates," "likely," "will," and similar
expressions identify the "forward-looking statements." These forward-looking
statements are subject to risks, uncertainties, and other factors, some of which
are beyond our control, that could cause actual results to differ materially
from those forecast or anticipated in the forward-looking statements. These
risks, uncertainties and other factors include, but are not limited to, the
following: competition; market pricing pressures; changes in federal, state, and
local legislation and regulations; our ability to execute projects within
contracted cost estimates; current or future claims made against us; our ability
to resolve contract and change order disputes favorably and availability of
qualified personnel to execute contracts and work plans.
Readers are cautioned not to place undue reliance on forward-looking
statements, which reflect management's view only as of the date of this Proxy
Statement. All forward-looking statements included in this Proxy Statement and
all subsequent forward-looking statements attributable to GZA or persons acting
on its behalf are expressly qualified in their entirety by these cautionary
statements. GZA undertakes no obligation to publicly release the result of any
revisions to these forward-looking statements that may be made to reflect events
or circumstances after the date of this Proxy Statement or to reflect the
occurrence of unanticipated events.
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<PAGE> 15
SELECTED CONSOLIDATED FINANCIAL DATA
The following table sets forth selected consolidated financial data for
each of the fiscal years in the five-year period ended February 29, 2000, and
for the three months ended May 31, 2000 and 1999. The selected consolidated
financial data presented below under the captions "Income Statement Data" for
each of the fiscal years in the five-year period ended February 29, 2000 and
"Balance Sheet Data" as of February 29, 2000, and February 28, 1999, 1998 and
1997, are derived from the consolidated financial statements of GZA and its
subsidiaries, which financial statements have been audited by
PricewaterhouseCoopers LLP, independent certified public accountants. The
unaudited selected consolidated financial data presented below under the
captions "Income Statement Data" and "Balance Sheet Data" as of and for the
three months ended May 31, 2000 and 1999, are derived from the unaudited
consolidated financial statements of GZA incorporated by reference in this Proxy
Statement from GZA's Quarterly Report on Form 10-Q for the three months ended
May 31, 2000. The financial data set forth below should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Consolidated Financial Statements as of February 29, 2000
and for each of the years in the three-year period ended February 29, 2000 and
for the three months ended May 31, 2000. GZA's audited consolidated financial
statements as of February 29, 2000 and February 28, 1999, and for each of the
years in the three-year period ended February 29, 2000, and the report thereon,
are incorporated by reference in this Proxy Statement from GZA's Annual Report
on Form 10-K, as amended, for the year ended February 29, 2000.
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<PAGE> 16
No pro forma data giving effect to the merger are provided because GZA does
not believe that pro forma information is material to stockholders in evaluating
the merger and the Merger Agreement because the merger consideration is all cash
and if the merger is completed, GZA's Public Stockholders will no longer have
any equity interest in GZA.
<TABLE>
<CAPTION>
THREE MONTHS FISCAL YEAR ENDED
ENDED MAY 31, ----------------------------------------------------
----------------- FEB. 29, FEB. 28, FEB. 28 FEB. 28, FEB. 29,
2000 1999 2000 1999 1998 1997 1996
------- ------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues.................................. $17,679 $15,533 $72,083 $60,653 $59,546 $59,340 $69,825
Subcontractor costs and other direct
expenses................................ 6,350 4,849 27,932 20,345 21,695 21,129 29,667
------- ------- ------- ------- ------- ------- -------
Net Revenues.......................... 11,329 10,684 44,151 40,308 37,851 38,211 40,158
Costs and Expenses:
Salaries and related costs.............. 8,299 8,028 31,661 28,766 26,981 27,782 28,918
General and administrative.............. 2,775 2,741 10,690 9,444 9,060 9,864 9,990
------- ------- ------- ------- ------- ------- -------
Income (loss) before other income and
taxes................................... 255 (85) 1,800 2,098 1,810 565 1,250
------- ------- ------- ------- ------- ------- -------
Total other income, net................... 103 69 294 383 437 256 33
------- ------- ------- ------- ------- ------- -------
Income (loss) before provision for income
taxes................................... 358 (16) 2,094 2,481 2,247 821 1,283
Provision (benefit) for income taxes...... 143 (7) 819 972 877 292 485
------- ------- ------- ------- ------- ------- -------
Net income (loss) before discontinued
operations.............................. 215 (9) 1,275 1,509 1,370 529 798
Loss from discontinued operations, net of
income taxes............................ -- -- -- -- -- -- (99)
Net income (loss)......................... 215 (9) 1,275 1,509 1,370 529 699
Comprehensive income (loss)............... 212 (29) $ 1,234 1,505 1,371 539 --
------- ------- ------- ------- ------- ------- -------
Per share amounts:
Basic earnings (loss) per share before
discontinued operations............... $ 0.06 $ 0 $ 0.35 $ 0.42 $ 0.35 $ 0.13 $ 0.21
Basic loss per share from discontinued
operations............................ (0.03)
Basic earnings (loss) per share......... $ 0.06 $ (0.00) $ 0.35 $ 0.42 $ 0.35 $ 0.13 $ 0.18
Basic weighted average shares........... 3,676 3,612 3,629 3,604 3,932 3,929 3,857
Diluted earnings (loss) per share before
discontinued operations............... $ 0.06 $ 0 $ 0.35 $ 0.41 $ 0.34 $ 0.13 $ 0.21
Diluted loss per share from discontinued
operations............................ (0.03)
Diluted earnings (loss) per share....... $ 0.06 $ (0.00) $ 0.35 $ 0.41 $ 0.34 $ 0.13 $ 0.18
Diluted weighted average shares......... 3,827 3,612 3,678 3,674 3,973 3,929 3,857
======= ======= ======= ======= ======= ======= =======
BALANCE SHEET DATA:
Working capital........................... $18,959 $18,776 $17,551 $17,366 $17,177 $18,175
Total assets.............................. 37,993 38,359 35,257 34,221 35,535 37,614
Total stockholders' equity................ 25,854 25,617 24,141 22,886 23,257 22,465
======= ======= ======= ======= ======= =======
</TABLE>
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<PAGE> 17
THE SPECIAL MEETING
DATE, TIME, PLACE AND RECORD DATE OF THE SPECIAL MEETING
The Special Meeting of stockholders of GZA will be held on November 9,
2000, beginning at 10:00 a.m., Eastern Standard Time, at the Sheraton Needham
Hotel, 100 Cabot Street, Needham, Massachusetts. The accompanying proxy is being
solicited by our Board of Directors and is to be voted at the Special Meeting or
any adjournment(s) or postponement(s) thereof. The holders of record of our
Common Stock as of the close of business on September 25, 2000 are entitled to
receive notice of, and to vote at, the Special Meeting. On the record date,
there were [ ] shares of GZA Common Stock outstanding. No other voting
securities of GZA are outstanding.
PURPOSE
At the Special Meeting, you are being asked to consider and vote upon the
approval and adoption of the Merger Agreement, which provides for the merger of
the Merger Subsidiary with and into GZA. You are also being asked to elect three
Class II directors to serve in the event that the merger is not approved. In the
merger, each issued and outstanding share of GZA Common Stock will be canceled
and converted automatically into the right to receive $6.40 in cash, without
interest or any other payment thereon, with the following exceptions: shares of
GZA Common Stock that are held by Futureco will be retained by Futureco;
treasury shares and shares of GZA Common Stock owned by any of GZA's
subsidiaries will be canceled; and shares held by dissenting stockholders will
be subject to appraisal in accordance with Delaware law.
We do not expect to ask you to vote on any matters at the Special Meeting
other than those described in this Proxy Statement. However, if any other
matters are properly presented at the Special Meeting for consideration, the
holder of the proxies will have discretion to vote on these matters in
accordance with their best judgment, which may include voting to adjourn the
meeting to solicit additional proxies. Proxies voting against a specific
proposal may not be used by the holder to vote for adjournment of the Special
Meeting for the purpose of giving the holder additional time to solicit votes in
favor of that proposal.
VOTING INFORMATION
Each outstanding share of our Common Stock is entitled to one vote. The
presence, in person or by proxy, of the holders of a majority of the outstanding
shares of our Common Stock entitled to vote at the Special Meeting is necessary
to constitute a quorum for the transaction of business at the Special Meeting.
The affirmative vote of the holders of a majority of the outstanding shares of
our Common Stock, and of at least 66 2/3% of the outstanding shares of our
Common Stock that are not owned by Futureco within the meaning of section 203 of
the Delaware General Corporation Law are required to approve and adopt the
Merger Agreement and the transactions contemplated by the Merger Agreement.
The selling stockholders and the participating executives have agreed to
vote their shares to approve and adopt the Merger Agreement and the transactions
contemplated by the Merger Agreement. As of September 25, 2000, the selling
stockholders and the participating executives held [ ] shares,
representing approximately [ ]% of our outstanding Common Stock and
approximately [ ]% of the shares not owned by Futureco within the meaning of
section 203 of the Delaware law. See "SPECIAL FACTORS -- Interests of Certain
GZA Directors, Officers and Stockholders in the Merger."
Brokers who hold shares in "street name" for customers have the authority
to vote on "routine" proposals when they have not received instructions from
beneficial owners. However, absent specific instructions from the beneficial
owner of the shares, brokers are not allowed to exercise their voting discretion
with respect to the approval and adoption of non-routine matters such as the
merger. Abstentions and properly executed broker non-votes will be treated as
shares that are present and entitled to vote at the Special Meeting for purposes
of determining whether a quorum exists, but will have the same effect as votes
AGAINST the
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<PAGE> 18
approval and adoption of the Merger Agreement and the transactions contemplated
by the Merger Agreement.
DELAWARE LAW CONSIDERATIONS
Section 203 of the Delaware General Corporation Law, entitled "Business
Combinations with Interested Stockholders," provides that, with certain
exceptions, a Delaware corporation may not engage in a merger such as that
proposed in this Proxy Statement with a person or entity that became an
"interested stockholder" of the corporation within the three-year period
preceding the transaction, unless the merger is authorized by the affirmative
vote of at least two-thirds of the outstanding voting stock of the corporation
that is not owned by the interested stockholder. GZA's Board of Directors
believes that Futureco became an interested stockholder by virtue of its having
during the three-year period acquired or agreed to acquire more than 15% of the
outstanding voting stock of GZA. For purposes of Section 203, a person is deemed
to "own" stock that it owns beneficially, either directly or indirectly, or that
it has the right to acquire pursuant to any agreement, arrangement or
understanding, or if it has any agreement, arrangement or understanding to
acquire, vote or dispose of the stock. Futureco has advised us that as of
September 25, 2000, the record date for the Special Meeting, Futureco owns
(within the meaning of Section 203) [ ] shares of GZA Common Stock.
Thus, the affirmative vote of at least [ ] shares of GZA Common Stock
not owned by Futureco representing two-thirds of the shares of GZA Common Stock
outstanding on that date and not owned by Futureco, will be required to
authorize the merger. For additional information about Futureco and its
ownership of GZA Common Stock, see "INFORMATION ABOUT FUTURECO."
SOLICITATION, REVOCATION AND USE OF PROXIES
Proxies are being solicited by and on behalf of GZA's Board of Directors.
We will pay the costs of soliciting proxies from our stockholders as well as all
mailing and Securities and Exchange Commission ("Commission") filing fees
incurred in connection with this Proxy Statement. GZA has engaged the services
of D.F. King, to solicit proxies and to assist in the distribution of proxy
materials. In connection with its retention by GZA, D.F. King agreed to provide
solicitation services with respect to banks, brokers, institutional investors
and individual stockholders. GZA has agreed to pay D.F. King a fee of $7,500
plus a stated amount for each telephone call made by D.F. King, and to reimburse
its reasonable out-of-pocket expenses and to indemnify it against certain
liabilities and expenses, including liabilities and expenses under the Federal
securities laws. In addition to the solicitation of proxies by mail, some of our
directors, officers and employees may solicit proxies by telephone, facsimile
and personal contact, without separate compensation for those activities. Copies
of solicitation materials will be furnished to fiduciaries, custodians and
brokerage houses for forwarding to beneficial owners of Common Stock, and these
persons will be reimbursed for their reasonable out-of-pocket expenses.
The grant of a proxy on the enclosed form does not preclude you from
attending the Special Meeting and voting in person. You may revoke your proxy at
any time before it is voted at the Special Meeting. If you are a record holder,
you may revoke your proxy by:
- delivering to the Secretary of GZA, before the vote is taken at the
Special Meeting, a written notice of revocation bearing a later date than
the proxy;
- duly executing a later dated proxy relating to the same shares of Common
Stock and delivering it to the Secretary of GZA before the vote is taken
at the Special Meeting; or
- attending the Special Meeting and voting in person.
Attendance at the Special Meeting will not in and of itself constitute a
revocation of a proxy. Any written notice of revocation or subsequent proxy
should be sent to the Secretary of GZA at 320 Needham Street, Newton Upper
Falls, Massachusetts 02464, or hand delivered to the Secretary of GZA before the
vote is taken at the Special Meeting. All valid proxies will be voted at the
Special Meeting in accordance with the instructions given. If no instructions
are given, the shares represented by the proxy will be voted at the Special
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<PAGE> 19
Meeting for approval and adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement. If you hold your shares in "street name"
and have instructed a broker to vote your shares, you must follow the directions
received from your broker as to how to change your vote. If you hold your shares
in "street name" and wish to vote in person at the Special Meeting, you must
first obtain a legal proxy from your broker.
Stockholders who do not vote in favor of approval and adoption of the
Merger Agreement and the transactions contemplated by the Merger Agreement, and
who otherwise comply with the applicable statutory procedures of the Delaware
General Corporation Law summarized elsewhere in this Proxy Statement, will be
entitled to seek appraisal of the value of their Common Stock under Section 262
of the Delaware General Corporation Law. See "SPECIAL FACTORS -- Dissenters'
Rights of Appraisal."
PLEASE DO NOT SEND IN YOUR STOCK CERTIFICATES AT THIS TIME. IN THE EVENT
THE MERGER IS COMPLETED, WE WILL SEND YOU INSTRUCTIONS REGARDING THE PROCEDURES
FOR EXCHANGING YOUR EXISTING STOCK CERTIFICATES FOR THE $6.40 PER SHARE CASH
PAYMENT.
SPECIAL FACTORS
BACKGROUND OF THE MERGER
In May 1999, some members of GZA's senior management informed the Board of
Directors that a management group might be interested in acquiring the
outstanding Common Stock of GZA. At its May 17, 1999 meeting, the Board decided
that it would consider offers brought before the Board. The Board also sought
financial advice from Houlihan Lokey concerning the valuation of GZA's Common
Stock. During the following several months, some members of GZA's senior
management evaluated a potential management-led buyout; however, no formal
proposal was presented to the Board.
In February 2000, the Board received a letter dated February 8 from Kelco
Acquisition Corp., a company unrelated to GZA or to any of GZA's officers or
directors, proposing a business combination whereby Kelco would acquire the
publicly-held shares of GZA's outstanding Common Stock for $5.00 per share in
cash, provided that shares held by senior management and certain affiliates of
GZA would be exchanged for shares of Kelco and subject to other stated
conditions. On February 14, the Board engaged Houlihan Lokey to advise it in
evaluating the proposal and considering strategic alternatives that might be
available. On February 22, the Board met, received advice from Houlihan Lokey,
and determined that the terms proposed by Kelco were inadequate and that it was
unlikely that the combination could be consummated as proposed. Accordingly, the
Board voted to decline the Kelco offer. At that meeting, the Board also decided
to consider adoption of a stockholders' rights plan and asked the President to
consult with GZA's outside counsel, Foley, Hoag & Eliot LLP (sometimes referred
to as "FH&E"), and with Houlihan Lokey and to prepare a recommended form of plan
for consideration at the Board's next meeting. At the conclusion of the meeting,
some members of GZA's senior management informed the Board that they were aware
of the Kelco offer and that they intended to form a management group to develop
and to present to the Board another proposal for a going-private transaction.
They said that they hoped to formulate the proposal within the next two weeks
and asked the Board to give the proposal careful consideration when it was
presented. After the management group left the meeting, the Board took no formal
action and made no commitment; but it was the sense of the meeting that any
management proposal, if presented, should be considered on its merits and in
context with any alternative courses that might be available at the time.
On March 3, the Board met and reviewed a proposed form of stockholders'
rights plan. At the meeting, FH&E advised the Board on the principles of
corporation law and fiduciary duty applicable to adoption of rights plans and
similar actions that might be characterized as anti-takeover measures. Houlihan
Lokey presented an analysis of the possible economic effect of the proposed plan
and the basis of various assumptions as to the possible exercise price of the
rights and projected market prices for GZA's stock during the period
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<PAGE> 20
when rights might be outstanding. The Board decided to take no immediate action
but to consider the proposed plan and possible revisions of the proposed plan at
a later meeting or meetings. Mr. Perini then reported that he had been informed
by Messrs. Beloff and Celi that the management group expected to submit a
proposal by March 14. Accordingly, the Board voted to form a Special Committee
consisting of Messrs. Devitt, Mandell, Perini and Philbin and Ms. Giordano, all
the directors of GZA who were not and are not employees of GZA or associated
with any of the members of the management group. The Special Committee was
authorized on behalf of GZA to consider the management group's offer if and when
presented, to consider strategic alternatives that might be available to the
Company, and to make recommendations to the Board of Directors. The Special
Committee was also authorized in its discretion to engage legal counsel and
financial advisers.
Following the Board meeting, the Special Committee met and elected Mr.
Perini its chair and Mr. Devitt its vice-chair. Thereafter, the Special
Committee engaged Houlihan Lokey as its financial adviser and the firm of
Epstein Becker & Green P.C. (sometimes referred to as "EB&G"), as its legal
counsel.
On March 7, the management group sent a letter to the Special Committee
asking for an exclusivity period to present an acquisition proposal. On March
10, the Special Committee met and decided not to enter into a formal exclusivity
agreement.
On March 21, Mr. Beloff and Mr. Celi, representing Futureco, presented to
Mr. Perini a draft letter of intent proposing that Futureco would acquire all
the outstanding shares of GZA Common Stock for cash at $5.65 per share. On March
22, the Special Committee met and authorized Mr. Perini and EB&G to negotiate
provisions of the proposed letter of intent, but the sense of the meeting was
that the price was too low. Mr. Perini informed Futureco that the proposed
letter of intent was not acceptable. On the same day, Futureco entered into the
Purchase Agreements with Messrs. Goldberg, Zoino, and Ayres providing for
Futureco's acquisition of their GZA holdings in the event that a business
combination were consummated.
Acquisitor plc, a British investment group, filed a Schedule 13D statement
with the SEC reporting that on March 27 it had acquired 219,200 shares of GZA's
Common Stock, approximately 5.3% of the total shares outstanding.
On March 31, GZA issued a press release announcing that its Board had
received a preliminary proposal for a management buyout for cash, that the
Special Committee had been organized and that the Special Committee had engaged
Houlihan Lokey and EB&G.
On April 6, Futureco delivered a revised draft letter of intent providing
for a price of $6.10 per share of GZA Common Stock. During the next two weeks,
Mr. Perini and Mr. Devitt had numerous meetings and telephone conversations with
Messrs. Beloff, Celi, and Hadge, principals of Futureco; Houlihan Lokey had
several telephone conversations with Tucker Anthony Cleary Gull (sometimes
referred as "Tucker Anthony"), the financial advisor for Futureco; and EB&G had
numerous telephone conversations with Bowditch & Dewey (sometimes referred to as
"B&D"), legal counsel for Futureco. These meetings and conversations concerned
various provisions of the Futureco proposal, including principally the price,
the amount and application of a possible break-up fee, the terms of proposed
employment agreements between Futureco and principals who were then employed by
GZA, and procedures for seeking a "market test" of whether Futureco's proposed
terms were sufficiently attractive that other possible acquirors of GZA would
not be induced to offer better terms.
On April 16, Tucker Anthony on behalf of Futureco communicated to Houlihan
Lokey a revised proposal for a buyout at $6.10 per share. On April 18, the
Special Committee determined that the $6.10 price was still too low.
On April 19, the Special Committee met to receive status reports from Mr.
Perini, Mr. Devitt, Houlihan Lokey, and EB&G. The committee decided to continue
negotiations with Futureco with a view to improving the terms of the offer.
18
<PAGE> 21
On April 20, Messrs. Perini and Devitt participated in a telephone
conference with representatives of Futureco, Houlihan Lokey, and Tucker Anthony,
in which the participants discussed the need for a market test in order to
determine whether the proposed price would be fair in comparison with what other
possible acquirors might offer.
On April 25, Messrs. Beloff, Celi, and Hadge communicated to Messrs. Perini
and Devitt a revised proposal at a price of $6.25 per share. On April 25 and 28,
the Special Committee met, decided that that price was inadequate, and
instructed Houlihan Lokey to investigate whether other parties might be
interested in making competing proposals. Meanwhile, the Special Committee and
its advisers continued to negotiate other provisions, including a proposed
break-up fee.
During the first two weeks of May, Houlihan Lokey initiated discussions
with other persons who Houlihan Lokey believed might be interested in acquiring
GZA. As a result of those discussions, eventually seven parties executed
confidentiality agreements with GZA and were provided with detailed financial
and other information. Meanwhile, Mr. Perini and Mr. Devitt continued
discussions with Messrs. Beloff, Celi, and Hadge and EB&G continued discussions
with B&D concerning the terms and provisions of the revised proposed letter of
intent. On May 9, Futureco and Acquisitor plc entered into an agreement giving
Futureco the option to purchase all shares of GZA Common Stock held by
Acquisitor at a price equal to the greater of $6.25 per share or the final
merger price.
On May 10, Mr. Perini and Mr. Devitt informed Messrs. Beloff, Celi, and
Hadge that Houlihan Lokey had initiated discussions with other prospective
purchasers. On May 15, Mr. Devitt informed Mr. Celi that the Special Committee
intended to suspend discussions with Futureco in view of the lack of progress in
the discussions since the April 25 offer was made. On May 15, Futureco sent to
the Special Committee a revised offer at $6.45 per share. On May 16, the Special
Committee met and voted to enter into a letter of intent at that price, subject
to negotiation of a definitive agreement, to approval by the full board and the
stockholders of GZA, completion of Futureco's financing arrangements, and to
there being no restriction on GZA's right to provide information to and to
continue discussions with other possible acquirors pending negotiation of the
definitive agreement. On May 17, the letter of intent was executed and GZA
issued a press release announcing that the letter of intent had been executed.
During the remainder of May and June, EB&G and B&D negotiated the
provisions of a definitive merger agreement, while Houlihan Lokey pursued
discussions with other possible purchasers, including the seven who executed
confidentiality agreements. Ultimately, those discussions did not result in a
competing proposal by any of the other parties.
On June 29, Mr. Celi told Mr. Devitt by telephone that financing concerns
relating to some of GZA's assets and contingent liabilities would require an
adjustment in Futureco's proposed price and that Futureco wanted a limitation on
the amount of GZA's transaction expenses that Futureco would assume. The
contingent items included primarily GZA's interest in a pending sale of a
brownfield development property, costs associated with the planned relocation of
GZA's offices and reorganization of some of its regional offices, and the impact
of GZA's discontinuing operation of its Information Services Division.
On June 30, Futureco announced that its agreement with Acquisitor plc had
expired by its terms.
On July 6, Mr. Devitt told Mr. Celi by telephone that the Special Committee
would instruct EB&G to discontinue negotiations with B&D in view of the lack of
progress toward a definitive agreement. He also suggested to Mr. Celi that the
Special Committee might accept a reduction of the price to $6.40 per share in
recognition of the contingent factors raised on June 29 and discussed
thereafter. He also stated that the Special Committee would not agree to revise
any other significant terms of the transaction, including the provisions for
payment of transaction expenses. On July 13, Mr. Beloff told Mr. Devitt by
telephone that Futureco would be prepared to proceed at a price of $6.40 per
share without revising any other material terms.
19
<PAGE> 22
On July 18, the Special Committee met and voted to present the transaction
for approval by the full Board of GZA as soon as the definitive agreement was
complete. EB&G and B&D continued negotiation of the definitive agreement for the
last two weeks of July and the first week of August.
On August 14, 2000, the Special Committee met at the offices of GZA and
reviewed with EB&G the terms and conditions of the Merger Agreement and other
documents in substantially final form, as compared with the drafts previously
reviewed by the Special Committee. At the August 14, 2000 meeting, Houlihan
Lokey made a presentation to the Special Committee and advised the Special
Committee that, in its opinion, as of that date, based on and subject to the
limitations, assumptions and qualifications that are set forth in its written
opinion, the merger consideration of $6.40 per share in cash to be received by
the stockholders of GZA, was fair from a financial point of view. A discussion
with and questions to Houlihan Lokey by the Special Committee followed Houlihan
Lokey's presentation. EB&G reviewed applicable fiduciary duty standards with the
Special Committee members. The Special Committee then concluded that, in the
circumstances then existing, the $6.40 per share cash offer was, for GZA's
Public Stockholders, preferable to continuing to hold shares in the public
company, and represented the highest price Futureco was willing to pay. The
Special Committee discussed the terms of the Merger Agreement and the interests
of GZA's management employees in the transaction. After considering the matters
discussed, the Special Committee unanimously determined that the terms of the
merger are advisable, and are fair to, and in the best interests of, GZA's
Public Stockholders, and recommended to the Board of Directors and to GZA's
Public Stockholders that the Merger Agreement and the transactions contemplated
by the Merger Agreement be approved.
Immediately following the August 14 meeting of the Special Committee, the
entire Board of Directors met at the offices of GZA. Houlihan Lokey discussed
its presentation and responded to questions from members of the Board of
Directors. EB&G responded to questions regarding the terms of the Merger
Agreement and other documents, and FH&E advised the Board of Directors with
respect to the fiduciary duties of the directors. The Board of Directors
discussed the terms of the Merger Agreement and the interests of GZA's
management employees in the transaction. After considering the matters presented
to the Board of Directors, the Board of Directors unanimously resolved that the
terms of the merger are advisable, and are fair to, and in the best interests
of, GZA's Public Stockholders, and recommended to GZA's Public Stockholders that
the Merger Agreement and the transactions contemplated by the Merger Agreement
be approved and adopted.
On August 16, 2000, Houlihan Lokey delivered its written opinion to the
Board of Directors; and GZA, Futureco and the Merger Subsidiary entered into the
Merger Agreement, and on August 17 GZA issued a press release announcing the
execution of the Merger Agreement.
RECOMMENDATIONS OF THE SPECIAL COMMITTEE AND BOARD OF DIRECTORS; FAIRNESS OF THE
MERGER
The Special Committee of the Board of Directors has unanimously determined
that the terms of the merger are advisable, and are fair to, and in the best
interests of, GZA's Public Stockholders. The Special Committee unanimously
recommended to the Board of Directors and GZA stockholders that the Merger
Agreement and the transactions contemplated by the Merger Agreement be approved
and adopted. The Special Committee considered a number of factors, as more fully
described above under "-- Background of the Merger" and as described below under
"-- Reasons for the Special Committee's Determination," in determining to
recommend that the Board of Directors and GZA stockholders approve the Merger
Agreement and the transactions contemplated by the Merger Agreement. The Board
of Directors, acting upon the recommendation of the Special Committee,
unanimously determined that the terms of the merger are advisable, and are fair
to, and in the best interests of, GZA's Public Stockholders. The Board of
Directors and the Special Committee unanimously recommend that you vote FOR the
approval and adoption of the Merger Agreement and the transactions contemplated
by the Merger Agreement.
20
<PAGE> 23
Reasons for the Special Committee's Determination. In reaching its
recommendation, the Special Committee considered a number of factors, both
positive and negative, including the following material factors:
- the financial and other terms of the Merger Agreement;
- the business, results of operations, properties and financial condition
of the Company and the nature of the industry in which it operates;
- the history of the price of the shares of GZA Common Stock on The Nasdaq
Stock Market over the past eighteen months and the recent daily trading
volume in GZA's shares;
- the discussions held by GZA with other companies regarding potential
business combination transactions with GZA and the Special Committee's
view, in light of these discussions, as to the likelihood of a superior
proposal;
- GZA's existing competitive and market position, including GZA's ability
to effectively compete with companies having significantly greater
financial resources than GZA;
- the alternatives available to GZA in light of the consideration proposed
to be received pursuant to the Merger Agreement, including continuing to
maintain GZA as an independent company and not engaging in any
extraordinary transaction, or engaging in an extraordinary transaction
designed to increase the trading price for shares of GZA's Common Stock;
- the financial presentation of Houlihan Lokey and its opinion as to the
fairness, from a financial point of view, of the merger consideration to
GZA's Public Stockholders;
- the Special Committee's belief that $6.40 per share of Common Stock was
the highest price that Futureco was willing to offer;
- the absence of any proposals from unaffiliated third parties to buy the
Company during the period since the filing of the Company's press release
disclosing that it was considering various strategic alternatives;
- the arm's-length nature of the negotiations between the Special Committee
and its advisors with Futureco and its advisors, evidenced among other
things by (i) the process of discussions regarding valuations of the
Company and its securities and terms of a possible transaction; (ii) the
Special Committee's rejection of several of Futureco's proposed offers;
(iii) the price increases achieved by the Special Committee and its
representatives; (iv) the fact that the initial draft of the Merger
Agreement received from B&D reflected a majority of the terms that the
Special Committee and its representatives believed would need to be
included in any draft merger agreement; and (v) the significant
improvements to the initial draft of the Merger Agreement that were
negotiated by the Special Committee and its representatives;
- the judgment that the price of $6.40 per share would adequately reflect
the unaffiliated stockholders' loss of the opportunity to participate in
any potential future growth of GZA; and
- the availability to dissenting stockholders of appraisal rights under
Section 262 of the Delaware General Corporation Law.
The members of the Special Committee also determined that the merger is
procedurally fair because, among other things:
- the Special Committee, consisting solely of directors who are not
officers or employees of GZA, and who have no financial interest in the
proposed merger different from GZA stockholders generally, had exclusive
authority to consider, negotiate and evaluate the terms of any proposed
transaction, including the merger;
21
<PAGE> 24
- none of the members of the Special Committee has or expects to have any
financial interest in Futureco;
- the Special Committee retained and received advice from independent legal
counsel and financial advisors in negotiating and evaluating the terms of
the Merger Agreement;
- the $6.40 per share cash consideration and the other terms and conditions
of the Merger Agreement resulted from arm's-length bargaining between the
Special Committee and its representatives, on the one hand, and Futureco
and its representatives, on the other hand; and
- the affirmative vote of 66 2/3% the outstanding GZA Common Stock not
owned by Futureco is required under Delaware law to approve and adopt the
Merger Agreement and, under Delaware law, GZA stockholders have the right
to dissent from the merger and demand an appraisal of the value of their
shares.
The foregoing discussion addresses the material information and factors
considered by the Special Committee in its consideration of the merger,
including factors that support the merger as well as those that may weigh
against it. In view of the variety of factors and the amount of information
considered, the Special Committee did not find it practicable to, and did not
specifically make assessments of, quantify or otherwise assign relative weights
to the various factors and analyses considered in reaching its determination.
The determination to approve the Merger Agreement and the transactions
contemplated by the Merger Agreement was made after consideration of all the
factors as a whole.
Reasons for the Board of Directors' Determination. In reaching its
decision to approve the Merger Agreement and the transactions contemplated by
the Merger Agreement, the Board of Directors relied on the Special Committee's
recommendation and the factors examined by the Special Committee as described
above. In view of the wide variety of factors considered in connection with its
evaluation of the proposed merger, the Board of Directors did not find it
practicable to quantify and did not quantify or otherwise attempt to assign
relative weights to the foregoing factors or determine that any factor was of
particular importance. Rather, the Board of Directors viewed its position as
being based on the totality of the information presented and considered by it.
In connection with its consideration of the determination by the Special
Committee, as part of its determination with respect to the merger, the Board of
Directors adopted the conclusion and the analysis underlying the conclusion of
the Special Committee, based upon its view as to the reasonableness of that
analysis.
Fairness of the Merger to Unaffiliated Stockholders. The Board of
Directors believes that the merger is substantively and procedurally fair to and
in the best interests of GZA's stockholders who are not affiliated with Futureco
for all of the reasons set forth above. In addition, with respect to procedural
fairness, the Board of Directors formed the Special Committee consisting of
directors of GZA, none of whom are officers or employees of GZA or have an
interest in the proposed merger different from that of GZA's unaffiliated
stockholders generally. The consideration of $6.40 in cash per share was the
highest price obtained following arm's length negotiations between the Special
Committee and representatives of Futureco.
In reaching these conclusions, the Board of Directors considered it
significant that:
- no member of the Special Committee has an interest in the proposed merger
different from that of GZA's stockholders generally;
- the Special Committee retained its own financial and legal advisors, who
have extensive experience with transactions similar to the merger and who
assisted the Special Committee in the negotiations with Futureco; and
- Houlihan Lokey had been retained to advise the Special Committee as to
the fairness, from a financial point of view, of the proposal received
from Futureco or any third party, and Houlihan Lokey had reached the
conclusions expressed in its written opinion dated August 16, 2000.
22
<PAGE> 25
The Board of Directors believes that the merger is procedurally fair to
GZA's Public Stockholders for all of the reasons and factors described above.
Position of the Futureco Parties as to the Fairness of the Merger. Under a
potential interpretation of the Exchange Act rules governing "going private"
transactions, Futureco and the Merger Subsidiary may be deemed to be affiliates
of GZA. The Futureco Parties are making the statements included in this
sub-section solely for the purposes of complying with the requirements of Rule
13e-3 and related rules under the Exchange Act. The Futureco Parties' position
as to the fairness of the merger is not a recommendation to any stockholder as
to how that stockholder should vote on the merger.
The Futureco Parties believe that the merger is substantively and
procedurally fair to GZA's stockholders who are not affiliated with Futureco.
However, none of the Futureco Parties has undertaken any formal evaluation of
the fairness of the merger to GZA's unaffiliated stockholders. Moreover, the
Futureco Parties did not participate in the deliberations of the Special
Committee or receive advice from the Special Committee's financial advisor. The
Futureco Parties believe that the merger is substantively fair to GZA's
unaffiliated stockholders based on the current and historical market prices of
GZA's Common Stock. The Futureco Parties believe that the merger is procedurally
fair to GZA's unaffiliated stockholders because the Special Committee,
consisting solely of directors who are not officers or employees of GZA, and who
have no financial interest in the proposed merger different from GZA
stockholders generally, was given exclusive authority to, among other things,
consider, negotiate and evaluate the terms of any proposed transaction,
including the merger. The Futureco Parties also believe that the merger is
procedurally fair to GZA's unaffiliated stockholders, because the Merger
Agreement requires that the holders of two-thirds of GZA's shares that are not
owned by Futureco vote in favor of approval and adoption of the Merger Agreement
in order to complete the merger.
Under a potential interpretation of the Exchange Act rules governing "going
private" transactions, one or more of the participating executives may be deemed
to be affiliates of GZA. The participating executives are making the statements
included in this sub-section solely for the purposes of complying with the
requirements of Rule 13e-3 and related rules under the Exchange Act. Although
the participating executives may have interests in the merger that are different
from, or in addition to, your interests as a GZA stockholder, each of the
participating executives, in his capacity as an officer of GZA, believes that
the merger is substantively and procedurally fair to GZA's unaffiliated
stockholders, in each case, based only on the limited facts and information
available to him.
The participating executives did not participate in the deliberations of
the Special Committee. However the participating executives considered the same
factors examined by the Special Committee described above under "-- Reasons for
the Special Committee's Determination" and have adopted the conclusion and the
analysis underlying the conclusion of the Special Committee, based upon their
view as to the reasonableness of that analysis. In addition, Mr. Celi and Mr.
Hadge, as members of GZA's Board of Directors, participated in the consideration
of the merger transaction by the Board of Directors as discussed above under
"-- Reasons for the Board of Director's Determination." Based on these factors,
considered together, the participating executives believe that the merger is
substantively and procedurally fair to GZA's unaffiliated stockholders. The
participating executives believe that the merger is procedurally fair to GZA's
unaffiliated stockholders for all of the reasons and factors described above
under "-- Reasons for the Special Committee's Determination."
The participating executives believe these analyses and factors provide a
reasonable basis upon which to form their belief that the merger is fair to
GZA's unaffiliated stockholders. This belief should not, however, be construed
as a recommendation to GZA's Public Stockholders by the participating executives
to vote to approve and adopt the Merger Agreement and the transactions
contemplated by the Merger Agreement.
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<PAGE> 26
OPINION OF FINANCIAL ADVISOR TO THE SPECIAL COMMITTEE
The Special Committee asked Houlihan Lokey, in its role as financial
advisor to the Special Committee, to render an opinion as to the fairness from a
financial point of view to the stockholders of GZA of the consideration to be
received by the stockholders pursuant to the terms of the Merger Agreement.
Houlihan Lokey delivered to the Special Committee its written opinion, dated
August 16, 2000, to the effect that, as of that date, based on and subject to
the assumptions, limitations and qualifications set forth in its written
opinion, the consideration to be received by the holders of GZA Common Stock
pursuant to the Merger Agreement, was fair to the stockholders from a financial
point of view. The full text of Houlihan Lokey's opinion is attached as Appendix
B to this Proxy Statement. On October [9], 2000, Houlihan Lokey delivered to
GZA's Board of Directors a supplementary letter confirming that, based on an
updated analysis as of [September 30,] 2000 and subject to the same assumptions,
qualifications and limitations set forth in the Opinion, the consideration to be
received by GZA's Public Stockholder pursuant to the merger is fair to them from
a financial point of view.
SUMMARY OF FINANCIAL ANALYSES PERFORMED BY HOULIHAN LOKEY
The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. The
following is a brief summary and general description of the valuation
methodologies utilized by Houlihan Lokey. The summary does not purport to be a
complete statement of the analyses and procedures applied, the judgments made or
the conclusion reached by Houlihan Lokey or a complete description of its
presentation. Houlihan Lokey believes, and so advised the Special Committee of
the Board and the Board, that its analyses must be considered as a whole and
that selecting portions of its analyses and of the factors considered by it,
without considering all factors and analyses, could create an incomplete view of
the process underlying its analyses and opinions.
Houlihan Lokey understands that the Board of Directors of GZA received an
offer from Futureco to acquire all of the outstanding Common Stock of the
Company for $6.40 per share. Certain officers, directors or stockholders of
Futureco are also employees or stockholders of GZA. All other common
stockholders of GZA are referred to herein as the "Public Stockholders." Such
transaction and all related transactions are referred to collectively herein as
the "Transaction."
Houlihan Lokey was retained to act as financial advisors to the Special
Committee of the Board regarding (i) negotiations with a management investment
group (the "MBO Group") for a potential acquisition of 100% of the outstanding
Common Stock of the Company and certain related transactions, (ii) a possible
sale or merger of GZA involving all or a substantial part of the business,
assets or equity interests of GZA and/or its subsidiaries and affiliates in one
or more transactions with an unaffiliated third party; and, (iii) if and when
requested by the Special Committee, providing an opinion to the Special
Committee and GZA's Board that the Transaction is fair to GZA's common
stockholders from a financial point of view. At the August 14, 2000 meeting of
the Board, Houlihan Lokey presented its analysis as hereinafter described and
delivered its oral opinion that as of such date and based on the matters
described therein, the Transaction is fair to the Public Stockholders of GZA
from a financial point of view. That oral opinion was subsequently confirmed by
a written opinion dated August 16, 2000.
THE COMPLETE TEXT OF HOULIHAN LOKEY'S OPINION DATED AUGUST 16, 2000 IS
ATTACHED HERETO AS APPENDIX B. THE SUMMARY OF THE OPINION SET FORTH BELOW IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH OPINION. THE COMMON STOCKHOLDERS
ARE URGED TO READ SUCH OPINION CAREFULLY IN ITS ENTIRETY FOR A DESCRIPTION OF
THE PROCEDURES FOLLOWED, THE FACTORS CONSIDERED AND THE ASSUMPTIONS MADE BY
HOULIHAN LOKEY. HOULIHAN LOKEY'S WRITTEN OPINION IS FOR THE INFORMATION AND
ASSISTANCE OF THE BOARD AND DOES NOT CONSTITUTE A RECOMMENDATION AS TO HOW ANY
HOLDER OF COMMON STOCK OF GZA SHOULD VOTE WITH RESPECT TO THE TRANSACTION.
24
<PAGE> 27
Houlihan Lokey's opinion does not address GZA's underlying business
decision to effect the Transaction. At the request of the Special Committee,
Houlihan Lokey solicited third party indications of interest in acquiring all or
part of GZA. Furthermore, at the request of the Special Committee, Houlihan
Lokey (i) participated in the negotiations with regard to the Transaction and
(ii) advised the Special Committee of the Board with respect to alternatives to
the Transaction.
In connection with the preparation of its opinion, Houlihan Lokey made such
reviews, analyses and inquiries as they deemed necessary and appropriate under
the circumstances. Among other things, Houlihan Lokey:
1. reviewed GZA's annual reports to stockholders and on Form 10-K for
the five fiscal years ended February 29, 2000 and its quarterly report on
Form 10-Q for the three months ended May 31, 2000, which the Company's
management has identified as being the most current financial statements
available;
2. reviewed the Draft Agreement and Plan of Merger dated August 7,
2000;
3. met with certain members of the senior management of GZA to discuss
the operations, financial condition, future prospects and projected
operations and performance of GZA;
4. visited certain facilities and business offices of GZA;
5. reviewed forecasts and projections prepared by GZA's management
with respect to GZA for the year ending February 28, 2001;
6. reviewed the historical market prices and trading volume for GZA's
publicly traded securities;
7. reviewed certain other publicly available financial data for
certain companies that Houlihan Lokey deemed comparable to GZA, and
publicly available prices and premiums paid in other transactions that
Houlihan Lokey considered similar to the Transaction;
8. reviewed drafts of certain documents to be delivered at the closing
of the Transaction;
9. at the request of the Special Committee of GZA's Board of
Directors, approached and held discussions with third parties to solicit
indications of interest in the possible acquisition of GZA; and
10. conducted such other studies, analyses and inquiries as Houlihan
Lokey deemed appropriate.
In assessing the financial fairness of the Transaction to the Public
Stockholders, Houlihan Lokey considered the trading history of GZA's public
securities and independently valued GZA using widely accepted valuation
methodologies.
Assessment of GZA's Public Stock Price
As part of its analysis, Houlihan Lokey analyzed the trading value of the
Common Stock over the past eighteen months on Nasdaq.
Houlihan Lokey calculated the ratio of the GZA Common Stock's average daily
volume (over the most recent 90 days) to its float and total shares outstanding.
Houlihan Lokey then compared GZA's ratios to similar ratios of comparable
publicly traded companies.
Based on these analyses, Houlihan Lokey observed that (i) GZA generally has
a smaller public float than the comparable public companies, (ii) GZA's common
equity securities generally do not trade as actively as the comparable public
companies, and (iii) GZA has less analyst coverage than most of the comparable
public companies.
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<PAGE> 28
GZA'S COMMON STOCK RECENT TRADING PRICES
<TABLE>
<CAPTION>
1 MONTH AVG. 6 MONTH AVG.
PRICE PRIOR AVG. SINCE PRIOR PRIOR
CURRENT 3/31/00 3/31/00 3/31/00 3/31/00
(9/30/00) ANNOUNCEMENT ANNOUNCEMENT ANNOUNCEMENT ANNOUNCEMENT
--------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Common Stock Prices....... $[ ] $5.00 $5.99 $4.57 $4.22
</TABLE>
Analysis of Control Premiums. The analysis of control premiums involved
the application of control premium evidence from the comparable transaction
approach to GZA's unaffected stock price. The unaffected stock prices for GZA
are considered to be the periods prior to the announcement of the formation of
the Special Committee of the Board to review a proposal for acquisition by
certain members of management. These control premiums of 24% - 49% yielded an
implied value for the Common Stock of $6.22 to $6.50 per share.
VALUATION OF GZA
As part of its analysis, Houlihan Lokey completed an independent valuation
of GZA using the market multiple and comparable transaction approaches in
addition to analyzing the recent trading history of the Company's Common Stock.
As part of its analysis, Houlihan Lokey considered a number of GZA-specific
factors relevant to its valuation. Houlihan Lokey considered the value of (i)
GZA's excess cash, liquid assets and other non-operating assets, (ii) certain
potential contingent liabilities, and (iii) the dilutive impact of GZA's
outstanding stock options (collectively, the "Other Factors"). Based on this
analysis, the total additive impact of these Other Factors was in the range of
$1.57 to $2.23 per share.
Market Multiple Approach. The first approach, the market multiple
approach, involved the multiplication of revenue, earnings and asset measures by
appropriate risk-adjusted multiples. Multiples were determined through an
analysis of certain publicly traded companies, selected on the basis of
operational and economic similarity with the principal business operations of
GZA. Revenue, earnings, and asset multiples were calculated for the comparative
companies based upon daily trading prices. A comparative risk analysis between
GZA and these public companies formed the basis for the selection of appropriate
risk adjusted multiples for GZA. The risk analysis incorporated both
quantitative and qualitative risk factors, which relate to, among other things,
the nature of the industry in which GZA and the other comparative companies are
engaged.
For purposes of this analysis, Houlihan Lokey selected nine publicly
traded, domestic companies involved in providing environmental engineering
services. These companies were CET Environmental Services, Ecology and
Environment, EA Engineering, Science and Technology, STV Group, IT Group, Tetra
Tech, TRC Companies, Versar and Roy F. Weston. It should be noted that no
company utilized in this analysis is identical to GZA.
Houlihan Lokey reviewed trailing latest twelve month multiples of revenues,
earnings before interest, taxes, depreciation and amortization ("EBITDA") and
earnings before interest and taxes ("EBIT"), and projected EBITDA and EBIT for
the next fiscal year and multiples of assets for the comparable companies. The
multiples for the comparable companies are summarized below:
RANGE OF MULTIPLES FOR COMPARABLE COMPANIES
<TABLE>
<CAPTION>
REVENUE EBITDA EBIT ASSETS
------- ------ ---- ------
<S> <C> <C> <C> <C>
Low....................................... 0.16 1.9 2.7 0.33
High...................................... 2.05 13.2 22.2 2.65
Median.................................... 0.36 8.4 9.9 0.55
</TABLE>
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<PAGE> 29
These valuation multiples and consideration of the Other Factors yielded an
implied value for the Common Stock of approximately $5.68 to $7.50 per share.
Comparable Transaction Approach. The second approach, the comparable
transaction approach, also involved multiples of revenue, cash flow and assets.
Multiples analyzed in this approach involved controlling interest transactions
for companies with operations similar in some manner to GZA's operations. For
purposes of this analysis, Houlihan Lokey analyzed nineteen private transactions
that occurred between 1996 and 2000.
Based on the comparable transaction evidence, Houlihan Lokey observed
EBITDA multiples in the range of 4.6x to 12.0x and Revenue multiples in the
range of 0.26x to 1.00x. These valuation multiples and consideration of the
Other Factors yielded an implied value for the Common Stock of $6.81 to $7.13
per share.
Separately, Houlihan Lokey examined the acquisition of Harding Lawson,
another environmental engineering and consulting firm acquired in June 2000.
This analysis also involved multiples of revenue, EBIT, EBITDA and assets. These
valuation multiples and consideration of the Other Factors yielded an implied
value for the Common Stock of $5.54 to $7.24 per share.
Assessment of GZA's Strategic Alternatives to the Transaction
In evaluating the fairness of the Transaction, from a financial point of
view, Houlihan Lokey considered the expected value to GZA's Public Stockholders
of completing the Transaction and certain alternatives to the Transaction.
In the course of working for the Special Committee, Houlihan Lokey
considered the following strategic alternatives: (i) status quo; (ii) sale to a
strategic buyer; and (iii) sale to a financial buyer. The assessment of
strategic alternatives included an assessment of the valuation impact of the
Transaction relative to the alternatives considered by Houlihan Lokey. The
analysis did not quantify the valuation impact because, in the opinion of
Houlihan Lokey, it was not feasible to so quantify such impact due to the
significant number of non-quantifiable variables.
Houlihan Lokey relied upon and assumed, without independent verification,
that the financial forecasts and projections provided to them, as adjusted based
on their discussions with management, were reasonably prepared and reflected the
best currently available estimates of the future financial results and condition
of GZA, and that there had been no material change in the assets, financial
condition, business or prospects of GZA since the date of the most recent
financial statements made available to them.
Houlihan Lokey did not independently verify the accuracy and completeness
of the information supplied to them with respect to GZA and does not assume any
responsibility with respect to it. Houlihan Lokey has not made any independent
appraisal of any of the properties or assets of GZA. Houlihan Lokey's opinion
was necessarily based on business, economic, market and other conditions as they
existed and could be evaluated by them at the date of their letter.
Houlihan Lokey's opinion is for the use and benefit of the Special
Committee of the Board of Directors and the Board of Directors of the Company in
its evaluation of the Transaction and should not be used by any other person
without the prior written consent of Houlihan Lokey.
The opinion of Houlihan Lokey and its presentations to the Special
Committee and to GZA's Board constituted only one of a number of factors taken
into consideration by the Board in making its determination to approve the
Transaction. In addition, Houlihan Lokey's opinion does not constitute a
recommendation to the Special Committee of the Board of Directors, the Board of
Directors or any stockholder of the Company as to how to vote in connection with
the Transaction.
Houlihan Lokey is a nationally recognized investment banking firm with
special expertise in, among other things, valuing businesses and securities and
rendering fairness opinions. Houlihan Lokey is continually engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, leveraged buyouts, private placements of debt and equity,
corporate reorganizations, employee stock ownership plans,
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<PAGE> 30
corporate and other purposes. The Special Committee selected Houlihan Lokey
because of its industry experience and expertise in mergers and acquisitions and
in performing valuation and fairness analyses. Houlihan Lokey does not
beneficially own nor has it ever beneficially owned any interest in GZA.
FEES AND EXPENSES
Pursuant to an agreement dated March 6, 2000, Houlihan Lokey was retained
by the Special Committee to provide investment banking and financial advisory
services. GZA has agreed to pay Houlihan Lokey a fee of $175,000 (of which
$25,000 has already been paid) plus its reasonable out-of-pocket expenses
incurred in connection with the rendering of a fairness opinion. GZA has further
agreed to indemnify Houlihan Lokey against certain liabilities and expenses in
connection with the rendering of its services. Houlihan Lokey has in the past
provided financial services to GZA unrelated to the Transaction, for which
services Houlihan Lokey has received compensation.
PURPOSE AND STRUCTURE OF THE MERGER
The purpose of the merger is to provide GZA stockholders cash for their
shares (other than excluded shares), to permit Futureco to acquire ownership of
GZA, to increase the percentage of GZA Common Stock owned indirectly by the
participating executives and participating employees through their equity
interest in Futureco, and to terminate the status of GZA as a company with
publicly traded equity. The Transaction has been structured as a cash merger in
order to provide the Public Stockholders of GZA with cash for all of their
shares and to provide a prompt and orderly transfer of ownership of GZA with
reduced transaction costs.
EFFECTS OF THE MERGER
After the merger becomes effective, current GZA stockholders, other than
Futureco, will cease to have ownership interests in GZA or rights as GZA
stockholders. Therefore, the current stockholders of GZA, other than Futureco,
will not participate in any future earnings or losses and growth or decline of
GZA.
As a result of the merger, GZA will be a privately-held corporation and
there will be no public market for its Common Stock. After the merger, the GZA
Common Stock will cease to be quoted on The Nasdaq Stock Market and price
quotations with respect to sales of shares of GZA Common Stock in the public
market will no longer be available. In addition, registration of the GZA Common
Stock under the Exchange Act will be terminated. This termination will make
certain provisions of the Exchange Act, such as the short-swing profit recovery
provisions of Section 16(b) and the requirement of furnishing a proxy or
information statement in connection with stockholders meetings, no longer
applicable to GZA. After the effective time of the merger, GZA will no longer be
required to file periodic reports with the Commission.
When the merger becomes effective, the directors of the Merger Subsidiary
will become the directors of GZA, and the officers of the Merger Subsidiary will
become the officers of GZA. When the merger becomes effective, GZA's certificate
of incorporation will be amended to be the same as the certificate of
incorporation of the Merger Subsidiary was immediately before the effective time
of the merger. At the effective time of the merger, the bylaws of GZA will be
amended to be the same as the bylaws of the Merger Subsidiary were immediately
before the effective time of the merger.
It is expected that following completion of the merger, the operations of
GZA will be conducted substantially as they are currently being conducted.
Neither GZA, the Futureco Parties, nor any of the participating executives has
any present plans or proposals that relate to or would result in an
extraordinary corporate transaction involving GZA's corporate structure,
business or management, such as a merger, reorganization, liquidation,
relocation of any operations, or sale or transfer of a material amount of
assets. However, GZA, the Futureco Parties and the participating executives will
continue to evaluate GZA's business and operations after the merger, and may
develop new plans and proposals that GZA, the Futureco Parties or the
participating executives consider to be in the best interests of GZA and its
private stockholders.
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<PAGE> 31
The merger will add significant new long-term debt to GZA's balance sheet.
It is anticipated that approximately $15 million of third-part financing will
initially be required to finance the merger. GZA will become a wholly-owned
subsidiary of Futureco and on a consolidated basis stockholder equity will
change from approximately $25.8 million before the merger to approximately $4.2
million (without taking into account any loans that may be made by Futureco to
finance the acquisition of Futureco common stock by employees) after the merger.
After the merger, the present executive officers and directors of the Merger
Subsidiary will replace the present executive officers and directors of GZA.
Immediately before the merger becomes effective, all GZA stock options will
become vested under the terms of the Merger Agreement and will thus be entitled
to participate in the exchange as shares of Common Stock. With the exception of
the excluded options, the option shares will be exchanged for a cash payment
equal to the excess of $6.40 per share over the aggregate exercise price of the
options, subject to any withholding for taxes. Options held by the participating
executives to purchase an aggregate of shares of GZA Common Stock at
exercise prices ranging from $ to $ will be converted to options to
purchase an aggregate of shares of Futureco Common Stock, at exercise
prices ranging from $ to $ per share. Additional options to purchase
an aggregate of shares of GZA Common Stock held by other participating
employees may also be converted to options to purchase Futureco common stock.
RISK THAT THE MERGER WILL NOT BE COMPLETED
Completion of the merger is subject to various conditions, including, but
not limited to, the following:
- approval and adoption of the Merger Agreement and the transactions
contemplated by the Merger Agreement by the stockholders of GZA;
- securing required third party consents to the merger;
- Futureco's securing the financing necessary to complete the merger and
the transactions contemplated by the Merger Agreement on terms acceptable
to Futureco; Futureco has advised GZA that the terms of the financing
commitment already obtained (except for certain financial covenants that
have not yet been negotiated) are acceptable to Futureco. See
" -- Financing for the Merger;"
- the representations and warranties made by the parties in the Merger
Agreement must be true and correct in all material respects at the time
the merger becomes effective;
- the absence of any pending action or proceeding by any governmental
authority, or by any other person or entity before any court or
governmental authority, that has a reasonable likelihood of materially
restraining, delaying or prohibiting the completion of the merger.
As a result of the various conditions to the completion of the merger, we
cannot assure you that the merger will be completed even if the requisite
stockholder approval is obtained.
It is expected that if GZA stockholders do not approve and adopt the Merger
Agreement and the transactions contemplated by the Merger Agreement, or if the
merger is not completed for any other reason, the current management of GZA,
under the direction of the Board of Directors, will continue to manage GZA as an
on-going business.
INTERESTS OF CERTAIN GZA DIRECTORS, OFFICERS AND STOCKHOLDERS IN THE MERGER
In considering the recommendations of the Board of Directors, you should be
aware that members of GZA's management and the Board of Directors have interests
in the transaction that are or may be different from, or in addition to, your
interests as a GZA stockholder. The Board of Directors appointed the Special
Committee, consisting solely of directors who are not officers or employees of
GZA, and who have no financial interest in the proposed merger different from
GZA stockholders generally, to consider and negotiate the Merger Agreement and
to evaluate whether the merger is in the best interests of GZA's Public
Stockholders.
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<PAGE> 32
The Special Committee was aware of these differing interests and considered
them, among other matters, in approving the Merger Agreement and the
transactions contemplated by the Merger Agreement, and in recommending to the
Board of Directors and to GZA stockholders that the Merger Agreement and the
transactions contemplated by the Merger Agreement be approved and adopted.
Executive Officers. Under the terms of the Merger Agreement, upon
completion of the merger, the current GZA officers will cease to be officers of
GZA and will be replaced by the officers of Futureco. See "INFORMATION ABOUT
FUTURECO."
Futureco will hold 100% of the GZA Common Stock after completion of the
merger, and the participating executives and participating employees will hold
Futureco common stock and options to purchase common stock of Futureco. The
opportunity to retain an indirect equity interest in GZA following completion of
the merger through their ownership of Futureco common stock gives the
participating executives and participating employees interests in connection
with the merger that are different from your interests as a GZA stockholder. See
"THE MERGER AGREEMENT -- Effect on Capital Stock."
As a result of the merger, Futureco will not recognize gain or loss for
U.S. Federal income tax purposes on the Common Stock that it retains.
Post-Merger Ownership of Futureco Common Stock. We have been informed by
Futureco that the participating executives will hold the indicated number and
percent of shares of Futureco common stock outstanding immediately after
completion of the merger, on a fully diluted basis:
<TABLE>
<CAPTION>
SHARES OF
NAME OF INDIVIDUAL OR GROUP COMMON STOCK(1)
--------------------------- ---------------
<S> <C> <C>
William R. Beloff........................................... 42,000 5.2%
M. Joseph Celi.............................................. 30,000 3.7
William E. Hadge............................................ 42,000 5.2
Joseph P. Hehir............................................. 42,000 5.2
Lawrence Feldman............................................ 42,000 5.2
------- ----
198,000 24.5
======= ====
</TABLE>
---------------
(1) The number of shares and percentages are computed based upon the total
number of shares of Futureco common stock that Futureco management estimates
will be outstanding after completion of the merger based upon management's
estimate as to the number of shares which will be purchased by participating
employees, and assumes the exercise of all options to purchase Futureco
common stock expected to be outstanding immediately following the merger.
Retention Agreement. Andrew Pajak, GZA's President and Chief Executive
Officer, expects to leave GZA if the merger is consummated. In order to retain
his services in the meantime, GZA entered into a retention agreement with Mr.
Pajak on July 21, 2000. Under that agreement, if Mr. Pajak leaves after the
merger, under the circumstances set forth in the retention agreement, he will
receive a severance payment equal to his base salary and benefits for up to nine
months or until March 31, 2001, whichever is longer, plus a pro-rated part of an
amount equal to the average annual bonus paid to him during three fiscal years
preceding his leaving, plus all accrued vacation and deferred compensation. In
addition, GZA must provide outplacement services to him at a cost of up to
$50,000, and must assign to him certain ownership rights on the key man life
insurance policy that GZA currently maintains on his life, with a current
coverage of $750,000. GZA will also release Mr. Pajak from his existing
contractual obligations not to compete with GZA. The unvested part of restricted
stock awarded to Mr. Pajak under GZA's 1995 stock incentive plan and unvested
contributions to his 401(k) account will vest immediately in full.
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<PAGE> 33
Employment Agreements.
Indemnification of Directors and Officers, Directors' and Officers'
Insurance. The Merger Agreement provides that GZA will indemnify and hold
harmless each present and former director and officer of GZA for acts and
omissions occurring before the merger becomes effective. The Merger Agreement
further provides that for a period of six years after the merger becomes
effective, GZA will maintain officers' and directors' liability insurance
covering the persons who, on the date of the Merger Agreement, were covered by
GZA's officers' and directors' liability insurance policies with respect to acts
and omissions occurring before the effective time of the merger. The persons
benefiting from the insurance provisions include all of GZA's current directors
and executive officers. See "THE MERGER AGREEMENT -- Indemnification."
Common Stock. As of the record date, GZA's directors and executive
officers held an aggregate of [ ] shares of Common Stock, and other employees
of GZA held an additional [ ] shares of GZA Common Stock.
Treatment of Stock Options. As of the record date, GZA's directors and
executive officers held options to purchase an aggregate of [ ] shares of
Common Stock. In connection with the merger, the holders of options whether or
not vested, other than excluded options held by participating employees, will
receive a cash payment from GZA equal to the excess of the $6.40 per share for
the shares subject to the options over the aggregate exercise price of the
options.
FINANCING FOR THE MERGER
Futureco has received and accepted a commitment letter to finance the
merger from KeyBank National Association. The commitment is in the amount of
$19.5 million, $9.5 million of which is structured as a term loan facility and
$10 million of which is a revolving credit facility which can be borrowed,
repaid and reborrowed. It is expected that the entire term loan and
approximately $5.5 million of the revolver will be drawn down to finance the
acquisition of shares of GZA Common Stock. The borrowers of the loans will
initially be Futureco and the Merger Subsidiary. Upon the completion of the
merger, GZA will assume any liabilities of the Merger Subsidiary, including the
loans. The loans will be guaranteed by all of the wholly-owned subsidiaries of
GZA (and subsidiaries which would be wholly owned except for licensing
requirements in various jurisdictions), and will be secured by a first lien on
all of the assets of each of the borrowers and the guarantors.
Interest on the revolver is payable monthly, with the principal amount of
the revolver due in three years, renewable at the option of the bank thereafter.
The term loan is payable in monthly payments of principal of $113,094 plus
interest and matures in seven years. At the option of Futureco, the loans will
bear interest at either rates based upon the London Interbank Offered Rate
("LIBOR") or the Wall Street Journal Prime Rate. Depending upon the ratio of
total funded debt to earnings of the borrowers before interest, taxes,
depreciation and amortization on a consolidated basis ("EBITDA"), the interest
rate on the revolver may range from LIBOR plus one hundred and fifty basis
points to LIBOR plus two hundred and fifty basis points or from Prime to Prime
plus fifty basis points with a commitment fee payable on the unused portion of
the revolver. The term loan may bear interest, depending upon the ratio of total
funded debt to EBITDA, of from LIBOR plus one hundred seventy five basis points
to LIBOR plus two hundred seventy five basis points or from Prime to Prime plus
fifty basis points.
The commitment is subject to, among other things, the bank's receipt and
complete satisfaction with financial statement projections in a fiscal quarterly
format for the period commencing August 31, 2000 and ending February 28, 2003
and with an environmental issues checklist to be completed by borrowers and the
execution by borrowers and the guarantors of loan and security documents with
such loan covenants as are satisfactory to the bank. The borrowers have the
right to terminate the commitment if the financial covenants imposed by the bank
upon a review of the financial projections are not acceptable to the borrowers.
ACCOUNTING TREATMENT OF THE MERGER
We intend to account for the merger and related transactions primarily
under the purchase method of accounting for business combinations. Under this
method of accounting and in accordance with the provisions
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<PAGE> 34
of Issue No. 88-16 promulgated by the Emerging Issues Task Force of the
Financial Accounting Standards Board, the cost to acquire GZA, including
transaction costs, will be allocated to its underlying net assets to proportion
to their respective fair values. GZA shares contributed to Futureco by GZA
employees in exchange for Futureco shares in contemplation of the acquisition.
MATERIAL FEDERAL INCOME TAX CONSEQUENCES TO STOCKHOLDERS
The following is a summary of the material U.S. Federal income tax
consequences of the merger to holders of Common Stock (including holders
exercising appraisal rights) who receive cash in the merger. This summary is
based on laws, regulations, rulings and decisions now in effect, all of which
are subject to change, possibly with retroactive effect. This summary does not
address all of the U.S. Federal income tax consequences that may be applicable
to a particular holder of Common Stock or to holders who are subject to special
treatment under U.S. Federal income tax law (including, for example, banks,
insurance companies, tax-exempt investors, S corporations, dealers in
securities, non-U.S. persons, holders who hold their Common Stock as part of a
hedge, straddle or conversion transaction, and holders who acquired Common Stock
through the exercise of employee stock options or other compensation
arrangements). Moreover, this summary does not deal with the consequences to
employees of GZA to the extent that they exchange their Common Stock or options
to purchase GZA Common Stock for options to purchase common stock of Futureco.
In addition, this summary does not address the tax consequences of the merger
under applicable state, local or foreign laws. YOU SHOULD CONSULT YOUR OWN TAX
ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO YOU OF THE MERGER, INCLUDING
THE APPLICATION OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
The receipt of cash by holders of Common Stock in the merger or upon
exercise of dissenters' appraisal rights will be a taxable transaction for U.S.
Federal income tax purposes. A holder of Common Stock generally will recognize
gain or loss in an amount equal to the difference between the merger
consideration received by the holder and the holder's adjusted tax basis in the
Common Stock. That gain or loss generally will be capital gain or loss if the
Common Stock is held as a capital asset at the effective time of the merger. Any
capital gain or loss generally will be long-term capital gain or loss if the
Common Stock has been held by the holder for more than one year. If the Common
Stock has been held by the holder for less than one year, any gain or loss will
generally be taxed as a short-term capital gain or loss.
DISSENTERS' RIGHTS OF APPRAISAL
Under Section 262 of the Delaware General Corporation Law, which we refer
to as the "DGCL," any holder of Common Stock who does not wish to accept $6.40
per share in cash for the holder's shares of Common Stock may dissent from the
merger and elect to have the fair value of the holder's shares of Common Stock
(exclusive of any element of value arising from the accomplishment or
expectation of the merger) judicially determined and paid to the holder in cash,
together with a fair rate of interest, if any, provided that the holder complies
with the provisions of Section 262.
The following discussion is not a complete statement of the law pertaining
to appraisal rights under the DGCL, and is qualified in its entirety by the full
text of Section 262, which is provided in its entirety as Appendix C to this
Proxy Statement. All references in Section 262 and in this summary to a
"stockholder" are to the record holder of the shares of Common Stock as to which
appraisal rights are asserted. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES
OF COMMON STOCK HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BROKER
OR NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY THE
STEPS SUMMARIZED BELOW AND IN A TIMELY MANNER TO PERFECT APPRAISAL RIGHTS.
Under Section 262, where a proposed merger is to be submitted for approval
and adoption at a meeting of stockholders, as in the case of the Special
Meeting, the corporation, not less than 20 days before the meeting, must notify
each of its stockholders entitled to appraisal rights that appraisal rights are
available and include in that notice a copy of Section 262. This Proxy Statement
constitutes that notice to the holders of Common
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<PAGE> 35
Stock and the applicable statutory provisions of the DGCL are attached to this
Proxy Statement as Appendix C. Any stockholder who wishes to exercise appraisal
rights or who wishes to preserve the right to do so should review carefully the
following discussion and Appendix C to this Proxy Statement. FAILURE TO COMPLY
WITH THE PROCEDURES SPECIFIED IN SECTION 262 TIMELY AND PROPERLY WILL RESULT IN
THE LOSS OF APPRAISAL RIGHTS. Moreover, because of the complexity of the
procedures for exercising the right to seek appraisal of the Common Stock, GZA
believes that stockholders who consider exercising appraisal rights should seek
the advice of counsel.
Any holder of Common Stock wishing to exercise the right to demand
appraisal under Section 262 of the DGCL must satisfy each of the following
conditions:
- as more fully described below, the holder must deliver to GZA a written
demand for appraisal of the holder's shares before the vote on the Merger
Agreement at the Special Meeting, which demand will be sufficient if it
reasonably informs GZA of the identity of the holder and that the holder
intends to demand the appraisal of the holder's shares;
- the holder must not vote the holder's shares of Common Stock in favor of
the Merger Agreement; a proxy which does not contain voting instructions
will, unless revoked, be voted in favor of the Merger Agreement;
therefore, a stockholder who votes by proxy and who wishes to exercise
appraisal rights must vote against the Merger Agreement or abstain from
voting on the Merger Agreement; and
- the holder must continuously hold the shares from the date of making the
demand through the effective time of the merger; a stockholder who is the
record holder of shares of Common Stock on the date the written demand
for appraisal is made but who thereafter transfers those shares before
the effective time of the merger will lose any right to appraisal in
respect of those shares.
Neither voting (in person or by proxy) against, abstaining from voting on
or failing to vote on the proposal to approve the Merger Agreement and the
transactions contemplated by the Merger Agreement will constitute a written
demand for appraisal within the meaning of Section 262. The written demand for
appraisal must be in addition to and separate from any proxy or vote.
Only a holder of record of shares of Common Stock issued and outstanding
immediately before the effective time of the merger is entitled to assert
appraisal rights for the shares of Common Stock registered in that holder's
name. A demand for appraisal should be executed by or on behalf of the
stockholder of record, fully and correctly, as the stockholder's name appears on
the stock certificates, should specify the stockholder's name and mailing
address, the number of shares of Common Stock owned and that the stockholder
intends to demand appraisal of the stockholder's Common Stock. If the shares are
owned of record in a fiduciary capacity, such as by a trustee, guardian or
custodian, execution of the demand should be made in that capacity. If the
shares are owned of record by more than one person, as in a joint tenancy or
tenancy in common, the demand should be executed by or on behalf of all owners.
An authorized agent, including one or more joint owners, may execute a demand
for appraisal on behalf of a stockholder; however, the agent must identify the
record owner or owners and expressly disclose the fact that, in executing the
demand, the agent is acting as agent for the owner or owners. A record holder
such as a broker who holds shares as nominee for several beneficial owners may
exercise appraisal rights with respect to the shares held for one or more
beneficial owners while not exercising appraisal rights with respect to the
shares held for one or more beneficial owners; in that case, the written demand
should set forth the number of shares as to which appraisal is sought, and where
no number of shares is expressly mentioned the demand will be presumed to cover
all shares held in the name of the record owner. STOCKHOLDERS WHO HOLD THEIR
SHARES IN BROKERAGE ACCOUNTS OR OTHER NOMINEE FORMS AND WHO WISH TO EXERCISE
APPRAISAL RIGHTS ARE URGED TO CONSULT WITH THEIR BROKERS TO DETERMINE
APPROPRIATE PROCEDURES FOR THE MAKING OF A DEMAND FOR APPRAISAL BY THE NOMINEE.
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<PAGE> 36
A stockholder who elects to exercise appraisal rights under Section 262
should mail or deliver a written demand to: GZA GeoEnvironmental Technologies,
Inc., 320 Needham Street, Newton Upper Falls, Massachusetts 02464, Attn: Robert
W. Sweet, Jr., Secretary.
Within ten days after the effective time of the merger, GZA must send a
notice as to the effectiveness of the merger to each former stockholder of GZA
who has made a written demand for appraisal in accordance with Section 262 and
who has not voted to approve and adopt the Merger Agreement and the transactions
contemplated by the Merger Agreement. Within 120 days after the effective time
of the Merger, but not thereafter, either GZA or any dissenting stockholder who
has complied with the requirements of Section 262 may file a petition in the
Delaware Court of Chancery demanding a determination of the value of the shares
of Common Stock held by all dissenting stockholders. GZA is under no obligation
to and has no present intent to file a petition for appraisal, and stockholders
seeking to exercise appraisal rights should not assume that GZA will file a
petition or that GZA will initiate any negotiations with respect to the fair
value of the shares. Accordingly, stockholders who desire to have their shares
appraised should initiate any petitions necessary for the perfection of their
appraisal rights within the time periods and in the manner prescribed in Section
262. Inasmuch as GZA has no obligation to file a petition, the failure of a
stockholder to do so within the period specified could nullify the stockholder's
previous written demand for appraisal.
Under the Merger Agreement, GZA has agreed to give Futureco prompt written
notice of any demands for appraisal received by GZA. Futureco has the right to
participate in and approve all negotiations and proceedings with respect to
demands for appraisal under the DGCL. GZA will not, except with the prior
written consent of Futureco, make any payment with respect to any demands for
appraisal, or offer to settle, or settle, any demands. If the holders of more
than 5% of the outstanding stock demand appraisal, Futureco will have the right
not to complete the merger.
Within 120 days after the effective time of the merger, any stockholder who
has complied with the provisions of Section 262 to that point in time will be
entitled to receive from GZA, upon written request, a statement setting forth
the aggregate number of shares not voted in favor of the Merger Agreement and
with respect to which demands for appraisal have been received and the aggregate
number of holders of shares. GZA must mail that statement to the stockholder
within 10 days of receipt of the request or within 10 days after expiration of
the period for delivery of demands for appraisals under Section 262, whichever
is later.
A stockholder timely filing a petition for appraisal with the Delaware
Court of Chancery must deliver a copy to GZA, which will then be obligated
within 20 days to provide the Delaware Court of Chancery with a duly verified
list containing the names and addresses of all stockholders who have demanded
appraisal of their shares. After notice to those stockholders, the Delaware
Court of Chancery is empowered to conduct a hearing on the petition to determine
which stockholders are entitled to appraisal rights. The Delaware Court of
Chancery may require stockholders who have demanded an appraisal for their
shares and who hold stock represented by certificates to submit their
certificates to the Register in Chancery for notation thereon of the pendency of
the appraisal proceedings, and if any stockholder fails to comply with the
requirement, the Delaware Court of Chancery may dismiss the proceedings as to
that stockholder.
After determining the stockholders entitled to an appraisal, the Delaware
Court of Chancery will appraise the "fair value" of their shares, exclusive of
any element of value arising from the accomplishment or expectation of the
merger, together with a fair rate of interest, if any, to be paid upon the
amount determined to be the fair value. The costs of the action may be
determined by the Delaware Court of Chancery and taxed upon the parties as the
Delaware Court of Chancery deems equitable. Upon application of a dissenting
stockholder, the Delaware Court of Chancery may also order that all or a portion
of the expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorneys' fees and the
fees and expenses of experts, be charged pro rata against the value of all of
the shares entitled to appraisal. STOCKHOLDERS CONSIDERING SEEKING APPRAISAL
SHOULD BE AWARE THAT THE FAIR VALUE OF THEIR SHARES AS DETERMINED UNDER SECTION
262 COULD BE MORE THAN, THE SAME AS OR LESS THAN THE $6.40 PER SHARE THEY WOULD
RECEIVE UNDER THE MERGER AGREEMENT IF THEY DID NOT SEEK APPRAISAL OF THEIR
SHARES. STOCKHOLDERS SHOULD ALSO BE AWARE THAT INVESTMENT BANKING OPINIONS ARE
NOT OPINIONS AS TO FAIR VALUE UNDER SECTION 262.
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In determining fair value and, if applicable, a fair rate of interest, the
Delaware Court of Chancery is to take into account all relevant factors. In
Weinberger v. UOP, Inc., the Delaware Supreme Court discussed the factors that
could be considered in determining fair value in an appraisal proceeding,
stating that "proof of value by any techniques or methods that are generally
considered acceptable in the financial community and otherwise admissible in
court" should be considered, and that "fair price obviously requires
consideration of all relevant factors involving the value of a company." The
Delaware Supreme Court stated that, in making this determination of fair value,
the court must consider market value, asset value, dividends, earnings
prospects, the nature of the enterprise and any other facts that could be
ascertained as of the date of the merger that throw any light on future
prospects of the merged corporation. In Weinberger, the Delaware Supreme Court
stated that "elements of future value, including the nature of the enterprise,
which are known or susceptible of proof as of the date of the merger and not the
product of speculation, may be considered." Section 262 provides that fair value
is to be "exclusive of any element of value arising from the accomplishment or
expectation of the merger."
Any stockholder who has duly demanded an appraisal in compliance with
Section 262 will not, after the effective time of the merger, be entitled to
vote the shares subject to that demand for any purpose or be entitled to the
payment of dividends or other distributions on those shares (except dividends or
other distributions payable to holders of record of shares as of a record date
before the effective time of the merger).
Any stockholder may withdraw its demand for appraisal and accept $6.40 per
share by delivering to GZA a written withdrawal of the stockholder's demand for
appraisal, except that (1) any attempt to withdraw made more than 60 days after
the effective time of the merger will require written approval of GZA and (2) no
appraisal proceeding in the Delaware Court of Chancery will be dismissed as to
any stockholder without the approval of the Delaware Court of Chancery, and the
approval may be conditioned upon such terms as the Delaware Court of Chancery
deems just. If GZA does not approve a stockholder's request to withdraw a demand
for appraisal when that approval is required or if the Delaware Court of
Chancery does not approve the dismissal of an appraisal proceeding, the
stockholder would be entitled to receive only the appraised value determined in
any appraisal proceeding, which value could be more than, the same or less than
$6.40 per share.
FAILURE TO COMPLY STRICTLY WITH ALL OF THE PROCEDURES SET FORTH IN SECTION
262 OF THE DGCL MAY RESULT IN THE LOSS OF A STOCKHOLDER'S STATUTORY APPRAISAL
RIGHTS. CONSEQUENTLY, ANY STOCKHOLDER WISHING TO EXERCISE APPRAISAL RIGHTS IS
URGED TO CONSULT LEGAL COUNSEL BEFORE ATTEMPTING TO EXERCISE APPRAISAL RIGHTS.
THE MERGER AGREEMENT
The description of the Merger Agreement contained in this Proxy Statement
describes the material terms of the Merger Agreement. The complete terms of the
Merger Agreement may be found in Appendix A to this Proxy Statement and are
incorporated herein by reference. Stockholders are urged to read the entire
Merger Agreement.
THE MERGER
The Merger Agreement provides that, subject to conditions summarized below,
the Merger Subsidiary, a wholly owned subsidiary of Futureco, will merge with
and into GZA. Following completion of the merger, the Merger Subsidiary will
cease to exist as a separate entity, and GZA will continue as the surviving
corporation (which we will sometimes refer to as the "surviving corporation").
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CLOSING OF THE MERGER
Subject to the terms and conditions of the Merger Agreement, the
consummation of the merger is expected to take place as soon as practicable, but
in no event later than three business days, after the approval and adoption of
the Merger Agreement and the transactions contemplated by the Merger Agreement
by our stockholders at the Special Meeting and the satisfaction or waiver of the
other conditions to the merger contained in the Merger Agreement, unless another
date is agreed to in writing by the parties. This date of consummation is
referred to as the "Closing Date." We cannot assure you that all conditions to
the merger contained in the Merger Agreement will be satisfied or waived. See
"-- Closing Conditions."
EFFECTIVE TIME OF THE MERGER
The merger will become effective when we file a Certificate of Merger,
together with any required related documents, with the Secretary of State of the
State of Delaware in accordance with DGCL. We refer to this time as the
"effective time." The filing will be made on the Closing Date.
DIRECTORS, OFFICERS AND GOVERNING DOCUMENTS
From and after the effective time of the merger, the directors and officers
of the Merger Subsidiary will become the directors and officers, respectively,
of the surviving corporation, until successors are duly elected or appointed and
qualified. At the effective time of the merger, GZA's certificate of
incorporation will be amended to be the same as the certificate of incorporation
of the Merger Subsidiary was immediately before the effective time of the
merger. At the effective time of the merger, the bylaws of GZA will be amended
to be the same as the bylaws of the Merger Subsidiary were immediately before
the effective time of the merger.
EFFECT OF THE MERGER
At the effective time of the merger, all the property rights, privileges,
powers and franchises of GZA and the Merger Subsidiary will vest in the
surviving corporation, as will all debts, liabilities and duties of GZA and the
Merger Subsidiary.
EFFECT ON CAPITAL STOCK
At the effective time of the merger, by virtue of the merger, each issued
and outstanding share of the Merger Subsidiary common stock will be converted
into and become one fully paid and nonassessable share of $.01 par value, common
stock in the surviving corporation.
At the effective time of the merger, by virtue of the merger, each share of
GZA Common Stock outstanding immediately prior to the effective time of the
merger will be canceled and automatically converted into the right to receive
$6.40 in cash without interest and less any required tax withholding, with the
following exceptions:
- shares owned by Futureco at the effective time and listed on a schedule
to be delivered to GZA by Futureco at least one day before the Closing
Date, will be excluded shares and thus will continue to remain issued and
outstanding;
- options outstanding at the effective time to purchase GZA Common Stock
granted pursuant to any GZA stock option plan, other than excluded
options, will be exercised as of the effective time and the option shares
will be considered issued and outstanding immediately before the
effective time, and thus will participate in the exchange. However, the
holders of these options must deliver duly executed stock option exercise
agreements in a form specified by the Merger Agreement, at least one
business day prior to the Closing Date, and payment for option shares
will be reduced by the exercise price with respect to the option shares.
Stock options not exercised prior to the effective time will be cancelled
at the effective time. Excluded options listed on the excluded securities
schedule will be exchanged for Futureco options at a specific rate.
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- shares held by GZA in its treasury immediately before the effective time
of the merger will be canceled and retired without any payment thereon;
and
- shares held by dissenting stockholders will instead be subject to
appraisal in accordance with DGCL. Dissenters are those who have neither
voted in favor of the Merger nor consented to it in writing, and who have
duly demanded appraisal for their shares under DGCL. Dissenters have the
right to receive payment from the surviving corporation for the fair
value of the shares they held immediately prior to the effective time,
unless they do not perfect or they lose their appraisal rights, in which
case their shares will be treated as if they were converted into the
right to receive $6.40 in cash as of the effective time, without
interest.
CERTIFICATES AND OWNERSHIP RIGHTS
No later than one business day after the effective time, the surviving
corporation will mail to all stockholders and optionholders eligible to
participate, letters and instructions about surrendering stock certificates for
payment of the consideration discussed above (which we sometimes will refer to
as "Merger Consideration"). Within one business day of the surrender of those
certificates, with duly executed letters of transmittal, a paying agent, chosen
by Futureco and reasonably acceptable to GZA, will pay the share and option
holders the appropriate merger consideration per share multiplied by the number
of their participating shares. In exchange, their certificates will be canceled.
Until the surrender and exchange, each certificate will represent only the right
to be so exchanged without interest. If someone other than the person in whose
name the certificate is registered wants to exchange and surrender the
certificate, the certificate must be properly endorsed or in proper form for
transfer, plus the person requesting the exchange must pay the paying agent any
transfer or other taxes required because of such payment, unless that person
establishes to the paying agent that the taxes were paid or are inapplicable.
YOU SHOULD NOT FORWARD SHARE CERTIFICATES WITH THE ENCLOSED PROXY CARD. YOU
SHOULD SURRENDER CERTIFICATES REPRESENTING SHARES OF COMMON STOCK ONLY AFTER
RECEIVING INSTRUCTIONS FROM THE PAYING AGENT.
Promptly before the effective time, Futureco will deposit with the paying
agent funds equal to the aggregate amount of consideration to which the
stockholders and option holders are entitled at the effective time. This merger
consideration will be invested by the paying agent, as directed by Futureco and
GZA before the Closing Date from a limited set of investment choices laid out in
the Merger Agreement.
One year after the effective time, the paying agent's duties will end and
the paying agent will deliver the cash and documents relating to the merger
consideration fund that were in its possession to the surviving corporation.
From then on, certificates may be surrendered to the surviving corporation for
exchange, without interest, subject to applicable abandoned property, escheat
and other similar laws. Neither Futureco, the Merger Subsidiary, nor the
surviving corporation will be liable to any holder of GZA Common Stock for any
merger consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
The paying agent or surviving corporation may deduct from the merger
consideration amount otherwise payable to share and option holders, the amounts
required to be withheld and deducted for tax purposes, and with respect to
option shares, the exercise price liability.
The exchange of the GZA Common Stock shares and option shares for merger
consideration will fully satisfy all rights pertaining to those shares eligible
to participate in the exchange. There will be no further registration of
transfers of those participating shares on the records of the surviving
corporation.
If a certificate for participating shares was lost, stolen or destroyed,
the paying agent will deliver the exchange amount upon receipt of an affidavit
attesting to what happened to the certificate, provided, however, that the
paying agent may at his discretion require the owner of the certificate to
deliver a reasonable bond as indemnity against claims with respect to the
certificate.
Futureco, the Merger Subsidiary and GZA will all take reasonable and lawful
actions to carry out the merger in accordance with the Merger Agreement as
promptly as possible.
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REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains various representations and warranties made
by GZA to Futureco and the Merger Subsidiary, subject to identified exceptions,
including representations and warranties relating to:
- the due organization, valid existence, good standing, and necessary
corporate powers, and authority, qualifications, and licensing of GZA;
- the capitalization of GZA;
- the ownership and investments of GZA in other entities;
- the requisite authorization, subject to GZA stockholder approval, and the
execution, delivery and enforceability of the Merger Agreement as to GZA;
- the absence of any materially adverse conflicts between the Merger
Agreement and GZA's certificate of incorporation, bylaws, any material
agreements, instruments, permits, concessions, franchises, licenses,
laws, except those specified in the Merger Agreement;
- the lack of need for consents, approvals, orders, authorizations,
registrations, declarations, and filings or with governmental
authorities, except those specified in the Merger Agreement, in order to
complete the merger;
- the adequacy and accuracy of GZA's periodic reports and other filings
made under the federal securities laws;
- the absence of material adverse changes or the reasonable likelihood of
such changes to GZA, or material changes in GZA capitalization or
accounting methods since May 31, 2000, or any amendment of any employment
or other agreement between GZA and any of its officers or directors,
except those specified in the Merger Agreement;
- the absence of any materially adverse suit, action or proceeding actually
pending or threatened against or affecting GZA;
- except as disclosed, the absence of any judgment, decree, injunction,
rule or order of any governmental authority or arbitrator that could
reasonably be expected to have a materially adverse effect or prevent
consummation of the merger;
- real property owned or leased by GZA, including a description of GZA's
interest in the properties and the extent to which the properties are
adversely encumbered in a material way;
- delivery of environmental reports listed in the schedules to the Merger
Agreement to Futureco, and compliance of GZA with laws relating to
pollution and the protection of human health or the environment;
- related party transactions;
- employee benefit plans of GZA, and except as disclosed: compliance of
those plans with the Employee Retirement Income Security Act of 1974, as
amended, lack of continuing liability for former employees under any of
the welfare plans or for payments not yet made, absence of lawsuits and
complaints concerning the plans, and material compliance of the plans
with the agreements concerning the plans and the law;
- policies regarding employees;
- the adequacy of accounting methods and of filings with the IRS and other
taxing authorities, and the adequate compliance with tax laws and
agreements by GZA and its affiliated entities as well as the absence of
liens for taxes on GZA assets beyond current taxes;
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- the absence of arrangements for excess parachute payments in connection
with the merger;
- the absence of tax withholding in connection with the merger;
- affirmation that deferred income will not result from the transactions
contemplated in the Merger Agreement;
- payments to employees, officers, trustees or directors as a result of the
merger;
- except as disclosed in the Merger Agreement schedules, no brokers or
other financial advisors are entitled to any fees or commissions from GZA
in connection with the merger transactions;
- compliance by GZA with the law with respect to its business, properties,
operations, and the Merger Agreement;
- material contracts, agreements and debt instruments of GZA and the lack
of consent requirements or penalties therein that would hinder the
consummation of the transactions contemplated by the Merger Agreement,
except as disclosed;
- the receipt of an opinion from Houlihan Lokey, that the consideration per
share to be received by GZA's Public Stockholders is fair to the holders
as of the date of the opinion, from a financial point of view;
- the intellectual property of GZA;
- the adequacy of the insurance coverage obtained by GZA;
- the limitation of dissenters' rights and other rights of appraisal for
GZA stockholders to those provided by Delaware law;
- the absence of necessity of third party consents in order to effect the
transactions contemplated by the Merger Agreement, except as disclosed in
the Merger Agreement; and
- the absence of earn-out contingencies, or similar provisions, for
non-employees in any GZA agreements.
The Merger Agreement contains various representations and warranties made
by Futureco and the Merger Subsidiary to GZA, subject to identified exceptions,
including representations and warranties relating to:
- the due organization, valid existence, good standing, and necessary
corporate powers and authority, qualifications, and licensing of
Futureco;
- the requisite authorization, execution, delivery and enforceability of
the Merger Agreement as to Futureco;
- the absence of any materially adverse conflicts between the Merger
Agreement and Futureco's certificate of incorporation, bylaws, any
material agreements, instruments, permits, concessions, franchises,
licenses, or laws, except those specified in the Merger Agreement;
- the lack of need, in order to consummate the transactions contemplated in
the Merger Agreement, for Futureco to get consents, approvals, orders or
authorizations of governmental authorities, except those specified in the
Merger Agreement;
- except as disclosed in the Merger Agreement schedules, no brokers or
other financial advisors are entitled to any fees or commissions from or
on behalf of Futureco in connection with the transactions contemplated in
the Merger Agreement;
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- the accuracy of information supplied by Futureco and on Futureco's behalf
for inclusion in this Proxy Statement and the related Schedule 13E-3
statement;
- the due organization, valid existence, good standing, and necessary
corporate powers and authority, qualifications, and licensing of the
Merger Subsidiary;
- the requisite authorization, execution, delivery and enforceability of
the Merger Agreement as to the Merger Subsidiary;
- the absence of any materially adverse conflicts between the Merger
Agreement and the Merger Subsidiary's certificate of incorporation,
bylaws, any material agreements, instruments, permits, concessions,
franchises, licenses, or laws, except those specified in the Merger
Agreement;
- the lack of need, in order to consummate the transactions contemplated in
the Merger Agreement, for the Merger Subsidiary to obtain consents,
approvals, orders or authorizations of governmental authorities, except
those specified in the Merger Agreement;
- except as disclosed in the Merger Agreement schedules, no brokers or
other financial advisors are entitled to any fees or commissions from or
on behalf of the Merger Subsidiary in connection with the transactions
contemplated in the Merger Agreement;
- the accuracy of information supplied by the Merger Subsidiary and on the
Merger Subsidiary's behalf for inclusion in this Proxy Statement and the
Schedule 13E-3;
- the adequacy and accuracy of filings made by Futureco and the Merger
Subsidiary with the Commission as required in connection with the Merger
Agreement;
- the absence for both Futureco and the Merger Subsidiary of liabilities or
obligations of any nature other than obligations related to fees or
expenses incurred in connection with the transactions contemplated by the
Merger Agreement, that would have a material adverse effect on the
ability of Futureco or the Merger Subsidiary to consummate the merger;
and
- the nature and terms of all stock agreements and understandings to which
Futureco or the Merger Subsidiary are party and which are related to any
shares of GZA Common Stock, including agreements related to the purchase,
sale, voting or other rights or privileges of such stock.
None of the representations and warranties in the Merger Agreement will
survive after the effective time.
GZA COVENANTS
We agreed in the Merger Agreement that prior to the effective time, except
with the prior written consent of Futureco, neither GZA nor any of our officers
or agents will solicit or seek to facilitate other merger or acquisition
proposals. We have agreed that if we receive any other acquisition proposals
prior to the effective time, we will notify Futureco immediately, and give
Futureco reasonable time to respond. We may not enter into a definitive
agreement with respect to another acquisition proposal during the term of the
Merger Agreement. However, our board or its Special Committee, as applicable,
may:
- continue discussing and negotiating acquisition proposals with any party
initially contacted by us or on our behalf before the execution of the
Merger Agreement if the Special Committee in good faith reasonably
believes that the negotiation could lead to a superior acquisition
proposal;
- enter into discussions with a person or entity that makes an unsolicited
acquisition proposal, if and to the extent that the special committee
determines in good faith that the proposal could lead to a superior
acquisition proposal, and if and to the extent that failure to do so
could constitute a breach of the fiduciary duties of the directors of GZA
to GZA stockholders;
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- approve and recommend a superior acquisition proposal, and modify or
withdraw its approval of the Merger Agreement, subject to the
reimbursement of certain expenses incurred by Futureco in connection with
the proposed merger, as explained in "THE MERGER
AGREEMENT -- Termination, Amendment and Waiver."
By a "superior acquisition proposal" we mean a bona fide acquisition
proposal made by a third party that the Special Committee determines in good
faith, after consultation with its financial advisor, could be more favorable to
GZA stockholders from a financial point of view than the one set forth in the
Merger Agreement, and one that is capable of being consummated within a
reasonable period of time.
In the Merger Agreement, we agreed that before completion of the merger,
except as contemplated by the Merger Agreement and disclosure schedules, or
except with the prior written consent of Futureco, to conduct business only in
the usual, regular and ordinary course of business and consistent with past
practice and to use commercially reasonable efforts to maintain our business
organization, goodwill, and relationships with employees, customers, suppliers
and others with whom we do business. In addition, we agreed that subject to the
same conditions we will:
- confer on a regular basis with one or more representatives of Futureco to
report material operational matters and proposals to engage in other
material transactions;
- promptly notify Futureco of any material emergency or change in
condition, properties, assets, liabilities, or course of operations, or
of any material complaints, investigations, or hearings;
- promptly deliver to Futureco SEC filings made after the date of the
Merger Agreement;
- maintain our books and records in accordance with generally accepted
accounting principles and SEC requirements;
- duly and timely make all required filings with governmental authorities,
subject to permitted extensions of which Futureco receives notice;
- not make or rescind any express or deemed election relative to taxes,
except as required by law;
- not amend our Certificate of Incorporation, bylaws, or any of our other
organizational documents;
- except for distributions made by our subsidiaries or except as
contemplated by the Merger Agreement or GZA's existing employee stock
purchase plan, not authorize or make distributions, repurchases or
redemptions with respect to capital stock, options, warrants, or other
GZA securities;
- not dispose of any material part of our assets outside of the ordinary
course of business consistent with past practice;
- not make loans or advances, except to existing subsidiaries and as
advances to employees in the ordinary course of business consistent with
past practice for travel and business expenses;
- not discharge or satisfy material claims, liabilities or obligations
beyond what would be done in the ordinary course of business consistent
with past practice, or as reflected in the financial statements provided
to Futureco in connection with the Merger Agreement;
- not enter into commitments that may result in payments in excess of
$100,000;
- not make material changes in employment and compensation arrangements or
benefit plans with officers, directors, and employees; nor enter into new
employment arrangements with anyone not currently employed by us,
providing compensation in excess of $75,000 a year; except in the
ordinary course of business consistent with past practice in timing and
amount;
- not settle any stockholder derivative or class action claims arising out
of the Merger Agreement, without prior written approval of Futureco;
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- not reduce our ownership in any of our subsidiaries;
- not change the rights under any agreements with our affiliates, officers,
directors, and employees;
- not directly or indirectly merge with or acquire beneficial ownership of
a majority interest in any person or entity;
- not enter into new commitments relating to our securities;
- not incur new indebtedness beyond the financing of ordinary course of
trade payables or existing credit facilities in the ordinary course of
business;
- not make any non-customary payments outside the ordinary course of
business, beyond what is contemplated in the Merger Agreement;
- not modify any agreements under which we have material rights; and
- not agree to take any of the above-listed actions.
PREPARATION OF PROXY STATEMENT; STOCKHOLDER MEETING
We agreed that we would promptly prepare the Schedule 13E-3 statement that
is required to be filed with the Commission and the proxy statement required to
be distributed to our stockholders in connection with the merger, and include in
the proxy statement an updated fairness opinion and recommendation of our Board
in favor of the approval of the Merger Agreement. However, the board may fail to
make or modify its recommendation if it decides to recommend a superior
acquisition proposal instead. We have agreed to use our best efforts to obtain
and furnish the information required to be included in the proxy statement and
Schedule 13E-3, and after consultation with Futureco, respond promptly to
Commission comments. Futureco and the Merger Subsidiary have agreed to cooperate
in the preparation of all of these filings. We also agreed to use reasonable
best efforts to mail the proxy statement to our stockholders as promptly as
practicable. All of these filings with the Commission and the related mailings
to our stockholders are subject to the prior review and approval of Futureco,
which it has agreed will not be unreasonably withheld.
We agreed that subject to our receipt of a written fairness opinion from
Houlihan Lokey as of the date of the proxy mailing that the merger consideration
for stockholders is financially fair to them, we will, as promptly as
practicable duly call and hold our stockholders meeting for the purpose of
approving the Merger Agreement and its contemplated transactions.
ACCESS TO INFORMATION; CONFIDENTIALITY
Subject to confidentiality agreements with third parties, we have agreed to
allow Futureco and the Merger Subsidiary, their officers, employees,
accountants, counsel, financial advisors and other representatives, reasonable
access during normal business hours before the effective time to all of our
properties, books, contracts, commitments, personnel and records. We further
agreed to furnish promptly to the other parties our filings with the Commission
and other information that they reasonably request. Each party will use
commercially reasonable efforts to hold nonpublic information in confidence in
accordance with the Confidentiality Agreement between GZA and Futureco dated
March 31, 2000. We have not agreed, however, to furnish Futureco or the Merger
Subsidiary with information related to meetings or activities of our Special
Committee or to potential transactions with third parties beyond what is
provided for in the Merger Agreement.
BEST EFFORTS; NOTIFICATION
GZA and Futureco have agreed, subject to the terms of the Merger Agreement,
to use reasonable best efforts to cooperate in determining what filings need to
be made with, and authorizations received from,
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governmental authorities in connection with the Merger Agreement; and then in
making those filings and obtaining those authorizations in a timely manner. In
addition, GZA and Futureco have agreed to use reasonable best efforts to
cooperate in obtaining necessary consents from third parties and in otherwise
appropriately consummating the transactions contemplated in the Merger
Agreement.
GZA and Futureco have also agreed to promptly notify each other if any of
the representations or warranties that they made become untrue or inaccurate in
a material respect, or if they fail to materially satisfy any of the covenants
or conditions in the Merger Agreement.
COSTS OF TRANSACTION
If the merger is not consummated, Futureco and GZA have agreed to pay their
own costs relating to the merger and the Merger Agreement, except as indicated
in the section on "-- Termination, Amendment and Waiver."
PUBLIC ANNOUNCEMENTS
GZA, Futureco, and the Merger Subsidiary have agreed not to issue public
comments and statements with respect to the merger transactions without first
consulting each other, except as required by law or as agreed to in the Merger
Agreement.
TAXES
We have agreed to let Futureco, at its own expense, review and comment on
our tax returns for the tax year ending on February 29, 2000.
RESIGNATIONS
GZA directors will resign from their positions if so requested by Futureco
on the Closing Date, effective as of the effective time.
INDEMNIFICATION
From and after the effective time, the surviving corporation will
exculpate, indemnify, and advance expenses for those who were officers and
directors of GZA before the effective time at least to the same extent provided
by GZA in its Certificate of Incorporation, bylaws and existing contractual
agreements in existence at the time the Merger Agreement was executed. These
protections will cover their actions on or prior to the effective time,
including transactions contemplated by the Merger Agreement. The surviving
corporation will obtain and maintain "tail" directors and officers liability
insurance for six years after the effective date, with coverage at least as
favorable as those in the indemnification agreements referred to above in this
paragraph.
The surviving corporation or any of its respective successors or assignees
will pay all costs that may be incurred by any of these indemnified parties in
successfully enforcing the indemnity obligations of Futureco or the surviving
corporation under this section. This section will survive the merger, along with
the indemnified parties' other rights.
NO FURTHER STOCK AGREEMENTS
From and after the date of the Merger Agreement and until GZA stockholder
approval is obtained, neither Futureco, the Merger Subsidiary, nor any of their
officers or directors will enter into stock agreements with any third parties
except for transactions related to determining which shares Futureco may be
considered to own.
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CLOSING CONDITIONS
The obligations of each party to effect the merger will be subject to the
fulfillment, on or prior to the Closing Date, of the following conditions:
- Stockholders who hold at least 66 2/3% of the shares of our outstanding
Common Stock that are not owned by Futureco, must approve and adopt the
merger by an affirmative vote; and
- No injunctions or legal restraints preventing the consummation of the
merger may be in effect.
Furthermore, the obligations of Futureco and the Merger Subsidiary to
effect the merger and consummate the other transactions contemplated to occur on
the Closing Date are also subject to the following conditions, any of which may
be waived in writing by Futureco:
- The representations and warranties of GZA must materially be true and
correct as of the Closing Date, and a certificate to that effect, signed
by the Chief Executive Officer of GZA, must be delivered to Futureco;
- GZA must have performed its obligations under the Merger Agreement in all
material respects, and a certificate to that effect, signed by the Chief
Executive Officer of GZA, must be delivered to Futureco;
- GZA must deliver to Futureco a certificate, signed by the Chief Executive
Officer of GZA, certifying that GZA has experienced no adverse material
changes since the date of the Merger Agreement;
- GZA must have delivered to Futureco an opinion of counsel reasonably
satisfactory to Futureco;
- All third party consents and waivers required for the consummation of the
transactions contemplated in the Merger Agreement must have been
obtained;
- No more than 5% of the issued and outstanding of GZA Common Stock may be
dissenting shares on the effective date;
- Futureco must have obtained adequate financing for the merger on terms
acceptable to it, and the proceeds of the financing must be available;
and
- At least one business day before the Closing Date, GZA must have received
from each stock option holder a duly executed option exercise agreement,
indicating the number of shares to be exercised and acknowledging that
any stock option not exercised prior to the Closing Date will be
terminated and cancelled. On the Closing Date, GZA must deliver to
Futureco a schedule of stock option holders of record, along with certain
information relating to those options.
Furthermore, the obligations of GZA to effect the merger and consummate the
other transactions contemplated to occur on the Closing Date are also subject to
the following conditions, any of which may be waived in writing by GZA:
- The representations and warranties of Futureco and the Merger Subsidiary
must materially be true and correct as of the Closing Date, and
certificates to that effect, signed by the Presidents of Futureco and the
Merger Subsidiary, must be delivered to GZA;
- Futureco and the Merger Subsidiary must have materially performed their
respective obligations under the Merger Agreement on or prior to the
effective time; and certificates to that effect, signed by the Presidents
of Futureco and the Merger Subsidiary, must be delivered to GZA;
- Futureco must have had delivered to GZA an opinion of counsel reasonably
satisfactory to GZA; and
- All third party consents and waivers required for the consummation of the
transactions contemplated in the Merger Agreement must have been
obtained.
44
<PAGE> 47
TERMINATION, AMENDMENT AND WAIVER
The Merger Agreement may be terminated at any time before the Certificate
of Merger is accepted by the Secretary of State of Delaware, before or after GZA
stockholder approval, in the following ways:
- By mutual written consent, duly authorized by the board of directors of
GZA and Futureco;
- By either us or Futureco if the other breaches certain conditions;
- By either us or Futureco if a government entity with legal authority
prevents the consummation of the merger in a nonappealable manner;
- By either us or Futureco, at any time after December 14, 2000, if the
closing conditions to the merger are not met;
- By either us or Futureco if the merger is not consummated on o before
December 14, 2000, and the party seeking to terminate did not proximately
contribute to the failure of the merger to occur;
- By either us or Futureco if GZA stockholders do not approve the merger
upon a duly held GZA stockholders meeting or adjournment thereof;
- By either us or Futureco if, before our stockholders' meeting, our Board
withdraws or modifies is approval to recommend the merger in connection
with a superior acquisition proposal;
- By Futureco if GZA enters into a definitive agreement with respect to any
other acquisition proposal; and
- By Futureco if more than five percent of the record holders of issued and
outstanding GZA stock on the effective time are dissenting stockholders.
If the Merger Agreement is terminated because our Board has withdrawn or
modified its approval or recommendation of the merger or has approved or
recommended, or we have entered into a definitive agreement with respect to
another acquisition proposal, then we will reimburse Futureco for up to $750,000
of its actual and reasonable expenses.
The Merger Agreement may be amended at any time by written agreement by
action of the boards of directors of GZA and Futureco before the Certificate of
Merger is accepted by the Secretary of State of Delaware, before GZA stockholder
approval or after such approval if permitted by law without the requirement of
obtaining further approval.
Any time before the effective time, the parties may, in writing:
- extend the time for performance of any of the other party's obligations;
- waive any of the inaccuracy in the representations and warranties of the
other party; or
- waive the need for the other party to comply with any of the conditions
or agreements in the Merger Agreement, subject to certain limitations.
FEES AND EXPENSES
Whether or not the merger is completed and except as otherwise provided in
the Merger Agreement, all fees and expenses incurred in connection with the
merger will be paid by the party incurring those fees and expenses, except that
GZA will pay for all costs and expenses relating to the printing and mailing of
this Proxy Statement. If the merger is terminated because of any of the reasons
described above in "THE MERGER AGREEMENT -- Termination, Amendment and Waiver,"
GZA will reimburse Futureco for its reasonable out-of-pocket expenses not to
exceed $750,000 in connection with the transaction.
45
<PAGE> 48
Estimated fees and expenses (rounded to the nearest thousand) to be
incurred in connection with the merger, the financing and related transactions
are as follows:
<TABLE>
<S> <C>
Financing fees and expenses................................. $122,000
Filing fees (Securities and Exchange Commission)............ 5,650
Legal, accounting and special committee's financial
advisors' fees and expenses............................... 647,000
Printing and solicitation fees and expenses................. 42,000
Miscellaneous............................................... 8,350
--------
Total............................................. $825,000
========
</TABLE>
PRICE RANGE OF COMMON STOCK
The Common Stock is currently traded on The Nasdaq Stock Market under the
symbol "GZEA." The following table sets forth the high and low closing sale
prices for shares of the Common Stock, as reported on The Nasdaq Stock Market
for the periods listed.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
YEAR ENDING FEBRUARY 28, 2001
First quarter............................................. $6.3750 $4.1875
Second quarter............................................ 6.25 5.50
Third quarter (through September 15, 2000)................ 6.25 6.0625
YEAR ENDED FEBRUARY 29, 2000
First quarter............................................. 4.625 3.75
Second quarter............................................ 5.50 4.00
Third quarter............................................. 4.50 3.50
Fourth quarter............................................ 4.9375 3.75
YEAR ENDED FEBRUARY 28, 1999
First quarter............................................. 5.1875 4.50
Second quarter............................................ 5.125 4.6875
Third quarter............................................. 4.875 4.125
Fourth quarter............................................ 5.00 4.00
</TABLE>
On March 30, 2000, the last trading day before GZA's public announcement
that it had received a preliminary acquisition proposal from a management group,
the high and low sales prices for the Common Stock as reported on The Nasdaq
Stock Market were $5.125 and $5.00 per share, respectively, and the closing sale
price on that date was $5.00 per share. On August 16, 2000, the last trading day
before the public announcement of the Merger Agreement, the high and low sales
prices for the Common Stock as reported on The Nasdaq Stock Market were $5.7188
and $5.6719 per share, respectively, and the closing sale price on that date was
$5.6719 per share. On October , 2000, the last trading day before the date of
this Proxy Statement, the closing price for shares of the Common Stock, as
reported on The Nasdaq Stock Market, was $ . You are urged to obtain
current market quotations for GZA Common Stock before making any decision with
respect to the merger.
DIVIDENDS
GZA has never declared or paid any dividends with respect to its Common
Stock. Any determination to pay dividends in the future will be at the
discretion of the Board of Directors and will be dependent upon GZA's results of
operations, financial condition, capital expenditures, working capital
requirements, any contractual restrictions and other factors deemed relevant by
GZA's Board of Directors. GZA does not
46
<PAGE> 49
anticipate that any cash dividends will be paid on its Common Stock in the
foreseeable future if, for any reason, the merger is not completed.
COMMON STOCK PURCHASE INFORMATION
During the sixty days preceding the date of this Proxy Statement, certain
of the participating executives acquired shares of GZA Common Stock as follows:
each of Messrs. Celi, Hadge, and Hehir received a restricted stock award of
1,000 shares in September 2000. Each of Messrs. Celi, Hadge, and Hehir also
received at that time an incentive stock option to purchase 4,000 shares at an
exercise price of $ per share.
GZA did not purchase any GZA Common Stock in 2000, 1999 or 1998, except as
follows. On July 14, 1997, the Board of Directors authorized the repurchase of
up to 250,000 shares of GZA stock from time to time at prevailing market rates.
The shares repurchased were to be used primarily for issuance under the
Company's 401(k) Plan, Employee Stock Purchase Plan, Stock Incentive Plan and
other equity incentive programs and, where necessary, for other appropriate
corporate purposes. The process was managed by the Chief Executive Officer, the
Chief Financial Officer and the Chairman of the Board's Audit Committee
according to guidelines established by the Board with progress periodically
reported to the Board. The principal reasons to implement this repurchase
program were to increase long-term stockholder value by reducing the number of
outstanding shares of Common Stock included in the Company's earnings per share,
to offset the dilutive effect of shares issued pursuant to the Company's 401(k)
Plan, Employee Stock Purchase Plan, and stock option plans; to provide liquidity
to existing stockholders that had been lacking as a result of the thin trading
volume in the Company's stock; and to improve employee morale. The directors
agreed that, at the then current market prices, the Company's stock was a good
investment and represented a more efficient use of the Company's cash than a
number of available investments. An August 6, 1997 press release announced the
Company's intent to initiate this stock buy-back program. On December 17, 1997,
the Board voted to increase the buy-back to a total of 500,000 shares under
previously established guidelines. Through August 1998, 500,000 shares of GZA
stock were repurchased at an average price of $4.91 share. In September 1998,
the Board decided to suspend further buy-back efforts in order to consider other
uses of the Company's cash.
INFORMATION ABOUT FUTURECO
Futureco Environmental, Inc. was incorporated in Delaware on March 6, 2000
and is qualified as a foreign corporation in Massachusetts. Futureco has not
carried on any activities to date other than those activities incident to its
formation and in furtherance of the merger, including but not limited to,
entering into the Stock Purchase Agreements and the Merger Agreement, as
described herein.
The executive officers and directors of each of Futureco and the Merger
Subsidiary, who will become the executive officers and directors of GZA when the
merger is consummated, are:
Officers: William R. Beloff -- President
Joseph P. Hehir -- Treasurer
William E. Hadge -- Secretary
Directors: William R. Beloff
William E. Hadge
Joseph P. Hehir
M. Joseph Celi
Lawrence Feldman
After the merger the Board of Directors of Futureco will be able to
determine all the directors and, indirectly, the management of GZA.
47
<PAGE> 50
WHERE YOU CAN FIND MORE INFORMATION
GZA files annual, quarterly and special reports, proxy statements and other
information with the Commission. In addition, because the merger is a "going
private" transaction, GZA has filed a Rule 13e-3 Transaction Statement on
Schedule 13E-3 with respect to the merger. The Schedule 13E-3 and other reports,
proxy statements and other information contain additional information about GZA.
You may read and copy any reports, statements or other information filed by GZA
at the Commission's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following Regional Offices of the Commission: 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center,
Suite 1300, New York, New York 10048. Please call the Commission at
1-800-732-0330 for further information on the operation of the public reference
rooms. GZA's filings with the Commission are also available to the public from
commercial document retrieval services and at the website maintained by the
Commission located at: "http://www.sec.gov."
The Commission allows GZA to "incorporate by reference" information into
this Proxy Statement. This means that GZA can disclose important information by
referring to another document filed separately with the Commission. The
information incorporated by reference is considered to be part of this Proxy
Statement, and later information filed with the Commission will update and
supersede the information in this Proxy Statement.
GZA incorporates by reference each document it files under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Proxy Statement
and before the Special Meeting. GZA also incorporates by reference into this
Proxy Statement the following documents filed by it with the Commission under
the Exchange Act:
- GZA's Annual Report on Form 10-K for the year ended February 29, 2000, as
amended by Form 10-K/A filed on June 29, 2000;
- GZA's Quarterly Report on Form 10-Q for the three months ended May 31,
2000;
- GZA's Current Report on Form 8-K, filed on August 24, 2000.
GZA will provide without charge to each person to whom a copy of this Proxy
Statement has been delivered, upon request, a copy of any or all of the
documents incorporated by reference herein, other than the exhibits to the
documents, unless the exhibits are specifically incorporated by reference into
the information that this Proxy Statement incorporates. Requests for copies
should be directed to GZA GeoEnvironmental Technologies, Inc., 320 Needham
Street, Newton Upper Falls, Massachusetts 02464, Attention: Secretary.
If you would like to request documents from GZA, please do so by October
31, 2000 in order to receive them before the Special Meeting.
GZA's Board of Directors does not intend to bring any other matters to the
stockholders for consideration at the Special Meeting, except as described in
this Proxy Statement.
The Proxy Statement does not constitute an offer to sell, or a solicitation
of an offer to buy, any securities, or the solicitation of a proxy, in any
jurisdiction to or from any person to whom it is not lawful to make any offer or
solicitation in that jurisdiction. The delivery of this Proxy Statement will not
create an implication that there has been no change in the affairs of GZA since
the date of this Proxy Statement or that the information herein is correct as of
any later date.
You should rely on the information contained or incorporated by reference
in this Proxy Statement. GZA has not authorized anyone to provide you with
information that is different from what is contained in this Proxy Statement.
This Proxy Statement is dated October 9, 2000. You should not assume that the
information
48
<PAGE> 51
contained in this Proxy Statement is accurate as of any date other than that
date, and the mailing of this Proxy Statement will not create any implication to
the contrary.
PROPOSAL TWO: ELECTION OF DIRECTORS
We have a classified Board of Directors consisting of Class I, Class II and
Class III directors who serve three-year terms, with the term of one of the
three classes expiring each year, concurrently with the Company's Annual
Meeting. Our by-laws specify that the number of directors constituting each
class shall be as nearly equal as possible. However, if the merger is approved
and consummated, the directors of the Merger Subsidiary, William R. Beloff,
William E. Hadge, Joseph P. Hehir, M. Joseph Celi and Lawrence Feldman will
become the directors of GZA, and the bylaws of the Merger Subsidiary, which do
not provide for a classified Board of Directors, will become the bylaws of GZA.
Currently, the number of directors constituting our full Board of Directors
of the Company is nine, consisting of three directors in each Class. The terms
of the Company's current Class I directors, Rose Ann Giordano, Donald T.
Goldberg and Thomas W. Philbin, expire in 2001. The terms of the Company's
current Class III directors, Timothy W. Devitt, David B. Perini and Andrew P.
Pajak, expire in 2002. The terms of the Company's current Class II directors, M.
Joseph Celi, Lewis Mandell and William E. Hadge, expire immediately following
the 2000 Annual Meeting.
The Board has nominated Lewis Mandell for re-election and William R. Beloff
and William S. Zoino for election as Class II directors, to serve in the event
that the merger is not approved and consummated. The Board has fixed the number
of directors constituting the full Board of Directors at nine. If they are
elected, and if the merger is not approved and consummated, the term of Messrs.
Mandell, Beloff and Zoino will expire in 2003. Unless marked otherwise, returned
proxies will be voted to elect each of Messrs. Mandell, Beloff and Zoino as the
Class II directors. Each nominee has agreed to serve if he is elected and if the
merger is not approved and consummated, and the Company has no reason to believe
that any of them will be unable to serve. If any nominee is unable or declines
to serve as a director at the time of the Special Meeting, then the Board will
designate another nominee and proxies will be voted in favor of that nominee.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE PROPOSAL
TO ELECT MESSRS. MANDELL, BELOFF AND ZOINO AS THE CLASS II DIRECTORS OF THE
COMPANY.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning each director
of the Company continuing in office, each nominee for election as director, and
each executive officer of the Company.
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL AGE PRINCIPAL POSITION
------------------ --- ------------------
<S> <C> <C>
Donald T. Goldberg(1)(2)............. 72 Chairman of the Board of Directors
Andrew P. Pajak...................... 50 Director, President and Chief Executive Officer of the
Company
M. Joseph Celi....................... 66 Director and Executive Vice President of the Company
John E. Ayres........................ 63 Executive Vice President -- Business Development of
the Company
William E. Hadge..................... 45 Director of the Company; Senior Vice President of GZA
GeoEnvironmental
Joseph P. Hehir...................... 55 Executive Vice President, Chief Financial Officer and
Treasurer of the Company
William R. Beloff.................... 51 Executive Vice President of the Company; nominee for
election as Class II Director
Lewis Mandell(1)..................... 57 Director; nominee for election as Class II Director
</TABLE>
49
<PAGE> 52
<TABLE>
<CAPTION>
NAME OF INDIVIDUAL AGE PRINCIPAL POSITION
------------------ --- ------------------
<S> <C> <C>
Thomas W. Philbin(1)................. 61 Director
Timothy W. Devitt(2)................. 56 Director
David B. Perini(2)................... 63 Director
Rose Ann Giordano.................... 62 Director
William S. Zoino..................... 68 Nominee for election as Class II Director
</TABLE>
---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Donald T. Goldberg has served as Chairman of the Company's Board of
Directors since 1989. Mr. Goldberg also served as the Company's Chief Executive
Officer from 1989 to 1995, and as President of GZA GeoEnvironmental from 1966 to
1990 and from 1992 to 1993.
Andrew P. Pajak has been a director, Chief Executive Officer and President
of the Company since 1996. Mr. Pajak was Executive Vice President of Michael
Baker Corporation, an engineering, construction and operations and maintenance
services firm, from 1993 to 1996, and President and Chief Executive Officer of
Baker Environmental, Inc., a wholly-owned subsidiary of Michael Baker
Corporation, from 1990 to 1996.
M. Joseph Celi has been a director and Executive Vice President of the
Company since 1991. In 1997, Mr. Celi was also appointed to the position of
Regional Operating Officer, Great Lakes and Southern Regions of GZA
GeoEnvironmental. Mr. Celi also is responsible for the Company's Brownfields
development effort.
John E. Ayres has been Executive Vice President -- Business Development of
the Company since 1992. Mr. Ayres joined the Company in 1966.
William E. Hadge has been a director of the Company since July 1997. Mr.
Hadge joined the Company in 1979 and has served as a Senior Vice President of
GZA GeoEnvironmental since 1993.
Joseph P. Hehir has been the Chief Financial Officer and Treasurer of the
Company since 1993 and an Executive Vice President of the Company since 1998.
Mr. Hehir has been Treasurer of GZA GeoEnvironmental since 1989 and was a Senior
Vice President of GZA GeoEnvironmental from 1990 to 1995. Mr. Hehir joined the
Company in 1981.
William R. Beloff was appointed Executive Vice President of the Company in
1998. Mr. Beloff has held the position of Regional Operating Officer, Northeast
Region, of GZA GeoEnvironmental since 1997. Mr. Beloff joined GZA
GeoEnvironmental in 1973.
Lewis Mandell has been a director of the Company since 1991. Dr. Mandell
has been Dean of the School of Management at the University of Buffalo since
1998. Dr. Mandell was Dean of the Business School of, and a professor of finance
at, Marquette University, from 1995 to 1998. He also serves as a director of the
Variable Annuities of Travelers Corporation and Delaware North Corporation.
Thomas W. Philbin has been a director of the Company since 1993. Dr.
Philbin has been the President and a director of HEC, Inc., an energy
conservation consulting firm, since 1991 and Vice President of Energy Services
of Northeast Utilities since 1999.
Timothy W. Devitt has been a director of the Company since 1993. Mr. Devitt
has been Senior Vice President of PHB Hagler Bailly, Inc., a management
consulting firm, since 1998. Mr. Devitt was Managing Director of Putnam, Hayes &
Bartlett, Inc., an economic and management consulting firm, from 1991 to 1998.
Rose Ann Giordano has been a director of the Company since 1998. Ms.
Giordano has been Vice President, Internet Service Provider Business Group of
Compaq Computer Corporation since 1997. Ms. Giordano also served as Vice
President, Internet Business Group of Digital Equipment Corporation from 1994 to
1997.
50
<PAGE> 53
David B. Perini has been a director of the Company since 1998. Mr. Perini
retired as director and Chairman of Perini Corporation, a general contracting
services firm in July 1999. Mr. Perini served as President and Chief Executive
Officer of Perini Corporation from 1972 until 1998, and also has served as Vice
President and General Counsel of Perini Corporation. Since May 2000, Mr. Perini
has been Commissioner of the Division of Capital Management for the Commonwealth
of Massachusetts.
William S. Zoino was the Vice Chairman of the Board of Directors of the
Company and President of its GZA Drilling subsidiary from 1989 to 1995. From
1995 until March 2000, Mr. Zoino was a founder and Principal of Zonio - Herbert,
Inc., a drilling and engineering firm.
BOARD AND COMMITTEE MEETINGS
During the fiscal year ended February 29, 2000 ("fiscal 2000"), the Board
of Directors of the Company met nine times. No director attended fewer than 80
percent of the meetings of the Board of Directors and of the committees on which
he or she served.
The Board of Directors has an Audit Committee, which confers with the
Company's independent public accountants concerning the scope of their
examinations of the Company's financial statements, the Company's accounting
policies and internal accounting controls and the results of the independent
public accountants' audit examination, and recommends the selection of the
Company's independent public accountants to the Board of Directors. The Audit
Committee's duties do not include accounting or auditing functions, which are
the responsibility of the Company's officers and its independent public
accountants. The Audit Committee met four times in fiscal 2000. The current
Audit Committee members are Messrs. Mandell and Philbin, neither of whom is an
employee of the Company and Mr. Goldberg, who was a consultant to the Company in
fiscal 2000.
The Board of Directors has a Compensation Committee, which oversees
compensation policy, executive salaries, profit sharing, stock options, employee
stock purchase and other benefit and incentive compensation plans and employment
contracts. In fiscal 2000, the Compensation Committee met four times. The
current Compensation Committee members are Messrs. Devitt and Perini, neither of
whom is an employee of the Company, and Mr. Goldberg, who was a consultant to
the Company in fiscal 2000. See "-- Compensation Committee Interlocks and
Insider Participation" and "-- Certain Transactions."
The Board has no other standing committees.
DIRECTORS' COMPENSATION
During fiscal 2000, Ms. Giordano and Messrs. Devitt, Mandell, Philbin and
Perini, were paid an annual retainer of $3,000 plus, in each case, $1,000 for
each Board meeting attended, plus expenses incurred in attending all such
meetings. Non-employee directors also may be compensated at the rate of $1,000
per day and receive reimbursement for travel and other expenses for
Board-related activities. In addition, each member of the Company's Compensation
Committee and Audit Committee, other than Mr. Goldberg, is compensated at the
rate of $750 per quarter and receives reimbursement for travel and other
expenses. Ms. Giordano, and Messrs. Devitt, Mandell, Perini and Philbin received
$11,000, $15,500, $14,500, $14,500 and $13,500, respectively, plus reimbursable
expenses, for such activities during fiscal year 2000. Each non-employee
director also may provide management consulting services to the Company, for
which they are compensated at a rate of $150 per hour plus expenses. Ms.
Giordano and Messrs. Devitt, Perini and Philbin received $3,040, $3,675, $5,775
and $3,600 respectively, plus expenses, for such services in fiscal 2000. In
addition, in April 2000, continuing GZA's previous practice, each non-employee
director other than Mr. Goldberg was granted 1,000 shares of Common Stock,
subject to certain transfer restrictions, in connection with his or her service
on the Board of Directors.
On March 16, 1998, the Company entered into a consulting agreement with Mr.
Goldberg pursuant to which, as compensation for his services as a director and
consultant to the Company, Mr. Goldberg received a
51
<PAGE> 54
retainer of $6,250 per month, plus reimbursement for actual out-of-pocket
expenses. Beginning September 1, 1999, the monthly retainer was reduced to
$4,167 per month. In addition, Mr. Goldberg may be compensated at the rate of
$125 per hour for professional engineering services on specific technical
projects at the request of the Company. During fiscal 2000, Mr. Goldberg
received an aggregate of $66,749 for all services rendered by him to the
Company.
Directors who are employees of the Company are not compensated separately
for serving as directors.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table provides certain summary
information concerning compensation paid to the Company's Chief Executive
Officer and President and its four other most highly compensated executive
officers who were in office on February 29, 2000 (collectively, the "Named
Executive Officers") for the fiscal years ended February 29, 2000, and February
28, 1999 and 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SECURITIES ALL OTHER
----------------------- UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) ($)(#)(1)
--------------------------- ---- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Andrew P. Pajak..................... 2000 $199,556 $15,000 36,200 $ 7,905
Chief Executive Officer and 1999 $193,003 $23,467 -- $ 9,028
President 1998 $193,003 $27,146 -- $22,470
M. Joseph Celi...................... 2000 $153,436 $10,000 28,750 $13,591
Executive Vice President -- 1999 $151,133 $13,964 -- $14,045
Remediation Services 1998 $151,133 $10,185 -- $12,016
Richard M. Simon.................... 2000 $146,023 $ 9,751 17,000 $ 7,186
Executive Vice President -- 1999 $142,002 $20,510 -- $ 9,306
Professional Practice of 1998 $142,002 $12,427 -- $ 7,969
the Company and of GZA
GeoEnvironmental(1)
John E. Ayres....................... 2000 $142,960 $14,156 17,000 $ 9,676
Executive Vice President -- 1999 $141,045 $23,110 -- $12,875
Business Development of 1998 $141,045 $ 5,941 -- $11,250
the Company and of
GeoEnvironmental
William R. Beloff................... 2000 $160,504 $32,884 28,750 $ 7,626
Executive Vice President 1999 $140,005 $28,926 -- $ 8,309
of GZA GeoEnvironmental 1998 $134,763 $17,000 -- $ 6,747
</TABLE>
---------------
(1) Amounts shown consist of the Company's contribution under the Company's
401(k) Profit Sharing Plan and the value of employer-paid premiums for term
life insurance programs. The Company's contributions under the 401(k) Profit
Sharing Plan in fiscal 2000 were as follows: Mr. Pajak, $6,389; Mr. Celi,
$6,034; Mr. Simon $5,670; Mr. Ayres, $5,632 and Mr. Beloff, $6,110. The
value of employer-paid premiums for term life insurance paid by the Company
in fiscal 2000 were as follows: Mr. Pajak, $1,516; Mr. Celi, $7,557; Mr.
Simon, $1,516; Mr. Ayres, $4,044 and Mr. Beloff, $1,516.
The Company's contributions under the 401(k) Profit Sharing Plan in fiscal
1999 were as follows: Mr. Pajak, $7,369; Mr. Celi, $7,229; Mr. Simon,
$6,792; Mr. Ayres, $6,746 and Mr. Beloff, $6,650. The value of employer-paid
premiums for term life insurance paid by the Company in fiscal 1999 were as
follows: Mr. Pajak, $1,659; Mr. Celi, $6,816; Mr. Simon, $2,514; Mr. Ayres,
$6,129 and Mr. Beloff, $1,659.
(2) Mr. Simon resigned from his employment by the Company, effective June 16,
2000.
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<PAGE> 55
The Company's contributions under the 401(k) Profit Sharing Plan in fiscal
1998 were as follows: Mr. Pajak, $6,400; Mr. Celi, $6,400; Mr. Simon, $5,665;
Mr. Ayres, $5,634 and Mr. Beloff, $5,355. The value of employer-paid premiums
for term life insurance paid by the Company in fiscal 1998 were as follows: Mr.
Pajak, $1,392; Mr. Celi, $5,616; Mr. Simon, $2,304; Mr. Ayres, $5,616 and Mr.
Beloff, $1,392.
Option Grants in Last Fiscal Year. The following table sets forth certain
information concerning stock options granted during fiscal 2000 to the Named
Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF PERCENTAGE OF VALUE AT ASSUMED
SECURITIES TOTAL OPTIONS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO PRICE APPRECIATION FOR
OPTIONS EMPLOYEES IN OPTION TERM
GRANTED FISCAL YEAR EXERCISE EXPIRATION ----------------------
NAME (#) (%) PRICE DATE(1) 5% ($) 10% ($)
---- ---------- ------------- -------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Andrew P. Pajak...... 22,000(2) 7.5% $4.13 March 1, 2003 $16,931 $36,078
14,200(3) 5.0 4.13 March 1, 2003 10,928 23,286
M. Joseph Celi....... 22,000(2) 7.7 4.13 March 1, 2003 16,931 36,078
6,750(3) 2.4 4.13 March 1, 2003 5,195 11,069
Richard M. Simon..... 17,000(2) 5.9 4.13 March 1, 2003 13,083 27,878
John E. Ayres........ 17,000(2) 5.9 4.13 March 1, 2003 13,083 27,878
William R. Beloff.... 22,000(2) 7.7 4.13 March 1, 2003 16,931 36,078
6,750(3) 2.4 4.13 March 1, 2003 5,195 11,069
</TABLE>
---------------
(1) All options vest on June 1, 2002 and expire nine months thereafter.
(2) Incentive stock option.
(3) Nonqualified stock option.
Option Exercises and Fiscal Year-End Values. The following table sets
forth certain information concerning stock options exercised during fiscal 2000
and stock options held as of February 29, 2000 by each of the Named Executive
Officers:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR-END FISCAL YEAR-END ($)(1)
ACQUIRED VALUE --------------------------- ---------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#) ($) (#) (#) ($) ($)
---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Andrew P. Pajak.......... -- -- 60,000 51,200 $60,000 $28,575
M. Joseph Celi........... -- -- 13,400 28,750 13,400 10,781
Richard M. Simon(2)...... -- -- 6,200 17,000 6,200 6,375
John E. Ayres............ -- -- -- 17,000 -- 6,375
William R. Beloff........ -- -- 3,200 28,750 4,000 10,781
</TABLE>
---------------
(1) Value is based on the last sale price of the Common Stock ($4.50 per share)
on February 29, 2000, as reported by the Nasdaq National Market, less the
applicable option exercise price. These values have not been and may never
be realized. Actual gains upon exercise, if any, will depend on the value of
the Common Stock on the date of the sale of the shares.
(2) Upon Mr. Simon's June 16, 2000 resignation from his employment by the
Company, the Compensation Committee of the Board of Directors of the Company
accelerated in full the vesting of his outstanding options.
53
<PAGE> 56
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors has furnished the
following report on executive compensation for fiscal year 2000:
Compensation Policies. The purpose of the Company's policy for
compensating its executive officers is to establish aggregate compensation
levels that are consistent with the Company's financial performance; to provide
appropriate incentives to promote individual performance and both short-term and
long-term goal achievement, thereby enhancing Company profitability and thus
stockholder value; and to grant total compensation sufficiently competitive to
retain and, when necessary, attract executive officers capable of leading the
Company in the attainment of its business objectives.
Base Salaries. The salaries of executive officers are established annually
by evaluating requirements of the position, the contribution of the individual
executive to Company performance and the executive's responsibility, experience
and potential. Base salaries of executive officers are intended to be comparable
to median salaries of a peer group of comparably-sized companies and to salaries
of executive officers reported in an environment industry salary survey. In
making the comparisons, the Company's financial performance as well as
non-financial measures such as contributions to the success of the Company's
strategic plan are considered. In fiscal 1999, the Committee also engaged the
services of an independent compensation consultant to provide advice in
establishing base salaries and short-term and long-term incentives as components
of a total compensation package for senior executives of the Company.
In keeping with the Compensation Committee's policy of increasing emphasis
on incentive-based compensation for its senior executives, base salaries of the
Company's Chief Executive Officer and other Named Executive Officers were not
increased for fiscal 2000.
Senior executives are also eligible to participate in various benefit
programs available to all full-time employees in varying degrees, including the
Company's 401(k) Profit Sharing Plan and a supplemental insurance program
whereby term insurance premiums are paid by the Company on behalf of senior
executives and selected other Company employees.
Incentive Compensation Plan. Senior executives and other selected Company
employees also may qualify for cash bonuses through participation in the
Company's Incentive Compensation Plan. The amount of the bonus awarded to a
participant is based on achievement of pre-established objectives, including
corporate performance goals (i.e., target earnings before interest, bonus and
taxes) and individual performance goals tied to specific corporate objectives.
For fiscal 2000, the amounts of the target bonuses, assuming the performance
goals were met, ranged from 9.5% to 27.5% of the participants' base salaries. If
the Compensation Committee determines that actual Company performance has
exceeded or fallen short of a participant's pre-established goals, a bonus that
is greater or less than the target bonus may be awarded.
Long-Term Incentives; Equity-Based Compensation. Awards of equity-based
compensation have not historically been a significant component of the Company's
compensation of its executive officers, in part, because the Company's senior
executives have often already held significant equity positions in the Company
through ownership of the Company's Common Stock. However, the Compensation
Committee has adopted a new policy under which it plans to provide increased
long-term incentives through awards of equity-based compensation to its
executive officers and other senior executives who are responsible for
significant Company operations, growth opportunities or strategic initiatives.
Under this new policy, a substantial component of the targeted total
compensation package of these senior executives will consist of the expected
future value of awards under the Company's 1999 Stock Incentive Plan, and the
executives' total compensation will therefore increasingly depend on achieving
targeted improvements in the Company's stock price.
The 1999 Stock Incentive Plan was approved by stockholders at the July 13,
1999 Annual Meeting. In fiscal 2000, the Compensation Committee granted options
to purchase an aggregate of 317,850 shares of Common Stock to the Company's
Chief Executive Officer, its other Named Executive Officers and a limited number
of other senior executives. The options will vest on June 1, 2002, and will
thereafter be exercisable for
54
<PAGE> 57
only nine months. The expected value of these grants, assuming the targeted rate
of growth of the Company's stock price over the vesting period, will range from
approximately 25% to more than 100% of the executive's annual base salary. In
fiscal years after fiscal 2000, and if the merger is not approved, the
Compensation Committee expects to continue to provide long-term incentives in
the form of additional awards of equity-based compensation to selected senior
executives. However, those awards will be smaller in magnitude than the initial
grants described above.
Chief Executive Officer Compensation
The base salary of Andrew P. Pajak, the Company's Chief Executive Officer,
increased from $193,003 in fiscal 1999 to $199,556 for fiscal 2000. In fiscal
2000, Mr. Pajak received a bonus of $15,000 compared to approximately $23,467
received for performance in fiscal 1999. This bonus was less than his target
bonus for fiscal 2000, and less than his fiscal 1999 bonus, primarily because
the Committee concluded that the Company had not made adequate progress toward
its goal of expansion through selected acquisitions. In fiscal 2000, Mr. Pajak
and other Named Executive Officers received awards of stock options from the
Long-term Incentive Compensation Plan of FYE 2000-2002, which included a
36,200-share grant to Mr. Pajak. See " -- Long-Term Incentives; Equity Based
Compensation".
Communications with Stockholders. The Committee is responsible for
communicating with stockholders regarding the Company's compensation policy and
to ensure that the Board of Directors understands stockholders' perspectives
regarding executive compensation. Members of the Committee may, when
appropriate, respond to stockholder concerns about compensation in subsequent
reports or proxy statements. Comments and questions may be addressed to any
member of the Compensation Committee at GZA GeoEnvironmental Technologies, Inc.,
320 Needham Street, Newton Upper Falls, MA 02464.
By: Timothy W. Devitt, Chair
David B. Perini
Donald T. Goldberg
As of February 29, 2000
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee currently consists of Messrs. Devitt,
Goldberg and Perini. Messrs. Devitt and Perini are not, nor have they ever been,
officers or employees of the Company or of any of its subsidiaries. Mr.
Goldberg, who was elected to the Compensation Committee in October 1995, was
employed by the Company as its Chief Executive Officer until his retirement in
September 1995. Mr. Goldberg was employed by the Company on a part-time basis
from September 1997 to February 1998. Since March 1998, Mr. Goldberg has been a
consultant to the Company. See "-- Directors' Compensation." There are no family
relationships among the executive officers or directors of the Company.
55
<PAGE> 58
PERFORMANCE GRAPH
The following Performance Graph compares the performance of the Company's
cumulative stockholder return with that of a broad market index, the Nasdaq
Stock Market Index for U.S. Companies, and with those equity securities of a
peer group of issuers in the environmental consulting industry selected by the
Company. Issuers in the peer group consist of EA Engineering, Science &
Technology, Inc., Ecology and Environment, Inc., EMCON, Harding Lawson
Associates Group, Inc., Versar, Inc. and Roy F. Weston, Inc. (Fluor Daniel GTI,
Inc., which was included in the Company's peer group in prior years' proxy
statements, has been eliminated from the group due to its acquisition by The IT
Group in December 1998). The cumulative stockholder returns for shares of the
Company's Common Stock and for the market and peer group indices are calculated
assuming $100 was invested on March 1, 1995, and assuming the reinvestment of
dividends, if any, as of the last day of February in each of the five succeeding
years. The Company paid no cash dividends during the periods shown.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
GZA
GEOENVIRONMENTAL NASDAQ MARKET
TECHNOLOGIES, INC. PEER GROUP INDEX INDEX
------------------ ---------------- -------------
<S> <C> <C> <C>
1995 100.00 100.00 100.00
1996 112.50 86.20 138.08
1997 104.17 83.23 165.74
1998 165.63 100.36 225.41
1999 158.33 62.31 291.27
2000 139.58 68.43 565.81
</TABLE>
ASSUMES $100 INVESTED ON MAR. 1, 1995
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING FEB. 29, 2000
56
<PAGE> 59
CERTAIN TRANSACTIONS
The Company leases certain of its facilities from employees, some of whom
are directors, executive officers or stockholders of the Company, or from
entities in which those persons have interests.
The Company's principal facility in Newton Upper Falls, Massachusetts is
leased from Donald T. Goldberg, Chairman of the Board of the Company and William
S. Zoino, a beneficial owner of more than five percent of the outstanding Common
Stock of the Company and a nominee for election as a Class II Director. Mr.
Goldberg and Mr. Zoino own the property as tenants in common. Rental payments to
Messrs. Goldberg and Zoino aggregated $714,000 for fiscal 2000.
The Company's Brockton, Massachusetts facility is leased from GZA
Investment Associates, Trust, a Massachusetts business trust in which the
Company owns a two-thirds interest together with Mr. Zoino and Joseph E. Hebert,
a former employee of GZA Drilling. Lease payments to GZA Investment Associates
Trust totaled $93,000 in fiscal 2000.
The Company's Providence, Rhode Island facility is leased from GZRI
Associates, a Rhode Island general partnership whose partners are Messrs.
Goldberg and Zoino and four others, Michael A. Powers, David R. Carchedi and
Nicholas A. Campagna, all current employees of GZA GeoEnvironmental, and Frank
W. Clark, a former employee of GZA GeoEnvironmental. Lease payments to GZRI
Associates totaled $80,000 in fiscal 2000.
The Company believes that the foregoing leases were entered into on terms
no less favorable to the Company than could reasonably have been obtained in
arm's-length transactions with independent third parties.
The Company provides geotechnical design, instrumentation and consulting
services, on a subcontracting basis, to Perini Corporation and other clients
affiliated with or engaged in joint ventures with Perini Corporation. David B.
Perini, a director of the Company, was the Chairman of the Board of Directors of
Perini Corporation until he retired in July 1999. In fiscal 2000, the Company
billed an aggregate of $2.7 million for services provided to Perini Corporation
and clients affiliated with Perini Corporation.
Donald T. Goldberg, Chairman of the Board of Directors and formerly the
Company's Chief Executive Officer, is a consultant to the Company and to GZA
GeoEnvironmental, Inc. See "-- Directors' Compensation".
AGREEMENTS WITH EXECUTIVE OFFICERS
Each of Messrs. Pajak, Simon, Ayres, Celi, Beloff, Hadge and Hehir has
entered into a Non-Competition and Non-Disclosure Agreement with the Company
that provides, among other things, that following the termination of his
employment, and provided that he complies with certain non-competition covenants
set forth in the agreement, he may be entitled to receive, for a period of up to
twelve months following his termination, his base salary and certain other
benefits.
As noted above, Mr. Pajak expects to leave GZA if the merger is
consummated. In order to retain his services in the meantime, GZA entered into a
retention agreement with Mr. Pajak. Under that agreement, if Mr. Pajak leaves
after the merger, under the circumstances set forth in the retention agreement,
he will receive a severance payment and other benefits, described more fully
under "Interests of Certain GZA Directors, Officers and Stockholders in the
Merger -- Retention Agreement" above.
The Company has entered into Indemnification Agreements, dated as of June
19, 2000 with each of Messrs. Celi, Devitt, Goldberg, Hadge, Mandell, Pajak,
Perini, Philbin, Ayres, Beloff, Hehir, Simon and Ms. Giordano. The
Indemnification Agreements, provide for indemnification of these persons in
respect of third party proceedings arising out of their service as directors and
officers of the Company, and in respect of proceedings by or in the right of the
Company. The term of each Indemnification Agreement is the later of six years
after the indemnified party ceases to serve as a director or officer of the
Company, or the termination of all proceedings then pending.
57
<PAGE> 60
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of September 13, 2000 by
(i) each person or group known to the Company to be the beneficial owner of more
than five percent of the outstanding GZA Common Stock; (ii) each of the
Company's directors and director nominees; (iii) each of the Named Executive
Officers and (iv) all directors, director nominees and executive officers of the
Company as a group. The information as to each person has been furnished by that
person.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED(1)
----------------------
NAMES AND ADDRESSES OF BENEFICIAL HOLDERS NUMBER PERCENT
----------------------------------------- --------- ---------
<S> <C> <C>
Heartland Advisors.......................................... 437,400 10.4%
789 North Water Street
Milwaukee, Wisconsin 53202
William S. Zoino(2)......................................... 409,368 9.7
93 Riverside Drive
West Harwich, MA 02671
Franklin Resources, Inc.(3)................................. 202,000 4.8
777 Mariners Island Boulevard
San Mateo, CA 94404
Acquisitor plc.............................................. 219,200 5.2
Avery House
52 Brook's Mews
London W1Y1LE
United Kingdom
Donald T. Goldberg(4)....................................... 158,241 3.8
John E. Ayres(5)............................................ 124,204 2.9
Andrew P. Pajak(6).......................................... 71,028 1.7
Richard M. Simon(7)......................................... 64,041 1.5
William R. Beloff(8)........................................ 41,848 1.0
M. Joseph Celi(9)........................................... 25,982 *
William E. Hadge(10)........................................ 20,986 *
Lewis Mandell(11)........................................... 17,100 *
Timothy W. Devitt(12)....................................... 11,350 *
Thomas W. Philbin(13)....................................... 7,100 *
David B. Perini............................................. 4,000 *
Rose Ann Giordano........................................... 3,000 *
All directors, director nominees and executive officers as a
group (13 persons)(14)(15)................................ 933,947 22.2%
</TABLE>
---------------
* Less than one percent.
(1) Unless otherwise noted, each person or group identified possesses sole
voting and investment power with respect to shares, subject to community
property laws where applicable. Shares not outstanding but deemed
beneficially owned by virtue of the right of a person or group to acquire
them within 60 days of September 13, 2000 are treated as outstanding only
for purposes of determining the amount and percent owned by that person or
group. As of the date of this table, there were [ ] shares of GZA
Common Stock outstanding.
(2) Includes 9,400 shares held by Mr. Zonio's spouse as custodian for members
of Mr. Zonio's family. Mr. Zonio disclaims beneficiary ownership of the
latter shares.
(3) Franklin Resources, Inc. is the parent holding company for Franklin
Advisory Services, Inc., an investment company. Franklin Advisory Services,
Inc. has sole power to vote or direct the vote of the
58
<PAGE> 61
shares. The principal stockholders of Franklin Resources, Inc. are Charles
B. Johnson and Rupert H. Johnson, Jr., so that Charles B. Johnson, Rupert
H. Johnson, Jr., and Franklin Advisory Services, Inc. may be deemed to be
the beneficial owners of those shares.
(4) Includes 1,120 shares issued for the account of Mr. Goldberg under the
Company's 401(k) Plan and 50,000 shares held by a trust for certain family
members of Mr. Goldberg. Mr. Goldberg, who is not a trustee of the trust,
disclaims beneficial ownership of the shares held by the trust. Mr.
Goldberg is Chairman of the Board of Directors of the Company.
(5) Includes 2,321 shares issued for the account of Mr. Ayres under the
Company's 401(k) Plan. Mr. Ayres is the Executive Vice
President -- Business Development of the Company.
(6) Includes 1,028 shares issued for the account of Mr. Pajak under the
Company's 401(k) Plan and 60,000 shares subject to stock options
exercisable within 60 days of the date of this table. Mr. Pajak is the
President and Chief Executive Officer and a director of the Company.
(7) Includes 17,000 shares subject to stock options exercisable within 60 days
of the date of this table. Mr. Simon resigned from his employment by the
Company, effective June 16, 2000.
(8) Includes 2,142 shares issued for the account of Mr. Beloff under the
Company's 401(k) Plan and 3,200 shares subject to stock options exercisable
within 60 days of the date of this table. Mr. Beloff is an Executive Vice
President of the Company.
(9) Includes 2,477 shares issued for the account of Mr. Celi under the
Company's 401(k) Plan and 13,400 shares subject to stock options
exercisable within 60 days of the date of this table. Mr. Celi is the
Executive Vice President and a director of the Company.
(10) Includes 1,869 shares issued for the account of Mr. Hadge under the
Company's 401(k) Plan and 3,600 shares subject to stock options exercisable
within 60 days of the date of this table. Mr. Hadge is a Senior Vice
President of GZA GeoEnvironmental and a director of the Company.
(11) Includes 2,500 shares subject to stock options exercisable within 60 days
of the date of this table. Mr. Mandell is a director of the Company.
(12) Includes 2,500 shares subject to stock options exercisable within 60 days
of the date of this table. Mr. Devitt is a director of the Company.
(13) Includes 2,500 shares subject to stock options exercisable within 60 days
of the date of this table. Mr. Philbin is a director of the Company.
(14) Includes shares described in Notes (3) through (13).
(15) Does not include Mr. Simon.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires the Company's directors,
executive officers and persons who own more than ten percent of the outstanding
Common Stock to file with the Commission reports of ownership on Form 3 and
reports of changes in ownership on Forms 4 and 5. Securities and Exchange
Commission regulations require directors, executive officers and
greater-than-ten percent stockholders to furnish the Company with copies of all
Forms 3, 4 and 5 filed with the Commission.
Based solely upon a review of Forms 3 and 4 that were furnished to the
Company during fiscal 2000, Forms 5 were furnished to the Company by certain
directors and executive officers of the Company with respect to fiscal 2000 and
representation letters of certain other directors and executive officers to the
effect that Form 5 filings were not required, the Company believes that all
Section 16(a) filing requirements applicable to its directors, executive
officers and greater-than-ten-percent stockholders were fulfilled in a timely
manner.
59
<PAGE> 62
SOLICITATION
Proxies are being solicited by and on behalf of GZA's Board of Directors.
We will pay the costs of soliciting proxies from our stockholders as well as all
mailing and Securities & Exchange Commission ("Commission") filing fees incurred
in connection with this Proxy Statement. GZA has engaged the services of D.F.
King, to solicit proxies and to assist in the distribution of proxy materials.
In connection with its retention by GZA, D.F. King agreed to provide
solicitation services with respect to banks, brokers, institutional investors
and individual stockholders. GZA has agreed to pay D.F. King a fee of $7,500
plus a stated amount for each telephone call made by D.F. King and to reimburse
its reasonable out-of-pocket expenses and to indemnify it against certain
liabilities and expenses, including liabilities and expenses under the Federal
securities laws. In addition to the solicitation of proxies by mail, some of our
directors, officers and employees may solicit proxies by telephone, facsimile
and personal contact, without separate compensation for those activities. Copies
of solicitation materials will be furnished to fiduciaries, custodians and
brokerage houses for forwarding to beneficial owners of Common Stock, and these
persons will be reimbursed for their reasonable out-of-pocket expenses.
STOCKHOLDER PROPOSALS
Under Rule 14a-8 of Regulation 14A promulgated by the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended
("Regulation 14A"), any stockholder intending to present a proposal at the 2001
Annual Meeting of Stockholders must submit the proposal to the Company at its
offices no later than May 14, 2001 in order to be considered for inclusion in
the proxy statement relating to that meeting.
Under the by-laws of the Company, any stockholder intending to present at
the 2001 Annual Meeting (a) any proposal (other than a proposal by, or at the
direction of, the Board of Directors of the Company) relating to nomination of
candidates for election as directors of the Company or (b) any other proposal
not made by, or at the direction of, the Board of Directors, Chairman of the
Board or President of the Company, must give written notice of the proposal
(including certain information about any nominee or matter proposed and the
proposing stockholder) to the Secretary of the Company, not later than March 10,
2001 and not before December 10, 2000; provided, however, that if less than 70
days' notice or prior public disclosure of the scheduled Annual Meeting is given
or made, the notice from the stockholder, to be timely, must be given within 10
days following public disclosure or mailing of notice of the meeting, whichever
is earlier.
Pursuant to Rule 14a-4(c) of Regulation 14A, proxies solicited by the Board
of Directors for the 2001 Annual Meeting may confer upon the attorneys-in-fact
named therein discretionary authority to vote on any matter (other than
proposals described in the proxy statement for the meeting) that is brought
before the 2001 Annual Meeting and of which the Company did not have written
notice by August 25, 2001.
MISCELLANEOUS
The Board of Directors does not know of any business that will be presented
for consideration at the Special Meeting other than that described in this Proxy
Statement. However, if any other business should come before the Special
Meeting, the persons named in the enclosed form of proxy will vote, or otherwise
act, in accordance with their best judgment.
AVAILABLE INFORMATION
Stockholders of record at the close of business on September 25, 2000 will
receive the Company's Annual Report to Stockholders, that contains detailed
financial information concerning the Company. The Company will mail, without
charge, a copy of the Company's Annual Report on Form 10-K for fiscal 2000
(excluding exhibits) to any stockholder solicited hereby who requests it in
writing. Please submit any written request to Mr. Joseph P. Hehir, Executive
Vice President and Chief Financial Officer, 320 Needham Street, Newton Upper
Falls, Massachusetts 02464.
The date of this Proxy Statement is October 9, 2000.
60
<PAGE> 63
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROPOSAL ONE: MERGER........................................ 2
SUMMARY TERM SHEET.......................................... 2
QUESTIONS AND ANSWERS ABOUT THE MERGER...................... 3
SUMMARY..................................................... 7
The Companies............................................. 7
The Merger................................................ 7
Our Recommendations to Stockholders; Fairness of the
Merger................................................. 8
Fairness Opinion.......................................... 8
Interests of GZA Directors and Officers in the Merger..... 8
Financing for the Merger.................................. 8
Record Date; Voting Power................................. 9
The Merger Agreement...................................... 9
Appraisal Rights.......................................... 9
Effects of the Merger..................................... 10
Conditions to the Merger.................................. 10
Termination of the Merger Agreement....................... 11
What Happens if GZA Receives a Better Offer............... 11
Expense Reimbursement Upon Termination.................... 11
Amending or Waiving Terms of the Merger Agreement......... 12
Price Range of Common Stock............................... 12
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS... 12
SELECTED CONSOLIDATED FINANCIAL DATA........................ 13
THE SPECIAL MEETING......................................... 15
Date; Time; Place and Record Date of the Special
Meeting................................................ 15
Purpose................................................... 15
Voting Information........................................ 15
Delaware Law Considerations............................... 16
Solicitation, Revocation and Use of Proxies............... 16
SPECIAL FACTORS............................................. 17
Background of the Merger.................................. 17
Recommendations of the Special Committee and Board of
Directors; Fairness of the Merger...................... 20
Opinion of Financial Advisor to the Special Committee..... 24
Summary of Financial Analyses Performed by Houlihan
Lokey.................................................. 24
Purpose and Structure of the Merger....................... 28
Effects of the Merger..................................... 28
Risk that the Merger Will Not Be Completed................ 29
Interests of Certain GZA Directors, Officers and
Stockholders in the Merger............................. 29
Financing for the Merger.................................. 31
Accounting Treatment of the Merger........................ 31
Material Federal Income Tax Consequences to
Stockholders........................................... 32
Dissenters' Rights of Appraisal........................... 32
THE MERGER AGREEMENT........................................ 35
The Merger................................................ 35
Closing of the Merger..................................... 35
Effective Time of the Merger.............................. 36
Directors, Officers and Governing Documents............... 36
</TABLE>
i
<PAGE> 64
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Effect of the Merger...................................... 36
Effect on Capital Stock................................... 36
Certificates and Ownership Rights......................... 37
Representations and Warranties............................ 38
GZA Covenants............................................. 40
Preparation of Proxy Statement; Stockholder Meeting....... 42
Access to Information; Confidentiality.................... 42
Best Efforts; Notification................................ 42
Costs of Transaction...................................... 43
Public Announcements...................................... 43
Taxes..................................................... 43
Resignations.............................................. 43
Indemnification........................................... 43
No Further Stock Agreements............................... 43
Closing Conditions........................................ 44
Termination, Amendment and Waiver......................... 45
FEES AND EXPENSES........................................... 45
PRICE RANGE OF COMMON STOCK................................. 46
DIVIDENDS................................................... 46
COMMON STOCK PURCHASE INFORMATION........................... 47
INFORMATION ABOUT FUTURECO.................................. 47
WHERE YOU CAN FIND MORE INFORMATION......................... 48
PROPOSAL TWO: ELECTION OF DIRECTORS......................... 49
Directors and Executive Officers.......................... 49
Board and Committee Meetings.............................. 51
Directors' Compensation................................... 51
Executive Compensation.................................... 52
Compensation Committee Report on Executive Compensation... 54
Compensation Committee Interlocks and Insider
Participation.......................................... 55
PERFORMANCE GRAPH........................................... 56
CERTAIN TRANSACTIONS........................................ 57
Agreements with Executive Officers........................ 57
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................ 58
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE..... 59
SOLICITATION................................................ 60
STOCKHOLDER PROPOSALS....................................... 60
MISCELLANEOUS............................................... 60
AVAILABLE INFORMATION....................................... 60
</TABLE>
Appendix A Agreement and Plan of Merger, dated as of August 16, 2000, among GZA
GeoEnvironmental Technologies, Inc., Futureco Environmental, Inc.
and GeoEnvironmental Acquisition, Inc.
Appendix B Opinion of Houlihan Lokey Howard & Zukin Capital.
Appendix C Section 262 of the Delaware General Corporation Law.
Annex A Form of Proxy.
ii
<PAGE> 65
AGREEMENT AND PLAN OF MERGER
AMONG
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
AND
FUTURECO ENVIRONMENTAL, INC.
AND
GEOENVIRONMENTAL ACQUISITION, INC.
DATED AS OF AUGUST 16, 2000
<PAGE> 66
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
INDEX OF TERMS.............................................................. I
ARTICLE 1 -- THE MERGER..................................................... 1
SECTION 1.1 THE MERGER.................................................. 1
SECTION 1.2 EFFECTIVE TIME.............................................. 1
SECTION 1.3 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION............. 1
SECTION 1.4 CERTIFICATE OF INCORPORATION................................ 1
SECTION 1.5 BYLAWS...................................................... 2
SECTION 1.6 EFFECT OF THE MERGER........................................ 2
SECTION 1.7 EFFECT ON CAPITAL STOCK..................................... 2
SECTION 1.8 EXCHANGE OF CERTIFICATES.................................... 3
SECTION 1.9 NO FURTHER OWNERSHIP RIGHTS IN GZA COMMON STOCK............. 4
SECTION 1.10 LOST, STOLEN OR DESTROYED CERTIFICATES...................... 4
SECTION 1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION.................. 4
ARTICLE 2 -- REPRESENTATIONS AND WARRANTIES OF GZA.......................... 5
SECTION 2.1 ORGANIZATION, STANDING AND POWER OF GZA..................... 5
SECTION 2.2 GZA SUBSIDIARIES............................................ 5
SECTION 2.3 CAPITAL STRUCTURE........................................... 6
SECTION 2.4 OTHER INTERESTS............................................. 6
SECTION 2.5 AUTHORITY; NONCONTRAVENTION; CONSENTS....................... 7
SECTION 2.6 SEC DOCUMENTS; FINANCIAL STATEMENTS; UNDISCLOSED
LIABILITIES................................................. 7
SECTION 2.7 ABSENCE OF CERTAIN CHANGES OR EVENTS........................ 8
SECTION 2.8 LITIGATION.................................................. 8
SECTION 2.9 PROPERTIES.................................................. 9
SECTION 2.10 ENVIRONMENTAL MATTERS....................................... 10
SECTION 2.11 MISCELLANEOUS TRANSACTIONS.................................. 11
SECTION 2.12 EMPLOYEE BENEFITS........................................... 11
SECTION 2.13 EMPLOYEE MATTERS............................................ 13
SECTION 2.14 TAXES....................................................... 13
SECTION 2.15 PAYMENTS TO EMPLOYEES, OFFICERS, TRUSTEES OR DIRECTORS...... 15
SECTION 2.16 BROKERS; SCHEDULE OF FEES AND EXPENSES...................... 15
SECTION 2.17 COMPLIANCE WITH LAWS........................................ 16
SECTION 2.18 CONTRACTS; DEBT INSTRUMENTS................................. 16
SECTION 2.19 OPINION OF FINANCIAL ADVISOR................................ 17
SECTION 2.20 TRADEMARKS, PATENTS AND COPYRIGHTS.......................... 17
SECTION 2.21 INSURANCE................................................... 18
SECTION 2.22 DEFINITION OF KNOWLEDGE..................................... 18
</TABLE>
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<TABLE>
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SECTION 2.23 VOTE REQUIRED............................................... 18
SECTION 2.24 THIRD PARTY CONSENTS........................................ 18
SECTION 2.25 CONTINGENT EARN-OUTS........................................ 18
ARTICLE 3 -- REPRESENTATIONS AND WARRANTIES OF FUTURECO AND SUB............. 18
SECTION 3.1 ORGANIZATION, GOOD STANDING AND POWER OF FUTURECO........... 18
SECTION 3.2 AUTHORITY; NONCONTRAVENTION; CONSENTS RELATING TO
FUTURECO.................................................... 19
SECTION 3.3 BROKERS; SCHEDULE OF FEES AND EXPENSES...................... 19
SECTION 3.4 PROXY STATEMENT............................................. 19
SECTION 3.5 ORGANIZATION, GOOD STANDING AND POWER OF SUB................ 20
SECTION 3.6 AUTHORITY; NONCONTRAVENTION; CONSENTS RELATING TO SUB....... 20
SECTION 3.7 BROKERS; SCHEDULE OF FEES AND EXPENSES...................... 20
SECTION 3.8 PROXY STATEMENT............................................. 20
SECTION 3.9 SEC DOCUMENTS; UNDISCLOSED LIABILITIES...................... 21
SECTION 3.10 STOCK AGREEMENTS............................................ 21
ARTICLE 4 -- COVENANTS...................................................... 21
SECTION 4.1 ACQUISITION PROPOSALS....................................... 21
SECTION 4.2 CONDUCT OF GZA'S BUSINESS PENDING MERGER.................... 22
ARTICLE 5 -- ADDITIONAL AGREEMENTS.......................................... 24
SECTION 5.1 PREPARATION OF PROXY STATEMENT; STOCKHOLDER MEETING; COMFORT
LETTERS..................................................... 24
SECTION 5.2 ACCESS TO INFORMATION; CONFIDENTIALITY...................... 25
SECTION 5.3 BEST EFFORTS; NOTIFICATION.................................. 25
SECTION 5.4 COSTS OF TRANSACTION........................................ 26
SECTION 5.5 PUBLIC ANNOUNCEMENTS........................................ 26
SECTION 5.6 TAXES....................................................... 26
SECTION 5.7 RESIGNATIONS................................................ 26
SECTION 5.8 INDEMNIFICATION............................................. 26
SECTION 5.9 NO FURTHER STOCK AGREEMENTS................................. 27
ARTICLE 6 -- CLOSING CONDITIONS............................................. 27
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER...................................................... 27
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF FUTURECO AND SUB............... 27
SECTION 6.3 CONDITIONS TO OBLIGATIONS OF GZA............................ 28
ARTICLE 7 -- TERMINATION, AMENDMENT AND WAIVER.............................. 29
SECTION 7.1 TERMINATION................................................. 29
SECTION 7.2 CERTAIN FEES AND EXPENSES................................... 29
SECTION 7.3 EFFECT OF TERMINATION....................................... 30
SECTION 7.4 AMENDMENT................................................... 30
SECTION 7.5 EXTENSION; WAIVER........................................... 30
</TABLE>
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<TABLE>
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ARTICLE 8 -- GENERAL PROVISIONS............................................. 30
SECTION 8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES............... 30
SECTION 8.2 NOTICES..................................................... 30
SECTION 8.3 INCORPORATION............................................... 31
SECTION 8.4 COUNTERPARTS................................................ 31
SECTION 8.5 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES.............. 31
SECTION 8.6 GOVERNING LAW............................................... 31
SECTION 8.7 ASSIGNMENT.................................................. 31
SECTION 8.8 ENFORCEMENT................................................. 31
SECTION 8.9 SEVERABILITY................................................ 32
</TABLE>
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of August,
, 2000, is by and among GZA GeoEnvironmental Technologies, Inc., a
Delaware corporation ("GZA"), Futureco Environmental, Inc., a Delaware
corporation ("Futureco") and GeoEnvironmental Acquisition, Inc., a Delaware
corporation and wholly owned subsidiary of Futureco ("Sub").
RECITALS:
WHEREAS, each of the Board of Directors and shareholders of Futureco and
the Board of Directors and shareholders of Sub has approved the merger (the
"Merger") of Sub with and into GZA in accordance with the Delaware General
Corporation Law (the "Delaware Law"), this Agreement and the transactions
contemplated hereby, upon the terms and subject to the conditions set forth
herein; and
WHEREAS, the Board of Directors of GZA (the "GZA Board"), upon the
recommendation of the special committee of GZA Board established to consider the
transaction (the "Special Committee"), has approved the Merger, this Agreement
and the transactions contemplated hereby and declared their advisability and
resolved to recommend approval and adoption of this Agreement by the
shareholders of GZA;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, GZA,
Futureco and Sub hereby agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1 The Merger.
(a) Agreement of Merger. Prior to the Effective Time (as defined below),
and subject to and upon the terms and conditions of this Agreement, Sub shall be
merged with and into GZA, the separate corporate existence of Sub shall cease
and GZA shall continue as the surviving corporation. GZA as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
(b) Closing. Subject to the terms and conditions of this Agreement, as
soon as practicable after the satisfaction or waiver of the conditions set forth
in Article 6, the consummation of the Merger will take place, but in no event
later than 3 business days after satisfaction or waiver of the conditions set
forth in Article 6 (the "Closing Date"), at the offices of Bowditch & Dewey,
LLP, 311 Main Street, Worcester, MA 01608, unless another date, time or place is
agreed to in writing by the parties hereto.
SECTION 1.2 Effective Time.
On the Closing Date, Sub and GZA shall cause the Merger to be consummated
by filing a certificate of merger (the "Certificate of Merger"), as contemplated
by Delaware Law together with any required related documents, with the Secretary
of State of the State of Delaware, in such form as required by, and executed in
accordance with the relevant provisions of, the Delaware Law (the time of such
filing being the "Effective Time").
SECTION 1.3 Directors and Officers of Surviving Corporation.
The directors and the officers of Sub at the Effective Time shall, from and
after the Effective Time, be the directors and officers, respectively, of
Surviving Corporation, until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation (including that
provided herein), or removal in accordance with the applicable law.
SECTION 1.4 Certificate of Incorporation.
The Certificate of Incorporation of Sub in effect at the Effective Time
shall be the Certificate of Incorporation of Surviving Corporation, until
amended, in accordance with applicable law.
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SECTION 1.5 Bylaws.
The Bylaws of Sub in effect at the Effective Time shall be the Bylaws of
Surviving Corporation, until amended, in accordance with applicable law.
SECTION 1.6 Effect of the Merger.
At the Effective Time, the effect of the Merger shall be as provided in
this Agreement and the Certificate of Merger and the applicable provisions of
the Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property rights, privileges, powers and
franchises of GZA and Sub shall vest in the Surviving Corporation, and all
debts, liabilities and duties of GZA and Sub shall become the debts, liabilities
and duties of the Surviving Corporation.
SECTION 1.7 Effect on Capital Stock.
At the Effective Time, by virtue of the Merger and without any action on
the part of Futureco, Sub, GZA or the holders of any of the following
securities:
(a) Sub Common Stock. Each issued and outstanding share of common
stock, par value $.01 per share, of Sub shall be converted into and become
one fully paid and nonassessable share of common stock, par value $.01 per
share, of Surviving Corporation.
(b) Conversion of GZA Shares. Each issued and outstanding share of
common stock, par value $.01 per share, of GZA (the "Shares") immediately
prior to the Effective Time, including each Option Share, other than a
Dissenting Share or an Excluded Share, each as hereinafter defined, is
sometimes referred to as a "Participating Share." Each Participating Share
shall be cancelled and converted into the right to receive, subject to the
terms and conditions of this Agreement, $6.40 per Participating Share (the
"Merger Consideration") payable to the holder thereof, without interest
thereon, upon the surrender of the certificate formerly representing such
Participating Share, less any required withholding of taxes; provided,
however, that any payment due hereunder with respect to an Option Share
shall be reduced by the exercise price with respect to such Option Share
(the "Exercise Price Liability"). "Excluded Share" shall mean a Share owned
by Futureco at the Effective Time and listed on a schedule (the "Excluded
Securities Schedule") to be delivered to GZA by Futureco at least one
business day prior to the Closing Date.
(c) Treasury Shares. Each Share held in the treasury of GZA, or any
direct or indirect wholly-owned subsidiary of GZA immediately prior to the
Effective Time shall, by virtue of the Merger and without any action on the
part of the holder thereof, cease to be outstanding, be canceled and
retired without payment of any consideration therefor and cease to exist.
(d) Excluded Shares. Each Excluded Share shall continue to remain
issued and outstanding as a share of Surviving Corporation and shall not be
converted into the right to receive the Merger Consideration.
(e) Stock Options. At the Effective Time, each outstanding option
which is not an Excluded Option, as hereinafter defined, (a "Stock Option")
to purchase common stock, par value $.01 per share, of GZA ("GZA Common
Stock") granted under or pursuant to any stock option plan or agreement
entered into by GZA or any subsidiary thereof (the "GZA Stock Option
Plans"), as to which the holder has delivered to GZA no later than one (1)
business day prior to the Closing Date a duly executed Option Exercise
Agreement in the form annexed hereto as Exhibit A, shall be exercised as of
the Effective Time pursuant to and in accordance with the terms of the
applicable Option Exercise Agreement and each share of GZA Common Stock
issuable upon the exercise of such Stock Option (an "Option Share") shall
be deemed to have been issued and outstanding immediately prior to the
Effective Time and to constitute a Participating Share for purposes of this
Agreement. All Stock Options which are not exercised prior to the Effective
Time shall be cancelled as of the Effective Time. "Excluded Option" shall
mean an option to purchase GZA Common Stock listed on the Excluded
Securities Schedule which options shall be exchanged for options of
Futureco based upon the exchange ratio set forth on the Excluded Securities
Schedule.
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(f) Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, Shares outstanding immediately prior to the Effective Time
and held by a holder who has not voted in favor of the Merger or consented
thereto in writing and who has demanded appraisal for such Shares in
accordance with Delaware Law ("Dissenting Shares") shall not be converted
into a right to receive the Merger Consideration, but shall be converted
into the right to receive payment from Surviving Corporation of the fair
value of such Dissenting Shares in accordance with Delaware Law, unless
such holder fails to perfect or withdraws or loses his right to appraisal,
in which case such Shares shall be treated as if they had been converted as
of the Effective Time into a right to receive the Merger Consideration,
without interest thereon. GZA shall give Futureco prompt notice of any
demands received by GZA for appraisal of Shares and, prior to the Effective
Time, GZA shall consult with Futureco with respect to all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, GZA
shall not, except with the prior written consent of Futureco make any
payment with respect to, or settle or offer to settle, any such demands.
SECTION 1.8 Exchange of Certificates.
(a) Exchange Agent and Procedures. Prior to the Effective Time, a bank or
trust company reasonably acceptable to GZA shall be designated by Futureco (the
"Paying Agent") to act as agent in connection with the Merger to receive the
funds to which holders of Participating Shares shall become entitled hereunder.
No later than one (1) business day after the Effective Time, the Surviving
Corporation shall cause to be mailed to each record holder of a Participating
Share, as of the Effective Time, of a certificate or certificates (the
"Certificates") that, prior to the Effective Time, represented Participating
Shares, a form of letter of transmittal and instructions (in each case
reasonably acceptable to GZA) for use in effecting the surrender of the
Certificates for payment of the Merger Consideration therefor. Within one (1)
business day of the surrender of each such Certificate formerly representing
Participating Shares, together with such letter of transmittal, duly completed
and validly executed in accordance with the instructions thereto, the Paying
Agent shall pay the holder of such Certificate the Merger Consideration
multiplied by the number of Participating Shares formerly represented by such
Certificate, in exchange therefor, and such Certificate shall forthwith be
canceled. Until so surrendered and exchanged, each such Certificate shall
represent solely the right to receive the Merger Consideration. No interest
shall be paid or accrue on the Merger Consideration. If the Merger Consideration
(or any portion thereof) is to be delivered to any person other than the person
in whose name the Certificate formerly representing the Participating Shares
surrendered in exchange therefor is registered, it shall be a condition to such
exchange that the Certificate so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person requesting such
exchange shall pay to the Paying Agent any transfer or other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the Certificate surrendered, or shall establish to the
satisfaction of the Paying Agent that such tax has been paid or is not
applicable.
(b) Consideration. (i) Immediately prior to the Effective Time (the
"Deposit Date"), the Surviving Corporation and/or Futureco shall deposit, or
cause to be deposited, with the Paying Agent, in trust for the benefit of the
holders of Participating Shares, an amount, in immediately available funds,
equal to the aggregate Merger Consideration to which holders of Participating
Shares shall be entitled at the Effective Time (the "Payment Fund"). The amount
of the Payment Fund shall be determined by (x) multiplying $6.40 by the number
of Participating Shares, and (y) subtracting therefrom the aggregate Exercise
Price Liability for all Participating Shares which are Option Shares.
(c) Investment of Merger Consideration. The Merger Consideration shall be
invested by the Paying Agent, as directed by Futureco, and GZA prior to the
Closing Date, provided such investments shall be limited to direct obligations
of the United States of America, obligations for which the full faith and credit
of the United States of America is pledged to provide for the payment of
principal and interest, commercial paper rated of the highest quality by Moody's
Investors Services, Inc. or Standard & Poor's, a division of The McGraw Hill
Companies, Inc., or certificates of deposit issued by a commercial bank having
at least $10,000,000,000 in assets.
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(d) Termination of Duties. Promptly following the date which is one (1)
year after the Effective Time, the Paying Agent shall deliver to the Surviving
Corporation all cash and documents in its possession relating to the Payment
Fund, and the Paying Agent's duties relating thereto shall terminate.
Thereafter, each holder of a Certificate formerly representing a Participating
Share may surrender such Certificate to the Surviving Corporation and (subject
to applicable abandoned property, escheat and similar laws) receive in exchange
therefor the Merger Consideration, without any interest thereon.
(e) No Liability. Neither Futureco, Sub, nor the Surviving Corporation
shall be liable to any holder of GZA Common Stock for any Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
(f) Withholding Rights. The Paying Agent or the Surviving Corporation
shall be entitled to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement to any holder of GZA Common Stock (i) such
amounts as the Paying Agent is required to deduct and withhold with respect to
the making of such payment under the Internal Revenue Code of 1986, as amended
(the "Code"), or any provision of state, local or foreign tax law, and (ii) with
respect to any Option Share, the Exercise Price Liability. To the extent that
amounts are so withheld by the Paying Agent or the Surviving Corporation, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Participating Shares in respect of which such
deduction and withholding was made by the Paying Agent or the Surviving
Corporation.
SECTION 1.9 No Further Ownership Rights in GZA Common Stock.
The Merger Consideration delivered upon the surrender for exchange of
Participating Shares in accordance with the terms hereof shall be deemed to have
been issued in full satisfaction of all rights pertaining to such Participating
Shares, and there shall be no further registration of transfers on the records
of the Surviving Corporation of Participating Shares which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged as provided in this Article 1.
SECTION 1.10 Lost, Stolen or Destroyed Certificates.
In the event any Certificates shall have been lost, stolen or destroyed,
the Paying Agent shall deliver in exchange for such lost, stolen or destroyed
Certificates, upon the making of an affidavit of that fact by the holder
thereof, the Merger Consideration; provided, however, that the Paying Agent may,
in its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed Certificates to deliver a bond in
such sum as it may reasonably direct as indemnity against any claim that may be
made against the Surviving Corporation or the Paying Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
SECTION 1.11 Taking of Necessary Action; Further Action.
Each of Futureco, Sub and GZA will take all such reasonable and lawful
action as may be necessary or appropriate in order to effectuate the Merger in
accordance with this Agreement as promptly as possible. If, at any time after
the Effective Time, any such further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of GZA and Sub, the officers and directors of GZA,
Futureco and Sub immediately prior to the Effective Time are fully authorized in
the name of their respective corporations or otherwise to take, and will take,
all such lawful and necessary action.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF GZA
GZA hereby represents and warrants to Futureco and Sub that, except as set
forth in a document of even date herewith and delivered on or prior to the
execution and delivery of this Agreement by GZA to Futureco and Sub (the "GZA
Disclosure Schedule"):
SECTION 2.1 Organization, Standing and Power of GZA.
GZA is a corporation duly organized and validly existing under the laws of
Delaware and has the requisite corporate power and authority to carry on its
business as now being conducted. GZA is duly qualified or licensed to do
business as a corporation and is in good corporate standing (or the local law
equivalent) in each jurisdiction in which the nature of its business or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate, would not have a material adverse
effect on the business, properties, assets, financial condition or results of
operations of GZA and the GZA Subsidiaries (as defined below) taken as a whole
(a "GZA Material Adverse Effect"). Section 2.1 of GZA Disclosure Schedule sets
forth each jurisdiction in which GZA is qualified or licensed to do business, as
well as all assumed names under which GZA conducts business in such
jurisdictions. GZA has previously delivered to Futureco complete and correct
copies of its Certificate of Incorporation and Bylaws, in each case, as amended
or supplemented to the date of this Agreement.
SECTION 2.2 GZA Subsidiaries.
Except as otherwise provided in the GZA Disclosure Schedule:
(a) Section 2.2 of GZA Disclosure Schedule sets forth:
(i) each subsidiary of GZA (each a "GZA Subsidiary" and
collectively, the "GZA Subsidiaries");
(ii) the legal form of each GZA Subsidiary, including the state or
country of formation;
(iii) the identity and ownership interest of each owner of such GZA
Subsidiary, including but not limited to the amount of securities of
such GZA Subsidiary owned by such owner;
(iv) each jurisdiction in which each GZA Subsidiary is qualified or
licensed to do business; and
(v) each assumed name under which each GZA Subsidiary conducts
business in any jurisdiction.
As used in this Agreement, "Subsidiary" of any Person means any
corporation, partnership, limited liability company, joint venture or other
legal entity of which such Person (either directly or through or together
with another Subsidiary of such Person) owns a majority of any of the
capital stock or other equity interests of such corporation, partnership,
limited liability company, joint venture or other legal entity or whose
results of operations are consolidated with those of GZA for financial
statement reporting purposes. As used herein, "Person" or "person" means an
individual, corporation, partnership, limited liability company, joint
venture, association, trust, unincorporated organization or any other legal
entity.
(b) All the outstanding shares of capital stock of each GZA Subsidiary
that is a corporation have been validly issued and are (A) fully paid and
nonassessable, (B) owned by GZA or by another GZA Subsidiary, and (C) owned
free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens")
other than restrictions on transfer imposed by federal or state securities
laws or regulations, and all equity interests in each GZA Subsidiary that
is a partnership, joint venture, limited liability company or trust which
are owned by GZA, by another GZA Subsidiary or by GZA and another GZA
Subsidiary are owned free and clear of all Liens other than restrictions on
transfer imposed by federal or state securities laws and regulations and by
the operating agreement of any such GZA Subsidiary that is a limited
liability company. Each GZA Subsidiary that is a corporation is duly
incorporated and validly existing under the laws of its jurisdiction
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of incorporation and has the requisite corporate power and authority to
carry on its business as now being conducted, and each GZA Subsidiary that
is a partnership, limited liability company or trust is duly organized and
validly existing under the laws of its jurisdiction of organization and has
the requisite power and authority to carry on its business as now being
conducted. Each GZA Subsidiary is duly qualified or licensed to do business
and, with respect to each GZA Subsidiary that is a corporation, is in good
corporate standing (or the local law equivalent) in each jurisdiction in
which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed,
individually or in the aggregate, would not have a GZA Material Adverse
Effect. True and correct copies of the Certificate of Incorporation,
Bylaws, partnership agreements, joint venture and operating agreements or
similar organizational documents of each GZA Subsidiary, as amended to the
date of this Agreement, have been previously delivered to Futureco.
SECTION 2.3 Capital Structure.
(a) As of the date hereof, the authorized shares of capital stock of GZA
consist of (i) 14,000,000 shares of GZA Common Stock of which 4,209,122 shares
are issued and outstanding and 500,000 shares are held as treasury shares, and
(ii) 1,000,000 shares of preferred stock, $.01 par value per share, none of
which are issued and outstanding. As of the date hereof, 95,800 shares of GZA
Common Stock were reserved for issuance but not issued under GZA Stock Option
Plans. On the date hereof, except as set forth in this Section 2.3 or Section
2.3 of GZA Disclosure Schedule, no GZA Common Stock or other voting securities
of GZA were issued, reserved for issuance or outstanding.
(b) Set forth in Section 2.3 of GZA Disclosure Schedule is a true and
complete list as of the date hereof of each outstanding incentive or
nonqualified stock option outstanding under GZA Stock Option Plans and a total
thereof and all outstanding rights under GZA's employee stock purchase plan.
(c) All outstanding shares of GZA Common Stock are duly authorized, validly
issued, fully paid and nonassessable and not subject to, and were not issued in
violation of, any preemptive rights. There are no bonds, debentures, notes or
other indebtedness of GZA, or assets of any other entities exchangeable into GZA
Common Stock having the right to vote on any matters on which shareholders of
GZA may vote.
(d) Except as set forth in Section 2.3 of the GZA Disclosure Schedule, as
of the date of this Agreement there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which GZA or any GZA Subsidiary is a party or by which such
entity is bound, obligating GZA or any GZA Subsidiary to issue, deliver, sell,
repurchase or redeem or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of capital stock, voting securities or other ownership
interests of GZA or any GZA Subsidiary or obligating GZA or any GZA Subsidiary
to issue, grant, extend, accelerate the vesting of, change the price of or
otherwise amend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking.
(e) No dividends or distributions on GZA Common Stock have been authorized
or declared prior to the date of this Agreement.
SECTION 2.4 Other Interests.
Except as set forth in Section 2.2 or 2.4 of the GZA Disclosure Schedule,
neither GZA nor any GZA Subsidiary owns directly or indirectly any interest or
investment whether equity or debt) in any corporation, partnership, limited
liability company, joint venture, business trust or entity (other than
investments in short-term investment securities). With respect to such
interests, GZA and each such GZA Subsidiary owns such interests free and clear
of all Liens, pledges, security interests, claims, options or other
encumbrances. With respect to such interests, neither GZA nor any of the GZA
Subsidiaries is in breach in any material respect of any provision of any
agreement, document or contract governing its rights in or to the interests
owned or held by it, all of which agreements, documents and contracts are (a)
set forth on the GZA Disclosure Schedule, (b) unmodified except as described
therein and (c) in full force and effect. To the Knowledge of GZA (hereinafter
defined), the other parties to such agreements, documents or contracts are not
in any material breach of any of their respective obligations under such
agreements, documents or contracts.
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SECTION 2.5 Authority; Noncontravention; Consents.
(a) GZA has the requisite power and authority to enter into this Agreement
and, subject to the affirmative vote of holders of the requisite number of
shares of outstanding GZA Common Stock entitled to vote thereon as described in
Section 6.1 hereof to approve the Merger ("GZA Shareholder Approval"), to
consummate the transactions contemplated by this Agreement to which GZA is a
party. The execution and delivery of this Agreement by GZA and the consummation
by GZA of the transactions contemplated by this Agreement have been duly
authorized by all necessary action on the part of GZA or any GZA Subsidiary,
subject to GZA Shareholder Approval. This Agreement has been duly executed and
delivered by GZA and constitutes a valid and binding obligation of GZA,
enforceable against GZA in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights and general principles of equity.
(b) Except as set forth in Section 2.5 of the GZA Disclosure Schedule, the
execution and delivery of this Agreement by GZA do not, and the consummation of
the transactions contemplated by this Agreement by GZA and compliance by GZA
with the provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any material obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of GZA or any GZA
Subsidiary under, (i) the Certificate of Incorporation or Bylaws, in each case
as amended or supplemented to the date of this Agreement, of GZA or the
comparable charter or organizational documents or partnership or similar
agreement (as the case may be) of any GZA Subsidiary, in each case as amended or
supplemented to the date of this Agreement, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, service agreement, lease or other material
agreement, instrument, permit, concession, franchise or license to which GZA or
any GZA Subsidiary is a party or their respective properties or assets are bound
or (iii) subject to the governmental filings and other matters referred to in
the following sentence, any judgment, order, decree, statute, law, ordinance,
rule or regulation (collectively, "Laws") applicable to GZA or any GZA
Subsidiary, or their respective properties or assets, other than, in the case of
clause (ii) or (iii), any such conflicts, violations, defaults, rights, loss or
Liens that individually or in the aggregate would not (x) have a GZA Material
Adverse Effect or (y) prevent the consummation of the transactions contemplated
by this Agreement. Except as set forth on Section 2.5 of the GZA Disclosure
Schedule, no consent, approval, order or authorization of, or registration,
declaration or filing with, any federal, state or local government or any court,
administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (a "Governmental Entity"), is required
by or with respect to GZA or any GZA Subsidiary in connection with the execution
and delivery of this Agreement by GZA or the consummation by GZA of the
transactions contemplated by this Agreement, except for (i) the filing with the
United States Securities and Exchange Commission ("SEC") of (x) materials
relating to the transactions contemplated by this Agreement including, but not
limited to a proxy statement and (y) such reports under Section 13(e) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement, (ii) the acceptance for record of the Certificate of Merger by
the Delaware Secretary of State and post-closing filings of the said Certificate
of Merger or other documents with the secretaries of state of other
jurisdictions in which GZA is qualified to do business as a foreign corporation;
and (iii) such other consents, approvals, orders, authorizations, registrations,
declarations and filings (A) as are set forth in Section 2.5 of GZA Disclosure
Schedule or (B) which, if not obtained or made, would not prevent or delay in
any material respect the consummation of any of the transactions contemplated by
this Agreement or otherwise prevent GZA or any GZA Subsidiary from performing
its obligations under this Agreement in any material respect or have,
individually or in the aggregate, a GZA Material Adverse Effect.
SECTION 2.6 SEC Documents; Financial Statements; Undisclosed Liabilities.
GZA has filed all required reports, schedules, forms, statements and other
documents with the SEC from May 31, 1997 through the date hereof (the "GZA SEC
Documents"). Section 2.6 of the GZA Disclosure Schedule contains a complete list
(without exhibits) of all GZA SEC Documents filed by GZA with the SEC since May
31, 1997 and on or prior to the date of this Agreement. All of the GZA SEC
Documents (other
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than preliminary material), as of their respective filing dates, or as of the
date of the last amendment thereof (if amended after filing), complied as to
form in all material respects with all applicable requirements of the Securities
Act of 1933, as amended (the "Securities Act"), and the Exchange Act and, in
each case, the rules and regulations promulgated thereunder applicable to such
GZA SEC Documents. None of the GZA SEC Documents at the time of filing contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent such statements have been modified or
superseded by later GZA SEC Documents filed on a non-confidential basis prior to
the date of this Agreement. The consolidated financial statements of GZA
included in the GZA SEC Documents complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of unaudited
statements, as permitted by the applicable rules and regulations of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto) and fairly presented, in accordance
with the applicable requirements of GAAP and the applicable rules and
regulations of the SEC in all material respects, the consolidated financial
position of GZA and the consolidated GZA Subsidiaries, taken as a whole, as of
the dates thereof and the consolidated results of operations and cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments, any other adjustments described therein and the fact
that certain information and notes have been condensed or omitted in accordance
with the rules and regulations of the SEC). Section 2.6 of the GZA Disclosure
Schedule sets forth all GZA Subsidiaries which are not consolidated for
accounting purposes as of the date hereof. Except for liabilities and
obligations set forth in the GZA SEC Documents or in Section 2.6 of the GZA
Disclosure Schedule or incurred in the ordinary course, neither GZA nor any of
the GZA Subsidiaries has any liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be set forth on
a consolidated balance sheet of GZA or in the notes thereto and which,
individually or in the aggregate, would have a GZA Material Adverse Effect,
after taking into account any assets acquired or services provided in connection
with the incurrence of such liabilities or obligations.
SECTION 2.7 Absence of Certain Changes or Events.
Except as disclosed in the GZA SEC Documents or Section 2.7 of the GZA
Disclosure Schedule, since the date of the most recent audited financial
statements included in the GZA SEC Documents (the "GZA Financial Statement
Date"), GZA and the GZA Subsidiaries have conducted their business only in the
ordinary course (taking into account prior practices, including the acquisition
of properties and issuance of securities) and there has not been (a) any
material adverse change in the business, financial condition or results of
operations of GZA and the GZA Subsidiaries taken as a whole (a "GZA Material
Adverse Change"), nor, to the Knowledge of GZA, has there been any occurrence or
circumstance that with the passage of time would reasonably be expected to
result in a GZA Material Adverse Change, (b) any declaration, setting aside or
payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any GZA Common Stock, (c) any split, combination or
reclassification of any GZA Common Stock or any issuance or the authorization of
any issuance of any other securities in respect of, in lieu of or in
substitution for, or giving the right to acquire by exchange or exercise, shares
of its beneficial interest or any issuance of an ownership interest in, any GZA
Subsidiary except as contemplated by this Agreement, (d) any damage, destruction
or loss, whether or not covered by insurance, that has or would have caused or
created a GZA Material Adverse Effect, (e) any change made prior to the date of
this Agreement in accounting methods, principles or practices by GZA or any GZA
Subsidiary materially affecting its assets, liabilities or business, except
insofar as may have been disclosed in GZA SEC Documents or required by a change
in GAAP, or (f) any amendment of any employment, consulting, severance,
retention or any other agreement between GZA and any officer or director of GZA.
SECTION 2.8 Litigation.
Except as disclosed in the GZA SEC Documents, Section 2.8 or Section 2.9 of
the GZA Disclosure Schedule, there is no suit, action or proceeding pending or,
to the Knowledge of GZA, threatened against or affecting GZA or any GZA
Subsidiary that, individually or in the aggregate, could reasonably be expected
to
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(i) have a GZA Material Adverse Effect or (ii) prevent the consummation of any
of the transactions contemplated by this Agreement, nor is there any judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against GZA or any GZA Subsidiary having, or which could reasonably
be expected to have, any such effect. Notwithstanding the foregoing, (y) Section
2.8 of the GZA Disclosure Schedule sets forth each and every claim that GZA has
Knowledge of involving a potential dollar cost to GZA in excess of $50,000
(identifying which are covered by insurance) including equal employment
opportunity claims, and claims relating to sexual harassment and/or
discrimination as of the date hereof, in each case with a brief summary of such
claim and (z) no claim is pending or has been made under any directors' or
officers' liability insurance policy maintained at any time by GZA or any of the
GZA Subsidiaries.
SECTION 2.9 Properties.
(a) Section 2.9 of the GZA Disclosure Schedule identifies all real property
owned by GZA and the GZA Subsidiaries (the "GZA Properties"). Except as provided
in Section 2.9 of the GZA Disclosure Schedule, GZA and the GZA Subsidiaries set
forth on Section 2.2 of the GZA Disclosure Schedule own fee simple title to
their respective GZA Properties. Except as set forth on Section 2.9 of the GZA
Disclosure Schedule, all such properties are owned in each case free and clear
of liens, mortgages or deeds of trust, claims against title, charges which are
liens, security interests or other encumbrances on title securing monetary
obligations ("Encumbrances"). Except as set forth in Section 2.2, Section 2.9 or
Section 2.18 of the GZA Disclosure Schedule, no other Person has any ownership
interest in any of the GZA Properties, and any such ownership interest so
scheduled does not materially detract from the value of, or materially interfere
with the present use of, any of the GZA Properties subject thereto or affected
thereby. To GZA's Knowledge, GZA Properties are not subject to any rights of
way, written agreements, laws, ordinances and regulations affecting building use
or occupancy, or reservations of an interest in title (collectively, "Property
Restrictions") or other Encumbrances, except for (i) Encumbrances and Property
Restrictions set forth in the GZA Disclosure Schedule, (ii) Property
Restrictions imposed or promulgated by law or any governmental body or authority
with respect to real property, including zoning regulations, provided they do
not materially adversely affect the current use of any GZA Property, (iii)
Encumbrances and Property Restrictions of record, which Encumbrances and
Property Restrictions, in any event, do not materially detract from the value
of, or materially interfere with the present use of, any of GZA Properties
subject thereto or affected thereby, (iv) real estate taxes and assessments
which constitute a lien but are not yet due and payable and (v) mechanics',
carriers', workmen's, repairmen's liens, other Encumbrances and Property
Restrictions, if any, which, individually or in the aggregate, do not materially
detract from the value of or materially interfere with the present use of any of
GZA Properties subject thereto or affected thereby, and do not otherwise
materially impair business operations conducted by GZA and the GZA Subsidiaries.
(b) Section 2.9 of the GZA Disclosure Schedule also identifies all real
property leased by GZA and the GZA Subsidiaries (the "GZA Leased Properties").
Except as set forth in Section 2.9 of the GZA Disclosure Schedule, all such
properties are leased pursuant to leases that are in full force and effect on
the date of this Agreement and, with GZA and the GZA Subsidiaries not being in
material default under such leases and with the lessors thereof, to the
Knowledge of GZA, also not being in material default thereunder. GZA has
previously delivered to Futureco true and correct copies of such leases. GZA
Leased Properties are not, to the Knowledge of GZA, subject to any Property
Restrictions or other Encumbrances, except for (i) Encumbrances and Property
Restrictions set forth in the GZA Disclosure Schedule, (ii) Property
Restrictions imposed or promulgated by law or any governmental body or authority
with respect to real property, including zoning regulations, provided they do
not materially adversely affect the current use of any GZA Leased Property,
(iii) Encumbrances and Property Restrictions of record, which Encumbrances and
Property Restrictions, in any event, do not materially detract from the value
of, or materially interfere with the present use of, any of GZA Leased
Properties subject thereto or affected thereby, (iv) real estate taxes and
assessments which constitute a lien but are not yet due and payable and (v)
mechanics', carriers', workmen's, repairmen's liens, other Encumbrances and
Property Restrictions, if any, which, individually or in the aggregate, do not
materially detract from the value of or materially interfere with the present
use of any of
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GZA Leased Properties subject thereto or affected thereby, and do not otherwise
materially impair business operations conducted by the GZA Subsidiaries.
(c) Except as provided in Section 2.9 of the GZA Disclosure Schedule, GZA
has no Knowledge (i) that, any certificate, permit or license from any
governmental authority having jurisdiction over any of the GZA Properties or any
agreement, easement or other right which is necessary to permit the lawful use
and operation of the buildings and improvements on any of the GZA Properties or
which is necessary to permit the lawful use and operation of all driveways,
roads and other means of egress and ingress to and from any of the GZA
Properties has not been obtained and is not in full force and effect, or of any
pending threat of modification or cancellation of any of same; or (ii) of any
written notice of any violation of any federal, state or municipal law,
ordinance, order, regulation or requirement materially and adversely affecting
any of the GZA Properties issued by any governmental authority.
(d) GZA and each of the GZA Subsidiaries have good and sufficient title to
all their personal and non-real properties and assets reflected as being owned
by them in the consolidated balance sheet of GZA as of the GZA Financial
Statement Date, except as since sold or otherwise disposed of in the ordinary
course of business), free and clear of all liens and encumbrances, except such
Encumbrances reflected on Section 2.9 or Section 2.18 of the GZA Disclosure
Schedule or on the consolidated balance sheet of GZA as of the GZA Financial
Statement Date, and the notes thereto, and except for liens for current taxes
not yet due and payable, and Liens or Encumbrances which are normal to the
business of GZA and the GZA Subsidiaries and are not, in the aggregate, material
in relation to the assets of GZA on a consolidated basis and except also for
such imperfections of title, easement and encumbrances, if any, as do not
materially interfere with the present use of the properties subject thereto or
affected thereby, or otherwise materially impair the consolidated business
operations of GZA.
SECTION 2.10 Environmental Matters.
GZA has delivered to Futureco a true and complete copy of the environmental
reports listed on Section 2.10 of the GZA Disclosure Schedule (the "GZA
Environmental Reports"). To GZA's Knowledge, the GZA Environmental Reports
constitute all final environmental reports (including, without limitation, all
final versions of environmental investigations and testing or laboratory
analysis made by or on behalf of GZA or any of the GZA Subsidiaries) with
respect to the GZA Properties or the GZA Leased Properties in the possession of
GZA or any GZA Subsidiary. With respect to each GZA Property or GZA Leased
Property except for any condition that individually or in the aggregate would
not be reasonably likely to have a GZA Material Adverse Effect, to the Knowledge
of GZA (a) no Hazardous Substances (as defined below) have been used, stored,
manufactured, treated, processed or transported to or from any such GZA Property
or GZA Leased Property, except as necessary to the conduct of business and in
compliance with Environmental Laws (as defined below); (b) no unlawful spills,
releases, discharges or disposals of Hazardous Substances have occurred or are
presently occurring on or from such GZA Property or GZA Leased Property; (c)
such GZA Property or GZA Leased Property and the business conducted thereon are
not in violation of Environmental Laws; and (d) GZA and the GZA Subsidiaries
have not received, nor had communications with third parties which would lead
them to reasonably expect to receive, any notice of potential responsibility,
letter of inquiry or notice of alleged liability under any Environmental Law
from any Person regarding such GZA Property or the business conducted thereon.
For the purposes of this Section 2.10 only, "GZA Properties" shall be deemed to
include all property formerly owned by GZA or the GZA Subsidiaries; solely,
however, as to the period of time when such formerly owned property was owned by
GZA or the GZA Subsidiaries.
"Environmental Laws" shall mean any applicable statute, code, enactment,
ordinance, rule, regulation, permit, consent, approval, authorization, judgment,
order, common law rule (including without limitation the common law respecting
nuisance and tortious liability), decree, injunction, or other requirement
having the force and effect of law, whether local, county, state, territorial or
national, at the date of this Agreement or at any prior time in force or effect
relating to:
(a) emissions, discharges, spills, releases or threatened releases of
Hazardous Substances into ambient air, surface water, groundwater,
watercourses, publicly or privately owned treatment works, drains, sewer
systems, wetlands, septic systems or onto land;
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(b) the use, treatment, storage, disposal, handling, manufacturing,
transportation or shipment of Hazardous Substances;
(c) the regulation of storage tanks; or
(d) otherwise relating to pollution or the protection the environment.
"Hazardous Substances" shall mean all substances, wastes, pollutants,
contaminants and materials regulated or defined or designated as hazardous,
extremely or imminently hazardous, dangerous, or toxic pursuant to any law, by
any local, county, state, territorial or federal governmental authority, or with
respect to which such a governmental authority otherwise requires environmental
investigation, monitoring, reporting, or remediation; including, but not limited
to:
(a) all substances, wastes, pollutants, contaminants and materials
regulated, or defined or designated as hazardous, extremely or imminently
hazardous, dangerous or toxic, under the following federal statutes and
their state counterparts, as well as their statutes' implementing
regulations: the Comprehensive Environmental Response, Compensation and
Liability Act, 42 U.S.C. section 9601 et. seq., the Resource Conservation
and Recovery Act, 42 U.S.C. section 6901 et. seq., the Toxic Substances
Control Act, 15 U.S.C. section 2601 et. seq., the Clean Water Act, 33
U.S.C. section 1251 et. seq., the Clean Air Act, 42 U.S.C. section 7401 et.
seq., the Emergency Planning and Community Right to Know Act, 42 U.S.C.
section 11011 et. seq., the Safe Drinking Water Act, 33 U.S.C. section 300f
et. seq., the Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
section 136 et. seq., and the Hazardous Materials Transportation Act, 49
U.S.C. section 1501 et. seq.;
(b) petroleum and petroleum products including crude oil and any
fractions thereof;
(c) natural gas, synthetic gas, and any mixtures thereof; and
(d) radon, radioactive substances, asbestos, urea formaldehyde, and
polychlorinated biphenyls.
SECTION 2.11 Miscellaneous Transactions.
Set forth in Section 2.11 of the GZA Disclosure Schedule is a list of all
arrangements, agreements and contracts entered into by GZA or any of the GZA
Subsidiaries under which continuing obligations exist with (i) any consultant
entitled to receive more than $100,000 annually from GZA or any GZA Subsidiary ;
(ii) any person who is an officer, director or Affiliate (as defined below) of
GZA or any of the GZA Subsidiaries, any member of the "immediate family" (as
such term is defined in Item 404 of Regulation S-K promulgated under the
Securities Act) of any of the foregoing or any entity of which any of the
foregoing is an Affiliate or (iii) any person who acquired GZA Common Stock in a
private placement since May 31, 1997, except in a transaction of a type
available to GZA employees generally. Such agreements, copies of all of which
have previously been delivered or made available to Futureco, are listed in
Section 2.11 of the GZA Disclosure Schedule. As used in this Agreement, the term
"Affiliate" shall have the same meaning as such term is defined in Rule 405
promulgated under the Securities Act.
SECTION 2.12 Employee Benefits.
As used herein, the term "GZA Employee Plan" includes any pension,
retirement, savings, disability, medical, dental, health, life, death benefit,
group insurance, profit sharing, deferred compensation, stock option, stock
loan, bonus, incentive, vacation pay, tuition reimbursement, severance pay, or
other employee benefit plan, trust, agreement, contract, arrangement, policy or
commitment (including, without limitation, any pension plan, as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
and the rules and regulations promulgated thereunder ("ERISA") ("Pension Plan"),
and any welfare plan as defined in Section 3(1) of ERISA ("Welfare Plan")),
whether any of the foregoing is funded, insured or self-funded, written or oral,
(i) sponsored or maintained by GZA or the GZA Subsidiaries (each a "Controlled
Group Member") and covering any Controlled Group Member's active or former
employees (or their beneficiaries), (ii) to which any Controlled Group Member is
a party or by which any Controlled Group Member (or any of the rights,
properties or assets thereof) is bound or (iii) with respect to which any
current Controlled Group Member may otherwise have any material liability
(whether or not such Controlled Group
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Member still maintains such GZA Employee Plan). Each GZA Employee Plan is listed
on Section 2.12 of the GZA Disclosure Schedule. With respect to GZA Employee
Plans:
(a) Except as disclosed in the GZA SEC Documents or in Section 2.12 of
the GZA Disclosure Schedule, no Controlled Group Member has any continuing
liability under any Welfare Plan which provides for continuing benefits or
coverage for any participant or any beneficiary of a participant after such
participant's termination of employment, except as may be required by
section 4980B of the Code or Section 601 (et seq.) of ERISA, or under any
applicable state law, and at the expense of the participant or the
beneficiary of the participant.
(b) Each GZA Employee Plan complies in all material respects with the
applicable requirements of ERISA, if any, and any other applicable law
governing such GZA Employee Plan; and each GZA Employee Plan has to GZA's
Knowledge at all times been properly administered in all material respects
and is presently being administered in all material respects in accordance
with all such requirements of law, and in accordance with its terms and the
terms of any applicable collective bargaining agreement to the extent
consistent with all such requirements of law. Each Pension Plan which is
intended to be qualified is qualified under Section 401(a) of the Code, has
received a favorable determination letter from the Internal Revenue Service
(the "IRS") stating that such Plan meets the requirements of Section 401(a)
of the Code and that the trust associated with such Plan is tax exempt
under Section 501(a) of the Code, and no event has occurred which, to GZA's
Knowledge, would be likely to jeopardize the qualified status of any such
plan or the tax exempt status of any such trust under Sections 401(a) and
Section 501(a) of the Code, respectively. GZA has received no notice of any
lawsuit, claim or complaint (other than routine claims for benefits) or
complaints to, or by, any person or governmental entity with respect to any
GZA Employee Plan and to the Knowledge of GZA there is no fact which would
reasonably be expected to give rise to any such lawsuit, claim (other than
routine claims for benefits) or complaint with respect to any GZA Employee
Plan. Without limiting the foregoing, except as disclosed on Section 2.12
of the GZA Disclosure Schedule, the following are true with respect to each
GZA Employee Plan:
(i) except for those not yet required to be filed or distributed,
all Controlled Group Members have filed or caused to be filed every
material return, report, statement, notice, declaration and other
document required by any law or governmental agency, federal, state and
local (including, without limitation, the IRS and the United States
Department of Labor) with respect to each such GZA Employee Plan, each
of such filings has been complete and accurate in all material respects
and no Controlled Group Member has incurred any material liability in
connection with such filings;
(ii) except for those not yet required to be filed or distributed,
all Controlled Group Members have delivered or caused to be delivered to
every participant, beneficiary and other party entitled to such
material, all material plan descriptions, returns, reports, schedules,
notices, statements and similar materials, including, without
limitation, summary plan descriptions and summary annual reports, as are
required under Title I of ERISA, the Code, or both, and no Controlled
Group Member has incurred any material liability in connection with such
deliveries;
(iii) all contributions and payments with respect to GZA Employee
Plans that are required to be made by a Controlled Group Member with
respect to periods ending on or before the Closing Date (including
periods from the first day of the current plan or policy year to the
Closing Date) have been, or will be, made or accrued before the Closing
Date in accordance with the appropriate plan document, actuarial report,
collective bargaining agreements or insurance contracts or arrangements
or as otherwise required by ERISA or the Code; and
(iv) with respect to each such GZA Employee Plan, to the extent
applicable, GZA has delivered to Futureco true and complete copies of
(A) current plan documents, or any and all other documents that
establish the existence of the current plan, trust, arrangement,
contract, policy or commitment and all amendments thereto, (B) the most
recent determination letter, if any, received from the IRS, (C) the
three most recent Form 5500 Annual Report (and all schedules and reports
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relating thereto) and actuarial reports and (D) all related trust
agreements, insurance contract or other funding agreements that
implement each such GZA Employee Plan.
(c) With respect to each GZA Employee Plan, there has not occurred,
and no person or entity is contractually bound to enter into, any
"prohibited transaction" within the meaning of Section 4975(c) of the Code
or Section 406 of ERISA, which transaction is not exempt under Section
4975(d) of the Code or Section 408 of ERISA.
(d) Except as disclosed in Section 2.12 of the GZA Disclosure
Schedule, no Controlled Group Member has maintained or been obligated to
contribute to any GZA Employee Plan subject to Code Section 412 or Title IV
of ERISA. With respect to each GZA Employee Plan set forth on Section 2.12A
of the GZA Disclosure Schedule, GZA represents that each such GZA Employee
Plan has been completely terminated in accordance with all Code and ERISA
requirements for a "standard termination" (as defined in 4041(b) of ERISA),
as applicable on the termination date.
(e) Except as set forth in Section 2.12 of the GZA Disclosure
Schedule, with respect to each Pension Plan maintained by any Controlled
Group Member, such Plans provide the Plan Sponsor the authority to amend or
terminate the plan at any time, subject to applicable requirements of ERISA
and the Code.
SECTION 2.13 Employee Matters.
Section 2.13 of the GZA Disclosure Schedule lists the employee handbooks of
GZA and each of the GZA Subsidiaries currently in effect. A true and correct
copy of each such employee handbook has previously been made available to
Futureco. Except as set forth in Section 2.13 of the GZA Disclosure Schedule,
such handbooks fairly and accurately summarize all material employee policies,
vacation policies and payroll practices of GZA and the GZA Subsidiaries. Neither
GZA nor any of the GZA Subsidiaries is a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or other labor organization, nor has GZA or any of the GZA Subsidiaries
agreed that any unit of their employees is appropriate for collective
bargaining. No union or other labor organization has been certified as
bargaining representative for any of GZA's employees. To the Knowledge of GZA
there are no organizational efforts with respect to the formation of a
collective bargaining unit presently being made or threatened involving
employees of GZA or any of the GZA Subsidiaries.
SECTION 2.14 Taxes.
(a) Tax Returns. All Tax Returns required to have been filed on or prior
to the date hereof or the Closing Date by GZA or any GZA Subsidiary have been or
will be filed on or prior to the due date for such Tax Return and such Tax
Returns are true and correct in all material respects. In particular, the
foregoing Tax Returns are not subject to penalties under Section 6662 of the
Code, relating to accuracy-related penalties (or any corresponding provision of
the state, local or foreign Tax law) or any predecessor provision of law. Except
as set forth on Section 2.14(a) of the GZA Disclosure Schedule, an extension of
time within which to file any Tax Return that has not been filed has not been
requested or granted. As used in this Agreement, the term "Affiliated Group"
shall mean an affiliated group as defined in Section 1504 of the Code (or any
analogous combined, consolidated or unitary group defined under state, local or
foreign income Tax law) of which GZA is or has been a member.
(b) Payment of Taxes. With respect to all amounts of Taxes imposed on GZA,
any GZA Subsidiary or for which GZA or any GZA Subsidiary is or could be liable,
whether to taxing authorities or to other persons or entities (as, for example,
under Tax allocation agreements), with respect to all taxable periods or
portions of periods ending on or before the Closing Date, all applicable Tax
laws and agreements have been fully complied with except where the failure to
comply would not have a Material Adverse Effect on GZA and all such amounts
required to be paid by GZA or any GZA Subsidiary to taxing authorities or others
on or before the Closing Date have been paid, or have been accrued for or fully
reserved against on the Financial Statements.
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(c) Audit History. Except as set forth on Section 2.14(c) of the GZA
Disclosure Schedule, with respect to all federal income tax returns of GZA for
taxable years ended prior to the date hereof that have been examined by the
Internal Revenue Service, any deficiencies or assessments, including interest
and penalties thereon, claimed or made as a result of those examinations have
been paid or are fully reserved against on the Financial Statements. Except as
set forth on Section 2.14(c) of the GZA Disclosure Schedule, no issues have been
raised or, to the Knowledge of GZA or any of the GZA Subsidiaries, are currently
pending by any taxing authority in connection with any of the Tax Returns of GZA
or any of the GZA Subsidiaries. Except as set forth on Section 2.14(c) of the
GZA Disclosure Schedule, to the Knowledge of GZA, no issue has been raised by
any taxing authority in any audit of GZA or any member of the Consolidated Group
that, if raised with respect to any other period not so audited, could be
expected to result in a proposed deficiency for any period so audited. Except as
set forth on Section 2.14(c) of the GZA Disclosure Schedule, no waivers of
statutes of limitation with respect to the Tax Returns have been given by or
requested from GZA or any Affiliates of such parties. Section 2.14(c) of the GZA
Disclosure Schedule sets forth, with respect to the taxable years of GZA and any
of the GZA Subsidiaries, those years for which examinations have not been
initiated, and those years for which required Tax Returns have not yet been
filed. Except to the extent shown on Section 2.14(c) of the GZA Disclosure
Schedule, all deficiencies asserted or assessments made as a result of any
examinations have been fully paid.
(d) Liens. There are no liens for Taxes (other than for current Taxes not
yet due and payable) on any of the assets of GZA or any of the GZA Subsidiaries.
(e) Tax-sharing or Allocation Agreements. Any Tax-indemnity, Tax-sharing,
Tax allocation or similar agreements of GZA or any of the GZA Subsidiaries and
any liability or obligation of GZA or any of the GZA Subsidiaries under such
agreements will terminate as of the Closing Date and be of no further force or
effect. All such agreements to which GZA or any of the GZA Subsidiaries is a
party and are now in effect are listed on Section 2.14(e) of the GZA Disclosure
Schedule. Any payments pursuant to such agreements that were not reflected in
the Financial Statements, are disclosed on Section 2.14(e) of the GZA Disclosure
Schedule.
(f) Prior Affiliated Groups. Except as set forth on Section 2.14(f) of the
GZA Disclosure Schedule, neither GZA nor any of the GZA Subsidiaries has ever
been a member of an Affiliated Group of corporations.
(g) Tax Elections and Methods of Accounting. Except as set forth on
Section 2.14(g) of the GZA Disclosure Schedule, after the date hereof, no
election with respect to Taxes of GZA will be made without the written consent
of Futureco which consent will not be unreasonably withheld or delayed and,
except as required by law, except as necessary or appropriate in the opinion of
GZA's independent auditors in order to comply with GAAP or SEC requirements, no
method of accounting of GZA will be changed without the written consent of
Futureco, which consent will not be unreasonably withheld or delayed.
(h) Certain Consents and Elections. (i) Neither GZA nor any Affiliated
Group in which GZA is or was a member has filed a consent pursuant to the
collapsible corporation provisions of Section 341(f) of the Code (or any
corresponding provision of state, local, or foreign income Tax law) or agreed to
have Section 341(f)(2) of the Code (or any corresponding provision of state,
local, or foreign income Tax law) apply to any disposition of any asset owned by
GZA or any of the GZA Subsidiaries; (ii) none of the assets of GZA or any of the
GZA Subsidiaries is property that is required to be treated as being owned by
any other person pursuant to the "safe harbor lease" provisions of former
Section 168(f)(8) of the Code; (iii) to the Knowledge of GZA, none of the assets
of GZA or any of the GZA Subsidiaries is "tax-exempt use property" within the
meaning of Section 168(h) of the Code; (iv) neither GZA nor any of the GZA
Subsidiaries has made a deemed dividend election under Treasury Regulations
Section 1.1502-32(f)(2) and has not made and will not make a consent dividend
election under Section 565 of the Code; (v) neither GZA nor any of the GZA
Subsidiaries has agreed to make nor is it required to make any adjustment under
Section 481(a) of the Code by reason of a change in accounting method or
otherwise; and (vi) neither GZA nor any of the GZA Subsidiaries has been a
member of an Affiliated Group that has filed an election to discontinue filing
consolidated returns pursuant to Revenue Procedure 91-11.
(i) Parachute Payment. Neither GZA nor any GZA Subsidiary is a party to
any agreement, contract, arrangement, or plan that has resulted or would result,
separately or in the aggregate, in the payment of any
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"excess parachute payments" within the meaning of Section 280G or 4999 of the
Code and the consummation of the transactions contemplated by this Agreement
will not result in any excise tax withholding.
(j) No Withholding. The transaction contemplated herein is not subject to
the tax withholding provisions of Section 3406 of the Code, or of Subchapter A
of Chapter 3 of the Code, or of any other tax withholding provision of U.S.
federal, state, local or foreign law.
(k) Existing Partnerships. Except as set forth on Section 2.14(k) of the
GZA Disclosure Schedule, neither GZA nor any GZA Subsidiary is a party to any
joint venture, partnership, or other arrangement or contract that is required to
be treated as a partnership for federal income tax purposes.
(l) Copies of Tax Returns. For the three most recent fiscal years, GZA has
provided true, correct and complete copies of all income Tax Returns filed by
GZA and each of the GZA Subsidiaries including copies of any Tax Returns filed
as listed on Section 2.14(l) of the GZA Disclosure Schedule.
(m) Deferred Income. As a result of the transactions contemplated under
this Agreement, GZA will not recognize any deferred income under federal
consolidated return regulations (or similar provisions, if any, of state, local
or foreign Tax laws), including, but not limited to, the deferred intercompany
transaction provisions of such federal consolidated return regulations (or
similar provisions, if any, of state, local or foreign tax laws).
(n) Definitions. As used in this Agreement, the following terms shall have
the following respective meanings:
(i) The term "Tax" shall mean any federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative minimum, add-on
minimum, sales, use, transfer, registration, value added, excise, natural
resources, severance, stamp, occupation, premium, surplus lines, windfall
profit, environmental, customs, duties, real property, personal property,
capital stock, social security, unemployment, disability, payroll, license,
employee or other withholding, or other tax, of any kind whatsoever,
including any interest, penalties or additions to tax or additional amounts
in respect to the foregoing; the foregoing shall include any transferee or
secondary liability for a Tax and any liability assumed by agreement or
arising as a result of being (or ceasing to be) a member of any Affiliated
Group (or being included or required to be included in any Tax Return
relating thereto);
(ii) The terms "Tax Return(s)" shall mean returns, declarations,
reports, claims for refund, information returns or other documents
(including any related or supporting schedules, statements or information)
filed or required to be filed in connection with the determination,
assessment or collection of any Taxes of GZA, any GZA Subsidiary or any
Affiliates of such parties or the administration of any laws, regulations
or administrative requirements relating to any Taxes; and
(iii) The term "Code" shall mean the Internal Revenue Code of 1986, as
amended, and all citations to the Code or to the regulations promulgated
thereunder shall include any amendments or any substitute or successor
provisions thereof.
SECTION 2.15 Payments to Employees, Officers, Trustees or Directors.
Set forth in Section 2.15 of the GZA Disclosure Schedule is a true and
complete list of all cash and non-cash payments, rights to property or other
contract rights which may become payable, accelerated or vested to or in each
current or former employee, officer or director of GZA or any GZA Subsidiary as
a result of the Merger. Except as described in Section 2.15 of the GZA
Disclosure Schedule, or as otherwise provided for in this Agreement, there is no
employment or severance contract, or other agreement requiring payments,
cancellation of indebtedness or other obligation to be made on a change of
control or otherwise as a result of the consummation of any of the transactions
contemplated by this Agreement, with respect to any current or former employee,
officer, trustee or director of GZA or any GZA Subsidiary.
SECTION 2.16 Brokers; Schedule of Fees and Expenses.
Except as disclosed in Section 2.16 of the GZA Disclosure Schedule, no
broker, investment banker, financial advisor or other person, is entitled to any
broker's, finder's, financial advisor's or other similar fee or
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commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of GZA or any GZA Subsidiary.
A true and correct copy of all engagement letters executed by parties
disclosed on Section 2.16 of the GZA Disclosure Schedule have been delivered to
Sub prior to the date of this Agreement.
SECTION 2.17 Compliance With Laws.
Except as disclosed in the GZA SEC Documents or in Section 2.6 or Section
2.17 of the GZA Disclosure Schedule, to the Knowledge of GZA, neither GZA nor
any of the GZA Subsidiaries is in breach of any statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity
applicable to its business, properties, operations or the Merger, except to the
extent that such violation or failure would not have a GZA Material Adverse
Effect.
SECTION 2.18 Contracts; Debt Instruments.
(a) There is no agreement, judgment, injunction, order or decree binding
upon GZA or any GZA Subsidiary which has or could reasonably be expected to have
the effect of prohibiting or materially impairing any current or planned
business practice of GZA or any GZA Subsidiary or the overall conduct of
business by GZA or any GZA Subsidiary as currently conducted. Neither GZA nor
any GZA Subsidiary has entered into any agreement under which GZA or any GZA
Subsidiary is restricted from selling, licensing or otherwise distributing any
of its products or services to any class of customers, in any geographic area,
during any period of time or in any segment of the market.
(b) Neither GZA nor any GZA Subsidiary has received a written notice that
GZA or any GZA Subsidiary is in violation of or in default under (nor to the
Knowledge of GZA does there exist any condition which upon the passage of time
or the giving of notice or both would cause such a violation of or default
under) any material loan or credit agreement, note, bond, mortgage, indenture,
lease, permit, concession, franchise, license or any other material contract,
agreement, arrangement or understanding, to which it is a party or by which it
or any of its properties or assets is bound, except as set forth in Section 2.18
of the GZA Disclosure Schedule, nor to the Knowledge of GZA does such a
violation or default exist, except as set forth in Section 2.18 of the GZA
Disclosure Schedule, or except to the extent that such violation or default,
individually or in the aggregate, would not have a GZA Material Adverse Effect.
(c) Section 2.18 of the GZA Disclosure Schedule sets forth a list of each
loan or credit agreement, note, bond, mortgage, indenture and any other
agreement and instrument pursuant to which any Indebtedness of GZA or any GZA
Subsidiary is outstanding or may be incurred (collectively, the "Debt
Documents"), as well as, with respect to the Indebtedness evidenced by each Debt
Document as of May 31, 2000, the outstanding principal balance, the maturity
date, the applicable interest rate (including the method or formula for
calculating any interest that is not a fixed percentage of the principal
balance) and the amount of or the method or formula for calculating any Equity
Participation (as defined herein). For purposes of this Section 2.18,
"Indebtedness" shall mean (1) indebtedness for borrowed money, whether secured
or unsecured, (2) obligations under conditional sale or other title retention
agreements relating to property purchased by such person, (3) capitalized lease
obligations, (4) obligations under interest rate cap, swap, collar or similar
transaction or currency hedging transactions (valued at the termination value
thereof), (5) obligations to pay any equity participation amount or other
participation in the operating cash flow, gross revenue or other income from the
real property or other asset of GZA or any GZA Subsidiary or in the gross, net
or excess sale, financing, refinancing or other capital proceeds from any such
property or other asset (whether or not in connection with any other
Indebtedness)(each an "Equity Participation") and (6) guarantees of any such
indebtedness of any other person.
(ii) Except as set forth in Section 2.18 of the GZA Disclosure Schedule,
the Merger will not cause a default or event of default under any item of
Indebtedness and will not require the consent of or requirement to obtain the
approval or confirmation as to any matter from the holder of any such
Indebtedness or any other person. For purposes of this Section 2.18, "default"
and/or "event of default" shall mean that, immediately after the giving of
notice or the passage of time (or both), such Indebtedness will either
automatically or upon the exercise of any right or option of the holder of such
Indebtedness or any other person, be accelerated or
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become due and payable in whole or in part as a result of the consummation of
the transactions contemplated by this Agreement (including, without limitation,
the Merger).
(d) Section 2.18 of the GZA Disclosure Schedule sets forth each interest
rate cap, interest rate collar, interest rate swap, currency hedging
transaction, and any other agreement relating to a similar transaction to which
GZA or any GZA Subsidiary is a party or an obligor with respect thereto.
(e) Except as set forth in Section 2.18 of the GZA Disclosure Schedule,
neither GZA nor any of the GZA Subsidiaries is party to any agreement which
would restrict any of them from prepaying any of their Indebtedness without
penalty or premium at any time or which requires any of them to maintain any
amount of Indebtedness with respect to any of the GZA Properties.
(f) Section 2.18 of the GZA Disclosure Schedule lists all agreements
entered into by GZA or any of the GZA Subsidiaries providing for the sale of, or
option to sell, any GZA Properties owned by GZA or the purchase of, or option to
purchase, any real estate which are currently in effect.
(g) Except as set forth in Section 2.18 of the GZA Disclosure Schedule,
neither GZA nor any GZA Subsidiary has any continuing contractual liability (i)
for indemnification, whether directly or indirectly, under any agreement
relating to the sale of real estate previously owned, by GZA or any GZA
Subsidiary, except for standard indemnification provisions entered into in the
normal course of business, (ii) to pay any additional purchase price for any of
the GZA Properties, or (iii) to make any reparations or adjustments to
prorations that may previously have been made with respect to any property
currently or formerly owned by GZA.
(h) Except as set forth in Section 2.18 of the GZA Disclosure Schedule,
there are no material outstanding contractual obligations of GZA or any GZA
Subsidiary to make any investment in the form of a loan, capital contribution or
otherwise in any GZA Subsidiary or any other Person.
SECTION 2.19 Opinion of Financial Advisor.
GZA has received the opinion of Houlihan, Lokey, Howard & Zukin Capital
(the "Financial Advisor"), dated as of the date of this Agreement (the "Fairness
Opinion"), satisfactory to GZA, and a signed copy of which has been provided to
Futureco, to the effect that the consideration to be received by the holders of
the Participating Shares pursuant to the Merger is fair, from a financial point
of view, to such holders.
SECTION 2.20 Trademarks, Patents and Copyrights.
Except as set forth in Section 2.20 of the GZA Disclosure Schedule, or to
the extent the inaccuracy of any of the following (or the circumstances giving
rise to such inaccuracy) individually or in the aggregate would not have a GZA
Material Adverse Effect, GZA and each GZA Subsidiary owns or possesses adequate
licenses or other legal rights to use all patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, copyrights, service marks,
trade secrets, applications for trademarks and for service marks, know-how and
other proprietary rights and information used or held for use in connection with
the business of GZA and the GZA Subsidiaries as currently conducted and GZA has
no Knowledge of any assertion or claim challenging the validity of any of the
foregoing. Each of GZA's patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, service marks, applications for trademarks and
for service marks used or held for use in connection with the business of GZA
and the GZA Subsidiaries as currently conducted is listed on Section 2.20 of the
GZA Disclosure Schedule. To the Knowledge of GZA, the conduct of the business of
GZA and the GZA Subsidiaries as currently conducted does not infringe in any way
any patent, patent right, license, trademark, trademark right, trade name, trade
name right, service mark, or copyright of any third party, where such
infringement, individually or in the aggregate, could have a GZA Material
Adverse Effect. To the Knowledge of GZA, there are no infringements by third
parties of any proprietary rights owned by or licensed by or to GZA or any GZA
Subsidiary that individually or in the aggregate could have a GZA Material
Adverse Effect.
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SECTION 2.21 Insurance.
To the Knowledge of GZA, each of GZA and the GZA Subsidiaries are insured
with insurers in such amounts and against such risks and losses as are customary
for companies conducting the business as conducted by GZA and GZA Subsidiaries.
Except as set forth on Section 2.21 of the GZA Disclosure Schedule, neither GZA
nor any GZA Subsidiary has received any written notice of cancellations or
termination with respect to any material insurance policy of GZA or any GZA
Subsidiary. To the Knowledge of GZA, the insurance policies of GZA and each GZA
Subsidiary are valid and enforceable policies in all material respects. Each
insurance policy of GZA and the GZA Subsidiaries in effect on the date hereof
and a summary of the terms of each such policy is listed on Section 2.21 of the
GZA Disclosure Schedule.
SECTION 2.22 Definition of Knowledge.
(a) As used in this Agreement, the phrase "to the Knowledge of GZA" (or
words of similar import) means the actual knowledge of those individuals
identified in Section 2.22 of the GZA Disclosure Schedule after due inquiry of
officers and other employees reasonably believed to have knowledge of the matter
in question.
(b) Futureco acknowledges that it has had an opportunity to review the
information provided by GZA regarding the business and assets of GZA and that
the principals of Futureco are senior members of the management of GZA and are
familiar with GZA's business operations. To Futureco's Knowledge, GZA's
representations and warranties made in this Agreement are true and correct and
as of the date hereof GZA is not in default under any covenant, term or
provision of this Agreement. For purposes of this Section 2.22(b), "Futureco's
Knowledge" shall mean the actual knowledge of William Beloff, Joseph Celi,
William Hadge, Joseph Hehir and Lawrence Feldman.
SECTION 2.23 Vote Required.
Except for GZA Shareholder Approval, no other vote or consent by the equity
holders of GZA or any GZA Subsidiary (whether by agreement, under applicable law
or otherwise) is required to approve this Agreement and the transactions
contemplated hereby, nor shall any such equity holders be entitled to
dissenters' rights or other rights of appraisal in connection with GZA
Shareholder Approvals or the consummation of the transactions contemplated by
this Agreement, except as provided under Delaware Law.
SECTION 2.24 Third Party Consents.
Except as listed on Section 2.24 of the GZA Disclosure Schedule, no
consent, approval or authorization is needed from any third party in order to
effect the Merger, this Agreement or any of the transactions contemplated
hereby.
SECTION 2.25 Contingent Earn-Outs.
GZA is not a party to any agreement, contract or any other obligation
pursuant to which GZA is or may be required to make payments to any person not
an employee of GZA based upon an "earn-out" or similar provision.
With respect to any representation by GZA in this Section 2 that it has
previously delivered a true and correct copy of an agreement to Futureco, such
representation shall be deemed to include any document which GZA has made
available to Futureco.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FUTURECO AND SUB
Each of Futureco and Sub hereby represents and warrants to GZA that:
SECTION 3.1 Organization, Good Standing and Power of Futureco.
Futureco is a corporation duly organized and validly existing under the
laws of Delaware and has the requisite corporate power and authority to carry on
its business as now being conducted. Futureco is duly
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qualified or licensed to do business as a foreign corporation and is in good
corporate standing in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed, individually or in the aggregate, would not have a material adverse
effect on the business, properties, assets, financial condition or results of
operations of Futureco or Sub ("Futureco Material Adverse Effect").
SECTION 3.2 Authority; Noncontravention; Consents Relating to Futureco.
(a) Futureco has the requisite power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement to
which Futureco is a party. The execution and delivery of this Agreement by
Futureco and the consummation by Futureco of the transactions contemplated by
this Agreement to which Futureco is a party have been duly authorized by all
necessary action on the part of Futureco. This Agreement has been duly executed
and delivered by Futureco and constitutes a valid and binding obligation of
Futureco, enforceable against Futureco in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights and general principles of equity.
(b) The execution and delivery of this Agreement by Futureco do not, and
the consummation of the transactions contemplated by this Agreement by Futureco
and compliance by Futureco with the provisions of this Agreement will not,
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any material obligation or to loss of a material
benefit under, or result in the creation of any Lien upon any of the properties
or assets of Futureco, (i) Futureco's Certificate of Incorporation or Futureco's
By-laws in each case as amended or supplemented to the date of this Agreement,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, reciprocal
easement agreement, lease or other agreement, instrument, permit, concession,
franchise or license to which Futureco is a party or its properties or assets
are bound or (iii) subject to the governmental filings and other matters
referred to in the following sentence, any laws applicable to Futureco or its
respective properties or assets, other than, in the case of clause (ii) or
(iii), any such conflicts, violations, defaults, rights, loss or Liens that
individually or in the aggregate would not (x) have a Futureco Material Adverse
Effect or (y) prevent the consummation of the transactions contemplated by this
Agreement. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Futureco in connection with the execution and delivery of this
Agreement or the consummation by Futureco of any of the transactions
contemplated by this Agreement, except for (i) the filing with the SEC of such
reports under Section 13(e) of the Exchange Act as may be required in connection
with this Agreement and the transactions contemplated by this Agreement, (ii)
the acceptance for record of the Certificate of Merger by the Delaware Secretary
of State, (iii) such filings as may be required in connection with the payment
of any transfer and gains taxes, and (iv) such other consents, approvals,
orders, authorizations, registrations, declarations which, if not obtained or
made, would not prevent or delay in any material respect the consummation of any
of the transactions contemplated by this Agreement or otherwise prevent Futureco
from performing its obligations under this Agreement in any material respect or
have, individually or in the aggregate, a Futureco Material Adverse Effect.
SECTION 3.3 Brokers; Schedule of Fees and Expenses.
Except for Tucker Anthony Cleary Gull, no broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Futureco.
SECTION 3.4 Proxy Statement.
None of the information provided by Futureco and/or by its auditors,
attorneys, financial advisors or other consultants or advisors in writing
specifically for use in the Schedule 13E-3 or the Proxy Statement shall, at the
time filed with the SEC, at the time mailed to GZA's shareholders, at the time
of GZA Shareholder Meeting or at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
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SECTION 3.5 Organization, Good Standing and Power of Sub.
Sub is a corporation duly organized and validly existing under the laws of
Delaware and has the requisite corporate power and authority to carry on its
business as now being conducted. Sub is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of its business or the ownership or leasing of its
properties makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed, individually or
in the aggregate, would not have a material adverse effect on the business,
properties, assets, financial condition or results of operations of Sub or Sub
("Sub Material Adverse Effect").
SECTION 3.6 Authority; Noncontravention; Consents Relating to Sub.
(a) Sub has the requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement to which Sub
is a party. The execution and delivery of this Agreement by Sub and the
consummation by Sub of the transactions contemplated by this Agreement to which
Sub is a party have been duly authorized by all necessary action on the part of
Sub. This Agreement has been duly executed and delivered by Sub and constitutes
a valid and binding obligation of Sub, enforceable against Sub in accordance
with its terms, subject to applicable bankruptcy, insolvency, moratorium or
other similar laws relating to creditors' rights and general principles of
equity.
(b) The execution and delivery of this Agreement by Sub do not, and the
consummation of the transactions contemplated by this Agreement by Sub and
compliance by Sub with the provisions of this Agreement will not, conflict with,
or result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to loss of a material benefit under,
or result in the creation of any Lien upon any of the properties or assets of
Sub, (i) Sub's Certificate of Incorporation or Sub's By-laws in each case as
amended or supplemented to the date of this Agreement, (ii) any loan or credit
agreement, note, bond, mortgage, indenture, reciprocal easement agreement, lease
or other agreement, instrument, permit, concession, franchise or license to
which Sub is a party or its properties or assets are bound or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any laws applicable to Sub or its respective properties or assets,
other than, in the case of clause (ii) or (iii), any such conflicts, violations,
defaults, rights, loss or Liens that individually or in the aggregate would not
(x) have a Sub Material Adverse Effect or (y) prevent the consummation of the
transactions contemplated by this Agreement. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Sub in connection with the execution
and delivery of this Agreement or the consummation by Sub of any of the
transactions contemplated by this Agreement, except for (i) the filing with the
SEC of such reports under Section 13(e) of the Exchange Act as may be required
in connection with this Agreement and the transactions contemplated by this
Agreement, (ii) the acceptance for record of the Certificate of Merger by the
Delaware Secretary of State, (iii) such filings as may be required in connection
with the payment of any transfer and gains taxes, and (iv) such other consents,
approvals, orders, authorizations, registrations, declarations and filings
which, if not obtained or made, would not prevent or delay in any material
respect the consummation of any of the transactions contemplated by this
Agreement or otherwise prevent Sub from performing its obligations under this
Agreement in any material respect or have, individually or in the aggregate, a
Sub Material Adverse Effect.
SECTION 3.7 Brokers; Schedule of Fees and Expenses.
Except for Tucker Anthony Cleary Gull, no broker, investment banker,
financial advisor or other person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
Sub.
SECTION 3.8 Proxy Statement.
None of the information provided by Sub and/or by its auditors, attorneys,
financial advisors or other consultants or advisors in writing specifically for
use in the Schedule 13E-3 or the Proxy Statement shall, at the time filed with
the SEC, at the time mailed to GZA's shareholders, at the time of GZA
Shareholder Meeting or at the Effective Time, contain any untrue statement of a
material fact or omit to state any material
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fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
SECTION 3.9 SEC Documents; Undisclosed Liabilities
Each of Futureco and Sub has filed all required reports, schedules, forms,
statements and other documents with the SEC since inception through the date
hereof (the "Futureco SEC Documents"). Schedule 3.9 of a document of even date
herewith delivered on or prior to the execution and delivery of this Agreement
by Futureco and Sub to GZA (the "Futureco Disclosure Schedule") contains a
complete list (without exhibits) of all Futureco SEC Documents filed by Futureco
or Sub with the SEC on or prior to the date of this Agreement. All of the
Futureco SEC Documents (other than preliminary material), as of their respective
filing dates, or as of the date of the last amendment thereof (if amended after
filing), complied as to form in all material respects with all applicable
requirements of the Securities Act and the Exchange Act and, in each case, the
rules and regulations promulgated thereunder applicable to such Futureco SEC
Documents. None of the Futureco SEC Documents at the time of filing contained
any untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except to the extent such statements have been modified or
superseded by later Futureco SEC Documents filed on a non-confidential basis
prior to the date of this Agreement. Neither Futureco nor Sub has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) other than obligations related to fees or expenses incurred in
connection with the transactions contemplated by this Agreement which
liabilities or obligations would have a material adverse effect on the ability
of Futureco or Sub to consummate the Merger.
SECTION 3.10 Stock Agreements.
Schedule 3.10 of the Futureco Disclosure Schedule sets forth a true and
complete list of all written or oral contracts, agreements, understandings or
arrangements between Futureco or Sub and any other person or party related to
the purchase, sale, voting or other rights or privileges related to any shares
of GZA Common Stock (each a "Stock Agreement"), and a summary of the terms of
each such Stock Agreement. Futureco has previously delivered, or will deliver,
to GZA prior to the Effective Time copies of (a) each written Stock Agreement
and (b) the written agreement of each holder of an Excluded Share or an Excluded
Option that any Shares or Stock Options owned by such holder are to be treated
as Excluded Shares of Excluded Options, as the case may be, for purposes of this
Agreement.
ARTICLE 4
COVENANTS
SECTION 4.1 Acquisition Proposals.
Prior to the Effective Time, GZA agrees that, except with the prior written
consent of Futureco:
(a) neither it nor any of the GZA Subsidiaries shall initiate, solicit
or encourage, directly or indirectly, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a merger,
acquisition, tender offer, exchange offer, consolidation, sale of assets or
similar transaction involving all or any significant portion of the assets
or any equity securities of GZA or any of the GZA Subsidiaries, other than
the transactions contemplated by this Agreement (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or engage in
any negotiations concerning or provide any confidential information or data
to, or have any discussions with, any person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or
implement an Acquisition Proposal;
(b) it will not authorize nor permit any of its officers, directors,
employees, affiliates, agents or any investment banker, attorney or other
advisor or representative retained by GZA or any GZA Subsidiary to engage
in any of the activities described in Section 4.1(a); and
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(c) it will notify Futureco immediately if GZA receives any
Acquisition Proposal; provided, however, that nothing contained in this
Section 4.1 shall prohibit GZA or the Special Committee or their agents and
representatives from (i) continuing to discuss and negotiate an Acquisition
Proposal with any party initially contacted by or on behalf of GZA prior to
the execution of this Agreement and to provide information to and cooperate
with such parties; provided the Special Committee in good faith reasonably
believes that such negotiation could lead to a Superior Acquisition
Proposal; (ii) furnishing information to or entering into discussions or
negotiations with, any person or entity that makes an unsolicited
Acquisition Proposal, if, and only to the extent that (A) the Special
Committee determines in good faith that such Acquisition Proposal could
lead to a Superior Acquisition Proposal, and that failure to do so could
constitute a breach of the duties of the directors of GZA to the holders of
the Shares, and (B) GZA shall promptly notify Futureco of such Acquisition
Proposal and any Acquisition Proposal made pursuant to subparagraph c(i)
hereof and keep Futureco informed of the status thereof. Nothing in this
Section 4.1 shall (x) permit GZA to terminate this Agreement (except as
specifically provided in Article 7 hereof, nor shall GZA terminate this
Agreement pursuant to the provisions of Article 7, unless and until it
shall have advised Futureco of the proposed terms and conditions of the
proposed Superior Acquisition Proposal and given Futureco a reasonable time
to respond), (y) permit GZA to enter into a definitive agreement with
respect to an Acquisition Proposal during the term of this Agreement it
being agreed that during the term of this Agreement, GZA shall not enter
into an agreement with any person that provides for, or in any way
facilitates an Acquisition Proposal (other than a confidentiality agreement
in customary form executed as provided above)or (z) affect any other
obligation of GZA under this Agreement; provided, however, that, subject to
the provisions of Section 7.2, the GZA Board, upon the recommendation of
the Special Committee, may approve and recommend a Superior Acquisition
Proposal and, in connection therewith, withdraw or modify its approval or
recommendation of this Agreement and the Merger. As used herein, "Superior
Acquisition Proposal" means a bona fide Acquisition Proposal made by a
third party which the Special Committee determines in good faith after
consultation with its financial advisor to be (I) more favorable to GZA's
shareholders from a financial point of view than the Merger and (II)
capable of being consummated within a reasonable period of time.
SECTION 4.2 Conduct of GZA's Business Pending Merger.
Prior to the Effective Time, except as (i) contemplated by this Agreement,
(ii) set forth in Section 4.2 of the GZA Disclosure Schedule or (iii) consented
to in writing by Futureco, GZA shall, and shall cause each of the GZA
Subsidiaries to, conduct its business only in the usual, regular and ordinary
course and in substantially the same manner as heretofore conducted, and,
irrespective of whether or not in the ordinary course of business, GZA shall,
and shall cause each of the GZA Subsidiaries to:
(a) use its reasonable commercial efforts to preserve intact its
business organizations and goodwill and keep available the services of its
officers and employees and preserve its relationship with customers,
suppliers and others with which it has business dealings;
(b) confer on a regular basis with one or more representatives of
Futureco to report operational matters of materiality and any proposals to
engage in material transactions not otherwise expressly permitted
hereunder;
(c) promptly notify Futureco of any material emergency or other
material change in the condition (financial or otherwise), business,
properties, assets, liabilities, or the normal course of its businesses or
in the operation of its properties, or of any material governmental
complaints, investigations or hearings (or communications indicating that
the same may be contemplated);
(d) promptly deliver to Futureco true and correct copies of any
report, statement or schedule filed with the SEC subsequent to the date of
this Agreement;
(e) maintain its books and records in accordance with GAAP
consistently applied and not change in any material manner any of its
methods, principles or practices of accounting in effect on the Financial
Statement Date, except as may be required by the SEC, applicable law or
GAAP;
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(f) duly and timely file all reports, tax returns and other documents
required to be filed with federal, state, local and other authorities,
subject to extensions permitted by law, provided GZA notifies Futureco that
it is availing itself of such extensions;
(g) not make or rescind any express or deemed election relative to
Taxes (unless required by law);
(h) not amend its Certificate of Incorporation or Bylaws or the
charter, partnership agreement, joint venture agreement or comparable
charter or organization document of any GZA Subsidiary;
(i) except for dividends and distributions by a GZA Subsidiary to GZA
or a wholly-owned GZA Subsidiary, not (x) authorize, declare, set aside or
pay any dividend or make any other distribution or payment with respect to
any shares of its capital stock, or (y) except as contemplated by this
Agreement and except for redemption or repurchase of shares of restricted
stock issued to participants in the GZA Stock Purchase Plan, directly or
indirectly redeem, purchase or otherwise acquire any shares of capital
stock, or any option, warrant or right to acquire, or security convertible
into, shares of capital stock, membership interests, or units of
partnership interest;
(j) not sell, lease, mortgage, subject to Lien or otherwise dispose of
any material part of its assets, individually or in the aggregate, except
in the ordinary course of business consistent with past practice;
(k) not make any loans, advances or capital contributions to, or
investments in, any other Person, other than (i) loans, advances and
capital contributions to GZA Subsidiaries in existence on the date hereof;
and (ii) advances of travel and other business expenses to employees in the
ordinary course of business consistent with past practice;
(l) not pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice, or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) furnished to Futureco or incurred in the ordinary course of
business consistent with past practice;
(m) not enter into any one commitment, contractual obligation, capital
expenditure or transaction to purchase goods or services (each, a
"Commitment") which may result in total payments or liability by it in
excess of $100,000;
(n) not increase any compensation or enter into or amend any
employment or severance or termination agreement or other arrangement with
any of its officers, directors or employees, other than waivers by
employees of benefits under such agreements; enter into any employment
agreement or arrangement with any other Person not currently an employee of
GZA or a GZA Subsidiary, providing for compensation in excess of $75,000
per annum; increase any compensation or enter into or amend any employment
agreement or other arrangement with any new or current employee earning
more than $75,000 per annum; except in each case in the ordinary course of
business and consistent with past practice in timing and amount or pursuant
to the terms of any such agreement or arrangement;
(o) not adopt any new employee benefit plan, amend any existing plans,
reprice, or extend the period of exercisability of options or restricted
stock options or rights, except for changes which are required by law;
(p) not settle any shareholder derivative or class action claims
arising out of or in connection with any of the transactions contemplated
by this Agreement without prior written approval of Futureco;
(q) not reduce its ownership of any of the GZA Subsidiaries;
(r) not enter into or amend or otherwise modify or waive any rights
under any agreement or arrangement for the persons that are Affiliates of
GZA or any GZA Subsidiary or any officer, director or employee, of GZA or
any GZA Subsidiary;
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(s) not directly or indirectly or through a subsidiary, merge or
consolidate with, acquire all or substantially all of the assets of, or
acquire the beneficial ownership of a majority of the outstanding capital
stock or other equity interest in any person or entity;
(t) not issue, deliver, sell, authorize, pledge or otherwise encumber
any shares of capital stock or any securities convertible into shares of
capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into shares of
capital stock, or enter into other agreements or commitments of any
character obligating it to issue any such shares or convertible securities,
other than the issuance, delivery and/or sale of (i) shares of GZA Common
Stock pursuant to the exercise of GZA options outstanding under the GZA
Stock Option Plans as of the date of this Agreement and (ii) shares of GZA
Common Stock issuable to participants in the GZA Stock Purchase Plan;
(u) not incur any indebtedness for borrowed money or guarantee any
such indebtedness of another person, issue or sell any debt securities or
options, warrants, calls or other rights to acquire any debt securities of
GZA or any GZA Subsidiary, enter into any "keep well" or other agreement to
maintain any financial statement condition or enter into any arrangement
having the economic effect of any of the foregoing other than (i) in
connection with the financing of ordinary course trade payables consistent
with past practice or (ii) pursuant to existing credit facilities in the
ordinary course of business;
(v) not make any payments outside of the ordinary course of business
except reasonable and customary costs incident to the transactions
contemplated by this Agreement;
(w) not modify, amend or terminate any material contract or agreement
to which GZA or any GZA Subsidiary is a party or waive, release or assign
any material rights or claims thereunder; except in the instance when such
modification, amendment or termination is in accordance with the GZA
Contract and Proposal Policy; or
(x) not agree in writing or otherwise to take any of the actions
described in Section 4.1(a) through (w) above.
ARTICLE 5
ADDITIONAL AGREEMENTS
SECTION 5.1 Preparation of Proxy Statement; Stockholder Meeting
(a) Promptly following the date of this Agreement, GZA shall prepare the
Schedule 13E-3 under the Exchange Act (the "Schedule 13E-3") with respect to the
transactions contemplated by this Agreement and a proxy statement (the "Proxy
Statement") required to be distributed to holders of GZA Common Stock in
connection with the Merger and include therein the Updated Fairness Opinion and
the recommendation of the GZA Board that the stockholders of GZA vote in favor
of the approval and adoption of this Agreement provided, however, that the GZA
Board may fail to make or may withdraw or modify such recommendation, if, in
accordance with the provisions hereof, the GZA Board recommends a Superior
Acquisition Proposal. Subject to applicable law and the provisions of Section 7,
nothing contained in this Section 5.1(a) shall limit GZA's obligation to hold
and convene the GZA Stockholder's Special Meeting, hereafter defined. GZA shall
use its reasonable best efforts to obtain and furnish the information required
to be included by it in the Proxy Statement and Schedule 13E-3 and, after
consultation with Futureco, respond promptly to any comments made by the SEC
with respect to the Proxy Statement and Schedule 13E-3 and any preliminary
version thereof, Futureco and Sub will cooperate with GZA in connection with the
preparation of the Proxy Statement and Schedule 13E-3 including, but not limited
to, furnishing to GZA any and all information regarding Futureco or Sub as may
be required to be disclosed therein and executing the Schedule 13E-3. GZA will
use reasonable best efforts to cause the Proxy Statement to be mailed to GZA's
stockholders as promptly as practicable.
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(b) All filings with the SEC and all mailings to GZA's stockholders in
connection with the Merger, including the Proxy Statement and Schedule 13E-3,
shall be subject to the prior review, comment and approval of Futureco (and such
approval shall not be unreasonably withheld or delayed).
(c) Subject to GZA's receipt of the written opinion of the Financial
Advisor dated as of the date of the mailing of the Proxy Statement to the
stockholders of GZA, that the consideration to be received by the holders of the
Shares pursuant to the Merger is fair, from a financial point of view, to such
stockholders (the "Updated Fairness Opinion"), GZA shall, as promptly as
practicable following the date of this Agreement and in consultation with
Futureco, duly call and give notice of, and, convene and hold, the GZA
Stockholders' Meeting for the purpose of approving this Agreement and the
transactions contemplated by this Agreement as set forth in Section 6.1 hereof
(the "GZA Stockholders' Meeting"). GZA will use reasonable best efforts to hold
such meeting as soon as practicable after the date hereof.
SECTION 5.2 Access to Information; Confidentiality.
Subject to the requirements of confidentiality agreements with third
parties, GZA, Futureco and Sub shall, and GZA shall cause each of the GZA
Subsidiaries to, afford to the other parties and to the officers, employees,
accountants, counsel, financial advisors and other representatives of such other
parties, reasonable access during normal business hours prior to the Effective
Time to all their respective properties, books, contracts, commitments,
personnel and records and, during such period, each of GZA, Futureco and Sub
shall, and GZA shall cause each of the GZA Subsidiaries to, furnish promptly to
the other parties (a) a copy of each report, schedule, registration statement
and other document filed by it during such period pursuant to the requirements
of federal or state securities laws and (b) all other information concerning its
business, properties and personnel as such other party may reasonably request.
Each of GZA, Futureco and Sub shall, and GZA shall cause the GZA Subsidiaries
to, use commercially reasonable efforts to cause its officers, employees,
accountants, counsel, financial advisors and other representatives and
affiliates to, hold any nonpublic information in confidence to the extent
required by, and in accordance with, and will comply with the provisions of the
Confidentiality Agreement dated as of March 31, 2000 between GZA and Futureco
(the "Confidentiality Agreements"); provided, however, that GZA shall not be
required to provide to Futureco or Sub any information related to meetings or
other activities of the Special Committee or, except as otherwise provided
herein, information related to a potential transaction with any third parties.
SECTION 5.3 Best Efforts; Notification.
(a) Subject to the terms and conditions herein provided, GZA and Futureco
shall: (i) use all reasonable best efforts to cooperate with one another in (A)
determining which filings are required to be made prior to the Effective Time
with, and which consents, approvals, permits or authorizations are required to
be obtained prior to the Effective Time, from governmental or regulatory
authorities of the United States, the several states and foreign jurisdictions
and any third parties in connection with the execution and delivery of this
Agreement, and the consummation of the transactions contemplated by such
agreements and (B) timely making all such filings and timely seeking all such
consents, approvals, permits and authorizations; (ii) use all reasonable best
efforts to obtain in writing any consents required from third parties to
effectuate the Merger, such consents to be in form reasonably satisfactory to
GZA and Futureco; and (iii) use all reasonable best efforts to take, or cause to
be taken, all other actions and do, or cause to be done, all other things
necessary, proper or appropriate to consummate and make effective the
transactions contemplated by this Agreement, including, but not limited to,
furnishing all information required to be included in the Proxy Statement. If,
at any time after the Effective Time, any further action is necessary or
desirable to carry out the purpose of this Agreement, the proper officers and
directors of GZA and Futureco shall take all such necessary action.
(b) GZA shall give prompt notice to Futureco, and Futureco shall give
prompt notice to GZA, (i) if any representation or warranty made by it contained
in this Agreement that is qualified as to materiality becomes untrue or
inaccurate in any respect or any such representation or warranty that is not so
qualified becomes untrue or inaccurate in any material respect or (ii) of the
failure by it to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
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SECTION 5.4 Costs of Transaction.
In the event that the Merger is not consummated, each of Futureco and GZA
shall pay their own costs and expenses relating to the Merger and the other
transactions contemplated by this Agreement. This Section 5.4 shall in no way
affect the rights and obligations of the parties hereto under Article 7 hereof.
SECTION 5.5 Public Announcements.
Futureco, Sub and GZA will consult with each other before issuing, and
provide each other the opportunity to review and comment upon, any press release
or other written public statements with respect to the transactions contemplated
by this Agreement, including (without limitation) the Merger, and shall not
issue any such press release or make any such written public statement prior to
such consultation, except as may be required by applicable law, court process or
by obligations pursuant to any listing agreement. The parties agree that the
initial press release to be issued with respect to the transactions contemplated
by this Agreement will be in the form agreed to by the parties hereto prior to
the execution of this Agreement. For purposes of this Section 5.5, "written
public statements" shall include any written statement transmitted to the Nasdaq
National Market or the shareholders of Futureco or GZA.
SECTION 5.6 Taxes.
At Futureco's expense, GZA will and will cause each GZA Subsidiary to
consult with and provide Futureco the opportunity to review and comment upon all
returns, questionnaires, applications or other documents to be filed after the
date hereof by GZA with respect to Taxes including, without limitation, GZA's
federal, state and local income tax returns for its taxable year ended February
29, 2000 (collectively, the "GZA Tax Returns"), and shall not file any such
returns without the prior review and comment of Futureco and Acquisition, which
shall not be unreasonably withheld or delayed.
SECTION 5.7 Resignations.
On the Closing Date, if requested by Futureco, the directors of each of GZA
and the GZA Subsidiaries shall have submitted their resignations from such
positions, effective as of the Effective Time.
SECTION 5.8 Indemnification.
(a) From and after the Effective Time, the Surviving Corporation shall
provide exculpation, indemnification and advancement of expenses for each person
who is now or has been at any time prior to the date hereof or who becomes prior
to the Effective Time, an officer or director of GZA or any GZA Subsidiary (the
"Indemnified Parties") which is the same as the exculpation, indemnification and
advancement of expenses provided to the Indemnified Parties by GZA (including
advancement of expenses, if so provided) immediately prior to the Effective Time
in its Certificate of Incorporation, Bylaws and existing contractual agreements
(the "Indemnification Agreements") as in effect at the close of business on the
date hereof; provided, that such exculpation, indemnification and advancement of
expenses covers actions on or prior to the Effective Time, including, without
limitation, all transactions contemplated by this Agreement. The Surviving
Corporation shall obtain and maintain in effect from the Effective Time and
continuing until the sixth anniversary thereof "tail" directors and officers
liability insurance with a term, coverage amount and other terms and conditions
as are at least as favorable as required by the Indemnification Agreements (the
"Tail Policy"). The Surviving Corporation shall provide GZA with a true and
complete copy of a binder with respect to the Tail Policy at least 10 days prior
to the Effective Time, and shall use its reasonable best efforts to provide to
GZA a true and complete copy of the Tail Policy as proposed to be issued prior
to the Effective Time. The premium for such policy shall be paid in full at the
Effective Time.
(b) The provisions of this Section 5.8 are intended to be for the benefit
of, and shall be enforceable by, each Indemnified Party, his or her heirs and
his or her personal representatives and shall be binding on all successors and
assigns of the Surviving Corporation. The Surviving Corporation shall pay all
costs and expenses (including fees and expenses of counsel) that may be incurred
by any Indemnified Party or his or her heirs or his or her personal
representatives in successfully enforcing the indemnity or other obligations of
Futureco or the Surviving Corporation under this Section 5.8. The provisions of
this Section 5.8 shall survive the Merger and are in addition to any other
rights to which an Indemnified Party may be entitled.
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(c) In the event that the Surviving Corporation or any of its respective
successors or assigns (i) consolidates with or merges into any other person and
shall not be the continuing or surviving corporation or entity of such
consolidation or merger or (ii) transfers all or substantially all of its
properties and assets to any person, then, and in each such case the successors
and assigns of such entity shall assume the obligations set forth in this
Section 5.8, which obligations are expressly intended to be for the irrevocable
benefit of, and shall be enforceable by, each director and officer covered
hereby.
SECTION 5.9 No Further Stock Agreements.
From and after the date of this Agreement, neither Futureco, Sub nor any of
their respective officers or directors shall enter into any Stock Agreement with
any third party except Stock Agreements with employees of GZA necessary in order
to determine the composition of the Excluded Securities Schedule which
agreements, arrangements or other undertakings with respect to any Shares which
could cause Futureco to be considered an "owner" of such Shares for purposes of
Section 203 of the Delaware Law shall not be entered into prior to GZA
Shareholder Approval.
ARTICLE 6
CLOSING CONDITIONS
SECTION 6.1 Conditions to Each Party's Obligation to Effect the Merger.
The obligations of each party to effect the Merger shall be subject to the
fulfillment at or prior to the Closing Date of the following conditions:
(a) GZA Shareholder Approval. The Merger shall have been approved and
adopted by the affirmative vote of at least 66 2/3% of the outstanding
shares of GZA Common Stock which are not "owned" by Futureco (as such term
is defined in Section 203 of the Delaware Law).
(b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Merger or any of the other transactions
contemplated hereby shall be in effect.
SECTION 6.2 Conditions to Obligations of Futureco and Sub.
The obligations of Futureco and Sub to effect the Merger and to consummate
the other transactions contemplated to occur on the Closing Date are further
subject to the following conditions, any one or more of which may be waived in
writing by Futureco:
(a) Representations and Warranties. The representations and
warranties of GZA set forth in this Agreement shall be true and correct as
of the Closing Date, as though made on and as of the Closing Date, except
to the extent the representation or warranty is expressly limited by its
terms to another date, and Futureco shall have received a certificate
(which certificate may be qualified by Knowledge to the same extent as the
representations and warranties of GZA contained herein are so qualified)
signed on behalf of GZA by the chief executive officer of GZA, in such
capacity, to such effect. For the purposes of Section 6.2, the
representations and warranties of GZA shall be deemed true and correct
unless the breach of such representations and warranties, in the aggregate,
could reasonably be expected to have a GZA Material Adverse Effect.
(b) Performance of Obligations of GZA. GZA shall have performed in
all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Futureco shall have
received a certificate signed on behalf of GZA by the chief executive
officer of GZA, in such capacity, to such effect.
(c) Material Adverse Change. Since the date of this Agreement, there
shall have been no GZA Material Adverse Change and Futureco shall have
received a certificate of the chief executive officer of GZA, in such
capacity, certifying to such effect.
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(d) Opinion of Counsel. Futureco shall have received an opinion of
Epstein, Becker & Green, P.C. or other counsel to GZA reasonably
satisfactory to Futureco dated the Closing Date in form and substance
reasonably satisfactory to Futureco.
(e) Consents. All consents and waivers from third parties necessary
in connection with the consummation of the transactions contemplated by
this Agreement shall have been obtained.
(f) Dissenters' Rights. The record holders of not more than five
percent (5%) of the issued and outstanding shares of GZA Common Stock on
the Effective Date are Dissenting Shares.
(g) Financing. Futureco shall have obtained adequate financing for
the Merger on terms acceptable to it, and the proceeds of such financing
shall be available for the transaction.
(h) Stock Options. Not later than one (1) business day prior to the
Closing Date, GZA shall have received from each holder of a Stock Option,
an Option Exercise Agreement, duly executed by or on behalf of such holder,
in which such holder shall have indicated the number of shares such holder
elects to purchase upon exercise of such option pursuant to such Option
Exercise Agreement, and such holder shall have acknowledged that any Stock
Option not exercised prior to the Closing Date shall be terminated and
cancelled. On the Closing Date, GZA shall deliver to Futureco a schedule
setting forth the name and address of each record holder of a Stock Option
as to which such holder has executed and delivered an Option Exercise
Agreement, the number of Option Shares issuable upon such exercise, and the
Exercise Price Liability with respect to each such Option Share.
SECTION 6.3 Conditions to Obligations of GZA.
The obligation of GZA to effect the Merger and to consummate the other
transactions contemplated to occur on the Closing Date is further subject to the
following conditions, any one or more of which may be waived in writing by GZA:
(a) Representations and Warranties. The representations and
warranties of Futureco and Sub set forth in this Agreement shall be true
and correct as of the date of this Agreement and as of the Closing Date, as
though made on and as of the Closing Date, except to the extent the
representation or warranty is expressly limited by its terms to another
date, and GZA shall have received certificates (which certificates may be
qualified by Knowledge to the same extent as the representations and
warranties of Futureco contained herein are so qualified) signed on behalf
of Futureco and Sub by the President of the respective Company to such
effect. For the purposes of this Section 6.3(a), the representations and
warranties of Futureco and Sub shall be deemed true and correct unless the
breach of such representations and warranties, in the aggregate, could
reasonably be expected to have a Futureco Material Adverse Effect or a Sub
Material Adverse Effect.
(b) Performance of Obligations of Futureco and Sub. Futureco and Sub
shall have performed in all material respects all of their respective
obligations required to be performed by them under this Agreement at or
prior to the Effective Time, and GZA shall have received certificates of
Futureco and Sub signed on behalf of Futureco and Sub by the President of
the respective Company, in such capacity, to such effect.
(c) Opinion of Counsel. GZA shall have received an opinion from
Bowditch & Dewey, LLP or other counsel to Futureco reasonably satisfactory
to GZA dated the Closing Date in form and substance reasonably satisfactory
to GZA.
(d) Consents. All consents and waivers from third parties necessary
in connection with the consummation of the transactions contemplated hereby
shall have been obtained.
(e) Fairness Opinion. GZA shall have received the Updated Fairness
Opinion.
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ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
SECTION 7.1 Termination.
This Agreement may be terminated at any time prior to the acceptance of the
Certificate of Merger for record by the Secretary of State of the State of
Delaware, whether before or after the GZA Shareholder Approval has been
obtained:
(a) by mutual written consent duly authorized by the boards of
directors of GZA and Futureco;
(b) by Futureco, upon a breach of any representation, warranty,
covenant, obligation or agreement on the part of GZA set forth in this
Agreement, such that the conditions set forth in Section 6.2(b), would be
incapable of being satisfied by December 14, 2000 (or as otherwise
extended);
(c) by GZA, upon a breach of any representation, warranty, covenant
obligation or agreement on the part of Futureco set forth in this
Agreement, in either case such that the conditions set forth in Section
6.3, would be incapable of being satisfied by December 14, 2000 (or as
otherwise extended);
(d) by either Futureco or GZA, if any judgment, injunction, order,
decree or action by any Governmental Entity of competent authority
preventing the consummation of the Merger shall have become final and
nonappealable;
(e) by either Futureco or GZA, at any time after December 14, 2000 if,
by that date, through no breach of the Agreement by the terminating party,
the conditions set forth in Sections 6.2 or 6.3, respectively, are not
satisfied;
(f) by either Futureco or GZA, if the Merger shall not have been
consummated before December 14, 2000; provided, that in the case of
termination pursuant to this Section 7.1(f), the terminating party shall
not have breached in any material respect its obligations under this
Agreement in any manner that shall have proximately contributed to the
occurrence of the failure referred to in this Section;
(g) by either Futureco or GZA if, upon a vote at a duly held GZA
Shareholders Meeting or any adjournment thereof, the GZA Shareholder
Approval shall not have been obtained;
(h) by GZA, if prior to the GZA Shareholder's Meeting, the GZA Board
shall have withdrawn or modified its approval or recommendation of the
Merger or this Agreement in connection with, or approved, or recommended or
entered into, a Superior Acquisition Proposal;
(i) by Futureco if (i) prior to the GZA Shareholders Meeting, the GZA
Board shall have withdrawn or modified in any manner adverse to Futureco
its approval or recommendation of the Merger or this Agreement in
connection with, or approved, recommended or entered into, any Superior
Acquisition Proposal, or (ii) GZA shall have entered into a definitive
agreement with respect to any Acquisition Proposal; and
(j) by Futureco if the record holders of more than five percent (5%)
of the issued and outstanding shares of GZA Common Stock on the Effective
Time are Dissenting Shares.
SECTION 7.2 Certain Fees and Expenses.
If this Agreement shall be terminated by GZA pursuant to Section 7.1(e) as
a result of the failure of GZA to receive the Updated Fairness Opinion or
pursuant to Section 7.1(h) or 7.1(i), then GZA will reimburse Futureco, within
five business days of GZA's receipt of documentation reasonably satisfactory to
GZA, for actual, reasonable, and customary expenses incurred by Futureco in
connection with the proposed Merger, up to a maximum of $750,000.
29
<PAGE> 98
SECTION 7.3 Effect of Termination.
In the event of termination of this Agreement by either GZA or Futureco as
provided in Section 7.1, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Futureco, Sub or GZA,
other than Section 7.2, this Section 7.3 and Article 8.
SECTION 7.4 Amendment.
This Agreement may be amended by the parties in writing by action of GZA's
Board and the Boards of Directors of Futureco and Sub at any time before or
after any Shareholder Approval is obtained and prior to the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware;
provided, however, that, after the Shareholder Approval is obtained, no such
amendment, modification or supplement shall be made which by law requires the
further approval of shareholders without obtaining such further approval.
SECTION 7.5 Extension; Waiver.
At any time prior to the Effective Time, the parties may (a) extend the
time for the performance of any of the obligations or other acts of the other
party, (b) waive any inaccuracies in the representations and warranties of the
other party contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the provisions of Section 7.4, waive compliance
with any of the agreements or conditions of the other party contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
ARTICLE 8
GENERAL PROVISIONS
SECTION 8.1 Nonsurvival of Representations and Warranties.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement confirming the representations
and warranties in this Agreement shall survive the Effective Time.
SECTION 8.2 Notices.
All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be delivered personally, sent by
overnight courier (providing proof of delivery) to the parties or sent by
telecopy (providing confirmation of transmission) at the following addresses or
telecopy numbers (or at such other address or telecopy number for a party as
shall be specified by like notice):
(a) If to Futureco:
Futureco Environmental, Inc.
9 Bridie Lane
Norfolk, MA 02056
Attn: William Beloff, President
Telephone:
Facsimile:
With a copy to:
Bowditch & Dewey, LLP
311 Main Street
Worcester, MA 01608
Attn: Jane V. Hawkes, Esq.
Telephone: (508) 926-3412
Facsimile: (508) 929-3017
30
<PAGE> 99
(b) If to GZA:
GZA GeoEnvironmental Technologies, Inc.
320 Needham Street
Newton Upper Falls, MA 02464
Attn: Andrew P. Pajak
Telephone: (617) 630-6240
Facsimile: (617) 969-0715
With a copy to:
Epstein, Becker & Green, P.C.
75 State Street
Boston, MA 02109-1807
Attn: Paul D. Broude, Esq.
Telephone: (617) 342-4000
Facsimile: (617) 342-4001
All notices shall be deemed given only when actually received.
SECTION 8.3 Incorporation.
All references made herein to any party shall include any predecessor to
such party. When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation."
SECTION 8.4 Counterparts.
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other party.
SECTION 8.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement and the Confidentiality Agreement and the other agreements
entered into in connection with the Transactions (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, between the parties with respect to the subject matter of this
Agreement and (b) are not intended to confer upon any person other than the
parties hereto any rights or remedies.
SECTION 8.6 Governing Law.
This agreement shall be governed by, and construed in accordance with, the
laws of the State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflict of laws thereof.
SECTION 8.7 Assignment.
Neither this Agreement nor any of the rights, interests or obligations
under this Agreement shall be assigned or delegated, in whole or in part, by
operation of law or otherwise by any of the parties without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of, and be enforceable by, the
parties and their respective successors and assigns.
SECTION 8.8 Enforcement.
The parties agree that irreparable damage would occur in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that subject
to Article 8, the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement.
31
<PAGE> 100
SECTION 8.9 Severability.
Any term or provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement or affecting
the validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this Agreement is so
broad as to be unenforceable, the provision shall be interpreted to be only so
broad as is enforceable.
32
<PAGE> 101
IN WITNESS WHEREOF, Futureco, Sub and GZA have caused this Agreement to be
executed as of the date first written above by their respective officers
thereunto duly authorized.
GZA GEOENVIRONMENTAL
TECHNOLOGIES, INC.
By: /s/ ANDREW P. PAJAK
------------------------------------
Name: Andrew P. Pajak
Its: Chief Executive Officer
FUTURECO ENVIRONMENTAL, INC.
By: /s/ WILLIAM R. BELOFF
------------------------------------
Name: William R. Beloff
Its: President
GEOENVIRONMENTAL ACQUISITION, INC.
By: /s/ WILLIAM R. BELOFF
------------------------------------
Name: William R. Beloff
Its: President
33
<PAGE> 102
INDEX OF TERMS
<TABLE>
<CAPTION>
PAGE
TERM NUMBER
---- ------
<S> <C>
Acquisition Proposal........................................ 32
Affiliate................................................... 17
Affiliated Group............................................ 20
Agreement................................................... 1
Certificate of Merger....................................... 2
Certificates................................................ 4
Closing Date................................................ 2
Code........................................................ 6
Commitment.................................................. 34
Confidentiality Agreements.................................. 37
Controlled Group Member..................................... 17
Debt Documents.............................................. 24
Default..................................................... 24
Delaware Law................................................ 1
Deposit Date................................................ 5
Dissenting Shares........................................... 4
Effective Time.............................................. 2
Encumbrances................................................ 13
Environmental Laws.......................................... 15
Equity Participation........................................ 24
ERISA....................................................... 17
Event of Default............................................ 24
Exchange Act................................................ 11
Excluded Option............................................. 4
Excluded Securities Schedule................................ 3
Excluded Share.............................................. 3
Exercise Price Liability.................................... 3
Fairness Opinion............................................ 25
Futureco.................................................... 1
Financial Advisor........................................... 25
Futureco Disclosure Schedule................................ 31
Futureco Material Adverse Effect............................ 28
Futureco SEC Documents...................................... 31
Futureco's Knowledge........................................ 27
GAAP........................................................ 11
GZA......................................................... 1
GZA Board................................................... 1
GZA Common Stock............................................ 3
GZA Disclosure Schedule..................................... 7
GZA Employee Plan........................................... 17
GZA Environmental Reports................................... 15
GZA Financial Statement Date................................ 12
GZA Leased Properties....................................... 14
GZA Material Adverse Change................................. 12
GZA Material Adverse Effect................................. 7
</TABLE>
i
<PAGE> 103
<TABLE>
<CAPTION>
PAGE
TERM NUMBER
---- ------
<S> <C>
GZA Properties.............................................. 13
GZA SEC Documents........................................... 11
GZA Shareholder Approval.................................... 10
GZA Stockholders' Meeting................................... 37
GZA Stock Option Plans...................................... 3
GZA Subsidiary.............................................. 7
GZA Tax Returns............................................. 39
Governmental Entity......................................... 10
Hazardous Substances........................................ 16
Indebtedness................................................ 24
Indemnification Agreements.................................. 39
Indemnified Parties......................................... 39
IRS......................................................... 17
Laws........................................................ 10
Liens....................................................... 8
Merger Consideration........................................ 3
Merger...................................................... 1
Option Share................................................ 3
Participating Share......................................... 3
Paying Agent................................................ 4
Payment Fund................................................ 5
Pension Plan................................................ 17
Person...................................................... 8
Property Restrictions....................................... 13
Proxy Statement............................................. 36
Schedule 13E-3.............................................. 36
SEC......................................................... 11
Securities Act.............................................. 11
Shares...................................................... 3
Special Committee........................................... 1
Stock Agreement............................................. 31
Stock Option................................................ 3
Sub Material Adverse Effect................................. 29
Sub......................................................... 1
Subsidiary.................................................. 7
Superior Acquisition Proposal............................... 33
Surviving Corporation....................................... 1
Tail Policy................................................. 39
Tax......................................................... 22
Tax Return(s)............................................... 22
to the Knowledge of GZA..................................... 26
Updated Fairness Opinion.................................... 37
Welfare Plan................................................ 17
</TABLE>
ii
<PAGE> 104
[Houlihan Lokey Howard & Zukin Capital LOGO]
August 16, 2000
Special Committee of the Board of Directors
GZA GeoEnvironmental Technologies, Inc.
320 Needham Street
Newton Falls, MA 02464
Dear Ladies and Gentlemen:
We understand that GZA GeoEnvironmental Technologies, Inc. ("GZA or the
"Company") has received an offer from Futureco Environmental, Inc. to acquire
all of the outstanding common stock of the Company for $6.40 per share. Certain
officers, directors or shareholders of Futureco Environmental, Inc. are also
employees or shareholders of GZA. All other common stockholders of the Company
are referred to herein as the "Public Stockholders." Such transaction and all
related transactions are referred to collectively herein as the "Transaction."
In connection with this Opinion, we have made such reviews, analyses and
inquiries as we have deemed necessary and appropriate under the circumstances.
Among other things, we have:
1. reviewed the Company's annual reports to shareholders and on Form
10-K for the five fiscal years ended February 29, 2000 and quarterly
reports on Form 10-Q for the quarter ended May 31, 2000, which the
Company's management has identified as being the most current financial
statements available;
2. reviewed the Draft Agreement and Plan of Merger dated August 7,
2000;
3. met with certain members of the senior management of the Company to
discuss the operations, financial condition, future prospects and projected
operations and performance of the Company;
4. visited certain facilities and business offices of the Company;
5. reviewed forecasts and projections prepared by the Company's
management with respect to the Company for the year ending February 28,
2001;
6. reviewed the historical market prices and trading volume for the
Company's publicly traded securities;
7. reviewed certain other publicly available financial data for
certain companies that we deem comparable to the Company, and publicly
available prices and premiums paid in other transactions that we considered
similar to the Transaction;
8. reviewed drafts of certain documents to be delivered at the closing
of the Transaction;
9. at the request of the Special Committee of GZA's Board of
Directors, approached and held discussions with third parties to solicit
indications of interest in the possible acquisition of GZA; and
10. conducted such other studies, analyses and inquiries as we have
deemed appropriate.
We have relied upon and assumed, without independent verification, that the
financial forecasts and projections provided to us have been reasonably prepared
and reflect the best currently available estimates of the future financial
results and condition of the Company, and that there has been no material change
in the assets, financial condition, business or prospects of the Company since
the date of the most recent financial statements made available to us.
<PAGE> 105
Special Committee of the Board of Directors
GZA GeoEnvironmental Technologies, Inc.
August 16, 2000
Page 2
We have not independently verified the accuracy and completeness of the
information supplied to us with respect to the Company and do not assume any
responsibility with respect to it. We have not made any physical inspection or
independent appraisal of any of the properties or assets of the Company. Our
opinion is necessarily based on business, economic, market and other conditions
as they exist and can be evaluated by us at the date of this letter.
The Company, like other companies and any business entities analyzed by
Houlihan Lokey or which are otherwise involved in any manner in connection with
this Opinion, could be materially affected by complications that may occur, or
may be anticipated to occur, in computer-related applications as a result of the
year change from 1999 to 2000 (the "Y2K Issue"). In accordance with
long-standing practice and procedure, Houlihan Lokey's services are not designed
to detect the likelihood and extent of the effect of the Y2K Issue, directly or
indirectly, on the financial condition and/or operations of a business. Further,
Houlihan Lokey has no responsibility with regard to the Company's efforts to
make its systems, or any other systems (including its vendors and service
providers), Year 2000 compliant on a timely basis. Accordingly, Houlihan Lokey
shall not be responsible for any effect of the Y2K Issue on the matters set
forth in this Opinion.
This Opinion does not constitute a recommendation to the Special Committee
of the Board of Directors, the Board of Directors or any shareholder of the
Company as to how to vote in connection with the Transaction.
Based upon the foregoing, and in reliance thereon, it is our opinion that
the consideration to be received by the Public Stockholders of the Company in
connection with the Transaction is fair to them from a financial point of view.
This Opinion is for the use and benefit of the Special Committee of the
Board of Directors and the Board of Directors of the Company in its evaluation
of the Transaction and shall not be used by any other person without the prior
written consent of Houlihan Lokey Howard & Zukin Capital.
/s/ Houlihan Lokey Howard & Zukin Capital
Houlihan Lokey Howard & Zukin Capital
2
<PAGE> 106
DELAWARE GENERAL CORPORATION LAW
TITLE 8. CORPORATIONS
sec.262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to sec.228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of the stockholder's shares of stock under the circumstances
described in subsections (b) and (c) of this section. As used in this section,
the word "stockholder" means a holder of record of stock in a stock corporation
and also a member of record of a nonstock corporation; the words "stock" and
"share" mean and include what is ordinarily meant by those words and also
membership or membership interest of a member of a nonstock corporation; and the
words "depository receipt" mean a receipt or other instrument issued by a
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec.251 (other than a merger effected pursuant to
sec.251(g) of this title), sec.252, sec.254, sec.257, sec.258, sec.263 or
sec.264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec.251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sec.sec.251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec.253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
<PAGE> 107
(c) Any corporation may provide in its certificate of incorporation
that appraisal rights under this section shall be available for the shares
of any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section, shall
apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec.228 or
sec.253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated therein. For purposes of
determining the stockholders entitled to receive either notice, each
constituent corporation may fix, in advance, a record date that shall be
not more than 10 days prior to the date the notice is given, provided, that
if the notice is given on or after the effective date of the merger or
consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the
record date shall be the close of business on the day next preceding the
day on which the notice is given.
2
<PAGE> 108
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
3
<PAGE> 109
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
4
<PAGE> 110
PROXY
GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
320 Needham Street
Newton Upper Falls, Massachusetts 02464
Proxy for Annual Meeting of Stockholders
to be held on November 9, 2000
The undersigned hereby constitutes and appoints Donald T. Goldberg, Andrew P.
Pajak and William R. Beloff , and each of them acting singly, as proxies of the
undersigned, each with full power to appoint his substitute, and authorizes each
of them, and each substitute so appointed, to represent and vote all shares of
Common Stock of GZA GeoEnvironmental Technologies, Inc. (the "Company") held of
record by the undersigned at the close of business on May 14, 1999 at the Annual
Meeting of Stockholders of the Company to be held at The Sheraton Needham Hotel,
100 Cabot Street, Needham, Massachusetts on November 9, 2000, at 10:00 a.m.
local time and at any adjournment thereof.
The undersigned hereby acknowledge(s) receipt of a copy of the accompanying
Notice of Annual Meeting of Stockholders and of the Proxy Statement relating
thereto, and hereby revoke(s) any proxy or proxies heretofore given. This proxy
may be revoke at any time before it is exercised.
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GZA GEOENVIRONMENTAL TECHNOLOGIES, INC.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy Ballot.
There are a number of issues related to the management and operation of your
Company that require your immediate attention and approval. These are discussed
in detail in the enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on the proxy card to indicate how your shares shall be
voted. Then sign the card, detach it and return your proxy vote in the enclosed
postage paid envelope.
Your vote must be received prior to the Annual Meeting of Stockholders, July 13,
1999, in order to be voted at the meeting.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
GZA GeoEnvironmental Technologies, Inc.
Please Detach and Mail in the Envelope Provided
A [X] Please mark your
votes as in this
example.
1. Proposal to approve and adopt the Merger 2. Proposal to elect the following
Agreement dated as of August 16, 2000 nominees to serve three-year
providing for the merger of terms as Class II Directors:
GeoEnvironmental Acquisition, Inc. with and
into the Company:
[ ] FOR Nominees:
[ ] AGAINST William R. Beloff
[ ] ABSTAIN Lewis Mandell
William S. Zoino
[ ] FOR ALL NOMINEES
[ ] WITHHOLD AUTHORITY
To withhold authority to vote for
any individual nominee, check the
"For All Nominees" box and strike
a line through that nominee's name
in the list above.
This proxy is being solicited on behalf of the Board of Directors. When properly
executed, this proxy will be voted in the manner directed. IF NO DIRECTION IS
GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND FOR ALL NOMINEES FOR
DIRECTOR. THE COMPANY HAS RECEIVED NO NOTICE OF ANY OTHER MATTER THAT WILL BE
PRESENTED AT THE MEETING. PURSUANT TO RULE 14a-4(c)(1), THIS PROXY WILL BE VOTED
IN THE
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DISCRETION OF THE PERSONS NAMED AS PROXIES AS TO ANY OTHER MATTER TO COME
PROPERLY BEFORE THE MEETING. Any stockholder who wishes to vote in accordance
with the recommendations of the Board of directors need only sign and date this
proxy and return it in the enclosed envelope.
RECORD DATE SHARES:
Signature ____________________________
Date _____________, 2000
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