SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)April 13, 1997
UNITED WASTE SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-20868 3-3532338
(State or Other (Commission File number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
Four Greenwich Office Park, Greenwich, Connecticut 06830
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (203) 622-3131
Item 5. Other Events
United Waste Systems, Inc., a Delaware corporation (the
"Company"), entered into an Agreement and Plan of Merger (the
"Merger Agreement"), dated as of April 13, 1997 by and among USA
Waste Services, Inc., a Delaware corporation ("USA Waste"),
Riviera Acquisition Corporation, a Delaware corporation and a
wholly-owned subsidiary of USA Waste ("Sub"), and the Company.
Subject to the terms and conditions of the Merger Agreement, the
Sub will merge with and into the Company (the "Merger"), and each
share of common stock of the Company will be converted into 1.075
shares of common stock of USA Waste. The Merger is conditioned
upon, among other things, approval by shareholders of the Company
and USA Waste, and expiration or termination of the waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976. A copy of the Merger Agreement is attached as Exhibit 99.1
hereto and is incorporated herein by reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized on this
16th day of April, 1997.
UNITED WASTE SYSTEMS INC.
By: Michael J. Nolan
-----------------
Name: Michael J. Nolan
Title: Chief Financial Officer
<PAGE>
EXHIBIT INDEX
UNITED WASTE SYSTEMS, INC.
Exhibit No. Description Page No.
99.1* Agreement and Plan of Merger 3
dated as of April 13, 1997 by
and among USA Waste Services, Inc.,
Riviera Acquisition Corporation and
United Waste Systems, Inc.
* Schedules and Exhibits referenced in this Agreement and Plan
of Merger have been omitted. The Company undertakes to
furnish copies of Schedules and Exhibits to the Securities
and Exchange Commission upon request.
AGREEMENT AND PLAN OF MERGER
Dated as of April 13, 1997
by and among
USA Waste Services, Inc.
Riviera Acquisition Corporation
and
United Waste Systems, Inc.
TABLE OF CONTENTS
Page No.
ARTICLE I
THE MERGER
SECTION 1.1 The Merger . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Effective Time of the Merger . . . . . . . . 1
ARTICLE II
THE SURVIVING AND PARENT CORPORATIONS
SECTION 2.1 Certificate of Incorporation . . . . . . . . 1
SECTION 2.2 By-Laws. . . . . . . . . . . . . . . . . . . 2
SECTION 2.3 Directors. . . . . . . . . . . . . . . . . . 2
SECTION 2.4 Officers . . . . . . . . . . . . . . . . . . 2
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion of Company Shares in the Merger . 2
SECTION 3.2 Conversion of Subsidiary Shares. . . . . . . 2
SECTION 3.3 Exchange of Certificates . . . . . . . . . . 2
SECTION 3.4 No Fractional Securities . . . . . . . . . . 4
SECTION 3.5 Closing. . . . . . . . . . . . . . . . . . . 4
SECTION 3.6 Closing of the Company's Transfer Books. . . 4
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
SECTION 4.1 Organization and Qualification . . . . . . . 4
SECTION 4.2 Capitalization . . . . . . . . . . . . . . . 5
SECTION 4.3 Subsidiaries . . . . . . . . . . . . . . . . 5
SECTION 4.4 Authority; Non-Contravention; Approvals. . . 6
SECTION 4.5 Reports and Financial Statements . . . . . . 7
SECTION 4.6 Absence of Undisclosed Liabilities . . . . . 7
SECTION 4.7 Absence of Certain Changes or Events . . . . 8
SECTION 4.8 Litigation . . . . . . . . . . . . . . . . . 8
SECTION 4.9 Registration Statement and Proxy Statement . 8
SECTION 4.10 No Violation of Law . . . . . . . . . . . . 8
SECTION 4.11 Compliance with Agreements. . . . . . . . . 9
SECTION 4.12 Taxes . . . . . . . . . . . . . . . . . . . 9
SECTION 4.13 Employee Benefit Plans; ERISA . . . . . . . 10
SECTION 4.14 Labor Controversies . . . . . . . . . . . . 11
SECTION 4.15 Environmental Matters . . . . . . . . . . . 11
SECTION 4.16 Non-competition Agreements. . . . . . . . . 12
SECTION 4.17 Title to Assets . . . . . . . . . . . . . . 12
SECTION 4.18 Reorganization and Pooling of Interests . . 13
SECTION 4.19 Parent Stockholders' Approval . . . . . . . 13
SECTION 4.20 Brokers and Finders . . . . . . . . . . . . 13
SECTION 4.21 Opinion of Financial Advisor. . . . . . . . 13
SECTION 4.22 Ownership of Company Common Stock . . . . . 13
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 5.1 Organization and Qualification . . . . . . . 14
SECTION 5.2 Capitalization . . . . . . . . . . . . . . . 14
SECTION 5.3 Subsidiaries . . . . . . . . . . . . . . . . 14
SECTION 5.4 Authority; Non-Contravention; Approvals. . . 15
SECTION 5.5 Reports and Financial Statements . . . . . . 16
SECTION 5.6 Absence of Undisclosed Liabilities . . . . . 16
SECTION 5.7 Absence of Certain Changes or Events . . . . 16
SECTION 5.8 Litigation . . . . . . . . . . . . . . . . . 17
SECTION 5.9 Registration Statement and Proxy Statement . 17
SECTION 5.10 No Violation of Law . . . . . . . . . . . . 17
SECTION 5.11 Compliance with Agreements. . . . . . . . . 18
SECTION 5.12 Taxes . . . . . . . . . . . . . . . . . . . 18
SECTION 5.13 Employee Benefit Plans; ERISA . . . . . . . 18
SECTION 5.14 Labor Controversies . . . . . . . . . . . . 20
SECTION 5.15 Environmental Matters . . . . . . . . . . . 20
SECTION 5.16 Non-competition Agreements. . . . . . . . . 20
SECTION 5.17 Title to Assets . . . . . . . . . . . . . . 20
SECTION 5.18 Reorganization and Pooling of Interests . . 21
SECTION 5.19 Company Stockholders' Approval. . . . . . . 21
SECTION 5.20 Brokers and Finders . . . . . . . . . . . . 21
SECTION 5.21 Opinion of Financial Advisor. . . . . . . . 21
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 Conduct of Business by the Company Pending the Merger 21
SECTION 6.2 Specific Conduct of Business by Parent and Subsidiary
Pending the Merger 23
SECTION 6.3 Control of the Company's Operations. . . . . 25
SECTION 6.4 Control of Parent's Operations . . . . . . . 25
SECTION 6.5 Acquisition Transactions . . . . . . . . . . 25
SECTION 6.6 Conduct of Businesses Pending the Merger . . 26
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information. . . . . . . . . . . . 26
SECTION 7.2 Registration Statement and Proxy Statement . 27
SECTION 7.3 Stockholders' Approvals. . . . . . . . . . . 27
SECTION 7.4 Compliance with the Securities Act . . . . . 27
SECTION 7.5 Exchange Listing . . . . . . . . . . . . . . 28
SECTION 7.6 Expenses and Fees. . . . . . . . . . . . . . 28
SECTION 7.7 Agreement to Cooperate . . . . . . . . . . . 28
SECTION 7.8 Public Statements. . . . . . . . . . . . . . 29
SECTION 7.9 Option Plans . . . . . . . . . . . . . . . . 29
SECTION 7.10 Notification of Certain Matters . . . . . . 29
SECTION 7.11 Directors' and Officers' Indemnification. . 29
SECTION 7.12 Corrections to the Joint Proxy Statement/Prospectus
and Registration Statement . . . . . . . . 31
SECTION 7.13 Supplemental Indenture. . . . . . . . . . . 31
SECTION 7.14 Employment Agreements . . . . . . . . . . . 31
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligation to Effect the Merger 31
SECTION 8.2 Conditions to Obligation of the Company to Effect the
Merger 32
SECTION 8.3 Conditions to Obligations of Parent and Subsidiary to
Effect the Merger 33
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. . . . . . . . . . . . . . . . . 34
SECTION 9.2 Effect of Termination. . . . . . . . . . . . 35
SECTION 9.3 Amendment. . . . . . . . . . . . . . . . . . 35
SECTION 9.4 Waiver . . . . . . . . . . . . . . . . . . . 36
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations and Warranties 36
SECTION 10.2 Notices . . . . . . . . . . . . . . . . . . 36
SECTION 10.3 Interpretation. . . . . . . . . . . . . . . 37
SECTION 10.4 Miscellaneous . . . . . . . . . . . . . . . 37
SECTION 10.5 Counterparts. . . . . . . . . . . . . . . . 37
SECTION 10.6 Parties in Interest . . . . . . . . . . . . 37
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of April 13, 1997
(this "Agreement"), is made and entered into by and among USA Waste
Services, Inc., a Delaware corporation ("Parent"), Riviera
Acquisition Corporation, a Delaware corporation and a wholly owned
subsidiary of Parent ("Subsidiary"), and United Waste Systems,
Inc., a Delaware corporation (the "Company");
W I T N E S S E T H:
WHEREAS, the Boards of Directors of Parent, Subsidiary and the
Company have approved the merger of Subsidiary with and into the
Company on the terms set forth in this Agreement (the "Merger");
and
WHEREAS, Parent, Subsidiary and the Company intend the Merger
to qualify as a tax-free reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code"), and the regulations thereunder.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time (as defined in
Section 1.2) in accordance with the General Corporation Law of the
State of Delaware (the "DGCL"), Subsidiary shall be merged with and
into the Company and the separate existence of Subsidiary shall
thereupon cease. The Company shall be the surviving corporation in
the Merger and is hereinafter sometimes referred to as the
"Surviving Corporation."
SECTION 1.2 Effective Time of the Merger. The Merger shall
become effective at such time (the "Effective Time") as shall be
stated in a certificate of merger, in a form mutually acceptable to
Parent and the Company, to be filed with the Secretary of State of
the State of Delaware in accordance with the DGCL (the "Merger
Filing"). The Merger Filing shall be made simultaneously with or as
soon as practicable after the closing of the transactions
contemplated by this Agreement in accordance with Section 3.5. The
parties acknowledge that it is their mutual desire and intent to
consummate the Merger as soon as practicable after the date hereof.
Accordingly, the parties shall, subject to the provisions hereof
and to the fiduciary duties of their respective boards of
directors, use all reasonable efforts to consummate, as soon as
practicable, the transactions contemplated by this Agreement in
accordance with Section 3.5.
ARTICLE II
THE SURVIVING AND PARENT CORPORATIONS
SECTION 2.1 Certificate of Incorporation. The Certificate of
Incorporation of the Company as in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the
Surviving Corporation after the Effective Time, and thereafter may
be amended in accordance with its terms and as provided in the DGCL
except that no amendment shall be made to, nor shall any provision
be included which is inconsistent with, Article IX or X of the
Certificate of Incorporation.
SECTION 2.2 By-Laws. The By-laws of the Company as in effect
immediately prior to the Effective Time shall be the By-laws of the
Surviving Corporation after the Effective Time and (subject to
Section 7.11 hereof) thereafter may be amended in accordance with
their terms and as provided by the Certificate of Incorporation of
the Surviving Corporation and the DGCL.
SECTION 2.3 Directors. The Board of Directors of Parent
shall take such action as may be necessary to cause two persons
designated by the Company and acceptable to Parent to be elected to
Parent's Board of Directors as of a mutually agreeable time after
the Effective Time. Each of such directors shall have a term of
office expiring at the annual meeting of stockholders of Parent
held in 1998. The directors of the Surviving Corporation shall be
as designated in Section 2.3 of the Parent Disclosure Schedule (as
defined in Article IV), and such directors shall serve in
accordance with the By-laws of the Surviving Corporation until
their respective successors are duly elected or appointed and
qualified.
SECTION 2.4 Officers. The officers of Subsidiary in office
immediately prior to the Effective Time shall be the officers of
the Surviving Corporation after the Effective Time, and such
officers shall serve in accordance with the By-laws of the
Surviving Corporation until their respective successors are duly
elected or appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion of Company Shares in the Merger. At
the Effective Time, by virtue of the Merger and without any action
on the part of any holder of any capital stock of Parent or the
Company:
(a) each share of the common stock, par value $.001 per
share, of the Company (the "Company Common Stock") shall,
subject to Sections 3.3 and 3.4, be converted into the right
to receive, without interest, 1.075 (the "Exchange Ratio")
shares of the common stock, par value $.01 per share, of
Parent ("Parent Common Stock");
(b) each share of capital stock of the Company, if any,
owned by Parent or any subsidiary of Parent or held in
treasury by the Company or any subsidiary of the Company
immediately prior to the Effective Time shall be canceled and
no consideration shall be paid in exchange therefor and shall
cease to exist from and after the Effective Time; and
(c) each unexpired warrant to purchase Company Common
Stock that is outstanding at the Effective Time, whether or
not exercisable, shall automatically and without any action on
the part of the holder thereof be converted into a warrant to
purchase a number of shares of Parent Common Stock equal to
the number of shares of Company Common Stock that could be
purchased under such warrant multiplied by the Exchange Ratio,
at a price per share of Parent Common Stock equal to the per
share exercise price of such warrant divided by the Exchange
Ratio.
SECTION 3.2 Conversion of Subsidiary Shares. At the
Effective Time, by virtue of the Merger and without any action on
the part of Parent as the sole stockholder of Subsidiary, each
issued and outstanding share of common stock, par value $.01 per
share, of Subsidiary ("Subsidiary Common Stock") shall be converted
into one share of common stock, par value $.001 per share, of the
Surviving Corporation.
SECTION 3.3 Exchange of Certificates. (a) From and after
the Effective Time, each holder of an outstanding certificate which
immediately prior to the Effective Time represented shares of
Company Common Stock shall be entitled to receive in exchange
therefor, upon surrender thereof to an exchange agent reasonably
satisfactory to Parent and the Company (the "Exchange Agent"), a
certificate or certificates representing the number of whole shares
of Parent Common Stock to which such holder is entitled pursuant to
Section 3.1(a). Notwithstanding any other provision of this
Agreement, (i) until holders or transferees of certificates
theretofore representing shares of Company Common Stock have
surrendered them for exchange as provided herein, no dividends or
other distributions shall be paid with respect to any shares
represented by such certificates and no payment for fractional
shares shall be made and (ii) without regard to when such
certificates representing shares of Company Common Stock are
surrendered for exchange as provided herein, no interest shall be
paid on any dividends or other distributions or any payment for
fractional shares. Upon surrender of a certificate which
immediately prior to the Effective Time represented shares of
Company Common Stock, there shall be paid to the holder of such
certificate the amount of any dividends or other distributions
which theretofore became payable, but which were not paid by reason
of the foregoing, with respect to the number of whole shares of
Parent Common Stock represented by the certificate or certificates
issued upon such surrender.
(b) If any certificate for shares of Parent Common Stock is
to be issued in a name other than that in which the certificate for
shares of Company Common Stock surrendered in exchange therefor is
registered, it shall be a condition of such exchange that the
person requesting such exchange shall pay any applicable transfer
or other taxes required by reason of such issuance.
(c) Promptly after the Effective Time, Parent shall make
available to the Exchange Agent the certificates representing
shares of Parent Common Stock required to effect the exchanges
referred to in paragraph (a) above and cash for payment of any
fractional shares referred to in Section 3.4.
(d) Promptly after the Effective Time, the Exchange Agent
shall mail to each holder of record of a certificate or
certificates that immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the
"Company Certificates") (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title
to the Company Certificates shall pass, only upon actual delivery
of the Company Certificates to the Exchange Agent) and (ii)
instructions for use in effecting the surrender of the Company
Certificates in exchange for certificates representing shares of
Parent Common Stock. Upon surrender of Company Certificates for
cancellation to the Exchange Agent, together with a duly executed
letter of transmittal and such other documents as the Exchange
Agent shall reasonably require, the holder of such Company
Certificates shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Parent
Common Stock into which the shares of Company Common Stock
theretofore represented by the Company Certificates so surrendered
shall have been converted pursuant to the provisions of Section
3.1(a), and the Company Certificates so surrendered shall be
canceled. Notwithstanding the foregoing, neither the Exchange Agent
nor any party hereto shall be liable to a holder of shares of
Company Common Stock for any shares of Parent Common Stock or
dividends or distributions thereon delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(e) Promptly following the date which is nine months after
the Effective Time, the Exchange Agent shall deliver to Parent all
cash, certificates (including any Parent Common Stock) and other
documents in its possession relating to the transactions described
in this Agreement, and the Exchange Agent's duties shall terminate.
Thereafter, each holder of a Company Certificate may surrender such
Company Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
exchange therefor the Parent Common Stock, without any interest
thereon. Notwithstanding the foregoing, none of the Exchange Agent,
Parent, Subsidiary, the Company or the Surviving Corporation shall
be liable to a holder of shares of Company Common Stock for any
shares of Parent Common Stock delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(f) In the event any Company Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that
fact by the person claiming such Company Certificate to be lost,
stolen or destroyed, the Surviving Corporation shall issue in
exchange for such lost, stolen or destroyed Company Certificate the
Parent Common Stock deliverable in respect thereof determined in
accordance with this Article III. When authorizing such issuance in
exchange therefor, the Board of Directors of the Surviving
Corporation may, in its discretion and as a condition precedent to
the issuance thereof, require the owner of such lost, stolen or
destroyed Company Certificate to give the Surviving Corporation
such indemnity as it may reasonably direct as protection against
any claim that may be made against the Surviving Corporation with
respect to the Company Certificate alleged to have been lost,
stolen or destroyed.
SECTION 3.4 No Fractional Securities. Notwithstanding any
other provision of this Agreement, no certificates or scrip for
fractional shares of Parent Common Stock shall be issued in the
Merger and no Parent Common Stock dividend, stock split or interest
shall relate to any fractional security, and such fractional
interests shall not entitle the owner thereof to vote or to any
other rights of a security holder. In lieu of any such fractional
shares, each holder of shares of Company Common Stock who would
otherwise have been entitled to receive a fraction of a share of
Parent Common Stock upon surrender of Company Certificates for
exchange pursuant to this Article III shall be entitled to receive
from the Exchange Agent a cash payment equal to such fraction
multiplied by the average closing price per share of Parent Common
Stock on the New York Stock Exchange Composite Tape, as reported by
the Wall Street Journal, during the 10 trading days immediately
preceding the Effective Time.
SECTION 3.5 Closing. The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at a
location mutually agreeable to Parent and the Company as promptly
as practicable (but in any event within five business days)
following the date on which the last of the conditions set forth in
Article VIII is fulfilled or waived, or at such other time and
place as Parent and the Company shall agree. The date on which the
Closing occurs is referred to in this Agreement as the "Closing
Date."
SECTION 3.6 Closing of the Company's Transfer Books. At and
after the Effective Time, holders of Company Certificates shall
cease to have any rights as stockholders of the Company, except for
the right to receive shares of Parent Common Stock pursuant to
Section 3.1 and the right to receive cash for payment of fractional
shares pursuant to Section 3.4. At the Effective Time, the stock
transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock which were outstanding immediately
prior to the Effective Time shall thereafter be made. If, after the
Effective Time, subject to the terms and conditions of this
Agreement, Company Certificates formerly representing shares of
Company Common Stock are presented to the Surviving Corporation,
they shall be canceled and exchanged for shares of Parent Common
Stock in accordance with this Article III.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUBSIDIARY
Parent and Subsidiary each represent and warrant to the
Company that, except as set forth in the Disclosure Schedule dated
as of the date hereof and signed by an authorized officer of Parent
(the "Parent Disclosure Schedule"), it being agreed that disclosure
of any item on the Parent Disclosure Schedule shall be deemed
disclosure with respect to all Sections of this Agreement if the
relevance of such item is reasonably apparent from the face of the
Parent Disclosure Schedule:
SECTION 4.1 Organization and Qualification. Each of Parent
and Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the state of its
incorporation and has the requisite power and authority to own,
lease and operate its assets and properties and to carry on its
business as it is now being conducted. Each of Parent and
Subsidiary is qualified to do business and is in good standing in
each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so
qualified and in good standing will not, when taken together with
all other such failures, have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other) or results of operations of Parent and its subsidiaries,
taken as a whole. True, accurate and complete copies of each of
Parent's and Subsidiary's charters and By-laws, in each case as in
effect on the date hereof, including all amendments thereto, have
heretofore been delivered to the Company.
SECTION 4.2 Capitalization. (a) As of April 11, 1997, the
authorized capital stock of Parent consisted of 300,000,000 shares
of Parent Common Stock and 10,000,000 shares of preferred stock,
par value $.01 per share ("Parent Preferred Stock"). As of
March 25, 1997, (i) 154,110,368 shares of Parent Common Stock were
issued and outstanding, all of which were validly issued and are
fully paid, nonassessable and free of preemptive rights, (ii) no
shares of Parent Preferred Stock were issued and outstanding, (iii)
23,485 shares of Parent Common Stock and no shares of Parent
Preferred Stock were held in the treasury of Parent, (iv)
18,620,205 shares of Parent Common Stock were reserved for issuance
pursuant to the exercise of outstanding options and warrants to
purchase Parent Common Stock and (v) 15,542,075 shares of Parent
Common Stock were reserved for issuance upon conversion of
outstanding convertible debentures and outstanding convertible
notes. Assuming the conversion of all outstanding convertible
debentures and outstanding convertible notes of Parent and the
exercise of all outstanding options and warrants to purchase Parent
Common Stock, as of March 25, 1997, there would be 188,272,648
shares of Parent Common Stock issued and outstanding. In addition,
as of March 25, 1997, no more than 47,817,778 shares of Parent
Common Stock were reserved and unissued pending conversion of
shares of acquired companies.
(b) The authorized capital stock of Subsidiary consists of
1,000 shares of Subsidiary Common Stock, of which 100 shares are
issued and outstanding, which shares are owned beneficially and of
record by Parent.
(c) Except as disclosed in the Parent SEC Reports (as defined
in Section 4.5) or in Section 4.2(a) or as otherwise contemplated
by this Agreement, as of the date hereof, there are no outstanding
subscriptions, options, calls, contracts, commitments,
understandings, restrictions, arrangements, rights or warrants,
including any right of conversion or exchange under any outstanding
security, instrument or other agreement and also including any
rights plan or other anti-takeover agreement, obligating Parent or
any subsidiary of Parent to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of the capital stock
of Parent or obligating Parent or any subsidiary of Parent to
grant, extend or enter into any such agreement or commitment.
Except as otherwise disclosed in the Parent SEC Reports, there are
no voting trusts, proxies or other agreements or understandings to
which Parent or any subsidiary of Parent is a party or is bound
with respect to the voting of any shares of capital stock of
Parent, other than voting agreements executed in connection with
this Agreement. The shares of Parent Common Stock issued to
stockholders of the Company in the Merger will be at the Effective
Time duly authorized, validly issued, fully paid and nonassessable
and free of preemptive rights.
SECTION 4.3 Subsidiaries. Each direct and indirect corporate
subsidiary of Parent is duly organized,validly existing and in good
standing under the laws of its jurisdiction of incorporation and
has the requisite power and authority to own, lease and operate its
assets and properties and to carry on its business as it is now
being conducted and each subsidiary of Parent is qualified to do
business, and is in good standing, in each jurisdiction in which
the properties owned, leased or operated by it or the nature of the
business conducted by it makes such qualification necessary; except
in all cases where the failure to be so qualified and in good
standing would not, when taken together with all such other
failures, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a
whole. All of the outstanding shares of capital stock of each
corporate subsidiary of Parent are validly issued, fully paid,
nonassessable and free of preemptive rights, and are owned directly
or indirectly by Parent, free and clear of any liens, claims or
encumbrances, except that such shares are pledged to secure
Parent's credit facilities. There are no subscriptions, options,
warrants, rights, calls, contracts, voting trusts, proxies or other
commitments, understandings, restrictions or arrangements relating
to the issuance, sale, voting, transfer, ownership or other rights
with respect to any shares of capital stock of any corporate
subsidiary of Parent, including any right of conversion or exchange
under any outstanding security, instrument or agreement. As used in
this Agreement, the term "subsidiary" shall mean, when used with
reference to any person or entity, any corporation, partnership,
joint venture or other entity of which such person or entity
(either acting alone or together with its other subsidiaries) owns,
directly or indirectly, 50% or more of the stock or other voting
interests, the holders of which are entitled to vote for the
election of a majority of the board of directors or any similar
governing body of such corporation, partnership, joint venture or
other entity.
SECTION 4.4 Authority; Non-Contravention; Approvals. (a)
Parent and Subsidiary each have full corporate power and authority
to enter into this Agreement and, subject to the Parent
Stockholders' Approval (as defined in Section 7.3(b)) and the
Parent Required Statutory Approvals (as defined in Section 4.4(c)),
to consummate the transactions contemplated hereby. This Agreement
has been approved by the Boards of Directors of Parent and
Subsidiary and the sole stockholder of Subsidiary, and no other
corporate proceedings on the part of Parent or Subsidiary are
necessary to authorize the execution and delivery of this Agreement
or, except for the Parent Stockholders' Approval, the consummation
by Parent and Subsidiary of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each of
Parent and Subsidiary, and, assuming the due authorization,
execution and delivery hereof by the Company, constitutes a valid
and legally binding agreement of each of Parent and Subsidiary
enforceable against each of them in accordance with its terms,
except that such enforcement may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting or relating to enforcement of creditors' rights generally
and (ii) general equitable principles. Without limitation of the
foregoing, each of the covenants and obligations of Parent set
forth in Sections 6.2, 6.5(d), 7.1, 7.2, 7.3(b), 7.6, 7.7, 7.8,
7.10 and 7.12 is valid, legally binding and enforceable (subject as
aforesaid) notwithstanding the absence of the Parent Stockholders'
Approval.
(b) The execution and delivery of this Agreement by each of
Parent and Subsidiary do not violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a
default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security
interest, charge or encumbrance upon any of the properties or
assets of Parent or any of its subsidiaries under any of the terms,
conditions or provisions of (i) the respective charters or by-laws
of Parent or any of its subsidiaries, (ii) any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority
applicable to Parent or any of its subsidiaries or any of their
respective properties or assets or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any
kind to which Parent or any of its subsidiaries is now a party or
by which Parent or any of its subsidiaries or any of their
respective properties or assets may be bound or affected. The
consummation by Parent and Subsidiary of the transactions
contemplated hereby will not result in any violation, conflict,
breach, termination, acceleration or creation of liens under any of
the terms, conditions or provisions described in clauses (i)
through (iii) of the preceding sentence, subject (x) in the case of
the terms, conditions or provisions described in clause (ii) above,
to obtaining (prior to the Effective Time) the Parent Required
Statutory Approvals and the Parent Stockholder's Approval and (y)
in the case of the terms, conditions or provisions described in
clause (iii) above, to obtaining (prior to the Effective Time)
consents required from commercial lenders, lessors or other third
parties as specified in Section 4.4(b) of the Parent Disclosure
Schedule. Excluded from the foregoing sentences of this paragraph
(b), insofar as they apply to the terms, conditions or provisions
described in clauses (ii) and (iii) of the first sentence of this
paragraph (b) (and whether resulting from such execution and
delivery or consummation), are such violations, conflicts,
breaches, defaults, terminations, accelerations or creations of
liens, security interests, charges or encumbrances that would not,
in the aggregate, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a
whole.
(c) Except for (i) the filings by Parent required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (ii) the filing of the Registration Statement and
Joint Proxy Statement/ Prospectus (as such terms are defined in
Section 4.9) with the Securities and Exchange Commission (the
"SEC") pursuant to the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the Securities Act of 1933, as amended
(the "Securities Act"), and the declaration of the effectiveness
thereof by the SEC and filings with various state blue sky
authorities, (iii) the making of the Merger Filing with the
Secretary of State of the State of Delaware in connection with the
Merger, and (iv) any required filings with or approvals from the
New York Stock Exchange, applicable state environmental
authorities, public service commissions and public utility
commissions (the filings and approvals referred to in clauses (i)
through (iv) are collectively referred to as the "Parent Required
Statutory Approvals"), no declaration, filing or registration with,
or notice to, or authorization, consent or approval of, any
governmental or regulatory body or authority is necessary for the
execution and delivery of this Agreement by Parent or Subsidiary or
the consummation by Parent or Subsidiary of the transactions
contemplated hereby, other than such declarations, filings,
registrations, notices, authorizations, consents or approvals
which, if not made or obtained, as the case may be, would not, in
the aggregate, have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a
whole.
SECTION 4.5 Reports and Financial Statements. Since January
1, 1994, Parent has filed with the SEC all forms, statements,
reports and documents (including all exhibits, post-effective
amendments and supplements thereto) required to be filed by it
under each of the Securities Act, the Exchange Act and the
respective rules and regulations thereunder, all of which, as
amended if applicable, complied when filed in all material respects
with all applicable requirements of the appropriate act and the
rules and regulations thereunder. Parent has previously delivered
or made available to the Company copies (including all exhibits,
post-effective amendments and supplements thereto) of its (a)
Annual Reports on Form 10-K for the fiscal year ended December 31,
1996 and for the immediately preceding fiscal year, as filed with
the SEC, (b) proxy and information statements relating to (i) all
meetings of its stockholders (whether annual or special) and (ii)
actions by written consent in lieu of a stockholders' meeting from
January 1, 1995, until the date hereof, and (c) all other reports,
including quarterly reports, and registration statements filed by
Parent with the SEC since January 1, 1995 (other than registration
statements filed on Form S-8) (the documents referred to in clauses
(a), (b) and (c) filed prior to the date hereof are collectively
referred to as the "Parent SEC Reports"). As of their respective
dates, the Parent SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The audited consolidated financial statements of Parent
included in the Parent's Annual Report on Form 10-K for the year
ended December 31, 1996 (collectively, the "Parent Financial
Statements") have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis
(except as may be indicated therein or in the notes thereto) and
fairly present the financial position of Parent and its
subsidiaries as of the dates thereof and the results of their
operations and changes in financial position for the periods then
ended.
SECTION 4.6 Absence of Undisclosed Liabilities. Except as
disclosed in the Parent SEC Reports or as heretofore disclosed to
the Company in writing with respect to acquisitions or potential
transactions or commitments, neither Parent nor any of its
subsidiaries had at December 31, 1996, or has incurred since that
date and as of the date hereof, any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature,
except: (a) liabilities, obligations or contingencies (i) which are
accrued or reserved against in the Parent Financial Statements or
reflected in the notes thereto or (ii) which were incurred after
December 31, 1996, and were incurred in the ordinary course of
business and consistent with past practices; (b) liabilities,
obligations or contingencies which (i) would not, in the aggregate,
have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole, or
(ii) have been discharged or paid in full prior to the date hereof;
and (c) liabilities and obligations which are of a nature not
required to be reflected in the consolidated financial statements
of Parent and its subsidiaries prepared in accordance with
generally accepted accounting principles consistently applied and
which were incurred in the ordinary course of business.
SECTION 4.7 Absence of Certain Changes or Events. Since the
date of the most recent Parent SEC Report that contains
consolidated financial statements of Parent, there has not been any
material adverse change in the business, operations, properties,
assets, liabilities, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole, except
for changes that affect the industries in which Parent and its
subsidiaries operate generally.
SECTION 4.8 Litigation. Except as disclosed in the Parent
SEC Reports, there are no claims, suits, actions or proceedings
pending or, to the knowledge of Parent, threatened against,
relating to or affecting Parent or any of its subsidiaries, before
any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seek to
restrain or enjoin the consummation of the Merger or which would
reasonably be expected, either alone or in the aggregate with all
such claims, actions or proceedings, to materially and adversely
affect the business, operations, properties, assets, condition
(financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole. Except as set forth in the Parent
SEC Reports, neither Parent nor any of its subsidiaries is subject
to any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or
authority or any arbitrator which prohibits or restricts the
consummation of the transactions contemplated hereby or would have
any material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole.
SECTION 4.9 Registration Statement and Proxy Statement. None
of the information to be supplied by Parent or its subsidiaries for
inclusion in (a) the Registration Statement on Form S-4 to be filed
under the Securities Act with the SEC by Parent in connection with
the Merger for the purpose of registering the shares of Parent
Common Stock to be issued in the Merger (the "Registration
Statement") or (b) the proxy statement to be distributed in
connection with the Company's and Parent's meetings of their
respective stockholders to vote upon this Agreement and the
transactions contemplated hereby (the "Proxy Statement" and,
together with the prospectus included in the Registration
Statement, the "Joint Proxy Statement/Prospectus") will, in the
case of the Proxy Statement or any amendments thereof or
supplements thereto, at the time of the mailing of the Proxy
Statement and any amendments or supplements thereto, and at the
time of the meetings of stockholders of the Company and Parent to
be held in connection with the transactions contemplated by this
Agreement, or, in the case of the Registration Statement, as
amended or supplemented, at the time it becomes effective and at
the time of such meetings of the stockholders of the Company and
Parent, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The Joint
Proxy Statement/ Prospectus will, as of its mailing date, comply as
to form in all material respects with all applicable laws,
including the provisions of the Securities Act and the Exchange Act
and the rules and regulations promulgated thereunder, except that
no representation is made by Parent or Subsidiary with respect to
information supplied by the Company or the stockholders of the
Company for inclusion therein.
SECTION 4.10 No Violation of Law. Except as disclosed in the
Parent SEC Reports, neither Parent nor any of its subsidiaries is
in violation of, or has been given notice or been charged with any
violation of, any law, statute, order, rule, regulation, ordinance,
or judgment (including, without limitation, any applicable
environmental law, ordinance or regulation) of any governmental or
regulatory body or authority, except for violations which, in the
aggregate, could not reasonably be expected to have a material
adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent
and its subsidiaries, taken as a whole. Except as disclosed in the
Parent SEC Reports, as of the date of this Agreement, to the
knowledge of Parent, no investigation or review by any governmental
or regulatory body or authority is pending or threatened, nor has
any governmental or regulatory body or authority indicated an
intention to conduct the same, other than, in each case, those the
outcome of which, as far as reasonably can be foreseen, will not
have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole. Parent
and its subsidiaries have all permits, licenses, franchises,
variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct their
businesses as presently conducted (collectively, the "Parent
Permits"), except for permits, licenses, franchises, variances,
exemptions, orders, authorizations, consents and approvals the
absence of which, alone or in the aggregate, would not have a
material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of
Parent and its subsidiaries, taken as a whole. Parent and its
subsidiaries are not in violation of the terms of any Parent
Permit, except for delays in filing reports or violations which,
alone or in the aggregate, would not have a material adverse effect
on the business, operations, properties, assets, condition
(financial or other) or results of operations of Parent and its
subsidiaries, taken as a whole.
SECTION 4.11 Compliance with Agreements. Except as disclosed
in the Parent SEC Reports, Parent and each of its subsidiaries are
not in breach or violation of or in default in the performance or
observance of any term or provision of, and no event has occurred
which, with lapse of time or action by a third party, could result
in a default under (a) the respective charter, by-laws or other
similar organizational instruments of Parent or any of its
subsidiaries or (b) any contract, commitment, agreement, indenture,
mortgage, loan agreement, note, lease, bond, license, approval or
other instrument to which Parent or any of its subsidiaries is a
party or by which any of them is bound or to which any of their
property is subject, other than, in the case of clause (b) of this
Section 4.11, breaches, violations and defaults which would not
have, in the aggregate, a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a
whole.
SECTION 4.12 Taxes. (a) Parent and its subsidiaries have
(i) duly filed with the appropriate governmental authorities all
Tax Returns (as defined in Section 4.12(c)) required to be filed by
them for all periods ending on or prior to the Effective Time,
other than those Tax Returns the failure of which to file would not
have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole, and
such Tax Returns are true, correct and complete in all material
respects and (ii) duly paid in full or made adequate provision in
accordance with generally accepted accounting principles for the
payment of all Taxes (as defined in Section 4.12(b)) for all past
and current periods. The liabilities and reserves for Taxes
reflected in the Parent balance sheet included in the latest Parent
SEC Report to cover all Taxes for all periods ending at or prior to
the date of such balance sheet have been determined in accordance
with generally accepted accounting principles and there is no
material liability for Taxes for any period beginning after such
date other than Taxes arising in the ordinary course of business.
There are no material liens for Taxes upon any property or assets
of Parent or any subsidiary thereof, except for liens for Taxes not
yet due or Taxes contested in good faith and adequately reserved
against in accordance with generally accepted accounting
principles. There are no unresolved issues of law or fact arising
out of a notice of deficiency, proposed deficiency or assessment
from the Internal Revenue Service (the "IRS") or any other
governmental taxing authority with respect to Taxes of the Parent
or any of its subsidiaries which, singly or in the aggregate, would
reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other) or results of operations of Parent and its subsidiaries,
taken as a whole. Neither Parent nor its subsidiaries has waived
any statute of limitations in respect of a material amount of Taxes
or agreed to any extension of time with respect to a material Tax
assessment or deficiency other than waivers and extensions which
are no longer in effect. Neither Parent nor any of its subsidiaries
is a party to any agreement providing for the allocation or sharing
of Taxes with any entity that is not, directly or indirectly, a
wholly-owned corporate subsidiary of Parent other than agreements
the consequences of which are fully and adequately reserved for in
the Parent Financial Statements. Neither Parent nor any of its
corporate subsidiaries has, with regard to any assets or property
held, acquired or to be acquired by any of them, filed a consent to
the application of Section 341(f) of the Code.
(b) For purposes of this Agreement, the term "Taxes" shall
mean all taxes, including, without limitation, income, gross
receipts, excise, property, sales, withholding, social security,
occupation, use, service, license, payroll, franchise, transfer and
recording taxes, fees and charges, windfall profits, severance,
customs, import, export, employment or similar taxes, charges,
fees, levies or other assessments imposed by the United States, or
any state, local or foreign government or subdivision or agency
thereof, whether computed on a separate, consolidated, unitary,
combined or any other basis, and such term shall include any
interest, fines, penalties or additional amounts and any interest
in respect of any additions, fines or penalties attributable or
imposed or with respect to any such taxes, charges, fees, levies or
other assessments.
(c) For purposes of this Agreement, the term "Tax Return"
shall mean any return, report or other document required to be
supplied to a taxing authority in connection with Taxes.
SECTION 4.13 Employee Benefit Plans; ERISA. (a) Except as
disclosed in the Parent SEC Reports, at the date hereof, Parent and
its subsidiaries do not maintain or contribute to or have any
obligation or liability to or with respect to any material employee
benefit plans, programs, arrangements or practices, including
employee benefit plans within the meaning set forth in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or other similar material arrangements for the provision
of benefits (excluding any "Multi-employer Plan" within the meaning
of Section 3(37) of ERISA or a "Multiple Employer Plan" within the
meaning of Section 413(c) of the Code) (such plans, programs,
arrangements or practices of Parent and its subsidiaries being
referred to as the "Parent Plans"). The Parent Disclosure Schedule
lists all Multi-employer Plans to which any of them makes
contributions or has any obligation or liability to make material
contributions. Neither Parent nor any of its subsidiaries maintains
or has any material liability with respect to any Multiple Employer
Plan. Neither Parent nor any of its subsidiaries has any obligation
to create or contribute to any additional such plan, program,
arrangement or practice or to amend any such plan, program,
arrangement or practice so as to increase benefits or contributions
thereunder, except as required under the terms of the Parent Plans,
under existing collective bargaining agreements or to comply with
applicable law.
(b) Except as disclosed in the Parent SEC Reports, (i) there
have been no prohibited transactions within the meaning of Section
406 or 407 of ERISA or Section 4975 of the Code with respect to any
of the Parent Plans that could result in penalties, taxes or
liabilities which, singly or in the aggregate, could have a
material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of
Parent and its subsidiaries, taken as a whole, (ii) except for
premiums due, there is no outstanding material liability, whether
measured alone or in the aggregate, under Title IV of ERISA with
respect to any of the Parent Plans, (iii) neither the Pension
Benefit Guaranty Corporation nor any plan administrator has
instituted proceedings to terminate any of the Parent Plans subject
to Title IV of ERISA other than in a "standard termination"
described in Section 4041(b) of ERISA, (iv) none of the Parent
Plans has incurred any "accumulated funding deficiency" (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or
not waived, as of the last day of the most recent fiscal year of
each of the Parent Plans ended prior to the date of this Agreement,
(v) the current present value of all projected benefit obligations
under each of the Parent Plans which is subject to Title IV of
ERISA did not, as of its latest valuation date, exceed the then
current value of the assets of such plan allocable to such benefit
liabilities by more than the amount, if any, disclosed in the
Parent SEC Reports as of December 31, 1996, based upon reasonable
actuarial assumptions currently utilized for such Parent Plan, (vi)
each of the Parent Plans has been operated and administered in
accordance with applicable laws during the period of time covered
by the applicable statute of limitations, except for failures to
comply which, singly or in the aggregate, would not reasonably be
expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or other) or
results of operations of Parent and its subsidiaries, taken as a
whole, (vii) each of the Parent Plans which is intended to be
"qualified" within the meaning of Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified
and such determination has not been modified, revoked or limited by
failure to satisfy any condition thereof or by a subsequent
amendment thereto or a failure to amend, except that it may be
necessary to make additional amendments retroactively to maintain
the "qualified" status of such Parent Plans, and the period for
making any such necessary retroactive amendments has not expired,
(viii) with respect to Multi-employer Plans, neither Parent nor any
of its subsidiaries has made or suffered a "complete withdrawal" or
a "partial withdrawal ," as such terms are respectively defined in
Sections 4203, 4204 and 4205 of ERISA and, to the best knowledge of
Parent and its subsidiaries, no event has occurred or is expected
to occur which presents a material risk of a complete or partial
withdrawal under said Sections 4203, 4204 and 4205, (ix) to the
best knowledge of Parent and its subsidiaries, there are no
material pending, threatened or anticipated claims involving any of
the Parent Plans other than claims for benefits in the ordinary
course, (x) Parent and its subsidiaries have no current material
liability under Title IV of ERISA, and Parent and its subsidiaries
do not reasonably anticipate that any such liability will be
asserted against Parent or any of its subsidiaries, and (xi) no
act, omission or transaction (individually or in the aggregate) has
occurred with respect to any Parent Plan that has resulted or could
result in any material liability (direct or indirect) of Parent or
any subsidiary under Sections 409 or 502(c)(i) or (l) of ERISA or
Chapter 43 of Subtitle (A) of the Code. None of the Parent
Controlled Group Plans has an "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code) or is
required to provide security to a Parent Plan pursuant to Section
401(a)(29) of the Code.
(c) The Parent SEC Reports contain a true and complete
summary or list of or otherwise describe all material employment
contracts and other employee benefit arrangements with "change of
control" or similar provisions and all severance agreements with
executive officers.
SECTION 4.14 Labor Controversies. Except as disclosed in the
Parent SEC Reports, as of the date hereof (a) there are no
significant controversies pending or, to the knowledge of Parent,
threatened between Parent or its subsidiaries and any
representatives of any of their employees and (b) to the knowledge
of Parent, there are no material organizational efforts presently
being made involving any of the presently unorganized employees of
Parent and its subsidiaries except for such controversies and
organizational efforts which, singly or in the aggregate, could not
reasonably be expected to materially and adversely affect the
business, operations, properties, assets, condition (financial or
other) or results of operations of Parent and its subsidiaries,
taken as a whole.
SECTION 4.15 Environmental Matters. (a) Except as disclosed
in the Parent SEC Reports, (i) Parent and its subsidiaries have
conducted their respective businesses in compliance with all
applicable Environmental Laws (defined in Section 4.15(b)),
including, without limitation, having all permits, licenses and
other approvals and authorizations necessary for the operation of
their respective businesses as presently conducted, (ii) none of
the properties owned by Parent or any of its subsidiaries contain
any Hazardous Substance (defined in Section 4.15(c)) as a result of
any activity of Parent or any of its subsidiaries in amounts
exceeding the levels permitted by applicable Environmental Laws,
(iii) since January 1, 1994, neither Parent nor any of its
subsidiaries has received any notices, demand letters or requests
for information from any Federal, state, local or foreign
governmental entity indicating that Parent or any of its
subsidiaries may be in violation of, or liable under, any
Environmental Law in connection with the ownership or operation of
their businesses, (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or threatened, against Parent
or any of its subsidiaries relating to any violation, or alleged
violation, of any Environmental Law, (v) no Hazardous Substance has
been disposed of, released or transported in violation of any
applicable Environmental Law from any properties owned by Parent or
any of its subsidiaries as a result of any activity of Parent or
any of its subsidiaries during the time such properties were owned,
leased or operated by Parent or any of its subsidiaries, and (vi)
neither Parent, its subsidiaries nor any of their respective
properties are subject to any liabilities or expenditures (fixed or
contingent) relating to any suit, settlement, court order,
administrative order, regulatory requirement, judgment or claim
asserted or arising under any Environmental Law, except for
violations of the foregoing clauses (i) through (vi) that, singly
or in the aggregate, would not reasonably be expected to have a
material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of
Parent and its subsidiaries, taken as a whole.
(b) As used herein, "Environmental Law" means any Federal,
state, local or foreign law, statute, ordinance, rule, regulation,
code, license, permit, authorization, approval, consent, legal
doctrine, order, judgment, decree, injunction, requirement or
agreement with any governmental entity relating to (x) the
protection, preservation or restoration of the environment
(including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land,
plant and animal life or any other natural resource) or to human
health or safety or (y) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing,
handling, labeling, production, release or disposal of Hazardous
Substances, in each case as amended and as in effect on the Closing
Date. The term "Environmental Law" includes, without limitation,
(i) the Federal Comprehensive Environmental Response Compensation
and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act, the Federal Water Pollution Control Act of
1972, the Federal Clean Air Act, the Federal Clean Water Act, the
Federal Resource Conservation and Recovery Act of 1976 (including
the Hazardous and Solid Waste Amendments thereto), the Federal
Solid Waste Disposal Act and the Federal Toxic Substances Control
Act, the Federal Insecticide, Fungicide and Rodenticide Act, and
the Federal Occupational Safety and Health Act of 1970, each as
amended and as in effect on the Closing Date, and (ii) any common
law or equitable doctrine (including, without limitation,
injunctive relief and tort doctrines such as negligence, nuisance,
trespass and strict liability) that may impose liability or
obligations for injuries or damages due to, or threatened as a
result of, the presence of, effects of or exposure to any Hazardous
Substance.
(c) As used herein, "Hazardous Substance" means any substance
presently or hereafter listed, defined, designated or classified as
hazardous, toxic, radioactive, or dangerous, or otherwise
regulated, under any Environmental Law. Hazardous Substance
includes any substance to which exposure is regulated by any
government authority or any Environmental Law including, without
limitation, any toxic waste, pollutant, contaminant, hazardous
substance, toxic substance, hazardous waste, special waste,
industrial substance or petroleum or any derivative or by-product
thereof, radon, radioactive material, asbestos, or asbestos
containing material, urea formaldehyde foam insulation, lead or
polychlorinated biphenyls.
SECTION 4.16 Non-competition Agreements. Neither Parent nor
any subsidiary of Parent is a party to any agreement which
(i) purports to restrict or prohibit in any material respect any of
them from, directly or indirectly, engaging in any business
involving the collection, interim storage, transfer, recovery,
processing, recycling, marketing or disposal of rubbish, garbage,
paper, textile wastes, chemical or hazardous wastes, liquid and
other wastes or any other material business currently engaged in by
Parent or the Company, or any corporations affiliated with either
of them and (ii) would restrict or prohibit the Company or any
subsidiary of the Company (other than the Company and its
subsidiaries that are currently so restricted or prohibited) from
engaging in any such business. None of Parent's officers, directors
or key employees is a party to any agreement which, by virtue of
such person's relationship with Parent, restricts in any material
respect Parent or any subsidiary of Parent from, directly or
indirectly, engaging in any of the businesses described above.
SECTION 4.17 Title to Assets. Parent and each of its
subsidiaries has good and marketable title in fee simple to all its
real property and good title to all its leasehold interests and
other properties as reflected in the most recent balance sheet
included in the Parent Financial Statements, except for such
properties and assets that have been disposed of in the ordinary
course of business since the date of such balance sheet, free and
clear of all mortgages, liens, pledges, charges or encumbrances of
any nature whatsoever, except (i) the lien for current taxes,
payments of which are not yet delinquent, (ii) such imperfections
in title and easements and encumbrances, if any, as are not
substantial in character, amount or extent and do not materially
detract from the value or interfere with the present use of the
property subject thereto or affected thereby, or otherwise
materially impair the Parent's business operations (in the manner
presently carried on by the Parent), or (iii) as disclosed in the
Parent SEC Reports, and except for such matters which, singly or in
the aggregate, could not reasonably be expected to materially and
adversely affect the business, operations, properties, assets,
condition (financial or other) or results of operations of Parent
and its subsidiaries, taken as a whole. All leases under which
Parent leases any real or personal property are in good standing,
valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing default or
event which with notice or lapse of time or both would become a
default other than failures to be in good standing, valid and
effective and defaults under such leases which in the aggregate
will not materially and adversely affect the business, operations,
properties, assets, condition (financial or other) or results of
operations of Parent and its subsidiaries, taken as a whole.
SECTION 4.18 Reorganization and Pooling of Interests. None
of the Parent, Subsidiary or, to their knowledge, any of their
affiliates has taken or agreed or intends to take any action or has
any knowledge of any fact or circumstance that would prevent the
Merger from (a) constituting a reorganization within the meaning of
Section 368(a) of the Code or (b) being treated for financial
accounting purposes as a "pooling of interests" in accordance with
generally accepted accounting principles and the rules, regulations
and interpretations of the SEC (a "Pooling Transaction"). As of
the date hereof, other than directors and officers of Parent, to
the knowledge of Parent, there are no "affiliates" of Parent, as
that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act.
SECTION 4.19 Parent Stockholders' Approval. The affirmative
vote of stockholders of Parent required for approval and adoption
of this Agreement and the Merger is a majority of the shares of
Parent Common Stock present in person or by proxy at a meeting of
such stockholders and entitled to vote thereat.
SECTION 4.20 Brokers and Finders. Except for the fees and
expenses payable to Donaldson, Lufkin & Jenrette Securities
Corporation, which fees are reflected in its agreement with Parent,
Parent has not entered into any contract, arrangement or
understanding with any person or firm which may result in the
obligation of Parent to pay any finder's fees, brokerage or agent
commissions or other like payments in connection with the
transactions contemplated hereby. Except for the fees and expenses
paid or payable to Donaldson, Lufkin & Jenrette Securities
Corporation, there is no claim for payment by Parent of any
investment banking fees, finder's fees, brokerage or agent
commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 4.21 Opinion of Financial Advisor. The financial
advisor of Parent, Donaldson, Lufkin & Jenrette Securities
Corporation, has rendered an opinion to the Board of Directors of
Parent to the effect that the Exchange Ratio is fair from a
financial point of view to Parent; it being understood and
acknowledged by the Company that such opinion has been rendered for
the benefit of the Board of Directors of Parent and is not intended
to, and may not, be relied upon by the Company, its affiliates or
their respective subsidiaries.
SECTION 4.22 Ownership of Company Common Stock. Neither
Parent nor any of its subsidiaries beneficially owns any shares of
Company Common Stock as of the date hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Subsidiary
that, except as set forth in the disclosure schedule dated as of
the date hereof and signed by an authorized officer of the Company
(the "Company Disclosure Schedule"), it being agreed that
disclosure of any item on the Company Disclosure Schedule shall be
deemed disclosure with respect to all Sections of this Agreement if
the relevance of such item is reasonably apparent from the face of
the Company Disclosure Schedule:
SECTION 5.1 Organization and Qualification. The Company is
a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite
corporate power and authority to own, lease and operate its assets
and properties and to carry on its business as it is now being
conducted. The Company is qualified to do business and is in good
standing in each jurisdiction in which the properties owned, leased
or operated by it or the nature of the business conducted by it
makes such qualification necessary, except where the failure to be
so qualified and in good standing will not, when taken together
with all other such failures, have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other) or results of operations of the Company and its
subsidiaries, taken as a whole. True, accurate and complete copies
of the Company's Certificate of Incorporation and By-laws, in each
case as in effect on the date hereof, including all amendments
thereto, have heretofore been delivered to Parent.
SECTION 5.2 Capitalization. (a) The authorized capital
stock of the Company consists of 75,000,000 shares of Company
Common Stock and 5,000,000 shares of preferred stock, par value
$.001 per share ("Company Preferred Stock"). As of March 31, 1997,
(i) 43,029,321 shares of Company Common Stock were issued and
outstanding, all of which were validly issued and are fully paid,
nonassessable and free of preemptive rights, and no shares of
Company Preferred Stock were issued and outstanding, (ii) no shares
of Company Common Stock and no shares of Company Preferred Stock
were held in the treasury of the Company, (iii) 3,673,898 shares of
Company Common Stock were reserved for issuance upon exercise of
options issued and outstanding pursuant to the Company's 1992 Stock
Option Plan, as amended, the Company's 1992 Disinterested Director
Stock Option Plan and other stock option plans of the Company, (iv)
4,615,385 shares of Company Common Stock were reserved for issuance
upon conversion of outstanding convertible debentures of the
Company, and (v) 1,607,334 shares of Company Common Stock were
reserved for issuance upon exercise of outstanding warrants.
Assuming conversion of all outstanding convertible debentures of
the Company and the exercise of all outstanding options, warrants
or rights to purchase Company Common Stock, as of March 31, 1997,
there would be 52,925,938 shares of Company Common Stock issued and
outstanding.
(b) Except as disclosed in the Company SEC Reports (as
defined in Section 5.5) or in Section 5.2(a), as of the date hereof
there were no outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement and also
including any rights plan or other anti-takeover agreement,
obligating the Company or any subsidiary of the Company to issue,
deliver or sell, or cause to be issued, delivered or sold,
additional shares of the capital stock of the Company or obligating
the Company or any subsidiary of the Company to grant, extend or
enter into any such agreement or commitment. Except as disclosed
in the Company SEC Reports, there are no voting trusts, proxies or
other agreements or understandings to which the Company or any
subsidiary of the Company is a party or is bound with respect to
the voting of any shares of capital stock of the Company, other
than voting agreements executed in connection with this Agreement.
SECTION 5.3 Subsidiaries. Each direct and indirect corporate
subsidiary of the Company is duly organized, validly existing and
in good standing under the laws of its jurisdiction of
incorporation and has the requisite power and authority to own,
lease and operate its assets and properties and to carry on its
business as it is now being conducted and each subsidiary of the
Company is qualified to do business, and is in good standing, in
each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such
qualification necessary; except in all cases where the failure to
be so qualified and in good standing will not, when taken together
with all such other failures, have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other) or results of operations of the Company and its
subsidiaries, taken as a whole. All of the outstanding shares of
capital stock of each corporate subsidiary of the Company are
validly issued, fully paid, nonassessable and free of preemptive
rights and are owned directly or indirectly by the Company free and
clear of any liens, claims, encumbrances, security interests,
equities, charges and options of any nature whatsoever. There are
no subscriptions, options, warrants, rights, calls, contracts,
voting trusts, proxies or other commitments, understandings,
restrictions or arrangements relating to the issuance, sale,
voting, transfer, ownership or other rights with respect to any
shares of capital stock of any corporate subsidiary of the Company,
including any right of conversion or exchange under any outstanding
security, instrument or agreement.
SECTION 5.4 Authority; Non-Contravention; Approvals. (a)
The Company has full corporate power and authority to enter into
this Agreement and, subject to the Company Stockholders' Approval
(as defined in Section 7.3(a)) and the Company Required Statutory
Approvals (as defined in Section 5.4(c)), to consummate the
transactions contemplated hereby. The Board of Directors of the
Company has at a meeting duly called and held and at which a quorum
was present and acting throughout, by the requisite affirmative
vote of the directors of the Company, (i) determined that the
Merger is in the best interests of the Company and its stockholders
and (ii) approved this Agreement and the Merger. No other
corporate proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement or, except
for the Company Stockholders' Approval, the consummation by the
Company of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Company, and, assuming the
due authorization, execution and delivery hereof by Parent and
Subsidiary, constitutes a valid and legally binding agreement of
the Company, enforceable against the Company in accordance with its
terms, except that such enforcement may be subject to (a)
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting or relating to enforcement of creditors' rights
generally and (b) general equitable principles. Without limitation
of the foregoing, each of the covenants and obligations of the
Company set forth in Sections 6.1, 6.5(a), (b) and (c), 7.1, 7.2,
7.3(a), 7.6, 7.7, 7.8, 7.10 and 7.12 is valid, legally binding and
enforceable (subject as aforesaid) notwithstanding the absence of
the Company Stockholders' Approval.
(b) The execution and delivery of this Agreement by the
Company do not violate, conflict with or result in a breach of any
provision of, or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance
required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the
Company or any of its subsidiaries under any of the terms,
conditions or provisions of (i) the respective charters or by-laws
of the Company or any of its subsidiaries, (ii) any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction,
writ, permit or license of any court or governmental authority
applicable to the Company or any of its subsidiaries or any of
their respective properties or assets, or (iii) any note, bond,
mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument, obligation or
agreement of any kind to which the Company or any of its
subsidiaries is now a party or by which the Company or any of its
subsidiaries or any of their respective properties or assets may be
bound or affected. The consummation by the Company of the
transactions contemplated hereby will not result in any violation,
conflict, breach, termination, acceleration or creation of liens
under any of the terms, conditions or provisions described in
clauses (i) through (iii) of the preceding sentence, subject (x) in
the case of the terms, conditions or provisions described in clause
(ii) above, to obtaining (prior to the Effective Time) the Company
Required Statutory Approvals and the Company Stockholders' Approval
and (y) in the case of the terms, conditions or provisions
described in clause (iii) above, to obtaining (prior to the
Effective Time) consents required from commercial lenders, lessors
or other third parties as specified in Section 5.4(b) of the
Company Disclosure Schedule. Excluded from the foregoing sentences
of this paragraph (b), insofar as they apply to the terms,
conditions or provisions described in clauses (ii) and (iii) of the
first sentence of this paragraph (b) (and whether resulting from
such execution and delivery or consummation), are such violations,
conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances
that would not, in the aggregate, have a material adverse effect on
the business, operations, properties, assets, condition (financial
or other) or results of operations of the Company and its
subsidiaries, taken as a whole.
(c) Except for (i) the filings by the Company required by the
HSR Act, (ii) the filing of the Joint Proxy Statement/Prospectus
with the SEC pursuant to the Exchange Act, (iii) the making of the
Merger Filing with the Secretary of State of the State of Delaware
in connection with the Merger and (iv) any required filings with or
approvals from applicable state environmental authorities, public
service commissions and public utility commissions (the filings and
approvals referred to in clauses (i) through (iv) are collectively
referred to as the "Company Required Statutory Approvals"), no
declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any governmental or
regulatory body or authority is necessary for the execution and
delivery of this Agreement by the Company or the consummation by
the Company of the transactions contemplated hereby, other than
such declarations, filings, registrations, notices, authorizations,
consents or approvals which, if not made or obtained, as the case
may be, would not, in the aggregate, have a material adverse effect
on the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and
its subsidiaries, taken as a whole.
SECTION 5.5 Reports and Financial Statements. Since January
1, 1994, the Company has filed with the SEC all material forms,
statements, reports and documents (including all exhibits,
post-effective amendments and supplements thereto) required to be
filed by it under each of the Securities Act, the Exchange Act and
the respective rules and regulations thereunder, all of which, as
amended if applicable, complied when filed in all material respects
with all applicable requirements of the appropriate act and the
rules and regulations thereunder. The Company has previously
delivered or made available to Parent copies (including all
exhibits, post-effective amendments and supplements thereto) of its
(a) Annual Reports on Form 10-K for the year ended December 31,
1996, and for the immediately preceding fiscal year, as filed with
the SEC, (b) proxy and information statements relating to (i) all
meetings of its stockholders (whether annual or special) and (ii)
actions by written consent in lieu of a stockholders' meeting from
January 1, 1995, until the date hereof, and (c) all other reports,
including quarterly reports, and registration statements filed by
the Company with the SEC since January 1, 1995 (other than
registration statements filed on Form S-8) (the documents referred
to in clauses (a), (b) and (c) filed prior to the date hereof are
collectively referred to as the "Company SEC Reports"). As of
their respective dates, the Company SEC Reports did not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading. The audited consolidated financial
statements of the Company included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 (collectively,
the "Company Financial Statements") have been prepared in
accordance with generally accepted accounting principles applied on
a consistent basis (except as may be indicated therein or in the
notes thereto) and fairly present the financial position of the
Company and its subsidiaries as of the dates thereof and the
results of their operations and changes in financial position for
the periods then ended.
SECTION 5.6 Absence of Undisclosed Liabilities. Except as
disclosed in the Company SEC Reports or as heretofore disclosed to
Parent in writing with respect to acquisitions or potential
transactions or commitments, neither the Company nor any of its
subsidiaries had at December 31, 1996, or has incurred since that
date and as of the date hereof, any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) of any nature,
except (a) liabilities, obligations or contingencies (i) which are
accrued or reserved against in the Company Financial Statements or
reflected in the notes thereto or (ii) which were incurred after
December 31, 1996, and were incurred in the ordinary course of
business and consistent with past practices, (b) liabilities,
obligations or contingencies which (i) would not, in the aggregate,
have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole or
(ii) have been discharged or paid in full prior to the date hereof,
and (c) liabilities and obligations which are of a nature not
required to be reflected in the consolidated financial statements
of the Company and its subsidiaries prepared in accordance with
generally accepted accounting principles consistently applied and
which were incurred in the ordinary course of business.
SECTION 5.7 Absence of Certain Changes or Events. Since the
date of the most recent Company SEC Report that contains
consolidated financial statements of the Company, there has not
been any material adverse change in the business, operations,
properties, assets, liabilities, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as
a whole, except for changes that affect the industries in which the
Company and its subsidiaries operate generally.
SECTION 5.8 Litigation. Except as referred to in the Company
SEC Reports, there are no claims, suits, actions or proceedings
pending or, to the knowledge of the Company, threatened against,
relating to or affecting the Company or any of its subsidiaries,
before any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator that seek to
restrain the consummation of the Merger or which would reasonably
be expected, either alone or in the aggregate with all such claims,
actions or proceedings, to materially and adversely affect the
business, operations, properties, assets, condition (financial or
other) or results of operations of the Company and its
subsidiaries, taken as a whole. Except as referred to in the
Company SEC Reports, neither the Company nor any of its
subsidiaries is subject to any judgment, decree, injunction, rule
or order of any court, governmental department, commission, agency,
instrumentality or authority, or any arbitrator which prohibits or
restricts the consummation of the transactions contemplated hereby
or would have any material adverse effect on the business,
operations, properties, assets, condition (financial or other) or
results of operations of the Company and its subsidiaries, taken as
a whole.
SECTION 5.9 Registration Statement and Proxy Statement. None
of the information to be supplied by the Company or its
subsidiaries for inclusion in (a) the Registration Statement or (b)
the Proxy Statement will, in the case of the Proxy Statement or any
amendments thereof or supplements thereto, at the time of the
mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the meetings of stockholders of the
Company and Parent to be held in connection with the transactions
contemplated by this Agreement or, in the case of the Registration
Statement, as amended or supplemented, at the time it becomes
effective and at the time of such meetings of the stockholders of
the Company and Parent, contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not
misleading. The Joint Proxy Statement/Prospectus will comply, as of
its mailing date, as to form in all material respects with all
applicable laws, including the provisions of the Securities Act and
the Exchange Act and the rules and regulations promulgated
thereunder, except that no representation is made by the Company
with respect to information supplied by Parent, Subsidiary or any
stockholder of Parent for inclusion therein.
SECTION 5.10 No Violation of Law. Except as disclosed in the
Company SEC Reports, neither the Company nor any of its
subsidiaries is in violation of or has been given notice or been
charged with any violation of, any law, statute, order, rule,
regulation, ordinance or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any
governmental or regulatory body or authority, except for violations
which, in the aggregate, could not reasonably be expected to have
a material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole. Except as
disclosed in the Company SEC Reports, as of the date of this
Agreement, to the knowledge of the Company, no investigation or
review by any governmental or regulatory body or authority is
pending or threatened, nor has any governmental or regulatory body
or authority indicated an intention to conduct the same, other
than, in each case, those the outcome of which, as far as
reasonably can be foreseen, will not have a material adverse effect
on the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and
its subsidiaries, taken as a whole. The Company and its
subsidiaries have all permits, licenses, franchises, variances,
exemptions, orders and other governmental authorizations, consents
and approvals necessary to conduct their businesses as presently
conducted (collectively, the "Company Permits"), except for
permits, licenses, franchises, variances, exemptions, orders,
authorizations, consents and approvals the absence of which, alone
or in the aggregate, would not have a material adverse effect on
the business, operations, properties, assets, condition (financial
or other) or results of operations of the Company and its
subsidiaries, taken as a whole. The Company and its subsidiaries
are not in violation of the terms of any Company Permit, except for
delays in filing reports or violations which, alone or in the
aggregate, would not have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other), results of operations of the Company and its subsidiaries,
taken as a whole.
SECTION 5.11 Compliance with Agreements. Except as disclosed
in the Company SEC Reports, the Company and each of its
subsidiaries are not in breach or violation of or in default in the
performance or observance of any term or provision of, and no event
has occurred which, with lapse of time or action by a third party,
could result in a default under, (a) the respective charter,
by-laws or similar organizational instruments of the Company or
any of its subsidiaries or (b) any contract, commitment, agreement,
indenture, mortgage, loan agreement, note, lease, bond, license,
approval or other instrument to which the Company or any of its
subsidiaries is a party or by which any of them is bound or to
which any of their property is subject, other than, in the case of
clause (b) of this Section 5.11, breaches, violations and defaults
which would not have, in the aggregate, a material adverse effect
on the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and
its subsidiaries, taken as a whole.
SECTION 5.12 Taxes. The Company and its subsidiaries have
(i) duly filed with the appropriate governmental authorities all
Tax Returns required to be filed by them for all periods ending on
or prior to the Effective Time, other than those Tax Returns the
failure of which to file would not have a material adverse effect
on the business, operations, properties, assets, condition
(financial or other) or results of operations of the Company and
its subsidiaries, taken as a whole, and such Tax Returns are true,
correct and complete in all material respects, and (ii) duly paid
in full or made adequate provision in accordance with generally
accepted accounting principles for the payment of all Taxes for all
past and current periods. The liabilities and reserves for Taxes
reflected in the Company balance sheet included in the latest
Company SEC Report to cover all Taxes for all periods ending at or
prior to the date of such balance sheet have been determined in
accordance with generally accepted accounting principles and there
is no material liability for Taxes for any period beginning after
such date other than Taxes arising in the ordinary course of
business. There are no material liens for Taxes upon any property
or asset of the Company or any subsidiary thereof, except for liens
for Taxes not yet due or Taxes contested in good faith and
adequately reserved against in accordance with generally accepted
accounting principles. There are no unresolved issues of law or
fact arising out of a notice of deficiency, proposed deficiency or
assessment from the IRS or any other governmental taxing authority
with respect to Taxes of the Company or any of its subsidiaries
which, singly or in the aggregate, would reasonably be expected to
have a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole.
Neither the Company nor its subsidiaries has waived any statute of
limitations in respect of a material amount of Taxes or agreed to
any extension of time with respect to a material Tax assessment or
deficiency other than waivers and extensions which are no longer in
effect. Neither the Company nor any of its subsidiaries is a party
to any agreement providing for the allocation or sharing of Taxes
with any entity that is not, directly or indirectly, a wholly-owned
corporate subsidiary of Company other than agreements the
consequences of which are fully and adequately reserved for in the
Company Financial Statements. Neither the Company nor any of its
corporate subsidiaries has, with regard to any assets or property
held, acquired or to be acquired by any of them, filed a consent to
the application of Section 341(f) of the Code.
SECTION 5.13 Employee Benefit Plans; ERISA. (a) Except as
disclosed in the Company SEC Reports, at the date hereof, the
Company and its subsidiaries do not maintain or contribute to or
have any obligation or liability to or with respect to any material
employee benefit plans, programs, arrangements or practices,
including employee benefit plans within the meaning set forth in
Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or other similar material arrangements
for the provision of benefits (excluding any "Multi-employer Plan"
within the meaning of Section 3(37) of ERISA or a "Multiple
Employer Plan" within the meaning of Section 413(c) of the Code)
(such plans, programs, arrangements or practices of the Company and
its subsidiaries being referred to as the "Company Plans"). The
Company Disclosure Schedule lists all Multi-employer Plans to which
any of them makes contributions or has any obligation or liability
to make material contributions. Neither the Company nor any of its
subsidiaries maintains or has any material liability with respect
to any Multiple Employer Plan. Neither the Company nor any of its
subsidiaries has any obligation to create or contribute to any
additional such plan, program, arrangement or practice or to amend
any such plan, program, arrangement or practice so as to increase
benefits or contributions thereunder, except as required under the
terms of the Company Plans, under existing collective bargaining
agreements or to comply with applicable law.
(b) Except as disclosed in the Company SEC Reports, (i) there
have been no prohibited transactions within the meaning of Section
406 or 407 of ERISA or Section 4975 of the Code with respect to any
of the Company Plans that could result in penalties, taxes or
liabilities which, singly or in the aggregate, could have a
material adverse effect on the business, operations, properties,
assets, condition (financial or other) or results of operations of
the Company and its subsidiaries, taken as a whole, (ii) except for
premiums due, there is no outstanding material liability, whether
measured alone or in the aggregate, under Title IV of ERISA with
respect to any of the Company Plans, (iii) neither the Pension
Benefit Guaranty Corporation nor any plan administrator has
instituted proceedings to terminate any of the Company Plans
subject to Title IV of ERISA other than in a "standard termination"
described in Section 4041(b) of ERISA, (iv) none of the Company
Plans has incurred any "accumulated funding deficiency" (as defined
in Section 302 of ERISA and Section 412 of the Code), whether or
not waived, as of the last day of the most recent fiscal year of
each of the Company Plans ended prior to the date of this
Agreement, (v) the current present value of all projected benefit
obligations under each of the Company Plans which is subject to
Title IV of ERISA did not, as of its latest valuation date, exceed
the then current value of the assets of such plan allocable to such
benefit liabilities by more than the amount, if any, disclosed in
the Company SEC Reports as of December 31, 1996, based upon
reasonable actuarial assumptions currently utilized for such
Company Plan, (vi) each of the Company Plans has been operated and
administered in accordance with applicable laws during the period
of time covered by the applicable statute of limitations, except
for failures to comply which, singly or in the aggregate, would not
reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other) or results of operations of the Company and its
subsidiaries, taken as a whole, (vii) each of the Company Plans
which is intended to be "qualified" within the meaning of Section
401(a) of the Code has been determined by the Internal Revenue
Service to be so qualified and such determination has not been
modified, revoked or limited by failure to satisfy any condition
thereof or by a subsequent amendment thereto or a failure to amend,
except that it may be necessary to make additional amendments
retroactively to maintain the "qualified" status of such Company
Plans, and the period for making any such necessary retroactive
amendments has not expired, (viii) with respect to Multi-employer
Plans, neither the Company nor any of its subsidiaries has made or
suffered a "complete withdrawal" or a "partial withdrawal ," as
such terms are respectively defined in Sections 4203, 4204 and 4205
of ERISA and, to the best knowledge of the Company and its
subsidiaries, no event has occurred or is expected to occur which
presents a material risk of a complete or partial withdrawal under
said Sections 4203, 4204 and 4205, (ix) to the best knowledge of
the Company and its subsidiaries, there are no material pending,
threatened or anticipated claims involving any of the Company Plans
other than claims for benefits in the ordinary course, (x) the
Company and its subsidiaries have no current material liability
under Title IV of ERISA, and the Company and its subsidiaries do
not reasonably anticipate that any such liability will be asserted
against the Company or any of its subsidiaries, and (xi) no act,
omission or transaction (individually or in the aggregate) has
occurred with respect to any Company Plan that has resulted or
could result in any material liability (direct or indirect) of the
Company or any subsidiary under Sections 409 or 502(c)(1) or (l) of
ERISA or Chapter 43 of Subtitle (A) of the Code. None of the
Company Controlled Group Plans has an"accumulated funding
deficiency" (as defined in Section 302 of ERISA and Section 412 of
the Code) or is required to provide security to a Company Plan
pursuant to Section 401(a)(29) of the Code.
(c) The Company SEC Reports contain a true and complete
summary or list of or otherwise describe all material employment
contracts and other employee benefit arrangements with "change of
control" or similar provisions and all severance agreements with
executive officers.
(d) There are no agreements which will or may provide
payments to any officer, employee, stockholder, or highly
compensated individual which will be "parachute payments" under
Code Section 280G that are nondeductible to the Company or subject
to tax under Code Section 4999 for which the Company or any ERISA
Affiliate would have withholding liability.
SECTION 5.14 Labor Controversies. Except as disclosed in the
Company SEC Reports as of the date hereof, (a) there are no
significant controversies pending or, to the knowledge of the
Company, threatened between the Company or its subsidiaries and any
representatives of any of their employees and (b) to the knowledge
of the Company, there are no material organizational efforts
presently being made involving any of the presently unorganized
employees of the Company or its subsidiaries, except for such
controversies and organizational efforts, which, singly or in the
aggregate, could not reasonably be expected to materially and
adversely affect the business, operations, properties, assets,
condition (financial or other) or results of operations of the
Company and its subsidiaries, taken as a whole.
SECTION 5.15 Environmental Matters. Except as disclosed in
the Company SEC Reports, (i) the Company and its subsidiaries have
conducted their respective businesses in compliance with all
applicable Environmental Laws, including, without limitation,
having all permits, licenses and other approvals and authorizations
necessary for the operation of their respective businesses as
presently conducted, (ii) none of the properties owned by the
Company or any of its subsidiaries contain any Hazardous Substance
as a result of any activity of the Company or any of its
subsidiaries in amounts exceeding the levels permitted by
applicable Environmental Laws, (iii) since January 1, 1994, neither
the Company nor any of its subsidiaries has received any notices,
demand letters or requests for information from any Federal, state,
local or foreign governmental entity indicating that the Company or
any of its subsidiaries may be in violation of, or liable under,
any Environmental Law in connection with the ownership or operation
of their businesses, (iv) there are no civil, criminal or
administrative actions, suits, demands, claims, hearings,
investigations or proceedings pending or threatened, against the
Company or any of its subsidiaries relating to any violation, or
alleged violation, of any Environmental Law, (v) no Hazardous
Substance has been disposed of, released or transported in
violation of any applicable Environmental Law from any properties
owned by the Company or any of its subsidiaries as a result of any
activity of the Company or any of its subsidiaries during the time
such properties were owned, leased or operated by the Company or
any of its subsidiaries, and (vi) neither the Company, its
subsidiaries nor any of their respective properties are subject to
any material liabilities or expenditures (fixed or contingent)
relating to any suit, settlement, court order, administrative
order, regulatory requirement, judgment or claim asserted or
arising under any Environmental Law, except for violations of the
foregoing clauses (i) through (vi) that, singly or in the
aggregate, would not reasonably be expected to have a material
adverse effect on the business, operations, properties, assets,
condition (financial or other) or results of operations of the
Company and its subsidiaries, taken as a whole.
SECTION 5.16 Non-competition Agreements. Except as disclosed
in the Company SEC Reports, neither the Company nor any subsidiary
of the Company is a party to any agreement which (i) purports to
restrict or prohibit in any material respect any of them or any
corporation affiliated with any of them from, directly or
indirectly, engaging in any business involving the collection,
interim storage, transfer, recovery, processing, recycling,
marketing or disposal of rubbish, garbage, paper, textile wastes,
chemical or hazardous wastes, liquid and other wastes or any other
material business currently engaged in by Parent or the Company, or
any corporations affiliated with either of them and (ii) would
restrict or prohibit Parent or any subsidiary of the Parent (other
than the Company and its subsidiaries that are currently so
restricted or prohibited) from engaging in such business. None of
the Company's officers, directors or key employees is a party to
any agreement which, by virtue of such person's relationship with
the Company, restricts in any material respect the Company or any
subsidiary or affiliate of the Company from, directly or
indirectly, engaging in any of the businesses described above.
SECTION 5.17 Title to Assets. The Company and each of its
subsidiaries has good and marketable title in fee simple to all its
real property and good title to all its leasehold interests and
other properties, as reflected in the most recent balance sheet
included in the Company Financial Statements, except for properties
and assets that have been disposed of in the ordinary course of
business since the date of such balance sheet, free and clear of
all mortgages, liens, pledges, charges or encumbrances of any
nature whatsoever, except (i) the lien for current taxes, payments
of which are not yet delinquent, (ii) such imperfections in title
and easements and encumbrances, if any, as are not substantial in
character, amount or extent and do not materially detract from the
value, or interfere with the present use of the property subject
thereto or affected thereby, or otherwise materially impair the
Company's business operations (in the manner presently carried on
by the Company) or (iii) as disclosed in the Company SEC Reports,
and except for such matters which, singly or in the aggregate,
could not reasonably be expected to materially and adversely affect
the business, operations, properties, assets, condition (financial
or other) or results of operations of the Company and its
subsidiaries, taken as a whole. All leases under which the Company
leases any real or personal property are in good standing, valid
and effective in accordance with their respective terms, and there
is not, under any of such leases, any existing default or event
which with notice or lapse of time or both would become a default
other than failures to be in good standing, valid and effective and
defaults under such leases which in the aggregate will not
materially and adversely affect the business, operations,
properties, assets, condition (financial or other) or results of
operations of the Company and its subsidiaries, taken as a whole.
SECTION 5.18 Reorganization and Pooling of Interests.
Neither the Company nor, to the knowledge of the Company, any of
its affiliates has taken or agreed or intends to take any action or
has any knowledge of any fact or circumstance that would prevent
the Merger from (a) constituting a reorganization within the
meaning of Section 368(a) of the Code or (b) being treated for
financial accounting purposes as a Pooling Transaction. As of the
date hereof, other than directors and officers of the Company, to
the knowledge of the Company, there are no "affiliates" of the
Company, as that term is used in paragraphs (c) and (d) of Rule 145
under the Securities Act.
SECTION 5.19 Company Stockholders' Approval. The affirmative
vote of stockholders of the Company required for approval and
adoption of this Agreement and the Merger is a majority of the
outstanding shares of Company Common Stock entitled to vote
thereon.
SECTION 5.20 Brokers and Finders. Except for the fees and
expenses payable to Goldman, Sachs & Co., which fees are reflected
in its agreement with the Company, the Company has not entered into
any contract, arrangement or understanding with any person or firm
which may result in the obligation of the Company to pay any
finder's fees, brokerage or agent commissions or other like
payments in connection with the transactions contemplated hereby.
Except for the fees and expenses paid or payable to Goldman, Sachs
& Co., there is no claim for payment by the Company of any
investment banking fees, finder's fees, brokerage or agent
commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 5.21 Opinion of Financial Advisor. The financial
advisor of the Company, Goldman, Sachs & Co., has rendered an
opinion to the Board of Directors of the Company to the effect
that, as of the date thereof, the Exchange Ratio is fair to the
holders of Company Common Stock; it being understood and
acknowledged by Parent and Subsidiary that such opinion has been
rendered for the benefit of the Board of Directors of the Company
and is not intended to, and may not, be relied upon by Parent, its
affiliates or their respective subsidiaries.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.1 Conduct of Business by the Company Pending the
Merger. Except as otherwise contemplated by this Agreement or
disclosed in Section 6.1 of the Company Disclosure Schedule, after
the date hereof and prior to the Closing Date or earlier
termination of this Agreement, unless Parent shall otherwise agree
in writing, the Company shall, and shall cause its subsidiaries to:
(a) conduct their respective businesses in the ordinary
and usual course of business and consistent with past
practice;
(b) not (i) amend or propose to amend their respective
charter or by-laws (except that the Company may amend its
charter to increase the number of authorized shares of Company
Common Stock, (ii) split, combine or reclassify their
outstanding capital stock or (iii) declare, set aside or pay
any dividend or distribution payable in cash, stock, property
or otherwise, except for the payment of dividends or
distributions to the Company by a wholly-owned subsidiary of
the Company;
(c) not issue, sell, pledge or dispose of, or agree to
issue, sell, pledge or dispose of, any additional shares of,
or any options, warrants or rights of any kind to acquire any
shares of their capital stock of any class or any debt or
equity securities convertible into or exchangeable for such
capital stock, except that (i) the Company may issue shares
upon conversion of convertible securities and exercise of
options and warrants, (ii) the Company may issue shares of
Company Common Stock (or warrants or options to acquire
Company Common Stock) in connection with acquisitions of
assets or businesses pursuant to the proviso of Section
6.1(d), and (iii) the Company may grant options with an
exercise price per share of Company Common Stock no less than
the closing price of a share of Company Common Stock on the
day prior to grant of such option with respect to up to an
aggregate of 200,000 shares of Company Common Stock; provided
that such grants may not be made to any current executive
officer or director of the Company and may only be made to (i)
persons who have not held and do not hold other options to
purchase Company Common Stock or (ii) in the ordinary course
of business, to existing employees of the Company and its
subsidiaries;
(d) not (i) incur or become contingently liable with
respect to any indebtedness for borrowed money other than (A)
borrowings in the ordinary course of business (other than
pursuant to credit facilities) or borrowings under the
existing credit facilities of the Company or any of its
subsidiaries as such facilities may be amended in a manner
that does not have a material adverse effect on the Company
(the "Existing Credit Facilities") up to the existing
borrowing limit on the date hereof (B) borrowings to refinance
existing indebtedness on terms which are reasonably acceptable
to Parent or (C) borrowings in connection with acquisitions as
set forth in the proviso in this Section 6.1(d), (ii) redeem,
purchase, acquire or offer to purchase or acquire any shares
of its capital stock or any options, warrants or rights to
acquire any of its capital stock or any security convertible
into or exchangeable for its capital stock, (iii) take any
action that would jeopardize the treatment of the Merger as a
pooling of interests under Opinion No. 16 of the Accounting
Principles Board ("APB No. 16"), (iv) take or fail to take any
action which action or failure to take action would cause the
Company or its stockholders (except to the extent that any
stockholders receive cash in lieu of fractional shares and
except to the extent of Stockholders in special circumstances)
to recognize gain or loss for federal income tax purposes as
a result of the consummation of the Merger or would otherwise
cause the Merger not to qualify as a reorganization under
Section 368(a) of the Code, (v) make any acquisition of any
assets or businesses other than expenditures for current
assets in the ordinary course of business and expenditures for
fixed or capital assets in the ordinary course of business and
other than as set forth in the proviso in this Section 6.1(d),
(vi) sell, pledge, dispose of or encumber any material assets
or businesses other than (a) sales of businesses or assets in
the ordinary course of business, (b) sales of businesses or
assets disclosed in Section 6.1 of the Company Disclosure
Schedule, (c) sales of businesses or assets with aggregate
1996 revenues less than $5.0 million, and (d) pledges or
encumbrances pursuant to Existing Credit Facilities or other
permitted borrowings, or (vii) except as contemplated by the
following proviso, enter into any binding contract, agreement,
commitment or arrangement with respect to any of the
foregoing; provided, however, that notwithstanding the
foregoing (other than subsections (iii) and (iv) of this
Section 6.1(d)), the Company shall not be prohibited from
acquiring any assets or businesses or incurring or assuming
indebtedness in connection with acquisitions of assets or
businesses so long as (A) such acquisitions are disclosed in
Section 6.1 of the Company Disclosure Schedule, or (B) the
aggregate value of consideration paid in connection with all
such acquisitions (other than those acquisitions disclosed in
Section 6.1 of the Company Disclosure Schedule) including any
funded indebtedness assumed and any Company Common Stock
issued in connection with such acquisitions (valued for
purposes of this limitation at a price per share equal to the
price of the Company Common Stock on the date the agreement in
respect of any such acquisition is entered into) does not
exceed $150 million and the aggregate value of consideration
paid or payable for any one such acquisition (other than those
acquisitions disclosed in Section 6.1 of the Company
Disclosure Schedule), including any funded indebtedness
assumed and any Company Common Stock issued in connection with
such acquisition (valued for purposes of this limitation at a
price per share equal to the price of the Company Common Stock
on the date the agreement in respect of such acquisition is
entered into) does not exceed $40 million. For purposes of
the foregoing, any contingent, royalty and similar payments
made in connection with acquisitions of businesses or assets
shall be included as acquisition consideration and shall be
deemed to have a value equal to their present value assuming
a 8% per annum discount rate and assuming that all amounts
payable for the first five years following consummation of the
acquisitions (but not thereafter) are paid. Notwithstanding
anything herein to the contrary (A) the Company will not
acquire or agree to acquire any assets or businesses if such
acquisition or agreement may reasonably be expected to delay
the consummation of the Merger, (B) the Company will not
acquire or agree to acquire any assets or businesses if such
assets or businesses are not in industries in which the
Company currently operates, unless such assets or businesses
are acquired incidental to an acquisition of businesses or
assets that are in industries in which the Company currently
operates and it is reasonable to acquire such incidental
businesses or assets in connection with such acquisition, and
(C) the Company will not acquire or agree to acquire all or
substantially all of the business, assets, properties or
capital stock of any entity with securities registered under
the Securities Act or the Exchange Act.
(e) use all reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available
the services of their respective present officers and key
employees, and preserve the goodwill and business
relationships with customers and others having business
relationships with them and not engage in any action, directly
or indirectly, with the intent to adversely impact the
transactions contemplated by this Agreement.
(f) subject to restrictions imposed by applicable law,
confer with one or more representatives of Parent to report
operational matters of materiality and the general status of
ongoing operations;
(g) not enter into or amend any employment, severance,
special pay arrangement with respect to termination of
employment or other similar arrangements or agreements with
any directors, officers or key employees, except in the
ordinary course and consistent with past practice; provided,
however, that the Company and its subsidiaries shall in no
event enter into or amend any written employment agreement
providing for annual base salary in excess of $75,000 per
annum;
(h) not adopt, enter into or amend any pension or
retirement plan, trust or fund, except as required to comply
with changes in applicable law and not adopt, enter into or
amend in any material respect any bonus, profit sharing,
compensation, stock option, deferred compensation, health
care, employment or other employee benefit plan, agreement,
trust, fund or arrangement for the benefit or welfare of any
employees or retirees generally, other than in the ordinary
course of business, except (i) as contemplated by Section
6.1(c), (ii) as required to comply with changes in applicable
law, (iii) to increase the number of shares of Company Common
Stock available for grant under the Company's 1992 Stock
Option Plan, as amended, and the Company's 1992 Disinterested
Director Stock Option Plan, as amended, (iv) any of the
foregoing involving any such then existing plans, agreements,
trusts, funds or arrangements of any company acquired after
the date hereof or (v) as required pursuant to an existing
contractual arrangement or agreement;
(i) use commercially reasonable efforts to maintain with
financially responsible insurance companies insurance on its
tangible assets and its businesses in such amounts and against
such risks and losses as are consistent with past practice;
and
(j) not make, change or revoke any material Tax election
or make any material agreement or settlement regarding Taxes
with any taxing authority.
SECTION 6.2 Conduct of Business by Parent and Subsidiary
Pending the Merger. Except as otherwise contemplated by this
Agreement, after the date hereof and prior to the Closing Date or
earlier termination of this Agreement, unless the Company shall
otherwise agree in writing, Parent shall, and shall cause its
subsidiaries to:
(a) conduct their respective businesses in the ordinary
and usual course of business and consistent with past
practice;
(b) not (i) amend or propose to amend their respective
charter (except for any amendments by Parent of its
Certificate of Incorporation to increase the number of
authorized shares of Parent Common Stock so as to be able to
consummate the Merger) or by-laws, (ii) split, combine or
reclassify (whether by stock dividend or otherwise) their
outstanding capital stock, or (iii) declare, set aside or pay
any dividend or distribution payable in cash, stock, property
or otherwise, except for the payment of dividends or
distributions to Parent by a wholly-owned subsidiary of
Parent;
(c) not issue, sell, pledge or dispose of, or agree to
issue, sell, pledge or dispose of, any additional shares of,
or any options, warrants or rights of any kind to acquire any
shares of their capital stock of any class or any debt or
equity securities convertible into or exchangeable for such
capital stock, except that (i) Parent may issue shares upon
conversion of convertible securities and exercise of options
(ii) Parent may issue options with an exercise price per share
of Parent Common Stock no less than the fair market value of
a share of Parent Common Stock on the date of grant thereof
(and shares upon exercise of such options) pursuant to its
employee stock option plans in effect on the date hereof with
respect to up to an aggregate of 500,000 shares of Parent
Common Stock and (iii) Parent may issue shares of capital
stock (or warrants or options to acquire capital stock) in
connection with acquisitions of assets or businesses pursuant
to the proviso of Section 6.2(d);
(d) not (i) incur or become contingently liable with
respect to any indebtedness for borrowed money other than (A)
borrowings in the ordinary course of business or borrowings
under the existing credit facilities of Parent or any of its
subsidiaries, (B) borrowings to refinance existing
indebtedness on terms which are reasonably acceptable to the
Company, or (C) as set forth in the proviso in this Section
6.2(d), (ii) redeem, purchase, acquire or offer to purchase or
acquire any shares of its capital stock or any options,
warrants or rights to acquire any of its capital stock or any
security convertible into or exchangeable for its capital
stock, (iii) take any action that would jeopardize the
treatment of the Merger as a pooling of interests under APB
No. 16, (iv) take or fail to take any action which action or
failure to take action would cause Parent or its stockholders
to recognize gain or loss for federal income tax purposes as
a result of the consummation of the Merger or would otherwise
cause the Merger not to qualify as a reorganization under
Section 368(a) of the Code, (v) pledge or encumber any
material assets or businesses other than pledges or
encumbrances pursuant to existing credit facilities, (vi) make
any acquisition of any assets or businesses other than
expenditures for current assets in the ordinary course of
business and expenditures for fixed or capital assets in the
ordinary course of business and other than as set forth in the
proviso of this Section 6.2(d) or (vii) enter into any binding
contract, agreement, commitment or arrangement with respect to
any of the foregoing; provided, however, that notwithstanding
the foregoing (other than subsections (iii) and (iv) of this
Section 6.2(d)), Parent shall not be prohibited from acquiring
any assets or businesses or incurring or assuming indebtedness
in connection with acquisitions of assets or businesses so
long as (A) such acquisitions are disclosed in Section 6.2 of
the Parent Disclosure Schedule, or (B) the aggregate value of
consideration paid in connection with all such acquisitions
(other than those acquisitions disclosed in Section 6.2 of the
Parent Disclosure Schedule) including any funded indebtedness
assumed and any Parent Common Stock issued in connection with
such acquisitions (valued for purposes of this limitation at
a price per share equal to the price of the Parent Common
Stock on the date the agreement in respect of any such
acquisition is entered into) does not exceed $375 million and
the aggregate value of consideration paid or payable for any
one such acquisition (other than those acquisitions disclosed
in Section 6.2 of the Parent Disclosure Schedule), including
any funded indebtedness assumed and any Parent Common Stock
issued in connection with such acquisition (valued for
purposes of this limitation at a price per share equal to the
price of the Parent Common Stock on the date the agreement in
respect of such acquisition is entered into) does not exceed
$100 million. For purposes of the foregoing, any contingent,
royalty and similar payments made in connection with
acquisitions of businesses or assets shall be included as
acquisition consideration and shall be deemed to have a value
equal to their present value assuming a 8% per annum discount
rate and assuming that all amounts payable for the first five
years following consummation of the acquisition (but not
thereafter) are paid. Notwithstanding anything herein to the
contrary (A) Parent will not acquire or agree to acquire any
assets or businesses if such acquisition or agreement may
reasonably be expected to delay the consummation of the
Merger; (B) Parent will not acquire or agree to acquire any
assets or businesses if such assets or businesses are not in
industries in which Parent currently operates, unless such
assets or businesses are acquired incidental to an acquisition
of businesses or assets that are in industries in which Parent
currently operates and it is reasonable to acquire such
incidental businesses or assets in connection with such
acquisition; and (C) Parent will not acquire or agree to
acquire all or substantially all of the business, assets,
properties or capital stock of any entity with securities
registered under the Securities Act or the Exchange Act.
(e) use all reasonable efforts to preserve intact their
respective business organizations and goodwill, keep available
the services of their respective present officers and key
employees, and preserve the goodwill and business
relationships with customers and others having business
relationships with them and not engage in any action, directly
or indirectly, with the intent to adversely impact the
transactions contemplated by this Agreement.
(f) subject to restrictions imposed by applicable law,
confer with one or more representatives of the Company to
report operational matters of materiality and the general
status of ongoing operations; and
(g) use commercially reasonable efforts to maintain with
financially responsible insurance companies insurance on its
tangible assets and its businesses in such amounts and against
such risks and losses as are consistent with past practice.
SECTION 6.3 Control of the Company's Operations. Nothing
contained in this Agreement shall give to Parent, directly or
indirectly, rights to control or direct the Company's operations
prior to the Effective Time. Prior to the Effective Time, the
Company shall exercise, consistent with the terms and conditions of
this Agreement, complete control and supervision of its operations.
SECTION 6.4 Control of Parent's Operations. Nothing
contained in this Agreement shall give to the Company, directly or
indirectly, rights to control or direct Parent's operations prior
to the Effective Time. Prior to the Effective Time, Parent shall
exercise, consistent with the terms and conditions of this
Agreement, complete control and supervision of its operations.
SECTION 6.5 Acquisition Transactions. (a) After the date
hereof and prior to the Effective Time or earlier termination of
this Agreement, the Company shall not, and shall not permit any of
its subsidiaries to, initiate, solicit, negotiate, encourage or
provide confidential information to facilitate, and the Company
shall, and shall use its reasonable efforts to cause any officer,
director or employee of the Company, or any attorney, accountant,
investment banker, financial advisor or other agent retained by it
or any of its subsidiaries, not to initiate, solicit, negotiate,
encourage or provide non-public or confidential information to
facilitate, any proposal or offer to acquire all or any substantial
part of the business or properties of the Company or any capital
stock of the Company, whether by merger, purchase of assets, tender
offer or otherwise, whether for cash, securities or any other
consideration or combination thereof (any such transactions being
referred to herein as an "Acquisition Transaction").
(b) Notwithstanding the provisions of paragraph (a) above,
(i) the Company may, in response to an unsolicited written offer or
proposal with respect to a potential or proposed Acquisition
Transaction ("Acquisition Proposal") which the Company's Board of
Directors determines, in good faith and after consultation with its
independent financial advisor, would result (if consummated
pursuant to its terms) in an Acquisition Transaction more favorable
to the Company's stockholders than the Merger (any such offer or
proposal being referred to as a "Superior Proposal"), furnish
(subject to the execution of a confidentiality agreement
substantially similar to the confidentiality provisions of this
agreement), confidential or non-public information to a financially
capable corporation, partnership, person or other entity or group
(a "Potential Acquirer") and negotiate with such Potential Acquirer
if the Board of Directors of the Company, after consulting with its
outside legal counsel, determines in good faith that the failure to
provide such confidential or non-public information to or negotiate
with such Potential Acquirer would be reasonably likely to
constitute a breach of its fiduciary duty to the Company's
stockholders and (ii) the Company's Board of Directors may take and
disclose to the Company's stockholders a position contemplated by
Rule 14e-2 under the Exchange Act. It is understood and agreed that
negotiations and other activities conducted in accordance with this
paragraph (b) shall not constitute a violation of paragraph (a) of
this Section 6.5.
(c) The Company shall immediately notify Parent after receipt
of any Acquisition Proposal, indication of interest or request for
nonpublic information relating to the Company or its subsidiaries
in connection with an Acquisition Proposal or for access to the
properties, books or records of the Company or any subsidiary by
any person or entity that informs the Board of Directors of the
Company or such subsidiary that it is considering making, or has
made, an Acquisition Proposal. Such notice to Parent shall be made
orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such
proposal, inquiry or contact.
(d) After the date hereof and prior to the Effective Time or
earlier termination of this Agreement, the Parent shall promptly
notify the Company after receipt of any proposal or offer to
acquire all or any substantial part of the business, properties or
capital stock of Parent, whether by merger, purchase of assets,
tender offer or otherwise, whether for cash, securities or any
other consideration or combination thereof (any such transactions
being referred to herein as a "Parent Acquisition Transaction") and
shall indicate in reasonable detail the identity of the offeror and
the terms and conditions of such proposal or offer.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1 Access to Information. (a) Subject to
applicable law, the Company and its subsidiaries shall afford to
Parent and Subsidiary and their respective accountants, counsel,
financial advisors and other representatives (the "Parent
Representatives") and Parent and its subsidiaries shall afford to
the Company and its accountants, counsel, financial advisors and
other representatives (the "Company Representatives") full access
during normal business hours with reasonable notice throughout the
period prior to the Effective Time to all of their respective
properties, books, contracts, commitments and records (including,
but not limited to, Tax Returns) and, during such period, shall
furnish promptly to one another (i) a copy of each report, schedule
and other document filed or received by any of them pursuant to the
requirements of federal or state securities laws or filed by any of
them with the SEC in connection with the transactions contemplated
by this Agreement and (ii) such other information concerning their
respective businesses, properties and personnel as Parent or
Subsidiary or the Company, as the case may be, shall reasonably
request; provided, however, that no investigation pursuant to this
Section 7.1 shall amend or modify any representations or warranties
made herein or the conditions to the obligations of the respective
parties to consummate the Merger. Parent and its subsidiaries shall
hold and shall use their reasonable best efforts to cause the
Parent Representatives to hold, and the Company and its
subsidiaries shall hold and shall use their reasonable best efforts
to cause the Company Representatives to hold, in strict confidence
all nonpublic documents and information furnished to Parent and
Subsidiary or to the Company, as the case may be, in connection
with the transactions contemplated by this Agreement, except that
(i) Parent, Subsidiary and the Company may disclose such
information as may be necessary in connection with seeking the
Parent Required Statutory Approvals and Parent Stockholders'
Approval, the Company Required Statutory Approvals and the Company
Stockholders' Approval and (ii) each of Parent, Subsidiary and the
Company may disclose any information that it is required by law or
judicial or administrative order to disclose.
(b) In the event that this Agreement is terminated in
accordance with its terms, each party shall promptly redeliver to
the other all nonpublic written material provided pursuant to this
Section 7.1 and shall not retain any copies, extracts or other
reproductions in whole or in part of such written material. In such
event, all documents, memoranda, notes and other writings prepared
by Parent or the Company based on the information in such material
shall be destroyed (and Parent and the Company shall use their
respective reasonable best efforts to cause their advisors and
representatives to similarly destroy their documents, memoranda and
notes), and such destruction (and reasonable best efforts) shall be
certified in writing by an authorized officer supervising such
destruction.
SECTION 7.2 Registration Statement and Proxy Statement.
Parent and the Company shall file with the SEC as soon as is
reasonably practicable after the date hereof the Registration
Statement and shall use all reasonable efforts to have the
Registration Statement declared effective by the SEC as promptly as
practicable. Parent shall also take any action required to be taken
under applicable state blue sky or securities laws in connection
with the issuance of Parent Common Stock pursuant hereto. Parent
and the Company shall promptly furnish to each other all
information, and take such other actions, as may reasonably be
requested in connection with any action by any of them in
connection with the preceding sentence. The information provided
and to be provided by Parent and the Company, respectively, for use
in the Joint Proxy Statement/Prospectus shall not contain any
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading.
SECTION 7.3 Stockholders' Approvals. (a) Subject to the
fiduciary duties of the Board of Directors of the Company under
applicable law, the Company shall, as promptly as practicable,
submit this Agreement and the transactions contemplated hereby for
the approval of its stockholders at a meeting of stockholders and
shall use its reasonable best efforts to obtain stockholder
approval and adoption (the "Company Stockholders' Approval") of
this Agreement and the transactions contemplated hereby. Subject
to the fiduciary duties of the Board of Directors of the Company
under applicable law, such meeting of stockholders shall be held as
soon as practicable following the date upon which the Registration
Statement becomes effective. Subject to the fiduciary duties of the
Board of Directors of the Company under applicable law, the Company
shall, through its Board of Directors, recommend to its
stockholders approval of the transactions contemplated by this
Agreement.
(b) Subject to the fiduciary duties of the Board of Directors
of Parent under applicable law, Parent shall, as promptly as
practicable, submit this Agreement and the transactions
contemplated hereby for the approval of its stockholders at a
meeting of stockholders and shall use its reasonable best efforts
to obtain stockholder approval and adoption (the "Parent
Stockholders' Approval") of this Agreement and the transactions
contemplated hereby. Such meeting of stockholders shall be held as
soon as practicable following the date on which the Registration
Statement becomes effective. Parent shall, through its Board of
Directors (i) subject to the fiduciary duties of the members
thereof, recommend to its stockholders approval of the transactions
contemplated by this Agreement and (ii) authorize and cause an
officer of Parent to vote Parent's shares of Subsidiary Common
Stock for adoption and approval of this Agreement and the
transactions contemplated hereby and shall take all additional
actions as the sole stockholder of Subsidiary necessary to adopt
and approve this Agreement and the transactions contemplated
hereby.
SECTION 7.4 Compliance with the Securities Act. Parent and
the Company shall each use its commercially reasonable efforts to
cause each officer, each director and each other person who is an
"affiliate," as that term is used in paragraphs (c) and (d) of Rule
145 under the Securities Act, of Parent or the Company, as the case
may be, to deliver to Parent and the Company on or prior to the
Effective Time a written agreement (an "Affiliate Agreement") to
the effect that such person will not offer to sell, sell or
otherwise dispose of any shares of Parent Common Stock issued in
the Merger, except, in each case, pursuant to an effective
registration statement or in compliance with Rule 145, as amended
from time to time, or in a transaction which, in the opinion of
legal counsel satisfactory to Parent, is exempt from the
registration requirements of the Securities Act and, in any case,
until after the results covering 30 days of post-Merger combined
operations of Parent and the Company have been filed with the SEC,
sent to stockholders of Parent or otherwise publicly issued.
Promptly following the Effective Time, Parent shall cause such
registration statements under the Securities Act to be declared
effective and to remain in effect as may be necessary to permit the
conversion, exchange or exercise of the Convertible Notes (as
defined in Section 7.13), options, warrants and other rights to
acquire Company Common Stock for shares of Parent Common Stock in
accordance with their respective terms and to permit the sale of
such shares of Parent Common Stock.
SECTION 7.5 Exchange Listing. Parent shall use its
reasonable best efforts to effect, at or before the Effective Time,
authorization for listing on the New York Stock Exchange Inc. (the
"NYSE"), upon official notice of issuance, of the shares of Parent
Common Stock to be issued pursuant to the Merger or to be reserved
for issuance upon exercise of stock options or warrants or the
conversion of convertible securities.
SECTION 7.6 Expenses and Fees. (a) All costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such
expenses, except that those expenses incurred in connection with
printing and filing the Joint Proxy Statement/Prospectus shall be
shared equally by Parent and the Company.
(b) The Company agrees to pay to Parent a fee equal to $50
million if:
(i) the Company terminates this Agreement pursuant to
clause (iv) or (v) of Section 9.1(a); or
(ii) Parent terminates this Agreement pursuant to clause
(iv) of Section 9.1(b);
(c) The Company agrees to pay Parent a fee equal to $1
million if Parent terminates this Agreement pursuant to clause (v)
of section 9.1(b).
(d) Parent agrees to pay to the Company a fee equal to $50
million if (i) this Agreement is terminated for any reason at a
time at which the Company was not in material breach of its
covenants contained in this Agreement and was entitled to terminate
this Agreement pursuant to clause (vii) of Section 9.1(a), (ii)
prior to the time of such termination a proposal relating to a
Parent Acquisition Transaction had been made, (iii) on or prior to
the sixth month anniversary of the termination of this Agreement
(x) Parent or any of its subsidiaries or affiliates enters into an
agreement or letter of intent (or resolves or announces an
intention to do) with respect to a Parent Acquisition Transaction
or a merger, acquisition or other business combination involving a
person, entity or group if such person, entity, group (or any
member of such group, or any affiliate of any of the foregoing)
made a proposal with respect to a Parent Acquisition Transaction on
or after the date hereof and prior to the termination of this
Agreement and such Parent Acquisition Transaction is consummated or
(y) a Parent Acquisition Transaction shall otherwise occur. Such
fee shall be payable upon the first occurrence of any such event.
(e) Parent agrees to pay the Company a fee equal to $1
million if the Company terminates this Agreement pursuant to clause
(vi) of Section 9.1(a).
SECTION 7.7 Agreement to Cooperate. (a) Subject to the
terms and conditions herein provided and subject to the fiduciary
duties of the respective boards of directors of the Company and
Parent, each of the parties hereto shall use all reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its
reasonable efforts to obtain all necessary or appropriate waivers,
consents or approvals of third parties required in order to
preserve material contractual relationships of Parent and the
Company and their respective subsidiaries, all necessary or
appropriate waivers, consents and approvals and SEC "no-action"
letters to effect all necessary registrations, filings and
submissions and to lift any injunction or other legal bar to the
Merger (and, in such case, to proceed with the Merger as
expeditiously as possible).
(b) Without limitation of the foregoing, each of Parent and
the Company undertakes and agrees to file as soon as practicable,
and in any event prior to 15 days after the date hereof, a
Notification and Report Form under the HSR Act with the FTC and the
Antitrust Division. Each of Parent and the Company shall (i)
respond as promptly as practicable to any inquiries received from
the FTC or the Antitrust Division for additional information or
documentation and to all inquiries and requests received from any
State Attorney General or other governmental authority in
connection with antitrust matters and (ii) not extend any waiting
period under the HSR Act or enter into any agreement with the FTC
or the Antitrust Division not to consummate the transactions
contemplated by this Agreement, except with the prior written
consent of the other parties hereto. Parent shall take all
reasonable steps necessary to avoid or eliminate impediments under
any antitrust, competition, or trade regulation law that may be
asserted by the FTC, the Antitrust Division, any State Attorney
General or any other governmental entity with respect to the Merger
so as to enable the Closing to occur as soon as reasonably
possible. Without limiting the foregoing, Parent shall propose,
negotiate, commit to and effect, by consent decree, hold separate
order, or otherwise, the sale, divestiture or disposition of such
assets or businesses of Parent or, effective as of the Effective
Time, the Surviving Corporation as may be required in order to
avoid the entry of, or to effect the dissolution of, any
injunction, temporary restraining order or other order in any suit
or proceeding, which would otherwise have the effect of preventing
or delaying the Closing; provided however that Parent shall not be
required to sell, divest, dispose of, or hold separate assets or
businesses with aggregate 1996 revenues in excess of $30 million,
not including any assets or businesses that are required to be
sold, divested, disposed of, or held separate as a result of
acquisitions of assets or businesses by the Parent or any of its
subsidiaries after the date hereof. Each party shall promptly
notify the other party of any communication to that party from the
FTC, the Antitrust Division, any State Attorney General or any
other governmental entity and permit the other party to review in
advance any proposed communication to any of the foregoing.
(c) In the event any litigation is commenced by any person or
entity relating to the transactions contemplated by this Agreement,
including any Acquisition Transaction, Parent shall have the right,
at its own expense, to participate therein, and the Company will
not settle any such litigation without the consent of Parent, which
consent will not be unreasonably withheld.
SECTION 7.8 Public Statements. The parties shall consult
with each other prior to issuing any press release or any written
public statement with respect to this Agreement or the transactions
contemplated hereby and shall not issue any such press release or
written public statement prior to such consultation.
SECTION 7.9 Option Plans. The Company shall use commercially
reasonable efforts to ensure that, at the Effective Time, all
rights with respect to the Company Common Stock pursuant to each
stock option ("Company Options") granted under stock option plans
of the Company or otherwise which is outstanding on the Effective
Date, whether or not such Company Option has previously vested or
become exercisable, shall be cancelled in exchange for a number of
shares of Parent Common Stock equal in market value (based upon the
Parent Trading Price computed with respect to the Closing Date (as
defined in Section 8.2(c)) to the fair value of such Company Option
as determined by Price Waterhouse, LLP., independent third party
experts, or any other party mutually agreed upon by Parent and the
Company. The parties hereto have agreed that the value determined
using the methodology proposed by such independent third party
experts will represent the fair value of the Company Options as of
the Effective Time.
SECTION 7.10 Notification of Certain Matters. Each of the
Company, Parent and Subsidiary agrees to give prompt notice to each
other of, and to use commercially reasonable efforts to remedy, (i)
the occurrence or failure to occur of any event which occurrence or
failure to occur would be likely to cause any of its
representations or warranties in this Agreement to be untrue or
inaccurate in any material respect at the Effective Time and (ii)
any material failure on its part to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied
by it hereunder; provided, however, that the delivery of any
notice pursuant to this Section 7.10 shall not limit or otherwise
affect the remedies available hereunder to the party receiving such
notice.
SECTION 7.11 Directors' and Officers' Indemnification. (a)
The indemnification provisions of the Certificate of Incorporation
and By-Laws of the Surviving Corporation as in effect at the
Effective Time shall not be amended, repealed or otherwise modified
for a period of six years from the Effective Time in any manner
that would adversely affect the rights thereunder of individuals
who at the Effective Time were directors, officers, employees or
agents of the Company. Parent shall assume, be jointly and
severally liable for, and honor, and shall cause the Surviving
Corporation to honor, in accordance with their respective terms
each of the indemnification agreements listed on Section 7.11 of
the Company Disclosure Schedule without limit as to time.
(b) Without limiting Section 7.11(a), after the Effective
Time, each of Parent and the Surviving Corporation shall, to the
fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee and
agent of the Company or any of its subsidiaries (each, together
with such person's heirs, executors or administrators, an
"indemnified Party" and collectively, the "indemnified Parties")
against any costs or expenses (including attorneys fees),
judgments, fines, losses, claims, damages, liabilities and amounts
paid in settlement in connection with any actual or threatened
claim, action, suit, proceeding or investigation, whether civil,
criminal, administrative or investigative, arising out of, relating
to or in connection with any action or omission occurring or
alleged to occur prior to the Effective Time (including, without
limitation, acts or omissions in connection with such persons
serving as an officer, director or other fiduciary in any entity if
such service was at the request or for the benefit of the Company)
or arising out of or pertaining to the transactions contemplated by
this Agreement. In the event of any such actual or threatened
claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) the Company or Parent and
the Surviving Corporation, as the case may be, shall pay the
reasonable fees and expenses of counsel selected by the indemnified
Parties, which counsel shall be reasonably satisfactory to the
Parent and the Surviving Corporation, promptly after statements
therefor are received and shall pay all other reasonable expenses
in advance of the final disposition of such action, (ii) the Parent
and the Surviving Corporation will cooperate and use all reasonable
efforts to assist in the vigorous defense of any such matter, and
(iii) to the extent any determination is required to be made with
respect to whether an indemnified Party's conduct complies with the
standards set forth under the DGCL and the Parent's or the
Surviving Corporation's respective charters or by-laws such
determination shall be made by independent legal counsel acceptable
to the Parent or the Surviving Corporation, as the case may be, and
the indemnified Party; provided, however, that neither Parent nor
the Surviving Corporation shall be liable for any settlement
effected without its written consent (which consent shall not be
unreasonably withheld) and, provided, further , that if Parent or
the Surviving Corporation advances or pays any amount to any person
under this paragraph (b) and if it shall thereafter be finally
determined by a court of competent jurisdiction that such person
was not entitled to be indemnified hereunder for all or any portion
of such amount, to the extent required by law, such person shall
repay such amount or such portion thereof, as the case may be, to
Parent or the Surviving Corporation, as the case may be. The
indemnified Parties as a group may not retain more than one law
firm to represent them with respect to each matter unless there is,
under applicable standards of professional conduct, a conflict on
any significant issue between the positions of any two or more
indemnified Parties.
(c) In the event the Surviving Corporation or Parent or any
of their successors or assigns (i) consolidates with or merges into
any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii)
transfers all or substantially all of its properties and assets to
any person, then and in each such case, proper provisions shall be
made so that the successors and assigns of the Surviving
Corporation or Parent shall assume the obligations of the Surviving
Corporation or the Parent, as the case may be, set forth in this
Section 7.11.
(d) For a period of six years after the Effective Time,
Parent shall cause to be maintained in effect the current policies
of directors' and officers' liability insurance maintained by the
Company and its subsidiaries (provided that Parent may substitute
therefor policies of at least the same coverage and amounts
containing terms and conditions that are no less advantageous to
the indemnified Parties and which coverages and amounts shall be no
less than the coverages and amounts provided at that time for
Parent's directors and officers) with respect to matters arising on
or before the Effective Time.
(e) Parent shall pay all reasonable expenses, including
reasonable attorneys' fees, that may be incurred by any indemnified
Party in enforcing the indemnity and other obligations provided in
this Section 7.11.
(f) The rights of each indemnified Party hereunder shall be
in addition to, and not in limitation of, any other rights such
indemnified Party may have under the charter or bylaws of the
Company, any indemnification agreement, under the DGCL or
otherwise. The provisions of this Section 7.11 shall survive the
consummation of the Merger and expressly are intended to benefit
each of the indemnified Parties.
SECTION 7.12 Corrections to the Joint Proxy
Statement/Prospectus and Registration Statement. Prior to the date
of approval of the Merger by their respective stockholders, each of
the Company, Parent and Subsidiary shall correct promptly any
information provided by it to be used specifically in the Joint
Proxy Statement/Prospectus and Registration Statement that shall
have become false or misleading in any material respect and shall
take all steps necessary to file with the SEC and have declared
effective or cleared by the SEC any amendment or supplement to the
Joint Proxy Statement/Prospectus or the Registration Statement so
as to correct the same and to cause the Joint Proxy
Statement/Prospectus as so corrected to be disseminated to the
stockholders of the Company and Parent, in each case to the extent
required by applicable law.
SECTION 7.13 Supplemental Indenture. The Company shall, and
Parent shall cause the Surviving Corporation to, execute a
supplemental indenture, effective as of the Effective Time, by
which there shall be made the adjustments in the conversion
provisions of the Indenture (the "Indenture") dated as of June 5,
1996 relating to the 4-1/2% convertible subordinated notes issued
by the Company (the "Convertible Notes") which are required to be
made as a result of the Merger in order to provide for the
Convertible Notes to be convertible from and after the Merger into
shares of Parent Common Stock (and cash in lieu of fractional
shares), in the manner and to the extent required by the Indenture,
including without limitation Section 12.11 thereof.
SECTION 7.14 Employment and Consulting Agreements. From and
after the Effective Time, Parent shall, and shall cause the
Surviving Corporation and its subsidiaries to, honor in accordance
with their terms, the employment, severance, and other compensation
contracts listed in Section 7.14 of the Company Disclosure Schedule
between the Company or one of its subsidiaries and certain current
or former directors, officers or employees thereof (true and
correct copies of which have been delivered by the Company to the
Parent). Parent, Subsidiary and the Company each hereby acknowledge
and agree that: (i) upon the consummation of the Merger, each of
the executives listed in Section 7.14 of the Company Disclosure
Schedule will be deemed to have terminated his employment with the
Company; (ii) each such executive will be entitled to receive the
severance pay and benefits set forth in Section 7.14 of the Company
Disclosure Schedule, which severance pay and benefits are required
by the contracts listed in Section 7.14 of the Company Disclosure
Schedule, and (iii) any cash payments to which such executives are
entitled shall be made at Closing and simultaneously therewith. At
the Closing, Parent shall offer to enter into consulting agreements
with Bradley S. Jacobs, John M. Milne and Michael J. Nolan in the
form set forth in Section 7.14 of the Parent Disclosure Schedule.
ARTICLE VIII
CONDITIONS
SECTION 8.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect
the Merger shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions:
(a) this Agreement and the transactions contemplated
hereby shall have been approved and adopted by the requisite
vote of the stockholders of the Company and Parent under
applicable law and applicable listing requirements;
(b) the shares of Parent Common Stock issuable in the
Merger and those to be reserved for issuance upon exercise of
stock options or warrants or the conversion of convertible
securities shall have been authorized for listing on the NYSE
upon official notice of issuance;
(c) the waiting period applicable to the consummation of
the Merger under the HSR Act shall have expired or been
terminated;
(d) the Registration Statement shall have become
effective in accordance with the provisions of the Securities
Act, and no stop order suspending such effectiveness shall
have been issued and remain in effect and no proceeding for
that purpose shall have been instituted by the SEC or any
state regulatory authorities;
(e) no preliminary or permanent injunction or other
order or decree by any federal or state court which prevents
the consummation of the Merger shall have been issued and
remain in effect (each party agreeing to use its reasonable
efforts to have any such injunction, order or decree lifted);
(f) no statute, rule or regulation shall have been
enacted by any state or federal government or governmental
agency in the United States which would prevent the
consummation of the Merger or make the Merger illegal.
(g) all governmental waivers, consents, orders and
approvals legally required for the consummation of the Merger
and the transactions contemplated hereby, and all consents
from lenders required to consummate the Merger, shall have
been obtained and be in effect at the Effective Time, except
where the failure to obtain the same would not be reasonably
likely, individually or in the aggregate, to have a material
adverse effect on the business, operations, properties,
assets, liabilities, condition (financial or other) or results
of operations of the Company and its subsidiaries, taken as a
whole, following the Effective Time;
(h) Coopers & Lybrand L.L.P., certified public
accountants for Parent, shall have delivered a letter, dated
the Closing Date, addressed to Parent, in form and substance
reasonably satisfactory to Parent, to the effect that the
Merger will qualify for a pooling of interests accounting
treatment if consummated in accordance with this Agreement;
and
(i) each of the parties to the Agreement shall have
received a letter dated the Closing Date, addressed to the
Company, from Ernst & Young LLP regarding such firm's
concurrence with the Company's management's conclusions that
no conditions exist related to the Company that would preclude
the Parent's accounting for the Merger with the Company as a
pooling of interests under Accounting Principles Board Opinion
No. 16 if closed and consummated in accordance with this
Agreement.
SECTION 8.2 Conditions to Obligation of the Company to Effect
the Merger. Unless waived by the Company, the obligation of the
Company to effect the Merger shall be subject to the fulfillment at
or prior to the Closing Date of the following additional
conditions:
(a) Parent and Subsidiary shall have performed their
agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the
representations and warranties of Parent and Subsidiary
contained in this Agreement shall be true and correct on and
as of the date made and (except to the extent that such
representations and warranties speak as of an earlier date) on
and as of the Closing Date as if made at and as of such date
except for such failures to perform or to be true and correct
that would not reasonably be expected to have a material
adverse effect on the business operations, properties, assets,
condition (financial or other) or results of operations of
Parent and its subsidiaries considered as a whole, and the
Company shall have received a certificate of the Chairman of
the Board and Chief Executive Officer, the President or a Vice
President of Parent and of the President and Chief Executive
Officer or a Vice President of Subsidiary to that effect;
(b) the Company shall have received an opinion of
Wachtell, Lipton, Rosen & Katz, in form and substance
reasonably satisfactory to the Company, dated the Closing
Date, substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion,
which are consistent with the state of facts existing at the
Effective Time: (i) the Merger will constitute a
reorganization within the meaning of Section 368(a) of the
Code, (ii) no gain or loss will be recognized by Parent, the
Company or Subsidiary as a result of the Merger, and (iii) no
gain or loss will be recognized by the holders of Company
Common Stock upon the exchange of their Company Common Stock
solely for shares of Parent Common Stock (except with respect
to cash received in lieu of fractional shares of Parent Common
Stock). In rendering such opinion, such counsel may rely upon
representations contained in certificates of officers and
certain stockholders of Parent, the Company and Subsidiary;
and
(c) the average of the daily closing prices per share of
Parent Common Stock (as reported on the NYSE Composite
Transactions reporting system) during the 20 consecutive
trading days ending on the second trading day prior to any
then scheduled Closing Date (the "Parent Trading Price") is
$31.50 per share or more (such amount to be appropriately
adjusted for any stock split or stock dividend or
distribution, combination or other change in Parent Common
Stock).
SECTION 8.3 Conditions to Obligations of Parent and
Subsidiary to Effect the Merger. Unless waived by Parent and
Subsidiary, the obligations of Parent and Subsidiary to effect the
Merger shall be subject to the fulfillment at or prior to the
Effective Time of the additional following conditions:
(a) the Company shall have performed its agreements
contained in this Agreement required to be performed on or
prior to the Closing Date and the representations and
warranties of the Company contained in this Agreement shall be
true and correct on and as of the date made and (except to the
extent that such representations and warranties speak as of an
earlier date) on and as of the Closing Date as if made at and
as of such date, except for such failures to perform and to be
true and correct that would not reasonably be expected to have
a material adverse effect on the business, operations,
properties, assets, condition (financial or other) or results
of operations of the Company and its subsidiaries considered
as a whole, and Parent shall have received a Certificate of
the President and Chief Executive Officer or of a Vice
President of the Company to that effect;
(b) Parent shall have received an opinion of McDermott,
Will & Emery, in form and substance reasonably satisfactory to
Parent, dated the Closing Date, substantially to the effect
that, on the basis of facts, representations and assumptions
set forth in such opinion, which are consistent with the state
of facts, existing at the Effective Time: (i) the Merger will
constitute a reorganization within the meaning of Section 368
of the Code and (ii) Parent and Subsidiary will recognize no
gain or loss for federal income tax purposes as a result of
consummation of the Merger. In rendering such opinion, such
counsel may rely upon representations contained in
certificates of officers and certain stockholders of Parent,
the Company and Subsidiary;
(c) at least 60 days prior to the Closing, the Company
shall have delivered to the Parent a complete copy of each
agreement which requires the Company to register any shares of
Company Common Stock under the Securities Act and which would
require the Parent to register any shares of Parent Common
Stock under the Securities Act upon or after the Closing.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.1 Termination. This Agreement may be terminated at
any time prior to the Closing Date, whether before or after
approval by the stockholders of the Company or Parent, by the
mutual written consent of the Company and Parent or as follows:
(a) The Company shall have the right to terminate this
Agreement:
(i) upon a material breach of a representation or
warranty of Parent contained in this Agreement which has
not been cured in all material respects and which has
caused any of the conditions set forth in section 8.2(a)
to be incapable of being satisfied by the Termination
Date;
(ii) if the Merger is not completed by October 31,
1997 (the "Termination Date") (unless due to a delay or
default on the part of the Company);
(iii) if the Merger is enjoined by a final,
unappealable court order not entered at the request or
with the support of the Company and if the Company shall
have used reasonable efforts to prevent the entry of such
order;
(iv) if the Company receives a Superior Proposal,
resolves to accept such Superior Proposal, and the
Company shall have given Parent two days' prior written
notice of its intention to terminate pursuant to this
provision; provided, however, that such termination
shall not be effective until such time as the payment
required by Section 7.6(b) shall have been received by
Parent;
(v) if (A) a tender or exchange offer is commenced
by a Potential Acquirer (excluding any affiliate of the
Company or any group of which any affiliate of the
Company is a member) for all outstanding shares of
Company Common Stock, (B) the Company's Board of
Directors determines, in good faith and after
consultation with an independent financial advisor, that
such offer constitutes a Superior Proposal and resolves
to accept such Superior Proposal or recommend to the
stockholders that they tender their shares in such tender
or exchange offer and (C) the Company shall have given
Parent two days' prior written notice of its intention to
terminate pursuant to this provision; provided, however,
that such termination shall not be effective until such
time as the payment required by Section 7.6(b) shall have
been received by Parent;
(vi) if Parent (A) fails to perform in any material
respect any of its material covenants in this Agreement
and (B) does not cure such default in all material
respects within 30 days after written notice of such
default specifying such default in reasonable detail is
given to Parent by the Company; or
(vii) if the stockholders of Parent fail to approve
the Merger at a duly held meeting of stockholders called
for such purpose or any adjournment or postponement
thereof.
(b) Parent shall have the right to terminate this
Agreement:
(i) upon a material breach of a representation or
warranty of the Company contained in this Agreement which
has not been cured in all material respects and which has
caused any of the conditions set forth in Section 8.3(a)
to be incapable of being satisfied by the Termination
Date;
(ii) if the Merger is not completed by October 31,
1997, (unless due to a delay or default on the part of
Parent);
(iii) if the Merger is enjoined by a final,
unappealable court order not entered at the request or
with the support of Parent and if Parent shall have used
reasonable efforts to prevent the entry of such order;
(iv) if the Board of Directors of the Company shall
have resolved to accept a Superior Proposal or shall have
recommended to the stockholders of the Company that they
tender their shares in a tender or an exchange offer
commenced by a third party (excluding any affiliate of
Parent or any group of which any affiliate of Parent is
a member); provided that the Parent may not so terminate
until three days after receipt of the notice of the
Company of such Superior Proposal;
(v) if the Company (A) fails to perform in any
material respect any of its material covenants in this
Agreement and (B) does not cure such default in all
material respects within 30 days after written notice of
such default specifying such default in reasonable detail
is given to the Company by Parent; or
(vi) if the stockholders of the Company fail to
approve the Merger at a duly held meeting of stockholders
called for such purpose or any adjournment or
postponement thereof.
(c) As used in this Section 9.1, (i) "affiliate" has the
meaning assigned to it in Section 7.4 and (ii) "group" has the
meaning set forth in Section 13(d) of the Exchange Act and the
rules and regulations thereunder.
SECTION 9.2 Effect of Termination. In the event of
termination of this Agreement by either Parent or the Company
pursuant to the provisions of Section 9.1, this Agreement shall
forthwith become void and there shall be no liability or further
obligation on the part of the Company, Parent, Subsidiary or their
respective officers or directors (except this Section 9.2, in the
second sentence of Section 7.1(a) and in Sections 7.1(b), 7.6 and
10.4 all of which shall survive the termination). Nothing in this
Section 9.2 shall relieve any party from liability for any willful
and intentional breach of any covenant or agreement of such party
contained in this Agreement.
SECTION 9.3 Amendment. This Agreement may not be amended
except by action taken by the parties' respective Boards of
Directors or duly authorized committees thereof and then only by an
instrument in writing signed on behalf of each of the parties
hereto and in compliance with applicable law. Such amendment may
take place at any time prior to the Closing Date, and, subject to
applicable law, whether before or after approval by the
stockholders of the Company, Parent or Subsidiary.
SECTION 9.4 Waiver. At any time prior to the Effective Time,
the parties hereto may (a) extend the time for the performance of
any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant thereto and
(c) waive compliance with any of the agreements or conditions
contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1 Non-Survival of Representations and Warranties.
No representations, warranties or agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall
survive the Merger, and after effectiveness of the Merger neither
the Company, Parent, Subsidiary or their respective officers or
directors shall have any further obligation with respect thereto
except for the representations, warranties and agreements contained
in Articles II, III and X, Section 7.9, Section 7.11, Section 7.13
and Section 7.14.
SECTION 10.2 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if
delivered personally, mailed by registered or certified mail
(return receipt requested) or sent via facsimile to the parties at
the following addresses (or at such other address for a party as
shall be specified by like notice):
(a) If to Parent or Subsidiary to:
USA Waste Services, Inc.
1001 Fannin Street
Suite 4000
Houston, Texas 77002
Attn: Gregory T. Sangalis
with a copy to:
Thomas J. Murphy, P.C.
McDermott, Will & Emery
227 W. Monroe Street
Chicago, Illinois 60606
(b) If to the Company, to:
United Waste Systems, Inc.
Four Greenwich Office Park
Greenwich, CT 06830
Attn: Bradley S. Jacobs
with a copy to:
Oscar A. Folger
521 Fifth Avenue, 24th Floor
New York, New York 10175
SECTION 10.3 Interpretation. The headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. In this
Agreement, unless a contrary intention appears, (i) the words
"herein", "hereof" and "hereunder" and other words of similar
import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision and (ii) reference to any
Article or Section means such Article or Section hereof. No
provision of this Agreement shall be interpreted or construed
against any party hereto solely because such party or its legal
representative drafted such provision. For purposes of determining
whether any fact or circumstance involves a material adverse effect
on the results of operations of a party, the following shall not be
considered: (i) any special transaction charges incurred by such
party as a result of the consummation of acquisitions accounted for
under the pooling of interests method of accounting and (ii) any
non-cash, non-recurring charges resulting from (A) the write-down
of non-material assets, the value of which are impaired as the
result of an order of a governmental or regulatory body or
authority, or (B) the sale of non-material assets. Notwithstanding
anything to the contrary herein or in the Parent Disclosure
Schedule, no representation or warranty or covenant or agreement of
Parent contained herein shall be deemed qualified by any of the
matters set forth in the Parent's Current Report on Form 8-K dated
January 13, 1997 or any matter arising out of, resulting from or
relating to any such matter, regardless of whether any provision
hereof is otherwise qualified by reference to the Parent SEC
Reports, the Parent Disclosure Schedule or otherwise.
SECTION 10.4 Miscellaneous. This Agreement (including the
documents and instruments referred to herein) (a) constitutes the
entire agreement and supersedes all other prior agreements and
understandings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof, (b) shall not be
assigned by operation of law or otherwise, except that Subsidiary
may assign this Agreement to any other wholly-owned subsidiary of
Parent. THIS AGREEMENT SHALL BE GOVERNED IN ALL RESPECTS,
INCLUDING VALIDITY, INTERPRETATION AND EFFECT, BY THE LAWS OF THE
STATE OF DELAWARE APPLICABLE TO CONTRACTS EXECUTED AND TO BE
PERFORMED WHOLLY WITHIN SUCH STATE. THE EXCLUSIVE VENUE FOR THE
ADJUDICATION OF ANY DISPUTE OR PROCEEDING ARISING OUT OF THIS
AGREEMENT OR THE PERFORMANCE THEREOF SHALL BE THE COURTS LOCATED IN
THE STATE OF DELAWARE AND THE PARTIES HERETO AND THEIR AFFILIATES
EACH CONSENT TO AND HEREBY SUBMIT TO THE JURISDICTION OF ANY COURT
LOCATED IN THE STATE OF DELAWARE.
SECTION 10.5 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same
agreement.
SECTION 10.6 Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto,
and except as set forth in Sections 2.1, 2.2, 3.3, 7.9, 7.11 and
7.14 (which are intended to and shall create third party
beneficiary rights if the Merger is consummated), nothing in this
Agreement, express or implied, is intended to confer upon any other
person any rights or remedies of any nature whatsoever under or by
reason of this Agreement. The rights of any third party
beneficiary hereunder are not subject to any defense, offset or
counterclaim.
<PAGE>
IN WITNESS WHEREOF, Parent, Subsidiary and the Company have
caused this Agreement to be signed by their respective officers and
attested to as of the date first written above.
USA WASTE SERVICES, INC.
Attest:
By:
Secretary Name:
Title:
RIVIERA ACQUISITION CORPORATION
Attest:
By:
Secretary Name:
Title:
UNITED WASTE SYSTEMS, INC.
By:
Secretary Name:
Title:
