SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file Number: 0-22756
Advanced Technology Materials, Inc.
(Exact name of registrant as specified in its charter)
Delaware 06-1236302
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7 Commerce Drive, Danbury, CT 06810
(Address of principal executive offices) (Zip Code)
203-794-1100
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No __
The number of shares outstanding of the registrant's common stock as of
July 28, 1997 was 8,813,945.
<PAGE>
ADVANCED TECHNOLOGY MATERIALS, INC.
Quarterly Report on Form 10-Q
For the Period Ended June 30, 1997
TABLE OF CONTENTS
Page
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheet............................................. 3
Consolidated Statement of Operations................................. 4
Consolidated Statement of Cash Flows................................. 6
Notes to Consolidated Interim Financial Statements................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................... 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk.... 13
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.............................. 14
Signatures............................................................ 15
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Advanced Technology Materials, Inc.
Consolidated Balance Sheet
June 30, December 31,
1997 1996
---- ----
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents ...... $ 1,338,477 $ 4,437,015
Marketable securities .......... 16,850,826 16,969,073
Accounts receivable, net of
allowance for doubtful accounts
of $185,485 in 1997 and
$141,504 in 1996 ............. 12,526,901 9,377,777
Inventory ...................... 4,698,106 4,541,282
Other .......................... 2,128,039 500,324
--------- -------
Total current assets .............. 37,542,349 35,825,471
Property and equipment, net ....... 9,121,482 8,102,218
Long-term investment .............. 1,250,003 1,000,000
Goodwill and other intangibles .... 5,176,024 5,190,758
--------- ---------
$ 53,089,858 $ 50,118,447
============ ============
Liabilities and stockholders' equity Current liabilities:
Accounts payable .............. $ 3,893,861 $ 3,469,530
Accrued expenses ............... 1,396,441 1,996,587
Accrued commissions ............ 1,765,684 1,378,888
Accrued payroll and benefits ... 860,643 465,280
Notes payable .................. 586,634 621,463
Other .......................... 785,642 790,261
------- -------
Total current liabilities ......... 9,288,905 8,722,009
Notes payable, less current portion 4,726,113 4,944,517
Other long-term liabilities ....... 57,500 59,382
Stockholders' equity:
Preferred stock, par value
$.01: 1,000,000 shares authorized;
none issued and outstanding ... - -
Common stock, par value $.01:
15,000,000 shares authorized;
issued and outstanding 8,807,420 in
1997 and 8,775,810 in 1996 88,074 87,758
Additional paid-in capital ..... 37,412,597 37,234,277
Retained earnings
(accumulated deficit) ......... 1,516,669 (929,496)
--------- --------
Total stockholders' equity ......... 39,017,340 36,392,539
---------- ----------
$ 53,089,858 $ 50,118,447
============ ============
</TABLE>
See accompanying notes
<PAGE>
<TABLE>
<CAPTION>
Advanced Technology Materials, Inc.
Consolidated Statement of Operations
(unaudited)
Three months ended June 30,
1997 1996
---- ----
<S> <C> <C>
Revenues:
Product revenues .................. $ 11,349,862 $ 10,164,431
Contract revenues ................. 2,282,410 2,211,758
--------- ---------
Total revenues ....................... 13,632,272 12,376,189
Cost of revenues:
Cost of product revenues .......... 4,718,632 4,358,087
Cost of contract revenues ......... 1,881,235 1,895,822
--------- ---------
Total cost of revenues ............... 6,599,867 6,253,909
--------- ---------
Gross profit ......................... 7,032,405 6,122,280
Operating expenses:
Research and development .......... 2,174,043 2,185,333
Selling, general and administrative 3,470,349 3,344,420
--------- ---------
5,644,392 5,529,753
--------- ---------
Operating income ..................... 1,388,013 592,527
Interest income ...................... 280,950 271,658
Interest expense ..................... (103,768) (140,163)
-------- --------
Income before income taxes ........... 1,565,195 724,022
Income taxes ......................... 225,601 83,574
======= ======
Net income ........................... $ 1,339,594 $ 640,448
============ ============
Net income per share ................. $ 0.14 $ 0.07
------------ ------------
Weighted average shares outstanding .. 9,617,638 9,413,062
========= =========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Advanced Technology Materials, Inc.
Consolidated Statement of Operations
(unaudited)
Six months ended June 30,
1997 1996
---- ----
<S> <C> <C>
Revenues:
Product revenues .................. $ 21,197,316 $ 17,743,508
Contract revenues ................. 4,900,651 4,694,752
--------- ---------
Total revenues ....................... 26,097,967 22,438,260
Cost of revenues:
Cost of product revenues .......... 9,329,662 7,607,245
Cost of contract revenues ......... 4,038,945 3,928,608
--------- ---------
Total cost of revenues ............... 13,368,607 11,535,853
---------- ----------
Gross profit ......................... 12,729,360 10,902,407
Operating expenses:
Research and development .......... 4,112,106 4,048,215
Selling, general and administrative 6,188,905 5,919,948
--------- ---------
10,301,011 9,968,163
---------- ---------
Operating income ..................... 2,428,349 934,244
Interest income ...................... 555,181 549,926
Interest expense ..................... (205,428) (262,702)
-------- --------
Income before income taxes ........... 2,778,102 1,221,468
Income taxes ......................... 331,937 111,574
======= =======
Net income ........................... $ 2,446,165 $ 1,109,894
============ ============
Net income per share ................. $ 0.26 $ 0.12
------------ ------------
Weighted average shares outstanding .. 9,583,528 9,364,302
========= =========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
Advanced Technology Materials, Inc.
Consolidated Statement of Cash Flows
(unaudited)
Six months ended June 30,
1997 1996
---- ----
<S> <C> <C>
Operating activities
Net income ................................... $ 2,446,165 $ 1,109,894
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization ............. 1,349,856 1,039,977
Changes in operating assets and liabilities
Increase in accounts receivable .......... (3,149,124) (267,573)
Increase in inventory .................... (156,824) (1,295,529)
Increase in other assets ................. (1,752,337) (210,579)
Increase (decrease) in accounts payable .. 424,331 (35,874)
Increase in accrued expenses ............. 182,013 1,473,314
Increase (decrease) in other liabilities . (6,501) 214,960
------ -------
Total adjustments ............................ (3,108,586) 918,696
---------- -------
Net cash (used) provided
by operating activities ..................... (662,421) 2,028,590
-------- ---------
Investing activities
Capital expenditures ......................... (2,229,764) (2,522,619)
Long term investment ......................... (250,003) --
Sale of marketable securities ................ 118,247 4,821,185
------- ---------
Net cash (used) provided
by investing activities ..................... (2,361,520) 2,298,566
---------- ---------
Financing activities
Proceeds from issuance of notes payable ...... -- 727,216
Principal payments on notes payable .......... (253,233) (4,366,193)
Proceeds from the exercise of stock
options and warrants .................... 178,636 32,505
------- ------
Net cash used by financing activities ........ (74,597) (3,606,472)
------- ----------
Net increase (decrease) in cash
and cash equivalents .................... (3,098,538) 720,684
Cash and cash equivalents, beginning
of period ................................... 4,437,015 3,609,265
========= =========
Cash and cash equivalents,
end of period ........................... $ 1,338,477 $ 4,329,949
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>
Advanced Technology Materials, Inc.
Notes To Consolidated Interim Financial Statements
(unaudited)
1. Basis of Presentation
The accompanying unaudited interim financial statements of Advanced
Technology Materials, Inc. ("ATMI" or the "Company") have been prepared in
accordance with the instructions to Form 10-Q and Rule 10.01 of Regulation S-X
and do not include all of the financial information and disclosures required by
generally accepted accounting principles.
In the opinion of the Company's management, the financial information
contained herein has been prepared on the same basis as the audited Consolidated
Financial Statements contained in the Company's Form 10-K for the year ended
December 31, 1996, and includes adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the unaudited quarterly results set
forth herein. The Company's quarterly results have, in the past, been subject to
fluctuation and, thus, the operating results for any quarter are not necessarily
indicative of results for any future fiscal period.
2. Per Share Data
Earnings per common share is computed using the treasury stock method based
on the weighted average number of common and common equivalent shares
outstanding during the period. Shares from the assumed exercise of options and
warrants granted by the Company have been included in the computation of
earnings per share for all periods, unless their inclusion would be
antidilutive.
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted on December 31,
1997. This Statement simplifies the computation of earnings per share and makes
the computation more consistent with those of other countries. The
implementation will require the disclosure of basic and diluted earnings per
share. The Company will adopt this Statement during the fourth quarter of 1997.
Pro forma basic earnings per share under the new computation are $.15 and $.28
for the three months and six months ended June 30, 1997, respectively.
3. Inventory
Inventory is comprised of the following:
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
---- ----
<S> <C> <C>
Raw materials $4,281,642 $4,143,818
Work in process 1,354,313 686,898
Finished goods 14,060 369,846
------ -------
5,650,015 5,200,562
Obsolescence reserve (951,909) (659,280)
-------- --------
$4,698,106 $4,541,282
========== ==========
</TABLE>
<PAGE>
4. Income taxes
ATMI's income tax expense relates primarily to state taxes on income
generated, partially offset by the utilization of loss carryforwards and
available state tax credits. Minimal federal taxes in 1997 and 1996 relate to
alternative minimum taxes arising from the use of net operating loss
carryforwards. ATMI has utilized substantially all its federal net operating
loss carryforwards as of June 30, 1997.
5. Mergers and Acquisitions
On April 7, 1997, the Company executed a Merger and Exchange Agreement (the
"ADCS Agreement") to acquire all of the issued and outstanding equity interests
in Advanced Delivery & Chemical Systems Nevada, Inc. and its related entities
("ADCS"). ADCS is engaged in the manufacture and sale of ultra-high purity
semiconductor thin film materials and associated delivery systems. The ADCS
Agreement is subject to approval by ATMI's stockholders and the satisfaction of
other customary conditions. Transaction costs of approximately $2 million will
be recognized in the period the transaction closes.
Pursuant to the ADCS Agreement, holders of interests in ADCS will receive
between 5,468,750 and 6,250,000 shares of common stock of a newly created
holding company in exchange for their interests. The actual number of shares to
be issued to the holders of equity interests in ADCS depends upon the average
closing price of ATMI's common stock during a 20 day trading period ending five
days prior to stockholder approval of the ADCS Agreement. Additionally, as part
of the transaction, ATMI will become a subsidiary of the holding company. The
acquisition is intended to be accounted for as a pooling of interests. ATMI
intends to continue the business currently performed by ADCS by combining it
with the semiconductor thin film and delivery system product lines of the
NovaMOS division of ATMI, under the name ADCS.
On May 17, 1997, the Company, executed an Agreement and Plan of Merger (the
"LSL Agreement") to acquire all of the issued and outstanding stock in Lawrence
Semiconductor Laboratories, Inc. ("LSL"). LSL is an outsourcer of epitaxial
processing of silicon wafers using chemical vapor deposition technology to meet
customer specifications. Epitaxial processing is one of many steps involved in
transforming a silicon wafer into a semiconductor chip, the primary functional
component of most electronic products. The LSL Agreement is subject to approval
by ATMI's stockholders and the satisfaction of other customary conditions.
Transaction costs of approximately $1.5 million are expected to be recognized.
Additionally, LSL would incur a fee of approximately $750,000 to its investment
banker and a break-up fee in connection with another transaction of
approximately $1.8 million upon consummation of the acquisition of LSL. All of
these non-recurring costs will be recognized in the period the transaction
closes.
Pursuant to the LSL Agreement, stockholders in LSL will receive between
approximately 3,714,285 and 4,588,235 shares of common stock of ATMI (or a newly
created holding company if the pending acquisition of ADCS and related entities
is consummated) in exchange for their shares. The actual number of shares to be
issued to the LSL stockholders depends upon the average closing price of ATMI's
common stock during a 20 day trading period ending three days prior to
stockholder approval of the LSL Agreement and changes in the net book value of
LSL up to the time of closing. The acquisition is intended to be accounted for
as a pooling of interests. The Company intends to continue the business
currently performed by LSL by combining it with its Epitronics division which
provides epitaxial services for gallium arsenide and other advanced materials.
As of June 30, 1997, approximately $1,430,000 of non-recurring transaction
costs have been classified on the balance sheet as other current assets until
the aforementioned transactions close.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Overview Founded in 1986, ATMI generates revenues from product sales and
contract research. Most product sales are point-of-use environmental equipment,
specialty materials, and delivery systems for the semiconductor industry. ATMI
also receives royalties for certain product sales from third parties.
Since 1986, a significant portion of ATMI's revenues has come from
contracts with United States government agencies. The programs in which ATMI
participates may extend for several years, but are usually funded annually.
There can be no assurance that the government will continue its commitment to
programs to which ATMI's development projects are applicable or that ATMI can
compete successfully to obtain program funding.
ATMI has used a targeted acquisition strategy to assist in building
critical mass and market position in the niches the Company serves. In 1994,
ATMI acquired Vector Technical Group, Inc. ("Vector"), and in conjunction with
the sale of certain Novapure product lines to Millipore Corporation in September
1994, formed ATMI EcoSys Corporation ("EcoSys") by merging the retained
operations of Novapure with those of Vector. In 1995, ATMI acquired the Guardian
product line from Messer Griesheim Industries, Inc. and folded that product line
into EcoSys. In 1995, ATMI acquired Epitronics Corporation, and in early 1996,
combined that business with the formerly known Diamond Electronics division
under the Epitronics name. In April 1997 and May 1997, ATMI announced intended
acquisitions of ADCS and LSL. ADCS manufactures and distributes ultra-high
purity semiconductor thin film materials. LSL is an outsourcer of epitaxial
processing of silicon wafers using chemical vapor deposition technology to meet
customer specifications. ATMI intends to combine the operations of ADCS with the
operations of ATMI's NovaMOS division and to combine the operations of LSL with
the operations of ATMI's Epitronics division following shareholder approval of
these transactions, which is anticipated during the third quarter of 1997.
The following table sets forth, for the periods indicated, the percentage
relationship to total revenues of certain items in ATMI's Consolidated Statement
of Operations:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
--- ---
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---- ---- ---- ----
Product revenues ............. 83.3% 82.1% 81.2% 79.1%
Contract revenues ............ 16.7 17.9 18.8 20.9
---- ---- ---- ----
Total revenues ......... 100.0 100.0 100.0 100.0
Cost of revenues ............. 48.4 50.5 51.2 51.4
Gross profit ................. 51.6 49.5 48.8 48.6
Operating expenses:
Research and development 15.9 17.7 15.7 18.0
Selling, general
and administrative . 25.5 27.0 23.7 26.4
---- ---- ---- ----
Total operating expenses ..... 41.4 44.7 39.4 44.4
Operating income ............. 10.2 4.8 9.4 4.2
Other income, net ............ 1.3 1.1 1.3 1.3
Income before taxes .......... 11.5 5.9 10.7 5.5
Income taxes ................. 1.7 0.7 1.3 0.5
Net income ................... 9.8% 5.2% 9.4% 5.0%
</TABLE>
<PAGE>
The following table sets forth revenues, cost of revenues and gross profit
for products and contracts, as a percentage of each category:
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
--- ---
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Products:
Revenues ........ 100.0% 100.0% 100.0% 100.0%
Cost of revenues 41.6 42.9 44.0 42.9
Gross profit ... 58.4% 57.1% 56.0% 57.1%
Contracts:
Revenues ........ 100.0% 100.0% 100.0% 100.0%
Cost of revenues 82.4 85.7 82.4 83.7
Gross profit ... 17.6% 14.3% 17.6% 16.3%
</TABLE>
Results of Operations
Three Months Ended June 30, 1997 and 1996.
Revenues. Total revenues increased 10.1% to approximately $13,632,000 in
the three months ended June 30, 1997 from approximately $12,376,000 in the same
three month period in 1996. Product revenues increased 11.7% to approximately
$11,350,000 in the three months ended June 30, 1997 from approximately
$10,164,000 in the comparable period in 1996. The product revenue growth was
primarily attributable to the continued expansion of SDS product sales. Contract
revenues, which are funded solely by United States government agencies,
increased 3.2% to approximately $2,282,000 in the quarter ended June 30, 1997
from approximately $2,212,000 in the same three month period in 1996. The
increase in the 1997 quarter reflects a general increase in government funding
of the Company's research activities.
Gross Profit. Gross profit increased 14.9% to approximately $7,032,000 in
the quarter ended June 30, 1997 from approximately $6,122,000 in the quarter
ended June 30, 1996. As a percentage of revenues, gross margin increased to
51.6% in the three month period in 1997 from 49.5% of revenues in the three
month period in 1996.
Gross profit from product revenues increased 14.2% to approximately
$6,631,000 in the three months ended June 30, 1997 from approximately $5,806,000
in the same three month period a year ago. As a percentage of product revenues,
gross margin increased to 58.4% in the 1997 period from 57.1% in the 1996 period
due principally to higher margin on the product mix within the EcoSys product
lines.
Gross profit on contract revenues increased 26.9% to approximately $401,000
in the quarter ended June 30, 1997 from approximately $316,000 in the same
quarter a year ago. As a percentage of contract revenues, gross margin increased
to 17.6% in the first quarter of 1997 from 14.3% in the first quarter of 1996.
Contract margins can vary slightly from year to year based on the mix of
cost-type, firm fixed price and cost share arrangements. Additionally, different
fee arrangements and indirect cost absorption can contribute to margin
variability.
Research and Development Expenses. Research and development expenses
decreased 0.5% to approximately $2,174,000 in the first three months of 1997
from approximately $2,185,000 in the first three months of 1996. This slight
decrease was attributable to the corresponding increase in government contract
revenues for the quarter which funded a slightly larger portion of the Company's
research expenses. As a percentage of revenues, research and development
expenses decreased to 15.9% in the 1997 quarter from 17.7% in the 1996 quarter.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 3.8% to approximately $3,470,000 in the three
months ended March 31, 1997 from approximately $3,344,000 in the same three
month period in 1996. The increase in the 1997 quarter was primarily due to
increased administrative costs related to an increase in headcount, including
expenses related to the ISO 9000 certification process underway at the Company.
As a percentage of revenues, these expenses decreased to 25.5% in the three
month period in 1997 from 27.0% in the comparable period in 1996.
Other Income, Net. Other income increased 35.1% to approximately $177,000
in the quarter ended June 30, 1997 from approximately $131,000 in the quarter
ended June 30, 1996. The increase in the 1997 quarter related to a decrease in
interest expense as a result of decreases in outstanding debt balances.
Income Taxes. ATMI's income tax expense related primarily to state taxes on
income generated, partially offset by the utilization of loss carryforwards and
available state tax credits. Minimal federal taxes paid in 1997 and 1996 related
to alternative minimum taxes arising from the use of net operating loss
carryforwards. Income tax expense in the quarter ended June 30, 1997 was
$226,000 up from $84,000 in the same quarter a year ago. The Company's loss
carryforwards have been substantially utilized at June 30, 1997, causing
effective tax rates to increase. The Company expects the tax rates to approach
approximately 40% by the end of the current year.
Earnings per Share. Earnings per share improved to $.14 for the first
quarter of 1997 compared with a $.07 earnings per share in the first quarter of
1996. Earnings per share in the 1997 period reflects the 2.2% increase in
weighted average shares outstanding from approximately 9,413,000 in the first
quarter of 1996 to approximately 9,618,000 in the first quarter of 1997, a
result of exercised stock options under the Company's existing stock plans and
the dilutive effect of a higher stock price when calculating common stock
equivalents.
Six Months Ended June 30, 1997 and 1996.
Revenues. Total revenues increased 16.3% to approximately $26,098,000 in
the six months ended June 30, 1997 from approximately $22,438,000 in the same
six month period in 1996. Product revenues increased 19.5% to approximately
$21,197,000 in the six months ended June 30, 1997 from approximately $17,744,000
in the comparable period in 1996. The product revenue growth was primarily
attributable to the continued expansion of SDS product sales and higher sales
levels at EcoSys. Contract revenues, which are funded by United State government
agencies, increased 4.4% to approximately $4,901,000 in the six months ended
June 30, 1997 from approximately $4,695,000 in the same six month period in
1996. The increase in the six months ended June 30, 1997 reflected a general
increase in government funding of the Company's research activities.
Gross Profit. Gross profit increased 16.8% to approximately $12,729,000 in
the six months ended June 30, 1997 from approximately $10,902,000 in the six
months ended June 30, 1996. As a percentage of revenues, gross margin increased
to 48.8% in the six month period in 1997 from 48.6% of revenues in the six month
period in 1996.
Gross profit from product revenues increased 17.1% to approximately
$11,868,000 in the six months ended June 30, 1997 from approximately $10,136,000
in the same six month period a year ago. As a percentage of product revenues,
gross margin decreased to 56.0% in the 1997 period from 57.1% in the 1996 period
due principally to product mix variability within the EcoSys product lines
offset by manufacturing margins on SDS product sales which are at a level that
is higher than the average ATMI product margin. Prior to November 1996, revenues
for the SDS product line consisted of royalty payments.
Gross profit on contract revenues increased 12.5% to approximately $862,000
in the six months ended June 30, 1997 from approximately $766,000 in the same
quarter a year ago. As a percentage of contract revenues, gross margin increased
to 17.6% in the first quarter of 1997 from 16.3% in the first quarter of 1996.
Research and Development Expenses. Research and development expenses
increased 1.6% to approximately $4,112,000 in the first six months of 1997 from
approximately $4,048,000 in the first six months of 1996. Increased development
efforts surrounding the Company's ferroelectric thin film technology and related
applications was the primary cause for the increase, offsetting reduced spending
related to other technology development efforts. As a percentage of revenues,
research and development expenses decreased to 15.7% in the first half of 1997
from 18.0% in the first half of 1996.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 4.5% to approximately $6,189,000 in the six
months ended June 30, 1997 from approximately $5,920,000 in the same period in
1996. The increase in the 1997 period was primarily due to increased corporate
administrative costs, increased product shipments and increased product
marketing activity. As a percentage of revenues, these expenses decreased to
23.7% in the first half of 1997 from 26.4% in the comparable period in 1996.
Other Income, Net. Other income increased 22.0% to approximately $350,000
for the six months ended June 30, 1997 from approximately $287,000 in for the
six months ended June 30, 1996. The increase in the first six months of 1997
related to a decrease in interest expense as a result of decreases in
outstanding debt balances.
Income Taxes. ATMI's income tax expense related primarily to state taxes on
income generated, partially offset by the utilization of loss carryforwards and
available state tax credits. Minimal federal taxes paid in 1997 and 1996 related
to alternative minimum taxes arising from the use of net operating loss
carryforwards. Income tax expense for the six months ended June 30, 1997 was
$332,000, up from $112,000 in the same six months a year ago. The Company's loss
carryforwards have been substantially utilized, causing effective tax rates to
increase. The Company currently estimates its tax rates to approximate 40% by
the end of the current year.
Earnings per Share. Earnings per share improved to $.26 for the six months
ended June 30, 1997 compared with a $.12 earnings per share for the six months
ended June 30, 1996. Earnings per share in the 1997 period reflects the 2.3%
increase in weighted average shares outstanding from approximately 9,364,000 in
the first six months of 1996 to approximately 9,584,000 in the first six months
of 1997, a result of exercised stock options under the Company's existing stock
plans and the dilutive effect of a higher stock price when calculating common
stock equivalents.
Liquidity and Capital Resources
Net cash used by operations was approximately $662,000 during the six
months ended June 30, 1997 compared to $2,029,000 provided during the same six
month period of 1997, despite generating approximately $1,336,000 more of net
income in the six month period ended June 30, 1997 than the preceding year's six
month period ended June 30, 1996. Working capital fluctuations in the first
quarter of 1997 resulted in a significant use of cash, primarily increases in
accounts receivable, and other assets which were partially offset by increases
in accounts payable and accrued expenses. The Company has used a significant
amount of cash for transaction costs associated with the pending mergers noted
above. These costs will be expensed in the period in which the transactions
close.
<PAGE>
The Company utilized approximately $2,362,000 in cash in investing
activities compared to a generation of approximately $2,299,000 in cash in the
same quarter a year ago. During the first six months of 1997, cash was used for
the purchase of approximately $2,200,000 in capital equipment, primarily related
to installation of SDS manufacturing capacity in Danbury and epitaxial capacity
at Epitronics' Phoenix facility. In the previous year's first six months, the
Company incurred approximately $2,500,000 in capital expenditures and sold a net
amount of approximately $4,800,000 in marketable securities.
The Company utilized approximately $75,000 from financing activities during
the first six months of 1997 compared to a utilization of cash of approximately
$3,606,000 in the first six months of 1996. The first six months of 1996
included a $4 million debt payment related to the Company's acquisition of its
Guardian line of environmental equipment.
ATMI believes its existing cash balances and marketable securities,
together with existing sources of liquidity and anticipated funds from
operations, will satisfy its projected working capital and other cash
requirements through at least the end of 1998. However, ATMI believes the level
of financing resources available to it is an important competitive factor in its
industry and may seek additional capital prior to the end of that period.
Additionally, ATMI considers, on a continuing basis, potential acquisitions of
technologies and businesses complementary to its current business which may
require additional cash.
Safe Harbor Statement
Statements which are not historical facts in this report are forward
looking statements, made on a good faith basis. Such forward looking statements,
including those expressing confidence about the Company's expectations for
demand and sales of new and existing products, semiconductor industry and market
segment growth, and market and technology opportunities, all involve risk and
uncertainties. Actual results may differ materially from forward looking
statements, for reasons including, but not limited to, changes in the pattern of
semiconductor industry growth or the markets the Company sells products for,
customer interest in the Company's products, product and market competition,
delays or problems in the development and commercialization of the Company's
products, or technological change affecting the Company's core thin film
competencies.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not Applicable
<PAGE>
PART II- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits.
Exhibit
No. Description
2.01 Agreement and Plan of Merger and Exchange
(the Reorganization)
2.02(a) Agreement and Plan of Merger
(the Lawrence Acquisition)
2.02(b) Agreement and Plan of Merger, first amendment dated June 6, 1997
(the Lawrence Acquisition)
2.02(c) Agreement and Plan of Merger, second amendment dated July 30, 1997
(the Lawrence Acquisition)
11.01 Statement re: computation of per share earnings
(Filed herewith)
27.01 Financial Data Schedule
All schedules and exhibits to the Agreements and Plans of Mergers listed
will be filed upon request.
b. Reports on Form 8-K.
On April 21, 1997, the Company filed a Current Report on Form 8-K dated
April 7, 1997 reporting in Item 5 thereof the execution of the ADCS Agreement to
acquire all of the issued and outstanding equity interests in ADCS. The ADCS
Agreement is subject to shareholder approval and other customary conditions.
<PAGE>
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 thereunto duly authorized.
Advanced Technology Materials, Inc.
August 12, 1997
By /S/ Eugene G. Banucci
- ------------------------
Eugene G. Banucci, Ph.D., President, Chief Executive
Officer, Chairman of the Board and Director
By /S/ Daniel P. Sharkey
- ------------------------
Daniel P. Sharkey, Vice President, Chief Financial
Officer and Treasurer (Chief Accounting Officer)
<PAGE>
EXHIBIT INDEX
Sequentially
Numbered
Exhibit No. Description
2.01 Agreement and Plan of Merger and Exchange (the Reorganization)
2.02(a) Agreement and Plan of Merger (the Lawrence Acquisition)
2.02(b) Agreement and Plan of Merger, first amendment dated June 6, 1997
2.02(c) Agreement and Plan of Merger, second amendment dated July 30, 1997
11.01 Statement re: computation of per share earnings
Financial Data Schedule
All schedules and exhibits to the Agreements and Plans of Mergers listed
will be filed upon request.
<PAGE>
AGREEMENT AND PLAN OF MERGER AND EXCHANGE
BY AND AMONG
ADVANCED TECHNOLOGY MATERIALS, INC.
ATMI HOLDINGS, INC.,
ALAMO MERGER, INC.
ADVANCED DELIVERY & CHEMICAL SYSTEMS NEVADA, INC.,
ADVANCED DELIVERY & CHEMICAL SYSTEMS HOLDINGS, LLC,
ADVANCED DELIVERY & CHEMICAL SYSTEMS OPERATING, LLC,
ADVANCED DELIVERY & CHEMICAL SYSTEMS MANAGER, INC.,
AND
ADVANCED DELIVERY & CHEMICAL SYSTEMS, LTD.
DATED AS OF APRIL 7, 1997
<PAGE>
AGREEMENT AND PLAN OF MERGER AND EXCHANGE
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<C> <S>
TABLE OF CONTENTS.....................................................
INDEX OF SCHEDULES AND EXHIBITS.......................................
INDEX OF DEFINED TERMS................................................
ARTICLE I ATMI PLAN OF MERGER .....................................
1.1 Surviving Corporation...................................
1.2 Certificate of Incorporation............................
1.3 By-laws.................................................
1.4 Directors...............................................
1.5 Officers................................................
1.6 Effective Time of the Merger............................
1.7 Additional Actions......................................
1.8 Merger Consideration....................................
1.9 Conversion of Shares....................................
1.10 Exchange Agent..........................................
1.11 Exchange of Certificates................................
1.12 ATMI Stock Options; Warrants............................
1.13 Closing of Stock Transfer Books.........................
ARTICLE II EXCHANGE................................................
2.1 Exchange................................................
2.2 Additional Actions......................................
2.3 Exchange Consideration..................................
2.4 Escrow..................................................
2.5 Average Closing Price...................................
2.6 Tax Treatment...........................................
2.7 Accounting Treatment....................................
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE ADCS GROUP........
3.1 Capitalization; Options, Warrants, Rights...............
3.2 Ownership of Interests..................................
3.3 Organization, Good Standing and Power...................
3.4 Organizational Documents................................
3.5 Authorizations..........................................
3.6 ADCS Commitments........................................
3.7 Restrictions; Burdensome Agreements.....................
3.8 Condition of the Assets.................................
3.9 Title; Absence of Liens and Encumbrances, Etc...........
3.10 Government and Other Consents...........................
3.11 Franchises, Permits, Licenses; Compliance with Applica-
ble Laws and Court Orders...............................
3.12 Financial Statements ...................................
3.13 Absence of Undisclosed Liabilities .....................
3.14 Absence of Certain Changes..............................
3.15 Indebtedness............................................
3.16 Accounts Receivable.....................................
3.17 Supplies................................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
3.18 No Prebillings..........................................
3.19 Taxes...................................................
3.20 Facilities..............................................
3.21 Insurance...............................................
3.22 Books and Records.......................................
3.23 Employees...............................................
3.24 Employee Benefit Plans..................................
3.25 Litigation..............................................
3.26 Proprietary Rights......................................
3.27 Section 341(f)(2) Consent...............................
3.28 Related Party Transactions..............................
3.29 Bank Accounts and Safe Deposit Arrangements.............
3.30 Powers of Attorney......................................
3.31 Environmental Matters; Health and Safety................
3.32 Customers and Suppliers.................................
3.33 Product and Service Warranties..........................
3.34 Hart-Scott-Rodino.......................................
3.35 Stock Ownership.........................................
3.36 Finders' Fees...........................................
3.37 Information in Disclosure Documents and Registration
Statement...............................................
3.38 Pooling.................................................
3.39 Atlantic Coast Polymers, Inc............................
3.40 No Misrepresentation....................................
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE ATMI GROUP........
4.1 Capitalization; Options, Warrants, Rights...............
4.2 Organization; Good Standing; Power......................
4.3 Organizational Documents................................
4.4 Authorization...........................................
4.5 SEC Compliance..........................................
4.6 ATMI Commitments........................................
4.7 Restrictions; Burdensome Agreements.....................
4.8 Condition of the Assets.................................
4.9 Title; Absence of Liens and Encumbrances, Etc...........
4.10 Government and Other Consents...........................
4.11 Franchises, Permits, Licenses; Compliance with Applica-
ble Laws and Court Orders...............................
4.12 Financial Statements....................................
4.13 Absence of Undisclosed Liabilities......................
4.14 Absence of Certain Changes..............................
4.15 Indebtedness............................................
4.16 Accounts Receivable.....................................
4.17 Supplies................................................
4.18 No Prebillings..........................................
4.19 Taxes...................................................
4.20 Employees...............................................
4.21 Employee Benefit Plans..................................
4.22 Litigation..............................................
4.23 Proprietary Rights......................................
4.24 Related Party Transactions..............................
4.25 Environmental Matters; Health and Safety................
4.26 Customers and Suppliers.................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
4.27 Product and Service Warranties..........................
4.28 No Prior Activities.....................................
4.29 Hart-Scott-Rodino.......................................
4.30 Finders' Fees...........................................
4.31 Information in Disclosure Documents and Registration
Statement...............................................
4.32 Pooling.................................................
4.33 Section 203 of the DGCL.................................
4.34 No Misrepresentation....................................
ARTICLE V COVENANTS...............................................
5.1 Access to Information...................................
5.2 Interim Operations of ADCS Group........................
5.3 Interim Operation of ATMI Group.........................
5.4 Notices of Certain Events...............................
5.5 Other Acquisitions by ATMI..............................
5.6 No Public Disclosure....................................
5.7 No Negotiation..........................................
5.8 NovaMOS.................................................
5.9 Election of Directors...................................
5.10 HSR Act.................................................
5.11 Preparation of S-4 and the Proxy Statement..............
5.12 Best Efforts; Cooperation...............................
5.13 ATMI Stockholder Matters................................
5.14 Nasdaq Listing..........................................
5.15 Affiliates..............................................
5.16 Financial Statements and SEC Reports....................
5.17 Employee Benefits.......................................
5.18 Tax Matters.............................................
5.19 Supplements to Disclosure Schedules.....................
5.20 Expenses................................................
5.21 Officer and Director Indemnity..........................
5.22 Exchange Act Section 16(b)..............................
5.23 Environmental Report....................................
ARTICLE VI CONDITIONS PRECEDENT TO CLOSING.........................
6.1 Conditions to the Obligations of the ATMI Group.........
6.2 Conditions to the Obligations of the ADCS Group.........
ARTICLE VII CLOSING.................................................
7.1 Closing.................................................
7.2 Simultaneous Closing....................................
ARTICLE VIII FURTHER ASSURANCES......................................
ARTICLE IX TERMINATION OF AGREEMENT................................
9.1 Termination.............................................
9.2 Termination Payment.....................................
9.3 Failure to Deliver Interests............................
9.4 Effect of Termination...................................
9.5 Breach of Section 5.7...................................
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<C> <S>
ARTICLE X MISCELLANEOUS..............................................
10.1 Right of Set-Off...........................................
10.2 Benefits of this Agreement.................................
10.3 Successors and Assigns.....................................
10.4 Notices....................................................
10.5 Severability...............................................
10.6 Pooling....................................................
10.7 Entire Agreement; Amendment................................
10.8 Waiver.....................................................
10.9 Applicable Law.............................................
10.10 Jurisdiction...............................................
10.11 Counterparts...............................................
10.12 Knowledge .................................................
</TABLE>
<PAGE>
INDEX OF SCHEDULES AND EXHIBITS
SCHEDULES
<TABLE>
<C> <S>
Schedule A Holders
Schedule 1.4 Directors of Surviving Corporation
Schedule 1.5 Officers of Surviving Corporation
Schedule 2.3(a) Exchange Consideration
ADCS Disclosure Schedule
ATMI Disclosure Schedule
Schedule 5.2 Permitted Pre-Closing Activities of ADCS
Schedule 5.3(p) Permitted Employment Agreements by ATMI
Schedule 5.8 Post-Closing Operations
Schedule 6.2(g) ATMI Assessment Opinion Patents
EXHIBITS
Exhibit A Form of Certificate of Merger
Exhibit B Form of Assignment of Membership Interests
Exhibit C Form of Registration Rights Agreement
Exhibit D-1 Form of Affiliates Agreement of ADCS
Exhibit D-2 Form of Affiliates Agreement of ATMI
Exhibit E Form of Proprietary Information and Inventions
Agreement
Exhibit F Form of Employment Agreements
Exhibit G Form of Escrow Agreement
Exhibit H Form of Indemnification Agreement
Exhibit I Form of Certificate of Holder
Exhibit J Form of Opinion of Counsel to ADCS
Exhibit K Form of Opinion of Patent Counsel to ADCS
Exhibit L Form of Releases
Exhibit M Form of Opinion of Counsel to ATMI
Exhibit N Form of Opinion of Patent Counsel to ATMI (General)
Exhibit O Form of Assessment Opinion of Patent Counsel to ATMI
</TABLE>
<PAGE>
INDEX OF DEFINED TERMS
The following index of defined terms is provided for convenience of reference
only:
<TABLE>
<CAPTION>
TERM LOCATION
---- --------
<C> <S>
ADCS Commitments Section 3.6(a)(i)
ADCS Controlled Group Section 3.24(e)(i)
ADCS Disclosure Schedule Introductory paragraph to Article
III
ADCS Financial Statements Section 3.12
ADCS Group Page A-9
ADCS Group Employee Benefit Plans Section 3.24(a)
ADCS Group Securities Section 3.1
ADCS Group Subsidiaries Section 3.1
ADCS Holdings Page A-9
ADCS LP Page A-9
ADCS Manager Page A-9
ADCS Material Adverse Effect Section 3.3(a)
ADCS Nevada Page A-9
ADCS Operating Page A-9
ADCS Organizational Documents Section 3.4
ADCS Premises Section 3.20
Additional Agreements Introductory paragraph to Article
III
Affiliates Agreements Section 5.15
Agreement Page A-9
ATMI Page A-9
ATMI Commitments Section 4.6(a)(i)
ATMI Common Stock Section 1.8
ATMI Controlled Group Section 4.21(e)(i)
ATMI Disclosure Schedule Introductory paragraph to Article
IV
ATMI Employee Benefit Plans Section 4.21(a)
ATMI Financial Statements Section 4.12
ATMI Group Page A-9
ATMI Group Securities Section 4.1
ATMI Group Subsidiaries Section 4.1
ATMI Identified Proprietary Rights Section 4.23(h)
ATMI Material Adverse Effect Section 4.2(a)
ATMI Organizational Documents Section 4.3
ATMI Premises Section 4.25(b)
ATMI SEC Documents Section 4.5
Average Closing Price Section 2.5
Balance Sheet Date Section 3.12
Burdensome Condition Section 6.1(n)
Capital Stock Recitals
Certificate of Merger Section 1.6
Closing Section 7.1
Closing Date Section 7.1
Code Recitals
Commitments Section 3.6(a)(i)
Coverage Section 5.17
Current ADCS Indemnitee Schedule 5.21
DGCL Section 1.1
Demand Date Section 2.3(b)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TERM LOCATION
---- --------
<C> <S>
Effective Time Section 1.6
Employment Agreement Section 6.1(f)(ii)
Environmental Conditions Section 3.31(a)(i)
Environmental Laws Section 3.31(a)(ii)
ERISA Section 3.24(b)
Escrow Agreement Section 6.1(f)(iv)
Exchange Recitals
Exchange Act Section 4.5
Exchange Agent Section 1.10
Exchange Consideration Section 2.3(a)
Hazardous Materials Section 3.31(a)(iii)
Holders Recitals
Holdings Page A-9
Holdings Common Stock Recitals
HSR Act Section 5.10
Indemnification Agreement Section 6.1(f)(v)
Interests Recitals
knowledge Section 10.12
Marks Section 3.26(c)
Material Environmental Condition Section 5.23
Membership Interests Recitals
Merger Recitals
Newco Page A-9
Notice (environmental) Section 3.31(a)(iv)
Organizational Chart Section 3.1
Outstanding ATMI Options Section 1.12
Outstanding ATMI Warrants Section 1.12
PBGC Section 3.24
Permit(s) Section 3.11
Pro Rata Portion Section 2.3(a)
Proposal Section 3.6(a)(ii)
Proprietary Information and Inventions
Agreements Section 6.1(f)(i)
Proprietary Rights Section 3.26(b)
Proxy Statement Section 3.37
Qualified Beneficiaries Section 5.17
Registration Rights Agreement Section 5.3(k)
Release Section 3.31(a)(v)
Reorganization Recitals
Returns Section 3.19(a)
S-4 Section 1.8
SEC Section 1.8
Section 16(b) Liability Section 5.22
Section 16(b) Matter Section 5.22
Securities Section 3.1
Securities Act Section 1.8
Site Remediation Measures Section 3.31(a)(vi)
Successor Welfare Plans Section 5.17
Surviving Corporation Section 1.1
Tax or Taxes Section 3.19(a)
Tax Opinion Section 6.1(j)
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
AND EXCHANGE
This AGREEMENT AND PLAN OF MERGER AND EXCHANGE ("Agreement") is made and
entered into as of the 7th day of April, 1997, by and among ADVANCED TECHNOLOGY
MATERIALS, INC., a Delaware corporation ("ATMI"), ATMI HOLDINGS, INC., a
Delaware corporation and wholly-owned subsidiary of ATMI ("Holdings"), ALAMO
MERGER, INC., a Delaware corporation and wholly-owned subsidiary of Holdings
("Newco"), ADVANCED DELIVERY & CHEMICAL SYSTEMS NEVADA, INC., a Nevada
corporation ("ADCS Nevada"), ADVANCED DELIVERY & CHEMICAL SYSTEMS MANAGER, INC.,
a Delaware corporation ("ADCS Manager"), ADVANCED DELIVERY & CHEMICAL SYSTEMS
HOLDINGS, LLC, a Delaware limited liability company ("ADCS Holdings"), ADVANCED
DELIVERY & CHEMICAL SYSTEMS OPERATING, LLC, a Delaware limited liability company
("ADCS Operating") and ADVANCED DELIVERY & CHEMICAL SYSTEMS, LTD., a Texas
limited partnership ("ADCS LP"). ATMI, Holdings and Newco are referred to herein
as the "ATMI Group." ADCS Nevada, ADCS Manager, ADCS Holdings, ADCS Operating
and ADCS LP are referred to herein as the "ADCS Group." As used herein, the
terms the "ATMI Group" and the "ADCS Group" shall refer to each member of such
group, two or more members of such group, and all members of such group
collectively, unless the context requires otherwise.
W I T N E S S E T H:
This Agreement is made with reference to the following facts.
A. The persons listed on Schedule A hereto (collectively, the "Holders"),
are the record and beneficial owners of (i) all of the issued and outstanding
shares of capital stock of ADCS Nevada and ADCS Manager (the "Capital Stock")
and (ii)together with ADCS Nevada, all of the membership interests in ADCS
Holdings (the "Membership Interests," and together with the Capital Stock, the
"Interests").
B. The ATMI Group desires to acquire the ADCS Group by acquiring all of the
Holders' Interests.
C. The parties desire such transaction to be a tax-free transaction under
the Internal Revenue Code of 1986, as amended (the "Code"), and for such
transaction to be accounted for as a pooling of interests.
D. In order to provide for the tax-free treatment of such transaction and
to account for such transaction as a pooling of interests, the parties have
determined that such transaction must be effected in accordance with Section 351
of the Code, pursuant to which (i) Newco will be merged with and into ATMI (the
"Merger") with the stockholders of ATMI receiving shares in Holdings and (ii)
simultaneously therewith the Holders will transfer their Interests to Holdings
in exchange (the "Exchange" and together with the Merger, the "Reorganization")
for shares of Holdings common stock, par value $.01 per share ("Holdings Common
Stock"), all pursuant to the terms, conditions and provisions of this Agreement.
E. The Board of Directors of ATMI, deeming it advisable and for the benefit
of its stockholders, has unanimously approved the Reorganization, upon and
subject to the terms, conditions and provisions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the
representations and warranties and mutual covenants herein contained, the
parties hereto agree as follows:
<PAGE>
ARTICLE I
ATMI Plan of Merger
1.1. Surviving Corporation. In accordance with the provisions of this
Agreement and at the Effective Time (as hereinafter defined), Newco shall be
merged with and into ATMI, with ATMI being the surviving corporation in the
Merger (the "Surviving Corporation"). At the Effective Time, the separate
existence of Newco shall cease, and the Surviving Corporation shall continue its
corporate existence under the laws of the State of Delaware. The Merger shall
have the effects set forth in Section 259 of the Delaware General Corporation
Law (the "DGCL"). By virtue of the Merger, the Surviving Corporation will become
a wholly-owned subsidiary of Holdings.
1.2. Certificate of Incorporation. The Certificate of Incorporation of ATMI
as in effect at the Effective Time shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter amended in accordance with its terms
and the DGCL. The authorized number and par value of shares of all classes of
capital stock of ATMI immediately prior to the Effective Time shall be the
authorized number and par value of shares of the classes of capital stock of the
Surviving Corporation from and after the Effective Time.
1.3. By-Laws. The By-Laws of ATMI as in effect at the Effective Time shall
be the By-Laws of the Surviving Corporation until thereafter amended as provided
by law.
1.4. Directors. From and after the Effective Time, the persons listed on
SCHEDULE 1.4 shall be the directors of the Surviving Corporation, all such
directors to hold office until their respective successors are duly elected and
qualified in the manner provided in the Certificate of Incorporation and By-Laws
of the Surviving Corporation, or as otherwise provided by law.
1.5. Officers. From and after the Effective Time, the persons listed on
SCHEDULE 1.5 shall be the officers of the Surviving Corporation, all such
officers to hold office until their respective successors are duly elected and
qualified in the manner provided in the Certificate of Incorporation and ByLaws
of the Surviving Corporation, or as otherwise provided by law.
1.6. Effective Time of the Merger. If all the conditions set forth in
Article VI have been fulfilled or waived in accordance with the terms thereof,
and this Agreement has not been terminated in accordance with Article IX, the
ATMI Group shall cause a Certificate of Merger in the form attached hereto as
Exhibit A (the "Certificate of Merger") to be properly executed and filed on the
Closing Date (as hereinafter defined), with the Secretary of State of the State
of Delaware. The Merger shall become effective upon the filing of an executed
Certificate of Merger and any and all required related certificates with the
Secretary of State of the State of Delaware (the date and time when the Merger
becomes effective is referred to as the "Effective Time").
1.7. Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other acts or things are necessary or
desirable to vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation, its right, title or interest in or to any of the rights, properties
or assets of Newco or ATMI acquired or to be acquired by reason of, or as a
result of, the Merger, or otherwise to carry out the purposes of this Agreement,
the Surviving Corporation and its proper officers and directors shall be
authorized to execute and deliver, in the name and on behalf of Newco and ATMI,
all such deeds, bills of sale, assignments and assurances and to do, in the name
and on behalf of Newco or ATMI, all such other acts and things necessary or
desirable to vest, perfect or confirm any and all right, title or interest in,
to or under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out the purposes of this Agreement.
1.8. Merger Consideration. Each share of ATMI common stock, par value $.01
per share ("ATMI Common Stock") issued and outstanding on the Effective Time
shall be converted into the right to receive one (1) validly issued, fully paid
and non-assessable share of Holdings Common Stock, such shares of Holdings
Common Stock to be issued in accordance with the terms of this Agreement and
pursuant to a registration
<PAGE>
statement on Form S-4 (the "S-4") declared effective under the Securities
Act of 1933, as amended (the "Securities Act"), by the Securities and Exchange
Commission (the "SEC").
1.9. Conversion of Shares.
(a) At the Effective Time, each share of ATMI Common Stock issued and
outstanding immediately prior to the Effective Time shall, by virtue of the
Merger and without any action on the part of the holder thereof, automatically
be converted into and represent the right to receive one (1) validly issued,
fully paid and non-assessable share of Holdings Common Stock.
(b) At the Effective Time, each share of ATMI Common Stock held in ATMI's
treasury immediately prior to the Effective Time shall, by virtue of the Merger,
be canceled and returned to the status of authorized but unissued capital stock
of ATMI without payment of any consideration therefor.
(c) At the Effective Time, each share of common stock, par value $.01 per
share, of Newco issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, automatically be converted into and represent one (1) validly issued,
fully paid and non-assessable share of common stock, par value $.01 per share,
of the Surviving Corporation, as such shares of common stock are constituted
immediately following the Effective Time.
(d) At the Effective Time, each share of common stock, par value $.01 per
share, of Holdings issued and outstanding immediately prior to the Effective
Time shall, by virtue of the Merger and without any action on the part of the
holder thereof, automatically be canceled.
1.10. Exchange Agent. Boston EquiServe Limited Partnership, or such other
national or state bank as is selected by Holdings, shall act as the agent for
ATMI stockholders for purposes of mailing and receiving transmittal letters and
distributing consideration to holders of ATMI Common Stock (the "Exchange
Agent").
1.11. Exchange of Certificates.
(a) As promptly as practicable after the Effective Time, the Exchange Agent
shall mail or deliver to each holder of record of a certificate or certificates
which immediately prior to the Effective Time represented outstanding shares of
ATMI Common Stock whose shares were converted into the right to receive Holdings
Common Stock pursuant to Section 1.9 hereof and the Certificate of Merger, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk, loss and title to such certificates shall pass, only upon delivery of the
certificates to the Exchange Agent and shall be in such form and have such other
provisions as Holdings may reasonably specify) and (ii) instructions for use in
effecting the surrender of such certificates in exchange for a certificate
representing Holdings Common Stock. Upon surrender of a certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Holdings, together with such letter of transmittal, duly executed,
such agent shall promptly deliver in accordance with the instructions properly
contained in such letter of transmittal a certificate for the number of shares
of Holdings Common Stock to which such holder is entitled pursuant to Section
1.9.
(b) At the Effective Time, each holder of an outstanding certificate or
certificates for shares of ATMI Common Stock shall cease to have any rights as a
stockholder of ATMI. Each such holder of an outstanding certificate or
certificates for shares of ATMI Common Stock converted in the Merger, upon
surrender of each such certificate to the Exchange Agent, shall receive promptly
in exchange for each such certificate the shares of Holdings Common Stock to
which such holder is entitled pursuant to Section 1.9 of this Agreement. Pending
such surrender and exchange, such holder's certificate or certificates for
shares of ATMI Common Stock shall be deemed for all corporate purposes, by
virtue of the Merger and without any action on the part of the holder thereof,
to evidence only the right to receive the shares of Holdings Common Stock
provided for under this Agreement. Unless and until any such outstanding
certificates for shares of ATMI Common Stock shall be so surrendered, no
dividend (cash or stock) payable to holders of record of shares of Holdings
Common Stock as of
<PAGE>
any date subsequent to the Effective Time shall be paid to the holder of
any such outstanding certificate, but upon such surrender of such outstanding
certificate there shall be paid to the record holder of the certificate for
shares of Holdings Common Stock issued in exchange therefor the amount of
dividends, if any, without interest and less any taxes which may have been
imposed thereon, that have theretofore become payable with respect to the number
of those shares of Holdings Common Stock represented by such certificate issued
upon such surrender and exchange.
1.12. ATMI Stock Options; Warrants. At or prior to the Effective Time,
Holdings, ATMI and Newco shall take all action necessary to cause the assumption
by Holdings as of the Effective Time of the options to purchase ATMI Common
Stock outstanding as of the Effective Time (the "Outstanding ATMI Options") and
warrants to purchase ATMI Common Stock outstanding as of the Effective Time (the
"Outstanding ATMI Warrants"). Each of the Outstanding ATMI Options and the
Outstanding ATMI Warrants shall be converted without any action on the part of
the holder thereof into an option or warrant, as the case may be, to purchase
shares of Holdings Common Stock as of the Effective Time. The holder of an
Outstanding ATMI Option or an Outstanding ATMI Warrant shall be entitled to
receive upon the exercise thereof one (1) share of Holdings Common Stock for
each share of ATMI Common Stock subject to such warrant or option, determined
immediately before the Effective Time. The exercise price of each share of
Holdings Common Stock subject to an Outstanding ATMI Warrant or Outstanding ATMI
Option shall be the exercise price per share of ATMI Common at which such
warrant or option is exercisable immediately before the Effective Time. The
assumption and substitution of the Outstanding ATMI Warrants and Outstanding
ATMI Options as provided herein shall not give the holders of such warrants or
options additional benefits which they did not have immediately prior to the
Effective Time or relieve the holders of any obligations or restrictions
applicable to their warrants or options or the shares obtainable upon exercise
of the warrants or options. Holdings shall (i) reserve out of its authorized but
unissued shares of Holdings Common Stock sufficient shares to provide for the
exercise of the Outstanding ATMI Warrants and Outstanding ATMI Options and (ii)
use all reasonable efforts to register under the Securities Act, coincident with
the Effective Time, those shares of Holdings Common Stock to be issued upon the
exercise of the Outstanding ATMI Options, which registration shall be made on
such form as may be permitted under the Securities Act.
1.13. Closing of Stock Transfer Books. The stock transfer books of ATMI
shall be closed at the close of business on the business day immediately
preceding the Effective Time. In the event of a transfer of ownership of ATMI
Common Stock which is not registered in the transfer records of ATMI, the shares
of Holdings Common Stock and cash for fractional shares (if any) to be issued in
the Merger as provided herein may be delivered to a transferee, if the
certificate representing such ATMI Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by payment of any applicable stock transfer taxes.
ARTICLE II
Exchange
2.1. Exchange. The ADCS Group hereby agrees to use its best efforts to
cause the Holders on the Closing Date and simultaneously with the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware to
tender their Interests in exchange for the number of shares of Holdings Common
Stock determined in accordance with Section 2.3 below. The ADCS Group hereby
further agrees to use its best efforts, exercised in good faith, to cause the
Holders to have present at the Closing the original certificate or certificates
representing all of the issued and outstanding shares of capital stock of each
of ADCS Nevada and ADCS Manager and to cause the Holders and their spouses, if
their signatures be required, to execute and/or deliver (as appropriate) to
Holdings (i) either each of the original share certificates, duly endorsed for
transfer against delivery by Holdings of the Exchange Consideration (as
hereinafter defined) or, as permitted by Section 2.3(c) below, irrevocable
instructions to the Exchange Agent to issue that number of shares of Holdings
Common Stock to each respective Holder as determined pursuant to Section 2.3
below, with all requisite transfer stamps, if any are due, attached thereto,
(ii) an assignment of the Membership Interests, the form of which is attached
hereto as
<PAGE>
EXHIBIT B, and (iii) all such other deeds, bills of sale, assignments and
assurances which Holdings deems reasonably necessary or desirable to vest,
perfect or confirm any and all right, title or interest in, to or under the
Interests.
2.2. Additional Actions. The ADCS Group hereby agrees to use its best
efforts to cause the Holders and their spouses, if signatures be required, to
execute and deliver at the Closing an agreement to the effect that if at any
time after the Effective Time Holdings shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other acts or things are
necessary or desirable to vest, perfect or confirm, of record or otherwise, in
Holdings, its right, title or interest in or to any of the Holders' Interests
acquired or to be acquired by reason of, or as a result of, the Exchange, or
otherwise to carry out the purposes of this Agreement, the Holders shall execute
and deliver all such deeds, bills of sale, assignments and assurances and to do
all such other acts and things reasonably necessary or desirable to vest,
perfect or confirm any and all right, title or interest in, to or under the
Interests or otherwise to carry out the purposes of this Agreement.
2.3. Exchange Consideration. (a) In exchange for the Interests of the
Holders and subject to the provisions of Section 2.3(b) below, at the Closing
Holdings will issue to the Holders the aggregate number of shares of Holdings
Common Stock (rounded up to the nearest whole number of shares) determined by
dividing Eighty-Seven Million Five Hundred Thousand Dollars ($87,500,000) by the
Average Closing Price (as hereinafter defined) of ATMI Common Stock (the
"Exchange Consideration"). The Exchange Consideration shall be deemed to be
allocated to each Holder as consideration for the exchange of the Holder's
Interests in the various ADCS Group entities, as set forth on SCHEDULE 2.3(A),
according to the Holders' relative pro rata ownership percentage of the
Interests in such ADCS Group entity, determined by the amount which each
Holder's respective ownership bears to the aggregate ownership of all of the
Holders in such entity. The pro rata portion of the aggregate Exchange
Consideration allocated to each Holder is referred to herein as the "Pro Rata
Portion."
(b) In the event that the combined book value of the ADCS Group and the
ADCS Group Subsidiaries (as hereinafter defined) determined as of the Closing
Date in accordance with generally accepted accounting principles is less than
$10,000,000 by an amount greater than $500,000, the number of shares of Holdings
Common Stock to be issued in accordance with Section 2.3(a) above shall be
decreased by a number of shares equal to (1) $10,000,000 less (2) the book value
as of Closing, divided by the Average Closing Price, and the Holders shall, in
the manner provided below and in the Escrow Agreement (as hereinafter defined)
return any excess shares of Holdings Common Stock to Holdings. The shares of
Holdings Common Stock delivered into escrow pursuant to the Escrow Agreement (as
hereinafter defined) shall stand as security for the Holders' obligations under
this Section 2.3(b). The determination of book value will be made by Holdings no
later than ninety (90) days after the Closing Date, and written notice thereof
shall be provided to the Holders and the escrow agent under the Escrow
Agreement. Such written notice shall indicate a date (the "Demand Date"), no
earlier than ten (10) business days after the date on which such notice is
received, on or after which Holdings may make demand upon the escrow agent for
such excess shares. If Holders owning seventy percent (70%) or more of the
Exchange Consideration notify Holdings and the escrow agent in writing prior to
the Demand Date that they do not agree with such book value, the Demand Date
will be postponed and such Holders and Holdings will attempt to agree on the
book value within sixty (60) days after Holdings' determination thereof. If such
Holders and Holdings are unable to agree, then Ernst & Young LLP or such other
nationally recognized accounting firm acceptable to Holdings and the Holders
owning seventy percent (70%) or more of the Exchange Consideration shall make
such determination which shall be final and binding on all parties. The escrow
agent is authorized to rely without investigation and to release to Holdings the
excess shares upon (i) a demand made by Holdings after the Demand Date if
Holders owning seventy percent (70%) or more of the Exchange Consideration have
not notified the escrow agent in writing of an objection prior to the Demand
Date, (ii) a written determination from Ernst & Young LLP or such other
nationally recognized accounting firm, or (iii) any writing signed by Holdings
and the Holders owning seventy percent (70%) or more of the Exchange
Consideration (each of (i), (ii) and (iii) shall constitute an Adjustment Notice
for purposes of Section 4(b) of the Escrow Agreement).
<PAGE>
(c) The Exchange Consideration, the amount and calculation of which shall
be set forth on a certificate executed by each of the parties at the Closing,
will be allocated among the Holders according to their respective Pro Rata
Portions. Share certificates evidencing the Exchange Consideration shall be
delivered to the Holders at the Closing, if at all practicable; and if not,
then irrevocable instructions regarding the issuance of the Exchange
Consideration to each of the Holders shall be delivered to the Exchange Agent at
Closing with the certificates representing the Exchange Consideration to be
delivered as soon as practicable thereafter. No fractional shares of Holdings
Common Stock shall be issuable by Holdings to any Holder in connection with the
Exchange. In lieu of any such fractional shares, each Holder who would otherwise
have been entitled to receive a fraction of a share of Holdings Common Stock
shall be entitled to receive instead an amount in cash equal to such fraction
multiplied by the Average Closing Price.
2.4. Escrow. At the Effective Time, Holdings shall deliver to the escrow
agent or any successor escrow agent appointed pursuant to the Escrow Agreement,
certificates evidencing 750,000 shares of the Exchange Consideration, such
shares to be allocated among the Holders in accordance with their respective Pro
Rata Portions and to be held and applied in accordance with the Indemnification
Agreement and the Escrow Agreement. Subject to the restrictions set forth in
Section 5.3, if between the date hereof and the Effective Time, the issued and
outstanding shares of ATMI Common Stock shall have been combined, split,
reclassified or otherwise changed into a different number of shares or a
different class of shares, an appropriate adjustment to the number of shares of
Holdings Common Stock to be delivered into escrow shall be made.
2.5. Average Closing Price. The term "Average Closing Price" shall mean the
average closing price of ATMI Common Stock on The Nasdaq National Market for the
twenty (20) trading days ended five (5) days prior to the date of ATMI's meeting
of stockholders to approve the Merger; provided that (i) in the event that the
Average Closing Price is greater than $16 per share, the Average Closing Price
shall be deemed to be $16 per share; and (ii) in the event that the Average
Closing Price is less than $14 per share, the Average Closing Price shall be
deemed to be $14 per share.
2.6. Tax Treatment. The parties intend and expect that (i) the Merger will
qualify as a reorganization within the meaning of Section 368 of the Code in a
transaction which is described in Section 351 of the Code, and (ii) that, as a
result of the simultaneous closing of the Merger and Exchange, the Holders will
be treated as having exchanged their Interests in a transaction which is
described in Section 351 of the Code.
2.7. Accounting Treatment. The parties intend and expect that the
Reorganization shall be accounted for as a pooling of interests.
ARTICLE III
Representations and Warranties of
the ADCS Group
The ADCS Group hereby jointly and severally represent and warrant to the
ATMI Group that, except as set forth in the ADCS DISCLOSURE SCHEDULE attached
hereto (which ADCS Disclosure Schedule makes explicit reference to the
particular subsection as to which exception is taken, which in each case shall
constitute the sole subsection as to which such exception shall apply, and the
statements in such ADCS Disclosure Schedule shall be deemed to be
representations and warranties), as supplemented pursuant to Section 5.19, and
acknowledge and confirm that the ATMI Group is relying upon such representations
and warranties in connection with the execution, delivery and performance of
this Agreement and the Additional Agreements to which the ATMI Group is a party
described in Section 6.1(f) below (the "Additional Agreements") and the
completion of the Reorganization, notwithstanding any investigation made by the
ATMI Group or on its behalf:
3.1. Capitalization; Options, Warrants, Rights. SCHEDULE 3.1 sets forth the
aggregate number of all of the shares of any class of stock, other securities or
other ownership interests (such types of securities are herein referred to
collectively as "Securities"), including the Capital Stock and the Membership
Interests, which the
<PAGE>
ADCS Group and each ADCS Group Subsidiary (as hereinafter defined) are
authorized to issue (the "ADCS Group Securities"), the aggregate number of all
of the ADCS Group Securities issued and outstanding and the record and
beneficial owners of all of the issued and outstanding ADCS Group Securities.
All Securities of the ADCS Group have been validly authorized and issued and are
fully paid and non-assessable, and have not been issued in violation of any
preemptive, first refusal or other subscription rights of any holder of any ADCS
Group Securities or any other person, and have been issued in compliance with
applicable foreign, federal and state securities laws. The Capital Stock
constitutes all of the issued and outstanding shares of capital stock of ADCS
Nevada and ADCS Manager. Except as set forth on SCHEDULE 3.1, the Membership
Interests constitute all of the membership interests of ADCS Holdings. With
respect to the ADCS Group and each ADCS Group Subsidiary, there are no
outstanding or existing (i) proxies, voting trusts, or other agreements or
understandings with respect to the voting of the ADCS Group Securities, (ii)
ADCS Group Securities convertible into or exchangeable for other ADCS Group
Securities, (iii) options, warrants or other rights to purchase or subscribe for
ADCS Group Securities (other than this Agreement) or ADCS Group Securities
convertible into or exchangeable for other ADCS Group Securities, or (iv)
agreements of any kind relating to the issuance or purchase of ADCS Group
Securities or ADCS Group Securities convertible into or exchangeable for other
ADCS Group Securities. No member of the ADCS Group holds or owns, directly or
indirectly, any Securities of any other corporation, or has any direct or
indirect equity or ownership interest in any association, partnership, joint
venture or other entity other than (i) through mutual funds or other similar
investment vehicles over which no investment discretion is retained, (ii)
publicly-traded Securities having a market value of $25,000 or less per issuer,
(iii) ADCS Group Securities and (iv) as identified on SCHEDULE 3.1 (each
corporation, association, partnership, joint venture or other entity in which
any member of the ADCS Group owns, directly or indirectly, twenty percent (20%)
or more of the issued and outstanding Securities are referred to herein as the
"ADCS Group Subsidiaries"). A true and correct organizational chart for the ADCS
Group and the ADCS Group Subsidiaries, indicating ownership interests, is
attached hereto as part of SCHEDULE 3.1 (the "Organizational Chart").
3.2. Ownership of Interests. (a) A current list of the record holders of
the Capital Stock and the Membership Interests is set forth on SCHEDULE 3.1.
Each of such record holders is the record and beneficial owner of the number of
ADCS Group Securities shown on SCHEDULE 3.1, and such ADCS Group Securities are,
to the ADCS Group's knowledge, free and clear of all liens, pledges, security
interests, charges, claims and other encumbrances, and will be so free and clear
as of the Closing.
(b) Each of the ADCS Group is the record and beneficial owner of the number
of ADCS Group Securities shown on the Organizational Chart, free and clear of
all liens, pledges, security interests, charges, claims and other encumbrances.
3.3. Organization, Good Standing and Power. (a) Each member of the ADCS
Group, each ADCS Group Subsidiary and each Holder which is an entity is a
corporation, limited partnership or limited liability company, as the case may
be, duly organized, validly existing and in good standing under the laws of its
state or country of organization, is authorized to do business as a foreign
corporation, foreign limited partnership or foreign limited liability company,
as the case may be, in the jurisdictions set forth on SCHEDULE 3.3 and is not
required to be authorized to do business as a foreign corporation, foreign
limited partnership or foreign limited liability company, as the case may be, in
any other jurisdiction (within or without the United States) by reason of the
nature of the business now being conducted by it or the properties owned or
leased or operated by it in which the failure to be so qualified would have a
material adverse effect on the assets, liabilities, results of operations,
financial condition or business of the ADCS Group and the ADCS Group
Subsidiaries taken as a whole (an "ADCS Material Adverse Effect").
(b) The ADCS Group, each ADCS Group Subsidiary and each Holder which is an
entity have the requisite power, corporate or otherwise, to own, lease and
operate its properties and carry on its business as it is now being conducted by
it, and has the power and authority, corporate or otherwise, to execute, deliver
and perform this Agreement and the Additional Agreements to which it is a party
and consummate the transactions contemplated hereby and thereby.
<PAGE>
(c) The ADCS Group and each ADCS Group Subsidiary conducts its business
under the trade names and other assumed names set forth on Schedule 3.3.
3.4. Organizational Documents. With respect to the ADCS Group, each ADCS
Group Subsidiary and each Holder which is an entity, the ADCS Group has
heretofore made available to the ATMI Group a complete and correct copy of (i)
each corporation's Certificate or Articles of Incorporation, as amended to date,
(ii) each corporation's By-Laws, as amended to date, (iii) each limited
liability company's Articles of Organization or similar instrument, as amended
to date, (iv) each limited liability company's Operating Agreement or similar
agreement, as amended to date, and (v) each limited partnership's certificate of
limited partnership and Limited Partnership Agreement, each as amended to date
(items (i) through (v) being referred to herein as the "ADCS Organizational
Documents"). Each of the foregoing are in full force and effect, and none of the
ADCS Group, any ADCS Group Subsidiary, any Holder or to the ADCS Group's
knowledge, any other party to the ADCS Organizational Documents, is in violation
of any of the provisions thereof. There are no proceedings for the amendment or
modification of or any other change in the ADCS Organizational Documents. There
are no proceedings for the dissolution or liquidation of the ADCS Group, any
ADCS Group Subsidiary or any Holder which is an entity or, to its knowledge,
threatening the existence of the ADCS Group, any ADCS Group Subsidiary or any
Holder which is an entity. The ADCS Group has made available to the ATMI Group
the minute books and stock records of each member of the ADCS Group and each
ADCS Group Subsidiary.
3.5. Authorizations. The ADCS Group has taken all action, corporate or
otherwise, necessary to authorize the execution, delivery and performance of
this Agreement and, as applicable, the Additional Agreements to which it is a
party. Such execution, delivery and performance and the other transactions
contemplated hereby do not and will not violate, result in any default,
acceleration or loss of any material benefit under, permit any third party to
rescind any term or provision of, or conflict with any terms of, the ADCS
Organizational Documents, any law, lien, order, award, judgment, decree, Permit
(as hereinafter defined), or any material agreements or contracts to which the
ADCS Group, any ADCS Group Subsidiary or any Holder is a party or is subject or
by which the ADCS Group, any ADCS Group Subsidiary or any Holder or their assets
is bound or result in the creation of any lien, charge or encumbrance upon any
of the assets, real, personal or mixed, tangible or intangible, of the ADCS
Group, any ADCS Group Subsidiary or any Holder or upon the Interests. Each of
this Agreement and the Additional Agreements to which the ADCS Group is a party
when executed will constitute its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent transfer and other similar laws affecting the
enforceability of creditors' rights generally.
3.6. ADCS Commitments.
(a) Definitions. The following definitions shall apply for purposes of this
Section 3.6:
(i) "ADCS Commitments" means all of the current written or oral leases,
agreements, contracts, instruments, indentures, notes and other documents
("Commitments") to which the ADCS Group or any ADCS Group Subsidiary is a party
other than the ADCS Group Employee Benefit Plans (as hereinafter defined). Not
included in the definition of ADCS Commitments are discussions, negotiations or
Proposals (as defined below) between ADCS Group representatives and third
parties.
(ii) "Proposal" means all of the current written offers, quotes or
proposals presented by the ADCS Group or any ADCS Group Subsidiary, which
written offer, quote, or proposal has not yet: (1) expired, (2) been rejected,
or (3) resulted in the execution of an ADCS Commitment.
(b) Schedule of ADCS Commitments and Proposals. SCHEDULE 3.6 hereto sets
forth a list of the following:
(i) any ADCS Commitments creating or evidencing rights to purchase ADCS
Group Securities;
(ii) any ADCS Commitments among stockholders, members, partners, or other
persons or entities holding ADCS Group Securities with respect to such ADCS
Group Securities;
<PAGE>
(iii) any ADCS Commitments, not including purchase orders placed by any
member of the ADCS Group, creating or evidencing indebtedness in excess of
$50,000.00 for money borrowed by the ADCS Group or any ADCS Group Subsidiary;
(iv) any ADCS Commitments mortgaging, pledging, granting, or creating a
lien or security interest or other encumbrance on any real or personal property
of the ADCS Group or any ADCS Group Subsidiary;
(v) any ADCS Commitments creating or evidencing any guaranty by the ADCS
Group or any ADCS Group Subsidiary of payment or performance by any other party
involving in excess of $50,000.00;
(vi) any ADCS Commitments pursuant to which the ADCS Group or any ADCS
Group Subsidiary reasonably expects to receive aggregate payments in excess of
$250,000 in calendar year 1997;
(vii) any ADCS Commitments with any dealer, sales representative, broker or
other distributor, jobber, advertiser or sales agency;
(viii) any ADCS Commitments involving an obligation to pay in excess of
$100,000.00 to or from the ADCS Group or any ADCS Group Subsidiary for the
furnishing or purchase of machinery, equipment, goods or services;
(ix) any ADCS Commitments (including private placement brochures) relating
to the future sale or repurchase of ADCS Group Securities;
(x) any ADCS Commitments to register under the Securities Act any ADCS
Group Securities;
(xi) any ADCS Commitments involving a sharing of profits or expenses,
including, but not limited to, any joint venture agreements;
(xii) any ADCS Commitments limiting the freedom of the ADCS Group or any
ADCS Group Subsidiary to engage in any line of business;
(xiii) any ADCS Commitments limiting the freedom of the ADCS Group or any
ADCS Group Subsidiary to operate in any geographic area;
(xiv) any ADCS Commitments limiting the freedom of the ADCS Group or any
ADCS Group Subsidiary to compete with any party;
(xv) any ADCS Commitments limiting the freedom of the ADCS Group or any
ADCS Group Subsidiary to disclose or use any information material to the
operation of the business of the ADCS Group or any ADCS Group Subsidiary;
(xvi) any collective bargaining agreements;
(xvii) any ADCS Commitments containing any unpaid severance liabilities or
obligations involving in excess of $5,000.00;
(xviii) any fidelity or surety bond or completion bond involving in excess
of $10,000.00;
(xix) any ADCS Commitments relating to capital expenditures involving
future obligations in excess of $100,000.00;
(xx) any ADCS Commitments for construction of physical facilities involving
in excess of $100,000.00;
(xxi) any ADCS Commitments providing for disposition of any line of
business, material assets or ADCS Group Securities;
(xxii) any ADCS Commitments providing for acquisition of any line of
business, material assets or Securities of any other business, which Securities
have a fair market value in excess of $50,000;
(xxiii) any ADCS Commitments providing for merger or consolidation
(including letters of intent) with any other business;
<PAGE>
(xxiv) any ADCS Commitments pertaining to maintenance or support of
products, services or supplies; and
(xxv) any Proposals to enter into any future ADCS Commitments which, if
currently in effect would be described under this Section 3.6(b)(i), (b)(ii),
(b)(ix), (b)(xi), (b)(xii), (b)(xiii), (b)(xiv), (b)(xxi), (b)(xxii) or
(b)(xxiii) as an ADCS Commitment or which involve transactions not in the
ordinary course of business.
(c) The ADCS Group and each ADCS Group Subsidiary have complied in all
material respects with and are not in material default under any of the ADCS
Commitments.
(d) Neither the ADCS Group nor any ADCS Group Subsidiary has granted or
been granted any waiver or forbearance with respect to any ADCS Commitment with
any customer or with any lender that in either case is in excess of $50,000.00.
(e) Neither the ADCS Group nor any ADCS Group Subsidiary has granted or
been granted any waiver or forbearance with respect to any ADCS Commitments to
provide goods or services to customers that produced aggregate payments in the
year ending December 31, 1996 of at least $250,000.00 to the ADCS Group or any
ADCS Group Subsidiary.
(f) The ADCS Commitments listed on Schedule 3.6 are valid and are in full
force and effect as to the ADCS Group or an ADCS Group Subsidiary, as the case
may be (and, to the knowledge of the ADCS Group, the other parties thereto).
(g) Except as otherwise noted and reserved against in the ADCS Financial
Statements (as hereinafter defined), none of the ADCS Commitments listed on
Schedule 3.6 could reasonably be expected to result in the successful assertion
or claim of any material liability against the ADCS Group or any ADCS Group
Subsidiary in excess of that anticipated by the ADCS Commitment.
(h) To the ADCS Group's knowledge, no event has occurred, or could
reasonably be expected to occur, that (after notice and lapse of time, or both)
would become a breach or default under any ADCS Commitment (other than
termination as the result of the expiration, absent a default, of the term of
the ADCS Commitment).
(i) True copies of all written ADCS Commitments and reasonably accurate
descriptions of all oral ADCS Commitments, including any amendments thereto and
modifications thereof, have been made available to the ATMI Group.
3.7. Restrictions; Burdensome Agreements. None of the ADCS Group, any ADCS
Group Subsidiary or any Holder is a party to any contract, commitment or
agreement (including the ADCS Commitments), and none of the ADCS Group, any ADCS
Group Subsidiary or any Holder or any of their respective properties and assets
is subject to or bound or affected by any charter, by-law, operating agreement,
limited partnership agreement, or other organizational restriction, or any
order, judgment, decree, law, statute, ordinance, rule, regulation, Permit or
other restriction of any kind or character, which would (i) prevent the ADCS
Group from entering into this Agreement and the Additional Agreements to which
it is a party or prevent the ADCS Group or any Holder from consummating the
transactions contemplated hereby and thereby, or (ii) have an ADCS Material
Adverse Effect and has not been disclosed in a Schedule hereto.
3.8. Condition of the Assets. Except as would not have an ADCS Material
Adverse Effect, the tangible assets of the ADCS Group and each ADCS Group
Subsidiary, including real, personal and mixed, material to the operation of its
business are in good condition and repair, ordinary wear and tear excepted, and
suitable for the uses intended. The assets of the ADCS Group and each ADCS Group
Subsidiary are operated in conformity in all material respects with all
applicable laws, ordinances, regulations, orders, Permits and other requirements
relating thereto adopted or currently in effect. Schedule 3.8 sets forth a list
of each asset (other than intangible assets listed on Schedule 3.26 and other
than as set forth on Schedule 3.20) having a book value in excess of $50,000,
indicating whether each such asset is owned or leased by the ADCS Group or any
ADCS Group
<PAGE>
Subsidiary, and setting forth where each such asset is located. Since the
Balance Sheet Date (as hereinafter defined), neither the ADCS Group nor any ADCS
Group Subsidiary has, except in the ordinary course of business, acquired or
sold or otherwise disposed of any of its assets. Schedule 3.8 also includes a
list of each lease under which the ADCS Group or any ADCS Group Subsidiary
leases an asset (other than leased real property) having replacement cost of
$50,000 or more. The leases and other agreements or instruments under which the
ADCS Group or any ADCS Group Subsidiary holds, leases, subleases or is entitled
to the use of any of the assets having a replacement cost of $50,000 or more are
in full force and effect, and all rentals, royalties or other payments payable
thereunder have been duly paid or provided for by adequate reserves. No default
or event of default by the ADCS Group or any ADCS Group Subsidiary exists, and
no event which, with notice or lapse of time or both, would constitute a default
by the ADCS Group or any ADCS Group Subsidiary, has occurred and is continuing,
under terms or provisions, express or implied, of any lease, agreement or other
instrument or under the terms or provisions of any agreement to which any of its
assets is subject which leases, agreements or other instruments individually or
in the aggregate involve assets having a book value of $50,000 or more, nor has
the ADCS Group or any ADCS Group Subsidiary received notice of any claim of such
default.
3.9. Title; Absence of Liens and Encumbrances, Etc. Each member of the ADCS
Group and each ADCS Group Subsidiary has good, valid, and marketable title to
its assets, free and clear of all mortgages, security interests, claims, liens,
charges, title defects, encumbrances, restrictions on use or transfer or other
defects. Except for Securities representing an interest in a member of the ADCS
Group or an ADCS Group Subsidiary and except as set forth on Schedule 3.9
hereto, ADCS LP has good, valid and marketable title to all of the tangible
assets owned by the ADCS Group.
3.10. Government and Other Consents. No consent, authorization or approval
of, exemption by, or filing with any governmental, public or self-regulatory
body or authority or other party is required in connection with the execution,
delivery and performance by the ADCS Group of this Agreement, the Additional
Agreements to which it is a party or any of the instruments or agreements
required to be executed and delivered pursuant to this Agreement or any
Additional Agreement, or the consummation of the Exchange, except under any
applicable federal and state securities laws and the HSR Act (as hereinafter
defined).
3.11. Franchises, Permits, Licenses; Compliance with Applicable Laws and
Court Orders. Except for intellectual property matters covered by Section 3.26,
the ADCS Group and each ADCS Group Subsidiary have all requisite franchises,
permits, licenses, authorizations, variances, orders and approvals of
governmental or administrative authorities (each a "Permit" and together the
"Permits") necessary to own, lease or operate its properties or necessary for
the conduct of its business as currently conducted, other than those the absence
of which would not result in an ADCS Material Adverse Effect. All such Permits
are in full force and effect, and there is no condition, nor has any event
occurred, which constitutes or with the giving of notice, or passage of time, or
both, would constitute a violation of the terms of any Permit, and to the
knowledge of the ADCS Group, no suspension or cancellation of any of them is
pending or threatened. Neither the execution of this Agreement or the Additional
Agreements to which any of the ADCS Group is a party nor the consummation of the
transactions contemplated hereby or thereby would constitute a violation of the
terms of any such Permit or grounds for the termination of any such Permit.
Schedule 3.11 contains a complete list of all such Permits and any outstanding
applications for Permits to which the ADCS Group or any ADCS Group Subsidiary is
a party. No application for a Permit filed by or on behalf of the ADCS Group or
any ADCS Group Subsidiary, or in connection with a facility operated by the ADCS
Group or any ADCS Group Subsidiary, within the last five (5) years has been
denied, other than the denial of Permits which individually or in the aggregate
did not or does not have an ADCS Material Adverse Effect. The ADCS Group and
each ADCS Group Subsidiary have, in the operation of its business, duly complied
with all applicable laws, rules, regulations, Permits and orders of federal,
state, local and foreign governments, except where the failure to comply did not
or does not have an ADCS Material Adverse Effect. Neither the ADCS Group nor any
ADCS Group Subsidiary is in default, and no event has occurred that with notice
or the passage of time or both would constitute such a default, with respect to
any order, judgment, writ, injunction, decree, award, Permit, rule or regulation
of any court, governmental or regulatory body or arbitrator which restrains or
limits in any material respect the operation of the business of, or
<PAGE>
the use of the assets of, the ADCS Group and ADCS Group Subsidiaries taken
as a whole. To the knowledge of the ADCS Group, no officer, director, member or
partner of the ADCS Group would be unable to give the representation that none
of the events or circumstances described in Rule 262 of Regulation A under the
Securities Act have occurred.
3.12. Financial Statements. The ADCS Group has made available to the ATMI
Group financial information respecting the ADCS Group, a copy of which is
annexed hereto as Schedule 3.12, as follows: (i) audited consolidated balance
sheet at March 31, 1996 and audited combined balance sheet at December 31, 1996,
and (ii) audited consolidated financial statements of the ADCS Group for the
year ended March 31, 1996, and audited combined financial statements for the
nine (9) months ended December 31, 1996 (the "Balance Sheet Date") (the
financial statements referred to in clauses (i) and (ii) collectively called the
"ADCS Financial Statements"). The ADCS Financial Statements fairly present the
financial position and results of operations of the ADCS Group for the periods
then ended and the financial position of the ADCS Group at the dates thereof in
accordance with generally accepted accounting principles (subject to normal
year-end adjustments for unaudited interim financial statements, if any). The
ADCS Group and each ADCS Group Subsidiary has maintained its books of account in
accordance with applicable laws, rules and regulations of government authorities
and with generally accepted accounting principles consistently applied, and such
books of account are and, during the period covered by the ADCS Financial
Statements were, correct and complete in all material respects, fairly and
accurately reflect or reflected the income, expenses, assets and liabilities of
the ADCS Group, including the nature thereof and the transactions giving rise
thereto, and provide or provided a fair and accurate basis for the preparation
of the ADCS Financial Statements.
3.13. Absence of Undisclosed Liabilities. Neither the ADCS Group nor any
ADCS Group Subsidiary has any liabilities or obligations, either absolute,
accrued, contingent or otherwise, which individually or in the aggregate would
have an ADCS Material Adverse Effect, and which (i) have not been reflected in
the ADCS Financial Statements, (ii) have not been described in this Agreement or
in any of the Schedules hereto, or (iii) have been incurred since the Balance
Sheet Date other than in the ordinary course of its business consistent with
past practices.
3.14. Absence of Certain Changes. Since the Balance Sheet Date there has
not been, except as described in Schedule 3.14 hereto:
(a) any material adverse change in the business, financial condition,
assets or liabilities, results of operations, or prospects of the ADCS Group and
the ADCS Group Subsidiaries taken as a whole other than changes in the ordinary
course of business, which changes have not in the aggregate been, and do not, to
the ADCS Group's knowledge, threaten to become, materially adverse to the
business, financial condition, assets or liabilities, results of operations, or
prospects of the ADCS Group and the ADCS Group Subsidiaries taken as a whole;
(b) any damage, destruction or loss in excess of $25,000 (whether or not
covered by insurance) adversely affecting any of the assets or business of the
ADCS Group or any ADCS Group Subsidiary;
(c) any ADCS Commitment or liability undertaken or incurred by the ADCS
Group or any ADCS Group Subsidiary (whether absolute, accrued, contingent or
otherwise and whether due or to become due), or any transaction entered into by
the ADCS Group or any ADCS Group Subsidiary which is material to the ADCS Group
and the ADCS Group Subsidiaries taken as a whole, other than items incurred or
entered into in the ordinary course of business and consistent with past
practices of the ADCS Group or any ADCS Group Subsidiary;
(d) any payment, discharge or satisfaction of any claim, lien, encumbrance
or liability of the ADCS Group or any ADCS Group Subsidiary outside the ordinary
course of business in excess of $5,000 individually or $50,000 in the aggregate;
<PAGE>
(e) any sale, transfer, conveyance, assignment, lease, license, pledge,
mortgage or other disposition or encumbrance by the ADCS Group or any ADCS Group
Subsidiary of any asset of the ADCS Group or any ADCS Group Subsidiary having a
value more than $20,000 individually or $50,000 in the aggregate, except in the
ordinary course of business and consistent with past practices of the ADCS Group
or any ADCS Group Subsidiary;
(f) any modification, amendment, cancellation, termination, revocation,
rescission, or waiver of any rights with value to the ADCS Group or any ADCS
Group Subsidiary in excess of $20,000 pursuant to any ADCS Commitments;
(g) any material change in the accounting methods or practices followed by
the ADCS Group or any ADCS Group Subsidiary or any change in the depreciation or
amortization policies or rates theretofore adopted and applied;
(h) any (i) grant of any severance or termination pay to any director,
officer, employee, partner or member of the ADCS Group or any ADCS Group
Subsidiary in excess of $25,000, (ii) entering into of any employment,
severance, management, consulting, deferred compensation or other similar
agreement (or any amendment to any such existing agreement) with any director,
officer, employee, partner or member of the ADCS Group or any ADCS Group
Subsidiary, except for employment agreements entered into in the ordinary course
of business (which agreements do not involve any Holder or which individually or
in the aggregate are not material to the financial condition or results of
operations of the ADCS Group and the ADCS Group Subsidiaries taken as a whole),
(iii) change in benefits payable under existing severance or termination pay
policies or employment, severance, management, consulting or other similar
agreements, other than normal yearly adjustments, or (iv) change in
compensation, bonus or other benefits payable to any director, officer,
employee, partner or member of the ADCS Group or any ADCS Group Subsidiary,
other than normal yearly adjustments, and other than any increase pursuant to
any ADCS Group Employee Benefit Plan, the formulae or commission rates of which
have not been amended or changed;
(i) declared, paid or set aside for payment by the ADCS Group or any ADCS
Group Subsidiary any dividend or other distribution in respect of ADCS Group
Securities, or redeemed, purchased or otherwise acquired any of their respective
ADCS Group Securities;
(j) issued, authorized for issuance, or entered into any commitment to
issue any Security, bond, note or other debt obligation of the ADCS Group or any
ADCS Group Subsidiary;
(k) any transaction or payments between (i) any Holder or any related party
or entity and (ii) the ADCS Group or any ADCS Group Subsidiary not in the
ordinary course of business;
(l) the termination, whether voluntary or involuntary, of any material
employee of the ADCS Group or any ADCS Group Subsidiary or of any material
relationship between the ADCS Group or any ADCS Group Subsidiary and a
consultant; or
(m) any agreement or understanding entered into by the ADCS Group or any
ADCS Group Subsidiary whether in writing or otherwise, for the ADCS Group, any
ADCS Group Subsidiary or, to the ADCS Group's knowledge, any Holder to take any
of the actions specified in this Section 3.14.
3.15. Indebtedness. Neither the ADCS Group nor any ADCS Group Subsidiary
has any obligation for money borrowed or under any guarantee nor any agreement
or arrangement to borrow money or to enter into any such guarantee, and as of
the Closing Date, neither the ADCS Group nor any ADCS Group Subsidiary will have
any obligation for money borrowed nor any agreement or arrangement to borrow
money, and neither the ADCS Group nor any ADCS Group Subsidiary will have any
guarantee outstanding nor any agreement or commitment to enter into any such
guarantee.
<PAGE>
3.16. Accounts Receivable. No amounts in excess of $10,000 individually or
$50,000 in the aggregate included in the accounts receivable of the ADCS Group
or any ADCS Group Subsidiary in the ADCS Financial Statements have been released
or are, or are currently expected to be, regarded under generally accepted
accounting principles as unrecoverable in whole or in part except to the extent
there shall have been an appropriate bad debt reserve therefor. Such receivables
are not, to the knowledge of the ADCS Group, subject to any counterclaim,
refusal to pay or setoff not reflected in the reserves set forth on the ADCS
Financial Statements. Schedule 3.16 hereto sets forth a list of all accounts
receivable of the ADCS Group or any ADCS Group Subsidiary as of the close of
business on the Balance Sheet Date, none of which, to the ADCS Group's
knowledge, is owing from a debtor that has become bankrupt or insolvent or has
been pledged to any third party.
3.17. Supplies. The supplies of the ADCS Group and the ADCS Group
Subsidiaries taken as a whole consist of a quality and quantity generally
adequate for and usable in the ordinary course of business consistent with past
practice.
3.18. No Prebillings. Neither the ADCS Group nor any ADCS Group Subsidiary
has prebilled or received payment, and the ADCS Group and the ADCS Group
Subsidiaries will not prebill or receive payment, from any of its accounts for
goods to be delivered or for services to be rendered or for expenses to be
incurred subsequent to the Closing Date, except in the ordinary course of
business and consistent with past practices of the ADCS Group or any ADCS Group
Subsidiary.
3.19. Taxes.
(a) All returns, reports, information statements, and other forms or
documentation (the "Returns") related to Taxes (as hereinafter defined) required
to be filed or maintained on or before the Closing Date with respect to the
business, activities or assets of the ADCS Group or any ADCS Group Subsidiary,
have been filed or maintained, or will be filed or maintained on or before the
Closing Date, in accordance with all applicable laws (after taking into account
extensions duly obtained), and no penalties or other charges are due or could
reasonably be expected to become due with respect to the late filing of any
Return. All Returns are or will be accurate and complete in all material
respects and properly reflect the Taxes due for the periods covered thereby. All
Taxes due and payable, whether or not called for by the Returns, and all Taxes
properly allocable to periods ending on or before the Closing Date have been
paid, adequately provided for in the ADCS Financial Statements or any ADCS Group
Subsidiary's financial statements, or properly protested or will be so paid,
reserved for or protested by the Closing Date, and the ADCS Group and each ADCS
Group Subsidiary have maintained all required records with respect to Taxes. All
Taxes required to be withheld or collected by the ADCS Group or any ADCS Group
Subsidiary have been duly withheld or collected and have been paid over to the
appropriate governmental authorities, or are held in separate bank accounts
established exclusively for such purpose. Except as set forth on Schedule 3.19
hereto, no audit or investigation of any Return is pending or, to the knowledge
of the ADCS Group, threatened. Schedule 3.19 hereto sets forth the status of any
audit that is pending, including the amounts of any deficiencies and additions
to Tax indicated on any notices of proposed deficiency or statutory notices of
deficiency that may have been issued in connection therewith and all of such
deficiencies or additions to Tax have been paid. There are no requests for
rulings pending before any taxing authority. Schedule 3.19 sets forth the states
in which the ADCS Group or any ADCS Group Subsidiary has filed Returns relating
to Taxes for the taxable years ended March 31, 1994 through March 31, 1996.
Neither the ADCS Group nor any ADCS Group Subsidiary has executed or filed with
the Internal Revenue Service or any other domestic or foreign taxing authority
any agreement extending the period for assessment or collection of any Taxes,
and neither the ADCS Group nor any ADCS Group Subsidiary has waived any law or
regulation fixing the period for assessment or collection of Taxes. Neither the
ADCS Group nor any ADCS Group Subsidiary is a party to any pending action or
proceeding by any domestic or foreign governmental authority for assessment or
collection of Taxes, and no claim for assessment or collection of Taxes has been
asserted or threatened against the ADCS Group or any ADCS Group Subsidiary for
which provision has not been made in the ADCS Financial Statements or any ADCS
Group Subsidiary's financial statements. There are no tax liens upon any of the
properties or assets of the ADCS Group or any ADCS Group Subsidiary other than
liens for Taxes not yet due and payable. True and complete
<PAGE>
copies of the income tax returns of the ADCS Group and each ADCS Group
Subsidiary for the three (3) fiscal years ended in 1994 through 1996, as filed
with the Internal Revenue Service and all other domestic or foreign taxing
authorities, have previously been made available to the ATMI Group.
As used herein, "Taxes" (or "Tax" where the context requires) shall mean
all federal, state, county, local, foreign and other taxes (including, without
limitation, income, profits, premium, estimated, excise, stamp, sales, use,
occupancy, gross receipts, franchise, ad valorem, value added, severance,
capital levy, production, transfer, gains, withholding, employment, social
security, workers' compensation, unemployment compensation, payroll-related and
property taxes (real and personal), imposts, custom duties and other
governmental charges and assessments of whatever kind), whether or not measured
in whole or in part by net income, and including deficiencies, interest,
additions to tax or interest or penalties with respect thereto.
(b) No sales, use or other transfer or conveyance taxes are or will become
payable by the ADCS Group or the ATMI Group solely as a consequence of the
Exchange, other than taxes based upon the net income of the parties.
3.20. Facilities. SCHEDULE 3.20 hereto sets forth a list of all of the real
property and all of the buildings, warehouses and storage facilities owned,
leased or operated by the ADCS Group or any ADCS Group Subsidiary during the
last five (5) years (the "ADCS Premises"), indicating where such property or
facility is located, whether such property is owned, leased, occupied and/or
operated by the ADCS Group or any ADCS Group Subsidiary and the date of
acquisition or occupancy thereof. The leases and other agreements or instruments
under which the ADCS Group or any ADCS Group Subsidiary holds, leases,
subleases, occupies or is entitled to the use of the ADCS Premises are in full
force and effect, and all rentals, royalties or other payments payable
thereunder prior to the date hereof have been duly paid. Neither the ADCS Group
nor any ADCS Group Subsidiary is in default in any material respect, and no
event has occurred that with notice or the passage of time or both would
constitute such a default, with respect to any such leases and other such
agreements or instruments. The current use by the ADCS Group or any ADCS Group
Subsidiary and, to the knowledge of the ADCS Group, by any third party, of the
ADCS Premises complies in all material respects with all applicable zoning laws
and building and use restrictions. Neither the ADCS Group nor any ADCS Group
Subsidiary has received a notice of violation of any applicable law, ordinance,
regulation, order, Permit or requirement (other than Environmental Laws which
are addressed in Section 3.31) relating to its operations or the ADCS Premises,
nor has the ADCS Group or any ADCS Group Subsidiary failed to comply in any
material respect with any provision or condition of any such lease, agreement or
other instrument with respect to the ADCS Premises. All buildings, plants, and
structures owned by the ADCS Group or any ADCS Group Subsidiary lie wholly
within the boundaries of the real property owned by it and do not encroach upon
the property of, or otherwise materially conflict with the property rights of,
any other person.
3.21. Insurance. Schedule 3.21 sets forth a list of the policies of
insurance and fidelity or surety bonds carried by the ADCS Group and the ADCS
Group Subsidiaries. Neither the ADCS Group nor any ADCS Group Subsidiary has
failed to present or to give any notice with respect to any material claim under
any insurance policy in due and timely fashion, and all insurance premiums due
and payable by the ADCS Group or any ADCS Group Subsidiary in connection with
the policies set forth on Schedule 3.21 prior to the Closing Date have been or
will be paid. There are no outstanding written requirements or material written
recommendations by any insurance company that issued a policy with respect to
any of the properties and assets of the ADCS Group or any ADCS Group Subsidiary,
by any Board of Fire Underwriters or other body exercising similar functions or
by any governmental authority requiring or recommending any repairs or other
work to be done on or with respect to any of the properties and assets of the
ADCS Group or any ADCS Group Subsidiary or requiring or recommending any
equipment or facilities to be installed on or in connection with any of the
assets. The unemployment insurance ratings and contributions of the ADCS Group
and each ADCS Group Subsidiary are also set forth on Schedule 3.21.
3.22. Books and Records. The books of account and other financial and
corporate records of the ADCS Group and each ADCS Group Subsidiary are complete
and accurate in all material respects and are maintained
<PAGE>
in accordance with good business practices. The minute books of the ADCS
Group and each ADCS Group Subsidiary as previously made available to the ATMI
Group and its counsel, contain accurate records of all meetings and accurately
reflect all other action of the stockholders, directors, partners and members
(and committees thereof) of the ADCS Group and each ADCS Group Subsidiary.
3.23. Employees. SCHEDULE 3.23 contains a true and complete list of all of
the officers and directors, partners and members of the ADCS Group and the ADCS
Group Subsidiaries, specifying their office or title, and a true and complete
list of all the employees of the ADCS Group and each ADCS Group Subsidiary as of
the date hereof. Neither the ADCS Group nor any ADCS Group Subsidiary has any
written or oral contract of employment with any employee of the ADCS Group or
any ADCS Group Subsidiary, and neither the ADCS Group nor any ADCS Group
Subsidiary is a party to or subject to any collective bargaining agreement nor
has been a party to or subject to any collective bargaining agreement or
collective bargaining plan during the last five (5) years. Neither the ADCS
Group nor any ADCS Group Subsidiary is a party to any pending nor, to the ADCS
Group's knowledge, threatened labor dispute affecting the ADCS Group or any ADCS
Group Subsidiary. The ADCS Group and each ADCS Group Subsidiary have complied in
all material respects with all applicable foreign, federal, state and local
laws, ordinances, rules and regulations and requirements relating to the
employment of labor, including, but not limited to, the provisions thereof
relative to wages, hours, collective bargaining, drug testing, personnel
policies and practices, payment of Social Security, unemployment and withholding
taxes, and ensuring equality of opportunity for employment and advancement of
minorities and women. To the knowledge of the ADCS Group, neither the ADCS Group
nor any ADCS Group Subsidiary is liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing. None of the ADCS
Group or any ADCS Group Subsidiary has received notice from any employee listed
on Schedule 3.23 as earning an annual base salary in excess of $40,000 that such
employee is terminating his or her employment with the ADCS Group or any ADCS
Group Subsidiary, nor to the knowledge of the ADCS Group does any such employee
intend to terminate his or her employment with the ADCS Group or any ADCS Group
Subsidiary.
3.24. Employee Benefit Plans.
(a) SCHEDULE 3.24 sets forth a list of every stock option, stock purchase,
stock appreciation right, bonus, incentive, deferred or current compensation,
excess benefits, profit sharing, pension, thrift, savings, retirement,
severance, sickness, accident, medical, disability, hospitalization, vacation,
insurance or other plan or agreement which provides benefits to or for or on
behalf of any one or more employees of the ADCS Group or any ADCS Group
Subsidiary (including former employees) or their beneficiaries (collectively,
"ADCS Group Employee Benefit Plans"). The ADCS Group has made available to the
ATMI Group true, correct and complete copies of all ADCS Group Employee Benefit
Plans, as in effect on the date of this Agreement, all written descriptions or
summaries thereof, all trust agreements or other funding arrangements (including
insurance or group annuity contracts) relating thereto, all amendments thereto
and all determination letters issued by the Internal Revenue Service with
respect to such ADCS Group Employee Benefit Plans.
(b) No employee benefit plan (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")) exists
which covers or is maintained for the benefit of any of the employees of the
ADCS Group or any ADCS Group Subsidiary or to which the ADCS Group or any ADCS
Group Subsidiary or any Holder is required to make contributions on account of
any employees of the ADCS Group or any ADCS Group Subsidiary.
(c) There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the knowledge of the ADCS Group, threatened against
any ADCS Group Employee Benefit Plan, nor, to the knowledge of the ADCS Group,
does any basis therefor exist. Each ADCS Group Employee Benefit Plan is in
compliance in all material respects with all applicable requirements of ERISA
and the Code and their regulations, and other applicable laws and regulations
and has been administered in all material respects in accordance with its terms
and with applicable legal requirements.
<PAGE>
(d) With respect to each ADCS Group Employee Benefit Plan,
(i) the ADCS Group and each ADCS Group Subsidiary have performed or caused
to be performed all obligations required to be performed under such ADCS Group
Employee Benefit Plan (including, but not limited to, the making when due of all
contributions required by the terms of such plan, by law, or by any collective
bargaining agreement, or otherwise);
(ii) the ADCS Group and each ADCS Group Subsidiary have complied in timely
fashion with the terms of each ADCS Group Employee Benefit Plan and with all
requirements of all laws, rules and regulations (including, but not limited to,
ERISA and the Code) which are applicable to each ADCS Group Employee Benefit
Plan and each ERISA Plan, including, but not limited to,
(1) the filing when due of all required returns, reports and other
documents, and
(2) compliance with all rules concerning notifications and disclosures to
participants and beneficiaries under each such plan;
(iii) neither the ADCS Group nor any ADCS Group Subsidiary has engaged in
any "prohibited transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA nor has committed any breach of fiduciary responsibility
under ERISA (or has any knowledge that any other person has engaged in any such
prohibited transaction or committed any such breach) which could subject the
ATMI Group and/or the Surviving Corporation to an excise tax or other liability
under ERISA or the Code; and
(iv) neither the ADCS Group nor any ADCS Group Subsidiary is in default
under or in violation of (and has no knowledge of any default or violation by
any other person of) the terms of any ADCS Group Employee Benefit Plan.
(e) Except as set forth on SCHEDULE 3.24,
(i) no employee pension benefit plan (as defined in Section 3(2)(A) of
ERISA) which is sponsored by any member of the "controlled group" (as defined in
Section 4001(a)(14) of ERISA) which includes the ADCS Group, any ADCS Group
Subsidiary or any Holder (the "ADCS Controlled Group") has been terminated since
September 2, 1974;
(ii) no proceeding has been initiated to terminate any such employee
pension benefit plan;
(iii) there has been no "reportable event" (within the meaning of Section
4043(c) of ERISA) with respect to any such employee pension benefit plan, other
than those with respect to which the requirement of thirty (30) days' notice,
whether in advance of the event or following the event, to the Pension Benefit
Guaranty Corporation ("PBGC") has been waived by regulation;
(iv) no excise or other taxes (or interest or penalties with respect
thereto) are due or owing with respect to any such employee pension benefit plan
because of any failure to comply with the minimum funding standards of ERISA or
for failing to comply with any other applicable requirement under ERISA or the
Code;
(v) all contributions to any such employee pension benefit plan have been
made within the time provided by law;
(vi) at no time during the last five (5) years has the ADCS Group or any
ADCS Group Subsidiary or any member of the ADCS Controlled Group been a party
to, or been required to make any contribution to, a "Multiemployer Plan" (as
defined in Section 3(37) of ERISA), nor has the ADCS Group or any ADCS Group
Subsidiary or any member of the ADCS Controlled Group made a complete or partial
withdrawal from a Multiemployer Plan as a result of which any withdrawal
liability has been or will be incurred by any of them;
(vii) neither the ADCS Group or any ADCS Group Subsidiary nor any member of
the ADCS Controlled Group has incurred any liability to the PBGC other than for
the payment of annual premiums (and no such premium payments are currently due
and owing); and
<PAGE>
(viii) neither the ADCS Group or any ADCS Group Subsidiary nor any member
of the ADCS Controlled Group has entered into any transaction within the past
five (5) years the purpose of which is to evade liability under Title IV of
ERISA.
(f) No ADCS Group Employee Benefit Plan (other than one which is an
employee pension benefit plan within the meaning of Section 3(2)(A) of ERISA)
provides benefits (including, without limitation, death, health or medical
benefits, whether or not insured) with respect to current or former employees of
the ADCS Group or any ADCS Group Subsidiary beyond their retirement or other
termination of service with the ADCS Group or any ADCS Group Subsidiary, other
than (i) coverage mandated by applicable law, (ii) deferred compensation
benefits which have been accrued as liabilities on the books of the ADCS Group
or any ADCS Group Subsidiary, (iii) benefits the full cost of which is borne by
the current or former employees (or their beneficiaries), (iv) benefits which
have already been satisfied in full or (v) death benefits under any pension plan
to the extent set forth in Schedule 3.24 hereto.
3.25. Litigation. There is no action, suit or proceeding pending and of
which it has been served notice or, to the ADCS Group's knowledge, threatened,
by or against the ADCS Group, any ADCS Group Subsidiary, its respective business
or assets, or, to the ADCS Group's knowledge, any Holder relating to or
affecting the Interests, at law, in equity, by way of arbitration or before any
governmental department, commission, board or agency. To the ADCS Group's
knowledge, there are no existing facts or conditions which reasonably would be
expected to give rise to any charge, claim, litigation, proceeding, or
investigation by any third party which could reasonably be expected to
materially adversely affect its business, the ADCS Group or any ADCS Group
Subsidiary, nor are there any facts or conditions which could reasonably be
expected to give rise to any order of condemnation, appropriation or other
taking of any of the assets. There is no litigation, action, suit, investigation
or proceeding pending and of which it has been served notice or, to the
knowledge of the ADCS Group, threatened, before any court, agency or other
governmental body against the ADCS Group, any ADCS Group Subsidiary or any
Holder (or any corporation or entity affiliated with the ADCS Group, any ADCS
Group Subsidiary or any Holder) which seeks to enjoin or prohibit or otherwise
challenge the transactions contemplated hereby or contemplated by the Additional
Agreements. SCHEDULE 3.25 sets forth each action, suit or proceeding against the
ADCS Group, any ADCS Group Subsidiary, its respective business or assets, or any
Holder relating to or affecting the Interests, at law, in equity, by way of
arbitration or before any governmental department, commission, board or agency,
which has been dismissed or settled or in which a judgment has been rendered, in
each case within the past five (5) years, and the disposition thereof. The ADCS
Group has made available to ATMI true and correct copies of each settlement
agreement and release, if any, in connection with any matter discussed in the
prior sentence, each of which constitutes a legal, valid and binding obligation
of the parties thereto, and no party thereto is in default of any of its
obligations thereunder. There is no order, judgment, decree or settlement
agreement against or involving the ADCS Group, any ADCS Group Subsidiary or any
Holder involving any ongoing liabilities or restrictions which, in the case of a
Holder, would adversely affect the ability of the Holder to transfer the
Interests.
3.26. Proprietary Rights. (a) SCHEDULE 3.26 sets forth a true, correct and
complete list of all foreign and domestic Marks (as hereinafter defined),
patents and applications for patents, and registered copyrights, and
applications therefor, owned by the ADCS Group or any ADCS Group Subsidiary or
in which the ADCS Group or any ADCS Group Subsidiary has any rights or licenses.
The ADCS Group has made available to the ATMI Group copies of all agreements of
the ADCS Group or any ADCS Group Subsidiary with each officer, employee or
consultant of the ADCS Group or any ADCS Group Subsidiary providing the ADCS
Group or any ADCS Group Subsidiary with secrets and inventions developed or used
by the ADCS Group or any ADCS Group Subsidiary. All of such agreements so
described are valid, enforceable and legally binding.
(b) The ADCS Group and each ADCS Group Subsidiary own or possess or have
the right to obtain licenses or other rights to use all patents, patent
applications, trade secrets, copyrights, inventions, drawings, designs,
proprietary know-how or information, or other rights with respect thereto
(collectively referred to as "Proprietary Rights"), which it has determined are
used in its business, and it believes the same are sufficient
<PAGE>
to conduct its business as it has been and is now being conducted. The ADCS
Group is not aware of any existing Proprietary Rights that the ADCS Group and
the ADCS Group Subsidiaries do not already own or possess or will be able to
obtain a license under, which Proprietary Rights would be necessary for the ADCS
Group or any ADCS Group Subsidiary to conduct its business.
(c) To the ADCS Group's knowledge, the operations of the ADCS Group and
each ADCS Group Subsidiary do not conflict with or infringe upon, and no one has
asserted to the ADCS Group or any ADCS Group Subsidiary that such operations
conflict with or infringe upon, any Proprietary Rights or any trademarks, trade
names, or service marks (collectively referred to as "Marks"), Marks owned,
possessed or used by any third party. There are no claims, disputes, actions,
proceedings, suits or appeals pending against the ADCS Group, any ADCS Group
Subsidiary or any Holder with respect to any Proprietary Rights or Marks, and
none has been threatened against the ADCS Group or any ADCS Group Subsidiary. To
the ADCS Group's knowledge, there are no facts or alleged facts which would
reasonably serve as a basis for any claim that the ADCS Group or any ADCS Group
Subsidiary does not have the right to use, free of any rights or claims of
others, all Proprietary Rights and Marks in the development, manufacture, use,
sale or other disposition of any or all products or services presently being
used, furnished or sold in the conduct of its business as it has been and is now
being conducted. Neither the ADCS Group nor any ADCS Group Subsidiary has
violated the terms of any confidentiality agreement or nondisclosure agreement
entered into in favor of any third party.
(d) There are no inter parties proceedings before any patent or trademark
authority to which the ADCS Group or any ADCS Group Subsidiary is a party.
(e) The ADCS Group and each ADCS Group Subsidiary have taken all other
measures they deem reasonable to maintain the confidentiality of the processes
and formulae, research and development results and other know-how, the value of
which to the ADCS Group or any ADCS Group Subsidiary is contingent upon
maintenance of the confidentiality thereof.
(f) Each employee and officer of the ADCS Group or any ADCS Group
Subsidiary is a party to a confidential non-disclosure agreement with the ADCS
Group or such ADCS Group Subsidiary (the form of which has been made available
to the ATMI Group). No employee of the ADCS Group or any ADCS Group Subsidiary
is in violation of any material term of any employment contract, proprietary
information and inventions agreement, confidentiality agreement, non-competition
agreement, or any other contract or agreement relating to the relationship of
any such employee with the ADCS Group or any ADCS Group Subsidiary, or any
previous employer.
(g) The Proprietary Rights and Marks are free of any unresolved ownership
disputes with respect to any third party. To the ADCS Group's knowledge there is
no unauthorized use, infringement or misappropriation of any of such Proprietary
Rights or Marks by any third party, including any employee or former employee of
the ADCS Group or any ADCS Group Subsidiary.
(h) Other than as part of transactions identified in SCHEDULE 3.26, the
ADCS Group has not burdened the Proprietary Rights with any liens, security
interests, financing agreements, or other encumbrances.
3.27. Section 341(f)(2) Consent. At no time has the ADCS Group or any ADCS
Group Subsidiary, or any predecessor, consented under Section 341(f)(1) of the
Code, or agreed under Section 341(f)(3) of the Code, to have the provisions of
Section 341(f)(2) of the Code apply to any sale of its capital stock.
3.28. Related Party Transactions. SCHEDULE 3.28 sets forth the amounts and
other essential terms of indebtedness or other obligations, liabilities or
commitments (contingent or otherwise) of the ADCS Group or any ADCS Group
Subsidiary to or from any Holder or any other present officer, director,
partner, member or stockholder or any person related to, controlling, controlled
by or under common control with any of the foregoing (other than for employment
services performed within the past month the payment for which is not yet due),
and all other transactions between such persons and the ADCS Group or any ADCS
Group Subsidiary,
<PAGE>
except for transactions which through consolidation are eliminated in the
ADCS Group Financial Statements. Without limiting the generality of the
foregoing, as of the date hereof, none of the Holders or any other present
officer, director, partner, member or stockholder or any person related to,
controlling, controlled by or under common control with any of the foregoing (a)
has any material direct or indirect interest in any entity which does business
with the ADCS Group or any ADCS Group Subsidiary, (b) has any direct or indirect
interest in any property, asset or right which is used by the ADCS Group or any
ADCS Group Subsidiary in the conduct of its business, or (c) has any contractual
relationship with the ADCS Group or any ADCS Group Subsidiary other than such
relationships which occur from being an employee, officer, director, etc.
3.29. Bank Accounts and Safe Deposit Arrangements. SCHEDULE 3.29 sets forth
a complete list of (i) the name and address of each bank and brokerage firm with
which the ADCS Group or any ADCS Group Subsidiary has any accounts, safe deposit
boxes, lock boxes or vaults, (ii) the account numbers relating thereto, and
(iii) the names of all persons authorized to deal with such accounts or to have
access to such boxes or vaults.
3.30. Powers of Attorney. No person has any power of attorney to act on
behalf of the ADCS Group or any ADCS Group Subsidiary in connection with any of
its properties or business affairs other than such powers to so act as normally
pertain to the officers of such entity.
3.31. Environmental Matters; Health and Safety.
(a) Definitions. The following definitions shall apply for purposes of this
Section 3.31:
(i) "Environmental Conditions" means circumstances with respect to soil,
surface waters, groundwaters, stream sediment and air, both on-site and off-site
of the real property either owned or leased by a party or on which a party
operates or operated its business during the last ten (10) years, that could
require remedial action and/or that would reasonably be expected to result in
claims and/or demands by and/or liabilities to third parties, including, but not
limited to governmental entities.
(ii) "Environmental Laws" means any and all foreign, federal, state, local
or municipal laws, regulations, ordinances, rules, orders, guidelines, policies
or requirements of any governmental authority regulating or imposing standards
of liability or standards of conduct (including common law) concerning air,
water, solid waste, Hazardous Materials (including, but not limited to, the
transfer of facilities involved in the generation, storage, handling,
transportation and/or disposal of Hazardous Materials), worker and community
right-to-know, hazard communication, noise, radioactive material, resource
protection, inland wetlands and watercourses and health protection. Such laws
include, but are not limited to, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Superfund Amendments and Reauthorization Act, the Occupational Safety and Health
Act, the Hazardous Materials Transportation Act, the Toxic Substances Control
Act, the Federal Insecticide Fungicide and Rodenticide Act, the Clean Water Act,
the Clean Air Act, and the Safe Drinking Water Act, all as amended and effective
on the date hereof, and the regulations, rules and orders promulgated or issued
thereunder. Environmental Laws also include any or all environmental permits,
approvals, consents, stipulations, licenses, registrations, certificates and
authorizations which are required by law, ordinance or regulation and any and
all environmental regulatory compliance requirements applicable to a party's
business and/or a party or, to the party's knowledge, its predecessor(s) in
interest as of or prior to the Closing.
(iii) "Hazardous Materials" means any petroleum, petroleum products, fuel
oil, explosives, reactive materials, ignitable materials, corrosive materials,
hazardous chemicals, hazardous wastes, hazardous substances, extremely hazardous
substances, toxic substances, toxic chemicals, radioactive materials, infectious
materials and any other element, compound, mixture, solution or substance that
may pose a present or potential hazard to human health or the environment, or as
otherwise defined in or regulated by Environmental Laws.
<PAGE>
(iv) "Notice" means any summons, citation, directive, order, claim,
litigation, pleading, investigation, proceeding, judgment, letter or any other
written or oral communication (if such oral communication is made to a manager,
officer or employee responsible for environmental compliance matters) from the
United States Environmental Protection Agency, California Environmental
Protection Agency, Texas Natural Resources Conservation Commission, Connecticut
Department of Environmental Protection or any other foreign, federal, state or
local agency or authority, or any other entity or any individual, concerning any
intentional or unintentional act or omission that constitutes or may constitute
a violation of an Environmental Law and shall expressly include the imposition
of any lien pursuant to any Environmental Laws.
(v) "Release" means releasing, spilling, leaking, pumping, pouring,
emitting, emptying, discharging, ejecting, escaping, leaching, disposing,
seeping, infiltrating, draining or dumping. This term shall be interpreted to
include both the present and past tense, as appropriate.
(vi) "Site Remediation Measures" means any efforts of any foreign, federal,
state or local government, or a party, their contractors, subcontractors, or
agents, that are made, designed, initiated, or maintained as required by
Environmental Laws or Commitments entered into by a party in order to ensure
that Environmental Conditions are consistent with Environmental Laws or
Commitments entered into by a party, including, site investigation, site
monitoring, containment, clean-up, transport, removal, disposal, restoration and
other remedial efforts of any kind.
(b) Environmental Representations and Warranties. Except as may be found to
the contrary in the Phase II environmental site assessment referred to in
Section 5.23 below:
(i) Compliance. The ADCS Group and each ADCS Group Subsidiary and, to the
ADCS Group's knowledge, its predecessor(s) in interest, have been and are in
compliance with and have no liability or obligation arising under any
Environmental Law, and neither the ADCS Group nor any ADCS Group Subsidiary has
received any Notice from any applicable governmental agency seeking any
information or alleging any violation of such Environmental Laws. No Site
Remediation Measure is necessary or required under Environmental Law or any ADCS
Commitment for its business or the ADCS Premises, nor are there any
Environmental Conditions on the ADCS Premises. No capital improvements,
alterations or repairs to the ADCS Premises are necessary or required to bring
such facility into compliance with all Environmental Laws now in effect.
(ii) Hazardous Materials/Underground Tanks. None of the ADCS Group, any
ADCS Group Subsidiary or any Holder and, to the ADCS Group's knowledge, their
predecessor(s) in interest, has caused or permitted any use of its business or
the ADCS Premises to generate, manufacture, refine, transport, treat, store,
handle, dispose, transfer, produce or process any Hazardous Materials or solid
waste, except in compliance with all Environmental Laws, and has not caused or
permitted and has no knowledge of the Release of any such Hazardous Materials
on-site or off-site of the ADCS Premises, resulting, or that could in the future
result in an Environmental Condition requiring Site Remediation Measures. The
ADCS Premises and all principal items and machinery and equipment used in the
ADCS Group's business comply with all applicable Environmental Laws. The ADCS
Premises do not contain any asbestos requiring removal now or in the course of
any remodeling that may occur in the future, or other Hazardous Materials, and,
except for chemicals and raw materials used, and wastes generated in connection
with, the manufacture of the ADCS Group's products, which in each case are
located on the ADCS Premises in the ordinary course of business, no such
materials are located on, in or under the ADCS Premises. Any and all underground
and aboveground tanks at the ADCS Premises are in compliance with any and all
Environmental Laws, and such Environmental Laws do not mandate the removal or
retrofitting of such tanks for a period of five (5) years after the Closing. The
removal of any tank has been carried out in compliance with all applicable
Environmental Laws.
(iii) There are no outstanding or, to the ADCS Group's knowledge,
threatened actions, claims, proceedings, determinations or judgments by any
party, including but not limited to any governmental
<PAGE>
authority, whether foreign, federal, state, local or any agency thereof,
against or involving the ADCS Group, any ADCS Group Subsidiary or any Holder, or
to the ADCS Group's knowledge, against or involving the ADCS Group's or any ADCS
Group Subsidiary's predecessor(s) in interest in any manner arising under the
Environmental Laws or alleging or involving personal injury or property damage
as a result of a violation of any Environmental Law or otherwise involving
Environmental Conditions. Attached hereto as SCHEDULE 3.31 is a list of all such
actions, claims, proceedings, determinations and judgments issued within the
past ten (10) years by any party against the ADCS Group, any ADCS Group
Subsidiary or any Holder as it relates to the ADCS Group or the ADCS Group
Subsidiaries and, to the ADCS Group's knowledge, against any predecessor(s) in
interest.
(iv) The ADCS Group and each ADCS Group Subsidiary and, to the ADCS Group's
knowledge, their predecessor(s) in interest, have complied with all notice,
recordkeeping and reporting requirements imposed by any governmental authority
and any informational requests or demands arising under any Environmental Laws.
None of the ADCS Group, any ADCS Group Subsidiary or any Holder, nor, to the
ADCS Group's knowledge, the ADCS Group's or any ADCS Group Subsidiary's
predecessor(s) in interest, is liable for any penalties, fines, or forfeitures
or is subject to any restrictions on the conduct of its business for failure to
comply with any of the foregoing.
(v) Schedule 3.31 lists all of the ADCS Premises, the date of acquisition
or leasing thereof, the person or entity from whom the ADCS Premises were
acquired or leased, the operations conducted thereon and, to the ADCS Group's
knowledge, the operations conducted prior to the acquisition or leasing thereof.
3.32. Customers and Suppliers. SCHEDULE 3.32 sets forth a list of (i) all
of the customers of the ADCS Group or any ADCS Group Subsidiary as of the date
hereof, but not including customers from whom the ADCS Group or any ADCS Group
Subsidiary in the aggregate has received less than $250,000 in gross receipts
during the immediately preceding twelve-month period, and (ii) the ten (10)
largest suppliers of the ADCS Group and the ADCS Group Subsidiaries taken as a
whole in terms of purchases made during the 1995 and 1996 fiscal years. Neither
the ADCS Group nor any ADCS Group Subsidiary has received any notice or has any
knowledge that any customer listed for the 1996 fiscal year (1) has ceased, or
currently intends to cease, to use the products, goods or services of the
business of the ADCS Group or of any ADCS Group Subsidiary; (2) has
substantially reduced, or currently intends to substantially reduce, the use of
products, goods or services of the business of the ADCS Group or of any ADCS
Group Subsidiary; or (3) other than in the ordinary course of business and to an
extent which is not reasonably likely to have an ADCS Material Adverse Effect,
has sought, or is seeking, to reduce the price it will pay for products, goods
or services of the business of the ADCS Group or of any ADCS Group Subsidiary.
Neither the ADCS Group nor any ADCS Group Subsidiary has received any notice or
has any knowledge that any such supplier will not sell raw materials, supplies,
merchandise and other goods to the ADCS Group or any ADCS Group Subsidiary at
any time after the Closing Date on terms and conditions similar to those used in
the current sales to the business, subject to general and customary price
increases and unforeseeable supply or demand changes.
3.33. Product and Service Warranties. To the knowledge of the ADCS Group:
(a) All products sold and all services rendered by the ADCS Group and each
ADCS Group Subsidiary have been in conformity in all material respects with all
applicable ADCS Commitments and all expressed warranties, and no material
liability exists or will arise for replacement or damage in connection with such
sales or for services not rendered in all material respects in accordance
therewith.
(b) There is adequate provision in the ADCS Financial Statements for
liabilities and obligations for damaged, defective or returned goods, or for
replacement of goods or for allowances with respect to goods sold or services
rendered by or on behalf of the ADCS Group or any ADCS Group Subsidiary.
(c) Neither the ADCS Group nor any ADCS Group Subsidiary has any pattern of
claims or actions based upon allegations of the same or similar product defect
for any of its products.
<PAGE>
(d) There has not been any material product recall, rework or retrofit
relating to any line of product manufactured, shipped or sold by the ADCS Group
or any ADCS Group Subsidiary, nor to the knowledge of the ADCS Group is there
any basis for any such product recall, rework or retrofit.
3.34. Hart-Scott-Rodino. The "total assets" and the "annual net sales" of
the "ultimate parent entity" (as such terms are used within the meaning of
Section 7A.(a)(2)(A) of the Hart-Scott-Rodino Antitrust Improvements Act of
1976) of the ADCS Group are less than $100,000,000.
3.35. Stock Ownership. Other than through mutual funds or other similar
investment vehicles over which no investment discretion is retained, none of the
ADCS Group, any ADCS Group Subsidiary or any Holder owns any ATMI Group
Securities issued by ATMI and has no warrants, options or other rights to
purchase or otherwise acquire or convert any obligations into ATMI Group
Securities.
3.36. Finders' Fees. There is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of the
ADCS Group, any ADCS Group Subsidiary or any Holder who might be entitled to any
fee or commission from the ATMI Group or any other person upon consummation of
the transactions contemplated by this Agreement.
3.37. Information in Disclosure Documents and Registration Statement. None
of the information made available or to be made available by the ADCS Group for
inclusion or incorporation by reference in (i) the S-4 will, at the time such
registration statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they are made, not misleading, and (ii) the proxy
statement relating to the meeting of ATMI's stockholders to be held in
connection with the Merger (the "Proxy Statement") will, at the date mailed to
stockholders and at the time of the meeting of stockholders to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
3.38. Pooling. To its knowledge, the ADCS Group has not taken, or failed to
take, any action that would jeopardize the treatment of the Reorganization as a
"pooling of interests" for accounting purposes.
3.39. Atlantic Coast Polymers, Inc. ADCS Nevada is the record and
beneficial owner of the number of Securities of Atlantic Coast Polymers, Inc.
shown on SCHEDULE 3.39, which Securities owned by ADCS Nevada represent less
than twenty percent (20%) of the issued and outstanding voting Securities of
Atlantic Coast Polymers, Inc. and which Securities owned by ADCS Nevada have
been fully paid and are nonassessable. Neither the ADCS Group nor any ADCS Group
Subsidiary is liable, directly or indirectly, whether as co-maker, guarantor,
surety or otherwise, for any of the liabilities or obligations of Atlantic Coast
Polymers, Inc.
3.40. No Misrepresentation. Neither this Agreement nor any certificate or
Schedule or other information furnished pursuant to this Agreement by or on
behalf of the ADCS Group or any ADCS Group Subsidiary contains any untrue
statement of a material fact or, when this Agreement and such certificates,
Schedules and other information are taken in their entirety, omits to state a
material fact required to be stated herein or therein necessary to make the
statements contained herein or therein not misleading.
ARTICLE IV
Representations and Warranties of the ATMI Group
The ATMI Group hereby jointly and severally represent and warrant to the
ADCS Group that, except as set forth in the ATMI DISCLOSURE SCHEDULE attached
hereto (which ATMI Disclosure Schedule makes explicit reference to the
particular subsection as to which exception is taken, which in each case shall
constitute the sole subsection as to which such exception shall apply, and the
statements in such ATMI Disclosure Schedule shall
<PAGE>
be deemed to be representations and warranties), as supplemented pursuant
to Section 5.19, and acknowledge and confirm that the ADCS Group is relying upon
such representations and warranties in connection with the execution, delivery
and performance of this Agreement and the Additional Agreements to which it is a
party, notwithstanding any investigation made by the ADCS Group or on its
behalf:
4.1. Capitalization; Options, Warrants, Rights. SCHEDULE 4.1 sets forth the
aggregate number of all of the Securities which the ATMI Group and each ATMI
Group Subsidiary (as hereinafter defined) are authorized to issue (the "ATMI
Group Securities") and the aggregate number of all of the ATMI Group Securities
issued and outstanding. All ATMI Group Securities have been validly authorized
and issued and are fully paid and nonassessable, and have not been issued in
violation of any preemptive, first refusal or other subscription rights of any
holder of any ATMI Group Securities or any other person, and have been issued in
compliance with applicable foreign, federal and state securities laws. With
respect to the ATMI Group, there are no outstanding or existing (i) proxies,
voting trusts, or other agreements or understandings with respect to the voting
of the ATMI Group Securities known to the ATMI Group, (ii) ATMI Group Securities
convertible into or exchangeable for other ATMI Group Securities, (iii) options,
warrants or other rights to purchase or subscribe for ATMI Group Securities
(other than this Agreement) or ATMI Group Securities convertible into or
exchangeable for other ATMI Group Securities, or (iv) agreements of any kind
relating to the issuance or purchase of ATMI Group Securities or Securities
convertible into or exchangeable for other ATMI Group Securities. No member of
the ATMI Group holds or owns, directly or indirectly, any Securities of any
other corporation, or has any direct or indirect equity or ownership interest in
any association, partnership, joint venture or other entity other than (i)
through mutual funds or other similar investment vehicles over which no
investment discretion is retained, (ii) publicly-traded Securities having a
market value of $25,000 or less per issuer, (iii) ATMI Group Securities and (iv)
as identified on SCHEDULE 4.1 (each corporation, association, partnership, joint
venture or other entity in which any member of the ATMI Group owns, directly or
indirectly, twenty percent (20%) or more of the issued and outstanding
Securities are referred to herein as the "ATMI Group Subsidiaries").
4.2. Organization; Good Standing; Power. (a) Each of the ATMI Group and
each of the ATMI Group Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation, is
authorized to do business as a foreign corporation in the jurisdictions set
forth on SCHEDULE 4.2 and is not required to be authorized to do business as a
foreign corporation in any other jurisdiction (within or without the United
States) by reason of the nature of the business now being conducted by it or the
properties owned or leased or operated by it in which the failure to be so
qualified would have a material adverse effect on the assets, liabilities,
results of operations, financial condition or business of the ATMI Group and the
ATMI Group Subsidiaries taken as a whole (an "ATMI Material Adverse Effect").
(b) Each of the ATMI Group has the requisite corporate power and authority
to own, lease and operate its properties and carry on its business as is now
being conducted by it, and to execute, deliver and perform this Agreement and
the Additional Agreements to which it is a party and consummate the transactions
contemplated hereby and thereby.
(c) The ATMI Group and each ATMI Group Subsidiary conducts its business
under the trade names and other assumed names set forth on SCHEDULE 4.2, if any.
4.3. Organizational Documents. With respect to the ATMI Group and each ATMI
Group Subsidiary, the ATMI Group has heretofore made available to the ADCS Group
a complete and correct copy of (i) each corporation's Certificate or Articles of
Incorporation, as amended to date, and (ii) each corporation's By- Laws, as
amended to date (items (i) and (ii) being referred to herein as the "ATMI
Organizational Documents"). Each of the foregoing are in full force and effect,
and none of the ATMI Group, any ATMI Group Subsidiary or to the ATMI Group's
knowledge, any other party to the ATMI Organizational Documents, is in violation
of any of the provisions thereof. There are no proceedings for the amendment or
modification of or any other change in the ATMI Organizational Documents. There
are no proceedings for the dissolution or liquidation of the ATMI Group or any
ATMI Group Subsidiary or, to the knowledge of the ATMI Group, threatening the
existence of the ATMI
<PAGE>
Group or any ATMI Group Subsidiary. The ATMI Group has made available to
the ADCS Group the minute books and stock records of each member of the ATMI
Group and ATMI Group Subsidiary.
4.4. Authorization. Except for the vote of ATMI stockholders contemplated
hereby, the ATMI Group has taken all corporate action necessary to authorize the
execution, delivery and performance of this Agreement and, as applicable, the
Additional Agreements to which it is a party. Such execution, delivery and
performance and the other transactions contemplated hereby do not and will not
violate, result in any default, acceleration or loss of any material benefit
under, permit any third party to rescind any term or provision of, or conflict
with any terms of, the ATMI Organizational Documents, any law, lien, order,
award, judgment, decree, Permit, or any material agreements or contracts to
which the ATMI Group or any ATMI Group Subsidiary is a party or is subject or by
which the ATMI Group or any ATMI Group Subsidiary or their assets is bound or
result in the creation of any lien, charge or encumbrance upon any of the
assets, real, personal or mixed, tangible or intangible, of the ATMI Group, or
any ATMI Group Subsidiary. This Agreement and each of the Additional Agreements
to which any of the ATMI Group is a party when executed will constitute the
legal, valid and binding obligation of the ATMI Group, enforceable against the
ATMI Group in accordance with its terms, subject to applicable bankruptcy,
insolvency, fraudulent transfer and other similar laws affecting the
enforceability of creditors' rights generally.
4.5. SEC Compliance. Since November 23, 1993, ATMI has filed all forms,
reports and documents (including all exhibits required to be filed therewith)
with the SEC (the "ATMI SEC Documents") required to be filed by it pursuant to
the federal securities laws and the SEC rules and regulations thereunder. As of
their respective filing dates, the ATMI SEC Documents complied in all material
respects with the requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the Securities Act or the rules and regulations
promulgated under either, and none of the ATMI SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, except
to the extent corrected by a subsequently filed ATMI SEC Document. ATMI has made
available to the ADCS Group copies of all of the ATMI SEC Documents.
4.6. ATMI Commitments
(a) Definitions. The following definition shall apply for purposes of this
Section 4.6:
(i) "ATMI Commitments" means all of the Commitments to which the ATMI Group
or any ATMI Group Subsidiary is a party other than the ATMI Group Employee
Benefit Plans (as hereinafter defined).
(b) Schedule of ATMI Commitments and Proposals. SCHEDULE 4.6 hereto sets
forth a list of the following:
(i) any ATMI Commitments, not including purchase orders placed by any
member of the ATMI Group, creating or evidencing indebtedness in excess of
$100,000.00 for money borrowed by the ATMI Group or any ATMI Group Subsidiary;
(ii) any material ATMI Commitments mortgaging, pledging, granting, or
creating a lien or security interest or other encumbrance on any real or
personal property of the ATMI Group or any ATMI Group Subsidiary;
(iii) any ATMI Commitments creating or evidencing any guaranty by the ATMI
Group or any ATMI Group Subsidiary of payment or performance by any other party
involving in excess of $100,000.00;
(iv) any ATMI Commitments involving a sharing of profits or expenses,
including, but not limited to, any joint venture agreements;
(v) any ATMI Commitments limiting the freedom of the ATMI Group or any ATMI
Group Subsidiary to engage in any line of business;
(vi) any ATMI Commitments limiting the freedom of the ATMI Group or any
ATMI Group Subsidiary to operate in any geographic area;
<PAGE>
(vii) any ATMI Commitments limiting the freedom of the ATMI Group or any
ATMI Group Subsidiary to compete with any party;
(viii) any ATMI Commitments limiting the freedom of the ATMI Group or any
ATMI Group Subsidiary to disclose or use any information material to the
operation of the business of the ATMI Group or any ATMI Group Subsidiary;
(ix) any ATMI Commitments for construction of physical facilities involving
in excess of $100,000.00;
(x) any ATMI Commitments providing for disposition of any line of business,
material assets or ATMI Group Securities;
(xi) any ATMI Commitments providing for acquisition of any line of
business, material assets or Securities of any other business, which Securities
have a fair market value in excess of $50,000; and
(xii) any ATMI Commitments providing for merger or consolidation (including
letters of intent) with any other business.
(c) The ATMI Group and each ATMI Group Subsidiary have complied in all
material respects with and are not in material default under any of the ATMI
Commitments.
(d)Neither the ATMI Group nor any ATMI Group Subsidiary has granted or been
granted any waiver or forbearance with respect to any ATMI Commitments to
provide goods or services to customers that produced aggregate payments in the
year ending December 31, 1996 of at least $250,000.00 to the ATMI Group or any
ATMI Group Subsidiary.
(e) The ATMI Commitments listed on Schedule 4.6 are valid and are in full
force and effect as to the ATMI Group or an ATMI Group Subsidiary, as the case
may be (and, to the knowledge of the ATMI Group, the other parties thereto).
4.7. Restrictions; Burdensome Agreements. None of the ATMI Group or any
ATMI Group Subsidiary is a party to any contract, commitment or agreement
(including the ATMI Commitments), and none of the ATMI Group or any ATMI Group
Subsidiary or any of their respective properties and assets is subject to or
bound or affected by any charter, by-law, operating agreement, limited
partnership agreement, or other organizational restriction, or any order,
judgment, decree, law, statute, ordinance, rule, regulation, Permit or other
restriction of any kind or character, which would (i) prevent the ATMI Group
from entering into this Agreement and the Additional Agreements to which it is a
party or prevent the ATMI Group from consummating the transactions contemplated
hereby and thereby, or (ii) have an ATMI Material Adverse Effect that has not
been disclosed in a Schedule hereto.
4.8. Condition of the Assets. Except as would not have an ATMI Material
Adverse Effect, the tangible assets of the ATMI Group and each ATMI Group
Subsidiary, including real, personal and mixed, material to the operation of its
business are in good condition and repair, ordinary wear and tear excepted, and
suitable for the uses intended. The assets of the ATMI Group and each ATMI Group
Subsidiary are operated in conformity in all material respects with all
applicable laws, ordinances, regulations, orders, Permits and other requirements
relating thereto adopted or currently in effect. SCHEDULE 4.8 sets forth a list
of each asset (other than intangible assets listed on SCHEDULE 4.23 and other
than as set forth on SCHEDULE 4.25) having a book value in excess of $50,000,
indicating whether each such asset is owned or leased by the ATMI Group or any
ATMI Group Subsidiary, and setting forth where each such asset is located. Since
December 31, 1996, neither the ATMI Group nor any ATMI Group Subsidiary has,
except in the ordinary course of business, acquired or sold or otherwise
disposed of any of its assets. SCHEDULE 4.8 also includes a list of each lease
under which the ATMI Group or any ATMI Group Subsidiary leases an asset (other
than leased real property) having a replacement cost of $50,000 or more. The
leases and other agreements or instruments under which the ATMI Group or any
ATMI Group Subsidiary holds, leases, subleases or is entitled to the use of any
of the assets having a replacement cost of $50,000 or more are in full force and
effect, and all rentals, royalties or other payments payable
<PAGE>
thereunder have been duly paid or provided for by adequate reserves. No
default or event of default by the ATMI Group or any ATMI Group Subsidiary
exists, and no event which, with notice or lapse of time or both, would
constitute a default by the ATMI Group or any ATMI Group Subsidiary, has
occurred and is continuing, under terms or provisions, express or implied, of
any such lease, agreement or other instrument or under the terms or provisions
of any agreement to which any of its assets is subject, which lease, agreements
or other instruments individually or in the aggregate involve assets having a
book value of $50,000 or more, nor has the ATMI Group received notice of any
claim of such default.
4.9. Title; Absence of Liens and Encumbrances, Etc. The ATMI Group and each
ATMI Group Subsidiary have good, valid, and marketable title to its assets, free
and clear of all mortgages, security interests, claims, liens, charges, title
defects, encumbrances, restrictions on use or transfer or other defects.
4.10. Government and Other Consents. No consent, authorization or approval
of, exemption by, or filing with any governmental, public or self-regulatory
body or authority or other party is required in connection with the execution,
delivery and performance by the ATMI Group of this Agreement, the Additional
Agreements to which it is a party or any of the instruments or agreements
required to be executed and delivered pursuant to this Agreement or any
Additional Agreement, or the consummation of the Exchange, except under any
applicable federal and state securities laws, the HSR Act and the rules and
regulations of the NASD.
4.11. Franchises, Permits, Licenses; Compliance with Applicable Laws and
Court Orders. Except for intellectual property matters covered by Section 4.23,
the ATMI Group and each ATMI Group Subsidiary have all Permits necessary to own,
lease or operate its properties or necessary for the conduct of its business as
currently conducted, other than those the absence of which would not result in
an ATMI Material Adverse Effect. All such Permits are in full force and effect,
and there is no condition, nor has any event occurred, which constitutes or with
the giving of notice, or passage of time, or both, would constitute a violation
of the terms of any Permit, and to the knowledge of the ATMI Group, no
suspension or cancellation of any of them is pending or threatened. Neither the
execution of this Agreement or the Additional Agreements to which any of the
ATMI Group is a party nor the consummation of the transactions contemplated
hereby or thereby would constitute a violation of the terms of any such Permit
or grounds for the termination of any such Permit. No application for a Permit
filed by or on behalf of the ATMI Group or any ATMI Group Subsidiary, or in
connection with a facility operated by the ATMI Group or any ATMI Group
Subsidiary, within the last five (5) years has been denied, other than the
denial of Permits which individually or in the aggregate did not or does not
have an ATMI Material Adverse Effect. The ATMI Group and each ATMI Group
Subsidiary have, in the operation of its business, duly complied with all
applicable laws, rules, regulations, Permits and orders of federal, state, local
and foreign governments, except where the failure to comply did not or does not
have an ATMI Material Adverse Effect. Neither the ATMI Group nor any ATMI Group
Subsidiary is in default, and no event has occurred that with notice or the
passage of time or both would constitute such a default, with respect to any
order, judgment, writ, injunction, decree, award, Permit, rule or regulation of
any court, governmental or regulatory body or arbitrator which restrains or
limits in any material respect the operation of the business of, or the use of
the assets of, the ATMI Group and the ATMI Group Subsidiaries taken as a whole.
To the knowledge of the ATMI Group, no officer, director, member or partner of
the ATMI Group would be unable to give the representation that none of the
events or circumstances described in Rule 262 of Regulation A under the
Securities Act have occurred.
4.12. Financial Statements. The (i) audited consolidated balance sheets of
ATMI and its subsidiaries at December 31, 1994 and 1995 and the statements
of
operations and changes in stockholders' equity and cash flows for the years
ended December 31, 1994 and 1995, and (ii) the unaudited consolidated balance
sheet at September 30, 1996 and the statement of operations and cash flows for
the nine months then ended and the unaudited consolidated statement of
operations for the three months ended September 30, 1996, included in the ATMI
SEC Documents (the "ATMI Financial Statements") fairly present the financial
position and results of operations of the ATMI Group as for the periods then
ended and the financial position of the ATMI Group at the dates thereof in
accordance with generally accepted accounting principles (subject to normal
year-end adjustments for unaudited interim financial statements, if any). ATMI
has maintained its books of account in accordance with applicable laws, rules
and regulations of government authorities and with generally accepted
<PAGE>
accounting principles consistently applied, and such books of account are and,
during the period covered by the ATMI Financial Statements were, correct and
complete in all material respects, fairly and accurately reflect or reflected
the income, expenses, assets and liabilities of ATMI, including the nature
thereof and the transactions giving rise thereto, and provide or provided a
fair and accurate basis for the preparation of the ATMI Financial
Statements.
4.13. Absence of Undisclosed Liabilities. Neither the ATMI Group nor any
ATMI Group Subsidiary has any liabilities or obligations, either absolute,
accrued, contingent or otherwise, which individually or in the aggregate would
have an ATMI Material Adverse Effect and which (i) have not been reflected in
the ATMI Financial Statements, (ii) have not been described in this Agreement or
in any of the Schedules hereto, or (iii) have been incurred since December 31,
1996, other than in the ordinary course of its business consistent with past
practices.
4.14. Absence of Certain Changes. Since December 31, 1996 there has not
been, except as described in SCHEDULE 4.14 hereto:
(a) any material adverse change in the business, financial condition,
assets or liabilities, results of operations, or prospects of the ATMI Group and
the ATMI Group Subsidiaries taken as a whole other than changes in the ordinary
course of business, which changes have not in the aggregate been, and do not, to
the ATMI Group's knowledge, threaten to become, materially adverse to the
business, financial condition, assets or liabilities, results of operations, or
prospects of the ATMI Group and the ATMI Group Subsidiaries taken as a whole;
(b) any damage, destruction or loss in excess of $25,000 (whether or not
covered by insurance) adversely affecting any of the assets or business of the
ATMI Group or any ATMI Group Subsidiary;
(c) any ATMI Commitment or liability undertaken or incurred by the ATMI
Group or any ATMI Group Subsidiary (whether absolute, accrued, contingent or
otherwise and whether due or to become due), or any transaction entered into by
the ATMI Group or any ATMI Group Subsidiary which is material to the ATMI Group
and the ATMI Group Subsidiaries taken as a whole, other than items incurred or
entered into in the ordinary course of business and consistent with past
practices of the ATMI Group or any ATMI Group Subsidiary;
(d) any payment, discharge or satisfaction of any claim, lien, encumbrance
or liability of the ATMI Group or any ATMI Group Subsidiary outside the ordinary
course of business in excess of $5,000 individually or $50,000 in the aggregate;
(e) any sale, transfer, conveyance, assignment, lease, license, pledge,
mortgage or other disposition or encumbrance by the ATMI Group or any ATMI Group
Subsidiary of any asset of the ATMI Group or any ATMI Group Subsidiary having a
value more than $20,000 individually or $50,000 in the aggregate, except in the
ordinary course of business and consistent with past practices of the ATMI Group
or any ATMI Group Subsidiary;
(f) any modification, amendment, cancellation, termination, revocation,
rescission, or waiver of any rights with value to the ATMI Group or any ATMI
Group Subsidiary in excess of $20,000 pursuant to any ATMI Commitments;
(g) any material change in the accounting methods or practices followed by
the ATMI Group or any ATMI Group Subsidiary or any change in the depreciation or
amortization policies or rates theretofore adopted and applied;
(h) any (i) grant of any severance or termination pay to any director,
officer, employee, partner or member of the ATMI Group or any ATMI Group
Subsidiary in excess of $25,000, (ii) entering into of any employment,
severance, management, consulting, deferred compensation or other similar
agreement (or any amendment to any
<PAGE>
such existing agreement) with any director, officer, employee, partner or
member of the ATMI Group or any ATMI Group Subsidiary, except for employment
agreements entered into in the ordinary course of business (which agreements
individually or in the aggregate are not material to the financial condition or
results of operations of the ATMI Group and the ATMI Group Subsidiaries taken as
a whole), (iii) change in benefits payable under existing severance or
termination pay policies or employment, severance, management, consulting or
other similar agreements, other than normal yearly adjustments, or (iv) change
in compensation, bonus or other benefits payable to any director, officer,
employee, partner or member of the ATMI Group or any ATMI Group Subsidiary,
other than normal yearly adjustments, and other than any increase pursuant to
any ATMI Group Employee Benefit Plan, the formulae or commission rates of which
have not been amended or changed;
(i) declared, paid or set aside for payment by the ATMI Group or any ATMI
Group Subsidiary any dividend or other distribution in respect of ATMI Group
Securities, or redeemed, purchased or otherwise acquired any of their respective
ATMI Group Securities;
(j) issued, authorized for issuance, or entered into any commitment to
issue any Security, bond, note or other debt obligation of the ATMI Group or any
ATMI Group Subsidiary;
(k) any transaction or payments between (i) any stockholder or any related
party or entity and (ii) the ATMI Group or any ATMI Group Subsidiary not in the
ordinary course of business, other than indebtedness which by its terms does not
require payment of principal or interest at any time after December 31, 1997;
(l) the termination, whether voluntary or involuntary, of any material
employee of the ATMI Group or any ATMI Group Subsidiary or of any material
relationship between the ATMI Group or any ATMI Group Subsidiary and a
consultant; or
(m) any agreement or understanding entered into by the ATMI Group or any
ATMI Group Subsidiary whether in writing or otherwise, for the ATMI Group or any
ATMI Group Subsidiary to take any of the actions specified in this Section 4.14.
4.15. Indebtedness. Neither the ATMI Group nor any ATMI Group Subsidiary
has any obligation for money borrowed or under any guarantee nor any agreement
or arrangement to borrow money or to enter into any such guarantee, and as of
the Closing Date, neither the ATMI Group nor any ATMI Group Subsidiary will have
any obligation for money borrowed nor any agreement or arrangement to borrow
money, and neither the ATMI Group nor any ATMI Group Subsidiary will have any
guarantee outstanding nor any agreement or commitment to enter into any such
guarantee, which with respect to any of the above is material to the ATMI Group
and the ATMI Group Subsidiaries taken as a whole.
4.16. Accounts Receivable. No amounts in excess of $10,000 individually or
$50,000 in the aggregate included in the accounts receivable of the ATMI Group
or any ATMI Group Subsidiary in the ATMI Financial Statements have been released
or are, or are currently expected to be, regarded under generally accepted
accounting principles as unrecoverable in whole or in part except to the extent
there shall have been an appropriate bad debt reserve therefor. Such receivables
are not, to the knowledge of the ATMI Group, subject to any counterclaim,
refusal to pay or setoff not reflected in the reserves set forth on the ATMI
Financial Statements. SCHEDULE 4.16 hereto sets forth a list of all accounts
receivable of the ATMI Group or any ATMI Group Subsidiary as of the close of
business on December 31, 1996, none of which, to the ATMI Group's knowledge, is
owing from a debtor that has become bankrupt or insolvent or has been pledged to
any third party.
4.17. Supplies. The supplies of the ATMI Group and the ATMI Group
Subsidiaries taken as a whole consist of a quality and quantity generally
adequate for and usable in the ordinary course of business consistent with past
practice.
4.18. No Prebillings. Neither the ATMI Group nor any ATMI Group Subsidiary
has prebilled or received payment in amounts greater than $20,000 individually
or $50,000 in the aggregate, and the ATMI Group and the
<PAGE>
ATMI Group Subsidiaries will not prebill or receive payment in such
amounts, from any of its accounts for goods to be delivered or for services to
be rendered or for expenses to be incurred subsequent to the Closing Date,
except in connection with any government contract and except in the ordinary
course of business and consistent with past practices of the ATMI Group or any
ATMI Group Subsidiary.
4.19. Taxes.
(a) All Returns related to Taxes required to be filed or maintained on or
before the Closing Date with respect to the business, activities or assets of
the ATMI Group or any ATMI Group Subsidiary, have been filed or maintained, or
will be filed or maintained on or before the Closing Date, in accordance with
all applicable laws (after taking into account extensions duly obtained), and no
penalties or other charges are due or could reasonably be expected to become due
with respect to the late filing of any Return. All Returns are or will be
accurate and complete in all material respects and properly reflect the Taxes
due for the periods covered thereby. All Taxes due and payable, whether or not
called for by the Returns, and all Taxes properly allocable to periods ending on
or before the Closing Date have been paid, adequately provided for in the ATMI
Financial Statements or any ATMI Group Subsidiary's financial statements, or
properly protested or will be so paid, reserved for or protested by the Closing
Date, and the ATMI Group and each ATMI Group Subsidiary have maintained all
required records with respect to Taxes. All Taxes required to be withheld or
collected by the ATMI Group or any ATMI Group Subsidiary have been duly withheld
or collected and have been paid over to the appropriate governmental
authorities, or are held in separate bank accounts established exclusively for
such purpose. Except as set forth on SCHEDULE 4.19 hereto, no audit or
investigation of any Return is pending or, to the knowledge of the ATMI Group,
threatened. SCHEDULE 4.19 hereto sets forth the status of any audit that is
pending, including the amounts of any deficiencies and additions to Tax
indicated on any notices of proposed deficiency or statutory notices of
deficiency that may have been issued in connection therewith and all of such
deficiencies or additions to Tax have been paid. There are no requests for
rulings pending before any taxing authority. SCHEDULE 4.19 sets forth the states
in which the ATMI Group or any ATMI Group Subsidiary has filed Returns relating
to Taxes for the taxable years ended December 31, 1993 through December 31,
1995. Neither the ATMI Group nor any ATMI Group Subsidiary has executed or filed
with the Internal Revenue Service or any other domestic or foreign taxing
authority any agreement extending the period for assessment or collection of any
Taxes, and neither the ATMI Group nor any ATMI Group Subsidiary has waived any
law or regulation fixing the period for assessment or collection of Taxes.
Neither the ATMI Group nor any ATMI Group Subsidiary is a party to any pending
action or proceeding by any domestic or foreign governmental authority for
assessment or collection of Taxes, and no claim for assessment or collection of
Taxes has been asserted or threatened against the ATMI Group or any ATMI Group
Subsidiary for which provision has not been made in the ATMI Financial
Statements or any ATMI Group Subsidiary's financial statements. There are no tax
liens upon any of the properties or assets of the ATMI Group or any ATMI Group
Subsidiary other than liens for Taxes not yet due and payable. True and complete
copies of the income tax returns of the ATMI Group and each ATMI Group
Subsidiary for the three (3) fiscal years ended in 1993 through 1995, as filed
with the Internal Revenue Service and all other domestic or foreign taxing
authorities, have previously been made available to the ATMI Group.
(b) No sales, use or other transfer or conveyance taxes are or will become
payable by the ADCS Group or the ATMI Group solely as a consequence of the
Merger, Exchange or Reorganization, other than taxes based upon the net income
of the parties.
4.20. Employees. SCHEDULE 4.20 contains a true and complete list of all of
the officers and directors, partners and members of the ATMI Group and ATMI
Group Subsidiaries, specifying their office or title, and a true and complete
list of all the employees of the ATMI Group and each ATMI Group Subsidiary as of
the date hereof. Neither the ATMI Group nor any ATMI Group Subsidiary has any
written or oral contract of employment with any employee of the ATMI Group or
any ATMI Group Subsidiary, and neither the ATMI Group nor any ATMI Group
Subsidiary is a party to or subject to any collective bargaining agreement nor
has been a party to or subject to any collective bargaining agreement or
collective bargaining plan during the last five (5) years. Neither the ATMI
Group nor any ATMI Group Subsidiary is a party to any pending nor, to the ATMI
Group's knowledge, threatened labor dispute affecting the ATMI Group or any ATMI
Group Subsidiary.
<PAGE>
The ATMI Group and each ATMI Group Subsidiary have complied in all material
respects with all applicable foreign, federal, state and local laws, ordinances,
rules and regulations and requirements relating to the employment of labor,
including, but not limited to, the provisions thereof relative to wages, hours,
collective bargaining, drug testing, personnel policies and practices, payment
of Social Security, unemployment and withholding taxes, and ensuring equality of
opportunity for employment and advancement of minorities and women. To the
knowledge of the ATMI Group, neither the ATMI Group nor any ATMI Group
Subsidiary is liable for any arrears of wages or any taxes or penalties for
failure to comply with any of the foregoing. None of the ATMI Group or any ATMI
Group Subsidiary has received notice from any employee listed on SCHEDULE 4.20
as earning an annual base salary in excess of $40,000 that such employee is
terminating his or her employment with the ATMI Group or any ATMI Group
Subsidiary, nor to the knowledge of the ATMI Group does any such employee intend
to terminate his or her employment with the ATMI Group or any ATMI Group
Subsidiary.
4.21. Employee Benefit Plans.
(a) SCHEDULE 4.21 sets forth a list of every stock option, stock purchase,
stock appreciation right, bonus, incentive, deferred or current compensation,
excess benefits, profit sharing, pension, thrift, savings, retirement,
severance, sickness, accident, medical, disability, hospitalization, vacation,
insurance or other plan or agreement which provides benefits to or for or on
behalf of any one or more employees of the ATMI Group or any ATMI Group
Subsidiary (including former employees) or their beneficiaries (collectively,
"ATMI Employee Benefit Plans"). The ATMI Group has made available to the ADCS
Group true, correct and complete copies of all ATMI Employee Benefit Plans, as
in effect on the date of this Agreement, all written descriptions or summaries
thereof, all trust agreements or other funding arrangements (including insurance
or group annuity contracts) relating thereto, all amendments thereto and all
determination letters issued by the Internal Revenue Service with respect to
such ATMI Employee Benefit Plans.
(b) No employee benefit plan (within the meaning of Section 3(3) of ERISA)
exists which covers or is maintained for the benefit of any of the employees of
the ATMI Group or any ATMI Group Subsidiary or to which the ATMI Group or any
ATMI Group Subsidiary is required to make contributions on account of any
employees of the ATMI Group or any ATMI Group Subsidiary.
(c) There are no actions, suits or claims pending (other than routine
claims for benefits) or, to the knowledge of the ATMI Group, threatened against
any ATMI Employee Benefit Plan, nor, to the knowledge of the ATMI Group, does
any basis therefor exist. Each ATMI Employee Benefit Plan is in compliance in
all material respects with all applicable requirements of ERISA and the Code and
their regulations, and other applicable laws and regulations and has been
administered in all material respects in accordance with its terms and with
applicable legal requirements.
(d) With respect to each ATMI Employee Benefit Plan,
(i) the ATMI Group and each ATMI Group Subsidiary have performed or caused
to be performed all obligations required to be performed under such ATMI
Employee Benefit Plan (including, but not limited to, the making when due of all
contributions required by the terms of such plan, by law, or by any collective
bargaining agreement, or otherwise);
(ii) the ATMI Group and each ATMI Group Subsidiary have complied in timely
fashion with the terms of each ATMI Employee Benefit Plan and with all
requirements of all laws, rules and regulations (including, but not limited to,
ERISA and the Code) which are applicable to each ATMI Employee Benefit Plan and
each ERISA Plan, including, but not limited to,
(1) the filing when due of all required returns, reports and other
documents, and
(2) compliance with all rules concerning notifications and disclosures to
participants and beneficiaries under each such plan;
<PAGE>
(iii) neither the ATMI Group nor any ATMI Group Subsidiary has engaged in
any "prohibited transaction" within the meaning of Section 4975 of the Code or
Section 406 of ERISA nor has committed any breach of fiduciary responsibility
under ERISA (or has any knowledge that any other person has engaged in any such
prohibited transaction or committed any such breach) which could subject the
ADCS Group and/or the Surviving Corporation to an excise tax or other liability
under ERISA or the Code; and
(iv) neither the ATMI Group nor any ATMI Group Subsidiary is in default
under or in violation of (and has no knowledge of any default or violation by
any other person of) the terms of any ATMI Employee Benefit Plan.
(e) Except as set forth on SCHEDULE 4.21,
(i) no employee pension benefit plan (as defined in Section 3(2)(A) of
ERISA) which is sponsored by any member of the "controlled group" (as defined in
Section 4001(a)(14) of ERISA) which includes the ATMI Group or any ATMI Group
Subsidiary (the "ATMI Controlled Group") has been terminated since September 2,
1974;
(ii) no proceeding has been initiated to terminate any such employee
pension benefit plan;
(iii) there has been no "reportable event" (within the meaning of Section
4043(c) of ERISA) with respect to any such employee pension benefit plan, other
than those with respect to which the requirement of thirty (30) days' notice,
whether in advance of the event or following the event, to the PBGC has been
waived by regulation;
(iv) no excise or other taxes (or interest or penalties with respect
thereto) are due or owing with respect to any such employee pension benefit plan
because of any failure to comply with the minimum funding standards of ERISA or
for failing to comply with any other applicable requirement under ERISA or the
Code;
(v) all contributions to any such employee pension benefit plan have been
made within the time provided by law;
(vi) at no time during the last five (5) years has the ATMI Group or any
ATMI Group Subsidiary or any member of the ATMI Controlled Group been a party
to, or been required to make any contribution to, a "Multiemployer Plan" (as
defined in Section 3(37) of ERISA), nor has the ATMI Group or any ATMI Group
Subsidiary or any member of the ATMI Controlled Group made a complete or partial
withdrawal from a Multiemployer Plan as a result of which any withdrawal
liability has been or will be incurred by any of them;
(vii) neither the ATMI Group or any ATMI Group Subsidiary nor any member of
the ATMI Controlled Group has incurred any liability to the PBGC other than for
the payment of annual premiums (and no such premium payments are currently due
and owing); and
(viii) neither the ATMI Group or any ATMI Group Subsidiary nor any member
of the ATMI Controlled Group has entered into any transaction within the past
five (5) years the purpose of which is to evade liability under Title IV of
ERISA.
(f) No ATMI Employee Benefit Plan (other than one which is an employee
pension benefit plan within the meaning of Section 3(2)(A) of ERISA) provides
benefits (including, without limitation, death, health or medical benefits,
whether or not insured) with respect to current or former employees of the ATMI
Group or any ATMI Group Subsidiary beyond their retirement or other termination
of service with the ATMI Group or any ATMI Group Subsidiary, other than (i)
coverage mandated by applicable law, (ii) deferred compensation benefits which
have been accrued as liabilities on the books of the ATMI Group or any ATMI
Group Subsidiary, (iii) benefits the full cost of which is borne by the current
or former employees (or their beneficiaries), (iv) benefits which have already
been satisfied in full or (v) death benefits under any pension plan to the
extent set forth in SCHEDULE 4.21 hereto.
<PAGE>
4.22. Litigation. There is no action, suit or proceeding pending and of
which it has been served notice or, to the ATMI Group's knowledge, threatened,
by or against the ATMI Group or any ATMI Group Subsidiary relating to or
affecting its business or assets, at law, in equity, by way of arbitration or
before any governmental department, commission, board or agency. To the ATMI
Group's knowledge, there are no existing facts or conditions which reasonably
would be expected to give rise to any charge, claim, litigation, proceeding, or
investigation by any third party which could reasonably be expected to
materially adversely affect its business, the ATMI Group or any ATMI Group
Subsidiary, nor are there any facts or conditions which could reasonably be
expected to give rise to any order of condemnation, appropriation or other
taking of any of the assets. There is no litigation, action, suit, investigation
or proceeding pending and of which it has been served notice or, to the
knowledge of the ATMI Group, threatened, before any court, agency or other
governmental body against the ATMI Group or any ATMI Group Subsidiary (or any
corporation or entity affiliated with the ADCS Group or any ATMI Group
Subsidiary) which seeks to enjoin or prohibit or otherwise challenge the
transactions contemplated hereby or contemplated by the Additional Agreements.
Schedule 4.22 sets forth each action, suit or proceeding against the ATMI Group
or any ATMI Group Subsidiary relating to or affecting its business or assets, at
law, in equity, by way of arbitration or before any governmental department,
commission, board or agency, which has been dismissed or settled or in which a
judgment has been rendered, in each case within the past five (5) years, and the
disposition thereof. The ATMI Group has made available to ATMI true and correct
copies of each settlement agreement and release, if any, in connection with any
matter discussed in the prior sentence, each of which constitutes a legal, valid
and binding obligation of the parties thereto, and no party thereto is in
default of any of its obligations thereunder. There is no order, judgment,
decree or settlement agreement against or involving the ATMI Group or any ATMI
Group Subsidiary involving any ongoing liabilities or restrictions.
4.23. Proprietary Rights. (a) SCHEDULE 4.23 sets forth a true, correct and
complete list of all foreign and domestic patents and applications for patents,
Marks, and registered copyrights, and applications therefor, owned by the ATMI
Group or any ATMI Group Subsidiary or in which the ATMI Group or any ATMI Group
Subsidiary has any rights or licenses. The ATMI Group has made available to the
ADCS Group copies of all agreements of the ATMI Group or any ATMI Group
Subsidiary with each officer, employee or consultant of the ATMI Group or any
ATMI Group Subsidiary providing the ATMI Group or any ATMI Group Subsidiary with
secrets and inventions developed or used by the ATMI Group or any ATMI Group
Subsidiary. All of such agreements so described are valid, enforceable and
legally binding.
(b) The ATMI Group and each ATMI Group Subsidiary own or possess or have
the right to obtain licenses or other rights to use all Proprietary Rights which
it has determined are used in its business, and it believes the same are
sufficient to conduct its business as it has been and is now being conducted.
The ATMI Group is not aware of any existing Proprietary Rights that the ATMI
Group and the ATMI Group Subsidiaries do not already own or possess or will be
able to obtain a license under, which Proprietary Rights would be necessary for
the ATMI Group or any ATMI Group Subsidiary to conduct its business.
(c) To the ATMI Group's knowledge, the operations of the ATMI Group and
each ATMI Group Subsidiary do not conflict with or infringe upon, and no one has
asserted to the ATMI Group or any ATMI Group Subsidiary that such operations
conflict with or infringe upon, any Proprietary Rights any Marks owned,
possessed or used by any third party. There are no claims, disputes, actions,
proceedings, suits or appeals pending against the ATMI Group or any ATMI Group
Subsidiary with respect to any Proprietary Rights or Marks, and none has been
threatened against the ATMI Group or any ATMI Group Subsidiary. To the ATMI
Group's knowledge, there are no facts or alleged facts which would
reasonably serve as a basis for any claim that the ATMI Group or any ATMI Group
Subsidiary does not have the right to use, free of any rights or claims of
others, all Proprietary Rights and Marks in the development, manufacture, use,
sale or other disposition of any or all products or services presently being
used, furnished or sold in the conduct of its business as it has been and is now
being conducted. Neither the ATMI Group nor any ATMI Group Subsidiary has
violated the terms of any confidentiality agreement or nondisclosure agreement
entered into in favor of any third party.
<PAGE>
(d) There are no inter parties proceedings before any patent or trademark
authority to which the ATMI Group or any ATMI Group Subsidiary is a party.
(e) The ATMI Group and each ATMI Group Subsidiary have taken all other
measures it deems reasonable to maintain the confidentiality of the processes
and formulae, research and development results and other know-how, the value of
which to the ATMI Group or any ATMI Group Subsidiary is contingent upon
maintenance of the confidentiality thereof.
(f) Each employee and officer of the ATMI Group or any ATMI Group
Subsidiary is a party to a confidential non-disclosure agreement with the ATMI
Group or such ATMI Group Subsidiary (the form of which has been made available
to the ADCS Group). No employee of the ATMI Group or any ATMI Group Subsidiary
is in violation of any material term of any employment contract, proprietary
information and inventions agreement, confidentiality agreement, non-competition
agreement, or any other contract or agreement relating to the relationship of
any such employee with the ATMI Group or any ATMI Group Subsidiary, or any
previous employer.
(g) The Proprietary Rights and Marks are free of any unresolved ownership
disputes with respect to any third party. To the ATMI Group's knowledge there is
no unauthorized use, infringement or misappropriation of any of such Proprietary
Rights or Marks by any third party, including any employee or former employee of
the ATMI Group or any ATMI Group Subsidiary.
(h) Other than as part of transactions identified in SCHEDULE 4.23, the
ATMI Group has not licensed, granted rights under, waived, released, discharged,
dedicated, disclaimed or otherwise relinquished any of the Proprietary Rights
identified on SCHEDULE 4.23(H) (the "ATMI Identified Proprietary Rights") to
third parties; has not burdened the Proprietary Rights with any liens, security
interests, financing agreements, or other encumbrances; and to the ATMI Group's
knowledge is not prevented in any manner, as by estoppel, laches, inequitable
conduct, or otherwise, from enforcing any of the ATMI Identified Proprietary
Rights, which prevention would individually or in the aggregate have an ATMI
Material Adverse Effect.
4.24. Related Party Transactions. SCHEDULE 4.24 sets forth the amounts and
other essential terms of indebtedness (which by its terms requires payment of
principal or interest at any time after December 31, 1997) or other obligations,
liabilities or commitments (contingent or otherwise) of the ATMI Group or any
ATMI Group Subsidiary to or from any present officer, director, partner, member
or stockholder or any person related to, controlling, controlled by or under
common control with any of the foregoing (other than for employment services
performed within the past month the payment for which is not yet due), and all
other transactions between such persons and the ATMI Group or any ATMI Group
Subsidiary, except for transactions which through consolidation are eliminated
in the ATMI Group Financial Statements. Without limiting the generality of the
foregoing, as of the date hereof, none of the present officers, directors,
partners, members or stockholders or any person related to, controlling,
controlled by or under common control with any of the foregoing (a) has any
material direct or indirect interest in any entity which does business with the
ATMI Group or any ATMI Group Subsidiary, (b) has any direct or indirect interest
in any property, asset or right which is used by the ATMI Group or any ATMI
Group Subsidiary in the conduct of its business, or (c) has any contractual
relationship with the ATMI Group or any ATMI Group Subsidiary other than such
relationships which occur from being an employee, officer, director, etc.
4.25. Environmental Matters; Health and Safety.
(a) Definitions. The definitions set forth in Section 3.31 shall apply for
purposes of this Section 4.25.
(b) Environmental Representations and Warranties. SCHEDULE 4.25 hereto sets
forth a list of all of the real property and all of the buildings, warehouses
and storage facilities owned, leased or operated by the ATMI Group or any ATMI
Group Subsidiary during the last five (5) years (the "ATMI Premises"),
indicating where such
<PAGE>
property or facility is located, whether such property is owned, leased
and/or operated by the ATMI Group or any ATMI Group Subsidiary and the date of
acquisition or occupancy thereof.
(i) Compliance. The ATMI Group and each ATMI Group Subsidiary and, to the
ATMI Group's knowledge, its predecessor(s) in interest, have been and are in
compliance with and have no liability or obligation arising under any
Environmental Law, and neither the ATMI Group nor any ATMI Group Subsidiary has
received any Notice from any applicable governmental agency seeking any
information or alleging any violation of such Environmental Laws. No Site
Remediation Measure is necessary or required under Environmental Law or any ATMI
Commitment for its business or the ATMI Premises, nor are there any
Environmental Conditions on the ATMI Premises. No capital improvements,
alterations or repairs to the ATMI Premises are necessary or required to bring
such facility into compliance with all Environmental Laws now in effect or
enacted or promulgated but not yet in effect.
(ii) Hazardous Materials/Underground Tanks. None of the ATMI Group or any
ATMI Group Subsidiary and, to the ATMI Group's knowledge, their predecessor(s)
in interest, has caused or permitted any use of its business or ATMI Premises to
generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce or process any Hazardous Materials or solid waste, except in
compliance with all Environmental Laws, and has not caused or permitted and has
no knowledge of the Release of any such Hazardous Materials on-site or off-site
of the ATMI Premises resulting or that could in the future result in an
Environmental Condition requiring Site Remediation Measures. The ATMI Premises
and all principal items and machinery and equipment used in the ATMI Group's
business comply with all applicable Environmental Laws. The ATMI Premises do not
contain any asbestos requiring removal now or in the course of any remodeling
that may occur in the future, or other Hazardous Materials, and, except for
chemicals and raw materials used, and wastes generated in connection with, the
manufacture of the ATMI Group's products, which in each case are located on the
ATMI Premises in the ordinary course of business, no such materials are located
on, in or under the ATMI Premises. Any and all underground and aboveground tanks
at the ATMI Premises are in compliance with any and all Environmental Laws, and
such Environmental Laws do not mandate the removal or retrofitting of such tanks
for a period of five (5) years after the Closing. The removal of any tank has
been carried out in compliance with all applicable Environmental Laws.
(iii) There are no outstanding or, to the ATMI Group's knowledge,
threatened actions, claims, proceedings, determinations or judgments by any
party, including but not limited to any governmental authority, whether foreign,
federal, state, local or any agency thereof, against or involving the ATMI Group
or any ATMI Group Subsidiary, or to the ATMI Group's knowledge, against or
involving the ATMI Group's or any ATMI Group Subsidiary's predecessor(s) in
interest in any manner arising under the Environmental Laws or alleging or
involving personal injury or property damage as a result of a violation of any
Environmental Law or otherwise involving Environmental Conditions. Attached
hereto as SCHEDULE 4.25 is a list of all such actions, claims, proceedings,
determinations and judgments issued within the past ten (10) years by any party
against the ATMI Group or any ATMI Group Subsidiary and, to the ATMI Group's
knowledge, against any predecessor(s) in interest.
(iv) The ATMI Group and each ATMI Group Subsidiary and, to the ATMI Group's
knowledge, their predecessor(s) in interest, have complied with all notice,
recordkeeping and reporting requirements imposed by any governmental authority
and any informational requests or demands arising under any Environmental Laws.
None of the ATMI Group or any ATMI Group Subsidiary, nor, to the ATMI Group's
knowledge, the ATMI Group's or any ATMI Group Subsidiary's predecessor(s) in
interest, is liable for any penalties, fines, or forfeitures or is subject to
any restrictions on the conduct of its business for failure to comply with any
of the foregoing.
4.26. Customers and Suppliers. Neither the ATMI Group nor any ATMI Group
Subsidiary has received any notice or has any knowledge that any customer from
whom the ATMI Group or any ATMI Group Subsidiary in the aggregate has received
more than $250,000 in gross receipts during the immediately preceding
twelve-month period (1) has ceased, or currently intends to cease, to use the
products, goods or services of the business
<PAGE>
of the ATMI Group or of any ATMI Group Subsidiary, (2) has substantially
reduced, or currently intends to substantially reduce, the use of products,
goods or services of the business of the ATMI Group or of any ATMI Group
Subsidiary, or (3) other than in the ordinary course of business and to an
extent which is not reasonably likely to have an ATMI Material Adverse Effect,
has sought, or is seeking, to reduce the price it will pay for products, goods
or services of the business of the ATMI Group or of any ATMI Group Subsidiary.
Neither the ATMI Group nor any ATMI Group Subsidiary has received any notice or
has any knowledge that any of the ten (10) largest suppliers of the ATMI Group
and the ATMI Group Subsidiaries taken as a whole in terms of purchases made
during the 1995 and 1996 fiscal years will not sell raw materials, supplies,
merchandise and other goods to the business of the ATMI Group or of any ATMI
Group Subsidiary at any time after the Closing Date on terms and conditions
similar to those used in the current sales to the business, subject to general
and customary price increases and unforeseeable supply or demand changes.
4.27. Product and Service Warranties. To the knowledge of the ATMI Group:
(a) All products sold and all services rendered by the ATMI Group and each
ATMI Group Subsidiary have been in conformity in all material respects with all
applicable ATMI Commitments and all expressed warranties, and no material
liability exists or will arise for replacement or damage in connection with such
sales or for services not rendered in all material respects in accordance
therewith.
(b) There is adequate provision in the ATMI Financial Statements for
liabilities and obligations for damaged, defective or returned goods, or for
replacement of goods or for allowances with respect to goods sold or services
rendered by or on behalf of the ATMI Group or any ATMI Group Subsidiary.
(c) Neither the ATMI Group nor any ATMI Group Subsidiary has any pattern of
claims or actions based upon allegations of the same or similar product defect
for any of its products.
(d) There has not been any material product recall, rework or retrofit
relating to any line of product manufactured, shipped or sold by the ATMI Group
or any ATMI Group Subsidiary, nor to the knowledge of the ATMI Group is there
any basis for any such product recall, rework or retrofit.
4.28. No Prior Activities. Holdings and Newco were formed solely for the
purpose of engaging in the transactions contemplated by this Agreement. As of
the date hereof and the Effective Time, except for obligations or liabilities
incurred in connection with its incorporation or organization and the
transactions contemplated by this Agreement and except for this Agreement and
any other agreements or arrangements contemplated by this Agreement, neither
Holdings nor Newco has nor will have incurred, directly or indirectly, through
any subsidiary or affiliate (other than its parent), any obligations or
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any person.
4.29. Hart-Scott-Rodino. The "total assets" and the "annual net sales" of
the "ultimate parent entity" (as such terms are used within the meaning of
Section 7A.(a)(2)(A) of the Hart-Scott-Rodino Antitrust Improvements Act of
1976) of the ATMI Group are less than $100,000,000.
4.30. Finders' Fees. There is no investment banker, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of the
ATMI Group or any ATMI Group Subsidiary who might be entitled to any fee or
commission from the ADCS Group or any other person upon consummation of the
transactions contemplated by this Agreement.
4.31. Information in Disclosure Documents and Registration Statement. None
of the information made available or to be made available by the ATMI Group for
inclusion or incorporation by reference in (i) any registration statement filed
in connection with this Agreement will, at the time such registration statement
is filed with the SEC and at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
<PAGE>
therein, in light of the circumstances under which they are made, not
misleading and (ii) the Proxy Statement will, at the date mailed to stockholders
and at the time of the meeting of stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. The Proxy Statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder, and any registration statement will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations thereunder, except that no representation is made by the ATMI Group
with respect to statements made therein based on information made available by
the ADCS Group, any ADCS Group Subsidiary or any Holder for inclusion in any
registration statement or the Proxy Statement.
4.32. Pooling. To its knowledge, the ATMI Group has not taken, or failed to
take, any action that would jeopardize the treatment of the Reorganization as a
"pooling of interests" for accounting purposes.
4.33. Section 203 of the DGCL. The Exchange by the Holders of each of their
Interests for their Pro Rata Portion of the Exchange Consideration has been
approved by the Board of Directors of Holdings for the purposes of Section 203
of the DGCL.
4.34. No Misrepresentation. Neither this Agreement nor any certificate or
Schedule or other information furnished pursuant to this Agreement by or on
behalf of the ATMI Group or any ATMI Group Subsidiary contains any untrue
statement of a material fact or, when this Agreement and such certificates,
Schedules and other information are taken in their entirety, omits to state a
material fact required to be stated herein or therein necessary to make the
statements contained herein or therein not misleading.
ARTICLE V
Covenants
5.1. Access to Information. From the date hereof to the Closing Date, each
party will (i) afford to the officers, independent certified public accountants,
legal counsel and other representatives of the other parties, during normal
business hours, reasonable access to its properties, books, records and
personnel in order that each party may have full opportunity to make such
investigation as it reasonably desires to make in connection with the
transactions contemplated herein; (ii) confer with representatives of the other
parties; (iii) furnish to the other parties, either orally or by means of such
records, documents, and memoranda as are available or reasonably capable of
preparation, such information as the other parties may reasonably request; and
(iv) furnish to the other parties' auditors all consents and authority that they
may reasonably request in connection with any examination of each party by the
other parties. The rights pursuant to this Section 5.1 shall be subject to the
provisions of the Confidentiality Agreement dated October 22, 1996 between ADCS
LP and ATMI, which Confidentiality Agreement shall be binding on each of the
ADCS Group and each of the ATMI Group and shall survive the execution and
delivery of and the termination of, this Agreement.
5.2. Interim Operations of ADCS Group. Except as set forth on Schedule 5.2
and as provided in Section 5.21, the ADCS Group hereby covenants and agrees that
between the date hereof and the Closing, and unless the ATMI Group otherwise
consents in advance in writing:
(a) The ADCS Group and each ADCS Group Subsidiary shall conduct its
business in the ordinary course and in accordance with its past practices, and
use its diligent efforts to (i) preserve its business organization intact, (ii)
preserve its goodwill and the confidentiality of its business know-how,
(iii) keep available to the ADCS Group and each ADCS Group Subsidiary the
services of its present key employees and those material to the operation of its
respective business, and (iv) preserve the present relationships between the
ADCS Group or
<PAGE>
any ADCS Group Subsidiary and its collaborators, licensors and others
having business relations with the ADCS Group or any ADCS Group Subsidiary.
(b) The ADCS Group and each ADCS Group Subsidiary shall conduct its
business only in the usual and ordinary manner and shall not change the
character of its business.
(c) Neither the ADCS Group nor any ADCS Group Subsidiary shall authorize,
amend the terms of, issue or contract for the issuance of or grant options,
warrants or rights to purchase any ADCS Group Securities.
(d) The ADCS Group shall use its best efforts to cause the Holders not to
transfer any of the Interests, other than transfers to family members and trusts
for their benefit or involuntary transfers, which in any event do not adversely
affect the pooling of interests treatment of the Reorganization. The ADCS Group
will give ATMI prompt written notice of any such transfer. Each such permitted
transferee shall be deemed a "Holder" for all purposes of this Agreement.
(e) Neither the ADCS Group nor any ADCS Group Subsidiary shall pay any
dividend or make any other distribution with respect to or repurchase or agree
to repurchase any ADCS Group Securities.
(f) The ADCS Group and each ADCS Group Subsidiary shall (i) use and operate
substantially all of its assets in the ordinary course of business in accordance
with past practices and maintain substantially all of its assets in
substantially the same condition as they are now (reasonable wear and tear,
which are not such as to adversely affect the operation of such business,
excepted); (ii) maintain insurance upon all of its assets and with respect to
the conduct of its business, all such insurance to be comparable in amount,
scope and coverage to that in effect on the date of this Agreement; and (iii)
give ATMI prompt written notice of any material damage to its properties by fire
or other casualty.
(g) The ADCS Group and each ADCS Group Subsidiary shall maintain its books,
records and accounts in the ordinary course consistent with past practice, on a
basis consistent with prior periods, and shall not make any material changes in
the accounting methods or practices followed by the ADCS Group or any ADCS Group
Subsidiary or any change in the depreciation or amortization policies or rates
theretofore adopted or applied.
(h) The ADCS Group and each ADCS Group Subsidiary shall duly comply in all
material respects with all laws applicable to it, its assets and the conduct of
its business.
(i) The ADCS Group and each ADCS Group Subsidiary shall perform all of its
material obligations under the ADCS Commitments without default.
(j) Except in the ordinary course of business consistent with past
practice, neither the ADCS Group nor any ADCS Group Subsidiary shall grant any
power of attorney with respect to its business or assets.
(k) Except in the ordinary course of business consistent with past
practice, neither the ADCS Group nor any ADCS Group Subsidiary shall enter into
any new ADCS Commitments, or cancel, amend, modify adversely, assign, encumber
or terminate any of the ADCS Commitments or make any material capital
investment, expenditure or improvement or enter into any agreement therefor,
which in any event would be material to the ADCS Group and the ADCS Group
Subsidiaries taken as a whole.
(l) Except in the ordinary course of business and to the extent not
material to the ADCS Group and the ADCS Group Subsidiaries taken as a whole,
neither the ADCS Group nor any ADCS Group Subsidiary shall (i) make any loan, or
otherwise extend credit to any person, firm or corporation, except in the
ordinary course of business and consistent with the past practices of the ADCS
Group or any ADCS Group Subsidiary, (ii) give any guarantee or indemnity, or
make any other similar commitment with respect to a debt or other liability of
any person, firm or corporation, or (iii) (excluding transactions among the ADCS
Group and the ADCS Group
<PAGE>
Subsidiaries) create, incur or otherwise become liable for any indebtedness
(other than interest and fees assessed on the outstanding portion of such
indebtedness), or otherwise subject any of its property or assets to any lien,
security interests, encumbrance or charge.
(m) Neither the ADCS Group nor any ADCS Group Subsidiary shall make any
payment in excess of $50,000, except for payment of liabilities incurred in the
ordinary course of business, and the payment of the fees and expenses of its
attorneys and accountants incurred in connection with the transactions
contemplated hereby.
(n) Neither the ADCS Group nor any ADCS Group Subsidiary shall sell, lease
or otherwise dispose of any of the assets, except in the ordinary course of
business for a cash consideration which equals a fair value at the time of the
sale of any of the assets.
(o) Except in the ordinary course of business consistent with past
practice, neither the ADCS Group nor any ADCS Group Subsidiary shall (i) grant
any severance or termination pay to any director, officer, employee, partner or
member of the ADCS Group or any ADCS Group Subsidiary; (ii) enter into any
employment, severance, management, consulting, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
director, officer, employee, partner or member of the ADCS Group or any ADCS
Group Subsidiary; (iii) change benefits payable under existing severance or
termination pay policies or employment, severance, management, consulting or
other similar agreements other than normal yearly adjustments; or (iv) change
compensation, bonus or other benefits payable to director, officer, employee,
partner or member of the ADCS Group or any ADCS Group Subsidiary, other than
normal yearly adjustments, other than promotions made in the ordinary course and
other than any increase pursuant to any ADCS Employee Benefit Plan, the formulae
or commission rates of which have not been amended or changed.
(p) The ADCS Group will use its best efforts not to authorize or permit (i)
the ADCS Organizational Documents to be amended; (ii) the merger, consolidation
or other combination of the ADCS Group or any ADCS Group Subsidiary with any
other entity; or (iii) the ADCS Group or any ADCS Group Subsidiary to organize a
subsidiary.
(q) The ADCS Group shall not take any action which would jeopardize the
treatment of the Reorganization as a tax-free transaction or which would prevent
the Reorganization from being accounted for as a pooling of interests.
5.3. Interim Operation of the ATMI Group. The ATMI Group hereby covenants
and agrees that between the date hereof and the Closing, and unless the ADCS
Group otherwise consents in advance in writing:
(a) The ATMI Group and each ATMI Group Subsidiary shall conduct its
business in the ordinary course and in accordance with its past practices, and
use its diligent efforts to (i) preserve its business organization intact, (ii)
preserve its goodwill and the confidentiality of its business know-how, (iii)
keep available to the ATMI Group and each ATMI Group Subsidiary the services of
its present key employees and those material to the operation of its respective
business, and (iv) preserve the present relationships between the ATMI Group or
any ATMI Group Subsidiary and its collaborators, licensors and others having
business relations with the ATMI Group or any ATMI Group Subsidiary.
(b) The ATMI Group and each ATMI Group Subsidiary shall conduct its
business only in the usual and ordinary manner and shall not change the
character of its business.
(c) Neither the ATMI Group nor any ATMI Group Subsidiary shall pay any
dividend or make any other distribution with respect to or repurchase or agree
to repurchase any ATMI Group Securities.
(d) The ATMI Group and each ATMI Group Subsidiary shall (i) use and operate
substantially all of its assets in the ordinary course of business in accordance
with past practices and maintain substantially all of its
<PAGE>
assets in substantially the same condition as they are now (reasonable wear
and tear, which are not such as to adversely affect the operation of such
business, excepted); (ii) maintain insurance upon the assets and with respect to
the conduct of its business, all such insurance to be comparable in amount,
scope and coverage to that in effect on the date of this Agreement; and (iii)
give the ADCS Group prompt written notice of any material damage to its
properties by fire or other casualty.
(e) The ATMI Group and each ATMI Group Subsidiary shall maintain its books,
records and accounts in the ordinary course consistent with past practice, on a
basis consistent with prior periods, and shall not make any material changes in
the accounting methods or practices followed by the ATMI Group or any ATMI Group
Subsidiary or any change in the depreciation or amortization policies or rates
theretofore adopted or applied.
(f) The ATMI Group and each ATMI Group Subsidiary shall duly comply in all
material respects with all laws applicable to it, its assets and the conduct of
its business.
(g) The ATMI Group and each ATMI Group Subsidiary shall perform all of its
material obligations under the ATMI Commitments without default.
(h) Neither the ATMI Group nor any ATMI Group Subsidiary shall sell, lease
or otherwise dispose of any of the assets, except in the ordinary course of
business for a cash consideration which equals a fair value at the time of the
sale of any of the assets.
(i) The ATMI Group will use its best efforts not to authorize or permit
with respect to ATMI, and will not authorize or permit with respect to any ATMI
Subsidiary, (i) the ATMI Organizational Documents to be amended, or (ii) the
merger, consolidation or other combination of the ATMI Group or any ATMI Group
Subsidiary with any other entity, except as may be necessary to effect any
acquisitions made by ATMI, subject to its obligations under Section 5.5, or to
change the name of any member of the ATMI Group.
(j) The ATMI Group shall not take any action which would jeopardize the
treatment of the Reorganization as a tax-free transaction or which would prevent
the Reorganization from being accounted for as a pooling of interests.
(k) The ATMI Group shall not grant to any other party piggyback or demand
registration rights which are pari passu or greater in priority than the
registration rights to be provided pursuant to the Registration Rights Agreement
attached hereto as EXHIBIT C (the "Registration Rights Agreement").
(l) The ATMI Group will not amend its stock option, stock purchase or other
similar equity-based incentive compensation plans to increase the number of
shares of stock issuable thereunder, nor issue shares of its capital stock which
would cause the number of its shares of capital stock to be more than the number
of shares that are issued and outstanding as of the date hereof, except (i) the
ATMI Group may approve and issue options under ATMI's existing stock option
plans, (ii) the ATMI Group may approve a new stock option plan for up to 900,000
shares of Holdings Common Stock, (iii) pursuant to the exercise of Outstanding
ATMI Options, Outstanding ATMI Warrants and options hereafter issued under (i)
above, and (iv) in connection with acquisitions made by ATMI, subject to its
obligations under Section 5.5.
(m) Except in the ordinary course of business consistent with past
practice, neither the ATMI Group nor any ATMI Group Subsidiary shall enter into
any new ATMI Commitments, or cancel, amend, modify adversely, assign, encumber
or terminate any of the ATMI Commitments or make any material capital
investment, expenditure or improvement or enter into any agreement therefor,
which in any event would be material to the ATMI Group and the ATMI Group
Subsidiaries taken as a whole.
(n) Except in the ordinary course of business and to the extent not
material to the ATMI Group and the ATMI Group Subsidiaries taken as a whole,
neither the ATMI Group nor any ATMI Group Subsidiary shall
<PAGE>
(i) make any loan, or otherwise extend credit to any person, firm or
corporation, except in the ordinary course of business and consistent with the
past practices of the ATMI Group or any ATMI Group Subsidiary, (ii) give any
guarantee or indemnity, or make any other similar commitment with respect to a
debt or other liability of any person, firm or corporation, or (iii) (excluding
transactions among the ATMI Group and the ATMI Group Subsidiaries) create, incur
or otherwise become liable for any indebtedness (other than interest and fees
assessed on the outstanding portion of such indebtedness), or otherwise subject
any of its property or assets to any lien, security interests, encumbrance or
charge.
(o) Neither the ATMI Group nor any ATMI Group Subsidiary shall make any
payment in excess of $100,000, except for payment of liabilities incurred in the
ordinary course of business, and the payment of the fees and expenses of its
attorneys and accountants incurred in connection with the transactions
contemplated hereby.
(p) Except in the ordinary course of business consistent with past
practice, neither the ATMI Group nor any ATMI Group Subsidiary shall (i) grant
any severance or termination pay to any director, officer, employee, partner or
member of the ATMI Group or any ATMI Group Subsidiary; (ii) except as described
in Schedule 5.3(p), enter into any employment, severance, management,
consulting, deferred compensation or other similar agreement (or any amendment
to any such existing agreement) with any director, officer, employee, partner or
member of the ATMI Group or any ATMI Group Subsidiary; (iii) change benefits
payable under existing severance or termination pay policies or employment,
severance, management, consulting or other similar agreements other than normal
yearly adjustments; or (iv) change compensation, bonus or other benefits payable
to director, officer, employee, partner or member of the ATMI Group or any ATMI
Group Subsidiary, other than normal yearly adjustments, other than promotions
made in the ordinary course and other than any increase pursuant to any ATMI
Employee Benefit Plan, the formulae or commission rates of which have not been
amended or changed.
5.4. Notices of Certain Events. From the date hereof to and including the
Closing Date, the ADCS Group and the ATMI Group covenant and agree to notify the
other of (i) any notice or other communication from any person alleging that the
consent of such person is or may be required in connection with the transactions
contemplated by this Agreement; (ii) any notice or other communication from any
foreign or domestic governmental authority in connection with the transactions
contemplated by this Agreement; and (iii) any matter arising and discovered
after the date of this Agreement that, if existing or known on the date of this
Agreement, would have been required to be disclosed pursuant to this Agreement,
or that constitutes a breach or prospective breach of this Agreement by the
notifying party or its affiliates.
5.5. Other Acquisitions by ATMI. From and after the date hereof to the
Effective Time or the termination of this Agreement in accordance with Article
IX, without first giving the ADCS Group notice thereof, ATMI will not enter into
a definitive agreement with respect to any acquisition having a value in excess
of $18,000,000 (including the value of (i) cash, stock and assets transferred as
consideration in any acquisition, whether by way of merger, purchase or exchange
or otherwise; (ii) options, warrants or convertible securities issued or assumed
in connection with such acquisition; and (iii) any debt or other liability
issued or assumed in connection with such acquisition). The information
contained in such notice shall be subject to the restrictions set forth in
Sections 5.1 and 5.6. The ADCS Group shall have the right within ten (10)
business days after notice is given by ATMI to notify ATMI that the ADCS Group
objects to such acquisition and indicating the reasonable basis for such
objection. Failure of the ADCS Group to give notice within such 10-day period
shall waive the ADCS Group's right to object. Within five (5) business days
after ATMI's receipt of the ADCS Group's notice of objection, ATMI shall notify
the ADCS Group of ATMI's intention to either terminate or proceed with such
acquisition. If ATMI indicates its intention to proceed with such acquisition,
the ADCS Group shall have the right, exercisable within five (5) business days
after its receipt of ATMI's notice of its intent to proceed, to terminate this
Agreement pursuant to Section 9.1(d)(ii) without any liability on the part of
any party hereto.
<PAGE>
5.6. No Public Disclosure. The ADCS Group understands that ATMI is a public
company, and that until the transactions contemplated by this Agreement are made
public, the ADCS Group and the Holders and those whom they advise of this
transaction (which shall only be on a "need to know basis") may be privy to
material inside information; accordingly, the ADCS Group understands, and the
ADCS Group has apprised those of its officers, members, partners and agents who
know of the potential transaction, of the need for confidentiality and the
potential consequences of any trading in the ATMI Group Securities. No public
announcements shall be made concerning the negotiations between the parties,
this Agreement or the transactions contemplated herein, without the prior mutual
consent of the ADCS Group and ATMI, except as may be required by law or the
rules or regulations of The Nasdaq National Market; provided that ATMI shall use
its best efforts to obtain ADCS' mutual consent to the timing and content of any
such announcements. The parties agree that, to the maximum extent feasible, they
will advise and confer with each other prior to the issuance of any reports,
statements or releases pertaining to this Agreement or the transactions
contemplated herein. In addition, the parties agree to respond to all inquiries
with respect to the Reorganization by stating that it is their policy not to
comment on such matters.
5.7. No Negotiation. The ADCS Group and each ADCS Group Subsidiary will
not, and the ADCS Group will use best efforts to cause each Holder not to,
directly or indirectly, solicit, discuss, or engage in negotiations with, or
provide information to, any person, other than ATMI, concerning any possible
proposal regarding the acquisition of the Interests, the ADCS Group or any ADCS
Group Subsidiary or any part thereof, or any merger or consolidation thereof, or
accept any such proposal.
5.8. NovaMOS. Following the Closing, the NovaMOS division and the ADCS
Group shall be operated as set forth on SCHEDULE 5.8.
5.9. Election of Directors. Holdings shall, as of the Closing Date, have a
vacancy on its six (6) person Board of Directors for the class of directors
elected for a three-year term and shall, on the day after the Closing Date,
appoint Stephen H. Siegele to fill such vacancy. To the extent permitted by
applicable law, Holdings shall cause the Board of Directors to nominate Stephen
H. Siegele or his designee to serve for an additional three-year term and to
support his or her nomination to the same extent and in the same manner as it
supports other nominees on the slate of directors proposed by Holdings, provided
that at the time of such nomination by the Board the Exchange Consideration
owned of record by the Holders represents in the aggregate ten percent (10%) or
more of the shares of Holdings Common Stock then outstanding.
5.10. HSR Act. In the event that the parties determine that the proposed
transactions are subject to a waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), the ADCS Group
and the ATMI Group shall promptly file or cause to be filed on behalf of itself
and any other acquired or acquiring persons under the HSR Act, Premerger
Notification and Report Forms with respect to the transactions contemplated
herein, respond to any requests for additional information and documents and
provide the necessary information and make the necessary filings under the HSR
Act. The Closing Date shall be reasonably extended as necessary to allow the
period specified in the HSR Act and any extensions thereof to expire prior to
such date. The ATMI Group shall pay all applicable HSR filing fees of the ADCS
Group, the Holders and their respective affiliates.
5.11. Preparation of S-4 and the Proxy Statement. The ATMI Group shall
prepare and file as promptly as practicable after the execution of this
Agreement with the SEC a confidential preliminary Proxy Statement with respect
to the Reorganization which complies in form with applicable requirements of the
SEC. As promptly as practicable after the receipt of any comment letter from the
staff of the SEC, ADCS and ATMI shall cooperate in the response to any such
comment letter, or, in any event and if no such letter is received, shall use
all reasonable efforts to cause the S-4 to become effective as soon thereafter
as practicable. The ATMI Group shall use its best efforts to have the S-4
declared effective under the Securities Act as promptly as practicable after
such filing. The ATMI Group shall take any action (other than qualifying to do
business in any jurisdiction in which it is not now so qualified) required to be
taken under any applicable state securities laws in connection
<PAGE>
with the issuance of Holdings Common Stock in the Reorganization, and the
ADCS Group shall furnish all information concerning the ADCS Group and the
Holders as may be reasonably requested in connection with any such action.
5.12. Best Efforts; Cooperation. The ADCS Group will use its best efforts
to cause the Holders to tender their Interests at the Closing and to cause the
other conditions of Closing to be met by it, and ATMI will use its best efforts
to cause the other conditions of Closing to be met by it.
5.13. ATMI Stockholder Matters. ATMI shall call a meeting of its
stockholders for the purpose of voting upon matters relating to this Agreement
and the Reorganization to be held as soon as practicable after the SEC declares
the S-4 effective. ATMI will use reasonable best efforts to hold its
stockholders' meeting as promptly as practicable thereafter and will, through
its Board of Directors, recommend to its stockholders approval of this
Agreement, the Reorganization and the other transactions contemplated hereby or
thereby and will use its reasonable best efforts to cause its stockholders to
approve the Merger. In addition, the ATMI Group may retain a
nationally-recognized proxy solicitation firm if the ATMI Group in consultation
with the ADCS Group deems such action to be necessary in order to receive the
approval of ATMI stockholders with respect to the transactions contemplated
hereby.
5.14. Nasdaq Listing. ATMI and Holdings will make such filings as are
necessary with the NASD and The Nasdaq National Market regarding the
transactions contemplated hereby and will use their best efforts to cause the
shares of Holdings Common Stock to be issued in the Reorganization to be
approved for listing on The Nasdaq National Market, subject to official notice
of issuance, prior to the Effective Time.
5.15. Affiliates. The ATMI Group and the ADCS Group shall deliver to
Holdings a letter identifying all persons who are, at the time the
Reorganization is effected, "affiliates" of either the ATMI Group or the ADCS
Group. The ATMI Group and the ADCS Group shall cause each person who is
identified as an "affiliate" in such letter to deliver to Holdings on or prior
to the Effective Time an Affiliates Agreement, in the form attached hereto as
EXHIBIT D-1 with respect to affiliates of ADCS and EXHIBIT D-2 with respect to
affiliates of ATMI (the "Affiliates Agreements").
5.16. Financial Statements and SEC Reports. From and after the date hereof
until the Effective Time, each party hereto shall deliver to the other, as soon
as available but in no event later than forty-five (45) days after the end of
each fiscal quarter, a consolidated balance sheet as of the last day of such
fiscal period and a consolidated statement of income, stockholders' equity and
cash flows of such party and its subsidiaries for the fiscal period then ended,
prepared in accordance with general accounting principles, with such exceptions
as are noted on such financial statements, and in the case of ATMI, the
requirements of Form 10-Q or Form 10-K, as the case may be, under the Exchange
Act. From and after the date hereof until the Effective Time, ATMI shall deliver
to the ADCS Group as soon as available all forms, reports and other documents
filed by the ATMI Group or its affiliates with the SEC, and each party shall
otherwise keep the other apprised of any material development with respect to
its business or financial condition.
5.17. Employee Benefits. (a) As of Closing Date, ATMI or Holdings shall
provide all employees of the ADCS Group and each ADCS Group ERISA Affiliate and
their dependents, and all qualified beneficiaries (as defined in Section
4980B(g)(1) of the Code) entitled to receive continuation coverage under COBRA
as of the Closing Date (the "Qualified Beneficiaries") with coverage under one
or more ATMI Benefit Plans (the "Successor Welfare Plans"), including, without
limitation, health care coverage ("Coverage"), which meets at least the
following requirements: (i) service with the ADCS Group and each ADCS Group
ERISA Affiliate prior to the Closing Date shall be credited against all service
and waiting period requirements under the Successor Welfare Plans for those
employees of the ADCS Group and each ADCS Group ERISA Affiliate (and their
eligible dependents) that received coverage from the ADCS Group or an ADCS-Group
ERISA Affiliate as of the Closing Date, (ii) the Successor Welfare Plans shall
not provide for any pre-existing condition exclusion for those employees of the
ADCS Group and each ADCS Group ERISA Affiliate (and their eligible dependents)
and
<PAGE>
Qualified Beneficiaries that were entitled to coverage from the ADCS Group
or an ADCS Group ERISA Affiliate as of the Closing Date, and (iii) the
deductibles in effect under the Successor Welfare Plans for the plan year in
which the Closing Date occurs shall be reduced by any amounts applied towards
the deductibles under the ADCS Group Benefit Plans for the plan year in which
the Closing Date occurs provided such individuals submit evidence to ATMI
sufficient to demonstrate the amount so applied against any applicable
deductibles in effect under any ADCS Group Benefit Plan, provided ATMI or
Holdings shall only be obligated to provide Coverage to such employees,
dependents and qualified beneficiaries to the extent ATMI or Holdings sponsors
the same type of Group Benefit Plans that the ADCS Group did as of the Closing
Date.
(b) ATMI covenants that the service of each employee of the ADCS Group and
each ADCS Group ERISA Affiliate prior to the Closing Date shall be credited as
service under the ATMI 401(k) Plan for all purposes (including without
limitation, eligibility and vesting) for those employees of the ADCS Group and
each ADCS Group ERISA Affiliate that were participants in any 401(k) plan
maintained by the ADCS Group or an ADCS Group ERISA Affiliate as of the Closing
Date.
(c) The parties recognize that the ADCS Group's forms of compensation of
its employees, consultants and directors have differed from ATMI's, including,
but not limited to, in the payment of cash versus equity-based compensation.
ATMI will use reasonable efforts prior to Closing to obtain the ADCS Group's
agreement to the amount and types of compensation to be paid to employees of the
ADCS Group commencing as of the Closing. Nothing herein shall confer any rights
upon any such employees.
5.18. Tax Matters. Each of the parties agrees to prepare and file any and
all tax returns, reports and other filings regarding the tax treatment of the
Reorganization in a manner which is consistent in all respects with the intent
and expectation set forth in Section 2.6 above. Each of the parties further
agrees to use reasonable efforts not to do any act or thing, before or at any
time after the Reorganization, which would cause the Reorganization not to be a
transaction described in Section 351 of the Code. The ATMI Group agrees that it
will not take any tax position contrary to, or in conflict with, any tax
position taken in good faith prior to the Closing by a member of the ADCS Group,
any ADCS Group Subsidiary, or any predecessor in interest to any of the
foregoing, or any Holder.
5.19. Supplements to Disclosure Schedules. Without limiting the parties'
obligations under Section 5.4, from time to time prior to the Closing, the ATMI
Group and the ADCS Group will promptly supplement or amend the respective
disclosure schedules which they have delivered pursuant to this Agreement with
respect to any matter hereafter arising which, if existing or occurring at the
date of this Agreement, would have been required to be set forth or described in
any such disclosure schedule or which is necessary to correct any information in
any such disclosure schedule which has been rendered inaccurate thereby. No
supplement or amendment to any such disclosure schedule shall have any effect
for the purpose of determining satisfaction of the conditions set forth in
Sections 6.l(a) or 6.2(a) of this Agreement.
5.20. Expenses. In the event the Reorganization is consummated, the
reasonable legal and accounting costs (for all of which an estimate shall be
given to the ATMI Group on the date hereof) will be borne by the ATMI Group;
otherwise, in the event the Reorganization is not consummated, each party will
bear its own costs and expenses. Whether or not the transaction is consummated,
the ATMI Group shall pay all SEC registration, HSR and other applicable
governmental filing fees incurred in connection with the negotiation,
preparation and execution of this Agreement and the performance of any of the
obligations contemplated hereby or thereby.
5.21. Officer and Director Indemnity. (a) Simultaneously with the Closing,
the ADCS Organizational Documents shall be amended to the extent necessary to
provide the same level of indemnification for the current directors and officers
and employees of the ADCS Group (each, a "Current ADCS Indemnitee") as the
bylaws of ATMI provide on the date hereof for directors, officers and employees
of ATMI. Holdings will not permit the ADCS Organizational Documents to be
amended to affect adversely the provisions concerning indemnification for a
Current ADCS Indemnitee; provided, however, that Holdings reserves the right to
liquidate, dissolve,
<PAGE>
consolidate, reorganize or merge any entity within the ADCS Group so long
as any successor(s) expressly assumes and agrees to perform the obligations of
indemnity set forth in such ADCS Organizational Documents in the same manner and
to the same extent that the predecessor entity would be required to perform if
no such succession had taken place, and each Current ADCS Indemnitee shall be
entitled to enforce such obligations of indemnity against any such successor(s)
to the same extent and with the same force and effect as if such successor was
originally a party hereto.
(b) Holdings agrees that in the event that the ATMI Organizational
Documents are at any time amended so that the provisions therein relating to the
indemnification of directors, officers or employees of the ATMI Group are less
favorable than those currently contained therein, that Holdings will first agree
with any Current ADCS Indemnitee, who at any time is or becomes a director,
officer or employee of Holdings, ATMI, or any subsidiary thereof, to provide for
rights to indemnification no less favorable than those in effect on the date
hereof.
5.22. Exchange Act Section 16(b). The ATMI Group shall take no position
inconsistent with the positions taken by any Holders with respect to a "Section
16(b) Matter" after the date hereof that will or may, directly or indirectly,
whether taken alone or together with other facts or events, result in a Holder
or any affiliate of a Holder having "Section 16(b) Liability." As used herein,
the following terms shall have the respective meanings set forth below:
"Section 16(b) Liability" means liability under Section 16(b) of the
Exchange Act with respect to or as a consequence, directly or indirectly, of (i)
a Holder's or Holder's affiliate's acquisition (or deemed acquisition) of
"beneficial ownership" of, or a "pecuniary interest" or "indirect pecuniary
interest" in, any of the Exchange Consideration that shall have been acquired
(or deemed to have been acquired) pursuant to this Agreement; or (ii) any
dispute with respect to the date on which any Holder becomes subject to Section
16 of the Exchange Act, if at all, pursuant to this Agreement.
"Section 16(b) Matter" means each matter or series of matters (including,
without limitation, a proposed transaction or series of transactions involving
any stock or other non-cash dividend, split-up, reverse split-up,
reclassification, recapitalization, reorganization, combination, subdivision,
conversion, exchange of shares or acquisition, merger or other similar such
transaction), which, directly or indirectly, as a result of the taking of such
action by Holdings, its Board of Directors or stockholders or any governmental
authority having jurisdiction thereover, or the conclusion of any such matter
will or may, directly or indirectly, whether taken alone or together with other
facts or events, result in Section 16(b) Liability.
5.23. Environmental Report. The ATMI Group has at its expense ordered from
GZA GeoEnvironmental, Inc. a Phase II environmental site assessment of the ADCS
manufacturing site in Burnet, Texas. The ATMI Group will use reasonable efforts
to have the assessment completed no later than April 28, 1997. Within ten (10)
days after its receipt thereof, the ATMI Group shall deliver to ADCS Nevada a
copy of the assessment, together with a written statement from ATMI stating
whether or not (i) the assessment indicates an Environmental Condition which
ATMI in good faith has determined could have an ADCS Material Adverse Effect (a
"Material Environmental Condition"), and (ii) the ATMI Group intends to
terminate this Agreement as a result of such Material Environmental Condition.
If the ATMI Group states its intention to terminate this Agreement as a result
of a Material Environmental Condition, this Agreement will terminate on the
thirtieth (30th) day after ADCS Nevada's receipt of such notice unless within
such 30-day period the ADCS Group successfully remediates such Material
Environmental Condition or the parties agree otherwise. If this Agreement is
terminated pursuant to this Section 5.23, the ATMI Group shall not be entitled
to a termination payment under Section 9.2. If this Agreement is not terminated
pursuant to this Section 5.23, then the results of such Phase II site assessment
shall be deemed to be incorporated into the ADCS Disclosure Schedule as of the
date on which this Agreement is executed.
<PAGE>
ARTICLE VI
Conditions Precedent to Closing
6.1. Conditions to the Obligations of the ATMI Group. The obligation of the
ATMI Group to consummate the Merger, the Exchange and the other transactions
contemplated hereby shall be subject to the satisfaction, on or prior to the
Closing Date, of each of the following conditions (any of which may be waived in
writing by the ATMI Group in its sole discretion):
(a) Representations and Warranties True. The representations and warranties
of the ADCS Group and the Holders which are contained in this Agreement, or
contained in any Schedule, certificate or other instrument or document delivered
or to be delivered pursuant to this Agreement, shall be true and correct in all
material respects on and as of the Closing Date as though such representations
and warranties were made on and as of the Closing Date, except for the effect of
any activities or transactions which may have taken place after the date of this
Agreement expressly permitted by this Agreement, incident to carrying out this
Agreement, or consented to in writing by ATMI. At the Closing, the ADCS Group
shall have delivered to the ATMI Group a certificate confirming the foregoing
(signed on behalf of the ADCS Group by the President, General Partner,
authorized member, etc., as appropriate).
(b) Performance. The ADCS Group shall have performed and complied in all
material respects with all of the obligations under this Agreement which are
required to be performed or complied with by it on or prior to the Closing Date.
At the Closing, the ADCS Group shall have delivered to the ATMI Group a
certificate confirming the foregoing (signed on behalf of the ADCS Group by the
President, General Partner, authorized member, etc., as appropriate).
(c) Stockholder Approval. This Agreement and the consummation of the
transactions contemplated herein shall have been duly approved and adopted by
the stockholders of ATMI in accordance with the DGCL and the ATMI Organizational
Documents.
(d) Absence of Litigation. No statute, rule or regulation shall have been
enacted or promulgated, and no order, decree, writ or injunction shall have been
issued and shall remain in effect, by any court or governmental or regulatory
body, agency or authority which restrains, enjoins or otherwise prohibits the
consummation of the transactions contemplated hereby, and no action, suit or
proceeding before any court or governmental or regulatory body, agency or
authority shall have been commenced with respect to the transactions
contemplated hereby or with respect to the ADCS Group, any ADCS Group Subsidiary
or any Holder not set forth in a Schedule hereto which, in the reasonable
judgment of the ATMI Group, would have a material adverse effect on the
transactions contemplated hereby or an ADCS Material Adverse Effect.
(e) Pooling of Interests. The ATMI Group shall have received a letter dated
as of the Effective Time from Ernst & Young LLP, independent accountants to the
ADCS Group and the ATMI Group, regarding the appropriateness of pooling of
interest accounting for the Reorganization under Accounting Principles Board
Opinion No. 16.
(f) Additional Agreements. The ADCS Group and the Holders shall have
delivered (or cause to be delivered) duly executed counterparts of the following
agreements:
(i) Proprietary Information and Inventions Agreements. The ADCS Group shall
have used best efforts to cause each employee of the ADCS Group and each ADCS
Group Subsidiary to have entered into ATMI's customary Employee Proprietary
Information and Inventions Agreements (the "Proprietary Information and
Inventions Agreements") with ATMI and/or the ADCS Group, as ATMI may determine,
a copy of which is attached hereto as EXHIBIT E.
<PAGE>
(ii) Employment Agreements. Each of Stephen H. Siegele, Frederick H.
Siegele, and Frederick J. Siegele shall have entered into an Employment
Agreement (each an "Employment Agreement") with ATMI and/or the ADCS Group, as
ATMI may determine, substantially in the form(s) of EXHIBIT F.
(iii) Affiliate Agreement. Each of the affiliates of the ADCS Group and
ATMI shall have entered into an Affiliate Agreement in the form of EXHIBIT D-1
or EXHIBIT D-2, as appropriate.
(iv) Escrow Agreement. Each of the Holders and the escrow agent thereunder
shall have entered into the Escrow Agreement (the "Escrow Agreement")
substantially in the form of EXHIBIT G.
(v) Indemnification Agreement. Each of the Holders and the ATMI Group shall
have entered into the Indemnification Agreement (the "Indemnification
Agreement") substantially in the form of EXHIBIT H.
(vi) Representations and Warranties of Holders. Each Holder shall have
executed and delivered to the ATMI Group a Certificate of Holder in the form
attached hereto as EXHIBIT I making each of the representations and warranties
contained therein with respect to such Holder, but only as to that Holder.
(g) Opinions of Counsel. (i) Brobeck, Phleger & Harrison LLP, counsel to
the ADCS Group, the ADCS Group Subsidiaries and the Holders, shall have
delivered to the ATMI Group an opinion substantially in the form of Exhibit J;
and (ii) Lyon & Lyon, patent counsel to the ADCS Group, shall have delivered to
the ATMI Group an opinion substantially in the form of EXHIBIT K;
(h) Fairness Opinion. Alex. Brown & Sons Incorporated, financial advisers
to ATMI, shall have delivered an opinion to the Board of Directors of ATMI to
the effect that the Exchange Consideration payable pursuant to the
Reorganization is fair from a financial point of view to ATMI.
(i) Comfort Letter. Ernst & Young LLP, independent accountants to the ADCS
Group and the ATMI Group, shall have delivered a "comfort" letter, addressed to
the ADCS Group and the ATMI Group and dated as of the effective date of the S-4
and the Closing Date, in such form and substance as is customary in connection
with such transactions and is satisfactory to the ADCS Group and the ATMI Group.
(j) Tax Opinion. Ernst & Young LLP, independent accountants to the ADCS
Group and the ATMI Group, shall have delivered an opinion letter, addressed to
the ADCS Group and the ATMI Group and dated as of the Closing Date, to the
effect that the Reorganization has been structured in a manner which is tax-free
with respect to the ATMI Group and its stockholders and the Holders (the "Tax
Opinion").
(k) Delivery of Certificates and Assignment. In exchange for the Exchange
Consideration, the Holders shall have delivered (i) each of the original share
certificates evidencing the Capital Stock, duly endorsed for transfer with all
requisite transfer stamps, if any are due, attached thereto, (ii) an assignment
of the Membership Interests, the form of which is attached hereto as EXHIBIT B,
and (iii) all such other deeds, bills of sale, assignments and assurances which
Holdings deems reasonably necessary or desirable to vest, perfect or confirm any
and all right, title or interest in, to or under the Interests or otherwise to
carry out the purposes of this Agreement. Each of the foregoing shall also be
executed and delivered by each Holder's spouse, if required.
(l) Securities Law Compliance. The S-4 registering the issuance and
delivery of the shares of Holdings Common Stock pursuant to the Merger shall
have been declared effective in accordance with the provisions of the Securities
Act, and no stop order suspending the effectiveness of the S-4 shall have been
issued by the SEC. All other filings necessary under federal and state
securities laws to permit the issuance and delivery of the shares of Holdings
Common Stock pursuant to the Merger and of the Exchange Consideration in
compliance with such laws shall have been made, and any authorizations in
connection therewith from all applicable securities regulatory authorities shall
have been obtained.
(m) Nasdaq Listing. Holdings Common Stock shall have been, at the Effective
Time, authorized for listing on The Nasdaq National Market.
<PAGE>
(n) Consents and Approvals. The ADCS Group shall have obtained all consents
and approvals and waivers and given such notices as may be reasonably necessary
to complete properly the restructuring undertaken by the ADCS Group in 1996. The
ADCS Group shall have obtained all consents and approvals and waivers and given
such notices as may be necessary to consummate the transactions contemplated
hereby and by the Additional Agreements to which it is a party, including but
not limited to (i) requisite stockholder, partner, member, etc. approval or
notification and (ii) the consent to the transactions contemplated hereby of the
parties to all Commitments under which the ADCS Group, any ADCS Group Subsidiary
or any Holder would otherwise be in default
in any material respect as a result of the transactions contemplated
hereby, other than Commitments which ATMI agrees are not material to the ADCS
Group or any ADCS Group Subsidiary's business or prospects. All consents,
authorizations, orders or approvals of, and filings or registrations with, any
federal, state, local or foreign governmental commission, board or other
regulatory body which are required for or in connection with the execution,
delivery and performance of this Agreement and the Additional Agreements by the
ADCS Group, any ADCS Group Subsidiary and the Holders and the consummation of
the transactions contemplated hereby and thereby, and in order to permit or
enable its business to be conducted after the Closing, shall have been duly
obtained or made, except filings under state securities laws, if any, which may
be made in the time period permitted by law. It is understood that none of such
approvals shall be deemed to have been received if any such approval is subject
to satisfaction of or compliance with a Burdensome Condition. "Burdensome
Condition" shall mean the imposition of a material restriction on the ATMI
Group's or the ADCS Group's ability to operate its business following the
Effective Time or requiring the ATMI Group or the ADCS Group to dispose of a
material amount of its assets following the Effective Time. Either the ATMI
Group or the ADCS Group may, but is not obligated to, seek the removal or
otherwise satisfactorily resolve the Burdensome Condition.
(o) No Material Adverse Changes. There shall not have been a material
adverse change in the general affairs, business, prospects, properties,
management, condition (financial or otherwise) or results of operations of the
ADCS Group or any ADCS Group Subsidiary, whether or not arising from
transactions in the ordinary course of business, and neither the ADCS Group nor
any ADCS Group Subsidiary shall have sustained any material loss or interference
with its business or properties from fire, explosion, flood or other casualty,
whether or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree.
(p) Delivery by the ADCS Group. The ADCS Group shall deliver or cause to be
delivered to ATMI:
(i) With respect to the ADCS Group, each ADCS Group Subsidiary and each
Holder which is an entity, a complete and correct copy of (i) each corporation's
Certificate or Articles of Incorporation, as amended to date, certified by the
Secretary of State of its state or country of incorporation, (ii) each
corporation's By-Laws, as amended to date, certified by the Secretary or an
Assistant Secretary of the respective corporation, (iii) each limited liability
company's Articles of Organization or similar instrument, as amended to date,
certified by the Secretary of State of its state of organization, (iv) each
limited liability company's Operating Agreement or similar agreement, as amended
to date, certified by a member or manager of the respective limited liability
company, (v) each limited partnership's certificate of limited partnership, as
amended to date, certified by the Secretary of State of the State of Texas, and
(vi) ADCS LP's Limited Partnership Agreement, as amended to date, certified by
its general partner, and the original corporate stock ledgers, corporate seal
and minute book(s) of the ADCS Group.
(ii) Long form certificates of good standing or legal existence, as
appropriate, as of a recent date issued by (i) the Secretary of State of the
state in which each of the ADCS Group and each ADCS Group Subsidiary is
organized to the effect that each is in good standing under the laws of such
state, and (ii) the Secretary of State of each state in which that the ADCS
Group or any ADCS Group Subsidiary is authorized to transact business as a
foreign corporation, foreign limited liability company or foreign limited
partnership to the effect that the ADCS Group or any ADCS Group Subsidiary is
duly qualified as a foreign entity in such state.
<PAGE>
(iii) Certificates issued as of a recent date by the Tax authorities of the
state of organization and of each state in which the ADCS Group or any ADCS
Group Subsidiary is authorized to transact business as to the status of the ADCS
Group and each ADCS Group Subsidiary's Tax liabilities (including, but not
limited to, sales tax).
(iv) Releases substantially in the form of EXHIBIT L hereto, executed by
each Holder.
(v) Written evidence satisfactory to ATMI that all prior outstanding
options to purchase any Securities of the ADCS Group or any ADCS Group
Subsidiary, if any, have been properly terminated.
(vi) Such other certificates and representations as are reasonably
requested by Ernst & Young LLP in order to render the Tax Opinion.
(vii) Such further instruments or documents as the ATMI Group or their
counsel may reasonably request to assure the full and effective completion of
the Reorganization and to assure the effective completion of the transactions
contemplated hereby.
(q) Termination of Certain Agreements. The following agreements shall have
been terminated with no further liability thereunder: (i) that certain Members'
and Shareholders' Agreement dated January 16, 1996; (ii) that certain Agreement
Regarding Stock Ownership and Distribution dated July 1, 1993; and (iii) that
certain Shareholders' Agreement dated on or about September, 1992.
(r) ADCS-Korea. The parties shall have obtained all third party and
governmental consents with respect to ADCS-Korea required as a result of, or in
connection with, the Reorganization. The parties shall cooperate in obtaining
and shall use best efforts to obtain such consents.
6.2. Conditions to the Obligations of the ADCS Group. The obligation of the
ADCS Group to consummate the Exchange and the other transactions contemplated by
this Agreement shall be subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions (any of which may be waived in writing
by the ADCS Group in its sole discretion):
(a) Representations and Warranties True. The representations and warranties
of the ATMI Group contained in this Agreement, or contained in any Schedule,
certificate or other instrument or document delivered or to be delivered
pursuant to this Agreement, shall be true and correct in all material respects
on and as of the Closing Date as though such representations and warranties were
made on and as of the Closing Date, except for the effect of any activities or
transactions which may have taken place after the date of this Agreement
expressly permitted by this Agreement, incident to carrying out this Agreement,
or consented to in writing by the ADCS Group. At the Closing, each of the ATMI
Group shall have delivered to the ADCS Group a certificate (signed on its behalf
by its President and its Chief Financial Officer) confirming the foregoing.
(b) Performance. The ATMI Group shall have performed and complied in all
material respects with all of the obligations under this Agreement which are
required to be performed or complied with by it on or prior to the Closing Date.
At the Closing, each of the ATMI Group shall have delivered to the ADCS Group a
certificate (signed on its behalf by its President and its Chief Financial
Officer) confirming the foregoing.
(c) Stockholder Approval. This Agreement and the consummation of the
transaction contemplated herein shall have been duly approved and adopted by the
stockholders of ATMI in accordance with the DGCL and the ATMI Organizational
Documents.
(d) Absence of Litigation. No statute, rule or regulation shall have been
enacted or promulgated, and no order, decree, writ or injunction shall have been
issued and shall remain in effect, by any court or governmental or regulatory
body, agency or authority which restrains, enjoins or otherwise prohibits the
consummation of the transactions contemplated hereby, and no action, suit or
proceeding before any court or governmental or regulatory body, agency or
authority shall have been commenced with respect to the transactions
contemplated
<PAGE>
hereby or with respect to the ATMI Group which, in the reasonable judgment
of the ADCS Group, would have a material adverse effect on the transactions
contemplated hereby or an ATMI Material Adverse Effect.
(e) Pooling of Interests. The ADCS Group shall have received a letter dated
as of the Effective Time from Ernst & Young LLP, independent accountants to the
ADCS Group and the ATMI Group, regarding the appropriateness of pooling of
interest accounting for the Reorganization under Accounting Principles Board
Opinion No. 16.
(f) Additional Agreements. The ATMI Group shall have executed and delivered
(and shall have agreed to cause Holdings to execute and deliver immediately
following the Effective Time, as applicable) counterparts of the following
documents:
(i) The Certificate of Merger.
(ii) The Proprietary Information and Inventions Agreements.
(iii) The Employment Agreements.
(iv) Affiliate Agreements in the form attached as Exhibit D-2.
(v) The Registration Rights Agreement.
(vi) The Escrow Agreement.
(vii) The Indemnification Agreement.
(viii) An employment agreement with each of Eugene G. Banucci, Chief
Executive Officer of ATMI, Daniel P. Sharkey, Chief Financial Officer of ATMI,
and Peter S. Kirlin, Executive Vice President of ATMI, which shall be in the
form of EXHIBIT F and contain the additional terms set forth on SCHEDULE 5.3(P).
(g) Opinions of Counsel. (i) Shipman & Goodwin LLP, counsel to the ATMI
Group shall have delivered to the ADCS Group an opinion substantially in the
form of EXHIBIT M; and (ii) Intellectual Property/Technology Law, patent counsel
to the ATMI Group, shall have delivered to the ADCS Group (A) an opinion
substantially in the form of EXHIBIT N and (B) an assessment opinion in the form
of EXHIBIT O with respect to each of the patents listed on SCHEDULE 6.2(G).
(h) Comfort Letter. Ernst & Young LLP, independent accountants to the ADCS
Group and the ATMI Group, shall have delivered a "comfort" letter, addressed to
the ADCS Group and the ATMI Group and dated the Closing Date, in such form and
substance as is customary in connection with such transactions and is
satisfactory to the ADCS Group and the ATMI Group.
(i) Tax Opinion. Ernst & Young LLP, independent accountants to the ADCS
Group and the ATMI Group, shall have rendered the Tax Opinion.
(j) Securities Law Compliance. All filings necessary under federal and
state securities laws to permit the issuance and delivery of the Exchange
Consideration in compliance therewith shall have been made, and any
authorizations in connection therewith from all applicable securities regulatory
authorities shall have been obtained.
(k) Nasdaq Listing. Holdings Common Stock, including that constituting the
Exchange Consideration, shall have been, at the Effective Time, authorized for
listing on The Nasdaq National Market.
(l) Consents and Approvals. The ATMI Group shall have obtained all consents
and approvals and waivers and given such notices as may be necessary to
consummate the transactions contemplated hereby and by the Additional Agreements
to which it is a party, including but not limited to (i) requisite stockholder,
partner, member, etc. approval or notification and (ii) the consent to the
transactions contemplated hereby of the parties to all commitments under which
the ATMI Group or any ATMI Group Subsidiary would otherwise be in default
<PAGE>
in any material respect as a result of the transactions contemplated
hereby, other than commitments which the ADCS Group agrees are not material to
the ATMI Group or any ATMI Group Subsidiary's business or prospects. All
consents, authorizations, orders or approvals of, and filings or registrations
with, any federal, state, local or foreign governmental commission, board or
other regulatory body which are required for or in connection with the
execution, delivery and performance of this Agreement and the Additional
Agreements by the ADCS Group and any ADCS Group Subsidiary and the consummation
of the transactions contemplated hereby and thereby, and in order to permit or
enable its business to be conducted after the Closing, shall have been duly
obtained or made, except filings under state securities laws, if any, which may
be made in the time period permitted by law. It is understood that none of such
approvals shall be deemed to have been received if any such approval is subject
to satisfaction of or compliance with a Burdensome Condition. Either the ATMI
Group or the ADCS Group may, but is not obligated to, seek the removal or
otherwise satisfactorily resolve the Burdensome Condition.
(m) No Material Adverse Changes. There shall not have been a material
adverse change in the general affairs, business, prospects, properties,
management, condition (financial or otherwise) or results of operations (other
than volatility in the market price of the ATMI Common Stock) of the ATMI Group
whether or not arising from transactions in the ordinary course of business, and
neither the ATMI Group nor any ADCS Group Subsidiary shall have sustained any
material loss or interference with its business or properties from fire,
explosion, flood, or other casualty, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental action,
order or decree.
(n) Delivery by the ATMI Group. The ATMI Group shall deliver or cause to be
delivered to the ADCS Group:
(i) With respect to the ATMI Group and each ATMI Group Subsidiary, a
complete and correct copy of (i) each corporation's Certificate or Articles of
Incorporation, as amended to date, certified by the Secretary of State of its
state or country of incorporation, and (ii) each corporation's By- Laws, as
amended to date, certified by the Secretary or an Assistant Secretary of the
respective corporation.
(ii) Long form certificates of good standing or legal existence, as
appropriate, as of a recent date issued by (i) the Secretary of State of the
state in which each of the ATMI Group and each ADCS Group Subsidiary is
organized to the effect that each is in good standing under the laws of such
state, and (ii) the Secretary of State of each state in which that the ATMI
Group or any ADCS Group Subsidiary is authorized to transact business as a
foreign corporation, foreign limited liability company or foreign limited
partnership to the effect that the ADCS Group or any ADCS Group Subsidiary is
duly qualified as a foreign entity in such state.
(iii) Certificates issued as of a recent date by the Tax authorities of the
state of organization and of each state in which the ATMI Group or any ADCS
Group Subsidiary is authorized to transact business as to the status of the ATMI
Group and each ADCS Group Subsidiary's Tax liabilities (including, but not
limited to, sales tax).
(iv) Such other certificates and representations as are reasonably
requested by Ernst & Young LLP in order to render the Tax Opinion.
(v) Such further instruments or documents as the ADCS Group or their
counsel may reasonably request to assure the full and effective completion of
the Reorganization and to assure the effective completion of the transactions
contemplated hereby.
(o) Shares of Exchange Consideration. Subject to the deposit into escrow of
shares of Holdings Common Stock contemplated under the Indemnification Agreement
and the Escrow Agreement, at the Closing, ATMI shall have delivered to the
Holders the Exchange Consideration issuable to the Holders pursuant to Section
2.3 hereof or irrevocable instruction letters as described in Section 2.1.
(p) ADCS-Korea. Holdings shall have delivered the commitments, if any,
required with respect to the ADCS Korea joint venture upon the change in control
of ADCS Nevada effected at the Closing.
<PAGE>
ARTICLE VII
Closing
7.1. Closing. The closing of transactions contemplated hereby (the
"Closing") shall occur at the offices of Shipman & Goodwin LLP, One American
Row, Hartford, Connecticut 06103, as soon as reasonably practicable following
the meeting of ATMI's stockholders described in Section 5.13 and in any event
within three (3) business days after the satisfaction or waiver of the other
conditions set forth in Article VI. The date on which the Closing occurs shall
be referred to as the "Closing Date".
7.2. Simultaneous Closing. All actions to be taken on the Closing Date
shall be deemed to occur simultaneously and in no event shall be deemed to occur
unless and until all such events have occurred; provided, that the election of
Stephen H. Siegele as a director of Holdings shall not, and shall not be deemed
to, occur prior to the Closing.
ARTICLE VIII
Further Assurances
The parties agree that they will execute or furnish such documents and
further assurances to each other or to proper authorities as may be necessary
for the full implementation and consummation of this Agreement and the
Additional Agreements. This Article VIII shall survive the Closing.
ARTICLE IX
Termination of Agreement
9.1. Termination. This Agreement may be terminated at any time prior to the
Closing, notwithstanding the approval of this Agreement by the stockholders of
ATMI:
(a) by the mutual written consent of ATMI and the ADCS Group;
(b) by either ATMI or the ADCS Group:
(i) if any court or governmental or regulatory agency, authority or body
shall have enacted, promulgated or issued any statute, rule, regulation, ruling,
writ or injunction, or taken any other action, restraining, enjoining or
otherwise prohibiting the transactions contemplated hereby and all appeals and
means of appeal therefrom have been exhausted;
(ii) if the Closing shall not have occurred on or before the later of (A)
August 31, 1997, subject to extension pursuant to Section 9.3 hereof, and (B)
the expiration of any cure period provided herein; provided, however, that the
right to terminate this Agreement pursuant to this Section 9.1(b)(ii) shall not
be available to any party whose (or whose affiliate(s)') breach of any
representation or warranty or failure to perform or comply with any obligation
under this Agreement has been the cause of, or resulted in, the failure of the
Closing to occur on or before such date; or
(iii) for any reason, upon the payment of $5,000,000 to the non-terminating
party (unless any other provision of the Agreement would permit termination
without payment of such amount);
(c) by ATMI (provided it has met its obligations under Section 5.12):
(i) in the event of a material breach of a representation or warranty as of
the date when made (or, in the case of the Phase II environmental site
assessment referred to in Section 5.23 above, when deemed to be made), or
covenant by the ADCS Group (subject to written notice and a thirty business day
cure period);
<PAGE>
(ii) subject to Section 9.3 hereof, if any Holder fails, refuses or is
unable to contribute its Interests in exchange for the Exchange Consideration;
(iii) if any condition to Closing specified in Section 6.1 shall not be
satisfied and such condition is not waived by the ATMI Group in its discretion;
or
(iv) pursuant to Section 5.23 above; or
(d) by the ADCS Group (provided it has met its obligations under Section
5.12):
(i) in the event of a material breach of a representation or warranty as of
the date when made, or covenant by the ATMI Group (subject to written notice and
a thirty business day cure period);
(ii) pursuant to Section 5.5 above; or
(iii) if any condition to Closing specified in Section 6.2 shall not be
satisfied and such condition is not waived by the ADCS Group in its discretion.
9.2. Termination Payment. No party shall be entitled to a termination
payment unless otherwise specified herein. In the event that either the ATMI
Group or the ADCS Group shall terminate this Agreement pursuant to subsection
(b)(iii), the terminating party shall be liable to and shall pay to the
non-terminating party by wire transfer the sum of $5,000,000 in full
satisfaction of all claims within fifteen (15) business days after the
non-terminating party's receipt of written notice of termination. In the event
that (i) the ADCS Group shall terminate this Agreement pursuant to subsection
(d)(i) above or (ii) ATMI shall terminate this Agreement pursuant to subsection
(c)(i) above (other than with respect to a breach of Section 5.7, which breach
shall be governed by Section 9.5 below), then the non-terminating party shall be
liable to and shall pay to the terminating party by wire transfer the sum of
$5,000,000 in full satisfaction of all claims within fifteen (15) business days
after receipt of written notice of termination by the terminating party. In the
event that ATMI shall terminate this Agreement pursuant to subsection (c)(ii)
(other than with respect to a failure, refusal or inability to contribute
described in Section 9.3), the ADCS Group shall be liable to and shall pay to
ATMI by wire transfer the sum of $5,000,000 in full satisfaction of all claims
within fifteen (15) business days after the ADCS Group's receipt of written
notice of termination by ATMI. It is agreed that the payments due hereunder are
the exclusive remedy for termination of this Agreement.
9.3. Failure to Deliver Interests. If any Holder fails, refuses or is
unable to contribute its Interests in exchange for the Exchange Consideration as
a direct result of any reason beyond Holder's control and of which Holder had no
knowledge as of the date of this Agreement, including, but not limited to,
Holder's death, disability, bankruptcy, divorce or separation, legal proceeding,
act of any governmental authority, or act of God, the ATMI Group shall have the
option, after giving notice, to (A) terminate this Agreement, in which event no
termination payment as described in Section 9.2 will be due, (B) extend the
Closing Date for a period of up to ninety (90) days, or (C) close on the Merger
and on the Exchange with those Holders who have tendered their Interests,
provided that the Merger and Exchange will qualify as a pooling of interests
transaction. In the event the Closing Date is extended pursuant to clause (B)
above, the ADCS Group will continue to use its best efforts during such 90-day
period to cause the Holders to tender their Interests at the Closing. In the
event the Closing occurs pursuant to clause (C) above, the tendering Holders
will agree at the Closing to use their best efforts for a period of one (1) year
after the Closing to cause the non- tendering Holders to tender the Interests.
9.4. Effect of Termination. In the event of termination of this Agreement,
this Agreement shall forthwith become void and there shall be no liability on
the part of any of the parties hereto or their respective affiliates, directors,
officers, stockholders, general partners, limited partners, and members, except
for Section 5.6, Section 9.2 and the last sentence of Section 5.1, which shall
remain in full force and effect.
9.5. Breach of Section 5.7. In the event of a breach by the ADCS Group or
any ADCS Group Subsidiary of Section 5.7 (subject to written notice and a thirty
business day cure period), the ATMI Group may pursue any and all remedies
available to it at law or in equity. Recovery by the ATMI Group of a termination
payment under Section 9.2 shall not bar any such action for breach of Section
5.7, but the amount of any monetary damages awarded to the ATMI Group in such
action shall be reduced by the termination payment actually received by the ATMI
Group.
<PAGE>
ARTICLE X
Miscellaneous
10.1. Right of Set-Off. Any party to this Agreement shall be entitled to
set-off against any amounts due to another party under the terms of this
Agreement or under any Additional Agreement, any amounts due from such other
party under the terms of this Agreement.
10.2. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any benefits to any person (including, without limiting the
generality of the foregoing, any present or former employee of the ADCS Group or
any ADCS Group Subsidiary) or corporation or other entity, other than the ADCS
Group, the Holders, ATMI, Holdings, Newco and the Surviving Corporation, except
for persons entitled to the protections afforded by Section 5.21; and this
Agreement shall be for the sole and exclusive benefit of the ADCS Group, the
Holders, and the ATMI Group. The obligations of the ADCS Group and the
obligations of the ATMI Group shall be joint and several.
10.3. Successors and Assigns. This Agreement may not be assigned by any
party without the prior written consent of all of the parties hereto. This
Agreement shall bind and inure to the benefit of the parties hereto and their
respective heirs, administrators, executors, successors and permitted assigns.
10.4. Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by facsimile (if sent during regular business hours, otherwise on the next
business day) (with written confirmation of receipt), provided that a copy is
mailed by registered mail, return receipt requested, or (c) when received by the
addressee, if sent by certified mail or a nationally recognized overnight
delivery service (receipt requested), in each case to the appropriate addresses
and facsimile numbers set forth below (or to such other addresses and facsimile
numbers as a party may designate by notice to the other parties):
If to the ATMI Group:
Advanced Technology Materials, Inc.
7 Commerce Drive
Danbury, CT 06810-4169
Facsimile No. (203) 792-8040
Attention Eugene Banucci
with copies to:
Frank J. Marco, Esq.
Shipman & Goodwin LLP
One American Row
Hartford, CT 06103-2819
Facsimile No. (860) 251-5900
If to the ADCS Group:
Advanced Delivery & Chemical Systems Nevada, Inc.
6805 Capital of Texas Highway, Suite 330
Austin, TX 78731
Facsimile No. (512) 418-1909
Attention Stephen H. Siegele
<PAGE>
with copies to:
Carmelo M. Gordian, Esq.
Brobeck, Phleger & Harrison LLP
301 Congress Avenue
Suite 1200
Austin, TX 78701
Facsimile No. (512) 477-5813
By its inclusion herein as a recipient of copies of notices, the parties
acknowledge and agree that notwithstanding the fact that Brobeck, Phleger &
Harrison LLP represented the ADCS Group (which effective as of the Closing shall
be wholly owned by Holdings) in connection with the transactions contemplated by
the Exchange Agreement, Brobeck, Phleger & Harrison LLP shall be permitted (A)
to represent the Holders and their respective heirs, executors, administrators,
affiliates, successors and assigns in connection with any and all matters which
may arise out of or in connection with this Agreement, the Escrow Agreement or
any of the other Additional Agreements; and (B) that upon receipt of appropriate
conflict waiver letters, if any be required, and subject to applicable ethical
obligations of attorneys, shall be entitled to represent any of the other
parties to this Agreement, the Escrow Agreement or the Additional Agreements on
any other matters which any such party may request; provided, however, that the
foregoing consent and waiver are applicable only to any conflict which may arise
out of the matters referred to above.
10.5. Severability. In the event any covenant, condition or other provision
of this Agreement is held to be invalid or unenforceable by a final judgment of
a court of competent jurisdiction, then such covenant, condition or other
provision shall be automatically terminated and performance thereof waived, and
such invalidity or unenforceability shall in no way affect any of the other
covenants, conditions or provisions hereof, and the parties hereto shall
negotiate in good faith to agree to such amendments, modifications or
supplements of or to this Agreement or such other appropriate actions as, to the
maximum extent practicable, shall implement and give effect to the intentions of
the parties as reflected herein.
10.6 Pooling. If any provision of this Agreement or the application of any
such provisions to any person or circumstance precludes the use of "pooling of
interests" accounting treatment in connection with the Reorganization, then
provided the parties mutually agree (A) such provision shall be of no force and
effect to the extent and solely to the extent necessary to preserve such
accounting treatment for the Reorganization; (B) such invalidity or
unenforceability shall in no way affect any of the other provisions hereof; and
(C) the parties hereto shall negotiate in good faith to agree to such
amendments, modifications or supplements of or to this Agreement or such other
appropriate actions in order, to the maximum extent practicable, for the
Reorganization to be treated as a "pooling of interests" for accounting
purposes.
10.7. Entire Agreement; Amendment. This Agreement, the Schedules, the
Exhibits, the Additional Agreements and the Confidentiality Agreement dated
October 22, 1996 between ADCS LP and ATMI contain all of the terms agreed upon
by the parties with respect to the subject matter hereof, and there are no
representations or understandings between the parties except as provided herein.
Without limiting the generality of the foregoing, this Agreement specifically
supersedes the letter of intent dated January 10, 1997 between ATMI and ADCS
Nevada, ADCS Manager and ADCS Holdings. This Agreement may not be amended or
modified in any way except by a written amendment to this Agreement duly
executed by ATMI and ADCS Nevada.
10.8. Waiver. No waiver of a breach of, or default under, any provision of
this Agreement shall be deemed a waiver of such provision or of any subsequent
breach or default of the same or similar nature or of any other provision or
condition of this Agreement.
10.9. Applicable Law. This Agreement shall be governed by and construed
(both as to validity and performance) and enforced in accordance with the laws
of the State of Delaware applicable to agreements made and to be performed
wholly within such jurisdiction.
<PAGE>
10.10. Jurisdiction. Each party hereby irrevocably: (1) agrees that any
suit, action, or other legal proceeding arising out of this Agreement or out of
any of the transactions contemplated hereby or thereby, may be brought in any
New York state court or United States federal court located in the southern
district of New York; (2) consents to the jurisdiction of each such court in any
such suit, action, or legal proceeding; (3) waives any objection which such
party may have to the laying of venue of any such suit, action, or legal
proceeding in any of such courts; and (4) agrees that New York state is the most
convenient forum for litigation of any such suit, action, or legal proceeding.
10.11. Counterparts. This Agreement may be executed in any number of
counterparts with the same effect as if the signatures thereto and hereto were
upon the same instrument, but all of such counterparts taken together shall be
deemed to constitute one and the same instrument.
10.12 Knowledge. As used herein, "knowledge" means knowledge of the
executive management of the ADCS Group or the ATMI Group, as the case may be,
after making reasonable inquiry of the knowledge of officers or senior
management employees having responsibility for those operations or transactions
to which such representation and warranty relates. An individual will be deemed
to have "knowledge" of a particular fact or other matter if:
(i) such individual is actually aware of such fact or other matter; or
(ii) a reasonably prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of making
reasonable inquiry of the knowledge of other officers or employees having
general responsibility for those operations or transactions to which such
representation and warranty relates.
<PAGE>
EXHIBIT
The following schedules and exhibits have been omitted from the Agreement
and Plan of Merger and Exchange attached to this registration statement as
Appendix A to the Proxy Statement/Prospectus and incorporated herein by
reference:
SCHEDULES
Schedule A Holders
Schedule 1.4 Directors of Surviving Corporation
Schedule 1.5 Officers of Surviving Corporation
Schedule 2.3(a) Exchange Consideration
ADCS Disclosure Schedule
ATMI Disclosure Schedule
Schedule 5.2 Permitted Pre-Closing Activities of ADCS
Schedule 5.3(p) Permitted Employment Agreements by ATMI
Schedule 5.8 Post-Closing Operations
Schedule 6.2(g) ATMI Assessment Opinion Patents
EXHIBITS
Exhibit A Form of Certificate of Merger
Exhibit B Form of Assignment of Membership Interests
Exhibit C Form of Registration Rights Agreement
Exhibit D-1 Form of Affiliates Agreement of ADCS
Exhibit D-2 Form of Affiliates Agreement of ATMI
Exhibit E Form of Proprietary Information and Inventions Agreement
Exhibit F Form of Employment Agreements
Exhibit G Form of Escrow Agreement
Exhibit H Form of Indemnification Agreement
Exhibit I Form of Certificate of Holder
Exhibit J Form of Opinion of Counsel to ADCS
Exhibit K Form of Opinion of Patent Counsel to ADCS
Exhibit L Form of Releases
Exhibit M Form of Opinion of Counsel to ATMI
Exhibit N Form of Opinion of Patent Counsel to ATMI (General)
Exhibit O Form of Assessment Opinion of Patent Counsel to ATMI
The Registrant agrees to furnish supplementally a copy of any omitted
schedule or exhibit to the Securities and Exchange Commission upon request.
[SIGNATURE PAGES FOLLOW.]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of
Merger and Exchange to be executed as of the date first written above.
Advanced Technology Materials, Inc.
By: /s/ Eugene G. Banucci
- ---------------------------------
Eugene G. Banucci
Chief Executive Officer
ATMI Holdings, Inc.
By: /s/ Eugene G. Banucci
- ---------------------------------
Eugene G. Banucci
President
Alamo Merger, Inc.
By: /s/ Daniel P. Sharkey
- ---------------------------------
Daniel P. Sharkey
President
Advanced Delivery & Chemical Systems
Nevada, Inc.
By: /s/ Stephen H. Siegele
- ---------------------------------
Stephen H. Siegele
President
Advanced Delivery & Chemical Systems
Manager, Inc.
By: /s/ Stephen H. Siegele
- ---------------------------------
Stephen H. Siegele
President
<PAGE>
Advanced Delivery & Chemical Systems
Holdings, LLC
By: Advanced Delivery & Chemical
Systems Nevada, Inc., Its
Manager
By: /s/ Stephen H. Siegele
- ---------------------------------
Stephen H. Siegele
President
Advanced Delivery & Chemical Systems
Operating, LLC
By: Advanced Delivery &
ChemicalSystems Manager, Inc.,
Its Manager
By: /s/ Stephen H. Siegele
- ---------------------------------
Stephen H. Siegele
President
Advanced Delivery & Chemical
Systems, Ltd.
By: Advanced Delivery & Chemical
Systems Operating, LLC, Its
General Partner
By: Advanced Delivery & Chemical
Systems Manager, Inc., Its
Manager
By: /s/ Stephen H. Siegele
- ---------------------------------
Stephen H. Siegele
President
<PAGE>
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is dated as of May 17, 1997, by and among
ADVANCED TECHNOLOGY MATERIALS, INC., a Delaware corporation ("Buyer"), WELK
ACQUISITION CORPORATION, a Delaware corporation and a wholly-owned subsidiary of
Buyer ("Buyer Sub"), ATMI HOLDINGS, INC., a Delaware corporation and
wholly-owned subsidiary of Buyer ("Holdings") LAWRENCE SEMICONDUCTOR
LABORATORIES, INC., an Arizona corporation ("LSL"), and LAWRENCE SEMICONDUCTOR
LABORATORIES MARKETING AND SALES, INC., an Arizona corporation ("LSLMS"); LSL
and LSLMS are referred to collectively as "Lawrence"; and all of the parties are
referred to collectively as the "Companies". Buyer Sub and Lawrence are referred
to collectively as the "Constituent Corporations" and individually as a
"Constituent Corporation."
Buyer and Holdings are parties to that certain Agreement and Plan of Merger
and Exchange dated April 7, 1997, by and among Buyer, Holdings, Advanced
Delivery & Chemical Systems Nevada, Inc., Advanced Delivery & Chemical Systems
Manager, Inc., Advanced Delivery & Chemical Systems Holdings, LLC, Advanced
Delivery & Chemical Systems Operating, LLC, and Advanced Delivery & Chemical
Systems, Ltd. (the "ADCS Merger Agreement").
In connection with the closing of the transactions contemplated by the ADCS
Merger Agreement, inter alia (i) all of the outstanding shares of Buyer common
stock, par value $.01 per share("Buyer Common Stock") will be converted into the
right to receive a like number of shares of Holdings common stock, par value
$.01 per share ("Holdings Common Stock"), and (ii) Buyer will become a
wholly-owned subsidiary of Holdings.
The respective Boards of Directors of the Companies deem it advisable and
in the best interests of their respective shareholders that Buyer acquire
Lawrence by the merger of Buyer Sub with and into Lawrence upon the terms and
subject to the conditions set forth in this Agreement (the "Merger").
The parties desire the Merger to be a tax-free reorganization under the
Internal Revenue Code of 1986, as amended, and for such transaction to be
accounted for as a pooling of interests.
In consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth herein, the parties agree as
follows:
ARTICLE I
The Merger
1.1 The Merger. Subject to the terms and conditions of this Agreement, at
the Effective Time (defined below) of the Merger, Buyer Sub shall be merged with
and into Lawrence, with Lawrence being the surviving corporation in such Merger
(the "Surviving Corporation"). The separate existence of Buyer Sub shall
thereupon cease. The Merger shall have the effects set forth in Section 10-1106
of the Arizona Business Corporation Act (the "ABCA") and Section 259 of the
Delaware General Corporation Law (the "DGCL"). Immediately following the
Effective Time, the Surviving Corporation shall be a wholly-owned subsidiary of
Buyer.
1.2 Effective Time of the Merger. The Merger shall become effective upon
the completion of the filing of properly executed Articles of Merger and a Plan
of Merger with the Arizona Corporation Commission and the Secretary of State of
the State of Delaware, which filing shall be made on the Closing Date (defined
below) after satisfaction of the conditions set forth in Article VIII. When used
in this Agreement, the term "Effective Time" shall mean the date and time at
which such Articles of Merger and Plan of Merger are accepted as filed.
<PAGE>
ARTICLE II
Buyer and the Surviving Corporation
2.1 Articles of Incorporation of the Surviving Corporation. The Articles of
Incorporation of the Surviving Corporation shall be the Articles of
Incorporation of Lawrence, as amended in connection with the Merger to read in
its entirety (other than with respect to the name of the corporation) as the
Certificate of Incorporation of Buyer Sub in effect immediately prior to the
Effective Time, with such changes as Buyer may determine are necessary or proper
to comply with Arizona law, until thereafter amended as provided by law.
2.2 Bylaws of the Surviving Corporation. The Bylaws of the Surviving
Corporation shall be the Bylaws of Lawrence, as amended in connection with the
Merger to read in their entirety (other than with respect to the name of the
corporation) as the Bylaws of Buyer Sub in effect immediately prior to the
Effective Time, with such changes as Buyer may determine are necessary or proper
to comply with Arizona law, until thereafter amended as provided by law.
2.3 Directors and Officers of the Surviving Corporation.
(a) The directors of Buyer Sub at the Effective Time shall be the initial
directors of the Surviving Corporation and shall hold office from the Effective
Time until their respective successors are duly elected or appointed and
qualified in the manner provided in the Articles of Incorporation and Bylaws of
the Surviving Corporation, or as otherwise provided by law.
(b) The officers of Buyer Sub at the Effective Time shall be the initial
officers of the Surviving Corporation and shall hold office from the Effective
Time until removed or until their respective successors are duly elected or
appointed and qualified in the manner provided in the Articles of Incorporation
and Bylaws of the Surviving Corporation, or as otherwise provided by law.
ARTICLE III
Exchange of Shares
3.1 Disposition of Buyer Sub Shares; Lawrence Treasury Shares. At the
Effective Time, by virtue of the Merger and without any action on the part of
the holder thereof:
(a) The shares of Buyer Sub common stock which shall be outstanding
immediately prior to the Effective Time shall be converted into a number of
shares of common stock of the Surviving Corporation equal to the number of
shares of common stock of Buyer Sub then outstanding.
(b) Each share of common stock of Lawrence ("Lawrence Share") held in the
treasury of Lawrence, if any, or by any subsidiary of Lawrence and each such
Lawrence Share held by Buyer or any subsidiary of Buyer immediately prior to the
Effective Time shall be canceled and retired and cease to exist, and no
consideration shall be given in exchange therefor.
3.2 Exchange of Lawrence Shares.
(a) Each Lawrence Share outstanding immediately prior to the Effective Time
(other than Lawrence Shares canceled as set forth in Subsection 3.1(b) above, if
any) shall, at the Effective Time, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into the right to receive
in shares of Buyer Common Stock, valued at the Average Closing Price (defined in
Section 3.9 below), an amount equal to that described in Section 3.4 below
divided by the number of Lawrence Shares outstanding immediately prior to the
Effective Time (subject to adjustment as provided in Sections 3.4 and 3.5 and
subject to reduction as provided in Article X and the Escrow Agreement),
ninety-five percent (95%) of which amount prior to adjustment and reduction, if
any (the "Preliminary Purchase Price Shares"), shall be issued to the holder
thereof upon the
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surrender of the certificate formerly representing such Lawrence Share in
accordance with this Section 3.2, and five percent (5%) of which amount prior to
adjustment and reduction, if any (the "Indemnification Escrow Shares"), shall be
held by the escrow agent (the "Escrow Agent") as provided for in Subsection
10.1(c) hereof.
(b) Immediately following the Effective Time, each record holder (a
"Shareholder") of any certificate or certificates which, immediately prior to
the Effective Time, represented outstanding Lawrence Shares (the "Certificates")
whose Lawrence Shares were converted into the right to receive a portion of the
Purchase Price (defined below) shall be entitled to surrender his or its
Certificates to Buyer for cancellation in exchange for the Shareholder's pro
rata share of the Preliminary Purchase Price Shares, and Buyer hereby agrees to
cause such Shareholder's pro rata share of the Preliminary Purchase Price Shares
to be issued to such person at such time. If any Shareholder shall fail to
surrender his or its Certificates promptly following the Effective Time, Buyer
shall send to such Shareholder notice of the Merger and instructions for use in
effecting the surrender of the Certificates in exchange for the Shareholder's
pro rata share of the Purchase Price and the holder of such Certificates shall
be entitled to receive in exchange therefor solely the Shareholder's pro rata
share of the Purchase Price less any applicable stock transfer taxes, and such
Certificates shall forthwith be canceled. No interest shall be paid or accrued
for the benefit of holders of the Certificates on the consideration payable upon
the surrender of the Certificates. It shall be a condition of exchange that the
Certificate so surrendered shall be properly endorsed or otherwise in proper
form for transfer.
(c) From and after the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of the Lawrence Shares which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Corporation for
exchange, they shall be canceled and exchanged for a pro rata share of the
Preliminary Purchase Price Shares in accordance with the procedures set forth in
this Section and Section 3.4.
(d) At or prior to the Effective Time of the Merger, Buyer shall deliver
irrevocably to the Escrow Agent certificates evidencing the Indemnification
Escrow Shares, together with appropriate stock powers executed by each
Shareholder. As provided in Article X hereof, the Indemnification Escrow Shares
shall be held in escrow (the "Indemnification Escrow") by the Escrow Agent.
Income, dividends and earnings therefrom shall become funds of the
Indemnification Escrow to be disbursed as provided in Article X of this
Agreement and in the Escrow Agreement.
(e) Notwithstanding the foregoing, any Lawrence Shares issued and
outstanding immediately prior to the Effective Time which are held by
Shareholders who have not voted such shares in favor of the Merger and who have
complied with all other relevant provisions of Chapter 13 of the ABCA (the
"Dissenting Shares") shall not be converted into shares of Buyer Common Stock in
the manner contemplated by Section 3.2(a) above, and the rights of holders of
the Dissenting Shares shall be governed by the provisions of Chapter 13 of the
ABCA; provided, however, that Shareholders that own in the aggregate no greater
than five percent (5%) of the issued and outstanding Lawrence Shares who have
not voted such shares in favor of the Merger (the "Electing Shares") may elect,
in lieu of following the provisions of Chapter 13 of the ABCA, to receive from
Buyer the Average Closing Price for each share of Buyer Common Stock to which
such Shareholder would have been entitled had such Shareholder voted in favor of
the Merger. Lawrence agrees to notify its Shareholders in writing prior to the
time the Merger is submitted to them for a vote at any Shareholders' meeting or
otherwise, of the foregoing election. To be effective, such election must be
made in writing to Lawrence and Buyer within five (5) days of the date of such
Shareholder meeting or other submission for a vote.
(f) Notwithstanding the foregoing, if the closing of the transactions
contemplated by the ADCS Merger Agreement shall occur on or before the Effective
Time, in lieu of Buyer Common Stock each Lawrence Share shall be converted into
the right to receive Holdings Common Stock in the same ratio as such Lawrence
Shares would have been converted into shares of Buyer Common Stock. In such
event, all references to "Buyer Common Stock" in this Agreement (other than in
Article IV) shall be deemed to be references to "Holdings Common Stock," unless
the context clearly requires otherwise. The parties shall modify the ancillary
agreements to be entered into as of the Effective Time as appropriate to reflect
such change.
<PAGE>
3.3 No Further Rights in Lawrence Shares. All shares of Buyer Common Stock
received by any Shareholder pursuant to this Agreement shall be deemed to have
been delivered and received in full satisfaction of all rights pertaining to
such Shareholder's Lawrence Shares. At the Effective Time, the holders of
certificates representing outstanding Lawrence Shares shall cease to have any
rights with respect to such shares (other than such rights as they may have as
dissenting shareholders under the ABCA), and their sole right shall be to
receive their pro rata share of the Purchase Price. Dissenting shareholders
shall have the rights accorded by the ABCA.
3.4 The Purchase Price. The aggregate merger consideration for all
outstanding Lawrence Shares shall be that number of shares of Buyer Common
Stock, valued at the Average Closing Price, having a value equal to Eighty
Million Dollars ($80,000,000) (the "Closing Price") plus an amount (the
Adjustment Amount, defined in Subsection 3.4(g) below), which may be a positive
or a negative number, as determined below, minus the amount of Two Million
Dollars ($2,000,000) required to be paid by LSL to Applied Materials, Inc.
("Applied") pursuant to LSL's settlement of its litigation with Applied (as
described in Section 5.7 and Schedule 5.7), minus any amounts owed to LSL by any
related parties as set forth in Schedule 5.26 and minus the cost to LSL of any
payment required to be made by LSL prior to the Effective Time to any third
party in connection with any other transaction contemplated by LSL, including
any payment in the nature of a required "break-up" fee (the "Specified Amount"),
subject to further reduction as provided in Article X and the Escrow Agreement
("Purchase Price").
(a) Within sixty (60) days after the Effective Time, the Representative
(defined in Subsection 3.6(a)(xix) below) shall cause to be delivered to Buyer a
combined balance sheet of Lawrence as of the close of business at the Effective
Time without inclusion of Lawrence Semiconductor Research Laboratories, Inc.
("LSRL") or Lawrence Semiconductor Investments, Inc. ("LSI") (the "Effective
Time Balance Sheet") together with the related combined statements of income,
shareholders' equity and cash flows for the time period from January 1, 1997 to
the Effective Time (the "Related Effective Time Statements") audited by
Lawrence's current independent accountants, which audit shall include a physical
inventory that representatives of Buyer may observe. The Effective Time Balance
Sheet and the Related Effective Time Statements shall be prepared in accordance
with generally accepted accounting principles applied on a basis consistent with
past practice, and the Effective Time Balance Sheet shall fairly present the
assets and liabilities and financial condition of Lawrence at the Effective
Time, including the tax savings to LSL as a result of the payment of the
Specified Amount, but not including the actual amount of the Specified Amount.
The reasonable cost of the audit pursuant to this Subsection 3.4(a) shall be
borne by the Surviving Corporation. After the Effective Time, Buyer agrees to
give the Representative and Lawrence's current accountants reasonable access to
Lawrence's books and records and to make available to such parties such
employees of Lawrence and the Surviving Corporation as may be reasonably
necessary in connection with the preparation of the Effective Time Balance
Sheet.
(b) The Effective Time Balance Sheet shall become final and binding on
Lawrence and Buyer thirty (30) days after its delivery to Buyer, unless Buyer or
Representative gives written notice to the other of his or its disagreement with
respect to any item included in such Effective Time Balance Sheet. During said
thirty (30) day period, Representative, Buyer and Buyer's representatives shall
be given reasonable access to all of the working papers of Lawrence's current
independent accountants for the purpose of its review of the Effective Time
Balance Sheet. The party making the objection shall notify the other party in
writing by the end of such thirty (30) day period of any objection it may have
to the Effective Time Balance Sheet, which objection shall identify the basis of
such objection and any adjustments to the Effective Time Balance Sheet that it
proposes be made (the "Proposed Adjustments").
(c) If written notice of objections to the Effective Time Balance Sheet is
given within the period specified in Subsection 3.4(b) above, the party
receiving the notice shall notify the party proposing the Proposed Adjustment of
his or its approval or disapproval of the Proposed Adjustments to the Effective
Time Balance Sheet contained in such written objection within thirty (30) days
of his or its receipt of such written objection. If the party receiving the
notice shall fail to notify the party proposing the Proposed Adjustments in
writing of his or its disapproval of the Proposed Adjustments within said thirty
(30) day period, such Proposed Adjustments shall be made to the Effective Time
Balance Sheet, and the Effective Time Balance Sheet, as so adjusted, shall
<PAGE>
be final and binding upon all parties. If Representative and Buyer cannot
reach agreement with respect to the Proposed Adjustments and the objections
thereto within thirty (30) days of the date of receipt of the notice of the
Proposed Adjustments (or such longer period as may be acceptable to Buyer and
Representative), Buyer and Representative shall submit the Proposed Adjustments
in dispute to the Arbitrating Accountants (defined in Subsection 3.4(f) below)
for resolution. The Arbitrating Accountants shall have no authority (i) to
decide any issues related to the Effective Time Balance Sheet other than those
issues expressly referred to them for arbitration pursuant to the terms hereof,
or (ii) to determine that any disputed Proposed Adjustment shall be made in
excess (negative or positive) of the amount originally proposed by Buyer or
Representative.
(d) If the parties submit a dispute to the Arbitrating Accountants, the
parties shall instruct the Arbitrating Accountants to resolve the disputed
Proposed Adjustments within thirty (30) business days after such Proposed
Adjustments are submitted to them, and such resolution shall be final and
binding upon all parties hereto. Upon such resolution, the adjustments to the
Effective Time Balance Sheet determined by the Arbitrating Accountants shall be
made and the Effective Time Balance Sheet, as so adjusted, shall be final and
binding upon all parties.
(e) The fees and expenses of the Arbitrating Accountants shall be paid by
Buyer; provided that the portion of such fees and expenses equal to the lesser
of (i) 100% or (ii) the percentage obtained by dividing (i) the aggregate dollar
amount of the adjustments to the Effective Time Balance Sheet determined under
Subsection 3.4(d) by (ii) the aggregate dollar amount of the disputed Proposed
Adjustments shall be reimbursed to Buyer from the Indemnification Escrow.
Representative shall have the right to retain legal counsel of its choosing with
regard to any dispute over the Adjustment Amount (defined in Subsection 3.4(g)
below), including Polese, Pietzsch, Williams & Nolan, P.A., and the costs and
expenses of such representation shall be paid from the Adjustment Amount if that
amount is a positive number and sufficient to so pay the costs and expenses, or
otherwise from the Indemnification Escrow.
(f) The "Arbitrating Accountants" shall be a "Big Six" accounting firm that
is mutually agreed to by Buyer and Representative.
(g) Upon the Effective Time Balance Sheet (including any adjustments)
becoming final and binding on all parties as set forth above, the Adjustment
Amount shall be determined by the Buyer. The "Adjustment Amount" shall equal the
difference between (x) the Net Worth (defined below) as shown on the Effective
Time Balance Sheet and (y) the Net Worth as shown on Lawrence's unaudited
balance sheet at December 31, 1996 without inclusion of LSRL or LSI. "Net Worth"
shall equal the amount by which assets exceed liabilities. Buyer and
Representative shall provide notice to the Shareholders of the Adjustment Amount
and final Purchase Price within two (2) business days of such amounts becoming
final.
3.5 Adjustment of Purchase Price. If the Adjustment Amount is a positive
number, ninety-five percent (95%) of such amount shall be paid by Buyer to
Shareholders pro rata in shares of Buyer Common Stock valued at the Average
Closing Price and five percent (5%) to Escrow Agent (the "Escrow Adjustment") by
delivering appropriate certificates evidencing such shares within ten (10)
business days of determination. If the Adjustment Amount is a negative number,
it shall be paid to Buyer in shares of Buyer Common Stock valued at the Average
Closing Price from the Indemnification Escrow within ten (10) business days of
receipt of notice of determination.
3.6 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Shipman & Goodwin LLP, One
American Row, Hartford, Connecticut 06103, at 9:00 a.m., local time, on the
third business day after the day on which all of the conditions set forth in
Article VIII hereof are satisfied or waived, or such other date, time and place
as the Companies shall otherwise agree (the "Closing Date").
(a) At the Closing, Lawrence shall deliver to Buyer the following:
(i) Resolutions. Copies of resolutions of the Board of Directors of
Lawrence certified by a Secretary, Assistant Secretary or other appropriate
officer of Lawrence, plus certified copies of its Articles of
<PAGE>
Incorporation and Bylaws, as amended to date, authorizing the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby and copies of resolutions of the Shareholders of Lawrence (or written
consent in lieu thereof), certified by a Secretary, Assistant Secretary or other
appropriate officer of Lawrence, authorizing the execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
(ii) Certificates, other than those held by any dissenting shareholder,
duly endorsed in blank or accompanied by appropriate stock powers.
(iii) Resignations of certain officers and all directors of Lawrence
effective as of the Effective Time, which Buyer shall request in writing prior
to the Closing.
(iv) Opinion of Polese, Pietzsch, Williams & Nolan, P.A. in a form
reasonably acceptable to Buyer.
(v) The Noncompete Agreement called for by Section 7.7.
(vi) The Consulting Agreement called for by Section 7.8.
(vii) Tax clearances from the Department of Economic Security and the
Arizona Department of Revenue, and all other jurisdictions in which Lawrence has
filed tax returns in the past three (3) years.
(viii) A certificate of good standing from the Arizona Corporation
Commission.
(ix) [Intentionally left blank]
(x) Releases substantially in the form of Exhibit 3.6(a)(x) hereto,
executed by Lamonte H. Lawrence and each other officer of Lawrence, releasing
Lawrence from any and all liabilities and obligations owed by Lawrence to him,
including but not limited to those owed to him in his capacity as a director,
officer, Shareholder and/or employee of Lawrence.
(xi) Written evidence satisfactory to Buyer that the Shareholders and
Lawrence have obtained all necessary governmental or other approvals for the
Merger and the other transactions contemplated hereby.
(xii) Written evidence satisfactory to Buyer that all prior outstanding
options to purchase any capital stock of Lawrence have been properly terminated.
(xiii) Each of the affiliates of Lawrence and Buyer shall have entered into
an Affiliate Agreement substantially in the form of Exhibit 3.6(a)(xiii)-A (the
"Affiliate Agreements"), and Tommy L. Thompson, Gerald W. McReynolds, and
Barbara C. Freund shall have entered into Employment Agreements with the
Surviving Corporation substantially in the form of Exhibit 3.6(a)(xiii)-B (the
"Employment Agreements"). The existing employment agreements listed on Schedule
5.8(b) shall have been terminated effective as of the Closing.
(xiv) Written evidence satisfactory to Buyer that Lawrence and LSLMS have
been merged in accordance with applicable law, with Lawrence as the surviving
corporation, and that all consents and approvals necessary or appropriate for
such merger have been obtained.
(xv) Written evidence satisfactory to Buyer that Lawrence has been
reincorporated in Arizona in accordance with applicable law, and that all
consents and approvals necessary or appropriate for such reincorporation have
been obtained.
(xvi) A written amendment to the sublease of the Tempe facility which
causes the economic terms of such sublease to reflect accurately Lawrence's
current and intended future use of the Tempe facility, together with the written
consent of LSRL as sublessor to the Merger.
(xvii) (A) All amounts currently outstanding under that certain Agreement
by and among Lawrence, LSRL and LSLMS dated December 31, 1993 shall have been
repaid in full or otherwise discharged in a manner satisfactory to Buyer, and
such Agreement terminated with no further liability thereunder; (B) all other
amounts currently outstanding by and among Lawrence, LSRL, LSLMS and LSI shall
have been repaid in full or otherwise discharged in a manner satisfactory to
Buyer; and (c) all amounts currently outstanding and owed by Lamonte H. Lawrence
to Lawrence and LSLMS or from Lawrence and LSLMS to Lamonte H. Lawrence shall
have been repaid in full or otherwise discharged in a manner satisfactory to
Buyer. In lieu of repayment of the net amount contemplated by this Subsection
3.6(a)(xvii) in cash, the
<PAGE>
amounts may be satisfied by reducing the Purchase Price, as contemplated by
the second "minus" clause in the first paragraph of this Section 3.4.
(xviii) Written releases of Lawrence and LSLMS from all further obligations
under those agreements, instruments, documents, etc. identified prior to Closing
by Buyer to which Lawrence and/or LSLMS are parties or which either or both has
guaranteed but which provide the principal benefit to LSRL, LSI or Lamonte H.
Lawrence.
(xix) Each Shareholder shall have executed and delivered an agreement and
acknowledgment with respect to his or its liabilities and obligations under
Article X, in form and substance satisfactory to Buyer and its counsel.
(xx) Each Shareholder shall have executed and delivered an irrevocable
power of attorney coupled with an interest constituting and appointing Lamonte
H. Lawrence (the "Representative") as his or its true and lawful agent and
attorney-in-fact to enter into any agreement in connection with the transactions
contemplated by this Agreement and the Escrow Agreement, to exercise all or any
of the powers, authority and discretion conferred on him under any such
agreement, to waive any terms and conditions of any such agreement, to give and
receive notices on his or its behalf and to be his or its exclusive
representative with respect to any matter, suit, claim, action or proceeding
arising with respect to any transaction contemplated by any such agreement,
including, without limitation, the defense, settlement or compromise of any
claim, action or proceeding for which Buyer or any Indemnitee (defined in
Subsection 10.1(b) below) may be entitled to indemnification, and the
Representative shall have agreed to act as, and to undertake the duties and
responsibilities of, such agent and attorney-in- fact. The Representative shall
not be liable for any action taken or not taken by him in connection with his
obligations under such power of attorney (i) with the consent of Shareholders
who, as of the date of this Agreement, own a majority in number of the
outstanding Lawrence Shares, or (ii) in the absence of his own gross negligence
or willful misconduct. If the Representative is unable or unwilling to serve in
such capacity, his successor shall be named by those persons holding a majority
of the outstanding Lawrence Shares as of the Effective Time who shall serve and
exercise the powers of the Representative.
(xxi) Such further instruments or documents as Buyer or Buyer Sub or their
counsel may reasonably request to assure the full and effective completion of
the Merger and to assure the effective carrying out of the transactions
contemplated hereby.
(b) At the Closing, Buyer shall deliver to Shareholders certificates
evidencing the Preliminary Purchase Price Shares in accordance with Section 3.2
hereof.
(c) At the Closing, Buyer shall deliver to Escrow Agent certificates
evidencing the Indemnification Escrow Shares, in accordance with Section 3.2
hereof.
(d) At the Closing, Buyer shall deliver to Lawrence the following:
(i) Copies of resolutions of Buyer and Buyer Sub certified by a Secretary,
Assistant Secretary or other appropriate officer of Buyer and Buyer Sub,
authorizing the execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
(ii) Opinion of Buyer's outside general counsel in a form reasonably
acceptable to Lawrence.
(iii) The Noncompete Agreement called for by Section 7.7.
(iv) The Consulting Agreement called for by Section 7.8.
(e) At the Closing, Buyer shall deliver to the Shareholders an executed
Registration Rights Agreement, in the form of Exhibit 3.6(e). If Section 3.2(f)
shall apply, in lieu of the foregoing, Holdings shall deliver to the
Shareholders an executed Registration Rights Agreement, in the form of Exhibit
3.6(e) but substituting Holdings for Buyer as a party thereto.
<PAGE>
3.7 Supplementary Actions. If, at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either Constituent
Corporation, or otherwise to carry out the provisions of this Agreement, the
officers and directors of the Surviving Corporation are hereby authorized and
empowered on behalf of the Constituent Corporations, in the name of and on
behalf of either Constituent Corporation as appropriate, to execute and deliver
any and all things necessary or proper to vest or to perfect or confirm title to
such property or rights in the Surviving Corporation and otherwise to carry out
the purposes and provisions of this Agreement.
3.8 No Fractional Securities. No fractional shares of Buyer Common Stock
shall be issuable by Buyer to any Shareholder in connection with the Merger. In
lieu of any such fractional shares, each Shareholder who would otherwise have
been entitled to receive a fraction of a share of Buyer Common Stock shall be
entitled to receive instead an amount in cash equal to such fraction multiplied
by the Average Closing Price.
3.9 Average Closing Price.
(a) The term "Average Closing Price" shall mean the average closing price
of Buyer Common Stock on The Nasdaq National Market for each of the twenty (20)
trading days preceding (and including) the third trading day prior to the date
of Buyer's meeting of stockholders to approve the Merger; provided that (i) in
the event that the Average Closing Price is greater than $21 per share, the
Average Closing Price shall be deemed to be $21 per share; and (ii) in the event
that the Average Closing Price is less than $17 per share, the Average Closing
Price shall be deemed to be $17 per share.
(b) All per share prices or amounts referred to in this Agreement shall be
appropriately adjusted to reflect the effect of any stock splits, stock
dividends, or similar transactions.
3.10 Tax and Accounting Treatment. The parties intend that the Merger will
be treated as a reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended, and a pooling of interests for accounting
purposes.
ARTICLE IV
Representations and Warranties of Buyer
4.1 Certain Definitions.
As used in Articles IV and V, the following terms shall have the following
meanings:
(a) The term "Material Adverse Effect" with respect to any party hereto
means any change or changes in, or effect or effects on, such party or any of
its subsidiaries that, individually or in the aggregate (i) is materially
adverse to the business, assets, or financial condition of such party and its
subsidiaries taken as a whole or (ii) may materially and adversely affect the
ability of such party to (A) operate or conduct its business substantially in
the manner in which it is currently operated or conducted or (B) substantially
perform its obligations hereunder and consummate the transactions contemplated
hereby.
(b) The word "subsidiary" when used with respect to any party means any
corporation or other organization, whether incorporated or unincorporated, of
which such party or any other subsidiary of such party is a general partner
(excluding partnerships the general partnership interests of which held by such
party or any subsidiary of such party do not have a majority of the voting
interests in such partnership) or of which at least a majority of the securities
or other interests having by their terms ordinary voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporations or other organizations is directly or indirectly
owned or controlled by such party and/or by any one or more of the subsidiaries,
excluding in the case of Lawrence, LSRL and LSI.
<PAGE>
(c) The term "Knowledge" with respect to Lawrence shall mean the actual
knowledge of any of the persons set forth on Schedule 4.1(c) and with respect to
Buyer shall mean the actual knowledge of Buyer's CEO and CFO, in each case after
conducting reasonable inquiry.
4.2 Buyer's and Buyer Sub's Representations and Warranties. Buyer and Buyer
Sub each represents and warrants to Lawrence as follows and acknowledges that
Lawrence is relying upon such representations and warranties in connection with
the execution, delivery, and performance of this Agreement and the completion of
the Merger, notwithstanding any investigation made by Lawrence or on its own
behalf.
(a) Each of Buyer and Buyer Sub is a corporation duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power to carry on its business as it is now
being conducted or presently proposed to be conducted and to own all of its
properties and assets.
(b) Each of Buyer and Buyer Sub has the corporate power to enter into this
Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement by Buyer and Buyer Sub and the consummation by each of Buyer
and Buyer Sub of the transactions contemplated hereby have been duly authorized
by the respective Boards of Directors of Buyer and Buyer Sub, and this Agreement
and each of the transactions contemplated hereby has been approved by Buyer as
the sole stockholder of Buyer Sub. No other corporate proceedings on the part of
either Buyer or Buyer Sub are necessary to approve this Agreement or the
transactions contemplated hereby, other than the approval of Buyer's
stockholders and this Agreement constitutes the valid and binding obligation of
Buyer and Buyer Sub, enforceable against each in accordance with its terms.
(c) Except as set forth on Schedule 4.2(c) and except for applicable
requirements of state or foreign laws relating to takeovers, federal and state
securities or blue sky laws, filings with the Nasdaq Stock Market, Inc. and
filing of Agreement of Merger under the ABCA and the DGCL, no filing with, and
no permit, authorization, consent or approval of, any public body or authority
is necessary for the consummation by Buyer or Buyer Sub of the transactions
contemplated by this Agreement. Except as set forth on Schedule 4.2(c), neither
the execution and delivery of this Agreement by Buyer or Buyer Sub, nor the
consummation by Buyer or Buyer Sub of the transactions contemplated hereby, nor
compliance by Buyer or Buyer Sub with any of the provisions hereof, will (i)
result in any breach of the Certificate of Incorporation or Bylaws of Buyer or
Buyer Sub, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
contract, agreement or other instrument or obligation to which Buyer or any of
its subsidiaries is a party or by which any of them or any of their properties
or assets may be bound or (iii) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to Buyer, any of its subsidiaries or any
of their properties or assets, except in the case of clauses (ii) and (iii) for
violations, breaches or defaults that would not have a Material Adverse Effect.
(d) Buyer agrees that, for a period of at least one year following the
Closing Date, the benefits provided under all Employee Benefit Programs (defined
in Subsection 5.9(a) below), with respect to participants who are employed on
the Closing Date, will be substantially similar to those provided immediately
prior to the Closing Date, provided that substantially similar plans were
provided by Buyer to its employees prior to the Effective Time.
(e) Since November 23, 1993, Buyer has filed all forms, reports and
documents with the Securities and Exchange Commission ("SEC") required to be
filed by it pursuant to the federal securities laws and the rules and
regulations of the SEC (the "SEC Documents"). As of their respective filing
dates, the SEC Documents complied in all material respects with the requirements
of the Securities Exchange Act of 1934 (the "Exchange Act") or the Securities
Act of 1933 (the "Securities Act"), and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, except
to the extent corrected by a subsequently filed SEC Document.
<PAGE>
(f) The authorized shares of capital stock of Buyer are as set forth in its
Annual Report on Form 10-K for the fiscal year ended December 31, 1996. All the
issued and outstanding shares of Buyer Common Stock are and, upon consummation
of the transaction contemplated by this Agreement, will be duly authorized,
validly issued, fully paid and nonassessable. As of May 15, 1997, Buyer had
8,804,820 shares of Common Stock outstanding, outstanding options to purchase
1,142,806 shares of Buyer Common Stock under its option plans and 25,443 options
available for issuance under such plans, and outstanding warrants to purchase
161,250 shares of Buyer Common Stock.
(g) The audited consolidated balance sheets of Buyer and its subsidiaries
at December 31, 1994, 1995, and 1996 and the statements of operations and
changes in stockholders' equity and cash flows for the years ended December 31,
1994, 1995, and 1996, included in the SEC Documents (the "Buyer Financial
Statements") fairly present the financial position and results of operations of
Buyer and its subsidiaries as for the periods then ended and the financial
position of Buyer and its subsidiaries at the dates thereof in accordance with
generally accepted accounting principles. Buyer has maintained its books of
account in accordance with applicable laws, rules and regulations of government
authorities and with generally accepted accounting principles consistently
applied, and such books of account are and, during the period covered by the
Buyer Financial Statements, were correct and complete in all material respects,
fairly and accurately reflect or reflected the income, expenses, assets and
liabilities of Buyer, including the nature thereof and the transactions giving
rise thereto, and provide or provided a fair and accurate basis for the
preparation of the Buyer Financial Statements
(h) Except as set forth in Schedule 4.2(h), neither the Buyer nor any
subsidiary has, nor at the Closing will have, any liabilities or obligations,
either absolute, accrued, contingent or otherwise, which individually or in the
aggregate are material to the financial condition and business of the Buyer or
any subsidiary and which (i) have not been reflected in the Buyer Financial
Statements, (ii) have not been described in this Agreement or in any of the
Schedules hereto, or (iii) have been incurred since December 31, 1996, other
than in the ordinary course of its business consistent with past practices.
(i) None of the information supplied or to be supplied by Buyer for
inclusion or incorporation by reference in (i) any registration statement filed
in connection with this Agreement will, at the time such registration statement
is filed with the SEC and at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not misleading
and (ii) any proxy statement will, at the date mailed to stockholders and at the
times of the meetings of Buyer's stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading. Any proxy statement will comply as to form in all material respects
with the provisions of the Exchange Act and the rules and regulations
thereunder, and any registration statement will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations thereunder, except that no representation is made by Buyer with
respect to statements made therein based
on information supplied by Lawrence or any Shareholder for inclusion in any
registration statement or proxy statement.
(j) Neither this Agreement nor any certificate or Schedule or other
information furnished by or on behalf of Buyer pursuant to this Agreement
contains any untrue statement of a material fact or, when this Agreement and
such certificates, Schedules and other information are taken in their entirety,
omits to state a material fact necessary to make the statements contained herein
or therein not misleading.
(k) Holdings was formed solely for the purpose of engaging in the
transactions contemplated by the ADCS Merger Agreement and this Agreement. As of
the date hereof and the Effective Time, except for obligations or liabilities
incurred in connection with its incorporation or organization and the
transactions contemplated by the ADCS Merger Agreement and this Agreement,
Holdings does not have and will not have incurred any obligations or liabilities
or engaged in any business activities of any type or kind whatsoever or entered
into any agreements or arrangements with any person.
<PAGE>
ARTICLE V
Representations and Warranties of Lawrence
Lawrence represents and warrants to Buyer and Buyer Sub as follows and
acknowledges and confirms that Buyer and Buyer Sub are relying upon such
representations and warranties in connection with the execution, delivery and
performance of this Agreement and the completion of the Merger, notwithstanding
any investigation made by Buyer or Buyer Sub or on their behalf:
5.1 Organization; Permits. Lawrence is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation and has the corporate power to carry on its business as it is now
being conducted and to own all of its properties and assets. True and complete
copies of the Articles of Incorporation and Bylaws of Lawrence with all
amendments and restatements thereto through the date hereof have been provided
to Buyer prior to the date hereof. Lawrence is duly qualified as a foreign
corporation to do business, and is in good standing in each jurisdiction where
the character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, except where the failure to be so
qualified will not have a Material Adverse Effect. Lawrence has all business
licenses, permits and approvals necessary to conduct its business as presently
conducted, except where the failure to have such permit or approval does not
have a Material Adverse Effect. Lawrence conducts its business under the trade
names and other assumed names set forth on Schedule 5.1.
5.2 Capitalization; Shareholders. As of the date hereof, the authorized
capital stock of Lawrence, the number and class of Lawrence Shares which are
issued and outstanding, and all persons having record or beneficial ownership of
shares of the capital stock of Lawrence or having any right to purchase, acquire
or obtain any of the capital stock of Lawrence are as set forth on Schedule 5.2.
Schedule 5.2 also sets forth the foregoing information on a pro forma basis
taking into account the merger of Lawrence and LSLMS. All of the issued and
outstanding Lawrence Shares are validly issued, fully paid and nonassessable and
not subject to any lien, charge or encumbrance, and were issued in compliance
with applicable federal and state securities laws. Lawrence is not, and prior to
the Effective Time will not become, a party to or subject to any contract or
obligation wherein any person has a right or option to purchase or acquire any
rights in any additional capital stock or other equity securities of Lawrence or
any of its subsidiaries, including any stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan. Lawrence does not
hold or own, directly or indirectly, any capital stock of any other corporation,
or have any direct or indirect equity or ownership interest in any association,
partnership, joint venture or other entity. To Lawrence's Knowledge, no officer,
director, or Shareholder of Lawrence would be unable to give the representation
that none of the events or circumstances described in Rule 262 of Regulation A
under the Securities Act have occurred.
5.3 Authority Relative to this Agreement. Lawrence has the corporate power
to enter into this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement by Lawrence and the consummation by
Lawrence of the transactions contemplated hereby have been duly authorized by
the Board of Directors of Lawrence, and no other corporate proceedings on the
part of Lawrence are necessary to approve this Agreement or the transactions
contemplated hereby. This Agreement constitutes the legal, valid and binding
obligation of Lawrence, enforceable against it in accordance with the
Agreement's terms.
5.4 Consents and Approvals; No Violations. Except as set forth on Schedule
5.4 and except for applicable requirements of state or foreign laws relating to
takeovers, state securities or blue sky laws, and filing of Agreement of Merger
under the ABCA and the DGCL, no filing with, and no permit, authorization,
consent or approval of, any public body or authority is necessary for the
consummation by Lawrence of the transactions contemplated by this Agreement.
Except as set forth on Schedule 5.4, neither the execution and delivery of this
Agreement by Lawrence, nor the consummation by Lawrence of the transactions
contemplated hereby, nor compliance by Lawrence with any of the provisions
hereof, will (i) result in any breach of the Articles of Incorporation or Bylaws
of Lawrence, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration)
<PAGE>
under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, contract, agreement or other instrument or
obligation to which Lawrence is a party or by which it or any of its properties
or assets may be bound or (iii) violate any order, writ, injunction, decree,
statute, rule, regulation or permit applicable to Lawrence or any of its
properties or assets, except in the case of clauses (ii) and (iii) for
violations, breaches or defaults that would not have a Material Adverse Effect.
5.5 Financial Statements. Lawrence has furnished to Buyer Lawrence's
audited combined financial statements (combined balance sheets, combined
statements of income, combined statements of shareholders' equity and combined
statements of cash flows) at and for each of the twelve-month periods ended
December 31, 1993, December 31, 1994, December 31, 1995, and December 31, 1996,
and the three-month period ended March 31, 1997, all restated so as to exclude
LSRL and LSI (collectively, the "Lawrence Financial Statements"). Except as set
forth on Schedule 5.5, each of the balance sheets (including the related notes)
included in the Lawrence Financial Statements fairly presents in all material
respects the financial position of Lawrence as of the respective dates thereof,
and the other related statements (including the related notes) included therein
fairly present in all material respects the results of operations and cash flows
of Lawrence for the respective periods or as of the respective dates set forth
therein, all in conformity with generally accepted accounting principles
consistently applied during the periods involved, except as otherwise noted
therein and subject, in the case of the interim financial statements, to normal
year-end adjustments and any other adjustments described therein and the absence
of any notes thereto.
5.6 Absence of Certain Changes or Events. Other than as permitted under
Section 6.1 and except as set forth on Schedule 5.6, since December 31, 1996 and
through the date hereof, Lawrence has not suffered a Material Adverse Effect and
Lawrence has not (i) declared any dividend or made any payment or other
distribution in respect of any shares of its capital stock, (ii) acquired or
disposed of any shares of its capital stock or granted any options, warrants or
other rights to acquire or convert any obligation into any shares of its capital
stock, (iii) entered into any material transaction with any officer, director,
employee or any known relative thereof or any entity in which such person has an
interest, except the payment of rent, salaries, wages and expense reimbursement
in the ordinary course of business, (iv) incurred any material obligation or
liability (contingent or otherwise), except for (A) this Agreement, (B) normal
trade and other obligations incurred in the ordinary course of business
consistent with past practice and (C) obligations under contracts, agreements
and leases incurred in the ordinary course of business consistent with past
practice, the performance of which has not and will not, individually or in the
aggregate, have a Material Adverse Effect on Lawrence, (v) discharged or
satisfied any material lien or other encumbrance or paid any material obligation
or liability (fixed or contingent), except in the ordinary course of business or
as contemplated by this Agreement, (vi) mortgaged, pledged or subjected to any
lien or other encumbrance any of its material assets (whether tangible or
intangible), (vii) sold, assigned, transferred, conveyed, leased or otherwise
disposed of or agreed to sell, lease or otherwise dispose of any of its material
assets except for sales of inventory or other assets for fair consideration in
the ordinary course of business or as contemplated by this Agreement, (viii)
canceled or compromised any material debt or claim, except in the ordinary
course of business, (ix) waived or released any material rights, except for
waivers or releases made in the ordinary course of business consistent with past
practice, (x) made any single capital expenditure in excess of One Hundred
Thousand Dollars ($100,000), or entered into any commitment therefor, or (xi)
suffered any material casualty loss or damage, whether or not covered by
insurance, or any adverse ruling, judgment or award, whether or not amounts were
reserved on Lawrence's books, which would have a Material Adverse Effect on
Lawrence.
5.7 Litigation. Except as set forth on Schedule 5.7, as of the date of this
Agreement, (a) there is no action, suit, judicial or administrative proceeding,
arbitration or investigation pending or, to Lawrence's Knowledge, threatened
against or involving Lawrence, or any of its properties or rights, before any
court, arbitrator, or administrative or governmental body; (b) there is no
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against Lawrence; and (c) Lawrence is not in violation of any term of any
judgments, decrees, injunctions or orders outstanding against it. An action,
suit, proceeding, arbitration or investigation shall be considered "threatened"
for purposes of this
<PAGE>
Article V if Lawrence has received written notice or otherwise has
Knowledge that such event may be commenced. Except as set forth on Schedule 5.7,
to Lawrence's Knowledge there are no existing facts or conditions which
reasonably would be expected to give rise to any charge, claim, litigation,
proceeding, or investigation.
5.8 Contracts.
(a) Set forth on Schedule 5.8(a) is a list of all contracts, instruments,
mortgages, notes, security agreements, leases, agreements or understandings to
which Lawrence is a party and which are material to the business of Lawrence or
which exceed $50,000. Each of the contracts, instruments, mortgages, notes,
security agreements, leases, agreements or understandings to which Lawrence is a
party that relates to or affects the assets or operations of Lawrence or to
which Lawrence or its assets or operations may be bound or subject is a valid
and binding obligation of Lawrence and, to Lawrence's Knowledge, of the other
parties thereto and is in full force and effect, except for where the failure to
be in full force and effect would not individually or in the aggregate have a
Material Adverse Effect. Except to the extent that the consummation of the
transactions contemplated by this Agreement may require the consent of third
parties as identified on Schedule 5.4, there are no existing defaults by
Lawrence thereunder or, to the Knowledge of Lawrence, by any other party
thereto, which defaults, individually or in the aggregate, would have a Material
Adverse Effect; and no event of default has occurred, and no event, condition or
occurrence exists, that (whether with or without notice, lapse of time or the
happening or occurrence of any other event) would constitute a default by
Lawrence thereunder which default would, individually or in the aggregate, have
a Material Adverse Effect.
(b) Except as set forth on Schedule 5.8(b), as of the date of this
Agreement, Lawrence is not a party to any oral or written (i) consulting
agreement not terminable on sixty (60) days or less notice involving the payment
of more than Fifty Thousand Dollars ($50,000) per annum, (ii) joint venture
agreement, (iii) noncompetition or similar agreement that restricts Lawrence
from engaging in a line of business, (iv) agreement with any executive officer
or other employee of Lawrence the benefits of which are contingent, or the terms
of which are materially altered, upon the occurrence of a transaction involving
Lawrence of the nature contemplated by this Agreement and which provides for the
payment of in excess of Fifty Thousand Dollars ($50,000), (v) agreement with
respect to any executive officer of Lawrence or any subsidiary providing any
term of employment or compensation guaranty in excess of Fifty Thousand Dollars
($50,000) per annum, (vi) agreement or plan, including any stock option plan,
stock appreciation rights plan, restricted stock plan or stock purchase plan,
any of the benefits of which will be increased, or the vesting of the benefits
of which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement, (vii) (A) any agreement providing for disposition of any line of
business, material assets or securities of Lawrence, (B) any agreement with
respect to the acquisition of any line of business, material assets or
securities of any other business, or (C) any agreement of merger or
consolidation or letter of intent with respect to the foregoing, or (viii) any
agreement to indemnify any other party with respect to an adverse environmental
condition.
5.9 Employee Benefit Plans.
(a) Schedule 5.9(a) lists each "employee benefit plan" (within the meaning
of section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) that is maintained or otherwise contributed to by Lawrence
for the benefit of its employees (including, without limitation, pension, profit
sharing, stock bonus, medical reimbursement, life insurance, disability and
severance pay plans) (collectively, "Company Plans") and all other employee
benefit plans providing for deferred compensation, bonuses, stock options,
employee insurance coverage or any similar compensation or welfare benefit plan
(collectively, "Benefit Arrangements" and, together with Company Plans,
collectively referred to as "Employee Benefit Programs").
(b) With respect to each of the Company Plans, Lawrence has made available
to Buyer a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof (including all existing
<PAGE>
amendments thereto that shall become effective at a later date) and, to the
extent applicable, (i) any related trust agreement, annuity contract or other
funding instrument; and (ii) any summary plan description.
(c) (i) Each of the Employee Benefit Programs has been established and
administered in compliance with any applicable provisions of ERISA, the Internal
Revenue Code of 1986, as amended (the "Code"), and the terms of all documents
relating to such programs; (ii) each Company Plan that is intended to be
qualified within the meaning of section 401(a) of the Code has received a
favorable determination letter as to its qualification; (iii) as of the date of
this Agreement, no "reportable event" (as such term is used in section 4043 of
ERISA) other than an event of a type as to which the Pension Benefit Guaranty
Corporation has waived the reporting requirements, "prohibited transaction" (as
such term is used in section 4975 of the Code or section 406 of ERISA) or
"accumulated funding deficiency" (as such term is used in section 412 or 4971 of
the Code) has heretofore occurred with respect to any Company Plan; and (iv)
there are no pending or, to Lawrence's Knowledge, threatened, actions, claims or
lawsuits which have been asserted or instituted against the Employee Benefit
Programs, the assets of any of the trusts under such plans or the plan sponsor
or the plan administrator, or against any fiduciary of the Employee Benefit
Programs with respect to the operation of such plans (other than routine benefit
claims).
(d) Lawrence does not maintain or contribute to any "multiemployer plan"
(as such term is defined in section 3(37) of ERISA) and has not incurred any
material liability that remains unsatisfied with respect to any such plans.
(e) No Employee Benefit Program (other than one which is an employee
pension benefit plan within the meaning of Section 3(2)(A) of ERISA) provides
benefits (including, without limitation, death, health or medical benefits,
whether or not insured) with respect to current or former employees of Lawrence
beyond their retirement or other termination of service with Lawrence, other
than (a) coverage mandated by applicable law, (b) deferred compensation benefits
which have been accrued as liabilities on the books of Lawrence, (c) benefits
the full cost of which is borne by the current or former employees (or their
beneficiaries), or (d) benefits which have already been satisfied in full.
5.10 Regulatory Authority Matters.
(a) Except as set forth in Schedule 5.10(a), Lawrence is, and the products
sold by Lawrence are, in compliance in all material respects with all applicable
statutes, rules, regulations, standards, guides or orders administered or issued
by any federal, state or local agency or governmental body having regulatory
authority over such products (the "Regulatory Agencies").
(b) Except as set forth in Schedule 5.10(b), Lawrence has not received from
the Regulatory Agencies, and has no Knowledge of any facts that would furnish
any reasonable basis for, any notice of adverse findings, regulatory letters,
warning letters or other similar communications from the Regulatory Agencies,
and there have been no seizures conducted or threatened by the Regulatory
Agencies, and no recalls, field notifications or alerts conducted, requested or
threatened by the Regulatory Agencies relating to the products sold by Lawrence
or any of its subsidiaries.
(c) Except as set forth on Schedule 5.10(c), Lawrence is not aware of any
facts which are reasonably likely to cause (i) the denial, withdrawal, recall or
suspension of any products sold or intended to be sold by Lawrence or any of its
subsidiaries, or (ii) a change in the marketing classification or labeling of
any such products, or (iii) a termination or suspension of marketing of any such
products.
(d) Except as set forth on Schedule 5.10(d), none of the products
manufactured, marketed or sold by Lawrence has been recalled or subject to a
field notification (whether voluntarily or otherwise), and Lawrence has not
received notice (whether completed or pending) of any proceeding seeking recall,
suspension or seizure of any products sold or proposed to be sold by Lawrence or
any of its subsidiaries.
<PAGE>
5.11 Intellectual Property.
(a) Schedule 5.11(a) contains an accurate and complete list of (i) all
patents, applications for patents, registrations of trademarks (including
service marks) and applications therefor, registrations of copyrights and
applications therefor that are owned by Lawrence and that are part of the
business of Lawrence as presently conducted; (ii) all other intellectual
property rights that are owned by Lawrence and that are material to the conduct
of business as presently conducted; (iii) all unexpired licenses relating to
such of Lawrence's intellectual property rights that have been granted to or by
Lawrence and that are material to the conduct of the business of Lawrence as
presently conducted, but excluding end-user licenses granted to Lawrence
relating to standard "off-the-shelf" personal computer software that is
generally available on commercially reasonable terms from vendors that are
unaffiliated with Lawrence, including software made available from such vendors
on a "shrink wrap license" basis ("Non-Scheduled Licenses"); and (iv) all other
agreements relating to intellectual property rights that are material to the
conduct of the business of Lawrence as presently conducted, but excluding the
Non-Scheduled Licenses (collectively, items (i)-(iv) are referred to as
"Lawrence Intellectual Property Rights").
(b) Lawrence owns and has the right to use, and license others to use, all
Lawrence Intellectual Property Rights that are material to the conduct of the
business of Lawrence as presently conducted, and such ownership and right to
use, and license of others to use, are free and clear of, and without liability
under, all liens and security interests of third parties. Such ownership and
right to use, and license of others to use, are free and clear of, and without
liability under, all claims and rights of third parties that, if determined to
be legally protectable, could have a Material Adverse Effect.
(c) Lawrence has taken reasonable steps sufficient to safeguard and
maintain the secrecy and confidentiality of, and its proprietary rights in, the
unpatented know-how, technology, proprietary processes, formulae, and other
information that is material to the conduct of the business of Lawrence as
presently conducted. Without limiting the generality of the foregoing, Lawrence
has obtained confidentiality and inventions assignment agreements from all of
Lawrence's past and present employees and independent contractors involved in
the creation or development of Lawrence Intellectual Property Rights including,
without limitation, from all employees and contractors who are inventors,
authors, creators or developers of Lawrence Intellectual Property Rights that
are material to the conduct of the business as presently conducted. Schedule
5.11(c) lists all nondisclosure agreements to which Lawrence is a party or by
which it is bound.
(d) Except as set forth on Schedule 5.11(d) and except for payments made
with respect to patents and patent applications, there are no royalties,
honoraria, fees or other payments payable by Lawrence to any person by reason of
the ownership, use, license, sale or disposition of any Lawrence Intellectual
Property Right.
(e) Except as set forth on Schedule 5.11(e), Lawrence has not received
notice that Lawrence is infringing in the conduct of the business upon the right
or claimed right of any other party with respect to any Lawrence Intellectual
Property Rights, nor does Lawrence have any Knowledge of any alleged or claimed
infringement by any product or process manufactured, used, sold or under
development by or for Lawrence in the conduct of the business of Lawrence as
presently conducted.
(f) For purposes of this Section 5.11, "use" with respect to intellectual
property rights includes make, reproduce, display or perform (publicly or
otherwise), prepare derivative works based on, sell, distribute, disclose and
otherwise exploit such intellectual property rights and products incorporating
or subject to such intellectual property rights. No reference in this Section
5.11 to Lawrence's right to use the Lawrence Intellectual Property Rights shall
be construed as a representation or warranty as to the validity of an issued
patent included in the Lawrence Intellectual Property Rights.
(g) To Lawrence's Knowledge, the Lawrence Intellectual Property Rights are
free of any unresolved ownership disputes with respect to any third party, and
there is no unauthorized use, infringement or misappropriation of any of such
Lawrence Intellectual Property Rights by any third party, including any employee
or former employee of Lawrence.
<PAGE>
5.12 Owned Property; Lawrence Facilities.
(a) Schedule 5.12(a) sets forth, by address, owner and usage, all real
property owned by Lawrence.
(b) Schedule 5.12(b) sets forth, by address, owner and usage, all material
real property agreements (including any amendments thereto) (the "Real Property
Leases") pursuant to which Lawrence leases, subleases or otherwise occupies or
leased, sublet or otherwise occupied during the past five (5) years any plants,
offices, manufacturing facilities, warehouses, improvements, administration
buildings and all other real property (the "Lawrence Facilities"). There are no
defaults or events which, with the passage of time, would constitute a default
under the Real Property Leases, except in either instance for defaults which
individually or in the aggregate would not have a Material Adverse Effect on
Lawrence.
(c) Lawrence owns, leases or has the right to use all material fixtures,
furniture, improvements, machinery or equipment necessary to conduct its
business as currently conducted (the "Equipment Leases"). There are no defaults
or events which, with the passage of time, would constitute a default under the
Equipment Leases, except in either instance for defaults which individually or
in the aggregate would not have a Material Adverse Effect on Lawrence.
5.13 Compliance With Legislation Regulating Environmental Quality.
(a) For the purposes of this Agreement, the term "Environmental Laws" shall
mean all federal, foreign, state and local environmental protection,
occupational, health and safety or similar laws, ordinances, restrictions,
licenses, rules, regulations and permit conditions, including but not limited to
the Federal Water Pollution Control Act, Resource Conservation & Recovery Act,
Safe Drinking Water Act, Toxic Substances Control Act, Clean Air Act,
Comprehensive Environmental Response, Compensation and Liability Act, Emergency
Planning and Community Right to Know or other United States or foreign, federal,
state, province, or local laws of similar effect, each as amended as of the
Effective Time, and the term "Hazardous Materials" shall mean any hazardous or
toxic substances, wastes or materials, including without limitation petroleum or
petroleum products, defined as such or regulated by any applicable Environmental
Law or governmental agencies.
(b) Except as set forth on Schedule 5.13(b), (i) Lawrence has not received
any written notices, directives, violation reports, actions or claims from or by
(A) any local, state, federal or foreign governmental agency concerning
Environmental Laws or (B) any person alleging that, in connection with Hazardous
Materials, conditions at any of the Lawrence Facilities or Lawrence's acts or
omissions have resulted in or caused or threatened to result in or cause injury
or death to any person or damage to any property, including without limitation,
damage to natural resources and, to Lawrence's Knowledge, no such notices,
directives, violation reports, actions, claims or allegations exist; (ii) the
Lawrence Facilities and the business operated by Lawrence are in compliance with
all applicable state, federal, foreign and local Environmental Laws, except
where any noncompliance with Environmental Laws would not have a Material
Adverse Effect on Lawrence; (iii) no underground storage tanks have been
installed by Lawrence and to Lawrence's Knowledge none either are or have been
located at any of the Lawrence Facilities; and (iv) to Lawrence's Knowledge, no
friable asbestos or PCBs have been located at any of the Lawrence Facilities.
(c) Except as set forth on Schedule 5.13(c), (i) there has been no spill,
discharge, release, cleanup of or contamination by any Hazardous Materials used,
generated, treated, stored, disposed of or handled by Lawrence; and (ii)
Lawrence holds all necessary permits, licenses, approvals and consents to
conduct its business as currently being conducted and is not in violation of any
condition of any such permit, license or consent.
5.14 Violations; Condemnation. Except as set forth on Schedule 5.14,
Lawrence has not received, with respect to any Lawrence Facility, any written or
oral notice of default or any written or oral notice of noncompliance with
respect to applicable state, federal or local laws or regulations relating to
zoning, building, fire, use restriction or safety or health codes which have not
been remedied in all respects, and noncompliance
<PAGE>
with which could have a Material Adverse Effect. Lawrence has received no
written or oral notice of any pending or threatened condemnation or other
governmental taking of any of the Lawrence Facilities.
5.15 Taxes.
(a) Except as set forth on Schedule 5.15(a), (i) all Returns (defined in
Subsection 5.15(b) below) in respect of Taxes (defined in Subsection 5.15(b)
below) required to be filed with respect to Lawrence (including any consolidated
federal income tax return and any state Tax return that includes Lawrence or any
of its related companies on a consolidated, combined or unitary basis) have been
timely filed, none of such Returns contains, or is required to contain, a
disclosure statement under section 6661 or 6662 of the Code or any similar
provision of state, local or foreign law, and no extension of time within which
to file any such Return has been requested, which Return has not since been
timely filed; (ii) all Taxes whether or not shown on such Returns have been
timely paid and all payments of estimated Taxes required to be made with respect
to Lawrence under section 6655 of the Code or any comparable provision of state,
local or foreign law have been made; (iii) all such Returns are true, correct
and complete in all material respects; (iv) no adjustment relating to any of
such Returns has been proposed formally or informally by any Tax authority; (v)
there are no outstanding subpoenas or requests for information with respect to
any Returns of Lawrence or the Taxes reflected on such Returns; (vi) there are
no pending or to Lawrence's Knowledge threatened actions or proceedings for the
assessment or collection of Taxes against Lawrence or any corporation that was
included in the filing of a Return with Lawrence on a consolidated, combined or
unitary basis; (vii) no consent under section 341(f) of the Code has been filed
with respect to Lawrence; (viii) there are no Tax liens on any assets of
Lawrence except liens for Taxes not yet due and payable or being contested in
good faith by appropriate proceedings for which adequate reserves have been
established; (ix) no acceleration of the vesting schedule for any property that
is nonvested within the meaning of the regulations under section 83 of the Code
will occur in connection with the transactions contemplated by this Agreement;
(x) Lawrence is not now nor has it at any time been subject to any accumulated
earnings tax or personal holding company tax; (xi) Lawrence owes no amounts
pursuant to any written or unwritten Tax sharing agreement or arrangement and
will not have any liability after the date hereof in respect of any written or
unwritten Tax sharing agreement or arrangement executed or agreed to prior to
the date hereof; (xii) all Taxes required to be withheld, collected or deposited
by Lawrence have been timely withheld, collected or deposited and, to the extent
required, have been paid to the relevant Tax authority; (xiii) any adjustment of
Taxes of Lawrence made by the IRS that is required to be reported to any state,
local or foreign Tax authority has been so reported and any additional Tax due
as a result thereof has been paid in full; (xiv) there are no outstanding
waivers or agreements extending the statute of limitations for any period with
respect to any Tax to which Lawrence may be subject; (xv) to Lawrence's
Knowledge there are no requests for rulings or information currently outstanding
that could affect the Taxes of Lawrence, or any similar matters pending with
respect to any Tax authority; (xvi) no Tax authority has proposed reassessments
of any property owned or leased by Lawrence that could increase the amount of
any Tax to which Lawrence would be subject; (xvii) no power of attorney that is
currently in force has been granted with respect to any matter relating to Taxes
that could affect Lawrence and (xviii) with respect to each Return that has been
examined by the relevant Tax authority, such examination is closed and final
without any adjustment having been made to such Return (including adjustments
not affecting the amount of Tax due with respect to such Return).
(b) For purposes of this Agreement, "Tax" or "Taxes" shall mean any and all
taxes, charges, fees, levies, and other governmental assessments and impositions
of any kind, payable to any federal, state, local or foreign governmental entity
or taxing authority or agency, including, without limitation, (i) income,
franchise, profits, gross receipts, minimum, alternative minimum, estimated, ad
valorem, value added, sales, use, service, real or personal property, capital
stock, license, payroll, withholding, disability, employment, social security,
workers compensation, unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes,
(ii) customs duties, imposts, charges, levies or other similar assessments of
any kind, and (iii) interest, penalties and additions to tax imposed with
respect thereto; and "Returns" shall mean any and all returns, reports, and
information statements with respect to Taxes required to be filed with the
Internal Revenue Service or any other governmental entity or Tax authority or
agency, whether domestic or
<PAGE>
foreign including, without limitation, consolidated, combined and unitary
tax returns. For the purposes of this Section 5.15, references to Lawrence shall
include former subsidiaries of Lawrence identified on Schedule 5.15(b), if any,
for the periods during which any such corporations were owned, directly or
indirectly, by Lawrence.
5.16 Product Liability Matters. Except as set forth on Schedule 5.16, as of
the date of this Agreement, Lawrence has not submitted to its product liability
insurance carriers any claims with respect to potential product liability of
Lawrence which claims could have a Material Adverse Effect on Lawrence, nor does
it know of any such claims which should have been submitted to its product
liability insurance carriers. Buyer has previously been afforded access to all
files containing, or been furnished with copies of, all pleadings, claims,
complaints and relevant documents in connection with the foregoing. Neither
Lawrence nor, to Lawrence's Knowledge, any employee or agent of Lawrence, has
made any untrue statement of a material fact or omitted to state a material fact
in connection with obtaining or renewing any insurance policy providing product
liability coverage in respect of the products of Lawrence which could reasonably
result in the loss of any material portion of such coverage, and Lawrence has
not received any written or oral notice from any insurance company stating that
any insurance policy of Lawrence may not provide coverage up to the limits of
such policy for any liability, loss or damage which may be incurred or suffered
by Lawrence in connection with product liability claims other than the possible
lack of coverage for punitive damages and claims for deductible amounts.
5.17 No Undisclosed Liabilities. Except as set forth on Schedule 5.17 and
except to the extent specifically reflected or reserved against in the
Consolidated Balance Sheet of Lawrence as of December 31, 1996, Lawrence does
not have any material liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise.
5.18 Construction of Certain Provisions. It is understood and agreed that
any dollar amount specified in the foregoing representations and warranties or
the inclusion of any specific items on the Schedules hereto is not intended to
imply that higher or lower amounts, or that the items that have been so
included, are or are not material, and neither party shall use the fact of the
setting of such amounts or the fact of the inclusion of any such items on the
Schedules hereto in any dispute or controversy between the parties on whether
any obligation, item or matter not described herein or included on a Schedule
hereto is or is not material for purposes of this Agreement.
5.19 Condition of the Assets. The assets of Lawrence, including real,
personal and mixed, tangible and intangible, necessary or useful to the
operation of its business (the "Assets") are in good condition and repair,
ordinary wear and tear excepted, and suitable for the uses intended. The Assets
comply with and are operated in conformity with all applicable laws, ordinances,
regulations, orders, permits and other requirements relating thereto adopted or
currently in effect. The leases and other agreements or instruments under which
Lawrence holds, leases, subleases or is entitled to the use of any of the Assets
are in full force and effect, and all rentals, royalties or other payments
payable thereunder have been duly paid or provided for by adequate reserves. No
default or event of default by Lawrence exists, and no event which, with notice
or lapse of time or both, would constitute a default by Lawrence, has occurred
and is continuing, under the terms or provisions of any such lease, agreement or
other instrument or under the terms or provisions of any agreement to which any
of such Assets is subject, nor has Lawrence received notice of any claim of such
default.
5.20 Title; Absence of Liens and Encumbrances, Etc. Except as set forth on
Schedule 5.20 and except for the restrictions imposed under the terms of its
capital and operating leases, Lawrence has good, valid, and marketable title to
the Assets, free and clear of all mortgages, security interests, claims, liens
(except inchoate construction liens), charges, title defects, encumbrances,
restrictions on use or transfer or other defects.
5.21 Indebtedness. Except as set forth on Schedule 5.21, Lawrence does not
have any obligation for money borrowed or under any guarantee nor any agreement
or arrangement to borrow money or to enter into any such guarantee, and as of
the Closing Date, except as set forth on Schedule 5.21, Lawrence will not have
<PAGE>
any obligation for money borrowed nor any agreement or arrangement to
borrow money, and Lawrence will not have any guarantee outstanding nor any
agreement or commitment to enter into any such guarantee.
5.22 Accounts Receivable. No amount included in the accounts receivable of
Lawrence in the Lawrence Financial Statements has been released for an amount
less than the value at which it was included or is or will be regarded as
unrecoverable in whole or in part except to the extent there shall have been an
appropriate bad debt reserve therefor. Such receivables are not, to Lawrence's
Knowledge, subject to any counterclaim, refusal to pay or setoff not reflected
in the reserves set forth on the Lawrence Financial Statements. Schedule 5.22
hereto sets forth a list of all accounts receivable of Lawrence as of the close
of business on December 31, 1996, none of which are owing from a debtor that, to
Lawrence's Knowledge, has become bankrupt or insolvent or have been pledged to
any third party.
5.23 No Sales or Conveyance Tax Due. No sales, use or other transfer or
conveyance taxes are or will become payable by any of the parties to this
Agreement as a consequence of the execution, delivery or performance of this
Agreement or any of the ancillary agreements, other than taxes based upon the
net income of the parties.
5.24 Books and Records. Lawrence has maintained its books of account in
accordance with applicable laws, rules and regulations and with generally
accepted accounting principles consistently applied, and such books of account
are and, during the period covered by the Lawrence Financial Statements, were
correct and complete in all material respects, fairly and accurately reflect or
reflected the income, expenses, assets and liabilities of Lawrence, including
the nature thereof and the transactions giving rise thereto, and provide or
provided a fair and accurate basis for the preparation of the Lawrence Financial
Statements. The minute books of Lawrence, as previously made available to Buyer
and its counsel, contain accurate records of all meetings and accurately reflect
all other corporate action of the Shareholder and directors (and committees
thereof) of Lawrence.
5.25 Employees. Schedule 5.25 sets forth a list of the names, employment
status, location of employment, and rates of compensation (including salaries,
wages, commissions and bonuses) of all employees of Lawrence. Except as
described on Schedule 5.25, Lawrence has no written or oral contract of
employment with any employee of Lawrence, and Lawrence is not a party to or
subject to any collective bargaining agreement nor has been a party to or
subject to any collective bargaining agreement or collective bargaining plan
during the last five (5) years. Except as described on Schedule 5.25, Lawrence
is not a party to any pending nor, to Lawrence's Knowledge, threatened labor
dispute affecting the business of Lawrence. Lawrence has complied in all
material respects with all applicable foreign, federal, state and local laws,
ordinances, rules and regulations and requirements relating to the employment of
labor, including, but not limited to, the provisions thereof relative to wages,
hours, collective bargaining, drug testing, personnel policies and practices,
payment of Social Security, unemployment and withholding taxes, and ensuring
equality of opportunity for employment and advancement of minorities and women.
To Lawrence's Knowledge, Lawrence is not liable for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing. At the
Closing Date, all employees will be terminable at will by Lawrence and will be
free to become the employees of Buyer, the Surviving Corporation or an affiliate
or subsidiary of Buyer. Lawrence has not received notice from any employee
listed on Schedule 5.25 as earning an annual base salary in excess of $40,000
that such employee is terminating his or her employment with Lawrence, nor to
Lawrence's Knowledge, does any such employee intend to terminate his or her
employment with Lawrence.
5.26 Related Party Transactions. Schedule 5.26 sets forth the amounts and
other essential terms of indebtedness or other obligations, liabilities or
commitments (contingent or otherwise) of Lawrence to or from any Shareholder or
any other present officer, or director, or any person related to, controlling,
controlled by or under common control with any of the foregoing (other than for
employment services performed within the past month the payment for which is not
yet due), and all other transactions between such persons and Lawrence. Without
limiting the generality of the foregoing, as of the date hereof, none of the
Shareholders or any other present officer, or director, or any person related
to, controlling, controlled by or under common control with
<PAGE>
any of the foregoing (i) has any material direct or indirect interest in
any entity which does business with Lawrence, (ii) has any direct or indirect
interest in any property, asset or right which is used by Lawrence in the
conduct of its business, or (iii) has any contractual relationship with Lawrence
other than such relationships which occur from being an employee, officer,
director, etc.
5.27 Hart-Scott-Rodino. The "total assets" and the "annual net sales" of
the "ultimate parent entity" of Lawrence (as such terms are used within the
meaning of Section 7A.(a)(2)(A) of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976) are shown on Schedule 5.27.
5.28 Customers and Suppliers. Except as set forth in Schedule 5.28,
Lawrence has not received any notice or has any Knowledge that any customer from
whom Lawrence received more than $50,000 in gross receipts during the 1995 or
1996 fiscal years (i) has ceased, or will cease, to use the products, goods or
services of its business, (ii) has substantially reduced, or will substantially
reduce, the use of products, goods or services of its business or (iii) has
sought, or is seeking, to reduce the price it will pay for products, goods or
services of its business. Lawrence has not received any notice or has any
Knowledge that any supplier from whom Lawrence purchased more than $50,000 in
goods during the 1995 or 1996 fiscal years will not sell raw materials,
supplies, merchandise and other goods to Lawrence at any time after the Closing
Date on terms and conditions similar to those used in the current sales to
Lawrence, subject to general and customary price increases and unforeseeable
supply or demand changes.
5.29 Stock Ownership. Other than through mutual funds or other similar
investment vehicles over which no investment discretion is retained, none of
Lawrence or any Shareholder owns any securities issued by Buyer and has no
warrants, options or other rights to purchase or otherwise acquire or convert
any obligations into securities issued by Buyer.
5.30 Insurance. All of the Assets are covered by such fire, casualty,
product liability, environmental liability and other insurance policies issued
by reputable companies as are customarily obtained to cover comparable
properties and assets by businesses in the region in which such Assets are
located, in amounts, scope and coverage which are reasonable in light of
existing conditions. Schedule 5.30 sets forth a list of the policies of
insurance and fidelity or surety bonds carried by Lawrence, including, but not
limited to, fire, flood, liability, workers' compensation, officers' life, and
directors' and officers' liability insurance policies. Lawrence has not failed
to give any notice or present any material claim under any insurance policy in
due and timely fashion, and all insurance premiums due and payable by Lawrence
in connection with the policies set forth on Schedule 5.30 prior to the Closing
Date have been or will be paid. There are no outstanding written requirements or
written recommendations by any insurance company that issued a policy with
respect to any of the properties and assets of Lawrence by any Board of Fire
Underwriters or other body exercising similar functions or by any governmental
authority requiring or recommending any repairs or other work to be done on or
with respect to any of the properties or Assets of Lawrence or requiring or
recommending any equipment or facilities to be installed on or in connection
with any of the properties or Assets. The unemployment insurance ratings and
contributions of Lawrence are also set forth on Schedule 5.30.
5.31 Information in Disclosure Documents and Registration Statement. None
of the information supplied or to be supplied by Lawrence for inclusion or
incorporation by reference in (i) any registration statement filed in connection
with this Agreement will, at the time such registration statement is filed with
the SEC and at the time it becomes effective under the Securities Act, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they are made, not misleading, and (ii)
any proxy statement relating to the meeting of Buyer's stockholders to be held
in connection with the Merger will, at the date mailed to stockholders and at
the time of the meeting of stockholders to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made, not
misleading.
<PAGE>
5.32 No Misrepresentation. Neither this Agreement nor any certificate or
Schedule or other information furnished by or on behalf of Lawrence or any
Shareholder pursuant to this Agreement contains any untrue statement of a
material fact or, when this Agreement and such certificates, Schedules and other
information are taken in their entirety, omits to state a material fact
necessary to make the statements contained herein or therein not misleading.
ARTICLE VI
Conduct of Business Pending the Merger
6.1 Conduct of Business Pending the Merger. Lawrence agrees that, except as
expressly contemplated by this Agreement, during the period from the date of
this Agreement and continuing until the Effective Time:
(a) The business of Lawrence shall be conducted only in the ordinary and
usual course of business and consistent with past practices;
(b) Lawrence shall not (i) amend its Articles of Incorporation or Bylaws;
or (ii) split, combine or reclassify any shares of its outstanding capital
stock, declare, set aside or pay any dividend or other distribution payable in
cash, stock or property in respect of its capital stock, or directly or
indirectly redeem, purchase or otherwise acquire any shares of its capital stock
or other securities;
(c) Lawrence shall not (i) authorize for issuance, issue, sell, pledge,
dispose of, encumber, deliver or agree or commit to issue, sell, pledge, or
deliver any additional shares of, or rights of any kind to acquire any shares
of, its capital stock of any class (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise),
(ii) acquire, dispose of, transfer, lease, or license, any fixed or other
substantial assets other than in the ordinary course of business and consistent
with past practices; (iii) incur, assume or prepay any material indebtedness,
liability or obligation or any other material liabilities or issue any debt
securities; (iv) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person; (v) make any material loans, advances or capital contributions
to, or investments in, any other person; (vi) fail to maintain adequate
insurance consistent with past practices for its business; (vii) take any action
described in items (i) through (x) of Section 5.6 without the consent of the
Buyer; or (viii) enter into any contract, agreement, commitment or arrangement
with respect to any of the foregoing;
(d) Lawrence shall use reasonable efforts to maintain the Assets, to
preserve intact its business organization, to keep available the services of its
present officers and key employees, and to preserve the goodwill of those having
business relationships with it; provided, however, that no breach of this
covenant shall be deemed to have occurred as a result of any matter arising out
of the transactions contemplated by this Agreement or the public announcement
thereof;
(e) Lawrence shall use all reasonable efforts to prevent any representation
or warranty of Lawrence herein from becoming materially untrue or incorrect in
any material respect; and
(f) Notwithstanding anything to the contrary in subsections (a) through (e)
above, Lawrence shall be permitted to take the following actions: (i) pay any
judgment or settlement of pending legal claims (including penalties, fees, or
taxes related thereto) provided that Lawrence will not without Buyer's written
consent enter into any settlement which imposes upon Lawrence any restrictions
or limitations on its ability to operate its business consistent with past
practice; (ii) repay any guarantors of Lawrence's obligations or pledgors of
collateral to secure Lawrence's obligations (including collateral pledged to
secure letters of credit relating to such obligations) if and to the extent such
guarantors pay any amount under the guaranty, or such pledgors have such
collateral foreclosed upon, in connection with any of Lawrence's obligations, on
behalf of Lawrence, and (iii) pay compensation as permitted under Section 6.2
below.
<PAGE>
6.2 Compensation Plans. During the period from the date of this Agreement
and continuing until the Effective Time, Lawrence agrees that it will not,
without the prior written consent of Buyer (except as required by applicable law
or pursuant to existing contractual arrangements or other plans or commitments
as otherwise disclosed in writing pursuant hereto) (a) enter into, adopt or
amend any Employee Benefit Programs as to increase the benefits thereunder, (b)
grant or become obligated to grant any increase in the compensation or fringe
benefits of directors, officers or employees (including any such increase
pursuant to any Employee Benefit Program) or any increase in the compensation
payable or to become payable to any officer, except for increases in
compensation in the ordinary course of business consistent with past practice,
or enter into any contract, commitment or arrangement to do any of the
foregoing, except for normal increases and non-stock benefit changes in the
ordinary course of business consistent with past practice, (c) institute any new
Employee Benefit Program, (d) make any material change in any Employee Benefit
Program arrangement or enter into any employment or similar agreement or
arrangement with any employee, or (e) enter into or renew any contract,
agreement, commitment or arrangement providing for the payment to any director,
officer or employee of compensation or benefits contingent, or the terms of
which are altered in favor of such individual, upon the occurrence of any of the
transactions contemplated by this Agreement. Notwithstanding anything to the
contrary in this Section 6.2, Lawrence shall be permitted to (i) pay fiscal
year-end cash bonuses to its employees in amounts consistent with past practice
and (ii) enter into staying bonus/severance agreements with the employees (the
"Designated Employees") listed on Exhibit "A-1" in the form attached as Exhibit
"A-2."
6.3 Legal Conditions to Merger. Each of Lawrence and Buyer shall use all
reasonable efforts (a) to take, or cause to be taken, all actions reasonably
necessary to comply promptly with all legal requirements which may be imposed on
such party or its subsidiaries with respect to the Merger and to consummate the
transactions contemplated by this Agreement, and (b) to obtain (and to cooperate
with the other party to obtain) any consent, authorization, order or approval
of, or any exemption by, any governmental entity and or any other public or
private third party which is required to be obtained or made by such party or
any of its subsidiaries in connection with the Merger and the transactions
contemplated by this Agreement; provided, however, that a party shall not be
obligated to take any action pursuant to the foregoing if the taking of such
action or such compliance or the obtaining of such consent, authorization,
order, approval or exemption would, in Buyer's reasonable opinion, result in the
imposition of a condition or restriction on such party or on the Surviving
Corporation of the type referred to in Section 8.1; and provided further that
neither party shall be obligated to take any action to obtain any third party
consent where a failure to obtain such consent would not in Buyer's reasonable
opinion have a Material Adverse Effect. Each party will cooperate with and
promptly furnish information to the other in connection with any such burden
suffered by, or requirement imposed upon, either of them in connection with the
foregoing.
ARTICLE VII
Additional Agreements
7.1 Access and Information. Lawrence shall afford to Buyer and to Buyer's
financial advisors, legal counsel, accountants, consultants and other
representatives reasonable access during normal business hours throughout the
period from the date hereof to the Effective Time to all of its books, records,
properties, facilities, personnel, commitments and records (including but not
limited to tax returns) and, during such period, shall furnish promptly to Buyer
all information concerning its business, properties and personnel as Buyer may
reasonably request.
7.2 Pooling. None of Lawrence, Buyer and Buyer Sub shall take any action
which would jeopardize the treatment of the Merger as a tax-free reorganization
or which would prevent the Merger from being accounted for as a pooling of
interests.
7.3 Public Announcements. Lawrence understands that Buyer is a public
company, and that until the transactions contemplated by this Agreement are made
public, Lawrence and the Shareholders and those whom
<PAGE>
they advise of this transaction (which shall only be on a "need to know
basis") may be privy to material inside information; accordingly, Lawrence
understands, and Lawrence has apprized those of its officers, directors and
employees who know of the potential transaction, of the need for confidentiality
and the potential consequences of any trading in Buyer Common Stock. No public
announcements shall be made concerning the negotiations between the parties,
this Agreement or the transactions contemplated herein, without the prior mutual
consent of Lawrence and Buyer, except as may be required by law or the rules or
regulations of The Nasdaq Stock Market. The parties agree that, to the maximum
extent feasible, they will advise and confer with each other prior to the
issuance of any reports, statements or releases pertaining to this Agreement or
the transactions contemplated herein. In addition, the parties agree to respond
to all inquiries with respect to the Merger by stating that it is their policy
not to comment on such matters.
7.4 Additional Agreements.
(a) Subject to the terms and conditions hereof, each of the parties hereto
agrees to use all reasonable efforts to take, or cause to be taken, all actions
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 all reasonable
efforts to obtain all necessary waivers, consents and approvals, and to effect
all necessary registrations and filings. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and/or directors of the Companies shall take
all such necessary action.
(b) Subject to the terms and conditions hereof, Buyer and Lawrence will
cooperate with each other and use all reasonable efforts to prepare all
necessary documentation to effect promptly all necessary filings and to obtain
all necessary permits, consents, approvals, orders and authorizations of or any
exemptions by, all third parties and governmental bodies necessary to consummate
the transactions contemplated by this Agreement.
(c) Each party will keep the other party apprized of the status of any
inquiries made of such party by any governmental agency or authority or members
of their respective staffs with respect to this Agreement or the transactions
contemplated herein.
7.5 Confidentiality. All confidential information disclosed by any party to
this Agreement to any other party to this Agreement in connection with the
transactions contemplated hereby shall be kept confidential by such other party
and shall not be used by such other party otherwise than as herein contemplated,
except to the extent that (a) it is or becomes generally available to the public
other than as a result of a wrongful disclosure by a party receiving such
confidential information hereunder, (b) it was readily available to the party
receiving such information on a non-confidential basis prior to its disclosure
hereunder, (c) it was already lawfully in the receiving party's possession prior
to its disclosure hereunder, (d) it becomes available to the receiving party on
a non-confidential basis from a source other than the disclosing party hereunder
without violation of such source's confidentiality agreement with the disclosing
party or its representatives or of legal, fiduciary or ethical constraints on
disclosure of such information, (e) it may be required by law, or (f) such duty
as to confidentiality is waived by the other party. Such obligation as to
confidentiality and non-use shall survive the termination of this Agreement for
any reason. This Section 7.5 shall survive termination hereof or consummation of
the transactions hereunder, and shall replace any prior confidentiality
agreements, including the Confidentiality Agreement dated October 23, 1996,
entered into by Lawrence and Buyer.
7.6 Guarantees. Buyer shall cooperate with Lawrence and use Buyer's
reasonable efforts to obtain, prior to the Effective Time, the release of all
guarantees listed on Schedule 7.6 ("Guarantees") provided by individuals, LSI or
LSRL on behalf of Lawrence relating to Lawrence's bank financings or other
indebtedness (the "Releases"), provided that no modification to, or amendment
of, the terms of any such bank financing or other indebtedness shall be made in
connection with obtaining a Release without Buyer's prior written consent. In
the event that the parties are unable to obtain the release of any of the
Guarantees, the Buyer shall indemnify the guarantors against any losses incurred
by them under such Guarantees as a result of a default by Lawrence of its
obligations as provided in Section 10.3.
<PAGE>
7.7 Noncompete Agreement. At the Effective Time, Lamonte H. Lawrence shall
enter into a Noncompete Agreement in the form attached hereto as Exhibit "B."
7.8 Consulting Agreement. At the Effective Time, the Surviving Corporation
shall enter into Consulting Agreement with LSI in the form attached hereto as
Exhibit "C."
7.9 Notices of Certain Events. From the date hereof to and including the
Closing Date, Lawrence and Buyer covenant and agree to notify the other of (i)
any notice or other communication from any person alleging that the consent of
such person is or may be required in connection with the transactions
contemplated by this Agreement; (ii) any notice or other communication from any
foreign or domestic governmental authority in connection with the transactions
contemplated by this Agreement; and (iii) any matter arising and discovered
after the date of this Agreement that, if existing or known on the date of this
Agreement, would have been required to be disclosed pursuant to this Agreement,
or that constitutes a breach or prospective breach of this Agreement by the
notifying party or its affiliates.
7.10 No Solicitation. Lawrence will not, and Lawrence will use best efforts
to cause each Shareholder not to, directly or indirectly, solicit any active
discussions or negotiations with, or provide information to, any person, other
than Buyer, concerning any possible proposal regarding the acquisition of
Lawrence or any part thereof, or any merger or consolidation thereof or accept
any such proposal.
7.11 Preparation of S-4 and the Proxy Statement. Buyer shall prepare and
file as promptly as practicable after the execution of this Agreement with the
SEC a proxy statement and a registration statement on Form S-4 (in which the
proxy statement will be included as a prospectus) (the "S-4"). Buyer shall use
its best efforts to have the S-4 declared effective under the Securities Act as
promptly as practicable after such filing. Buyer shall also take any action
(other than qualifying to do business in any jurisdiction in which it is not now
so qualified) required to be taken under any applicable state securities laws in
connection with the issuance of Buyer Common Stock in the Merger, and Lawrence
shall furnish all information concerning Lawrence and the Shareholders as may be
reasonably requested in connection with any such action.
7.12 Nasdaq Listing. Buyer will make such filings as are necessary with The
Nasdaq Stock Market regarding the transactions contemplated hereby, including
filing a Notification Form for Listing of Additional Shares with respect to the
shares of Buyer Common Stock to be issued in the Merger.
7.13 Qualified Retirement Plan. The Lawrence Profit Sharing Plan and Trust
(the "Plan and Trust") shall be continued by Lawrence for at least twelve months
from the Effective Time (the "Continuation Period") with respect to the Lawrence
employees at the Effective Time (except for LSRL employees), and the Lawrence
employees shall continue to participate in the Plan and Trust during such time.
After the Continuation Period, neither Lawrence nor Buyer will have any
obligation to continue the Plan and Trust. At Buyer's discretion, after the
Continuation Period Lawrence may continue the Plan and Trust, freeze it,
terminate it, or merge it into any other qualified plan in which Buyer's
employees are eligible to participate. At the Effective Time, LSRL employees
shall cease to participate in the Plan and Trust. After the Continuation Period,
Lawrence employees shall be eligible to participate in Buyer's 401(k) plan,
except to the extent Buyer has elected to continue the Plan and Trust beyond the
Continuation Period in which case the Lawrence employees will remain eligible
under the Plan and Trust. When Lawrence employees do become eligible to
participate in Buyer's 401(k) plan, they shall be given credit for their service
with Lawrence toward eligibility requirements and vesting in Buyer's 401(k)
plan.
7.14 Name. It is Buyer's current intention that the Surviving Corporation
will continue to do business under the name "Lawrence Semiconductor
Laboratories, Inc." following the Closing.
7.15 Conduct of Buyer's Business Pending the Merger. Buyer agrees that,
except as expressly contemplated by this Agreement, and except as may be
necessary or required in connection with the
<PAGE>
consummation of the transaction contemplated by the ADCS Merger Agreement,
during the period from the date of this Agreement and continuing until the
Effective Time:
(a) The business of Buyer shall be conducted only in the ordinary and usual
course of business and consistent with past practices;
(b) Buyer shall not (i) amend its Articles of Incorporation or Bylaws; or
(ii) split, combine or reclassify any shares of its outstanding capital stock,
declare, set aside or pay any dividend or other distribution payable in cash,
stock or property in respect of its capital stock, or directly or indirectly
redeem, purchase or otherwise acquire any shares of its capital stock or other
securities;
(c) Buyer shall not authorize for issuance, issue, sell, pledge, dispose
of, encumber, deliver or agree or commit to issue, sell, pledge, or deliver any
additional shares of, or rights of any kind to acquire any shares of, its
capital stock of any class (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise),
provided, however, that Buyer may do any of the foregoing if the value of the
consideration per Share received by Buyer in such transaction is greater than
the greater of (i) $17 and (ii) the closing price of Buyer Common Stock on the
Nasdaq National Market on the trading day immediately preceding the date of the
consummation of such transaction. Notwithstanding the foregoing, Buyer may grant
additional options under its existing option plans consistent with past
practice, and may also issue additional shares upon the exercise of outstanding
options and warrants.
(d) Buyer shall use reasonable efforts to maintain its assets, to preserve
intact its business organization, to keep available the services of its present
officers and key employees, and to preserve the goodwill of those having
business relationships with it; provided, however, that no breach of this
covenant shall be deemed to have occurred as a result of any matter arising out
of the transactions contemplated by this Agreement or the public announcement
thereof;
(e) Buyer shall use all reasonable efforts to prevent any representation or
warranty of Buyer herein from becoming materially untrue or incorrect in any
material respect; and
(f) Notwithstanding anything to the contrary in subsections (a) through (e)
above, Buyer shall be permitted to take the following actions: (i) pay any
judgment or settlement of pending legal claims (including penalties, fees, or
taxes related thereto) provided that Buyer will not without Lawrence's written
consent enter into any settlement which imposes upon Buyer any restrictions or
limitations on its ability to operate its business consistent with past
practice; and (ii) repay any guarantors of Buyer's obligations or pledgors of
collateral to secure Buyer's obligations (including collateral pledged to secure
letters of credit relating to such obligations) if and to the extent such
guarantors pay any amount under the guaranty, or such pledgors have such
collateral foreclosed upon, in connection with any of Buyer's obligations, on
behalf of Buyer.
ARTICLE VIII
Conditions to Consummation of the Merger
8.1 Conditions to Both Lawrence's and Buyer's Obligation to Effect the
Merger. The respective obligations of Lawrence and Buyer to effect the
transactions contemplated in this Agreement shall be subject to the satisfaction
at or prior to the Effective Time of the following conditions, which may be
waived by mutual agreement: (a) no preliminary or permanent injunction or other
order by or before any federal, state or foreign court of competent jurisdiction
which prohibits the consummation of the Merger shall have been issued and remain
in effect; and (b) no statute, rule, regulation, executive order, stay, decree,
or judgment shall have been enacted, entered, issued, promulgated or enforced by
or before any court or governmental authority which prohibits or restricts the
consummation of the Merger. Other than the filing of Articles of Merger and Plan
of Merger with the Arizona Corporation Commission and the Secretary of State of
the State of Delaware, all authorizations, consents, orders or approvals of, or
declarations or filings with, and all expirations of waiting
<PAGE>
periods imposed by, any governmental entity (all of the foregoing,
"Consents") which are necessary for the consummation of the Merger, other than
Consents the failure to obtain which would have no Material Adverse Effect on
the consummation of the Merger or on the Surviving Corporation, Buyer and their
subsidiaries shall have been filed, occurred or been obtained (all such permits,
approvals, filings and consents and the lapse of all such waiting periods being
referred to as the "Requisite Regulatory Approvals"), and all such Requisite
Regulatory Approvals shall be in full force and effect.
8.2 Conditions to Obligation of Each Company to Effect the Merger.
(a) The obligation of Lawrence to effect the Merger shall be further
subject to the following conditions: (i) Buyer and Buyer Sub shall satisfy all
of the obligations under this Agreement required to be performed by Buyer and
Buyer Sub at or prior to the Effective Time in all material respects, (ii) the
representations and warranties of Buyer and Buyer Sub contained in this
Agreement shall be true and correct in all material respects when made and at
and as of the Effective Time as if made at and as of such time, except as
contemplated by this Agreement, and (iii) Lamonte H. Lawrence shall have been
elected to serve as a member of Buyer's six (6) person Board of Directors,
effective immediately following the Closing Date, provided that if Section
3.2(f) shall apply, in lieu of the foregoing, Lamonte H. Lawrence shall have
been elected to serve as a member of the class of directors elected for a term
not to exceed two (2) years on Holdings' seven (7) person Board of Directors.
These conditions may be waived by Lawrence. Further, if and to the extent
Holdings is formed on or prior to the Effective Time, and Section 3.2(f) is
applicable, then at the Effective Time: (i) Holdings shall own directly all of
the issued and outstanding capital stock of Buyer; (ii) Holdings shall not have
incurred any liabilities of any nature whatsoever, except for the liabilities
described in Section 4.2(k); and (iii) the authorized, issued and outstanding
capital stock of Holdings shall be substantially identical to that of the Buyer
as of the Effective Time, subject only to changes therein necessary to
consummate the transactions contemplated by the ACDS Merger Agreement, and (iv)
evidence reasonably satisfactory to Lawrence that all conditions to Lawrence's
obligations hereunder have been satisfied in all material respects.
(b) The obligation of Buyer to effect the Merger shall be further subject
to the following conditions: (i) Lawrence shall satisfy all of the obligations
under this Agreement required to be performed by Lawrence at or prior to the
Effective Time in all material respects, (ii) the representations and warranties
of Lawrence contained in this Agreement shall be true and correct in all
material respects when made and at and as of the Effective Time as if made at
and as of such time, except as contemplated by this Agreement, and (iii)
evidence reasonably satisfactory to Buyer that all conditions to Buyer's
obligations hereunder have been satisfied in all material respects. These
conditions may be waived by Buyer.
8.3 Additional Conditions to Obligations of Buyer. The obligation of Buyer
to effect the Merger shall be further subject to the following conditions:
(a) This Agreement and the consummation of the Merger shall have been duly
approved and adopted by the affirmative vote of the holders of at least 95% of
the voting securities of Lawrence. This Agreement and the consummation of the
Merger shall have been duly approved and adopted by the stockholders of Buyer in
accordance with the DGCL and its charter.
(b) Ernst & Young LLP, independent accountants to Buyer, shall have
rendered its opinion(s), addressed to Buyer, in form and substance satisfactory
to Buyer as to the appropriateness of pooling of interest accounting for the
Merger under Accounting Principles Board Opinion No. 16 and Ernst & Young shall
have rendered its opinion to Buyer to the effect that the Merger has been
structured in a manner which is tax-free with respect to Buyer and its
stockholders and Lawrence and the Shareholders.
(c) Lawrence shall have delivered (or cause to be delivered) duly executed
counterparts of Employee Proprietary Information and Inventions Agreements with
Buyer and the Surviving Corporation substantially in the form of Exhibit 8.3(d)
duly executed by each employee of Lawrence.
<PAGE>
(d) The share certificates representing all of the issued and outstanding
Lawrence Shares as of the Closing Date (other than Dissenting Shares), in each
case duly endorsed in blank, shall have been surrendered for cancellation.
(e) The S-4 registering the issuance and delivery of the shares of Buyer
Common Stock shall have been declared effective in accordance with the
provisions of the Securities Act, and no stop order suspending the effectiveness
of the S-4 shall have been issued by the SEC. All other filings necessary under
federal and state securities laws to permit the issuance and delivery of the
shares of Buyer Common Stock in compliance therewith shall have been made, and
any authorizations in connection therewith from all applicable securities
regulatory authorities shall have been obtained.
(f) There shall not have been a material adverse change in the general
affairs, business, business prospects, properties, management, condition
(financial or otherwise) or results of operations of Lawrence, whether or not
arising from transactions in the ordinary course of business, and Lawrence shall
not have sustained any material loss or interference with its business or
properties from fire, explosion, flood or other casualty, whether or not covered
by insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree.
(g) The Mesa real estate (both the developed and undeveloped parcels) shall
have been reconveyed to Lawrence from LSI, subject to the liens and encumbrances
existing on the date hereof, for an aggregate consideration no greater than net
book value.
(h) Buyer shall have received satisfactory Phase I and, if, applicable,
Phase II environmental site assessments of the Lawrence Facilities, and all
permits necessary for the operation of those facilities shall have been
appropriately transferred, if required by applicable law.
(i) That certain litigation currently pending in the United States District
Court, Northern District of California, San Jose Division, captioned Applied
Materials, Inc. v. Lawrence Semiconductor, Inc. (C-96 20591 EAI) shall have been
dismissed with prejudice.
8.4 Additional Conditions to Obligations of Lawrence. The obligation of
Lawrence to effect the Merger shall be further subject to the following
conditions:
(a) There shall not have been a material adverse change in the general
affairs, business, business prospects, properties, management, condition
(financial or otherwise) or results of operations of Buyer, whether or not
arising from transactions in the ordinary course of business, and Buyer shall
not have sustained any material loss or interference with its business or
properties from fire, explosion, flood or other casualty, whether or not covered
by insurance, or from any labor dispute or any court or legislative or other
governmental action, order or decree.
(b) Price Waterhouse, LLP, independent accountants to Lawrence, shall have
rendered its opinion(s) addressed to Lawrence and Lamonte H. Lawrence, and dated
the Closing Date, in form and substance satisfactory to Lawrence as to the
appropriateness of pooling interest accounting for the Merger under Accounting
Principles Board Opinion No. 16.
ARTICLE IX
Termination, Amendment and Waiver
9.1 Termination. This Agreement may be terminated and the Merger
contemplated hereby abandoned at any time prior to the Effective Time:
(a) By mutual written consent of Buyer and Lawrence.
<PAGE>
(b) By Buyer or Lawrence if the Merger shall not have been consummated
within one hundred twenty (120) days of the date hereof, unless the failure of
the Effective Time to occur by such date shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein.
(c) By Buyer or Lawrence if there shall have been any material
misrepresentation or material breach of a material obligation of the other and,
if such breach is curable, such default shall have not been remedied within
thirty (30) days after receipt by the defaulting party of notice in writing from
the other party specifying such breach and requesting that it be remedied;
provided, that such thirty-day period shall be extended for so long as the other
party shall be making diligent attempts to cure such default, but not beyond an
additional thirty (30) days.
(d) By Buyer or Lawrence, if any court of competent jurisdiction in the
United States or other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting any Merger and such order, decree, ruling or any other
action shall have become final and non-appealable.
9.2 Termination; Termination Payment. In the event of termination of this
Agreement, this Agreement shall forthwith become void and there shall be no
liability on the part of any of the parties hereto or their respective
affiliates, directors, officers, or stockholders, except as provided below and
except for those obligations intended to survive termination. In the event that
either the Buyer or Lawrence shall terminate this Agreement because of a
material misrepresentation or a material breach of a material covenant by the
other party (subject to the 30-day notice and cure period provided in Section
9.1(c)), the breaching party shall be liable to and shall pay to the terminating
party by wire transfer the sum of $5,000,000 in full satisfaction of all claims
within fifteen (15) business days after the breaching party's receipt of written
notice of termination. It is agreed that the payments due hereunder are the
exclusive remedy for termination of this Agreement. Notwithstanding the
foregoing, in the event of a breach by Lawrence of Section 7.10, the Buyer may
pursue any and all remedies available to it at law or in equity. Recovery by the
Buyer of a termination payment under this Section 9.2 shall not bar any such
action for breach of Section 7.10, but the amount of any monetary damages
awarded to the Buyer in such action shall be reduced by the termination payment
actually received by the Buyer.
9.3 Amendment. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
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 hereto 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. Such waiver shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
ARTICLE X
Survival of Representations and Warranties: Indemnification
10.1 Survival: Indemnification.
(a) No representations, warranties or agreements contained herein shall
survive beyond the Effective Time except that (i) the representations,
warranties and agreements contained in Sections 3.1, 3.2, 3.3, 3.4, 3.5, 3.7,
5.13, 5.15, 7.3, 7.4, 7.5, 7.6, 9.2, 9.3, 9.4, 11.1, 11.2, 11.5, 11.6, 11.7,
11.8, 11.9 and 11.10 and Article X hereof shall survive beyond the Effective
Time for the period of the applicable statute of limitations and (ii) the other
representations and warranties of Buyer and Lawrence in this Agreement shall
survive beyond the Effective Time
<PAGE>
for one (1) year (the end of such one-year period, the "Termination Date")
solely for the purpose of the Indemnification Escrow as described below.
(b) Through the Indemnification Escrow described below, the Surviving
Corporation, Buyer, Buyer Sub, Holdings and each of their officers, directors,
employees, agents, representatives and affiliates (collectively, the
"Indemnitees" and, individually, each an "Indemnitee") (subject to the terms and
conditions below) will be entitled to be indemnified and held harmless by the
Shareholders against and in respect of any claims, damages, losses, costs,
expenses, liabilities (absolute, accrued, contingent or otherwise), and
reasonable legal fees and expenses (collectively, "Losses") incurred or suffered
by any Indemnitee, directly or indirectly, caused by or arising out of or
related to any untruth, inaccuracy, error in, or breach of, any representation
or warranty (when made or deemed to be made) or covenant of Lawrence contained
in this Agreement. The rights of Indemnitees to indemnification under this
Subsection 10.1(b) shall be limited to, and satisfied solely out of and to the
extent of, the Indemnification Escrow as it may be reduced or increased pursuant
to Subsections 3.2(d), 3.4(e), 3.5 this Section 10.1 and the Escrow Agreement,
and any Loss shall be reduced by any amounts actually received by the Indemnitee
under applicable insurance policies, if any. All indemnification requests of
Indemnitees hereunder shall be made by or through Buyer.
(c) By voting to approve this Agreement or by surrendering his or its
Certificate(s) evidencing Lawrence Shares at Closing, each Shareholder, other
than Shareholders who have perfected dissenter rights under the ABCA,
acknowledges and agrees that (i) the consideration to which such Shareholder is
entitled hereunder is subject to adjustment as contemplated in Articles III and
X, (ii) the Indemnification Escrow Shares and the Escrow Adjustment shall be
placed in the Indemnification Escrow provided for in an Escrow Agreement to be
entered into, as of the Effective Time, in the form of Exhibit "D" attached
hereto and (iii) the Escrow Agent shall be, and is hereby, authorized from time
to time to transfer all or any portion of the amounts so deposited in
satisfaction of the indemnity obligation and as otherwise provided pursuant to
Articles III and X and as contemplated in the Escrow Agreement. Except as
provided in Section 10.5, the Indemnitees agree to look solely to the
Indemnification Escrow for recourse in the event of a breach of any
representation or warranty or covenant of Lawrence contained in this Agreement
and will not look directly to any Shareholder or Shareholders for any
indemnification hereunder.
(d) If any Indemnitee shall have any liquidated claim of indemnification
pursuant to Subsection 10.1(b), it shall promptly request that Buyer give
written notice thereof to the Representative and the Escrow Agent, including a
brief description of the facts upon which such claim is based and the amount
thereof. Any Indemnitee may also request that Buyer provide written notice to
the Representative and the Escrow Agent of any unliquidated claim of
indemnification pursuant to Subsection 10.1(b), including a brief description of
the facts upon which such claim is based and a demand for a reserve amount to be
created in respect of such claim. Any claim made by any Indemnitee for Losses
that are unliquidated shall not be paid, but shares of Buyer Common Stock valued
at the Average Closing Price equal to such claim shall be held in the
Indemnification Escrow until such Losses are fully liquidated. Notwithstanding
the foregoing, no amount will be delivered to an Indemnitee pursuant to a
written claim notice (with respect to either a liquidated or unliquidated claim)
pursuant to Subsection 10.1(b) above and Section 10.5 below unless, and then
only to the extent that, the aggregate amount of Losses sustained by Indemnitees
as a group and as to which written claim notices have been given exceeds Two
Hundred Fifty Thousand Dollars ($250,000) (taking into account any reduction of
prior noticed claims resulting from the dispute resolution procedures of Section
10.2 below).
(e) If the Representative shall notify the Escrow Agent in writing (within
thirty (30) days of delivery to the Escrow Agent by Buyer of a written notice of
claim for indemnification) of his objection to a claim of indemnification or a
demand for the creation of a reserve against the Indemnification Escrow for any
unliquidated claim (or the amount thereof), the Escrow Agent shall hold the
disputed amount of funds in the Indemnification Escrow until the rights of the
Shareholders and the Indemnitees with respect thereto have been agreed upon
between the Representative and the claiming Indemnitee. In the event such an
agreement is reached, the claiming Indemnitee shall request Buyer to provide to
the Escrow Agent a written notice signed by the Representative in the form
specified in the Escrow Agreement. If no such agreement has been reached, either
the Indemnitee or
<PAGE>
the Representative may, not earlier than thirty (30) days after the date of
the initial claim notice, submit the dispute to confidential, binding
arbitration in New York, New York before a panel of three arbitrators, one each
to be selected by Buyer and the Representative, and the third to be selected by
the other two arbitrators, pursuant to the procedures and rules for commercial
arbitration of the American Arbitration Association. The Escrow Agent may rely
on the order or other determination of such arbitrators. If such arbitrators
shall determine that any part of the Indemnification Escrow is to be delivered
to an Indemnitee or is to be set aside in a reserve for any unliquidated claim,
the Escrow Agent shall promptly following receipt of a copy of such
determination establish such reserve or deliver to such Indemnitee the lesser of
(i) the amount of the claim or claims as awarded to the Indemnitee to be
satisfied, subject to the limitation set forth in Subsection 10.1(d) or (ii) the
entire amount remaining in the Indemnification Escrow. Any disputed amounts not
awarded to the Indemnitee shall promptly be transferred to the unreserved
portion of the Indemnification Escrow. Buyer and the Representative shall bear
their respective costs and expenses of any such arbitration. Buyer expressly
acknowledges that Polese, Pietzsch, Williams & Nolan, P.A. can continue to
represent Representative in any such dispute and hereby waives any conflict of
interest which might otherwise exist.
(f) Promptly after the Termination Date, the Escrow Agent shall distribute
to the Shareholders on a pro rata basis all remaining unreserved amounts in the
Indemnification Escrow, less an amount equal to the dollar amount of all claims
pursuant to Subsection 10.1(c) that are still in process and (i) that are
then-payable liquidated claims, (ii) for which a reserve established pursuant to
Subsection 10.1(d) then exists, or (iii) that are still in the process of
resolution pursuant to this Section 10.1. No new claims may be brought under
this Section 10.1 after the Termination Date.
(g) After the Termination Date, (i) as each matter referred to in
Subsection 10.1(f) is resolved or otherwise concluded and (ii) as each
undisputed unliquidated claim which remains unliquidated as of the Termination
Date is liquidated, the Escrow Agent shall distribute to the Shareholders their
respective pro rata portion of the Escrow Fund (as defined in Exhibit D) then
determined by the Escrow Agent to be free of any rights of any Indemnitee and,
when all such matters are resolved and such claims are liquidated, the
obligations under Subsection 10.1(b) hereof shall terminate. The Indemnification
Escrow shall be terminated when all of the Escrow Fund in the Indemnification
Escrow shall have been disbursed by the Escrow Agent in accordance with the
provisions hereof and the Escrow Agreement.
(h) In taking any action whatsoever hereunder, the Representative shall be
protected in relying upon any notice, paper or other document reasonably
believed by him to be genuine, or upon any evidence reasonably deemed by him to
be sufficient. The Representative may consult with counsel in connection with
his duties hereunder and shall be fully protected in any act taken, suffered or
permitted by him in good faith or in accordance with the advice of counsel. The
Representative shall not be liable to the Shareholders for the performance of
any act or the failure to act so long as he acted or failed to act in good faith
within what he reasonably believed to be the scope of his authority and for a
purpose which he reasonably believed to be in the best interests of the
Shareholders.
10.2 Procedure. In the event that, at any time or from time to time after
the Effective Time, a person indemnified under Section 10.1 or 10.3 (an
"Indemnified Party") shall sustain a loss of any nature whatsoever against which
such Indemnified Party is indemnified under this Agreement, such Indemnified
Party shall notify the party hereto obligated to provide such indemnification
(the "Indemnitor") of any such loss so sustained. If Indemnitor is Buyer,
Indemnitor shall within thirty (30) days after transmittal of such notice pay to
such Indemnified Party the amount of such loss so sustained, subject to the
right to contest any claim. If Indemnitor is the Shareholders, payment shall be
governed by the Escrow Agreement. The Indemnified Party shall promptly notify
the Indemnitor of the existence of any claim, demand, or other matter involving
liabilities to third parties to which the Indemnitor's indemnification
obligations would apply and shall give the Indemnitor (acting through the
Representative if Indemnitor is the Escrow Agent) a reasonable opportunity to
defend the same or prosecute such action to conclusion or settlement
satisfactory to the Indemnified Party at Indemnitor's own expense and with
counsel of Indemnitor's selection (who shall be approved by Indemnified Party,
which approval shall not be unreasonably withheld); provided that the
Indemnified Party shall at all times also have the right to fully
<PAGE>
participate in the defense at its own expense. If the Indemnitor shall,
within a reasonable time after said notice, fail to defend, the Indemnified
Party shall have the right, but not the obligation, to undertake the defense of,
and to compromise or settle (exercising reasonable business judgment) the claim
or other matter on behalf, for the account, and at the risk and expense of
Indemnitor. Except as provided in the preceding sentence, the Indemnified Party
shall not compromise or settle the claim or other matter without the prior
written consent of the Indemnitor. If the claim is one that cannot by its nature
be defended solely by the Indemnitor, the Indemnified Party shall make available
all information and assistance that the Indemnitor may reasonably request;
provided that any associated expenses shall be paid by the Indemnitor. If the
Losses relate to a Loss or demand asserted by a third party, the Indemnified
Party and Indemnitor shall jointly control the defense and settlement thereof
and any settlement shall require the prior written consent of both parties,
which consent shall not be unreasonably withheld.
10.3 Buyer's Indemnification. Buyer agrees to indemnify and hold
Shareholders harmless from and against any and all Losses which may accrue or be
sustained by Shareholders arising out of or as a result of (a) the conduct of
the business or ownership of Lawrence or the Surviving Corporation after the
Effective Time, or (b) any of the warranties, representations or covenants of
Buyer contained in this Agreement being incorrect, untrue or breached. The term
"Losses" for purposes of this Section 10.3 shall not include any loss resulting
from a diminution in the value of Buyer Common Stock received in the Merger.
Buyer also agrees to indemnify and hold Lamonte H. Lawrence, LSI and LSRL
harmless from and against any and all losses which may accrue or be sustained by
Lamonte H. Lawrence, LSI and/or LSRL arising out of or as a result of the
parties' inability to obtain the Releases of all of the Guarantees and a breach
by Lawrence of the guaranteed obligation. Notwithstanding the foregoing, no
amount will be paid pursuant to a written claim notice for indemnification
pursuant to this Section 10.3 (with respect to either a liquidated or
unliquidated claim) unless, and then only to the extent that, the aggregate
amount of Losses sustained by Shareholders, Lamonte H. Lawrence, LSI, or LSRL as
a group and as to which written claim notices have been given by any of
Shareholders, Lamonte H. Lawrence, LSI and/or LSRL to Buyer exceeds Two Hundred
Fifty Thousand Dollars ($250,000).
10.4 Contest; Challenge. If Indemnitor contests or challenges any claim or
action asserted against Indemnified Party referred to in this Article, it shall
do so at its own cost and expense, holding Indemnified Party harmless from all
costs, fees, expenses, debts, liabilities and charges in connection with such
contest; shall diligently defend against any such claim; and shall hold
Indemnified Party's business and assets free and harmless from any attachment,
execution, judgment, lien or other legal process.
10.5 Special Indemnity.
(a) By voting to approve this Agreement or by surrendering his or its
Certificate(s) evidencing Lawrence Shares at Closing, each Shareholder, other
than Shareholders who have perfected dissenter rights under applicable law,
severally and not jointly, agrees to defend and indemnify the Indemnitees
against and hold each of them harmless from each Shareholder's Pro Rata Portion
(defined below) of any and all Losses which any such Indemnitee may suffer or
incur by reason of the inaccuracy or breach of any of the representations,
warranties and covenants of Lawrence contained in Section 5.13 or Section 5.15
of this Agreement or any documents, certificates or agreements delivered
pursuant hereto. The right of Indemnitees to indemnification under this Section
10.5 shall apply only to those claims for indemnification, notice of which is
given pursuant to this Agreement to the Shareholders on or before the running of
the applicable statute of limitations; provided that such limitations shall not
apply to any claim resulting from fraud or intentional misrepresentation. As
used herein, "Pro Rata Portion" shall mean with respect to each Shareholder his
or its percentage ownership of Lawrence after the merger of Lawrence and LSLMS
and immediately prior to the Effective Time.
(b) Each Shareholder, other than Shareholders who have perfected dissenter
rights under applicable law, acknowledges and agrees that its obligations under
this Section 10.5 are recourse obligations enforceable against it personally.
Each Shareholder waives any right to require Indemnitees to (i) proceed against
any person or entity including any other Shareholder, (ii) proceed against or
exhaust any collateral or security or any part thereof, or (iii) pursue any
other remedy in its power, and waives any defense arising by reason of any
inability
<PAGE>
of any other obligor to pay or any defense based on bankruptcy or
insolvency or other similar limitations on creditors' remedies with respect to
any other person. Indemnitees agree to use their reasonable efforts to collect
any Losses from any available insurer or third party indemnitors before
collecting from the Shareholders or the Escrow Fund, and to use their reasonable
efforts to collect from the Escrow Fund before collecting from the Shareholders;
however, nothing in the foregoing clauses shall preclude any claiming party from
filing a claim against either the Shareholders or the Escrow Fund from the
outset. If any amounts are recovered from an insurer or third party after
payment to an Indemnitee of all Losses suffered or incurred by it, such
Indemnitee shall promptly pay over to the indemnifying party the excess amount
so recovered. Any claims against the Escrow Fund shall be subject to the
procedures set forth in Section 10.2.
(c) Notwithstanding anything to the contrary in this Article X, including
without limitation any provision of Section 10.2, the Representative shall have
sole and complete power and authority (i) to settle any matter which is the
subject of a claim for indemnification pursuant to this Section 10.5 which can
be settled solely with the payment of money (ii) to conduct and settle any
litigation which is the subject of a claim for indemnification pursuant to this
Section 10.5 which can be settled solely with the payment of money, and (iii) to
control and direct, subject to Buyer's approval, which shall not be unreasonably
withheld or delayed, any and all remediation or other clean-up or mitigation of
any environmental condition which is the subject of a claim for indemnification
pursuant to this Section 10.5.
10.6 Waiver. Each Shareholder irrevocably, knowingly and voluntarily waives
any claim which such Shareholder now has or may hereafter have against
Indemnitees, the Escrow Fund, and any collateral or security whatsoever now or
hereafter held by Indemnitees, arising out of or resulting from payment or
demand for payment of Losses, whether such claim is characterized as a claim for
contribution, indemnification, subrogation or otherwise; provided that the
foregoing shall not limit the Shareholders' ability to challenge the propriety
of any claim for Losses made by Indemnitee(s).
10.7 Average Closing Price. To the extent that the Indemnitees make a claim
against the Escrow Fund pursuant to the Escrow Agreement, and such claim is paid
in shares of Buyer Common Stock, then for purposes of such payment, the shares
of Buyer Common Stock shall be valued at the Average Closing Price.
10.8 Reduction of Losses. The amount of any Losses for which
indemnification is provided under this Article X shall be reduced to take
account of any net tax benefit realized arising from the incurrence or payment
of any such Losses or from the receipt of any such indemnification payment and
shall be reduced by the insurance proceeds received and any other amount, if
any, recovered from third parties by an Indemnitee (or any of their affiliated
entities) with respect to any Losses. The Indemnified Party shall be obligated
to use commercially reasonable efforts to prosecute diligently and in good faith
claims under any applicable insurance policies (including, without limitation,
any applicable insurance policies maintained by either of the Companies or the
Surviving Corporation) and against other third parties who may be responsible
for Losses prior to collecting indemnification for such Losses under this
Article X. If any Indemnitee (or any of their affiliated entities) shall have
received any payment pursuant to this Article X with respect to any Loss and
shall subsequently have received insurance proceeds or other amounts with
respect to such Loss, then such Indemnitee (or its affiliated entities) shall
promptly pay over to the Representative (for distribution pro rata to the
Shareholders) the amount so recovered but not in excess of the amount previously
so paid by the Shareholders.
10.9 Remedies. The sole and exclusive remedy of any party to this Agreement
for any claim arising under this Agreement against any other party hereto shall
be the indemnification provided in this Article X, and each party agrees that it
will not pursue any other remedy, except that either party may seek specific
performance or injunctive relief.
<PAGE>
ARTICLE XI
General Provisions
11.1 Brokers. Lawrence represents and warrants to Buyer and Buyer Sub that,
except for Lawrence's financial advisor, Alex. Brown & Sons Incorporated, no
broker, finder or financial advisor is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Lawrence. Buyer represents and warrants to Lawrence that no broker, finder or
financial advisor is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Buyer.
11.2 Notices. All notices, claims, demands and other communications
hereunder shall be in writing and shall be deemed given if delivered personally
or by facsimile or mailed by registered or certified mail (postage prepaid,
return receipt requested) to the respective parties at the following addresses
(or at such other address for a party as shall be specified by like notice):
(a) If to Lawrence, to:
Lawrence Semiconductor Laboratories, Inc.
2300 West Huntington Drive
Tempe, Arizona 85282
Attention: Lamonte H. Lawrence, President
Facsimile Number: (602) 464-7421
with a copy to:
Polese, Pietzsch, Williams & Nolan, P.A.
2702 North Third Street, Suite 3000
Phoenix, Arizona 85004-4607
Attention: Michael E. Pietzsch, Esq.
Michael J. Tucker, Esq.
Facsimile Number: (602) 279-5107
(b) If to Buyer, or Buyer Sub or Holdings, to:
Advanced Technology Materials, Inc.
7 Commerce Drive
Danbury, CT 06810
Attention: Daniel P. Sharkey, VP
Facsimile Number: (203) 792-8040
with a copy to:
Shipman & Goodwin LLP
One American Row
Hartford, CT 06103
Attention: Frank J. Marco, Esq.
Facsimile Number: (860) 251-5900
and
(c) If to the Representative, to:
Lamonte H. Lawrence
100 Sir Francis Drake Blvd.
Ross, California 94957
Facsimile Number: (415) 456-0949
<PAGE>
with a copy to:
Polese, Pietzsch, Williams & Nolan, P.A.
2702 North Third Street, Suite 3000
Phoenix, Arizona 85004-4607
Attention: Michael E. Pietzsch, Esq.
Facsimile Number: (602) 279-5107
All such notices shall be deemed received on the date of delivery (if
delivered personally or by facsimile) or on the date shown on the return receipt
(if delivered by mail).
11.3 Descriptive Headings. 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.
11.4 Entire Agreement; Assignment. This Agreement (including the Schedules,
Exhibits and other documents and instruments referred to herein) 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, and shall not be assigned by operation of law or
otherwise.
11.5 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to the
provisions thereof relating to conflicts of law.
11.6 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.
11.7 Validity. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
11.8 Investigation. The respective representations and warranties of Buyer
or Lawrence contained herein or in the certificates or other documents
delivered prior to the Effective Time shall not be deemed waived or
otherwise affected by any investigation made by the other.
11.9 Consents. For purposes of any provision of this Agreement requiring,
permitting or providing for the consent of any party, the written consent of the
Chief Executive Officer of such party shall be sufficient to constitute such
consent.
11.10 Jurisdiction. Each party hereby irrevocably: (1) agrees that any
suit, action, or other legal proceeding arising out of this Agreement or out of
any of the transactions contemplated hereby or thereby, may be brought in any
New York court or United States federal court located in the County of New York;
(2) consents to the jurisdiction of each such court in any such suit, action, or
legal proceeding; (3) waives any objection which such party may have to the
laying of venue of any such suit, action, or legal proceeding in any of such
courts; and (4) agrees that New York is the most convenient forum for litigation
of any such suit, action, or legal proceeding.
<PAGE>
IN WITNESS WHEREOF, each of Buyer, Buyer Sub and Lawrence has caused this
Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
Advanced Technology Materials, Inc.,
a Delaware corporation
By: /s/ Daniel P. Sharkey
- ---------------------------------
Name: Daniel P. Sharkey
Title: Vice President, Chief
Financial Officer
Welk Acquisition Corporation, a
Delaware corporation
By: /s/ Daniel P. Sharkey
- ---------------------------------
Name: Daniel P. Sharkey
Title: President
ATMI Holdings, Inc., a Delaware
corporation
By: /s/ Daniel P. Sharkey
- ---------------------------------
Name: Daniel P. Sharkey
Title: Treasurer
Lawrence Semiconductor Laboratories,
Inc., an Arizona corporation
By: /s/ Lamonte H. Lawrence
- ---------------------------------
Name: Lamonte H. Lawrence
Title: Chief Executive Officer
Lawrence Semiconductor Laboratories
Marketing and Sales, Inc., an
Arizona corporation
By: /s/ Lamonte H. Lawrence
- ---------------------------------
Name: Lamonte H. Lawrence
Title: Chief Executive Officer
<PAGE>
EXHIBITS
<TABLE>
<C> <S> <C>
3.6(a)(xiii)-A
Affiliate Agreement Section 3.6(a)(xiii)-A
3.6(a)(xiii)-B
Employment Agreement Section 3.6(a)(xiii)-B
3.6(a)(x)
Release Section 3.6(a)(x)
3.6(e)
Registration Rights Agreement Section 3.6(e)
A-1 Designated Employees Section 6.2
A-2 Staying Bonus and Severance Agreement Section 6.2
B Noncompete Agreement--Lamonte H. Lawrence Section 7.8
C Consulting Agreement--Lamonte H. Lawrence Section 7.9
8.3(d)
Proprietary Information and Inventions Agreement Section 8.3(d)
D Escrow Agreement Subsection 10.1(c)
</TABLE>
<PAGE>
SCHEDULES
<TABLE>
<CAPTION>
SCHEDULE
NUMBER CONTENTS
-------- --------
<C> <S>
4.1(c) Persons whose knowledge constitute the "Knowledge" of Lawrence 4.2(c)
Filings, permits, authorizations, consents and approvals required for
Buyer and/or Buyer Sub to consummate transaction 4.2(h) Material
liabilities of Buyer 5.1 Trade names and assumed names
5.2 Authorized capital stock, number and class of issued and outstanding
stock, identity of owners of capital stock, and identity of anyone
with a right to acquire any capital stock; pro forma following merger
5.4 Filings, permits, authorizations, consents and approvals required for
Lawrence to consummate transaction
5.5 Material errors in Lawrence financial statements
5.6 Material adverse changes and other specified information occurring
since date of unaudited financial statement
5.7 Litigation; expected litigation
5.8(a) Contracts and other instruments
5.8(b) Consulting agreements and other contracts with certain provisions 5.9(a)
Employee benefits programs 5.10(a) Known non-compliance of products with laws,
statutes, etc. 5.10(b) Notices received from regulatory agencies regarding
possible
violations, or facts that might lead to such
5.10(c) Facts that might lead to recall of products, termination of marketing
of products, etc.
5.10(d) Recalls of products
5.11(a) Patents, applications for patents, registration of trademarks, other
intellectual property
5.11(c) Nondisclosure agreements to which Lawrence is a party or bound 5.11(d)
Royalties, fees or other payments owed by reason of any intellectual
property
5.11(e) Notices of infringement
5.12(b) Property agreements (leases, etc.)
5.13(b) Environmental notices received, existence of USTs, asbestos, etc.
5.13(c) Environmental incidents
5.14 Notices of violations of city codes, condemnation actions, etc.
5.15(a) Tax information
5.15(b) Subsidiaries
5.16 Product liability insurance claims
5.17 Other material liabilities
5.20 Mortgages, liens, etc.
5.21 Debts
5.22 Accounts Receivable
5.25 Employee Names
5.26 Related Parties; Transactions
5.27 Hart-Scott-Rodino
5.28 Customers
5.30 Insurance; Unemployment insurance ratings
7.6 Guarantees
8.3(d) Proprietary Information and Inventions Agreements
</TABLE>
EXHIBIT
The following schedules and exhibits have been omitted from the Agreement
and Plan of Merger and Exchange attached to this registration statement as
Appendix A to the Proxy Statement/Prospectus and incorporated herein by
reference:
SCHEDULES
Schedule 4.1(c)
Persons whose knowledge constitute the "Knowledge" of Lawrence
Schedule 4.2(c)
Filings, permits, authorizations, consents and approvals required for Buyer
and/or Buyer Sub to consummate transaction
Schedule 4.2(h)
Material liabilities of Buyer
Schedule 5.1
Trade names and assumed names
Schedule 5.2
Authorized capital stock, number and class of issued and outstanding stock,
identity of owners of capital stock, and identity of anyone with a right to
acquire any capital stock; pro forma following merger
Schedule 5.4
Filings, permits, authorizations, consents and approvals required
for Lawrence to consummate transaction
Schedule 5.5
Material errors in Lawrence financial statements
Schedule 5.6
Material adverse changes and other specified information occurring since date of
unaudited financial statement
Schedule 5.7
Litigation; expected litigation
Schedule 5.8(a)
Contracts and other instruments
Schedule 5.8(b)
Consulting agreements and other contracts with certain provisions
Schedule 5.9(a)
Employee benefits programs
Schedule 5.10(a)
Known non-compliance of products with laws, statutes, etc.
Schedule 5.10(b)
Notices received from regulatory agencies regarding possible violations, or
facts that might lead to such
Schedule 5.10(c)
Facts that might lead to recall of products, termination of marketing of
products, etc.
Schedule 5.10(d)
Recalls of products
Schedule 5.11(a)
Patents, applications for patents, registration of trademarks, other
intellectual property
Schedule 5.11(c)
Nondisclosure agreements to which Lawrence is a party or bound
Schedule 5.11(d)
Royalties, fees or other payments owed by reason of any intellectual
property
Schedule 5.11(e)
Notices of infringement
Schedule 5.12(b) Property agreements (leases, etc.)
Schedule 5.13(b)
Environmental notices received, existence of USTs, asbestos, etc.
Schedule 5.13(c)
Environmental incidents
Schedule 5.14
Notices of violations of city codes, condemnation actions, etc.
Schedule 5.15(a)
Tax information
Schedule 5.15(b)
Subsidiaries
Schedule 5.16
Product liability insurance claims
Schedule 5.17
Other material liabilities
Schedule 5.20 Mortgages, liens, etc.
Schedule 5.21
Debts
Schedule 5.22
Accounts Receivable
Schedule 5.25
Employee Names
Schedule 5.26
Related Parties; Transactions
Schedule 5.27
Hart-Scott-Rodino
Schedule 5.28
Customers
Schedule 5.30
Insurance; Unemployment insurance ratings
Schedule 7.6
Guarantees
Schedule 8.3(d)
Proprietary Information and Inventions Agreements
EXHIBITS
Exhibit 3.6(a)(xiii)-A
Affiliate Agreement
Exhibit 3.6(a)(xiii)-B
Employment Agreement
Exhibit 3.6(a)(x)
Release
Exhibit 3.6(e)
Registration Rights Agreement
Exhibit A-1
Designated Employees
Exhibit A-2
Staying Bonus and Severance Agreement
Exhibit B
Noncompete Agreement -- Lamonte H. Lawrence
Exhibit C
Consulting Agreement -- Lamonte H. Lawrence
Exhibit 8.3(d)
Proprietary Information and Inventions Agreement
Exhibit D
Escrow Agreement
The Registrant agrees to furnish supplementally a copy of any omitted
schedule or exhibit to the Securities and Exchange Commission upon request.
<PAGE>
FIRST AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER is dated as of June 6,
1997, by and among ADVANCED TECHNOLOGY MATERIALS, INC., a Delaware corporation
("Buyer"), WELK ACQUISITION CORPORATION, a Delaware corporation and a
wholly-owned subsidiary of Buyer ("Buyer Sub"), ATMI HOLDINGS, INC., a Delaware
corporation and wholly-owned subsidiary of Buyer ("Holdings") LAWRENCE
SEMICONDUCTOR LABORATORIES, INC., an Arizona corporation ("LSL"), and LAWRENCE
SEMICONDUCTOR LABORATORIES MARKETING AND SALES, INC., an Arizona corporation
("LSLMS"; LSL and LSLMS are referred to collectively as "Lawrence"); and all of
the parties are referred to collectively as the "Companies." Buyer Sub and
Lawrence are referred to collectively as the "Constituent Corporations" and
individually as a "Constituent Corporation."
The Companies are parties to that certain Agreement and Plan of Merger
dated May 17, 1997 (the "Merger Agreement"), and wish to amend the Merger
Agreement in order to permit the following: (i) the possible transfer by Buyer
of the issued and outstanding shares of capital stock of Buyer Sub to Holdings,
(ii) the transfer by Lamonte H. Lawrence of the issued and outstanding shares of
capital stock of LSLMS to LSL, and (iii) the adoption by Holdings or Buyer, as
appropriate, of a stock option plan for 900,000 shares of common stock. The
Companies also wish to amend the Merger Agreement in order to eliminate any
offset of the intercompany indebtedness against the purchase price.
In consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth herein, the parties agree as
follows:
1. Capitalized terms not otherwise defined herein shall have the meanings
provided in the Merger Agreement.
2. Section 1.1 is hereby amended to insert the following at the end of the
final sentence: "unless Buyer elects in its discretion to contribute prior to
the Effective Time all of the issued and outstanding shares of capital stock of
Buyer Sub to Holdings, in which case the Surviving Corporation shall be a
wholly-owned subsidiary of Holdings."
3. Section 3.1(b) is hereby amended and restated to read in its entirety as
follows: "Each share of common stock of LSL ("Lawrence Share") held in the
treasury of LSL, if any, or by any subsidiary of Lawrence and each such Lawrence
Share held by Buyer or any subsidiary of Buyer immediately prior to the
Effective Time shall be canceled and retired and cease to exist, and no
consideration shall be given in exchange therefor."
4. Section 3.4 is hereby amended to delete the following from the first
paragraph: "minus any amounts owed to LSL by any related parties as set forth in
Schedule 5.26."
5. Section 3.6(a)(xiv) is hereby amended and restated to read in its
entirety as follows: "Written evidence satisfactory to Buyer that Lamonte H.
Lawrence, the sole stockholder of LSLMS, has contributed immediately prior to
the Effective Time all of the issued and outstanding shares of capital stock of
LSLMS to LSL, with LSLMS becoming a wholly-owned subsidiary of LSL and that all
consents and approvals necessary or appropriate for such contribution have been
obtained."
6. Section 3.6(a)(xvii) is hereby amended to delete the final sentence.
7. Section 4.2(k) is hereby amended to insert the following as a new final
sentence: "Notwithstanding the foregoing, Buyer may elect in its discretion to
contribute prior to the Effective Time all of the issued and outstanding shares
of capital stock of Buyer Sub to Holdings, in which case the Surviving
Corporation shall become a wholly-owned subsidiary of Holdings."
8. Section 5.2 is hereby amended to delete the second sentence.
9. Section 6.1(f) is hereby amended to insert the following as subsection
(iv): "(iv) Lamonte H. Lawrence, the sole stockholder of LSLMS, may contribute
all of the issued and outstanding shares of capital stock of LSLMS to LSL, with
LSLMS becoming a wholly-owned subsidiary of LSL."
<PAGE>
10. Section 7.15(f) is hereby amended to insert the following as
subsections (iii) and (iv): "(iii) Buyer may in its discretion contribute prior
to the Effective Time all of the issued and outstanding shares of capital stock
of Buyer Sub to Holdings, in which case the Surviving Corporation shall be a
wholly-owned subsidiary of Holdings; and (iv) (A) Buyer may approve a new stock
option plan for up to 900,000 shares of Buyer Common Stock, if the closing of
the transactions contemplated by the ADCS Merger Agreement shall not have
occurred on or before the Effective Time, or (B) Holdings may increase the
authorized number of shares of Holdings Common Stock available in its existing
stock option plan from 750,000 to 900,000, if the closing of the transactions
contemplated by the ADCS Merger Agreement shall have occurred on or before the
Effective Time."
11. The final sentence of Section 10.5(a) is hereby amended and restated to
read in its entirety as follows: "As used herein, "Pro Rata Portion" shall mean
with respect to each Shareholder his or its percentage ownership of LSL
immediately prior to the Effective Time."
12. Except as modified herein, the Agreement as originally executed and
previously amended is hereby ratified and affirmed and acknowledged to be the
legal, valid and binding obligations of each of the parties hereto.
13. This Amendment shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to the provisions
thereof relating to conflicts of law.
14. This Amendment 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.
IN WITNESS WHEREOF, each of Buyer, Buyer Sub, Holdings and Lawrence has
caused this Amendment to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
Advanced Technology Materials, Inc.,
a Delaware corporation
By: /s/ Daniel P. Sharkey
- ---------------------------------
Name: Daniel P. Sharkey
Title: Vice President, Chief
Financial Officer
Welk Acquisition Corporation, a
Delaware corporation
By: /s/ Daniel P. Sharkey
- ---------------------------------
Name: Daniel P. Sharkey
Title: President
ATMI Holdings, Inc., a Delaware
corporation
By: /s/ Daniel P. Sharkey
- ---------------------------------
Name: Daniel P. Sharkey
Title: Treasurer
Lawrence Semiconductor Laboratories,
Inc., an Arizona corporation
By: /s/ Lamonte H. Lawrence
- ---------------------------------
Name: Lamonte H. Lawrence
Title: Chief Executive Officer
Lawrence Semiconductor Laboratories
Marketing and Sales, Inc., an
Arizona corporation
By: /s/ Lamonte H. Lawrence
- ---------------------------------
Name: Lamonte H. Lawrence
Title: Chief Executive Officer
<PAGE>
SECOND AMENDMENT TO
AGREEMENT AND PLAN OF MERGER
This SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER is dated as of July
30, 1997, by and among ADVANCED TECHNOLOGY MATERIALS, INC., a Delaware
corporation ("Buyer"), WELK ACQUISITION CORPORATION, a Delaware corporation and
a wholly-owned subsidiary of Buyer ("Buyer Sub"), ATMI HOLDINGS, INC., a
Delaware corporation and wholly-owned subsidiary of Buyer ("Holdings") LAWRENCE
SEMICONDUCTOR LABORATORIES, INC., an Arizona corporation ("LSL"), and LAWRENCE
SEMICONDUCTOR LABORATORIES MARKETING AND SALES, INC., an Arizona corporation
("LSLMS"; LSL and LSLMS are referred to collectively as "Lawrence"); and all of
the parties are referred to collectively as the "Companies." Buyer Sub and
Lawrence are referred to collectively as the "Constituent Corporations" and
individually as a "Constituent Corporation."
The Companies are parties to that certain Agreement and Plan of Merger
dated May 17, 1997, as amended by First Amendment to Agreement and Plan of
Merger dated June 6, 1997 (as amended, the "Merger Agreement"), and wish to
amend further the Merger Agreement in order to limit the time period in which
certain claims for indemnification may be made.
In consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth herein, the parties agree as
follows:
1. Capitalized terms not otherwise defined herein shall have the meanings
provided in the Merger Agreement.
2. Section 10.1(f) is hereby amended to insert the following as a new final
sentence: "Notwithstanding the foregoing or anything in this Agreement to the
contrary, no claim seeking indemnification from the Shareholders or the
Indemnification Escrow may be brought after the date of issuance of the first
independent audit report with respect to the financial statements of Buyer (or
Holdings, if the closing of the transactions contemplated by the ADCS
Merger Agreement shall occur on or before the Effective Time) after the
Effective Time if such claim is of a type expected to be encountered in the
course of an audit performed in accordance with generally accepted auditing
standards."
3. Section 10.3 is hereby amended to insert the following as a new final
sentence: "Notwithstanding the foregoing or anything in this Agreement to the
contrary, no claim seeking indemnification from Buyer may be brought after the
date of issuance of the first independent audit report with respect to the
financial statements of Buyer (or Holdings, if the closing of the transactions
contemplated by the ADCS Merger Agreement shall occur on or before the Effective
Time) after the Effective Time if such claim is of a type expected to be
encountered in the course of an audit performed in accordance with generally
accepted auditing standards."
4. Section 5(d) of the form of Escrow Agreement attached to the Merger
Agreement as Exhibit D is hereby amended to insert the following as a new final
sentence: "Notwithstanding the foregoing or anything in this Agreement to the
contrary, no claim seeking indemnification from the Shareholders or the
Indemnification Escrow may be brought after the date of issuance of the first
independent audit report with respect to the financial statements of Buyer (or
Holdings, if the closing of the transactions contemplated by the ADCS Merger
Agreement shall occur on or before the Effective Time) after the Effective Time
if such claim is of a type expected to be encountered in the course of an audit
performed in accordance with generally accepted auditing standards."
5. Except as modified herein, the Agreement as originally executed and
previously amended is hereby ratified and affirmed and acknowledged to be the
legal, valid and binding obligations of each of the parties hereto.
6. This Amendment shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to the provisions thereof
relating to conflicts of law.
7. This Amendment 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.
<PAGE>
IN WITNESS WHEREOF, each of Buyer, Buyer Sub, Holdings and Lawrence has
caused this Amendment to be executed on its behalf by its officers thereunto
duly authorized, all as of the date first above written.
Advanced Technology Materials, Inc.,
a Delaware corporation
By: /s/ Daniel P. Sharkey
- ---------------------------------
Name: Daniel P. Sharkey
Title: Vice President, Chief
Financial Officer
Welk Acquisition Corporation, a
Delaware corporation
By: /s/ Daniel P. Sharkey
- ---------------------------------
Name: Daniel P. Sharkey
Title: President
ATMI Holdings, Inc., a Delaware
corporation
By: /s/ Daniel P. Sharkey
- ---------------------------------
Name: Daniel P. Sharkey
Title: Treasurer
Lawrence Semiconductor Laboratories,
Inc., an Arizona corporation
By: /s/ Lamonte H. Lawrence
- ---------------------------------
Name: Lamonte H. Lawrence
Title: Chief Executive Officer
Lawrence Semiconductor Laboratories
Marketing and Sales, Inc., an
Arizona corporation
By: /s/ Lamonte H. Lawrence
- ---------------------------------
Name: Lamonte H. Lawrence
Title: Chief Executive Officer
On May 30, 1997, the Company filed a Current Report on Form 8-K dated May
17, 1997 reporting in Item 5 thereof the execution of the LSL Agreement to
acquire all of the issued and outstanding equity interests in LSL. The LSL
Agreement is subject to shareholder approval and other customary conditions.
<PAGE>
EXHIBIT 11.01
ADVANCED TECHNOLOGY MATERIALS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended
6/30/97 6/30/96
---------- -----------
<S> <C> <C>
Net income $ 1,339,594 $ 640,448
--------- -------
Average common shares outstanding 8,802,622 8,731,572
Incremental shares issuable pursuant to
employee stock options and warrants (if dilutive) 815,016 681,490
------- -------
Total shares 9,617,638 9,413,062
--------- ---------
Net income per share $ 0.14 $ 0.07
---- ----
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
6/30/97 6/30/96
<S> <C> <C>
Net income $ 2,446,165 $1,109,894
--------- ----------
Average common shares outstanding 8,796,939 8,726,818
Incremental shares issuable pursuant to
employee stock options and warrants (if dilutive) 786,589 637,484
------- -------
Total shares 9,583,528 9,364,302
--------- ---------
Net income per share $ 0.26 $ 0.12
---- ----
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 1338
<SECURITIES> 16851
<RECEIVABLES> 12527<F1>
<ALLOWANCES> 0
<INVENTORY> 4698
<CURRENT-ASSETS> 37542
<PP&E> 9121<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 53090
<CURRENT-LIABILITIES> 9289
<BONDS> 0
0
0
<COMMON> 88
<OTHER-SE> 38929
<TOTAL-LIABILITY-AND-EQUITY> 53090
<SALES> 26098
<TOTAL-REVENUES> 26098
<CGS> 13369
<TOTAL-COSTS> 13369
<OTHER-EXPENSES> 4112<F3>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 205
<INCOME-PRETAX> 2778
<INCOME-TAX> 332
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2446
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
<FN>
<F1>Net of allowance for doubtful accounts, consistent with balance sheet
presentation.
<F2>Net of accumulated depreciation, consistent with balance sheet
presentation.
<F3>Research and development expenses
</FN>
</TABLE>
