<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of Earliest Event Reported) June 9, 1998
_______________
MTL INC.
(Exact name of registrant as specified in its charter)
FLORIDA 0-24180 59-3239073
-------
(State or other jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
3108 Central Drive 33567
Plant City, Florida (Zip Code)
(Address of principal executive offices)
(813) 754-4725
(Registrant's telephone number, including area code)
_______________
NOT APPLICABLE
(Former name or address, if changed since last report)
================================================================================
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 9, 1998, MTL Inc. (the "Company") announced that Sombrero
-------
Acquisition Corp., a Florida corporation and a wholly-owned subsidiary of the
Company ("Sombrero") had merged (the "MTL Merger") with and into the Company
-------- ----------
pursuant to an Agreement and Plan of Merger, dated as of February 10, 1998, by
and among Merger Sub and the Company ("MTL Merger Agreement") with the Company
--------------------
as the surviving corporation. In the MTL Merger, the holders of the outstanding
shares of common stock, $.01 par value per share, of the Company ("Company
-------
Common Stock")(except for the Rollover Shares and Excluded Shares as defined in
- ------------
the MTL Merger Agreement) received $40 in cash for each share of Company Common
Stock held by them. The MTL Merger was treated as a recapitalization for
accounting purposes.
On June 9, 1998, in connection with the MTL Merger and the
recapitalization, the Company entered into an agreement (the "New Credit
----------
Agreement") providing for a six-year $50.0 million term loan facility (the "Term
- --------- ----
Loan Facility"), which was funded to partially consummate the recapitalization,
- -------------
and a six-year $110.0 million revolving credit facility (the "Revolving Credit
----------------
Facility") of which $10.0 million was drawn at closing with the remainder
- --------
remaining available for the Company's working capital requirements, to finance
certain permitted acquisitions and for general corporate purposes.
Interest rates on the Term Loan Facility are as follows: At the option of
the Company, (i) 0.75% in excess of the higher of (A) 1/2 of 1.0% in excess of
the federal funds rate and (B) the rate that Credit Suisse First Boston
Corporation ("CSFB") as the administrative agent announces from time to time as
its prime lending rate, as in effect from time to time, and (ii) 1.75% in excess
of the Eurodollar rate for Eurodollar loans, in each case, subject to
adjustments based upon the achievement of certain financial ratios.
Interest rates on the Revolving Credit Facility are as follows: At the
option of the Company, (i) 0.50% in excess of the higher of (A) 1/2 of 1.0% in
excess of the federal funds rate and (B) the rate that CSFB as the
administrative agent announces from time to time as its prime lending rate, as
in effect from time to time and (ii) 1.50% in excess of the Eurodollar rate for
Eurodollar loans, in each case, subject to adjustments based upon the
achievement of certain financial ratios. The interest rate on certain funds
will be based on Canadian dollar bankers' acceptances and the Canadian prime
rate. It is expected that the Company will be obligated to obtain interest rate
protection in amounts and for periods to be determined. In addition, it is
expected that the Company will be required to comply with customary financial
and affirmative covenants.
The loans and letters of credit under the New Credit Agreement will be
guaranteed by all of the Company's existing and future direct and indirect
wholly-owned domestic subsidiaries (collectively, the "Bank Guarantors"). The
---------------
obligations of the Company and the Bank Guarantors will be secured by a first
priority perfected lien on substantially all of the properties and assets of the
Company and the Bank Guarantors, now owned or subsequently acquired, including a
pledge of all capital stock and notes owned by the Company and the Bank
Guarantors, subject to certain exceptions.
2
<PAGE>
Also on June 9, 1998, in connection with the consummation of the MTL
Merger and the recapitalization, the Company issued $100,000,000 aggregate
principal amount of 10% Senior Subordinated Notes due 2006 (the "Fixed Rate
----------
Notes") and $40,000,000 aggregate principal amount of Floating Interest Rate
- -----
Subordinated Term Securities due 2006 (FIRSTSSM) (the "Floating Rate Notes" and
-------------------
together with the Fixed Rate Notes, the "Notes"). Interest on the Notes will
-----
accrue from the date of original issuance (the "Issue Date") and is payable
----------
semi-annually on each June 15 and December 15, commencing December 15, 1998.
The Fixed Rate Notes will bear interest at a rate of 10% per annum. The
Floating Rate Notes will bear interest at a rate per annum equal to three-month
LIBOR plus 4.81%. Interest on the Floating Rate Notes will be reset every three
months. The Fixed Rate Notes will be redeemable, in whole or in part, at the
option of the Company on or after June 15, 2002, and the Floating Rate Notes
will be redeemable, in whole or in part, at the option of the Company, at any
time, in each case at the redemption prices set forth in the Indenture governing
the Notes (the "Indenture"), plus accrued and unpaid interest to the date of
---------
redemption. The Notes will be unconditionally guaranteed on a senior
subordinated basis by substantially all of the Company's subsidiaries (the
"Guarantors"). The Indenture contains certain customary covenants and
----------
agreements.
The financial statements specified by Item 7 of Form 8-k have not been
included in this filing. If required to be filed, such statements will be filed
within the 60 day period specified in provision (a)(4) of such Item 7.
ITEM 5. OTHER EVENTS.
On June 24, 1998, the Company announced that Palestra Acquisition Corp., a
Delaware corporation and a wholly-owned subsidiary of the Company ("Palestra"),
--------
had entered into an Agreement and Plan of Merger ("CLC Merger Agreement"), dated
--------------------
as of June 23, 1998, by and among Palestra, Chemical Leaman Corporation, a
Pennsylvania corporation ("CLC"), and the shareholders of CLC (each, a
---
"Shareholder" and, collectively, the "Shareholders") pursuant to which the
- ------------ ------------
Company has agreed, subject to the satisfaction of certain terms and conditions,
to acquire all of the outstanding shares of common stock, $2.50 par value per
share, of CLC ("CLC Common Stock") through the merger (the "CLC Merger") of
---------------- ----------
Palestra with and into CLC, which thereby will become a wholly-owned subsidiary
of the Company. The CLC Merger has been approved by the CLC shareholders and is
expected to close in August or September of 1998 and has an outside closing date
of October 31, 1998.
Under the terms of the Merger Agreement, all shares ("Shares") of CLC
------
Common Stock held by the Shareholders shall, by virtue of the CLC Merger, be
converted into the right to receive an aggregate amount in cash (and Company
Common Stock, as described below) equal to $77.8 million less Transaction
Expenses (as defined in the CLC Merger Agreement attached as exhibit 2.2 hereto)
in excess of $100,000 (collectively, "Merger Consideration"), subject to certain
--------------------
setoffs as set forth in the Merger Agreement. A portion of the Shares held by
certain Shareholders who are officers of CLC shall not be converted into cash,
but in lieu thereof, shall be converted into shares of Company Common Stock as
set forth in their employment agreements.
In connection with the transactions contemplated by the CLC Merger, CLC
will transfer all of the common stock of Leaman Air Services, Inc., a subsidiary
of CLC, to a principal stockholder of CLC, as additional consideration
for the Shares held by him.
3
<PAGE>
Based upon the 579,925 shares of CLC Common Stock outstanding on June 23,
1998 (assuming the conversion of 151 shares of Series B Cumulative Convertible
Preferred Stock of CLC into 30,200 shares of CLC Common Stock immediately prior
to the closing of the CLC Merger), the aggregate consideration for the
outstanding shares of CLC Common Stock, which was determined based upon arms'-
length negotiation between Palestra and CLC, will be the Merger Consideration,
subject to applicable setoffs. The acquisition will be accounted for as a
purchase. Prior to the execution of the Merger Agreement, no material
relationship existed between CLC and the Company, or any of its affiliates, any
director or officer of the Company or any associate of any such director or
officer.
The sources of funds to be used to consummate the CLC Merger are expected
to include an additional $100.0 million to be borrowed under the New Credit
Agreement, approximately $16.5 million of equity, and the issuance of $40.0
million of additional Notes (as defined below). In addition, it is anticipated
that CLC will keep $100.0 million of existing CLC Notes (as defined in the CLC
Merger Agreement) outstanding. The CLC Notes will be guaranteed by the Company
and its subsidiaries, which will be contributed to CLC at the closing of the CLC
Merger.
Like the Company, CLC is a bulk tank truck carrier with national
operations. The combination of CLC and the Company will create a trailer fleet
with over 5,000 stainless steel tank trailers, augment each company's terminal
networks and create expanded geographical coverage with significant backhaul
opportunities, as well as other business opportunities including tank cleaning,
logistics, brokerage and dry bulk.
The Company anticipates that the ratio of pro-forma debt to trailing
12-months adjusted pro-forma earnings before net interest expense, income taxes,
depreciation and other income (expense) ("Adjusted Pro-forma EBITDA") at June
30, 1998 will be approximately 5 to 1. Adjusted Pro-forma EBITDA reflects
adjustments of approximately $ 12.5 million attributable to anticipated merger
synergies and approximately $ 15.0 million based on the identification of
certain CLC non-recurring or non-cash costs and expenses and certain other
adjustments. Net capital expenditures have been estimated at approximately $53.8
million for the trailing 12-months at June 30, 1998, with approximately $25.0
million to $30.0 million attributable to maintenance capital expenditures.
4
<PAGE>
(b) Exhibits.
2.1 Agreement and Plan of Merger, dated as of February 10, 1998, by and
between Sombrero Acquisition Corp. and MTL, Inc. (incorporated by
reference to the Form 8-K filed by the Company on February 25, 1998).
2.2 Agreement and Plan of Merger, dated as of June 23, 1998, by and among
Palestra Acquisition Corp., Chemical Leaman Corporation and the
shareholders of Chemical Leaman Corporation.
99.1 Joint Press Release of MTL Inc. and Chemical Leaman Corporation,
dated June 24, 1998.
5
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, MTL
Inc. has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
MTL Inc.
By: /s/ Charles J. O'Brien, Jr.
---------------------------
Date: June 25, 1998
6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
2.1 Agreement and Plan of Merger dated as of February 10, 1998, by and
between Sombrero Acquisition Corp. and MTL, Inc. (incorporated by
reference to the Form 8-K filed by the Company on February 25, 1998).
2.2 Agreement and Plan of Merger dated as of June 23, 1998, by and among
Palestra Acquisition Corp., Chemical Leaman Corporation and the
shareholders of Chemical Leaman Corporation.
99.1 Joint Press Release of MTL Inc. and Chemical Leaman Corporation, dated
June 24, 1998.
</TABLE>
7
<PAGE>
EXHIBIT 2.2
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
AMONG
PALESTRA ACQUISITION CORP.,
CHEMICAL LEAMAN CORPORATION,
AND
THE SHAREHOLDERS OF CHEMICAL LEAMAN CORPORATION
Dated as of June 23, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE 1 GENERAL.................................................................................................1
1.1 THE MERGER............................................................................................1
1.2 EFFECTIVE TIME OF THE MERGER..........................................................................2
1.3 EFFECT OF THE MERGER..................................................................................2
1.4 CHARTER, BY-LAWS, OFFICERS AND DIRECTORS OF SURVIVING CORPORATION.....................................2
1.5 TAKING OF NECESSARY ACTION; FURTHER ASSURANCES........................................................2
1.6 AUTHORIZATION OF THE MERGER, THIS AGREEMENT, THE DELAWARE CERTIFICATE OF MERGER AND THE
PENNSYLVANIA ARTICLES OF MERGER.......................................................................3
1.7 THE CLOSING...........................................................................................3
ARTICLE 2 EFFECT OF MERGER........................................................................................4
2.1 PURCHASE PRICE; EFFECT ON CAPITAL STOCK...............................................................4
2.2 DELIVERY OF FUNDS; SURRENDER OF CERTIFICATES..........................................................5
ARTICLE 3 REPRESENTATIONS AND WARRANTIES ABOUT THE SHAREHOLDER....................................................7
3.1 TITLE TO THE SHARES...................................................................................7
3.2 AUTHORITY; NONCONTRAVENTION; CONSENTS.................................................................7
ARTICLE 4 REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY........................................................9
4.1 ORGANIZATION, POWER, AUTHORITY AND GOOD STANDING......................................................9
4.2 AUTHORIZATION, EXECUTION AND ENFORCEABILITY...........................................................9
4.3 CONSENTS.............................................................................................10
4.4 CAPITALIZATION.......................................................................................10
4.5 SUBSIDIARIES; INVESTMENTS............................................................................11
4.6 ABSENCE OF CHANGES...................................................................................11
4.7 FINANCIAL INFORMATION................................................................................12
4.8 ABSENCE OF UNDISCLOSED LIABILITIES...................................................................14
4.9 ACCOUNTS AND NOTES RECEIVABLE........................................................................14
4.10 BANK ACCOUNTS; POWERS OF ATTORNEY....................................................................14
4.11 TAX MATTERS..........................................................................................15
4.12 TITLE TO ASSETS, PROPERTIES AND RIGHTS AND RELATED MATTERS...........................................17
4.13 REAL PROPERTY--OWNED OR LEASED.......................................................................18
4.14 INTELLECTUAL PROPERTY................................................................................19
4.15 AGREEMENTS, NO DEFAULTS, ETC.........................................................................20
4.16 LITIGATION, ETC......................................................................................21
4.17 COMPLIANCE WITH LAWS.................................................................................21
4.18 INSURANCE............................................................................................21
4.19 LABOR MANAGEMENT RELATIONS; EMPLOYEES................................................................22
4.20 ERISA COMPLIANCE.....................................................................................25
4.21 ENVIRONMENTAL MATTERS................................................................................28
4.22 RELATED TRANSACTIONS.................................................................................30
4.23 INDEPENDENT CONTRACTORS..............................................................................30
4.24 RELATIONSHIPS........................................................................................31
4.25 DISCLOSURE...........................................................................................31
4.26 CONFLICTS OF INTEREST................................................................................31
4.27 STATE TAKEOVER STATUTES..............................................................................32
4.28 SEC DOCUMENTS........................................................................................32
4.29 BROKERS..............................................................................................32
4.30 YEAR 2000 COMPLIANCE.................................................................................33
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PURCHASER............................................................34
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.1 ORGANIZATION; CORPORATE AUTHORITY....................................................................34
5.2 CORPORATE ACTION; AUTHORITY; NO CONFLICT.............................................................34
5.3 BROKERS..............................................................................................34
5.4 CONSENTS.............................................................................................35
5.5 FINANCING............................................................................................35
ARTICLE 6 COVENANTS AND AGREEMENTS...............................................................................35
6.1 ACCESS TO RECORDS AND PROPERTIES OF THE COMPANY......................................................35
6.2 CONDUCT OF THE COMPANY...............................................................................36
6.3 FINANCIAL INFORMATION................................................................................38
6.4 EFFORTS TO CONSUMMATE................................................................................38
6.5 NEGOTIATION WITH OTHERS..............................................................................39
6.6 NOTICE OF PROSPECTIVE BREACH.........................................................................39
6.7 PUBLIC ANNOUNCEMENTS.................................................................................39
6.8 FILINGS..............................................................................................39
6.9 [INTENTIONALLY LEFT BLANK]...........................................................................40
6.10 LEAMAN AIR SERVICES, INC.............................................................................40
6.11 HAMILTON BONUSES.....................................................................................40
6.12 SENIOR NOTES.........................................................................................41
6.13 [INTENTIONALLY LEFT BLANK]...........................................................................41
6.14 ENVIRONMENTAL TRANSFER ACTS..........................................................................41
6.15 WAIVERS..............................................................................................42
6.16 ACCOUNTS PAYABLE, ACCRUED EXPENSES AND ACCOUNTS RECEIVABLE...........................................42
6.17 NO TRANSFERS.........................................................................................42
ARTICLE 7 CONDITIONS.............................................................................................43
7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER...........................................43
7.2 CONDITIONS TO THE COMPANY'S OBLIGATION TO EFFECT THE MERGER..........................................43
7.3 CONDITIONS TO PURCHASER'S OBLIGATIONS TO EFFECT THE MERGER...........................................43
7.4 CONDITIONS TO OBLIGATIONS OF THE SHAREHOLDERS........................................................46
ARTICLE 8 INDEMNIFICATION........................................................................................46
8.1 INDEMNIFICATION GENERALLY; ETC.......................................................................46
8.2 ASSERTION OF CLAIMS..................................................................................47
8.3 NOTICE AND DEFENSE OF THIRD PARTY CLAIMS.............................................................48
8.4 ENVIRONMENTAL INDEMNIFICATION PROCEDURES.............................................................49
8.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES...........................................................53
8.6 LIMITATIONS ON INDEMNIFICATION.......................................................................54
8.7 LETTER OF CREDIT.....................................................................................54
8.8 NO INDEMNIFICATION SET-OFFS..........................................................................55
ARTICLE 9 TERMINATION; EFFECT OF TERMINATION.....................................................................55
9.1 TERMINATION..........................................................................................55
9.2 EFFECT OF TERMINATION................................................................................56
ARTICLE 10 MISCELLANEOUS PROVISIONS..............................................................................57
10.1 AMENDMENT............................................................................................57
10.2 ENTIRE AGREEMENT.....................................................................................57
10.3 SEVERABILITY.........................................................................................57
10.4 BENEFITS OF AGREEMENT; ASSIGNMENT....................................................................58
10.5 EXPENSES.............................................................................................58
10.6 HEADING..............................................................................................58
10.7 NOTICES..............................................................................................58
10.8 COUNTERPARTS.........................................................................................59
10.9 GOVERNING LAW........................................................................................60
</TABLE>
ii
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<TABLE>
<S> <C>
10.10 INCORPORATION OF EXHIBITS AND SCHEDULES..............................................................60
10.11 INDEPENDENCE OF COVENANTS AND REPRESENTATIONS AND WARRANTIES.........................................60
10.12 INTERPRETATION; CONSTRUCTION.........................................................................60
10.13 REMEDIES.............................................................................................61
10.14 WAIVER OF JURY TRIAL.................................................................................61
</TABLE>
iii
<PAGE>
SCHEDULES AND EXHIBITS
----------------------
Schedule I - Shareholders of the Company
Schedule 3.1(a) - Record Holders
Schedule 3.1(b) - Restrictions on Shares
Schedule 3.1(d) - Shareholder Indebtedness and Liabilities
Schedule 3.2(c) - Governmental Consents
Schedule 3.2(e) - Shareholder Agreements
Schedule 4.1(a) - Foreign Qualifications of the Company
Schedule 4.1(b) - Foreign Qualifications of Subsidiaries
Schedule 4.1(c) - Other Business and Trade Names
Schedule 4.2 - Violations
Schedule 4.3 - Consents
Schedule 4.4(a) - Capitalization of the Company
Schedule 4.4(c) - Warrants, Options, etc.
Schedule 4.5(a) - Subsidiaries
Schedule 4.5(b) - Capitalization of Subsidiaries
Schedule 4.6(a) - Material Adverse Changes
Schedule 4.6(b) - Intercompany Payments
Schedule 4.6(c) - Compensation
Schedule 4.6(d) - Accounting Methods
Schedule 4.6(e) - Customer Procedures
Schedule 4.6(f) - Expenditures
Schedule 4.6(g) - Assets
Schedule 4.6(h) - Breach of Section 6.2
Schedule 4.7(a) - Audited Balance Sheets
Schedule 4.7(b) - Unaudited Balance Sheets
Schedule 4.7(c) - Liabilities Required by GAAP
Schedule 4.7(d) - Prepayment
Schedule 4.7(e) - Indebtedness
Schedule 4.7(f) - Accounts Payable, Accrued Expenses and Accounts
Receivable
Schedule 4.8 - Liabilities
Schedule 4.9(a) - Accounts Receivable and Notes Receivable
Schedule 4.10 - Bank Accounts
Schedule 4.11(a) - Tax Returns
Schedule 4.11(c) - Tax Audits
Schedule 4.12(a) - Owned Tractors and Trailers
Schedule 4.12(b) - Leased Tractors and Trailers
Schedule 4.12(c) - Revenues from Independent Contractors
Schedule 4.12(d) - Encumbrances
Schedule 4.13(a) - Owned Real Property
Schedule 4.13(b) - Leased Real Property
Schedule 4.13(c) - Restrictions on Real Property
Schedule 4.14(a) - Intellectual Property
iv
<PAGE>
Schedule 4.14(d) - Intellectual Property Violations
Schedule 4.14(e) - Intellectual Property Claims
Schedule 4.15(a) - Material Contracts
Schedule 4.16(a) - Litigation
Schedule 4.16(b) - Litigation Payments
Schedule 4.16(c) - Litigation Recoverable Expenses
Schedule 4.17(a) - Permits
Schedule 4.17(b) - Compliance
Schedule 4.18(a) - Insurance
Schedule 4.18(b) - Insurance Defaults
Schedule 4.19(a) - Directors, Officers and Key Management
Employees
Schedule 4.19(b) - Drivers, Maintenance Employees, etc.
Schedule 4.19(c) - Amendments
Schedule 4.19(d) - Employment Agreements
Schedule 4.19(e) - Employee Payments
Schedule 4.19(g) - Related Party Transactions
Schedule 4.19(i) - Collective Bargaining Agreements
Schedule 4.19(j) - Labor Relations
Schedule 4.19(l) - Unfair Labor Practices
Schedule 4.19(m) - Joint Employer
Schedule 4.19(n) - Withdrawal Liability
Schedule 4.19(p) - Unfair Labor Practices and Material Adverse
Effect
Schedule 4.20(a) - Employee Plans
Schedule 4.20(b) - Administration of Employee Plans
Schedule 4.21(a) - Compliance with EHS Requirements of Law
Schedule 4.21(b) - EHS Permits
Schedule 4.21(c) - Material EHS Permits
Schedule 4.21(d) - Third Parties
Schedule 4.21(e) - Investigations
Schedule 4.21(g) - Notices
Schedule 4.21(h) - Releases
Schedule 4.21(i) - National Priorities List
Schedule 4.21(j) - Disposal of Contaminants
Schedule 4.21(k) - Transport of Contaminants
Schedule 4.21(l) - Migration of Contaminants
Schedule 4.21(m) - Underground Improvements
Schedule 4.21(n) - PCBs
Schedule 4.21(o) - Liabilities under EHS Requirements of Law
Schedule 4.22 - Related Transactions
Schedule 4.23(a) - Independent Contractors
Schedule 4.21(b) - EHS Permits
Schedule 4.30(a) - Computer Products
Schedule 4.30(b) - Year 2000 Compliance
Schedule 6.2(e) - Anticipated Equipment
Schedule 6.10(d) - Leaman Air
v
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Schedule 6.12 - Senior Notes
Schedule 7.3(p)(1) - Consultants
Schedule 7.3(p)(2) - Conditions Causing EHS Damages
Schedule 8.4(d) - Neutral Third Parties
Schedule 8.4(e) - Certain EHS Damages
Exhibit A - Form of Delaware Certificate of Merger
Exhibit B - Form of Pennsylvania Articles of Merger
Exhibit C - Articles of Incorporation of the Company
Exhibit D - Form of Letter of Transmittal
Exhibit E - Financing Letters
Exhibit F - Restrictive Covenant Agreement
Exhibit G - Waiver and Release
vi
<PAGE>
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of June 23,
1998, by and among PALESTRA ACQUISITION CORP., a Delaware corporation
("Purchaser"), CHEMICAL LEAMAN CORPORATION, a Pennsylvania corporation (the
- -----------
"Company"), and THE SHAREHOLDERS OF THE COMPANY NAMED ON SCHEDULE I ATTACHED
- -------- ----------
HERETO (each, a "Shareholder", and collectively, the "Shareholders"). Certain
----------- ------------
capitalized terms used herein are defined in Annex I hereto.
-------
WHEREAS, the Board of Directors of the Company has determined that it
is fair and in the best interests of its shareholders for Purchaser to merge
with and into the Company (the "Merger") pursuant to Section 252 of the Delaware
------
General Corporation Law (the "Delaware Statute") and Subchapter C of Chapter 19
----------------
of the Pennsylvania Business Corporation Law of 1988, as amended (the
"Pennsylvania Statute") upon the terms and subject to the conditions set forth
- ---------------------
herein;
WHEREAS, the Board of Directors of the Company has adopted resolutions
approving the Merger, this Agreement and the transactions to which the Company
is a party contemplated hereby, and has agreed, upon the terms and subject to
the conditions set forth herein, to recommend that the Company's shareholders
approve the Merger and this Agreement;
WHEREAS, the parties have agreed (subject to the terms and conditions
of this Agreement), as soon as practicable following the approval by the
shareholders of the Company, to effect the Merger, as more fully described
herein;
WHEREAS, simultaneously with the execution hereof, the Company and
certain of its employees are entering into letter agreements (the "Employment
----------
Agreements") with respect to the employment of such persons after the
- ----------
consummation of the Merger;
WHEREAS, simultaneously with the execution hereof, the Company and all
the Shareholders have entered into an agreement with respect to the appointment
of a representative of the Shareholders (the "Shareholders Representative"), a
---------------------------
copy of which has been furnished to Purchaser; and
WHEREAS, Purchaser, the Company and the Shareholders desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual
benefits to be derived from this Agreement and the representations, warranties,
covenants, agreements and conditions hereinafter set forth, the parties hereto
hereby agree as follows:
<PAGE>
ARTICLE 1
GENERAL
1.1 The Merger.
----------
In accordance with, and subject to, the provisions of this Agreement,
the Delaware Certificate of Merger in substantially the form of Exhibit A
---------
attached hereto (the "Delaware Certificate of Merger"), the Delaware Statute,
------------------------------
the Pennsylvania Articles of Merger in substantially the form of Exhibit B
---------
attached hereto (the "Pennsylvania Articles of Merger") and the Pennsylvania
-------------------------------
Statute, Purchaser shall be merged with and into the Company, which, at and
after the Effective Time, shall be and is hereinafter sometimes referred to as
the "Surviving Corporation." Purchaser and the Company are hereinafter
---------------------
sometimes collectively referred to as the "Constituent Corporations."
------------------------
1.2 Effective Time of the Merger.
----------------------------
The Merger shall become effective on the Closing Date upon the filing
by the Surviving Corporation of the Delaware Certificate of Merger with the
Secretary of State of the State of Delaware. The Delaware Certificate of Merger
shall be executed and delivered in the manner provided under the Delaware
Statute. The Pennsylvania Articles of Merger shall be executed and delivered in
the manner provided under the Pennsylvania Statute and filed with the Secretary
of State of the Commonwealth of Pennsylvania concurrently with the filing of the
Delaware Certificate of Merger. The time when the Merger shall become effective
is referred to herein as the "Effective Time."
--------------
1.3 Effect of the Merger.
--------------------
Except as specifically set forth herein or in the Pennsylvania
Articles of Merger, at the Effective Time, the identity, existence, corporate
organization, purposes, powers, objects, franchises, privileges, rights,
immunities, restrictions, debts, liabilities and duties (collectively, the
"Corporate Rights") of the Company shall continue in effect and be unimpaired by
the Merger, and the Corporate Rights of Purchaser shall be merged with and into
the Company, which shall, as the Surviving Corporation, be fully vested
therewith. At the Effective Time, the separate existence and corporate
organization of Purchaser shall cease, and Purchaser shall be merged with and
into the Surviving Corporation.
1.4 Charter, By-Laws, Officers and Directors of Surviving Corporation.
-----------------------------------------------------------------
From and after the Effective Time, the articles of incorporation, as
amended, of the Company shall be amended and restated in their entirety to read
as set forth in Exhibit C hereto (the "Company's Charter") and, as so amended,
--------- -----------------
the Company's Charter shall be the articles of incorporation of the Surviving
Corporation until altered, amended or repealed as provided in the Pennsylvania
Statute; the by-laws of Purchaser shall become the by-laws of the Surviving
Corporation (the "Company's By-Laws"), unless and until altered, amended or
-----------------
repealed as provided in the Pennsylvania Statute, the Company's Charter or such
By-laws; and
2
<PAGE>
the officers and directors of Purchaser shall become the officers and directors
of the Surviving Corporation, respectively, unless and until removed or until
their respective terms of office shall have expired in accordance with the
Pennsylvania Statute, the Company's Charter or the Company's By-Laws, as
applicable.
1.5 Taking of Necessary Action; Further Assurances.
----------------------------------------------
Prior to the Effective Time, and subject to the terms and conditions
contained in this Agreement, the parties hereto shall take or cause to be taken
all such actions as may be necessary or appropriate in order to effectuate, as
expeditiously as reasonably practicable, the Merger and the other transactions
contemplated by this Agreement.
1.6 Authorization of the Merger, this Agreement, the Delaware Certificate
---------------------------------------------------------------------
of Merger and the Pennsylvania Articles of Merger.
-------------------------------------------------
(a) Prior to or simultaneously with the execution and delivery of this
Agreement, the Shareholders shall execute a written consent in lieu of a
meeting, which written consent shall include resolutions approving and adopting
the Merger, this Agreement, the Pennsylvania Articles of Merger, the Delaware
Certificate of Merger, and Related Documents and consummation of the
transactions contemplated hereby, as required by the Delaware Statute and the
Pennsylvania Statute.
(b) Prior to or simultaneously with the execution and delivery of this
Agreement, Purchaser shall execute a written consent in lieu of a meeting, which
written consent shall include resolutions approving and adopting the Merger,
this Agreement, the Delaware Certificate of Merger, the Pennsylvania Articles of
Merger, the Related Documents and the consummation of the transactions
contemplated hereby, as required by the Delaware Statute and the Pennsylvania
Statute.
(c) The Company shall take, and the Shareholders shall cause the Company
to take, as promptly as practicable, all such other actions as may be necessary
or advisable under the Delaware Statute, the Pennsylvania Statute and any other
applicable law or regulation in connection with this Agreement, the Merger, the
Delaware Certificate of Merger or the Pennsylvania Articles of Merger. The
Company shall prepare and distribute any written notice or other materials
relating to the Shareholders' action contemplated by Section 1.6(a) required to
be delivered pursuant to the Company's articles of incorporation, the Company's
by-laws, the Delaware Statute, the Pennsylvania Statute or any other Federal or
state law applicable to this Agreement, the Merger, the Delaware Certificate of
Merger, the Pennsylvania Articles of Merger, the Related Documents or the
Shareholders' action (collectively, the "Shareholders' Materials"); provided,
--------
however, that Purchaser and its counsel shall have a reasonable opportunity to
- -------
review all Shareholders' Materials and all Shareholders' Materials shall be
reasonably satisfactory in form and substance to Purchaser and its respective
counsel.
1.7 The Closing.
-----------
3
<PAGE>
The closing of the transactions contemplated hereby (the "Closing")
will take place as promptly as practicable after satisfaction or waiver of the
conditions set forth in Article VII or such other date to be mutually agreed
upon by the parties(the "Closing Date"). On the Closing Date, the Surviving
------------
Corporation shall file the Delaware Certificate of Merger with the Secretary of
State of the State of Delaware and the Pennsylvania Articles of Merger with the
Pennsylvania Secretary of State pursuant to Section 1.2 hereof. The Closing
shall take place at the offices of O'Sullivan Graev & Karabell, LLP, 30
Rockefeller Plaza, New York, New York 10112, unless another place is agreed to
in writing by the parties.
ARTICLE 2
EFFECT OF MERGER
2.1 Purchase Price; Effect on Capital Stock.
---------------------------------------
(a) Subject to any setoffs as set forth in Section 7.3(g) or Section
7.3(h), the aggregate purchase price payable at the Closing hereunder for the
issued and outstanding capital stock of the Company shall be equal to the Merger
Consideration minus the Net Transaction Expenses, plus with respect to George
McFadden, the consideration set forth in Section 6.10 hereof.
(b) The manner and basis of converting, exchanging or canceling the
shares of capital stock of each of the Constituent Corporations into or for cash
(or the contingent right to receive cash) or securities of the Surviving
Corporation shall be as follows:
(i) each share of common stock, $.01 par value, of Purchaser issued
and outstanding immediately prior to the Effective Time shall be converted
into one share of common stock, $.01 par value, of the Surviving
Corporation;
(ii) each Share issued and outstanding immediately prior to the
Effective Time and owned directly or indirectly by the Company (whether as
treasury stock or otherwise) shall, by virtue of the Merger and without any
action on the part of the holder thereof, be canceled and no consideration
shall be delivered in exchange therefor;
(iii) each Merger Share held by the Shareholders (other than the
Merger Shares held by David R. Hamilton and the Merger Shares held by David
M. Boucher) shall, by virtue of the Merger and without any action on the
part of the holders thereof, cease to be outstanding and be converted into
the right to receive, subject to the terms and conditions of this
Agreement, an amount in cash equal to a portion of the Merger Consideration
determined as follows:
(A) multiply the Merger Consideration by such Shareholder's
Common Equity Percentage to determine the "Base Merger Consideration" for
such Shareholder;
(B) subtract from the Base Merger Consideration for such
Shareholder, an amount equal to the sum of (x) the Hamilton Special Merger
Consideration multiplied by such Shareholder's Common Equity Percentage,
plus (y) the Boucher Special Merger
4
<PAGE>
Consideration multiplied by such Shareholder's Common Equity Percentage,
plus (z) the Net Transaction Expenses multiplied by such Shareholders'
Percentage of Merger Consideration, in order to determine such
Shareholder's portion of the Merger Consideration;
(iv) each Merger Share held by David R. Hamilton shall, by virtue of
the Merger and without any action on the part of Mr. Hamilton, cease to be
outstanding and shall be converted into the right to receive, subject to
the terms and conditions of this Agreement, an amount in cash equal to a
portion of the Merger Consideration determined as follows:
(A) multiply the Merger Consideration by such Shareholder's
Common Equity Percentage to determine the "Base Merger Consideration" for
such Shareholder;
(B) add to the Base Merger Consideration for such Shareholder, an
amount equal to the Hamilton Special Merger Consideration (such sum,
collectively, the "Hamilton Adjusted Merger Consideration");
(C) subtract from the Hamilton Adjusted Merger Consideration, an
amount equal to the sum of (x) the Boucher Special Merger Consideration
multiplied by Mr. Hamilton's Common Equity Percentage, plus (y) the Net
Transaction Expenses multiplied by Mr. Hamilton's Percentage of Merger
Consideration, in order to determine such Shareholder's portion of the
Merger Consideration;
(v) each Merger Share held by David M. Boucher shall, by virtue of
the Merger and without any action on the part of Mr. Boucher, cease to be
outstanding and shall be converted into the right to receive, subject to
the terms and conditions of this Agreement, an amount in cash equal to a
portion of the Merger Consideration determined as follows:
(A) multiply the Merger Consideration by such Shareholder's
Common Equity Percentage to determine the "Base Merger Consideration" for
such Shareholder;
(B) add to the Base Merger Consideration for such Shareholder, an
amount equal to the Boucher Special Merger Consideration (such sum,
collectively, the "Boucher Adjusted Merger Consideration");
(C) subtract from the Boucher Adjusted Merger Consideration, an
amount equal to the sum of (x) the Hamilton Special Merger Consideration
multiplied by Mr. Boucher's Common Equity Percentage plus (y) the Net
Transaction Expenses multiplied by such Shareholder's Percentage of Merger
Consideration, in order to determine such Shareholder's portion of the
Merger Consideration;
(vi) each authorized but unissued share of Company Common Stock
immediately prior to the Effective Time shall be canceled.
5
<PAGE>
(c) Notwithstanding the foregoing, all or a portion of the Merger Shares
held by certain Shareholders shall not be converted into cash, but in lieu
thereof shall be converted into common stock of MTL (the "MTL Stock") in
---------
accordance with the provisions of the Employment Agreements entered into by such
Shareholders.
2.2 Delivery of Funds; Surrender of Certificates.
--------------------------------------------
(a) At the Effective Time, upon surrender by the Shareholders to the
Surviving Corporation of the certificates which, immediately prior to the
Effective Time, represented Shares, the Surviving Corporation shall deposit with
the Transfer Agent for the benefit of the holders of the Shares, for payment in
accordance with this Article II, the funds necessary to pay the Merger
Consideration (taking into consideration the MTL Stock and subject to any
setoffs as set forth in Section 7.3(g) or Section 7.3(h)).
(b) Each holder of an outstanding certificate or certificates which prior
thereto represented Merger Shares, upon surrender at, or as soon as practicable
after, the Effective Time of the Merger (as the case may be) to the Transfer
Agent of such certificate or certificates (together with a letter of transmittal
signed by such holder in substantially the form of Exhibit D attached hereto),
---------
shall be entitled to the amount of cash into which the number of Merger Shares
previously represented by such certificate or certificates surrendered shall
have been converted pursuant to this Agreement (taking into consideration the
MTL Stock and subject to any setoffs as set forth in Section 7.3(g) or Section
7.3(h)). The Transfer Agent shall accept such certificates and such letter of
transmittal upon compliance with such reasonable terms and conditions as the
Transfer Agent may impose to effect an orderly exchange thereof in accordance
with normal practices. After the Effective Time of the Merger, there shall be
no further transfer on the records of the Company or its transfer agent of
certificates representing Merger Shares which have been converted, in whole or
in part, pursuant to this Agreement, into the right to receive cash, and if such
certificates are presented to the Company for transfer, they shall be canceled
against delivery of such cash. If cash is to be remitted to a name other than
that in which the certificate for Merger Shares surrendered for exchange is
registered, it shall be a condition of such exchange that the certificate so
surrendered shall be properly endorsed, with signature guaranteed or otherwise
in proper form for transfer. Until surrendered as contemplated by this Section
2.2(b), each certificate for Merger Shares shall be deemed at any time after the
Effective Time of the Merger to represent only the right to receive upon such
surrender the Merger Consideration for each Merger Share.
(c) No dividends or other distributions with respect to Shares with a
record date after the Effective Time of the Merger shall be paid to the holder
of any certificate for Shares not surrendered with respect to the Shares
represented thereby.
(d) All cash paid upon the surrender for exchange of certificates
representing Shares in accordance with the terms of this Article II shall be
deemed to have been paid in full satisfaction of all rights pertaining to the
Shares exchanged for cash theretofore represented by such certificates.
6
<PAGE>
(e) Any cash deposited with the Transfer Agent pursuant to this Section
2.2 (the "Exchange Fund") which remains undistributed to the holders of the
-------------
certificates representing Shares 180 days after the Effective Time of the Merger
shall be delivered to the Surviving Corporation at such time and any holders of
Shares prior to the Merger who have not theretofore complied with this Article
II shall thereafter look only to the Surviving Corporation and only as general
unsecured creditors thereof for payment of their claim for cash.
(f) Neither Purchaser nor the Company shall be liable to any person in
respect of any cash from the Exchange Fund delivered to a public office pursuant
to any applicable abandoned property, escheat or similar law. If any
certificates representing Shares shall not have been surrendered prior to one
year after the Effective Time of the Merger (or immediately prior to such
earlier date on which any cash in respect of such certificate would otherwise
escheat to or become the property of any Governmental Entity), any such cash in
respect of such certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all claims
or interest of any person previously entitled thereto.
(g) The Company shall invest any cash included in the Exchange Fund, as
directed by Purchaser, on a daily basis. Any interest and other income
resulting from such investments shall be paid to the Company. To the extent
that there are losses with respect to such investments, or the Exchange Fund
diminishes for other reasons below the level required to make prompt payments of
the Merger Consideration as contemplated hereby, Purchaser shall promptly
replace or restore the portion of the Exchange Fund lost through investments or
other events so as to ensure that the Exchange Fund is, at all times, maintained
at a level sufficient to make such payments.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES ABOUT THE SHAREHOLDER
Each Shareholder represents and warrants (severally as to such
Shareholder only) to Purchaser as follows:
3.1 Title to the Shares.
-------------------
(a) Such Shareholder is the lawful owner, of record and beneficially, of
those Shares set forth opposite his, her or its name on Schedule 3.1(a) and has
---------------
good and marketable title to such Shares.
(b) Except to the extent set forth on Schedule 3.1(b), (i) such
---------------
Shareholder owns such Shares free and clear of any Encumbrances whatsoever and
with no restriction on the voting rights and other incidents of record and
beneficial ownership pertaining thereto, (ii) such Shareholder is not the
subject of any bankruptcy, reorganization or similar proceeding and (iii) except
for this Agreement and any agreements entered into pursuant hereto, there are no
agreements or understandings between such Shareholder and any other Person with
respect to the acquisition, disposition, transfer, registration or voting of or
any other matters in any way pertaining or relating to any of the capital stock
of the Company.
7
<PAGE>
(c) Such Shareholder does not have any right whatsoever to receive or
acquire any additional capital stock of the Company.
(d) Schedule 3.1(d) sets forth a schedule of all Indebtedness and
---------------
Liabilities owing by each Shareholder to the Company and each Subsidiary, all of
which, except as otherwise set forth in this Agreement shall be fully satisfied
at or prior to the Effective Time.
3.2 Authority; Noncontravention; Consents.
-------------------------------------
(a) Such Shareholder has the full and absolute right, capacity, power and
authority to enter into this Agreement and each Related Document to which such
Shareholder is or will be a party; this Agreement and each Related Document to
which such Shareholder is or will be a party has been, or upon the execution and
delivery thereof will be, duly and validly executed and delivered by such
Shareholder; and this Agreement and each Related Document is, or upon the
execution and delivery thereof will be, the valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance with its terms,
except as enforceability may be limited by equitable principles of bankruptcy,
fraudulent conveyance or insolvency laws affecting creditors' rights generally.
(b) None of the execution, delivery or performance by such Shareholder of
this Agreement or the Related Documents to which such Shareholder is or will be
a party nor the consummation of the transactions contemplated hereby or thereby
nor compliance by such Shareholder with any of the provisions hereof or thereof
will (i) conflict with, or result in any violation of, or cause a default (with
or without notice or lapse of time, or both) under, or give rise to any right of
termination, amendment, cancellation or acceleration of any obligations
contained in or the loss of any benefit under, any term, condition or provision
of any Contract to which such Shareholder is a party, or by which such
Shareholder or its assets may be bound, except for any conflict, violation,
default, termination, amendment, cancellation or acceleration that is not
material, or (ii) violate any Law applicable to such Shareholder, which conflict
or violation could prevent the consummation of the transactions contemplated by
this Agreement or any of the Related Documents to which such Shareholder is or
will be a party or result in an Encumbrance on or against any assets, rights or
properties of such Shareholder, or on or against any capital stock of the
Company, or give rise to any claim against the Company or Purchaser.
(c) Except as set forth on Schedule 3.2(c) or otherwise contemplated by
---------------
this Agreement, no Permit, authorization, consent or approval of or by, or any
notification of or filing with, any Person (governmental or private) is required
in connection with the execution, delivery and performance by such Shareholder
of this Agreement or the Related Documents to which such Shareholder is or will
be a party or the consummation by such Shareholder of the transactions
contemplated hereby or thereby.
(d) The Company's execution and delivery of this Agreement and each
Related Document to which it is a party, and performance by the Company of its
obligations hereunder and thereunder are hereby duly and validly authorized and
approved by such Shareholder.
8
<PAGE>
(e) Except as set forth on Schedule 3.2(e), no Shareholder is party to or
---------------
bound by any agreement, arrangement or understanding with any other Shareholder,
except for (i) agreements to which the Company is a party and (ii) agreements
with respect to which no party to, or beneficiary of, is expected to be an
employee or officer of the Company at or immediately after the Effective Time.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES ABOUT THE COMPANY
The Company represents and warrants to Purchaser as follows:
4.1 Organization, Power, Authority and Good Standing.
------------------------------------------------
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite power and authority (corporate and otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted. The Company is duly qualified and in good standing to transact
business as a foreign corporation in those jurisdictions set forth on Schedule
--------
4.1(a), which constitute all the jurisdictions in which the character of the
- ------
property owned, leased or operated by such entity or the nature of the business
or activities conducted by such entity makes such qualification necessary,
except where the failure to so qualify would not reasonably be expected to have
a Material Adverse Effect. Purchaser has been furnished with true, correct and
complete copies of the Company's Charter and the Company's By-Laws, in each case
as amended and in effect on the date hereof.
(b) Each Subsidiary is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite power and authority (corporate and otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted. Each Subsidiary is duly qualified and in good standing to transact
business as a foreign corporation in those jurisdictions set forth on Schedule
--------
4.1(b), which constitute all the jurisdictions in which the character of the
- ------
property owned, leased or operated by such entity or the nature of the business
or activities conducted by such entity makes such qualification necessary,
except where the failure to so qualify would not reasonably be expected to have
a Material Adverse Effect. Purchaser has been furnished with true, correct and
complete copies of the organizational documents of each Subsidiary, including
all certificates or articles of incorporation, formation, or partnership, all
bylaws, partnership agreements, operating agreements, limited liability company
agreements or other organizational documents, in each case as amended and in
effect on the date hereof.
(c) Except as set forth on Schedule 4.1(c), neither the Company nor any
---------------
Subsidiary has (i) within the last three years, engaged in any business other
than the Business and (ii) used within the last three years any other trade name
or assumed names.
4.2 Authorization, Execution and Enforceability.
-------------------------------------------
9
<PAGE>
The Company has all requisite power and authority (corporate and
otherwise) to execute, deliver and perform its obligations under this Agreement
and each Related Document to which it is or will be a party and to consummate
the transactions contemplated hereby and thereby. The Company's execution and
delivery of this Agreement and each Related Document to which it is or will be a
party, and performance by the Company of its obligations hereunder and
thereunder have been duly and validly authorized by all requisite action on the
part of the Company and its Shareholders, and this Agreement and each Related
Document to which the Company is or will be a party has been, or upon the
execution and delivery thereof will be, duly and validly executed and delivered
by the Company and constitutes, or upon its execution and delivery will
constitute, a valid and binding obligation of the Company, enforceable against
the Company, as the case may be, in accordance with its terms, except as
enforceability may be limited by equitable principles of bankruptcy, fraudulent
conveyance or insolvency laws affecting creditors' rights generally. Except as
set forth on Schedule 4.2 or as otherwise contemplated by this Agreement,
------------
neither the Company's execution and delivery of, and/or performance of its
obligations under, this Agreement or the Related Documents to which it is or
will be a party, nor the consummation of the transactions contemplated hereby or
thereby will (a) violate, or result in the creation of an Encumbrance upon any
of the Company's assets as a result of, any Laws applicable to the Company or
any of its properties or assets or (b) conflict with, or result in any violation
or breach of, any of the terms, conditions or provisions of, or constitute (with
due notice or lapse of time, or both) a default or give rise to any right of
contingent payment, termination, cancellation or acceleration, or result in the
creation of any Encumbrance upon any of the properties or assets of the Company,
under, any provision of the Company's Charter or the Company's By-laws or any
Permit, Order or Material Contract to which it is a party or by which it or any
of its assets or properties is or may be bound.
4.3 Consents.
--------
Except as set forth on Schedule 4.3, no consent, approval, Permit,
------------
Order or authorization of, registration, declaration or filing with, or
notification to any Governmental Entity is required in connection with the
execution, delivery and performance by the Company or any Subsidiary of this
Agreement or any Related Document to which it is or will be a party or the
consummation of the transactions contemplated hereby or thereby.
4.4 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of 3,500,000
shares, of which (i) 3,000,000 are designated as Common Stock, par value $2.50
per share and (ii) 500,000 are designated as Preferred Stock, no par value per
share, of which (A) 130 shares are designated as Series A Preferred Stock, (B)
151 shares are designated as Series B Cumulative Convertible Preferred Stock and
(C) 302 shares are designated as Series C Cumulative Preferred Stock. Schedule
--------
4.4(a) sets forth a true, correct and complete list of the owners of all issued
- ------
and outstanding shares of Common Stock, Series A Preferred Stock, Series B
Cumulative Convertible Preferred Stock and Series C Cumulative Preferred Stock
(setting forth the number of each such shares owned by each such owner). All
issued and outstanding shares set forth in such Schedule have been duly and
validly issued and are fully paid and nonassessable and are owned of record and
beneficially by the persons set forth in such Schedule. Prior to the Effective
10
<PAGE>
Time, all of the Series B Cumulative Convertible Preferred Stock shall have been
converted into Common Stock.
(b) [Intentionally Left Blank.].
(c) Except as set forth on Schedule 4.4(c), there are no securities
---------------
presently outstanding, that are convertible into, exchangeable for, or carrying
the right to acquire, equity securities of the Company or subscriptions,
warrants, options, calls, puts, convertible securities, registration or other
rights or arrangements obligating the Company to issue, sell, register, purchase
or redeem any of its equity securities or any ownership interest or rights
therein. There are no voting trusts or other agreements or understandings to
which the Company is bound with respect to the voting of the Company's capital
stock. There are no stock appreciation rights, phantom stock rights or similar
rights or arrangements outstanding. Except as set forth on Schedule 4.4(c) or
---------------
as otherwise contemplated by this Agreement, there are no Contracts,
commitments, arrangements, understandings or restrictions to which the Company,
the Shareholders or to the Best Knowledge of the Company any other Person is
bound relating in any way to any shares of capital stock or other securities of
the Company.
(d) Other than the Notes (as defined below), which have been registered
under the Securities Act, all securities issued by the Company have been issued
in transactions exempt from registration under the Securities Act and the rules
and regulations promulgated thereunder and all applicable state securities or
"blue sky" laws, and the Company has complied in all material respects with the
Securities Act and all applicable state securities or "blue sky" laws in
connection with the issuance of any such securities.
4.5 Subsidiaries; Investments.
-------------------------
(a) Schedule 4.5(a) sets forth a true, correct and complete list of each
---------------
Subsidiary of the Company and the percentage of the voting securities and total
equity interests of such Subsidiary owned by the Company (or one or more of its
Subsidiaries) and each other holder thereof. Except as set forth on such
Schedule, the Company does not own or hold, directly or indirectly, any equity
interest in any Person. All of the voting securities and equity interests set
forth on Schedule 4.5(a) are owned of record and beneficially by the Company or
---------------
one of its Subsidiaries, free and clear of all Encumbrances. All equity
interests of the Subsidiaries are fully paid, nonassessable and not subject to
preemptive rights.
(b) The authorized capital stock of each Subsidiary is as set forth in
Schedule 4.5(b).
- ---------------
4.6 Absence of Changes.
------------------
Since the Latest Balance Sheet Date, the Company and each Subsidiary
has been operated in the ordinary course, consistent with past practice, and
there has not been:
(a) except as set forth in Schedule 4.6(a), any change in the business,
---------------
operations, assets, condition (financial or otherwise), operating results or
Liabilities which has had or is reasonably likely to have a material adverse
effect on the Company and its Subsidiaries
11
<PAGE>
(taken as a whole) or any material casualty loss or damage to the assets of the
Company or any Subsidiary, whether or not covered by insurance (a "Material
--------
Adverse Change");
- --------------
(b) except for intercompany payments in the ordinary course of business
or as set forth in Schedule 4.6(b), any declaration, setting aside or payment of
---------------
any distribution with respect to any shares of capital stock of the Company or
any Subsidiary, or any direct or indirect redemption, purchase or other
acquisition of any thereof, or any other payments of any nature outside the
ordinary course of business to any Affiliate of the Company whether or not on or
with respect to any shares of capital stock of the Company owned by such
Affiliate (excluding salaries and benefits in ordinary course consistent with
past practices at rates equal to those in effect on the Latest Balance Sheet
Date);
(c) except as set forth in Schedule 4.6(c), any general uniform increase
---------------
in the compensation of employees (including, without limitation, any increase
pursuant to any bonus, pension, profit-sharing or other plan or commitment) of
the Company or any Subsidiary, or any increase in any such compensation payable
to any officer, director or key management employee;
(d) except as set forth in Schedule 4.6(d), any change in the tax or
---------------
other accounting methods or practices followed by the Company or any Subsidiary,
any change in depreciation or amortization policies or rates previously adopted
or any write-up of inventory or other assets;
(e) except as set forth in Schedule 4.6(e) any material change in the
---------------
manner in which products or services of the Company or any Subsidiary are
marketed (including, without limitation, any material change in prices), any
material change in the manner in which the Company or any Subsidiary extends
discounts or credit to customers or any material change in the manner or terms
by which the Company or any Subsidiary collects its accounts receivable or
otherwise deals with customers;
(f) except as set forth in Schedule 4.6(f), any failure by the Company or
---------------
any Subsidiary to make scheduled capital expenditures or investments or any
failure to pay trade accounts payable or any other Liability of the Company or
any Subsidiary in the ordinary course consistent with past practices;
(g) except as set forth in Schedule 4.6(g), neither the Company nor any
---------------
Subsidiary has sold, leased, licensed, mortgaged or otherwise encumbered or
subjected to any Encumbrance or otherwise disposed of its properties or assets,
except (i) immaterial assets, (ii) in the ordinary course of business (including
for trade-ins) and (iii) where the amount of such sales does not exceed,
individually or in the aggregate, $250,000;
(h) except as set forth in Schedule 4.6(h), neither the Company nor any
---------------
Subsidiary has taken any action that would result in a breach of Section 6.2 if
such action was taken after the date hereof; or
(i) any entry into any agreement or understanding, whether in writing or
otherwise, to take any of the actions specified in the foregoing clauses (a)
through (h).
12
<PAGE>
4.7 Financial Information.
---------------------
(a) Schedule 4.7(a) contains true, correct and complete copies of the
---------------
audited consolidated balance sheets of the Company and its Subsidiaries as of
December 31, 1995, 1996 and 1997 (each an "Audited Balance Sheet Date"), and the
--------------------------
related audited consolidated statements of operations and cash flows of the
Company and its Subsidiaries for the fiscal years then ended, including the
footnotes thereto, as audited by (and together with the report of their audit)
Arthur Andersen LLP (all of foregoing being hereinafter collectively called the
"Audited Financial Statements").
----------------------------
(b) Schedule 4.7(b) contains true, correct and complete copies of the
---------------
unaudited consolidated balance sheets of the Company and its Subsidiaries as of
April 5, 1998 (the "Latest Balance Sheet") and the related unaudited
--------------------
consolidated statements of operations and cash flows of the Company and its
Subsidiaries for the year-to-date period then ended (all of foregoing being
hereinafter collectively called the "Unaudited Financial Statements").
------------------------------
(c) The Audited Financial Statements and the Unaudited Financial
Statements were prepared in accordance with GAAP applied on a consistent basis
during the periods involved and fairly present, in all material respects, the
consolidated financial position of the Company and its Subsidiaries as of the
dates thereof and the results of its operations and cash flows for the periods
then ended, subject, in the case of the Unaudited Financial Statements, to
normal year-end adjustments. Except as set forth on Schedule 4.7(c),
---------------
liabilities set forth on the Latest Balance Sheet, and liabilities and
obligations incurred in the ordinary course of business consistent with past
practice since the date of the Latest Balance Sheet (the "Latest Balance Sheet
--------------------
Date"), neither the Company nor any of its Subsidiaries has any Liabilities of
- ----
any nature (whether accrued, absolute, contingent or otherwise) required by GAAP
to be set forth on a balance sheet or in the notes thereto. Management of the
Company has no reason to believe that with respect to its and its Subsidiaries'
long-lived assets and intangible assets which are subject to Financial
Accounting Standards No. 121, as of December 31, 1997, the undiscounted future
cash flows related to such assets did not exceed the carrying values thereof
recorded as of such date, as required by GAAP.
(d) Except as set forth in Schedule 4.7(d), all Indebtedness of the
---------------
Company and each Subsidiary may be prepaid in whole or in part at any time and
from time to time without premium or penalty. Schedule 4.7(d) sets forth a
---------------
schedule of all such prepayment premiums and penalties.
(e) Schedule 4.7(e) sets forth a true, correct and complete schedule of
---------------
the consolidated Indebtedness owed, as of the date hereof, by the Company and
its Subsidiaries to any third party (determined in accordance with GAAP
consistently applied), which schedule shall (i) identify the lender or lenders
and the aggregate principal amount outstanding and interest in respect thereof,
(ii) set forth the aggregate principal amount of Indebtedness owed in respect of
each tractor or trailer (if applicable) set forth in Schedule 4.12(a) or the net
present value of all future lease payments owed in respect of each tractor or
trailer (if applicable) set forth in Schedule 4.12(b) and (iii) set forth an
amortization schedule of all future principal payments in
13
<PAGE>
respect of such Indebtedness and/or all future lease payments (identifying the
portion attributable to financing in respect of the tractors and trailers and
the portion attributable to other financing).
(f) Schedule 4.7(f) sets forth a true, correct and complete summary of
---------------
all consolidated accounts payable, accrued expenses and accounts receivable of
the Company and its Subsidiaries as of the end of each of the three months ended
immediately prior to the date hereof, which schedule shall set forth the name of
the account debtor (in the case of accounts receivable) or account creditor (in
the case of accounts payable and accrued expenses) and the amount owed by or
owing to such account debtor or account creditor (identifying the portion of
such amount that is current, 30, 60, 90 and more than 90 days past due).
4.8 Absence of Undisclosed Liabilities.
----------------------------------
Neither the Company nor any Subsidiary has any Liability except (i) as
set forth in Schedule 4.8, (ii) those Liabilities reflected or reserved against
------------
on the Latest Balance Sheet, (ii) Liabilities under the Contracts to which it is
party (excluding Liabilities resulting from any breach thereof) and (iv)
Liabilities incurred in the ordinary course of business consistent with past
practice since the Latest Balance Sheet Date (other than any such Liability
arising from breach of contract, breach of warranty, tort, infringement, or
violation of any Law or any Proceeding). There are no loss contingencies (as
such term is used in Statement of Financial Accounting Standards No. 5 issued by
the Financial Accounting Standards Board in March 1975) of or affecting the
Company or any Subsidiary which are not adequately provided for or disclosed on
the Latest Balance Sheet or in the notes thereto, in each case, to the extent
required by GAAP. Except as set forth on Schedule 4.8, neither the Company nor
------------
any Subsidiary has, either expressly or by operation of Law, assumed or
undertaken any Liability of any other Person, including without limitation any
obligation for corrective or remedial action relating to EHS Requirements of
Law.
4.9 Accounts and Notes Receivable.
-----------------------------
(a) Except as set forth on Schedule 4.9(a), all the accounts receivable
---------------
and notes receivable owing to the Company or any Subsidiary as of the date
hereof constitute valid and enforceable claims arising from bona fide
transactions in the ordinary course of business. Except to the extent reflected
in reserves on the consolidated books of the Company, there are no known or
asserted claims, refusals to pay or other rights of set-off against any such
accounts or notes receivable. Except as set forth on Schedule 4.9(a), there is
---------------
(i) no account debtor or note debtor that has refused or, to the Best Knowledge
of the Company, threatened to refuse to pay its obligations to the Company or
any Subsidiary for any reason, or has otherwise made a claim of set-off or
similar claim (other than in amounts not in excess of $25,000.00 per account
debtor or $100,000.00 in the aggregate) and (ii) to the Best Knowledge of the
Company, no account debtor or note debtor that owes the Company amounts in
excess of $25,000.00 in the aggregate that is insolvent or bankrupt.
(b) For purposes of Section 4.9(a), accounts receivable or notes
receivable owing to Pickering Way Funding Trust shall be deemed to be accounts
receivable or notes receivable owing to the Company or a Subsidiary, as the case
may be.
14
<PAGE>
4.10 Bank Accounts; Powers of Attorney.
---------------------------------
Schedule 4.10 sets forth a true, correct and complete list of (i)
-------------
all bank accounts and safe deposit boxes of the Company and each Subsidiary and
all persons who are signatories thereunder or who have access thereto and (ii)
the names of all persons, firms, associations, corporations or business
organizations holding general or special powers of attorney from the Company or
any Subsidiary and a summary of the terms thereof (excluding ministerial powers
of attorney granted to representatives of the Company or any Subsidiary which
are terminable at will).
4.11 Tax Matters.
-----------
(a) Except as set forth on Schedule 4.11(a): (i) the Company and (ii)
----------------
each other Person included in any consolidated or combined Tax Return and part
of an affiliated group, within the meaning of Section 1504 of the Internal
Revenue Code of 1986, as amended (the "Code"), of which the Company is or has
----
been a member ("Tax Affiliate"), for the years that it was a Tax Affiliate of
-------------
the Company:
(i) has timely paid or caused to be paid all Taxes required to be
paid by it through the date hereof and as of the Closing Date (including
any Taxes shown due on any Tax Return);
(ii) has filed or caused to be filed in a timely and proper manner
(within any applicable extension periods) all Tax Returns required to be
filed by it with the appropriate Governmental Entities in all jurisdictions
in which such Tax Returns are required to be filed; and all Tax Returns
filed on behalf of the Company and each Tax Affiliate were complete and
correct in all material respects; and
(iii) has not requested or caused to be requested any extension of
time within which to file any Tax Return, which Tax Return has not since
been filed.
(b) The Company has previously delivered true, correct and complete
copies of all Federal Tax Returns filed by or on behalf of the Company through
the date hereof for the periods ending on and after December 31, 1994.
(c) Except as set forth in Schedule 4.11(c):
(i) since December 31, 1997, neither the Company nor any Tax
Affiliate (for the years that it was a Tax Affiliate of the Company) has
been notified by the Internal Revenue Service or any other taxing authority
that any issues have been raised (and no such issues are currently pending)
by the Internal Revenue Service or any other taxing authority in connection
with any Tax Return filed by or on behalf of the Company or to the Best
Knowledge of the Company any Tax Affiliate; there are no pending Tax audits
and no waivers of statutes of limitation have been given or requested with
respect to the Company or to the Best Knowledge of the Company any Tax
Affiliate (for the years that it was a Tax Affiliate of the Company); no
Tax liens have been filed against the Company or any Tax Affiliate (for the
years that it was a Tax Affiliate of the Company); no
15
<PAGE>
unresolved deficiencies or additions to Taxes have been proposed, asserted,
or assessed against the Company or to the Best Knowledge of the Company any
Tax Affiliate (for the years that it was a Tax Affiliate of the Company);
(ii) full and adequate accrual has been made (A) on the Latest
Balance Sheet, and the books and records of the Company and each Subsidiary
for all Taxes currently due and all deferred Taxes not yet due and payable
by the Company and each Subsidiary, respectively, as if they were stand-
alone corporations for all periods ending on or prior to the Latest Balance
Sheet Date, and (B) on the books and records of the Company and each
Subsidiary for all Taxes payable by the Company and each Subsidiary,
respectively, as if they were stand-alone corporations for all periods
beginning after the Latest Balance Sheet Date;
(iii) neither the Company nor any Subsidiary has incurred any
Liability for Taxes from and after the Latest Balance Sheet Date other than
Taxes incurred in the ordinary course of business and consistent with past
practices;
(iv) neither the Company nor any Subsidiary has (A) made an election
(or had an election made on its behalf by another person) to be treated as
a "consenting corporation" under Section 341(f) of the Code or (B) been a
----------------------
"personal holding company" within the meaning of Section 542 of the Code;
------------------------
(v) the Company and each Subsidiary has complied in all material
respects with all applicable Laws relating to the collection or withholding
of Taxes (such as sales Taxes or withholding of Taxes from the wages of
employees);
(vi) neither the Company nor any Subsidiary has any liability in
respect of any Tax sharing agreement with any Person and all Tax sharing
agreements to which either the Company or any Subsidiary has been bound
have been terminated;
(vii) neither the Company nor any Subsidiary has incurred any
Liability to make any payments either alone or in conjunction with any
other payments in connection with the transactions contemplated hereby or
otherwise that:
(A) shall be non-deductible under, or would otherwise constitute
a "parachute payment" within the meaning of Section 280G of the Code (or
-----------------
any corresponding provision of state, local or foreign income Tax Law); or
(B) are or may be subject to the imposition of an excise Tax
under Section 4999 of the Code;
(viii) neither the Company nor any Subsidiary has agreed to (nor has
any other person agreed to on its behalf) and is not required to make any
adjustments or changes either on, before or after the Closing Date, to its
accounting methods pursuant to Section 481 of the Code, and the Internal
Revenue Service has not proposed any such adjustments or changes in the
accounting methods of the Company;
16
<PAGE>
(ix) no claim has been made within the last three years by any taxing
authority in a jurisdiction in which the Company or any Subsidiary does not
file Tax Returns that the Company or such Subsidiary is or may be subject
to taxation by that jurisdiction;
(x) the consummation of the transactions hereunder will not trigger
the realization or recognition of intercompany gain or income to the
Company under the Federal consolidated return regulations with respect to
Federal, state, or local taxes;
(xi) none of the Shareholders are foreign Persons within the meaning
of (S) 1.1445-2(b) of the rules and regulations promulgated under Section
1445 of the Code, and Purchaser has been furnished with a true and accurate
certificate of the Company so stating which complies in all respects with
(S) 1.1445-2(b)(1) of such rules and regulations; and
(xii) The Company is not currently, nor has it been at any time
during the previous five years, a "U.S. real property holding corporation"
and, therefore, the Shares are not "U.S. real property interests," as such
terms are defined in Section 897 of the Code.
4.12 Title to Assets, Properties and Rights and Related Matters.
----------------------------------------------------------
(a) Schedule 4.12(a) sets forth a true, correct and complete list, as of
----------------
the Latest Balance Sheet Date, of all tractors and trailers owned by the Company
and each Subsidiary, including the net book value of such assets and the
following information with respect to each such tractor and/or trailer:
(i) the net book value of such tractor or trailer as of the Latest
Balance Sheet Date, determined in accordance with GAAP;
(ii) the date of purchase and the age of such tractor or trailer;
(iii) the purchase price of such tractor or trailer; and
(iv) the revenues for the twelve months ended on the Latest Balance
Sheet Date derived from such tractor or trailer (to the extent applicable),
determined from the Company's books and records.
(b) Schedule 4.12(b) sets forth a true, correct and complete list as of
----------------
the Latest Balance Sheet Date of all tractors and trailers leased by the Company
and each Subsidiary, and the following information with respect to each such
tractor and/or trailer:
(i) the net book value of such tractor or trailer as of the Latest
Balance Sheet Date;
(ii) the date of delivery and the age of such tractor or trailer; and
17
<PAGE>
(iii) the revenues for the twelve months ended on the Latest Balance
Sheet Date derived from such tractor or trailer (to the extent applicable),
determined from the Company's books and records.
(c) Schedule 4.12(c) set forth a list of the revenues derived from each
----------------
tractor operated by an Independent Contractor for the three month period ended
April 5, 1998, determined from the Company's books and records.
(d) The Company and/or one of its Subsidiaries has good and marketable
title to all of the assets, properties and interests in properties, real,
personal or mixed, reflected on the Latest Balance Sheet or acquired after the
Latest Balance Sheet Date (except inventory or other property sold or otherwise
disposed of since the Latest Balance Sheet Date in the ordinary course of
business and accounts receivable and notes receivable to the extent collected
subsequent to the Latest Balance Sheet Date), free and clear of all
Encumbrances, of any kind or character, except for those Encumbrances set forth
on Schedule 4.12(d) and Permitted Encumbrances. Such assets comprise all of the
----------------
assets necessary or required for the conduct of the Business as currently
conducted.
(e) Such assets are in good operating condition and repair (normal wear
and tear excepted), and are not subject to any condition which materially
interferes with the economic value or use thereof. With respect to any leased
assets, such assets are in such condition as to permit the surrender thereof by
the Company or its Subsidiary to the lessors thereunder on the date hereof
without any cost or expense for repair or restoration if the terms of the
related leases expired on the date hereof in the ordinary course of business.
With respect to tank trailers, facilities and tractors, such assets are free
from all structural flaws and design and engineering deficiencies which would
materially reduce the useful life of such assets, except for reasonable wear and
tear and except for items which have been written down in the Audited Financial
Statements or the Unaudited Financial Statements (as the case may be).
4.13 Real Property--Owned or Leased.
------------------------------
(a) Schedule 4.13(a) contains a true, correct and complete list, as of
----------------
the date hereof, by location of all of the real property owned by Company or any
of its Subsidiaries (the "Owned Property"), including the name of the owner
--------------
thereof. All Owned Property is located in the United States and, except as set
forth on Schedule 4.13(a), is owned by the Company or one of its wholly owned
----------------
Subsidiaries free and clear of all Encumbrances except Permitted Encumbrances.
There are no rights of first refusal or other options to purchase any parcel of
Owned Property or any portion or interest therein.
(b) Schedule 4.13(b) contains a true, correct and complete list, as of
----------------
the date hereof, by location of all of the real property leased by the Company
or any Subsidiary subject to one or more leases (the "Leased Property"),
---------------
including the names of the lessor and the lessee. The Company or such Subsidiary
is the owner and holder of all the leasehold estates purported to be granted by
such leases.
18
<PAGE>
(c) The Leased Property and the Owned Property constitute all real
property used or occupied by the Company or any Subsidiary of the Company in
connection with the Business. Except as set forth on Schedule 4.13(c): (i) no
----------------
portion thereof is subject to any pending condemnation Proceeding or Proceeding
by any Governmental Entity and, to the Best Knowledge of the Company, there is
no threatened condemnation or Proceeding with respect thereto; (ii) the physical
condition of each of the Owned Property and the Leased Property is sufficient to
permit the continued conduct of the Business as presently conducted and as
proposed by the Company to be conducted, subject to the provision of usual and
customary maintenance and repair performed in the ordinary course; (iii) there
are no Contracts, written or oral, to which the Company or any Affiliate thereof
is a party, granting to any party or parties the right of use or occupancy of
any portion of the parcels of the Leased Property or the Owned Property; (iv)
there are no parties (other than the Company or their lessees disclosed pursuant
to clause (iii) above) in possession of either the Leased Property or the Owned
Property and (v) no notice of any increase in the assessed valuation of either
the Leased Property or the Owned Property and no notice of any contemplated
special assessment has been received by the Company and to the Best Knowledge of
the Company, there is no threatened increase in assessed valuation or threatened
special assessment pertaining to any of the Leased Property or any of the Owned
Property.
4.14 Intellectual Property.
---------------------
(a) Schedule 4.14(a) sets forth a true, correct and complete list, as of
----------------
the date hereof, of all patents, trademarks, service marks and copyrights
licensed by or registered or filed for by the Company or any Subsidiary (other
than readily-available off-the-shelf software licensed by the Company or any
Subsidiary).
(b) The Company or one of its Subsidiaries owns, has the right to use,
sell, license and dispose of, and has the right to bring actions for the
infringement of (excluding readily available off-the-shelf software), all
Intellectual Property Rights purported to be owned by the Company or any
Subsidiary and necessary or required for the conduct of the Business (the "Owned
-----
Requisite Rights"), including "Qualawash", "Chemshuttle", "Bulkmodal",
- ----------------
"Continuous Improvement Drives Our Success", "C Chemical Tank Lines Inc. and
Design", "C and Design" and "Fleet (stylized)". The Company has the right to
use all other Intellectual Property Rights used by it, for which the Company has
a valid license (collectively, the "Licensed Requisite Rights"; and, together
-------------------------
with the Owned Requisite Rights, the "Requisite Rights"). The Company's rights
----------------
to use, sell, license, dispose of and bring actions are exclusive with respect
to the Owned Requisite Rights;
(c) The Company and each Subsidiary have taken reasonable and practicable
steps designed to safeguard and maintain (i) the secrecy and confidentiality of
Confidential or Proprietary Information and (ii) the proprietary rights of the
Company in all of its Owned Requisite Rights;
(d) Except as set forth on Schedule 4.14(d), neither the Company nor any
----------------
Subsidiary has interfered with, infringed upon, misappropriated or otherwise
come into conflict with any Intellectual Property Rights of any Person and has
complied in all material respects with
19
<PAGE>
all applicable Laws relating to unfair competition, and neither the Company nor
any Subsidiary has received from any Person in the past three years any notice,
charge, complaint, claim or assertion thereof; and
(e) Except as set forth on Schedule 4.14(e), the Company has not sent to
----------------
any Person or otherwise communicated to any Person, in the past three years, any
notice, charge, complaint, claim or other assertion of any present, impending or
threatened infringement by or misappropriation of, or other conflict with, any
Intellectual Property Rights of the Company by such other Person or any acts of
unfair competition by such other Person, nor to the Best Knowledge of the
Company, is any such infringement, misappropriation, conflict or act of unfair
competition occurring or threatened.
4.15 Agreements, No Defaults, Etc.
-----------------------------
(a) Schedule 4.15(a) sets forth a true, correct and complete list, as of
----------------
the date hereof, of all Contracts to which the Company or any Subsidiary, or any
of their Affiliates, is a party or by which any of their respective assets or
properties are bound that (i) involves payment over the remaining term (without
regard to any early termination or cancellation rights) of such Contract of more
than $50,000 or requires the Company and/or its Subsidiaries, or any of their
Affiliates, to provide goods or services with a value of more than $50,000, (ii)
evidences or provides for any Indebtedness of the Company or any Subsidiary, or
any of their Affiliates, or any Encumbrance securing such Indebtedness, (iii)
guarantees the performance, liabilities or obligations of any other Person, (iv)
restricts the Company or any Subsidiary, or any of their Affiliates, from
engaging in any line of business, (v) provides for the payment of commissions or
fees in respect of the sale, distribution or marketing of products or services
of the Company or any Subsidiary, or any of their Affiliates (including forms of
contracts of with Independent Contractors), (vi) are with any current officer,
director, Affiliate or "associate" (as defined in Rule 12b-2 under the Exchange
Act), (vii) relate to the ownership, leasing, licensing or use of real property
or any Intellectual Property Right, (viii) relate to any proposed Alternative
Transaction (as defined below) as to which discussions have not been terminated
prior to the date hereof, including all Contracts containing confidentiality,
standstill, non-solicitation or similar provisions, (ix) are otherwise material
to the business, financial condition or results of operations of the Company and
its Subsidiaries, or any of their Affiliates, taken as a whole (collectively,
"Material Contracts").
- -------------------
(b) Neither the Company nor any Subsidiary, nor any of their Affiliates,
is and, to the Best Knowledge of the Company, no other party is in violation of
or in default under (nor does there exist any condition affecting the Company or
any Subsidiary, or to the Best Knowledge of the Company, other parties to such
Material Contracts which upon the passage of time or the giving of notice or
both would reasonably be expected to cause such a violation of or default under)
any Material Contract to which it is a party or by which it or any of its
properties or assets is bound. Each Material Contract constitutes a valid and
binding obligation of the Company and/or Subsidiary, or any of their Affiliates,
party thereto and, to the Best Knowledge of the Company, each other party
thereto, enforceable against such other party in accordance with its terms,
except as enforceability may be limited by equitable principles of bankruptcy,
fraudulent conveyance or insolvency laws affecting creditors' rights generally.
20
<PAGE>
(c) To the Best Knowledge of the Company, each party to each Material
Contract (other than the Company and its Subsidiaries) has all Permits necessary
or advisable for the conduct of its business and to the Best Knowledge of the
Company there are no adverse claims, suits, actions, Proceedings or
investigations pending or threatened against such Person, in each case, relating
to such Material Contract or services.
4.16 Litigation, Etc.
----------------
(a) Except as disclosed on Schedule 4.16(a), there are no (i) Proceedings
----------------
pending or, to the Best Knowledge of the Company, threatened against the
Company, whether at law or in equity, whether civil or criminal in nature, or
(ii) Orders of any Governmental Entity or arbitrator with respect to, involving
or against the Company.
(b) Schedule 4.16(b) sets forth a true, correct and complete list of each
----------------
matter described in Section 4.16(a) that was in existence within the last three
---------------
years that resulted in any criminal sanctions or payments in excess of
$100,000.00 by the Company (whether as a result of a judgment, civil fine,
settlement or otherwise).
(c) To the Best Knowledge of the Company, the Company is entitled to
recover the amounts set forth in Schedule 4.16(c) in respect of legal fees and
----------------
other expenses related to the litigation matter described in such Schedule,
there are no rights of set-off with respect to such amounts, and all of such
sums are collectible prior to December 31, 1999.
(d) Except as required under EHS Requirements of Law, neither the Company
nor any Subsidiary has any Liability in respect of any settlement or any
judgment resulting from any Proceeding.
4.17 Compliance with Laws.
--------------------
(a) Intentionally omitted.
(b) Except for those required by EHS Requirements of Law, the Company,
each Subsidiary and, to the Best Knowledge of the Company, each Independent
Contractor (i) except as set forth on Schedule 4.17(a), has complied in all
----------------
material respects with, and is in compliance in all material respects with, all
Laws, Orders and Permits applicable to it and the Business and (ii) has all
Permits (other than local business Permits or licenses containing no change of
control provision) used or necessary in the conduct of its Business. All Permits
are in full force and effect, no violations with respect to any thereof have
occurred or are or have been recorded, no Proceeding is pending or, to the Best
Knowledge of the Company, threatened to revoke or limit any thereof. No
investigation or review by any Governmental Entity with respect to the Company
or any Subsidiary is pending or, to the Best Knowledge of the Company,
threatened, nor has any Governmental Entity notified the Company of its
intention to conduct the same.
4.18 Insurance.
---------
21
<PAGE>
(a) Schedule 4.18(a) contains a true, correct and complete list of all
----------------
policies of liability, theft, fidelity, life, fire, product liability, workmen's
compensation, health and other forms of insurance held by the Company and each
Subsidiary (specifying the insurer, amount of coverage, type of insurance,
policy number, deductible or retention amount, premium, policy term, Best's
rating of the insurer and any pending claims thereunder). The Company and each
Subsidiary has maintained such insurance coverage at all times during the course
of the operation of the Business, and such insurance coverage has been
maintained on an occurrence (as opposed to a claims made) basis. The Company
and its Subsidiaries have not exhausted the insurance coverage available under
the Company's currently existing insurance policies.
(b) Except as set forth on Schedule 4.18(b), with respect to each policy
----------------
of insurance listed on Schedule 4.18(a): (i) all premiums with respect thereto
----------------
are currently paid and are not subject to adjustment, and no Person is in
default in any respect with respect to its obligations under such policy, and no
basis exists that would give any insurer under any such policy the right to
cancel or unilaterally reduce or limit the stated coverages contained in such
policy; (ii) there are no outstanding claims currently pending under such policy
that reasonably would be expected to cause a substantial increase in the
insurance rates of the Company or any Subsidiary, and no facts or circumstances
exist that might reasonably be expected to relieve the insurer under such policy
of its obligations to satisfy in full any claim thereunder and (iii) neither the
Company nor any Subsidiary has received any notice that such policy has been or
shall be canceled or terminated or will not be renewed on substantially the same
terms as are now in effect or the premium on such policy shall be materially
increased on the renewal thereof.
(c) The Audited Financial Statements and the Unaudited Financial
Statements reflect adequate reserves, determined using the case reserve method,
for any insurance programs which requires (or has required) the Company or its
Subsidiaries to retain a portion of each loss, including deductible and self
insurance programs.
4.19 Labor Management Relations; Employees.
-------------------------------------
(a) Schedule 4.19(a) sets forth a true, correct and complete list of all
----------------
directors, officers and key management employees of the Company and each
Subsidiary as of the date hereof, together with their respective titles (if
any), their current compensation (including salary, wages, current bonus plans
and commissions) and the respective dates on which they commenced employment.
To the extent any such employee is on a leave of absence, Schedule 4.19(a)
----------------
indicates the nature of such leave of absence and such employee's anticipated
date of return to active employment. To the Best Knowledge of the Company, none
of the key management employees listed on Schedule 4.19(a) has any plans or
----------------
intends to terminate his or her employment or engagement with the Company and no
former key management employee has left the service of the Company within the
last six months.
(b) Schedule 4.19(b) sets forth the aggregate number of drivers,
----------------
maintenance employees, shop employees, tank cleaners and all other non-
supervisory personnel that work for any of the Company, any Subsidiary or any
independent contractor or any person or legal entity which leases drivers or
other personnel to the Company or a Subsidiary, specifying in the case of the
Company and its Subsidiaries, the number of such drivers or other listed
personnel that
22
<PAGE>
belong to a union or are otherwise covered by an employment agreement or a
collective bargaining agreement, identified by terminal location or facility.
(c) Except as disclosed on Schedule 4.19(c) or as expressly provided in
----------------
this Agreement, since the Latest Balance Sheet Date, there has not been any
adoption or amendment in any material respect by the Company or any Subsidiary
of any collective bargaining agreement or any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other plan or arrangement providing
benefits to any current or former employee, officer or director of the Company
or any Subsidiary (for the avoidance of doubt, regular salary and/or wage
increases and modifications to bonus, commission and other incentive
compensation arrangements in case with respect to non-officer employees of the
Company or any Subsidiary in the ordinary course of business and consistent with
past practice are excluded from the foregoing).
(d) Except as set forth in Schedule 4.19(d) and except as provided in the
----------------
Company's Charter and the Company's By-Laws or as expressly provided in this
Agreement, there exist no employment, consulting, severance, termination or
indemnification agreements or arrangements between the Company and any current
or former employee, officer or director of the Company.
(e) Schedule 4.19(e) contains a true, correct and complete list of all
----------------
amounts payable or that will or may become payable to each director, officer or
employee or former director, officer or employee of the Company or any
Subsidiary pursuant to any employment, change-in-control, severance or
termination agreement or arrangement.
(f) Intentionally omitted.
(g) Schedule 4.19(g) sets forth a true, correct and complete description
----------------
of all transactions between the Company or its Subsidiaries, on the one hand,
and any of their respective Affiliates, directors, officers, employees, or
consultants, on the other hand, in each case consummated at any time since
January 1, 1995. Except as set forth on Schedule 4.19(g), there are no
----------------
Contracts or arrangements between the Company or its Subsidiaries, on the one
hand, and any of their respective Affiliates, directors, officers, employees or
consultants, on the other hand, with respect to any such transactions. Except
as set forth on Schedule 4.19(g), no Affiliate, director, officer, employee or
----------------
consultant of the Company owns any interest in any asset or property (real or
personal, tangible or intangible), business or contract used or intended for use
or otherwise relating to the business currently conducted or proposed to be
conducted by the Company or any Subsidiary.
(h) Neither the Company nor any of its Subsidiaries has experience within
the past twelve months a "plant closing" or "mass layoff" within the meaning of
the Worker Adjustment and Retraining Notification Act, 29 U.S.C. (S)(S) 2101 et
seq.
(i) Schedule 4.19(i) sets forth a true, correct and complete list, as of
----------------
the date hereof, of all collective bargaining agreements, union contracts or
similar agreements to which
23
<PAGE>
the Company or any Subsidiary is a party or by which any of their respective
properties or assets are bound. Except for the items set forth on such Schedule,
no collective bargaining agreements, union contracts or similar agreements are
being negotiated by the Company or any Subsidiary . To the Best Knowledge of the
Company, no labor union has taken any action with respect to organizing
employees of the Company or any Subsidiary and no representation question exists
with respect to any such employees.
(j) Except as set forth on Schedule 4.19(j), there is no labor strike,
----------------
dispute or grievance, slowdown or stoppage pending or, to the Best Knowledge of
the Company, threatened against or involving the Company or any Subsidiary or
any dispute or grievance related thereto, and no such labor strike, dispute or
grievance, slowdown or stoppage has occurred since January 1, 1993.
(k) The Company agrees and acknowledges that it is responsible for making
any required notifications regarding this Agreement to any labor organization if
such notification is required or contemplated by the terms of its, or any
Subsidiary's, collective bargaining agreement(s) with said labor
organization(s). Further, the Company represents and warrants that neither the
execution and delivery of this agreement, nor the consummation by the Company of
transactions contemplated in accordance with the terms hereby will violate any
of the Company's, or any Subsidiary's, collective bargaining agreement(s) with
any labor organization(s); however, the Company represents that certain of its
collective bargaining agreements may require that in the event of a transfer or
merger of all or part of an operation that the transferred or merged operations
would remain subject to the terms and conditions of the collective bargaining
agreements.
(l) Schedule 4.19(l) sets forth a true, correct and complete list, as of
----------------
the date hereof, of any and all unfair labor practice charges or other
proceedings before the National Labor Relations Board, EEOC charges, employment
discrimination lawsuits, wrongful discharge lawsuits, OSHA citations and/or
litigation, wage and hour charges and/or litigation which are presently pending,
or to the best knowledge of the Company, threatened at law or in equity, and
this Schedule also sets forth a true, correct, and complete list of those
cases/charges/proceedings falling within the above categories which have been
settled or otherwise disposed of within the previous 3 years.
(m) Except as set forth in Schedule 4.19(m), the Company represents and
----------------
warrants that neither it nor any Subsidiary has been found to be or is alleged
to be a joint employer or alter ego, as construed under the National Labor
Relations Act, as amended, with or of any of its suppliers, distributors,
customers or other persons/legal entities with which it has any contractual
arrangement, including, but not limited to, any owner/operator with whom the
Company, or any Subsidiary, has a contractual relationship or any other entity
with which the Company, or any Subsidiary, has a leasing arrangement
(collectively referred to as "Third Parties") and that no Third Parties are
alter egos of the Company or its Subsidiaries. The Company represents and
warrants that neither it nor a Subsidiary: (1) exercises management power or
authority over the operations or personnel of any Third Parties; (2) supervises
the employees of any Third Parties but may dispatch Independent Contractors in
connection with such parties pick up and/or delivery of cargo; or (3) is
responsible for, or has the authority to
24
<PAGE>
establish, implement or effectively recommend the labor relations or employment
policies or actions, including wages, hours, working conditions or any terms of
employment, for any employee of Third Parties. The Company represents and
warrants that there is no interchange of personnel, no common boards of
directors and no common officers, managers or employees between the Company, or
any of its Subsidiaries, and the Third Parties. Further, the Company represents
and warrants that neither the Company nor any of its Subsidiaries provides any
administrative services for any Third Parties which is not required by law or
which is not provided in a bona fide, arms' length transaction at fair market
value. Any administrative services provided by the Company, or its Subsidiaries,
for any Third Parties have been detailed in Schedule 4.19(m).
----------------
(n) Schedule 4.19(n) sets forth a true, correct and complete in all
----------------
material respects summary as of the date hereof of all contingent withdrawal
liability regarding the Company's or any Subsidiary's participation in
Multiemployer Plan(s) (as defined in Section 3(37) of ERISA), listing the amount
of potential contingent withdrawal liability by Multiemployer Plan(s), and to
the extent possible by terminal or facility within each fund.
(o) The Company, its Subsidiaries and their ERISA Affiliates have
complied in all respects with Laws relating to the hiring and retention of all
employees, leased employees and independent contractors relating to wages,
hours, Employee Plans, Foreign Employee Benefit Plans, equal opportunities,
collective bargaining and the payment of social security and other taxes.
(p) Except as set forth on Schedule 4.19(p), neither the Company nor any
----------------
Subsidiary, nor to the Best Knowledge of the Company, their respective
representatives, have committed any unfair labor practices in connection with
the operation of the respective business of the Company or any Subsidiary which
has had or reasonably could be expected to have a Material Adverse Effect, and
the Company and each Subsidiary has in the past been and is in compliance in all
material respects with all applicable collective bargaining agreements and Laws
in respect of employment, employment practices, labor relations, safety and
health, wages, hours and terms and conditions of employment.
4.20 ERISA Compliance.
----------------
(a) Schedule 4.20(a) contains a true, correct and complete list as of the
----------------
date hereof of all Employee Benefit Plans, Multiemployer Plans and Foreign
Employee Benefit Plans (collectively, the "Employee Plans"), as of the date
--------------
hereof, (i) that cover any employees, contract employees or former employees of
any entity or any spouses, family members or beneficiaries thereof (A) that are
maintained, sponsored or contributed to by any entity or (B) with respect to
which any entity is obligated to contribute or has any actual or potential
Liability, or (ii) with respect to which any entity has any actual or potential
Liability or obligation on account of the maintenance or sponsorship thereof or
contribution thereto by any present or former ERISA Affiliate (as defined below)
of any entity. The Company represents that it has no Foreign Pension Plans.
25
<PAGE>
(b) Administration and Compliance. Except as set forth on Schedule
----------------------------- --------
4.20(b), with respect to each Employee Plan:
- -------
(i) each Employee Benefit Plan has been established, maintained,
operated and administered in accordance with its terms and in compliance in
all material respects with ERISA, the Code, and other applicable Laws
(including with respect to reporting and disclosure);
(ii) all required, declared or discretionary (in accordance with
historical practices) payments, premiums, contributions, reimbursements or
accruals for all periods ending prior to or as of the date hereof have been
made or properly accrued on the Latest Balance Sheet, or with respect to
accruals properly made after the Latest Balance Sheet Date, on the books
and records of the applicable entity and all amounts withheld from
employees have been timely deposited into the appropriate trust or account;
(iii) there is no unfunded actual or potential Liability relating to
such Employee Plan which is not specifically accrued for on the Latest
Balance Sheet, or with respect to accruals properly made after the Latest
Balance Sheet Date, on the books and records of the applicable entity;
(iv) no entity, any of their respective ERISA Affiliates or any other
"disqualified person" or "party in interest" (as such terms are defined in
------------------- -----------------
Section 4975 of the Code and Section 3(14) of ERISA, respectively) with
respect to such Employee Benefit Plan, has breached the fiduciary rules of
ERISA or engaged in a prohibited transaction that could subject any of the
foregoing Persons to any tax or penalty imposed under Section 4975 of the
Code of Section 502(i), (j) or (l) of ERISA;
(v) no Proceedings (other than routine claims for benefits) are
pending or, to the Best Knowledge of the Company, threatened against or
relating to any Employee Benefit Plan or any fiduciary thereof, and there
is, to the Best Knowledge of the Company, no basis for any such Proceeding
against any Employee Benefit Plan;
(vi) such Employee Benefit Plan, if intended to be "qualified",
---------
within the meaning of Section 401(a) of the Code, has been determined by
the Internal Revenue Service to be so qualified and the related trusts are
exempt from Tax under Section 501(a) of the Code, and nothing has occurred
that has or could reasonably be expected to adversely affect such
qualification or exemption;
(vii) except as may be required under Laws of general application,
such Employee Benefit Plan does not obligate any entity to provide any
employee or former employee, or their spouses, family members or
beneficiaries, any post-employment or post-retirement health or life
insurance, accident or other "welfare-type" benefits;
------------
(viii) each Employee Benefit Plan which is subject to the
requirements of the Consolidated Omnibus Budget Reconciliation of 1985
("COBRA") and the Health Insurance Portability and Accountability Act
-------
("HIPAA") has been maintained in
-------
26
<PAGE>
compliance with COBRA and HIPAA, including all notice requirements, and no
tax payable on account of Section 4980B or any other section of the Code
has been or is expected to be incurred;
(ix) no benefit payable or which may become payable by the Company or
its ERISA Affiliates pursuant to any Employee Plan shall constitute an
"excess parachute payment," within the meaning of Section 280G of the Code,
which is or may be subject to the imposition of an excise tax under Section
4999 of the Code or which would not be deductible by reason of Section 280G
of the Code;
(x) each Employee Benefit Plan which is intended to meet the
requirements of Section 125 of the Code meets such requirements and each
program of benefits for which employee contributions are provided pursuant
to elections made under such Employee Benefit Plan meets the requirements
of the Code applicable thereto;
(xi) the present value of all accrued benefits (whether or not
vested) under each Employee Benefit Plan subject to Title IV of ERISA did
not exceed, as of the most recent plan valuation date, and will not exceed,
as of the Closing Date, the then current fair market value of the assets of
such Plan (for purposes of determining the present value of accrued
benefits under the Plans, the actuarial assumptions and methods used under
each Plan for the most recent plan valuation date shall be used);
(xii) no Employee Benefit Plan subject to Part (3) of Subtitle B of
Title I of ERISA or Section 412 of the Code has incurred any "accumulated
funding deficiency" (as defined in Section 412(a) of the Code), whether or
not waived;
(xiii) no liability under Title IV of ERISA has been incurred,
including without limitation, for previously terminated Employee Benefit
Plans, by the Company or its ERISA Affiliates that has not been satisfied,
and no condition exists that presents a risk to the Company or its ERISA
Affiliates of incurring any liability under such Title;
(xiv) no "reportable event" (within the meaning of Section 4043 of
ERISA) has occurred with respect to any Employee Benefit Plan;
(xv) each Foreign Employee Benefit Plan has been maintained in good
standing with applicable Governmental Entity;
(xvi) all contributions have been made with respect to all Foreign
Employee Benefit Plans on a timely basis;
(xvii) neither the Company nor any ERISA Affiliate has incurred any
obligation in connection with the termination of or withdrawal from any
Foreign Employee Benefit Plan;
(xviii) the present value of the accrued benefit liabilities
(whether vested or not) under each Foreign Employee Benefit Plan,
determined as of the end of the Company's most recently ended fiscal year
on the basis of actuarial assumptions provided
27
<PAGE>
for in such Foreign Employee Benefit Plan, did not exceed the current value
of the assets of such Foreign Plan allocable to such benefit liabilities;
(xix) neither the Company nor any of its ERISA Affiliates has within
the past five years had a complete or partial withdrawal from any
Multiemployer Plan as to which any withdrawal liability is due or may be
assessed.
(c) Purchaser has been provided with true and complete copies, to the
extent applicable, of all documents pursuant to which such Employee Benefit Plan
is maintained and administered, the two most recent annual reports (Form 5500
and attachments) and financial statements therefor, all governmental rulings,
determinations, and opinions (and pending requests therefor), and, if such
Employee Benefit Plan provides post-employment or post-retirement health and
life insurance, accident or other "welfare-type" benefits, the most recent
------------
valuation of the present and future obligations under such Employee Benefit
Plan; and the foregoing documents accurately reflect all of the terms of such
Employee Benefit Plan (including, without limitation, any agreement or provision
which would limit the ability of any entity to make any prospective amendments
or terminate such Employee Benefit Plan).
4.21 Environmental Matters.
----------------------
Except for any matter which individually is not reasonably likely to
cost more than $100,000:
(a) Except as set forth on Schedule 4.21(a), the Company and each of its
----------------
Subsidiaries comply, and the Company and each of its Subsidiaries at all times
have complied, with all EHS Requirements of Law applicable to their operations
or the Properties;
(b) Except as set forth on Schedule 4.21(b), the Company and each of its
----------------
Subsidiaries have obtained or have taken appropriate steps, as required by EHS
Requirements of Law, to obtain all EHS Permits necessary for their operations
and the ownership and operation of the Properties, all such EHS Permits are in
effect or the Company has submitted timely and complete applications for such
Permits, and the Company and each of its Subsidiaries are currently in
compliance with all terms and conditions of such EHS Permits. No material
change in the facts or circumstances reported by the Company or any Subsidiary
in the applications for or the granting of such EHS Permits exists which has not
been reported to the applicable Governmental Entity, if required. There are not
any Proceedings pending or threatened which would be expected to result in the
revocation of any such EHS Permits;
(c) Schedule 4.21(c) sets forth a true, complete list of all of the
----------------
Company's and its subsidiaries' material Permits or pending permit applications
required under EHS Requirements of Law;
(d) Except as set forth on Schedule 4.21(d), all of the third parties
----------------
with which the Company or any of its Subsidiaries have arranged, engaged or
contracted to Treat, Transport, or, dispose (as those terms are defined under
RCRA) any Contaminant generated or present at any of the Properties were, to the
Best Knowledge of the Company, properly permitted, if
28
<PAGE>
applicable, at the relevant time to perform the foregoing activities or conduct
pursuant to EHS Requirements' of Law;
(e) Except as set forth in Schedule 4.21(e), neither the Company nor any
----------------
of its Subsidiaries is subject to any pending investigation, Proceeding or Order
alleging, reporting or requiring, in connection with the operations or the
Properties, (i) any violation of any EHS Requirements of Law, or (ii) any
Remedial Action, or (iii) any claims or liabilities and costs arising from the
Release or threatened Release of any Contaminant;
(f) No Environmental Encumbrance has attached to any of the Properties;
(g) Except as set forth in Schedule 4.21(g), neither the Company nor any
----------------
of its Subsidiaries has received any notice, claim or other communication
alleging (i) any violation of any EHS Requirements of Law at any of the
Properties, (ii) Liability of the Company or any Subsidiary for EHS Damages
arising out of or related to its operations or any of the Properties, or (iii)
any Liability of the Company or any of its Subsidiaries arising out of or
related to its operations or the Properties for the Release or threatened
Release of a Contaminant at any location, and there exists no Order, Proceeding
or summons, pending or, to the Best Knowledge of the Company, threatened,
relating to the presence or the suspected presence of Contaminants at any of the
Properties;
(h) Except as set forth in Schedule 4.21(h), there has been no Release of
----------------
any Contaminants in reportable quantities at, to or from any of the Properties;
(i) Except as set forth in Schedule 4.21(i), none of the Properties is
----------------
listed or proposed for listing on the National Priorities List ("NPL") pursuant
---
to the Comprehensive Environmental Response, Compensation, and Liability Act, as
amended ("CERCLA"), or listed on the Comprehensive Environmental Response
------
Compensation Liability Information System List ("CERCLIS") or any similar state
-------
list of sites, and neither the Company nor any of its Subsidiaries is aware of
any conditions at any of such Properties which, if known to a Governmental
Entity, would qualify such Properties for inclusion on any such list;
(j) Except as set forth in Schedule 4.21(j), neither the Company nor any
----------------
of its Subsidiaries has disposed (as such term is defined under RCRA) of any
----
Contaminant at any of the Properties;
(k) Except as set forth in Schedule 4.21(k), since June 16, 1993 and, to
----------------
the Best Knowledge of the Company, prior to such date, neither the Company nor
any of its Subsidiaries has transported or arranged for the transport of any
Contaminant to any facility or site for the purpose of Treatment or Disposal (as
those terms are defined in the RCRA) which (i) is included on the NPL or CERCLIS
or (ii) is or was, at the time of disposal, subject to a Remedial Action
requirement (other than routine, normal operational or closure-related
corrective action obligations affecting solid waste management units at such
facility) issued under the RCRA or any state, local or foreign solid or
hazardous waste regulatory law;
29
<PAGE>
(l) Except as set forth in Schedule 4.21(l), no Contaminant has migrated
----------------
from any of the Properties onto or underneath other properties and, to the Best
Knowledge of the Company, no Contaminant has migrated or threatened to migrate
from other properties upon, about or beneath any of the Properties;
(m) Except as set forth in Schedule 4.21(m), no underground improvements
----------------
containing Contaminants, including, but not limited to, treatment or storage
tanks, sumps, or gas or oil wells, or associated piping, are, to the Best
Knowledge of the Company, or have ever been located on any of the Properties
during the time of ownership by the Company or any Subsidiary;
(n) Except as set forth in Schedule 4.21(n), no polychlorinated biphenyls
----------------
("PCBs") or transformers, capacitors, ballasts, or other equipment which contain
----
dielectric fluid containing PCBs are located or at any time have been located on
any of the Properties; and
(o) Except as set forth in Schedule 4.212(o), neither the Company nor any
---------
of its Subsidiaries has any Liability, or has received any notice, claim or
other communication alleging liability on the part of the Company or any of its
Subsidiaries, for the violation of any EHS Requirements of Law, for EHS Damages,
or for the Release or threatened Release of any Contaminant in connection with
any businesses or properties previously owned or operated by the Company or any
of its Subsidiaries or any former subsidiary.
4.22 Related Transactions.
--------------------
Except as set forth on Schedule 4.22, no current or former Affiliate
-------------
of the Company or any "associate" (as defined in the rules promulgated under the
---------
Exchange Act) thereof, is now (i) party to any transaction or Contract with the
Company (including, but not limited to, any contract, agreement or other
arrangement providing for the furnishing of services by, or rental of real or
personal property from, or otherwise requiring payments in excess of $60,000
individually or in the aggregate to, any such Affiliate or Associate) or (ii)
the direct or indirect owner of an interest in any Person which is a present or
potential competitor, supplier or customer of the Company (other than non-
affiliated holdings in publicly held companies). Except as set forth on
Schedule 4.22, the Company is not a guarantor or otherwise liable for any actual
- -------------
or potential Liability of its Affiliates and their associates. Except as set
forth on Schedule 4.22, the Company does not (x) own or operate any vehicles,
-------------
boats, aircraft, apartments or other residential or recreational properties or
facilities for executive, administrative or sales purposes or (y) own or pay for
any social club memberships, whether or not for the benefit of the Company
and/or their executives.
4.23 Independent Contractors.
------------------------
(a) Schedule 4.23(a) contains a true, correct and complete summary, in
----------------
all material respects, of the arrangements of the Company and its Subsidiaries
with all Independent Contractors.
(b) The Company and its Subsidiaries have furnished to Purchaser copies
of the standard form of the Independent Contractor Service Agreement. The
actual terms and
30
<PAGE>
provisions of the arrangements (contractual or otherwise) between the Company
and/or any Subsidiary on the one hand, and the Independent Contractors on the
other hand, (a) are not in any material respect (taken as a whole) different in
form from those set forth in such standard contract, (b) are on arms' length
terms and (c) do not contain any unusual or burdensome provision which,
individually or in the aggregate, has or reasonably could be expected to result
in a Material Adverse Change. All of such agreements between the Company and/or
any Subsidiary on the one hand, and the Independent Contractors on the other
hand, are legal, valid and binding obligations of the Company or its
Subsidiaries and, to the Best Knowledge of the Company, of each of the other
parties thereto, enforceable against such parties in accordance with their
respective terms. Neither the Company nor any of its Subsidiaries nor, to the
Best Knowledge of the Company, the Independent Contractors who are parties to
such agreement, is in default under any term of any such agreement, which
default, individually or in the aggregate, has or reasonably could be expected
to result in a Material Adverse Change.
(c) The Company's and its Subsidiaries' contractual agreements with
Independent Contractors establish bona fide arrangements where said individuals
are independent contractors to, and not employees of, the Company or any of its
Subsidiaries and that there are no pending Proceedings, disputes, claims,
charges, allegations or, to the Best Knowledge of the Company, threatened at Law
or in equity before any Governmental Entity in any form, which challenges the
independent contractor nature of such agreements.
4.24 Relationships.
-------------
(a) Except in the ordinary course of business, neither any material
supplier, vendor or distributor for the Company or any Subsidiary (including all
Independent Contractors), nor any franchisee or licensee of the Company, has (i)
canceled or otherwise terminated, or, to the Best Knowledge of the Company,
threatened to cancel or otherwise terminate, its relationship with the Company
or has decreased, limited or otherwise adversely modified, or (ii) threatened to
decrease, limit or otherwise adversely modify, the services, supplies, materials
or services it provides to the Company, and the transactions proposed to be
consummated pursuant to this Agreement and the Related Documents, to the Best
Knowledge of the Company, shall not adversely affect the relationship of the
Company to any supplier, vendor, distributor, franchisee or licensee, except to
the extent that the Company's merger into or sale to MTL Inc. or any of its
subsidiaries (as opposed to another entity) is the primary cause of such adverse
affect.
(b) No customers to which more than $250,000 in the aggregate of the
Company's annual sales for the 12 month period ending December 31, 1997 are
attributable have notified the Company that they intend to, or, to the Best
Knowledge of the Company, have threatened to, terminate or materially curtail
their relationship and dealings with the Company, whether as a result of the
transactions contemplated by this Agreement or otherwise.
4.25 Disclosure.
----------
This Agreement, including the schedules, attachments or exhibits
hereto, does not contain any untrue statement of a material fact and does not
omit to state any material fact necessary to make the statements made not
misleading.
31
<PAGE>
4.26 Conflicts of Interest.
---------------------
None of the Shareholders, the Company, nor any officer, employee,
agent or other Person acting on behalf of the Company has, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any Governmental Entity or other Person who was, is, or may be in
a position to help or hinder the business of the Company (or assist in
connection with any actual or proposed transaction) that (i) would be reasonably
likely to subject the Company to any damage or penalty in any Proceeding, (ii)
if not given in the past, would have resulted in a Material Adverse Change to
the Company (taken as a whole) or (iii) if not continued in the future, could
reasonably be expected to result in a Material Adverse Change. There is not
now, and there has never been, any employment by the Company of, or, to the Best
Knowledge of the Company, beneficial ownership in the Company by, any
governmental or political official in any jurisdiction in which the Company has
conducted or proposes to conduct business.
4.27 State Takeover Statutes.
-----------------------
The Board of Directors of the Company has approved this Agreement and
the Related Documents and the transactions contemplated hereby and thereby
(including the Merger) and such approval is sufficient to render inapplicable to
such agreements and transactions the provisions of any "fair price,"
"moratorium," "control share," "interested shareholder," "affiliated
transaction" or other anti-takeover statute or regulation and any applicable
anti-takeover or other restrictive provision of the Articles of Incorporation,
by-laws or other governing instruments.
4.28 SEC Documents.
-------------
The Company has furnished the Purchaser with a correct and complete
copy of each report, schedule and registration statement filed by the Company
with the SEC on or after January 1, 1995 (the "SEC Documents"), which are all
-------------
the documents (other than preliminary material) that the Company was required to
file (or otherwise did file) with the SEC on or after such date. As of their
respective dates, none of the SEC Documents (including all exhibits and
schedules thereto and documents incorporated by reference therein) 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 therein, in
light of the circumstances under which they were made, not misleading, and the
SEC Documents complied when filed in all material respects with the then
applicable requirements of the Securities Act or the Exchange Act, as the case
may be, and the rules and regulations promulgated by the SEC thereunder. The
financial statements of the Company included in the SEC Documents complied as to
form in all material respects with the then applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with GAAP during the periods involved (except as may have
been indicated in the notes thereto or, in the case of the unaudited statements,
as permitted by Form 10-Q promulgated by the SEC) and fairly present (subject,
in the case of the unaudited statements, to normal audit adjustments) the
consolidated financial position of the Company and its Subsidiaries as at the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended.
32
<PAGE>
4.29 Brokers.
-------
Neither the Shareholders nor the Company has employed any broker or
finder or incurred any Liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated hereby.
4.30 Year 2000 Compliance.
--------------------
(a) Except as set forth on Schedule 4.30, all computer hardware and
-------------
software owned, licensed or used by the Company or any Subsidiary (collectively,
"Computer Products") has been designed to be used prior to, during and after the
-----------------
calendar year 2000 AD, and will operate during each such time period without
error relating to date data and date-dependent data, specifically including any
error relating to, or the product of, date data which represents or references
different centuries or more than one century.
(b) Without limiting the generality of the foregoing, and at no
additional cost to the Company or any Subsidiary, except as set forth on
Schedule 4.30.
- -------------
(i) each Computer Product will not abnormally end or provide invalid
or incorrect results as a result of date data, specifically including date
data which represents or references different centuries or more than one
century;
(ii) each Computer Product has been designed to ensure year 2000
compatibility, including, but not limited to, date data century
recognition, calculations which accommodate same century and multi-century
formulas and date values and date data interface values that reflect the
century; and
(iii) each Computer Product includes "Year 2000 Capabilities." For
the purposes of this Contract, "Year 2000 Capabilities" means each Computer
Product:
(A) manages and manipulates data involving dates, including
single century formulas and multi-century formulas, and will not cause an
abnormally ending scenario within the application or generate incorrect
values or invalid results involving such dates; and
(B) provides that all date-related user interface functionalities
and data fields include the indication of century; and
(C) provides that all date-related data interface functionalities
include the indication of century.
(c) At the Purchaser's request and upon reasonable notice, the Company
will provide written evidence sufficient to demonstrate adequate testing and
conversion of each Computer Product to meet the foregoing requirements.
33
<PAGE>
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to the Shareholders as follows:
5.1 Organization; Corporate Authority.
---------------------------------
Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction of its incorporation and has
all requisite power and authority (corporate or otherwise) to own, lease and
operate its assets and properties and to carry on its business as presently
conducted and as presently proposed to be conducted. The Company has been
furnished with true, correct and complete copies of the certificate of
incorporation ("Purchaser's Charter") and by-laws (the "Purchaser's By-laws"),
------------------- -------------------
of Purchaser in each case as amended and in effect on the date hereof.
5.2 Corporate Action; Authority; No Conflict.
----------------------------------------
Purchaser has all requisite power and authority (corporate and
otherwise) to execute, deliver and perform its obligations under this Agreement
and each Related Document to which it is or will be a party and to consummate
the transactions contemplated hereby and thereby. The execution, delivery and
performance by Purchaser of this Agreement and each Related Document to which it
is or will be a party, and performance of its obligations hereunder and
thereunder have been duly and validly authorized by all necessary corporate
action on the part of Purchaser and its Shareholders. This Agreement and each
Related Document to which it is or will be a party has been or upon the
execution thereof will be, duly and validly executed and delivered by Purchaser,
and constitutes, or upon its execution and delivery will constitute, a valid and
binding obligation of Purchaser, enforceable against it in accordance with its
terms. Neither Purchaser's execution and delivery of, and/or performance of its
obligations under, this Agreement and each Related Document to which it is or
will be a party, nor the consummation of the transactions contemplated hereby
and thereby shall (i) conflict with or result in any violation or breach of, any
of the terms, conditions or provisions of, or constitute (with due notice or
lapse of time, or both) a default under, or give rise to any right of
termination, cancellation or acceleration or result in the creation of any
Encumbrance upon any of the assets or properties of Purchaser under provision of
Purchaser's Charter or Purchaser's By-laws or any Contract to which Purchaser is
a party or by which it or any of its assets or properties is or may be bound or
(ii) violate, or result in the creation of an Encumbrance upon any of
Purchaser's assets as a result of, any Law's applicable to Purchaser or any of
its properties or assets.
5.3 Brokers.
-------
Purchaser has not employed any broker or finder or incurred any
Liability for any brokerage fees, commissions or finders' fees in connection
with the transactions contemplated hereby for which the Company will be liable
if the transactions contemplated hereby have not been consummated, except as set
forth in Section 9.2.
34
<PAGE>
5.4 Consents.
--------
No consent, approval, Order or authorization of, or registration,
declaration or filing with or notification to (except for any filings required
under the HSR Act), any Governmental Entity or any third party is required in
connection with the execution, delivery and performance by Purchaser of this
Agreement or the Related Documents to which Purchaser is or will be a party or
the consummation of the transactions contemplated hereby or thereby.
5.5 Financing.
---------
Purchaser has delivered to the Shareholders true and correct copies of
signed letters received by Purchaser with respect to the financing (the
"Financing Letters") required for the consummation of the transactions
- ------------------
contemplated hereby. A copy of each Financing Letter is set forth in Exhibit E.
---------
Assuming satisfaction of all applicable conditions set forth in the Financing
Letters and full funding thereunder, such financing will provide sufficient
funds to pay the Merger Consideration and effect the Merger as set forth in
Article II hereof.
ARTICLE 6
COVENANTS AND AGREEMENTS
6.1 Access to Records and Properties of the Company.
-----------------------------------------------
From and after the date hereof until the Closing, the Company shall
afford (i) to Purchaser, its potential lenders and other financing sources and
their respective authorized representatives, including accountants, free and
full access at all reasonable times during normal business hours and after
reasonable prior notice to the assets, business, facilities, properties, books,
records (including tax returns filed and in preparation), customers,
consultants, and key employees of or relating to the Company in order that
Purchaser has full opportunity to make such investigation as it shall reasonably
desire to make of the affairs of the Company, and the Company shall cooperate
fully in connection therewith and (ii) to the respective independent certified
public accountants of Purchaser, free and full access at all reasonable times
during normal business hours and after reasonable prior notice to the records of
the independent certified public accountants of the Company relating to the
Company. Without limiting the generality of the foregoing, the Purchaser or its
representatives shall be entitled to conduct Phase I environmental assessments
of the Company's and its Subsidiaries' properties and, based on the
recommendation of Purchaser's environmental consultants, such Phase II
assessments as the Purchaser deems reasonably necessary after considering the
results of the Phase I Reports. The Company may elect, but shall not be
required, to receive copies of or review any data, records, reports, or other
information obtained or generated during the Phase I and/or Phase II
environmental site assessments (collectively the "ESA Data"). Prior to Closing,
Purchaser shall, except as required (in the event of any dispute) to enforce its
rights to terminate this Agreement pursuant to Section 9.1(g) and in such event,
to enforce its rights under Section 9.2, keep all ESA Data strictly
confidential, and shall not disclose any ESA Data to any third party, other than
its attorneys, accountants, affiliates, financial institutions, their attorneys
or consultants or any other advisors or representatives of the Purchaser, its
accountants or financial institutions directly
35
<PAGE>
involved in the transaction contemplated by this Agreement, unless (a) required
to do so pursuant to a valid subpoena, order of a court of competent
jurisdiction or any EHS Requirements of Law or (b) the Company provides its
prior written consent to disclosure. If the transactions contemplated by this
Agreement are not consummated, then, at the Company's request, Purchaser and its
representatives, including without limitation, its consultants, shall certify in
writing to the Company that, unless otherwise required pursuant to a valid
subpoena, order of a court of competent jurisdiction or any EHS Requirements of
Law, all ESA Data including without limitation, drafts and copies thereof, have
been destroyed. If the transactions contemplated by this Agreement are not
consummated, Purchaser's duties to maintain the confidentiality of the ESA Data
pursuant to this Section 6.1 shall survive termination of the Agreement. The
investigation contemplated by this Section 6.1 shall not affect or otherwise
diminish or obviate in any respect any of the representations and warranties or
the indemnification obligations of the Shareholders contained in this Agreement.
From and after the Closing, the Company will afford to the
Shareholders and their counsel free and full access at all reasonable times
during normal business hours and after reasonable prior notice to the books and
records of the Surviving Corporation for the purpose of assuming the defense of
any Third Party Claim pursuant to Section 8.3. The Shareholders agree that all
Confidential or Proprietary Information shall not be disclosed by such
Shareholders to any Person except as it shall be used by the Shareholders solely
for the purposes set forth in this Section.
6.2 Conduct of the Company.
----------------------
From the date hereof to the Effective Time, the Company shall carry on
its business in the ordinary course consistent with past practice and use
reasonable efforts to preserve intact its current business organization, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers, licensors, licensees and others having
significant business dealings with it. Without limiting the generality of the
foregoing, from the date hereof to the Effective Time, the Company shall not
without the prior written consent of Purchaser:
(a) (i) declare, set aside or pay any dividends on, or make any other
distributions in respect of, any of its capital stock, (ii) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for Shares of its
capital stock, or (iii) except as expressly provided in Section 7.3(i) hereof,
purchase, redeem or otherwise acquire any Shares or any capital stock of the
Company or any Subsidiary or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities;
(b) change its practices, policies or procedures with respect to the
timing of the payment of accounts payable or the collection of accounts
receivable;
(c) except as provided in Section 7.3(i) hereof issue, deliver, sell,
pledge or otherwise encumber any shares of its capital stock, any other voting
securities or any securities
36
<PAGE>
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities;
(d) amend the Company's Charter or the Company's By-Laws or other
comparable charter or organizational documents;
(e) acquire or agree to acquire (i) by merging or consolidating with, or
by purchasing a substantial portion of the assets or stock of, or by any other
manner, any business or any person, or (ii) any assets except for the purchase
of (x) equipment as identified on Schedule 6.2(e) (the "Anticipated Equipment
--------------- ---------------------
List") or (y) equipment or other assets in the ordinary course of business;
- ----
(f) sell, lease, license, mortgage or otherwise encumber or subject to
any Encumbrance or otherwise dispose of any of its properties or assets, except
(i) immaterial assets, (ii) in the ordinary course of business (including for
trade-ins) and (iii) where the amount of such sales does not exceed,
individually or in the aggregate, $50,000.00;
(g) (i) incur any Indebtedness or guarantee any such Indebtedness of
another person, issue or sell any debt securities or warrants or other rights to
acquire any debt securities of the Company or any Subsidiary, guarantee any debt
securities of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing except in the
ordinary course of business consistent with past practice, provided that any of
the foregoing shall be prepayable without premium or penalty, or (ii) make any
loans, advances (other than advances to Subsidiaries or among Subsidiaries) or
capital contributions to, or investments in, any other person;
(h) make or agree to make any capital expenditure or expenditures with
respect to property, plant or equipment which, individually, is in excess of
$50,000.00 or, in the aggregate, are in excess of $250,000.00, except as
identified on the Anticipated Equipment List;
(i) make any material tax election or settle or compromise any material
income tax liability;
(j) prepay any Indebtedness, Liability or other obligation, or pay,
discharge, settle or satisfy any claims, Liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
specifically accrued for in the most recent consolidated financial statements of
the Company or incurred thereafter in the ordinary course of business consistent
with past practice, or waive any material benefits of, or agree to modify in any
material respect, any confidentiality, standstill, non-solicitation or similar
agreement to which the Company or any Subsidiary is a party (it being understood
that the Company shall not, without limiting the generality of the foregoing,
prepay any Indebtedness with any proceeds received in respect of any loans
repaid by Shareholders pursuant to Section 7.3(g));
37
<PAGE>
(k) modify, amend or terminate any Material Contract to which the Company
or any Subsidiary is a party, or waive, release or assign any rights or claims,
other than in the ordinary course of business consistent with past practice;
(l) enter into any Material Contract relating to the provision of
services by the Company or any Subsidiary or the distribution, sale or marketing
by third parties of the Company's or any Subsidiary's services other than in the
ordinary course of business consistent with past practice;
(m) except as required to comply with applicable law, (i) adopt, enter
into, terminate or amend any Employee Plan or other arrangement for the benefit
or welfare of any director, officer or current or former employee (including any
collective bargaining, employment or severance agreements), other than, in the
case of non-officer employees, in the ordinary course of business consistent
with past practice, (ii) increase in any manner the compensation or fringe
benefits of, or pay any bonus to, any director, officer or consultant, (iii) pay
any material benefit not provided for under any Benefit Plan, (iv) except as
permitted in clause (ii), grant any awards under any bonus, incentive,
performance or other compensation plan or arrangement or Employee Plan
(including the grant of stock options, stock appreciation rights, stock based or
stock related awards, performance units or restricted stock, or the removal of
existing restrictions in any Employee Plans or agreement or awards made
thereunder) or (v) take any action to fund or in any other way secure the
payment of compensation or benefits under any employee plan, agreement, contract
or arrangement or Employee Plan; or
(n) authorize any of, or commit or agree to take any of, the foregoing
actions.
6.3 Financial Information.
---------------------
The Company shall furnish to Purchaser the following financial
statements:
(a) as soon as available, but in any event within 45 days following the
end of the fiscal quarter, the unaudited consolidated balance sheet, income
statement and statement of cash flows of the Company for the period ended June
30, 1998, showing its financial condition as of the close of such fiscal quarter
and the results of operations during such quarter on a basis of accounting which
shall not be materially different from the Audited Financial Statements or the
Unaudited Financial Statements;
(b) as soon as available, but in any event within 30 days following the
end of each calendar month, the unaudited financial statements of the Company,
showing its financial condition as of the close of such month and the results of
operations during such month and for the then elapsed portion of the Company's
fiscal year, in each case, setting forth the comparative figures for the
corresponding month in the prior fiscal year and the corresponding elapsed
portion of the prior fiscal year; and
6.4 Efforts to Consummate.
---------------------
Subject to the terms and conditions of this Agreement, each party
shall use commercially reasonable efforts, in light of the obligations of each
such party hereunder, to take
38
<PAGE>
or cause to be taken all actions and do or cause to be done all things required
under all applicable Laws, in order to consummate the transactions contemplated
hereby. Without limiting the generality of the foregoing, the Company and each
Shareholder agrees to cause the transactions contemplated by Section 7.3(f),
7.3(g), 7.3(h), 7.3(i) and 7.3(k) to be consummated prior to the Closing Date.
Purchaser shall use commercially reasonable efforts to cause the financing
pursuant to the Financing Letters to be obtained on or prior to Closing.
6.5 Negotiation with Others.
-----------------------
From and after the date hereof until the Closing, or the termination
of this Agreement pursuant to Article X, the Shareholders and the Company shall
not, and each shall cause its officers, directors, Affiliates, representatives
and agents not to, directly or indirectly, (i) take any action to solicit or
initiate any Acquisition Proposal, (ii) continue, initiate or engage in
negotiations or discussions relating to an Acquisition Proposal with, or
disclose or provide any non-public information or Confidential or Proprietary
Information (other than in the ordinary course of business or otherwise required
by Law, Order or similar compulsion) relating to the Company or any Person other
than the parties hereto and their respective representatives or (iii) enter into
any written or oral agreement or understanding with any Person (other than
Purchaser) regarding an Acquisition Proposal. If the Shareholders or the
Company receives any bona fide unsolicited offer or proposal to enter into
negotiations relating to any Acquisition Proposal, such party shall promptly
notify Purchaser of such offer or proposal and the general economic terms of
such offer or proposal and shall furnish a copy of any written offer or proposal
thereto.
6.6 Notice of Prospective Breach.
----------------------------
Each party shall immediately notify the other parties in writing upon
the occurrence, or failure to occur, of any event, which occurrence or failure
to occur would be reasonably likely to cause any representation or warranty of
such notifying party that is contained in this Agreement or any Related Document
to be untrue or inaccurate in any material respect at any time from the date of
this Agreement to the Closing as if such representation and warranty were made
at such time.
6.7 Public Announcements.
--------------------
Each party agrees that, except (i) as otherwise required by Law and
(ii) for disclosure to its respective directors, officers, employees, financial
advisors, potential financing sources, legal counsel, independent certified
public accountants or other agents, advisors or representatives on a need-to-
know basis and with whom such party has a confidential relationship, it will not
issue any reports, statements or releases, in each case pertaining to this
Agreement or any Related Document to which it is a party or the transactions
contemplated hereby or thereby, without the prior written consent of the
Shareholders and Purchaser, which consent shall not unreasonably be withheld or
delayed; provided, however, that after reasonable prior notice to Purchaser,
-------- -------
Shareholders may make a public announcement concerning the execution and
delivery by each party of this Agreement.
6.8 Filings.
-------
39
<PAGE>
Purchaser, the Company and as may be reasonably requested by it or
them, the Shareholders will make or cause to be made all such filings and
submissions under applicable Law and regulations as may be required for the
consummation of the transactions contemplated hereunder, including without
limitation any filings required under the HSR Act. Purchaser, the Company and
as may be reasonably requested by it or them, the Shareholders will cooperate
and coordinate with one another in connection with any such filings or
submissions.
6.9 [Intentionally Left Blank]
---------------------------
6.10 Leaman Air Services, Inc.
------------------------
(a) At the Closing, the Company, as additional consideration for the
shares of the Company's capital stock held by George McFadden, will transfer all
of the common stock of Leaman Air Services, Inc. ("Leaman Air") to George
----------
McFadden.
(b) Mr. McFadden hereby agrees to be bound by the Restrictive Covenant
Agreement set forth in Exhibit F (it being understood that the signature to this
---------
Agreement shall be an agreement to be so bound) and hereby waives any and all
rights to receive any severance or compensatory payments in respect of Mr.
McFadden's role (as applicable) as a director, shareholder or consultant of the
Company (other than the right to receive the amounts otherwise payable pursuant
to this Agreement) and releases and forever discharges the Company and each
Subsidiary for all Liabilities.
(c) The Company represents and warrants to the Purchaser that the
transactions contemplated by this Section 6.10 could not reasonably be expected
to have a Material Adverse Effect on the Company.
(d) The Company represents and warrants to the Purchaser that Leaman Air
owns no assets or properties other than the airplane and related equipment
described in detail in Schedule 6.10(d).
----------------
6.11 Hamilton Bonuses.
----------------
(a) Subject to the prior approval of the shareholders of the Company in
accordance with Section 280G(b)(5) of the Code, 30 days after the Closing, in
consideration of services rendered in connection with the structuring and
negotiation of the transactions contemplated by this Agreement, the Company
shall pay to David R. Hamilton a bonus of $6,050,116, payable by setting off
such amount against the debt owing by Mr. Hamilton to the Company pursuant to
Section 7.3(g). The bonus payments provided for in the preceding sentence shall
not be subject to set off for any obligation owing or claims against Mr.
Hamilton.
(b) Subject to the prior approval of the shareholders of the Company in
accordance with Section 280G(b)(5) of the Code, the Company shall pay to Mr.
Hamilton a consulting payment of $1,600,000 payable in four equal annual
installments of $400,000 (on the Closing and on each of the next succeeding
three-year anniversaries thereof) and during such period, the Company shall
provide Mr. Hamilton medical benefits provided generally to executives of the
Company. The consulting payments provided for in the preceding sentence
40
<PAGE>
shall be paid to Mr. Hamilton or his survivors notwithstanding Mr. Hamilton's
death or disability during the term of payments and shall not be subject to set
off for any obligation owing from or claims against Mr. Hamilton.
(c) Subject to the prior approval of the shareholders of the Company in
accordance with Section 280G(b)(5) of the Code, after the Closing, Mr. Hamilton
shall be entitled to the following until the first anniversary of the Closing
Date (at the expense of the Company, provided that the aggregate fees and
expenses incurred by the Company in respect of this Section 6.11(c) shall not
exceed $100,000): (i) the continued use of the office maintained by the Company
for Mr. Hamilton in Chicago; (ii) the use of a secretary in respect of such
office and (iii) the continued use of the Volvo automobile currently provided by
the Company to Mr. Hamilton; and
(d) Mr. Hamilton hereby agrees to be bound by the Restrictive Covenant
Agreement and the Waiver and Release set forth in Exhibit G (it being understood
---------
that the signature to this Agreement shall be an agreement to be so bound).
(e) The Company may withhold from the Merger Consideration or from other
cash payments to be made to Mr. Hamilton the amount which the Company determines
is required to be withheld by applicable Law in respect of any payments to be
made to Mr. Hamilton under this Agreement, including the bonus referred to in
Section 6.11(a).
6.12 Senior Notes.
------------
The Company agrees to use its commercially reasonable efforts to
obtain, without incurring a total cost of more than $4,000,000 therefor, the
requisite consent of the holders of the Company's 10 3/8% Senior Notes (the
"Notes") to an amendment to the terms of the Indenture (the "Indenture")
- ------ ---------
pursuant to which such notes were issued so that such notes will remain
outstanding after the Effective Time free of any default or conflict with the
terms of the Indenture and so that the covenants thereunder will be amended in a
manner substantially as provided on Schedule 6.12 hereto (it being understood
-------------
that the foregoing shall not apply to amendments that pursuant to the terms of
the Indenture require the approval of 100% of the holders of the Notes).
The Purchaser agrees to use its commercially reasonable efforts to
obtain, without incurring any cost therefor, the requisite consent of the
holders of the Notes as set forth in this Section 6.12.
6.13 [Intentionally Left Blank]
--------------------------
6.14 Environmental Transfer Acts.
---------------------------
The Company shall fully comply with and have all obligations under the
New Jersey Industrial Site Recovery Act ("ISRA"), including, but not limited to,
making all filings with the NJDEP, conducting any and all investigation and
remediation activities required by the NJDEP, and satisfying any financial
assurance requirements thereunder except when not possible due to exigent
circumstances beyond the Company's control. Prior to all such filings,
investigations and/or remediation activities, the Company shall provide
Purchaser with all reports
41
<PAGE>
(including, but not limited to, draft and final consultant reports, workplans
and sampling data), consult with Purchaser thereon and give reasonable
consideration to Purchaser's comments regarding investigation, remediation and
filings with NJDEP. Purchaser shall review such reports, workplans and data and
provide comments to the Company in a timely manner. The Company shall notify
Purchaser and shall give Purchaser the opportunity to attend any meetings with
NJDEP or inspections by NJDEP. The Company shall conduct as promptly as
practicable after the date hereof any and all investigation, environmental
testing and remediation required by the NJDEP pursuant to ISRA, including, but
not limited to, any additional sampling of soil and groundwater at the Real
Property.
6.15 Waivers.
-------
(a) Each Shareholder and the Company hereby waives any rights of
repurchase, rights of first refusal, rights of first offer and other rights that
any such Person may have in respect of the outstanding shares of capital stock
of the Company and/or any Subsidiary owned or held by any other Person (it being
understood that if this Agreement shall be terminated in accordance with its
terms, such waiver shall of no further force or effect).
(b) Each Shareholder hereby releases the Company and each Subsidiary from
any Liability or obligation that the Company or any Subsidiary may have in
respect of any severance or other arrangements arising as a result of the
consummation of the transactions contemplated by this Agreement (except with
respect to Mr. Parkerson, Mr. Hamilton and Mr. McFadden, other than any such
rights which require a termination of employment of such Person in addition to
the consummation of the transactions contemplated by this Agreement) (it being
understood that if this Agreement shall be terminated in accordance with its
terms, such release shall be of no further force or effect).
6.16 Accounts Payable, Accrued Expenses and Accounts Receivable.
----------------------------------------------------------
At least two business days prior to the Closing Date, the Company
shall provide a true, correct and complete listing of all consolidated accounts
payable, accrued expenses and accounts receivable of the Company and its
Subsidiaries as of the most reasonably practicable recent date and as of the end
of each month after the latest month provided in Schedule 4.7(f), which schedule
---------------
shall set forth the name of the account debtor (in the case of accounts
receivable) or account creditor (in the case of accounts payable and accrued
expenses) and the amount owed by or owing to such account debtor or account
creditor (identifying the portion of such amount that is current, 30, 60, 90 and
more than 90 days past due).
6.17 No Transfers.
-------------
No Shareholder will, directly or indirectly, grant or suffer to exist
any Encumbrance (other than Encumbrances for the benefit of the Company) on any
Shares held by such Shareholder or otherwise transfer, sell, assign or otherwise
dispose of any Shares or any interest therein.
42
<PAGE>
ARTICLE 7
CONDITIONS
7.1 Conditions to Each Party's Obligation to Effect the Merger.
----------------------------------------------------------
The respective obligations of each party to effect the Merger are
subject to the satisfaction or waiver, where permissible, prior to the Effective
Time, of the following conditions:
(a) No statute, rule, regulation, executive order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any court or
Governmental Entity that prohibits or restricts the consummation of the Merger
or makes such consummation illegal (each party agreeing to use commercially
reasonable efforts to have any such prohibition lifted).
(b) The waiting period applicable to the consummation of the Merger under
the HSR Act shall have expired or been terminated.
7.2 Conditions to the Company's Obligation To Effect the Merger.
-----------------------------------------------------------
The obligation of the Company to effect the Merger shall be subject to
the satisfaction or waiver, prior to the proposed Effective Time, of the
following conditions: All of the representations and warranties of Purchaser
set forth in this Agreement shall be true and correct in all material respects
(except for those representations and warranties that are qualified as to
materiality, which shall be true and correct in all respects) as of the date
hereof and (except for those that are expressly made only as of another date) as
of the Effective Time as though made on and as of such time, and Purchaser shall
have performed in all material respects all covenants and agreements required to
be performed by then under this Agreement at or prior to the Effective Time.
7.3 Conditions to Purchaser's Obligations to Effect the Merger.
----------------------------------------------------------
The obligations of Purchaser to effect the Merger shall be subject to
the satisfaction or waiver by Purchaser, prior to the proposed Effective Time,
of the following conditions:
(a) All of the representations and warranties of the Company and the
Shareholders set forth in this Agreement, shall be true and correct in all
material respects (except for those representations and warranties that are
qualified as to materiality, which shall be true and correct in all respects) as
of the date hereof and (except for those that are expressly made only as of
another date) as of the Effective Time as though made on and as of such time,
and the Company and the Shareholders shall have performed in all material
respects all covenants and agreements required to be performed by it under this
Agreement at or prior to the Effective Time.
(b) There shall not have occurred any Material Adverse Change since the
Latest Balance Sheet Date.
43
<PAGE>
(c) The conditions set forth in the Financing Letters shall have been
satisfied or waived and the funding referred to therein shall be available to
Purchaser on terms no less favorable to Purchaser than are set forth in such
Financing Letters.
(d) All filings required to be made prior to the Effective Time with, and
all consents, approvals, authorizations and Permits required to be obtained
prior to the Effective Time from, any Governmental Entity in connection with the
consummation of the Merger including without limitation those under EHS
Requirements of Law, have been made and/or obtained, other than those the
failure of which to be made and/or obtained would not reasonably be expected to
have a Material Adverse Effect or prevent or materially delay the consummation
of the Merger.
(e) All notices required to be given prior to the Effective Time with,
and all consents, approvals, authorizations, waivers and amendments required to
be obtained prior to the Effective Time from, any third party in connection with
the consummation of the Merger and the financing thereof, have been made and/or
obtained (or, if the notice, consent, approval, authorization, waiver or
amendment that is not so made and/or obtained is required pursuant to the terms
of any of the Company's Indebtedness or obligations for money borrowed, the
Company repays such Indebtedness or obligation on or prior to the Effective
Time), other than those the failure of which to be made and/or obtained would
not reasonably be expected to have a Material Adverse Effect or prevent or
materially delay the consummation of the Merger.
(f) All Transaction Expenses shall have been paid prior to the Closing
and the Purchaser shall have received evidence reasonably satisfactory to it
that such payment has occurred.
(g) Subject to any provision contained in any Employment Agreement, all
Indebtedness and Liabilities owing to or from any shareholder, director, officer
or employee of the Company or any Subsidiary immediately prior to the Effective
Time shall be paid in full and the Purchaser shall have received evidence
satisfactory to it in its reasonable discretion that neither the Company nor any
Subsidiary shall have any Liability to any such Person from and after the
Closing and that each such other Person shall have fully satisfied all
Liabilities owing by any such Person to the Company or any Subsidiary (it being
understood that any amount owing to the Company shall be paid by setting off any
payments in respect of any Indebtedness or Liabilities against any Merger
Consideration or other payments to be made to such Persons at the Closing).
(h) Subject to any provision contained in any Employment Agreement, all
Contracts, arrangements or understandings with any current or former
shareholder, officer, director or employee of the Company or any Subsidiary
(other than any collective bargaining agreements, union contracts or similar
agreements covering employees of the Company) shall have been terminated
effective as of the Closing without any future Liability of the Company or any
Subsidiary and the Purchaser shall have received evidence reasonably
satisfactory to it of such termination (it being understood that any amount
owing to the Company in respect thereof shall be paid by setting off any
Liabilities owing to any such Person against any Merger Consideration or other
payments to be made to such Persons at the Closing).
44
<PAGE>
(i) All outstanding shares of Preferred Stock that are convertible into
Shares shall have been converted into Shares prior to the Closing and the
Purchaser shall have received evidence reasonably satisfactory to it of such
conversion.
(j) The holders no more than 5% in the aggregate of the outstanding
Shares shall have validly elected to demand the appraisal of their Shares
pursuant to the Pennsylvania Statute.
(k) All of the officers, directors and employees of the Company and each
Subsidiary requested by the Purchaser to resign shall have resigned.
(l) Subject to Section 7.14(c), the Company shall have filed a General
Information Notice (GIN) with the NJDEP with respect to the Real Property
located in New Jersey, and either (i) received a No Further Action Letter from
the NJDEP, or (ii) caused the Company to enter into a Remediation Agreement (as
defined under ISRA) with NJDEP specifying that the Company will be responsible
for any costs associated with any requirements thereunder, with respect to any
and all Real Property subject to ISRA.
(m) The terms of the Indenture shall have been amended, and the Notes
issued thereunder shall remain outstanding, in a manner acceptable to the
Purchaser, in its reasonable discretion, pursuant to Section 6.12 hereof.
(n) The Purchaser shall have been provided with a certificate from an
officer of the Company certifying that the conditions precedent to the
Purchaser's obligations set forth in this Section shall have been satisfied.
(o) The Purchaser shall have received from David R. Hamilton and George
McFadden a Qualifying Letter of Credit.
(p) (i) the sum of any EHS Damages which in the written opinion of
Purchaser's consultant (which shall be one or more of the consultants listed on
Schedule 7.3(p)(1)) are reasonably expected to be required to be incurred
- -------------------
pursuant to EHS Requirements of Law due to conditions other than those
identified on Schedule 7.3(p)(2) discovered by the Purchaser after the date
------------------
hereof and prior to the Closing in the course of Purchaser's due diligence or
due to any new Proceeding or Order or any new claim or amended claim arising in
connection with any existing Proceeding, Order or condition, plus (ii) the
reasonably expected costs based on the Purchaser's consultant's evaluation in
writing, for full compliance and remediation required pursuant to any EHS
Requirement of Law (including pursuant to ISRA and the Connecticut Transfer Act)
resulting from the announcement or consummation of the transactions contemplated
by this Agreement, shall not in the aggregate exceed $4,000,000; provided that,
--------
in the Shareholder Representative's sole discretion, such amount may be
increased, at any time prior to two days after Purchaser delivers a notice that
it intends to terminate this Agreement pursuant to Section 9.1 based upon the
condition set forth in this Section 7.3(p) not being satisfied, to an amount not
to exceed $5,000,000 (such excess amount over $4,000,000, the "Indemnity Cap
-------------
Adjustment Amount"); it being understood that if such amount exceeds $5,000,000,
- -----------------
Purchaser shall be under no obligation to effect the Merger.
45
<PAGE>
7.4 Conditions to Obligations of the Shareholders.
---------------------------------------------
The obligations of the Shareholders under this Agreement are subject
to the satisfaction of the following conditions unless waived (to the extent
such conditions can be waived) by the Shareholders:
(a) Accuracy of Representations and Warranties. All representations and
------------------------------------------
warranties made by Purchaser in this Agreement and the Related Documents shall
be true and correct in all material respects as of the date hereof and at and as
of the Closing Date with the same effect as if such warranties and
representations had been made as of the Closing Date, and the Company and the
Shareholders shall have received a certificate to that effect signed by
Purchaser and by a principal executive officer of Purchaser.
(b) Performance of Obligations of Purchaser. Purchaser shall have
---------------------------------------
performed in all material respects all obligations and covenants required to be
performed by it under this Agreement and the Related Documents prior to or as of
the Closing Date and the Company and the Shareholders shall have received a
certificate to that effect signed by Purchaser.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification Generally; Etc.
-------------------------------
(a) Subject to the further terms of this Article VIII, the Shareholders
agree severally but not jointly with respect only to the representations in
Article III hereof and to any individual obligations hereunder, and otherwise,
the Shareholders agree, jointly and severally, to indemnify, from and after the
Closing Date, Purchaser Indemnified Persons for, and hold them harmless from and
against, any and all Purchaser Losses arising from or in connection with any of
the following (in each case without giving effect to any qualification as to
materiality contained in this Agreement):
(i) the inaccuracy or breach of any representation or warranty of the
Company or the Shareholders contained herein or in any certificate
delivered by any Shareholder or the Shareholders' Representative in
connection herewith at or before the Closing (or any facts or circumstances
constituting any such untruth, inaccuracy or breach);
(ii) the breach of any agreement or covenant of the Shareholders or
Company contained in this Agreement, excluding the covenants set forth in
Section 6.14, as to which the sole remedies are set forth in Section 7.3(q)
and Article IX;
(iii) any Liabilities or obligations arising out of or relating to
Leaman Air (whether incurred prior to or after the Closing); and
(iv) any EHS Damages arising from or relating to (A) the presence,
Release, threatened or suspected Release, of any Contaminants, from, in,
to, on, or under
46
<PAGE>
any Property existing as of the Closing Date; (B) the shipment of
Contaminants generated by the Company, any predecessors of the Company, or
any Person previously owned by the Company, to any off-site location prior
to the Closing Date, (C) any violation of any EHS Requirement of Law by the
Company, any predecessor of the Company or any Person previously owned by
the Company prior to the Closing Date or (D) compliance with ISRA, the
Connecticut Transfer Act and any other EHS Requirement of Law triggered by
the transactions contemplated by this Agreement. Notwithstanding the
foregoing, the Shareholders' indemnification obligations hereunder shall
not extend to any EHS Damages that arise solely as a result of any act or
condition first created after the Closing Date and caused by Purchasers or
their representatives. After the Closing, the provisions of this Agreement
shall be the sole remedies available to the Parties for EHS Damages.
(v) The failure of the Company or the Surviving Corporation to
withhold any Tax due to be withheld from any amount paid or consideration
transferred pursuant to the terms hereof to any Shareholder of the Company.
(b) Subject to the further terms of this Article VIII, Purchaser agrees
to indemnify the Shareholders' Indemnified Persons for, and hold them harmless
from and against, any and all Shareholders' Losses arising from or in connection
with any of the following:
(i) the inaccuracy or breach of any representation or warranty of
Purchaser contained herein or any certificate delivered by Purchaser in
connection herewith at or before the Closing (or any facts or circumstances
constituting any such untruth, inaccuracy or breach); and
(ii) the breach of any agreement or covenant of Purchaser contained
in this Agreement.
(iii) (A) the operation of the Company after the Effective Time,
but only to the extent such Shareholders' Losses do not result from the
operation of the Company prior to the Effective Time, and (B) the failure
of the Company after the Effective Time to pay indefeasibly, and on a
timely basis, all amounts payable in respect of the shares of Series A
Preferred Stock and Series C Cumulative Preferred Stock issued and
outstanding immediately after the Effective Time.
(c) Notwithstanding the provisions of Section 8.1(a), with respect to any
--------------
Purchaser Loss for which the Shareholders are jointly and severally liable
pursuant to Section 8.1(a), Messrs. David Hamilton and George McFadden shall
--------------
each be jointly and severally liable for only up to 60% of such Purchaser Loss.
8.2 Assertion of Claims.
-------------------
No claim shall be brought for a breach of a representation or warranty
under Section 8.1 hereof unless the Indemnified Persons, or any of them, at any
time prior to the applicable Survival Date, give the Indemnifying Persons (a)
written notice of the existence of any
47
<PAGE>
such claim, specifying the nature and basis of such claim and the amount
thereof, to the extent known or (b) written notice pursuant to Section 8.3 of
any Third Party Claim (as hereinafter defined), the existence of which might
give rise to such a claim. Upon the giving of such written notice as aforesaid,
the Indemnified Persons, or any of them, shall have the right to commence legal
proceedings subsequent to the Survival Date for the enforcement of their rights
under Section 8.1.
8.3 Notice and Defense of Third Party Claims.
----------------------------------------
The obligations and liabilities of an Indemnifying Person with respect
to Losses resulting from the assertion of liability by third parties (each, a
"Third Party Claim") shall be subject to the following terms and conditions:
- ------------------
(a) The Indemnified Persons shall give written notice to the Indemnifying
Persons of any Third Party Claim which might give rise to any Loss by the
Indemnified Persons, stating the nature and basis of such Third Party Claim, and
the amount thereof to the extent known; provided, however, that no delay or
-------- -------
inadequacy on the part of the Indemnified Persons in notifying any Indemnifying
Persons shall relieve the Indemnifying Persons from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Person thereby
is prejudiced by such delay. Such notice shall be accompanied by copies of all
relevant documentation with respect to such Third Party Claim, including,
without limitation, any summons, complaint or other pleading which may have been
served, any written demand or any other document or instrument.
(b) If the Indemnifying Persons shall acknowledge irrevocably in a
writing delivered to the Indemnified Persons that such Third Party Claim is
properly subject to their indemnification obligations hereunder, then the
Indemnifying Persons shall have the right to assume the defense of any Third
Party Claim at their own expense and by their own counsel, which counsel shall
be reasonably satisfactory to the Indemnified Persons; provided, however, that
the Indemnifying Persons shall not have the right to assume the defense of any
Third Party Claim, notwithstanding the giving of such written acknowledgment, if
(i) the Indemnified Persons shall have been advised by counsel that there are
one or more legal or equitable defenses available to them which are different
from or in addition to those available to the Indemnifying Persons, and, in the
reasonable opinion of the Indemnified Persons, counsel for the Indemnifying
Persons could not adequately represent the interests of the Indemnified Persons
because such interests could be in conflict with those of the Indemnifying
Persons, (ii) such action or proceeding involves, or could have a material
effect on, any material matter beyond the scope of the indemnification
obligation of the Indemnifying Persons or (iii) the Indemnifying Persons shall
not have assumed the defense of the Third Party Claim in a timely fashion.
(c) If the Indemnifying Persons shall assume the defense of a Third Party
Claim (under circumstances in which the proviso to the first sentence of Section
8.3(b) is not applicable), the Indemnifying Persons shall not be responsible for
any legal or other defense costs subsequently incurred by the Indemnified
Persons in connection with the defense thereof. If the Indemnifying Persons do
not exercise their right to assume the defense of a Third Party Claim by giving
the written acknowledgment referred to in Section 8.3(b), or are otherwise
restricted from
48
<PAGE>
so assuming by the proviso to the first sentence of Section 8.3(b), the
Indemnifying Persons shall nevertheless be entitled to participate in such
defense with their own counsel and at their own expense. If the defense of a
Third Party Claim is assumed by the Indemnified Persons pursuant to clause (i)
or (ii) of the proviso of Section 8.3(b), the Indemnified Persons shall not be
entitled to settle such Third Party Claim without the prior written consent of
the Indemnifying Persons, which consent shall not be unreasonably withheld or
delayed.
(d) If the Indemnifying Persons exercise their right to assume the
defense of a Third Party Claim, (i) the Indemnified Persons shall be entitled to
participate in such defense with their own counsel at their own expense and (ii)
the Indemnifying Persons shall not make any settlement of any claims without the
written consent of the Indemnified Persons, which consent shall not be
unreasonably withheld or delayed.
8.4 Environmental Indemnification Procedures.
----------------------------------------
(a) Application. Notwithstanding anything in this Agreement to the
-----------
contrary, (i) the indemnification procedures in this Section shall apply to any
claim for indemnification arising from or relating to EHS Damages or EHS
Requirements of Law, and (ii) after the Closing, the indemnities set forth in
this Article VIII shall be the parties' sole remedy with respect to EHS Damages.
(b) Environmental Response Action. The Purchaser shall determine the
-----------------------------
manner of resolution of, and shall otherwise control the management and
implementation of any part of the defense, response, Proceedings or settlement
relating to any Losses for which the Shareholders have an indemnity obligation
under Section 8.1(a)(i), (ii) or (iv) and which involves or relates to the
investigation, study, sampling, testing, abatement, monitoring, cleanup,
removal, remediation, other response action, third party action or regulatory
Proceeding relating to (i) the Release or presence of Contaminants at, from, in,
to, on, under, or about any Property currently leased or operated by the Company
or any Subsidiary, (ii) the Company's transportation to or arrangements for the
treatment, storage, handling or disposal of any Contaminants at any off-site
location or (iii) violation of any EHS Requirement of Law. For all matters
other than those identified on Schedule 8.4(e), Shareholders' indemnity
obligations with respect to the matters identified in this Section 8.4(b) shall
be governed in accordance with the following procedures until the Environmental
Survival Date:
(i) Purchaser shall provide written notice to the Shareholders (each
such notice an "Environmental Response Action Notice") setting forth with
------------------------------------
reasonable particularity the nature of the condition or event giving rise
to the related Environmental Response Action Notice, the nature of the
activities undertaken or to be undertaken by Purchaser with respect thereto
(to the extent then determinable), and the estimated cost associated with
such activities (to the extent then estimable).
(ii) The Shareholder Representative shall within fifteen (15) days
after receipt of an Environmental Response Action Notice, notify Purchaser
in writing that the Shareholders object in whole or in part to the actions
contemplated by the Environmental Response Action Notice. If no such
objection is received within such fifteen (15) day
49
<PAGE>
period, the Losses associated with the Environmental Response Action Notice
shall conclusively be deemed Losses for which Shareholders have an
indemnity obligation and the actions contemplated by the Environmental
Response Action Notice shall be conclusively deemed approved by the
Shareholders. The Shareholders agree that their approval of Environmental
Response Action Notices will not be unreasonably withheld. The parties
shall resolve any disputes regarding whether Shareholders' Indemnifying
Persons have an indemnification responsibility for any matter set forth in
an Environmental Response Action Notice according to the procedures set
forth in Section 8.4(d).
(iii) Subject to the provisions of Section 8.4(b)(ii), prior to the
Environmental Survival Date, Shareholders shall reimburse Purchaser for
Losses associated with Environmental Response Action Notices within thirty
days of receipt of an invoice or notice setting forth amounts incurred by
the Company for such Losses. Shareholders' indemnification obligations for
Losses associated with Environmental Response Action Notices that are
expected to be paid after the Environmental Survival Date shall be
determined in accordance with the procedures set forth in Section 8.4(e).
(iv) The Purchaser shall undertake all matters governed by this
Section 8.4 in good faith and in a responsible manner, and any activities
conducted in connection herewith shall be undertaken promptly and concluded
expeditiously using commercially reasonably efforts, subject to the
requirements, schedules and approvals required by the applicable
Governmental Entities. The parties agree to reasonably cooperate with one
another in connection with the requirements of this Section.
(c) Remedial Action. The obligations of Shareholders' Indemnifying
----------------
Persons hereunder with respect to Losses associated with any Remedial Action
shall be determined in accordance with the following criteria. Such Remedial
Action shall:
(i) Attain compliance in a reasonably cost-effective manner with
applicable EHS Requirements of Law, including without limitation, all
action levels or cleanup standards promulgated thereunder, and any lawful
order or directive of an appropriate Governmental Entity;
(ii) Interfere to the least extent reasonably practicable with
operations at any affected Properties; provided, that for purposes of this
--------
Section, a determination of what is "reasonably practicable" shall include
an evaluation of the relative costs and benefits of proposed Remedial
Action; and
(iii) Not be required to render any affected Properties suitable for
use beyond use as an industrial property, provided, however, that a
-------- -------
Remedial Action shall meet all lawful requirements imposed by a
Governmental Entity.
(d) Notification and Disputes. In the event the Shareholders object to
-------------------------
all or any part of an Environmental Response Action Notice or any Remedial
Actions planned by Purchaser on a timely basis, the Shareholder Representative
shall notify Purchaser in writing of
50
<PAGE>
their specific disagreement (and the basis therefor) regarding such
Environmental Response Action Notice or Remedial Action. If the Shareholders'
objection relates to Remedial Action, the Shareholders shall provide an
alternative proposal describing in reasonable detail the proposed activities or
response, including estimated costs associated therewith ("Dispute
-------
Notification"), within fifteen (15) days of its receipt of the related
- ------------
Environmental Response Action Notice Purchaser and the Shareholders shall
thereafter negotiate in good faith in an attempt to reach an agreement as to the
disputed Environmental Response Action Notice or Remedial Action. If unable to
resolve their dispute within twenty (20) days, either Party may submit the
dispute to Deloitte & Touche or a professional skilled in mediation in a
nationally accredited firm mutually agreed upon (the "Neutral Third Party"). The
-------------------
parties may submit statements and documents to the Neutral Third Party regarding
the dispute, provided that copies of any such statements or documents are
--------
simultaneously be provided to the other party. The Neutral Third Party shall
render a decision within thirty (30) days of submission of the dispute to the
Neutral Third Party. The Neutral Third Party's decision shall be final,
binding and unappealable by the Purchaser and the Shareholders. Such decision
shall be communicated by the Neutral Third Party to Purchaser and Shareholders
in writing and shall state the basis of the decision.
(e) Indemnity with Respect to Certain EHS Damages. Subject to the
----------------------------------------------
limitations contained in Section 8.6(b), with respect to matters identified in
Schedule 8.4(e) and with respect to Post True-Up EHS Damages, the Shareholders
shall satisfy their obligations pursuant to Section 8.1(a)(iv) as follows:
(i) EHS Damages Paid During the Environmental Survival Period. If,
----------------------------------------------------------
prior to the Environmental Survival Date, the Company shall have paid
Actual EHS Damages with a future value in excess of the future value of the
Expected EHS Damages, Shareholders shall pay to the Purchaser an amount
equal to such excess. If prior to the Environmental Survival Date, the
Company shall have paid Actual EHS damages with a future value less than
the future value of Expected EHS Damages, the Shareholders indemnity
obligations pursuant to Section 8.4(e)(ii) shall be reduced in the amount
of the difference between the future value of Actual EHS Damages and
Expected EHS Damages (the "Survival Period Credit"). The future value
----------------------
shall be calculated as of the Environmental Survival Date based on the time
of the actual or expected cash payments (as applicable), compounded
annually and using a discount factor equal to the rate of interest on the
notes sold by the Surviving Corporation or its Affiliates in connection
with the consummation of the transactions contemplated by this Agreement.
Subject to the other applicable procedures set forth in this Article VIII
and subject to the limitations set forth in Section 8.6, if at any time
prior to the Environmental Survival Date, the Company shall have paid
Actual EHS Damages in an aggregate amount of more than $5 million in excess
of the Expected EHS Damages for the period commencing on the Closing Date
and ending on the date of the determination of any such Actual EHS Damages,
then the Shareholders shall pay to the Purchaser Indemnified Persons,
promptly upon request an amount equal to the excess of the Actual EHS
Damages paid by the Company prior to the Environmental Survival Date over
the Expected EHS Damages for such period (such amount, the "Pre True-Up
-----------
Payment").
-------
51
<PAGE>
(ii) EHS Damages to be Paid After the Environmental Survival Period.
---------------------------------------------------------------
If, as of the Environmental Survival Date, the present value of the Post
True-Up EHS Damages exceeds the present value of the Post True-Up Expected
EHS Damages, then the Shareholders shall pay to the Purchaser an amount
equal to such excess, less the Survival Period Credit (if any). If the
present value of the Post True-Up EHS Damages is less than the present
value of the Post True-Up Expected EHS Damages, the Shareholders' indemnity
obligation pursuant to paragraph 8.4(e)(i), if any, shall be reduced in an
amount equal to the difference between the Post True-Up EHS Damages and the
Post True-Up Expected EHS Damages. For the purposes of this Agreement,
Post True-Up EHS Damages shall be calculated as of the Environmental
Survival Date based on the time of the expected cash payments. The present
value shall be calculated as of the date of payment based on the schedule
of the Post True-Up EHS Damages and the Post True-Up Expected EHS Damages
(as applicable), compounded annually and using a discount factor equal to
the rate of interest on the notes sold by the Surviving Corporation or its
Affiliates in connection with the consummation of the transactions
contemplated hereby.
(iii) Procedures for Determining Post True-Up EHS Damages. For the
---------------------------------------------------
sixty day period immediately preceding the Environmental Survival Date, the
parties shall seek to agree in good faith upon the Post True-Up EHS
Damages. If the parties are unable to agree in good faith prior to the
Environmental Survival Date, the following procedures shall apply:
(A) On or prior to the Environmental Survival Date, the parties
shall submit the determination of Post True-Up EHS Damages to the Neutral
Third Party. The issues presented to the Neutral Third Party shall be
limited to the determination of the disputed items included in the
estimated amount of the Post True-Up EHS Damages.
(B) The parties may submit statements and documents to the
Neutral Third Party to assist in determination of Post True-Up EHS Damages.
(C) The Neutral Third Party shall render a decision regarding the
disputed Post True-Up EHS Damages within thirty days of submission of the
request for determination to the Neutral Third Party.
(D) Within ten (10) days of receipt of the Neutral Third Party's
determination, either Purchaser or the Shareholders (acting through the
Shareholders' Representative) may submit the Neutral Third Party's decision
to arbitration. Arbitration shall be conducted in New York, New York and,
to the extent reasonably practicable, the arbitrators selected shall be
resident in New York. Arbitration shall be limited to determination of the
disputed items included in the estimated amount of the Post-True-Up EHS
Damages, and the arbitrators shall have no jurisdiction or authority to
resolve any claims not so related, whether arising by way of asserted
rights, offsets, or otherwise.
(E) In the event that determination of the Post-True-Up EHS
Damages is submitted to arbitration, Purchaser and the Shareholders (acting
through the Shareholder
52
<PAGE>
Representative) shall appoint one arbitrator each within 10 days after the
request of the other Party, and a third arbitrator shall be chosen by the
other two arbitrators, provided that if the two arbitrators fail to agree
upon the third arbitrator (or any Party fails to appoint an arbitrator in
the period specified above), the additional arbitrator(s) shall be
appointed by the American Arbitration Association, New York, New York. All
three arbitrators must be chosen within 20 days of receipt of notice for
arbitration. The arbitration shall be completed within 120 days of the date
the matter is submitted to arbitration. For purposes of this Section 8.4
time is of the essence.
(F) The arbitrators' decision shall be final and binding on the
Parties. Upon delivery of such decision, the Purchaser shall be entitled
to draw against the Qualifying Letters of Credit for the amount to which
the Purchaser is entitled pursuant to the terms hereof (subject to the
limitations set forth in Section 8.4(e)(iii)(G)). Such decision shall be
communicated by the arbitrators to the Parties in writing and shall state
the basis of their decision. Any arbitration award shall be enforceable in
any court of competent jurisdiction. The parties hereby consent to such
jurisdiction and to entry of judgment thereon.
(G) Within ten (10) days of a determination of the Post True-Up
EHS Damages, the Shareholders shall pay Purchaser the excess of the present
value of the excess of the Post True-Up EHS Damages over the present value
of the Post True-Up Expected EHS Damages. The Purchaser agrees not to draw
against the Qualifying Letters of Credit until the expiration of such 10-
day period, unless the L/C Expiration Date (as hereinafter defined) would
occur during such time frame.
(H) Notwithstanding anything to the contrary contained in this
Agreement, the Shareholders indemnification under Section 8.1 with respect
to any EHS Damages shall survive the Environmental Survival Date until the
resolution of the matters referred to in this Section 8.4. Each Party
shall bear its own costs associated with determination by the Neutral Third
Party and/or arbitration.
(iv) Notwithstanding anything to the contrary herein, the
Shareholders' indemnity obligations shall be subject to the Cap or, if
applicable, the Adjusted Cap, as set forth in Section 8.6(b).
8.5 Survival of Representations and Warranties.
------------------------------------------
(a) Subject to the further provisions of Section 8.4 and this Section
8.5, the representations and warranties contained in this Agreement or in any
certificate or other writing delivered in connection with this Agreement shall
survive the Closing until the date that is 18 months immediately following the
Closing Date; provided, however, that (i) the representations and warranties
-------- -------
contained in (x) Sections 3.1 and 3.2, the first and last sentences of Section
4.1(a), the first sentence of Section 4.1(b), the first two sentences of Section
4.2 and Sections 4.4(a), 4.4(b), 4.4(c) and 4.12(d) (except for the last
sentence thereof) (collectively, the "Subject R&W"), (y) Section 5.1 and the
-----------
first two sentences of Section 5.2 and (z) the representations and warranties
contained in Section 4.11 shall survive the Closing Date until the
53
<PAGE>
expiration of the respective statutes of limitation for Third Party Claims
applicable to the matters covered thereby, or, if there is no such statute of
limitation, for six years, (iii) the representations and warranties contained in
Section 4.20 shall survive until the 5 year anniversary of the Closing Date and
(iii) subject to the provisions of Section 8.4(e), the representations and
covenants contained in Section 4.21 shall survive until the end of the 27th
month immediately following the Closing Date (the "Environmental Survival
----------------------
Date"). The covenants and other agreements of the parties contained in this
- ----
Agreement shall survive the Closing Date until they are otherwise terminated by
their terms. For convenience of reference, the date upon which any
representation or warranty and covenants contained herein shall terminate, if
any, is referred to herein as the "Survival Date".
-------------
(b) Subject to the provisions of Section 8.4(e), the Shareholders'
indemnification obligations pursuant to Section 8.1(a)(vi) shall survive until
the Environmental Survival Date.
(c) From and after the Closing, the Shareholders shall have no recourse
against the Company for any breach of any representation, warranty, covenant or
agreement of the Company set forth in this Agreement or in any certificate or
other writing delivered in connection with this Agreement.
8.6 Limitations on Indemnification.
------------------------------
(a) Indemnity Baskets for the Shareholders. Purchaser Indemnified
--------------------------------------
Persons shall not have the right to be indemnified for breaches of
representations and warranties pursuant to Section 8.1(a)(i) unless and until
Purchaser Indemnified Persons shall have incurred on a cumulative basis
aggregate Losses in an amount exceeding $500,000.00, in which event the right to
be indemnified shall apply only to the extent such Losses exceed $500,000.00;
provided, however, that in no event shall the limitations set forth in this
- -------- -------
Section 8.6(a) apply with respect to the representations and warranties set
forth in the Subject R&W or any claim arising as a result of fraud.
(b) Indemnity Limitations for the Shareholders. Except as provided
------------------------------------------
herein, the sum of all Losses pursuant to which indemnification is payable by
the Shareholders in the aggregate pursuant to Section 8.1(a)(i) and Section
8.1(a)(iv) shall not exceed $10,750,000 (the "Cap"), plus an amount equal to the
--- ----
Indemnity Cap Adjustment Amount (the "Adjusted Cap"), and no Shareholder shall
------------
be liable to Purchaser for any amount in excess of the portion of the Merger
Consideration received by such Shareholder; provided, however, that in no event
-------- -------
shall the limitations set forth in this Section 8.6(b) apply with respect to the
representations and warranties set forth in the Subject R&W or any claim arising
as a result of fraud.
(c) The Shareholders shall have no duty of indemnification with respect
to costs of compliance with EHS Requirements of Law enacted or amended after the
Closing to the extent that such EHS Requirements of Law impose additional
requirements, financial or other obligations or liabilities of any kind or
character that are more burdensome than those that would have been imposed under
EHS Requirements of Law in effect as of the Closing.
54
<PAGE>
8.7 Letter of Credit.
----------------
From and including the Closing Date until the third anniversary of the
Closing Date or the end of the 39th month after the Closing Date (or such
earlier date as payment has been made pursuant to 8.4(e)(iii)(G)) if, as of the
third anniversary thereof, (i) no final determination of Post True-Up EHS
Damages has been made, or (ii) if such a determination has been made and the
Purchaser is entitled to payment pursuant to 8.4(e)(iii)(G), but such payment is
not received prior to such date (such date, the "L/C Expiration Date"), David R.
-------------------
Hamilton and George McFadden shall cause one or more Qualifying Letters of
Credit to be issued (and, at all relevant times, maintained) in an aggregate
principal amount equal to the Adjusted Cap. The term "Qualifying Letter of
--------------------
Credit" means a letter of credit which is (a) irrevocable, (b) is issued by a
- ------
reputable and solvent bank with assets of at least $2 billion, (c) shall
specifically provide that it secures the Shareholders' obligations pursuant to
Article VIII, (d) shall specifically provide that the issuing bank shall pay to
the Purchaser Indemnified Persons, immediately after the failure of any
Shareholder to pay any amount to any such Person when due as required by this
Agreement and (e) shall remain outstanding until, and shall not mature prior to,
the L/C Expiration Date. Nothing contained in this Section 8.6(c) shall in any
way abrogate the liability of the Shareholders under Article VIII for a breach
of the representations and warranties set forth herein. The Purchaser agrees
(a) to draw upon each such Letter of Credit on an equal basis (unless, for any
reason, either of the Qualifying Letters of Credit shall cease to be available
before the L/C Expiration Date or the Adjusted Cap has been exhausted) and (b)
to pay the reasonable bank fee (up to an aggregate amount equal to 2% of the
face value of the Qualifying Letters of Credit per year) payable in respect of
the Qualifying Letters of Credit. The parties hereto agree and use all
commercially reasonable efforts to ensure that all procedures set forth herein
with respect to determining Post True-Up EHS Damages shall be finalized and any
payments required to be made pursuant to Section 8.4(e)(iii)(G) shall be made
prior to the L/C Expiration Date.
8.8 No Indemnification Set-Offs.
---------------------------
Sums due under this Article VIII shall not be set off against or
------------
subject to set-off by, other sums due to and from the parties hereto.
ARTICLE 9
TERMINATION; EFFECT OF TERMINATION
9.1 Termination.
-----------
This Agreement may be terminated at any time prior to the Closing by:
(a) the mutual written consent of Purchaser and the Company; or
(b) Purchaser, if there has been a material breach by the Shareholders or
the Company of any representation, warranty, covenant or agreement set forth in
this Agreement which is not cured by the Company or the Shareholders within 10
days after notice thereof; or
55
<PAGE>
(c) the Company, if there has been a material breach by Purchaser of any
representation, warranty, covenant or agreement set forth in this Agreement
which is not cured by Purchaser within 10 days after notice thereof; or
(d) Purchaser, if the conditions set forth in Sections 7.1 or 7.3 shall
not have been satisfied or waived by October 31, 1998; or
(e) the Company, if the conditions set forth in Sections 7.1 or 7.2 shall
not have been satisfied or waived by October 31, 1998;
(f) Purchaser, or the Company, if any permanent injunction or other Order
of a court or other competent authority preventing the Closing shall have become
final and nonappealable; or
(g) Purchaser, if the condition set forth in Section 7.3(p) shall not be
satisfied.
provided, however, that none of the Shareholders, the Company or the Purchaser
- -------- -------
shall be entitled to terminate this Agreement if such party's breach of this
Agreement has prevented the satisfaction of a condition. Any termination
pursuant to this Section 9.1 (other than a termination pursuant to Section
9.1(a)) shall be effected by written notice from the party or parties so
terminating to the other parties hereto, which notice shall specify the Section
of this Agreement pursuant to which this Agreement is being terminated.
9.2 Effect of Termination.
---------------------
Without limiting the rights of Purchaser pursuant to Section 10.13, in
the event of the termination of this Agreement as provided in Section 9.1, this
Agreement shall be of no further force or effect except for this Section 9.2 and
Article X, each of which shall survive the termination of this Agreement.
Without limiting the rights of Purchaser pursuant to Section 10.13, if there
shall have occurred an intentional, willful or knowing breach by the
Shareholders or the Company of any one or more representations and warranties or
covenants in this Agreement and as a result thereof this Agreement is terminated
by the Purchaser pursuant to Section 9.1(b) or 9.1(d), then the Company shall
pay to Purchaser all costs and expenses (including reasonable attorneys' fees
and expenses) incurred by or on behalf of Purchaser in connection with the
transactions contemplated by this Agreement, including all costs and expenses
(including reasonable attorneys' fees and expenses) incurred by or on behalf of
Purchaser in connection with the transactions contemplated by the Financing
Letters and in enforcing this provision.
Without limiting the rights of the Company pursuant to Section 10.13,
if there shall have occurred an intentional, willful or knowing breach by
Purchaser of any one or more representations and warranties or covenants in this
Agreement and as a result thereof this Agreement is terminated by the Company
pursuant to Section 9.1(c) or 9.1(e), then the Purchaser (or its assignee) shall
pay to the Company all costs and expenses (including reasonable attorneys' fees
and expenses) incurred by or on behalf of the Company in connection with the
transactions contemplated by this Agreement, including all costs and expenses
(including reasonable
56
<PAGE>
attorneys' fees and expenses) incurred by or on behalf of the Company in
enforcing this provision.
The Liability of any party for any intentional, willful or knowing
breach by such party of the representations, warranties, covenants or agreements
of such party set forth in this Agreement occurring prior to the termination of
this Agreement shall survive the termination of this Agreement.
ARTICLE 10
MISCELLANEOUS PROVISIONS
10.1 Amendment.
---------
This Agreement shall not be altered or otherwise amended except
pursuant to an instrument in writing signed by each party, except that any party
may waive any obligation owed to it by another party under this Agreement. No
waiver by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
10.2 Entire Agreement.
----------------
Except for that certain Confidentiality Agreement dated November 14,
1997 between an affiliate of Purchaser and the Company, which shall remain in
full force and effect until the Effective Time, notwithstanding the provisions
of this Section 10.2, this Agreement and the other agreements and documents
referenced herein (including, but not limited to, the schedules and the exhibits
(in their executed form) attached hereto) and any other document or agreement
contemporaneously entered into this Agreement contain all of the agreements
among the parties hereto with respect to the transactions contemplated hereby
and supersede all prior agreements or understandings among the parties with
respect thereto.
10.3 Severability.
------------
It is the desire and intent of the parties that the provisions of this
Agreement be enforced to the fullest extent permissible under the Law and public
policies applied in each jurisdiction in which enforcement is sought.
Accordingly, in the event that any provision of this Agreement would be held in
any jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
57
<PAGE>
10.4 Benefits of Agreement; Assignment.
---------------------------------
All the terms and provisions of this Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
permitted assigns. Except as expressly provided herein, this Agreement shall
not confer any rights or remedies upon any Person other than the foregoing.
This Agreement may not be assigned by either party, whether by operation of law
or otherwise, without the consent of the other party; provided that Purchaser
--------
may assign its rights and obligations hereunder without the consent of any
Person to (a) any Affiliate of Purchaser or any shareholder, partner or member
of Purchaser or (b) Apollo Management, L.P. or any Person that is managed or
controlled by, or is an Affiliate of, Apollo Management, L.P.
10.5 Expenses.
--------
Except as otherwise provided in this Agreement, Purchaser, the Company
and the Shareholder shall each bear their own expenses, incurred in connection
with this Agreement and the Related Documents.
10.6 Heading.
-------
Descriptive headings are for convenience only and shall not control or
affect in any way the meaning or construction of any provision of this
Agreement.
10.7 Notices.
-------
All notices or other communications pursuant to this Agreement shall
be in writing and shall be deemed to be sufficient if delivered personally, by
facsimile sent by nationally-recognized, overnight courier or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at the following addresses (or at such other address for a part as shall
be specified by like notice):
(a) if to the Company, to:
Chemical Leaman Corporation
102 Pickering Way
Exton, Pennsylvania 19341-0200
Telephone: (610) 363-4215
Telecopier: (610) 363-4233
Attention: Mr. David Boucher
with a copy to (prior to the Effective Time, only):
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
Telephone: (215) 981-4000
58
<PAGE>
Telecopier: (215) 981-4750
Attention: Barry M. Abelson
(b) if to the Shareholders' Representative, to:
George McFadden & David Hamilton
c/o McFadden Brothers
745 Fifth Avenue
New York, N.Y.
Telephone:
Telecopier:
Attention:
with a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
Telephone: (215) 981-4000
Telecopier: (215) 981-4750
Attention: Barry M. Abelson
(c) if to Purchaser, to:
Purchaser, Inc.
c/o Apollo Management, L.P.
1301 Avenue of the Americas, 38/th/ Floor
New York, New York 10019
Telephone: (212) 261-4000
Telecopier: (212) 261-4102
Attention: Josh Harris
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Telephone No.: (212) 480-2400
Facsimile No.: (212) 728-5950
Attention: John J. Suydam, Esq.
All such notices and other communications shall be deemed to have been given and
received (i) in the case of personal delivery, on the date of such delivery,
(ii) in the case of delivery by facsimile, on the date of such delivery, (iii)
in the case of delivery by nationally-recognized, overnight courier, on the
Business Day following dispatch, and (iv) in the case of mailing, on the third
Business Day following such mailing.
10.8 Counterparts.
------------
59
<PAGE>
This Agreement may be executed in any number of counterparts, and each
such counterpart shall be deemed to be an original instrument, but all such
counterparts together shall constitute one agreement.
10.9 Governing Law.
-------------
THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE DOMESTIC LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY CHOICE
OF LAW OR CONFLICTING PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK, OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN
THE STATE OF NEW YORK TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE
INTERNAL LAW OF THE STATE OF NEW YORK WILL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION'S CHOICE OF LAW
OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION
WOULD ORDINARILY APPLY. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY RELATED DOCUMENT MAY BE BROUGHT EXCLUSIVELY IN THE COURTS OF
THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW
YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY
IRREVOCABLY ACCEPTS FOR ITSELF OR HIMSELF AND IN RESPECT OF ITS OR HIS PROPERTY
AND ASSETS, GENERALLY AND UNCONDITIONALLY THE JURISDICTION OF THE AFORESAID
COURTS.
10.10 Incorporation of Exhibits and Schedules.
---------------------------------------
The Exhibits, Schedules and Annexes identified in this Agreement are
-------- --------- -------
incorporated herein by reference and made a part hereof.
10.11 Independence of Covenants and Representations and Warranties.
------------------------------------------------------------
All covenants hereunder shall be given independent effect so that if a
certain action or condition constitutes a default under a certain covenant, the
fact that such action or condition is permitted by another covenant shall not
affect the occurrence of such default, unless expressly permitted under an
exception to such initial covenant. In addition, all representations and
warranties hereunder shall be given independent effect so that if a particular
representation or warranty proves to be incorrect or is breached, the fact that
another representation or warranty concerning the same or similar subject matter
is correct or is not breached shall not affect the incorrectness of or a breach
of a representation and warranty hereunder.
10.12 Interpretation; Construction.
----------------------------
The term "Agreement" means this agreement together with all schedules
---------
and exhibits hereto, as the same may from time to time be amended, modified,
supplemented or restated in accordance with the terms hereof. In this
Agreement, the term "Best Knowledge" of any Person means (i) the actual
--------------
knowledge of such Person and (ii) that knowledge which would
60
<PAGE>
have been acquired by such Person after making due inquiry of those officers,
directors and key employees of the Person who should reasonably be expected to
have actual knowledge of the matters in question. Without limiting the
generality of the foregoing, when used in the case of the Company, the term
"Best Knowledge" shall include the Best Knowledge of the Shareholders. The
--------------
use in this Agreement of the term "including" means "including, without
--------- ------------------
limitation." The words "herein", "hereof", "hereunder", "hereby", "hereto",
- ----------- ------ ------ --------- ------ ------
"hereinafter", and other words of similar import refer to this Agreement as a
-----------
whole, including the schedules and exhibits, as the same may from time to time
be amended, modified, supplemented or restated, and not to any particular
article, section, subsection, paragraph, subparagraph or clause contained in
this Agreement. All references to articles, sections, subsections, clauses,
paragraphs, schedules and exhibits mean such provisions of this Agreement and
the schedules and exhibits attached to this Agreement, except where otherwise
stated. The title of and the article, section and paragraph headings in this
Agreement are for convenience of reference only and shall not govern or affect
the interpretation of any of the terms or provisions of this Agreement. The use
herein of the masculine, feminine or neuter forms shall also denote the other
forms, as in each case the context may require. Where specific language is used
to clarify by example a general statement contained herein, such specific
language shall not be deemed to modify, limit or restrict in any manner the
construction of the general statement to which it relates. The language used in
this Agreement has been chosen by the parties to express their mutual intent,
and no rule of strict construction shall be applied against any party.
Accounting terms used but not otherwise defined herein shall have the meanings
given to them under GAAP. Unless expressly provided otherwise, the measure of a
period of one month or year for purposes of this Agreement shall be that date of
the following month or year corresponding to the starting date, provided that if
no corresponding date exists, the measure shall be that date of the following
month or year corresponding to the next day following the starting date. For
example, one month following February 18 is March 18, and one month following
March 31 is May 1.
10.13 Remedies.
--------
The parties shall each have and retain all rights and remedies
existing in their favor under this Agreement, at law or equity, including rights
to bring actions for contract damages, specific performance and injunctive and
other equitable relief to enforce or prevent a breach or any violation of this
Agreement. All such rights and remedies shall, to the extent permitted by
applicable Law, be cumulative. Notwithstanding the foregoing, after the
Closing, the provisions of Article VIII hereof shall provide the parties'
------------
exclusive remedies with respect hereto.
10.14 Waiver of Jury Trial.
--------------------
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY RELATED DOCUMENT.
* * *
61
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Merger
Agreement as of the date first written above.
The Purchaser:
PALESTRA ACQUISITION CORP.
By:
-------------------------------------
Name:
Title:
The Company:
CHEMICAL LEAMAN CORPORATION
By:
-------------------------------------
Name:
Title:
62
<PAGE>
The Shareholders:
David R. Hamilton
CATHARINE C. HAMILTON
CATHARINE ELIZABETH HAMILTON
TENNESSE ALEXIS HAMILTON
By:
-------------------------------------
David R. Hamilton
Attorney-in-Fact
HAMILTON FAMILY TRUST
By:
-------------------------------------
Trustee
----------------------------------------
Samuel C. Hamilton
----------------------------------------
George McFadden
----------------------------------------
John H. McFadden
63
<PAGE>
TRUSTEES U/W/O ALEXANDER B.
MCFADDEN, DECEASED, F/B/O JOHN, MARY AND GEORGE MCFADDEN
By:
------------------------------------
George McFadden, Trustee
By:
------------------------------------
Alexander Cushing, Trustee
By:
------------------------------------
Mellon Bank (East), Trustee
TRUSTEE U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O GEORGE MCFADDEN
By:
------------------------------------
George McFadden, Trustee
By:
------------------------------------
Alexander Cushing, Trustee
By:
------------------------------------
Mellon Bank (East), Trustee
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O JOHN H. MCFADDEN
By:
------------------------------------
George McFadden, Trustee
By:
------------------------------------
John H. McFadden, Trustee
By:
------------------------------------
64
<PAGE>
Mellon Bank (East), Trustee
TRUSTEES U/W/O GEORGE MCFADDEN,
DECEASED, F/B/O MARY JOSEPHINE MCFADDEN
By:
------------------------------------
George McFadden, Trustee
By:
------------------------------------
Mellon Bank (East), Trustee
----------------------------------------
Lesley Taylor
TRUSTEES F/B/O ELIZABETH CUTTING MCFADDEN
By:
------------------------------------
George McFadden, Trustee
By:
------------------------------------
Lesley Taylor
----------------------------------------
Eugene C. Parkerson
----------------------------------------
David M. Boucher
----------------------------------------
Philip J. Ringo
65
<PAGE>
----------------------------------------
Reuben M. Rosenthal
----------------------------------------
Jack H. Elrod
----------------------------------------
J. Stephen Hamilton
----------------------------------------
Leon F. Palmer
----------------------------------------
Dennis R. Copeland
----------------------------------------
F.C. Colon-Osorio
----------------------------------------
G. Michael Cronk
----------------------------------------
Karen Szabo Lloyd
----------------------------------------
Frank Lloyd
ARTICLE 11
66
<PAGE>
ANNEX I
-------
DEFINITIONS
-----------
"Accounting Firm" means an independent "Big 6" public accounting firm or
---------------
their successors.
"Actual EHS Damages" means all EHS Damages paid by the Company and its
------------------
Subsidiaries after the Closing Date with respect to all matters identified on
Schedule 8.4(e), net of any Insurance Proceeds actually received by the Company
in respect of such EHS Damages.
"Agreement" has the meaning set forth in the first paragraph to this
---------
Agreement.
"Affiliate" means, with respect to any Person, (i) a director, officer or
---------
shareholder of such Person, (ii) a spouse of such Person, and (iii) any other
Person that, directly or indirectly through one or more intermediaries,
Controls, or is Controlled by, or is under common Control with, such Person.
"Alternative Transaction" means any direct or indirect acquisition or
-----------------------
purchase of assets of the Company or any Subsidiary outside the ordinary course
of business or any outstanding equity securities of the Company or any
Subsidiary, any tender offer or exchange offer that if consummated would result
in any person beneficially owning equity securities of the Company or any
merger, consolidation, business combination, sale of substantially all the
assets, recapitalization, liquidation, dissolution or similar transaction
involving the Company or any Subsidiary, other than the transactions
contemplated by this Agreement and other than the acquisition of Shares pursuant
to the exercise of Company Stock Options or Warrants that are issued and
outstanding as of the date hereof.
"Audited Balance Sheet Date" has the meaning set forth in Section 4.7(a).
--------------------------
"Audited Financial Statements" has the meaning set forth in Section 4.7(a).
----------------------------
"Best Knowledge" has the meaning set forth in Section 10.12.
--------------
"Boucher Special Merger Consideration" means $200,000.
------------------------------------
"Business" means specialized transportation services, including short and
--------
long-haul transportation, intermodal services, materials handling and third
party logistics, principally to the chemical industry and tank cleaning and
driver-related services.
"Business Day" means any day that is not a Saturday, Sunday or a day on
------------
which banking institutions in New York, New York are not required to be open.
"Closing" has the meaning set forth in Section 1.7.
-------
"Closing Date" has the meaning set forth in Section 1.7.
------------
"Code" has the meaning set forth in Section 4.11(a).
----
Common Equity Percentage" for a Shareholder means the percentage derived by
------------------------
dividing the number of Merger Shares owned by such Shareholder by the Merger
Share Number.
"Company" has the meaning set forth in the caption.
-------
"Company's By-Laws" has the meaning set forth in Section 1.4.
-----------------
<PAGE>
"Company's Charter" has the meaning set forth in Section 1.4.
-----------------
"Confidential or Proprietary Information" means all confidential or
---------------------------------------
proprietary information disclosed (i) by or on behalf of the Company or the
Shareholders to Purchaser, or to employees, consultants or others in a
confidential relationship with any of them, or (ii) by or on behalf of Purchaser
to the Company, the Shareholders or to employees, consultants or others in a
confidential relationship with any of them, in each case other than such
information which (A) becomes generally available to the public (other than as a
result of a breach of Section 6.6), (B) was known to the party to whom such
information was disclosed prior to its disclosure to such party, (C) is
hereafter available to the party to whom such information was disclosed on a
non-confidential basis from a source (other than the party disclosing or on
whose behalf such information was disclosed) which was, to the knowledge of the
receiving party after due inquiry, entitled to disclose the same or (D) is
required by law, governmental order or decree to be disclosed by the party to
whom such information was disclosed.
"Connecticut Transfer Act" shall mean the Connecticut Hazardous Waste
------------------------
Establishment Transfer Act, Conn. Gen. Stat., 22a-134 et. seq.
"Contaminant" means any Hazardous Substance defined or identified pursuant
-----------
to the Comprehensive Environmental Response Compensation and Liability Act, 42
U.S.C. (S) 9601 et seq. or any applicable state analogs thereto, any Hazardous
Waste as defined under RCRA or any applicable state analog, any Hazardous
Material as defined pursuant to the Hazardous Material Transportation Act, 49
U.S.C. (S) 1801 et seq. or any applicable state analog, radioactive substance or
petroleum or any fractions thereof.
"Contract" means any loan or credit agreement, note, bond, mortgage,
--------
indenture, lease, sublease, purchase order or other agreement, commitment,
instrument, Permit, concession, franchise or license.
"Control" means, with respect to any Person, the possession, directly or
-------
indirectly, of the power to direct or cause the direction of the management or
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
"Covered Taxes" means all Taxes of the Company and each Tax Affiliate for
-------------
periods ending on or prior to the close of business on the Closing.
"Effective Time" has the meaning set forth in Article II.
--------------
"EHS Damages" means all claims, judgments, damages (including punitive
-----------
damages), Losses, Liabilities (including strict liability), Encumbrances, costs,
and expenses of investigation and defense of any claim, whether or not such
claim is ultimately defeated, and of any good faith settlement of judgment, of
whatever kind or nature, contingent or otherwise, matured or unmatured,
foreseeable or unforeseeable, including, without limitation, reasonable
attorneys' fees and disbursements and consultants' fees, any of which are
incurred at any time pursuant to EHS Requirements of Law or pursuant to common
law claims arising from or related to the existence of Contaminants at any of
the Properties or any off-site facility to which the Company (or its
predecessors) arranged for the treatment, storage or disposal of Contaminants,
including without limitation:
I-2
<PAGE>
(i) Damages for personal injury or threatened personal injury
(including sickness, disease or death), or injury or threatened injury to
property or natural resources, foreseeable or unforeseeable, including,
without limitation, the cost of demolition and rebuilding of any
improvements on real property;
(ii) Reasonable fees incurred for the services of attorneys,
consultants, contractors, doctors, experts, laboratories and all other
reasonable costs incurred in connection with any damages as described in
subparagraph (i) of this 'definition, and the investigation or remediation
of Contaminants or the suspected presence of Contaminants or the violation
or threatened violation of EHS Requirements of Law including, but not
limited to, the preparation of any feasibility studies or reports or the
performance of any investigations, cleanup, treatment, remediation,
removal, response, abatement, containment, closure, storage, disposal,
transport, restoration or monitoring work required by any federal, state,
local or foreign governmental agency or political subdivision, or otherwise
expended in connection with such conditions, and including, without
limitation, any reasonable attorneys' fees, costs and expenses incurred in
enforcing this Agreement or collecting any sums due hereunder; and
(iii) Liability to any third person or Governmental Entity to
indemnify such person or Governmental Entity for costs expended in
connection with the items referenced in subparagraphs (i) and (ii) of this
definition.
"EHS Permits" means all Permits required under EHS Requirements of Law.
-----------
"EHS Requirements of Law" means all civil and criminal Laws, EHS Permits, or
-----------------------
Orders issued promulgated or entered in order to protect human health, welfare
or the environment, whether now existing or subsequently enacted, amended or
superseded (except to the extent that any additional requirements, financial or
other obligations or liabilities of any kind or character are more burdensome
than those that would have been imposed under EHS Requirements of Law in effect
as of the Closing), including, but not limited to, any Law, directive, binding
policy, EHS Permit or Order relating to (x) the use, handling or disposal of any
Contaminant or (y) workplace or worker safety and health, as such requirements
are promulgated by the specifically authorized Governmental Entity responsible
for administering such requirements.
"Employee Benefit Plan" means (i) any qualified or non-qualified Employee
---------------------
Pension Benefit Plan (as defined in Section 3(2) of ERISA), including any
Multiple Employer Plan, (ii) any Employee Welfare Benefit Plan (as defined in
Section 3(1) of ERISA), or (iii) any employee benefit, fringe benefit,
compensation, severance, incentive, bonus, profit-sharing, stock option, stock
purchase or other plan, program or arrangement, whether or not subject to ERISA
and whether or not funded, but shall not include any Multiemployer Plan.
"Employee Plans" has the meaning set forth in Section 4.20(a).
--------------
"Encumbrances" shall mean and include security interests, mortgages, liens,
------------
pledges, charges, easements, reservations, restrictions, rights of way,
servitudes, options, rights of first refusal, community property interests,
equitable interests, restrictions of any kind and all other encumbrances,
whether or not relating to the extension of credit or the borrowing of money.
I-3
<PAGE>
"Environmental Encumbrance" means an Encumbrance in favor of any
-------------------------
Governmental Entity for any (a) Liability under any EHS Requirement of Law or
(b) Losses or damages arising from, or costs incurred by, such Governmental
Entity in response to a Release or threatened Release of a Contaminant into the
environment.
"Environmental Survival Date" has the meaning set forth in Section 8.5(a).
---------------------------
"ERISA Affiliate" means, with respect to any Person, any other Person that
---------------
is a member of a "controlled group of corporations" with, or is under "common
control" with, or is a member of the same "affiliated service group" with such
Person as defined in Section 414(b), 414(c), or 414(m) or 414(o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any
------------
successor thereto.
"Expected EHS Damages" means the dollar amount of EHS Damages expected to be
--------------------
incurred by the Company and its Subsidiaries from and after the Closing Date to
the Environmental Survival Date in respect of all matters identified on Schedule
8.4(e) as such dollar amounts are set forth in Schedule 8.4(e) hereto, net of
all Insurance Proceeds which are expected to be recovered by the Company in
respect of such EHS Damages). EHS Damages for 1998 shall be prorated based upon
the number of days from the Closing Date through and including December 31,
1998); estimated net EHS Damages for 1999 and 2000 shall be as set forth on
Schedule 8.4(e); and estimated net EHS Damages for 2001 shall be prorated based
upon the number of days from December 31, 2000 through and including the
Environmental Survival Date.
"Foreign Employee Benefit Plan" means any employee benefit plan that is
-----------------------------
structured like an employee benefit plan described in Section 3(3) of ERISA
which is maintained outside the United States primarily for the benefit of
persons substantially all of whom are nonresident aliens and who are employees
of the Company or any of its ERISA Affiliates and is not covered by ERISA
pursuant to Section 4(b)(4) of ERISA.
"Foreign Pension Plan" means any employee benefit plan that is structured
--------------------
like an employee benefit plan described in Section 3(3) of ERISA which is (i)
maintained outside the United States primarily for the benefit of persons
substantially all of whom are nonresident aliens and who are employees of the
Company or any of its ERISA Affiliates, (ii) is not covered by ERISA pursuant to
Section 4(b)(4) of ERISA, and (iii) is required to be funded through a trust or
other funding vehicle.
"GAAP" means generally accepted accounting principles consistently applied.
----
"Governmental Entity" means federal, state, local or foreign government and
-------------------
any court, tribunal, administrative agency, commission or other governmental or
regulatory authority or agency, domestic, foreign or supranational.
"Group Health Plan" has the meaning set forth in Section 4.20(b)(viii).
-----------------
"Hamilton Special Merger Consideration" means $4,781,118.
-------------------------------------
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
-------
as amended.
I-4
<PAGE>
"ISRA" shall mean the New Jersey Industrial Site Recovery Act.
----
"Income Taxes" shall mean all Taxes based upon income, including without
------------
limitation income Taxes, franchise Taxes based upon income and any Taxes paid in
lieu of (or because they are greater than) any of the foregoing.
"Indebtedness" shall include all obligations in respect of indebtedness for
------------
borrowed money (including interest payable in respect thereof), obligations
incurred, issued or assumed as the deferred purchase price of property or
services other than accounts payable incurred in the ordinary course of business
consistent with past practice, Liabilities of others secured by (or, for which
the holder of such indebtedness has an existing right, contingent or otherwise,
to be secured) any Encumbrance on property or assets of the Company or any
Subsidiary, capital lease obligations, all prepayment premiums or penalties
resulting from or arising out of the transactions contemplated by this Agreement
and obligations in respect of guarantees of any of the foregoing or any "keep
well" or other agreement to maintain any financial statement condition of
another person, in each case, whether or not matured, liquidated, fixed,
contingent, or disputed.
"Indemnified Persons" means and includes the Shareholders' Indemnifying
-------------------
Persons or Purchaser Indemnified Persons, as the case may be.
"Indemnifying Persons" means and includes the Shareholders' Indemnifying
--------------------
Persons or Purchaser Indemnifying Persons, as the case may be.
"Indemnity Cap Adjustment Amount" has the meaning set forth in Section
-------------------------------
7.3(p).
"Independent Contractors" means any driver who works for the Company but is
-----------------------
not employed by the Company, including owner-operators who provide tractors to
and drive exclusively for the Company.
"Insurance Proceeds" means proceeds, other than those set forth on Schedule
------------------
4.16(c), from Qualified Insurance Carriers in respect of the Company's
properties located in Bridgeport, New Jersey. Qualified Insurance Carriers
means insurance carriers with a Moody's rating of at least [B+] and policies in
favor of the Company or its Subsidiaries in existence on the date hereof with
respect to the Company's properties located in Bridgeport, New Jersey.
"Intellectual Property Rights" means all intellectual property rights,
----------------------------
including, without limitation, patents, patent applications, trademarks,
trademark applications, tradenames, servicemarks, servicemark applications,
trade dress, logos and designs and the goodwill connected with the foregoing,
copyrights and copyright applications, know-how, trade secrets, proprietary
processes and formulae, confidential information, franchises, licenses,
inventions, including, without limitation, manuals, memoranda and records.
"Latest Balance Sheet" has the meaning set forth in Section 4.8.
--------------------
"Latest Balance Sheet Date" has the meaning set forth in Section 4.7(b).
-------------------------
"Law" means any applicable foreign, federal, state or local law, statute,
---
treaty, rule, directive, regulation, ordinances and similar provisions having
the force or effect of law or an Order of any Governmental Entity (including all
Environmental, Health and Safety Laws).
"Leased Property" has the meaning set forth in Section 4.13(b).
---------------
I-5
<PAGE>
"Liability" means any liability or obligation, whether known or unknown,
---------
asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated
or unliquidated and whether due or to become due, regardless of when asserted.
"Licensed Requisite Rights" has the meaning set forth in Section 4.14(b).
-------------------------
"Litigation Expense" means any reasonable out-of-pocket expenses incurred in
------------------
connection with investigating, defending or asserting any claim, legal or
administrative action, suit or Proceeding incident to any matter indemnified
against hereunder including, without limitation, court filing fees, court costs,
arbitration fees or costs, witness fees and fees and disbursements of outside
legal counsel, investigators, expert witnesses, accountants and other
professionals.
"Losses" means any and all losses, claims, shortages, damages, Liabilities,
------
expenses (including reasonable attorneys' and accountants' and other
professionals' fees and Litigation Expenses), assessments, Taxes (including
interest or penalties thereon) and insurance premium increases to the extent
such increases are directly attributable to any such matter that is the subject
of indemnification under Article VIII as reduced by (i) the amount actually
recovered under insurance policies (net of deductibles and incidental expenses
resulting therefrom) and (ii) tax benefits actually realized under Tax Laws in
respect of such Losses, in each case net of all costs and expenses of recovering
any such amount. For purposes of determining tax benefits actually realized,
there shall be included tax benefits actually realized before the taxable year
in which a payment for a Loss is received and tax benefits realized in the
taxable year in which a payment for a Loss is received.
"Material Adverse Change" has the meaning set forth in Section 4.6(a).
-----------------------
"Material Adverse Effect" means any event, condition, change, fact,
-----------------------
circumstance or effect, which, individually or in the aggregate, has had or is
reasonably likely to have a material adverse effect on the business, operations,
assets, condition (financial or otherwise), operating results, prospects or
Liabilities of the Company and its Subsidiaries (taken as a whole) or any
material casualty loss or damage to the assets of the Company or any Subsidiary,
whether or not covered by insurance
"Merger Consideration" means $77,800,000.
--------------------
"Merger Share Number" means the number of Merger Shares.
-------------------
"Merger Shares" means the shares of Company Common Stock that are issued and
-------------
outstanding immediately prior to the Effective Time that are owned by any Person
other than the Company.
"Net Transaction Expenses" means aggregate Transaction Expenses in excess of
------------------------
$100,000.
"No Further Action Letter" shall mean either (i) a No Further Action Letter
------------------------
(as defined under ISRA) issued by the NJDEP to the Shareholders or the Company
with respect to the Real Property or (ii) a written communication by the NJDEP
to the Shareholders or the Company notifying the Shareholders or the Company, as
the case may be, that neither the Shareholders nor the Company shall have any
further obligation relating to environmental contamination at the Real Property,
other than any one or more of the following: (A) institutional or engineering
I-6
<PAGE>
controls, (B) deed restriction, (C) monitoring, (D) groundwater
reclassification, (E) reopen for changed conditions.
"Orders" means judgments, writs, decrees, compliance agreements, injunctions
------
or judicial or administrative orders and determinations of any Governmental
Entity or arbitrator.
"Owned Property" has the meaning set forth in Section 4.13(a)
--------------
"Owned Requisite Rights" has the meaning set forth in Section 4.14(b).
----------------------
"Percentage of Merger Consideration" for each Shareholder means the
----------------------------------
percentage obtained by dividing the portion of the Merger Consideration to be
received by such Shareholder pursuant to this Agreement (assuming the Net
Transaction Expenses are equal to zero) by the Merger Consideration.
"Permits" means all permits, licenses, authorizations, registrations,
-------
franchises, approvals, certificates, variances and similar rights obtained, or
required to be obtained, from Governmental Entities.
"Permitted Encumbrances" means (i) Encumbrances for Taxes that are not yet
----------------------
delinquent or are being contested in good faith by appropriate proceedings and
for which there are adequate reserves on the books, (ii) workers or unemployment
compensation liens arising in the ordinary course of business; (iii) mechanic's,
materialman's, supplier's, vendor's or similar liens arising in the ordinary
course of business securing amounts that are not delinquent (iv) laws,
ordinances and governmental regulations regulating the use of occupancy of the
Leased Property or the Owned Property or the character, dimensions or locations
of the improvements thereon, provided that none of the same are or would be
violated by the continued use of any portion of the Leased Property or the Owned
Property for the purposes for which it has been customarily used by or in the
Business; and (v) exceptions discoverable by an inspection or survey or other
imperfections of title that do not make title unmarketable and are not so
substantial as to impair the value of or interfere with the continued or
contemplated use of any portion of the Owned Property or the Leased Property for
the purposes for which they have been used by or in the Business.
"Person" shall be construed broadly and shall include an individual, a
------
partnership, a corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated organization or a
governmental entity (or any department, agency or political subdivision
thereof).
"Post True-Up EHS Damages" means the dollar amount of EHS Damages expected
------------------------
as of the Environmental Survival Date to be incurred by the Company for the
period from and after the Environmental Survival Date, net of all Insurance
Proceeds which are expected as of the Environmental Survival Date to be
recovered by the Company in respect of such EHS Damages (as such Insurance
Proceeds shall be determined by a nationally recognized insurance recoverables
expert chosen by mutual agreement of Purchaser and the Shareholders
Representative or, if no such agreement can be reached, as chosen by the Neutral
Third Party).
"Post True-Up Expected EHS Damages" means the dollar amount of EHS Damages
---------------------------------
expected as of the date hereof to be incurred by the Company from and after the
Environmental Survival Date in respect of all matters identified on Schedule
8.4(e) as such dollar amounts are
I-7
<PAGE>
set forth in Schedule 8.4(e), net of Insurance Proceeds which are expected to be
recovered by the Company for such EHS Damages.
"Proceeding" means any action, suit, investigation or proceedings before any
----------
Governmental Entity or arbitrator.
"Properties" means all real or personal property of any kind or description
----------
presently owned, leased, operated, or otherwise under the control of the Company
or any Subsidiary.
"Purchaser" has the meaning set forth in the first paragraph of this
---------
Agreement.
"Purchaser Indemnified Persons" means and includes Purchaser, its
-----------------------------
Affiliates, its and their successors and assigns, and the respective officers,
directors, employees and agents of each of the foregoing; provided, however,
-------- -------
that any such Person or entity who was, prior to the Closing Date, an officer,
director, employee, Affiliate, successor or assign of the Company or the
Shareholders shall not in such capacity, be a Purchaser Indemnified Person with
respect to a breach of this Agreement or any Related Document.
"Purchaser Indemnifying Persons" means Purchaser and its successors and
------------------------------
assigns.
"Purchaser Losses" means any and all Losses sustained, suffered or incurred
----------------
by any Purchaser Indemnified Person arising from or in connection with any such
matter which is the subject of indemnification under Article VIII.
"Purchaser's By-Laws" has the meaning set forth in Section 5.1.
-------------------
"Purchaser's Charter" has the meaning set forth in Section 5.1.
-------------------
"RCRA" means the federal Resource Conservation and Recovery Act.
----
"Release" means the presence, release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migrating into
the indoor or outdoor environment of any Contaminant through or in the air,
soil, subsurface, surface water, groundwater or Properties.
"Remedial Action" means actions required to (i) clean up, remove, treat or
---------------
in-any other way address Contaminants in the indoor or outdoor environment; (ii)
prevent the Release or threat of Release or minimize the further Release of
Contaminants; or (iii) investigate and determine if a remedial response is
needed, to design such a response and post-remedial investigation, monitoring,
operation, maintenance and care.
"Requisite Rights" has the meaning set forth in Section 4.12(a)(i).
----------------
"Securities Act" means the Securities Act of 1933, as amended, or any
--------------
successor thereto.
"Shares" means the shares of Common Stock, par value $2.50 per share, of the
------
Company.
"Shareholder" has the meaning set forth in the caption.
-----------
"Shareholders' Indemnified Persons" means and includes the Shareholders and
---------------------------------
its successors and assigns.
"Shareholders' Indemnifying Persons" means and includes the Shareholders and
----------------------------------
its successors and assigns.
I-8
<PAGE>
"Shareholders' Losses" means any and all Losses sustained, suffered or
--------------------
incurred by any Shareholders' Indemnified Person arising from or in connection
with any matter which is the subject of indemnification under Article VIII.
"Shareholders' Representative" has the meaning set forth in the Recitals to
----------------------------
this Agreement.
"Subsidiary" means any Person of which more than 50% of the total voting
---------
power is owned directly or indirectly by any other Person, and if not specified,
means a Subsidiary of the Company.
"Survival Date" has the meaning set forth in Section 8.5(a).
-------------
"Tax Losses" means any and all Losses sustained, suffered or incurred by any
----------
Purchaser Indemnified Person arising from or in connection with the untruth,
inaccuracy or breach of the representations and warranties of the Company and
the Shareholders contained in Section 4.11.
"Tax Return" means any return, declaration, report, claim for refund, or
----------
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Taxes" means, with respect to any Person, (i) all income taxes (including
-----
any tax on or based upon net income, gross income, income as specially defined,
earnings, profits or selected items of income, earnings or profits) and all
gross receipts, sales, use, ad valorem, transfer, franchise, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property or windfall profits taxes, alternative or add-on minimum taxes, customs
duties and other taxes, fees, assessments or charges of any kind whatsoever,
together with all interest and penalties, additions to tax and other additional
amounts imposed by any taxing authority (domestic or foreign) on such Person (if
any) and (ii) any liability for the payment of any amount of the type described
in clause (i) above as a result of (A) being a "transferee" (within the meaning
of Section 6901 of the Code or any other applicable Law) of another Person, (B)
being a member of an affiliated, combined or consolidated group or (C) a
contractual arrangement or otherwise.
"Transaction Expenses" means all fees and expenses that are incurred by or
--------------------
on behalf of the Company or any Shareholder (whether incurred prior to, at or
after the Closing) in connection with the preparation for, and consummation of,
the transactions contemplated hereby, by the other agreements referred to herein
or otherwise in connection with a sale of the Company, including any payments to
terminate or purchase options to purchase equity interests of any Subsidiary
(including payments to Robert Johnson and William Kannehan) (it being understood
that Transaction Expenses shall not include either the $4,000,000 cost to obtain
the requisite consent of the holders of Notes to an amendment to the terms of
the Indenture, or the fees and expenses incurred by the Company in connection
with such solicitation of consents all as set forth in Section 6.12).
"Transfer Agent" means a transfer agent selected by the Company and
--------------
acceptable to the Purchaser.
"Third Party Claim" has the meaning set forth in Section 8.3.
-----------------
I-9
<PAGE>
Exhibit A
Form of Delaware Certificate of Merger
(See attached)
<PAGE>
Exhibit B
Form of Pennsylvania Articles of Merger
(See attached)
<PAGE>
Exhibit C
Articles of Incorporation of the Company
(See attached)
<PAGE>
Exhibit D
Form of Letter of Transmittal
(See attached)
<PAGE>
Exhibit E
Financing Letters
(See attached)
<PAGE>
DISCLOSURE SCHEDULE
Disclosure of particular information hereunder does not necessarily indicate
that such information is material or relevant, or will be material or relevant
to Purchaser.
In disclosing any of the information herein, the Company is not expressing
any opinion, explicitly or implicitly, as to the validity, truth or merit of any
referenced claim, nor is the Company admitting to or expressing any opinion as
to any possible wrongdoing by the Company.
<PAGE>
EXHIBIT 99.1
KCSA News
W O R L D W I D E
- --------------------------------------------------------------------------------
Public & Investor Relations, Corporate & Marketing Communications
FOR: MTL INC.
3108 Central Drive
Plant City, FL 33567
CONTACT: Daniel R. Furth
(800) 282-2031
CLC Cidney L. Gilbertson
CONTACT: (610) 363-4443
APOLLO Joshua Harris
CONTACT: (212) 261-4032
KCSA Joseph A. Mansi/Adam I Friedman
CONTACT: (212) 682-6300 ext. 205/215
FOR IMMEDIATE RELEASE
---------------------
MTL INC. TO COMBINE WITH CHEMICAL LEAMAN CORPORATION
PLANT CITY, Fla., June 24, 1998 MTL INC. MTL or ("the Company"), the
holding Company of one of North America's largest bulk transport services
providers, announced today that it has entered into a definitive agreement with
Chemical Leaman Corporation ("CLC") to combine with CLC and its subsidiaries.
MTL recently announced the completion of its merger and
recapitalization whereby certain affiliates of Apollo Management L.P. became
MTL's controlling shareholder.
<PAGE>
In announcing this agreement, Charles J. O'Brien, Jr., MTL's President
and Chief Executive Officer, said, "Uniting these two leading service
organizations under one holding company allows each major tank truck subsidiary
Montgomery Tank Lines and Chemical Leaman Tank Lines to actively pursue their
independent, highly successful growth strategies. The combination with Chemical
Leaman further solidifies MTL Inc.'s position as the leader in its industry."
CLC Chairman and Chief Executive Officer, David R. Hamilton, stated,
"The transaction between MTL Inc. and CLC creates the number one tank truck
company in North America. Our two companies share several operating values:
variable cost business models, quality service, technological innovation and the
tenets of Responsible Care(R) offering great benefits to our many customers."
MTL Chief Financial Officer, Dick Brandewie stated his belief that,
"The Company's prospects are enhanced by the transaction. Furthermore, after
giving effect to synergies and the elimination of certain non-recurring items,
it is anticipated that MTL on a consolidated basis, will have a debt to trailing
twelve months pro forma EBITDA of approximately five times and trailing twelve
months pro forma EBITDA to pro forma interest expense of approximately two
times."
Joshua Harris, Apollo partner and MTL Director, said, "CLC is one of
the finest companies in the bulk transportation business with a solid reputation
for customer service and professionalism. The aggregate strength of these two
tank truck operators under one holding company creates a customer-service
enterprise without equal in the history of the tank truck industry."
2
<PAGE>
MTL Inc. operates approximately 1,900 tractors and 4,000 tank trailers
through its three principal transportation subsidiaries: Montgomery Tank Lines,
Inc., Quality Carriers, Inc. and Levy Transport, Ltd.
Headquartered in Exton, Pennsylvania, Chemical Leaman Corporation is a
holding company with varied business interests in the bulk transportation
services industry, including: Chemical Leaman Tank Lines, Inc., QualaSystems,
Inc., Fleet Transport Company, Inc., TransPlastics, Inc., Leaman Logistics,
Inc., EnviroPower, Inc. and Power Purchasing, Inc.
Both companies are Chemical Manufacturers Association Responsible
Care(R) Partners and serve a wide variety of manufacturing and industrial
customers including a large number of Fortune 500 chemical companies
# # #
This Press release contains statements of a forward-looking nature relating to
future events. Shareholders are cautioned that such statements are predictions
and that actual events or results may differ significantly.
This release is available on the KCSA Worldwide Public Relations website at
www.kcsa.com.
3
