<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): April 22, 1998
ENVIROQ CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 59-3290346
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
0-25528
(Commission File Number)
3918 Montclair Road, Suite 206 35213
Birmingham, Alabama (Zip Code)
(Address of principal executive offices)
(205) 870-0588
(Registrant's Telephone Number, including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5.
On April 22, 1998, Enviroq Corporation (the "Company") entered
into an Agreement and Plan of Reorganization (the "Merger Agreement") with
Institutional Asset Management, Inc., a Florida corporation ("IAM"), Capital
Research Corporation, a Florida corporation ("CRC"), Intrepid Capital
Corporation, a newly formed Delaware corporation and a subsidiary of the Company
("Intrepid Capital") and three wholly-owned subsidiaries of Intrepid Capital
formed to effect the transactions contemplated in the Merger Agreement. Subject
to the terms and conditions of the Merger Agreement, including without
limitation the approval of the stockholders of the Company ("Stockholders"), the
Company will be merged into a wholly-owned subsidiary of Intrepid Capital
("Company Merger"), which will occur simultaneously with similar mergers between
wholly-owned subsidiaries of Intrepid Capital and each of CRC and IAM. As a
result of the simultaneous mergers ("Mergers"), the Company, CRC and IAM will
become wholly-owned subsidiaries of Intrepid Capital.
In connection with the Company Merger, and immediately prior
thereto, each Stockholder will be given the option to redeem 42.698013%, but not
less than 42.698013%, of the shares of the outstanding common stock of the
Company ("Company Stock") owned by such Stockholder for $5.22061144 per share
("Redemption"). The Redemption will occur only if all terms and conditions
contained in the Merger Agreement are satisfied or waived. Each Stockholder that
participates in the Redemption will receive in the Company Merger 1.74514041
shares of common stock of Intrepid Capital ("Intrepid Capital Stock") for each
of its remaining shares of Company Stock. In the event that a Stockholder elects
not to participate in the Redemption, such Stockholder will receive one share of
Intrepid Capital Stock and $2.22909775 for each share of Company Stock in the
Company Merger. The total consideration that a Stockholder that participates in
the Redemption will receive as a result of the Redemption and the Company Merger
will be equivalent on a per share basis to the total consideration that a
Stockholder that does not participate in the Redemption will receive in the
Company Merger (except for possible differences in tax treatment).
The two shareholders of IAM and CRC ("IAM/CRC Shareholders")
have approved the Merger Agreement and the transactions contemplated thereby,
and, subject to the terms and conditions of the Merger Agreement, will receive
1206.149 shares of Intrepid Capital Stock for each outstanding share of common
stock of IAM and CRC, respectively. After giving effect to the Mergers, the
former IAM/CRC Shareholders will own approximately 54.44% of the outstanding
Intrepid Capital Stock and the former Stockholders will own approximately 45.56%
of the outstanding Intrepid Capital Stock (subject to adjustment upon any
exercise of the Stockholders' right to dissent).
The Company Merger, the Redemption and related matters will be
voted upon by the Stockholders at a special meeting of the Stockholders called
for such purpose. The Stockholders will be receiving proxy materials describing
such matters, and noting the time, place and date of such meeting. The terms of
the Company Merger and Redemption will be more fully described in a Registration
Statement on Form S-4 and related Proxy Statement/Prospectus to be filed with
the Securities and Exchange Commission in connection with the proposed Mergers,
and related
<PAGE> 3
materials. It is contemplated that the shares of Intrepid Capital Stock to be
issued in the Mergers will be registered under the Securities Exchange Act of
1934, as amended.
On April 22, 1998, certain Stockholders that cumulatively own
in excess of a majority of the outstanding Company Stock ("Majority
Stockholders") entered into a Stock Agreement with IAM and CRC pursuant to which
such Majority Stockholders have agreed, subject to certain fiduciary obligations
and other provisions of the Stock Agreement, to vote such Company Stock owned by
such Majority Stockholder in favor of the adoption of the Merger Agreement and
the approval of the Company Merger and other transactions contemplated by the
Merger Agreement, and to take certain other actions in furtherance of such
transactions. If the Majority Stockholders vote all shares of Company Stock so
owned by them in favor of the Company Merger and related transactions, the
Company Merger and the related transactions will be approved by the
Stockholders.
As a condition to the consummation of the Mergers, the
Majority Stockholders will execute a Voting Agreement with the IAM/CRC
Shareholders. In the Voting Agreement, the Majority Stockholders and the IAM/CRC
Shareholders will agree to vote all shares of Intrepid Capital Stock that will
be owned by them after the Mergers to elect certain persons to the board of
directors of Intrepid Capital ("Board") after consummation of the Mergers, and
in general to give each of the Majority Stockholders, as a group, and the
IAM/CRC Shareholders, as a group, representation on the Board for so long as the
Voting Agreement remains in effect. The Majority Stockholders and the IAM/CRC
Shareholders together will own approximately 79% of the issued and outstanding
shares of Intrepid Capital Stock after the consummation of the Mergers.
Also as a condition to the Mergers, Intrepid Capital or one of
its subsidiaries will enter into employment agreements with William J. Long,
President and Chief Executive Officer of the Company, and with each of the
IAM/CRC Shareholders, Forrest Travis and Mark F. Travis.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not Applicable.
(b) Not Applicable.
(c) Exhibits.
The following exhibits are filed as part of this Form 8-K or are
incorporated herein by reference, and this list comprises the Exhibit Index.
<TABLE>
<CAPTION>
Item Description of Exhibits
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<S> <C>
2 Agreement and Plan of Reorganization, dated as of April 22,
1998, by and among Enviroq Corporation, Institutional Asset
Management, Capital Research Corporation, Intrepid Capital
Corporation and certain other entities (without schedules or
exhibits).
</TABLE>
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<TABLE>
<S> <C>
4 Stock Agreement, dated as of April 22, 1998, by and among
certain Stockholders of Enviroq Corporation, Institutional
Asset Management and Capital Research Corporation.
99 Press Release.
</TABLE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENVIROQ CORPORATION
By /s/ William J. Long
-----------------------------------
William J. Long
President, Chief Executive Officer,
Principal Executive Officer, and
Principal Financial and
Accounting Officer
Date: April 22, 1998
<PAGE> 1
EXHIBIT 2
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF REORGANIZATION
by and among
INTREPID CAPITAL CORPORATION,
ENVIROQ CORPORATION,
FREEDOM HOLDING OF ALABAMA, INC.,
INSTITUTIONAL ASSET MANAGEMENT, INC.,
IAM MERGER SUB, INC.,
CAPITAL RESEARCH CORPORATION,
and
CRC MERGER SUB, INC.
--------------------------------
DATED: April 22, 1998
--------------------------------
- -------------------------------------------------------------------------------
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE 1
DEFINITIONS
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Section 1.1 "Action"......................................................................................2
Section 1.2 "Adverse Consequences"........................................................................2
Section 1.3 "Affiliate"...................................................................................2
Section 1.4 "Broker-Dealer"...............................................................................2
Section 1.5 "Broker-Dealer Filings".......................................................................2
Section 1.6 "Business Day"................................................................................2
Section 1.7 "Alternative Proposal"........................................................................2
Section 1.8 "Closing".....................................................................................2
Section 1.9 "Closing Date"................................................................................2
Section 1.10 "Code"........................................................................................3
Section 1.11 "Confidential Information"....................................................................3
Section 1.12 "Consent".....................................................................................3
Section 1.13 "Controlled Group Liability"..................................................................3
Section 1.14 "CRC".........................................................................................3
Section 1.15 "CRC Consideration"...........................................................................3
Section 1.16 "CRC Merger"..................................................................................3
Section 1.17 "CRC Stock"...................................................................................3
Section 1.18 "CRC Surviving Corporation"...................................................................3
Section 1.19 "Delaware General Corporation Law"............................................................3
Section 1.20 "Dissent Provisions"..........................................................................3
Section 1.21 "Dissenting Stockholder"......................................................................3
Section 1.22 "Effective Time"..............................................................................3
Section 1.23 "Employee Benefit Plan".......................................................................4
Section 1.24 "Employee Pension Benefit Plan"...............................................................4
Section 1.25 "Employee Welfare Benefit Plan"...............................................................4
Section 1.26 "Environmental, Health, and Safety Laws"......................................................4
Section 1.27 "Enviroq".....................................................................................4
Section 1.28 "Enviroq Financial Statements"................................................................4
Section 1.29 "Enviroq Intellectual Property Rights"........................................................4
Section 1.30 "Enviroq Merger"..............................................................................4
Section 1.31 "Enviroq Most Recent Financial Statements"....................................................4
Section 1.32 "Enviroq Most Recent Fiscal Month End"........................................................4
Section 1.33 "Enviroq Most Recent Fiscal Year End".........................................................4
Section 1.34 "Enviroq Plans"...............................................................................4
Section 1.35 "Enviroq SEC Documents".......................................................................5
Section 1.36 "Enviroq Stock"...............................................................................5
Section 1.37 "Enviroq Surviving Corporation"...............................................................5
Section 1.38 "ERISA".......................................................................................5
Section 1.39 "ERISA Affiliate".............................................................................5
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<TABLE>
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Section 1.40 "Exchange Act"................................................................................5
Section 1.41 "Extremely Hazardous Substance"...............................................................5
Section 1.42 "Fiduciary"...................................................................................5
Section 1.43 "GAAP"........................................................................................5
Section 1.44 "IAM".........................................................................................5
Section 1.45 "IAM/CRC Regulatory Documents"................................................................5
Section 1.46 "IAM and CRC Intellectual Property Rights"....................................................5
Section 1.47 "IAM Consideration"...........................................................................5
Section 1.48 "IAM/CRC Financial Statements"................................................................6
Section 1.49 "IAM/CRC Most Recent Financial Statements"....................................................6
Section 1.50 "IAM/CRC Most Recent Fiscal Month End"........................................................6
Section 1.51 "IAM/CRC Most Recent Fiscal Year End".........................................................6
Section 1.52 "IAM/CRC Plans"...............................................................................6
Section 1.53 "IAM/CRC Regulatory Documents"................................................................6
Section 1.54 "IAM Merger"..................................................................................6
Section 1.55 "IAM Stock"...................................................................................6
Section 1.56 "IAM Surviving Corporation"...................................................................6
Section 1.57 "Indemnified Party or Parties"................................................................6
Section 1.58 "Intellectual Property".......................................................................6
Section 1.59 "Investment Advisor Filings"..................................................................7
Section 1.60 "Investment Company Act"......................................................................7
Section 1.61 "Knowledge"...................................................................................7
Section 1.62 "Losses"......................................................................................7
Section 1.63 "Mergers".....................................................................................7
Section 1.64 "Material Adverse Effect".....................................................................7
Section 1.65 "Merger Consideration"........................................................................7
Section 1.66 "Merger Letter of Transmittal"................................................................7
Section 1.67 "Multi-employer Plan".........................................................................7
Section 1.68 "Multiple Employer Plan"......................................................................7
Section 1.69 "NewCo".......................................................................................7
Section 1.70 "NewCo Stock".................................................................................7
Section 1.71 "NewCo Subs"..................................................................................7
Section 1.72 "Non-Redeeming Enviroq Stockholder"...........................................................8
Section 1.73 "Non-Redeeming Enviroq Stockholder Cash Consideration"........................................8
Section 1.74 "Non-Redeeming Enviroq Stockholder Consideration".............................................8
Section 1.75 "Non-Redeeming Enviroq Stockholder Stock Consideration".......................................8
Section 1.76 "Ordinary Course of Business".................................................................8
Section 1.77 "PBGC"........................................................................................8
Section 1.78 "Parties".....................................................................................8
Section 1.79 "Party".......................................................................................8
Section 1.80 "Paying Agent"................................................................................8
Section 1.81 "Person"......................................................................................8
Section 1.82 "Prohibited Transaction"......................................................................8
Section 1.83 "Proxy Statement".............................................................................8
Section 1.84 "Qualified Enviroq Plan"......................................................................9
Section 1.85 "Qualified IAM/CRC Plan"......................................................................9
Section 1.86 "Redeemed Shares".............................................................................9
</TABLE>
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<TABLE>
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Section 1.87 "Redeeming Enviroq Stockholder" ..............................................................9
Section 1.88 "Redeeming Enviroq Stockholder Consideration".................................................9
Section 1.89 "Redemption"..................................................................................9
Section 1.90 "Redemption Expiration Date" .................................................................9
Section 1.91 "Redemption Letter of Transmittal" ...........................................................9
Section 1.92 "Redemption Materials"........................................................................9
Section 1.93 "Redemption Offer"............................................................................9
Section 1.94 "Redemption Price"...........................................................................10
Section 1.95 "Redemption Record Date".....................................................................10
Section 1.96 "Registered Investment Adviser"..............................................................10
Section 1.97 "Registration Attorney"......................................................................10
Section 1.98 "Registration Statement".....................................................................10
Section 1.99 "Regulatory Authority".......................................................................10
Section 1.100 "Reportable Event"...........................................................................10
Section 1.101 "SEC"........................................................................................10
Section 1.102 "Securities Act".............................................................................10
Section 1.103 "Security Interest"..........................................................................10
Section 1.104 "Stock Agreement"............................................................................10
Section 1.105 "Sub-1"......................................................................................10
Section 1.106 "Sub-1 Stock"................................................................................10
Section 1.107 "Sub-2"......................................................................................10
Section 1.108 "Sub-2 Stock"................................................................................11
Section 1.109 "Sub-3"......................................................................................11
Section 1.110 "Sub-3 Stock"................................................................................11
Section 1.111 "Subsidiary".................................................................................11
Section 1.112 "Surviving Corporations".....................................................................11
Section 1.113 "Tax Returns"................................................................................11
Section 1.114 "Taxes"......................................................................................11
Section 1.115 "Third-Party Intellectual Property Rights"...................................................11
Section 1.116 "Valid Acceptance"...........................................................................11
Section 1.117 "Voting Agreement"...........................................................................12
<CAPTION>
ARTICLE 2
THE MERGERS
<S> <C> <C>
Section 2.1 The Mergers..................................................................................12
Section 2.2 The Effective Time and the Closing Date......................................................12
Section 2.3 Effect of the Mergers........................................................................12
Section 2.4 Certificate or Articles of Incorporation and Bylaws..........................................12
Section 2.5 Directors and Officers.......................................................................13
Section 2.6 NewCo Board Composition......................................................................13
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<TABLE>
<CAPTION>
ARTICLE 3
CONVERSION OF STOCK
<S> <C> <C>
Section 3.1 Conversion of Sub-1 Stock and Enviroq Stock..................................................13
Section 3.2 Conversion of Sub-2 and IAM Stock............................................................14
Section 3.3 Conversion of Sub-3 and CRC Stock............................................................14
Section 3.4 Rights of Dissent of Enviroq Stockholders....................................................14
Section 3.5 Stock Options and Related Matters............................................................15
Section 3.6 Shares of NewCo Stock Owned by Enviroq.......................................................15
<CAPTION>
ARTICLE 4
PAYMENT OF THE REDEMPTION PRICE AND MERGER CONSIDERATION
<S> <C> <C>
Section 4.1 Payment of the Redemption Price and the Non-Redeeming Enviroq
Stockholder Cash Consideration...............................................................15
Section 4.2 Payment of the Non-Redeeming Enviroq Stockholder Stock
Consideration, the Redeeming Enviroq Stockholder Consideration, the
IAM Consideration and the CRC Consideration..................................................16
Section 4.3 Lost Certificates............................................................................17
Section 4.4 Payment to Another Person....................................................................17
Section 4.5 Right to Receive the Merger Consideration Only...............................................18
<CAPTION>
ARTICLE 5
COVENANTS AND AGREEMENTS
<S> <C> <C>
Section 5.1 Conduct of the Business......................................................................18
Section 5.2 Access to Books and Records..................................................................19
Section 5.3 Approval of Stockholders of Enviroq..........................................................20
Section 5.4 Preparation of Proxy Statement and Registration Statement....................................20
Section 5.5 Exemption Under Anti-Takeover Statutes.......................................................20
Section 5.6 Alternative Proposals........................................................................21
Section 5.7 Affiliates...................................................................................21
Section 5.8 Redemption of Certain Shares of Enviroq Stock................................................21
Section 5.9 Consent of IAM Clients.......................................................................23
<CAPTION>
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS
<S> <C> <C>
Section 6.1 Best Efforts; Cooperation....................................................................23
Section 6.2 Regulatory Matters...........................................................................23
Section 6.3 Indemnification Regarding the Registration Statement and Proxy
Statement....................................................................................24
Section 6.4 Notice of Developments.......................................................................24
Section 6.5 Notices and Consents.........................................................................24
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<TABLE>
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Section 6.6 Payment of the Merger Consideration..........................................................25
Section 6.7 Repayment of Loans...........................................................................25
Section 6.8 Indemnity....................................................................................25
<CAPTION>
ARTICLE 7
MUTUAL CONDITIONS TO CLOSING
<S> <C> <C>
Section 7.1 Shareholder Approval.........................................................................26
Section 7.2 Regulatory Approvals.........................................................................26
Section 7.3 Litigation...................................................................................26
Section 7.4 Proxy Statement..............................................................................26
Section 7.5 Registration Statement.......................................................................26
Section 7.6 Material Condition...........................................................................26
Section 7.7 Consents.....................................................................................27
<CAPTION>
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF ENVIROQ
<S> <C> <C>
Section 8.1 Representations and Warranties...............................................................27
Section 8.2 Performance of Obligations...................................................................27
Section 8.3 Certificate Representing Satisfaction of Conditions..........................................27
Section 8.4 Consummation of the IAM Merger and the CRC Merger............................................27
Section 8.5 Absence of Adverse Facts.....................................................................27
Section 8.6 Employment Agreement with William J. Long....................................................28
Section 8.7 Repayment of Loans...........................................................................28
Section 8.8 Voting Agreement.............................................................................28
Section 8.9 Stock Options................................................................................28
Section 8.10 Resignations.................................................................................28
Section 8.11 Consent to Assignment by IAM Clients.........................................................28
<CAPTION>
ARTICLE 9
CONDITIONS TO THE OBLIGATIONS OF IAM
<S> <C> <C>
Section 9.1 Representations and Warranties...............................................................28
Section 9.2 Performance of Obligations...................................................................29
Section 9.3 Certificate Representing Satisfaction of Conditions..........................................29
Section 9.4 Dissenters...................................................................................29
Section 9.5 Consummation of the Enviroq Merger and the CRC Merger........................................29
Section 9.6 Absence of Adverse Facts.....................................................................29
Section 9.7 Employment Agreements with Forrest Travis and Mark F. Travis.................................29
Section 9.8 Stock Agreement..............................................................................29
Section 9.9 Voting Agreement.............................................................................29
Section 9.10 Stock Options................................................................................29
Section 9.11 Resignations.................................................................................29
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<CAPTION>
ARTICLE 10
CONDITIONS TO THE OBLIGATIONS OF CRC
<S> <C> <C>
Section 10.1 Representations and Warranties...............................................................30
Section 10.2 Performance of Obligations...................................................................30
Section 10.3 Certificate Representing Satisfaction of Conditions..........................................30
Section 10.4 Dissenters...................................................................................30
Section 10.5 Consummation of the Enviroq Merger and the IAM Merger........................................30
Section 10.6 Absence of Adverse Facts.....................................................................30
Section 10.7 Employment Agreements with Forrest Travis and Mark F. Travis.................................30
Section 10.8 Stock Agreement..............................................................................30
Section 10.9 Voting Agreement.............................................................................31
Section 10.10 Stock Options................................................................................31
Section 10.11 Resignations.................................................................................31
<CAPTION>
ARTICLE 11
TERMINATION
<S> <C> <C>
Section 11.1 Termination of Agreement.....................................................................31
Section 11.2 Effect of Termination........................................................................32
Section 11.3 Confidentiality Upon Termination.............................................................33
Section 11.4 Specific Performance.........................................................................33
<CAPTION>
ARTICLE 12
REPRESENTATIONS AND WARRANTIES OF ENVIROQ
<S> <C> <C>
Section 12.1 Organization, Qualification, and Corporate Power; Authority..................................33
Section 12.2 Capitalization...............................................................................34
Section 12.3 Non-contravention............................................................................34
Section 12.4 Brokers' Fees................................................................................35
Section 12.5 Title to Assets..............................................................................35
Section 12.6 Subsidiaries.................................................................................35
Section 12.7 Financial Statements.........................................................................36
Section 12.8 Enviroq SEC Documents........................................................................36
Section 12.9 Events Subsequent to Enviroq Most Recent Fiscal Year End.....................................36
Section 12.10 Undisclosed Liabilities......................................................................38
Section 12.11 Legal Compliance.............................................................................38
Section 12.12 Tax Matters..................................................................................38
Section 12.13 Real Property................................................................................39
Section 12.14 Intellectual Property........................................................................41
Section 12.15 Tangible Assets..............................................................................42
Section 12.16 Inventory....................................................................................42
Section 12.17 Contracts....................................................................................42
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<TABLE>
<S> <C> <C>
Section 12.18 Notes and Accounts Receivable................................................................43
Section 12.19 Insurance....................................................................................43
Section 12.20 Litigation...................................................................................44
Section 12.21 Employees....................................................................................44
Section 12.22 Employee Benefits............................................................................45
Section 12.23 Guaranties...................................................................................46
Section 12.24 Environment, Health, and Safety..............................................................46
Section 12.25 Registration Statement and Proxy Statement...................................................47
<CAPTION>
ARTICLE 13
REPRESENTATIONS AND WARRANTIES OF IAM AND CRC
<S> <C> <C>
Section 13.1 Organization, Qualification, and Corporate Power; Authority..................................47
Section 13.2 Capitalization...............................................................................48
Section 13.3 Non-contravention............................................................................48
Section 13.4 Brokers' Fees................................................................................49
Section 13.5 Title to Assets..............................................................................49
Section 13.6 Subsidiaries.................................................................................49
Section 13.7 Financial Statements.........................................................................49
Section 13.8 Events Subsequent to IAM/CRC Most Recent Fiscal Year End.....................................50
Section 13.9 Undisclosed Liabilities......................................................................51
Section 13.10 Legal Compliance.............................................................................51
Section 13.11 Tax Matters..................................................................................51
Section 13.12 Real Property................................................................................52
Section 13.13 Intellectual Property........................................................................52
Section 13.14 Tangible Assets..............................................................................53
Section 13.15 Inventory....................................................................................53
Section 13.16 Contracts....................................................................................53
Section 13.17 Notes and Accounts Receivable................................................................54
Section 13.18 Insurance....................................................................................54
Section 13.19 Litigation...................................................................................55
Section 13.20 Employees....................................................................................55
Section 13.21 Employee Benefits............................................................................55
Section 13.22 Guaranties...................................................................................57
Section 13.23 Environment, Health, and Safety..............................................................57
Section 13.24 Registration Statement and Proxy Statement...................................................58
Section 13.25 IAM and CRC Documents Filed With Various Regulatory Authorities..............................58
Section 13.26 No Investment Company Registration or Activities. ..........................................58
<CAPTION>
ARTICLE 14
REPRESENTATIONS AND WARRANTIES OF NEWCO, SUB-1, SUB-2 AND SUB-3
<S> <C> <C>
Section 14.1 Organization, Qualification, and Corporate Power; Authority..................................59
Section 14.2 Capitalization...............................................................................60
Section 14.3 Non-contravention............................................................................60
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<TABLE>
<CAPTION>
ARTICLE 15
GENERAL PROVISIONS
<S> <C> <C>
Section 15.1 Nonsurvival of Representations and Warranties................................................60
Section 15.2 Press Releases and Public Announcements......................................................61
Section 15.3 No Third-Party Beneficiaries.................................................................61
Section 15.4 Entire Agreement.............................................................................61
Section 15.5 Succession and Assignment....................................................................61
Section 15.6 Counterparts.................................................................................61
Section 15.7 Notices......................................................................................61
Section 15.8 Governing Law................................................................................63
Section 15.9 Amendments and Waivers.......................................................................63
Section 15.10 Severability.................................................................................63
Section 15.11 Construction.................................................................................63
Section 15.12 Incorporation of Exhibits and Schedules......................................................64
Section 15.13 Transaction Costs............................................................................64
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES
<S> <C>
Schedule 9.9: Stockholders of Enviroq Executing the Voting Agreement
Schedule 12.1: Directors and Officers of Enviroq and its Subsidiaries
Schedule 12.2: Capitalization (Enviroq)
Schedule 12.3: Non-Contravention (Enviroq)
Schedule 12.5: Title to Assets (Enviroq and its Subsidiaries)
Schedule 12.6: Subsidiaries (Enviroq)
Schedule 12.7: Financial Statements (Enviroq)
Schedule 12.9: Subsequent Events (Enviroq)
Schedule 12.10: Undisclosed Liabilities (Enviroq)
Schedule 12.11: Legal Compliance (Enviroq)
Schedule 12.12: Tax Matters (Enviroq)
Schedule 12.13: Real Property (Enviroq)
Schedule 12.14: Intellectual Property (Enviroq)
</TABLE>
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<TABLE>
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Schedule 12.17: Contracts (Enviroq)
Schedule 12.18: Notes and Accounts Receivable (Enviroq)
Schedule 12.19: Insurance (Enviroq)
Schedule 12.20: Litigation (Enviroq)
Schedule 12.22: Employee Benefits (Enviroq)
Schedule 12.23: Guaranties (Enviroq)
Schedule 12.24: Environmental, Health, and Safety (Enviroq)
Schedule 13.1: Directors and Officers of IAM and CRC
Schedule 13.2: Capitalization (IAM/CRC)
Schedule 13.3: Non-Contravention (IAM/CRC)
Schedule 13.5: Title to Assets (IAM/CRC)
Schedule 13.7: Financial Statements (IAM/CRC)
Schedule 13.8: Subsequent Events (IAM/CRC)
Schedule 13.9: Undisclosed Liabilities (IAM/CRC)
Schedule 13.10: Legal Compliance (IAM/CRC)
Schedule 13.13: Intellectual Property (IAM/CRC)
Schedule 13.16: Contracts (IAM/CRC)
Schedule 13.17: Notes and Accounts Receivable (IAM/CRC)
Schedule 13.18: Insurance (IAM/CRC)
Schedule 13.19: Litigation (IAM/CRC)
Schedule 13.21: Employee Benefits (IAM/CRC)
Schedule 13.22: Guaranties (IAM/CRC)
Schedule 13.23: Environment, Health, and Safety (IAM/CRC)
Schedule 14.1: Directors and Officers of NewCo and the NewCo Subs
</TABLE>
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<TABLE>
<S> <C>
Schedule 14.2: Capitalization (NewCo and the NewCo Subs)
Schedule 14.3: Non-Contravention (NewCo and the NewCo Subs)
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A: Form of Incentive Stock Option Plan of NewCo
Exhibit B: Form of Non-Employee Directors' Stock Option Plan of NewCo
Exhibit C: Affiliate Agreement
Exhibit D: Employment Agreement (William J. Long)
Exhibit E: Voting Agreement
Exhibit F: Employment Agreement (Forrest Travis)
Exhibit G: Employment Agreement (Mark F. Travis)
</TABLE>
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<PAGE> 12
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") dated as
of the 22nd day of April, 1998, is entered into by and among Intrepid Capital
Corporation, a Delaware corporation ("NewCo"), Enviroq Corporation, a Delaware
corporation ("Enviroq"), Freedom Holding of Alabama, Inc., a Delaware
corporation ("Sub-1"), Institutional Asset Management, Inc., a Florida
corporation ("IAM"), IAM Merger Sub, Inc., a Florida corporation ("Sub-2"),
Capital Research Corporation, a Florida corporation ("CRC") and CRC Merger Sub,
Inc., a Florida corporation ("Sub-3").
RECITALS
1. NewCo is a newly formed Delaware corporation and is a wholly-owned
subsidiary of Enviroq.
2. NewCo owns all of the issued and outstanding capital stock of Sub-1,
Sub-2 and Sub-3.
3. Immediately prior to the consummation of the Enviroq Merger (as
defined below), Enviroq shall redeem a certain number of shares of its common
stock.
4. Sub-1, upon the terms and subject to the conditions of this
Agreement, will be merged with and into Enviroq (the "Enviroq Merger").
5. Sub-2, upon the terms and subject to the conditions of this
Agreement, will be merged with and into IAM (the "IAM Merger").
6. Sub-3, upon the terms and subject to the conditions of this
Agreement, will be merged with and into CRC (the "CRC Merger").
7. The respective boards of directors of Enviroq and Sub-1 deem it in
the best interests of Enviroq and Sub-1, respectively, and of their respective
stockholders that the Enviroq Merger be consummated.
8. The respective boards of directors of IAM and Sub-2 deem it in the
best interests of IAM and Sub-2, respectively, and their respective stockholders
that the IAM Merger be consummated.
9. The respective boards of directors of CRC and Sub-3 deem it in the
best interests of CRC and Sub-3, respectively, and their respective stockholders
that the CRC Merger be consummated.
10. The respective boards of directors of all of the Parties have
approved this Agreement, and the board of directors of Enviroq has directed that
this Agreement be submitted to its stockholders for approval and adoption. The
shareholders of Sub-1, Sub-2, Sub-3, IAM and CRC have approved this Agreement
prior to its execution.
<PAGE> 13
11. Concurrently with the execution hereof, in order to induce IAM and
CRC to enter into this Agreement, certain stockholders of Enviroq are entering
into a stock agreement with IAM and CRC (the "Stock Agreement") providing for
certain voting and other restrictions with respect to the shares of Enviroq
Stock beneficially owned by them upon the terms and conditions specified
therein.
12. NewCo, the sole stockholder of Sub-1, Sub-2 and Sub-3, will
deliver, or cause to be delivered to the stockholders of Enviroq, IAM and CRC,
the consideration to be paid pursuant to the Enviroq Merger, the IAM Merger and
the CRC Merger, respectively, in accordance with the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the warranties and covenants
herein contained, the Parties agree as follows:
ARTICLE 1
DEFINITIONS
Capitalized terms used in this Agreement shall have the definitions set
forth in this Article 1.
SECTION 1.1 "ACTION" has the meaning set forth in Section 6.8 of this
Agreement.
SECTION 1.2 "ADVERSE CONSEQUENCES" means all actions, suits,
proceedings, hearings, investigations, charges, complaints, injunctions,
judgments, orders, decrees, rulings, dues, penalties, fines, reasonable amounts
paid in settlement, taxes, liens and Losses.
SECTION 1.3 "AFFILIATE" means with respect to each Party an officer or
director of such Party or any Person owning an equity interest of 10% or more of
such Party, any direct or indirect wholly owned subsidiary of such Party, any
other subsidiary owned directly or indirectly by a direct or indirect parent
company of such Party or any other Person in which such Party has at least a 10%
equity interest.
SECTION 1.4 "BROKER-DEALER" has the meaning set forth in Section 13.25
of this Agreement.
SECTION 1.5 "BROKER-DEALER FILINGS" has the meaning set forth in
Section 13.25 of this Agreement.
SECTION 1.6 "BUSINESS DAY" means each day on which national banks in
Birmingham, Alabama are open for business.
SECTION 1.7 "ALTERNATIVE PROPOSAL" has the meaning set forth in Section
5.6 of this Agreement.
SECTION 1.8 "CLOSING" has the meaning set forth in Section 2.2 of this
Agreement.
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SECTION 1.9 "CLOSING DATE" has the meaning set forth in Section 2.2 of
this Agreement.
SECTION 1.10 "CODE" means the Internal Revenue Code of 1986, as
amended. All citations to the Code or to the regulations promulgated thereunder
shall include any amendments or any substitute or successor provisions thereto.
SECTION 1.11 "CONFIDENTIAL INFORMATION" means and includes, but is not
limited to, written data, reports, interpretations, analyses, trade secrets,
processes, drawings, photographs, records, specifications, designs, programs,
product development activities, software packages and related documentation,
technical know-how, concepts, theories, ideas, methods and procedures of
operation, business or marketing plans, proposals, financial information,
compiled data, communications, customer lists and data and equipment, as well as
the nature and results of a Party's development activities and all other
information and/or materials related to the business or activities of a Party,
but excluding such information that is (i) generally available to the public, or
(ii) available, or becomes available, to a Party on a non-confidential basis
prior to its disclosure from a Person authorized to disclose the same.
SECTION 1.12 "CONSENT" means a consent, approval or authorization,
waiver, clearance, exemption or similar affirmation by any Person pursuant to
any contract, permit, law, regulation or order.
SECTION 1.13 "CONTROLLED GROUP LIABILITY" has the meaning set forth in
Section 12.22 of this Agreement.
SECTION 1.14 "CRC" means Capital Research Corporation, a Florida
corporation.
SECTION 1.15 "CRC CONSIDERATION" means 1206.149 shares of NewCo Stock
per share of issued and outstanding CRC Stock.
SECTION 1.16 "CRC MERGER" has the meaning set forth in Recital 5 of
this Agreement.
SECTION 1.17 "CRC STOCK" means any share of the common stock, par value
$25 per share, of CRC.
SECTION 1.18 "CRC SURVIVING CORPORATION" has the meaning set forth in
Section 2.1 of this Agreement.
SECTION 1.19 "DELAWARE GENERAL CORPORATION LAW" means Title 8 of the
Delaware Code, as amended.
SECTION 1.20 "DISSENT PROVISIONS" has the meaning set forth in Section
3.4 of this Agreement.
SECTION 1.21 "DISSENTING STOCKHOLDER" has the meaning set forth in
Section 3.4 of this Agreement.
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SECTION 1.22 "EFFECTIVE TIME" has the meaning set forth in Section 2.2
of this Agreement.
SECTION 1.23 "EMPLOYEE BENEFIT PLAN" means any (a) non-qualified
deferred compensation or retirement plan or arrangement which is an Employee
Pension Benefit Plan, (b) qualified defined contribution retirement plan or
arrangement which is an Employee Pension Benefit Plan, (c) qualified defined
benefit retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any Multi-employer Plan), or (d) Employee Welfare Benefit Plan (or
material fringe benefit plan or program).
SECTION 1.24 "EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth
in ERISA Section 3(2).
SECTION 1.25 "EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth
in ERISA Section 3(l).
SECTION 1.26 "ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Resource Conservation and Recovery Act of 1976, and the Occupational Safety
and Health Act of 1970, each as amended, together with all other laws (including
rules, regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health and safety, including
laws relating to emissions, discharges, releases, or threatened releases of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic materials
or waste into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or waste.
SECTION 1.27 "ENVIROQ" means Enviroq Corporation, a Delaware
corporation.
SECTION 1.28 "ENVIROQ FINANCIAL STATEMENTS" has the meaning set forth
in Section 12.7 of this Agreement.
SECTION 1.29 "ENVIROQ INTELLECTUAL PROPERTY RIGHTS" has the meaning set
forth in Section 12.14(b) of this Agreement.
SECTION 1.30 "ENVIROQ MERGER" has the meaning set forth in Recital 3 of
this Agreement.
SECTION 1.31 "ENVIROQ MOST RECENT FINANCIAL STATEMENTS" has the meaning
set forth in Section 12.7 of this Agreement.
SECTION 1.32 "ENVIROQ MOST RECENT FISCAL MONTH END" has the meaning set
forth in Section 12.7 of this Agreement.
SECTION 1.33 "ENVIROQ MOST RECENT FISCAL YEAR END" has the meaning set
forth in Section 12.7 of this Agreement.
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SECTION 1.34 "ENVIROQ PLANS" means all Employee Benefit Plans,
programs, policies, practices, and other arrangements providing benefits to any
employee or former employee or beneficiary or dependent thereof, whether or not
written, and whether covering one Person or more than one Person, sponsored or
maintained by Enviroq or any of its Subsidiaries or to which Enviroq or any of
its Subsidiaries contributes or is obligated to contribute. Without limiting the
generality of the foregoing, the term "Enviroq Plans" includes all Employee
Welfare Benefit Plans and all Employee Pension Benefit Plans.
SECTION 1.35 "ENVIROQ SEC DOCUMENTS" has the meaning set forth in
Section 12.8 of this Agreement.
SECTION 1.36 "ENVIROQ STOCK" means any share of the common stock, par
value $0.01 per share, of Enviroq.
SECTION 1.37 "ENVIROQ SURVIVING CORPORATION" has the meaning set forth
in Section 2.1 of this Agreement.
SECTION 1.38 "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
SECTION 1.39 "ERISA AFFILIATE" means, with respect to any entity, trade
or business, any other entity, trade or business that is a member of a group
described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1)
of ERISA that includes the first entity, trade or business, or that is a member
of the same "controlled group" as the first entity, trade or business pursuant
to Section 4001(a)(14) of ERISA.
SECTION 1.40 "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended, together with the rules and regulations promulgated thereunder,
including any amendments or any substitute or successor provisions, rules and
regulations thereto.
SECTION 1.41 "EXTREMELY HAZARDOUS SUBSTANCE" has the meaning set forth
in Section 302 of the Emergency Planning and Community Right to Know Act of
1986, as amended.
SECTION 1.42 "FIDUCIARY" has the meaning set forth in ERISA Section
3(21).
SECTION 1.43 "GAAP" means United States generally accepted accounting
principles as in effect from time to time.
SECTION 1.44 "IAM" means Institutional Asset Management, Inc., a
Florida corporation.
SECTION 1.45 "IAM/CRC REGULATORY DOCUMENTS" has the meaning set forth
in Section 13.25 of this Agreement.
SECTION 1.46 "IAM AND CRC INTELLECTUAL PROPERTY RIGHTS" has the meaning
set forth in Section 13.13 of this Agreement.
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<PAGE> 17
SECTION 1.47 "IAM CONSIDERATION" means 1206.149 shares of NewCo Stock
per share of issued and outstanding IAM Stock.
SECTION 1.48 "IAM/CRC FINANCIAL STATEMENTS" has the meaning set forth
in Section 13.7 of this Agreement.
SECTION 1.49 "IAM/CRC MOST RECENT FINANCIAL STATEMENTS" has the meaning
set forth in Section 13.7 of this Agreement.
SECTION 1.50 "IAM/CRC MOST RECENT FISCAL MONTH END" has the meaning set
forth in Section 13.7 of this Agreement.
SECTION 1.51 "IAM/CRC MOST RECENT FISCAL YEAR END" has the meaning set
forth in Section 13.7 of this Agreement.
SECTION 1.52 "IAM/CRC PLANS" means all Employee Benefit Plans,
programs, policies, practices, and other arrangements providing benefits to any
employee or former employee or beneficiary or dependent thereof, whether or not
written, and whether covering one Person or more than one Person, sponsored or
maintained by IAM/CRC or to which IAM/CRC contributes or is obligated to
contribute. Without limiting the generality of the foregoing, the term "IAM/CRC
Plans" includes all Employee Welfare Benefit Plans and all Employee Pension
Benefit Plans.
SECTION 1.53 "IAM/CRC REGULATORY DOCUMENTS" has the meaning set forth
in Section 13.25 of this Agreement.
SECTION 1.54 "IAM MERGER" has the meaning set forth in Recital 4 of
this Agreement.
SECTION 1.55 "IAM STOCK" means any share of the common stock, par value
$0.01 per share, of IAM.
SECTION 1.56 "IAM SURVIVING CORPORATION" has the meaning set forth in
Section 2.1 of this Agreement.
SECTION 1.57 "INDEMNIFIED PARTY OR PARTIES" has the meaning set forth
in Section 6.8 of this Agreement.
SECTION 1.58 "INTELLECTUAL PROPERTY" means (a) all inventions (whether
patentable or unpatentable), all improvements thereto, and all patents, patent
applications, and patent disclosures, together with all reissuances,
continuations, continuations in part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade drafts, logos, trade names,
and corporate names, together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill associated therewith, and
all applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connections therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and
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<PAGE> 18
production processes and techniques, technical data, designs, drawings,
specifications, customer and supplier list, pricing and cost information, and
business and marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other proprietary rights,
and (h) all copies and tangible embodiments thereof in whatever form or medium.
SECTION 1.59 "INVESTMENT ADVISOR FILINGS" has the meaning set forth in
Section 13.25 of this Agreement.
SECTION 1.60 "INVESTMENT COMPANY ACT" has the meaning set forth in
Section 13.26 of this Agreement.
SECTION 1.61 "KNOWLEDGE" means either (a) that an individual is
actually aware of a particular fact or other matter or (b) a prudent individual
could be expected to discover or otherwise become aware of such fact or other
matter in the course of performing the duties which are normally performed by a
person acting in a similar capacity. A Person (other than an individual) will be
deemed to have "Knowledge" of a particular fact or other matter if any
individual who is serving, or who has at any time served, as director, officer,
partner, executor or trustee of such Person (or in any similar capacity) has, or
at any time had, knowledge of such fact or other matter.
SECTION 1.62 "LOSSES" means any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries and deficiencies,
including interest, penalties and attorneys' fees and disbursements.
SECTION 1.63 "MERGERS" means the Enviroq Merger, the IAM Merger and the
CRC Merger.
SECTION 1.64 "MATERIAL ADVERSE EFFECT" means, with respect to any of
the Parties, an event, change or occurrence which, individually or together with
any other event, change or occurrence, has or could be expected to have a
material adverse effect on the financial position, business, assets, properties,
operations, results of operations or prospects of such Party and its
Subsidiaries, if any, considered on a consolidated basis.
SECTION 1.65 "MERGER CONSIDERATION" means the Non-Redeeming Enviroq
Stockholder Consideration, the Redeeming Enviroq Stockholder Consideration, the
IAM Consideration and the CRC Consideration.
SECTION 1.66 "MERGER LETTER OF TRANSMITTAL" has the meaning set forth
in Section 4.2 of this Agreement.
SECTION 1.67 "MULTI-EMPLOYER PLAN" has the meaning set forth in Section
3(37) of ERISA.
SECTION 1.68 "MULTIPLE EMPLOYER PLAN" has the meaning set forth in
Section 4063 of ERISA.
SECTION 1.69 "NEWCO" shall mean Intrepid Capital Corporation, a
Delaware corporation.
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SECTION 1.70 "NEWCO STOCK" means any share of the common stock, par
value $0.01 per share, of NewCo.
SECTION 1.71 "NEWCO SUBS" means Sub-1, Sub 2 and Sub-3.
SECTION 1.72 "NON-REDEEMING ENVIROQ STOCKHOLDER" shall mean each holder
of shares of Enviroq Stock other than a Redeeming Enviroq Stockholder.
SECTION 1.73 "NON-REDEEMING ENVIROQ STOCKHOLDER CASH CONSIDERATION"
means $2.22909775 per share of issued and outstanding Enviroq Stock owned by a
Non-Redeeming Enviroq Stockholder, rounding to the nearest whole cent.
SECTION 1.74 "NON-REDEEMING ENVIROQ STOCKHOLDER CONSIDERATION" means
the aggregate of the Non-Redeeming Enviroq Stockholder Stock Consideration and
the Non-Redeeming Enviroq Stockholder Cash Consideration.
SECTION 1.75 "NON-REDEEMING ENVIROQ STOCKHOLDER STOCK CONSIDERATION"
means one (1) share of NewCo Stock per share of issued and outstanding Enviroq
Stock owned by a Non-Redeeming Enviroq Stockholder.
SECTION 1.76 "ORDINARY COURSE OF BUSINESS" means any action taken by a
Person only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day
operations of such Person; or
(b) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors
(or by any Person or group of Persons exercising similar authority), in
the ordinary course of the normal day-to-day operations of other
Persons that are in the same line of business as such Person.
SECTION 1.77 "PBGC" means the Pension Benefit Guaranty Corporation.
SECTION 1.78 "PARTIES" mean collectively, or any two or more of,
Enviroq, IAM, CRC, Sub-1, Sub-2, Sub-3 and NewCo.
SECTION 1.79 "PARTY" means any one of the Parties to this Agreement.
SECTION 1.80 "PAYING AGENT" means AmSouth Bank, a state banking
corporation, of Birmingham, Alabama or such other qualified transfer agent as
NewCo may designate.
SECTION 1.81 "PERSON" means an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization or association, a limited liability company, a
limited liability partnership, or a governmental entity (or any department,
agency, or political subdivision thereof, including a Regulatory Authority).
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SECTION 1.82 "PROHIBITED TRANSACTION" has the meaning set forth in
ERISA Section 406 and Code Section 4975.
SECTION 1.83 "PROXY STATEMENT" has the meaning set forth in Section 5.4
of this Agreement.
SECTION 1.84 "QUALIFIED ENVIROQ PLAN" has the meaning set forth in
Section 12.22 of this Agreement.
SECTION 1.85 "QUALIFIED IAM/CRC PLAN" has the meaning set forth in
Section 13.21 of this Agreement.
SECTION 1.86 "REDEEMED SHARES" has the meaning set forth in Section
5.8(d) of this Agreement.
SECTION 1.87 "REDEEMING ENVIROQ STOCKHOLDER" shall mean each holder of
shares of Enviroq Stock who submitted a Valid Acceptance and whose shares of
Enviroq Stock are redeemed, in part, in the Redemption.
SECTION 1.88 "REDEEMING ENVIROQ STOCKHOLDER CONSIDERATION" means
1.74514041 shares of NewCo Stock per issued and outstanding share of Enviroq
Stock owned by a Redeeming Enviroq Stockholder after giving effect to, and
excluding shares of each Redeeming Enviroq Stockholder's Enviroq Stock redeemed
in, the Redemption; provided, however, if for any Redeeming Enviroq Stockholder
the calculation of the number of shares of NewCo Stock pursuant to first part of
this sentence would result in the issuance of a fractional share of NewCo Stock
to such Redeeming Enviroq Stockholder, then the number of shares of NewCo Stock
issued to such Redeeming Enviroq Stockholder shall be rounded down to the
nearest whole share of NewCo Stock and such Redeeming Enviroq Stockholder shall
receive from NewCo an amount in cash equal to the fractional component resulting
from the calculation in the first part of this sentence (which shall always be
less than 1 but greater than zero, if applicable) times $2.99151457, rounded to
the nearest whole cent.
SECTION 1.89 "REDEMPTION" shall mean the making of the Redemption Offer
and the Valid Acceptance thereof by any of the holders of shares of Enviroq
Stock as of the Redemption Record Date; the payment of the Redemption Price to
any such holder of shares of Enviroq Stock who shall have submitted a Valid
Acceptance, upon the satisfaction or waiver of the conditions to the Redemption
contained in the Redemption Materials; the acquisition of the Redeemed Shares by
Enviroq with the result that such shares are held as treasury stock of Enviroq;
and all actions taken in connection with any of the foregoing.
SECTION 1.90 "REDEMPTION EXPIRATION DATE" has the meaning set forth in
Section 5.8(a) of this Agreement.
SECTION 1.91 "REDEMPTION LETTER OF TRANSMITTAL" has the meaning set
forth in Section 5.8(d) of this Agreement.
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SECTION 1.92 "REDEMPTION MATERIALS" has the meaning set forth in
Section 5.8(a) of this Agreement.
SECTION 1.93 "REDEMPTION OFFER" has the meaning set forth in Section
5.8(a) of this Agreement.
SECTION 1.94 "REDEMPTION PRICE" has the meaning set forth in Section
5.8(a) of this Agreement.
SECTION 1.95 "REDEMPTION RECORD DATE" has the meaning set forth in
Section 5.8(a) of this Agreement.
SECTION 1.96 "REGISTERED INVESTMENT ADVISER" has the meaning set forth
in Section 13.25 of this Agreement.
SECTION 1.97 "REGISTRATION ATTORNEY" means the law firm of Bradley
Arant Rose & White LLP, located in Birmingham, Alabama or other firm to which
the Parties agree.
SECTION 1.98 "REGISTRATION STATEMENT" has the meaning set forth in
Section 5.4 of this Agreement.
SECTION 1.99 "REGULATORY AUTHORITY" means, collectively, the Federal
Trade Commission, the United States Department of Justice, the SEC, the National
Association of Securities Dealers, Inc., and all national and state securities
exchanges and any other governmental or regulatory body, agency, instrumentality
or authority.
SECTION 1.100 "REPORTABLE EVENT" has the meaning set forth in ERISA
Section 4043.
SECTION 1.101 "SEC" means the Securities and Exchange Commission.
SECTION 1.102 "SECURITIES ACT" means the Securities Act of 1933, as
amended, together with the rules and regulations promulgated thereunder,
including any amendments or any substitutes or successor provisions, rules and
regulations thereto.
SECTION 1.103 "SECURITY INTEREST" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialman's, and similar liens for work done on the property to the extent
that such liens arise in the Ordinary Course of Business and are not yet due and
payable, (b) liens for taxes not yet delinquent or for taxes that the taxpayer
is contesting in good faith through appropriate proceedings, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, in
each case, where there exists no default in Enviroq's or any Subsidiary's
obligations with respect to the underlying agreements, and (d) other liens
arising in the Ordinary Course of Business and not incurred in connection with
the borrowing of money.
SECTION 1.104 "STOCK AGREEMENT" has the meaning set forth in Recital 10
of this Agreement.
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SECTION 1.105 "SUB-1" means Freedom Holding of Alabama, Inc., a
Delaware corporation.
SECTION 1.106 "SUB-1 STOCK" means any share of the common stock, par
value $0.01 per share, of Sub-1.
SECTION 1.107 "SUB-2" means IAM Merger Sub, Inc., a Florida
corporation.
SECTION 1.108 "SUB-2 STOCK" means any share of the common stock, par
value $0.01 per share, of Sub-2.
SECTION 1.109 "SUB-3" means CRC Merger Sub, Inc., a Florida
corporation.
SECTION 1.110 "SUB-3 STOCK" means any share of the common stock, par
value $0.01 per share, of Sub-3.
SECTION 1.111 "SUBSIDIARY" means any corporation with respect to which
a specified Person (or a Subsidiary thereof) owns (directly or indirectly) a
majority of the common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
SECTION 1.112 "SURVIVING CORPORATIONS" means the Enviroq Surviving
Corporation, the IAM Surviving Corporation and the CRC Surviving Corporation.
SECTION 1.113 "TAX RETURNS" means, collectively, (a) all reports,
declarations, estimates, returns, information statements, and similar documents
relating to, or required to be filed in respect of any Taxes; and (b) all
information statements, returns, reports or similar documents required to be
filed with respect to payments to (or from) third parties or with respect to
transactions in which any Person or any Subsidiary thereof participates; and the
term "Tax Return" shall mean any one of the foregoing Tax Returns.
SECTION 1.114 "TAXES" means, collectively, (a) all net income, gross
income, gross receipts, sales, use, ad valorem, franchise, profits, license,
lease, service, service use, withholding, employment, payroll, excise,
severance, transfer, documentary, mortgage, registration, stamp, occupation,
environmental, premium, property, windfall, profits, customs, duties, and other
taxes, fees, assessments or charges of any kind whatever, including any
estimates thereof, together with any interest, penalties and other additions
with respect thereto, imposed by any federal, territorial, state, local or
foreign government; and (b) any penalties, interest, or other additions to tax
for the failure to collect, withhold, or pay over any of the foregoing, or to
accurately file any Tax Return; and the term "Tax" shall mean any one of the
foregoing Taxes. When used with reference to a specified Person (for example and
without limitation, "Taxes of Enviroq"), the terms "Taxes" and "Tax" shall
include only amounts of, or in respect of, Taxes for which such Person is, or
could become, liable in whole or part (including any obligation in connection
with a duty to collect, withhold, or pay over any Tax), any obligation to
contribute to the payment of any Taxes determined on a consolidated, combined,
or unitary basis, any liability as a transferee, or any liability as a result of
any express or implied obligation to indemnity or pay the Tax obligations of
another Person.
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SECTION 1.115 "THIRD-PARTY INTELLECTUAL PROPERTY RIGHTS" means, with
respect to each of Enviroq, IAM and CRC, all licenses, sublicenses and other
agreements as to which it is a party and pursuant to which it is authorized to
use any third-party patents, trademarks, service marks or copyrights.
SECTION 1.116 "VALID ACCEPTANCE" has the meaning set forth in Section
5.8(b) of this Agreement.
SECTION 1.117 "VOTING AGREEMENT" has the meaning set forth in Section
8.8 of this Agreement.
ARTICLE 2
THE MERGERS
SECTION 2.1 THE MERGERS. On the terms and subject to the conditions
contained in this Agreement, the Mergers will be consummated. Enviroq shall be
the corporation surviving the Enviroq Merger (the "Enviroq Surviving
Corporation"). IAM shall be the corporation surviving the IAM Merger (the "IAM
Surviving Corporation"). CRC shall be the corporation surviving the CRC Merger
(the "CRC Surviving Corporation").
SECTION 2.2 THE EFFECTIVE TIME AND THE CLOSING DATE. The Mergers shall
become effective on the date and at the time on which the latest of the
following actions has been completed: (i) the certificate of merger with respect
to the Enviroq Merger has been duly filed with the Secretary of State of the
State of Delaware; (ii) the articles of merger with respect to the IAM Merger
has been duly filed with the Secretary of State of the State of Florida; and
(iii) the articles of merger with respect to the CRC Merger has been duly filed
with the Secretary of State of the State of Florida (the "Effective Time");
provided, however, the Mergers shall not become effective until after the
Redemption (as generally set forth in Section 5.8) shall have been completed,
including, without limitation, the issuance of checks to the Redeeming Enviroq
Stockholders pursuant to Section 4.1(a) and the completion of all necessary
actions so that the Redeemed Shares shall have become treasury stock of Enviroq.
Upon the terms and subject to the conditions hereof, unless otherwise agreed
upon by the Parties, the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Bradley Arant Rose
& White LLP, 2001 Park Place, Suite 1400, Birmingham, Alabama 35203-2736,
commencing at 10:00 a.m. local time as soon as practicable following the
satisfaction or waiver of the conditions set forth in Articles 7 through 10, but
in no event later than two business days thereafter (the date of such being
referred to herein as the "Closing Date"), unless otherwise mutually agreed to
by the Parties.
SECTION 2.3 EFFECT OF THE MERGERS. At the Effective Time:
(a) the Enviroq Merger shall have the effects set forth in the
Delaware General Corporation Law; and
(b) the IAM Merger and the CRC Merger shall each have the
effects set forth in the Florida Business Corporation Act.
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SECTION 2.4 CERTIFICATE OR ARTICLES OF INCORPORATION AND BYLAWS.
At the Effective Time:
(a) with respect to the Enviroq Merger, the certificate of
incorporation and bylaws of Enviroq, as in effect on the date hereof and
otherwise amended prior to the Effective Time, shall be the certificate of
incorporation and bylaws of the Enviroq Surviving Corporation until further
amended as provided therein and in accordance with applicable laws;
(b) with respect to the IAM Merger, the articles of
incorporation and bylaws of IAM, as in effect on the date hereof and otherwise
amended prior to the Effective Time, shall be the articles of incorporation and
bylaws of IAM Surviving Corporation until further amended as provided therein
and in accordance with applicable law; and
(c) with respect to the CRC Merger, the articles of
incorporation and bylaws of CRC, as in effect on the date hereof and otherwise
amended prior to the Effective Time, shall be the articles of incorporation and
bylaws of CRC Surviving Corporation until further amended as provided therein
and in accordance with applicable law.
SECTION 2.5 DIRECTORS AND OFFICERS. From and after the Effective Time,
the directors and officers of each of Enviroq, IAM and CRC shall be the
directors and officers of each of Enviroq Surviving Corporation, IAM Surviving
Corporation and CRC Surviving Corporation, respectively to serve until such
Person's successor shall be elected and qualified, or until such Person dies,
resigns or is removed from office.
SECTION 2.6 NEWCO BOARD COMPOSITION. The initial board of directors of
NewCo shall consist of seven directors, which directors shall be Forrest Travis,
Mark F. Travis, Morgan Payne, William J. Long, Thomas W. Brander, Michael X.
Marinelli and Alexander M. Zechella. Subsequent boards of directors shall be
elected in accordance with the terms and provisions of the Voting Agreement so
long as such agreement remains in effect.
ARTICLE 3
CONVERSION OF STOCK
SECTION 3.1 CONVERSION OF SUB-1 STOCK AND ENVIROQ STOCK. Subject to the
terms and conditions of this Agreement, as of the Effective Time and by virtue
of the Enviroq Merger and without any further action on the part of the holder
of any Sub-1 Stock or Enviroq Stock:
(a) all shares of Enviroq Stock which are held by Enviroq as
treasury stock (including, without limitation, all Redeemed Shares) shall be
canceled and retired, and no consideration shall be paid or delivered in
exchange therefor;
(b) each share of Enviroq Stock outstanding immediately prior
to the Effective Time that is owned by a Non-Redeeming Enviroq Stockholder shall
be canceled and converted into the right to receive the Non-Redeeming Enviroq
Stockholder Consideration, and all outstanding certificates representing shares
of Enviroq Stock owned by a Non-Redeeming Enviroq Stockholder
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shall thereafter represent solely the right to receive the Non-Redeeming Enviroq
Stockholder Consideration with respect to each such share of Enviroq Stock;
(c) each share of Enviroq Stock outstanding immediately prior
to the Effective Time that is owned by a Redeeming Enviroq Stockholder (that is,
those shares of Enviroq Stock owned by a Redeeming Enviroq Stockholder that are
not redeemed in the Redemption) shall be canceled and converted into the right
to receive the Redeeming Enviroq Stockholder Consideration, and all outstanding
certificates representing shares of Enviroq Stock (after giving effect to, and
excluding shares of Enviroq Stock redeemed in, the Redemption) owned by a
Redeeming Enviroq Stockholder shall thereafter represent solely the right to
receive the Redeeming Enviroq Stockholder Consideration with respect to each
such share of Enviroq Stock.
(d) at the Effective Time, each share of Sub-1 Stock issued
and outstanding immediately prior to the Effective Time shall be converted into
one fully paid and nonassessable share of common stock, par value $0.01 per
share, of the Enviroq Surviving Corporation.
SECTION 3.2 CONVERSION OF SUB-2 AND IAM STOCK. Subject to the terms and
conditions of this Agreement, as of the Effective Time and by virtue of the IAM
Merger and without any further action on the part of the holder of any Sub-2
Stock or IAM Stock:
(a) all shares of IAM Stock which are held by IAM as treasury
stock, if any, shall be canceled and retired, and no consideration shall be paid
or delivered in exchange therefor;
(b) each share of IAM Stock outstanding immediately prior to
the Effective Time shall be canceled and converted into the right to receive the
IAM Consideration, and all outstanding certificates representing shares of IAM
Stock shall thereafter represent solely the right to receive the IAM
Consideration with respect to each such share of IAM Stock; and
(c) at the Effective Time, each share of Sub-2 Stock issued
and outstanding immediately prior to the Effective Time shall be converted into
one fully paid and nonassessable share of common stock, par value $0.01 per
share, of the IAM Surviving Corporation.
SECTION 3.3 CONVERSION OF SUB-3 AND CRC STOCK. Subject to the terms and
conditions of this Agreement, as of the Effective Time and by virtue of the CRC
Merger and without any further action on the part of the holder of any Sub-3
Stock or CRC Stock:
(a) all shares of CRC Stock which are held by CRC as treasury
stock, if any, shall be canceled and retired, and no consideration shall be paid
or delivered in exchange therefor;
(b) each share of CRC Stock outstanding immediately prior to
the Effective Time shall be canceled and converted into the right to receive the
CRC Consideration, and all outstanding certificates representing shares of CRC
Stock shall thereafter represent solely the right to receive the CRC
Consideration with respect to each such share of CRC Stock; and
(c) at the Effective Time, each share of Sub-3 Stock issued
and outstanding immediately prior to the Effective Time shall be converted into
one fully paid and nonassessable share of common stock, par value $ 0.01 per
share, of the CRC Surviving Corporation.
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SECTION 3.4 RIGHTS OF DISSENT OF ENVIROQ STOCKHOLDERS. Notwithstanding
anything in this Agreement to the contrary, each outstanding share of Enviroq
Stock the holder of which has demanded and perfected his demand for payment of
the "fair or appraised" value of such share in accordance with Section 262 of
the Delaware General Corporation Law (the "Dissent Provisions"), to the extent
applicable, and has not effectively withdrawn or lost such holder's right to
such appraisal (each such Person, a "Dissenting Stockholder"), and has not
redeemed such shares of Enviroq Stock in the Redemption, shall not be converted
into or represent a right to receive the Redeeming Enviroq Stockholder
Consideration or the Non-Redeeming Enviroq Stockholder Consideration payable in
the Enviroq Merger, but the holder thereof shall be entitled only to such rights
as are granted by the Dissent Provisions. Enviroq shall give NewCo and each
other Party prompt notice of any written notices of any intent to demand payment
and any written demands for payment received by Enviroq. Each Dissenting
Stockholder who becomes entitled, pursuant to the Dissent Provisions, to payment
of fair value of the Enviroq Stock held by such Dissenting Stockholder shall
receive payment therefor from NewCo (but only after the amount thereof shall
have been determined as required by the applicable Dissent Provisions) and all
of such Dissenting Stockholder's Enviroq Stock shall be canceled. Prior to the
Effective Time, Enviroq shall not, without the prior written consent of the
other Parties, voluntarily make any payment with respect to, or settle, offer to
settle or otherwise negotiate, any such demands. If any Dissenting Stockholder
shall have failed to perfect or shall have effectively withdrawn or lost such
right to demand payment of fair or appraised value, the Enviroq Stock held by
such Dissenting Stockholder shall thereupon be deemed to have been converted as
of the Effective Time into the right to receive the Redeeming Enviroq
Stockholder Consideration or the Non-Redeeming Enviroq Stockholder
Consideration, as applicable, to be paid in the Enviroq Merger as provided by
this Agreement. The shareholders of IAM and CRC have approved the IAM Merger and
the CRC Merger and therefore have no right to dissent under the Florida Business
Corporation Act.
SECTION 3.5 STOCK OPTIONS AND RELATED MATTERS. As of the Effective
Time, all rights with respect to Enviroq Stock, IAM Stock or CRC Stock issuable
pursuant to the exercise of stock options granted by Enviroq, IAM or CRC under
stock option plans of Enviroq, IAM or CRC, respectively, and held by each
participant thereunder, whether or not such options are then exercisable, shall
be terminated and canceled for no payment. Such holder of any options so
surrendered shall execute an appropriate instrument of cancellation pursuant to
which the rights held by such holder shall be canceled and terminated and the
options held by such holder shall be canceled and terminated and shall be of no
further force or effect. It is anticipated that as soon as practicable after the
Effective Time, NewCo will adopt an Incentive Stock Option Plan and a
Non-Employee Directors' Stock Option Plan, substantially in the form attached as
EXHIBIT A and EXHIBIT B, respectively.
SECTION 3.6 SHARES OF NEWCO STOCK OWNED BY ENVIROQ. As of the Effective
Time, all shares of NewCo Stock owned by Enviroq shall be canceled and retired,
and no consideration shall be paid or delivered in exchange therefor.
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ARTICLE 4
PAYMENT OF THE REDEMPTION PRICE AND MERGER CONSIDERATION
SECTION 4.1 PAYMENT OF THE REDEMPTION PRICE AND THE NON-REDEEMING
ENVIROQ STOCKHOLDER CASH CONSIDERATION.
(a) After the Redemption Expiration Date, but before the
Effective Time, Enviroq will transfer to the Paying Agent an amount equal to the
Redemption Price multiplied by the number of shares of Enviroq Stock to be
redeemed in the Redemption, plus any ancillary amount to cover rounding to the
nearest whole cent when paying the Redemption Price for each Redeeming Enviroq
Stockholder's Redeemed Shares, in order that the Paying Agent shall have
sufficient funds to pay, on behalf of Enviroq, the amount calculated pursuant to
this sentence for each Redeeming Enviroq Stockholder's Redeemed Shares.
Immediately after the Redemption has been completed, but before the Effective
Time, Enviroq shall notify the Paying Agent that the Redemption has occurred and
the Paying Agent shall issue checks to each Redeeming Enviroq Stockholder in the
amount calculated in the immediately preceding sentence for such Redeeming
Enviroq Stockholder's Redeemed Stock.
(b) Immediately after the Effective Time, the board of
directors of Enviroq Surviving Corporation shall declare, and the Enviroq
Surviving Corporation shall pay, a cash dividend to NewCo in an amount
sufficient to pay the Non-Redeeming Enviroq Stockholder Cash Consideration to
each Non-Redeeming Enviroq Stockholder, minus any amount that would otherwise be
paid pursuant to the immediately preceding clause in this sentence except for
the fact that a Non-Redeeming Enviroq Stockholder perfected and did not withdraw
its demand for payment of "fair or appraised" value pursuant to Section 3.4 of
this Agreement, plus any ancillary amount needed to pay to each Redeeming
Enviroq Stockholder the cash payment, if applicable, that is to be paid to each
Redeeming Enviroq Stockholder pursuant to the proviso found in the definition of
"Redeeming Enviroq Stockholder Consideration." Immediately following this
dividend, NewCo will furnish to the Paying Agent the amount set forth in the
immediately preceding sentence to enable the Paying Agent to make full payment
of the Non-Redeeming Enviroq Stockholder Cash Consideration to the Non-Redeeming
Enviroq Stockholders and the cash portion of the Redeeming Enviroq Stockholder
Consideration to the Redeeming Enviroq Stockholders, all amounts to be paid
concurrently with and in the manner set forth with respect to the Non-Redeeming
Enviroq Stockholder Stock Consideration, as described in Section 4.2(a).
SECTION 4.2 PAYMENT OF THE NON-REDEEMING ENVIROQ STOCKHOLDER STOCK
CONSIDERATION, THE REDEEMING ENVIROQ STOCKHOLDER
CONSIDERATION, THE IAM CONSIDERATION AND THE CRC
CONSIDERATION.
(a) The Paying Agent shall also serve as the exchange agent.
The Paying Agent may employ sub-agents in connection with performing its duties.
As promptly as practicable after the Effective Time, the Paying Agent shall send
or cause to be sent to each former holder of record of shares of Enviroq Stock,
IAM Stock and CRC Stock transmittal materials (the "Merger Letter of
Transmittal") for use in exchanging their certificates formerly representing
Enviroq Stock, IAM Stock and CRC Stock for the Merger Consideration provided for
in this Agreement. The Merger Letter of Transmittal will contain instructions
with respect to the surrender of certificates representing Enviroq Stock, IAM
Stock and CRC Stock and the receipt of the Merger Consideration contemplated by
this Agreement and will require each holder of shares of Enviroq Stock, IAM
Stock
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and CRC Stock to transfer good and marketable title to such shares of Enviroq
Stock, IAM Stock and CRC Stock to NewCo, free and clear of all liens, claims and
encumbrances. Upon receipt of properly completed Merger Letters of Transmittal,
the Paying Agent shall pay the appropriate Merger Consideration to the
stockholders of Enviroq, IAM and CRC, as appropriate. The Paying Agent shall, as
promptly as practicable after the Effective Time, send or cause to be sent to
each former holder of record of Enviroq Stock, IAM Stock and CRC Stock a Merger
Letter of Transmittal and upon the proper execution and return of such Merger
Letter of Transmittal to the Paying Agent, the appropriate Merger Consideration
shall be promptly paid. In respect of a Redeeming Enviroq Stockholder who
submitted the certificate(s) representing all shares of Enviroq Stock owned by
such holder in connection with the submission of a Redemption Letter of
Transmittal and who so indicated on such holder's Redemption Letter of
Transmittal, the Redemption Letter of Transmittal shall serve in lieu of a
Merger Letter of Transmittal for such holder, subject to the terms and
conditions contained in the Redemption Offer Materials. Amounts that would have
been payable to Dissenting Stockholders but for the fact of their dissent in
accordance with the provisions of Section 3.4 hereof, shall be handled in
accordance with and in a manner consistent with the Dissent Provisions.
(b) At the Effective Time, the stock transfer books of Enviroq
Stock, IAM Stock and CRC Stock shall be closed as to holders of Enviroq Stock,
IAM Stock and CRC Stock immediately prior to the Effective Time (but after the
Redemption has taken place), and no transfer of Enviroq Stock, IAM Stock and CRC
Stock by any such holder shall thereafter be made or recognized and each
outstanding certificate formerly representing Enviroq Stock, IAM Stock and CRC
Stock shall, without any action on the part of any holder thereof, no longer
represent Enviroq Stock, IAM Stock and CRC Stock. If, after the Effective Time,
certificates are properly presented to the Exchange Agent, such certificates
shall be exchanged for the Merger Consideration contemplated by this Agreement
into which the Enviroq Stock, IAM Stock and CRC Stock represented thereby were
converted in the Mergers.
SECTION 4.3 LOST CERTIFICATES. In the event that any holder of Enviroq
Stock, IAM Stock and CRC Stock is unable to deliver the certificate which
represents such holder's Enviroq Stock, IAM Stock or CRC Stock, NewCo (or
Enviroq, with respect to the Redemption), in the absence of actual notice that
any Enviroq Stock, IAM Stock or CRC Stock theretofore represented by any such
certificate has been acquired by a bona fide purchaser or, in the case of
Enviroq Stock, redeemed in the Redemption, may, in its sole discretion, deliver
to such holder the Merger Consideration (or the Redemption Price in respect of
such holder's Redeemed Shares) contemplated by this Agreement to which such
holder is entitled in accordance with the provisions of this Agreement, upon the
presentation of all of the following:
(a) an affidavit or other evidence to the reasonable
satisfaction of NewCo (or Enviroq, with respect to the Redemption) that any such
certificate has been lost, wrongfully taken or destroyed;
(b) such security or indemnity as may be reasonably requested
by NewCo (or Enviroq, with respect to the Redemption) to indemnify and hold
NewCo (or Enviroq, with respect to the Redemption) harmless; and
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(c) evidence to the satisfaction of NewCo (or Enviroq, with
respect to the Redemption) that such holder is the owner of Enviroq Stock, IAM
Stock or CRC Stock theretofore represented by each certificate claimed by such
holder to be lost, wrongfully taken or destroyed and that such holder is the
Person who would be entitled to present each such certificate for exchange
pursuant to this Agreement.
SECTION 4.4 PAYMENT TO ANOTHER PERSON. In the event that the delivery
of any Merger Consideration contemplated by this Agreement is to be made to a
Person other than the Person in whose name any certificate representing Enviroq
Stock, IAM Stock or CRC Stock surrendered is registered, such certificate so
surrendered shall be properly endorsed (or accompanied by an appropriate
instrument of transfer), with the signature(s) appropriately guaranteed, and
otherwise in proper form for transfer, and the Person requesting such delivery
shall pay any transfer or other taxes required by reason of the delivery to a
Person other than the registered holder of such certificate surrendered or
establish to the satisfaction of NewCo that such tax has been paid or is not
applicable.
SECTION 4.5 RIGHT TO RECEIVE THE MERGER CONSIDERATION ONLY. Until
surrendered in accordance with the provisions of Section 4.2, each certificate
representing Enviroq Stock, IAM Stock and CRC Stock shall represent for all
purposes the right to receive the appropriate Merger Consideration contemplated
by this Agreement or, with respect to Enviroq stockholders, the right to receive
payment of the fair value of the shares in such amount as may be determined to
be due to a Dissenting Stockholder pursuant to the applicable Dissent
Provisions, and shall not represent the right to receive any other
consideration, including, without limitation, interest on any sum.
ARTICLE 5
COVENANTS AND AGREEMENTS
SECTION 5.1 CONDUCT OF THE BUSINESS.
(a) During the period from the date of this Agreement to the
Effective Time, Enviroq, on the one hand, and IAM and CRC, on the other hand,
shall, and shall cause their respective direct or indirect Subsidiaries to, (i)
take all actions and do all things consistent with the Ordinary Course of
Business, (ii) use its best efforts to maintain and preserve intact its business
organization, employees, goodwill with customers and advantageous business
relationships and retain the services of its officers and key employees, and
(iii) except as required by law or regulation, take no action which would
adversely affect or delay the ability of any Party to obtain any Consent from
any Regulatory Authorities or other approvals required for the consummation of
the transactions contemplated hereby or to perform its covenants and agreements
under this Agreement; provided, however, Enviroq shall be permitted to redeem
shares of Enviroq Stock in the Redemption;
(b) During the period from the date of this Agreement to the
Effective Time, except as required by law or regulation and except as expressly
contemplated by this Agreement, each of Enviroq, on the one hand, and IAM and
CRC, on the other hand, shall not, and shall not permit of their respective
Subsidiaries, without the prior written consent of the other Parties, to:
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(i) change, delete or add any provision of or to its
certificate or articles of incorporation or bylaws or of any of their respective
Subsidiaries;
(ii) change the number of shares of its authorized,
issued or outstanding capital stock, including any issuance, purchase,
redemption, split, combination or reclassification thereof; issue or grant any
option, warrant, call, commitment, subscription right; enter into any agreement
to purchase relating to its authorized, issued or outstanding capital stock; or
declare, set aside or pay any dividend or other distribution with respect to its
outstanding capital stock; provided, however, Enviroq shall be permitted to
redeem shares of Enviroq Stock in the Redemption;
(iii) incur any material liabilities or material
obligations (other than deposit liabilities and short-term borrowings in the
Ordinary Course of Business), whether directly or by way of guaranty, including
any obligation for borrowed money, or whether evidenced by any note, bond,
debenture, or similar instrument, except in the Ordinary Course of Business;
Enviroq shall be permitted to incur liabilities to the holders of Enviroq Stock
in connection with the Redemption;
(iv) make any capital expenditures individually in
excess of $25,000, or in the aggregate in excess of $50,000, excluding (a)
binding commitments existing on the date of this Agreement and disclosed in a
Disclosure Schedule delivered pursuant to this Agreement and (b) expenditures
necessary to maintain existing assets in good repair;
(v) sell, transfer, convey or otherwise dispose of any
real property or interest therein having a book value in excess of or in
exchange for consideration in excess of $10,000;
(vi) pay any bonuses to any executive officer except
pursuant to the terms of an enforceable written employment agreement; enter into
any new, or amend in any respect any existing, employment, consulting,
non-competition or independent contractor agreement with any Person; alter the
terms of any existing incentive bonus or commission plan; adopt any new or amend
in any material respect any existing Employee Benefit Plan, except as may be
required by law; grant any general increase in compensation to its employees as
a class or to its officers except for non-executive officers in the Ordinary
Course of Business and consistent with past practices and policies or except in
accordance with the terms of an enforceable written agreement; grant any
material increases in fees or other increases in compensation or in other
benefits to any of its directors; or effect any change in any material respect
in retirement benefits to any class of employees or officers, except as required
by law; or
(vii) acquire any of the assets or equity securities
of any Person or acquire direct or indirect control of any Person, other than in
connection with (a) any internal reorganization or consolidation involving
existing Subsidiaries which has been approved in advance in writing by Enviroq,
IAM and CRC, (b) any such acquisition of assets in the Ordinary Course of
Business, or (c) the creation of new Subsidiaries organized to conduct and
continue activities not otherwise permitted by this Agreement.
SECTION 5.2 ACCESS TO BOOKS AND RECORDS. Each of the Parties will, and
will cause each of its Subsidiaries to, permit representatives of the other
Parties to have reasonable access at all reasonable times, and in a manner so as
not to interfere with the normal business operations, to all
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premises, properties, personnel, books, records (including tax records),
contracts, and documents of or pertaining to each of the Parties and their
Subsidiaries in accordance with reasonable procedures required by the Parties
that are designed to minimize the impact on the Parties' business. Each of the
Parties will treat and hold as such any Confidential Information it receives
from any of the Parties and their Subsidiaries in the course of the reviews
contemplated by this Section, will not use any of the Confidential Information
except in connection with this Agreement, and, if this Agreement is terminated
for any reason whatsoever, agrees to return all tangible embodiments (and all
copies thereof), to whichever of the Parties that originally disclosed such
embodiments, which are in its possession.
SECTION 5.3 APPROVAL OF STOCKHOLDERS OF ENVIROQ. Enviroq will take all
steps necessary under applicable law and its certificate of incorporation and
bylaws to call, give notice of, convene and hold a meeting of its stockholders
for the purpose of approving this Agreement, the Enviroq Merger and for such
other purposes consistent with the complete performance of this Agreement as may
be necessary or desirable. Unless the board of directors of Enviroq determines
in good faith, based upon advice of its outside counsel, that the failure to
terminate this Agreement and the transactions contemplated hereby would be
reasonably likely to result in a breach of the directors' fiduciary duty to the
stockholders of Enviroq, the board of directors of Enviroq will recommend to its
stockholders the approval of this Agreement, the Enviroq Merger and the
transactions contemplated hereby and will use its best efforts to obtain the
necessary approvals by its stockholders of this Agreement, the Enviroq Merger
and the transactions contemplated hereby.
SECTION 5.4 PREPARATION OF PROXY STATEMENT AND REGISTRATION STATEMENT.
In connection with the meeting of its stockholders, Enviroq shall promptly
prepare a proxy statement for submission to its stockholders (the "Proxy
Statement"). Each of the other Parties shall promptly furnish Enviroq with all
information concerning its business and financial statements and affairs which,
in the reasonable judgment of Enviroq or its counsel, may be required or
appropriate for inclusion in the Proxy Statement and shall take such other
action as they may reasonably request in connection with the Proxy Statement.
Enviroq, IAM and CRC shall use reasonable efforts to cause NewCo to engage the
Registration Attorney to promptly prepare and file with the SEC, pursuant to the
Securities Act, a registration statement (which registration statement, in the
form it is declared effective under the Securities Act by the SEC, together with
any and all amendments or supplements thereto and all information incorporated
by reference therein, is referred to herein as the "Registration Statement")
with respect to the shares of NewCo Stock to be issued in connection with the
transactions described in this Agreement and shall use all reasonable efforts to
have the Registration Statement declared effective under the Securities Act by
the SEC as promptly as practicable. Each of the other Parties shall promptly
furnish NewCo with all information concerning its business and financial
statements and affairs which, in the reasonable judgment of NewCo, its counsel,
or the Registration Attorney may be required or appropriate for inclusion in the
Registration Statement. Each party shall take such other action as NewCo may
reasonably request in connection with the Registration Statement. Once the
Registration Statement has been declared effective, Enviroq shall thereafter
promptly mail to its stockholders the Proxy Statement in definitive form (as
amended or supplemented). Furthermore, each of Enviroq, IAM, CRC and NewCo shall
cooperate with respect to, and shall take such other reasonable actions required
to be taken under, any applicable state securities laws in connection with the
issuance of shares of NewCo Stock and the transactions contemplated by this
Agreement. In respect of the Proxy Statement, the Registration Statement and any
other filing with or statement made to any Regulatory Authority, Enviroq shall
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provide, and is responsible for, all such information (including any omissions
of information) related to Enviroq, and IAM and CRC shall provide, and are
jointly and severally responsible for, all such information (including any
omissions of information) related to IAM and CRC.
SECTION 5.5 EXEMPTION UNDER ANTI-TAKEOVER STATUTES. Prior to the
Effective Time, each Party will use its best efforts to take all steps required
to exempt the transactions contemplated by this Agreement from any applicable
state anti-takeover law.
SECTION 5.6 ALTERNATIVE PROPOSALS. Prior to the Effective Time, Enviroq
agrees (a) that neither it nor any of its Subsidiaries shall, nor shall it or
any of its Subsidiaries permit their respective officers, directors, employees,
agents and representatives (including any investment banker, attorney or
accountant retained by it or any of its Subsidiaries) to, initiate, solicit or
encourage, directly or indirectly, any inquiries or the making or implementation
of any proposal or offer (including any proposal or offer to its stockholders)
with respect to a merger, acquisition, consolidation or similar transaction
involving, or purchase of (i) all or any significant portion of the assets of
the Enviroq and its Subsidiaries taken as a whole, (ii) 15% or more of the
outstanding shares of Enviroq Stock or (iii) 15% or more of the outstanding
shares of the capital stock of any Subsidiary of Enviroq (any such proposal or
offer being hereinafter referred to as an "Alternative Proposal") or engage in
any negotiations concerning, or provide any confidential information or data to,
or have any discussions with, any Person relating to an Alternative Proposal
(excluding the Mergers and the Redemption contemplated by this Agreement), or
otherwise facilitate any effort or attempt to make or implement an Alternative
Proposal; and (b) that it will notify IAM and CRC immediately if any such
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated or continued
with, it; provided, however, that nothing contained in this Section 5.6 shall
prohibit the board of directors of Enviroq from (i) furnishing information to or
entering into discussions or negotiations with, any Person that makes an
unsolicited bona fide Alternative Proposal if, and only to the extent that, (A)
the board of directors of Enviroq, based upon the advice of outside counsel,
determines in good faith that the failure to terminate this Agreement and the
transactions contemplated hereby would be reasonably likely to result in a
breach of the directors' fiduciary duty to the stockholders of Enviroq, (B)
prior to furnishing such information to, or entering into discussions or
negotiations with, such Person, Enviroq provides written notice to IAM and CRC
to the effect that it is furnishing information to, or entering into discussions
or negotiations with, such Person, and (C) Enviroq keeps IAM and CRC reasonably
informed of the status of any such discussions; and (ii) to the extent
applicable, complying with Rule 14e-2 promulgated under the Exchange Act with
regard to an Alternative Proposal. Nothing in this Section 5.6 shall (x) permit
Enviroq to terminate this Agreement (except as specifically provided in Article
11 hereof), (y) permit Enviroq to enter into any agreement with respect to an
Alternative Proposal for as long as this Agreement remains in effect (it being
agreed that for as long as this Agreement remains in effect, Enviroq shall not
enter into any agreement with any Person that provides for, or in any way
facilitates, an Alternative Proposal (other than a confidentiality agreement in
customary form)), or (z) affect any other obligation of Enviroq under this
Agreement.
SECTION 5.7 AFFILIATES. Each party to this Agreement shall deliver to
NewCo a letter identifying all Persons who are, at the time this Agreement is
submitted for approval to the stockholders of Enviroq, "affiliates" of such
party for purposes of Rule 145 under the Securities Act.
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Each party shall use its best efforts to cause each of its respective
"affiliates" to deliver to NewCo on or prior to the Closing Date a written
agreement substantially in the form attached as EXHIBIT C.
SECTION 5.8 REDEMPTION OF CERTAIN SHARES OF ENVIROQ STOCK.
(a) Offer. As soon as practicable after the date of this
Agreement, Enviroq shall make an offer ("Redemption Offer") to redeem up to
42.698013% of the issued and outstanding shares of Enviroq Stock at a price of
$5.22061144 per share of Enviroq Stock ("Redemption Stock"). The Redemption
Offer shall be made to all holders of record of shares of Enviroq Stock (other
than treasury shares and any shares of Enviroq Stock owned by Enviroq's
Subsidiaries) as of the record date for such Redemption Offer as determined by
the board of directors of Enviroq ("Redemption Record Date"). The Redemption
Offer shall be subject to the same conditions found in Articles 7, 8, 9 and 10
of this Agreement, and such other terms and conditions which will be contained
in the offer materials to be sent to such holders in connection with the
Redemption Offer ("Redemption Materials"), which conditions can be waived in the
sole discretion of Enviroq. The Redemption Offer shall terminate automatically
without further action by Enviroq if this Agreement is terminated. Pursuant to
the Redemption Offer, each holder of shares of Enviroq Stock generally shall
have the right to redeem exactly 42.698013%, but not less than 42.698013%, of
the shares of Enviroq Stock owned of record by such holder as of the Redemption
Record Date; provided, however, in determining the amount to be paid pursuant to
the first part of this sentence, rounding to the nearest whole cent shall be
performed. Upon making of the Redemption Offer, Enviroq shall set aside such
amount of money as is sufficient to pay the Redemption Price for all shares of
Enviroq Stock subject of the Redemption Offer, plus any ancillary amount to
cover rounding to the nearest whole cent when paying the Redemption Price for
each Redeeming Enviroq Stockholder's Redeemed Shares.
(b) Acceptance. In order to accept the Redemption Offer, a holder of
shares of Enviroq Stock must properly complete the letter of transmittal and any
other required forms included in the Redemption Materials ("Redemption Letter of
Transmittal") and return the properly completed Redemption Letter of
Transmittal, together with the certificates evidencing the shares of Enviroq
Stock to be redeemed in the Redemption, to Enviroq. The Redemption Letter of
Transmittal will contain instructions with respect to the surrender of
certificates evidencing shares of Enviroq Stock and will require each holder of
shares of Enviroq Stock to transfer good and marketable title to such shares of
Enviroq Stock, free and clear of all liens, claims and encumbrances. The
Redemption Materials will establish a procedure to be followed in the event that
a holder has lost or had stolen the certificate(s) evidencing the shares of
Enviroq Stock so owned by such holder. A properly completed Redemption Letter of
Transmittal, together with the certificates evidencing shares of Enviroq Stock
to be redeemed in the Redemption (or alternative forms, if such certificate(s)
have been lost or stolen) must be received by Enviroq by that certain date
("Redemption Expiration Date") which shall be 5:00 p.m. (Central Time) on the
day before the date of the special shareholder meeting to be convened to approve
this Agreement and the Enviroq Merger or such later time as the board of
directors of Enviroq shall designate. After the Redemption Expiration Date, no
further Redemption Letters of Transmittal and certificates representing shares
of Enviroq Stock shall be accepted by Enviroq in connection with the Redemption.
Enviroq shall determine, in its sole discretion, whether a holder of Enviroq
Stock has properly completed and returned the Letter of Transmittal together
with certificates for the shares of Enviroq Stock being redeemed (or alternative
forms, if such certificate(s) have been lost or stolen), and otherwise complied
with the terms and
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conditions as shall be set forth in the Redemption Materials (upon such
affirmative determination by Enviroq, a "Valid Acceptance").
(c) Timing. Subject to the terms and conditions contained in
Redemption Materials, the Redemption will occur immediately prior to the
Effective Time.
(d) Effect of Redemption. Immediately prior to the Effective
Time, each Redeeming Enviroq Stockholder shall be paid the Redemption Price in
respect of those shares of Enviroq Stock redeemed in the Redemption ("Redeemed
Shares"). Subject to the right of dissent set forth in Section 3.4, all shares
of Enviroq Stock owned by a Redeeming Enviroq Stockholder that are not redeemed
in the Redemption (that is, excluding Redeemed Shares) shall be canceled and
converted into the right to receive the Redeeming Enviroq Stockholder
Consideration as of the Effective Time as set forth in Section 3.1(c). Subject
to the right of dissent set forth in Section 3.4, all shares of Enviroq Stock
owned by a Non-Redeeming Enviroq Stockholder shall be canceled and converted
into the right to receive the Non-Redeeming Enviroq Stockholder Consideration as
of the Effective Time, as set forth in Section 3.1(b). As a result of the
Redemption, all Redeemed Shares shall become treasury stock of Enviroq; at the
Effective Time, such Redeemed Shares shall be canceled and retired, and no
consideration shall be paid or delivered in exchange therefor, as set forth in
Section 3.1(a).
(e) New Certificates. Immediately after the Redemption, but
before the Effective Time, Enviroq shall issue new certificates to a Redeeming
Enviroq Stockholders evidencing ownership of those shares of Enviroq Stock owned
by a Redeeming Enviroq Stockholders that are not redeemed in the Redemption, if
such Redeeming Enviroq Stockholder: (i) perfects and does not withdraw a demand
for payment of "fair or appraised" value pursuant to Section 3.4 of this
Agreement or (ii) otherwise does not elect to have the Redemption Letter of
Transmittal serve as such holder's Merger Letter of Transmittal in accordance
with the terms and conditions contained in the Redemption Offer Materials.
SECTION 5.9 CONSENT OF IAM CLIENTS. IAM shall promptly prepare and send
to all its clients a consent to assignment, whereby each client of IAM consents
to the change in control of IAM as required by Section 205(a)(2) of the
Investment Advisers Act. IAM shall use its best efforts to ensure that each of
its clients executes and delivers to IAM such consent prior to the scheduled
Effective Time.
ARTICLE 6
ADDITIONAL COVENANTS AND AGREEMENTS
Section 6.1 Best Efforts; Cooperation. Subject to the terms and
conditions herein provided, each of the Parties agrees to use its best efforts
promptly to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or otherwise, including attempting to obtain all necessary
Consents, to consummate and make effective, as soon as practicable, the
transactions contemplated by this Agreement.
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SECTION 6.2 REGULATORY MATTERS.
(a) Following the execution and delivery of this Agreement,
Enviroq, IAM and CRC shall cause to be prepared and filed all required
applications and filings with the Regulatory Authorities which are necessary or
contemplated for the obtaining of the Consents of the Regulatory Authorities and
the consummation of the Mergers. Such applications and filings shall be in such
form as may be prescribed by the respective Regulatory Authority and shall
contain such information as such Regulatory Authority may require. The Parties
hereto will cooperate with each other and use reasonable efforts to prepare and
execute all necessary documentation, to effect all necessary or contemplated
filings and to obtain all necessary or contemplated Consents of the Regulatory
Authorities and third parties which are necessary or contemplated to consummate
the transactions contemplated by this Agreement, including the stockholders of
Enviroq. Each of the Parties shall have the right to review and approve in
advance, which approval shall not be unreasonably withheld, any filing made
with, or written material submitted to, any Regulatory Authority in connection
with the transactions contemplated by this Agreement.
(b) Each Party will furnish the other Parties with all
information concerning itself, its Subsidiaries, directors, officers and
stockholders, as applicable, and such other matters as may be necessary or
advisable in connection with any statement or application made by or on behalf
of any such Party to any governmental body in connection with the transactions,
applications or filings contemplated by this Agreement. Upon request, the
Parties hereto will promptly furnish each other with copies of written
communications received by them or their respective Subsidiaries from, or
delivered by any of the foregoing to, any governmental body in respect of the
transactions contemplated hereby.
SECTION 6.3 INDEMNIFICATION REGARDING THE REGISTRATION STATEMENT AND
PROXY STATEMENT. Enviroq, with respect to IAM and CRC, and IAM and CRC, jointly
and severally with respect to Enviroq, agree to indemnify, defend and hold
harmless the other, their respective Subsidiaries, and each of their respective
present and former officers, directors, employees and agents, from and against
all losses, expenses, claims, damages or liabilities to which any of them may
become subject under applicable laws (including the Securities Act or the
Exchange Act), and will reimburse each of them for any legal, accounting or
other expenses reasonably incurred in connection with investigating or defending
any such actions, whether or not resulting in liability, insofar as such losses,
expenses, claims, damages or liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of material fact provided by the
indemnifying Party and contained in the Proxy Statement or the Registration
Statement or arise out of or are based upon the omission or alleged omission by
the indemnifying Party to state therein a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
SECTION 6.4 NOTICE OF DEVELOPMENTS. Each of the Parties will give
prompt written notice to other Parties of any material adverse development that
causes or is likely to cause a material breach of any of its representations and
warranties contained in this Agreement. Such disclosure by any Party pursuant to
this Section shall be deemed to amend or supplement any disclosure contained in
the Schedules attached hereto to prevent or cure any misrepresentation, breach
of warranty, or breach of covenant.
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SECTION 6.5 NOTICES AND CONSENTS. Each of the Parties will give any
notices (and will cause each of the Parties within their control to give any
notices) to third parties, and will use their reasonable efforts to obtain (and
will cause each of the Parties within their control to use their reasonable
efforts to obtain) any third-party consents that may be required to consummate
the transactions contemplated hereby.
SECTION 6.6 PAYMENT OF THE MERGER CONSIDERATION. NewCo shall issue the
Redeeming Enviroq Stockholder Consideration, the Non-Redeeming Enviroq
Stockholder Consideration, the IAM Consideration and the CRC Consideration, as
and when the same shall be required to be issued pursuant to this Agreement.
SECTION 6.7 REPAYMENT OF LOANS. Prior to the Closing Date, IAM and CRC
shall repay all loans to stockholders or Affiliates of IAM and CRC, including
those loans shown on the IAM/CRC Most Recent Balance Sheet, and shall cause the
stockholders and Affiliates of IAM and CRC to repay all loans to IAM and CRC.
SECTION 6.8 INDEMNITY.
(a) From and after the Effective Time, NewCo shall indemnify, defend
and hold harmless to the fullest extent that Enviroq, IAM or CRC would have been
permitted under applicable law each Person who is now, or has been at any time
prior to the date hereof, an officer or director of Enviroq, IAM or CRC
(individually, an "Indemnified Party" and collectively, the "Indemnified
Parties"), against all losses, claims, damages, liabilities, costs or expenses
(including attorneys's fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such occurring at or prior to the
Effective Time. In the event of any such claim, action, suit, proceeding or
investigation (an "Action"), (i) any Indemnified Party wishing to claim
indemnification shall promptly notify NewCo thereof, (ii) NewCo shall pay the
reasonable fees and expenses of counsel selected by the Indemnified Party, which
counsel shall be reasonably acceptable to NewCo, in advance of the final
disposition of any such Action to the full extent permitted by applicable law,
upon receipt of any undertaking required by applicable law, and (iii) NewCo will
cooperate in the defense of any such matter; provided, however, that NewCo shall
not be liable for any settlement effected without its written consent and
provided, further, that NewCo shall not be obligated pursuant to this Section to
pay the fees and disbursements of more than one counsel for all Indemnified
Parties in any single Action except to the extent that, in the opinion of
counsel for the Indemnified Parties, two or more of such Indemnified Parties
have conflicting interests in the outcome of such action.
(b) NewCo shall cause each of Enviroq, IAM and CRC to keep in
effect provisions of their respective certificate or articles of incorporation
and bylaws providing for exculpation of director and officer liability and its
indemnification of the Indemnified Parties to the fullest extent permitted under
Delaware or Florida law, as the case may be, which provisions shall not be
amended except as required by applicable law or except to make changes permitted
by law that would enlarge the Indemnified Parties' right of indemnification. For
six (6) years after the Effective Time, NewCo shall cause Enviroq Surviving
Corporation to, and Enviroq Surviving Corporation shall, use its good faith,
best efforts to provide officers' and directors' liability insurance covering
each director and officer of Enviroq who at the date of this Agreement and/or
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at the Effective Time is covered by Enviroq's existing directors' and officers'
liability insurance with respect to actions and omissions occurring at or prior
to the Effective Time, on terms no less favorable than such insurance maintained
in effect by Enviroq on the date of this Agreement in terms of coverage and
amounts. NewCo and/or Enviroq Surviving Corporation shall, as soon as
practicable after the Effective Time, furnish upon request evidence that such
insurance has been purchased and paid in full.
(c) The provisions of this Section shall survive the
consummation of the Mergers and expressly are intended to benefit each of the
Indemnified Parties.
ARTICLE 7
MUTUAL CONDITIONS TO CLOSING
The obligations of the Parties to consummate the transactions provided
for herein shall be subject to the satisfaction of the following conditions,
unless waived as hereinafter provided for:
SECTION 7.1 SHAREHOLDER APPROVAL. The Enviroq Merger shall have been
approved by the requisite vote of the stockholders of Enviroq.
SECTION 7.2 REGULATORY APPROVALS. All necessary Consents of the
Regulatory Authorities shall have been obtained and all notice and waiting
periods required by law to pass after receipt of such Consents shall have
passed, and all conditions to consummation of the Mergers set forth in such
Consents shall have been satisfied. NewCo shall have received all federal and
state securities laws, or "Blue Sky," permits or other authorizations or
confirmations as to the availability of exemptions from registration
requirements, as may be necessary to issue shares of NewCo Stock pursuant to
this Agreement.
SECTION 7.3 LITIGATION. There shall be no actual or threatened causes
of action, investigations or proceedings (a) challenging the validity or
legality of this Agreement or the consummation of the transactions contemplated
by this Agreement, (b) seeking damages in connection with the transactions
contemplated by this Agreement, or (c) seeking to restrain or invalidate the
transactions contemplated by this Agreement, which, in the case of (i) through
(iii), and in the reasonable judgment of Enviroq, IAM and CRC, based upon advice
of counsel, would have a Material Adverse Effect with respect to Enviroq, IAM or
CRC, as the case may be.
SECTION 7.4 PROXY STATEMENT. The Proxy Statement shall have been filed
with the SEC for review and comment and shall have been authorized for mailing,
either by notice from the SEC or the lapse of time for review and comment by the
SEC.
SECTION 7.5 REGISTRATION STATEMENT. The Registration Statement shall
have been declared effective, and no stop order with respect thereto shall be in
effect and no proceedings for that purpose shall have been initiated or, to the
knowledge of the Parties, threatened by the SEC or any other Regulatory
Authority.
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SECTION 7.6 MATERIAL CONDITION. There shall not be any action taken, or
any statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the Mergers by any Regulatory Authority which, in connection with
the grant of any Consent by any Regulatory Authority, imposes, in the judgment
of the Parties, any requirement which would have a Material Adverse Effect upon
the Parties, or any one of them, provided that no such term or condition imposed
by any Regulatory Authority in connection with the grant of any Consent by any
Regulatory Authority shall be deemed to be a requirement which would have a
Material Adverse Effect on any Party unless it materially differs from terms and
conditions customarily imposed by any such entity in connection with the
acquisition of corporations under similar circumstances.
SECTION 7.7 CONSENTS. All Consents of third parties required in
connection with the transactions contemplated hereby shall have been obtained,
except where the failure to obtain such Consents, in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect on Enviroq, IAM or
CRC, as the case may be, provided that a Party which has not used all reasonable
efforts to obtain a Consent may not assert this condition with respect to such
Consent.
ARTICLE 8
CONDITIONS TO THE OBLIGATIONS OF ENVIROQ
The obligations of Enviroq to consummate the Enviroq Merger are subject
to the fulfillment of each of the following conditions, unless waived as
hereinafter provided for:
SECTION 8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of IAM and CRC set forth in this Agreement and in any certificate or
document delivered pursuant hereto shall be true and correct in all material
respects as of the date of this Agreement and as of all times up to and
including the Effective Time (as though made on and as of the Effective Time
except to the extent such representations and warranties are by their express
provisions made as of a specified date and except for changes therein
contemplated by this Agreement).
SECTION 8.2 PERFORMANCE OF OBLIGATIONS. IAM and CRC shall have
performed all covenants, obligations and agreements required to be performed by
them under this Agreement prior to the Effective Time.
SECTION 8.3 CERTIFICATE REPRESENTING SATISFACTION OF CONDITIONS. All
other Parties shall each have delivered to Enviroq a certificate dated as of the
Closing Date as to the satisfaction of the matters described in Sections 8.1 and
8.2 hereof, and such certificates shall be deemed to constitute additional
representations, warranties, covenants, and agreements of the respective Parties
under this Agreement.
SECTION 8.4 CONSUMMATION OF THE IAM MERGER AND THE CRC MERGER. All of
the conditions to the consummation of the IAM Merger and the CRC Merger shall
have been satisfied or waived in accordance with the terms of this Agreement,
and all the Mergers shall be consummated substantially contemporaneously.
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SECTION 8.5 ABSENCE OF ADVERSE FACTS. There shall have been no
determination by Enviroq that any fact, event or condition exists, or has
occurred that, in the judgment of Enviroq, (a) would be materially adverse to
the interests of Enviroq, individually or on a consolidated basis, or (b) would
render the Enviroq Merger or the other transactions contemplated by this
Agreement impracticable because of any state of war, national emergency, banking
moratorium or general suspension of trading on NASDAQ, the New York Stock
Exchange, Inc. or other national securities exchange.
SECTION 8.6 EMPLOYMENT AGREEMENT WITH WILLIAM J. LONG. NewCo shall have
entered into an Employment Agreement with William J. Long substantially in the
form attached hereto as EXHIBIT C.
SECTION 8.7 REPAYMENT OF LOANS. Prior to the Closing Date, all loans
from IAM or CRC to stockholders or Affiliates of IAM or CRC, shall have been
repaid, and all loans to IAM or CRC from stockholders or Affiliates of IAM or
CRC shall have been repaid.
SECTION 8.8 VOTING AGREEMENT. All of the shareholders of IAM and CRC
shall have executed the voting agreement substantially in the form attached
hereto as EXHIBIT E ("Voting Agreement").
SECTION 8.9 STOCK OPTIONS. All rights with respect to IAM Stock and CRC
Stock issuable pursuant to the exercise of stock options granted under any IAM
or CRC stock option plans, whether or not exercisable, shall have been
terminated and any holder thereof shall have executed an appropriate instrument
of cancellation.
SECTION 8.10 RESIGNATIONS. NewCo shall have received the resignations,
effective as of the Closing, of each director and officer of IAM and CRC, other
than those whom shall have been agreed upon by the Parties as specified in
writing at least thirty (30) days prior to the Closing, and other than Forrest
Travis, who shall serve as President and Chief Executive Officer of NewCo, and
Mark F. Travis, who shall serve as an Executive Vice President of NewCo.
SECTION 8.11 CONSENT TO ASSIGNMENT BY IAM CLIENTS. Clients which
together own at least 85% of the assets managed by IAM as of the Closing shall
have executed and delivered to IAM that consent to assignment required to be
sent by IAM to all of its clients pursuant to Section 5.9 of this Agreement.
ARTICLE 9
CONDITIONS TO THE OBLIGATIONS OF IAM
The obligations of IAM to consummate the IAM Merger are subject to the
fulfillment of each of the following conditions, unless waived as hereinafter
provided for:
SECTION 9.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Enviroq set forth in this Agreement and in any certificate or
document delivered pursuant hereto
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shall be true and correct in all material respects as of the date of this
Agreement and as of all times up to and including the Effective Time (as though
made on and as of the Effective Time except to the extent such representations
and warranties are by their express provisions made as of a specified date and
except for changes therein contemplated by this Agreement).
SECTION 9.2 PERFORMANCE OF OBLIGATIONS. Enviroq shall have performed
all covenants, obligations and agreements required to be performed by it under
this Agreement prior to the Effective Time.
SECTION 9.3 CERTIFICATE REPRESENTING SATISFACTION OF CONDITIONS. The
other Parties shall each have delivered to IAM a certificate dated as of the
Closing Date as to the satisfaction of the matters described in Sections 9.1 and
9.2 hereof, and such certificates shall be deemed to constitute additional
representations, warranties, covenants, and agreements of the other Parties
under this Agreement.
SECTION 9.4 DISSENTERS. The holders of not more than seven and one-half
percent (7 1/2%) of the outstanding shares of Enviroq Stock shall have elected
to exercise their right to dissent from the Enviroq Merger and demand payment in
cash pursuant to the Dissent Provisions.
SECTION 9.5 CONSUMMATION OF THE ENVIROQ MERGER AND THE CRC MERGER. All
of the conditions to the consummation of the Enviroq Merger and the CRC Merger
shall have been satisfied or waived in accordance with the terms of this
Agreement, and all of the Mergers shall be consummated substantially
contemporaneously.
SECTION 9.6 ABSENCE OF ADVERSE FACTS. There shall have been no
determination by IAM that any fact, event or condition exists, or as occurred
that, in the judgment of IAM, (a) would be materially adverse to the interests
of IAM, individually or on a consolidated basis, or (b) would render the IAM
Merger or the other transactions contemplated by this agreement impracticable
because of any state of war, national emergency, banking moratorium or general
suspension of trading on NASDAQ, the New York Stock Exchange, Inc. or other
national securities exchange.
SECTION 9.7 EMPLOYMENT AGREEMENTS WITH FORREST TRAVIS AND MARK F.
TRAVIS. NewCo shall have entered into an Employment Agreement with each of
Forrest Travis and Mark F. Travis substantially in the forms attached hereto as
EXHIBIT F and EXHIBIT G, respectively.
SECTION 9.8 STOCK AGREEMENT. The Stock Agreement shall have remained in
full force and effect through the Effective Time.
SECTION 9.9 VOTING AGREEMENT. The stockholders of Enviroq set forth on
Schedule 9.9 shall have executed the Voting Agreement.
SECTION 9.10 STOCK OPTIONS. All rights with respect to Enviroq Stock
issuable pursuant to the exercise of stock options granted under any Enviroq
stock option plan, whether or not exercisable, shall have been terminated and
any holder thereof shall have executed an appropriate instrument of
cancellation.
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SECTION 9.11 RESIGNATIONS. NewCo shall have received the resignations,
effective as of the Closing, of each director and officer of Enviroq, other than
those whom shall have been agreed upon by the Parties as specified in writing at
least thirty (30) days prior to the Closing, and other than William J. Long who
will serve as Executive Vice President, Chief Operating Officer and Interim
Chief Financial Officer of NewCo.
ARTICLE 10
CONDITIONS TO THE OBLIGATIONS OF CRC
The obligations of CRC to consummate the CRC Merger are subject to the
fulfillment of each of the following conditions, unless waived as hereinafter
provided for:
SECTION 10.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Enviroq set forth in this Agreement and in any certificate or
document delivered pursuant hereto shall be true and correct in all material
respects as of the date of this Agreement and as of all times up to and
including the Effective Time (as though made on and as of the Effective Time
except to the extent such representations and warranties are by their express
provisions made as of a specified date and except for changes therein
contemplated by this Agreement).
SECTION 10.2 PERFORMANCE OF OBLIGATIONS. Enviroq shall have performed
all covenants, obligations and agreements required to be performed by it under
this Agreement prior to the Effective Time.
SECTION 10.3 CERTIFICATE REPRESENTING SATISFACTION OF CONDITIONS. The
other Parties shall each have delivered to CRC a certificate dated as of the
Closing Date as to the satisfaction of the matters described in Sections 10.1
and 10.2 hereof, and such certificates shall be deemed to constitute additional
representations, warranties, covenants, and agreements of the other Parties
under this Agreement.
SECTION 10.4 DISSENTERS. The holders of not more than seven and
one-half percent (7 1/2%) of the outstanding shares of Enviroq Stock shall have
elected to exercise their right to dissent from the Enviroq Merger and demand
payment in cash for the fair or appraised value of their shares.
SECTION 10.5 CONSUMMATION OF THE ENVIROQ MERGER AND THE IAM MERGER. All
of the conditions to the consummation of the Enviroq Merger and the IAM Merger
shall have been satisfied or waived in accordance with the terms of this
Agreement, and all of the Mergers shall be consummated substantially
contemporaneously.
SECTION 10.6 ABSENCE OF ADVERSE FACTS. There shall have been no
determination by CRC that any fact, event or condition exists, or as occurred
that, in the judgment of CRC, (a) would be materially adverse to the interests
of CRC, individually or on a consolidated basis, or (b) would render the CRC
Merger or the other transactions contemplated by this agreement impracticable
because of any state of war, national emergency, banking moratorium or general
suspension of trading on NASDAQ, the New York Stock Exchange, Inc. or other
national securities exchange.
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SECTION 10.7 EMPLOYMENT AGREEMENTS WITH FORREST TRAVIS AND MARK F.
TRAVIS. NewCo shall have entered into an Employment Agreement with each of
Forrest Travis and Mark F. Travis substantially in the form attached hereto as
EXHIBIT F and EXHIBIT G, respectively.
SECTION 10.8 STOCK AGREEMENT. The Stock Agreement shall have remained
in full force and effect through the Effective Time.
SECTION 10.9 VOTING AGREEMENT. The Stockholders of Enviroq set forth on
Schedule 9.9 shall have executed the Voting Agreement.
SECTION 10.10 STOCK OPTIONS. All rights with respect to Enviroq Stock
issuable pursuant to the exercise of stock options granted under any Enviroq
stock option plans, whether or not exercisable, shall have been terminated and
any holder thereof shall have executed an appropriate instrument of
cancellation.
SECTION 10.11 RESIGNATIONS. NewCo shall have received the resignations,
effective as of the Closing, of each director and officer of Enviroq, other than
those whom shall have been agreed upon by the Parties as specified in writing at
least thirty (30) days prior to the Closing, and other than William J. Long who
will serve as Executive Vice President, Chief Operating Officer and Interim
Chief Financial Officer of NewCo.
ARTICLE 11
TERMINATION
SECTION 11.1 TERMINATION OF AGREEMENT. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual written consent duly authorized by the boards of
directors of Enviroq, IAM and CRC at any time prior to the Effective Time; or
(b) by Enviroq at any time prior to the Effective Time, if
there has been a material breach of a representation, warranty, covenant, or
agreement of IAM or CRC and such breach has not been cured or is incapable of
being cured within 15 days of notice of such breach; or
(c) by IAM at any time prior to the Effective Time, if there
has been a material breach of a representation, warranty, covenant, or agreement
of Enviroq and such breach has not been cured or is incapable of being cured
within 15 days of notice of such breach; or
(d) by CRC at anytime prior to the Effective Time, if there
has been a material breach of a representation, warranty, covenant or agreement
of Enviroq and such breach has not been cured or is incapable of being cured
within 15 days of notice of such breach; or
(e) if the Closing has not occurred by August 31, 1998, unless
extended by mutual written consent duly authorized by the boards of directors of
Enviroq, IAM and CRC (provided that the right to terminate this Agreement under
this Section shall not be available to any
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Party whose failure to perform any material covenant or obligation or whose
breach of a representation or warranty under this Agreement has been the cause
of or resulted in the failure of the Closing to occur on or before such date);
or
(f) by Enviroq if the board of directors of Enviroq, as
advised by outside counsel, determines in good faith that the failure to
terminate this Agreement and the transactions contemplated herein would be
reasonably likely to result in a breach of the directors' fiduciary duty to the
stockholders of Enviroq, provided that (i) Enviroq shall notify IAM and CRC
promptly of its intention to terminate this Agreement or enter into a definitive
agreement with respect to any Alternative Proposal, but in no event shall such
notice be given less than 48 hours prior to the public announcement of Enviroq's
termination of this Agreement, and (ii) Enviroq's ability to terminate this
Agreement pursuant to Section 11.1(f) is conditioned upon the prior payment by
it of any amounts owed by it pursuant to Section 11.2(a); or
(g) by Enviroq, IAM or CRC if at the meeting of Enviroq
Stockholders held for such purpose (including any adjournment or postponement
thereof) the requisite vote of the Enviroq Stockholders to approve the Enviroq
Merger shall not have been obtained.
SECTION 11.2 EFFECT OF TERMINATION.
(a) In the event that any Person shall have made an
Alternative Proposal for Enviroq and thereafter (i) this Agreement is terminated
pursuant to Section 11.1(f) or (ii) this Agreement is terminated pursuant to
Section 11.1(c) or 11.1(d) due to Enviroq's breach (and neither IAM or CRC is in
breach of this Agreement) and, in the case of this clause (ii) only, a
definitive agreement with respect to such Alternative Proposal is executed
within one year after such termination and such transaction is thereafter
consummated, then Enviroq shall pay IAM and CRC an aggregate fee of $250,000,
which amount shall be payable by wire transfer of same day funds either on the
date contemplated in the last clause of Section 11.1(f), if applicable, or
otherwise within two business days after the consummation of the transaction.
Enviroq acknowledges that the agreements contained in this Section 11.2(a) are
an integral part of the transactions contemplated in this Agreement and that,
without these agreements, IAM and CRC would not enter into this Agreement;
accordingly, if Enviroq fails to promptly pay the amount due pursuant to this
Section 11.2(a) and, in order to obtain such payment, IAM and CRC commence a
suit which results in a judgment against Enviroq for the fee set forth in this
Section 11.2(a), Enviroq shall pay to IAM and CRC their costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on the amount of such fee at the rate of 12% per annum.
(b) In the event that this Agreement is terminated by Enviroq
pursuant to Section 11.1(b) due to IAM's or CRC's breach (and Enviroq is not in
breach of this Agreement) and either IAM or CRC, within one year after such
termination, executes a definitive agreement with respect to a transaction which
would meet the definition of an Alternative Proposal if the term "IAM or CRC"
were substituted instead of the term "Enviroq" in such definition and IAM or CRC
thereafter consummates such transaction, then IAM or CRC shall pay Enviroq an
aggregate fee of $250,000, which amount shall be payable by wire transfer of
same day funds within two business days after consummation of the transaction.
IAM and CRC acknowledge that the agreements contained in this Section 11.2(b)
are an integral part of the transactions contemplated in this Agreement and
that, without these agreements, Enviroq would not enter into this Agreement;
accordingly, if IAM or
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CRC fails to promptly pay the amount due pursuant to this Section 11.2(b) and,
in order to obtain such payment, Enviroq commences a suit which results in a
judgment against IAM or CRC for the fee set forth in this Section 11.2(b), IAM
or CRC shall pay to Enviroq its costs and expenses (including attorneys' fees)
in connection with such suit, together with interest on the amount of such fee
at the rate of 12% per annum.
(c) In the event of termination of this Agreement by Enviroq,
IAM or CRC as provided in Section 11.1, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on the part of
Enviroq, IAM or CRC, other than any liability or obligation arising under the
provisions of Sections 11.2, 11.3 and 15.13; provided, however, that in no event
shall such termination relieve any Party of liability for any breach by such
Party of any of its representations, warranties, covenants and agreements set
forth herein.
SECTION 11.3 CONFIDENTIALITY UPON TERMINATION. In the event of any
termination of this Agreement for any reason, including any breach by any of the
Parties, except to the extent necessary to enforce its rights under this
Agreement, each Party shall treat as confidential and shall not disclose, or use
directly or indirectly for their benefit or any third party's benefit or to the
detriment of any other Party in any manner whatsoever, or permit others under
their control to disclose, or to use, Confidential Information concerning the
other Parties obtained pursuant to or in connection with the Mergers which is
not generally known to the trade or a matter of public knowledge.
SECTION 11.4 SPECIFIC PERFORMANCE. The Parties hereto agree that money
damages or other remedy at law would not be a sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by them and that
in addition to all other remedies available to them, each of them shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach, violation or default or threatened breach, violation or default and
to any other equitable relief, including specific performance, without bond or
other security being required.
ARTICLE 12
REPRESENTATIONS AND WARRANTIES OF ENVIROQ
In order to induce IAM and CRC to enter into this Agreement, Enviroq
represents and warrants to IAM and CRC as follows:
SECTION 12.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER;
AUTHORITY.
(a) Each of Enviroq and its Subsidiaries is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each of Enviroq and its Subsidiaries is duly
authorized and qualified to conduct business and is in good standing under the
laws of each jurisdiction where such qualification is required, except where the
lack of such qualification would not have a Material Adverse Effect. Each of
Enviroq and its Subsidiaries has full corporate power and authority to carry on
the businesses in which it is engaged and to own, lease, use and operate the
properties owned, leased, used and operated by it. The copies of the
certificates of incorporation and the bylaws of Enviroq and its Subsidiaries,
which have previously been made available to IAM and CRC, are true, complete and
correct copies of such
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documents as in effect as of the date of this Agreement. Schedule 12.1 lists the
directors and officers of each of Enviroq and its Subsidiaries.
(b) Enviroq has full corporate power and authority to execute
and deliver this Agreement and, subject to the approval of the stockholders of
Enviroq and to the receipt of the Consents of the Regulatory Authorities, to
consummate the transactions contemplated hereby. The board of directors of
Enviroq has duly and validly approved this Agreement and the transactions
contemplated hereby, has authorized the execution and delivery of this
Agreement, has directed that this Agreement and the transactions contemplated
hereby be submitted to Enviroq's stockholders for approval at a meeting of such
stockholders and, except for the adoption of this Agreement by its stockholders,
no other corporate proceedings on the part of Enviroq are necessary to
consummate the transactions so contemplated. This Agreement, when duly and
validly executed by Enviroq and delivered by Enviroq, will constitute a valid
and binding obligation of Enviroq, and will be enforceable against Enviroq in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
SECTION 12.2 CAPITALIZATION. The entire authorized common capital stock
of Enviroq and its Subsidiaries consists of 10,000,000 shares of Enviroq Stock,
of which 1,009,377 Enviroq Shares were issued and outstanding as of the date
hereof; provided, however, it is envisioned that Enviroq shall redeem up to
42.698013% of the issued and outstanding shares of Enviroq Stock in the
Redemption. No shares of Enviroq Stock are held in treasury, although it is
contemplated that the Redeemed Shares shall be held as treasury shares prior to
their cancellation and retirement as of the Effective Time in accordance with
Section 3.1(a). All of the issued and outstanding shares of Enviroq Stock have
been duly authorized and are validly issued, fully paid, and nonassessable.
Except as set forth on Schedule 12.2, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require Enviroq or
any of its Subsidiaries to issue, sell, or otherwise cause to become outstanding
any of its capital stock; provided, however, it is contemplated that Enviroq
shall redeem shares of Enviroq Stock in the Redemption. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation, or
similar rights with respect to Enviroq and its Subsidiaries. Enviroq and its
Subsidiaries have no outstanding bonds, debentures, notes or similar obligations
the holders of which have the right to vote generally with holders of Enviroq
Shares.
SECTION 12.3 NON-CONTRAVENTION. Except as set forth on Schedule 12.3,
neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
any of Enviroq or any of its Subsidiaries is subject or any provision of the
charter or bylaws of any of Enviroq or any of its Subsidiaries; or (ii) except
with respect to those agreements for which Consent shall be obtained prior to
Closing, conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which Enviroq or
any of its Subsidiaries is a party or by which it is bound or to
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which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets), except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, failure to give
notice, or Security Interest would not have a Material Adverse Effect on Enviroq
or on the ability of the Parties to consummate the transactions contemplated by
this Agreement. Except as set forth specifically in this Agreement or on
Schedule 12.3, neither Enviroq nor any of its Subsidiaries needs to give any
notice to, make any filing with, or obtain any Consent of any government,
governmental agency or regulatory authority in order for the Parties to
consummate the transactions contemplated by this Agreement, except where the
failure to give notice, to file, or to obtain any Consent would not have a
Material Adverse Effect on Enviroq or on the ability of the Parties to
consummate the transactions contemplated by this Agreement.
SECTION 12.4 BROKERS' FEES. None of Enviroq or any of its Subsidiaries
has any liability or obligation, contingent or otherwise, to pay any fees or
commissions or similar payments to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.
SECTION 12.5 TITLE TO ASSETS. Except as set forth on Schedule 12.5,
Enviroq and its Subsidiaries have good and marketable title to all of their
properties and assets real and personal, tangible and intangible, used by them,
located on their premises, or shown on the Enviroq Most Recent Financial
Statements or acquired after the date thereof, free and clear of all Security
Interests, except for properties and assets disposed of in the Ordinary Course
of Business or in the Redemption since the date of the Enviroq Most Recent
Financial Statements. All leases pursuant to which Enviroq or any of its
Subsidiaries lease from others material amounts of real or personal property are
in good standing, valid and effective in accordance with their respective terms,
and there is not, to the knowledge of Enviroq and its Subsidiaries, under any of
such leases, any existing material default or event of default (or event which,
with notice or lapse of time, or both, would constitute a material default),
except where lack of such good standing, validity and effectiveness or the
existence of such default or event of default would not reasonably be expected
to have Material Adverse Effect on Enviroq.
SECTION 12.6 SUBSIDIARIES. Schedule 12.6(a) sets forth for each
Subsidiary of Enviroq (i) its name and jurisdiction of incorporation, (ii) the
number of shares of authorized capital stock of each class of its capital stock,
(iii) the number of issued and outstanding shares of each class of its capital
stock, the names of the holders thereof, and the number of shares held by each
such holder, and (iv) the number of shares of its capital stock held in
treasury. All of the issued and outstanding shares of capital stock of each
Subsidiary of Enviroq have been duly authorized, and are validly issued, fully
paid, and nonassessable and were issued in accordance with applicable federal
and state securities laws. Except as set forth on Schedule 12.6(b), Enviroq
holds of record and owns beneficially all of the outstanding shares of each
Subsidiary of Enviroq, free and clear of any restrictions on transfer (other
than restrictions under the Securities Act and state securities laws), taxes,
Security Interests, options, warrants, purchase rights, contracts, commitments,
equities, claims, and demands. Except as disclosed on Schedule 12.6(c), there
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require Enviroq or any of its Subsidiaries to sell,
transfer, or otherwise dispose of any capital stock of any of its Subsidiaries
or that could require any Subsidiary of Enviroq to issue, sell, or otherwise
cause to become outstanding any of its own capital stock. Except as disclosed on
Schedule 12.6(d), there are no outstanding stock appreciation, phantom stock,
profit participation, or similar rights with respect to any Subsidiary of
Enviroq.
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Except as disclosed to IAM and CRC on Schedule 12.6(e), there are no voting
trusts, proxies, or other agreements or understandings with respect to the
voting of any capital stock of any Subsidiary of Enviroq. Except as set forth on
Schedule 12.6(f), none of Enviroq and its Subsidiaries controls directly or
indirectly or has any direct or indirect equity participation in any
corporation, partnership, trust, or other business association which is not a
Subsidiary of Enviroq.
SECTION 12.7 FINANCIAL STATEMENTS. Schedule 12.7 includes the following
financial statements of Enviroq and its Subsidiaries (collectively the "Enviroq
Financial Statements"): (i) audited consolidated balance sheets and statements
of income, changes in stockholders' equity, and cash flows as of and for the
fiscal year ended March 30, 1996, and the fiscal year ended March 29, 1997 (the
"Enviroq Most Recent Fiscal Year End") for Enviroq and its Subsidiaries; and
(ii) unaudited consolidated balance sheets and statements of income, and cash
flows (the "Enviroq Most Recent Financial Statements") as of and for the three
months and year to date periods ended September 27, 1997 (the "Enviroq Most
Recent Fiscal Month End"), for Enviroq and its Subsidiaries. The Enviroq
Financial Statements (including the notes thereto) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby and present fairly the financial condition of Enviroq and its
Subsidiaries as of such dates and the results of operations of Enviroq and its
Subsidiaries for such periods; provided, however, that the Enviroq Most Recent
Financial Statements are subject to normal recurring adjustments (which will not
be material individually or in the aggregate) and lack footnotes and other
presentation items. Without limiting the generality of the foregoing, the
Enviroq Most Recent Financial Statements accurately reflect anticipated costs to
complete all contracts or services pursuant to which Enviroq or any of its
Subsidiaries have agreed to furnish products and services in accordance with
GAAP applied on a basis consistent with the Enviroq Financial Statements for the
Enviroq Most Recent Fiscal Year End; provided, however, the Enviroq Most Recent
Financial Statements do not reflect any provision for the payment of the
Redemption Price to the holders of Enviroq Stock who shall accept the Redemption
Offer.
SECTION 12.8 ENVIROQ SEC DOCUMENTS. Each of Enviroq and its
Subsidiaries has timely filed with the SEC all forms, reports, schedules,
statements, exhibits and other documents required to be filed by it since
December 31, 1994 with the SEC (such documents, as supplemented and amended
since the time of filing, collectively, the "Enviroq SEC Documents"). The
Enviroq SEC Documents, including any financial statements or schedules included
therein, at the time filed (and, in the case of registration statements and
proxy statements, on the dates of effectiveness and the dates of mailing,
respectively), (a) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, and (b) complied in all material respects with
the applicable requirements of the Exchange Act and the Securities Act, as the
case may be. The financial statements (including the related notes) of Enviroq
included in the Enviroq SEC Documents comply as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with GAAP applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto), and fairly present (subject in the case of unaudited
statements to the absence of footnotes and to normal, recurring and year-end
audit adjustments which will not be material individually or in the aggregate)
the consolidated financial position of Enviroq as of the dates thereof and the
consolidated results of its operations and cash flows for the periods then
ended.
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SECTION 12.9 EVENTS SUBSEQUENT TO ENVIROQ MOST RECENT FISCAL YEAR END.
Since the Enviroq Most Recent Fiscal Year End, except as set forth on Schedule
12.7 or 12.9, there has not been any change in the business, financial
condition, operations, results of operations, or future prospects of Enviroq and
its Subsidiaries taken as a whole which would constitute a Material Adverse
Effect in respect of Enviroq. Without limiting the generality of the foregoing,
except as set forth on Schedule 12.9 and for actions to be taken in connection
with the Redemption, since that date:
(a) none of Enviroq or any of its Subsidiaries has sold,
leased, transferred, or assigned any material assets, tangible or intangible,
outside the Ordinary Course of Business;
(b) none of Enviroq or any of its Subsidiaries has entered
into any material agreement, contract, lease, or license outside the Ordinary
Course of Business;
(c) no Party (including any of Enviroq and its Subsidiaries)
has accelerated, terminated, made material modifications to, or canceled any
material agreement, contract, lease, or license to which any of Enviroq or any
of its Subsidiaries is a party or by which any of them is bound;
(d) none of Enviroq or any of its Subsidiaries has caused to
be imposed any Security Interest upon any of its assets, tangible or intangible;
(e) none of Enviroq or any of its Subsidiaries has made any
material capital expenditures outside the Ordinary Course of Business;
(f) none of Enviroq or any of its Subsidiaries has made any
material capital investment in, or any material loan to, any other Person
outside the Ordinary Course of Business;
(g) none of Enviroq or any of its Subsidiaries has created,
incurred, assumed, or guaranteed more than $20,000 in aggregate indebtedness
(other than internal debt between Enviroq and/or its Subsidiaries) for borrowed
money and capitalized lease obligations;
(h) other than is normal and customary with respect to the
business of Sprayroq, none of Enviroq or any of its Subsidiaries has granted any
license or sublicense of any material rights under or with respect to any
Intellectual Property;
(i) there has been no change made or authorized in the charter
or bylaws of any of Enviroq or any of its Subsidiaries;
(j) none of Enviroq or any of its Subsidiaries has issued,
sold, or otherwise disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
(k) none of Enviroq or any of its Subsidiaries has declared,
set aside, or paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
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(l) none of Enviroq or any of its Subsidiaries has experienced
any material damage, destruction, or loss (whether or not covered by insurance)
to its property;
(m) none of Enviroq or any of its Subsidiaries has made any
loan to, or entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of Business;
(n) none of Enviroq or any of its Subsidiaries has entered
into any employment contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or agreement;
(o) none of Enviroq or any of its Subsidiaries has granted any
increase in the base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(p) none of Enviroq or any of its Subsidiaries has adopted,
amended, modified, or terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with respect to any
other Employee Benefit Plan);
(q) none of Enviroq or any of its Subsidiaries has made any
other material change in employment terms for any of its directors, officers,
and employees outside the Ordinary Course of Business; and
(r) none of Enviroq or any of its Subsidiaries has committed
to any of the foregoing.
SECTION 12.10 UNDISCLOSED LIABILITIES. Except as set forth on Schedule
12.10, none of Enviroq or any of its Subsidiaries has any material liability
(whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, and whether due or to become due, including any liability for
taxes), except for (a) liabilities set forth in the Enviroq SEC Documents; (b)
liabilities which have arisen since September 27, 1997 in the Ordinary Course of
Business and (c) any liabilities to holders of Enviroq Stock who accept the
Redemption Offer.
SECTION 12.11 LEGAL COMPLIANCE. Except as set forth on Schedule 12.11,
each of Enviroq and its Subsidiaries has complied with all applicable laws
(including rules, regulations, codes, ordinances, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced or, to the Knowledge of Enviroq and its Subsidiaries,
threatened, against any of them alleging any failure so to comply, except where
the failure to comply would not have a Material Adverse Effect on Enviroq.
SECTION 12.12 TAX MATTERS. Except as set forth in the Enviroq SEC
Documents or on Schedule 12.12, and except with respect to any such matters that
would not, in the aggregate, have a Material Adverse Effect on Enviroq, (a) each
of Enviroq and its Subsidiaries has duly filed all federal and state income Tax
Returns and all other material Tax Returns (including, those filed on
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a consolidated, combined or unitary basis) required to have been filed by
Enviroq or any of its Subsidiaries prior to the date hereof and will file, on or
before the Effective Time, all such returns which are required to be filed after
the date hereof and on or before the Effective Time, (b) all of the foregoing
returns and reports are and will be at the Effective Time true and correct in
all material respects, and each of Enviroq and its Subsidiaries has paid or,
prior to the Effective Time, will pay, or make adequate provision for payment in
accordance with GAAP regarding, all Taxes required to be paid in respect of the
periods covered by such returns or reports to any federal, state, foreign, local
or other taxing authority, (c) neither Enviroq nor any of its Subsidiaries will
have any material liability for any Taxes in excess of the amounts so paid or
reserves so established or is delinquent in the payment of any material Tax,
assessment or governmental charge, and none of them has requested any extension
of time within which to file any returns in respect of any fiscal year which
have not since been filed, (d) no deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or assessed in writing
(tentatively or definitely), in each case, by any taxing authority, against
Enviroq or any of its Subsidiaries for which there are not adequate reserves in
its financial statements (in accordance with GAAP), (e) as of the date of this
Agreement, there are no extensions or waivers or pending requests for extensions
or waivers of the time to assess or collect any such tax, (f) the federal income
Tax Returns of Enviroq have not been audited, and the federal income Tax Returns
of its Subsidiaries have not been audited, (g) neither Enviroq nor any of its
Subsidiaries is or has been a party to any tax sharing agreement with any
corporation which is not currently a member of the affiliated group of which
Enviroq is currently a member, (h) there are no liens for Taxes on any assets of
Enviroq or any of its Subsidiaries (other than statutory liens for taxes not yet
due or liens for which adequate reserves have been established in its financial
statements in accordance with generally accepted accounting principles), (i)
Enviroq and its Subsidiaries have withheld and paid (and until the Effective
Time will withhold and pay) all income, social security, unemployment, and all
other material payroll Taxes required to be withheld (including pursuant to
Sections 1441 and 1442 of the Code or similar provisions under foreign law) and
paid in connection with amounts paid to any employee, independent contractor,
stockholder, creditor or other third party, and (j) Enviroq has not filed an
election under Section 341(f) of the Code to be treated as a consenting
corporation.
SECTION 12.13 REAL PROPERTY.
(a) Schedule 12.13(a) lists and describes briefly all real
property that any of Enviroq and its Subsidiaries owns. Except as set forth on
Schedule 12.13(a), and except as would not reasonably be expected to have a
Material Adverse Effect on Enviroq, with respect to each such parcel of owned
real property:
(i) the identified owner has good and marketable
title to the parcel of real property, free and clear of any Security Interest,
easement, covenant, or other restriction, except for (A) installments of special
assessments not yet delinquent, (B) recorded easements, covenants, and other
restrictions, and utility easements, building restrictions and zoning
restrictions, and (C) other easements and restrictions existing generally with
respect to properties of a similar character, none of which affect materially
and adversely the current use, occupancy, or value, or the marketability of
title, of the property subject thereto;
(ii) there are no pending or, to the Knowledge of
Enviroq and its Subsidiaries, threatened condemnation proceedings, lawsuits, or
administrative actions relating to
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the property or other matters affecting materially and adversely the current
use, occupancy, or value thereof;
(iii) the legal description for the parcel contained
in the deed thereof describes such parcel fully and adequately, the buildings
and improvements are located within the boundary lines of the described parcels
of land, are not in material violation of applicable setback requirements,
zoning laws, and ordinances (and none of the properties or buildings or
improvements thereon are subject to "permitted nonconforming use" or "permitted
non-conforming structure" classifications), and do not encroach on any easement
which may burden the land;
(iv) to the Knowledge of Enviroq and its
Subsidiaries, all facilities have received all approvals of governmental
authorities (including material licenses and permits) required in connection
with the ownership or operation thereof, and have been operated and maintained
in accordance with applicable laws, rules, and regulations in all material
respects;
(v) there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to any party or
parties the right of use or occupancy of any portion of the parcel of real
property;
(vi) there are no outstanding options or rights of
first refusal to purchase the parcel of real property, or any portion thereof or
interest therein;
(vii) there are no Parties (other than Enviroq and
its Subsidiaries) in possession of the parcel of real property, other than
tenants under any leases disclosed in Schedule 12.13 who are in possession of
space to which they are entitled;
(viii) the plumbing, HVAC, electrical and mechanical
systems located in the facilities are all in good repair, order and condition
subject to reasonable wear and tear; and
(ix) there are no pending or, to the Knowledge of
any of the officers and directors of Enviroq or any of its Subsidiaries,
threatened insurance claims with respect to the properties.
(b) Schedule 12.13(b) lists and describes briefly all real
property leased or subleased to any of Enviroq and its Subsidiaries. Enviroq and
its Subsidiaries has delivered to IAM and CRC correct and complete copies of the
leases and subleases listed on Schedule 12.13(b) (as amended to date). Except as
set forth on Schedule 12.13(b), with respect to each material lease and sublease
listed on Schedule 12.13(b):
(i) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect in all material respects;
(ii) Enviroq is not, and to the Knowledge of any of
the directors and officers of Enviroq and its Subsidiaries, no other party to
the lease or sublease is, in material breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a material breach
or default or permit termination, modification, or acceleration thereunder;
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(iii) no party to the lease or sublease has
repudiated any material provision thereof;
(iv) to the Knowledge of any of the directors and
officers of Enviroq and its Subsidiaries, there are no material disputes, oral
agreements, or forbearance programs in effect as to the lease or sublease;
(v) none of Enviroq or any of its Subsidiaries has
assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any
interest in the leasehold or subleasehold; and
(vi) all facilities leased or subleased thereunder
have received all approvals of governmental authorities (including material
licenses and permits) required in connection with the operation thereof, and
have been operated and maintained in accordance with applicable laws, rules, and
regulations in all material respects.
SECTION 12.14 INTELLECTUAL PROPERTY.
(a) Enviroq and each of its Subsidiaries owns, or is licensed
or otherwise possesses legally enforceable rights to use, all patents, trade
secrets, trademarks, trade names, service marks, copyrights, and any
applications therefor, technology, know-how, computer software programs or
applications, and tangible or intangible proprietary information or material
that are used in the business of Enviroq and its Subsidiaries as currently
conducted, except as would not reasonably be expected to have a Material Adverse
Effect on Enviroq.
(b) Except as disclosed in Schedule 12.14 or as would not
reasonably be expected to have a Material Adverse Effect on Enviroq, (i) neither
Enviroq nor any of its Subsidiaries, is or will be as a result of the execution
and delivery of this Agreement or the performance of its obligations hereunder,
in violation of any Third-Party Intellectual Property Rights; (ii) no claims
with respect to the patents, registered and material unregistered trademarks and
service marks, registered copyrights, trade names and any applications therefor
owned by Enviroq or any of its Subsidiaries (the "Enviroq Intellectual Property
Rights"), any trade secret material to Enviroq, or Third Party Intellectual
Property Rights to the extent arising out of any use, reproduction or
distribution of such Third Party Intellectual Property Rights by or through
Enviroq or any of its Subsidiaries, are currently pending or, to the knowledge
of Enviroq or any of it Subsidiaries, are overtly threatened by any person; and
(iii) Enviroq and its Subsidiaries do not have Knowledge of any bona fide claims
(A) to the effect that the manufacture, sale, licensing or use of any product as
now used, sold or licensed or proposed for use, sale or license by Enviroq or
any of its Subsidiaries infringes on any copyright, patent, trademark, service
mark or trade secret; (B) against the use by Enviroq or any of its Subsidiaries
of any trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the business of
Enviroq or any of its Subsidiaries as currently conducted or as proposed to be
conducted; (C) challenging the ownership, validity or effectiveness of any of
the Enviroq Intellectual Property Rights or other trade secret material to
Enviroq; or (D) challenging the license or legally enforceable right to use of
the Third Party Intellectual Rights by Enviroq or any of its Subsidiaries.
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(c) Except as would not reasonably be expected to have a
Material Adverse Effect on Enviroq, to the Knowledge of Enviroq and its
Subsidiaries, all material patents, registered trademarks, service marks and
copyrights held by Enviroq and its Subsidiaries are valid and subsisting. Except
as set forth in Schedule 12.14 or the Enviroq SEC Documents, to the Knowledge of
Enviroq and its Subsidiaries, there is no material unauthorized use,
infringement or misappropriation of any of the Intellectual Property of Enviroq
by any third party, including any employee or former employee of Enviroq or any
of its Subsidiaries.
SECTION 12.15 TANGIBLE ASSETS. Except as would not reasonably be
expected to have a Material Adverse Effect on Enviroq, the buildings, machinery,
equipment, and other tangible assets that Enviroq and its Subsidiaries own and
lease have been maintained in accordance with normal industry practice, are in
good operating condition and repair (subject to normal wear and tear), and have
no defects (patent and latent).
SECTION 12.16 INVENTORY. Except as would not reasonably be expected to
have a Material Adverse Effect on Enviroq, the inventory of Enviroq and its
Subsidiaries consists of raw materials and supplies, manufactured and processed
parts, work in process, and finished goods, all of which is merchantable and fit
for the purpose for which it was procured or manufactured, and none of which is
obsolete, damaged, or defective, subject only to the reserve for inventory
writedown set forth in the Enviroq SEC documents as adjusted for operations and
transactions through the Closing Date in accordance with the Ordinary Course of
Business of Enviroq and its Subsidiaries.
SECTION 12.17 CONTRACTS. Schedule 12.17 lists the following contracts
and other agreements to which any of Enviroq and its Subsidiaries is a party:
(a) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease payments in
excess of $20,000 per annum;
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year or involve
consideration in excess of $20,000;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $20,000 or under which
it has imposed a Security Interest on any of its assets, tangible or intangible;
(e) any material agreement concerning confidentiality or
noncompetition;
(f) any material agreement with any Affiliates of Enviroq or
its Subsidiaries;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
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(h) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $20,000 or providing material severance benefits;
(i) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the Ordinary
Course of Business;
(j) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect on Enviroq not identified on
any other Schedule hereto; and
(k) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $20,000.
Enviroq and its Subsidiaries have delivered to IAM or CRC, or made
available for review by IAM and CRC, a correct and complete copy of each written
agreement listed in Schedule 12.17 (as amended to date), which shall be deemed
to be Schedules for purposes of Section 12.17 hereof, and a written summary
setting forth the material terms and conditions of each oral agreement referred
to in Schedule 12.17. Except as set forth on Schedule 12.17 and except as would
not reasonably be expected to have a Material Adverse Effect on Enviroq, to the
Knowledge of Enviroq and its Subsidiaries, with respect to each such agreement:
(a) the agreement is legal, valid, binding, enforceable, and in full force and
effect in all material respects; (b) no party is in material breach or default,
and no event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under the agreement; and (c) no party has repudiated any material
provision of the agreement.
SECTION 12.18 NOTES AND ACCOUNTS RECEIVABLE. Except as disclosed on
Schedule 12.18 or except as would not reasonably be expected to have a Material
Adverse Effect on Enviroq, all notes and accounts receivable of Enviroq and its
Subsidiaries are reflected properly on their books and records, are valid
receivables, are current and collectible, and will be collected in accordance
with their terms at their recorded amounts, subject only to the reserve for bad
debts set forth on the face of the Enviroq Most Recent Financial Statements
(rather than in any notes thereto) included in the Enviroq SEC Documents as
adjusted for operations and transactions through the Closing Date in the
Ordinary Course of Business of Enviroq and its Subsidiaries. Except as disclosed
on Schedule 12.18, prior to the Closing Date, all loans from Enviroq to
stockholders of Enviroq or any of its Subsidiaries, including any shown on the
Enviroq Most Recent Financial Statements, shall have been repaid, and all loans
to Enviroq or any of its Subsidiaries from stockholders of Enviroq or any of its
Subsidiaries, including any shown on the Enviroq Most Recent Balance Sheet,
shall have been repaid.
SECTION 12.19 INSURANCE. Schedule 12.19 sets forth the following
information with respect to each material insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) with respect to which any of Enviroq and its
Subsidiaries is a party, a named insured, or otherwise the beneficiary of
coverage:
(a) the name, address, and telephone number of the agent;
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(b) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage
is on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(e) a description of any retroactive premium adjustments or
other material loss- sharing arrangements.
With respect to each such insurance policy: to the Knowledge of Enviroq and its
Subsidiaries with respect to such policy, (a) the policy is legal, valid,
binding, enforceable, and in full force and effect in all material respects; (b)
the policy is with a reputable insurance carrier and provides adequate coverage
subject to a normal deductible amount for all risks incident to the business of
Enviroq and its Subsidiaries and their respective properties and assets normally
insured against by a similar business, except as would not reasonably be
expected to have a Material Adverse Effect on Enviroq; (c) neither Enviroq nor
its Subsidiaries nor any other party to the policy is in material breach or
default (including, with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a material breach or default, or permit termination,
modification, or acceleration, under the policy; and (d) no party to the policy
has repudiated any material provision thereof. Schedule 12.19 describes any
material self-insurance arrangements affecting any of Enviroq and its
Subsidiaries.
SECTION 12.20 LITIGATION. Schedule 12.20 sets forth each instance in
which any of Enviroq and its Subsidiaries (a) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (b) is a party or, to
the Knowledge of Enviroq and its Subsidiaries, is threatened to be made a party
to any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi- judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator, and to the Knowledge of each
of such officers and directors, no reasonable basis therefor exists.
SECTION 12.21 EMPLOYEES. Except as contemplated by this Agreement, to
the Knowledge of Enviroq and its Subsidiaries, no executive, key employee, or
significant group of employees plans to terminate employment with any of Enviroq
and its Subsidiaries during the next four months. None of Enviroq and its
Subsidiaries is a party to or bound by any collective bargaining agreement, nor
has any of them experienced any strike or material grievance, claim of unfair
labor practices, or other collective bargaining dispute within the past three
years.
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SECTION 12.22 EMPLOYEE BENEFITS.
(a) For purposes of this Agreement, "Controlled Group
Liability" means any and all liabilities under (i) Title IV of ERISA, (ii)
section 302 of ERISA, (iii) sections 412 and 4971 of the Code, (iv) the
continuation coverage requirements of section 601 et seq. of ERISA and section
4980B of the Code, and (v) corresponding or similar provisions of foreign laws
or regulations, in each case other than pursuant to the Enviroq Plans with
respect to Enviroq and its Subsidiaries, or the IAM/CRC Plans with respect to
IAM and CRC.
(b) Schedule 12.22(b) lists all Enviroq Plans. With respect to
each Enviroq Plan, Enviroq and its Subsidiaries have made available a true,
correct and complete copy of: (i) each writing constituting a part of such
Enviroq Plan, including all plan documents, benefit schedules, trust agreements,
and insurance contracts and other funding vehicles; (ii) the most recent Annual
Report (Form 5500 Series) and accompanying schedule, if any; (iii) the current
summary plan description, if any; (iv) the most recent annual financial report,
if any; and (v) the most recent determination letter from the IRS, if any.
(c) Except as set forth in Schedule 12.22(c), the Internal
Revenue Service has issued a favorable determination letter or opinion letter
with respect to each Enviroq Plan that is intended to be a "qualified plan"
within the meaning of Section 401(a) of the Code (a "Qualified Enviroq Plan"),
and there are no existing circumstances nor any events that have occurred that
could adversely affect the qualified status of any Qualified Enviroq Plan or the
related trust.
(d) All contributions required to be made to any Enviroq Plan
by applicable Law or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any
Enviroq Plan, for any period through the date hereof have been timely made or
paid in full and through the Closing Date will be timely made or paid in full
or, to the extent not required to be made or paid on or before the date hereof
or the Closing Date, as applicable, have been or will be fully reflected in
Enviroq's financial statements contained in the Enviroq SEC Documents as of the
date of such statements.
(e) Except as set forth in Schedule 12.22(e), to the Knowledge
of any of the directors and officers of Enviroq and its Subsidiaries, Enviroq
and its Subsidiaries have complied, and are now in compliance, in all material
respects, with all provisions of ERISA, the Code and all laws and regulations
applicable to the Enviroq Plans. To the Knowledge of any of the directors and
officers of Enviroq and its Subsidiaries, there is not now, and there are no
existing, circumstances that standing alone could give rise to, any requirement
for the posting of security with respect to an Enviroq Plan or the imposition of
any lien on the assets of Enviroq or any of its Subsidiaries under ERISA or the
Code.
(f) Except as set forth in Schedule 12.22(f), no Enviroq Plan
is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the
Code. Except as set forth in Schedule 12.22(f), no Enviroq Plan is a
Multiemployer Plan or a Multiple Employer Plan, nor has Enviroq or any of its
Subsidiaries or any of their respective ERISA Affiliates, at any time within
five years before the date hereof, contributed to or been obligated to
contribute to any Multiemployer Plan or Multiple Employer Plan.
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(g) There does not now exist, and there are no existing,
circumstances that could result in, any Controlled Group Liability that would be
a liability of Enviroq or any of its Subsidiaries following the Closing, other
than normal funding responsibilities. Without limiting the generality of the
foregoing, neither Enviroq nor any of its Subsidiaries, nor any of their
respective ERISA Affiliates, has engaged in any transaction described in Section
4069 or Section 4204 of ERISA.
(h) Except as set forth in Schedule 12.22(h), and except for
health continuation coverage as required by Section 4980B of the Code or Part 6
of Title I of ERISA, neither Enviroq nor any of its Subsidiaries has any
liability for life, health, medical or other welfare benefits to former
employees or beneficiaries or dependents thereof.
(i) Except as set forth in Schedule 12.22(i), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in, cause the accelerated vesting
or delivery of, or increase the amount or value of, any payment or benefit to
any employee or director or former employee or former director of Enviroq or any
of its Subsidiaries, pursuant to a "change in control" or "change of control" or
otherwise. Without limiting the generality of the foregoing and except as set
forth in Schedule 12.22(i), no amount paid or payable by Enviroq or any of its
Subsidiaries in connection with the transactions contemplated hereby either
solely as a result thereof or as a result of such transactions in conjunction
with any other events will be an "excess parachute payment" within the meaning
of Section 280G of the Code.
(j) There are no pending or, to the Knowledge of any of the
directors and officers of Enviroq and its Subsidiaries, threatened claims (other
than claims for benefits in the ordinary course), lawsuits or arbitrations which
have been asserted or instituted against the Enviroq Plans, any fiduciaries
thereof with respect to their duties to the Enviroq Plans or the assets of any
of the trusts under any of the Enviroq Plans which could reasonably be expected
to result in any material liability of Enviroq or any of its Subsidiaries to the
PBGC, the Department of Treasury, the Department of Labor or any Multiemployer
Plan.
SECTION 12.23 GUARANTIES. Except as set forth on Schedule 12.23,
neither Enviroq nor any of its Subsidiaries is a guarantor or otherwise is
responsible for any liability or obligation (including indebtedness) of any
other Person.
SECTION 12.24 ENVIRONMENT, HEALTH, AND SAFETY. Except as set forth on
Schedule 12.24:
(a) each of Enviroq and its Subsidiaries (i) has complied with
the Environmental, Health, and Safety Laws in all material respects, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
such failure to comply, (ii) has obtained and has at all times been and is in
substantial compliance with all of the terms and conditions of all material
permits, licenses, and other authorizations, certifications and training which
are required under any of the Environmental, Health, and Safety Laws, (iii) has
complied in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in the Environmental, Health, and Safety Laws,
and (iv) each of Enviroq and its Subsidiaries will provide IAM and CRC, within
12 Business Days hereof, with
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copies within its possession or control of all environmental assessments,
complaints, claims, consent orders or agreements, notices of violations,
governmental inquiries and permits issued or arising under or subject or
relating or pursuant to any Environmental, Health and Safety Laws for any
property owned, now or in the past or to be acquired prior to Closing, by
Enviroq or any of its Subsidiaries, and such copies shall be deemed to be
Schedules for purposes of Section 12.24(a) hereof; and
(b) none of Enviroq and its Subsidiaries has any material
liability, and none of Enviroq, its Subsidiaries, and their respective
predecessors has handled or disposed of any substance, arranged for the disposal
of any substance, exposed any employee or other individual to any substance or
condition, or owned or operated any property or facility in any manner that
could give rise to any material liability, for contamination or damage to any
site, location, or body of water (surface or subsurface), for any illness of or
personal injury to any employee or other individual, or for any reason under any
Environmental, Health, and Safety Law.
SECTION 12.25 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information supplied or to be supplied by or on behalf of Enviroq or any of its
Subsidiaries for inclusion or incorporation by reference in the Registration
Statement will, at the time the Registration Statement is filed with the SEC and
at the time it becomes effective under the Securities Act or the Exchange Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Proxy Statement will not contain, at the date mailed to the
stockholders of Enviroq and at the time of the meeting of stockholders of
Enviroq to be held in connection with the Enviroq Merger, any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, excluding any
information supplied, or omitted information which should have been supplied, by
IAM and CRC for inclusion therein.
ARTICLE 13
REPRESENTATIONS AND WARRANTIES OF IAM AND CRC
In order to induce Enviroq to enter into this Agreement, IAM and CRC,
jointly and severally, represent and warrant to Enviroq as follows:
SECTION 13.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER;
AUTHORITY.
(a) Each of IAM and CRC is a corporation duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
incorporation. Each of IAM and CRC is duly authorized and qualified to conduct
business and is in good standing under the laws of each jurisdiction where such
qualification is required, except where the lack of such qualification would
not have a Material Adverse Effect on IAM or CRC. Each of IAM and CRC has full
corporate power and authority to carry on the businesses in which it is engaged
and to own, lease, use, and operate the properties owned, leased, used, and
operated by it. The copies of the articles of incorporation and the bylaws of
IAM and CRC, respectively, which have previously been made available to Enviroq,
are true, complete and correct copies of such documents as in effect as of the
date of this Agreement. Schedule 13.1 lists the directors and officers of each
of IAM and CRC.
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(b) Each of IAM and CRC has full corporate power and authority
to execute and deliver this Agreement and, subject to receipt of the Consents of
the Regulatory Authorities, to consummate the transactions contemplated hereby.
The respective boards of directors and shareholders of IAM and CRC have duly and
validly approved this Agreement and the transactions contemplated hereby, have
authorized the execution and delivery of this Agreement, and no other corporate
proceedings on the part of IAM and CRC are necessary to consummate the
transactions so contemplated. This Agreement constitutes the valid and binding
obligation of IAM and CRC, and will be enforceable against IAM and CRC in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors rights generally and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding may
be brought.
SECTION 13.2 CAPITALIZATION. The entire authorized common capital stock
of IAM consists of 1000 shares of IAM Stock, of which 500 shares of IAM Stock
are issued and outstanding. No shares of IAM Stock are held in treasury. The
entire authorized common capital stock of CRC consists of 1000 shares of CRC
Stock, of which 500 shares of CRC Stock are issued and outstanding. No shares of
CRC Stock are held in treasury. All of the issued and outstanding shares of IAM
Stock and CRC Stock have been duly authorized and are validly issued, fully
paid, and nonassessable. Except as set forth on Schedule 13.2, there are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require IAM or CRC to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to IAM or to CRC. Neither IAM nor CRC has any outstanding bonds,
debentures, notes or other similar obligations the holders of which have the
right to vote generally with holders of Enviroq Stock.
SECTION 13.3 NON-CONTRAVENTION. Except as set forth on Schedule 13.3,
neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
any of IAM or CRC is subject or any provision of the articles of incorporation
or bylaws of any of IAM or CRC; or (ii) except with respect to those agreements
for which Consent shall be obtained prior to Closing, conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which IAM or CRC is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets), except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, failure
to give notice, or Security Interest would not have a Material Adverse Effect on
IAM or CRC or on the ability of the Parties to consummate the transactions
contemplated by this Agreement. Except as set forth specifically in this
Agreement or on Schedule 13.3, neither IAM nor CRC needs to give any notice to,
make any filing with, or obtain any Consent of any government, governmental
agency, or regulatory authority in order for the Parties to consummate the
transactions contemplated by this Agreement, except where the failure to give
notice, to file, or to obtain any Consent would not have a Material Adverse
Effect on IAM or CRC or on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
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SECTION 13.4 BROKERS' FEES. None of IAM or CRC has any liability or
obligation, contingent or otherwise, to pay any fees or commissions or similar
payments to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
SECTION 13.5 TITLE TO ASSETS. Except as set forth on Schedule 13.5, IAM
and CRC have good and marketable title to all of their properties and assets,
real and personal, tangible and intangible, used by them, located on their
premises, or shown on the IAM/CRC Most Recent Balance Sheet or acquired after
the date thereof, free and clear of all Security Interests, except for
properties and assets disposed of in the Ordinary Course of Business since the
date of the IAM/CRC Most Recent Balance Sheet. All leases pursuant to which IAM
or CRC lease from other Persons material amounts of real or personal property
are in good standing, valid and effective in accordance with their respective
terms, and there is not, to the Knowledge of IAM or CRC, under any of such
leases, any existing material default or event of default (or event which, with
notice or lapse of time, or both, would constitute a material default) except
where lack of such good standing, validity and effectiveness or the existence of
such default or event of default would not reasonably be expected to have a
Material Adverse Effect on IAM or CRC.
SECTION 13.6 SUBSIDIARIES. None of IAM and CRC controls directly or
indirectly or has any direct or indirect equity participation in any
corporation, partnership, trust, or other business association. Except as
specifically provided in this Agreement or as disclosed to the Parties on or
before the date hereof, there are no voting trusts, proxies, or other agreements
or understandings with respect to the voting of any capital stock of IAM or CRC.
SECTION 13.7 FINANCIAL STATEMENTS. Schedule 13.7 includes the following
financial statements of each of IAM and CRC (collectively, the "IAM/CRC
Financial Statements"): (i) audited consolidated balance sheets and statements
of income, changes in stockholders' equity, and cash flows as of and for the
fiscal year ended December 31, 1997 (the "IAM/CRC Most Recent Fiscal Year End");
and (ii) unaudited consolidated balance sheets and statements of income, and
cash flows (the "IAM/CRC Most Recent Financial Statements") as of and for the
three months and year to date periods ended March 31, 1998 (the "IAM/CRC Most
Recent Fiscal Month End"). The IAM/CRC Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby and present fairly the financial
condition of IAM and CRC as of such dates and the results of operations of IAM
and CRC for such periods; provided, however, that the IAM/CRC Most Recent
Financial Statements are subject to normal recurring adjustments (which will not
be material individually or in the aggregate) and lack
footnotes and other presentation items. Without limiting the generality of the
foregoing, the IAM/CRC Most Recent Financial Statements accurately reflect
anticipated costs to complete all contracts or services pursuant to which IAM or
CRC have agreed to furnish products and services in accordance with GAAP applied
on a basis consistent with the IAM/CRC Financial Statements for the IAM/CRC Most
Recent Fiscal Year End.
SECTION 13.8 EVENTS SUBSEQUENT TO IAM/CRC MOST RECENT FISCAL YEAR END.
Since the IAM/CRC Most Recent Fiscal Year End, except as set forth on Schedule
13.7 or 13.8, there has not been any change in the business, financial
condition, operations, results of operations, or future prospects of IAM or CRC
which would constitute a Material Adverse Effect in respect of IAM or
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CRC. Without limiting the generality of the foregoing, except as set forth on
Schedule 13.8, since that date:
(a) none of IAM or CRC has sold, leased, transferred, or
assigned any material assets, tangible or intangible, outside the Ordinary
Course of Business;
(b) none of IAM or CRC has entered into any material
agreement, contract, lease, or license outside the Ordinary Course of Business;
(c) no party (including any of IAM and CRC) has accelerated,
terminated, made material modifications to, or canceled any material agreement,
contract, lease, or license to which any of IAM or CRC is a party or by which
any of them is bound;
(d) none of IAM or CRC has caused to be imposed any Security
Interest upon any of its assets, tangible or intangible;
(e) none of IAM or CRC has made any material capital
expenditures outside the Ordinary Course of Business;
(f) none of IAM or CRC has made any material capital
investment in, or any material loan to, any other Person outside the Ordinary
Course of Business;
(g) none of IAM or CRC has created, incurred, assumed, or
guaranteed more than $20,000 in aggregate indebtedness for borrowed money and
capitalized lease obligations;
(h) none of IAM or CRC has granted any license or sublicense
of any material rights under or with respect to any Intellectual Property;
(i) there has been no change made or authorized in the
Articles of Incorporation or Bylaws of IAM or CRC;
(j) none of IAM or CRC has issued, sold, or otherwise disposed
of any of its capital stock, or granted any options, warrants, or other rights
to purchase or obtain (including upon conversion, exchange, or exercise) any of
its capital stock;
(k) none of IAM or CRC has declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock (whether in
cash or in kind) or redeemed, purchased, or otherwise acquired any of its
capital stock;
(l) none of IAM or CRC has experienced any material damage,
destruction, or loss (whether or not covered by insurance) to its property;
(m) none of IAM or CRC has made any loan to, or entered into
any other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
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(n) none of IAM or CRC has entered into any employment
contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(o) none of IAM or CRC has granted any increase in the base
compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(p) none of IAM or CRC has adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any other Employee Benefit
Plan);
(q) none of IAM or CRC has made any other material change in
employment terms for any of its directors, officers, and employees outside the
Ordinary Course of Business; and
(r) none of IAM or CRC has committed to any of the foregoing.
SECTION 13.9 UNDISCLOSED LIABILITIES. Except as set forth on Schedule
13.9, none of IAM or CRC has any material liability (whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued, and
whether due or to become due, including any liability for taxes), except for (i)
liabilities set forth in the IAM/CRC Most Recent Balance Sheet and (ii)
liabilities which have arisen after the IAM/CRC Most Recent Fiscal Month End in
the Ordinary Course of Business.
SECTION 13.10 LEGAL COMPLIANCE. Except as set forth on Schedule 13.10,
each of IAM and CRC has complied with all applicable laws (including rules,
regulations, codes, ordinances, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and foreign
governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced or, to the Knowledge of IAM or CRC, threatened against any of
them alleging any failure so to comply, except where the failure to comply would
not have a Material Adverse Effect on IAM or CRC.
SECTION 13.11 TAX MATTERS. Except with respect to any such matters that
would not, in the aggregate, have a Material Adverse Effect on IAM or CRC, (a)
each of IAM and CRC has duly filed all federal and state income Tax Returns and
all other material Tax Returns (including, those filed on a consolidated,
combined or unitary basis) required to have been filed by IAM and CRC prior to
the date hereof and will file, on or before the Effective Time, all such returns
which are required to be filed after the date hereof and on or before the
Effective Time, (b) all of the foregoing returns and reports are and will be at
the Effective Time true and correct in all material respects, and each of IAM
and CRC has paid or, prior to the Effective Time, will pay, or make adequate
provision for payment in accordance with GAAP regarding, all Taxes required to
be paid in respect of the periods covered by such returns or reports to any
federal, state, foreign, local or other taxing authority, (c) neither IAM nor
CRC will have any material liability for any Taxes in excess of the amounts so
paid or reserves so established or is delinquent in the payment of any material
Tax, assessment or governmental charge, and none of them has requested any
extension of time within which to file any returns in respect of any fiscal year
which have not since been filed, (d) no deficiencies for any tax, assessment or
governmental charge have been proposed, asserted or assessed in writing
(tentatively
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or definitely), in each case, by any taxing authority, against IAM or CRC for
which there are not adequate reserves in its financial statements (in accordance
with GAAP), (e) as of the date of this Agreement, there are no extensions or
waivers or pending requests for extensions or waivers of the time to assess or
collect any such tax, (f) the federal income Tax Returns of IAM and CRC have not
been audited, (g) neither IAM nor CRC is or has been a party to any tax sharing
agreement with any corporation which is not currently a member of the affiliated
group of which IAM and CRC are currently members, (h) there are no liens for
Taxes on any assets of IAM or CRC (other than statutory liens for taxes not yet
due or liens for which adequate reserves have been established in its financial
statements in accordance with generally accepted accounting principles), (i) IAM
and CRC have withheld and paid (and until the Effective Time will withhold and
pay) all income, social security, unemployment, and all other material payroll
Taxes required to be withheld (including, pursuant to Sections 1441 and 1442 of
the Code or similar provisions under foreign law) and paid in connection with
amounts paid to any employee, independent contractor, stockholder, creditor or
other third party, and (j) IAM and CRC have not filed an election under Section
341(f) of the Code to be treated as a consenting corporation. IAM has been a
validly electing S corporation within the meaning of Code ss. ss. 1361 and 1362
at all times during its existence and will be an S corporation up to and
including the Effective Time. CRC (and any predecessor of CRC) has been a
validly electing S corporation within the meaning of Code ss. ss. 1361 and 1362
at all times during its existence and will be an electing S corporation up to
and including the Effective Time.
SECTION 13.12 REAL PROPERTY. Neither IAM nor CRC owns any real
property.
SECTION 13.13 INTELLECTUAL PROPERTY.
(a) IAM and CRC own, or are licensed or otherwise possess
legally enforceable rights to use, all patents, trade secrets, trademarks, trade
names, service marks, copyrights, and any applications therefor, technology,
know-how, computer software programs or applications, and tangible or intangible
proprietary information or material that are used in the business of IAM and CRC
as currently conducted, except as would not reasonably be expected to have a
Material Adverse Effect on IAM or CRC.
(b) Except as disclosed in Schedule 13.13 or as would not
reasonably be expected to have a Material Adverse Effect on IAM or CRC (i)
neither IAM nor CRC is or will be as a result of the execution and delivery of
this Agreement or the performance of their obligations hereunder, in violation
of any Third-Party Intellectual Property Rights; (ii) no claims with respect to
the patents, registered and material unregistered trademarks and service marks,
registered copyrights, trade names and any applications therefor owned by IAM
and CRC (the "IAM and CRC Intellectual Property Rights"), any trade secret
material to IAM and CRC, or Third Party Intellectual Property Rights to the
extent arising out of any use, reproduction or distribution of such Third Party
Intellectual Property Rights by or through IAM and CRC, are currently pending
or, to the knowledge of IAM and CRC, are overtly threatened by any person; and
(iii) IAM and CRC do not have Knowledge of any bona fide claims (A) to the
effect that the manufacture, sale, licensing or use of any product as now used,
sold or licensed or proposed for use, sale or license by IAM and CRC infringes
on any copyright, patent, trademark, service mark or trade secret; (B) against
the use by IAM and CRC, of any programs and applications used in the business of
IAM and CRC of any trademarks, trade names, trade secrets, copyrights, patents,
technology, know-how or computer software programs and applications used in the
business of IAM and CRC as currently conducted
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or as proposed to be conducted; (C) challenging the ownership, validity or
effectiveness of any of the IAM and CRC Intellectual Property Rights or other
trade secret material to IAM and CRC; or (D) challenging the license or legally
enforceable right to use of the Third Party Intellectual Rights by IAM and CRC.
(c) Except as would not reasonably be expected to have a
Material Adverse Effect on IAM or CRC, to the Knowledge of IAM and CRC, all
material patents, registered trademarks, service marks and copyrights held by
IAM and CRC are valid and subsisting. Except as set forth in Schedule 13.13, to
IAM's and CRC's knowledge, there is no material unauthorized use, infringement
or misappropriation of any of the IAM and CRC Intellectual Property by any third
party, including any employee or former employee of IAM and CRC.
SECTION 13.14 TANGIBLE ASSETS. Except as would not reasonably be
expected to have a Material Adverse Effect on IAM or CRC, the buildings,
machinery, equipment, and other tangible assets that IAM and CRC own and lease
have been maintained in accordance with normal industry practice, are in good
operating condition and repair (subject to normal wear and tear), and have no
defects (patent and latent) which have or would have a Material Adverse Effect.
SECTION 13.15 INVENTORY. Neither IAM nor CRC owns any inventory.
SECTION 13.16 CONTRACTS. Schedule 13.16 lists the following contracts
and other agreements to which any of IAM and CRC is a party:
(a) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease payments in
excess of $20,000 per annum;
(b) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year or involve
consideration in excess of $20,000;
(c) any agreement concerning a partnership or joint venture;
(d) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $20,000 or under which
it has imposed a Security Interest on any of its assets, tangible or intangible;
(e) any material agreement concerning confidentiality or
noncompetition;
(f) any material agreement with any Affiliates of IAM or CRC;
(g) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers, and
employees;
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(h) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual compensation
in excess of $20,000 or providing material severance benefits;
(i) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees outside the Ordinary
Course of Business;
(j) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect on IAM or CRC not identified on
any other Schedule hereto; and
(k) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $20,000.
Each of IAM and CRC has delivered to Enviroq and its
Subsidiaries, or made available for Enviroq's review, a correct and complete
copy of each written agreement listed in Schedule 13.16 (as amended to date),
which shall be deemed to be Schedules for purposes of Section 15.12 hereof, and
a written summary setting forth the material terms and conditions of each oral
agreement referred to in Schedule 13.16. Except as set forth on Schedule 13.16
and except as would not reasonably be expected to have a Material Adverse Effect
on IAM or CRC, to the Knowledge of IAM and CRC, with respect to each such
agreement: (a) the agreement is legal, valid, binding, enforceable, and in full
force and effect in all material respects; (b) no party is in material breach or
default, and no event has occurred which with notice or lapse of time would
constitute a material breach or default, or permit termination, modification, or
acceleration, under the agreement; and (c) no party has repudiated any material
provision of the agreement.
SECTION 13.17 NOTES AND ACCOUNTS RECEIVABLE. Except as disclosed on
Schedule 13.17 or except as would not reasonably be expected to have a Material
Adverse Effect on IAM or CRC, all notes and accounts receivable of IAM and CRC
are reflected properly on their books and records, are valid receivables, are
current and collectible, and will be collected in accordance with their terms at
their recorded amounts, subject only to the reserve for bad debts set forth on
the face of the IAM/CRC Most Recent Financial Statements (rather than in any
notes thereto) as adjusted for operations and transactions through the Closing
Date in the Ordinary Course of Business of IAM and CRC. Except as disclosed on
Schedule 13.17, prior to the Closing Date, all loans from IAM/CRC to
stockholders of IAM and CRC, including any shown on the Most Recent Financial
Statements, shall have been repaid, and all loans to IAM and CRC from
stockholders of IAM and CRC, including any shown on the IAM/CRC Most Recent
Financial Statements, shall have been repaid.
SECTION 13.18 INSURANCE. Schedule 13.18 sets forth the following
information with respect to each material insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) with respect to which any of IAM and CRC is a
party, a named insured, or otherwise the beneficiary of coverage:
(a) the name, address, and telephone number of the agent;
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(b) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage
is on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(e) a description of any retroactive premium adjustments or
other material loss- sharing arrangements.
With respect to each such insurance policy, to the Knowledge of IAM and CRC with
respect to such policy: (a) the policy is legal, valid, binding, enforceable,
and in full force and effect in all material respects; (b) the policy is with a
reputable insurance carrier and provides adequate coverage subject to a normal
deductible amount for all risks incident to the business of IAM and CRC and
their respective properties and assets normally insured against by a similar
business, except as would not reasonably be expected to have a Material Adverse
Effect on IAM or CRC; (c) neither any of IAM and CRC nor any other party to the
policy is in material breach or default (including, with respect to the payment
of premiums or the giving of notices), and no event has occurred which, with
notice or the lapse of time, would constitute such a material breach or default,
or permit termination, modification, or acceleration, under the policy; and (d)
no party to the policy has repudiated any material provision thereof. Schedule
13.18 describes any material self-insurance arrangements affecting any of IAM
and CRC.
SECTION 13.19 LITIGATION. Schedule 13.19 sets forth each instance in
which any of IAM and CRC (a) is subject to any outstanding injunction, judgment,
order, decree, ruling, or charge or (b) is a party or, to the Knowledge of IAM
and CRC, is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before any court or quasi-judicial or
administrative agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator, and to the Knowledge of such officers and directors, no
reasonable basis therefor exists.
SECTION 13.20 EMPLOYEES. Except as contemplated by this Agreement, to
the Knowledge of IAM and CRC, no executive, key employee, or significant group
of employees plans to terminate employment with any of IAM and CRC during the
next four months. None of IAM and CRC is a party to or bound by any collective
bargaining agreement, nor has any of them experienced any strike or material
grievance, claim of unfair labor practices, or other collective bargaining
dispute within the past three years.
SECTION 13.21 EMPLOYEE BENEFITS.
(a) Schedule 13.21(a) lists all IAM/CRC Plans. With respect to
each IAM/CRC Plan, IAM and CRC have made available to Enviroq and its
Subsidiaries a true, correct and complete copy of: (i) each writing constituting
a part of such IAM/CRC Plan, including all plan documents, benefit schedules,
trust agreements, and insurance contracts and other funding vehicles; (ii) the
most recent Annual Report (Form 5500 Series) and accompanying schedule, if any;
(iii) the
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current summary plan description, if any; (iv) the most recent annual financial
report, if any; and (v) the most recent determination letter from the IRS, if
any.
(b) Except as set forth in Schedule 13.21(b), the Internal
Revenue Service has issued a favorable determination letter or opinion letter
with respect to each IAM/CRC Plan that is intended to be a "qualified plan"
within the meaning of Section 401(a) of the Code (a "Qualified IAM/CRC Plan")
and there are no existing circumstances nor any events that have occurred that
could adversely affect the qualified status of any Qualified IAM/CRC Plan or the
related trust.
(c) All contributions required to be made to any IAM/CRC Plan
by applicable Law or by any plan document or other contractual undertaking, and
all premiums due or payable with respect to insurance policies funding any
IAM/CRC Plan, for any period through the date hereof have been timely made or
paid in full and through the Closing Date will be timely made or paid in full
or, to the extent not required to be made or paid on or before the date hereof
or the Closing Date, as applicable, have been or will be fully reflected in the
IAM/CRC Financial Statements as of the date of such statements.
(d) Except as set forth in Schedule 13.21(d), to the Knowledge
of any of the directors and officers of IAM and CRC, IAM and CRC have complied,
and are now in compliance, in all material respects, with all provisions of
ERISA, the Code and all laws and regulations applicable to the IAM/CRC Plans. To
the Knowledge of any of the directors and officers of IAM and CRC, there is not
now, and there are no existing, circumstances that standing alone could give
rise to, any requirement for the posting of security with respect to an IAM/CRC
Plan or the imposition of any lien on the assets of IAM and CRC under ERISA or
the Code.
(e) Except as set forth in Schedule 13.21(e), no IAM/CRC Plan
is subject to Title IV or Section 302 of ERISA or Section 412 or 4971 of the
Code. Except as set forth in Schedule 13.21(e), no IAM/CRC Plan is Multiemployer
Plan or a Multiple Employer Plan, nor has IAM nor CRC, nor any of their
respective ERISA Affiliates, at any time within five years before the date
hereof, contributed to or been obligated to contribute to any Multiemployer Plan
or Multiple Employer Plan.
(f) There does not now exist, and there are no existing,
circumstances that could result in, any Controlled Group Liability that would be
a liability of IAM or CRC following the Closing, other than normal funding
responsibilities. Without limiting the generality of the foregoing, neither IAM
nor CRC, nor any of their respective ERISA Affiliates, has engaged in any
transaction described in Section 4069 or Section 4204 of ERISA.
(g) Except as set forth in Schedule 13.21(g), and except for
health continuation coverage as required by Section 4980B of the Code or Part 6
of Title I of ERISA, neither IAM nor CRC has any liability for life, health,
medical or other welfare benefits to former employees or beneficiaries or
dependents thereof.
(h) Except as set forth in Schedule 13.21(h), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will result in, cause the accelerated vesting
or delivery of, or increase the amount or value of, any payment or benefit to
any employee or director or former employee or former director of IAM or CRC,
pursuant
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to a "change in control" or "change of control" or otherwise. Without limiting
the generality of the foregoing and except as set forth in Schedule 13.21(h), no
amount paid or payable by IAM or CRC in connection with the transactions
contemplated hereby either solely as a result thereof or as a result of such
transactions in conjunction with any other events will be an "excess parachute
payment" within the meaning of Section 280G of the Code.
(i) There are no pending or, to the Knowledge of any of the
directors and officers of IAM or CRC, threatened claims (other than claims for
benefits in the ordinary course), lawsuits or arbitrations which have been
asserted or instituted against the IAM/CRC Plans, any fiduciaries thereof with
respect to their duties to the IAM/CRC Plans or the assets of any of the trusts
under any of the IAM/CRC Plans which could reasonably be expected to result in
any material liability of IAM or CRC to the PBGC, the Department of Treasury,
the Department of Labor or any Multiemployer Plan.
SECTION 13.22 GUARANTIES. Except as set forth on Schedule 13.22,
neither IAM nor CRC is a guarantor or otherwise is responsible for any liability
or obligation (including indebtedness) of any other Person.
SECTION 13.23 ENVIRONMENT, HEALTH, AND SAFETY. Except as set forth on
Schedule 13.23:
(a) each of IAM and CRC (i) has complied with the
Environmental, Health, and Safety Laws in all material respects, and no action,
suit, proceeding, hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced against any of them alleging any such failure
to comply, (ii) has obtained and has at all times been and is in substantial
compliance with all of the terms and conditions of all permits, licenses, and
other authorizations, certifications and training which are required under any
of the Environmental, Health, and Safety Laws, (iii) has complied in all
material respects with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and timetables
which are contained in the Environmental, Health, and Safety Laws, and (iv) each
of IAM and CRC will provide Purchaser, within 12 Business Days hereof, with
copies within its possession or control of all environmental assessments,
complaints, claims, consent orders or agreements, notices of violations,
governmental inquiries and permits issued or arising under or subject or
relating or pursuant to any Environmental, Health and Safety Laws for any
property owned, now or in the past or to be acquired prior to Closing, by IAM or
CRC, and such copies shall be deemed to be Schedules for purposes of Section
13.23 hereof; and
(b) none of IAM and CRC has any material liability, and none
of IAM, CRC, and their respective predecessors has handled or disposed of any
substance, arranged for the disposal of any substance, exposed any employee or
other individual to any substance or condition, or owned or operated any
property or facility in any manner that could give rise to any material
liability, for contamination or damage to any site, location, or body of water
(surface or subsurface), for any illness of or personal injury to any employee
or other individual, or for any reason under any Environmental, Health, and
Safety Law.
SECTION 13.24 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information supplied or to be supplied by or on behalf of IAM or CRC for
inclusion or incorporation by reference in (a) the Registration Statement will,
at the time the Registration Statement is filed with
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the SEC and at the time it becomes effective under the Securities Act or the
Exchange Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading and (b) the Proxy Statement will, at the date
mailed to the stockholders of Enviroq, and at the time of the meeting of
stockholders of Enviroq to be held in connection with the Enviroq Merger,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
SECTION 13.25 IAM AND CRC DOCUMENTS FILED WITH VARIOUS REGULATORY
AUTHORITIES. Each of IAM and CRC has timely filed with all applicable Regulatory
Authorities all notices, applications, forms, reports, schedules, statements,
exhibits and other documents required to be filed by it since December 31, 1994
(such documents, as supplemented and amended since the time of filing, together
with the Investment Advisor Filings (as defined herein) and the Broker-Dealer
Filings (as defined herein), collectively, the "IAM/CRC Regulatory Documents").
IAM is registered as an investment advisor pursuant to the Investment Advisers
Act of 1940 (a "Registered Investment Adviser") and has timely filed all forms,
reports, schedules, statements, exhibits and other documents, including Form
ADV, and all amendments thereto, required to be filed by it since its
registration as a Registered Investment Adviser (the "Investment Adviser
Filings") and has maintained a continual, valid registration as a Registered
Investment Adviser. CRC is a registered broker-dealer (a "Broker-Dealer")
pursuant to the Exchange Act and the rules and regulations of the National
Association of Securities Dealers, Inc. and has timely filed all forms, reports,
schedules, statements, exhibits and other documents, including Form B-D, and all
amendments thereto, required to be filed by it since its registration as a
Broker-Dealer (the "Broker-Dealer Filings") and has maintained a continual,
valid registration as a Broker-Dealer. The IAM/CRC Regulatory Documents at the
time filed (a) did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and (b) complied in all material respects with the
applicable requirements of the Exchange Act, the Investment Advisers Act of 1940
and the rules and regulations of the National Association of Securities Dealers,
Inc., as the case may be.
SECTION 13.26 NO INVESTMENT COMPANY REGISTRATION OR ACTIVITIES. Neither
IAM nor CRC is registered as an investment company pursuant to the Investment
Company Act of 1940 (as amended, the "Investment Company Act"). Without relying
on the exception from the definition of "investment company" found in paragraph
(1) or (7) of Section 3(c) of the Investment Company Act, neither IAM nor CRC is
engaged, or proposes to engage, in any business which would cause it to fall
within the definition of, or otherwise cause it to be deemed to be, an
"investment company" as defined in the Investment Company Act.
ARTICLE 14
REPRESENTATIONS AND WARRANTIES OF NEWCO, SUB-1, SUB-2 AND SUB-3
In order to induce Enviroq, IAM and CRC to enter into this Agreement,
NewCo and its subsidiaries, Sub-1, Sub-2 and Sub-3 (collectively, the "NewCo
Subs"), jointly and severally, represent and warrant to Enviroq, IAM and CRC as
follows:
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SECTION 14.1 ORGANIZATION, QUALIFICATION, AND CORPORATE POWER;
AUTHORITY.
(a) Each of NewCo and the NewCo Subs is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each of NewCo and the NewCo Subs is duly
authorized and qualified to conduct business and is in good standing under the
laws of each jurisdiction where such qualification is required, except where the
lack of such qualification would not have a Material Adverse Effect on NewCo.
Each of NewCo and the NewCo Subs has full corporate power and authority to carry
on the businesses in which it is engaged and to own, lease, use and operate the
properties owned, leased used and operated by it. The copies of the certificate
of incorporation and the bylaws of NewCo and the NewCo Subs , which have
previously been made available to Enviroq, IAM and CRC are true, complete and
correct copies of such documents as in effect as of the date of this Agreement.
Schedule 14.1 lists the directors and officers of each of NewCo and the NewCo
Subs.
(b) Each of NewCo and the NewCo Subs has full corporate power
and authority to execute and deliver this Agreement, and to consummate the
transactions contemplated hereby. The respective boards of directors of each of
NewCo and the NewCo Subs have duly and validly approved this Agreement and the
transactions contemplated hereby, have authorized the execution and delivery of
this Agreement, have directed that this Agreement and the transactions
contemplated hereby be submitted to the shareholders of each of NewCo and the
NewCo Subs, as the case may be, for approval at a meeting of such shareholders,
the shareholders of each of NewCo and the NewCo Subs have approved this
Agreement and the transactions contemplated hereby, and no other corporate
proceedings on the part of each of NewCo and the NewCo Subs are necessary to
consummate the transactions so contemplated. This Agreement constitutes a valid
and binding obligation of each of NewCo and the NewCo Subs, and is enforceable
against each of NewCo and the NewCo Subs in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors rights generally and except that the availability of the equitable
remedy of specific performance or injunctive relief is subject to the discretion
of the court before which any proceeding may be brought.
SECTION 14.2 CAPITALIZATION. The entire authorized common capital stock
of NewCo consists of 3,000,000 share of NewCo Stock, of which 100 shares of
NewCo Stock were issued and outstanding as of the date hereof, 1998. The entire
authorized common capital stock of Sub-1, Sub-2 and Sub-3 consists of 1,000
shares of Sub-1 Stock, 1,000 shares of Sub-2 Stock and 1,000 shares of Sub-3
Stock, respectively. Sub-1, Sub-2 and Sub-3 have 100 shares of Sub-1 Stock,
Sub-2 Stock and Sub-3 Stock issued and outstanding, respectively as of the date
hereof. No shares of NewCo stock are held in treasury. All of the issued and
outstanding shares of NewCo Stock, Sub-1 Stock, Sub-2 Stock or Sub-3 Stock have
been duly authorized and are validly issued, fully paid, and nonassessable.
Except as set forth in this Agreement and except as set forth on Schedule 14.2,
there are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require NewCo or any of the NewCo Subs to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to NewCo and the NewCo Subs. NewCo
and the NewCo Subs have no outstanding bonds, debentures, notes or similar
obligations the holders of which have the right to vote generally with holders
of NewCo Stock, Sub-1 Stock, Sub-2 Stock or Sub-3 Stock.
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SECTION 14.3 NON-CONTRAVENTION. Except as set forth on Schedule 14.3,
neither the execution and the delivery of this Agreement, nor the consummation
of the transactions contemplated hereby, will (a) violate any constitution,
statute, regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court to which
any of NewCo and the NewCo Subs are subject or any provision of the charter or
bylaws of any of NewCo or any of the NewCo Subs; or (b) except with respect to
those agreements for which Consent shall be obtained prior to Closing, conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which NewCo or any of the NewCo Subs is a
party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets),
except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a Material Adverse Effect on NewCo or on the ability of
the Parties to consummate the transactions contemplated by this Agreement.
Except as set forth specifically in this Agreement or on Schedule 14.3, neither
NewCo nor any of the NewCo Subs needs to give any notice to, make any filing
with, or obtain any Consent of any government, governmental agency or regulatory
authority in order for the Parties to consummate the transactions contemplated
by this Agreement, except where the failure to give notice, to file, or to
obtain any Consent would not have a Material Adverse Effect on NewCo or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement.
ARTICLE 15
GENERAL PROVISIONS
SECTION 15.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement shall survive the Effective
Time. This Section shall not limit those covenants and agreements of the Parties
found in Sections 2.5, 2.6, 6.1, 6.5, 6.6, 6.8 and in Articles 3, 4 and 15 which
by their terms contemplate performance after the Effective Time.
SECTION 15.2 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement without the prior written approval of all of the other
Parties; provided, however, that any Party may make any public disclosure it
believes in good faith is required by applicable law (in which case the
disclosing Party will use its best efforts to advise the other Parties at the
earliest possible time prior to making such disclosure).
SECTION 15.3 NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; provided, however, that the
provisions in Article 4 above concerning payment of the Merger Consideration
contemplated by this Agreement and certain additional agreements are intended
for the benefit of the stockholders of Enviroq, IAM, CRC and their respective
directors and officers.
SECTION 15.4 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings,
60
<PAGE> 72
agreements, or representations by or among the Parties, written or oral, to the
extent they related in any way to the subject matter hereof.
SECTION 15.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of all of the other Parties.
SECTION 15.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
SECTION 15.7 NOTICES. Notices to be given to IAM and CRC hereunder
shall be in writing, and delivered personally to the designated officer of IAM,
transmitted by facsimile, or deposited in the United States mail, certified and
return receipt requested, postage prepaid, and addressed to IAM or CRC at:
50 North Laura Street, Suite 3550
Jacksonville, Florida 32202
Attention: Forrest Travis
Telephone (904) 350-9999
Facsimile (904) 355-1745
with a copy to:
Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Steven E. Fox, Esq.
Telephone: (404) 420-4603
Facsimile: (404) 525-2224
or to such other address as may be specified by IAM or CRC in writing.
Notices to be given to Enviroq and its Subsidiaries hereunder shall be
in writing, and delivered personally to the designated officer of Enviroq,
transmitted by facsimile, or deposited in the United States mail, certified and
return receipt requested, postage prepaid, and addressed to Enviroq at:
Enviroq Corporation
3918 Montclair Road, Suite 206
Post Office Box 130062
Birmingham, Alabama 35213
Attention: William J. Long
Telephone (205)870-0588
Facsimile (205)870-0576
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with a copy to:
Bradley Arant Rose & White LLP
2001 Park Place, Suite 1400
Birmingham, Alabama 35203-2736
Attn: John K. Molen, Esq.
Telephone (205)521-8238
Facsimile (205)521-8800
or to such other address as may be specified by Enviroq in writing.
Notices to be given to NewCo, Sub-1, Sub-2 or Sub-3 hereunder shall be
in writing, and delivered personally to the designated officer of NewCo
transmitted by facsimile, or deposited in the United States mail, certified and
return receipt requested, postage prepaid, and addressed to NewCo, Sub-1, Sub-2
or Sub -3 at:
3918 Montclair Road, Suite 206
Post Office Box 130062
Birmingham, Alabama 35213
Attention: William J. Long
Telephone: (205) 870-0588
Facsimile: (205) 870-0576
with a copy to:
Bradley Arant Rose & White LLP
2001 Park Place, Suite 1400
Birmingham, Alabama 35203-2736
Attention: John K. Molen, Esq.
Telephone: (205) 521-8238
Facsimile: (205) 521-8800
or to such other address as may be specified by NewCo in writing.
Notices delivered personally shall be effective upon delivery. Notices
transmitted by facsimile shall be effective when receipt is confirmed. Notices
delivered by mail shall be effective upon the acceptance or rejection by the
person to whom they are addressed.
SECTION 15.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
SECTION 15.9 AMENDMENTS AND WAIVERS. The Parties may mutually amend any
provision of this Agreement at any time prior to the Effective Time with the
prior authorization of their respective boards of directors; provided, however,
that any amendment effected subsequent to the stockholder approval of Enviroq
will be subject to the restrictions contained in the Delaware General
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<PAGE> 74
Corporation Law. No amendment of any provision of this Agreement shall be valid
unless the same shall be in writing and signed by all of the Parties. 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.
SECTION 15.10 SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
SECTION 15.11 CONSTRUCTION. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires.
"Herein", "hereby", "hereunder", "hereof", "hereinbefore, "hereinafter" and
other equivalent words refer to this Agreement as a whole and not solely to the
particular Article or Section in which such word is used. When a reference is
made in this Agreement to a Section or Exhibit, such reference shall be to a
Section of, or an Exhibit to, this Agreement unless otherwise indicated. The
table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 15.12 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
SECTION 15.13 TRANSACTION COSTS. With the exception of expenses
relating to the incorporation and registration of NewCo, Sub-1, Sub-2 and Sub-3
and any fees and expenses payable pursuant to Section 11.2(a) hereof, each of
the Parties shall be responsible for its own expenses in connection with the
negotiation of this Agreement and the consummation of the transactions
contemplated hereby, including those expenses incurred in connection with the
Proxy Statement; Paying Agent charges; attorneys' fees and disbursements;
accounting fees and disbursements; investment banking fees and disbursements,
and printing costs. Enviroq and its Subsidiaries, IAM and CRC agree that the
Registration Attorney shall be engaged to prepare and file any registration
statements with the SEC as well as any related filings, including "blue sky"
filings with applicable states, and the Registration Attorney shall engage the
accounting firm of Deloitte & Touche LLP, Birmingham, Alabama to assist in such
filings. If the Mergers are not consummated, Enviroq will pay one half of the
fees and expenses of the Registration Attorney, IAM will pay one-fourth of fees
and expenses of the Registration Attorney, and CRC will pay one-fourth of the
fees and expenses of the Registration Attorney. If the Mergers are consummated,
NewCo will pay all of the fees and expenses of the Registration Attorney.
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IN WITNESS WHEREOF, each of the Parties hereto has caused its duly
authorized officer to execute this Agreement on the date first above written.
INTREPID CAPITAL CORPORATION
By:
----------------------------------
Name: William J. Long
Its: President
ENVIROQ CORPORATION
By:
----------------------------------
Name: William J. Long
Its: President
FREEDOM HOLDING OF ALABAMA, INC.
By:
----------------------------------
Name: William J. Long
Its: President
ATTESTED TO: INSTITUTIONAL ASSET
MANAGEMENT, INC.
By: By:
------------------------------ ----------------------------------
Name: Name: Forrest Travis
------------------------------
Its: Secretary Its: President
ATTESTED TO: IAM MERGER SUB, INC.
By: By:
------------------------------ ----------------------------------
Name: Name: Forrest Travis
------------------------------
Its: Secretary Its: President
ATTESTED TO: CAPITAL RESEARCH CORPORATION
By: By:
------------------------------ ----------------------------------
Name: Name: Forrest Travis
------------------------------
Its: Secretary Its: President
64
<PAGE> 76
ATTESTED TO: CRC MERGER SUB, INC.
By: By:
------------------------------ ----------------------------------
Name: Name: Forrest Travis
------------------------------
Its: Secretary Its: President
65
<PAGE> 1
EXHIBIT 4
STOCK AGREEMENT
STOCK AGREEMENT (the "Agreement"), dated as of April 22, 1998,
between INSTITUTIONAL ASSET MANAGEMENT INC. ("IAM") and CAPITAL RESEARCH
CORPORATION ("CRC"), both of which are Florida corporations, and the undersigned
STOCKHOLDERS (the "Stockholders") of Enviroq Corporation, a Delaware corporation
(the "Company").
WHEREAS, as of the date hereof the Stockholders own of record an
aggregate of 552,875 shares of common stock, par value $0.01 per share ("Company
Common Stock"), of the Company (all such shares and any shares hereafter
acquired by the Stockholders prior to the termination of this Agreement being
referred to herein as the "Shares");
WHEREAS, concurrently herewith, IAM, CRC and the Company are entering
into an Agreement and Plan of Reorganization (as such Agreement may hereafter be
amended from time to time, the "Merger Agreement"), pursuant to which, upon the
terms and subject to the conditions thereof, certain affiliates of the Company
will be merged (the "Mergers") with and into IAM, CRC and the Company and
resulting in IAM, CRC and the Company becoming wholly-owned subsidiaries of a
common holding company; and
WHEREAS, as a condition to the willingness of IAM and CRC to enter into
the Merger Agreement, IAM and CRC have requested that each Stockholder agree,
and, in order to induce the Purchaser to enter into the Merger Agreement, each
Stockholder has agreed to grant IAM and CRC proxies to vote such Stockholder's
Shares;
NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE 1
SECTION 1.01 TRANSFER OF SHARES. Until the earlier to occur of (i) the
close of business on the date of the special meeting of stockholders of the
Company called to consider and vote upon the Mergers (the "Special Meeting") or
(ii) the termination of the Merger Agreement in accordance with its terms, each
Stockholder agrees not to (a) sell, pledge or otherwise dispose of any of such
Stockholder's Shares, (b) deposit such Shares into a voting trust or enter into
a voting agreement or arrangement with respect to such Shares or grant any proxy
with respect thereto or (c) enter into any contract, option or other arrangement
or undertaking with respect to the direct or indirect acquisition or sale,
assignment, transfer or other disposition of any Company Common Stock.
SECTION 1.02 VOTING OF SHARES; FURTHER ASSURANCES. For such time as
this Agreement remains in effect, each Stockholder agrees, with respect to those
Shares that such
<PAGE> 2
Stockholder owns of record on the record date for voting at the Special Meeting,
to vote such Shares (or to execute written consents with respect to such Shares)
(i) in favor of the adoption of the Merger Agreement and approval of the Mergers
and the other transactions contemplated by the Merger Agreement, (ii) against
any Alternative Proposal (as defined in the Merger Agreement) and (iii) in favor
of any other matter necessary to consummate the transactions contemplated by the
Merger Agreement and considered and voted upon at the Special Meeting. Each
Stockholder agrees to vote the Shares owned by such Stockholder beneficially to
be voted in accordance with the foregoing. Each Stockholder acknowledges receipt
of and has reviewed a copy of the Merger Agreement.
SECTION 1.03 NO SOLICITATION. Prior to the Effective Time, (a) none of
the Stockholders shall initiate, solicit or encourage, directly or indirectly,
any inquiries or the making or implementation of any proposal or offer
(including, without limitation, any proposal or offer to the Company's
stockholders) with respect to an Alternative Proposal (as defined in the Merger
Agreement) or engage in any negotiations concerning, or provide any confidential
information or data to, or have any discussions with, any Person (as defined in
the Merger Agreement) relating to an Alternative Proposal, or otherwise
facilitate any effort or attempt to make or implement an Alternative Proposal
and (b) each Stockholder agrees to notify IAM and CRC immediately if any such
inquiries or proposals are received by, any such information is requested from,
or any such negotiations or discussions are sought to be initiated or continued
with, such Stockholder.
SECTION 1.04 NO FIDUCIARY VIOLATION. Notwithstanding any other
provision of this Agreement, no Stockholder who is a member of the board of
directors of the Company ("Director") or control person thereof, if acting
solely in such Stockholder's capacity as a Director or control person thereof,
shall have any obligation or duty (a) to vote (or cause any Director under its
control to vote) (i) in favor of the Mergers and the other transactions
contemplated by the Merger Agreement or (ii) against any Alternative Proposal
(as defined in the Merger Agreement) or (b) to refrain from voting (or cause any
Director under its control to refrain from voting) to terminate the Merger
Agreement, if such Director (or control person thereof) determines in good
faith, based on advice of the board of directors' outside counsel, that the
failure to terminate the Merger Agreement and the transactions contemplated
therein would be reasonably likely to result in a breach of such Director's
fiduciary duty to the Company's stockholders; provided, however, in the event
that the Merger Agreement has not been terminated prior to the time of the
stockholder vote at the Special Meeting to approve the Mergers and the other
transactions contemplated in the Merger Agreement, such Stockholder shall vote
its Shares in accordance with Section 1.02 hereof. No action of a Stockholder,
if such action is taken solely in the Stockholder's capacity as a Director (or
control person thereof) consistent with the provisions of the immediately
preceding sentence, shall be deemed to violate the provisions of Section 1.03
hereof.
2
<PAGE> 3
ARTICLE 2
SECTION 2.01 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered, mailed or transmitted, and shall be
effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like changes of address) or sent by electronic transmission to the telecopier
number specified below:
(a) If to IAM or CRC:
50 North Laura Street, Suite 3550
Jacksonville, Florida 32202
Attention: Forrest Travis
Telephone (904) 350-9999
Facsimile (904) 355-1745
with a copy to:
Rogers & Hardin LLP
2700 International Tower
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Steven E. Fox, Esq.
Telephone (404) 420-4603
Facsimile (404) 525-2224
(b) If to a Stockholder:
c/o Enviroq Corporation
3918 Montclair Road
Suite 206
Birmingham, Alabama 35213
Attention: William J. Long
Telephone (205) 870-0588
Facsimile (205) 870-0576
with a copy to:
Bradley Arant Rose & White LLP
2001 Park Place, Suite 1400
Birmingham, Alabama 35203-2736
Attention: John K. Molen, Esq.
Telephone (205) 521-8238
Facsimile (205) 521-8800
3
<PAGE> 4
SECTION 2.02 INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Unless otherwise defined in this Agreement,
capitalized terms used in this Agreement shall have the meanings ascribed to
them in the Merger Agreement.
SECTION 2.03 SEVERABILITY. If any term, condition or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other terms, conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby and by the
Merger Agreement does not have a Material Adverse Effect (defined below) with
respect to any Party or any party to this Agreement. Upon such determination
that any term, condition or other provision is invalid, illegal or incapable of
being enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the Parties and the parties
hereto as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby and
by the Merger Agreement are fulfilled to the extent possible. For the purposes
of this Agreement "Material Adverse Effect" means with respect to any of the
Parties, an event, change or occurrence which, individually or together with any
other event, change or occurrence, has or could be expected to have a material
adverse effect on the financial position, business, assets, properties,
operations, results of operations or prospects of such Party.
SECTION 2.04 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties and supersedes all prior agreements and undertakings,
both written and oral, between the parties, or any of them, with respect to the
subject matter hereof.
SECTION 2.05 CERTAIN EVENTS. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to such Stockholder's
Shares and shall be binding upon any Person to which legal or beneficial
ownership (as such term is applied under Rule 13d-3 promulgated pursuant to the
Securities Exchange Act of 1934, as amended) of such Shares shall pass, whether
by operation of law or otherwise. Notwithstanding the transfer of any Shares,
the transferor shall remain liable for the performance of all obligations under
this Agreement of the transferor.
SECTION 2.06 ASSIGNMENT. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 2.07 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any person
any right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
SECTION 2.08 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
4
<PAGE> 5
SECTION 2.09 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, without giving
effect to principles of conflicts of laws.
SECTION 2.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which,
taken together, shall constitute one and the same agreement.
SECTION 2.11 TERMINATION. This Agreement shall terminate automatically
immediately upon termination of the Merger Agreement, and no party hereto shall
have any further obligations hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INSTITUTIONAL ASSET MANAGEMENT, INC.
By:
-------------------------------------
Name: Forrest Travis
Title: President
CAPITAL RESEARCH CORPORATION
By:
-------------------------------------
Name: Forrest Travis
Title: President
WILLIAM J. LONG
---------------------------------------
MARINELLI SECURITIES ASSOCIATES
By:
-------------------------------------
Name: Antonio M. Marinelli
Title:
----------------------------------
5
<PAGE> 6
SCHEDULE I
William J. Long
Marinelli Securities Associates
6
<PAGE> 1
EXHIBIT 99
FOR IMMEDIATE RELEASE FOR ADDITIONAL INFORMATION
WILLIAM LONG (205)870-0588
ENVIROQ ANNOUNCES APPROVAL OF AGREEMENT FOR
REORGANIZATION AND MERGER WITH INSTITUTIONAL ASSET
MANAGEMENT AND CAPITAL RESEARCH
BIRMINGHAM, ALABAMA April 23, 1998 -- ENVIROQ CORPORATION ("Enviroq") (OTC
Bulletin Board: (ENVQ) announced today its board of directors has approved
entering into an Agreement and Plan of Reorganization by which Enviroq will
merge with a subsidiary of Intrepid Capital Corporation ("Intrepid"), a
newly-formed corporation. The merger would be consummated through a transaction
in which Enviroq stockholders would receive shares of Intrepid common stock, as
well as cash. Simultaneously with the Enviroq-Intrepid merger, Institutional
Asset Management, Inc. ("IAM") and Capital Research Corporation ("CRC") will
also merge with newly-formed subsidiaries of Intrepid. As a result of the
transaction, Enviroq, IAM, and CRC will become wholly-owned subsidiaries of
Intrepid.
The shares of Intrepid common stock issued in the mergers will be registered
securities under the Securities Exchange Act of 1934, as amended. It is
anticipated that the common stock of Intrepid will be traded in the
over-the-counter markets. As a result of the merger transaction, Enviroq
stockholders will receive $2,250,000 in cash and 1,009,377 shares of Intrepid
common stock. This would result in Enviroq stockholders receiving approximately
$2.23 and one share of Intrepid common stock for each issued and outstanding
share of Enviroq stock. The stockholders of IAM and CRC will receive
approximately 1,206,149 shares of Intrepid common stock in exchange for all of
the outstanding common stock of IAM and CRC. Completion of the mergers are
subject to a number of conditions, including approval of Enviroq stockholders
and other conditions.
IAM and CRC are privately-held corporations with principal offices in
Jacksonville, Florida. IAM is an asset management company providing investment
management to individuals, corporations and institutions. IAM is a registered
investment adviser and has clients in several states in the southeast. Most of
the revenue of IAM is earned from fees based on assets under management, a
service IAM has provided since January, 1995. CRC was incorporated in July,
1972, is a registered broker/dealer, and is a member of the National
Association of Securities Dealers. CRC conducts a general securities business
primarily to registered investment advisors on a fully-disclosed basis through
a clearing broker/dealer, which carries all accounts and prepares and maintains
all books and records for CRC's customers.
The current President and chief executive officer of IAM and CRC, Forrest
Travis, is expected to serve as President and chief executive officer of
Intrepid. Enviroq President William J. Long is expected to serve as executive
vice president of Intrepid, as well as interim principal financial officer.
Mark Travis, currently chief investment officer of IAM will continue in that
role as well as become president of IAM. All other employees of IAM, CRC and
Enviroq are expected to remain in their current positions. Several of the
current Enviroq directors and Forrest Travis and Mark Travis are expected to
serve as directors of Intrepid.
