3
--------------------------------
AGREEMENT AND PLAN OF MERGER
among
VS&A COMMUNICATIONS PARTNERS III, L.P.
VS&A-GP, L.L.C.
VS&A-GP ACQUISITION, INC.
and
GP STRATEGIES CORPORATION
dated as of
October 6, 1999
--------------------------------
AGREEMENT AND PLAN OF MERGER
October 6, 1999
The parties to this agreement are VS&A Communications Partners III,
L.P., a Delaware limited partnership ("Parent"), VS&A-GP, L.L.C., a Delaware
limited liability company wholly owned by Parent and its affiliate VS&A
Communications Parallel Partners III, L.P. (the "LLC"), VS&A-GP ACQUISITION,
INC., a Delaware corporation and a wholly owned subsidiary of LLC (the "Sub"),
and GP Strategies Corporation, a Delaware corporation (the "Company").
The parties wish to provide for the acquisition of the Company by
Parent by means of a merger (the "Merger") of the Sub into the Company pursuant
to Section 251 of the Delaware General Corporation Law (the "DGCL").Pursuant to
an agreement dated August 31, 1999, among the Parent and certain stockholders
(the "Stockholders")of the Company (the "Stockholder Agreement"), as amended on
the date hereof, each of the Stockholders has agreed, with certain exceptions,
to exercise all options held by him to purchase shares of the Company's Common
Stock, par value $.01 per share ("Common Stock") and Class B Capital Stock, par
value $.01 ("Capital Stock"), to vote all of his shares of Common Stock and
Capital Stock in favor of the Merger and, immediately prior to the Effective
Time (as defined in Section 1.3) of the Merger, to acquire membership interests
in the LLC in exchange for his contribution to the LLC of Shares (as defined
below)owned by him (the "Exchanged Shares"). The shares of Common Stock and the
shares of Capital Stock are referred to collectively as the "Shares."
It is therefore agreed as follows:
ARTICLE I
THE MERGER
Section I.1 The Merger. Subject to the terms and conditions of this
agreement,the Company and the Sub shall consummate the Merger pursuant to which
(a)the Sub shall be merged with and into the Company and the separate corporate
existence of the Sub shall thereupon cease and (b) the Company shall be the
successor or surviving corporation in the Merger (sometimes referred to below
as the "Surviving Corporation") and shall continue to be governed by the law of
Delaware. Subject to Section 4.8(a)(i), the certificate of incorporation of the
Company, as in effect immediately prior to the Effective Time, shall be amended
as of the Effective Time to read as set forth on Exhibit 1.1(a) to this
agreement and the bylaws of the Company, as in effect immediately prior to the
Effective Time, shall be amended as of the Effective Time to read as set forth
on Exhibit 1.1(b) to this agreement.The Merger shall have the effects specified
in the DGCL.
Section I.2 Stockholders' Meeting. Subject to the provisions of
Section 4.4, the Company, acting through its Board of Directors (the "Board of
Directors"), shall, in accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Special Meeting") as promptly as
practicable following the execution of this agreement for the purpose of
considering and adopting this agreement;
(ii) prepare and file with the Securities and Exchange
Commission (the "SEC") a preliminary proxy statement relating to the
Merger and this agreement and use its reasonable efforts to obtain and
furnish the information required to be included by the SEC in the Proxy
Statement as hereinafter defined) and, after consultation with Parent, to
respond promptly to any comments made by the SEC with respect to the
preliminary proxy statement and cause a definitive proxy statement,
including any amendment or supplement thereto (the "Proxy Statement"), to
be mailed to its stockholders, provided that no amendment or supplement
to the Proxy Statement shall be made by the Company without consultation
with Parent and its counsel; and
(iii) (x) include in the Proxy Statement the recommendation of
the Board of Directors that stockholders of the Company approve this
agreement and the transactions contemplated hereby, (y) use reasonable
efforts to solicit from stockholders of the Company proxies in favor of
adoption of this agreement, and take all other actions reasonably
necessary or advisable to secure such vote, and (z) cooperate with Parent,
LLC and Sub with respect to each of the foregoing matters.
Section I.3 Effective Time. On the Closing Date (as defined in
Section 1.4), Parent and the Company shall cause a Certificate of Merger to be
executed and filed with the secretary of state of Delaware (the "Secretary of
State") as provided in the DGCL. The Merger shall become effective on the date
on which the Certificate of Merger is duly filed with the Secretary of State or
such time subsequent to such filing as is agreed upon by the parties and
specified in the Certificate of Merger. The time at which the Merger becomes
effective is referred to in this agreement as the "Effective Time."
Section I.4 Closing. The closing of the transactions relating to
the Merger (the "Closing") shall take place at the offices of Proskauer Rose
LLP, 1585 Broadway, New York, New York 10036, at 10:00 a.m. on a date to be
specified by Parent, which shall be no later than the second business day after
satisfaction or waiver of all of the conditions set forth in Sections 5.1(a),
5.1(c) and 5.2(f), or on such other date or at such other place as the parties
to this agreement may agree upon in writing. The date of the Closing is referred
to in this agreement as the "Closing Date."
Section I.5 Directors and Officers of the Surviving Corporation.
The directors and officers of the Sub at the Effective Time shall, from and
after the Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors shall have been duly elected or
appointed or qualified or until their earlier death, resignation or removal in
accordance with the certificate of incorporation and the by-laws of the
Surviving Corporation.
Section I.6 Conversion of Stock Upon the Merger. As of the
Effective Time, by virtue of the Merger and without any further action on the
part of the holders of any shares of the Company, LLC or the Sub:
(a) The Sub Common Stock. Each issued and outstanding share
of the Sub's common stock as of the Effective Time shall be converted into and
become 11,000 fully paid nonassessable shares of common stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
All issued and outstanding Shares that, as of the Effective Time, are owned by
the Company as treasury stock or owned by Parent, LLC, the Sub or any other
wholly owned Subsidiary of Parent or LLC shall be canceled and retired and shall
cease to exist and no consideration shall be delivered in exchange therefor.
(c) Conversion of the Company's Common Stock and Capital
Stock. Each issued and outstanding Share as of the Effective Time (other than
Shares to be canceled in accordance with Section 1.6 (b) and any Shares held by
stockholders exercising appraisal rights pursuant to Section 262 of the DGCL
("Dissenting Stockholders")) shall be converted into the right to receive an
amount equal to $13.74 per Share (the "Merger Consideration"), payable in cash
to the holder, without interest, upon surrender, in the manner provided in
Section 1.7, of the Certificate (as defined in Section 1.7(b)) formerly
representing that Share. All such Shares, when so converted upon the Merger,
shall no longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a Certificate representing any such
Shares shall cease to have any rights with respect thereto except the right to
receive the Merger Consideration therefor upon the surrender of the Certificate
in accordance with Section 1.7, without interest, or the right, if any, to
receive payment from the Surviving Corporation of the "fair value" of the shares
as determined in accordance with Section 262 of the DGCL.
(d) Conversion of Options. Options to purchase shares of
Common Stock or Capital Stock pursuant to the Option Plan (as defined in Section
1.9) or the Other Option Agreements (as defined in Section 1.9) are collectively
referred to as the "Company Options". Each Company Option outstanding as of the
Effective Time (whether vested or unvested) shall be converted into the right to
receive an amount equal to the product of (i) the number of Shares issuable upon
exercise of such Company Option and (ii) the greater of (A) the excess, if any,
of the per Share Merger Consideration over the per Share exercise price of such
Company Option and (B) $.05, payable in cash to the holder, without interest,
and net of applicable withholding taxes.
Section I.7 Exchange of Certificates.
(a) Prior to the Effective Time, Parent shall designate a
bank or trust company reasonably acceptable to the Company to act as agent for
the holders of the Shares in connection with the Merger (the "Paying Agent") to
receive in trust the funds to which holders of the Shares shall become entitled
pursuant to the Merger. Such funds shall be delivered by the Parent to the
Paying Agent on the Closing Date and prior to the Effective Time and shall be
invested by the Paying Agent as directed by Parent or the Surviving Corporation;
provided that such investments shall be short-term obligations of, or backed by
the full faith and credit of, the United States and shall provide sufficient
liquidity to pay the Merger Consideration to the holders of the Shares in
accordance with this agreement.
(b) As soon as reasonably practicable after the Effective
Time, the Paying Agent shall mail to each holder of record of a certificate or
certificates, which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates"), whose Shares were converted upon the
Merger into the right to receive the Merger Consideration (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify prior to the
Effective Time) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment of the Merger Consideration. Upon surrender
of a Certificate for cancellation to the Paying Agent or to such other agent or
agents as may be appointed prior to the Effective Time by Parent, subject to the
approval of the Company, together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive forthwith
in exchange therefor the Merger Consideration for each Share formerly
represented by the Certificate, and the Certificate so surrendered shall
forthwith be canceled. If payment of the Merger Consideration is to be made to a
person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable. Until
surrendered as contemplated by this Section 1.7, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration in cash as contemplated by this Section 1.7.
(c) At the Effective Time, the stock transfer books of the
Company shall be closed and thereafter there shall be no further registration of
transfers of the Shares on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of the Shares
outstanding immediately prior to the Effective Time shall cease to have any
rights with respect to those Shares, except as otherwise provided for herein or
by applicable law. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
for cash as provided in this Article I.
(d) At any time following one year after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds (including any interest received with respect thereto)
which had been made available to the Paying Agent and which have not been
disbursed to holders of Certificates, and thereafter such holders shall be
entitled to look to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) only as general creditors thereof with respect to
the Merger Consideration payable upon due surrender of their Certificates,
without any interest thereon. Notwithstanding the foregoing, neither the
Surviving Corporation nor the Paying Agent shall be liable to any holder of a
Certificate for Merger Consideration delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
Section I.8 Dissenters' Rights. If any Dissenting Stockholder shall
demand to be paid the "fair value" of such holder's Shares, as provided in
Section 262 of the DGCL, the Company shall give Parent notice thereof and Parent
shall have the right to participate in all negotiations and proceedings with
respect to any such demands. Neither the Company nor the Surviving Corporation
shall, except with the prior written consent of Parent, voluntarily make any
payment with respect to, or settle or offer to settle, any such demand for
payment. If any Dissenting Stockholder shall fail to perfect or shall have
effectively withdrawn or lost the right to dissent, the Shares held by such
Dissenting Stockholder shall thereupon be treated as though such Shares had been
converted upon the Merger into the Merger Consideration.
Section I.9 Company Plans. As of the Effective Time, the Company's
1973 Non-Qualified Stock Option Plan (the "Option Plan") shall terminate.
Options to purchase an aggregate of 3,083,207 shares of Common Stock are
outstanding under the Option Plan, as reflected in Section 1.9 of the Company
Disclosure Schedule, and options to purchase an aggregate of 11,560 Shares of
Common Stock and 500,000 shares of Capital Stock are outstanding under other
agreements to issue Shares (the "Other Option Agreements"). The number and
holders of options granted under each of the Other Option Agreements are set
forth in Section 1.9 of the Company Disclosure Schedule (as defined below).
Options granted under the GTS Duratek, Inc. Stock Option Plan (as listed on
Section 1.9 of the Company Disclosure Schedule) shall not be affected by the
Merger.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, LLC and the Sub that
all of the statements contained in this Article II are true and correct as of
the date of this agreement (or, if made as of a specified date, as of such
date), except as set forth in the schedule attached to this agreement setting
forth exceptions to the Company's representations and warranties set forth
herein (the "Company Disclosure Schedule").
Section II.1Organization. Each of the Company and its Subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or organization and has all
requisite corporate power and authority and all necessary governmental approvals
to own, lease and operate its properties and to carry on its business as now
being conducted. As used in this agreement, the term "Subsidiary" shall mean all
corporations or other entities in which the Company or Parent or the Sub, as the
case may be, owns 50% or more of the issued and outstanding capital stock or
similar interests. Each of the Company and its Subsidiaries which are set forth
in Section 2.1 of the Company Disclosure Schedule is duly qualified or licensed
to do business and in good standing in each jurisdiction set forth in Section
2.1 of the Company Disclosure Schedule. Except as set forth in Section 2.1 of
the Company Disclosure Schedule, the Company does not own, directly or
indirectly, any equity interest in any entity where the Company's equity
interest in such entity exceeds five percent of the outstanding equity of such
entity on the date hereof.
Section II.2Capitalization.
(a) The authorized capital stock of the Company consists of
25,000,000 shares of Common Stock, 2,800,000 shares of Capital Stock and
10,000,000 shares of Preferred Stock, par value $.01 per share ("Preferred
Stock"). As of the date hereof, (i) 11,081,043 shares of Common Stock are issued
and outstanding, (ii) 427,186 shares of Common Stock are issued and held in the
treasury of the Company, (iii) 450,000 shares of Capital Stock are issued and
outstanding, (iv) no shares of Capital Stock are issued and held in the treasury
of the Company, (v) no shares of Preferred Stock are issued, (vi) 950,000 shares
of Common Stock are reserved for issuance upon conversion of Capital Stock
issued or issuable upon exercise of Company Options, (vii) 3,094,767 shares of
Common Stock are reserved for issuance upon exercise of outstanding Company
Options, (viii) 0 shares of Common Stock are reserved for issuance upon the
exercise of options authorized but not granted under the Option Plan, (ix)
500,000 shares of Capital Stock are reserved for issuance upon exercise of
Company Options, (x) 63,321 shares of Common Stock are reserved for issuance
upon exercise of warrants (the "Company Warrants") and (xi) 10,000 shares of
Series A Junior Participating Preferred Stock are reserved for issuance upon
exercise of the rights to purchase Preferred Stock (the "Company Rights")
pursuant to the Rights Agreement between the Company (then known as National
Patent Development Corporation) and Harris Trust Company of New York, as Rights
Agent, dated as of June 23, 1997 (the "Rights Agreement"). All the outstanding
shares of the Company's capital stock are, and all shares which may be issued
pursuant to the exercise of outstanding Company Options will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and non-assessable. There are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into securities having
such rights) ("Voting Debt") of the Company or any of its Subsidiaries issued
and outstanding. Except as set forth above and except for the transactions
contemplated by this agreement and the Stockholder Agreement, as of the date
hereof, (i) there are no shares of capital stock of the Company authorized,
issued or outstanding, (ii) there are no existing options (other than the
Company Options outstanding on the date hereof), warrants (other than the
Company Warrants outstanding on the date hereof), calls, pre-emptive rights,
subscriptions or other rights (other than the Company Rights), agreements,
arrangements or commitments of any character, relating to the issued or unissued
capital stock of the Company or any of its Subsidiaries, obligating the Company
or any of its Subsidiaries to issue, transfer or sell or cause to be issued,
transferred or sold any shares of capital stock or Voting Debt of, or other
equity interest in, the Company or any of its Subsidiaries or securities
convertible into or exchangeable for such shares or equity interests, or
obligating the Company or any of its Subsidiaries to grant, extend or enter into
any such option, warrant, call, subscription or other right, agreement,
arrangement or commitment and (iii) except as set forth in Section 2.2(a) of the
Company Disclosure Schedule, there are no outstanding contractual obligations of
the Company or any of its Subsidiaries to repurchase, redeem or otherwise
acquire any Shares, or the capital stock of the Company, or any Subsidiary or
affiliate of the Company or to provide funds to make any investment (in the form
of a loan, capital contribution or otherwise) in any Subsidiary or any other
entity.
(b) All of the outstanding shares of capital stock of each of
the Subsidiaries are beneficially owned by the Company (except as set forth in
Section 2.2 of the Company Disclosure Schedule), directly or indirectly, and all
such shares have been validly issued and are fully paid and nonassessable and
are owned by either the Company or one of its Subsidiaries (except as set forth
in Section 2.2 of the Company Disclosure Schedule) free and clear of all liens,
charges, claims or encumbrances ("Encumbrances").
(c) Except as set forth in Section 2.2 of the Company
Disclosure Schedule, there are no voting trusts or other agreements or
understandings to which the Company or any of its Subsidiaries is a party with
respect to the voting of the capital stock of the Company or any of the
Subsidiaries.
Section II.3Authorization; Validity of Agreement; Company Action.
The Company has full corporate power and authority to execute and deliver this
agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance by the Company of this agreement, and the consummation
by it of the transactions contemplated hereby, have been duly authorized by its
Board of Directors and, except as contemplated by Section 1.2 hereof, no other
corporate action on the part of the Company is necessary to authorize the
execution and delivery by the Company of this agreement and the consummation by
it of the transactions contemplated hereby. This agreement has been duly
executed and delivered by the Company and, assuming due and valid authorization,
execution and delivery hereof by Parent, LLC and the Sub, is a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms.
Section II.4Consents and Approvals; No Violations. Except for the
filings, consents and approvals set forth in Section 2.4 of the Company
Disclosure Schedule and the filings, permits, authorizations, consents and
approvals as may be required under, and other applicable requirements of, the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), state securities or blue sky laws, and the DGCL, none of the execution,
delivery or performance of this agreement by the Company, the consummation by
the Company of the transactions contemplated hereby or compliance by the Company
with any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the certificate of incorporation, the by-laws or similar
organizational documents of the Company or of any of its Subsidiaries, (ii)
require any filing with, or authorization, consent or approval of, any court,
arbitral tribunal, administrative agency or commission or other governmental or
other regulatory authority or agency (a "Governmental Entity"), (iii) result in
a violation or breach of, or constitute (with or without due notice or lapse of
time or both) a default (or give rise to any right of termination, amendment,
cancellation or acceleration) under, any of the terms, conditions or provisions
of any Material Contract (as defined in Section 2.17), other than as set forth
in Article Thirteenth of the Company's Restated Certificate of Incorporation, as
amended, or (iv) violate in any material respect any order, writ, injunction,
decree, statute, rule or regulation applicable to the Company, any of its
Subsidiaries or any of their properties or assets. Section 2.4 of the Company
Disclosure Schedule sets forth a list of all third party consents and approvals
required to be obtained in connection with this agreement under any Material
Contract prior to the consummation of the transactions contemplated by this
agreement.
Section II.5SEC Reports and Financial Statements. The Company has
filed with the SEC all forms, reports, schedules, statements and other documents
required to be filed by it under the Exchange Act or the Securities Act of 1933,
as amended (the "Securities Act") (as such documents have been amended since the
time of their filing, collectively, the "Company SEC Documents"). As of their
respective dates or, if amended, as of the date of the last such amendment, the
Company SEC Documents, including, without limitation, any financial statements
or schedules included therein (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, and the applicable rules and regulations of the SEC
thereunder. None of the Company's Subsidiaries is required to file any forms,
reports or other documents with the SEC. The financial statements of the Company
included in the Company SEC Documents (the "Financial Statements") have been
prepared from, and are in accordance with, the books and records of the Company
and its consolidated Subsidiaries, comply in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis during the
periods involved (except as may be indicated in the notes thereto and except for
the absence of footnotes with respect to interim Financial Statements) and
fairly present the consolidated financial position and the consolidated results
of operations and cash flows of the Company and its consolidated Subsidiaries as
of the times and for the periods referred to therein.
Section II.6Absence of Certain Changes. Except as disclosed in
Section 2.6 of the Company Disclosure Schedule, since December 31, 1998 the
Company and its Subsidiaries have conducted their respective businesses in all
material respects only in the ordinary and usual course and there have not
occurred any events or changes having or reasonably likely to have, individually
or in the aggregate, a material adverse effect on the condition (financial or
otherwise), business, assets, results of operations or prospects of the Company
and its Subsidiaries taken as a whole or upon the ability of the Company to
perform its obligations under this agreement.
Section II.7No Undisclosed Liabilities. Except (a) as disclosed in
the Financial Statements and (b) for liabilities and obligations (x) incurred in
the ordinary course of business and consistent with past practice, (y) arising
pursuant to the terms of this agreement or (z) as set forth in Section 2.7 of
the Company Disclosure Schedule, since December 31, 1998, neither the Company
nor any of its Subsidiaries has incurred any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, which in the aggregate
are material and which would be required by GAAP to be reflected on a
consolidated balance sheet of the Company and its Subsidiaries (or in the notes
thereto).
Section II.8Litigation. Except as set forth in Section 2.8 of the
Company Disclosure Schedule, there are no suits, claims, actions, proceedings,
including, without limitation, arbitration proceedings or alternative dispute
resolution proceedings, or investigations pending or, to the best of the
Company's knowledge, threatened against the Company or any of its Subsidiaries
before any Governmental Entity where the plaintiff or other claimant or party
seeks to recover from the Company or any of its Subsidiaries an amount in excess
of $500,000, excluding workers compensation or unemployment benefits claims.
Except as disclosed in Section 2.8 of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries is subject to any outstanding order,
writ, injunction or decree.
Section II.9Employee Benefit Plan; ERISA.
(a) Section 2.9(a) of the Company Disclosure Schedule sets
forth a true and complete list (or, in the case of an unwritten plan, a
description) of all "employee benefit plans" within the meaning of Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and any other bonus, profit sharing, pension, severance, deferred compensation,
fringe benefit, insurance, welfare, post-retirement, health, life, stock option,
stock purchase, restricted stock, tuition refund, scholarship, relocation,
disability, accident, sick, vacation, individual employment, consulting,
executive compensation, incentive, commission, retention, change in control,
noncompetition, and other plans, agreements, policies, trust funds, or
arrangements (whether written or unwritten, insured or self-insured, domestic or
foreign) (i) established, maintained, sponsored or contributed to (or with
respect to which any obligation to contribute has been undertaken) within the
last six years by the Company, any of its Subsidiaries or any trade or business,
whether or not incorporated, which together with the Company or any of its
Subsidiaries would be deemed a "single employer" within the meaning of Section
414(b), 414(c) or 414(m) of the United States Internal Revenue Code of 1986, as
amended (the "Code"), or the regulations issued under Section 414(o) of the Code
or Section 4001 of ERISA (an "ERISA Affiliate") on behalf of any employee,
director or shareholder of the Company or any of its Subsidiaries (whether
current, former or retired) or their beneficiaries or (ii) with respect to which
the Company, any of its Subsidiaries or any ERISA Affiliate has or has had any
obligation within the last six years on behalf of any such employee, director,
shareholder, or beneficiary (each a "Benefit Plan" and, collectively, the
"Benefit Plans"). None of the Company, any of its Subsidiaries or any ERISA
Affiliate has any formal plan or commitment, whether legally binding or not, to
create any additional Benefit Plan or modify or change any existing Benefit Plan
that would affect any employee, director or shareholder (whether current, former
or retired) of the Company or any of its Subsidiaries or their beneficiaries.
(b) With respect to each Benefit Plan: (i) each Benefit Plan
intended to be tax-qualified under Section 401(a) of the Code (or similar
provision for tax-registered or tax-favored plans of foreign jurisdictions) has
received a determination letter from the United States Internal Revenue Service
to the effect that the Benefit Plan is so qualified and any trust maintained
pursuant thereto is exempt from taxation under Section 501(a) of the Code (or
similar determination letter or approval for tax-registered or tax-favored plans
of foreign jurisdictions) and nothing has occurred or is expected to occur
through the Effective Time that caused or could cause the loss of such
qualification or exemption or the imposition of any penalty or tax liability;
(ii) such Benefit Plan complies in all material respects with, and has been
maintained and administered in accordance with, its terms (including, without
limitation, the pass-through voting and tender provisions of any Benefit Plan
with respect to any Common Stock held thereunder) and applicable statutes,
orders or governmental rules or regulations, including but not limited to ERISA
and the Code, no notice has been issued by any Governmental Entity questioning
or challenging such compliance, and no condition exists that would be expected
to affect such compliance; (iii) no disputes, claims or other actions are
pending or asserted, or, to the best of the Company's knowledge, threatened,
that would be expected to give rise to any liability on the part of the Company,
any of its Subsidiaries or any ERISA Affiliate (other than non-material, routine
claims for benefits); (iv) no "prohibited transaction" (within the meaning of
Section 4975 of the Code and Section 406 of ERISA) has occurred or is expected
to occur; (v) all contributions and premiums due as of the date hereof in
respect of any Benefit Plan (taking into account any extensions for such
contributions and premiums) have been made in full or accrued on the Company's
balance sheet; (vi) with respect to each Benefit Plan that is funded mostly or
partially through an insurance policy, none of the Company, any of its
Subsidiaries or any ERISA Affiliate has any liability in the nature of
retroactive rate adjustment, loss sharing arrangement or other actual or
contingent liability arising wholly or partially out of events occurring on or
before the Effective Time; and (vii) nothing has occurred that could reasonably
be expected to increase the costs associated with any Benefit Plan.
(c) Except as set forth in Section 2.9(c) of the Company Disclosure
Schedule, none of the Company, any of its Subsidiaries or any ERISA Affiliate or
any of their respective predecessors has within the last six years contributed
to, contributes to, has ever been required to contribute to, or otherwise
participated in or participates in or in any way, directly or indirectly, has
any liability with respect to any plan subject to Section 412 of the Code,
Section 302 of ERISA or Title IV of ERISA, including, without limitation, any
"multiemployer plan" (within the meaning of Sections 3(37) or 4001(a)(3) of
ERISA or Section 414(f) of the Code), or any single employer pension plan
(within the meaning of Section 4001(a)(15) of ERISA) which is subject to
Sections 4063 and 4064 of ERISA. With regard to the multiple employer defined
benefit plan (within the meaning of Section 413(c) of the Code) set forth in
Section 2.9(c) of the Company Disclosure Schedule (the "Terminated Pension
Plan"), the Company has (i) taken all corporate actions necessary to terminate
the Terminated Pension Plan; (ii) received a favorable determination letter from
the United States Internal Revenue Service approving the tax-qualified status of
the Terminated Pension Plan upon its termination; (iii) timely filed PBGC Forms
500 and 501, including all schedules and attachments; (iv) timely filed the
final Form 5500 with the United States Internal Revenue Service; and (v) taken
all other actions as are necessary or appropriate to effectuate the termination
of the Terminated Pension Plan in accordance with its terms and the Code, ERISA
and other applicable law. None of the Company, any of its Subsidiaries, any
ERISA Affiliate, or any of their respective predecessors has or could reasonably
be expected to have any liability with respect to the Terminated Pension Plan.
(d) Except as set forth in Section 2.9(d) of the Company Disclosure
Schedule, none of the Company, any of its Subsidiaries or any ERISA Affiliate
maintains, contributes to, or in any way provides welfare benefits of any kind
whatsoever (other than under Section 4980B of the Code, the Federal Social
Security Act, or a plan qualified under Section 401(a) of the Code) to any
current or future retiree or terminee.
(e) No amounts payable under any Benefit Plan will fail to be
deductible for federal income tax purposes by virtue of Sections 280G or 162(m)
of the Code. None of the Company, any of its Subsidiaries or any ERISA Affiliate
has any unfunded liabilities pursuant to any Benefit Plan that is not intended
to be qualified under Section 401(a) of the Code and that is not an employee
pension benefit plan within the meaning of Section 3(2) of ERISA, a nonqualified
deferred compensation plan, an excess benefit plan or a Foreign Employee Plan
(as defined below).
(f) Except as disclosed on Section 2.9(f) of the Company Disclosure
Schedule, neither the execution of this agreement nor the consummation of the
transactions contemplated hereby will (i) entitle any individual to severance
pay or accelerate the time of payment or vesting, or increase the amount, of
compensation or benefits due to any individual solely by reason of such
transactions or by reason of a termination of employment following such
transactions, (ii) constitute or result in a prohibited transaction under
Section 4975 of the Code or Section 406 of ERISA or (iii) subject the Company,
any of its Subsidiaries, any ERISA Affiliate, any of the Benefit Plans, any
related trust, any trustee or administrator of any thereof, or any party dealing
with the Benefit Plans or any such trust to either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975 of the Code. The Company is primarily engaged directly or through majority
owned subsidiaries in the production or sale of a product or service, other than
the investment of capital.
(g) With respect to each Benefit Plan, the Company has previously
delivered to Parent or its representatives accurate and complete copies of all
plan documents, summary plan descriptions, summaries of material modifications,
trust agreements and other related agreements, including all amendments to the
foregoing; the most recent annual report; the annual and periodic accounting of
plan assets in respect of the three most recent plan years; the most recent
determination letter received from the United States Internal Revenue Service;
the actuarial valuation; and any material communication from any Governmental
Entity, to the extent any of the foregoing may be applicable to a particular
Benefit Plan, in respect of the three most recent plan years.
(h) With respect to each scheme or arrangement mandated by a
government other than the United States and with respect to each Benefit Plan
that is not subject to United States law (a "Foreign Employee Plan"), the fair
market value of the assets of each funded Foreign Employee Plan, the liability
of each insurer for any Foreign Employee Plan funded through insurance or the
book reserve established for any Foreign Employee Plan, together with any
accrued contributions, is sufficient to procure or provide for the accrued
benefit obligations (taking into account all projections for future salary
increases with respect to all service before the Closing Date), as of the date
of this agreement, with respect to all current and former participants in such
Foreign Employee Plan according to the actuarial assumptions and valuations most
recently used to determine employer contributions to such Foreign Employee Plan
and no transaction contemplated by this agreement shall cause such assets or
insurance obligations to be less than such benefit obligations.
Section II.10 Tax Matters; Government Benefits.
(a) Except as set forth in Section 2.10 of the Company
Disclosure Schedule, the Company and its Subsidiaries have filed all Tax Returns
(as hereinafter defined) that are required to be filed and have paid or caused
to be paid all Taxes (as hereinafter defined) that are either shown on such Tax
Returns as due and payable or otherwise due or claimed to be due by any taxing
authority in writing. All such Tax Returns are correct and complete in all
material respects and accurately reflect all liability for Taxes for the periods
covered thereby. All Taxes owed and due by the Company and each of its
Subsidiaries with respect to their results of operations through December 31,
1998 (whether or not shown on any Tax Return) have been paid or have been
adequately reflected on the Company's consolidated balance sheet as of December
31, 1998 included in the Financial Statements (the "Balance Sheet"). Since
December 31, 1998, the Company has not incurred liability for any Taxes other
than in the ordinary course of business. Neither the Company nor any of its
Subsidiaries has received written notice of any claim made by an authority in a
jurisdiction where neither the Company nor any of its Subsidiaries files Tax
Returns that the Company or any of its Subsidiaries is or may be subject to
taxation by that jurisdiction.
(b) Neither the Company nor any of its Subsidiaries has
violated any applicable law of any jurisdiction relating to the payment and
withholding of Taxes, including, without limitation, (x) withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or similar provisions under
non-U.S. law and (y) withholding of Taxes in respect of amounts paid or owing to
any employee, creditor, independent contractor or other third party. The Company
and each of its Subsidiaries have, in the manner prescribed by law, withheld and
paid when due all Taxes required to have been withheld and paid under all
applicable laws.
(c) There are no Encumbrances upon the shares of capital
stock of any of the Company's Subsidiaries or any of the assets or properties of
the Company or any of its Subsidiaries that arose in connection with any failure
(or alleged failure) to pay any Tax when due.
(d) Except as set forth in Section 2.10 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has waived
any statute of limitations in any jurisdiction in respect of Taxes or Tax
Returns or agreed to any extension of time with respect to a Tax assessment or
deficiency.
(e) Except as set forth in Section 2.10 of the Company
Disclosure Schedule, no federal, state, local or foreign audits, examinations or
other administrative proceedings have been commenced or, to the best of the
Company's knowledge, are pending with regard to any Taxes or Tax Returns of the
Company or of any of its Subsidiaries. No written notification has been received
by the Company or by any of its Subsidiaries that such an audit, examination or
other proceeding is pending or threatened with respect to any Taxes due from or
with respect to or attributable to the Company or any of its Subsidiaries or any
Tax Return filed by or with respect to the Company or any of its Subsidiaries.
To the best of the Company's knowledge, there is no dispute or claim concerning
any Tax liability of the Company or any of its Subsidiaries either claimed or
raised by any taxing authority in writing.
(f) Except as set forth in Section 2.10 of the Company
Disclosure Schedule, during their most recent five taxable years, respectively,
neither the Company nor any of its Subsidiaries has made a material change in
tax accounting methods, received a ruling from any taxing authority or signed an
agreement with any taxing authority which has or would be reasonably likely to
materially adversely affect the Company or its Subsidiaries taken as a whole.
Neither the Company nor any of its Subsidiaries is required to include in income
any adjustment pursuant to Section 481(a) of the Code or any similar provision
of foreign, state or local law, by reason of a voluntary change in tax
accounting method (nor has any taxing authority proposed in writing any such
adjustment or change of accounting method).
(g) Except as set forth in Section 2.10 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to, is bound by or has any obligation under any Tax sharing agreement, Tax
indemnification agreement or similar contract or arrangement (other than
contracts or arrangements among the Company and its Subsidiaries). Neither the
Company nor any of its Subsidiaries is aware of any potential liability or
obligation to any person as a result of, or pursuant to, any such agreement,
contract or arrangement. Neither the Company nor any of its Subsidiaries has any
liability for Taxes of another person by contract or otherwise.
(h) Except as set forth in Section 2.10 of the Company
Disclosure Schedule, no power of attorney with respect to any matter relating to
Taxes or Tax Returns has been granted by or with respect to the Company or any
of its Subsidiaries.
(i) Neither the Company nor any of its Subsidiaries is a
party to any agreement, plan, contract or arrangement that could result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
(j) During the most recent five taxable years of the Company
and of each of its Subsidiaries, no closing agreement pursuant to Section 7121
of the Code (or any predecessor provision, or any similar provision of any
state, local or foreign law) has been entered into by or with respect to the
Company or any of its Subsidiaries.
(k) Neither the Company nor any of its Subsidiaries has filed
a consent pursuant to Section 341(f) of the Code (or any predecessor provision)
concerning collapsible corporations, or agreed to have Section 341(f)(2) of the
Code apply to any disposition of a "subsection (f) asset" (as such term is
defined in Section 341(f)(4) of the Code) owned by the Company or any of its
Subsidiaries.
(l) The Company has never been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. The
Company has never been a member of an Affiliated Group within the meaning of
Section 1504 of the Code, other than an Affiliated Group for which the Company
is or was the common parent. None of the Subsidiaries of the Company is a
foreign personal holding company within the meaning of Section 552 of the Code
or a passive foreign investment company within the meaning of Section 1296 of
the Code.
(m) Except as set forth in Section 2.10 of the Company
Disclosure Schedule, no taxing authority is asserting or threatening to assert a
claim in writing against the Company, or any of its Subsidiaries under or as a
result of Section 482 of the Code or any similar provision of state, local or
foreign law.
(n) Section 2.10 of the Company Disclosure Schedule lists all
federal, state, local and foreign Tax Returns in respect of which an audit is in
progress or is, to the best of the Company's knowledge, pending, which was filed
by, on behalf of or with respect to the Company and its Subsidiaries. The
Company has delivered to Parent complete and accurate copies of each of: (A) all
audit, examination and similar reports and all letter rulings and technical
advice memoranda filed or received by the Company during the last five years
relating to federal, state, local and foreign Taxes due from or with respect to
the Company and its Subsidiaries; (B) all federal, state and local and foreign
Tax Returns, Tax examination reports and similar documents filed by the Company
and its Subsidiaries during the last five years; and (C) all closing agreements
entered into by the Company and its Subsidiaries with any taxing authority and
all statements of Tax deficiencies assessed against or agreed to by the Company
and its Subsidiaries during the last five years.
(o) As used in this agreement, the following terms shall have
the following meanings:
(i) "Tax" or "Taxes" shall mean all taxes, charges,
fees, duties, levies, penalties or other assessments imposed by any
federal, state, local or foreign governmental authority, including, but
not limited to, income, gross receipts, excise, property, sales, gain,
use, license, custom duty, unemployment, capital stock, transfer,
franchise, payroll, withholding, social security, minimum, estimated and
other taxes, and shall include interest, penalties or additions
attributable thereto; and
(ii) "Tax Return" shall mean any return, declaration,
report, claim for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and including any
amendment thereof.
Section II.11 Title and Condition of Properties. Section 2.11 of
the Company Disclosure Schedule contains a true, correct and complete list of
all owned and all material leased real property in which the Company or any
Subsidiary has an interest, whether an ownership interest, interest pursuant to
a lease or sublease, water rights or otherwise, and a description of the
interests owned by the Company and any Subsidiary therein (including a brief
description of the property, the location thereof and the improvements thereon).
Except as set forth in Section 2.11 of the Company Disclosure Schedule, the
Company and its Subsidiaries own good and marketable title, free and clear of
all Encumbrances, to all of the real property, and good title, free and clear of
all Encumbrances to all of the personal property and assets, shown on the
Balance Sheet or acquired after December 31, 1998, except for (A) assets which
have been disposed of to nonaffiliated third parties since December 31, 1998 in
the ordinary course of business, (B) Encumbrances reflected in the Balance Sheet
or in the notes thereto, (C) Encumbrances or imperfections of title which are
not, individually or in the aggregate, material in character, amount or extent
and which do not materially detract from the value or materially interfere with
the present or presently contemplated use of the assets subject thereto or
affected thereby, and (D) Encumbrances for Taxes not yet due and payable. All of
the machinery, equipment and other tangible personal property and assets owned
or used by the Company and its Subsidiaries are in good condition and repair in
all material respects, except for ordinary wear and tear not caused by neglect,
and are useable in the ordinary course of business. The personal property and
assets reflected on the Balance Sheet or acquired after December 31, 1998, the
rights under any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound and the Intellectual Property (as defined in Section 2.12)
owned or used by the Company under valid Licenses (as defined in Section 2.12)
collectively include all assets necessary to provide, produce, sell and license
the services and products currently provided, produced, sold and licensed by the
Company and its Subsidiaries and to conduct the business of the Company and its
Subsidiaries as presently conducted or as currently contemplated to be
conducted.
Section II.12 Intellectual Property.
(a) Section 2.12(a) of the Company Disclosure Schedule
contains an accurate and complete listing setting forth (x) all registered
Trademarks, Patents and registered Copyrights (as each such term is hereinafter
defined) which are owned by the Company or any of its Subsidiaries and (y) all
material Licenses to which the Company or any of its Subsidiaries is a party,
such schedule indicating, as to each such License, whether the Company or any of
its Subsidiaries is the licensee or licensor, whether it is royalty bearing, the
territory, whether it is exclusive or non-exclusive, and the nature of the
licensed property.
(b) Except as set forth in Section 2.12(b) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is under
any obligation to pay any royalty or other compensation to any third party or to
obtain any approval or consent for the use of any Intellectual Property used in
or necessary for its business as currently conducted or as currently proposed to
be conducted. None of the Intellectual Property owned by the Company or by any
of its Subsidiaries or, to the best of the Company's knowledge, licensed to the
Company or to any of its Subsidiaries is subject to any outstanding judgment,
order, decree, stipulation, injunction or charge. Except as set forth in Section
2.12(b) of the Company Disclosure Schedule, there is no claim, charge,
complaint, action, suit, proceeding, hearing, investigation or demand pending
or, to the best of the Company's knowledge, threatened, which challenges the
legality, validity, enforceability, or the Company's or any of its Subsidiaries'
use or ownership of any of the Intellectual Property owned by the Company or any
of its Subsidiaries or, to the best of the Company's knowledge, licensed to the
Company or to any of its Subsidiaries.
(c) No material breach or default (or event which with notice
or lapse of time or both would result in a material event of default) by the
Company or any of its Subsidiaries exists or has occurred under any License or
other agreement pursuant to which the Company or any of its Subsidiaries uses
any Intellectual Property owned by a third party or has granted any third party
the right to use its Intellectual Property, and the consummation of the
transactions contemplated by this agreement will not violate or conflict with or
constitute a material default (or an event which, with notice or lapse of time
or both, would constitute a material default), result in a forfeiture under, or
constitute a basis for termination of any such License or other agreement.
(d) The Company and its Subsidiaries own all registered
Trademarks, Patents, and registered Copyrights set forth in Section 2.12(a) of
the Company Disclosure Schedule as owned by the Company or a Subsidiary of the
Company and own or have the right to use all items of Intellectual Property
necessary to provide, produce, sell and license the services and products
currently provided, produced, sold and licensed by the Company and its
Subsidiaries and to conduct the business of the Company and its Subsidiaries as
presently conducted or as currently proposed to be conducted.
(e) To the best of the Company's knowledge, except as set
forth in Section 2.12(e) of the Company Disclosure Schedule, the conduct of the
Company's and its Subsidiaries' business, the Intellectual Property owned or
used by the Company and its Subsidiaries, and the products or services produced,
sold or licensed by the Company and its Subsidiaries do not infringe any
Intellectual Property rights of any person. The Company and its Subsidiaries
have received no notice of any allegations or threats that the Company's and its
Subsidiaries' use of any of the Intellectual Property infringes upon or is in
conflict with any Intellectual Property of any third party.
(f) All of the Company's and its Subsidiaries' Patents,
Trademarks and Copyrights set forth in Section 2.12(a) of the Company Disclosure
Schedule have been duly registered, filed or issued, as the case may be, have
been properly maintained and renewed in accordance with all applicable
provisions of law and administrative regulations, and the Company and its
Subsidiaries, as the case may be, are the record owners thereof, except in each
case where the Company has determined in its reasonable business judgment that
the use of such Intellectual Property is not required for the operation of its
or its Subsidiaries' business. The Company and its Subsidiaries have taken
reasonable steps in accordance with normal industry practice to maintain the
confidentiality of its trade secrets and other confidential Intellectual
Property.
(g) No employees, officers, agents, directors or independent
contractors of the Company or any of its Subsidiaries have asserted any claim,
or have any valid claim or valid right, which is material, to any of the
Company's or any of its Subsidiaries' Intellectual Property used in or necessary
for the conduct of the Company's or its Subsidiaries' business as now conducted
or as currently proposed to be conducted. To the best of the Company's
knowledge, no employee, officer, agent or director of the Company or any of its
Subsidiaries is a party to or otherwise bound by any agreement with or obligated
to any other person (including, any former employer) which conflicts with any
obligation or commitment of such employee to the Company or any of its
Subsidiaries under any agreement to which he or she is a party or otherwise.
(h) As used in this agreement, "Intellectual Property" means
all of the following: (i) U.S. and foreign registered and unregistered
trademarks, service marks, logos, trade names, corporate names and all
registrations and applications to register the same (the "Trademarks"); (ii)
issued U.S. and foreign patents and pending patent applications, patent
disclosures, and any and all divisions, continuations, continuations-in-part,
reissues, reexaminations, and extension thereof, any counterparts claiming
priority therefrom, utility models, patents of importation/confirmation,
certificates of invention and like statutory rights (the "Patents"); (iii) U.S.
and foreign registered and unregistered copyrights (including, but not limited
to, those in computer software and databases), rights of publicity and all
registrations and applications to register the same (the "Copyrights"); (iv) all
categories of trade secrets as defined in the Uniform Trade Secrets Act
including, but not limited to, business information; and (v) all licenses and
agreements, other than licenses for the internal use and reproduction by the
Company or any of its Subsidiaries of computer software and other works
protected by copyrights, pursuant to which the Company has acquired rights in or
to any Trademarks, Patents or Copyrights, or licenses and agreements pursuant to
which the Company has licensed or transferred the right to use any of the
foregoing ("Licenses").
Section II.13 Employment Matters. Except as set forth in Section
2.13 of the Company Disclosure Schedule, to the best of the Company's knowledge,
(a) no key employee or group of key employees has any plans to terminate their
employment with the Company or any of its Subsidiaries as a result of the
transactions contemplated hereby or otherwise, (b) neither the Company nor any
of its Subsidiaries has experienced any strikes, collective labor grievances,
other collective bargaining disputes or claims of unfair labor practices in the
last five years, (c) there is no organizational effort presently being made or
threatened by or on behalf of any labor union with respect to employees of the
Company and its Subsidiaries, and (d) except as set forth in Section 2.13 to the
Company Disclosure Schedule, the Company and each Subsidiary is in compliance in
all material respects with all laws relating to the employment or the workplace,
including, without limitation, provisions relating to wages, hours, collective
bargaining, safety and health, work authorization, equal employment opportunity,
immigration and the withholding of income taxes, unemployment compensation,
worker's compensation, employee privacy and right to know and social security
contributions.
Section II.14 Compliance with Laws. Except as set forth in Section
2.14 to the Company Disclosure Schedule, the Company and its Subsidiaries are in
compliance in all material respects with, and have not violated in any material
respect, any applicable law, rule or regulation of any federal, state, local or
foreign government or agency thereof (including but not limited to, Military
Specifications and Federal Acquisitions Regulations), and no notice, charge,
claim, action or assertion has been received by the Company or any of its
Subsidiaries or to the best of the Company's knowledge, has been filed,
commenced or threatened against the Company or any of its Subsidiaries alleging
any such violation. The Company and its Subsidiaries hold all licenses, permits
and approvals from all Governmental Entities which are material to the conduct
of the business of the Company and its Subsidiaries and necessary for the
Company and its Subsidiaries to own, lease and operate their properties and to
conduct their businesses and all such licenses, permits and approvals are in
full force and effect.
Section II.15 Environmental Compliance.
(a) Except as set forth in Section 2.15 to the Company
Disclosure Schedule,
(i) all of the current and past operations of the Company,
including the Company's current and past operations in connection with the
Company's Environmental Engineering Services, comply, and have at all times
complied, in all material respects with applicable Environmental Laws, and all
of the current and past operations of the Company (x) at or from any real
property presently or formerly owned, leased, managed or operated by the Company
(collectively, the "Real Property"), and (y) at or from any real property
presently or formerly leased, managed or operated by the Company in connection
with the Company's Environmental Engineering Services, comply, and have at all
times complied, in all material respects with applicable Environmental Laws.
(ii) neither the Company, nor to the best knowledge of the
Company, any other person or entity, has engaged in, authorized, allowed or
suffered any operations or activities upon any of the Real Property for the
purpose of or in any way involving the handling, manufacture, treatment,
processing, storage, use, generation, release, discharge, spilling, emission,
dumping, transporting, disposal or arranging for transport or disposal of any
Hazardous Substances at, on under or from the Real Property, except in
compliance in all material respects with all applicable Environmental Laws;
(iii) the Real Property is not listed or to the best of the
Company's knowledge proposed for listing on the National Priorities List (the
"NPL") pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. ss. 9601 et seq., or on any similar
inventory of sites requiring investigation or remediation maintained by any
state or locality. The Company has not received any notice, whether oral or
written, from any Governmental Entity or third party of any actual or threatened
Environmental Liabilities with respect to the Company, the Company's
Environmental Engineering Services or the Real Property;
(iv) the Real Property does not contain any Hazardous
Substances (as defined below) in, on, or under it, in concentrations which would
presently violate any applicable Environmental Laws or to the best of the
Company's knowledge would result in the imposition of obligations on the present
or former owner, manager or operator of the Real Property under applicable
Environmental Laws, for the investigation, clean-up, corrective action,
remediation or monitoring of Hazardous Substances in, on, or under the Real
Property;
(v) there are no underground storage tanks owned, leased, or
operated by the Company or used in the business of the Company in, on, or under
any Real Property;
(vi) there are no conditions existing at any currently owned,
leased, managed, or operated real property that require remedial or corrective
action, removal, monitoring or closure pursuant to the Environmental Laws or
with respect to the business of the Company that would be reasonably likely to
result in the imposition of any material Environmental Liabilities on the
Company as a result of the handling, manufacture, treatment, processing,
storage, use, generation, release, discharge, spilling, emission, dumping,
transporting, disposing or arranging for transport or disposal of any Hazardous
Substances, including in connection with the Company's Environmental Engineering
Services;
(vii) the Company has all the permits, licenses,
authorizations and approvals necessary for the conduct of its business,
including the Company's Environmental Engineering Services, and for the
operations on, in or at the Real Property, which are required under applicable
Environmental Laws (the "Environmental Permits"). The Company is in compliance
in all material respects with the terms and conditions of all such Environmental
Permits, and, to the best knowledge of the Company, no reason exists why the
Company would not be capable of continued operation of its business, after the
consummation of the Merger, in compliance in all material respects with the
Environmental Permits and the applicable Environmental Laws;
(viii)the Company has provided to Parent or its
representatives all environmental reports, assessments, audits, studies,
investigations, data, Environmental Permits and other material written
environmental information in its custody, possession or control concerning the
Company, the Real Property and any Environmental Liabilities associated with the
Company's business, including the Company's Environmental Engineering Services,
and the Real Property;
(ix) the Company has not contractually, or to the best of the
Company's knowledge, by operation of law, by the Environmental Laws, by common
law or otherwise assumed or succeeded to any Environmental Liabilities of any
predecessors or any other person or entity; and
(x) None of the items set forth in Section 2.15 of the
Company's Disclosure Schedule, individually or in the aggregate, is reasonably
likely to result in any material Environmental Liability.
(b) As used in this Section 2.15, these terms shall have the
following meanings:
(i) "Environment" means any surface or subsurface physical
medium or natural resource, including air, land, soil, surface waters, ground
waters, stream and river sediments, biota and any indoor area, surface or
physical medium.
(ii) "Environmental Engineering Services" means the Company's
environmental engineering and support services, described in Item 1 to the
Company's Form 10-K for the Fiscal Year Ended December 31, 1998, including (i)
the development and management of environmental remediation plans, (ii) the
contracting and subcontracting of remediation construction activities, (iii) the
arrangement, transport, removal and offsite disposal and treatment of hazardous
substances, and (iv) such other related activities of the Company performed in
connection with such environmental engineering and support services.
(iii) "Environmental Laws" means any federal, state, local or
common law, rule, regulation, ordinance, code, order or judgment (including any
written judicial or administrative interpretations, guidances, directives,
policy statements or opinions) relating to the injury to, or the pollution or
protection of human health and safety or the Environment.
(iv) "Environmental Liabilities" means any claims, judgments,
damages (including punitive damages), losses, penalties, fines, liabilities,
encumbrances, liens, violations, costs and expenses (including attorneys' and
consultants' fees) of investigation, remediation, monitoring or defense of any
matter relating to human health, safety or the Environment of whatever kind of
nature by any party, entity or authority, (A) which are incurred as a result of
(i) the existence of Hazardous Substances in, on, under, at or emanating from
any real property presently or formerly owned, operated or managed by the
Company, (ii) the offsite transportation, treatment, storage or disposal of
Hazardous Substances generated by the Company, or (iii) the violation of any
Environmental Laws or (B) which arise under the Environmental Laws.
(v) "Hazardous Substances" means any petroleum, petroleum
products, petroleum-derived substances, radioactive materials, hazardous wastes,
polychlorinated biphenyls, lead-based paint, radon, urea formaldehyde, asbestos
or any materials containing asbestos, pesticides and any chemicals, materials or
substances regulated under any Environmental Law, or defined as or included in
the definition of "hazardous substances," "hazardous wastes," "extremely
hazardous substances," "hazardous materials," "hazardous constituents," "toxic
substances," "pollutants," "contaminants," or any similar denomination intended
to classify or regulate such chemicals, materials or substances by reason of
their toxicity, carcinogenicity, ignitability, corrosivity or reactivity or
other characteristics under any Environmental Law.
(c) All references in this Section 2.15 to the Company shall
include any Subsidiary thereto, and all predecessors thereto, and any person or
entity the liabilities of which, pursuant to the Environmental Laws,
contractually, by common law, by operation of law or otherwise, the Company may
have succeeded to.
Section II.16 Year 2000 Compliance. (a) Except as set forth in
Section 2.16 of the Company Disclosure Schedule, the computer systems and
products of the Company and its Subsidiaries (including all software, hardware,
workstations and related components, automated devices, embedded chips and other
date sensitive equipment are, or will by November 1, 1999 be, Year 2000
Compliant in all material respects. "Year 2000 Compliant" means that the
computer systems: (i) are capable of recognizing, processing, managing,
representing, interpreting and manipulating correctly date-related data for
dates earlier and later than January 1, 2000, including calculating, comparing,
sorting, storing, tagging and sequencing, without resulting in or causing
logical or mathematical errors or inconsistencies in any user-interface
functionalities or otherwise, including data input and retrieval, data storage,
data fields, calculations, reports, processing or any other input or output;
(ii) have the ability to provide date recognition for any data element without
limitation (including date-related data represented without a century
designation, date-related data whose year is represented by only two digits and
date fields assigned special values); (iii) have the ability to function
automatically into and beyond the year 2000 without human intervention and
without any change in operations associated with the advent of the year 2000;
(iv) have the ability to interpret data, dates and time correctly into and
beyond the year 2000; (v) have the ability not to produce noncompliance in
existing information, nor otherwise corrupt such data into and beyond the year
2000; (vi) have the ability to process correctly after January 1, 2000 data
containing dates before that date; and (vii) have the ability to recognize all
"leap years," including February 29, 2000.
Section II.17 Contracts. Section 2.17 to the Company Disclosure
Schedule sets forth a complete and correct list, as of the date of this
agreement, of all agreements of the following types to which the Company or a
Subsidiary is a party or may be bound (collectively, the "Material Contracts"):
(i) agreements filed as an exhibit to the Company SEC Documents and each
agreement that would have been required to be filed as an exhibit to the Company
SEC Documents had such agreement been entered into as of the date of filing any
such Company SEC Documents; (ii) employment, severance, termination, consulting
and retirement agreements that involve future annual payments in excess of
$100,000; (iii) loan agreements, indentures, letters of credit, mortgages, notes
and other debt instruments evidencing indebtedness in excess of $500,000; (iv)
leases, subleases, licenses, contracts, agreements and other instruments that
require aggregate future payments to or by the Company or any Subsidiary of more
than $500,000 (other than purchase orders and other transactions entered into in
the ordinary course of business consistent with past practice with a term not
exceeding one year); (v) agreements containing any "change of control"
provisions which, if triggered, would involve payments by the Company or any
Subsidiary in excess of $150,000 or the forfeiture, loss or restriction of
material rights of the Company or any Subsidiary, or a material increase in the
obligations of the Company or any Subsidiary, thereunder; (vi) material
agreements with any key employee, director or officer of the Company or a
Subsidiary thereof, or person known to the Company to be a direct or indirect
holder of 5% or more of any class of stock of the Company or any Subsidiary
thereof; (vii) agreements prohibiting the Company or any Subsidiary from
engaging or competing in any line of business or limiting such competition;
(viii) any joint venture, partnership and similar agreements involving a sharing
of profits; (ix) acquisition or divestiture agreements relating to (A) the sale
of assets or stock of the Company or any Subsidiary or (B) the purchase of
assets or stock of any other person, in each case that involve or may involve
future annual payments in excess of 100,000; (x) brokerage, finder's or
financial advisory agreements; and (xi) guarantees of indebtedness for borrowed
money of any person (other than a wholly-owned Subsidiary). Each of the Material
Contracts is legally valid and binding and in full force and effect, and there
are no material defaults by the Company or any of its Subsidiaries thereunder.
The Company has previously made available for inspection by Parent or the Sub or
their representatives all of the Material Contracts.
Section II.18 Vote Required. The affirmative vote of the holders
representing a majority of the number of votes entitled to be cast by the
holders of the outstanding shares of Common Stock and Capital Stock, voting as a
single class, are the only votes of the holders of any class or series of the
Company's capital stock necessary to approve this agreement and the transactions
contemplated hereby.
Section II.19 Information in Proxy Statement. The Proxy Statement,
at the date mailed to Company stockholders and at the time of the meeting of
Company stockholders to be held in connection with the Merger, will not 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, except that no representation is made by the Company with respect to
statements made therein based solely on information supplied by Parent, LLC or
the Sub for inclusion in the Proxy Statement. The Proxy Statement shall comply
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder.
Section II.20 Company Actions With Respect to the Merger. The Board
of Directors, at a meeting duly called and held, has (i) determined that each of
this agreement and the Merger are fair to and in the best interests of the
stockholders of the Company, (ii) approved this agreement and the transactions
contemplated hereby, including the Merger, and (iii) resolved to recommend that
the stockholders of the Company approve and adopt this agreement and the Merger.
The Board of Directors, at a meeting duly called and held, has unanimously
approved the Stockholders Agreement for purposes of Section 203 of the DGCL. The
actions set forth in this Section 2.20 and the other actions it has taken in
connection therewith are sufficient to render the relevant provisions of such
Section 203 of the DGCL inapplicable to the Merger.
Section II.21 Brokers. Except as set forth in Section 2.21 of the
Company Disclosure Schedule, no broker, finder or investment banker is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this agreement based upon arrangements made by or
on behalf of the Company.
Section II.22 Insurance. Section 2.22 of the Company Disclosure
Schedule contains a complete and correct list of all policies of insurance of
any kind or nature covering the Company and its Subsidiaries, including, without
limitation, policies of life, fire, theft, casualty, product liability,
workmen's compensation, business interruption, employee fidelity and other
casualty and liability insurance, indicating the type of coverage, name of
insured, the insurer, the premium, the expiration date of each policy and the
amount of coverage. All such policies (i) are with insurance companies
financially sound and reputable and are in full force and effect; (ii) are
sufficient for compliance with all requirements of law and of all applicable
Material Contracts; (iii) are valid, outstanding and enforceable policies; and
(iv) provide adequate insurance coverage for the assets and operations of the
Company and its Subsidiaries for all risks normally insured against by persons
carrying on the same business as the Company and its Subsidiaries. Complete and
correct copies of such policies have been furnished to Parent. Neither the
Company nor any of its Subsidiaries has been denied any insurance coverage which
it has requested or made any material reduction in the scope or change in the
nature of its insurance coverage.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT, LLC AND THE SUB
Parent, LLC and the Sub represent and warrant to the Company that
the statements contained in this Article III are true and correct as of the date
of this agreement.
Section III.1 Organization. Parent is a limited partnership duly
organized and validly existing under the laws of Delaware, LLC is a limited
liability company duly organized and validly existing under the laws of Delaware
and the Sub is a corporation duly organized, validly existing and in good
standing under the laws of Delaware. Each of Parent, LLC and the Sub has all
requisite corporate, partnership or other power and authority and all necessary
government approvals to own, lease and operate its properties and to carry on
its business as now being conducted.
Section III.2 Authorization; Validity of Agreement; Necessary
Action. Each of Parent, LLC and the Sub has full partnership, limited liability
company or corporate power and authority to execute and deliver this agreement
and to consummate the transactions contemplated hereby. The execution, delivery
and performance by Parent, LLC and the Sub of this agreement, and the
consummation of the Merger and of the transactions contemplated hereby have been
duly authorized by the general partner of Parent, the Board of Managers of LLC
and the Board of Directors of the Sub and by LLC as the sole stockholder of the
Sub and no other partnership, limited liability company or corporate action on
the part of Parent, LLC or the Sub is necessary to authorize the execution and
delivery by Parent, LLC and the Sub of this agreement and the consummation of
the transactions contemplated hereby. This agreement has been duly executed and
delivered by Parent, LLC and the Sub, as the case may be, and, assuming due and
valid authorization, execution and delivery hereof by the Company, is a legal,
valid and binding obligation of each of Parent, LLC and the Sub, as the case may
be, enforceable against each of them in accordance with its respective terms.
Section III.3 Consents and Approvals; No Violations. Except as set
forth in Section 3.3 of the schedule attached to this agreement setting forth
exceptions to Parent's, LLC's and the Sub's representations and warranties set
forth herein (the "Parent Disclosure Schedule") and except for filings, permits,
authorizations, consents and approvals as may be required under, and other
applicable requirements of, the Exchange Act, the HSR Act, state securities or
blue sky laws and the DGCL, the Delaware Limited Liability Company Act and the
Delaware Revised Uniform Limited Partnership Act, none of the execution,
delivery or performance of this agreement by Parent, LLC or the Sub, the
consummation by Parent, LLC or the Sub of the transactions contemplated hereby
or compliance by Parent, LLC or the Sub with any of the provisions hereof will
(i) conflict with or result in any breach of any provision of the limited
partnership agreement or certificate of limited partnership of the Parent, the
certificate of formation or limited liability company agreement of LLC or the
certificate of incorporation or by-laws of the Sub, (ii) require any filing
with, or permit, authorization, consent or approval of, any Governmental Entity,
(iii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which Parent, LLC or the Sub is a
party or by which any of them or any of their respective properties or assets
may be bound, or (iv) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Parent, LLC or the Sub or any of their properties or
assets.
Section III.4 Information in Proxy Statement. None of the
information supplied by Parent, LLC or the Sub specifically for inclusion or
incorporation by reference in the Proxy Statement shall, at the date mailed to
stockholders and at the time of the meeting of stockholders to be held in
connection with the Merger, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading.
Section III.5 Company Shares. Neither Parent, LLC nor any
of their Subsidiaries owns any Shares.
Section III.6 Brokers. Except for Veronis, Suhler and Associates
Inc., no broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this agreement based upon arrangements made by or on behalf of
Parent, LLC or the Sub.
Section III.7 Merger Consideration. Parent has the
financial resources to consummate the Merger.
ARTICLE IV
COVENANTS
Section IV.1 Interim Operations of the Company. The Company
covenants and agrees that, except (i) as expressly contemplated by this
agreement, (ii) as set forth in Section 4.1 of the Company Disclosure Schedule,
or (iii) as agreed in writing by Parent, after the date hereof, and prior to the
consummation of the Merger or the termination of this Agreement:
(a) the business of the Company and its Subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its Subsidiaries shall use reasonable efforts
to preserve its business organization intact and maintain its existing relations
with customers, suppliers, employees, creditors and business partners;
(b) the Company shall not, directly or indirectly, (i) sell,
transfer or pledge or agree to sell, transfer or pledge any treasury stock of
the Company or any capital stock of any of its Subsidiaries beneficially owned
by it; (ii) amend its certificate of incorporation or by-laws or similar
organizational documents; or (iii) split, combine or reclassify the outstanding
Shares or any outstanding capital stock of any of the Subsidiaries of the
Company;
(c) neither the Company nor any of its Subsidiaries shall:
(i) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property with respect to its capital stock (except dividends from
a wholly-owned Subsidiary to the Company); (ii) issue, sell, pledge, dispose of
or encumber any additional shares of, or securities convertible into or
exchangeable for, or options, warrants, calls, commitments or rights of any kind
to acquire, any shares of capital stock of any class of the Company or its
Subsidiaries, other than (x) the issuance of shares reserved for issuance on the
date hereof for the purpose reserved or (y) the issuance of shares pursuant to
the General Physics Corporation Profit Investment Plan in the ordinary course of
business consistent with past practice but in no event shall the Company issue
in any one month shares with an aggregate value (based on the then current
market price of the Shares) of more than $125,000; (iii) transfer, lease,
license, sell, mortgage, pledge, dispose of, or encumber any material assets
other than in the ordinary and usual course of business and consistent with past
practice, or incur or modify in any respect materially adverse to the Company
any material indebtedness or other liability, other than in the ordinary and
usual course of business and consistent with past practice; or (iv) redeem,
purchase or otherwise acquire directly or indirectly any of its capital stock;
(d) other than in the ordinary and usual course of business
and consistent with past practice, neither the Company nor any of its
Subsidiaries shall: (i) grant any increase in the compensation payable or to
become payable by the Company or any of its Subsidiaries to any of its executive
officers or key employees or materially increase the foregoing for any other
employees; or (ii)(A) adopt any new, or (B) amend or otherwise increase, or
accelerate the payment or vesting of the amounts payable or to become payable
under any existing, bonus, incentive compensation, deferred compensation,
severance, profit sharing, stock option, stock purchase, insurance, pension,
retirement or other employee benefit plan, agreement or arrangement, other than
the Company Options as provided in Section 1.9; or (iii) enter into any
employment or severance agreement with or, except in accordance with the
existing written policies of the Company, grant any severance or termination pay
to any officer, director or employee of the Company or any its Subsidiaries;
(e) neither the Company nor any of its Subsidiaries shall
modify, amend or terminate any of its Material Contracts or waive, release or
assign any material rights or claims, except in the ordinary course of business
and consistent with past practice;
(f) neither the Company nor any of its Subsidiaries shall
permit any material insurance policy naming it as a beneficiary or a loss
payable payee to be cancelled or terminated, except in the ordinary course of
business and consistent with past practice;
(g) except with Parent's consent, which shall not
unreasonably be withheld or delayed, neither the Company nor any of its
Subsidiaries shall: (i) incur or assume any debt other than short term debt
incurred or assumed in the ordinary course of business in amounts consistent
with past practices; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (whether directly, contingently or otherwise) for the obligations
of any other person or entity, or make any loan, advance or capital contribution
to, or investment in, any other person or entity, other than (1) wholly owned
Subsidiaries of the Company, (2) pursuant to existing commitments under the
Material Contracts listed on Section 2.17 to the Company Disclosure Schedule or
under any existing contract that is not a Material Contract, or (3) in the
ordinary course of business consistent with past practice and in an aggregate
amount not to exceed $450,000 at any time outstanding prior to February 1, 2000
and $250,000 at any time outstanding thereafter; (iii) enter into any commitment
or transaction with a client involving more than $1,000,000 (other than pursuant
to existing commitments under the Material Contracts listed on such Section 2.17
or under any existing contract that is not a Material Contract); or (iv) make
any capital expenditure or purchase or lease of assets, securities or real
estate in excess of $250,000 for any one expenditure, purchase or lease or
$1,000,000 in the aggregate for all such expenditures, purchases or leases
(other than pursuant to existing commitments under the Material Contracts listed
on such Section 2.17 or under any existing contract that is not a Material
Contract).
(h) neither the Company nor any of its Subsidiaries shall
change any of the accounting methods used by it unless required by GAAP;
(i) neither the Company nor any of its Subsidiaries shall
pay, discharge or satisfy any claims, liabilities or obligations (absolute,
accrued, asserted or unasserted, contingent or otherwise), other than in the
ordinary course of business and consistent with past practice;
(j) neither the Company nor any of its Subsidiaries shall
adopt a plan of complete or partial liquidation, dissolution, merger,
consolidation, restructuring, recapitalization or other reorganization of the
Company or any of its Subsidiaries (other than the Merger or in accordance with
Section 4.4);
(k) neither the Company nor any of its Subsidiaries shall
take, or agree to commit to take, any action that would or is reasonably likely
to result in any of the conditions to the Merger set forth in Article V not
being satisfied, or would make any representation or warranty of the Company,
contained herein inaccurate in any respect at, or as of any time prior to, the
Effective Time, or that would materially adversely affect the Company or its
Subsidiaries, materially impair the ability of the Company to consummate the
Merger in accordance with the terms hereof or materially delay such
consummation; and
(l) neither the Company nor any of its Subsidiaries shall
enter into an agreement, contract, commitment or arrangement to do any of the
foregoing, or to authorize, recommend, propose or announce an intention to do
any of the foregoing.
Section IV.2Access; Confidentiality. Upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel, environmental consultants, financing
sources and other representatives of Parent and LLC, access (including for
environmental due diligence purposes), during normal business hours (at such
times and in such manner so as not to interfere with the normal business
operations of the Company and its Subsidiaries), during the period prior to the
consummation of the Merger, to all its properties, books, contracts, commitments
and records and, during such period, the Company shall (and shall cause each of
its Subsidiaries to) furnish promptly to the Parent (a) a copy of each report,
schedule, registration statement and other document filed or received by it
during such period pursuant to the requirements of federal securities laws and
(b) all other information concerning its business, properties and personnel as
Parent may reasonably request. Unless otherwise required by law, Parent will
hold any such information which is nonpublic in confidence in accordance with
the provisions of a letter agreement dated May 17, 1999 between the Company and
Parent (the "Confidentiality Agreement"). A copy of any sample results obtained
by the Parent in connection with its environmental due diligence shall be
promptly provided to the Company at its request.
Section IV.3Consents and Approvals.
(a) Each of the Company, Parent, LLC and the Sub shall take
all reasonable actions necessary to comply promptly with all legal requirements
which may be imposed on it with respect to this agreement and the transactions
contemplated hereby (which requirements shall include, without limitation, those
identified in Section 2.4 of the Company Disclosure Schedule or Section 3.3 of
the Parent Disclosure Schedule, and which actions shall include, without
limitation, furnishing all information required under the HSR Act and in
connection with approvals of or filings with any other Governmental Entity) and
shall promptly cooperate with and furnish information to each other in
connection with any such requirements imposed upon any of them or any of their
Subsidiaries in connection with this agreement and the transactions contemplated
hereby. Each of the Company, Parent, LLC and the Sub shall, and shall cause its
Subsidiaries to, take all reasonable actions necessary to obtain (and shall
cooperate with each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or other public or
private third party required to be obtained or made by Parent, LLC, the Sub, the
Company or any of its Subsidiaries in connection with the Merger or the taking
of any action contemplated thereby or by this agreement.
(b) The Company and Parent shall take all reasonable actions
necessary to file as soon as practicable, and in no event later than 15 days
from the date of this agreement, notifications under the HSR Act and to respond
as promptly as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of Justice for
additional information or documentation and to respond as promptly as
practicable to all inquiries and requests received from any State Attorney
General or other Governmental Entity in connection with antitrust matters.
Section IV.4No Solicitation, etc.
(a) The Company shall not, and shall not permit any of the
officers, directors, employees, agents or representatives of the Company or any
of its Subsidiaries (including any financial advisor, attorney or accountant
retained by the Company or any of its Subsidiaries) to:
(i) directly or indirectly initiate, solicit,
encourage, participate in or otherwise facilitate any inquiries or the making of
any proposal or offer with respect to a merger, reorganization, share exchange,
tender offer, consolidation or similar transaction involving, or any purchase of
10% or more of the assets or any equity securities of, the Company or any of its
Subsidiaries (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal"); or
(ii) directly or indirectly engage in any
negotiations concerning an Acquisition Proposal, or provide any confidential
information or data to, any person or entity (other than Parent, LLC or any of
their affiliates or representatives relating to an Acquisition Proposal (whether
made before or after the date of this agreement) or otherwise facilitate any
effort or attempt to make or implement an Acquisition Proposal.
(b) The Company immediately shall cease any existing
activities or negotiations with any third parties with respect to any
Acquisition Proposal, and the Company promptly shall inform those parties in
writing of the Company's obligations under paragraph (a) above and this
paragraph (b). In addition, the Company promptly shall inform the officers,
directors, employees, agents and representatives of the Company and of its
Subsidiaries (including any financial advisor, attorney or accountant retained
by the Company or any of its Subsidiaries) of the Company's obligations under
paragraph (a) above and this paragraph (b).
(c) Nothing contained in this agreement shall prevent the
Board of Directors or the Special Negotiating Committee of the Board of
Directors (the "Special Committee") or the Company from (x) complying with Rules
14e-2 and 14d-9 under the Exchange Act with regard to an Acquisition Proposal or
providing information in response to a request therefor by a person who has made
an unsolicited bona fide written Acquisition Proposal (so long as such proposal
did not result from a breach of the provisions of paragraph (a) or (b)), if the
Board of Directors or the Special Committee or the Company receives from the
person so requesting such information an executed confidentiality agreement with
terms substantially the same as those contained in the confidentiality agreement
between Parent and the Company including a one year restriction on solicitation
of employees, or engaging in any negotiations or discussions with any person who
has made an unsolicited bona fide written Acquisition Proposal, if and only to
the extent that in each case (A) the Board of Directors or the Special Committee
determines in good faith after consultation with outside legal counsel that
failure to take such action would be reasonably likely to constitute a breach of
its fiduciary duties under applicable law and (B) the Board of Directors or the
Special Committee determines in good faith after consultation with its financial
advisor that such Acquisition Proposal is reasonably likely to be consummated,
taking into account all legal, financial and regulatory aspects of the proposal
and the person making the proposal (including the financial capability of that
person and any conditions contained in the proposal), and that such Acquisition
Proposal would, if consummated, be reasonably likely to result in a more
favorable transaction than the transaction contemplated by this agreement (any
such more favorable Acquisition Proposal being referred to herein as a "Superior
Proposal"); provided, however, that the Company may not, except as permitted by
paragraph (d) below, approve or recommend, or propose to approve or recommend,
any Acquisition Proposal, or enter into any agreement with respect to any
Acquisition Proposal, or (y) for a period of 30 days from the date hereof,
providing reasonable information in response to a request therefor by a person
who has expressed an interest in acquiring the Company (so long as such request
was not solicited by the Company or any of its representatives after the date
hereof), if the Board of Directors or the Special Committee receives from the
person so requesting such information a confidentiality agreement with terms
substantially the same as those contained in the confidentiality agreement
between Parent and the Company including a one year restriction on solicitation
of employees.
(d Neither the Board of Directors nor any committee of the
Board of Directors shall approve or recommend, or propose to approve or
recommend, any Acquisition Proposal by a third party, or enter into a definitive
agreement regarding any third party Acquisition Proposal, unless the Board of
Directors (or any committee thereof) shall have (x) determined in good faith,
after consultation with outside legal counsel, that failure to take such action
would be reasonably likely to constitute a breach of its fiduciary duties under
applicable law and (y) determined in good faith, after receiving advice from its
financial advisor, that the Acquisition Proposal is superior to the Merger and
that such Acquisition Proposal is a Superior Proposal.
(e The Company shall notify Parent promptly (but in any event
within 24 hours) if any inquiries, proposals or offers relating to an
Acquisition Proposal are received by the Company or any of its representatives
or any information relating to an Acquisition Proposal is requested from, or any
discussions or negotiations relating to an Acquisition Proposal are sought to be
initiated or continued with, the Company or any of its representatives. The
Company shall identify in its notice the name of the person or entity involved
and the material terms and conditions of any proposals or offers and thereafter
shall keep Parent informed, on a current basis, of any material changes in the
status and content of any such proposals or offers and the status of any such
negotiations or discussions. If the Board of Directors determines that any
Acquisition Proposal is a Superior Proposal and the per Share price is not more
than 10% greater than the per Share Merger Consideration, then the Board shall
so notify Parent and shall give Parent up to five business days to propose
changes to the terms and conditions of the Merger and the Company shall during
that five business day period negotiate in good faith with Parent with respect
to such proposed changes and, if agreement is reached, amend this agreement so
there is no Superior Proposal.
Section IV.5Additional Agreements. Subject to the terms and
conditions herein provided, each of the parties hereto shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to achieve the satisfaction of all conditions set forth in Article
V, and to consummate and make effective the Merger and the other transactions
contemplated by this agreement. Without limitation of the foregoing, Parent,
LLC, the Sub and the Company shall use all reasonable efforts to take such steps
and provide and comply with such undertakings as may be required by any
Governmental Entity whose approval or consent, or with respect to which a
waiting period must expire, to satisfy the conditions set forth in Article V;
provided that such steps and undertakings shall not impose upon the Company or
Parent and the Sub any terms or conditions which Parent determines reasonably
and in good faith to be unreasonably burdensome to Parent or the Sub or to the
operations of the Company on a going-forward basis or impose upon the Company
any terms or conditions which the Company determines reasonably and in good
faith to be unreasonably burdensome to the Company. Neither Parent, LLC nor Sub
shall take, or agree to commit to take, any action that would or is reasonably
likely to result in any of the conditions to the Merger set forth in Article V
not being satisfied, or would make any representation or warranty of Parent, LLC
and Sub contained herein inaccurate in any respect at, or as of any time prior
to, the Effective Time, or that would materially adversely affect Parent, LLC or
Sub, materially impair the ability of Parent, LLC or Sub to consummate the
Merger in accordance with the terms hereof or materially delay such
consummation. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this agreement, the proper
officers and directors (or managers, as the case may be) of the Company, Parent,
LLC and the Sub shall use all reasonable efforts to promptly take or cause to be
taken, all such necessary actions.
Section IV.6Publicity. The initial press release with respect to
the execution of this agreement shall be a joint press release acceptable to
Parent and the Company and shall be in substantially the form attached hereto as
Exhibit 4.6. Thereafter, so long as this agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this agreement or the other transactions contemplated hereby without the
prior consultation of the other party, except as may be required by law or by
any listing agreement with a national securities exchange or trading market.
Section IV.7Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would cause any representation or warranty contained in
this agreement to be untrue or inaccurate in any material respect at or prior to
the Effective Time and (ii) any material failure of the Company, Parent, LLC or
the Sub, as the case may be, to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder; provided,
however, that the delivery of any notice pursuant to this Section 4.7 shall not
limit or otherwise affect the remedies available hereunder to the party
receiving such notice.
Section IV.8Directors' and Officers' Insurance and
Indemnification.
(a For six years after the Effective Time, Parent shall, and
shall cause the Surviving Corporation (or any successor to the Surviving
Corporation) to, (i) retain all provisions of the Company's certificate of
incorporation and by-laws as now in effect respecting the limitation of
liabilities of directors and officers and indemnification, and (ii) indemnify,
defend and hold harmless the present and former officers and directors of the
Company and its Subsidiaries, and persons who become any of the foregoing prior
to the Effective Time (each an "Indemnified Party"), against all losses, claims,
damages, liabilities, costs, fees and expenses (including reasonable fees and
disbursements of counsel and judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the prior written consent of the Parent or the Surviving Corporation)) arising
out of actions or omissions occurring at or prior to the Effective Time to the
full extent permitted under Delaware law, subject to the terms of the Company's
certificate of incorporation or by-laws, as in effect at the date hereof;
provided that, in the event any claim or claims are asserted or made within such
six year period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims; provided,
further, that any determination required to be made with respect to whether an
Indemnified Party's conduct complies with the standards set forth under Delaware
law, the certificate of incorporation or the by-laws, as the case may be, shall
be made by independent counsel mutually acceptable to Parent and the Indemnified
Party; and provided, further, that nothing herein shall impair any rights or
obligations of any present or former directors or officers of the Company. In
the event the Surviving Corporation or any of its successors or assigns
consolidates with or merges into any other person or entity and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
transfers or conveys all or substantially all of its properties and assets to
any person or entity, then, and in each such case, proper provision shall be
made so that the successors and assigns of the Surviving Corporation assume the
obligations set forth in this Section 4.8.
(b Parent or the Surviving Corporation shall maintain the
Company's existing officers' and directors' liability insurance ("D&O
Insurance") for a period of not less than six years after the Effective Date;
provided, that the Parent may substitute therefor policies of substantially
equivalent coverage and amounts containing terms no less favorable to such
former directors or officers; provided, further, if the existing D&O Insurance
expires, is terminated or cancelled during such period, Parent or the Surviving
Corporation shall use all reasonable efforts to obtain substantially similar D&O
Insurance; provided, further, however, that in no event shall the Company be
required to pay aggregate premiums for insurance under this Section in excess of
150% of the aggregate premiums paid by the Company in 1998 on an annualized
basis for such purpose (the "1998 Premium"); and provided, further, that if the
Parent or the Surviving Corporation is unable to obtain the amount of insurance
required by this Section 4.8(b) for such aggregate premium, Parent or the
Surviving Corporation shall obtain as much insurance as can be obtained for an
annual premium of 150% of the 1998 Premium.
Section IV.9Rights Agreement. At the Closing, the Company shall
take all actions necessary to redeem the Company Rights in accordance with the
Rights Agreement.
Section IV.10 Audit. The Company shall cause KPMG LLP, its
independent accountants, to audit and deliver its report with respect to the
consolidated balance sheet of the Company and its subsidiaries and with respect
to the consolidated balance sheet of General Physics Corporation and its
subsidiaries as of September 30, 1999 and the consolidated results of operations
of the Company and its subsidiaries and the consolidated results of operations
of General Physics Corporation and its subsidiaries for the nine months ended
September 30, 1999, in accordance with GAAP consistently applied (the "1999
Audit"), and shall use its reasonable efforts to deliver the 1999 Audit to
Parent no later than December 15, 1999. Parent shall pay any and all expenses of
the 1999 Audit unless this agreement is terminated as a result of the failure to
satisfy the conditions in Section 5.1(h).
ARTICLE V
CONDITIONS
Section V.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction on or prior to the Closing Date of each of the
following conditions:
(a Stockholder Approval. This agreement shall have
been approved and adopted by the requisite vote of the holders of the Shares
in order to consummate the Merger;
(b Statutes; Consents. There shall not have been any statute,
rule, regulation, injunction, writ or order enacted, promulgated or issued by
any court or by any Governmental Entity which declares this agreement
unenforceable in any material respect or which prohibits consummation of the
Merger, and all governmental consents, orders and approvals (including, without
limitation, those identified in Section 2.4 of the Company Disclosure Schedule)
required for the consummation of the Merger and the other transactions
contemplated hereby shall have been obtained and shall be in effect at the
Effective Time; and
(c HSR Approval. The applicable waiting period under the HSR
Act shall have expired or been terminated.
Section V.2 Conditions to Parent's, LLC's and the Sub's Obligations
to Effect the Merger. The obligations of Parent and the Sub to consummate the
Merger are further subject to the fulfillment of the following conditions, any
and all of which may be waived in whole or in part by Parent and the Sub:
(a Representations and Warranties. All of the representations
and warranties of the Company set forth in this agreement that are qualified as
to materiality shall be true and correct in all respects, and all of the
representations and warranties of the Company set forth in this agreement that
are not qualified as to materiality shall be true and correct in all material
respects, as of the date of this agreement and as of the Closing Date (except
that representations and warranties that address matters as of a particular date
need be true only as of that date), with such exceptions as do not in the
aggregate have a material adverse effect on the condition (financial or
otherwise), business, assets, results of operations or prospects of the Company
and its Subsidiaries taken as a whole or upon the ability of the Company to
perform its obligations under this agreement in any material respect;
(b Covenants. The Company shall have performed in all
material respects all material obligations of the Company and complied in all
material respects with all material agreements or covenants of the Company to be
performed or complied with by it under this agreement;
(c Opinion. Parent shall have received an opinion of Duane,
Morris & Heckscher LLP, counsel to the Company, substantially in the form of
Exhibit 5.2(c)(1) and an opinion of Andrea Kantor, Esq., General Counsel of the
Company, substantially in the form of Exhibit 5.2(c)(2);
(d Material Adverse Change. There shall not have occurred any
material adverse change (or any developments that, insofar as reasonably can be
foreseen, are reasonably likely to result in a material adverse change) in the
condition (financial or otherwise), business, results of operations, assets or
prospects of the Company and its Subsidiaries taken as a whole;
(e Injunctions. There shall not be any threatened or pending
suit, action or proceeding by any Governmental Entity against the Sub, Parent,
the Company or any Subsidiary of the Company (A) seeking to prohibit or impose
any material limitations on Parent's or the Sub's ownership or operation (or
that of any of their respective Subsidiaries or affiliates) of all or a material
portion of their or the Company's businesses or assets, or to compel Parent or
the Sub or their respective Subsidiaries and affiliates to dispose of or hold
separate any material portion of the business or assets of the Company or Parent
and their respective Subsidiaries, (B) seeking to restrain or prohibit the
consummation of the Merger or the performance of any of the other transactions
contemplated by this agreement or seeking to obtain from the Company, Parent or
the Sub any damages that are material in relation to the Company and its
Subsidiaries taken as a whole and (C) which otherwise would prohibit the
consummation of the Merger or materially adversely affect or be reasonably
likely to materially adversely affect the Company or its Subsidiaries taken as a
whole; and no other action shall have been taken by any Governmental Entity,
other than the application to the Merger of applicable waiting periods under the
HSR Act, that is reasonably likely to result, directly or indirectly, in any of
the consequences referred to in clauses (A) through (C) above;
(f Consents. All consents under the Material Agreements
listed on Section 5.2(f) of the Company Disclosure Schedule shall have been
obtained, without any terms or conditions that Parent determines in good faith
to be unreasonably burdensome to Parent, LLC or the Sub or the operations of the
Company on a going forward basis, and shall be in effect at the Effective Time;
(g Environmental Matters.
(i0 For each property owned, leased or operated by
the Company in the State of New Jersey, Parent or its representatives shall have
received either (A) a Letter of Non-Applicability under New Jersey's Industrial
Site Recovery Act, N.J.S.A. 13:1K-6 et seq. ("ISRA"), or, (B) if it is
determined that the transactions under this Agreement trigger ISRA as concerns
certain of the properties owned, leased or operated by the Company in New
Jersey, for each of those properties a written approval by the New Jersey
Department of Environmental Protection (the "NJDEP") of a negative declaration
affidavit, which affidavit has been submitted by the Company to the NJDEP.
Parent or its representatives shall also have received copies of all submissions
made to the NJDEP under ISRA and copies of all correspondence to or from the
NJDEP under ISRA.
(ii0 For each property owned, leased or operated by
the Company in the State of Connecticut, Parent or its representatives shall
have received either (A) documentation satisfactory to Parent that the
transactions under this Agreement do not trigger Connecticut's Real Property
Transfer Act, C.G.S.A. 22a-134 et seq. (the "Connecticut Real Property Transfer
Act"), or (B) if it is determined that the transactions under this Agreement do
trigger the Connecticut Real Property Transfer Act as concerns certain of the
properties owned, leased, or operated by the Company in Connecticut, Parent or
its representatives shall have received from the Company for each of the
properties that does trigger the Connecticut Real Property Transfer Act (x)
either (a) a properly completed and executed Form I as that term is defined in
the Connecticut Real Property Transfer Act, indicating that no discharge,
spillage, uncontrolled loss, seepage or filtration of hazardous waste has
occurred at the subject Connecticut property as determined by an investigation
conducted in accordance with prevailing standards, or (b) a properly completed
and executed Form II as that term is defined in the Connecticut Real Property
Transfer Act, indicating that any discharge, spillage, uncontrolled loss,
seepage or filtration of hazardous waste which has occurred at the subject
Connecticut property has been remediated in accordance with the remediation
standards and that the remediation has been appropriately approved or that no
remediation is necessary to achieve compliance with the remediation standards,
and (y) documentation satisfactory to Parent that the Form Is and Form IIs have
been submitted to the Commissioner of Environmental Protection, as required
under the Connecticut Real Property Transfer Act, and that those respective Form
Is and Form IIs were the appropriate forms for filing under the Connecticut Real
Property Transfer Act;
(h Audit Results. The 1999 Audit shall have been delivered to
Parent and shall not indicate that the consolidated financial statements of the
Company and its subsidiaries as of June 30, 1999 included in the Company's Form
10-Q for the quarter ended June 30, 1999 or the consolidated financial
statements of General Physics Corporation and its subsidiaries as of August 31,
1999 included in Section 5.2(h) of the Company Disclosure Schedule (i) are
inaccurate in any respect that would have a material adverse effect on the
condition (financial or otherwise), business, assets, results of operations or
prospects of the Company and its Subsidiaries taken as a whole or that would
otherwise materially and adversely affect the value of the Company and its
Subsidiaries taken as a whole or the value of General Physics Corporation and
its subsidiaries taken as a whole or (ii) were not prepared in accordance with
generally accepted accounting principles applied on a basis consistent with the
application of those principles for prior periods;
(i Redemption of Rights. The Company shall have
redeemed the Company Rights in accordance with the Rights Agreement; and
(j Aggregate Consideration. The aggregate number of shares of
Common Stock or Capital Stock outstanding at the Effective Time, together with
the aggregate number of shares of Common Stock or Capital Stock issuable upon
exercise or conversion of any options, warrants, calls, subscriptions or other
rights (other than the Company Rights), agreements, arrangements or commitments
of any character, shall not exceed an amount equal to 14,735,508 (after giving
effect to the cancellation of 453,623 options pursuant to the Stockholders
Agreement) plus any shares issued pursuant to the General Physics Corporation
Profit Investment Plan in accordance with Section 4.1(c), and the aggregate
exercise price of all Company Options shall not be less than the amount (the
"Aggregate Amount") indicated in Section 1.9 of the Company Disclosure Letter;
provided, however, this condition shall be deemed satisfied if the aggregate
additional cost to Parent from either the aggregate number of Shares exceeding
14,735,508 or the aggregate exercise price being less than the Aggregate Amount
is less than $100,000 or if any third party reimburses the Parent for any cost
in excess of $100,000.
Section V.3 Conditions to Company's Obligations to Effect the
Merger. The obligations of the Company to consummate the Merger are further
subject to the fulfillment of the following conditions, any or all of which may
be waived in whole or in part by the Company:
(a Representations. All of the representations and warranties
of the Parent, LLC and the Sub set forth in this agreement that are qualified as
to materiality shall be true and correct in all respects and any such
representations and warranties that are not so qualified shall be true and
correct in all material respects, in each case (i) as of the date referred to in
any representation or warranty which addresses matters as of a particular date,
or (ii) as to all other representations and warranties, as of the date of this
agreement and as of the Closing Date;
(b Covenants. Parent, LLC and the Sub shall have performed in
all respects its obligations under Section 1.7(a) and in all material respects
all other material obligations and complied in all material respects with all
other material agreements or covenants of the Parent, LLC and the Sub to be
performed or complied with by them under this agreement; and
(c Opinion. The Company shall have received an opinion of
Proskauer Rose LLP, counsel to Parent, LLC and the Sub, substantially in the
form of Exhibit 5.3(c).
ARTICLE VI
TERMINATION
Section VI.1Termination. This agreement may be terminated and the
transactions contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after stockholder approval thereof:
(a By the mutual written consent of Parent and the
Company.
(b By either the Company or Parent:
(i0 if any Governmental Entity shall have issued an
order, decree or ruling or taken any other action (which order, decree,
ruling or other action the parties hereto shall use reasonable efforts to
lift), which permanently restrains, enjoins or otherwise prohibits the
acceptance for payment of, or payment for, Shares pursuant to the Merger
and such order, decree, ruling or other action shall have become final
and non-appealable;
(ii0 if the Merger shall fail to receive the
requisite vote for approval and adoption by the stockholders of the
Company; or
(iii0 if the Merger shall not have been consummated
before June 30, 2000; provided, however, this Section 6.1(b)(iii) shall
not be available to any party whose failure to fulfill any obligation
under this agreement has been the cause of, or resulted in, the failure
to consummate the Merger before that date.
(c By the Company:
(i0 in connection with entering into a definitive
agreement in accordance with Sections 4.4(c), (d) and (e), provided it
has complied with all provisions thereof, including the notice provisions
therein; or
(ii0 if Parent, LLC or the Sub shall have breached in
any material respect any of their respective representations, warranties,
covenants or other agreements contained in this agreement, which breach
cannot be or has not been cured within 30 days after the giving of
written notice by the Company to Parent, LLC or the Sub, as applicable.
(d By Parent, if the Company shall have breached in any
material respect any of its representations, warranties, covenants or
other agreements contained in this agreement, which breach cannot be or
has not been cured within 30 days after the giving of written notice by
Parent to the Company (an "Uncured Breach"), provided that such Uncured
Breach, together with all other then existing Uncured Breaches, cause the
condition in Section 5.2(a) or (b) not to be satisfied.
Section VI.2Effect of Termination. In the event of the termination
of this agreement pursuant to its terms, written notice thereof shall forthwith
be given to the other party or parties specifying the provision hereof pursuant
to which such termination is made, and this agreement shall forthwith become
null and void, and there shall be no liability on the part of the Parent, LLC,
the Sub or the Company except (a) for fraud, (b) as set forth in Section 7.1,
(c) for any willful breach prior to such termination of any covenant or
agreement in this agreement, or (d) for any intentional breach prior to such
termination of any representation or warranty in this agreement.
ARTICLE VII
MISCELLANEOUS
Section VII.1 Fees and Expenses.
(a Except as contemplated by this agreement, including
Sections 4.10 and 7.1(b) hereof, all costs and expenses incurred in connection
with this agreement and the consummation of the transactions contemplated hereby
shall be paid by the party incurring such expenses.
(b If (x) the Company shall accept a Superior Proposal and
shall terminate this agreement pursuant to Section 6.1(c)(i) and (A) the
transaction contemplated by the Superior Proposal is consummated within nine
months after that termination or (B) within six months thereafter the Company
enters into an agreement for a transaction pursuant to a different Acquisition
Proposal (whether received before or after termination) at a price and on terms
at least as favorable to the stockholders of the Company as the Merger, and the
transaction contemplated by that Acquisition Proposal is consummated within nine
months after that termination, or (y) the Merger shall fail to receive the
requisite vote for approval and adoption by the stockholders of the Company, the
Company or Parent shall terminate this agreement pursuant to Section 6.1(b)(ii),
prior to that failure to receive such vote the Company shall have received an
Acquisition Proposal at a price and on terms at least as favorable to the
stockholders of the Company as the Merger and the transaction contemplated by
that Acquisition Proposal is consummated within nine months after that
termination, then, upon consummation of the transaction, the Company shall pay
to Parent a cash fee (the "Termination Fee") in an amount equal to 2.75% of the
aggregate Merger Consideration (assuming for purposes of calculating the
Termination Fee that the Exchanged Shares had not been exchanged for interests
in the LLC and were instead converted into the right to receive the Merger
Consideration applicable to such shares) plus an amount to be established by
submission by Parent to the Company of reasonably satisfactory documentation up
to $625,000 to reimburse Parent for its costs, fees and expenses (including, but
not limited to, investment banking, legal and accounting costs, fees and
expenses) in connection with the Merger and this agreement (the "Expense
Reimbursement"), provided, however, that no Termination Fee or Expense
Reimbursement shall be payable if the Sub, LLC or Parent was in material breach
of its representations, warranties, covenants or obligations under this
agreement at the time of its termination.
(c Notwithstanding anything to the contrary in Section
7.1(b), if the Company shall terminate this agreement pursuant to Section
6.1(c)(i) and the Company does not consummate within nine months after that
termination, a transaction pursuant to the Superior Proposal or pursuant to a
different Acquisition Proposal at a price and on terms at least as favorable to
the stockholders of the Company as the Merger, the Termination Fee shall be 2%
and the Termination Fee and Expense Reimbursement shall be payable within 30
days after the expiration of that nine month period by delivery, at the
Company's election, of (i) the Company's negotiable promissory note in the
aggregate amount of the Termination Fee and the Expense Reimbursement (the
"Note") or (ii) shares of Common Stock (the "Payment Shares") having a fair
market value (based on the closing price of the Common Stock on the New York
Stock Exchange on the tenth trading day after termination of this agreement
equal to the aggregate amount of the Termination Fee and the Expense
Reimbursement. The Note shall mature on the third anniversary of issuance, shall
be payable in equal quarterly installments on the first day of each calendar
quarter after delivery of the Note and shall bear interest from the date of
termination of this agreement at a rate equal to the prime rate of Chase
Manhattan Bank, N.A. in effect from time to time. Any Payment Shares shall be
taken by Parent for investment and not with a view to distribution thereof and
Parent hereby agrees not to sell or otherwise dispose of one-half of any Payment
Shares for a period of one year after receipt. Any Payment Shares may bear a
restrictive legend with respect to the foregoing restrictions.
(d Payment of the Termination Fee and Expense Reimbursement
upon any termination referred to in Section 7.1(b) or 7.1(c) shall be the sole
and exclusive remedy for Parent, LLC and the Sub as a result of such
termination.
Section VII.2 Amendment and Modification. Subject to applicable
law, this agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto, at any time
prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this agreement by the stockholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration or effect any other change
requiring stockholder approval under applicable law.
Section VII.3 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this agreement or in any schedule,
instrument or other document delivered pursuant to this agreement shall survive
the Effective Time.
Section VII.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or sent by an overnight courier service, such as
Federal Express, to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice);
(a if to Parent, LLC or the Sub, to:
VS&A Communications Partners III, L.P.
350 Park Avenue
New York, New York 10022
Attn: Jeffrey T. Stevenson
President and
Jonathan D. Drucker, Esq.
General Counsel
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attn: Bertram A. Abrams, Esq.
(b if to the Company, to:
GP Strategies Corporation
9 West 57th Street
New York, New York 10019
Attn: Jerome I. Feldman, President
with a copy to:
Duane, Morris & Heckscher LLP
380 Lexington Avenue
New York, New York 10168
Attn: Robert J. Hasday, Esq.
Section VII.5 Counterparts. This agreement may be executed in one
or more counterparts, each of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section VII.6 Entire Agreement; No Third Party Beneficiaries. This
agreement and the Confidentiality Agreement (including the documents and the
instruments referred to herein and therein): (a) constitute the entire agreement
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, and (b) except as
provided in Section 4.8 are not intended to confer upon any person other than
the parties hereto any rights or remedies hereunder, except that the
stockholders of the Company shall have the right to enforce their rights to
receive the Merger Consideration pursuant to Sections 1.6(c) and 1.7.
Section VII.7 Severability. Any term or provision of this agreement
that is held by a court of competent jurisdiction or other authority to be
invalid, void 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. If the final judgment of a
court of competent jurisdiction or other authority declares that any term or
provision hereof is invalid, void or unenforceable, the parties agree that the
court making such determination shall have the power to reduce the scope,
duration, area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision.
Section VII.8 Governing Law. This agreement shall be governed by
and construed in accordance with the laws of the State of Delaware without
giving effect to the principles of conflicts of law thereof.
Section VII.9 Assignment. Neither this agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties, except that the Sub may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Parent, LLC or to any direct or indirect wholly owned Subsidiary of Parent or
LLC. Subject to the preceding sentence, this agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
VS&A COMMUNICATIONS PARTNERS III, L.P.
By: VS&A Equities III, LLC, its general
partner
By:
Jeffrey T. Stevenson, President and
Senior Managing Member
VS&A-GP, L.L.C.
By: VS&A Communications Partners III, L.P.
By: VS&A Equities III, LLC, its general
partner
By:
Jeffrey T. Stevenson, President and
Senior Managing Partner
VS&A-GP ACQUISITION, INC.
By:
Jeffrey T. Stevenson
President
GP STRATEGIES CORPORATION
By:
Jerome I. Feldman
President
Company Disclosure Schedule
(See Attached)
Parent Disclosure Schedule
(See Attached)