EXHIBIT 2(a)
AGREEMENT AND PLAN OF MERGER
Agreement entered into as of December 1, 1995 by and among
Thermo Remediation, Inc., a Delaware corporation (the "Buyer"),
TRI Acquisition Inc., a Delaware corporation and a wholly-owned
subsidiary of the Buyer (the "Transitory Subsidiary"), and
Remediation Technologies, Inc., a Delaware corporation (the
"Company"). The Buyer, the Transitory Subsidiary and the Company
are referred to collectively herein as the "Parties."
This Agreement contemplates a taxable merger of the
Transitory Subsidiary into the Company. In such merger, the
stockholders of the Company will receive cash and, if they file
an election as set forth herein, capital stock of the Buyer in
exchange for their capital stock of the Company.
Now, therefore, in consideration of the representations,
warranties and covenants herein contained, the Parties agree as
follows.
ARTICLE I
THE MERGER
1.1 The Merger. Upon and subject to the terms and
conditions of this Agreement, the Transitory Subsidiary shall
merge with and into the Company (with such merger referred to
herein as the "Merger") at the Effective Time (as defined below).
From and after the Effective Time, the separate corporate
existence of the Transitory Subsidiary shall cease and the
Company shall continue as the surviving corporation in the Merger
(the "Surviving Corporation"). The "Effective Time" shall be the
time at which the Company and the Transitory Subsidiary file the
certificate of merger or other appropriate documents prepared and
executed in accordance with the relevant provisions of the
Delaware General Corporation Law (the "Certificate of Merger")
with the Secretary of State of the State of Delaware, or such
later time as shall be agreed to by the Buyer and the Company and
be specific in said Certificate of Merger. The Merger shall have
the effects set forth in Section 259 of the Delaware General
Corporation Law.
1.2 The Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place
at the offices of Hale and Dorr in Boston, Massachusetts,
commencing at 1:00 p.m. local time on December 8, 1995, or, if
all of the conditions to the obligations of the Parties to
consummate the transactions contemplated hereby have not been
satisfied or waived by such date, on such mutually agreeable
later date as soon as practicable after the satisfaction or
PAGE
waiver of all conditions to the obligations of the Parties to
consummate the transactions contemplated hereby (the "Closing
Date").
1.3 Actions at the Closing. At the Closing, (a) the
Company shall deliver to the Buyer and the Transitory Subsidiary
the various certificates, instruments and documents referred to
in Section 5.2, (b) the Buyer and the Transitory Subsidiary shall
deliver to the Company the various certificates, instruments and
documents referred to in Section 5.3, (c) the Company and the
Transitory Subsidiary shall file with the Secretary of State of
the State of Delaware the Certificate of Merger and (d) the
Buyer, the Indemnification Representatives (as defined therein)
and the Escrow Agent (as defined therein) shall execute and
deliver the Escrow Agreement attached hereto as Exhibit A (the
"Escrow Agreement") and the Buyer shall deliver to the Escrow
Agent a bank check or funds by wire transfer in the aggregate
amount of the Cash Consideration (as defined below) to be placed
in escrow on the Closing Date pursuant to Section 1.11.
1.4 Additional Action. The Surviving Corporation may, at
any time after the Effective Time, take any action, including
executing and delivering any document, in the name and on behalf
of either the Company or the Transitory Subsidiary, in order to
consummate the transactions contemplated by this Agreement.
1.5 Conversion of Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of any Party or
the holder of any of the following securities:
(a) Subject to Section 1.8 below, each share of
Series A Common Stock, $.01 par value per share ("Series A
Shares") and each share of Series B Common Stock, $.01 par value
per share ("Series B Shares"), of the Company (collectively,
"Company Shares") as to which an election has been made in
accordance with Section 1.7 below and has not been revoked (the
"Unit Election Shares") shall be converted into and shall
represent the right to receive that fraction of a Unit (as
defined below) determined by dividing the Outstanding Company
Share Value (as defined below) by the Unit Value (as defined
below).
(b) Subject to Section 1.6 below, each Series A Share
and each Series B Share other than the Unit Election Shares
issued and outstanding immediately prior to the Effective Time
(other than Company Shares owned beneficially by the Buyer or the
Transitory Subsidiary, Dissenting Shares (as defined below) and
Company Shares held in the Company's treasury) shall be converted
into and shall represent the right to receive an amount of cash
equal to the Outstanding Company Share Value.
(c) For purposes of this Agreement:
2
PAGE
(i) "Buyer Common Stock" shall mean shares of
common stock, par value $.01 per share, of the Buyer;
(ii) "Buyer Warrants" shall mean a warrant to
acquire one share of Buyer Common Stock in the form attached
hereto as Exhibit B;
(iii) "Cash Consideration" shall mean
$18,523,660;
(iv) "Merger Consideration" shall mean the Cash
Consideration and the Merger Units;
(v) "Merger Units" shall mean 75,750 Units to be
issued hereunder in the Merger;
(vi) "Outstanding Company Share Value" shall mean
the amount determined by dividing (A) the sum of the Cash
Consideration and the aggregate Unit Value of the Merger Units,
by (B) the number of Company Shares issued and outstanding
immediately prior to the Effective Time (other than Company
Shares owned beneficially by the Buyer or the Transitory
Subsidiary and Company Shares held in the Company's treasury);
and
(vii) "Unit" shall mean a unit comprised of
three shares of Buyer Common Stock and one Buyer Warrant; and
(viii) "Unit Value" shall mean $49.00.
(d) The number of Merger Units and the Unit Value
shall be subject to equitable adjustment in the event of any
stock split, stock dividend, reverse stock split or similar event
affecting the Buyer Common Stock between the date of this
Agreement and January 3, 1996.
(e) Each Company Share held in the Company's treasury
immediately prior to the Effective Time and each Company Share
owned beneficially by the Buyer or the Transitory Subsidiary
shall be cancelled and retired without payment of any
consideration therefor.
(f) Each share of common stock, $.01 par value per
share, of the Transitory Subsidiary issued and outstanding
immediately prior to the Effective Time shall be converted into
and thereafter evidence one share of common stock, $.01 par value
per share, of the Surviving Corporation.
(g) All of the Merger Units and all of the Cash
Consideration shall initially be deposited in escrow. The Cash
Consideration shall be deposited by the Buyer into escrow at the
Closing. The Merger Units shall be issued by the Buyer, and
shall be deposited by the Buyer into escrow on, but not before,
January 3, 1996. Stockholders of record of the Company
3
PAGE
immediately prior to the Effective Time ("Company Stockholders")
shall be entitled to receive the Merger Consideration out of
escrow on or after January 5, 1996, as set forth in the Escrow
Agreement.
1.6 Dissenting Shares.
(a) For purposes of this Agreement, "Dissenting
Shares" means Company Shares held of record immediately prior to
the Effective Time by a Company Stockholder who has not executed
a written consent in favor of the adoption of this Agreement and
the Merger (which such written consent in favor shall be deemed
to have been given if a Form of Election is made in accordance
with Section 1.7 below) and with respect to which appraisal shall
have been duly demanded and perfected in accordance with
Section 262 of the Delaware General Corporation Law and not
effectively withdrawn or forfeited. Dissenting Shares shall not
be converted into or represent the right to receive the Merger
Consideration, unless such Company Stockholder shall have
forfeited his right to appraisal under the Delaware General
Corporation Law or effectively withdrawn his demand for
appraisal. If such Company Stockholder has so forfeited or
withdrawn his right to appraisal of Dissenting Shares, then
(i) as of the occurrence of such event, such holder's Dissenting
Shares shall cease to be Dissenting Shares and shall be converted
into and represent the right to receive an amount of cash payable
in respect of such Company Shares pursuant to Section 1.5(b), and
(ii) promptly following the occurrence of such event, the Buyer
shall deliver to the Escrow Agent under the Escrow Agreement
(and, if the Escrow Agent has made a distribution to Company
Stockholders in accordance with the terms of the Escrow
Agreement, to the holders as appropriate) the cash payment to
which such holder is entitled pursuant to Section 1.5(b). Any
amount delivered to the Escrow Agent under this Section 1.6(a)
shall be considered part of the Escrow Fund for all purposes of
this Agreement.
(b) Within two (2) business days of the effectiveness
of any written consent of Company Stockholders approving the
Merger and this Agreement, the Company shall send written notice
of such approval to those Company Stockholders as required by
Section 228 of the Delaware General Corporation Law.
(c) The Company shall give the Buyer (i) prompt notice
of any written demands for appraisal of any Company Shares,
withdrawals of such demands, and any other instruments that
relate to such demands received by the Company and (ii) the
opportunity to direct all negotiations and proceedings with
respect to demands for appraisal under the Delaware General
Corporation Law. The Company shall not, except with the prior
written consent of the Buyer or as ordered by the Court, make any
payment with respect to any demands for appraisal of Company
Shares or offer to settle or settle any such demands.
4
PAGE
1.7 Procedure for Unit Election.
(a) At the time of delivery of the Confidential
Offering Memorandum/Information Statement provided for by Section
4.3(a) below, the Company will deliver to each holder of record
of Company Shares a Unit election form (the "Form of Election"),
providing such holder with the option to elect to receive whole
(but not fractional) Units with respect to all or any portion of
such holder's Company Shares. Any such election shall have been
properly made only if duly completed and delivered to Robert W.
Dunlap before the Effective Time. Any Form of Election may be
revoked by the person submitting the same only by written notice
received by Robert W. Dunlap prior to the Effective Time. In
addition, all Forms of Election shall automatically be revoked if
this Agreement is terminated for any reason. If a Form of
Election is revoked, the certificate or certificates representing
Company Shares ("Certificates") to which such Form of Election
relates shall be promptly returned to the person submitting the
same. The Company may determine whether or not any Form of
Election has been properly made or revoked pursuant to this
Section 1.7, and any such determination shall be conclusive and
binding. If the Buyer determines that any Form of Election was
not properly or timely made, the Company Shares covered thereby
shall not be treated as Unit Election Shares, and shall be
converted in the Merger as provided in Section 1.5(b) hereof.
(b) The filing of a form of Election shall be deemed
for all purposes (including without limitation the ability to
seek appraisal rights under Section 262 of the Delaware General
Corporation Law) to constitute a written consent in favor of the
Merger and this Agreement.
1.8 Procedure for Proration. If the aggregate number of
Company Shares for which Forms of Election have been filed and
not revoked pursuant to Section 1.7 would not convert into a
whole number of Units equal to the Merger Units, then each
Company Stockholder filing a Form of Election shall be deemed to
have filed (without any additional action on the part of the
Company or such holder) a Form of Election with respect to that
number of Unit Election Shares determined by multiplying (i) the
number of Merger Units, by (ii) a fraction of which the
numerator shall be the number of Unit Election Shares owned by
such holder and the denominator shall be the aggregate number of
Unit Election Shares owned by all Company Stockholders filing a
Form of Election, rounded up or down as appropriate (as
determined by the Buyer) so that the number of Unit Election
Shares convert into the next higher or lower number of whole
Units.
1.9 Exchange of Shares
(a) Each holder of a Certificate, upon proper
surrender thereof to the Buyer, shall be entitled to receive in
exchange therefor (subject to any taxes required to be withheld
5
PAGE
and in accordance with the procedures set forth in the Escrow
Agreement) a pro rata share of the Merger Consideration issuable
pursuant to Section 1.5. Until properly surrendered, each such
Certificate shall be deemed for all purposes to evidence only the
right to receive a portion of the Merger Consideration. Holders
of Certificates shall not be entitled to receive Merger
Consideration out of escrow until the later of (i) January 5,
1996 and (ii) the date such Certificates have been surrendered to
the Buyer. The Buyer will notify the Escrow Agent of those
Company Stockholders that have tendered Certificates (or
Affidavits pursuant to Section 1.9(b) below). The Buyer shall
transmit certificates representing Buyer Common Stock and Buyer
Warrants representing the Merger Units within 5 business days of
any request by the Escrow Agent.
(b) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact
by the person claiming such Certificate to be lost, stolen or
destroyed, the Buyer shall issue in exchange for such lost,
stolen or destroyed Certificate the Merger Consideration issuable
in exchange therefor pursuant to Section 1.5. The Board of
Directors of the Buyer will require the owner of such lost,
stolen or destroyed Certificate to give the Buyer indemnity
against any claim that may be made against the Buyer with respect
to the Certificate alleged to have been lost, stolen or
destroyed.
1.10 Dividends. No dividends or other distributions payable
to the holders of record of Buyer Common Stock on or after the
Closing Date and before January 3, 1996 shall be paid to former
Company Stockholders in respect of Merger Units (which shall not
be issued until January 3, 1996). Dividends or other
distributions payable to the holders of record of Buyer Common
Stock on or after January 3, 1996 shall not be paid to former
Company Stockholders entitled by reason of the Merger to receive
Merger Units until such holders surrender their Certificates in
accordance with Section 1.9 of the Agreement. Upon such
surrender, the Buyer shall pay or deliver to the persons in whose
name the certificates representing such Merger Units are issued
(including, without limitation, the Escrow Agent) any dividends
or other distributions that are payable to the holders of record
of Buyer Common Stock on or after January 3, 1996; provided that
no such person shall be entitled to receive any interest on such
dividends or other distributions.
1.11 Escrow.
(a) On the Closing Date, the Buyer shall deliver to
the Escrow Agent by check or wire transfer funds in the amount of
the Cash Consideration and on, but not before, January 3, 1996
the Buyer shall deliver to the Escrow Agent certificates (issued
in the name of the Escrow Agent or its nominee) representing the
Buyer Common Stock and the Buyer Warrants comprising the Merger
Units, for the purpose of securing the indemnification
6
PAGE
obligations set forth in Article VI of the Agreement. The
escrowed property shall be held by the Escrow Agent under the
Escrow Agreement pursuant to the terms thereof. The escrowed
property shall be held as a trust fund and shall not be the
subject of any lien, attachment, trustee process or any other
judicial process of any creditor of any party, and shall be held
and disbursed solely for the purposes and in accordance with the
terms of the Escrow Agreement.
(b) The adoption of this Agreement and the approval of
the Merger by the Company Stockholders shall constitute their
approval of and agreement to be bound by the terms of the Escrow
Agreement and of all of the arrangements relating thereto,
including without limitation the placement of the Merger
Consideration in escrow and the appointment of the Escrow Agent
and the Indemnification Representatives pursuant to the terms
thereof.
1.12 Options and Warrants.
(a) As of the Effective Time, all options to purchase
Company Shares issued by the Company pursuant to its stock option
plans or otherwise ("Options"), whether vested or unvested, shall
be assumed by the Buyer. Immediately after the Effective Time,
each Option outstanding immediately prior to the Effective Time
shall be deemed to constitute an option to acquire, on the same
terms and conditions as were applicable under such Option at the
Effective Time, such number of shares of Buyer Common Stock as is
equal to the number of Company Shares subject to the unexercised
portion of such Option multiplied by 2.2298 (the "Conversion
Ratio"), with any fraction resulting from such multiplication to
be rounded down to the nearest whole number. The exercise price
per share of each such assumed Option shall be equal to the
exercise price of such Option immediately prior to the Effective
Time, divided by the Conversion Ratio, with such quotient rounded
up to the nearest whole cent. The term, exercisability, vesting
schedule, status as an "incentive stock option" under Section 422
of the Internal Revenue Code of 1986 (as amended, the "Code"),
if applicable, and all of the other terms of the Options shall
otherwise remain unchanged. As part of the Merger, certain
holders of the Options shall be given an opportunity to have
their Options converted into Buyer Common Stock upon a conversion
ratio equal to 2.5461, in return for executing an Optionee
Consent Agreement in the form attached hereto as Exhibit C (an
"Optionee Consent Agreement") whereby such holder agrees to
participate in the Escrow Agreement and agrees to resale
restrictions on shares of Buyer Common Stock acquired upon
exercise of such Options.
(b) As soon as practicable after the Effective Time,
the Buyer or the Surviving Corporation shall deliver to the
holders of Options appropriate notices setting forth such
holders' rights pursuant to such Options, as amended by this
Section 1.12, and the agreements evidencing such Options shall
7
PAGE
continue in effect on the same terms and conditions (subject to
the amendments provided for in this Section 1.12 and such
notice).
(c) The Buyer shall take all corporate action
necessary to reserve for issuance a sufficient number of shares
of Buyer Common Stock for delivery upon exercise of the Options
assumed in accordance with this Section 1.12. As soon as
practicable following the Effective Time, the Buyer shall file a
Registration Statement on Form S-8 (or any successor form) under
the Securities Act of 1933 (as amended, the "Securities Act")
with respect to all shares of Buyer Common Stock subject to such
Options that may be registered on a Form S-8, and shall use its
best efforts to maintain the effectiveness of such Registration
Statement for so long as such Options remain outstanding.
1.13 Certificate of Incorporation. The Certificate of
Incorporation of the Surviving Corporation shall be amended as of
the Effective Time so as to read in its entirety as the form
annexed hereto as Exhibit D.
1.14 By-laws. The By-laws of the Surviving Corporation
shall be the same as the By-laws of the Transitory Subsidiary
immediately prior to the Effective Time, except that the name of
the corporation set forth therein shall be changed to the name of
the Company.
1.15 Directors and Officers. The directors of the
Transitory Subsidiary shall become the directors of the Surviving
Corporation as of the Effective Time. The officers of the
Company shall remain as officers of the Surviving Corporation
after the Effective Time, retaining their respective positions.
1.16 No Further Rights. From and after the Effective Time,
no Company Shares shall be deemed to be outstanding, and holders
of Certificates shall cease to have any rights with respect
thereto, except as provided herein or by law.
1.17 Closing of Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and no
transfer of Company Shares shall thereafter be made. If, after
the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent, they shall be cancelled and
exchanged for Merger Consideration in accordance with
Section 1.5, subject to Section 1.11 and to applicable law in the
case of Dissenting Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer that the
statements contained in this Article II are true and correct,
except as set forth in the disclosure schedule attached hereto
8
PAGE
(the "Disclosure Schedule"). The Disclosure Schedule shall be
initialed by the Parties and shall be arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained
in this Article II, and the disclosures in any paragraph of the
Disclosure Schedule shall qualify only the corresponding
paragraph in this Article II.
2.1 Organization, Qualification and Corporate Power. The
Company is a corporation duly organized, validly existing and in
corporate and tax good standing under the laws of the State of
Delaware. The Company is duly qualified to conduct business and
is in corporate and tax good standing under the laws of each
jurisdiction in which the failure to be so qualified could have a
material adverse effect on the assets, business, financial
condition, results of operations or future prospects of the
Company. The Company has all requisite corporate power and
authority to carry on the businesses in which it is engaged and
to own and use the properties owned and used by it. The Company
has furnished to the Buyer true and complete copies of its
Certificate of Incorporation and By-laws, each as amended and as
in effect on the date hereof. The Company is not in default
under or in violation of any provision of its Certificate of
Incorporation or By-laws.
2.2 Capitalization. The authorized capital stock of the
Company consists of (i) 1,875,000 Series A Company Shares, of
which 664,698 shares are issued and outstanding and 89,111 shares
are held in the treasury of the Company, (ii) 125,000 Series B
Company Shares, of which 125,000 shares are issued and
outstanding and no shares are held in the treasury of the
Company, and (iii) 1,000,000 shares of preferred stock, $.01 par
value per share, of which no shares are outstanding or held in
the treasury of the Company. Section 2.2 of the Disclosure
Schedule sets forth a complete and accurate list of (i) all
stockholders of the Company, indicating the type and number of
Company Shares held by each stockholder, and (ii) all holders of
Options and warrants to purchase Company Shares ("Warrants"),
indicating the type and number of shares of Company Shares
subject to each Option and Warrant. All of the issued and
outstanding Company Shares are, and all Company Shares that may
be issued upon exercise of Options and Warrants will be, duly
authorized, validly issued, fully paid, nonassessable and free of
all preemptive rights. There are no outstanding or authorized
options, warrants, rights, agreements or commitments to which the
Company is a party or which are binding upon the Company
providing for the issuance, disposition or acquisition of any of
its capital stock, other than the Options and Warrants listed in
Section 2.2 of the Disclosure Schedule. There are no outstanding
or authorized stock appreciation, phantom stock or similar rights
with respect to the Company. There are no agreements, voting
trusts, proxies, or understandings with respect to the voting, or
registration under the Securities Act, of any Company Shares.
All of the issued and outstanding Company Shares were issued in
compliance with applicable federal and state securities laws.
9
PAGE
2.3 Authorization of Transaction. The Company has all
requisite power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The
execution and delivery of this Agreement and, subject to the
adoption of this Agreement and the approval of the Merger by a
majority of the votes represented by the outstanding Company
Shares entitled to vote on this Agreement and the Merger (the
"Requisite Stockholder Approval"), the performance by the Company
of this Agreement and the consummation by the Company of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly and validly executed and
delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms.
2.4 Noncontravention. Subject to compliance with the
applicable requirements of the Securities Act and any applicable
state securities laws, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "Hart-Scott-Rodino
Act") and the filing of the Certificate of Merger as required by
the Delaware General Corporation Law, neither the execution and
delivery of this Agreement by the Company, nor the consummation
by the Company of the transactions contemplated hereby, will:
(a) require on the part of the Company or on the part of
RETEC/TETRA, L.C. ("R/T") or any corporation with respect to
which the Company, directly or indirectly, has the power to vote
or direct the voting of sufficient securities to elect a majority
of the directors (any of the foregoing being referred to herein
as a "Subsidiary") any filing with, or any permit,
authorization, consent or approval of, any court, arbitrational
tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (a "Governmental
Entity"); (b) conflict with or violate any provision of the
charter or By-laws of the Company or any Subsidiary; (c) conflict
with, result in a breach of, constitute (with or without due
notice or lapse of time or both) a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify or cancel, or require any notice, consent or
waiver under, any contract, lease, sublease, license, sublicense,
franchise, permit, indenture, agreement or mortgage for borrowed
money, instrument of indebtedness, Security Interest (as defined
below) or other arrangement to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary
is bound or to which any of their assets is subject, except real
property leases set forth in Section 2.13 of the Disclosure
Schedule and written arrangements relating to the projects listed
in Section 2.14(a) of the Disclosure Schedule, as to which no
representation or warranty is made in this clause (c); (d) result
in the imposition of any Security Interest upon any assets of the
Company or any Subsidiary; or (e) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the
Company, any Subsidiary or any of their properties or assets.
10
PAGE
For purposes of this Agreement, "Security Interest" means any
mortgage, pledge, security interest, encumbrance, charge, or
other lien (whether arising by contract or by operation of law),
other than (i) mechanic's, materialmen's, and similar liens,
(ii) liens arising under worker's compensation, unemployment
insurance, social security, retirement, and similar legislation,
and (iii) liens on goods in transit incurred pursuant to
documentary letters of credit, in each case arising in the
ordinary course of business consistent with past custom and
practice (including with respect to frequency and amount)
("Ordinary Course of Business") of the Company and not material
to the Company. Section 2.4 of the Disclosure Schedule sets
forth a true, correct and complete list of all consents and
approvals of non-governmental third parties that are required in
connection with the consummation by the Company and the
Subsidiaries of the transactions contemplated by this Agreement.
2.5 Subsidiaries. Section 2.5 of the Disclosure Schedule
sets forth for each Subsidiary (a) its name and jurisdiction of
incorporation, (b) the number of shares of authorized capital
stock of each class of its capital stock, (c) the number of
issued and outstanding shares of each class of its capital stock
or the number of partnership interests or limited liability
company interests, as applicable, the names of the holders
thereof and the number of shares, partnership interests and
limited liability company interests held by each such holder,
(d) the number of shares of its capital stock held in treasury,
and (e) its directors and officers. Each Subsidiary is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Each
Subsidiary is duly qualified to conduct business and is in
corporate and tax good standing under the laws of each
jurisdiction in which the failure to be so qualified could have a
material adverse effect on the assets, business, financial
condition, results of operations or future prospects of such
Subsidiary. Each Subsidiary has all requisite corporate power
and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. The
Company has delivered or made available to the Buyer correct and
complete copies of the charter and By-laws of each Subsidiary, as
amended to date. No Subsidiary is in default under or in
violation of any provision of its charter or By-laws. All of the
issued and outstanding shares of capital stock of each Subsidiary
are duly authorized, validly issued, fully paid, nonassessable
and free of preemptive rights. All shares of each Subsidiary
that are held of record or owned beneficially by either the
Company or any Subsidiary are held or owned free and clear of any
restrictions on transfer (other than restrictions under the
Securities Act and state securities laws), claims, Security
Interests, options, warrants, rights, contracts, calls,
commitments, equities and demands. There are no outstanding or
authorized options, warrants, rights, agreements or commitments
to which the Company or any Subsidiary is a party or which are
binding on any of them providing for the issuance, disposition or
11
PAGE
acquisition of any capital stock of any Subsidiary. There are no
outstanding stock appreciation, phantom stock or similar rights
with respect to any Subsidiary. There are no voting trusts,
proxies, or other agreements or understandings with respect to
the voting of any capital stock of any Subsidiary. The Company
does not control directly or indirectly or have any direct or
indirect equity participation in any corporation, partnership,
trust, or other business association which is not a Subsidiary.
2.6 Reports and Financial Statements.
(a) The Company has provided to the Buyer (i) the
audited consolidated balance sheets and statements of income,
changes in stockholders' equity and cash flows for each of the
last five fiscal years for the Company and the Subsidiaries (or
such shorter periods as such Subsidiaries have been in
existence); and (ii) the unaudited consolidated balance sheet and
statements of income, changes in stockholders' equity and cash
flows as of and for the quarter ended as of September 30, 1995
(the "Most Recent Fiscal Quarter End"). Such financial
statements (collectively, the "Financial Statements") have been
prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis
throughout the periods covered thereby, fairly present the
financial condition, results of operations and cash flows of the
Company and the Subsidiaries as of the respective dates thereof
and for the periods referred to therein and are consistent with
the books and records of the Company and the Subsidiaries,
provided, however, that the Financial Statements referred to in
clause (ii) above are subject to normal recurring year-end
adjustments (which will not be material) and do not include
footnotes.
(b) The Company has provided to the Buyer (i) the
audited balance sheets and statements of income, changes in
stockholders' equity and cash flows for each of the last four
fiscal years for R/T (or such shorter periods as R/T has been in
existence); and (ii) the unaudited consolidated balance sheet and
statements of income, changes in stockholders' equity and cash
flows for R/T as of and for the quarter ended as of September 30,
1995 (the "Most Recent Fiscal Quarter End"). Such R/T financial
statements (collectively, the "R/T Financial Statements") have
been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, fairly present the
financial conditions, results of operations and cash flows of R/T
as of the respective dates thereof and for the periods referred
to therein and are consistent with the books and records of R/T ,
provided, however, that the R/T Financial Statements referred to
in clause (ii) above are subject to normal recurring year-end
adjustments (which will not be material) and do not include
footnotes.
12
PAGE
2.7 Absence of Certain Changes. Since the Most Recent
Fiscal Quarter End, (a) there has not been any material adverse
change in the assets, business, financial condition or results of
operations of the Company or any Subsidiary, nor has there
occurred any event or development which could reasonably be
foreseen to result in such a material adverse change in the
future, and (b) neither the Company nor any Subsidiary has taken
any of the actions set forth in paragraphs (a) through (n) of
Section 4.5.
2.8 Undisclosed Liabilities. None of the Company and its
Subsidiaries has any liability, whether absolute or contingent,
whether liquidated or unliquidated and whether due or to become
due), except for (a) liabilities shown on the balance sheets
referred to in clause (ii) of Section 2.6 (a) and (b) (the "Most
Recent Balance Sheets"), (b) liabilities which have arisen since
the Most Recent Fiscal Quarter End in the Ordinary Course of
Business and which are similar in nature and amount to the
liabilities which arose during the comparable period of time in
the immediately preceding fiscal period and (c) contractual
liabilities incurred in the Ordinary Course of Business which are
not required by GAAP to be reflected on a balance sheet.
2.9 Tax Matters.
(a) Each of the Company and the Subsidiaries has filed
in a timely manner (including permitted exceptions) all Tax
Returns (as defined below) that it was required to file and all
such Tax Returns were correct and complete in all material
respects. Each of the Company and the Subsidiaries has paid all
Taxes (as defined below) that are shown to be due on any such Tax
Returns. The unpaid Taxes of the Company and the Subsidiaries
for tax periods through the date of the Most Recent Balance
Sheets do not exceed the accruals and reserves for Taxes set
forth on the Most Recent Balance Sheets. All Taxes that the
Company or any Subsidiary is or was required by law to withhold
or collect have been duly withheld or collected and, to the
extent required, have been paid to the proper Governmental
Entity. There are no liens for taxes on the assets of the
Company or any Subsidiary. For purposes of this Agreement,
"Taxes" means all taxes, charges, fees, levies or other similar
assessments or liabilities, including without limitation income,
gross receipts, ad valorem, premium, value-added, excise, real
property, personal property, sales, use, transfer, withholding,
employment, payroll and franchise taxes imposed by the United
States of America or any state, local or foreign government, or
any agency thereof, or other political subdivision of the United
States or any such government, and any interest, fines,
penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any tax or any
contest or dispute thereof. For purposes of this Agreement, "Tax
Returns" means all reports, returns, declarations, statements or
other information required to be supplied to a taxing authority
in connection with Taxes.
13
PAGE
(b) The Company has delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination
reports and statements of deficiencies assessed against or agreed
to by any of the Company or any Subsidiary since December 31,
1991. No federal income Tax Return of the Company has been
audited by the Internal Revenue Service. No examination or audit
of any Tax Returns of the Company or any Subsidiary by any
Governmental Entity is currently in progress or, to the knowledge
of the Company and the Subsidiaries, threatened or contemplated.
Neither the Company nor any Subsidiary has waived any statute of
limitations with respect to taxes or agreed to an extension of
time with respect to a tax assessment or deficiency.
(c) Neither the Company nor any Subsidiary is a
"consenting corporation" within the meaning of Section 341(f) of
the Code and none of the assets of the Company nor the
Subsidiaries are subject to an election under Section 341(f) of
the Code. Neither the Company nor any Subsidiary has 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)(l)(A)(ii) of the Code.
Neither the Company nor any Subsidiary is a party to any Tax
allocation or sharing agreement.
(d) Neither the Company nor any Subsidiary is or has
ever been a member of an "affiliated group" of corporations
(within the meaning of Section 1504 of the Code), other than a
group of which only the Company and the Subsidiaries are members.
Neither the Company nor any Subsidiary has made an election under
Treasury Reg. Section 1.1502-20(g). Neither the Company nor any
Subsidiary is or has been required to make a basis reduction
pursuant to Treasury Reg. Section 1.1502-20(b) or Treasury Reg.
Section 1.337(d)-2(b).
(e) None of the assets of the Company nor any
Subsidiary is property that the Company or any Subsidiary is
required to treat as being owned by any other person pursuant to
the "safe harbor lease" provisions of the former Section
168(f)(8) of the Code. None of the assets of the Company nor any
Subsidiary directly or indirectly secures any debt the interest
of which is tax exempt under Section 103(a) of the Code. None of
the assets of the Company nor any Subsidiary is "tax exempt use
property" within the meaning of Section 168(h) of the Code.
Neither the Company nor any Subsidiary has agreed to make or is
required to make any adjustment under Section 481 of the Code by
reason of a change in accounting method or otherwise. Neither
the Company nor any Subsidiary has participated in or will
participate in an international boycott within the meaning of
Section 999 of the Code. Neither the Company nor any Subsidiary
has or has had a permanent establishment in any foreign country,
as defined in any applicable treaty or convention between the
United States and such foreign country. Neither the Company nor
any Subsidiary is a party to any joint venture, partnership or
14
PAGE
other arrangement or contract that could be treated as a
partnership for federal income tax purposes.
2.10 Assets. Each of the Company and the Subsidiaries owns
or leases all tangible assets necessary for the conduct of its
businesses as presently conducted. Each such tangible asset is
free from material defects, has been maintained in accordance
with normal industry practice and is in good operating condition
and repair (subject to normal wear and tear). No asset of the
Company (tangible or intangible) is subject to any Security
Interest.
2.11 Owned Real Property. None of the Company nor any
Subsidiary owns any real property.
2.12 Intellectual Property.
(a) Each of the Company and the Subsidiaries owns, or
is licensed or otherwise possesses legally enforceable rights to
use, all Intellectual Property (as defined below) that is used
to conduct its business as currently conducted. For purposes of
this Agreement, the term "Intellectual Property" means all (i)
patents, patent applications, patent disclosures and all related
continuation, continuation-in-part, divisional, reissue,
reexamination, utility, model, certificate of invention and
design patents, patent applications, registrations and
applications for registrations, (ii) trademarks, service marks,
trade dress, logos, trade names and corporate names and
registrations and applications for registration thereof,
(iii) copyrights and registrations and applications for
registration thereof, (iv) mask works and registrations and
applications for registration thereof, (v) computer software,
data and documentation, (vi) trade secrets and confidential
business information, whether patentable or unpatentable and
whether or not reduced to practice, knowhow, manufacturing and
production processes and techniques, research and development
information, copyrightable works, financial, marketing and
business data, pricing and cost information, business and
marketing plans and customer and supplier lists and information,
(vii) other proprietary rights relating to any of the foregoing
and (viii) copies and tangible embodiments thereof. Section 2.12
of the Disclosure Schedule lists (i) all patents and patent
applications and all trademarks, registered copyrights, trade
names and service marks owned by or licensed to the Company or
any Subsidiary which are used in the business of the Company or
the Subsidiaries, including the jurisdictions in which each such
Intellectual Property right has been issued or registered or in
which any such application for such issuance or registration has
been filed, (ii) all material written licenses, sublicenses and
other agreements to which the Company or a Subsidiary is a party
and pursuant to which any person is authorized to use any
Intellectual Property rights, and (iii) all material written
licenses, sublicenses and other agreements as to which the
Company or a Subsidiary is a party and pursuant to which the
15
PAGE
Company or a Subsidiary is authorized to use any third party
patents, trademarks or copyrights, including software ("Third
Party Intellectual Property Rights") which are used in the
business of the Company or any Subsidiary or which form a part of
any product or service of the Company or any Subsidiary. The
Company has made available to the Buyer correct and complete
copies of all such patents, registrations, applications, licenses
and agreements (as amended to date) and related documentation.
Except pursuant to the Contracts listed on Section 2.14 of the
Disclosure Schedule and except pursuant to the licenses listed on
Section 2.12 of the Disclosure Schedule, neither the Company nor
any Subsidiary has agreed to indemnify any person or entity for
or against any infringement, misappropriation or other conflict
with respect to any item of Intellectual Property that the
Company or any Subsidiary owns or uses. Neither the Company nor
any Subsidiary is a party to any oral license, sublicense or
agreement which, if reduced to written form, would be required to
be listed in Section 2.12 of the Disclosure Schedule under the
terms of this Section 2.12(a).
(b) None of the Company nor any Subsidiary is in
breach of any license, sublicense or other agreement relating to
the Intellectual Property or Third Party Intellectual Property
Rights. None of the Company nor any Subsidiary will be in breach
of any license, sublicense or other agreement relating to the
Intellectual Property or Third Party Intellectual Property Rights
as a result of the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except
that no such representation or warranty is made herein with
respect to Third Party Intellectual Property Rights comprised of
commercially available, off-the-shelf software.
(c) Neither the Company nor any of the Subsidiaries
has been named in any suit, action or proceeding which involves a
claim of infringement of any Intellectual Property right of any
third party. The manufacturing, marketing, licensing or sale of
the products or performance of the service offerings of the
Company and the Subsidiaries do not infringe any Intellectual
Property right of any third party; and to the knowledge of the
Company and the Subsidiaries, the Intellectual Property rights of
the Company and the Subsidiaries are not being infringed by
activities, products or services of any third party.
(d) Notwithstanding any other provision herein, the
representations and warranties in this Section 2.12 shall only be
applicable to patent rights of third parties which were matters
of public record as of December 1, 1995.
2.13 Real Property Leases. Section 2.13 of the Disclosure
Schedule lists all real property leased or subleased to the
Company or any Subsidiary. The Company has made available to the
Buyer correct and complete copies of the leases and subleases (as
amended to date) listed in Section 2.13 of the Disclosure
16
PAGE
Schedule. With respect to each lease and sublease listed in
Section 2.13 of the Disclosure Schedule:
(a) To the Company's knowledge, the lease or sublease
is the legal, valid and binding obligation of each party
thereto, enforceable and in full force and effect against each
such party;
(b) None of the Company nor any Subsidiary party to
such lease or sublease is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a
breach or default by the Company or such Subsidiary or permit
termination, modification, or acceleration by any other party
thereunder and, to the Company's knowledge, no other party to
such lease or sublease is in breach or default, and no event has
occurred which, with notice or lapse of time, would constitute a
breach or default by such other party or permit termination,
modification or acceleration by the Company or any Subsidiary
thereunder;
(c) there are no disputes, oral agreements or
forbearance programs in effect as to the lease or sublease;
(d) neither the Company nor any Subsidiary has
assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the leasehold or subleasehold;
(e) to the Company's knowledge all facilities leased
or subleased thereunder are supplied with utilities and other
services reasonably necessary for the operation of said
facilities; and
(f) all facilities leased or subleased thereunder are
free from material defects, have been maintained in accordance
with normal industry practice, are in good operating condition
and repair (subject to normal wear and tear) and are suitable for
the purposes for which they presently are used.
2.14 Contracts. Section 2.14 of the Disclosure Schedule
lists the following information or written arrangements
(including without limitation written agreements) to which the
Company or any Subsidiary is a party:
(a) any project where the Company or any Subsidiary
provided services to third parties in 1995 or have obligations to
provide services in the future, arranged by project number and
including the name of the client and a brief description of the
project, as well as similar project information for calendar
years 1990 through 1994, inclusive;
(b) any written arrangement (or group of related
written arrangements) for the lease of personal property (other
than office equipment) from or to third parties providing for
lease payments in excess of $10,000 per annum;
17
PAGE
(c) any written arrangement (or group of related
written arrangements) for the purchase or sale of raw materials,
commodities, supplies, products or other personal property or for
the furnishing or receipt of services (i) which calls for
performance over a period of more than one year, (ii) which
involves more than the sum of $10,000, or (iii) in which the
Company or any Subsidiary has granted manufacturing rights, "most
favored nation" pricing provisions or marketing or distribution
rights relating to any products or territory or has agreed to
purchase a minimum quantity of goods or services or has agreed to
purchase goods or services exclusively from a certain party;
(d) any written arrangement establishing a partnership
or joint venture;
(e) any written arrangement (or group of related
written arrangements) under which it has created, incurred,
assumed, or guaranteed (or may create, incur, assume, or
guarantee) indebtedness (including capitalized lease obligations)
involving more than $10,000 or under which it has imposed (or may
impose) a Security Interest on any of its assets, tangible or
intangible;
(f) any written arrangement concerning confidentiality
(other than those listed in response to clause (a) above) or
noncompetition;
(g) any written arrangement involving any of the
Company Stockholders or their affiliates, as defined in
Rule 12b-2 under the Securities Exchange Act of 1934 (as amended,
the "Exchange Act") ("Affiliates") that will not be terminated in
its entirety before or upon the Effective Time;
(h) any written arrangement (other than real estate
leases or employee benefit plans or those listed in response to
clause (a) above) under which the consequences of a default or
termination could have a material adverse effect on the assets,
business, financial condition, results of operations or future
prospects of the Company or any Subsidiary; and
(i) any other written arrangement (or group of related
written arrangements) either involving more than $10,000 or not
entered into in the Ordinary Course of Business, other than real
estate leases or employee benefit plans.
The Company has made available for inspection by the Buyer a
correct and complete copy of each written arrangement (as amended
to date) listed in Section 2.14 of the Disclosure Schedule. With
respect to each written arrangement so listed: (i) to the
Company's knowledge, the written arrangement or contract listed
is the legal, valid and binding obligation of each party thereto
and enforceable and in full force and effect against each such
party; (ii) with respect to all such written arrangements other
18
PAGE
than those listed on Section 2.14 of the Disclosure Schedule in
response to clause (a) above, no action or consent of any other
party thereto is required in order for the written arrangement to
continue to be legal, valid, binding and enforceable and in full
force and effect immediately following the Closing in accordance
with the terms thereof as in effect prior to the Closing;
(iii) with respect to those written arrangements listed in
response to clause (a) above, the Company has no knowledge or
belief that the execution and delivery of this Agreement by the
Company or the consummation of the transactions contemplated
hereby will result in any other party to such written
arrangements seeking to terminate or modify the terms of such
arrangement; and (iv) none of the Company nor any Subsidiary
party to such written arrangement is in material breach or
default, and no event has occurred which with notice or lapse of
time would constitute a material breach or default by the Company
or such Subsidiary or permit termination, modification, or
acceleration by any other party under the written arrangement
and, to the Company's knowledge, no other party to such written
arrangement is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a breach or
default by such other party or permit termination, modification
or acceleration by the Company or any Subsidiary thereunder.
Neither the Company nor any Subsidiary is a party to any oral
contract, agreement or other arrangement which, if reduced to
written form, would be required to be listed in Section 2.14 of
the Disclosure Schedule under the terms of this Section 2.14.
2.15 Accounts Receivable. All accounts receivable of the
Company and the Subsidiaries reflected on the Most Recent Balance
Sheet are valid receivables subject to no setoffs or
counterclaims and are current and collectible consistent with
past practices, net of the applicable reserve for bad debts on
the Most Recent Balance Sheet. All accounts receivable reflected
in the financial or accounting records of the Company that have
arisen since the Most Recent Fiscal Quarter End are valid
receivables subject to no setoffs or counterclaims and are
collectible, net of a reserve for bad debts in an amount
proportionate to the reserve shown on the Most Recent Balance
Sheet.
2.16 Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of the Company or any Subsidiary.
2.17 Insurance. Section 2.17 of the Disclosure Schedule
lists, or the Company has otherwise made available to the Buyer,
each insurance policy (including fire, theft, casualty, general
liability, workers compensation, business interruption,
environmental, product liability and automobile insurance
policies and bond and surety arrangements) to which the Company
or any Subsidiary has been a party, a named insured, or otherwise
the beneficiary of coverage at any time within the past three
years. The Company has previously made such policies available
to the Buyer through the Company's insurance broker.
19
PAGE
Neither the Company nor any Subsidiary (i) is in breach
or default (including with respect to the payment of premiums or
the giving of notices) under any such policy, and no event has
occurred which, with notice or the lapse of time, would
constitute such a breach or default or permit termination,
modification or acceleration, under any such policy, or (ii) has
received any notice from the insurer disclaiming coverage or
reserving rights with respect to a particular claim or any such
policy in general. Neither the Company nor any Subsidiary has
incurred any loss, damage, expense or liability covered by any
such insurance policy for which it has not properly asserted a
claim under such policy. Each of the Company and the
Subsidiaries is covered by insurance in scope and amount
sufficient to satisfy the insurance provision of each written
arrangement listed or required to be listed in Section 2.14 of
the Disclosure Schedule.
2.18 Litigation. Section 2.18 of the Disclosure
Schedule identifies, and contains a brief description of, (a) any
unsatisfied judgment, order, decree, stipulation or injunction
and (b) any claim, complaint, action, suit, proceeding, hearing
or investigation of or in any Governmental Entity or before any
arbitrator to which the Company or any Subsidiary is a party or,
to the knowledge of the Company and the Subsidiaries, is
threatened to be made a party.
2.19 Employees. Section 2.19 of the Disclosure Schedule
contains a list of all current employees of the Company and each
Subsidiary, along with the position and the annual rate of
compensation of each such person. Each principal and associate
of the Company and the Subsidiaries has entered into a
confidentiality/assignment of inventions agreement with the
Company or a Subsidiary, a copy of which has previously been
delivered to the Buyer. To the knowledge of the Company and its
Subsidiaries, no key employee or group of employees has any plans
to terminate employment with the Company or any Subsidiary.
Neither the Company nor any Subsidiary is a party to or bound by
any collective bargaining agreement, nor has any of them
experienced any strikes, grievances, claims of unfair labor
practices or other collective bargaining disputes. The Company
and the Subsidiaries have no knowledge of any organizational
effort made or threatened, either currently or within the past
two years, by or on behalf of any labor union with respect to
employees of the Company or any Subsidiary.
2.20 Employee Benefits.
(a) Section 2.20(a) of the Disclosure Schedule
contains a complete and accurate list of all Employee Benefit
Plans (as defined below) maintained, or contributed to, by the
Company, any Subsidiary, or any ERISA Affiliate (as defined
below). For purposes of this Agreement, "Employee Benefit Plan"
means any "employee pension benefit plan" (as defined in
20
PAGE
Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), any "employee welfare benefit plan"
(as defined in Section 3(1) of ERISA), and any other written or
oral plan, agreement or arrangement involving direct or indirect
compensation, including without limitation insurance coverage,
severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or
post-retirement compensation. For purposes of this Agreement,
"ERISA Affiliate" means any entity which is a member of (i) a
controlled group of corporations (as defined in Section 414(b) of
the Code), (ii) a group of trades or businesses under common
control (as defined in Section 414(c) of the Code), or (iii) an
affiliated service group (as defined under Section 414(m) of the
Code or the regulations under Section 414(o) of the Code), any of
which includes the Company or a Subsidiary. Complete and
accurate copies of (i) all Employee Benefit Plans which have been
reduced to writing, (ii) written summaries of all unwritten
Employee Benefit Plans, (iii) all related trust agreements,
insurance contracts and summary plan descriptions, and (iv) all
annual reports filed on IRS Form 5500, 5500C or 5500R for the
last five plan years for each Employee Benefit Plan, have been
delivered to the Buyer. Each Employee Benefit Plan has been
administered in all material respects in accordance with its
terms and each of the Company, the Subsidiaries and the ERISA
Affiliates has in all material respects met its obligations with
respect to such Employee Benefit Plan and has made all required
contributions thereto. The Company and all Employee Benefit
Plans are in compliance in all material respects with the
currently applicable provisions of ERISA and the Code and the
regulations thereunder.
(b) There are no investigations by any Governmental
Entity, termination proceedings or other claims (except claims
for benefits payable in the normal operation of the Employee
Benefit Plans and proceedings with respect to qualified domestic
relations orders), suits or proceedings against or involving any
Employee Benefit Plan or asserting any rights or claims to
benefits under any Employee Benefit Plan that could give rise to
any material liability.
(c) All the Employee Benefit Plans that are intended
to be qualified under Section 401(a) of the Code have received
determination letters from the Internal Revenue Service to the
effect that such Employee Benefit Plans are qualified and the
plans and the trusts related thereto are exempt from federal
income taxes under Sections 401(a) and 501(a), respectively, of
the Code, no such determination letter has been revoked and
revocation has not been threatened, and no such Employee Benefit
Plan has been amended since the date of its most recent
determination letter or application therefor in any respect, and
no act or omission has occurred, that would adversely affect its
qualification or materially increase its cost.
21
PAGE
(d) Neither the Company, any Subsidiary, nor any ERISA
Affiliate has ever maintained an Employee Benefit Plan subject to
Section 412 of the Code or Title IV of ERISA.
(e) At no time has the Company, any Subsidiary or any
ERISA Affiliate been obligated to contribute to any
"multi-employer plan" (as defined in Section 4001(a)(3) of
ERISA).
(f) There are no unfunded obligations under any
Employee Benefit Plan providing benefits after termination of
employment to any employee of the Company or any Subsidiary (or
to any beneficiary of any such employee), including but not
limited to retiree health coverage and deferred compensation, but
excluding continuation of health coverage required to be
continued under Section 4980B of the Code and insurance
conversion privileges under state law.
(g) No act or omission has occurred and no condition
exists with respect to any Employee Benefit Plan maintained by
the Company, any Subsidiary or any ERISA Affiliate that would
subject the Company, any Subsidiary or any ERISA Affiliate to any
material fine, penalty, tax or liability of any kind imposed
under ERISA or the Code.
(h) No Employee Benefit Plan is funded by, associated
with, or related to a "voluntary employee's beneficiary
association" within the meaning of Section 501(c)(9) of the Code.
(i) No Employee Benefit Plan, plan documentation or
agreement, summary plan description or other written
communication distributed generally to employees by its terms
prohibits the Company from amending or terminating any such
Employee Benefit Plan.
(j) Section 2.20(j) of the Disclosure Schedule
discloses each: (i) agreement with any director, executive
officer or other key employee of the Company or any Subsidiary
(A) the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction
involving the Company or any Subsidiary of the nature of any of
the transactions contemplated by this Agreement, (B) providing
any term of employment or compensation guarantee or (C) providing
severance benefits or other benefits after the termination of
employment of such director, executive officer or key employee;
(ii) agreement, plan or arrangement under which any person may
receive payments from the Company or any Subsidiary that may be
subject to the tax imposed by Section 4999 of the Code or
included in the determination of such person's "parachute
payment" under Section 280G of the Code; and (iii) agreement or
plan binding the Company or any Subsidiary, including without
limitation any stock option plan, stock appreciation right plan,
restricted stock plan, stock purchase plan, severance benefit
plan, or any Employee Benefit Plan, any of the benefits of which
22
PAGE
will be increased, or the vesting of the benefits of which will
be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.
2.21 Environmental Matters.
(a) Each of the Company and the Subsidiaries has
complied with all Environmental Laws (as defined below)
applicable to their business operations and the Services (as
defined below) they provide, except for violations of
Environmental Laws that do not and will not, individually or in
the aggregate, have a material adverse effect on the assets,
business, financial condition, results of operations or future
prospects of the Company and the Subsidiaries. For purposes of
this Agreement, "Environmental Law" means any federal, state or
local law, statute, rule or regulation or the common law relating
to the environment or occupational health and safety, including
without limitation any statute, regulation or order pertaining to
(i) treatment, storage, disposal, generation and transportation
of Materials of Environmental Concern (as defined below);
(ii) air, water and noise pollution; (iii) groundwater and soil
contamination; (iv) the release or threatened release into the
environment of Materials of Environmental Concern, including
without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals;
(v) the protection of wildlife, marine sanctuaries and wetlands,
including without limitation all endangered and threatened
species; (vi) storage tanks, vessels and containers;
(vii) underground and other storage tanks or vessels, abandoned,
disposed or discarded barrels, containers and other closed
receptacles; (viii) health and safety of employees and other
persons; and (ix) manufacture, processing, use, distribution,
treatment, storage, disposal, transportation or handling of
Materials of Environmental Concern. For purposes of this
Agreement, "Services" means any and all services provided by the
Company or any Subsidiary to its clients including but not
limited to (i) consulting services; (ii) project coordination,
oversight and/or management; (iii) remediation services; (iv)
treatment, storage, disposal or other handling of Materials of
Environmental Concern; (v) arranging for the treatment, storage,
disposal or other handling of Materials of Environmental Concern;
(vi) transportation of Materials of Environmental Concern; and
(vii) correspondence, meetings and other dealings with
Governmental Entities. As used above, the terms "release" and
"environment" shall have the meaning set forth in the federal
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 ("CERCLA").
(b) There have been no releases by the Company or any
Subsidiary of any Materials of Environmental Concern into the
environment at any parcel of real property or any facility
formerly or currently owned or leased by the Company or a
23
PAGE
Subsidiary, except for those that would not, individually or in
the aggregate, have a material adverse effect on the assets,
business, financial condition, results of operations or future
prospects of the Company and the Subsidiaries. There have been
no releases of any Materials of Environmental Concern into the
environment by the Company or any Subsidiary at any parcel of
real property or any facility at which the Company or a
Subsidiary formerly provided or is currently providing Services,
or for which the Company or any Subsidiary may have any material
liability under any Environmental Law. With respect to any such
releases of Materials of Environmental Concern, the Company or
such Subsidiary has given all required notices to Governmental
Entities (copies of which have been provided to the Buyer),
except where the failure to give such notice would not,
individually or in the aggregate, have a material adverse effect
on the assets, business, financial condition, results of
operations or future prospects of the Company and the
Subsidiaries. Neither the Company nor any Subsidiary is aware of
any other releases of Materials of Environmental Concern for
which material liability can be imposed on the Company or the
Subsidiary under any Environmental Law. For purposes of this
Agreement, "Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous substances (as
such term is defined under CERCLA), solid wastes and hazardous
wastes (as such terms are defined under the federal Resource
Conservation and Recovery Act), toxic materials, industrial
materials, oil or petroleum and petroleum products, or any other
material subject to regulation under any Environmental Law.
(c) There is no pending or, to the knowledge of the
Company and the Subsidiaries, threatened civil or criminal
litigation, written notice of violation or noncompliance, formal
administrative or judicial proceeding, claim, cause of action,
liability, investigation, citation, order, consent order, consent
decree, inquiry or information request by any Governmental
Entity, involving the Company or any Subsidiary, except those
that will not, individually or in the aggregate, have a material
adverse effect on the assets, business, financial condition,
results of operations or future prospects of the Company and the
Subsidiaries, relating to any of the following: (i) violation of
any Environmental Law; (ii) violation of any permit, license or
registration issued under any Environmental Law; (iii) the
disposal, discharge or release of Materials of Environmental
Concern, whether or not in compliance with Environmental Laws;
(iv) the generation, storage, treatment, transportation,
reclamation, recycling or other handling of Materials of
Environmental Concern, whether or not in compliance with
Environmental Laws; (v) the ownership, operation or use of any
landfill, surface impoundment, pit, pond, lagoon, underground
injection well, waste pile, land treatment unit, wastewater
treatment plant, air pollution control equipment, or any other
unit used for the storage, disposal, handling or treatment of
Materials of Environmental Concern; (vi) the exacerbation of
previously existing environmental contamination; (vii) exposure
24
PAGE
to any Materials of Environmental Concern, noises, odors, or
vibrations at or from any real property or facility formerly or
currently owned or leased by the Company or a Subsidiary or at
which the Company or a Subsidiary is providing Services; or
(viii) the providing of negligent Services. Without limiting the
foregoing, none of the Company nor any Subsidiary has been named
a "potentially responsible party" or has received any
correspondence or notice that it may be named a "potentially
responsible party."
(d) The Company and the Subsidiaries possess all
permits, licenses and/or registrations required under
Environmental Laws for their business operations and the Services
they provide, including permits, licenses and/or registrations
required for equipment owned and/or operated by the Company and
the Subsidiaries, and all such permits, licenses and/or
registrations are valid and in full force and effect. Set forth
in Section 2.21(d) of the Disclosure Schedule is a list of all
violations by the Company and its Subsidiaries of any terms,
conditions or requirements of such permits, licenses and/or
registrations since the date of incorporation of the Company.
(e) Set forth in Section 2.21(e) of the Disclosure
Schedule is a list of all environmental reports, investigations,
audits, assessments, surveys and analyses, relating to premises
currently or previously owned or occupied by the Company or a
Subsidiary which the Company has possession of or access to.
Complete and accurate copies of each such report, or the results
of each such investigation have been provided to the Buyer.
(f) To the knowledge of the Company and its
Subsidiaries, all entities, including without limitation
transporters, treatment, storage and disposal facilities, and
remediation companies, used by the Company or a Subsidiary, or
recommended by the Company or a Subsidiary while providing
Services, for the transportation, storage, disposal, treatment or
other handling of Materials of Environmental Concern possess all
permits, licenses and registrations required under Environmental
Laws, except those of which the failure to possess would not,
individually or in the aggregate, have a material adverse effect
on the assets, business, financial condition, results of
operations or future prospects of the Company and the
Subsidiaries. To the knowledge of the Company, there is no
previous, pending or threatened civil or criminal litigation,
written notice of violation or noncompliance, formal
administrative or judicial proceeding, investigation, citation,
order, consent order, consent decree, inquiry or information
request by any Governmental Entity, relating to such entities for
any violations of Environmental Laws, except with respect to
violations which, individually or in the aggregate, would not
have a material adverse effect on the assets, business, financial
condition, results of operations or future prospects of the
Company and the Subsidiaries.
25
PAGE
2.22 Legal Compliance. Each of the Company and the
Subsidiaries, and the conduct and operations of their respective
businesses, are in compliance with each law (including rules and
regulations thereunder) of any federal, state, local or foreign
government, or any Governmental Entity, which is applicable to
the Company or such Subsidiary or business, except for any
violation of or default under a law which reasonably may be
expected not to have a material adverse effect on the assets,
business, financial condition, results of operations or future
prospects of the Company or such Subsidiary.
2.23 Permits. Section 2.23 of the Disclosure Schedule sets
forth a list of all permits, licenses, registrations,
certificates, orders or approvals from any Governmental Entity
(including without limitation those issued or required under
Environmental Laws and those relating to the occupancy or use of
owned or leased real property) ("Permits") issued to or held by
the Company or any Subsidiary. Such listed Permits are the only
Permits that are required for the Company and the Subsidiaries to
conduct their respective businesses as presently conducted or as
proposed to be conducted, except for those the absence of which
would not have any material adverse effect on the assets,
business, financial condition, results of operations or future
prospects of the Company and the Subsidiaries. Each such Permit
is in full force and effect and, to the best of the knowledge of
the Company or any Subsidiary, no suspension or cancellation of
such Permit is threatened and there is no basis for believing
that such Permit will not be renewable upon expiration. Each
such Permit will continue in full force and effect following the
Closing.
2.24 Certain Business Relationships With Affiliates. No
Affiliate of the Company or of any Subsidiary (a) owns any
property or right, tangible or intangible, which is used in the
business of the Company or any Subsidiary, (b) has any claim or
cause of action against the Company or any Subsidiary, or
(c) owes any money to the Company or any Subsidiary.
Section 2.24 of the Disclosure Schedule describes any
transactions or relationships between the Company and any
Affiliate thereof which are reflected in the statements of
operations of the Company included in the Financial Statements.
2.25 Brokers' Fees. Neither the Company nor any Subsidiary
has any liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
2.26 Books and Records. The minute books and other similar
records of the Company and each Subsidiary contain true and
complete records of all actions taken at any meetings of the
Company's or such Subsidiary's stockholders, Board of Directors
or any committee thereof and of all written consents executed in
lieu of the holding of any such meeting. The books and records
of the Company and each Subsidiary accurately reflect in all
26
PAGE
material respects the assets, liabilities, business, financial
condition and results of operations of the Company or such
Subsidiary and have been maintained in accordance with good
business and bookkeeping practices.
2.27 Customers and Suppliers. No purchase order or
commitment of the Company or any Subsidiary is in excess of
normal requirements, nor are prices provided therein in excess of
market prices for the products or services to be provided
thereunder at the time the purchase order or commitment was
entered into. No material supplier of the Company or any
Subsidiary has indicated within the past year that it will stop,
or decrease the rate of, supplying materials, products or
services to them and no material customer of the Company or any
Subsidiary has indicated within the past year that it will stop,
or decrease the rate of, buying, leasing or licensing materials,
products or services from them. Section 2.27 of the Disclosure
Schedule sets forth a list of (a) each customer that accounted
for more than 5% of the consolidated revenues of the Company
during the last full fiscal year or the interim period through
the Most Recent Fiscal Quarter End and the amount of revenues
accounted for by such customer during each such period and
(b) each supplier that is the sole supplier of any significant
product or component to the Company or a Subsidiary.
2.28 Banking Facilities. Section 2.28 of the Disclosure
Schedule sets forth a true, correct and complete list of:
(a) each bank, savings and loan or similar financial
institution at which the Company or any Subsidiary has an
account, safety deposit box, line of credit or credit facility
and the numbers of the accounts or safety deposit boxes
maintained by the Company or any Subsidiary thereat and details,
including terms, of any line of credit or credit facility; and
(b) the names of all persons authorized to draw on
each such account or to have access to any such safety deposit
box facility, together with a description of the authority (and
conditions thereof, if any) of each such person with respect
thereto.
2.29 Powers of Attorney and Suretyships. Except as set
forth in Section 2.29 of the Disclosure Schedule, none of the
Company or any Subsidiary has any general or special powers of
attorney outstanding (whether as grantor or grantee thereof) or
has any obligation or liability (whether actual, accrued,
accruing, contingent or otherwise) as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise in respect
of the obligation of any person, corporation, partnership, joint
venture, association, organization or other entity, except as
endorser or maker of checks or letters of credit, respectively,
endorsed or made in the Ordinary Course of Business.
27
PAGE
2.30 Backlog. Section 2.30 of the Disclosure Schedule
contains an accurate list of all commitments for the Company's
services that make up the Company's backlog as of October 31,
1995 as well as the sum of such backlog, which was at least
$18,000,000. All such orders and commitments and any Company
quotations for work which are outstanding at that time contain
terms and conditions that are consistent with the Company's
practices over the past year.
2.31 Company Action. The Board of Directors of the Company,
at a meeting duly called and held, has by the majority vote of
all directors present (i) determined that the Merger is fair and
in the best interests of the Company and its stockholders,
(ii) adopted this Agreement in accordance with the provisions of
the Delaware General Corporation Law, and (iii) directed that
this Agreement and the Merger be submitted to the Company
Stockholders for their adoption and approval and resolved to
recommend that Company Stockholders vote in favor of the adoption
of this Agreement and the approval of the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
AND THE TRANSITORY SUBSIDIARY
Each of the Buyer and the Transitory Subsidiary represents
and warrants to the Company as follows:
3.1 Organization. Each of the Buyer and the Transitory
Subsidiary is a corporation duly organized, validly existing and
in good standing under the laws of the state of its
incorporation.
3.2 Capitalization. The authorized capital stock of the
Buyer consists of 20,000,000 shares of Buyer Common Stock, of
which 12,366,033 shares were issued and outstanding and 402
shares were held in the treasury of the Buyer as of November 30,
1995. As of November 30, 1995 there were no outstanding or
authorized options, warrants, rights, agreements or commitments
to which the Buyer was a party of which were binding upon the
Buyer providing for the issuance, disposition or acquisition of
any of its capital stock, other than (i) options to acquire an
aggregate of 805,500 shares of Buyer Common Stock outstanding
pursuant to Employee Benefit Plans adopted by the Buyer and
options to acquire an additional 849,260 shares of Buyer Common
Stock reserved for issuance pursuant to such plans, and (ii)
2,387,236 shares of Buyer Common Stock reserved for issuance to
Thermo Process Systems, Inc. upon conversion of the Buyer's
$2,650,000 principal amount 3.875% subordinated convertible note
due 2000 and reserved for issuance to others upon conversion of
the Buyer's $37,950,000 principal amount 4 7/8% subordinated
convertible debentures due 2000. There are no agreements, voting
trusts, proxies, or understandings with respect to the voting, or
registration under the Securities Act, of any shares of Buyer
28
PAGE
Common Stock to which the Buyer is a party. All of the issued
and outstanding shares of Buyer Common Stock were issued in
compliance with applicable federal and state securities laws.
All of the issued and outstanding shares of Buyer Common Stock
are duly authorized, validly issued, fully paid, nonassessable
and free of all preemptive rights. All of the shares of Buyer
Common Stock comprising the Merger Units and issuable upon
exercise of the Buyer Warrants will be, when issued in accordance
with this Agreement and the Buyer Warrants, duly authorized,
validly issued, fully paid, nonassessable and free of all
preemptive rights.
3.3 Authorization of Transaction. Each of the Buyer and
the Transitory Subsidiary has all requisite power and authority
to execute and deliver this Agreement and (in the case of the
Buyer) the Escrow Agreement and to perform its obligations
hereunder and thereunder. The execution and delivery of this
Agreement and (in the case of the Buyer) the Escrow Agreement by
the Buyer and the Transitory Subsidiary and the performance of
this Agreement and (in the case of the Buyer) the Escrow
Agreement the consummation of the transactions contemplated
hereby and thereby by the Buyer and the Transitory Subsidiary
have been duly and validly authorized by all necessary corporate
action on the part of the Buyer and Transitory Subsidiary. This
Agreement has been duly and validly executed and delivered by the
Buyer and the Transitory Subsidiary and constitutes a valid and
binding obligation of the Buyer and the Transitory Subsidiary,
enforceable against them in accordance with its terms.
3.4 Noncontravention. Subject to compliance with the
applicable requirements of the Securities Act and any applicable
state securities laws, the Hart-Scott-Rodino Act and the filing
of the Certificate of Merger as required by the Delaware General
Corporation Law, neither the execution and delivery of this
Agreement or (in the case of the Buyer) the Escrow Agreement by
the Buyer or the Transitory Subsidiary, nor the consummation by
the Buyer or the Transitory Subsidiary of the transactions
contemplated hereby or thereby, will (a) conflict or violate any
provision of the charter or By-laws of the Buyer or the
Transitory Subsidiary, (b) require on the part of the Buyer or
the Transitory Subsidiary any filing with, or permit,
authorization, consent or approval of, any Governmental Entity,
(c) conflict with, result in breach of, constitute (with or
without due notice or lapse of time or both) a default under,
result in the acceleration of, create in any party any right to
accelerate, terminate, modify or cancel, or require any notice,
consent or waiver under, any contract, lease, sublease, license,
sublicense, franchise, permit, indenture, agreement or mortgage
for borrowed money, instrument of indebtedness, Security Interest
or other arrangement to which the Buyer or Transitory Subsidiary
is a party or by which either is bound or to which any of their
assets are subject, or (d) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to the Buyer or
the Transitory Subsidiary or any of their properties or assets.
29
PAGE
3.5 Reports and Financial Statements. The Buyer has
previously furnished to the Company complete and accurate copies,
as amended or supplemented, of its (a) Annual Report on Form 10-K
for the fiscal year ended March 31, 1995 as filed with the SEC,
and (b) all other reports filed by the Buyer under Section 13 of
the Exchange Act with the SEC since March 31, 1995 (such reports
are collectively referred to herein as the "Buyer Reports"). The
Buyer Reports constitute all of the documents required to be
filed by the Buyer under Section 13 of the Exchange Act with the
SEC since March 31, 1995. As of their respective dates, the
Buyer Reports did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
The audited financial statements and unaudited interim financial
statements of the Buyer included in the Buyer Reports (i) comply
as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC
with respect thereto, (ii) have been prepared in accordance with
GAAP applied on a consistent basis throughout the periods covered
thereby (except as may be indicated therein or in the notes
thereto, and in the case of quarterly financial statements, as
permitted by Form 10-Q under the Exchange Act), (iii) fairly
present the consolidated financial condition, results of
operations and cash flows of the Buyer as of the respective dates
thereof and for the periods referred to therein, and (iv) are
consistent with the books and records of the Buyer.
3.6 Absence of Material Adverse Changes. Since March 31,
1995, there has not been any material adverse change in the
assets, business, financial condition or results of operations of
the Buyer, nor has there occurred any event or development which
could reasonably be foreseen to result in such a material adverse
change in the future.
3.7 Brokers' Fees. Neither the Buyer nor the Transitory
Subsidiary has any liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement, except for a fee
payable by the Buyer to Redloh Associates.
ARTICLE IV
COVENANTS
4.1 Best Efforts. Each of the Parties shall use its best
efforts, to the extent commercially reasonable, to take all
actions and to do all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement;
provided, however, that notwithstanding anything in this
Agreement to the contrary, the Buyer shall not be required to
sell or dispose of or hold separately (through a trust or
30
PAGE
otherwise) any assets or businesses of the Buyer or its
Affiliates.
4.2 Notices and Consents. The Company shall use its best
efforts to obtain, at its expense, all such waivers, permits,
consents, approvals or other authorizations from third parties
required as a condition to the obligation of any party hereto to
consummate the Merger and all of the foregoing from Governmental
Entities, and to effect all such registrations, filings and
notices with or to third parties required as a condition to the
obligation of any party hereto to consummate the Merger and all
of the foregoing with Governmental Entities, as may be required
by or with respect to the Company in connection with the
transactions contemplated by this Agreement (including without
limitation those listed in Section 2.22 of the Disclosure
Schedule).
4.3 Confidential Offering Memorandum and Information
Statement.
(a) The Buyer and the Company shall jointly prepare
appropriate materials for the purpose of making disclosure of the
Merger and the Merger Consideration (including the Merger Units)
to and soliciting the written consents of Company Stockholders in
favor of the adoption of this Agreement (including without
limitation the matters referred to in Section 1.12 and
Article VI). Such materials shall be in the form of a joint
confidential offering memorandum and information statement (the
"Offering Memorandum/Information Statement") which shall contain
the information concerning the Buyer, the Transitory Subsidiary
and the Company required under Regulation D promulgated under the
Securities Act ("Regulation D") (including without limitation,
Rule 502(b)(2) thereof) and Form of Election and form of written
consent soliciting written consents from Company Stockholders in
favor of the Merger and this Agreement.
(b) Promptly following the execution of this
Agreement, the Company will circulate to each Company Stockholder
and each holder of an Option or Warrant the Offering
Memorandum/Information Statement (which may include by reference,
materials filed by the Buyer under the Exchange Act previously
sent to Company Stockholders and holders of Options and Warrants)
and, pursuant thereto and in accordance with the Delaware General
Corporation Law, shall solicit the written consents from Company
Stockholders in favor of the adoption of this Agreement and the
approval of the Merger.
(c) The Company shall comply with all applicable
provisions of and rules under the Securities Act in the
preparation and distribution of the Offering
Memorandum/Information Statement and the solicitation of written
consents thereunder. Without limiting the foregoing, the Company
shall ensure that the information in the Offering
Memorandum/Information Statement relating to the Company or
31
PAGE
furnished by the Company in writing for inclusion therein does
not, as of the date on which it is distributed to Company
Stockholders, and as of the date of taking of action by written
consent, contain any untrue statement of a material fact or omit
to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they
were made, not misleading.
(d) The Buyer shall comply with all applicable
provisions of and rules under the Securities Act and state
securities laws in the preparation and distribution of the
Offering Memorandum/Information Statement and the offering and
issuance of the Merger Units. Without limiting the foregoing,
the Buyer shall ensure that the Offering Memorandum/Information
Statement does not, as of the date on which it is distributed to
Company Stockholders, and as of the date of the taking of action
by written consent, contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements made, in light of the circumstances under which
they were made, not misleading (provided that the Buyer shall not
be responsible for the accuracy or completeness of any
information relating to the Company or any other information
furnished by the Company in writing for inclusion therein).
(e) The Company, acting through its Board of
Directors, shall include in the Information Statement the
recommendation of its Board of Directors that the Company
Stockholders consent to the adoption of this Agreement and the
approval of the Merger, and shall otherwise use its best efforts
to obtain the Requisite Stockholder Approval.
4.4 Hart-Scott-Rodino Act. Each of the Parties has filed
the Notification and Report Forms and related material required
to be filed with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the
Hart-Scott-Rodino Act, and each shall use its best efforts to
obtain an early termination of the applicable waiting period, and
shall make any further filings or information submissions
pursuant thereto that may be necessary, proper or advisable;
provided, however, that the Buyer shall not be obligated to
respond to formal requests for additional information or
documentary material pursuant to 16 C.F.R. 803.20 under the
Hart-Scott-Rodino Act except to the extent it elects to do so in
its sole discretion.
4.5 Operation of Business. Except as contemplated by this
Agreement, during the period from the date of this Agreement to
the Effective Time, the Company shall (and shall cause each
Subsidiary to) conduct its operations in the Ordinary Course of
Business and in compliance with all applicable laws and
regulations and, to the extent consistent therewith, use all
reasonable efforts to preserve intact its current business
organization, keep its physical assets in good working condition,
keep available the services of its current officers and employees
32
PAGE
and preserve its relationships with customers, suppliers and
others having business dealings with it to the end that its
goodwill and ongoing business shall not be impaired in any
material respect. Without limiting the generality of the
foregoing, prior to the Effective Time or termination of this
Agreement pursuant to Section 7.1 hereof, neither the Company nor
any Subsidiary shall, without the written consent of the Buyer:
(a) issue, sell, deliver or agree or commit to issue,
sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase
or otherwise) or authorize the issuance, sale or delivery of, or
redeem or repurchase, any stock of any class or any other
securities or any rights, warrants or options to acquire any such
stock or other securities (except pursuant to the conversion or
exercise of convertible securities, Options or Warrants
outstanding on the date hereof), or amend any of the terms of any
such convertible securities, Options or Warrants;
(b) split, combine or reclassify any shares of its
capital stock; declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any
combination thereof) in respect of its capital stock;
(c) create, incur or assume any debt not currently
outstanding (including obligations in respect of capital leases);
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 loans,
advances or capital contributions to, or investments in, any
other person or entity;
(d) enter into, adopt or amend any Employee Benefit
Plan or any employment or severance agreement or arrangement of
the type described in Section 2.21(j) or (except for normal
increases in the Ordinary Course of Business) increase in any
manner the compensation or fringe benefits of, or materially
modify the employment terms of, its directors, officers or
employees, generally or individually, or pay any benefit not
required by the terms in effect on the date hereof of any
existing Employee Benefit Plan;
(e) acquire, sell, lease, encumber or dispose of any
assets or property (including without limitation any shares or
other equity interests in or securities of any Subsidiary or any
corporation, partnership, association or other business
organization or division thereof), other than purchases and sales
of assets in the Ordinary Course of Business;
(f) amend its charter or By-laws;
(g) change in any material respect its accounting
methods, principles or practices, except insofar as may be
required by a generally applicable change in GAAP;
33
PAGE
(h) discharge or satisfy any Security Interest or pay
any obligation or liability other than in the Ordinary Course of
Business;
(i) mortgage or pledge any of its property or assets
or subject any such assets to any Security Interest;
(j) sell, assign, transfer or license any Intellectual
Property, other than in the Ordinary Course of Business;
(k) enter into, amend, terminate, take or omit to take
any action that would constitute a violation of or default under,
or waive any rights under, any material contract or agreement;
(l) make or commit to make any capital expenditure in
excess of $5,000 per item;
(m) take any action or fail to take any action
permitted by this Agreement with the knowledge that such action
or failure to take action would result in (i) any of the
representations and warranties of the Company set forth in this
Agreement becoming untrue or (ii) any of the conditions to the
Merger set forth in Article V not being satisfied; or
(n) agree in writing or otherwise to take any of the
foregoing actions.
4.6 Full Access. The Company shall (and shall cause each
Subsidiary to) permit representatives of the Buyer to have full
access (at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Company and
the Subsidiaries) to all premises, properties, financial and
accounting records, contracts, other records and documents, and
personnel, of or pertaining to the Company and each Subsidiary.
4.7 Notice of Breaches. The Company shall promptly deliver
to the Buyer written notice of any event or development that
would (a) render any statement, representation or warranty of the
Company in this Agreement (including the Disclosure Schedule)
inaccurate or incomplete in any material respect, or
(b) constitute or result in a breach by the Company of, or a
failure by the Company to comply with, any agreement or covenant
in this Agreement applicable to such party. The Buyer or the
Transitory Subsidiary shall promptly deliver to the Company
written notice of any event or development that would (i) render
any statement, representation or warranty of the Buyer or the
Transitory Subsidiary in this Agreement inaccurate or incomplete
in any material respect, or (ii) constitute or result in a breach
by the Buyer or the Transitory Subsidiary of, or a failure by the
Buyer or the Transitory Subsidiary to comply with, any agreement
or covenant in this Agreement applicable to such party. No such
disclosure shall be deemed to avoid or cure any such
misrepresentation or breach.
34
PAGE
4.8 Exclusivity. The Company shall not, and the Company
shall use its best efforts to cause its Affiliates and each of
its officers, directors, employees, representatives and agents
not to, directly or indirectly, (a) encourage, solicit, initiate,
engage or participate in discussions or negotiations with any
person or entity (other than the Buyer) concerning any merger,
consolidation, sale of material assets, tender offer,
recapitalization, accumulation of Company Shares, proxy
solicitation or other business combination involving the Company,
any Subsidiary or any division of the Company or any Subsidiary
or (b) provide any non-public information concerning the
business, properties or assets of the Company or any Subsidiary
to any person or entity (other than the Buyer).
4.9 Execution of Non-Competition Agreements. The Company
shall use its reasonable efforts to have those employees set
forth in Schedule 4.09 execute a Non-Competition Agreement
substantially in the form of Exhibit E hereto prior to the
Closing.
4.10 Listing of Merger Units.
The Buyer shall use its best efforts to list the Buyer
Common Stock comprising the Merger Units and issuable upon
exercise of the Buyer Warrants on the American Stock Exchange on
or before the effectiveness of the Registration Statements (as
defined below).
4.11 Registration of Buyer Common Stock Comprising the
Merger Units and Issuable Upon Exercise of the Buyer Warrants.
(a) Within 30 days after the Effective Date, the Buyer
shall file, and shall use its best efforts to have declared
effective as promptly as practicable thereafter, a "shelf"
registration statement (the "Unit Registration Statement") on
Form S-3 pursuant to Rule 415 (or similar rule that may be
adopted by the Securities and Exchange Commission (the "SEC")
under the Securities Act for the resale by those Company
Stockholders receiving Merger Units of the shares of Buyer Common
Stock initially comprising the Merger Units (the "Initial
Registrable Shares"). Except as set forth below, the Buyer
agrees to use its best efforts to keep the Unit Registration
Statement continuously effective and usable for resale of the
Initial Registrable Shares for a period of 36 months after its
effectiveness or if shorter when (i) all the Initial Registrable
Shares have been sold pursuant to the Unit Registration Statement
or (ii) the first date after the second anniversary of the
Effective Time on which the largest number of Initial Registrable
Shares then held by any former Company Stockholder constitutes
less than 1% of the then outstanding shares of Buyer Common
Stock.
35
PAGE
(b) Prior to the initial exercisability of the Buyer
Warrants, the Buyer shall file, and shall use its best efforts to
have declared effective as promptly as practicable thereafter, a
"shelf" registration statement (the "Warrant Registration
Statement") pursuant to Rule 415 (or similar rule that may be
adopted by the SEC) under the Securities Act for the issuance of
shares of Buyer Common Stock upon exercise of the Buyer Warrants
(the "Warrant Registrable Shares"). Except as set forth below,
the Buyer agrees to use its best efforts to keep the Warrant
Registration Statement continuously effective and usable until
the earlier of (i) the exercise of all Buyer Warrants that may be
exercised or (ii) the expiration of the Buyer Warrants.
(c) Buyer shall use its best efforts to qualify all
initial Registrable Shares and Warrant Registrable Shares
(collectively, the "Registrable Shares") under any applicable
state securities laws; provided, however, that Buyer shall not be
required to qualify as a foreign corporation or execute a general
consent to service of process in any jurisdiction.
(d) From time to time, the Buyer will amend or
supplement the Unit Registration Statement and the Warrant
Registration Statement (collectively, the "Registration
Statements") and any prospectus contained therein to the extent
necessary to comply with the Securities Act and any applicable
state securities statute or regulations. The Buyer will also
provide the holder of Registrable Shares with as many copies of
the prospectus contained in the appropriate Registration
Statement and such other documents as such holder may reasonably
request (including without limitation a copy of all documents
filed with and correspondence from or to the SEC in connection
with the appropriate Registration Statement).
(e) The Buyer shall be entitled to (i) postpone the
filing or effectiveness of the Registration Statements or (ii) if
effective, elect that the Registration Statements not be usable
and require each Company Stockholder seeking to sell Initial
Registrable Shares pursuant to the Unit Registration Statement or
to acquire Warrant Registrable Shares pursuant to the Warrant
Registration Statement to suspend sales or purchases pursuant to
any prospectus contained therein, for a reasonable period of
time, but not in excess of 60 days (a "Blackout Period"), if the
Buyer determines in good faith that the registration and
distribution of Registrable Shares (or the use of the
Registration Statements or any related prospectus) would
interfere with any pending material acquisition, material
corporate reorganization or any other material corporate
development involving the Buyer or any of its subsidiaries or
would require premature disclosure thereof. The Buyer shall
promptly give each Company Stockholder seeking to sell or
purchase Registrable Shares pursuant to the Registration
Statements written notice of such determination, containing a
general statement of the reasons for such postponement or
restriction on use and an approximation of the anticipated delay;
36
PAGE
provided, however, that the aggregate number of days included in
all Blackout Periods during any consecutive 12 months shall not
exceed 120 days.
(f) If (i) the Buyer shall file a registration
statement (other than in connection with the registration of
securities issuable pursuant to an employee stock option, stock
purchase or similar plan or pursuant to a merger, exchange offer
or a transaction of the type specified in Rule 145(a) under the
Securities Act) with respect to Buyer Common Stock and (ii) with
reasonable prior notice, the Buyer (in the case of a
non-underwritten offering by the Buyer pursuant to such Initial
registration statement) advises Company Stockholder seeking to
sell Initial Registrable Shares pursuant to the Unit Registration
Statement or to sell Warrant Registrable Shares following the
exercise of Buyer Warrants in writing that a public sale or
distribution of such Registrable Shares would adversely affect
such offering or the managing underwriter (in the case of an
underwritten offering by the Buyer pursuant to such registration
statement) advises Company Stockholders seeking to sell such
Registrable Shares in writing that such public sale or
distribution would adversely affect such offering, then each
Company Stockholder seeking to sell Initial Registrable Shares
pursuant to the Unit Registration Statement or to sell Warrant
Registrable Shares following the exercise of Buyer Warrants
shall, to the extent not prohibited by applicable law,
(x) refrain from effecting any public sale or distribution of
such Registrable Shares commencing on the effectiveness of such
registration statement, (y) be entitled to include such
Registrable Shares in such registration statement, subject to
customary underwriter cut back, and sell such Registrable Shares
pursuant thereto, and (z) sign a customary lock-up agreement with
the managing underwriter (in the case of an underwritten
offering) or the Buyer of scope and duration identical to the
scope and duration of the lock-up agreement signed by the Buyer
and each director and executive officer of the Buyer, but in no
event to exceed 90 days.
(g) Each Company Stockholder seeking to sell Initial
Registrable Shares pursuant to the Unit Registration Statement
shall provide in writing all information reasonably requested by
the Buyer for inclusion in or in connection with the Unit
Registration Statement and any such information shall 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.
(h) The Buyer will indemnify and hold harmless each
holder of Registrable Shares (including any broker or dealer
through whom such shares may be sold) and each person, if any,
who controls such holder or any such broker or dealer within the
meaning of Section 15 of the Securities Act from and against any
and all losses, claims, damages, expenses or liabilities, joint
37
PAGE
or several, to which they or any of them become subject under the
Securities Act, applicable state securities laws or under any
other statute or at common law or otherwise, as incurred, and,
except as hereinafter provided, will reimburse each such holder
and each such controlling person, if any, for any legal or other
expenses reasonably incurred by them or any of them in connection
with investigating or defending any actions whether or not
resulting in any liability insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are
based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statements, in any
preliminary or amended preliminary prospectus or in the final
prospectus (or the Registration Statements or any such prospectus
as from time to time amended or supplemented by the Buyer), or
arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light
of the circumstances in which they were made, not misleading, or
any violation by the Buyer of any rule or regulations promulgated
under the Securities Act or any state securities laws applicable
to the Buyer and relating to action or inaction required of the
Buyer in connection with such registration. Notwithstanding the
foregoing, the Buyer shall have no obligation to indemnify any
such holder or controlling person if: (i) such untrue statement
or omission was made in such Registration Statement, preliminary
or amended preliminary prospectus or final prospectus in reliance
upon and in conformity with information furnished in writing to
the Buyer in connection therewith by such holder of Registrable
Shares (in the case of indemnification of such holder) or such
controlling person (in the case of indemnification of such
controlling person) expressly for use therein, or (ii) such
untrue statement or alleged untrue statement or omission or
alleged omission was contained in a preliminary prospectus and
corrected in a final or amended prospectus copies of which were
delivered to such holder of Registrable Shares on a timely basis,
and such holder of Registrable Shares failed to deliver a copy of
the final or amended prospectus at or prior to the confirmation
of the sale of the Registrable Shares to the person asserting any
such loss, claim, damage or liability in any case where such
delivery is required by the Securities Act.
(i) Each holder of the Registrable Shares so
registered will indemnify and hold harmless the Buyer, each of
its directors, each of its officers who have signed or otherwise
participated in the preparation of the Registration Statements
and each person, if any, who controls the Buyer within the
meaning of Section 15 of the Securities Act from and against any
and all losses, claims, damages, expenses or liabilities, joint
or several, to which they or any of them may become subject under
the Securities Act, applicable state securities law or under any
other statute or at common law or otherwise, and, except as
hereinafter provided, will reimburse the Buyer and each such
director, officer, or controlling person for any legal or other
expenses reasonably incurred by them or any of them in connection
38
PAGE
with investigating or defending any actions whether or not
resulting in any liability, insofar as such losses, claims,
damages, expenses, liabilities or actions arise out of or are
based upon any untrue statement of a material fact contained in
the Registration Statements, in any preliminary or amended
preliminary prospectus or in the final prospectus (or in the
Registration Statements or any such prospectus as from time to
time amended or supplemented) or arise out of or are based upon
the omission to state therein a material fact required to be
stated therein or necessary in order to make the statements
therein not misleading, but only to the extent that such
statement or omission was made in reliance upon and in conformity
with information furnished in writing to the Buyer in connection
therewith by such holder of Registrable Shares expressly for use
therein. The Company Stockholders' obligations hereunder shall
be limited to an amount equal to the proceeds received by such
holder of Registrable Shares sold in or following any such
registration.
(j) If any action or proceeding (including any
governmental investigation) shall be brought or asserted against
any person entitled to indemnification under the provisions in
this Section 4.11 (an "Indemnitee") in respect of which indemnity
may be sought form any party who has agreed to provide such
indemnification in this Section 4.11 (an "Indemnitor"), the
Indemnitor shall assume the defense thereof, including the
employment of counsel selected by the Indemnitor and shall assume
the payment of all expenses. Such Indemnitee shall have the
right to employ separate counsel in any such action and to
participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such Indemnitee. The
Indemnitor shall not be liable for any settlement of any such
action or proceedings effected without its written consent, but
if settled with its written consent, or if there be a final
judgment for the plaintiff in any such action or proceeding, the
Indemnitor shall indemnify and hold harmless such Indemnitee from
and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
(k) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any
case in which the Buyer or any holder of Registrable Shares makes
a claim for indemnification pursuant to this Section 4.11 but it
is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case
notwithstanding that this Section 4.11 provides for
indemnification, in such case, then the Buyer and such holder of
Registrable Shares will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Buyer on the one
hand and of the holder of Registrable Shares on the other in
39
PAGE
connection with the statements or omission which resulted in such
losses, claims, damages or liabilities, as well as any other
relevant equitable considerations or, if the allocation provided
herein is not permitted by applicable law, in such proportion as
shall be appropriate to reflect the relative benefits received by
the Buyer and any holder of Registrable Shares form the offering
of the securities covered by such Registration Statements. The
relative fault of the Buyer on the one hand and of the holder of
Registrable Shares on the other shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the
Buyer on the one hand or by the holder of Registrable Shares on
the other, and each party's relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission; provided, however, that, in any such case (i) no
such holder of Registrable Shares will be required to contribute
any amount in excess of the proceeds received by such holder of
Registrable Shares offered by it pursuant to the Unit
Registration Statement or sold following the acquisition thereof
pursuant to the Warrant Registration Statement; and (ii) no
person or entity guilty of fraudulent misrepresentation within
the meaning of Section 11(f) of the Securities Act will be
entitled to contribution from any person or entity who was no
guilty of such fraudulent misrepresentation.
(l) The Buyer shall timely file with the SEC such
information as the SEC may require under Section 13 or 15(d) of
the Exchange Act; and in such event, the Buyer shall use its best
efforts to take all action pursuant to Rule 144(c) as may be
required as a condition to the availability of Rule 144 under the
Securities Act (or any successor exemptive rule hereinafter in
effect) with respect to Buyer Common Stock. The Buyer shall
furnish to any holder of Registrable Shares forthwith upon
request (i) a written statement by the Buyer as to its compliance
with the reporting requirements of Rule 144(c), (ii) a copy of
the most recent annual or quarterly report of the Buyer as filed
with the SEC, and (iii) such other publicly-filed reports and
documents as a holder may reasonable request in availing itself
of any rule or regulation of the SEC allowing a holder to sell
any such Registrable Shares without registration.
(m) The Buyer shall bear all costs and expenses of
such registration, including, but not limited to, printing, legal
and accounting expenses, SEC and NASD filing fees and all related
"Blue Sky" fees and expenses, provided, however, that the Buyer
shall have no obligation to pay or otherwise bear any portion of
the underwriters' commissions or discounts attributable to the
Registrable Shares being offered and sold by the Company
Stockholders, or the fees and expenses of any counsel or other
advisor for the Company Stockholders in connection with such
registration.
40
PAGE
4.12 Continuation of Insurance. Until the second
anniversary of the Effective Date and provided that such
insurance is available, the Buyer will maintain insurance
policies in place insuring the Surviving Corporation and
liabilities of the Company in scope and at levels no less than
that currently in effect for the Company, including "tail"
coverage for such policies, where applicable, to the year
currently covered by the Company's policies. If during such two
year period a claim for indemnification is made hereunder or
under the Escrow Agreement, and such claim may be covered by any
of such insurance policies such policies will be continued in
force to provide recovery if necessary to do so.
4.13 No Short Selling. The Company and the Buyer shall use
their reasonable best efforts to ensure that no Company
Stockholder receiving Units and no holder of an Option engage in
short sales of Buyer Common Stock following the Effective Time.
ARTICLE V
CONDITIONS TO CONSUMMATION OF MERGER
5.1 Conditions to Each Party's Obligations. The respective
obligations of each Party to consummate the Merger are subject to
the satisfaction of the following conditions:
(a) this Agreement and the Merger shall have received
the Requisite Stockholder Approval;
(b) all applicable waiting periods (and any extensions
thereof) under the Hart-Scott-Rodino Act shall have expired or
otherwise been terminated;
(c) no action, suit or proceeding shall be pending or
threatened by or before any Governmental Entity wherein an
unfavorable judgment, order, decree, stipulation or injunction
would (i) prevent consummation of any of the transactions
contemplated by this Agreement, (ii) cause any of the
transactions contemplated by this Agreement to be rescinded
following consummation or (iii) affect adversely the right of the
Buyer to own, operate or control any of the assets and operations
of the Surviving Corporation and the Subsidiaries following the
Merger, and no such judgment, order, decree, stipulation or
injunction shall be in effect; and
(d) the Registrable Shares shall have been authorized
for listing on the American Stock Exchange upon official notice
of issuance.
5.2 Conditions to Obligations of the Buyer and the
Transitory Subsidiary. The obligation of each of the Buyer and
the Transitory Subsidiary to consummate the Merger is subject to
the satisfaction of the following additional conditions:
41
PAGE
(a) Company Stockholders holding in the aggregate at
least 95% of the outstanding Company Shares shall have delivered
effective written consents in favor of the Merger and this
Agreement;
(b) the Company and the Subsidiaries shall have
obtained all of the waivers, permits, consents, approvals or
other authorizations, and effected all of the registrations,
filings and notices, referred to in Section 4.2;
(c) the representations and warranties of the Company
set forth in Article II shall be true and correct when made on
the date hereof and shall be true and correct as of the Effective
Time as if made as of the Effective Time, except for
representations and warranties made as of a specific date, which
shall be true and correct as of such date;
(d) the Company shall have performed or complied with
its agreements and covenants required to be performed or complied
with under this Agreement as of or prior to the Effective Time;
(e) the Company shall have delivered to the Buyer and
the Transitory Subsidiary a certificate (without qualification as
to knowledge or materiality or otherwise) to the effect that each
of the conditions specified in clauses (a) and (c) of Section 5.1
and clauses (a) through (d) of this Section 5.2 is satisfied in
all respects;
(f) the Buyer and the Transitory Subsidiary shall have
received from counsel to the Company an opinion with respect to
the matters set forth in Exhibit F attached hereto, addressed to
the Buyer and the Transitory Subsidiary and dated as of the
Closing Date;
(g) Messrs. Robert W. Dunlap, John R. Ryan, Michael D.
Knupp and Andrew C. Middleton shall have executed non-competition
agreements substantially in the form of Exhibit E hereto;
(h) Not more than 35 Company Stockholders that are not
"accredited investors" (as defined in Regulation D) shall have
filed Forms of Election to receive Merger Units;
(i) Company Stockholders shall have filed and not
revoked Forms of Election sufficient for all Merger Units to be
allocated pursuant to Section 1.8 at the Effective Time;
(j) Each holder of an Option electing to be subject to
certain restrictions as set forth in Section 1.12(a) shall have
executed a Optionee Consent Agreement;
(k) The Escrow Agreement shall have been executed and
delivered by or on behalf of all Company Stockholders;
42
PAGE
(l) the Buyer and the Transitory Subsidiary shall have
received the resignations, effective as of the Effective Time, of
each director of the Company and the Subsidiaries (other than
R/T);
(m) No holder of an Option shall have exercised any
such Option between the execution of this Agreement and the
Effective Time;
(n) All unexercised Warrants shall have been
terminated or exercised in full and the Company shall have
obtained any necessary consent of the holder of such Warrants to
such termination and to the assumption and amendment of Options
as contemplated by Section 1.12 hereof (unless such consent is
not required under the terms of the applicable agreement,
instrument or plan).
(o) All agreements between the Company and the Company
Stockholders, or among the Company Stockholders (other than the
Escrow Agreement) shall have been terminated prior or shall
terminate effective upon the Effective Time; and
(p) all actions to be taken by the Company in
connection with the consummation of the transactions contemplated
hereby and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated hereby
shall be reasonably satisfactory in form and substance to the
Buyer and the Transitory Subsidiary.
5.3 Conditions to Obligations of the Company. The
obligation of the Company to consummate the Merger is subject to
the satisfaction of the following additional conditions:
(a) the representations and warranties of the Buyer
and the Transitory Subsidiary set forth in Article III shall be
true and correct when made on the date hereof and shall be true
and correct as of the Effective Time as if made as of the
Effective Time, except for representations and warranties made as
of a specific date, which shall be true and correct as of such
date;
(b) each of the Buyer and the Transitory Subsidiary
shall have performed or complied with its agreements and
covenants required to be performed or complied with under this
Agreement as of or prior to the Effective Time;
(c) each of the Buyer and the Transitory Subsidiary
shall have delivered to the Company a certificate (without
qualification as to knowledge or materiality or otherwise) to the
effect that each of the conditions specified in clauses (c) and
(d) of Section 5.1 and clauses (a) and (b) of this Section 5.3 is
satisfied in all respects;
43
PAGE
(d) the Company shall have received from counsel to
the Buyer and the Transitory Subsidiary an opinion with respect
to the matters set forth in Exhibit G attached hereto, addressed
to the Company and dated as of the Closing Date; and
(e) all actions to be taken by the Buyer and the
Transitory Subsidiary in connection with the consummation of the
transactions contemplated hereby and all certificates, opinions,
instruments and other documents required to effect the
transactions contemplated hereby shall be reasonably satisfactory
in form and substance to the Company.
ARTICLE VI
INDEMNIFICATION
6.1 Of the Buyer and the Company. If the Closing occurs,
the Buyer, the Company and each Subsidiary shall be indemnified
and held harmless from and against any and all claims, damages,
losses, diminution of value, liabilities, costs and expenses
(including, without limitation, settlement costs and any legal,
accounting, consulting or other fees or expenses for
investigating or defending any actions or threatened actions)
whether or not involving a third-party claim (collectively, the
"Damages") arising out of, constituting or related to each and
all of the following:
(a) any misrepresentation or breach of any
representation or warranty made by the Company in Section 2 of
this Agreement or in any statement, certificate or Schedule
furnished by the Company pursuant to this Agreement;
(b) any breach of any covenant, agreement or
obligation of the Company contained in this Agreement (other than
Section 4.13 hereof) or any other agreement, instrument or
document contemplated by this Agreement;
(c) resulting from (i) any release of any Materials of
Environmental Concern into the environment relating to the
operation of the business of the Company or any Subsidiary or any
predecessor business or company of the Company or any Subsidiary
prior to the Closing Date (including without limitation with
respect to the transportation of Materials of Environmental
Concern or the off-site storage, treatment, reclamation,
recycling or disposal thereof); (ii) any release of any Materials
of Environmental Concern at any location prior to the Closing
Date if such release could give rise under any Environmental Law
to liability on the part of the Company or any Subsidiary or any
predecessor business or company of the Company or any Subsidiary;
or (iii) any violation of any Environmental Law by the Company or
any Subsidiary or any predecessor business or company of the
Company or any Subsidiary which occurred prior to the Closing
Date;
44
PAGE
(d) any liability for Taxes relating to operation of
the Company or any Subsidiary for any period prior to the Closing
(except to the extent of reserves specifically therefor on the
Most Recent Balance Sheet);
(e) resulting from any failure of any Company
Stockholders to have good, valid and marketable title to the
issued and outstanding Company Shares held by such Company
Stockholders, free and clear of all liens, claims, pledges,
options, adverse claims or charges of any nature whatsoever; or
(f) resulting from any claim by a stockholder or
former stockholder of the Company, or any other person, firm,
corporation or entity, seeking to assert, or based upon: (i)
ownership or rights to ownership of any shares of capital stock
of or equity interest in the Company; (ii) any rights under the
Certificate of Incorporation or By-laws of the Company; or (iii)
any claim that his, her or its shares were wrongfully repurchased
by the Company at any time prior to the Closing.
The obligations of the Company Stockholders to
indemnify and hold harmless the Buyer, the Company and each
Subsidiary shall in each case be joint and several obligations,
except that the liability of each Company Stockholder with
respect to Damages specified in Section 6.1(e) shall be several,
and not joint.
6.2 Of the Company Stockholders. If the Closing occurs,
the Buyer hereby agrees to indemnify and hold harmless each
Company Stockholder from and against all Damages arising out of
or related to each and all of the following:
(a) any misrepresentation or breach of any
representation or warranty made by the Buyer in this Agreement;
(b) any breach of any covenant, agreement or
obligation of the Buyer contained in this Agreement or any other
agreement, instrument or document contemplated by this Agreement;
(c) any misrepresentation contained in any statement,
certificate or schedule furnished by the Buyer pursuant to this
Agreement or in connection with the transactions contemplated by
this Agreement; or
(d) except as otherwise provided herein (including
without limitation in Section 6.1), the Company's operation after
the Closing (provided that no such indemnification shall be
provided with respect to any facts which would require
indemnification of the Buyer or the Company in Section 6.1 if a
claim was made therefor within the periods set forth in Section
6.5).
45
PAGE
6.3 Claims for Indemnification.
(a) Whenever any claim shall arise for indemnification
under this Section 6, the party seeking indemnification (the
"Indemnified Party"), shall promptly notify the party from whom
indemnification is sought (the "Indemnifying Party") of the claim
and, when known, the facts constituting the basis for such claim
with as much specificity and particularity as practicable under
the circumstances; provided, however, that no delay on the part
of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or
obligation hereunder except to the extent of any damage or
liability caused by or arising out of such failure.
(b) All claims for indemnification not involving any
claim or legal proceeding by a third party shall be made in
accordance with the procedures set forth in the Escrow Agreement.
(c) In the event of any such claim for indemnification
hereunder resulting from or in connection with any claim or legal
proceeding by a third party, the notice shall specify, if known,
the amount or an estimate of the amount of the liability arising
therefrom and shall include copies of all suit, service and claim
documents. The Indemnified Party shall not settle or compromise
any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent,
which shall not be unreasonably withheld or delayed, of the
Indemnifying Party; provided, however, that if suit shall have
been instituted against an Indemnified Party and the Indemnifying
Party shall not have taken control of such suit after
notification thereof as provided in Section 6.4 of this
Agreement, the Indemnified Party shall have the right to settle
or compromise such claim as provided in Section 6.4. The
Indemnification Representative shall have the power and authority
to bind all the Company Stockholders for all purposes of this
Section 6.
(d) The parties agree that, prior to submitting any
claim for indemnification under this Article VI, they shall use
reasonable efforts to determine the amount, if any, by which
their losses would be offset by an Indemnified Party's recovery
of insurance proceeds and reduction of tax liabilities and to
provide the Indemnifying Party notice of and a description of
such determination. All claims for indemnification shall provide
for appropriate adjustments as a result of such reductions.
6.4 Defense by the Indemnifying Party. In connection with
any claim which may give rise to indemnity hereunder resulting
from or arising out of any claim or legal proceeding by a person
other than the Indemnified Party, the Indemnifying Party may,
upon written notice to the Indemnified Party, assume the defense
of any such claim or legal proceeding if the Indemnifying Party
acknowledges to the Indemnified Party in writing the obligation
of the Indemnifying Party to indemnify the Indemnified Party with
46
PAGE
respect to all elements of such claim. If the Indemnifying Party
assumes the defense of any such claim or legal proceeding, the
Indemnifying Party shall select counsel reasonably acceptable to
the Indemnified Party to conduct the defense of such claims or
legal proceedings and shall take all steps necessary in the
defense or settlement thereof. The Indemnifying Party shall bear
its costs and expenses incurred in connection with its defense of
any claim under this Section 6.4, provided that, if the Buyer of
the Company is the Indemnified Party, the Indemnifying Party, if
it assumes the control of such claim, may be reimbursed for its
reasonable out-of-pocket costs in connection with such defense
from the amounts then held pursuant to the Escrow Agreement
pursuant to the procedures set forth therein. The Indemnifying
Party shall not consent to a settlement of, or the entry of any
judgment arising from, any such claim or legal proceeding,
without the prior written consent of the Indemnified Party (which
consent shall not be unreasonably withheld or delayed) unless the
terms thereof provide for the unconditional release and discharge
of the Indemnified Party; provided that if the Indemnified Party
is the Buyer or the Company, the Indemnifying Party shall not
consent to a settlement of, or the entry of any judgment arising
from, any such claim or legal proceeding without the consent of
the Buyer where the Buyer or the Company shall have reasonably
demonstrated that the circumstances surrounding such settlement
or judgment could result in an adverse impact upon the business,
operations, assets or financial position of the Buyer, the
Company or any Subsidiary. The Indemnified Party shall be
entitled to participate in (but not control) the defense of any
such action, with its own counsel and at its own expense (except
that the Indemnifying Party will be responsible for the fees and
expenses of the separate co-counsel to the extent the Indemnified
Party reasonably concludes that the counsel the Indemnifying
Party has selected has a conflict of interest). If the
Indemnifying Party does not assume the defense of any such claim
or litigation resulting therefrom as provided in this Section 6.4
within thirty (30) days after the date that the Indemnified Party
has given notice of the claim to the Indemnifying Party: (a) the
Indemnified Party may defend against such claim or litigation in
such manner as he or it may deem appropriate, including, but not
limited to, settling such claim or litigation on such terms as
the Indemnified Party may deem appropriate; and (b) the
Indemnifying Party shall be entitled to participate in (but not
control) the defense of such action, with his or its counsel and
at his or its own expense.
6.5 Survival. The representations and warranties of the
Company set forth in this Agreement shall survive the Closing and
the consummation of the transactions contemplated hereby and
continue until 24 months after the Closing Date and shall not be
affected by any examination made for or on behalf of the Buyer or
the knowledge of any of the Buyer's officers, directors,
stockholders, employees or agents. Notwithstanding the
foregoing, the representations and warranties contained in
Section 2.2 relating to capitalization and the representations
47
PAGE
and warranties contained in Section 2.9 relating to tax matters
shall survive the Closing and the consummation of the
transactions contemplated thereby and continue until 90 days
after the expiration of the applicable statute of limitations
relating to such representations and the representations and
warranties contained in Section 2.3 relating to authorization of
the Merger shall survive without limitation. If a notice is
given in accordance with the Escrow Agreement before expiration
of such periods, then (notwithstanding the expiration of such
time period) the representation or warranty applicable to such
claim shall survive until, but only for purposes of, the
resolution of such claim. No claim for indemnification may be
made except within the time periods specified herein.
6.6 Limitations. Notwithstanding anything to the contrary
herein, (a) the aggregate liability of the Company Stockholders
for Damages under this Article VI shall not exceed the Escrow
Property (as defined in the Escrow Agreement), except with
respect to claims made in connection with the breaches of
representations and warranties in Section 2.2 and 2.3, or
pursuant to Section 6.1(d), (e) or (f), as to which such
liability shall not be limited to the Escrow Property, but shall
not exceed the Cash Consideration and Merger Units (or proceeds
from the sale thereof) received by the Company Stockholders
hereunder, and (b) except for claims pursuant to Section 9.11,
the Buyer shall not receive indemnification under this Article VI
unless and until the aggregate Damages exceed $300,000 (at which
point the Buyer shall be indemnified for the aggregate Damages
(subject to the limitation in the foregoing clause (a)), and not
just the amounts in excess of $300,000). Except with respect to
claims based on fraud, the rights of the Indemnified Persons
under this Article VI shall be the exclusive remedy of the
Indemnified Persons with respect to claims resulting from or
relating to any misrepresentation, breach of warranty or failure
to perform any covenant or agreement of the Company contained in
this Agreement. No Company Stockholder shall have any right of
contribution against the Company with respect to any breach by
the Company of any of its representations, warranties, covenants
or agreements. In any circumstances in which the Company
Stockholders may be liable for amounts in excess of the Escrow
Property, recovery shall be had first against the Escrow
Property, as appropriate, and second (to the extent the Escrow
Property is insufficient to satisfy such claims) from the
remaining Cash Consideration and Merger Units (or proceeds from
the sale thereof).
48
PAGE
ARTICLE VII
TERMINATION
7.1 Termination of Agreement. The Parties may terminate
this Agreement prior to the Effective Time (whether before or
after Requisite Stockholder Approval) as provided below:
(a) the Parties may terminate this Agreement by mutual
written consent;
(b) the Buyer may terminate this Agreement by giving
written notice to the Company in the event the Company is in
breach, and the Company may terminate this Agreement by giving
written notice to the Buyer and the Transitory Subsidiary in the
event the Buyer or the Transitory Subsidiary is in breach, of any
material representation, warranty or covenant contained in this
Agreement, and such breach is not remedied within 10 days of
delivery of written notice thereof;
(c) the Buyer may terminate this Agreement by giving
written notice to the Company if the Closing shall not have
occurred on or before December 31, 1995 by reason of the failure
of any condition precedent under Section 5.1 or 5.2 hereof
(unless the failure results primarily from a breach by the Buyer
or the Transitory Subsidiary of any representation, warranty or
covenant contained in this Agreement);
(d) the Company may terminate this Agreement by giving
written notice to the Buyer and the Transitory Subsidiary if the
Closing shall not have occurred on or before December 31, 1995 by
reason of the failure of any condition precedent under
Section 5.1 or 5.3 hereof (unless the failure results primarily
from a breach by the Company of any representation, warranty or
covenant contained in this Agreement); or
7.2 Effect of Termination. If any Party terminates this
Agreement pursuant to Section 7.1, all obligations of the Parties
hereunder shall terminate without any liability of any Party to
any other Party (except for any liability of any Party for
breaches of this Agreement).
ARTICLE VIII
DEFINITIONS
For purposes of this Agreement, each of the following
defined terms is defined in the Section of this Agreement
indicated below.
Defined Term Section
Affiliate 2.15(f)
49
PAGE
Average Price of Buyer Common Stock 1.5(c)
Buyer Introduction
Buyer Common Stock 1.5(a)
Buyer Reports 3.5
Buyer Warrants 1.5(c)
Cash Consideration 1.5(c)
CERCLA 2.22(a)
Certificate of Merger 1.1
Certificates 1.7(a)
Closing 1.2
Closing Date 1.2
Code 1.13(a)
Company Introduction
Company Shares 1.5(a)
Company Stockholder 1.5(a)
Conversion Ratio 1.13(a)
Damages 6.1
Disclosure Schedule Article II
Dissenting Shares 1.6(a)
Effective Time 1.1
Employee Benefit Plan 2.21(a)
Environmental Law 2.22(a)
ERISA 2.21(a)
ERISA Affiliate 2.21(a)
Escrow Agreement 1.3
Escrow Agent 1.3
Exchange Act 2.14(g)
Exchange Agent 1.3
Financial Statements 2.6
Form of Election 1.7(a)
GAAP 2.6
Governmental Entity 2.4
Hart-Scott-Rodino Act 2.4
Indemnification Representatives 1.3
Indemnified Persons 6.1
Intellectual Property 2.12(a)
Intended Uses 2.11(a)
Materials of Environmental Concern 2.22(b)
Merger 1.1
Merger Consideration 1.5(c)
Merger Units 1.5(c)
Most Recent Balance Sheet 2.8
Most Recent Fiscal Quarter End 2.7
Offering Memorandum/Information
Statement 4.3(a)
Optionee Consent Agreement 1.13(a)
Options 1.13(a)
Ordinary Course of Business 2.4
Outstanding Company Share Value 1.5(c)
Party Introduction
Permit 2.24
Registrable Shares 4.11
Registration Statement 4.12(a)
Requisite Stockholder Approval 2.3
50
PAGE
R/T 2.4
SEC 4.11
Securities Act 1.13(c)
Security Interest 2.4
Series A Shares 1.5(a)
Series B Shares 1.5(a)
Services 2.21(a)
Subsidiary 2.4
Surviving Corporation 1.1
Taxes 2.9(a)
Tax Returns 2.9(a)
Third Party Intellectual
Property Rights 2.12(a)
Transitory Subsidiary Introduction
Unit 1.5(c)
Unit Election Shares 1.5(a)
Unit Value 1.5(c)
Warrants 1.13(d)
ARTICLE IX
MISCELLANEOUS
9.1 Press Releases and Announcements. No Party shall issue
any press release or public disclosure relating to the subject
matter of this Agreement without the prior approval of the other
Parties; provided, however, that any Party may make any public
disclosure it believes in good faith is required by law or
regulation (in which case the disclosing Party shall advise the
other Parties and provide them with a copy of the proposed
disclosure prior to making the disclosure).
9.2 No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any person other than the
Parties and their respective successors and permitted assigns;
provided, however, that the provisions in Article I concerning
issuance of the Merger Units and in Section 4.11 concerning
registration rights are intended for the benefit of the Company
Stockholders.
9.3 Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement
among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written
or oral, with respect to the subject matter hereof.
9.4 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of
the other Parties; provided that the Transitory Subsidiary may
assign its rights, interests and obligations hereunder to an
Affiliate of the Buyer.
51
PAGE
9.5 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same
instrument.
9.6 Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
9.7 Notices. All notices, requests, demands, claims, and
other communications hereunder shall be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly delivered two business days after it is sent by
registered or certified mail, return receipt requested, postage
prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service, in each case to the
intended recipient as set forth below:
If to the Company: Copy to:
Remediation Technologies, Inc. Van Wert & Zimmer, P.C.
Damonmill Square One Militia Drive
9 Pond Lane Lexington, MA 02173
Concord, MA 01741 Attn: Thomas M. Zimmer
Attn: Robert W. Dunlap
If to the Buyer: Copy to:
Thermo Remediation, Inc. Thermo Remediation, Inc.
c/o Thermo Electron Corporation c/o Thermo Electron
81 Wyman Street Corporation
Waltham, MA 02254 81 Wyman Street
Attn: Seth Hoogasian, Esq. Waltham, MA 02254
General Counsel Attn: Dr. John P. Appleton
If to the Transitory Subsidiary: Copy to:
TRI Acquisition Inc. TRI Acquisition Inc.
c/o Thermo Electron Corporation c/o Thermo Electron
81 Wyman Street Corporation
Waltham, MA 02254 81 Wyman Street
Attn: Seth Hoogasian, Esq. Waltham, MA 02254
General Counsel Attn: Dr. John P. Appleton
Any Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communication shall be deemed to have
52
PAGE
been duly given unless and until it actually is received by the
party for whom it is intended. Any Party may change the address
to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
9.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws (and not the law
of conflicts) of the Commonwealth of Massachusetts.
9.9 Amendments and Waivers. The Parties may mutually amend
any provision of this Agreement at any time prior to the
Effective Time; provided, however, that any amendment effected
subsequent to the Requisite Stockholder Approval shall be subject
to the restrictions contained in the Delaware General Corporation
Law. No amendment of any provision of this Agreement shall be
valid unless the same shall be in writing and signed by all of
the Parties. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
9.10 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of
a court of competent jurisdiction declares that any term or
provision hereof is invalid or unenforceable, the Parties agree
that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific
words or phrases, or to replace any invalid 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, and this
Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed.
9.11 Expenses. Except as set forth in the Escrow Agreement,
each of the Parties shall bear its own costs and expenses
(including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby;
provided, however, that if the Merger is consummated, the Company
and the Subsidiaries shall not incur more than an aggregate of
$100,000 in out-of-pocket fees and expenses (including legal and
accounting, but excluding internal marketing and analysis fees
and expenses) in connection with the Merger, and any fees and
expenses incurred by the Company or its Subsidiaries in excess of
such amount shall be recovered by the Buyer pursuant to the
53
PAGE
Escrow Agreement without regard to the provisions of the first
sentence of Section 6.6.
9.12 Specific Performance. Each of the Parties acknowledges
and agrees that one or more of the other Parties would be damaged
irreparably in the event any of the provisions of this Agreement
are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the Parties agrees
that the other Parties shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the
terms and provisions hereof in any action instituted in any court
of the United States or any state thereof having jurisdiction
over the Parties and the matter (subject to the provisions of
Section 9.13), in addition to any other remedy to which it may be
entitled, at law or in equity.
9.13 Submission to Jurisdiction. Each of the Parties
(a) submits to the jurisdiction of any state or federal court
sitting in Massachusetts in any action or proceeding arising out
of or relating to this Agreement, (b) agrees that all claims in
respect of the action or proceeding may be heard and determined
in any such court, and (c) agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any
other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding
so brought and waives any bond, surety or other security that
might be required of any other Party with respect thereto. Any
Party may make service on another Party by sending or delivering
a copy of the process to the Party to be served at the address
and in the manner provided for the giving of notices in
Section 9.7. Nothing in this Section 9.13, however, shall affect
the right of any Party to serve legal process in any other manner
permitted by law.
9.14 Construction. The language used in this Agreement
shall be deemed to be the language chosen by the Parties hereto
to express their mutual intent, and no rule of strict
construction shall be applied against any Party. Any reference
to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise.
9.15 Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
54
PAGE
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
THERMO REMEDIATION, INC.
By:/s/ John P. Appleton
Title: Chairman and Chief Executive
Officer
TRI ACQUISITION INC.
By:/s/ Norman A. Pedersen
Title: Vice President
REMEDIATION TECHNOLOGIES, INC.
By:/s/ Robert W. Dunlap
Title: President
The undersigned, being the duly elected Vice President of
TRI Acquisition Inc., hereby certifies that this Agreement has
been adopted by a majority of the votes represented by the
outstanding shares of capital stock of TRI Acquisition Inc.
entitled to vote on this Agreement.
/s/ Norman A. Pedersen
Vice President
The undersigned, being the duly elected Secretary of
Remediation Technologies, Inc., hereby certifies that this
Agreement has been adopted by the written consent of shareholders
owning a majority of the issued and outstanding Company Shares
entitled to grant a consent for the approval of this Agreement.
/s/ Thomas M. Zimmer
Secretary
55