Tender-Offer Solicitation/Recommendation Statement — Schedule 14D-9
Filing Table of Contents
Document/Exhibit Description Pages Size
1: SC 14D9 Tender-Offer Solicitation/Recommendation Statement 26 131K
2: EX-99.1 Agree & Plan of Merge 37 145K
11: EX-99.10 News Release 2± 9K
3: EX-99.2 Agree & Allen & Co. 5 22K
4: EX-99.3 Agree Paul Gould 5 23K
5: EX-99.4 Agree Andrew Dwyer 6 23K
6: EX-99.5 Employment Agreement 4 17K
7: EX-99.6 Press Release 2± 9K
8: EX-99.7 Letter to Stockholders 1 7K
9: EX-99.8 Opinion of Allen & Co. 4 15K
10: EX-99.9 Opinion of Gilford SEC. 3 14K
Exhibit 1
AGREEMENT AND PLAN OF MERGER
March 17, 1995
WASTE MANAGEMENT, INC.
WMI ACQUISITION SUB, INC.
RESOURCE RECYCLING TECHNOLOGIES, INC.
TABLE OF CONTENTS
Page
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1. The Offer................................................................ 1
1.1 General............................................................. 1
1.2 Company Actions..................................................... 3
1.3 Directors; Section 14(f)............................................ 4
2. The Merger and Related Matters........................................... 4
2.1 The Merger.......................................................... 4
2.2 Conversion of Stock................................................. 5
2.3 Dissenting Shares................................................... 5
2.4 Payment............................................................. 6
2.5 No Further Rights or Transfers...................................... 7
2.6 Certificate of Incorporation of the Surviving Corporation........... 8
2.7 By-Laws of the Surviving Corporation................................ 8
2.8 Directors and Officers of the Surviving Corporation................. 8
2.9 Closing............................................................. 8
2.10 Stock Options, Warrants and Convertible Securities.................. 8
2.11 Special Meeting..................................................... 9
2.12 Merger Without Meeting of Stockholders.............................. 9
3. Representations and Warranties........................................... 9
3.1 Representations and Warranties of the Company....................... 9
3.2 Representations and Warranties of the Parent and the Sub............ 9
4. Covenants................................................................ 11
4.1 Disclosure Documents................................................ 11
4.2 Access to Information Concerning Properties and Records............. 11
4.3 Confidentiality..................................................... 11
4.4 Interim Operations of the Company................................... 12
4.5 Consents............................................................ 13
4.6 No Solicitation..................................................... 13
4.7 Filings............................................................. 14
4.8 All Reasonable Efforts.............................................. 14
4.9 Public Announcements................................................ 14
4.10 Notification of Certain Matters..................................... 14
4.11 Directors' and Officers' Indemnification............................ 14
4.12 Expenses............................................................ 15
5. Conditions to Consummation of the Merger................................. 15
5.1 Conditions to Each Party's Obligation to Effect the Merger.......... 15
5.2 Additional Condition to Obligations of the Parent and the
Sub to Effect the Merger.......................................... 15
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6. Termination.............................................................. 16
6.1 Termination......................................................... 16
6.2 Notice and Effect of Termination.................................... 17
6.3 Extension; Waiver................................................... 17
6.4 Amendment and Modification.......................................... 17
7. Miscellaneous............................................................ 17
7.1 Fees................................................................ 17
7.2 Survival of Representations and Warranties.......................... 18
7.3 Notices............................................................. 18
7.4 Entire Agreement; Assignment........................................ 19
7.5 Binding Effect; Benefit............................................. 19
7.6 Headings............................................................ 19
7.7 Counterparts........................................................ 19
7.8 Governing Law....................................................... 20
7.9 Severability........................................................ 20
7.10 Certain Definitions................................................. 20
ANNEX A......................................................................A-1
ANNEX B......................................................................B-1
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AGREEMENT AND PLAN OF MERGER
March 17, 1995
The parties to this Agreement and Plan of Merger are Waste Management,
Inc., an Illinois corporation (the "Parent"), WMI Acquisition Sub, Inc., a
Delaware corporation, and a wholly-owned subsidiary of the Parent (the "Sub"),
and Resource Recycling Technologies, Inc., a Delaware corporation (the
"Company").
The parties wish to provide for the merger of the Sub with and into
the Company on the terms and conditions set forth in this agreement.
Accordingly, the parties agree as follows:
1. The Offer.
1.1 General.
(a) As promptly as practicable (but in no event later than five
business days after the date of this Agreement), the Parent shall cause the Sub
to commence (within the meaning of Rule 14d-2 under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") an offer (the "Offer") to purchase all
the outstanding shares of common stock, par value $1.00 per share (the "Company
Common Stock"), of the Company at a price of $11.50 per share, net to the seller
in cash (the "Offer Price"), and, subject to the conditions of the Offer, shall
use all reasonable efforts to consummate the Offer as promptly as permitted by
law. The obligation of the Parent and the Sub to consummate the Offer and to
accept for payment and to pay for any shares of Company Common Stock tendered
pursuant to the Offer (i) shall be subject to the condition that such number of
shares of Company Common Stock shall have been validly tendered and not
withdrawn prior to the expiration date of the Offer that, together with the
shares of Company Common Stock beneficially owned by the Parent and any
affiliate of the Parent on that date, constitute more than 50.1% of Company
Common Stock, assuming exercise and conversion of all outstanding options and
convertible securities of the Company (the "Minimum Condition") and (ii) shall
be subject to the other conditions set forth in Annex A to this Agreement.
(b) Neither the Parent nor the Sub shall, without the consent of the
Company, waive the Minimum Condition. Otherwise, the conditions of the Offer
are for the sole benefit of the Sub and the Parent regardless of the
circumstances giving rise to the non-fulfillment of any such conditions and may
be waived by the Sub and the Parent in whole or in part. The Company agrees
that no shares of Company Common Stock held by the Company shall be tendered
pursuant to the Offer. Parent and Sub may modify the terms of the Offer, except
that, without the consent of the Company, they shall not (i) reduce the number
of shares of Company Common Stock to be purchased in the Offer, (ii) reduce the
Offer Price, (iii) modify or add to the conditions set forth in Annex A, (iv)
except as provided in the next sentence, extend the Offer, (v) change the form
of consideration payable in the Offer, or (vi) amend any other term of the
Offer in a manner adverse to the holders of Company Common Stock.
Notwithstanding the foregoing, Parent and Sub may, without the consent of the
Company, (i) extend the Offer beyond any scheduled expiration date (the initial
scheduled expiration date being 20 business days following commencement of the
Offer) for a period not to exceed 20 business days, if at any scheduled
expiration date of the Offer, any of the conditions to Sub's obligation to
accept for payment, and pay for, shares of Company Common Stock shall not be
satisfied or waived, until such time as such conditions are satisfied or waived,
(ii) extend the Offer for any period required by any rule, regulation,
interpretation or position of the Securities and Exchange Commission (the "SEC")
or the staff thereof applicable to the Offer, and (iii) extend the Offer for an
aggregate period of not more than 15 business days beyond the latest expiration
date that would otherwise be permitted under clause (i) or (ii) of this sentence
if there shall not have been tendered sufficient shares of Company Common Stock
so that the Merger could be effected as provided in Section 2.12. Subject to the
terms and conditions of the Offer and this Agreement, Sub shall, and Parent
shall cause Sub to, accept for payment, and pay for, all shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Offer that Sub
becomes obligated to accept for payment, and pay for, pursuant to the Offer as
soon as practicable after expiration of the Offer.
(c) As soon as practicable on the date of commencement of the Offer,
the Sub shall file with the SEC a Tender Offer Statement on Schedule 14D-1 with
respect to the Offer, which will contain the offer to purchase and form of the
related letter of transmittal (which, together with any supplements or
amendments to those documents, are collectively referred to as the "Offer
Documents"). The Sub and the Parent shall cause the Offer Documents to comply
in all material respects with the provisions of applicable federal securities
laws and, on the date filed with the SEC and on the date first published, sent
or given to the Company's stockholders, not to contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading (except that neither the
Parent nor the Sub shall be responsible with respect to information supplied by
the Company in writing for inclusion in the Offer Documents). Each of the
Parent, the Sub and the Company shall promptly correct any information provided
by it for use or used in the Offer Documents, if and to the extent such
information shall have become false or misleading in any material respect, and
the Sub and the Parent shall take all steps necessary to cause the Offer
Documents as so corrected to be filed with the SEC and to be disseminated to
holders of shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities laws. The Company and its counsel
shall be given a reasonable opportunity to review and comment upon the Offer
Documents and all amendments and supplements thereto prior to their filing with
the SEC or dissemination to stockholders of the Company. Parent and Sub agree
to provide the Company and its counsel any comments Parent, Sub or their counsel
may receive from the SEC or its staff with respect to the Offer Documents
promptly after the receipt of such comments and shall provide the Company and
its counsel an opportunity to participate, including by way of discussion with
the SEC or its staff, in the response of Parent and/or Sub to such comments.
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(d) Parent shall provide or cause to be provided to Sub on a timely
basis the funds necessary to accept for payment, and pay for, any shares of
Company Common Stock that Sub accepts for payment, and becomes obligated to pay
for, pursuant to the Offer.
1.2 Company Actions. The Company hereby consents to the Offer and
represents and warrants to the Parent and the Sub that its board of directors
(at a meeting duly called and held) has unanimously (i) determined that as of
the date of such meeting the Offer and the Merger (as defined in Section 2.1(a))
are fair to, and in the best interests of, the Company's stockholders, (ii)
approved this Agreement and the transactions contemplated by this Agreement,
including the Offer, the Stock Tender Agreements (as defined in Section 21 of
Annex A) and the Merger, and (iii) resolved, subject to its fiduciary duties
under applicable law, to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by the stockholders of the Company.
The Company shall file with the SEC contemporaneously with the commencement of
the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (the
"Schedule 14D-9") containing that recommendation in favor of the Offer and the
Merger. The Company shall cause the Schedule 14D-9 to comply in all material
respects with the provisions of applicable federal securities laws. The Company
shall cause the Schedule 14D-9, on the date filed with the SEC and on the date
first published, sent or given to the Company's stockholders, not to contain any
untrue statement of a material fact or to omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not misleading
(except that the Company shall not be responsible with respect to information
supplied by the Parent or the Sub in writing for inclusion in the Schedule 14D-
9). The Company shall take all steps necessary to cause the Schedule 14D-9 to
be filed with the SEC and mailed to the Company's stockholders to the extent
required by applicable federal securities laws. The Company shall include in
the Schedule 14D-9, on the date first published, sent or given to the Company's
stockholders, such information with respect to the Company's officers and
directors as is required under Section 14(f) of the Exchange Act and Rule 14f-1
thereunder in order to fulfill its obligations under Section 1.3. The Parent
and the Sub shall supply the Company with, and be solely responsible for, any
information with respect to themselves and their nominees, officers, directors
and affiliates required by Section 14(f) and Rule 14f-1. Each of the Company,
Parent and Sub agrees promptly to correct any information provided by it for use
in the Schedule 14D-9 if and to the extent that such information shall have
become false or misleading in any material respect, and the Company further
agrees to take all steps necessary to amend or supplement the Schedule 14D-9 and
to cause the Schedule 14D-9 as so amended or supplemented to be filed with the
SEC and disseminated to the Company's stockholders, in each case as and to the
extent required by applicable federal securities laws. Parent and its counsel
shall be given a reasonable opportunity to review and comment upon the Schedule
14D-9 and all amendments and supplements thereto prior to their filing with the
SEC or dissemination to stockholders of the Company. The Company agrees to
provide Parent and its counsel with any comments the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments and shall provide Parent and its counsel an
opportunity to participate, including by way of discussions with the SEC or its
staff, in the response of the Company to such comments. In connection with the
Offer, the Company shall promptly furnish the Sub with mailing labels, security
position listings and any available listing or computer file containing the
names and addresses of the record
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holders of the Company Common Stock as of a recent date, and shall furnish the
Sub with such information and assistance as the Sub or its agents may reasonably
request in communicating the Offer to the stockholders of the Company. Subject
to the requirements of law, and except for such steps as are necessary to
disseminate the documents constituting the Offer and any other documents
necessary to consummate the Merger, the Parent and the Sub shall, and shall
cause each of their affiliates and associates to, hold in confidence the
information contained in any such labels, lists and other documents, to use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, to deliver to the Company all copies of such
information then in their possession.
1.3 Directors; Section 14(f). Promptly upon the purchase by the Parent or
the Sub of at least a majority of the outstanding shares of Company Common Stock
and from time to time thereafter, the Parent and the Sub shall be entitled to
designate such number of directors, rounded up to the next whole number but in
no event more than one less than the total number directors of the board of
directors of the Company as will give the Parent and the Sub, subject to
compliance with Section 14(f) of the Exchange Act, representation on the board
of directors of the Company equal to the product of the number of directors on
the board of directors of the Company and the percentage that such number of
shares of Company Common Stock so purchased bears to the number of shares of
Company Common Stock outstanding, and the Company shall, upon request by the
Parent and the Sub, promptly increase the size of the board of directors of the
Company or exercise all reasonable efforts to secure the resignations of such
number of directors as is necessary to enable the Parent's and the Sub's
designees to be elected to the board of directors of the Company and shall cause
such designees to be so elected. At the request of the Parent and the Sub, the
Company shall take, at its expense, all action necessary to effect any such
election, including mailing to its stockholders the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. From and after the
date that such designees to the board of directors of the Company constitute a
majority of the board of directors of the Company, any action taken by the
Company under Section 5 or 6 of this Agreement shall require the approval of a
majority of the members of the board of directors, if any, who are not designees
or affiliates of the Parent and the Sub.
2. The Merger and Related Matters.
2.1 The Merger.
(a) Upon the terms and conditions of this Agreement, at the Effective
Time (as defined in Section 2.1(b)), the Sub shall be merged with and into the
Company (the "Merger") in accordance with the provisions of the General
Corporation Law of the State of Delaware (the "GCL") and the separate corporate
existence of the Sub shall cease, and the Company shall continue as the
surviving corporation under the laws of the State of Delaware with its current
corporate name (the "Surviving Corporation").
(b) The Merger shall become effective at the time of filing of a
certificate of merger with the Secretary of State of the State of Delaware in
accordance with the provisions of Section 251 of the GCL (the "Certificate of
Merger"), or at the time specified as the effective
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time in the Certificate of Merger (it being understood that such specified
effective time shall be within a reasonable period, not to exceed five business
days, after the date the Certificate of Merger is filed). The Certificate of
Merger shall be filed at the time of the Closing Date (as defined in Section
2.9). The date and time when the Merger shall become effective is referred to as
the "Effective Time."
(c) The separate corporate existence of the Company, as the Surviving
Corporation, with all its purposes, objects, rights, privileges, powers,
certificates and franchises, shall continue unimpaired by the Merger. At the
Effective Time, the separate corporate existence of the Sub shall cease and the
Surviving Corporation shall succeed to all the properties and assets of the
Company and the Sub and to all the debts, choses in action and other interests
due or belonging to the Company and the Sub and shall be subject to, and
responsible for, all the debts, liabilities and duties of the Company with the
effect set forth under the GCL.
2.2 Conversion of Stock. At the Effective Time:
(a) Each share of Company Common Stock then issued and outstanding
(other than Dissenting Shares (as defined in Section 2.3) and any shares of
Company Common Stock held by the Parent or the Sub or any corporate affiliate of
either of them) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into and represent the right to
receive, and shall be exchangeable for, the highest price paid pursuant to the
Offer, subject to applicable withholding or back-up withholding taxes, if any,
payable to the holder thereof, without any interest thereon (the "Merger
Consideration"), upon surrender of the certificates representing such shares of
Company Common Stock.
(b) Each share of common stock of the Sub (the "Sub Common Stock")
then issued and outstanding shall, by virtue of the Merger and without any
action on the part of the holder thereof, be converted into and become one fully
paid and nonassessable share of common stock of the Surviving Corporation, which
thereafter will constitute all of the issued and outstanding shares of common
stock of the Surviving Corporation.
(c) Each share of Company Common Stock then held in the treasury of
the Company shall, by virtue of the Merger, be cancelled without payment of any
consideration therefor and without any conversion thereof.
(d) Each share of Company Common Stock then held by the Sub or the
Parent (or any corporate affiliate of either of them) shall, by virtue of the
Merger and without any action on the part of the holder thereof, be cancelled
without payment of any consideration therefor and without any conversion
thereof.
2.3 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, none of the shares of Company Common Stock that are outstanding
immediately prior to the Effective Time and that are held by stockholders (other
than the Parent or the Sub or any corporate affiliate of either of them) who
shall not have voted those shares of Company Common Stock in favor of the Merger
and who are entitled by applicable Delaware law to appraisal rights, and who
shall have delivered a written demand for appraisal of those shares of Company
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Common Stock in the manner provided in Section 262 of the GCL ("Dissenting
Shares") shall be converted into the right to receive, or be exchangeable for,
the Merger Consideration; however, (a) if any holder of Dissenting Shares shall
subsequently deliver a written withdrawal of his demand for appraisal of those
shares of Company Common Stock (with the written approval of the Company, if
such withdrawal is not tendered within 60 days after the Effective Time), or (b)
if any holder fails to establish his entitlement to appraisal rights as provided
in Section 262 of the GCL or (c) if neither any holder of Dissenting Shares nor
the Surviving Corporation has filed a petition demanding a determination of the
value of all Dissenting Shares within the time provided in Section 262 of the
GCL, such holder or holders shall forfeit the right to appraisal of those shares
of Company Common Stock and each such share shall thereupon be deemed to have
been converted into the right to receive, and to have become exchangeable for,
as of the Effective Time, the Merger Consideration.
2.4 Payment.
(a) Prior to the Effective Time, the Parent and the Sub shall
designate a bank or trust company reasonably acceptable to the Company to act as
exchange agent in the Merger (the "Exchange Agent"). At or immediately prior to
the Effective Time, the Parent and the Sub shall take all steps necessary to
provide the Exchange Agent with funds necessary to make the payments
contemplated by Section 2.2.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Exchange Agent to mail to each record holder, as of the Effective
Time, of a certificate or certificates that, immediately prior to the Effective
Time, represented outstanding shares of Company Common Stock (each, a
"Certificate"), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to a Certificate shall
pass, only upon proper delivery of a Certificate to the Exchange Agent) and
instructions for use in effecting the surrender of the Certificate and payment
therefor. Upon surrender to the Exchange Agent of a Certificate, together with
the letter of transmittal duly executed, the holder of the Certificate shall be
entitled to receive in exchange therefor an amount equal to the product of the
number of shares of Company Common Stock represented by the Certificate
multiplied by the amount of the Merger Consideration and the Certificate shall
then be cancelled. No interest will be paid or accrued on the cash payable upon
the surrender of the Certificate. If payment is to be made to a person other
than a person in whose name the surrendered Certificate is registered, it shall
be a condition of payment that the Certificate so surrendered shall be properly
endorsed or otherwise in proper form for transfer and that the person requesting
payment shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the surrendered Certificate or
establish to the satisfaction of the Surviving Corporation that the tax has been
paid or is not applicable. The Exchange Agent may invest any cash deposited
with it as the Surviving Corporation directs; however, substantially all such
investments shall be in obligations of or guaranteed by the United States of
America, in commercial paper obligations receiving the highest rating from
either Moody's Investors Service, Inc. or Standard and Poor's Corporation, or in
certificates of deposit, bank repurchase agreements or bankers' acceptances of
commercial banks with capital exceeding $100,000,000 (collectively, "Permitted
Investments") or in money market funds invested solely in Permitted Investments,
and the maturities of
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Permitted Investments shall be such as to permit the Exchange Agent to make
prompt payment of the Merger Consideration to former stockholders of the Company
entitled thereto. Any net profit resulting from, or interest or income produced
by, Permitted Investments shall be payable to the Surviving Corporation. In the
event that at any time there shall be a net loss from such investments, the
Surviving Corporation shall immediately pay over to the Exchange Agent
additional funds in an amount sufficient to make all payments contemplated by
Section 2.2 of this Agreement. At any time after the 180th day following the
Effective Time, the Surviving Corporation shall be entitled to require the
Exchange Agent to deliver to it any funds (including any interest received with
respect thereto) that have been made available to the Exchange Agent for the
purpose of paying the Merger Consideration to holders of Company Common Stock
and that have not been disbursed to holders of Certificates, and thereafter
those holders shall be entitled to look to the Surviving Corporation (subject to
abandoned property, escheat or other similar laws) only as general creditors of
the Surviving Corporation with respect to the cash payable upon due surrender of
their Certificates. The Surviving Corporation shall pay all charges and
expenses, including those of the Exchange Agent, in connection with the exchange
of cash for shares of Company Common Stock. Until surrendered in accordance with
the provisions of this Section 2.4(b), each Certificate (other than Certificates
representing shares of Company Common Stock held by the Parent, the Sub, the
Company or any corporate affiliate of any of them and Dissenting Shares) shall
represent for all purposes the right to receive the Merger Consideration in cash
multiplied by the number of shares of Company Common Stock evidenced by that
Certificate, without any interest thereon.
(c) From and after the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of the shares of Company
Common Stock that were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation, they shall be cancelled and exchanged for cash as provided in this
Section 2.4.
(d) 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
the Certificate to be lost, stolen or destroyed, the Surviving Corporation shall
issue in exchange for the lost, stolen or destroyed Certificate, the Merger
Consideration deliverable in respect thereof as determined in accordance with
this Section 2. When authorizing the delivery of the Merger Consideration in
exchange therefor, the board of directors of the Surviving Corporation may, in
its discretion and as a condition to the delivery thereof, require the owner of
the lost, stolen or destroyed Certificate to give the Surviving Corporation a
bond in such sum as it may direct (not greater than the product of the number of
Shares represented by such certificate and the Merger Consideration) as
indemnity against any claim that may be made against the Surviving Corporation
with respect to the Certificate alleged to have been lost, stolen or destroyed.
2.5 No Further Rights or Transfers. At and after the Effective Time, the
holder of a Certificate or of Dissenting Shares shall cease to have any rights
as a stockholder of the Company, except for, in the case of the holder of a
Certificate, the right to surrender his Certificate in exchange for payment of
the Merger Consideration, or, in the case of the holder of Dissenting Shares, to
perfect his right to receive payment for his Dissenting Shares pursuant to
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Section 262 of the GCL, if the holder has validly exercised and not withdrawn
his right to receive payment for his shares, and no transfer of those shares
shall be made on the stock transfer books of the Surviving Corporation.
2.6 Certificate of Incorporation of the Surviving Corporation. The
certificate of incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the certificate of incorporation of the Surviving
Corporation from and after the Effective Time, with Article Fourth amended to
read in its entirety that the authorized capital stock of the Surviving
Corporation shall consist of 1,000 shares of common stock, $1.00 par value.
2.7 By-Laws of the Surviving Corporation. The by-laws of the Sub, as in
effect immediately prior to the Effective Time, shall be the by-laws of the
Surviving Corporation until thereafter amended as provided in those by-laws or
by law.
2.8 Directors and Officers of the Surviving Corporation. At the Effective
Time, the directors of the Sub immediately prior to the Effective Time shall be
the directors of the Surviving Corporation, each to hold office, subject to the
provisions of the certificate of incorporation and by-laws of the Surviving
Corporation, until their respective successors shall be duly elected or
appointed. At the Effective Time, the officers of the Company immediately prior
to the Effective Time shall, subject to the provisions of the certificate of
incorporation and by-laws of the Surviving Corporation, be the officers of the
Surviving Corporation, until their respective successors shall be duly elected
or appointed.
2.9 Closing. The closing of the Merger shall take place (a) at the
offices of Beveridge & Diamond, P.C., 1350 I Street, N.W., Washington, D.C., at
10:00 am., local time, on the later of (i) the day of the Special Meeting
provided for in Section 2.11, if required by law, or (ii) the day on which the
last of the conditions set forth in Sections 5.1 and 5.2 is fulfilled or waived
(subject to applicable law), or (b) at such other time and place and on such
other date as the Parent, the Sub and the Company shall agree (the "Closing
Date").
2.10 Stock Options, Warrants and Convertible Securities. At or prior to
the consummation of the Offer, the Company shall have made arrangements the
effect of which shall be that no shares of Company Common Stock or capital stock
of the Surviving Corporation shall be issuable after the Effective Time pursuant
to options or warrants to purchase shares, or securities convertible into
shares, of Company Common Stock. The Company will cause any outstanding shares
of its 8.25% cumulative convertible redeemable preferred stock to be redeemed or
converted prior to consummation of the Offer. In full settlement of all options
and warrants, each holder thereof shall receive or be entitled to receive
immediately after the Effective Time a cash payment from the Company in an
amount equal to the excess, if any, of the price paid for each share of Company
Common Stock pursuant to the Merger over the per share exercise price of such
option or warrant multiplied by the number of shares of Company Common Stock
issuable pursuant to any such option or warrant, net, in the case of stock
options, of any income tax withholding and payroll taxes applicable to such
payment. Prior to consummation of the
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Offer, the Company shall have furnished to the Parent and the Sub evidence
satisfactory to the Parent confirming compliance by the Company with its
obligations under the first and second sentences of this Section 2.10.
2.11 Special Meeting. If required by applicable law in order to
consummate the Merger, the Company, acting through its board of directors,
shall, in accordance with applicable law:
(a) duly call, give notice of, convene and hold a special meeting (the
"Special Meeting") of its stockholders as soon as practicable following the
expiration of the Offer for the purpose of approving and adopting this
Agreement;
(b) subject to its fiduciary duties under applicable law, include in
the proxy statement for, or any information statement with respect to, the
Special Meeting the recommendation of its board of directors that stockholders
of the Company vote in favor of the approval and adoption of this Agreement; and
(c) use all reasonable efforts (i) to obtain and furnish the
information required to be included by it in the proxy statement or the
information statement, and, after consultation with the Sub and the Parent,
respond promptly to any comments made by the SEC with respect to the proxy
statement or the information statement and any preliminary version of the proxy
statement or the information statement and cause the proxy statement or the
information statement to be mailed to its stockholders at the earliest
practicable time following the expiration of the Offer, and (ii) subject to the
fiduciary duties of the board of directors under applicable law, to obtain the
necessary approval of the Merger by its stockholders. The Parent and the Sub
shall cause all the shares of Company Common Stock acquired pursuant to the
Offer or otherwise by the Parent, the Sub or any other subsidiary of the Parent
to be voted in favor of the Merger.
2.12 Merger Without Meeting of Stockholders. Notwithstanding anything to
the contrary in this Agreement, in the event that the Sub, or any other direct
or indirect subsidiary of the Parent, acquires at least 90% of the outstanding
shares of each class of capital stock of the Company, at the request of the
Parent or the Sub, the parties shall take all necessary and appropriate action
to cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the Company in
accordance with Section 253 of the GCL.
3. Representations and Warranties.
3.1 Representations and Warranties of the Company. The Company represents
and warrants to the Parent and the Sub as set forth in Annex B to this
Agreement.
3.2 Representations and Warranties of the Parent and the Sub. The Parent
and the Sub jointly and severally represent and warrant to the Company as
follows:
9
(a) Due Organization; Good Standing and Corporate Power. Each of the
Parent and the Sub is a corporation duly incorporated, validly existing and in
good standing under the law of the state of its incorporation and has all
requisite corporate power and authority to own, lease and operate its properties
and to conduct its business as now being conducted.
(b) Authorization and Validity of Agreement. Each of the Parent and
the Sub has full corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this Agreement.
The execution, delivery and performance by each of the Parent and the Sub of
this Agreement, and the consummation of the transactions contemplated by this
Agreement, have been duly authorized by the board of directors of the Parent and
the board of directors of the Sub, and this Agreement has been duly approved and
adopted by the sole stockholder of the Sub. No other corporate action on the
part of the Parent or the Sub is necessary to authorize the execution and
delivery of this Agreement by the Sub or the Parent, or the consummation by the
Parent and the Sub of the transactions contemplated by this Agreement. This
Agreement has been duly executed and delivered by the Parent and the Sub and is
a valid and binding obligation of the Parent and the Sub enforceable against the
Parent and the Sub in accordance with its terms.
(c) Brokers and Finders. Neither the Parent nor the Sub, nor any of
their officers, directors or employees, on behalf of the Company or any of its
subsidiaries, has incurred any financial advisory, brokerage or finders' fees,
commissions or other similar obligations or liabilities in connection with the
transactions contemplated by this Agreement.
(d) No Contravention. The execution and delivery of this Agreement
does not, and the consummation of the transactions contemplated hereby will not,
conflict with or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, any provision of the certificate of incorporation or by-laws of the
Parent or the Sub or any loan or credit agreement, note, bond, mortgage,
indenture, lease, or other agreement, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Parent or the Sub or their respective properties or assets,
other than any such conflicts, violations, defaults, terminations,
cancellations, accelerations or losses which individually or in the aggregate do
not have a material adverse effect on the Parent or the Sub taken as a whole
together with the other subsidiaries of the Parent. No consent, approval, order
or authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign, is required by or with respect to the
Parent or the Sub in connection with the execution and delivery of this
Agreement by the Parent and the Sub or the consummation by the Parent and the
Sub of the transactions contemplated hereby, except for (a) the filing of a
notification and report form by or on behalf of the Parent under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (b) the
filing with the SEC of a Tender Offer Statement on Schedule 14D-1 relating to
the Offer and (c) the filing of such other documents with, and the obtaining of
such orders from, the SEC and various state securities or "blue sky" authorities
as may be required in connection with the transactions contemplated by this
Agreement, (d) the filing of the Certificate of Merger with the Secretary of
State of the State
10
of Delaware and (e) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under the law of any
foreign country in which the Company or any of its Subsidiaries conducts any
business or owns any property or assets.
(e) Availability of Funds. The Parent currently has and will continue
to have through the Effective Time sufficient available cash, cash equivalents
or immediately available financing through existing unsecured financing
arrangements with sufficient currently available borrowing capacity in order to
pay all amounts which may be payable to stockholders of the Company pursuant to
the Offer and the Merger.
4. Covenants.
4.1 Disclosure Documents. The Company shall supply to the Parent and the
Sub the necessary information in writing, or cause the necessary information to
be supplied in writing (other than the information supplied in writing by the
Parent or the Sub), for inclusion in the Offer Documents and any other documents
to be filed with the SEC or any regulatory agency in connection with the
transactions contemplated by this Agreement.
4.2 Access to Information Concerning Properties and Records. During the
period prior to the Closing Date, the Company shall, upon reasonable notice,
afford the Parent and the Sub and their counsel, accountants and other
authorized representatives, full access during normal business hours to the
properties, books and records of the Company in order that they may have the
opportunity to make such reasonable investigation as they wish of the affairs of
the Company, and the Company shall cause its officers and employees to furnish
such additional financial and operating data and other information and respond
to such inquiries as the Parent and the Sub and other persons shall from time to
time reasonably request.
4.3 Confidentiality.
(a) Except as may be reasonably necessary to carry out this Agreement
and the transactions contemplated by this Agreement, the Parent and the Sub
shall, and shall require their respective officers, directors, employees and
authorized representatives to, hold in confidence prior to the Effective Time
and for two years from any termination of this Agreement all data and
information obtained by them from the Company (unless required to disclose such
information by judicial or administrative process, as otherwise required by law,
or unless such information (i) is or becomes generally available to the public
other than as a result of a disclosure by the Parent, any subsidiary of the
Parent or any of their representatives, (ii) is independently acquired or
developed by, the Parent, any subsidiary of the Parent or any of their
representatives without violating any confidentiality agreement between any such
person and the Company or any of its representatives, or (iii) is, or becomes,
available to the Parent, any subsidiary of the Parent or any of their
representatives from a source other than the Company or its representatives,
provided that such source is not known by the Parent, any subsidiary of the
Parent or any of their representatives to be bound by a confidentiality
agreement with the Company or any of its representatives or by any other legal,
contractual or fiduciary duty not to
11
disclose such information) and shall not, and shall use all reasonable efforts
to cause such officers, directors, employees and authorized representatives not
to, disclose such information to others without the prior written consent of the
Company.
(b) If this Agreement is terminated, the Parent and the Sub shall, if
so requested by the Company, promptly return every document furnished to them or
their affiliates in connection with the transactions contemplated by this
Agreement and any copies of such documents that may have been made and shall use
all reasonable efforts to cause the representatives to whom such documents were
furnished promptly to return such documents and any copies of such documents,
other than documents filed with the SEC or otherwise publicly available.
4.4 Interim Operations of the Company. During the period from the date of
this Agreement and continuing until the Effective Time, the Company agrees
(except as expressly contemplated by this Agreement or to the extent that the
Parent and the Sub shall otherwise consent in writing) that:
(a) Ordinary Course. The Company shall carry on its business in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent with such business, use all
reasonable efforts to preserve intact its present business organization, keep
available the services of its present officers and employees and preserve its
relationships with customers, suppliers and others having business dealings with
it to the end that their goodwill and on-going businesses shall be unimpaired at
the Effective Time.
(b) Dividends; Changes in Stock. The Company shall not and shall not
propose to (i) declare or pay any dividend on, or make other distributions in
respect of, any of its capital stock (except regular dividends on the Preferred
Stock), (ii) split, combine or reclassify any of its capital stock or issue,
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of capital stock of the Company or (iii)
repurchase or otherwise acquire any shares of capital stock of the Company
(other than pursuant to the terms of its Preferred Stock).
(c) Issuance of Securities. The Company shall not sell, issue,
authorize or propose the sale or issuance of, or purchase or propose the
purchase of, any shares of its capital stock of any class or securities
convertible into, or rights, warrants or options to acquire, any such shares or
other convertible securities (other than the issuance of Common Stock upon the
exercise or conversion of currently outstanding stock options or warrants or
convertible securities).
(d) Governing Documents. The Company shall not amend its certificate
of incorporation or by-laws.
12
(e) No Acquisition. The Company shall not acquire or agree to acquire
by merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the Company.
(f) No Dispositions. The Company shall not sell, lease or otherwise
dispose of, or agree to sell, lease or otherwise dispose of, any of its assets,
which are material, individually or in the aggregate, to the Company, except in
the ordinary course of business consistent with prior practice.
(g) Indebtedness. The Company shall not incur any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell any debt
securities of the Company or guarantee any debt securities of others other than
in the ordinary course of business consistent with prior practice.
(h) Benefit Plans, Etc. The Company shall not adopt or amend in any
material respect any collective bargaining agreement or Employee Benefit Plan
(as that term is defined in Annex B) other than in the ordinary course of
business consistent with prior practice.
(i) Executive Compensation. The Company shall not grant to any
executive officer any increase in compensation or in severance or termination
pay, or enter into any employment agreement with any executive officer, except
as may be required under employment or termination agreements in effect on the
date of this Agreement or in the ordinary course of business consistent with
prior practice.
4.5 Consents. The Company, the Parent and the Sub shall cooperate and use
all reasonable efforts to obtain, prior to the Closing Date, all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company as are
necessary for the consummation of the transactions contemplated by this
Agreement; however, no loan agreement or contract for borrowed money shall be
repaid and no contract shall be amended materially to increase the amount
payable thereunder or otherwise to be materially more burdensome to the Company
in order to obtain any such consent, approval or authorization without first
obtaining the written approval of the Parent.
4.6 No Solicitation. The Company shall not, and shall use all reasonable
efforts to cause its affiliates, officers, directors, employees, representatives
and agents not to, directly or indirectly, solicit, initiate, or knowingly
promote discussions or negotiations with, any corporation, partnership, person
or other entity or group (other than the Parent or any of its affiliates or
representatives) concerning any merger, tender offer, sale of any material
assets, sale of shares of capital stock or similar transaction involving the
Company or any division of the Company. Notwithstanding the foregoing, the
Company may, if required by the fiduciary duties of its directors after
consulting with outside counsel to the Company, (i) furnish information to any
corporation, partnership, person or other entity or group pursuant to
appropriate confidentiality agreements, and (ii) negotiate or participate in
discussions with such entity or
13
group. The Company shall immediately advise the Parent of the terms of any
proposal, the fact of any negotiation, discussion or inquiry and the identity of
the party making such proposal or inquiry or involved in such discussion or
negotiation.
4.7 Filings. The Parent, the Sub and the Company shall as promptly as
practicable make any required filings, and the Parent, the Sub and the Company
shall promptly make any other required submissions, under any law, statute,
order, rule or regulation with respect to the Merger and shall cooperate with
each other with respect to the foregoing.
4.8 All Reasonable Efforts. Subject to the terms and conditions of this
Agreement and to the fiduciary duties and obligations of the board of directors
of the Company, each of the parties to this Agreement shall use all reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations, or to remove any injunctions or other impediments or delays, legal
or otherwise, to consummate the Merger and the other transactions contemplated
by this Agreement.
4.9 Public Announcements. The Company, the Parent and the Sub shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to the Offer and the Merger, this Agreement or
the other transactions contemplated by this Agreement and shall not issue any
other press release or make any other public statement without prior
consultation with the other parties, except as may be required by law or by
obligations pursuant to any listing agreement with any national securities
exchange.
4.10 Notification of Certain Matters. The Company shall give prompt
notice to the Parent, and the Parent and the Sub shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which would cause any of its representations or warranties
in this Agreement to be untrue or inaccurate in any material respect at or prior
to the Effective Time and (b) any material failure of the Company, on the one
hand, or the Parent or the Sub, on the other hand, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; however, the delivery of any notice
pursuant to this Section 4.10 shall not limit or otherwise affect the remedies
available to the party receiving such notice under this Agreement.
4.11 Directors' and Officers' Indemnification.
(a) The Parent acknowledges that all rights to indemnification or
limitations on liability now existing in favor of the present or former
employees, agents, directors or officers of the Company as provided in its
certificate of incorporation, by-laws, agreements or pursuant to applicable law
in effect on this date shall survive the Merger and shall continue in full force
and effect for a period of not less than the applicable statutes of limitations;
however, in the event any claim or claims are asserted or made within such
applicable period, all rights to indemnification in respect of any such claim or
claims shall continue until disposition of any and all such claims.
14
(b) If any action, suit, proceeding or investigation relating to this
Agreement or to the transactions contemplated by this Agreement is commenced,
whether before or after the Effective Time, the parties shall cooperate with
each other and use all reasonable efforts to defend against and respond to any
such action, suit, proceeding or investigation.
(c) The Parent and the Surviving Corporation agree to maintain in
effect the Company's current directors' and officers' insurance policy for the
remainder of its term and to purchase a policy providing continued coverage
relating to actions, alleged actions, omissions and alleged omissions occurring
at or prior to the Effective Time for a period of at least three years from and
after the Effective Time; provided that the total amount the Parent and the
Surviving Corporation are required to expend for such coverage shall not exceed
250% of the premium for such current policy.
4.12 Expenses. Except as otherwise provided herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Offer or the Merger is consummated.
5. Conditions to Consummation of the Merger.
5.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger are subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) If required by the GCL, this Agreement shall have been approved
and adopted by the affirmative vote of the stockholders of the Company by the
requisite vote in accordance with the GCL.
(b) No statute, rule, regulation, executive order, decree, injunction
or restraining order shall have been enacted, entered, promulgated or enforced
by any court of competent jurisdiction or governmental authority that prohibits
or restricts the consummation of the Merger.
(c) Any waiting period applicable to the Merger under the HSR Act
shall have expired or been terminated.
5.2 Additional Condition to Obligations of the Parent and the Sub to
Effect the Merger. The obligations of the Parent and the Sub to consummate the
transactions contemplated by this Agreement are also subject to the
satisfaction, at or prior to the Effective Time, of the condition that the Sub
shall have accepted for payment and paid for shares of Company Common Stock
tendered pursuant to the Offer; however, this condition shall be deemed
satisfied if the Sub fails to accept for payment and pay for shares of Company
Common Stock pursuant to the Offer in violation of the terms of the Offer.
15
6. Termination.
6.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time, whether before or after
stockholder approval of the Merger:
(a) by mutual written consent of the boards of directors of the
Company, the Parent and the Sub;
(b) by any of the Company, the Parent or the Sub:
(i) if a purchase of shares of Company Common Stock pursuant to
the Offer shall not have occurred on or before June 30, 1995; however, the right
to terminate this Agreement under this Section 6.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of, or resulted in, the failure of a purchase of shares of Company
Common Stock pursuant to the Offer to occur on or before that date; or
(ii) if any court of competent jurisdiction, or any governmental
body, regulatory or administrative agency or commission having appropriate
jurisdiction shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable;
(c) by the Company:
(i) if the Sub shall have (A) failed to commence the Offer within
five business days following the date of this Agreement, (B) terminated the
Offer or (C) failed to pay (by deposit with the depository for the Offer) for
shares of Company Common Stock pursuant to the Offer within five business days
following the expiration of the Offer; or
(ii) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the board of directors of the Company shall have (A)
withdrawn (or modified in a manner adverse to the Sub) its recommendation to the
Company's stockholders to accept the Offer in order to permit the Company, in
response to an offer as to which the Company has not contravened Section 4.6
hereof, to execute a definitive agreement providing for the acquisition of the
Company, or to approve a tender offer for all the outstanding Company Common
Stock, in either case on terms determined by the Company's board of directors,
after consultation with outside legal and financial advisors, to be more
favorable to the stockholders of the Company than the acquisition of the Company
contemplated by this Agreement, or (B) recommended another such offer; or
(d) by the Parent and the Sub:
(i) if due to an occurrence that would result in a failure to
satisfy any of the conditions set forth in Annex A, the Sub shall have (A)
failed to commence the Offer within five business days following the date of
this Agreement, or (B) terminated the Offer; or
16
(ii) if, prior to the purchase of shares of Company Common Stock
pursuant to the Offer, the board of directors of the Company shall have
withdrawn (or modified in a manner adverse to the Sub) its approval or
recommendation of the Offer, this Agreement or the Merger, or shall have
recommended another offer; or
(iii) if the Company deliberately fails to perform in any material
respect any of its obligations under this Agreement, and, at the time of such
failure, the Parent's and the Sub's designees on the board of directors of the
Company do not constitute a majority of the members of the board of directors of
the Company.
6.2 Notice and Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 6.1, written notice thereof
shall forthwith be given to the other party or parties specifying the provision
pursuant to which such termination is made, and this Agreement shall forthwith
become void and have no effect, without any liability on the part of any party
or its directors, officers or stockholders, except for the provisions of this
Section 6.2 and Sections 4.3, 4.11(b), 4.12 and 7. Nothing contained in this
Section 6.2 shall relieve any party from liability for any breach of this
Agreement. Sections 4.3, 4.11(b), 4.12 and 7 shall survive any termination of
this Agreement.
6.3 Extension; Waiver. Any time prior to the Effective Time, the parties
may (a) extend the time for the performance of any of the obligations or other
acts of any other party, (b) waive any inaccuracies in the representations and
warranties by any other party or (c) waive compliance with any of the agreements
of any other party or with any conditions to its own obligations. Any agreement
on the part of any other party to any such extension or waiver shall be valid
only if set forth in an instrument in writing signed on behalf of such party.
6.4 Amendment and Modification. This Agreement may be amended, whether
before or after the vote of the stockholders of the Company contemplated by
Section 2.11, by written agreement of the Company, the Parent and the Sub;
however, after the approval of this Agreement by the stockholders of the
Company, no such amendment shall reduce or change the Merger Consideration to be
delivered to the stockholders pursuant to Sections 2.2 and 2.4 or shall
otherwise adversely affect the rights under this Agreement of the Company's
stockholders without the approval of such stockholders. This Agreement may not
be amended except by an instrument in writing signed on behalf of all the
parties.
7. Miscellaneous.
7.1 Fees. If at any time while this Agreement is in effect (a) any
person, corporation, partnership or other entity (other than the Parent, the Sub
or any of their affiliates) ("Third Person") acquires more than 33% of the
outstanding shares of Common Stock, (b) a Third Person acquires more than 50% of
the Company's total assets, (c) the Company consummates a plan of liquidation
relating to more than 50% of its total assets, (d) the Company repurchases more
than 50% of the outstanding shares of the Company's Common Stock, (e) the
Company consummates a merger of the Company with, the sale of all or
substantially all of the assets of the Company to, or any other business
combination involving the Company with a Third Person, or (f) Parent and Sub
terminate this Agreement because of the failure to satisfy the Minimum Condition
and
17
within one year from the date of such termination a transaction contemplated by
Subsections (a), (b) or (e) of this Section 7.1 is consummated with a Third
Person, provided (i) that such transaction is accomplished so as to provide a
yield to holders of Company Common Stock of at least the equivalent of $11.50
per share, and (ii) there was a public announcement or written proposal to
effect such transaction by or with such Third Person while this Agreement is in
effect, or (g) the board of directors of the Company withdraws or amends in any
material respect adverse to consummation of the Offer its recommendation that
the Offer be accepted by the Company's stockholders and that stockholders tender
their shares of Company Common Stock in the Offer, unless such withdrawal or
amendment results from a material breach by Parent or Sub of any representations
or warranties herein or a failure by Parent or Sub to fulfill any material
covenant herein, then the Company shall, within five days after the first of
such events has occurred, pay the Parent a fee of $1,000,000.
Nothing in this Section 7.1 shall relieve the Company from its obligation
(subject to the fiduciary responsibility of its directors) to recommend that the
Company's stockholders accept the Offer and approve this Agreement pursuant to
Section 1.2 of this Agreement.
7.2 Survival of Representations and Warranties. The respective
representations and warranties of the Company, the Parent and the Sub shall not
be deemed waived or otherwise affected by any investigation made by any party.
Each representation and warranty in this Agreement and each covenant of the
Company in Annex B shall expire with, and be terminated and extinguished by, the
first purchase of shares of Company Common Stock under the Offer and thereafter
the Company, the Parent and the Sub shall have no liability with respect to any
such representation or warranty. This Section 7.2 shall have no effect upon any
other obligation of the parties, whether to be performed before or after the
first purchase of shares of Company Common Stock under the Offer.
7.3 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or when received
by telex, telegram or telecopier, as follows:
(a) if to the Company, to it at:
Resource Recycling Technologies, Inc.
200 Plaza Drive
Vestal, New York 13850
Attention: Lawrence J. Schorr, President
Facsimile: 607-798-0503
18
with a copy to:
Beveridge & Diamond, P.C.
1350 I Street, N.W.
Washington, D.C. 20005
Attention: Dean H. Cannon, Esq.
Facsimile: 202-789-6190
(b) if to the Parent or the Sub, to it at:
Waste Management, Inc.
3003 Butterfield Road
Oak Brook, Illinois 60529
Attention: General Counsel
Facsimile: 708-684-7050
with a copy to:
Bell, Boyd & Lloyd
Three First National Plaza, Room 3300
Chicago, Illinois 60602
Attention: John H. Bitner, Esq.
Facsimile: 312-372-2098
7.4 Entire Agreement; Assignment. This Agreement, including all Annexes,
exhibits and schedules hereto, (a) constitutes the entire agreement among the
parties with respect to its subject matter and supersedes all prior agreements
and understandings, both written and oral, among the parties or any of them with
respect to such subject matter and (b) shall not be assigned by operation of law
or otherwise, provided that, subject to any approvals required by applicable
law, the Parent or the Sub may assign its respective rights and obligations to
any majority-owning or owned, direct or indirect, parent, subsidiary or
subsidiaries of the Parent, but no such assignment shall relieve the Parent or
the Sub of its obligations under this Agreement.
7.5 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties and their respective successors and assigns.
Nothing in this Agreement is intended to confer on any person other than the
parties to this Agreement or their respective successors and assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
7.6 Headings. The descriptive headings of the sections of this Agreement
are inserted for convenience only, do not constitute a part of this Agreement
and shall not affect in any way the meaning or interpretation of this Agreement.
7.7 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument.
19
7.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Delaware, without regard to the
conflicts of laws rules of Delaware.
7.9 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction or other authority to be
invalid, void, unenforceable or against its regulatory policy, the remainder of
this Agreement shall remain in full force and effect and shall in no way be
affected, impaired or invalidated.
7.10 Certain Definitions. As used herein:
(a) "affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act;
(b) "Company," when used in the context of a covenant, undertaking,
representation or warranty made by the Company, unless the context otherwise
requires, shall also be deemed to be made by the Company with respect to its
subsidiaries, provided that materiality shall in all cases be measured with
respect to the Company and its subsidiaries considered as a whole. For example,
a representation that the Company is duly incorporated shall be deemed to be a
representation that each of the Company's subsidiaries is also duly
incorporated, but the materiality of the failure of a subsidiary to be so
incorporated shall be measured with respect to the Company and its subsidiaries
taken as a whole (and not with respect to that subsidiary alone);
(c) "Material Adverse Effect" shall mean any adverse effect on the
business, financial condition or results of operations of the Company and its
subsidiaries which is material to the Company and its subsidiaries taken as a
whole, excluding any change which generally affects the recycling industry as a
whole in the United States (such as changes in commodity prices and changes in
legal requirements); and
(d) "subsidiary" shall mean, when used with reference to an entity,
any corporation, a majority of the outstanding voting securities of which is
owned directly or indirectly, or a majority of the board of directors of which
may be elected, by such entity.
20
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the date first written above.
RESOURCE RECYCLING TECHNOLOGIES,
INC.
/s/ LAWRENCE J. SCHORR
By:___________________________
Title: President and Chief Executive
Officer
WASTE MANAGEMENT, INC.
/s/ JOSEPH M. HOLSTEN
By:___________________________
Title: Executive Vice President
WMI ACQUISITION SUB, INC.
/s/ JOSEPH M. HOLSTEN
By:___________________________
Title: Vice President
21
ANNEX A
TO
AGREEMENT AND PLAN OF MERGER
Conditions of the Offer. Notwithstanding any other provisions of the
Offer, and in addition to (and not in limitation of) the Sub's right to amend
the Offer at any time in its sole discretion, but nevertheless subject to the
provisions of the Agreement (capitalized terms used herein and not otherwise
defined herein having the meanings ascribed to such terms in the Agreement) the
Sub shall not be required to accept for payment, or pay for, and may delay the
acceptance for payment, or the payment, of, any tendered shares of Company
Common Stock, if (i) the Minimum Condition shall not have been satisfied, or
(ii) at any time on or after the date of the Agreement and at or before the time
of payment for any such shares of Company Common Stock (whether or not any
shares of Company Common Stock have theretofore been accepted for payment or
paid for pursuant to the Offer), any of the following events shall occur:
(a) any Material Adverse Effect shall have occurred or be threatened;
or
(b) there shall have occurred (1) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange or
the American Stock Exchange (excluding any coordinated trading halt triggered
solely as a result of a specified decrease in a market index), (2) a declaration
of a banking moratorium or any suspension of payments in respect of banks in the
United States (whether or not mandatory), (3) any material limitation (whether
or not mandatory) imposed by any governmental authority on the extension of
credit by banks or other lending institutions in the United States that
materially and adversely affects the ability of the Parent and the Sub to obtain
extensions of credit, or (4) from the date of the Agreement through the date of
termination or expiration of the Offer, a decline of at least 33% in either the
Dow Jones Average of Industrial Stocks or the Standard & Poor's 500 Index; or
(c) any of the representations and warranties made by the Company in
the Agreement shall not be true and correct in any material respect, or the
Company shall have breached in any material respect any covenant contained in
the Agreement or the Agreement shall have been terminated in accordance with its
terms; or
(d) there shall have been any action taken, or any statute, rule,
regulation, judgment, order or injunction promulgated, enacted, entered or
enforced, by any state, federal or foreign government or governmental authority
or by any court, domestic or foreign, that could reasonably be expected to (i)
make the acceptance for payment of, or the payment for, some or all of the
shares of Company Common Stock illegal or otherwise prohibited, (ii) impose
material limitations on the ability of the Parent or the Sub to acquire or hold
or to exercise effectively all rights of ownership of Company Common Stock,
including, without limitation, the right to vote any shares of Company Common
Stock purchased by either of them on all matters properly presented to the
stockholders of the Company, or (iii) prohibit or impose any material limitation
on the Parent's or the Sub's ownership or operation of all or a material portion
of the assets or business of the Company or any of its subsidiaries or
affiliates; or
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(e) the Company, the Parent or the Sub shall have failed to receive
any or all governmental consents and approvals to consummation of the Offer,
which, if not received, could reasonably be expected to have a Material Adverse
Effect; or
(f) the board of directors of the Company shall have publicly
(including by amendment of its Schedule 14D-9) withdrawn or amended in any
respect its recommendation of the Offer or shall have resolved to do so, unless
such withdrawal or amendment results from a material breach by Parent or Sub of
any representations or warranties herein or a failure by Parent or Sub to
fulfill any material covenant herein.
The foregoing conditions are for the sole benefit of the Parent and
the Sub and may be asserted by the Parent or the Sub regardless of the
circumstance giving rise to such condition and, subject to the terms of the
Agreement, may be waived by the Parent and the Sub, in whole or in part at any
time and from time to time, in their sole discretion (except that the Minimum
Condition may not be waived by the Purchaser without the consent of the
Company). The failure by the Parent and the Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right, which may be asserted at any time
and from time to time. Any determination by the Parent and the Sub shall be
final and binding upon all parties, including tendering stockholders.
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ANNEX B
TO
AGREEMENT AND PLAN OF MERGER
For purposes hereof, capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to such terms in the Agreement.
Any representations and warranties contained herein shall be qualified
by the contents of a writing delivered by the Company to the Parent prior to the
date of this Agreement which specifically references the Sections of this Annex
B intended to be so qualified (the "Writing").
SECTION 1. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, and has all corporate powers and,
except for such the absence of which would not have a Material Adverse Effect,
all governmental licenses, authorizations, consents and approvals required to
carry on its business as now conducted. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect. The Company has heretofore delivered
to the Parent true and complete copies of the Company's certificate of
incorporation and by-laws as currently in effect.
SECTION 2. Corporate Authorization. The execution, delivery and
performance by the Company of the Agreement and the consummation by the Company
of the transactions contemplated thereby are within the Company's corporate
powers and, except for any required approval by the Company's stockholders in
connection with the consummation of the Merger, have been duly authorized by all
necessary corporate action. The Agreement constitutes a valid and binding
Agreement of the Company, enforceable in accordance with its terms.
SECTION 3. No Contravention. The execution and delivery of the
Agreement does not, and the consummation of the transactions contemplated
thereby will not, conflict with or result in any violation of or default (with
or without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any right or obligation or to loss
of a material benefit under, any provision of the certificate of incorporation
or by-laws of the Company or any loan or credit agreement, note, bond, mortgage,
indenture, lease, or other agreement, instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to the Company or its properties or assets, except for agreements,
contracts or instruments which do not provide for a payment to or from the
Company in excess of $100,000, or result in the creation or imposition of any
mortgage, lien, pledge, charge, security interest or encumbrance of any kind
("Lien") on any asset of the Company. No consent, approval, order or
authorization of, or registration, declaration or filing with, any court,
administrative agency or commission or other governmental authority or
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instrumentality, domestic or foreign, is required by or with respect to the
Company in connection with the execution and delivery of the Agreement by the
Company or the consummation by the Company of the transactions contemplated
thereby, except for (a) the filing of a notification and report form by or on
behalf of the Company under the HSR Act, (b) the filing with the SEC of a
Solicitation/Recommendation Statement on Schedule 14D-9 relating to the Offer
(the "Schedule 14D-9") and (c) the filing with the SEC and the distribution to
stockholders of a proxy statement relating to any meeting of the Company's
stockholders required in connection with the Merger (as that term is defined in
the Agreement) (the "Proxy Statement") or any information statement required in
connection with the Merger (the "Information Statement"), as the case may be,
(d) the filing of such other documents with, and the obtaining of such orders
from, the SEC and various state securities or "blue sky" authorities as may be
required in connection with the transactions contemplated by the Agreement, and
(e) the filing of the Certificate of Merger with the Secretary of State of the
State of Delaware.
SECTION 4. Capitalization. The authorized capital stock of the
Company consists of 5,000,000 shares of Common Stock of the Company (the
"Shares") and 500,000 preferred shares. As of March 9, 1995, there were
outstanding (i) 2,675,773 Shares, (ii) 7,813 shares of 8.25% cumulative
convertible redeemable preferred stock, no par value, convertible into an
aggregate of 6,509 Shares ("Preferred Stock"), (iii) employee and director stock
options to purchase an aggregate of 435,500 Shares (all of which options are or
by virtue of the Merger, will be exercisable), (iv) a warrant dated April 11,
1990 to purchase 113,363 Shares at an adjusted exercise price of $9.13 per
share, and (v) an option dated August 26, 1992 to purchase 25,000 Shares at an
exercise price of $3.00 per share. All outstanding shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in this Section 4 and except for changes
since March 9, 1995, resulting from the exercise of employee or other stock
options and warrants and the conversion of Preferred Stock outstanding on such
date, there are outstanding (A) no shares of capital stock or other voting
securities of the Company, (B) no securities of the Company convertible into or
exchangeable for shares of capital stock or voting securities of the Company,
and (C) no options or other rights to acquire from the Company, and no
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company (the items in clauses (i), (ii), (iii), (iv) and (v)
being referred to collectively as the "Company Securities"). There are no
outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any Company Securities, other than Preferred Stock. Except for the
subsidiaries identified in the Writing, the Company does not own any stock of
any corporation or other entity.
SECTION 5. SEC Filings. (a) The Company has delivered to the Parent
(i) its annual reports on Form 10-K for its fiscal years ended December 31,
1991, 1992 and 1993, (ii) its quarterly reports on Form 10-Q for its fiscal
quarters ended March 31, June 30 and September 30, 1994, (iii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held since January 1, 1991 and (iv)
all of its other reports, statements, schedules and registration statements
filed by the Company with the SEC since January 1, 1991, but including only such
pre-effective amendments to such registration statements as contain material
information not fully reflected in any subsequent
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amendment to such registration statements (or to any prospectus included
therein) delivered to the Parent pursuant to this Section 5. The Company will
file with SEC by not later than March 31, 1995 (or such later date as is in
compliance with SEC Rule 12b-25) its annual report on Form 10-K for the year
ended December 31, 1994, and deliver a copy thereof to Parent at or before such
filing.
(b) As of its filing date, each such report or statement filed
pursuant to the Exchange Act did not (or will not) contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.
(c) Each such registration statement, as amended or supplemented if
applicable, filed pursuant to the Securities Act of 1933, as amended (the
"Securities Act"), as of the date such statement or amendment became effective,
did not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading.
SECTION 6. Financial Statements. The audited consolidated financial
statements at and for the year ended December 31, 1994 delivered to the Parent
and the audited consolidated financial statements and unaudited consolidated
interim financial statements of the Company included in its annual reports on
Form 10-K and its quarterly reports on Form 10-Q referred to in Section 5 fairly
present, in conformity with generally accepted accounting principles applied on
a consistent basis, the consolidated financial position of the Company as of the
dates thereof and its consolidated results of operations and changes in
financial position or cash flows, as the case may be, for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited interim
financial statements).
SECTION 7. Disclosure Documents. Each document required to be filed
by the Company with the SEC in connection with the transactions contemplated by
this Agreement (the "Company Disclosure Documents") and any amendment or
supplements thereto will, when filed, comply as to form in all material respects
with the applicable requirements of the Exchange Act.
SECTION 8. Absence of Certain Changes. Except for transactions
contemplated by the Agreement, since December 31, 1994 (the "Balance Sheet
Date"), the Company has conducted its business in the ordinary course consistent
with past practice and there has not been:
(a) any event, occurrence or development of a state of circumstances
or facts which has had or reasonably could be expected to have a Material
Adverse Effect;
(b) any declaration, setting aside or payment of any dividend (except
for any regular dividends on the Preferred Stock) or other distribution with
respect to any shares of capital stock of the Company or any repurchase,
redemption or other acquisition by the Company of any outstanding shares of
capital stock or other securities of, or other ownership interests in, the
Company;
(c) any amendment of any term of any outstanding security of the
Company;
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(d) any incurrence, assumption or guarantee by the Company of any
indebtedness for borrowed money other than in the ordinary course of business
consistent with past practice;
(e) any creation or assumption by the Company of any Lien on any
material asset other than in the ordinary course of business consistent with
past practice;
(f) any making of any loan, advance or capital contribution to or
investment in any Person other than loans or advances made in the ordinary
course of business consistent with past practice;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company which,
individually or in the aggregate, has had or would reasonably be expected to
have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company relating to its assets or business (including the
acquisition or disposition of any assets) or any relinquishment by the Company
of any contract or other right, in either case, material to the Company, other
than transactions and commitments in the ordinary course of business consistent
with past practice and those contemplated by the Agreement;
(i) any change in any method of accounting or accounting practice by
the Company, except for any such change required by reason of a concurrent
change in generally accepted accounting principles;
(j) other than in the ordinary course of business consistent with past
practice, any (i) grant of any severance or termination pay to any director,
officer or employee of the Company, (ii) entering into of any employment,
deferred compensation or other similar agreement (or any amendment to any such
existing Agreement) with any director, officer or employee of the Company, (iii)
increase in benefits payable under any existing severance or termination pay
policies or employment agreements or (iv) increase in compensation, bonus or
other benefits payable to directors, officers or employees of the Company;
(k) any (i) labor dispute (other than routine individual grievances),
lockout, strike, slowdown, work stoppage or threat thereof by or with respect to
any employees of the Company, or (ii) activity or proceeding by a labor union or
representative thereof to organize any such employees.
SECTION 9. Properties. (a) The Company has good and marketable title
to, or in the case of leased property has valid leasehold interests in, all
properties and assets (whether real, personal, tangible or intangible) reflected
on the December 31, 1994 balance sheet or in the notes thereto (the "December
Balance Sheet") or acquired after the Balance Sheet Date, except for properties
and assets sold since the Balance Sheet Date in the ordinary course of business
consistent with past practice. None of such owned properties or assets is
subject to any Liens and, to the best knowledge of the Company, no leased
property is subject to any Liens incurred by the Company, except:
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(i) Liens disclosed in the December Balance Sheet;
(ii) Liens for taxes not yet due or being contested in good faith
(and for which adequate reserves have been established on the December Balance
Sheet);
(iii) Liens arising under financing agreements of the Company
identified in the December Balance Sheet;
(iv) Statutory or common law Liens relating to obligations of the
Company that are not delinquent or are being contested in good faith;
(v) Purchase money security interests securing obligations of the
Company that are not delinquent for the purchase of goods in the ordinary course
of business consistent with past practice; or
(vi) Liens which do not materially detract from the value of such
property or assets as now used, or materially interfere with any present or
intended use of such property or assets.
(b) No violation of any law, regulation or ordinance (including,
without limitation, laws, regulations or ordinances relating to zoning, city
planning or similar matters) relating to any of the properties or assets of the
Company exists or has existed at any time since January 1, 1989 other than for
violations which have not had and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. There are no
developments affecting any of such properties or assets pending or, to the
knowledge of the Company, threatened, which could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
SECTION 10. No Undisclosed Material Liabilities. There are no
material liabilities of the Company of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances known to the Company which
could reasonably be expected to result in such a liability, other than:
(i) liabilities disclosed or provided for in the December Balance
Sheet;
(ii) liabilities incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date, which in the
aggregate are not materially greater than those reflected in the December
Balance Sheet;
(iii) liabilities arising under or in connection with the Agreement.
SECTION 11. Litigation. There is no action, suit, investigation or
proceeding (or to the Company's knowledge, any basis therefor) pending against,
or to the knowledge of the Company threatened against or affecting, the Company,
its subsidiaries or any of their properties before any court or arbitrator or
any governmental body, agency or official which, if determined
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or resolved adversely to the Company or a subsidiary, could reasonably be
expected to have a Material Adverse Effect or which in any manner challenges or
seeks to prevent, enjoin, alter or materially delay the Offer or Merger or any
of the other transactions contemplated hereby.
SECTION 12. Taxes. The Company and its subsidiaries have filed all
federal income and other tax returns required to be filed by any of them and
have paid (or the Company has paid on behalf of its subsidiaries), or have set
up an adequate reserve (in accordance with generally accepted accounting
principles) for the payment of, all taxes shown to be due on such returns and
the December Balance Sheet reflects an adequate reserve for all taxes payable by
the Company accrued through December 31, 1994. The Company is not delinquent in
the payment of any material tax, assessment or governmental charge. No material
deficiencies for any taxes have been proposed, asserted or assessed in writing
against the Company or its subsidiaries. For the purposes of this Agreement,
the term "tax" shall include all federal, state, local and foreign income,
property, sales, excise and other taxes of any nature whatsoever. Neither the
Company nor any member of any affiliated or combined group of which the Company
is or has been a member has granted any extension or waiver of the limitation
period applicable to any tax returns. There are no Liens for taxes upon the
assets of the Company, except Liens for current taxes not yet due. The Company
will not be required under Section 481(c) of the Internal Revenue Code of 1986,
as amended (the "Code"), to include any adjustment in taxable income for any
period subsequent to the Merger. The Company has delivered to the Parent copies
of its federal, state and local income and franchise tax returns for the years
ended December 31, 1991, 1992 and 1993. The Company has not been a United
States real property holding corporation within the meaning of Code Sec.
897(c)(2) during the applicable period specified in Code Sec. 897(c)(1)(A)(ii).
Each of the Company and its subsidiaries has disclosed on its federal income tax
returns all positions taken therein that could give rise to a substantial
understatement of federal income tax within the meaning of Code Sec. 6662. None
of the Company or its subsidiaries is a party to any tax allocation or sharing
agreement. None of the Company or its subsidiaries (A) has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was the Company or a subsidiary of the Company)
or (B) has any liability for the taxes of any person (other than any of the
Company and its subsidiaries) under Treas. Reg. (S) 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract, or otherwise.
SECTION 13. ERISA. (a) The Writing identifies each "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which (i) is subject to any
provision of ERISA, (ii) is maintained, administered or contributed to by the
Company or any affiliate (as defined below) and (iii) covers any employee or
former employee of the Company or any affiliate or under which the Company or
any affiliate has any liability. Copies of such plans (and, if applicable,
related trust agreements) and all amendments thereto and any written
interpretations thereof have been furnished to the Parent together, if
applicable, with (x) the three most recent annual reports (Form 5500 including,
if applicable, Schedule B thereto) prepared in connection with any such plan and
(y) the most recent actuarial valuation report prepared in connection with any
such plan. Such plans are referred to collectively herein as the "Employee
Plans." For purposes of this Section, "affiliate" of any Person means any other
Person which, together with such Person, would be treated as a
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single employer under Section 414 of the Code. For purposes of this Annex B,
"Person" means any individual, corporation, partnership, association, trust, or
other entity or organization, including a governmental or political subdivision
or an agency or institution thereof.
(b) There are no Employee Plans subject to Title IV of ERISA, other
than multiemployer plans as defined in Section 4001(a)(3) of ERISA
("Multiemployer Plans"). The Company has provided the Parent with a list of all
Multiemployer Plans to which the Company or any active subsidiary presently has
any obligation to contribute. Neither the Company nor any affiliate has any
outstanding liability to any Multiemployer Plan for delinquent contributions, or
for withdrawal liability pursuant to Section 4201 of ERISA.
(c) There are no Employee Plans which are intended to be qualified
under Section 401(a) of the Code. Each Employee Plan has been maintained in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, which are
applicable to such Plan.
(d) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company or any affiliate that, individually
or collectively, could give rise to the payment of any amounts that would not be
deductible pursuant to the provisions of Section 280G of the Code.
(e) The Writing contains a list of each employment, severance or other
similar contract, arrangement or policy and each plan or arrangement (written or
oral) providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation rights
or other forms of incentive compensation or post-retirement insurance,
compensation or benefits which (i) is not an Employee Plan, (ii) is entered
into, maintained or contributed to, as the case may be, by the Company or any of
its affiliates and (iii) covers any employee or former employee of the Company
or any of its affiliates. Such contracts, plans and arrangements as are
described above, copies or descriptions of all of which have been furnished
previously to the Parent, are referred to collectively herein as the "Benefit
Arrangements." Each Benefit Arrangement has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations that are applicable to such Benefit
Arrangement.
(f) Neither the Company nor any affiliate has or maintains or has
maintained any Employee Plan or Benefit Arrangement providing post-retirement
health or medical benefits in respect of any active or former employee of the
Company or any affiliate or former affiliate.
(g) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its affiliates
relating to, or change in employee participation or coverage under, any Employee
Plan or Benefit Arrangement which would increase materially the expense of
maintaining such Employee Plan or Benefit Arrangement above the level of the
expense incurred in respect thereof for the fiscal year ended on the Balance
Sheet Date.
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(h) The Company is not a party to or subject to any union contract or
any express employment contract or arrangement providing for annual future
compensation of, or benefits or other similar payments to, any officer,
consultant, director or employee in excess of $50,000.
SECTION 14. Material Contracts. (a) Except for agreements,
contracts, plans, leases, arrangements or commitments disclosed in the Company's
SEC filings referred to in Section 5 or as previously disclosed in the Writing,
the Company is not a party to or subject to:
(i) any lease relating to real property or any other lease
providing for annual rentals in excess of $100,000;
(ii) any agreement for the purchase of materials, supplies, goods,
services, equipment or other assets providing for annual payments by the Company
in excess of $100,000, other than in the ordinary course of business consistent
with past practice;
(iii) any sales, distribution or other similar agreement providing
for the sale by the Company of materials, supplies, goods, services, equipment
or other assets that provides for annual payments to the Company in excess of
$100,000, other than in the ordinary course of business consistent with past
practice;
(iv) any partnership, joint venture, or other similar contract,
arrangement or agreement;
(v) any contract relating to indebtedness for borrowed money or the
deferred purchase price of property (whether incurred, assumed, guaranteed or
secured by any asset) in excess of $100,000, except in the ordinary course of
business consistent with past practice;
(vi) any license agreements, franchise agreements or agreements in
respect of similar rights granted to or held by the Company;
(vii) any agency, dealer, sales representative or other similar
agreement;
(viii) any contract or other document that substantially limits the
freedom of the Company to compete in any line of business or with any Person or
in any area or which would so limit the freedom of the Company after the
Effective Time (as that term is defined in the Agreement); or
(ix) any other contract or commitment not made in the ordinary
course of business which is material to the Company.
(b) All agreements, contracts, plans, leases, arrangements and
commitments disclosed in the Company's SEC filings referred to in Section 5 or
disclosed or required to be disclosed pursuant to this Annex (the "Material
Contracts") are valid and binding agreements of the Company, are in full force
and effect, and neither the Company nor, to the knowledge of the
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Company, any other party thereto is in default in any respect under the terms of
any such agreement, contract, plan, lease, arrangement or commitment, except, in
all cases, such as could not reasonably be expected to have a Material Adverse
Effect.
SECTION 15. Insurance Coverage. The Company has made available to
the Parent true and complete copies of, all insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of the Company. There is no claim by the
Company pending under any of such policies or bonds as to which coverage has
been questioned, denied or disputed by the underwriters of such policies or
bonds. All premiums due and payable under all such policies and bonds have been
paid and the Company is otherwise in full compliance with the terms and
conditions of all such policies and bonds. Such policies of insurance and bonds
(or other policies and bonds providing substantially similar insurance coverage)
are in full force and effect. Except as previously disclosed by the Company to
the Parent in writing, the Company does not know of any threatened termination
of, or premium increase with respect to, any of such policies or bonds.
SECTION 16. Compliance with Laws. The Company is not in violation
of, and has not materially violated, any applicable provisions of any laws,
statutes, ordinances or regulations material to the conduct of the business of
the Company as currently conducted, except in all cases, such as could not
reasonably be expected to have a Material Adverse Effect.
SECTION 17. Investment Banking Fees. There is no investment banker,
broker, finder or other similar intermediary which has been retained by, or is
authorized by, the Company to act on behalf of the Company who might be entitled
to any fee or commission from the Company, the Parent and the Sub or any of
their respective affiliates upon consummation of the transactions contemplated
by this Agreement, except Allen & Company Incorporated and Guilford Securities,
Inc. Copies of the Company's agreements with these firms have been furnished to
Parent.
SECTION 18. Intellectual Property. (a) The Company has listed in
the Writing all inventions which are the subject of issued letters patent or an
application therefor, all trade and service marks which have been registered or
for which an application for registration is pending and all writings for which
a claim for copyright has been recorded or is pending, in each case which are
owned by and used or held for use by the Company (collectively, the
"Intellectual Property Rights"), specifying as to each, as applicable: (i) the
nature of such Intellectual Property Right; (ii) the owner of such Intellectual
Property Right; (iii) the jurisdictions by or in which such Intellectual
Property Right has been issued or registered or in which an application for such
issuance or registration has been filed, including the respective registration
or application numbers; and (iv) material licenses, sublicenses and other
agreements as to which the Company or any of its affiliates is a party and
pursuant to which any Person is authorized to use such Intellectual Property
Right including the identity of all parties thereto, a description of the nature
and subject matter thereof, the applicable royalty and the term thereof.
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(b) The Company holds all licenses for Intellectual Property Rights
owned by another Person materially necessary to the conduct of its business as
currently conducted, except such as could not reasonably be expected to have a
Material Adverse Effect.
(c) The Company (i) during the three years preceding the date of this
Agreement has not been sued or charged in writing with or been a defendant in
any claim, suit, action or proceeding relating to its business which has not
been finally terminated prior to the date hereof and which involves a claim of
infringement of any patents, trademarks, service marks or copyrights, (ii) has
no knowledge of any other claim or infringement by the Company or (iii) has no
knowledge of any continuing infringement by any other Person of any Intellectual
Property Rights. No Intellectual Property Right is subject to any outstanding
order, judgment, decree, stipulation or agreement restricting the use thereof by
the Company or restricting the licensing thereof by the Company to any Person.
The Company has not entered into any agreement to indemnify any other Person
against any charge of infringement of any patent, trademark, service mark or
copyright.
SECTION 19. Environmental Compliance. Except in all cases as in the
aggregate have not had and could not reasonably be expected to have a Material
Adverse Effect, the Company and each of its subsidiaries (i) have obtained all
permits, licenses and other authorizations which are required under Federal,
state or local laws relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, or hazardous or toxic materials or wastes
into ambient air, surface water, ground water, or land or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous or toxic
materials or wastes; (ii) are in compliance with all terms and conditions of
such required permits, licenses and authorizations, and also are in compliance
with other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in such laws or
contained in any regulation, code, order, decree or judgment, issued, entered or
promulgated thereunder; (iii) as of the date of the Agreement, are not aware of
nor have received notice of any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued compliance or which would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding, based on or resulting from the Company's or any of its subsidiary's
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, or handling, or the emission, discharge, or release into the
environment, of any pollutant, contaminant, or hazardous or toxic material or
waste; and (iv) have taken all actions necessary under applicable requirements
of Federal, state or local laws, rules or regulations to register any products
or materials required to be registered thereunder.
SECTION 20. Information Supplied. None of the information supplied
or to be supplied by the Company for inclusion in (i) the Schedule 14D-9 and
(ii), insofar as it relates to the Company, the Offer, will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
B-10
SECTION 21. Delaware Corporation Law, etc. The board of directors of
the Company has unanimously approved the Offer, the Merger, the agreements of
any stockholders to tender Shares (the "Stock Tender Agreements") and the
consummation of the transactions contemplated hereby and thereby and such
approval is sufficient to render inapplicable the prohibitions of Section 203 of
the General Corporation Law of the State of Delaware with respect to the Offer
and the Merger. To the best of the Company's knowledge, no other state takeover
statute applies to the Offer, the Merger or the Stock Tender Agreements (and the
Company covenants to use all reasonable efforts to take all action necessary to
ensure that the same are inapplicable to the Offer, the Merger and the Stock
Tender Agreements and the transactions contemplated thereby).
SECTION 22. Real Estate. Except as disclosed in the Writing,
(a) The real estate owned ("Real Estate") or leased (the "Leasehold
Premises") by the Company is as described in the Company's Annual Report on Form
10-K for the year ended December 31, 1993.
(b) The buildings located on the Real Estate and the Leasehold
Premises are each in good operating condition, normal wear, tear and maintenance
down-time excepted, and are in the aggregate sufficient to satisfy the Company's
current operating levels.
(c) Each parcel of the Real Estate and the Leasehold Premises: (i)
has direct access to public roads or access to public roads by means of a
perpetual access easement, such access being sufficient to satisfy the current
and reasonably anticipated normal transportation requirements of the Company's
business as presently conducted at such parcel; and (ii) is served by all
utilities, including but not limited to water, electricity, natural gas, sewer
and telephone, in such quantity and quality as are sufficient to satisfy the
current normal production levels and business activities of the Company's
business as conducted at such parcel.
(d) The Company has received no notice of: (i) any condemnation
proceeding with respect to any portion of the Real Estate or the Leasehold
Premises, and to the best of its knowledge no proceeding is contemplated by any
governmental authority; or (ii) any special assessment which may affect the Real
Estate or the Leasehold Premises, and to the best of its knowledge no such
special assessment is contemplated by any governmental authority.
B-11
Dates Referenced Herein and Documents Incorporated by Reference
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