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EXHIBIT (C)(5)
SHORT FORM MERGER OPTION AGREEMENT
AGREEMENT, dated as of December 15, 1997 among Advanced Environmental
Systems, Inc., a New York corporation (the "Company"), AES Acquisition Corp., a
New York corporation ("Sub"), and Xxxxxx Services Corp., an Ontario corporation
("Parent").
WHEREAS, concurrently with the execution of this Agreement, the Company,
Sub and Parent are entering into an Agreement and Plan of Merger (the "Merger
Agreement") providing for the making of a tender offer (the "Offer") to
purchase all of the issued and outstanding shares of the Company's Common
Stock, par value $.0001 per share (the "Shares") and, following the completion
of the Offer, the merger (the "Merger") of Sub and the Company in which each
Share not purchased pursuant to the Offer (other than shares as to which
appraisal rights are asserted) will be converted into the per share
consideration paid pursuant to the Offer, in accordance with the terms of the
Merger Agreement; and
WHEREAS, the Company desires to induce Parent and Sub to enter into the
Merger Agreement and to facilitate the prompt completion of the Merger
following the purchase of Shares pursuant to the Offer,
NOW, THEREFORE, the parties hereto agree as follows:
1. Grant of Option. The Company hereby irrevocably grants to Sub an
option (the "Option") to purchase up to 1,300,000,000 newly issued Shares (the
"Optioned Shares") for a consideration per share equal to $0.0059 per Optioned
Share in cash.
2. Exercise of the Option. The Option may be exercised by Sub at any time
within six business days after the acceptance for payment by Sub of Shares
pursuant to the Offer in accordance with the terms of the Merger Agreement;
provided that Sub may only exercise the Option in respect of at least that
number of Optioned Shares which, when added to the number of Shares purchased
pursuant to the Offer, represents at least 90% of the outstanding Shares, after
giving effect to the issuance of the Optioned Shares. In the event Sub wishes
to exercise the Option, Sub shall give written notice (the "Notice") to the
Company specifying the total number of Optioned Shares it will purchase
pursuant to the exercise of the Option and a place and a time not less than one
day from the date of the Notice for the closing of such purchase.
3. Payment and Delivery of Certificates. At any closing hereunder: (i) Sub
will make payment to the Company of the aggregate price for the Shares so
purchased by check or wire transfer in the amount of the aggregate cash
consideration to be paid for all such Shares; and (ii) the Company will deliver
to Sub a certificate or certificates representing the number of Shares so
purchased. Sub hereby represents to the Company that it will not offer to sell,
sell or otherwise dispose of, any Shares acquired by it pursuant to this
Agreement in violation of the Securities Act of 1933, as amended (the "1933
Act").
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4. Covenant. Each of Parent and Sub agrees to consummate the Merger as
promptly as practicable following the closing of the purchase of Optioned
Shares in accordance with Section 905 of the New York Business Corporation Law.
5. Representations and Warranties of the Company. The Company hereby
represents and warrants to Parent and Sub as follows:
5.1. The Company has all requisite corporate power and authority to enter
into and perform all of its obligations under this Agreement. The execution,
delivery and performance of this Agreement and all of the transactions,
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company. This Agreement has been duly executed and
delivered by the Company.
5.2. The Company has taken all necessary corporate action to authorize and
reserve for issuance up to 1,300,000,000 Shares upon exercise of the Option.
5.3. The Shares to be issued upon due exercise, in whole or in part, of
the Option, when paid for as provided herein, will be duly authorized, validly
issued, fully paid and non-assessable.
5.4. The execution and delivery of this Agreement do not, and the
performance of this Agreement will not, (i) conflict with any provision of the
Company's Certificate of Incorporation or By-Laws, or (ii) violate any law,
rule or regulation, or any judgment, decree or order of any court or
governmental agency or instrumentality, to which the Company or any of its
subsidiaries is subject, or (iii) conflict with, or result in a breach or
violation of, or accelerate the performance required by, or result in early
termination under, or result in any loss of benefits under, the terms of any
agreement, indenture, mortgage or other instrument to which the Company or any
of its subsidiaries is a party or to which any of its or their property is
subject, or constitute a default thereunder or any event which, with the lapse
of time or action by a third party, could result in a default thereunder or the
creation of any lien, charge or encumbrance upon any of the assets or
properties of the Company or any of its subsidiaries, except if the effect of
any of the foregoing contained in subsection (ii) or (iii) above, singly or in
the aggregate, would not be material to the business, financial condition,
results of operations or prospects of the Company and its subsidiaries,
considered as a whole.
6. Representations and Warranties of Parent and Sub. Each of Parent and
Sub hereby represents and warrants to the Company that (i) it has all requisite
power and authority to enter into
and perform all of its obligations under this Agreement, (ii) all of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Parent and Sub and (iii) this Agreement has been duly
executed and delivered by Parent and Sub.
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7. Adjustment Upon Changes in Capitalization. In the event of any change
in the Shares by reason of stock dividends, split-ups, recapitalizations,
combinations, exchanges of shares or the like, the number of Optioned Shares
and/or the purchase price per Optioned Share shall be adjusted appropriately.
8. Termination. This Agreement will terminate upon termination of the
Merger Agreement.
9. Assignment. Without the prior written consent of the Company, this
Agreement shall not be assigned by Sub except to Parent or any direct or
indirect wholly-owned subsidiary of Parent.
10. Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given (and shall be deemed to
have been duly received if so given) if personally delivered or sent by
registered or certified mail, postage prepaid, or telecopy addressed to the
respective parties as follows:
If to the Company:
Advanced Environmental Systems, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxx
If to Parent or Sub:
Xxxxxx Services Corp.
000 Xxxx Xxxxxx Xxxx
X.X. Xxx 0000, LCD #1
Xxxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxx Xxxxxx
or to such other address as any party may have furnished to the other parties
in writing in accordance herewith.
11. Specific Performance. The Company agrees that damages would be an
inadequate remedy for a breach of the provisions of this Agreement and that
this Agreement may be enforced by injunctive or other equitable relief.
12. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to the
conflict of laws provisions thereof.
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13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers of each of the parties hereto all as of the date first above written.
ADVANCED ENVIRONMENTAL SYSTEMS, INC.
By: /s/ XXXX X. XXXXXXX
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Xxxx X. Xxxxxxx
Vice President
XXXXXX SERVICES CORP.
By: /s/ XXXXX XXXXX
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Xxxxx Xxxxx
Executive Vice President, General
Counsel and Secretary
AES ACQUISITION CORP.
By: /s/ XXXXX XXXXX
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Xxxxx Xxxxx
Secretary
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