Item 1.01. Entry into a Material Definitive Agreement.
On March 30, 2017, TRC Companies, Inc. (the "Company") entered into an Agreement and Plan of Merger (the "Merger Agreement") by
and among the Company, Bolt Infrastructure Parent, Inc., a Delaware corporation ("Parent"), and Bolt Infrastructure Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary
of Parent ("Merger Sub"), pursuant to which, and on the terms and subject to the conditions thereof, among other things, Merger Sub will merge with and into the Company (the "Merger"), with the
Company continuing as the surviving corporation and as a wholly owned subsidiary of Parent. Parent and Merger Sub were formed by affiliates of New Mountain Partners IV, L.P., a fund affiliated
with New Mountain Capital, L.L.C. ("New Mountain Capital").
The
Merger Agreement provides that at the effective time of the Merger (the "Effective Time"), each share of common stock, par value $0.10 per share, of the Company issued and
outstanding immediately prior to the Effective Time (other than shares (i) owned by the Company, Parent or Merger Sub or (ii) held by a stockholder who is entitled to, but did not vote
in favor of the Merger (or consent thereto in writing) and is entitled to demand and properly demands appraisal of such shares) will be automatically converted into the right to receive cash in an
amount per share (subject to any applicable
withholding tax) equal to $17.55 per share, without interest (the "Merger Consideration"). The Merger Agreement contemplates that the Merger will be effected pursuant to Section 251 of the
Delaware General Corporation Law.
In
addition, immediately prior to the Effective Time, unless otherwise agreed between a participant and Parent, each outstanding unvested and unexercised Company stock option will become
immediately vested and exercisable in full and, at the Effective Time, each outstanding Company stock option, whether or not vested, that remains outstanding and unexercised as of immediately prior to
the Effective Time (including each stock option that becomes vested and exercisable pursuant to the previous clause) will be canceled and converted into the right to receive an amount in cash, without
interest and less the amount of any tax withholding, equal to the product of the excess, if any, of the Merger Consideration over the exercise price of such option and the number of shares of Company
common stock underlying such option. Further, at the Effective Time, unless otherwise agreed between a participant and Parent, each restricted stock award, restricted stock unit and performance stock
unit (the "Restricted Awards"), under any Company equity plan will become immediately vested (and, in the case of performance stock units, such vesting will be in the amounts corresponding to actual
achievement of applicable performance goals thereto, which in the event that the closing of the Merger shall occur prior to June 30, 2017, will be determined in good faith by the Compensation
Committee of the Board, by assuming achievement of performance goals for any portion of the applicable performance period that has not been completed as of the closing of the Merger taking into
account historical levels of performance with respect to the applicable performance goals) and all restrictions thereupon shall lapse, and such Restricted Awards will be canceled in exchange for and
converted into the right to receive an amount in cash, without interest and less the amount of any tax withholding, equal to the product of the number of shares of Company common stock subject to such
Restricted Award and the Merger Consideration following the Effective Time.
The
Board of Directors of the Company (the "Board") has unanimously (1) determined that the Merger and the other transactions contemplated by the Merger Agreement are advisable
and fair to, and in the best interests of, the Company and its stockholders, (2) adopted, approved and declared advisable the execution, delivery and performance of the Merger Agreement and the
consummation of the transactions contemplated thereby, including the Merger and (3) resolved to recommend that the Company's stockholders approve the Merger Agreement and the Merger and other
transactions contemplated by the Merger Agreement.
Stockholders
of the Company will be asked to vote on the approval of the Merger Agreement and the Merger at a special stockholders meeting that will be held on a date to be announced.
The closing of the Merger is subject to various closing conditions, including (1) approval of the Merger Agreement by the affirmative vote by stockholders of outstanding shares of common stock
of the Company
representing
at least a majority of all votes entitled to be case thereupon by stockholders of the outstanding Company common stock (the "Requisite Stockholder Approval"), (2) the expiration or
termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (3) the absence of any statute, rule or regulation prohibiting or making
illegal the consummation of the merger or order or injunction preventing the consummation of the Merger, (4) the accuracy of each party's representations and warranties (subject to certain
materiality qualifiers), (5) each party's performance in all material respects of its obligations under the Merger Agreement and (6) no Material Adverse Effect (as defined in the Merger
Agreement) having occurred with respect to the Company. The Merger is not subject to any financing condition.
The
Merger Agreement contains customary representations, warranties and covenants of the parties. The Company has agreed, subject to the terms of the Merger Agreement, to various
covenants and agreements, including, among others: (i) to continue to conduct its and its subsidiaries business in the ordinary course during the period between the execution of the Merger
Agreement and the Effective Time and not to engage in certain kinds of transactions during this period; (ii) to cooperate in seeking regulatory approvals; (iii) to promptly call a
special stockholders meeting to vote on the Merger Agreement and the Merger; and (iv) to cease all existing, and not to solicit or initiate any additional, discussions with third parties
regarding other proposals to acquire the Company and to certain restrictions on its ability to respond to such proposals, subject to fulfillment of certain fiduciary requirements of the Board.
The
Merger Agreement contains certain customary termination rights for the Company and Parent. Subject to certain limitations, the Merger Agreement may be terminated by either Parent or
the Company if (i) agreed to in writing by Parent and the Company; (ii) the Merger is not consummated on or before July 31, 2017; (iii) the Merger becomes subject to a
final, non-appealable order, decree or ruling in each case permanently restraining, enjoining or otherwise prohibiting the Merger or the other transactions contemplated by the Merger Agreement;
(iv) the Requisite Stockholder Approval is not obtained following a vote of stockholders taken thereon; or (v) there has been a breach of any of the other party's representations,
warranties, covenants or agreements contained in the Merger Agreement such that the applicable condition to closing would not be satisfied. In addition, and also subject to certain limitations,
(a) Parent may terminate the Merger Agreement prior to obtaining the Required Vote, if a Change of Recommendation (as defined in the Merger Agreement) has occurred or if the Company has
otherwise materially breached its obligations relating to the solicitation of proposals from third parties, and (b) subject to the Company's compliance with certain provisions contained in the
Merger Agreement, prior to the Requisite Stockholder Approval, the Company may terminate the Merger Agreement to enter into an acquisition agreement with respect to a Superior Proposal (as defined in
the Merger Agreement).
Upon
termination of the Merger Agreement under specified circumstances, including with respect to the Company's entry into an agreement with respect to a Superior Proposal, the Company
will be required to pay Parent a termination fee of $19,380,000.
The
foregoing description of the Merger Agreement is not complete and is qualified in its entirety by reference to the Merger Agreement, which is attached to this report as
Exhibit 2.1 and incorporated herein by reference.
The
Merger Agreement and the foregoing description of the agreement have been included to provide investors and stockholders with information regarding the terms of the agreement. They
are not intended to provide any other factual information about the Company. The representations, warranties and covenants contained in the Merger Agreement were made only as of specified dates for
the purposes of such agreement, were solely for the benefit of the parties to such agreement and may be subject to qualifications and limitations agreed upon by such parties. In particular, in
reviewing the representations, warranties and covenants contained in the Merger Agreement and discussed in the foregoing description, it is important to bear in mind that such representations,
warranties and covenants were negotiated with the principal purpose of allocating risk between the parties, rather than establishing matters as facts. Such representations, warranties and covenants
may also be subject to a
contractual
standard of materiality different from those generally applicable to stockholders and reports and documents filed with the U.S. Securities and Exchange Commission (the "SEC"). Investors
and stockholders are not third-party beneficiaries under the Merger Agreement. Accordingly, investors and stockholders should not rely on such representations, warranties and covenants as
characterizations of the actual state of facts or circumstances described therein. Information concerning the subject matter of such representations, warranties and covenants may change after the date
of the Merger Agreement, which subsequent information may or may not be fully reflected in the parties' public disclosures.
Concurrently with the execution and delivery of the Merger Agreement, on March 30, 2017, Parent and Merger Sub entered into a voting and
support agreement (the "Support Agreement") with The Clark Estates, Inc. (the "Supporting Person"), which holds approximately 17.6% of the outstanding shares of common stock of the Company as
of March 30, 2017 (the "Stockholder Securities"). Pursuant to the terms of the Support Agreement, the Supporting Person agreed, among other things, to vote the Stockholder Securities in favor
of the adoption of the Merger Agreement and against any proposal made by third parties to acquire the Company, and to take certain other actions in furtherance of the transactions contemplated by the
Merger Agreement, in each case subject to the limitations set forth in the Support Agreement.
Subject
to certain exceptions, the Support Agreement prohibits transfers by the Supporting Person of any of the Stockholder Securities prior to the termination of the Support Agreement
and certain other actions that would impair the ability of the Supporting Person to fulfill its obligations under the Support Agreement.
The
Support Agreement will terminate upon the earliest to occur of (i) termination of the Merger Agreement, (ii) the Effective Time, (iii) any change to the Merger
Agreement that reduces any consideration payable to the Supporting Person or changes the form of consideration payable to the Supporting Person or otherwise materially amends the Merger Agreement in a
manner adverse to the Supporting Person relative to the other stockholders of the Company and (iv) the mutual consent of Parent and the Supporting Person.
The
foregoing description of the Support Agreement is not complete and is qualified in its entirety by reference to the form of the Support Agreement, which is attached to this report as
Exhibit 99.1 and incorporated herein by reference.