EXHIBIT 2.1
MEMBERSHIP INTERESTS AND ASSET PURCHASE AGREEMENT
BY AND AMONG
▇▇▇▇▇▇ SERVICES CORPORATION,
PSC INDUSTRIAL OUTSOURCING, INC.,
FLUOR ENTERPRISES, INC.
AND
PLANT PERFORMANCE SERVICES LLC
EFFECTIVE AS OF MARCH 2, 2003
MEMBERSHIP INTERESTS AND ASSET PURCHASE AGREEMENT
THIS MEMBERSHIP INTERESTS AND ASSET PURCHASE AGREEMENT (this
"AGREEMENT") is effective as of March 2, 2003 by and among ▇▇▇▇▇▇ Services
Corporation, a Delaware corporation ("PSC"); PSC Industrial Outsourcing, Inc., a
Delaware corporation ("SELLER") and indirect, wholly owned subsidiary of PSC;
Fluor Enterprises, Inc., a California corporation ("FEI"); and Plant Performance
Services LLC, a Delaware limited liability company ("BUYER") and wholly owned
subsidiary of FEI. Capitalized terms used in this Agreement not otherwise
defined have the meanings ascribed to them in Section 6.1 hereof.
A. Seller is the sole member and manager of Luling Acquisition, L.L.C.,
a Delaware limited liability company (the "LLC"), and holds one thousand (1,000)
units of, constituting one hundred percent (100%) of the membership interests in
(the "MEMBERSHIP INTERESTS"), the LLC.
B. The LLC owns substantially all the assets related to the Business,
other than the Excluded Assets.
C. Seller is or controls the principal PSC contracting party under all
of the Seller Contracts.
D. PSC and Seller desire to sell to Buyer, and Buyer desires to
purchase from Seller, all of the Membership Interests owned by Seller on the
terms and conditions set forth in this Agreement.
E. In connection with the sale of all the Membership Interests to
Buyer, PSC and Seller shall transfer and assign to FEI each of the Seller
Contracts.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual representations, warranties and agreements set forth herein, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto intend to be legally bound and agree as
follows:
ARTICLE 1
SALE AND PURCHASE
1.1 AGREEMENT TO SELL AND PURCHASE. On and subject to the terms of this
Agreement, (a) Seller hereby sells to Buyer, and PSC shall cause Seller to sell
to Buyer, the Membership Interests; (b) Seller hereby transfers and assigns to
FEI, and PSC shall cause Seller to transfer and assign to FEI, the Seller
Contracts for value; (c) Buyer hereby purchases from Seller the Membership
Interests; and (d) FEI hereby accepts the assignment of the Seller Contracts.
1.2 PURCHASE PRICE AND PURCHASE PRICE ALLOCATION.
(a) Purchase Price Amount. As payment in full for all the
Membership Interests and the Seller Contracts and subject to any other
adjustments provided under this Agreement, FEI and Buyer hereby pay to Seller an
aggregate purchase price equal to (a) Twenty
One Million Two Hundred Thousand U.S. dollars ($21,200,000) (the "PURCHASE
PRICE"), plus (b) the Additional Amount, and less (c) the Holdback Amount.
(b) Purchase Price Allocation. Buyer, FEI and Seller shall allocate the
Purchase Price (an all other capitalized costs) among the Business Assets for
all purposes (including financial accounting and tax purposes) in accordance
with Section 1060 of the Code. Buyer, FEI and Seller shall each prepare and file
and IRS Form 8594 in a timely fashion in accordance with the rules under Section
1060 of the Code. The determination and allocation of the Purchase Price derived
pursuant to this Section 1.2(b) will be binding on the parties for all financial
accounting and tax reporting purposes.
1.3 DELIVERABLES OF SELLER AND BUYER.
(a) Deliverables of Seller. Concurrently herewith, Seller
hereby delivers, and PSC shall cause Seller to deliver, to Buyer:
(i) a duly executed membership interests assignment
agreement in the form attached hereto as Exhibit A (the "MEMBERSHIP INTERESTS
ASSIGNMENT INSTRUMENT");
(ii) a duly executed security agreement in the form
attached hereto as Exhibit B (the "SECURITY AGREEMENT");
(iii) a duly executed resignation, dated as of the
date hereof, of the manager of the LLC;
(iv) certificates of the Secretary of State of the
State of Delaware as to the legal existence and good standing of PSC, Seller and
the LLC in the State of Delaware, dated no more than seven (7) business days
prior to the date hereof;
(v) certificates of the Secretaries of State or other
similar governmental official of each jurisdiction in which the LLC is required
to qualify to do business as of the date hereof, as to the due qualification and
good standing (including tax) of the LLC in each such jurisdiction, dated no
more than seven (7) business days prior to the date hereof;
(vi) a legal opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.,
counsel to PSC and Seller, dated as of the date hereof in form and substance
reasonably satisfactory to Buyer;
(vii) the consents, waivers, authorizations and
approvals set forth on Sections 2.3 and 2.4 to the Seller Disclosure Schedule,
in form and substance reasonably satisfactory to Buyer; and
(viii) the termination or exclusion from the lease
Contract therefor of those premises commonly known as ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇, in form and substance reasonably satisfactory to Buyer.
(b) Other Deliverables of Seller. Concurrently herewith,
Seller hereby delivers, and PSC shall cause Seller to deliver, to FEI a duly
executed assignment agreement in
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the form attached hereto as Exhibit C (the "CONTRACT ASSIGNMENT AND ASSUMPTION
AGREEMENT"), with respect to the transfer and assignment to FEI of all the
Seller Contracts.
(c) Deliverables of Buyer. Concurrently herewith, Buyer hereby
delivers, and FEI shall cause Buyer to deliver, to Seller:
(i) the Purchase Price, plus the Additional Amount,
and less the Holdback Amount, by wire transfer of immediately available funds,
in accordance with Seller's duly authorized payment instructions;
(ii) certificates of the Secretaries of State of the
States of California and Delaware as to the legal existence and good standing of
FEI in the State of California and Buyer in the State of Delaware, dated no more
than seven (7) business days prior to the date hereof; and
(iii) a legal opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP,
counsel to FEI and Buyer, dated as of the date hereof in form and substance
reasonably satisfactory to Seller.
(d) Other Deliverables. Concurrently herewith, the parties
hereto, as applicable, shall execute and deliver the following other agreements:
(i) an information technologies services agreement,
in the form attached hereto as Exhibit D (the "INFORMATION TECHNOLOGIES SERVICES
AGREEMENT");
(ii) a human resources services agreement, in the
form attached hereto as Exhibit E (the "HUMAN RESOURCES SERVICES AGREEMENT");
(iii) an accounts receivable services agreement, in
the form attached hereto as Exhibit F (the "ACCOUNTS RECEIVABLE SERVICES
AGREEMENT");
(iv) a license agreement, in the form attached hereto
as Exhibit G (the "FASTDRAW/FASTCLEAN LICENSE AGREEMENT");
(v) a license agreement, in the form attached hereto
as Exhibit H (the "GILDERWARE LICENSE AGREEMENT");
(vi) a cooperative alliance agreement, in the form
attached hereto as Exhibit I (the "COOPERATIVE ALLIANCE AGREEMENT");
(vii) occupancy licenses, in substantially the form
attached hereto as Exhibit J (the "OCCUPANCY LICENSES"), relating to (A) the
co-occupancy by Seller of the premises commonly known as (1) ▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ and (2) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇; (B) the
co-occupancy by Buyer of the parking lot commonly known as ▇▇▇▇ ▇▇ ▇▇▇ ▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇; and (C) the occupancy by the LLC of the premises commonly
known as (1) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, (2) ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇, (3) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, (4) ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, and (5) ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇; and
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(viii) a sublease, in the form attached hereto as
Exhibit K (the "FREEPORT SUBLEASE"), relating to the sublease by the LLC from
Seller of the premises commonly known as 212 and ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF PSC AND SELLER
Each representation and warranty contained in this Article 2 is
qualified by the disclosure made with respect to any such particular
representation and warranty in the Seller Disclosure Schedule attached hereto as
Schedule 2, to the extent that such disclosure specifically identifies (or that
it is reasonably apparent that such disclosure relates to) the subsection which
it qualifies. This Article 2 and the Seller Disclosure Schedule shall be read
together as an integrated provision. Except as set forth on the Seller
Disclosure Schedule, each of PSC and Seller hereby jointly and severally make
the representations and warranties to FEI and Buyer as set forth below.
2.1 ORGANIZATION AND GOOD STANDING. PSC is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. PSC indirectly owns all of the issued and outstanding capital stock
of, and all other equity interests in, Seller. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full corporate power and authority to own the Membership
Interests. The LLC is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware, with all
requisite power and authority to own, lease and operate its properties and to
carry on its business as now being conducted. The LLC is duly qualified and in
good standing to do business in each jurisdiction, whether domestic or foreign,
in which the property owned, leased or operated by it or the nature of the
business conducted by it to date makes such qualification or licensing
necessary.
2.2 AUTHORIZATION OF AGREEMENT. PSC and Seller have all requisite
corporate power and authority to enter into this Agreement and to complete the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the other Transaction Documents (except for Transaction
Documents to be executed and delivered solely by Buyer) have been duly and
validly authorized by the respective boards of directors of PSC and Seller and
no other actions or proceedings on the part of either PSC or Seller are
necessary to approve this Agreement and to complete the transactions
contemplated hereby. This Agreement and the other Transaction Documents
delivered by PSC and Seller: (a) have been duly executed and delivered by PSC
and Seller, and (b) constitute legal, valid and binding obligations of PSC and
Seller, enforceable against PSC and Seller in accordance with their respective
terms.
2.3 NO CONFLICT OR VIOLATION. The execution, delivery and performance
by PSC and Seller of this Agreement and the other Transaction Documents executed
and delivered by PSC and Seller and the completion of the transactions
contemplated hereby and thereby do not and will not: (a) violate or conflict
with any provision of the certificates of incorporation or bylaws of PSC or
Seller; (b) violate or conflict with any provision of the certificate of
formation, limited liability company agreement or other governing document of
the LLC; (c) violate any provision or requirement of any federal, state or local
law, statute, rule or regulation or any judgment, order, writ, injunction,
decree or award of any Governmental Entity having jurisdiction over
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PSC, Seller or the LLC; (d) violate, result in a breach of, constitute (with due
notice or lapse of time or both) a default or cause any obligation, penalty,
premium or right of termination to arise or accrue under, any Contract; (e)
result in the creation or imposition of any lien, charge or encumbrance of any
kind whatsoever upon any of the Membership Interests or any of the Business
Assets; (f) result in the cancellation, modification, revocation or suspension
of any LLC License; (g) require the consent, approval, or notification of, or
registration or filing with, any third party, other than the Lender Consent; or
(h) cause FEI, Buyer, the LLC or any of the Business Assets to become subject
to, or liable for the payment of, any Tax relating to the operation of the LLC,
the Business Assets or the Business for any period ending or deemed to end on or
before the date hereof.
2.4 GOVERNMENTAL CONSENTS. No filing with or notice to, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the execution and delivery by PSC or Seller of this Agreement and the other
Transaction Documents required to be delivered by PSC or Seller or the
completion of the transactions contemplated hereby or thereby.
2.5 OWNERSHIP OF MEMBERSHIP INTERESTS. The Membership Interests
represent all of the authorized, issued and outstanding interests, of any kind,
in the LLC. Seller is the sole record holder of the Membership Interests and has
sole legal and beneficial ownership of, and good and marketable title to, the
Membership Interests. All of the Membership Interests were validly issued to
Seller and none of the Membership Interests was issued to Seller in violation of
any U.S. federal or state securities law. All of the Membership Interests are
free and clear of any claims, liens, pledges, options, security interests,
trusts, encumbrances or other rights or interests of any person or entity and
there is no security, option, warrant, right (including, without limitation,
preemptive rights), put, call, subscription agreement, commitment, understanding
or claim of any nature whatsoever, fixed or contingent, to which either PSC,
Seller, or the LLC is a party or by which PSC, Seller or the LLC is bound that
directly or indirectly (a) calls for the issuance, sale, pledge, delivery or
other disposition of any interests in the LLC or any securities convertible
into, or other rights to acquire, any interests in the LLC, (b) relates to the
voting or control of any interests in the LLC, or (c) obligates PSC, Seller, the
LLC or any of their respective Affiliates to grant, offer or enter into any of
the foregoing. Seller has the absolute and unrestricted legal right, power,
authority and capacity to transfer the Membership Interests to Buyer. Upon the
completion of the transactions contemplated by this Agreement, Buyer will become
the sole record holder of the Membership Interests and acquire from Seller sole
legal and beneficial ownership of all rights with respect to, and good and
marketable title to, the Membership Interests, free and clear of any claims,
liens, pledges, options, security interests, trusts, encumbrances or other
rights or interests of any person or entity. The Membership Interests will be
free of any restrictions on transfer, other than restrictions on transfer under
any applicable federal or state securities law.
2.6 PROPERTIES AND ASSETS.
(a) Owned Property. None of the properties or assets owned by
the LLC is subject to any mortgages, liens, pledges, loans, claims or
encumbrances of any kind whatsoever, except for liens for current Taxes not yet
due and payable and minor defects and irregularities in title which do not
impair the use or marketability of such properties or assets. Section 2.6(a) of
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the Seller Disclosure Schedule lists (i) all real property owned by the LLC,
together with the name of the record title holder and land register extracts
related thereto; and (ii) all other property and assets owned by the LLC. With
respect to all real property, the LLC possesses a valid certificate of occupancy
to the extent required by law and there is no pending or proposed special or
other assessment for public improvements or otherwise.
(b) Leased Property. The properties and assets leased by the
LLC are held under valid leasehold interests in such properties and assets.
Section 2.6(b) of the Seller Disclosure Schedule sets forth a list of (i) all
leases or rental contracts under which the LLC is a lessee, lessor, sublessee or
sublessor, and (ii) all leased property or equipment used by the LLC in the
operation of the Business, as currently conducted. All payments have been made
under, and the LLC in compliance with the terms of, each lease or rental
contract to which it is a party. The LLC is in peaceable and undisturbed
possession of the real property and improvements, buildings, machinery,
equipment or other tangible property or assets covered by a lease. All
improvements on leased property used by the LLC in the operation of the
Business, as currently conducted, and the current use thereof are in accordance
with all applicable agreements under which such improvements are leased.
(c) Condition of Property. All of the tangible properties and
assets owned or leased by the LLC are in good operating condition and repair,
subject to ordinary wear and tear, and are adequate and suitable for the
purposes for, and the manner in, which they are currently being used. No
proceeding is pending or proposed which would preclude or impair the use of any
such properties and assets by the LLC for the purposes for, and the manner in,
which it is currently used.
2.7 INTELLECTUAL PROPERTY.
(a) Right to Intellectual Property. The LLC owns exclusively
or has the exclusive right to use, free and clear of all mortgages, liens,
pledges, loans, claims, encumbrances or restrictions of any kind whatsoever, all
the Intellectual Property used in connection with, or necessary for, the conduct
of the Business, as currently conducted. Section 2.7(a) of the Seller Disclosure
Schedule identifies each patent and copyright registration with respect to the
Intellectual Property, or application for any of the foregoing, which is owned
or licensed by the LLC, has been issued to the LLC or has been submitted by the
LLC for issuance. To the knowledge of PSC or Seller, all applications for
registration of such Intellectual Property were true and accurate at the time of
filing and all fees to maintain such Intellectual Property, including, without
limitation, registration, maintenance, prosecution and other professional fees
incurred in connection therewith, have been paid.
(b) Protection. PSC, Seller and the LLC have taken all actions
that are customary and commercially reasonable in the industry to protect the
confidentiality of all trade secrets and confidential information (including,
without limitation, know-how, specifications, financial and business plans)
comprising the Intellectual Property of the LLC. All the employees of Seller and
the LLC, and all the consultants and contractors performing services on behalf
of Seller and the LLC, have entered into a written agreement assigning to Seller
or the LLC, as applicable, all right, title and interest in and to proprietary
information and inventions developed, conceived or reduced to practice during
their employment with, or in the case of consultants and
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contractors performance of services for the benefit of, the Business. All rights
under such written agreements held by Seller have been validly assigned to the
LLC or Buyer.
(c) Licenses of Intellectual Property. Except as expressly
contemplated by this Agreement, there are no outstanding licenses or options of
any kind relating to the Intellectual Property used in the Business held by PSC,
Seller, their respective Affiliates or any other third party. Except for
publicly-available commercial software that the LLC may license for no more than
$25,000 per year, the LLC is not bound by or a party to any licenses, options or
agreements of any kind with respect to the Intellectual Property of any other
person or entity.
(d) Disputes. To the knowledge of PSC or Seller, no person or
entity has interfered with, infringed upon, misappropriated or violated any of
the Intellectual Property of the LLC. There are no disputes involving contracts
or licenses between the LLC and any other person, with respect to the
Intellectual Property used in connection with the conduct of the Business.
(e) Restrictions. No Intellectual Property or product,
technology or service of the LLC is subject to any order, action or proceeding
that restricts, or is reasonably expected to restrict in any manner, the use,
transfer, licensing or validity of any of such Intellectual Property, product,
technology or service.
2.8 CONTRACTS.
(a) List of Contracts.
(i) Except for any employment-related agreements,
Section 2.8(a)(i) of the Seller Disclosure Schedule sets forth a complete and
accurate list of all written contracts, agreements, arrangements and commitments
to which Seller is a party or bound relating to, or necessary for, the conduct
of the Business, as currently conducted (collectively, the "SELLER CONTRACTS"),
including, without limitation:
(A) all contracts, agreements, arrangements
and commitments between Seller and any party to whom Seller provides products or
services as part of the Business;
(B) all contracts, agreements, arrangements
and commitments between Seller and any party from whom Seller receives
materials, equipment, supplies or services as part of the Business; and
(C) all contracts, agreements, arrangements
and commitments containing covenants not to compete on the part of Seller or the
LLC with respect to the Business or otherwise restricting the ability of Seller
or the LLC to engage in the Business.
(ii) Section 2.8(a)(ii) of the Seller Disclosure
Schedule sets forth a complete and accurate list of all contracts, agreements,
arrangements and commitments (whether written or unwritten) to which the LLC is
a party or bound (collectively with the Seller Contracts, the "CONTRACTS"),
including, without limitation:
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(A) all contracts, agreements, arrangements
and commitments between the LLC and any party to whom the LLC provides products
or services as part of the Business;
(B) all contracts, agreements, arrangements
and commitments between the LLC and any party from whom the LLC receives
materials, equipment, supplies or services as part of the Business;
(C) all contracts, agreements, arrangements
and commitments containing covenants not to compete on the part of the LLC with
respect to the Business or otherwise restricting the ability of the LLC to
engage in the Business; and
(D) all notes, mortgages, indentures,
letters of credit, guarantees, performance bonds, sale-leaseback agreements and
all other agreements or instruments for or relating to any lending or borrowing
(including assumed debt) pursuant to which any other Business Assets are pledged
or mortgaged as collateral.
(iii) A complete and accurate copy of each Contract
has been heretofore delivered to Buyer by Seller.
(b) Validity of Contracts. Each Contract is a valid, binding
and enforceable agreement of (i) Seller and the LLC, as applicable, and (ii) to
the knowledge of PSC or Seller, the other parties thereto. None of the Contracts
nor any of Seller's or the LLC's rights thereunder are subject to any mortgages,
liens, pledges, loans, claims, encumbrances or restrictions of any kind
whatsoever. There has not occurred any breach or default (or event which upon
provision of notice or lapse of time or both would become such a breach or
default) under any of the Contracts on the part of Seller or the LLC. Seller and
the LLC have, through the date hereof, performed and discharged all of their
respective obligations under the Contracts in accordance with the terms thereof.
To the knowledge of PSC or Seller, there does not exist any event that, with the
giving of notice or the lapse of time or both, would constitute any breach or
default under such Contract by any party other than Seller or the LLC and none
of PSC, Seller or the LLC has received or given notice of any such event, breach
or default.
2.9 LICENSES. Section 2.9 of the Seller Disclosure Schedule sets forth
a complete and accurate list of all Licenses necessary for the operation of the
Business, as currently conducted. PSC and Seller have provided Buyer with
complete and accurate copies of each License.
2.10 ADEQUACY OF ASSETS. Except for the assets and rights set forth on
Sections 2.9 and 2.10 of the Seller Disclosure Schedule (the "EXCLUDED ASSETS"),
the assets and rights listed in Sections 2.6(a) and (b), 2.7(a), 2.8(a)(i) and
(a)(ii) of the Seller Disclosure Schedule (the "BUSINESS ASSETS") constitute all
the assets and rights which are either (a) used by PSC, Seller, the LLC or any
of their respective Affiliates in connection with the operation of the Business,
as currently conducted, or (b) necessary for the continued conduct of the
Business, as currently conducted. Except for the Excluded Assets, neither PSC
nor Seller has any reason to believe that the Business Assets will be inadequate
to fulfill in all respects all of the obligations under the Contracts which may
arise from time to time after the date hereof.
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2.11 FINANCIAL STATEMENTS. Attached as Section 2.11 to the Seller
Disclosure Schedule are (a) the unaudited balance sheets of Seller's operating
divisions conducting the Business as of December 31, 2000, 2001 and 2002 and the
related unaudited statements of income for the annual periods then ended, and
(b) the unaudited balance sheets of Seller's operating divisions conducting the
Business as of the one month ended January 31, 2003 and the related statements
of income for the nine-month period then ended (such statements specified in
clauses (a) and (b), collectively, the "FINANCIAL STATEMENTS"). The Financial
Statements have been prepared in accordance with Seller's accounting policies,
consistently applied, and fairly present in all material respects the results of
the operations relating to the Business for the periods covered thereby, except
for certain PSC corporate allocations and the absence of notes and ordinary
year-end adjustments. Since September 30, 2002, there has not been any event,
circumstance, condition, development or occurrence causing, resulting in, or
could be reasonably expected to result in, a material adverse effect on the LLC,
the Business Assets or the Business.
2.12 SUBSIDIARIES AND INVESTMENTS. The LLC does not own any assets or
conduct any operations through any other entity or subsidiary. The LLC does not
control, directly or indirectly, or possess any direct or indirect ownership,
equity participation or other interest in, any corporation, partnership, limited
liability company, trust or other business entity.
2.13 CUSTOMERS AND SUPPLIERS. Section 2.13 of the Seller Disclosure
Schedule sets forth, for the two (2) years prior to the date hereof, a complete
and accurate listing of (a) each customer of the Business; (b) each supplier or
distributor for the Business that is the sole supplier or distributor of any
product or component or sole provider of any product related service, the
product, component or service provided thereby, the most recent and best prices
quoted and, if applicable, the lead time for such product, component or service;
and (c) each supplier that holds any tooling for the Business or for the
production of any of the products, the tooling, its location and the part and
product line the tooling supports.
2.14 IMPAIRMENT OF RELATIONSHIPS. To the knowledge of PSC or Seller, no
customer, distributor or supplier of the Business (a) refuses to honor any of
its commitments; (b) is dissatisfied with the quality or price of the services
provided by the Business or is otherwise dissatisfied with the Business or its
relationship with Seller or the LLC; (c) intends to cease retaining, purchasing
from, selling to or dealing with the LLC, FEI or Buyer in the manner in which
such transactions have previously occurred; or (d) intends to alter in any
significant respect the amount of such retention, purchases or sales or the
extent of dealings with the LLC, FEI or Buyer. To the knowledge of PSC or
Seller, there is no fact, condition or circumstance that could reasonably result
in the impairment of any relationship between any current customer, distributor
or supplier of the Business and the Business.
2.15 CERTAIN PAYMENTS. To the knowledge of PSC or Seller, none of
Seller, the LLC or any of their respective members, managers, directors,
officers, employees or agents has directly or indirectly made any contribution,
bribe, rebate, payoff, influence payment, kickback or other payment to any
person, public or private, regardless of form, whether in money, property or
services (a) to obtain favorable treatment in securing work for the Business,
(b) to pay for favorable treatment in securing work for the Business, (c) to
obtain special concessions, or for special concessions already obtained, for or
in respect of the Business, or (d) in violation of any applicable U.S. federal,
state, local or foreign law.
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2.16 LITIGATION. There is no pending or, to the knowledge of PSC or
Seller, threatened claim, suit, arbitration or other judicial or regulatory
proceeding or investigation of any character by, against or involving (a) any of
the Membership Interests, (b) the LLC, (c) any of the Business Assets, or (d)
PSC, Seller or any of their respective Affiliates that affects or relates to the
transactions contemplated by this Agreement or materially and adversely affects
PSC's or Seller's ability to complete the transactions contemplated by this
Agreement; and neither PSC nor Seller have any knowledge of any facts which
would reasonably be expected to form the basis for any such claim, suit,
arbitration or proceeding. There is also no judgment, decree, injunction or
order of any Governmental Entity against or involving (w) any of the Membership
Interests, (x) the LLC, (y) any of the Business Assets, or (z) PSC, Seller or
any of their respective Affiliates that affects or relates to the transactions
contemplated by this Agreement or materially and adversely affects PSC's or
Seller's ability to complete the transactions contemplated by this Agreement;
and neither PSC nor Seller have any knowledge of any facts which would
reasonably be expected to form the basis for any such judgment, decree,
injunction or order.
2.17 COMPLIANCE WITH LAWS. Except with respect to Tax matters (which
are addressed in Section 2.18) and Environmental Laws (which are addressed in
Section 2.19), the operations of the LLC, the use of the Business Assets and
conduct of the Business are, and have been, conducted in all material respects
in accordance with all applicable laws, regulations, orders and other
requirements of all Governmental Entities having jurisdiction over the LLC, the
Business Assets or the Business. None of PSC, Seller or the LLC has received
notice of any violation of any such law, regulation, order or other legal
requirement relating to violations pending as of the date hereof, and neither
PSC, Seller nor the LLC is currently in default with respect to any order, writ,
judgment, award, injunction or decree of any Governmental Entity, applicable to
the LLC, the Business Assets or the Business.
2.18 TAX MATTERS.
(a) Filing of Returns. There have been properly completed and
filed on a timely basis and in correct form all Tax Returns required to be filed
with respect to the LLC, the Business Assets and the Business on or prior to the
date hereof. As of the time of filing, all such Tax Returns were correct and
complete in all material respects. In particular, and without in any manner
limiting the foregoing, to the knowledge of PSC or Seller, none of such Tax
Returns contains any position which is or would be subject to penalties under
Section 6662 of the Code (or any corresponding or similar provision of state,
local or foreign Tax law). An extension of time within which to file any Tax
Return which has not been filed has not been requested or granted. Without
limiting the generality of the foregoing, to the knowledge of PSC or Seller, PSC
and Seller have complied with all record keeping and Tax reporting obligations
pertaining to the LLC, the Business Assets and the Business relating to income
and employment Taxes due with respect to amounts paid or owing to any employee,
independent contractor, creditor, stockholder, member or other third party,
including, without limitation, the withholding of all Taxes required to be
withheld.
(b) Payment of Taxes. With respect to all amounts in respect
of Taxes imposed upon the LLC, the Business Assets and the Business, or for
which the LLC is or could be liable, whether to taxing authorities (i.e., under
law) or to other persons or entities (i.e., under Tax allocation agreements),
with respect to all taxable periods (or portions thereof) ending on or
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before the date hereof, to the knowledge of PSC or Seller, all applicable Tax
laws and agreements have been fully complied with, and all such amounts required
to be paid with respect to the LLC, the Business Assets and the Business to such
taxing authorities or others on or before the date hereof have been paid.
Without limiting the generality of the foregoing, PSC and Seller have paid all
Taxes required to have been withheld and paid pertaining to the LLC, the
Business Assets and the Business in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, member or other third
party.
(c) Audit History. No issues have been raised (and are
currently pending) by any taxing authority in connection with any Tax Returns
relating to the LLC, the Business Assets and the Business. No waivers of
statutes of limitation with respect to such Tax Returns have been given by or
requested from Seller or the LLC. Section 2.18(c) of the Seller Disclosure
Schedule sets forth (i) all federal, state, local and foreign Tax Returns filed
with respect to the LLC and any of the Business Assets for taxable periods ended
on or after December 31, 1997; (ii) indicates those Tax Returns that have been
audited; and (iii) indicates those Tax Returns that are currently subject to
audit. Except as set forth on Section 2.18(c) of the Seller Disclosure Schedule,
all deficiencies asserted or assessments made as a result of any examinations
have been fully paid.
(d) Other Jurisdictions. To the knowledge of PSC or Seller,
there is no investigation or other proceeding pending or threatened or expected
to be commenced by any Tax authority for any jurisdiction where the Business or
the LLC does not file Tax Returns that could lead to an assertion by such Tax
authority that the Business or the LLC is or may be subject to a Tax in such
jurisdiction. To the knowledge of PSC or Seller, there is no basis for any such
investigation or other proceeding.
(e) Liens. There are no liens for Taxes (other than for
current Taxes not yet due and payable) existing upon the LLC, any of the
Membership Interests or any of the Business Assets.
(f) Tax Sharing or Allocation Agreements. The LLC is not party
to or bound by any Tax indemnity, Tax sharing or Tax allocation agreement or
arrangement.
(g) Prior Affiliated Groups. Except for the group of which PSC
and Seller are presently members, the LLC has never been a member of an
affiliated group of corporations, within the meaning of Section 1504 of the
Code.
(h) Tax Elections. Section 2.18(h) of the Disclosure Schedule
sets forth a list of all material Tax elections affecting the LLC and the
Business Assets.
(i) Safe Harbor Lease Property. None of the properties or
assets of the LLC constitutes property which the LLC is required to treat as
being owned by any other person pursuant to the so-called "safe harbor lease"
provisions of former Section 168(f)(8) of the Code.
(j) Security for Tax Exempt Obligations. None of the
properties or assets of the LLC directly or indirectly secures any debt the
interest on which is Tax exempt under Section 103(a) of the Code.
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(k) Tax Exempt Use Property. None of the properties or assets
of the LLC is "tax-exempt use property" within the meaning of Section 168(h) of
the Code.
(l) Parachute Payment. The LLC has assumed no obligation to
make a payment that is not deductible under Section 280G of the Code or any
similar provision of state, local or foreign law.
(m) Existing Partnerships. The LLC is not party to any joint
venture, partnership, or other arrangement or contract which could be treated as
a partnership for U.S. federal income Tax purposes.
(n) Disregarded Entity. The LLC is a disregarded entity under
Treasury Regulations Section 301.7701-3(b)(ii) and will not make an election
under Treasury Regulations Section 301.7701-3(c) to be treated as an association
taxable as a corporation. The parties acknowledge that the LLC's status as a
disregarded entity may cause certain of the foregoing representations and
warranties in this Section 2.18 and certain provisions of Section 4.7 to be
inapplicable solely for federal income tax purposes and solely with respect to
the LLC. Notwithstanding the foregoing, this acknowledgment shall under no
circumstances negate or diminish the representations and warranties in Section
2.18 and the provisions of Section 4.7.
2.19 ENVIRONMENTAL MATTERS.
(a) Compliance with Environmental Laws. All current and prior
uses by PSC, Seller and the LLC of each property set forth on Sections 2.6(a)
and (b) of the Seller Disclosure Schedule, and all operations, activities and
conduct of PSC, Seller and the LLC related thereto, are, and during Seller's or
the LLC's ownership or occupancy were, in compliance in all material respects
with all Environmental Laws. The LLC is not required to make any capital or
other expenditures to comply with any Environmental Law nor is there any
reasonable basis, under current Environmental Laws, on which any Governmental
Entity could take action that would require such capital or other expenditure.
(b) Release of Hazardous Materials. There has been no
disposal, release, or threatened release of Hazardous Materials by PSC, Seller
or the LLC (whether legal or illegal, accidental or intentional) on, under, in,
from or about any property set forth on Sections 2.6(a) and (b) of the Seller
Disclosure Schedule, or otherwise related to the operations, activities or
conduct of PSC, Seller or the LLC that has subjected the LLC to liability under
any Environmental Law. To the knowledge of PSC or Seller, no Hazardous Materials
have migrated or threatened to migrate from any property set forth on Sections
2.6(a) and (b) of the Seller Disclosure Schedule onto, about or beneath any
other property, nor have any Hazardous Materials migrated or threatened to
migrate from other properties onto, about or beneath any property set forth on
Sections 2.6(a) and (b) of the Seller Disclosure Schedule. None of PSC, Seller
or the LLC has (i) disposed of or arranged for disposal of Hazardous Materials
on any third party property that has subjected or may subject the LLC to
liability under any Environmental Law or (ii) exposed any employee or third
party to any Hazardous Material or condition which has subjected or may subject
the LLC to liability under any Environmental Law.
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(c) No Environmental Claims. None of PSC, Seller or the LLC
has received any notice, demand, letter, claim, request for information or other
communication relating to any property set forth on Sections 2.6(a) and (b) of
the Seller Disclosure Schedule alleging violation of or liability under any
Environmental Law and there are no proceedings, actions, orders, decrees,
injunctions, other claims or, to the knowledge of PSC or Seller, any threatened
actions or claims, relating to or otherwise alleging liability under any
Environmental Law. The LLC has not assumed any liability of any person for
investigation or remediation of Hazardous Materials, compliance with
Environmental Law, release or disposal of Hazardous Materials, or any claim for
personal injury or property damage related to or arising under Environmental
Law.
(d) PCBs. No polychlorinated biphenyls have ever been located
on any property set forth on Sections 2.6(a) and (b) of the Seller Disclosure
Schedule.
(e) Environmental Reports. PSC and Seller have made available
to Buyer copies of all environmental assessments, audits, studies, and other
environmental reports in its possession relating to each property set forth on
Sections 2.6(a) and (b) of the Seller Disclosure Schedule. There has not
occurred any event since the dates of such assessments, audits, studies and
reports that could alter or affect the findings or conclusions contained
therein.
(f) Construction. For purposes of this Section 2.19,
references to the LLC shall be deemed to include any entity for which FEI, Buyer
or the LLC would, under current law, be reasonably expected to have successor
liability.
2.20 EMPLOYEE COMPENSATION AND BENEFITS.
(a) Employees. Section 2.20(a) of the Seller Disclosure
Schedule sets forth a complete and accurate list of each individual employed by
PSC, Seller or the LLC whose primary responsibilities relate to the conduct of
the Business (the "EMPLOYEES") and includes the following information for each
Employee: (i) whether the Employee is a Key Employee; (ii) job title; (iii)
current salary grade; (iv) annual target bonus and/or annual target sales
commissions; (v) target long-term incentive payments; (vi) accrued vacation;
(vii) accrued sick days; and (viii) service date or any adjusted service date
reflecting service credit for prior employment. Section 2.20(a) of the Seller
Disclosure Schedule also identifies those Employees who, as of the date hereof,
are on leave of absence, short- or long-term disability leave, or who are
otherwise not actively employed and the date on which each such Employee is
expected to return to active employment. To the knowledge of PSC or Seller, none
of the Employees have been improperly classified as independent contractors,
leased employees or as being exempt from the payment of wages for overtime.
(b) Employment Agreements. Section 2.20(b) of the Seller
Disclosure Schedule sets forth a complete and accurate list of (i) all written
agreements with each Transferred Employee; (ii) all the Transferred Employees
who have executed non-competition agreements with the Business; and (iii) all
written plans, programs, agreements and other arrangements of PSC or Seller with
or relating to the Transferred Employees which contain change in control or
severance provisions or any other provision pursuant to which amounts may become
payable by Buyer or the LLC to any Transferred Employee as a result of or in
connection with the transactions contemplated by this Agreement, including,
without limitation, any termination of employment by Seller in connection
herewith. PSC and Seller have provided
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complete and accurate copies of each of the documents set forth in Section
2.20(b) of the Seller Disclosure Schedule to Buyer.
(c) Compliance with Agreements. To the knowledge of PSC or
Seller, no Transferred Employee is in violation of any term of any employment
agreement, confidentiality or non-disclosure agreement or any other contract,
agreement, commitment or understanding with Seller or relating to the Business.
To the knowledge of PSC or Seller, no Key Employee is obligated under any
contract or agreement, subject to any judgment, decree, or order of any court or
administrative agency, that would materially interfere with such person's
efforts to promote the interests of Buyer or the LLC or that would interfere
with the Business. The execution, delivery and performance of this Agreement and
the other Transaction Documents will not violate, conflict with or accelerate
any benefits under any agreement between Seller and any Transferred Employee. To
the knowledge of PSC or Seller, the conduct of the Business, as currently
conducted, will not violate or conflict with any contract or agreement under
which any Transferred Employee is now bound. To the knowledge of PSC or Seller,
each Employee permitted access to confidential or proprietary information
pertaining to the Business has executed a legally binding agreement obligating
such Employee to hold confidential such proprietary information.
(d) Benefit Plans. Section 2.20(d) of the Seller Disclosure
Schedule contains a complete and accurate list of each (i) "employee pension
benefit plan" as defined in Section 3(2) of ERISA and not exempted under Section
4(b) or 201 of ERISA maintained by PSC or Seller, or to which the LLC is
required to contribute, including any multiemployer pension plan, and (ii) each
"employee welfare benefit plan" as defined in Section 3(1) of ERISA maintained
by PSC or Seller, or to which the LLC contributes or is required to contribute,
including any multiemployer welfare plan, and each other plan under which
"fringe benefits" (including, without limitation, profit-sharing, bonus, stock
option, stock purchase, stock bonus, dependent care assistance, excess benefit,
incentive, salary continuation, and other compensation arrangements, vacation
plans or programs, severance benefits, sick leave plans or programs, dental or
medical plans or programs, and related or similar benefits) are afforded to
employees of, or otherwise required to be provided by, PSC, Seller or the LLC
(all plans, programs and arrangements described in clauses (i) and (ii),
together, the "EMPLOYEE BENEFIT PLANS"). PSC and Seller have provided complete
and accurate copies of each Employee Benefit Plan to Buyer. To the knowledge of
PSC or Seller, there is no liability of the LLC under any insurance policy or
similar arrangement procured in connection with any Employee Benefit Plan in the
nature of a retroactive rate adjustment or loss sharing arrangement and, to the
knowledge of PSC or Seller, there is no event that has occurred or may occur
that reasonably could be anticipated to cause FEI, Buyer, the LLC or any of
their respective Affiliates to incur any liability pursuant to Title IV of ERISA
with respect to any Employee Benefit Plan or other arrangement currently or
previously maintained or contributed to by PSC, Seller, the LLC or any of their
respective Affiliates.
(e) Drug Screening. All Active Transferred Employees required
to be screened in connection with the performance of any Contract or under PSC's
or Seller's drug and alcohol policy have been screened and have successfully
passed the screening test most recently administered in accordance with PSC's or
Seller's drug and alcohol policy. PSC and Seller have provided Buyer with a
complete and accurate copy of their drug and alcohol policy.
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(f) Labor Matters. None of the Transferred Employees is
represented by a union and there is no request for union representation pending,
or to the knowledge of PSC or Seller, threatened with respect to the Transferred
Employees. Neither PSC nor Seller has engaged in any unfair labor practice,
unlawful employment practice or unlawful discriminatory practice in the conduct
of the Business. There are no strikes, lockouts, work stoppages, slowdowns or
jurisdictional disputes occurring, or to the knowledge of PSC or Seller,
threatened with respect to any of the Transferred Employees in connection with
the Business. To the knowledge of PSC or Seller, there are no organizing
activities occurring or threatened with respect to any of the Transferred
Employees in connection with the Business.
2.21 INSURANCE. Section 2.21 of the Seller Disclosure Schedule sets
forth a complete and accurate list of all insurance policies of any nature
whatsoever maintained by, or on behalf of, Seller and the LLC with respect to
the Business Assets and the Business. Seller maintains with responsible
insurance carriers, fire, worker's compensation, property and general liability
insurance appropriate for the Business Assets and the Business. Such policies
are in full force and effect through the date hereof, all premiums with respect
thereto have been paid to the extent due and such policies, or other policies
covering the same risks, have been in full force and effect, without gaps,
continuously since inception. The LLC is an additional named insured under such
policies through the date hereof. Copies of all such policies and binders have
been made available to Buyer for its inspection. There is no default of any kind
under any of such policies and there has been no failure to give any notice or
to present any claim under any such policy in a due and timely fashion. No
notice of cancellation or termination has been received by PSC, Seller or the
LLC with respect to such policies.
2.22 PRODUCT LIABILITIES.
(a) Work Related Liabilities. The LLC has not incurred or
assumed, and to the knowledge of PSC or Seller there is no event or activity
which forms the basis for alleging, any liability, damage, loss, cost or expense
as a result of any defect or other deficiency (whether of design, materials,
workmanship, labeling, instructions or otherwise) (collectively, "WORK RELATED
LIABILITIES") with respect to the services rendered, equipment supplied or
leased, or products sold in connection with the Business, whether any Work
Related Liability is incurred by reason of any express or implied warranty
(including, without limitation, any Warranty Obligation, warranty of
merchantability or fitness, or other warranty), any doctrine of common law
(whether in tort, contract or otherwise), any statutory provision or otherwise
and irrespective of whether any Work Related Liability is covered by insurance.
(b) Warranty Obligations. Section 2.22(b) of the Seller
Disclosure Schedules sets forth a complete and accurate listing of (i) all
warranties, guarantees and warranty policies, whether written or unwritten (the
"WARRANTY OBLIGATIONS"), in respect of any products or services sold in
connection with the Business and the duration of each Warranty Obligation; (ii)
all pending and, to the knowledge of PSC or Seller, threatened disputes or
claims with respect to any Warranty Obligation; and (iii) the experience history
with respect to the Warranty Obligations. There have been no material deviations
from the Warranty Obligations and no employee, salesperson or agent of PSC,
Seller or the LLC is authorized to undertake obligations with respect to any
person in excess of the Warranty Obligations. All products manufactured,
designed, licensed or sold by PSC, Seller and the LLC in connection with the
Business are
15
operational, will conform to published documentation and satisfy any and all
contract or other specifications related thereto to the extent stated in writing
in such contracts or specifications.
2.23 CERTIFICATE, LLC AGREEMENT, MINUTE BOOKS AND RECORDS. Complete and
accurate copies of the certificate of formation, limited liability company
agreement and minute books of the LLC, together with all amendments thereto to
the date hereof, have been furnished to Buyer and its representatives. The
minute books of the LLC contain accurate and complete records of all action
taken by the member and manager of the LLC and no action by the member or
manager has been taken for which minutes have not been prepared and are not
contained in such minute books. As of the date hereof, all of the foregoing
minute books and other corporate records are in the possession of the LLC. In
addition, as of the date hereof, all books, records, files, documents, drawings
or specifications, product and sales literature, manufacturing, technical and
procedural manuals, advertising and promotional materials, studies, reports and
other printed or written materials relating solely to the management and
operation of the Business are in the possession of the LLC.
2.24 RELATED PARTY TRANSACTIONS. None of PSC, Seller or any of their
respective Affiliates is a party to any Contract or any other arrangement with
the LLC (a) providing for the furnishing of services (other than as a manager,
officer or employee) or assets; (b) providing for the rental of property or
assets; (c) requiring the payment of money; or (d) otherwise relating to the
Business. There are no outstanding financial obligations of either PSC, Seller
or any of their respective Affiliates, or any of their respective officers or
employees, to the LLC, and there are no outstanding financial obligations of the
LLC to PSC, Seller or any of their respective Affiliates or any of their
respective officers or employees.
2.25 LENDER CONSENT. PSC and Seller have obtained and received the
written consent and authorization of each of their respective lenders (the
"LENDER CONSENT") with respect to the completion of the transactions
contemplated by this Agreement and the other Transaction Documents, which
consent and authorization are not subject to any qualifications or conditions
which could either (a) impair PSC's or Seller's ability to complete the
transactions contemplated hereby or (b) adversely affect the LLC, the Business
Assets or the Business after the date hereof.
2.26 PREPAID EXPENSES AND DEPOSITS.
(a) Prepaid Expenses. Section 2.26(a) of the Seller Disclosure
Schedule sets forth an accurate allocation of prepaid expenses paid by PSC or
Seller prior to the date hereof solely with respect to the Business Assets. The
prepaid expenses are apportioned pro rata (i) to PSC and Seller for the period
up to and including the date hereof and (ii) to FEI and Buyer for the period
after the date hereof. The aggregate amount of all prepaid expenses apportioned
to FEI and Buyer total $5,773.95 (the "PREPAID EXPENSES").
(b) Deposits. Section 2.26(b) of the Seller Disclosure
Schedule sets forth an accurate list of deposits paid by PSC or Seller and
currently held by landlords, lessors, vendors and customers under the terms of
the Contracts. The aggregate amount of all deposits total $55,359.45 (the
"DEPOSITS").
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2.27 BROKERS. No broker, finder, investment banker, or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement, based upon arrangements
made by or on behalf of PSC, Seller or the LLC.
2.28 FULL DISCLOSURE. None of the representations or warranties
contained in this Article 2, including, without limitation, the Seller
Disclosure Schedule, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make the statements contained
herein or therein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF FEI AND BUYER
FEI and Buyer hereby make the representations and warranties to PSC and
Seller as set forth below.
3.1 ORGANIZATION AND GOOD STANDING. FEI is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of California. Buyer is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Delaware.
3.2 AUTHORIZATION OF AGREEMENT. FEI and Buyer have all requisite
corporate power and authority to enter into this Agreement and to complete the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement and the other Transaction Documents have (except for Transaction
Documents to be executed and delivered solely by PSC or Seller) been duly and
validly authorized by the board of directors of FEI and the managing member of
Buyer and no other actions or proceedings on the part of FEI or Buyer is
necessary to approve this Agreement and to complete the transactions
contemplated hereby. This Agreement and the other Transaction Documents
delivered by FEI and Buyer: (a) have been duly executed and delivered by FEI and
Buyer, and (b) constitute legal, valid and binding obligations of FEI and Buyer,
enforceable in accordance against FEI and Buyer with their respective terms.
3.3 NO CONFLICT OR VIOLATION. The execution, delivery and performance
by FEI and Buyer of this Agreement and the other Transaction Documents executed
and delivered by FEI and Buyer and the completion of the transactions
contemplated hereby and thereby do not and will not: (a) violate or conflict
with any provision of the certificate of incorporation or bylaws of FEI; (b)
violate or conflict with any provision of the certificate of formation, limited
liability agreement or other governing document of Buyer; or (c) violate any
provision or requirement of any federal, state or local law, statute, rule or
regulation or any judgment, order, writ, injunction, decree or award of any
Governmental Entity having jurisdiction over FEI or Buyer, except for violations
that do not affect the ability of FEI or Buyer to complete the transactions
contemplated by this Agreement.
3.4 GOVERNMENTAL CONSENTS. No filing with or notice to, and no permit,
authorization, consent or approval of, any Governmental Entity is necessary for
the execution and delivery by FEI or Buyer of this Agreement and the other
Transaction Documents required to be delivered by FEI or Buyer or the completion
of the transactions contemplated hereby or
17
thereby, except for consents that do not affect the ability of FEI or Buyer to
complete the transactions contemplated by this Agreement.
3.5 LITIGATION. There is no pending or, to the knowledge of FEI or
Buyer, threatened claim, suit, arbitration or other judicial or regulatory
proceeding or investigation of any character by, against or involving FEI, Buyer
or any of their respective Affiliates that affects or relates to the
transactions contemplated by this Agreement or materially and adversely affects
FEI's or Buyer's ability to complete the transactions contemplated by this
Agreement. Neither FEI nor Buyer is subject to any judgment, decree, injunction
or order of any Governmental Entity that affects or relates to the transactions
contemplated by this Agreement or materially and adversely affects FEI's or
Buyer's ability to complete the transactions contemplated by this Agreement.
3.6 SECURITIES MATTERS. The Membership Interests to be purchased by
Buyer will be acquired for investment for Buyer's own account, not with a view
to the distribution of any part thereof, and Buyer has no present intention of
selling, granting any participation in, or otherwise distributing the same.
Buyer does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participations to such person or to any third
person, with respect to any of the Membership Interests. Buyer understands that
the Membership Interests are characterized as "restricted securities" under the
U.S. federal securities laws inasmuch as such securities are being acquired in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may not be resold in the absence of an
effective registration statement covering the Membership Interests or an
exemption from registration under the Securities Act.
3.7 BROKERS. No broker, finder, investment banker, or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement, based upon arrangements
made by or on behalf of Buyer.
ARTICLE 4
CERTAIN COVENANTS
4.1 CONFIDENTIAL INFORMATION. Except as expressly permitted by the
terms of this Agreement, from and after the date hereof, PSC and Seller shall
not disclose to any person nor make use of, and each shall cause their
respective Affiliates, stockholders, members, directors, officers, employees and
agents to not disclose to any person or make use of, any Confidential
Information, without the prior written consent of Buyer.
4.2 SOLICITATION AND HIRING OF EMPLOYEES.
(a) PSC's and Seller's Nonsolicit. For a period of four (4)
years after the date hereof, neither PSC, Seller nor their respective Affiliates
will, either directly or indirectly as a stockholder, investor, member, partner,
director, officer, employee or otherwise, (i) solicit or attempt to induce any
employee to terminate employment with the LLC, Buyer, FEI or any of their
respective Affiliates, or (ii) hire or attempt to hire any employee of the LLC,
Buyer or any of their respective Affiliates; provided, however, that this
provision will not prevent PSC, Seller or any of their respective Affiliates
from employing any employee who responds to a general advertisement for
employment on his or her own initiative without any direct or indirect
18
solicitation by or encouragement from PSC, Seller or their respective
Affiliates, except that in no event may PSC, Seller or their Affiliates hire the
Transferred Employees identified on Schedule 4.2(a).
(b) Buyer's Nonsolicit. For a period of four (4) years after
the date hereof, neither Buyer nor any of its Affiliates will, either directly
or indirectly as a stockholder, investor, member, partner, director, officer,
employee or otherwise, (i) solicit or attempt to induce any employee to
terminate employment with Seller or any of its Affiliates, or (ii) hire or
attempt to hire any employee of Seller or any of its Affiliates; provided,
however, that this provision will not prevent Buyer or any of its Affiliates
from employing any employee who responds to a general advertisement for
employment on his or her own initiative without any direct or indirect
solicitation by or encouragement from Buyer or its Affiliates, except that in no
event may FEI, Buyer or their Affiliates hire the PSC or Seller employees
identified on Schedule 4.2(b).
4.3 NONCOMPETITION AND REFERRAL OF CUSTOMERS.
(a) Noncompete. For a period of four (4) years after the date
hereof, neither PSC, Seller nor any of their respective Affiliates will, either
directly or indirectly as a stockholder, investor, partner, director, officer,
employee, consultant or otherwise, (i) design, develop, manufacture, market,
sell, perform or offer anywhere in the world any material, product, component or
service which is competitive with any material, product, component or service
developed (or under development), manufactured, marketed, sold or offered by the
Business on or prior to the date hereof, or (ii) engage anywhere in the world in
any business competitive with the Business, as conducted on the date of this
Agreement or during the two (2) years prior to the date hereof; provided,
however, that PSC, Seller and their respective Affiliates may (x) own securities
in companies whose securities are publicly traded, so long as the securities
constitute less than five percent (5%) of the total outstanding voting
securities of such publicly-traded company, and (y) continue to actively pursue
the activities engaged in by (A) the Union Business, as the Union Business
exists as of the date hereof, solely with respect to the union/closed-shop
market (including hiring employees and pursuing new technologies and customers
in such union/closed-shop market), (B) the Demolition Business, as the
Demolition Business exists as of the date hereof (including hiring employees and
pursuing new technologies and customers), and (C) the Industrial Cleaning and
Maintenance Business (including hiring employees and pursuing new technologies
and customers), except with respect to any services provided by the Business, as
currently conducted.
(b) Referral. Except for the limited activities permitted
under the proviso to Section 4.3(a), PSC and Seller shall, and each shall cause
their respective Affiliates, stockholders, directors, officers, employees and
agents to, refer all inquiries regarding the Business to the LLC, FEI and Buyer
and neither PSC nor Seller (nor any of their respective Affiliates) will
independently pursue any such inquiries. PSC and Seller shall notify their
respective Affiliates in writing promptly after the date hereof that the
Business has been sold to FEI and Buyer, and such notice will inform such
Affiliates of their obligations under this Section 4.3(b). Such notice must be
in such form and substance reasonably satisfactory to FEI and Buyer.
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4.4 REASONABLENESS OF COVENANTS. Each of PSC and Seller acknowledges
that the duration and geographic scope of the nonsolicit provisions set forth in
Section 4.2 and the noncompetition provisions set forth in Section 4.3 are
reasonable in all respects. Each of PSC and Seller recognizes and acknowledges
that FEI and Buyer are paying significant consideration to acquire the
Membership Interests and the Seller Contracts and that FEI and Buyer would not
be doing so but for the covenant not to solicit employees and the covenant not
to compete contained herein. Each of PSC and Seller further recognizes and
acknowledges that each of them is deriving significant and tangible benefits
from Buyer's execution and delivery of this Agreement and that such covenants
are necessary to protect and maintain the business interests of the LLC, FEI and
Buyer. In the event that any court determines that the duration or the
geographic scope, or both, are unreasonable and that any provision under either
Section 4.2 or 4.3 is to that extent unenforceable, the provision shall remain
in full force and effect for the greatest time period and in the greatest area
that would not render it unenforceable. The parties hereto intend that the
nonsolicit provisions set forth in Section 4.2 and the noncompetition provisions
set forth in Section 4.3 will be deemed to be a series of separate covenants,
one for each and every county of each and every state or province of each and
every country.
4.5 SHARING OF DATA.
(a) Provision of Access by PSC and Seller. For a period of
four (4) years after the date hereof, PSC and Seller shall provide FEI and Buyer
with reasonable access to (a) those books, records and accounts, including
financial and Tax information, correspondence, production records, employment
records and other records that are retained by PSC and Seller, and (b) the work
papers of PSC's and Seller's respective accountants and auditors, in each case
to the extent that any of the foregoing is needed by FEI or Buyer for the
purposes of conducting a complete audit of the financial records of the LLC and
complying with their respective obligations under applicable securities, Tax,
environmental, employment or other laws and regulations or to the extent that
there is a commercially reasonable need in connection with the conduct of the
Business (collectively, the "RETAINED RECORDS"). For a period of four (4) years
after the date hereof, neither PSC nor Seller shall destroy any Retained
Records. Notwithstanding the foregoing, and consistent with Section 4.7(b), PSC
and Seller shall retain all Tax Returns, schedules and work papers, and all
records and other documents relating thereto, until the expiration of the
applicable statute of limitations, including, without limitation, any extension
thereof.
(b) Provision of Access by FEI and Buyer. For a period of four
(4) years after the date hereof, FEI, Buyer and the LLC shall provide PSC and
Seller with reasonable access to those books and records in the possession of
FEI, Buyer and the LLC relating to the businesses of PSC or Seller, as conducted
on or prior to the date hereof, to the limited extent for which there is a
commercially reasonable need in connection with the conduct of the businesses of
PSC and Seller.
4.6 COOPERATION IN LITIGATION. From and after the date hereof and from
time to time as may be reasonably requested, each party shall fully cooperate
with the other in the defense or prosecution of any litigation or proceeding
already instituted or which may be instituted hereafter against or by such other
party relating to or arising out of the conduct of the Business prior to or
after the date hereof (other than litigation among the parties hereto or their
respective Affiliates arising out of the transactions contemplated by this
Agreement or the other Transaction
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Documents). The party requesting such cooperation shall pay the reasonable
out-of-pocket expenses incurred in providing such cooperation (including legal
fees and disbursements) by the party providing such cooperation and by its
directors, officers, employees and agents, but shall not be responsible for
reimbursing such party or its directors, officers, employees and agents for
their time spent in such cooperation, unless such time exceeds five (5) business
days in any one calendar year for any such party.
4.7 CERTAIN TAX MATTERS.
(a) Tax Returns.
(i) PSC and Seller shall include the income
attributable to the LLC, the Business Assets and the Business on PSC's and
Seller's consolidated U.S. federal income Tax Return (and similar state, local
or foreign Tax Return) for all periods through and including the date hereof and
pay any income Taxes attributable to such income. Buyer shall furnish Tax
information to PSC and Seller for inclusion in PSC's and Seller's U.S. federal
consolidated income Tax Return (and similar state, local or foreign Tax Return)
for the period which includes the date hereof in accordance with the past income
Tax practices of Seller and the LLC. Seller shall make all payments required
with respect to any such Tax Return; provided, however, that Buyer shall
reimburse Seller concurrently therewith to the extent any payment Seller is
making relates to the operation of the LLC, the Business Assets or the Business
for any period ending after the date hereof.
(ii) Buyer shall include the income attributable to
the LLC, the Business Assets and the Business on Buyer's consolidated U.S.
federal income Tax Return (and similar state, local or foreign Tax Return) for
all periods after the date hereof and pay any income Taxes attributable to such
income. PSC and Seller shall furnish Tax information to Buyer with respect to
the LLC, the Business Assets, the Business and the operations, ownership and
activities thereof for all periods through and including the date hereof to the
extent such information is relevant to any Tax Return which Buyer has the right
and obligation hereunder to file. Buyer shall make all payments required with
respect to any such Tax Return; provided, however, that Seller shall reimburse
Buyer concurrently therewith to the extent any payment Buyer is making relates
to the operation of the LLC, the Business Assets or the Business for any period
ending on or before the date hereof.
(iii) The income attributable to the LLC, the
Business Assets and the Business shall be apportioned to the period up to and
including the date hereof (the "PRE-CLOSING SHORT YEAR") and the period after
the date hereof (the "POST-CLOSING SHORT YEAR") by closing the books of the LLC
as of the end of the date hereof. For purposes of this Section 4.7, in the case
of any Taxes that are imposed on a periodic basis and are payable for a taxable
period that includes (but does not end on) the date hereof, the portion of such
Tax which relates to the portion of such taxable period ending on the date
hereof shall (A) in the case of Taxes that are not based on income or gross
receipts (e.g., property Taxes), be deemed to be the total amount of such Taxes
for the period in question multiplied by a fraction, the numerator of which is
the number of days in the taxable period ending on the date hereof, and the
denominator of which is the total number of days in the entire taxable period in
question, and (B) in the case of Taxes that are based on income or gross
receipts, be deemed to be the Taxes that would be due if the relevant taxable
period ended on the date hereof.
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(b) Cooperation. PSC and Seller, on the one hand, and Buyer,
on the other hand, shall, with respect to any Tax Return which such party is
responsible for preparing and filing, make such Tax Return and related work
papers available for meaningful review, comment and reasonable modification by
the other party, if the Tax Return (i) is with respect to Taxes for which the
other party or one if its Affiliates may be liable, or (ii) claims Tax benefits
which the other party or one of its Affiliates is entitled to receive. PSC,
Seller and Buyer shall cooperate fully, and to the extent reasonably requested
by the other party, in connection with the filing of all Tax Returns pursuant to
this Agreement and any audit, litigation, or other proceeding related to such
Tax Returns. Such cooperation shall include the retention and provision of
records and information relevant to any such Tax filing, audit, litigation or
other matter and making employees available on a reasonable basis. With respect
to the retention of records, PSC and Seller shall retain all Tax Returns,
schedules and work papers, and all records and other documents relating thereto,
until the expiration of the applicable statute of limitations (including, any
extension thereof).
(c) Tax Controversies and Audits.
(i) In the event any Tax authority informs PSC or
Seller, on the one hand, or Buyer, on the other hand, of any notice of proposed
audit, claim, assessment or other dispute concerning an amount of Taxes with
respect to which the other party may incur liability hereunder, the party so
informed shall promptly notify the other party of such matter. Such notice shall
contain factual information (to the extent known) describing any asserted Tax
liability in reasonable detail and shall be accompanied by copies of any notice
or other documents received from any Tax authority with respect to such matter.
(ii) PSC and Seller shall control all audits and
contests relating to any Taxes attributable to the LLC, the Business Assets or
the Business for all Tax periods ending on or prior to the date hereof. FEI and
Buyer shall control all audits and contests relating to any Taxes attributable
to the LLC, the Business Assets or the Business that arise following the date
hereof, including Taxes related to the Post-Closing Short Year. Subject to the
foregoing, in the event an adverse determination could result in a party having
liability for Taxes, such party shall be entitled to participate in that portion
of the proceedings relating to the Taxes with respect to which it may incur
liability hereunder, including, (A) participation in conferences, meetings or
proceedings with any taxing authority, (B) participation in appearances before
any Governmental Entity, and (iii) with respect to the matters described in the
preceding clauses (i) and (ii), participation in the submission and
determination of the content of the documentation, protests, memoranda of fact
and law, briefs, and the conduct of oral arguments and presentations.
(iii) Without the prior written consent of FEI and
Buyer, neither PSC nor Seller may settle or agree to any settlement of any Tax
liability relating to a Tax period ending on or prior to the date hereof if such
settlement or agreement would have an adverse impact on FEI's or Buyer's Tax
liability for any Tax period ending after the date hereof. Without the prior
written consent of PSC or Seller, neither FEI nor Buyer may settle or agree to
any settlement of any Tax liability relating to a Tax period ending after the
date hereof if such settlement or agreement would have an adverse impact on
PSC's or Seller's Tax liability for any Tax period ending on or prior to the
date hereof.
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(d) Tax Sharing Agreements. Any Tax sharing agreement between
PSC, Seller or any of their Affiliates, on the one hand, and the LLC, on the
other hand, shall terminate as of the date hereof and will have no further
effect for any taxable year (whether the current year, a future year, or a past
year).
(e) Transfer Taxes. All stamp, documentary, recording,
transfer and sales and use Taxes incurred in connection with this Agreement and
the transactions contemplated hereby shall be borne equally by Buyer and Seller.
Seller shall file, to the extent required by applicable law, all necessary Tax
Returns and other documentation with respect to all such transfer or sales and
use Taxes. The expense of such filing shall be borne equally by Buyer and
Seller.
4.8 EMPLOYEE MATTERS.
(a) Transferred Employees. Concurrently herewith, Seller shall
obtain the voluntary resignation or terminate the employment of, and Buyer shall
offer employment to, each active Employee identified on Schedule 4.8(a)(1)
hereto (the "ACTIVE TRANSFERRED EMPLOYEES"), all of whom are active Employees of
Seller as of the date hereof. Buyer or its designee may elect to offer
employment to, and at the request of Buyer or its designee contemporaneously
therewith Seller shall terminate the employment of, each Employee identified on
Schedule 4.8(a)(2) hereto who is absent due to illness, injury, military
service, family medical leave, short-term disability leave, workers'
compensation leave or any other leave of absence of twelve (12) months or less
(the "INACTIVE TRANSFERRED EMPLOYEES" and, together with the Active Transferred
Employees, the "TRANSFERRED EMPLOYEES"), at the end of the leave period for any
such Inactive Transferred Employee. Each Transferred Employee who accepts
employment with Buyer or its designee shall be considered to be employed "at
will" and nothing shall be construed to limit the ability of Buyer or its
designee to terminate any Transferred Employee at any time for any reason. Buyer
and its designee may change the terms and conditions of the Transferred
Employees' employment, including, without limitation, the levels of compensation
in effect after their respective dates of hire.
(b) WARN Act. FEI and Buyer shall be entirely and solely
responsible for all liabilities arising after the date hereof under the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN ACT") with respect to
Transferred Employees, including providing and discharging any and all
notifications and benefits to Transferred Employees and government agencies
required by the WARN Act or any other applicable law including any such
requirements that may be imposed as a result of the transactions contemplated by
this Agreement. PSC and Seller shall be entirely responsible for all liabilities
under the WARN Act with respect to any Employee who is not a Transferred
Employee.
(c) COBRA. FEI and Buyer shall be responsible for all health
continuation coverage for the Transferred Employees and qualified beneficiaries
of the Transferred Employees including such coverage under any health care plan
sponsored by PSC or Seller for the Transferred Employees and their qualified
beneficiaries with respect to the health care continuation coverage requirements
under Sections 601 through 609 of ERISA and Section 4980B of the Code ("COBRA"),
with respect to any "qualifying event" that occurs after
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the date hereof for each Active Transferred Employee and after the respective
dates of hire for each Inactive Transferred Employee. FEI and Buyer shall have
no responsibility under COBRA with respect to any other Employee who is not a
Transferred Employee.
(d) Severance. On and after the date hereof, (i) FEI and Buyer
shall be responsible for providing any severance pay benefits under any
severance plans or programs sponsored by FEI or Buyer; and (ii) PSC or Seller
shall be responsible for any severance pay benefits under any plans or programs
sponsored by, and any termination fees under any employment agreement with, PSC
or Seller that may become payable for any reason, including, without limitation,
as a result of the transactions contemplated by this Agreement.
(e) Transferred Employee Benefits. Effective as of the date
hereof for each Active Transferred Employee and after the date of hire with
respect to each Inactive Transferred Employee, FEI or Buyer shall provide each
Transferred Employee with group medical benefits substantially equal to or
better than, both as to conditions covered and amounts of coverage, as provided
by PSC or Seller to such Transferred Employee immediately prior to the date
hereof. FEI or Buyer may provide such benefits either through a group medical
plan newly established by it as of the date hereof or a group medical plan
maintained by FEI or Buyer for its employees or affiliates as of the date
hereof; provided, however, that FEI and Buyer shall cause to be waived any
preexisting condition restrictions under any FEI or Buyer medical plan with
respect to the Transferred Employees.
(f) Eligibility. Each Transferred Employee shall be entitled
to credit for prior service with PSC and Seller for purposes of eligibility to
participate and vesting (but not for purposes of benefit accrual) under the
employee benefit plans and programs sponsored by Buyer on behalf of its
employees and affiliates that are a similar type of plan in which the
Transferred Employees participated in immediately prior to the date hereof.
(g) Other Employee Payments. PSC and Seller shall be
responsible for all other obligations that Seller may owe to any Transferred
Employee as a result of such Transferred Employee's employment with Seller,
including, without limitation, all salary, bonuses, benefits and related Taxes
through the date of such Transferred Employee's termination of employment with
Seller.
(h) No Rights. No provision of this Section 4.8 shall create
any third party beneficiary or other rights of any Employee or Transferred
Employee (including beneficiary or dependent thereof) with respect to continued
employment or resumed employment with PSC, Seller, FEI or Buyer and no provision
shall create any such rights in any Employee or Transferred Employee (including
any beneficiary or dependent thereof) with respect to any benefits that may be
provided directly or indirectly in any employee benefit plan, program or
arrangement established by FEI, Buyer, PSC, the LLC or Seller.
4.9 RIGHT OF FIRST REFUSAL RE UNION BUSINESS.
(a) Rights on Transfer. In the event PSC, Seller or any of
their Affiliates proposes to transfer, sell, assign, pledge or otherwise dispose
of any portion of the Union Business (whether directly or indirectly or whether
as a sale of assets, capital stock or otherwise,
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a "TRANSFER") to any non-Affiliate of Seller, pursuant to a transaction or a
series of transactions commenced prior to the fourth (4th) anniversary of the
date hereof, then FEI, Buyer or their designated Affiliate will have the
exclusive right (but not the obligation) to purchase all of the Union Business
subject to Transfer.
(b) Delivery of Transfer Notice. If at any time that PSC,
Seller or any of their Affiliates proposes to effect a Transfer, pursuant to a
transaction or a series of transactions commenced prior to the fourth (4th)
anniversary of the date hereof, then the transferring party shall give prompt
written notice (the "TRANSFER NOTICE") to FEI and Buyer of such proposed
Transfer. The Transfer Notice shall specify all the material terms and
conditions of the proposed Transfer (the "TRANSFER TERMS"), including, without
limitation, (i) the name of the proposed transferee; (ii) the assets of the
Union Business involved; (iii) the total purchase price or consideration (the
"TRANSFER CONSIDERATION") to be received by PSC, Seller or such Affiliate in
connection with such Transfer; and (iv) the terms of any deferred payment for
the Union Business. The Transfer Notice shall also grant FEI, Buyer and their
designated Affiliate with full access to all due diligence matters to which the
proposed transferee was provided access. The Transfer Notice must further state
that FEI, Buyer or their designated Affiliate may acquire the Union Business
subject to Transfer for the Transfer Consideration and under terms substantially
equivalent to the other Transfer Terms specified in the Transfer Notice.
(c) Right of FEI and Buyer. FEI, Buyer or their designated
Affiliate will have twenty-one (21) days after the receipt by FEI and Buyer of a
Transfer Notice (the "FEI EXERCISE PERIOD") during which to exercise its right
to purchase all of the Union Business subject to Transfer for the Transfer
Consideration and under terms substantially equivalent to the other Transfer
Terms specified in the Transfer Notice. FEI, Buyer or their designated Affiliate
may only exercise its right by giving written notice to PSC within the FEI
Exercise Period. The failure by FEI, Buyer or their designated Affiliate to give
written notice of exercise within the FEI Exercise Period will be deemed an
election by FEI, Buyer and their designated Affiliate not to purchase all of the
Union Business subject to Transfer. If FEI, Buyer or their designated Affiliate
exercise their right to purchase the Union Business subject to Transfer, then
the parties shall use their commercially reasonable efforts to complete the
purchase and sale of such Union Business within one hundred twenty (120) days
after the exercise of such right.
(d) Election Not to Purchase. If FEI, Buyer or their
designated Affiliate elect not to purchase the Union Business subject to
Transfer, then PSC, Seller and their Affiliate may Transfer such portion of the
Union Business at any time within one hundred twenty (120) days after the
expiration of the FEI Exercise Period; provided, however, that such Transfer
must be for at least ninety-eight percent (98%) of the Transfer Consideration
and under terms substantially equivalent to the other Transfer Terms specified
in the Transfer Notice.
(e) No Written Notice of Transfer. If PSC, Seller or any of
their Affiliates purport to make a Transfer, pursuant a transaction or a series
of transactions commenced prior to the fourth (4th) anniversary of the date
hereof, without providing a Transfer Notice, then any such purported Transfer
will remain subject to the rights of FEI, Buyer and their designated Affiliate
under this Section 4.9.
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ARTICLE 5
INDEMNIFICATION
5.1 INDEMNIFICATION BY PSC AND SELLER. Subject to the limits set forth
in this Article 5, PSC and Seller, and their respective successors and assigns,
shall jointly and severally indemnify, defend, reimburse and hold harmless the
Buyer Indemnitees, from and against any and all claims, losses, damages,
liabilities, obligations, assessments, Taxes, penalties and interest, demands,
actions and expenses (including, without limitation, settlement costs and any
legal, accounting and other expenses for investigating or defending any actions)
("LOSSES") reasonably incurred by any Buyer Indemnitee, arising out of either:
(a) the breach of any representation or warranty made by PSC
or Seller contained in this Agreement or any other Transaction Document;
(b) the breach of any covenant, agreement or obligation of PSC
or Seller contained in this Agreement or any other Transaction Document;
(c) the payment of any and all Taxes (including any penalties
or interest) that are imposed on FEI, Buyer, the LLC, the Business Assets or the
Business in respect of any income, property, business or operations for any
taxable period ending on or prior to the date hereof and for any Pre-Closing
Short Year (whether or not such Tax obligation is disclosed in the Seller
Disclosure Schedule);
(d) any violation of any Environmental Law or any release or
disposal of Hazardous Materials that occurred on or prior to the date hereof in
connection with the Business (whether or not such violation, release or disposal
is disclosed in the Seller Disclosure Schedule);
(e) the payment of any severance pay benefits under any plans
or programs sponsored by, or any termination fees under any employment agreement
with, PSC or Seller that may become payable for any reason, including, without
limitation, as a result of the transactions contemplated by this Agreement;
(f) any other claim, suit, action, arbitration, proceeding,
investigation or other similar matter relating to the ownership and operation of
the Business and resulting from events occurring on or prior to the date hereof
(whether or not such claim, suit, action, arbitration, proceeding, investigation
or other similar matter is disclosed in the Seller Disclosure Schedule);
(g) the existence of any mortgages, financial liens, pledges,
loans, financial claims or financial encumbrances of any kind with respect to
any of the Business Assets; or
(h) any avoidance, preference or other proceeding or action
relating to a bankruptcy, reorganization, fraudulent conveyance or receivership
proceeding (including, without limitation, an assignment for the benefit of
creditors) involving PSC or Seller, whether voluntary or involuntary, occurring
on or prior to the fourth (4th) anniversary of the date hereof.
5.2 INDEMNIFICATION BY FEI AND BUYER. Subject to the limits set forth
in this Article 5, FEI and Buyer, and their respective successors and assigns,
shall indemnify, defend, reimburse and hold harmless the Seller Indemnitees,
from and against any and all Losses reasonably incurred by any Seller
Indemnitee, arising out of either:
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(a) the breach of any representation or warranty made by FEI
or Buyer contained in this Agreement or any other Transaction Document;
(b) the breach of any covenant, agreement or obligation of FEI
or Buyer contained in this Agreement or any other Transaction Document;
(c) the payment of any and all Taxes (including any penalties
or interest) that are imposed on the LLC, the Business Assets or the Business in
respect of any income, property, business or operations for any taxable period
ending after the date hereof and for any Post-Closing Short Year;
(d) any violation of any Environmental Law or any release or
disposal of Hazardous Materials that occurs after the date hereof in connection
with the Business (except that neither FEI nor Buyer shall be obligated to
indemnify any Seller Indemnitee for any migration, seepage, leaching or other
movement of any Hazardous Materials that exist on or prior to the date hereof,
whether through the air, soil, ground water, surface water or any other media);
(e) FEI's or Buyer's use of the human resources information
transferred by Seller to Buyer under employment applications,
self-identification forms, PAN forms, employee benefit plan forms, emergency
forms and Forms I-9; or
(f) any other claim, suit, action, arbitration, proceeding,
investigation or other similar matter relating to the ownership and operation of
the Business and resulting from events after the date hereof.
5.3 INDEMNIFICATION PROCEDURE.
(a) Notice of Claim. Whenever any claim (a "CLAIM") shall
arise for indemnification under this Article 5, the Indemnitee shall promptly
give written notice to the Indemnitor and each other party hereunder with
respect to the Claim, which notice shall include the facts constituting the
basis for the Claim. Notwithstanding the foregoing, the failure to timely give
such notice shall not relieve the Indemnitor from any obligation under this
Agreement, except to the extent, if any, that the Indemnitor is materially
prejudiced thereby. In the event of any Claim resulting from or in connection
with any claim or legal proceedings by a third party, the notice to the
Indemnitor shall specify, if known, the amount or an estimate of the amount of
liability arising therefrom. The Indemnitee shall not settle or compromise any
claim by any third party for which it is entitled to indemnification hereunder,
without the prior written consent of the Indemnitor (which consent will not be
unreasonably withheld or delayed) unless suit shall have been instituted against
it and the Indemnitor shall not have taken control of such suit after
notification thereof as provided in Section 5.3(c) hereof.
(b) Obligations of Indemnitor. Upon receipt of written notice
from the Indemnitee of a Claim, the Indemnitor shall provide counsel (such
counsel subject to the reasonable approval of the Indemnitee) to defend the
Indemnitee against the matter from which the Claim arose, at the Indemnitor's
sole cost, risk and expense. The Indemnitee shall cooperate
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in all reasonable respects with the Indemnitor in the investigation, trial,
defense and any appeal arising from the matter from which the Claim arose. The
Indemnitee shall be entitled to participate in (but not control) the defense of
any such action, with counsel at its own expense. The Indemnitor shall have the
right to elect to settle any claim for monetary damages without the Indemnitee's
consent only if the settlement includes a complete release of the Indemnitee. If
the settlement does not include such a release, it will be subject to the
consent of the Indemnitee, which will not be unreasonably withheld; provided,
however, if the Indemnitee fails to give such consent within twenty (20) days of
being requested to do so, the Indemnitee shall, at its expense, assume the
defense of such Claim and regardless of the outcome of such matter, the
Indemnitor's liability hereunder shall be limited to the amount of the proposed
settlement. The Indemnitor may not admit any liability of the Indemnitee or
waive any of the Indemnitee's rights without the Indemnitee's prior written
consent, which will not be unreasonably withheld. If the subject of any Claim
results in a judgment or settlement, the Indemnitor shall promptly pay such
judgment or settlement.
(c) Assumption of Defense. If the Indemnitor (i) fails to
assume the defense of the subject of any Claim in accordance with the terms of
Section 5.3(b), (ii) fails diligently to prosecute such defense, or (iii) has,
in the Indemnitee's reasonable good faith judgment, a conflict of interest, the
Indemnitee may defend against the subject of the Claim, at the Indemnitor's sole
cost, risk and expense, in such manner and on such terms as the Indemnitee deems
appropriate, including, without limitation, settling the subject of the Claim;
provided, however, that any dispute between the Indemnitor and any Indemnitee
with respect to the foregoing clauses (ii) or (iii) shall be first resolved
pursuant to Section 6.8 before the Indemnitee may assume any defense hereunder;
and provided, further, that any compromise or settlement shall be subject to the
Indemnitor's consent, which consent will not be unreasonably withheld. If the
Indemnitee defends the subject of a Claim in accordance with this Section
5.3(c), the Indemnitor shall cooperate with the Indemnitee and its counsel in
all reasonable respects and shall deliver to the Indemnitee or its counsel
copies of all pleadings and other information within the Indemnitor's knowledge
or possession reasonably requested by the Indemnitee or its counsel that are
relevant to the defense of the subject of any such Claim and that will not
prejudice the Indemnitor's position, claims or defenses. The Indemnitee shall
maintain confidentiality with respect to all such information consistent with
the conduct of a defense hereunder.
5.4 PAYMENT. All payments owing under any Claim will be made promptly
as indemnifiable Losses are incurred. If the Indemnitee defends the subject
matter of any Claim in accordance with Section 5.3(c), the expenses (including
reasonable attorneys' fees and costs) incurred by the Indemnitee shall be paid
by the Indemnitor in advance of the final disposition of such matter as incurred
by the Indemnitee; provided that the Indemnitee undertakes in writing to repay
any such advances in the event that it is ultimately determined that the
Indemnitee is not entitled to indemnification under the terms of this Agreement
or applicable law.
5.5 LIMITATIONS.
(a) PSC's and Seller's Threshold. Neither PSC nor Seller shall
have any obligation to indemnify any Buyer Indemnitee for Losses under this
Agreement or any other Transaction Document unless the Buyer Indemnitees have
suffered Losses in an aggregate amount attributable to all Claims in excess of
Two Hundred Fifty Thousand Dollars ($250,000)
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(the "THRESHOLD"); provided, however, that the Threshold will not apply to (i)
any breach by PSC or Seller with respect to either of their respective
obligations under Article I hereof; (ii) any breach by PSC or Seller of its
representations and warranties under Section 2.5 hereof; and (iii) any matter
arising under Section 5.1(b), (g) or (h). Once the aggregate amount of all
Losses incurred by the Buyer Indemnitees exceeds the Threshold, the Buyer
Indemnitees shall be entitled to recover the full amount of all Losses in excess
of the Threshold.
(b) PSC's and Seller's Limit. The maximum aggregate liability
of each of PSC and Seller to the Buyer Indemnitees for all claims arising under
this Agreement and the other Transaction Documents will equal Twelve Million
Dollars ($12,000,000); provided, however, that the maximum aggregate liability
of each of PSC and Seller will be unlimited for (i) any breach by PSC or Seller
of its representations and warranties under Section 2.5 hereof; and (ii) any
matter arising under Section 5.1(g) or (h) hereof.
(c) FEI's and Buyer's Threshold. Neither FEI nor Buyer shall
have any obligation to indemnify any Seller Indemnitee for Losses under this
Agreement or any other Transaction Document unless the Seller Indemnitees have
suffered Losses in an aggregate amount attributable to all Claims in excess of
the Threshold; provided, however, that the Threshold will not apply to (i) any
breach by FEI or Buyer with respect to either of their respective obligations
under Article I hereof, and (ii) any matter arising under Section 5.2(b). Once
the aggregate amount of all Losses incurred by the Seller Indemnitees exceeds
the Threshold, the Seller Indemnitees shall be entitled to recover the full
amount of all Losses in excess of the Threshold.
(d) FEI's and Buyer's Limit. The maximum aggregate liability
of FEI and Buyer to the Seller Indemnitees for all claims arising under this
Agreement and the other Transaction Documents will equal Twelve Million Dollars
($12,000,000).
(e) Limit for Covered Amounts. No Indemnitee shall be entitled
to indemnification under this Article 5 for Losses either covered by insurance
proceeds from insurance owned and paid for by an Indemnitor or otherwise
reimbursed by any third party, solely to the extent that the Indemnitee has
actually received the insurance proceeds or reimbursed amounts to fully cover
such Losses.
5.6 HOLDBACK AS SECURITY AND BUYER'S SECURITY INTEREST.
(a) Retention of Holdback. As security for PSC's and Seller's
indemnification obligations under this Article 5, but without limitation of
their respective obligations hereunder, an amount equal to Four Million Dollars
($4,000,000) (together with any applicable interest paid thereon, the "HOLDBACK
AMOUNT") shall be withheld from the Purchase Price otherwise payable by Buyer to
Seller. Buyer shall hold the Holdback Amount in a segregated account (the
"HOLDBACK ACCOUNT"). In furtherance of the foregoing, Seller shall execute and
deliver to Buyer the Security Agreement which shall grant to Buyer a security
interest in the Holdback Amount for the purpose of securing PSC's and Seller's
obligations under this Agreement.
(b) Release of Holdback.
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(i) Buyer shall pay to Seller, as promptly as
practicable after the first (1st) anniversary of the date hereof (the "FIRST
HOLDBACK EXPIRY") (but in no event later than five (5) days thereafter), any
positive amount equal to (A) Two Million Dollars ($2,000,000), less (B) the
aggregate amount of (1) all resolved but unpaid Claims owing to the Buyer
Indemnitees existing on the First Holdback Expiry, together with (2) all pending
Claims made by the Buyer Indemnitees prior to the First Holdback Expiry in
accordance with this Article 5.
(ii) Buyer shall pay to Seller, as promptly as
practicable after the second (2nd) anniversary of the date hereof (the "SECOND
HOLDBACK EXPIRY") (but in no event later than five (5) days thereafter), any
positive amount equal to (A) any Holdback Amount (together with any interest
thereon) remaining in the Holdback Account on the Second Holdback Expiry, less
(B) the aggregate amount of (1) all resolved but unpaid Claims owing to the
Buyer Indemnitees existing on the Second Holdback Expiry, together with (2) all
pending Claims made by the Buyer Indemnitees at least six (6) weeks prior to the
Second Holdback Expiry in accordance with this Article 5. Any remaining Holdback
Amount (together with any interest thereon) that is not released on the Second
Holdback Expiry shall, as each unresolved Claim is resolved, be released to
Seller or paid to any Buyer Indemnitee to satisfy such Claim, in such amounts as
are appropriate to reflect the resolution of such Claim. The release of any
remaining Holdback Amount (together with interest thereon) from the Holdback
Account in accordance with this Section 5.6(b) shall be by wire transfer of
immediately available funds, in accordance with Seller's duly authorized payment
instructions.
(c) No Limitation of Liability. Nothing in this Section 5.6
will be construed as limiting the liability of PSC or Seller under this
Agreement or any other Transaction Document, nor will the Holdback Amount be
deemed to constitute liquidated damages for any breach under this Agreement or
any other Transaction Document.
5.7 SURVIVAL. All representations, warranties, covenants and
obligations set forth in this Agreement or any other Transaction Document will
survive the completion of the transactions contemplated hereby or thereby. All
such representations and warranties will only expire on the third (3rd)
anniversary of the date hereof, except that the representations and warranties
under (a) Sections 2.19 will survive until the seventh (7th) anniversary of the
date hereof, and (b) Sections 2.3(h) and 2.18 will survive until the tenth
(10th) anniversary of the date hereof. All such covenants and obligations will
survive for the applicable period specified in this Agreement or the applicable
Transaction Document or, if no period is specified, without limitation, except
that the covenants and obligations under (a) Sections 5.1(f) and 5.2(f) will
survive until the third (3rd) anniversary of the date hereof, (b) Sections
5.1(d) and 5.2(d) will survive until the seventh (7th) anniversary of the date
hereof, and (c) Sections 5.1(c) and 5.2(c) will survive until the tenth (10th)
anniversary of the date hereof. No party will be liable to another under any
representation or warranty after the applicable expiration of such warranty or
representation; provided, however, that if a Claim is properly made under this
Article 5 with respect to any representation or warranty prior to the applicable
expiration date, such Claim may be pursued to resolution notwithstanding
expiration of the representation or warranty under which the claim was brought.
No party will be liable to another under any covenant or obligation after the
applicable expiration of such covenant or obligation, if any.
5.8 EXCLUSIVITY OF INDEMNIFICATION AND AVAILABILITY OF SPECIFIC
PERFORMANCE. Except for any other remedy available under the Security Agreement,
the indemnification provisions of this
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Article 5 are intended to provide the exclusive remedy as to all Losses that any
party hereto may incur arising from or relating to the transactions contemplated
by this Agreement or such other Transaction Document; provided, however, that
nothing in this Section 5.8 or this Agreement shall limit or restrict any
party's recourse or remedies in any case involving fraud or willful misconduct;
and provided, further, that the parties hereto acknowledge that money damages
may not be a sufficient remedy for any breach of a covenant under this Agreement
or any other Transaction Document and that, in addition to the indemnification
provisions of this Article 5, the parties hereto will be entitled to specific
performance and injunctive or other equitable relief as a remedy for any breach
of a covenant.
5.9 TREATMENT OF INDEMNITY PAYMENTS. The receipt by any Indemnitee of
any indemnification payment pursuant to this Article 5 will be treated and
reported as a non-taxable adjustment to the Purchase Price.
5.10 NEGLIGENCE. THE INDEMNIFICATION PROVIDED IN THIS AGREEMENT WILL BE
APPLICABLE WHETHER OR NOT THE SOLE, CONCURRENT, CONTRIBUTORY OR COMPARATIVE
NEGLIGENCE OR THE SOLE OR CONCURRENT STRICT LIABILITY OF THE PERSON ENTITLED TO
INDEMNIFICATION HEREUNDER IS ALLEGED OR PROVEN.AN
ARTICLE 6
MISCELLANEOUS
6.1 DEFINITIONS.
(a) "ACCOUNTS RECEIVABLE SERVICES AGREEMENT" has the meaning
ascribed to it in Section 1.3(d)(iii) hereof.
(b) "ACTION" means any action, suit, counterclaim,
cross-claim, appeal, arbitration or mediation for any relief against a party
hereunder or any of its Affiliates, successors or assigns, declaratory or
otherwise, to enforce the terms of this Agreement or to declare rights under
this Agreement.
(c) "ACTIVE TRANSFERRED EMPLOYEE" has the meaning ascribed to
it in Section 4.8(a) hereof.
(d) "ADDITIONAL AMOUNT" means the sum of (i) Prepaid Expenses
and (ii) Deposits.
(e) "AFFILIATE" has the meaning ascribed to it in Rule 405
under the Securities Act, except that Affiliate does not include any person who
would otherwise be considered an Affiliate solely by reason of such person's
beneficial ownership of securities registered under the Securities Exchange Act
of 1934, as amended.
(f) "AGREEMENT" has the meaning ascribed to it in the preamble
to this Agreement.
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(g) "BUSINESS" means Seller's Electrical and Instrumentation
Services Unit (SECO) and Specialty Welding Services Unit (comprising Seller's
Piping and Fabrication Services, Power Services (solely as such power services
relate to boiler and mechanical services that are incidental to mechanical
turnaround services) and Mechanical Turnaround Services for the Western, Eastern
and Central Service Districts); but specifically excludes Seller's Union
Contracting Services Unit and the Specialty Services Unit (comprising Seller's
refractory and catalyst operations).
(h) "BUSINESS ASSETS" has the meaning ascribed to it in
Section 2.10 hereof.
(i) "BUYER" has the meaning ascribed to it in the preamble to
this Agreement.
(j) "BUYER INDEMNITEES" means Fluor Corporation, FEI, Buyer
and their respective Affiliates, and the directors, officers and employees of
any of them.
(k) "CLAIM" has the meaning ascribed to it in Section 5.3(a)
hereof.
(l) "COBRA" has the meaning ascribed to it in Section 4.8(c)
hereof.
(m) "CODE" means the Internal Revenue Code of 1986, as
amended.
(n) "CONFIDENTIAL INFORMATION" means any information relating
to the Business, including, without limitation, information regarding vendors,
suppliers, trade secrets, training programs, technical information, contracts,
systems, procedures, know-how, improvements, price lists, financial or other
data, business plans, computer programs, software systems, internal reports,
personnel files or any other compilation of information which is or was used in
the Business and is either designated as confidential or proprietary or should
reasonably be known to be confidential or proprietary, except for information
that was or becomes generally available to the public, other than as a result of
disclosure by PSC, Seller or any of their respective Affiliates, stockholders,
members, directors, officers, employees or agents.
(o) "CONTRACT" has the meaning ascribed to it in Section
2.8(a)(ii) hereof.
(p) "CONTRACT ASSIGNMENT AND ASSUMPTION AGREEMENT" has the
meaning ascribed to it in Section 1.3(b) hereof.
(q) "COOPERATIVE ALLIANCE AGREEMENT" has the meaning ascribed
to it in Section 1.3(d)(vi) hereof.
(r) "DECISION" means any judgment, order, ruling, or award
granted with respect to an Action.
(s) "DEMOLITION BUSINESS" means the demolition business and
operations of ▇▇▇▇▇▇ Environmental Services Corporation based in Columbia,
Illinois.
(t) "DEPOSITS" has the meaning ascribed to it in Section
2.26(b) hereof.
(u) "EMPLOYEE" has the meaning ascribed to it in Section
2.20(a) hereof.
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(v) "EMPLOYEE BENEFIT PLANS" has the meaning ascribed to it in
Section 2.20(d).
(w) "EXCLUDED ASSETS" has the meaning ascribed to it in
Section 2.10 hereof.
(x) "ENVIRONMENTAL LAWS" means all applicable laws,
regulations and other requirements of Governmental Entities or duties under
common law relating to toxic or hazardous substances, wastes, pollution or to
the protection of health or the environment.
(y) "FASTDRAW/FASTCLEAN LICENSE AGREEMENT" has the meaning
ascribed to it in Section 1.3(d)(iv) hereof.
(z) "FEI" has the meaning ascribed to it in the preamble to
this Agreement.
(aa) "FEI EXERCISE PERIOD" has the meaning ascribed to it in
Section 4.9(c) hereof.
(bb) "FINANCIAL STATEMENTS" has the meaning ascribed to it in
Section 2.11 hereof.
(cc) "FIRST HOLDBACK EXPIRY" has the meaning ascribed to it in
Section 5.6(b) hereof.
(dd) "FREEPORT SUBLEASE" has the meaning ascribed to it in
Section 1.3(d)(viii) hereof.
(ee) "GILDERWARE LICENSE AGREEMENT" has the meaning ascribed
to it in Section 1.3(d)(v) hereof.
(ff) "GOVERNMENTAL ENTITY" means any court, arbitrator,
federal, state or local government agency, regulatory body, or other
governmental authority.
(gg) "HAZARDOUS MATERIALS" means all hazardous or toxic
substances, wastes, materials or chemicals, petroleum (including crude oil or
any fraction thereof), petroleum products, asbestos, asbestos-containing
materials, pollutants, contaminants, radioactivity and all other materials,
whether or not defined as such, that are regulated pursuant to, or that could
result in liability under, any applicable Environmental Laws.
(hh) "HOLDBACK AMOUNT" has the meaning ascribed to it in
Section 5.6(a) hereof.
(ii) "HUMAN RESOURCES SERVICES AGREEMENT" has the meaning
ascribed to it in Section 1.3(d)(ii) hereof.
(jj) "INACTIVE TRANSFERRED EMPLOYEE" has the meaning ascribed
to it in Section 4.8(a) hereof.
33
(kk) "INDEMNITEE" means the party entitled to indemnification
under Article 5 hereof.
(ll) "INDEMNITOR" means the party obligated to provide
indemnity under Article 5 hereof.
(mm) "INDUSTRIAL CLEANING & MAINTENANCE BUSINESS" means the
business of Seller engaged in hydroblasting/pressure washing, chemical cleaning
and NORM decontamination, airmoving, liquid vacuuming, grit and media blasting,
painting and sand blasting, explosive deslagging, dewatering, tank cleaning,
sludge treatment, wastewater decontamination, sewer line cleaning services,
waste transportation, waste storage and other waste management and equipment
rental services.
(nn) "INFORMATION TECHNOLOGIES SERVICES AGREEMENT" has the
meaning ascribed to it in Section 1.3(d)(i) hereof.
(oo) "INTELLECTUAL PROPERTY" means all property and rights
arising from or in respect of the following, whether protected, created or
arising under the laws of the United States or any other jurisdiction: (i)
patents, patent rights and all applications therefor, including any and all
continuation, divisional, continuation-in-part, or reissue patent applications
or patents issuing thereon; (ii) registered copyrights and applications
therefor; and (iii) know-how, trade secrets, inventions, discoveries, concepts,
ideas, methods, processes, designs, formulae, technical data, drawings,
specifications, data bases and other proprietary and confidential information,
in each case to the extent not included in the foregoing clauses (i) or (ii).
(pp) "JOINT CONTRACT" means any Contract, entered into on or
prior to the date hereof, involving obligations relating to the conduct of
businesses other than the Business being effectively conveyed by PSC and Seller
to FEI and Buyer in connection with the transactions contemplated by this
Agreement and the other Transaction Documents.
(qq) "KEY EMPLOYEES" means, with respect to any entity, (i)
all officers, (ii) all members of senior management, and (iii) all salaried
persons earning a base salary of $100,000 per annum or more.
(rr) "knowledge" or "known" means with respect to any
individual, the actual knowledge of such individual or, in the case of any
entity, the actual knowledge, without independent investigation, of the persons
set forth on Schedule 6.1 hereto for such entity. Notwithstanding anything else
in this Agreement to the contrary, any reference to knowledge of PSC or Seller,
to the extent that it pertains to any Tax matter, shall mean knowledge that the
officers or managers of PSC, Seller or the LLC shall reasonably possess after
due inquiry and investigation, including, without limitation, inquiry of
employees responsible for Tax and accounting matters and inquiry of PSC's,
Seller's and the LLC's advisors.
(ss) "LICENSE" means any permit, license or other governmental
authorization.
(tt) "LENDER CONSENT" has the meaning ascribed to it in
Section 2.25 hereof.
(uu) "LLC" has the meaning ascribed to it in Recital A hereof.
34
(vv) "LOSSES" has the meaning ascribed to it in Section 5.1
hereof.
(ww) "MEMBERSHIP INTERESTS" has the meaning ascribed to in
Recital A hereof.
(xx) "MEMBERSHIP INTERESTS ASSIGNMENT INSTRUMENT" has the
meaning ascribed to it in Section 1.3(a)(i) hereof.
(yy) "NOVATION" has the meaning ascribed to it in Section
6.14(d) hereto.
(zz) "OCCUPANCY LICENSES" has the meaning ascribed to it in
Section 1.3(d)(vii) hereof.
(aaa) "POST-CLOSING TAX YEAR" has the meaning ascribed to it
in Section 4.7(a)(iii) hereof.
(bbb) "PRE-CLOSING TAX YEAR" has the meaning ascribed to it in
Section 4.7(a)(iii) hereof.
(ccc) "PREPAID EXPENSES" has the meaning ascribed to it in
Section 2.26(a) hereof.
(ddd) "PURCHASE PRICE" has the meaning ascribed to it in
Section 1.2 hereof.
(eee) "SECOND HOLDBACK EXPIRY" has the meaning ascribed to it
in Section 5.6(b) hereof.
(fff) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(ggg) "SECURITY AGREEMENT" has the meaning ascribed to it in
Section 1.3(a)(ii) hereof.
(hhh) "SELLER" has the meaning ascribed to it in the preamble
to this Agreement.
(iii) "SELLER CONTRACT" has the meaning ascribed to it in
Section 2.8(a)(i) hereof.
(jjj) "SELLER INDEMNITEES" means PSC, Seller and their
respective Affiliates, and the directors, officers and employees of any of them.
(kkk) "TAX" means any federal, state, local or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties, capital
stock, franchise, profits, withholding, social security (or similar), sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not, imposed by any United States
federal, state, local or foreign taxing authority.
(lll) "TAX RETURNS" means all returns, declarations, reports,
statements and other documents required to be filed in respect of any Taxes or
any claim for refunds of any Taxes, including, without limitation, any
amendments or supplements to any of the foregoing.
35
(mmm) "TRANSACTION DOCUMENTS" means this Agreement, the
Membership Interests Assignment Instrument, the Contract Assignment and
Assumption Instrument, the Security Agreement, the Information Technologies
Services Agreement, the Human Resources Services Agreement, the Accounts
Receivable Services Agreement, the FastDraw/FastClean License Agreement, the
Gilderware License Agreement, the Cooperative Alliance Agreement, the Occupancy
Licenses and the Freeport Sublease.
(nnn) "TRANSFER" has the meaning ascribed to it in Section
4.9(a) hereof.
(ooo) "TRANSFER CONSIDERATION" has the meaning ascribed to it
in Section 4.9(b) hereof.
(ppp) "TRANSFER NOTICE" has the meaning ascribed to it in
Section 4.9(b) hereof.
(qqq) "TRANSFER TERMS" has the meaning ascribed to it in
Section 4.9(b) hereof.
(rrr) "TRANSFERRED EMPLOYEE" has the meaning ascribed to it in
Section 4.8(a) hereof.
(sss) "TREASURY REGULATIONS" means the federal income tax
regulations, including any temporary or proposed regulations, promulgated under
the Code.
(ttt) "UNION BUSINESS" means the respective businesses and
operations of PSC, Seller and their Affiliates that relate solely to union or
closed-shop projects.
(uuu) "WARRANTY OBLIGATIONS" has the meaning ascribed to it in
Section 2.22(b) hereof.
(vvv) "WARN ACT" has the meaning ascribed to it in Section
4.8(b) hereof.
(www) "WORK RELATED LIABILITIES" has the meaning ascribed to
it in Section 2.22(a) hereof.
6.2 NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed given upon personal delivery
or five (5) business days after being mailed by certified or registered mail,
postage prepaid, return receipt requested, or one (1) business day after being
sent via a nationally recognized overnight courier service if overnight courier
service is requested from such service or upon receipt of electronic or other
confirmation of transmission if sent via facsimile, to the parties, their
successors in interest or their assignees at the following addresses and
telephone numbers, or at such other addresses or telephone numbers as the
parties may designate by written notice in accordance with this Section 6.2:
If to Buyer: Fluor Enterprises, Inc.
c/o Fluor Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
36
With a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to PSC or Seller: ▇▇▇▇▇▇ Services Corporation
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: T. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
6.3 ASSIGNABILITY AND PARTIES IN INTEREST. This Agreement and the
rights, interests or obligations hereunder may not be assigned by any of the
parties hereto without the prior written consent of the other parties hereto.
This Agreement shall inure to the benefit of and be binding upon PSC, Seller,
FEI and Buyer and their respective permitted successors and assigns. Except as
provided by Article 5 hereof, nothing in this Agreement will confer upon any
person or entity not a party to this Agreement, or the legal representatives of
such person or entity, any rights or remedies of any nature or kind whatsoever
under or by reason of this Agreement.
6.4 COMPLETE AGREEMENT. This Agreement, the exhibits and schedules
hereto and the other Transaction Documents contain or will contain the entire
agreement between the parties hereto with respect to the transactions
contemplated herein and therein and shall supersede all previous oral and
written and all contemporaneous oral negotiations, commitments, and
understandings.
6.5 AMENDMENT, MODIFICATION, WAIVER AND CONSENTS. This Agreement may be
amended, modified or supplemented only by written agreement of PSC and Seller,
on the one hand, and FEI and Buyer, on the other hand. Any failure of PSC or
Seller, on the one hand, or FEI and Buyer, on the other hand, to comply with any
obligation, covenant, agreement, or condition herein may be waived by FEI or
Buyer, on the one hand, or PSC or Seller, on the other hand, only by a written
instrument signed by an officer of the party granting such waiver.
Notwithstanding the foregoing, any such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement, or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing.
37
6.6 HEADINGS AND REFERENCES. The headings contained in this Agreement
and the other Transaction Documents are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
6.7 GOVERNING LAW. This Agreement and the other Transaction Documents
shall be governed by, and construed and enforced in accordance with, the
internal laws of the State of Texas.
6.8 BINDING ARBITRATION. Except for any other remedy available under
the Security Agreement, any dispute, claim or controversy arising out of or
relating to this Agreement or such other Transaction Document shall be resolved,
if possible, by negotiation between the parties. In any such case, the disputing
party shall provide written notice to the other party specifying the dispute and
requesting the application of this Section 6.8. The parties shall involve their
respective division vice presidents or other similar officers in connection with
any such dispute resolution negotiations. If, however, the parties are unable to
resolve the dispute within ten (10) calendar days after written notice thereof,
then, to the extent not done so already, the parties shall involve their
respective chief financial officers or other similar executive officers. If,
thereafter, the parties are still unable to resolve the dispute within twenty
(20) calendar days after the original written notice thereof, then such dispute,
including the determination of the scope or applicability of this Section 6.8 to
arbitrate, shall be resolved by binding arbitration in the County of ▇▇▇▇▇▇,
State of Texas, before a sole arbitrator, in accordance with the laws of the
State of Texas for agreements made in and to be performed in the State of Texas.
The arbitration shall be administered by JAMS pursuant to its Comprehensive
Arbitration Rules and Procedures. Judgment on any award granted by such
arbitrator may be entered in any court having jurisdiction. The arbitrator
shall, in the award, allocate all of the costs of the arbitration, including the
fees of the arbitrator and the actual attorneys' fees of the prevailing party,
against the non-prevailing party.
6.9 SEVERABILITY. Any provision of this Agreement which is invalid,
illegal or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality, or unenforceability,
without affecting in any way the remaining provisions hereof in such
jurisdiction or rendering that or any other provisions of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction. In case any
provision of this Agreement is found by a court of competent jurisdiction to be
invalid, illegal or unenforceable, it will, to the extent practicable, be deemed
modified so as to make it valid, legal and enforceable and to retain as nearly
as practicable the intent of the parties.
6.10 EXPENSES OF TRANSACTIONS. Except as otherwise provided in this
Agreement, (a) all fees, costs and expenses incurred by FEI and Buyer in
connection with the transactions contemplated by this Agreement shall be borne
by FEI Buyer, and (b) all fees, costs and expenses incurred by PSC and Seller in
connection with the transactions contemplated by this Agreement shall be borne
by PSC and Seller.
6.11 ATTORNEYS' FEES. If FEI, Buyer or any of their respective
Affiliates, successors or assigns brings any Action against PSC, Seller or any
of their respective Affiliates, successors or
38
assigns, or if PSC, Seller or any of their respective Affiliates, successors or
assigns brings any Action against FEI, Buyer or any of their respective
Affiliates, successors or assigns, in addition to any damages and costs which
the prevailing party otherwise would be entitled, the non-prevailing party shall
pay to the prevailing party its actual attorneys' fees and costs incurred in
bringing and prosecuting such Action and/or enforcing any Decision granted
therein, all of which shall be deemed to have accrued on the commencement of
such Action and shall be paid whether or not such action is prosecuted to a
Decision. Any Decision entered in such Action shall contain a specific provision
providing for the recovery of attorneys' fees and costs incurred in enforcing
such Decision. For the purposes of this Section 6.11 attorneys' fees shall
include, without limitation, fees incurred in the following: (a) postjudgment
motions and collection actions; (b) contempt proceedings; (c) garnishment, levy
and debtor and third party examinations; (d) discovery; and (e) bankruptcy
litigation.
6.12 SURETYSHIP WAIVER.
(a) Availability of Recourse. Without in any manner limiting
the obligations of any party under this Agreement, FEI or Buyer may, subject to
the terms and conditions hereof, (i) accept partial payments from either PSC or
Seller on account of the obligations under this Agreement; (ii) release or
substitute either PSC or Seller, and otherwise deal with either PSC or Seller as
FEI or Buyer may determine in accordance with the terms hereof and applicable
law; (iii) settle or release, either by agreement or by operation of law, either
PSC or Seller; and (iv) proceed directly against the property of either PSC or
Seller without proceeding against the other to collect and recover the full
amount of the obligations or any portion thereof, and each of PSC or Seller
waives any right to require FEI or Buyer to proceed against the other, or pursue
any other remedy in their respective power and permitted by this Agreement or
any other Transaction Document.
(b) Waiver of Defenses. Each of PSC and Seller hereby waives
any suretyship or other similar defense to the extent that any such defense
impairs the ability of FEI or Buyer to elect to pursue any right or remedy
either of them may have against either PSC or Seller. FEI and Buyer may, in
their sole discretion, exercise any right or remedy either of them may have
against either PSC or Seller without affecting or impairing in any way the
liability of the other hereunder.
(c) Subrogation. Until all of the obligations under this
Agreement and the other Transaction Documents have been fully and finally
satisfied, neither PSC nor Seller shall have any right of subrogation to any of
the rights of FEI or Buyer against PSC or Seller and each of PSC and Seller
waives any right to enforce any remedy which FEI or Buyer now has or may
hereafter have against PSC or Seller.
(d) Financial Condition. Each of PSC and Seller assumes the
responsibility for being and keeping itself informed of the financial condition
of the other. Neither FEI nor Buyer shall have any duty to advise PSC or Seller
regarding such condition.
(e) Election of Remedies. Each of PSC and Seller waives all
rights and defenses arising out of an election of remedies by FEI or Buyer (as
permitted by this Agreement
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or any other Transaction Document) even though that election of remedies has
destroyed PSC's or Seller's rights of subrogation, reimbursement and/or
contribution against the other.
6.13 PUBLICITY. Upon execution of this Agreement, PSC and FEI may
jointly issue a press release, as mutually agreed upon by PSC and FEI. PSC,
Seller, FEI and Buyer intend that all future statements or communications to the
public or press regarding this Agreement or the transactions contemplated by
this Agreement must be mutually agreed upon by PSC and FEI and none of PSC,
Seller, FEI or Buyer, nor any of their respective subsidiaries or Affiliates
may, without such mutual agreement, issue any statement or communication to the
public or to the press regarding this Agreement, or any of the terms,
conditions, or other matters with respect to this Agreement, except as required
by law and then only (a) upon the advice of such party's legal counsel and (b)
following at least one (1) business day's notice to PSC or FEI, as applicable
(which notice shall include a copy of the proposed statement or communication to
be issued to the press or public). The foregoing will not restrict PSC's or
FEI's communications with its employees or customers in the ordinary course of
business.
6.14 FURTHER ASSURANCES AND POST-CLOSING CONSENT MATTERS.
(a) General Assurances. Upon the reasonable request of a party
or parties hereto at any time after the date hereof, the other party or parties
shall forthwith execute and deliver such further instruments of assignment,
transfer, conveyance, endorsement, direction or authorization and other
documents as the requesting party or parties or its or their counsel may
reasonably request in order to effectuate the purposes of this Agreement,
including, without limitation, the transfer or conveyance of any assets used in
connection with the Business but not otherwise in the possession of the LLC or
transferred to Buyer on the date hereof.
(b) Third Party Consents. In the event any consent or approval
required to be obtained in connection with the transactions contemplated by this
Agreement is not obtained on or prior to the date hereof, (i) PSC, Seller and
their Affiliates shall use all reasonable efforts to promptly obtain such
consent or approval, including, without limitation, paying any consent fees, and
(ii) to the maximum extent permitted by law, PSC, Seller and their Affiliates
shall take all reasonable action and enter into any reasonable arrangement
(which, at the request of FEI, Buyer or the LLC, may entail FEI, Buyer, the LLC
or their designee acting as subcontractors of PSC, Seller or their Affiliates)
to secure for FEI and Buyer all the interests of PSC, Seller and their
Affiliates in the benefits that would otherwise accrue to FEI, Buyer or the LLC
after the date hereof under any Business Asset or any other agreement,
instrument or arrangement relating to the Business if such consent or approval
had been obtained on or prior to the date hereof; provided that FEI and Buyer
shall undertake to pay or satisfy those corresponding expenses and liabilities
for the enjoyment of such benefit to the limited extent that FEI or Buyer would
have been responsible therefor under this Agreement if such consent or approval
had been obtained on or prior to the date hereof. If, after twelve (12) months
from the date hereof (or at such earlier date to which the parties hereto may
mutually agree), any particular consent or approval has not been obtained with
respect to any Contract, PSC or Seller may terminate such Contract; provided
that (w) PSC, Seller and their Affiliates have performed all their obligations
under this Agreement; (x) PSC and Seller have provided FEI and Buyer with at
least thirty (30) days' prior written notice of their intent to terminate; (y)
FEI and Buyer concur that PSC, Seller and their
40
Affiliates have exhausted all reasonable efforts in obtaining such consent or
approval; and (z) FEI and Buyer have given their prior written consent to the
termination of the Contract.
(c) Lease Contracts. With respect solely to the lease
Contracts set forth on Schedule 6.14(c) hereto for which a third-party consent
or approval is required, FEI and Buyer shall use commercially reasonable efforts
to assist PSC and Seller in obtaining any such required consent or approval,
including providing commercially reasonable corporate guaranties substantially
equivalent to any existing PSC or Seller guaranty. To the extent that PSC and
Seller are unable to obtain consents or approvals within sixty (60) days after
the date hereof for the assignment of any such lease Contract, then FEI and
Buyer shall permit PSC or Seller to terminate such lease Contract. FEI and Buyer
shall reimburse PSC or Seller for those expenses and liabilities that PSC or
Seller may incur under any existing PSC or Seller guaranty, to the extent that
the conduct of the LLC, after the date hereof through the date such lease
Contract or PSC or Seller guaranty is terminated, directly causes PSC or Seller
to incur such expenses or liabilities.
(c) Joint Contracts.
(i) Promptly after the date hereof, PSC, Seller, FEI
and Buyer shall use all of their respective commercially reasonable efforts to
novate each Joint Contract with each customer counterparty thereto, within
twelve (12) months from the date hereof, by entering into new, commercially
reasonable arrangements that separate the terms, conditions and obligations
relating to the Business from those terms, conditions and obligations not
relating to the Business (each, a "NOVATION"). PSC and Seller shall pay all fees
pertaining to each Novation that may be payable to any Joint Contract customer
counterparty.
(ii) If, prior to the completion of the Novation of
any Joint Contract, any customer counterparty requests services under the Joint
Contract that implicate the obligations of FEI, Buyer or the LLC with respect to
the Business and PSC or Seller with respect to businesses other than the
Business, then the party receiving the customer counterparty's request for
services shall promptly notify the designated representatives identified on
Schedule 6.14(d) (or their respective successors), who shall endeavor to reach
agreement on a reasonable and appropriate allocation of responsibilities with
respect to the services requested under the Joint Contract. If the designated
representatives are unable to resolve the allocation of obligations under the
Joint Contract, then the disputing party shall request the application of
Section 6.8.
6.15 SELLER'S PAYMENT INSTRUCTIONS. Unless otherwise specified by
Seller in writing, FEI and Buyer shall make all payments to Seller under this
Agreement pursuant to the duly authorized payment instructions set forth on
Schedule 6.15.
6.16 FACSIMILES AND COUNTERPARTS. Facsimile transmission of any signed
original document and/or retransmission of any signed facsimile transmission
will be deemed the same as delivery of an original. At the request of any party,
the parties will confirm facsimile transmission by signing a duplicate original
document. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Membership Interests and Asset Purchase Agreement as of the date first written
above.
PSC:
▇▇▇▇▇▇ Services Corporation,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
Title: Chairman and Principal Executive Officer
----------------------------------------
SELLER:
PSC Industrial Outsourcing, Inc.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President and Treasurer
----------------------------------------
FEI:
Fluor Enterprises, Inc.,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Title: Vice President
----------------------------------------
BUYER:
Plant Performance Services LLC,
a Delaware limited liability company
By: ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name: ▇. ▇. ▇▇▇▇▇
----------------------------------------
Title: Vice President
----------------------------------------
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