ACQUISITION AGREEMENT
AMONG
▇▇▇▇▇▇▇▇▇ INTERNATIONAL, INC.,
▇▇▇▇▇▇▇▇▇ INCORPORATED,
▇▇▇▇▇▇ ENGINEERING (CANADA) LTD.,
DELTA CATALYTIC (HOLLAND) B.V.,
AND
▇▇▇▇▇▇ ENGINEERING GROUP INC.,
JACOBS CANADA INC.
DATED AS OF OCTOBER 29, 2001
TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS................................................................................ 4
SECTION 1.1. Definitions............................................................ 4
ARTICLE 2 PURCHASE OF STOCK.......................................................................... 11
SECTION 2.1. Purchase and Sale of Shares............................................ 11
SECTION 2.2. Consideration.......................................................... 11
SECTION 2.3. Closing................................................................ 13
ARTICLE 3 REPRESENTATIONS AND WARRANTIES REGARDING THE DELTA COMPANIES............................... 13
SECTION 3.1. Title to Shares........................................................ 13
SECTION 3.2. Corporate Existence and Power of the Sellers........................... 13
SECTION 3.3. Corporate Existence and Power.......................................... 14
SECTION 3.4. Subsidiaries........................................................... 14
SECTION 3.5. Authorization.......................................................... 15
SECTION 3.6. Corporate Records...................................................... 15
SECTION 3.7. Governmental Authorization............................................. 15
SECTION 3.8. Non-Contravention...................................................... 15
SECTION 3.9. Capitalization......................................................... 16
SECTION 3.10. Delta Companies' Reports and Financial Statements...................... 16
SECTION 3.11. Accounts Receivable and Unbilled Work in Process....................... 17
SECTION 3.12. Absence of Undisclosed Liabilities..................................... 18
SECTION 3.13. Permits................................................................ 18
SECTION 3.14. Absence of Certain Changes............................................. 18
SECTION 3.15. Litigation............................................................. 20
SECTION 3.16. Employee Benefit Plans................................................. 20
SECTION 3.17. Labor and Employment Matters........................................... 21
SECTION 3.18. Taxes.................................................................. 22
SECTION 3.19. Compliance With Laws................................................... 23
SECTION 3.20. Finders' Fees.......................................................... 23
SECTION 3.21. Environmental Compliance............................................... 23
SECTION 3.22. Insurance; Bonds....................................................... 24
SECTION 3.23. Takeover Statutes...................................................... 25
SECTION 3.24. Material Contracts..................................................... 25
SECTION 3.25. Related Party Transactions............................................. 27
SECTION 3.26. Real Estate............................................................ 28
SECTION 3.27. Government Contracting................................................. 29
SECTION 3.28. Foreign Corrupt Practices.............................................. 30
SECTION 3.29. Relations with Suppliers and Customers................................. 30
SECTION 3.30. Intellectual Property.................................................. 30
SECTION 3.31. Title to Assets........................................................ 30
SECTION 3.32. Transfer of Stock...................................................... 31
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SECTION 3.33. Assumption of Claims................................................... 31
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE BUYER................................................ 31
SECTION 4.1. Organization and Existence............................................. 31
SECTION 4.2. Corporate Authorization................................................ 31
SECTION 4.3. Governmental Authorization............................................. 32
SECTION 4.4. Non-Contravention...................................................... 32
SECTION 4.5. Litigation............................................................. 32
SECTION 4.6. Finders' Fees.......................................................... 32
SECTION 4.7. Limitation on Representations and Warranties........................... 32
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND MCDERMOTT..................................... 32
SECTION 5.1. Organization and Existence............................................. 32
SECTION 5.2. Corporate Authorization................................................ 33
SECTION 5.3. Governmental Authorization............................................. 33
SECTION 5.4. Non-Contravention...................................................... 33
SECTION 5.5. Litigation............................................................. 33
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF JACOBS................................................... 34
SECTION 6.1. Organization and Existence............................................. 34
SECTION 6.2. Corporate Authorization................................................ 34
SECTION 6.3. Governmental Authorization............................................. 34
SECTION 6.4. Non-Contravention...................................................... 34
SECTION 6.5. Litigation............................................................. 35
ARTICLE 7 COVENANTS OF PARENT, MCDERMOTT AND THE SELLERS............................................. 35
SECTION 7.1. Use of Names........................................................... 35
SECTION 7.2. Noncompetition......................................................... 35
SECTION 7.3. Resignation of Directors and Officers.................................. 36
SECTION 7.4. Parent and McDermott Guaranty.......................................... 36
SECTION 7.5. Intercompany Agreements................................................ 36
SECTION 7.6. Directors and Officers Insurance....................................... 37
ARTICLE 8 COVENANTS OF THE BUYER AND JACOBS.......................................................... 37
SECTION 8.1. Use of Names........................................................... 37
SECTION 8.2. Employees.............................................................. 37
SECTION 8.3. Records Retention; Cooperation......................................... 38
SECTION 8.4. Agreements in Respect of the Seller Assumed Obligations................ 38
SECTION 8.5. Removal of Guaranties.................................................. 38
SECTION 8.6. Jacobs Guaranty........................................................ 39
ARTICLE 9 MUTUAL COVENANTS........................................................................... 39
SECTION 9.1. Further Assurances..................................................... 39
SECTION 9.2. Publicity.............................................................. 40
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SECTION 9.3. Section 338 Election................................................... 40
ARTICLE 10 CLOSING DELIVERIES........................................................................ 40
SECTION 10.1. Closing Delivery Obligations of the Sellers............................ 40
SECTION 10.2. Closing Delivery Obligations of the Buyer.............................. 41
SECTION 10.3. Closing Delivery Obligations of Parent and McDermott................... 42
SECTION 10.4. Closing Delivery Obligations of Jacobs................................. 42
ARTICLE 11 INDEMNIFICATION........................................................................... 42
SECTION 11.1. Agreement to Indemnify................................................. 42
SECTION 11.2. Survival of Representations, Warranties and Covenants; Exclusive Remedy 45
SECTION 11.3. Notice and Procedure................................................... 46
SECTION 11.4. Treatment of Indemnity Payments........................................ 48
SECTION 11.5. Subrogation............................................................ 48
ARTICLE 12 MISCELLANEOUS............................................................................. 48
SECTION 12.1. Notices................................................................ 48
SECTION 12.2. Amendments; No Waivers................................................. 50
SECTION 12.3. Expenses............................................................... 50
SECTION 12.4. Entire Agreement/No Third Party Beneficiaries.......................... 50
SECTION 12.5. Further Assurances..................................................... 50
SECTION 12.6. Successors and Assigns................................................. 50
SECTION 12.7. Governing Law.......................................................... 51
SECTION 12.8. Consent to Jurisdiction; Waiver of Jury Trial.......................... 51
SECTION 12.9. Counterparts; Effectiveness............................................ 51
SECTION 12.10. Severability........................................................... 51
SECTION 12.11. Headings............................................................... 52
SECTION 21.12. Construction........................................................... 52
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EXHIBIT LIST
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Exhibit A-1 Legal Opinion of ▇▇▇▇▇ ▇▇▇▇▇ LLP
Exhibit A-2 Legal Opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Exhibit A-3 Legal Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
Exhibit A-4 Legal Opinion of ▇▇▇▇▇ Dutilh
Exhibit B Software License Agreement
Exhibit C Support Services Agreement
Exhibit D Transition Services Agreement
Exhibit E-1 Legal Opinion of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
Exhibit E-2 Legal Opinion of Keel Cottrelle
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SCHEDULE LIST
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Schedule 3.4 Subsidiaries
Schedule 3.8 Non-Contravention
Schedule 3.9 Capitalization
Schedule 3.10 Delta Companies' Reports and Financial Statements
Schedule 3.11 Accounts Receivable and Unbilled Work in Process
Schedule 3.12 Absence of Undisclosed Liabilities
Schedule 3.13 Permits
Schedule 3.14 Absence of Certain Changes
Schedule 3.15 Litigation
Schedule 3.16 Employee Benefit Plans
Schedule 3.17 Labor and Employment Matters
Schedule 3.18 Taxes
Schedule 3.19 Compliance with Laws
Schedule 3.21 Environmental Compliance
Schedule 3.22 Insurance; Bonds
Schedule 3.24 Material Contracts
Schedule 3.25 Related Party Transactions
Schedule 3.26 Real Estate
Schedule 3.27 Government Compliance
Schedule 3.30 Intellectual Property
Schedule 3.31 Title to Assets
Schedule 7.1 Use of Names
Schedule 7.3 Required Resignations
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Schedule 8.1 Use of Names
Schedule 8.5 Removal of Guarantees
Schedule 10.2 Wire Transfer Instructions
Schedule 12.12 Knowledgeable Persons
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ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT (this "Agreement") is dated as of October
29, 2001, and is by and among ▇▇▇▇▇▇▇▇▇ International, Inc., a Panamanian
corporation ("Parent"), ▇▇▇▇▇▇▇▇▇ Incorporated, a Delaware corporation and
wholly owned subsidiary of Parent ("McDermott"), Hudson Engineering (Canada)
Ltd., a Canadian company and an indirect wholly owned subsidiary of McDermott
("Hudson (Canada)"), Delta Catalytic (Holland) B.V., a Netherlands company and
an indirect wholly owned subsidiary of Parent ("Delta (Holland)"), on one hand,
and ▇▇▇▇▇▇ Engineering Group Inc., a Delaware corporation ("Jacobs"), and Jacobs
Canada Inc., a Canadian company and a wholly owned subsidiary of Jacobs (the
"Buyer"), on the other hand.
RECITALS
WHEREAS, the Delta Companies (as defined below), directly and
indirectly through their subsidiaries are engaged in the business of providing
engineering, construction and property management and maintenance services to
customers in various industries, including: oil and gas production, processing
and refining; petrochemical and chemical; and power generation (such business,
as currently conducted by the Delta Companies, being hereinafter referred to as
the "Business"); and
WHEREAS, ▇▇▇▇▇▇ (Canada) and Delta (Holland) desire to sell, and the
Buyer desires to buy, all the issued and outstanding capital stock of McDermott
Engineers (the "Shares"), as more fully described herein;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties and covenants set forth herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. As used in this Agreement, and unless the
content requires a different meaning, the following terms have the meanings
given:
"Accountant" has the meaning set forth in Section 2.2(c).
"Accountant's Report" has the meaning set forth in Section
2.2(c).
"Affiliate" means, with respect to any specified Person, any
other Person who directly or indirectly through one or more intermediaries or
otherwise, controls, is controlled by or is under common control with the
specified Person. As used in this definition, "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
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management or policies of a Person (whether through ownership of capital stock
of or other equity interests in that Person, by contract or otherwise).
"Agreement" has the meaning set forth in the Preamble.
"Annual Statements" has the meaning set forth in Section
3.10(a).
"Applicable Law" means, with respect to any Person, any
domestic or foreign, federal, provincial, state, territorial or local statute,
law, ordinance, policy, guidance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree or other
requirement, of any Governmental Authority (including any Environmental Law)
applicable to such Person or any of its properties or assets.
"Benefit Arrangement" means any material benefit arrangement
of the Delta Companies or their Affiliates covering any current or former
officer, director, employee, consultant or agent of the Delta Companies (in each
case, in such person's capacity as such) that is not an Employee Benefit Plan,
including, without limitation, (i) each employment or consulting agreement, (ii)
each arrangement providing for insurance coverage or workers' compensation
benefits, (iii) each incentive bonus or deferred bonus arrangement, (iv) each
arrangement providing termination allowance, severance, continuation pay,
indemnification or similar benefits, (v) each equity compensation plan, (vi)
each deferred compensation plan and (vii) each compensation policy and practice
(A) maintained by the Delta Companies or (B) maintained by any Affiliate of the
Delta Companies and applicable to any full-time employee of any of the Delta
Companies at the time of the Closing.
"Benefit Plan" means an Employee Benefit Plan or Benefit
Arrangement.
"Business" has the meaning set forth in the Recitals.
"Business Day" means any day other than a day on which
commercial banks are authorized or required to close in New York City.
"Buyer" has the meaning set forth in the Preamble.
"Buyer Dispute Notice" has the meaning set forth in Section
2.2(b).
"Buyer Indemnitees" means Jacobs, the Buyer and their
Affiliates and their respective directors, officers, employees, agents and
representatives.
"Buyer Review Period" has the meaning set forth in Section
2.2(b).
"Cap" has the meaning set forth in Section 11.1(f).
"Claim Notice" means any written notification of a Third Party
Claim by an Indemnified Party to an Indemnifying Party pursuant to Section 11.3
hereunder.
"Closing" has the meaning set forth in Section 2.3.
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"Closing Date" has the meaning set forth in Section 2.3.
"Closing Date Balance Sheet" has the meaning set forth in
Section 2.2(b).
"Closing Date Cash Distributions" has the meaning set forth in
Section 2.2(b).
"Closing Date Net Equity" means, as determined from the
Closing Date Balance Sheet, the amount by which (a) the pro forma consolidated
total assets of the Delta Companies as of the close of business on the last
Business Day prior to on the Closing Date (as reduced by the amount of the
Closing Date Cash Distributions) are greater than (b) the pro forma consolidated
total liabilities of the Delta Companies as of the close of business on the last
Business Day prior to the Closing Date.
"Code" means the U.S. Internal Revenue Code.
"Computed Amount" means any of the following: (i) the Closing
Date Net Equity; (ii) the Negative Adjustment; and (iii) the Positive
Adjustment.
"Contracts" means all commitments, contracts, leases,
licenses, agreements and understandings, written or oral, relating to the
operation of the Business to which any of the Delta Companies is a party or by
which any of the Delta Companies or any of their respective assets are bound.
"Debt" means (i) any indebtedness of any of the Delta
Companies, whether or not contingent, in respect of borrowed money or evidenced
by bonds, notes, debentures or other similar instruments or letters of credit
(or reimbursement agreements in respect thereof) or banker's acceptances or
representing capitalized lease obligations, (ii) any balance deferred and unpaid
of the purchase price of any property of any of the Delta Companies, except any
such balance that constitutes an accrued expense or account payable, in each
case referred to in this clause (ii) incurred in the ordinary course of
business, (iii) all indebtedness of others secured by a Lien on any asset of any
of the Delta Companies (whether or not such indebtedness has been assumed by any
of the Delta Companies) and, (iv) to the extent not otherwise included by
clauses (i) through (iii), any guaranty by any of the Delta Companies of any
indebtedness of any other Person.
"Delta Companies" means McDermott Engineers and the Delta
Subsidiaries.
"Delta Companies Pro Forma Balance Sheet" has the meaning set
forth in Section 3.10(c).
"Delta (Holland)" has the meaning set forth in the Preamble.
"Delta Subsidiaries" has the meaning set forth in Section 3.4.
"Dollars" or "$" means U.S. Dollars.
"Environmental Law" means any federal, state, territorial,
local, provincial, county or foreign law, statute, ordinance, rule, regulation
or treaty and all judicial,
6
administrative, and regulatory orders, judgments, decrees, permits and
authorizations, relating to: (i) the protection, investigation, remediation or
restoration of the environment or natural resources, (ii) the handling, use,
storage, treatment, disposal, release or threatened release of any Hazardous
Substance, (iii) noise, odor or pollution, contamination or land use or (iv) the
protection of the health and safety of employees or the public.
"Employee Benefit Plan" means any employee benefit plan, as
defined in Section 3(3) of ERISA, or any similar foreign, state, territorial,
county, provincial or local law, rule or regulation, that is sponsored or
contributed to by the Delta Companies or any ERISA Affiliate thereof covering
employees or former employees of the Delta Companies in their capacities as
such.
"Employee Pension Benefit Plan" means any employee pension
benefit plan, as defined in Section 3(2) of ERISA, that is subject to Title IV
of ERISA, or any similar foreign, state, territorial, county, provincial or
local law, rule or regulation, excluding any Multiemployer Plan.
"Equity Securities" has the meaning set forth in Section
3.9(b).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Excluded Entities" has the meaning set forth in Section 3.32.
"Excluded Losses" has the meaning set forth in Section
11.1(g).
"Facilities" has the meaning set forth in Section 3.26(a)(ii).
"Financial Statements" has the meaning set forth in Section
3.10(a).
"Floor" has the meaning set forth in Section 11.1(f).
"Foreign Antitrust Laws" means the antitrust laws of Canada
(including the provinces thereof).
"Governmental Authority" means any foreign, domestic, federal,
territorial, provincial, state, county or local governmental authority,
quasi-governmental authority, instrumentality, court, government, commission,
tribunal or organization or any regulatory, administrative or other agency, or
any political or other subdivision, department or branch of any of the
foregoing.
"Government Contract" means (i) any Contract between any of
the Delta Companies, as a prime contractor, and any Governmental Authority or
(ii) any Contract that is a subcontract under a contract between another prime
contractor and any Governmental Authority.
"Group Policies" has the meaning set forth in Section 3.22(a).
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"Hazardous Substance" means any substance, material, or waste
that is: (i) listed, classified or regulated in any concentration pursuant to
any Environmental Law; (ii) any petroleum hydrocarbon, asbestos-containing
material, lead-containing paint or plumbing, polychlorinated biphenyls,
radioactive materials, radon or urea formaldehyde foam insulation; or (iii) any
other substance, material, or waste which may be the subject of regulatory
action by any governmental entity pursuant to any Environmental Law.
"Hired Employee" has the meaning set forth in Section 8.2(a).
"▇▇▇▇▇▇ (Canada)" has the meaning set forth in the Preamble.
"Indemnified Party" means any Person entitled to
indemnification under Article 11.
"Indemnifying Party" means any Person obligated to indemnify
another Person under Article 11.
"Indemnity Notice" means a written notification of a claim for
indemnity under Section 11.1 other than a Third Party Claim, made by an
Indemnified Party to an Indemnifying Party pursuant to Section 11.3(b).
"Intellectual Property Rights" has the meaning set for in
Section 3.30.
"Interim Statements" has the meaning set forth in Section
3.10(a).
"IRS" means the U.S. Internal Revenue Service.
"Jacobs" has the meaning set forth in the Preamble.
"knowledge of the Sellers" has the meaning set forth in
Section 12.12.
"Legal Proceeding" has the meaning set forth in Section 3.15.
"Leased Property" has the meaning set forth in Section
3.26(a)(ii).
"Leases" has the meaning set forth in Section 3.26 (a)(ii).
"Lien" means, with respect to any asset, any mortgage, title
defect, lien, pledge, security interest, hypothecation, restriction, encumbrance
or charge of any kind in respect of such asset.
"Losses" means any and all damages, claims, costs, losses,
liabilities, expenses or obligations (including Taxes, interest, penalties,
court costs, costs of preparation and investigation, and reasonable attorneys',
accountants' and other professional advisors' fees and expenses).
"Material Adverse Effect" means (i) any adverse change in, or
an adverse effect on, the assets, liabilities, business or operations of the
Delta Companies taken as a whole in an amount in excess of $200,000 or (ii) any
event or circumstance affecting any of the Sellers or the
8
Delta Companies that would prevent them from, or materially hinder or materially
delay them in, consummating the transactions contemplated by this Agreement.
"McDermott" has the meaning set forth in the Preamble.
"McDermott Engineers" means ▇▇▇▇▇▇▇▇▇ Engineers & Constructors
(Canada) Ltd., an Alberta corporation owned by ▇▇▇▇▇▇ (Canada) and Delta
(Holland).
"McDermott Engineers Balance Sheet" has the meaning set forth
in Section 3.10(a).
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 3(37) of ERISA, Section 414 of the Code or Section 4001(a)(3) of ERISA.
"Multiple Employer Plan" means any Employee Benefit Plan
sponsored by more than one employer, within the meaning of Sections 4063 or 4064
of ERISA or Section 413(c) of the Code.
"Negative Adjustment" means the amount, if any, by which (i)
$11,289,000 exceeds (ii) the Closing Date Net Equity.
"Owned Property" has the meaning set forth in Section
3.26(a)(i).
"Parent" has the meaning set forth in the Preamble.
"Permits" has the meaning set forth in Section 3.13.
"Permitted Liens" means, with respect to the property or other
assets of any Person: (i) Liens for Taxes if the same are not at the time due
and delinquent; (ii) Liens of carriers, warehousemen, mechanics, laborers and
materialmen for sums not yet due; (iii) Liens incurred in the ordinary course of
that Person's business in connection with workers' compensation, unemployment
insurance and other social security legislation (other than pursuant to ERISA or
Section 412(n) of the Code); (iv) Liens incurred in the ordinary course of that
Person's business in connection with deposit accounts or to secure the
performance of bids, tenders, trade contracts, statutory obligations, surety and
appeal bonds, performance and return-of-money bonds and other obligations of
like nature; (v) easements, rights-of-way, reservations, restrictions and other
similar encumbrances incurred in the ordinary course of that Person's business
or existing on property and not materially interfering with the ordinary conduct
of that Person's business or the use of that property; (vi) defects or
irregularities in that Person's title to its real properties which do not
materially (A) diminish the value of the surface estate or (B) interfere with
the ordinary conduct of that Person's business or the use of any of such
properties; (vii) any interest or title of a lessor of assets, which that Person
is leasing pursuant to any capital lease listed on Schedule 3.10 or any lease
accounted for as an operating lease; and (viii) Liens securing purchase money
Debt listed on Schedule 3.10, so long as those Liens do not attach to any
property or other assets other than the properties or other assets purchased
with the proceeds of that Debt.
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"Person" means an individual, corporation, partnership,
limited company, association, trust, estate or other entity or organization,
including a Governmental Authority.
"Plan Affiliate" means, with respect to any specified Person,
any employee benefit plan or arrangement sponsored by, maintained by or
contributed to by such Person, and with respect to any employee benefit plan or
arrangement, any Person sponsoring, maintaining or contributing to such plan or
arrangement.
"Positive Adjustment" means the amount, if any, by which (i)
the Closing Date Net Equity exceeds (ii) $11,289,000.
"Post-closing Statement" has the meaning set forth in Section
2.2(b).
"Pre-Closing Environmental Matters" means all liabilities
arising from (i) the pre-closing release of Hazardous Substances either in, on,
under or from the Owned Property or any current or former facility where any of
the Delta Companies has conducted the Business, including, without limitation,
the effects of such release of Hazardous Substances on resources, persons or
property within or outside the boundaries of the Owned Property or any such
current or former facility, (ii) the presence as of the Closing Date of
Hazardous Substances in, on or under the Owned Property or any such current or
former facility, (iii) the failure on or prior to the Closing Date of the
facility or any former facility or any operations of the Business to be in
compliance with any Environmental Laws in effect at the time of Closing, (iv)
the disposal, treatment, recycling or other disposition of Hazardous Substances
by the Business or arrangement thereof at any location other than the Owned
Property or the current or former facilities on or prior to the Closing Date and
(v) any other pre-Closing act, omission or condition related to the Business,
the Owned Property or any current or former facility prior to the Closing Date
which gives rise to liability under any Environmental Laws in effect at the time
of Closing.
"Purchase Price" has the meaning set forth in Section 2.2(a).
"Required Consents" has the meaning set forth in Section 3.7.
"Required Contractual Consent" means, with respect to any
Scheduled Contract, any consent of any party thereto (other than the Delta
Companies) that is required by the terms thereof or Applicable Law by reason of
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby in order to avoid any default thereunder,
breach of the terms thereof or material alteration of the terms thereof.
"Required Governmental Approval" has the meaning set forth in
Section 3.7.
"Scheduled Contracts" has the meaning set forth in Section
3.24.
"Seller Assumed Obligations" has the meaning set forth in
Section 3.10(c).
"Seller Indemnitees" means Parent, ▇▇▇▇▇▇▇▇▇ and the Sellers
and their Affiliates and their respective directors, officers, employees, agents
and representatives.
"Sellers" means each of ▇▇▇▇▇▇ (Canada) and Delta (Holland).
10
"Shares" has the meaning set forth in the Recitals.
"Share Encumbrances" means any liens, charges, claims,
options, pledges, rights of other parties, voting trusts, proxies, stockholder
or similar agreements with respect to the Shares.
"Tax Return" means all returns, reports, statements, forms or
other materials or information required to be filed with respect to Taxes with
any Government Authority.
"Tax" or "Taxes" means all taxes, charges, fees, levies or
other like assessments, including, without limitation, income, gross receipts,
ad valorem, value added, premium, excise, real property, personal property,
windfall profit, sales, use, transfer, license, withholding, employment, payroll
and franchise taxes imposed by any Governmental Authority, irrespective of
whether imposed directly or indirectly, as a successor or transferee liability,
as a joint and several liability pursuant to Section 1.1502-6 of the Treasury
Regulations or comparable provisions of provincial, state, territorial, county,
local, foreign or other law; and shall include any interest, fines, penalties,
assessments or additions to tax resulting from, attributable to or incurred in
connection with any such Taxes or any contest or dispute thereof.
"Third Party Claim" has the meaning set forth in Section
11.3(a).
"Transfer" has the meaning set forth in Section 3.32.
"Transferred Stock" has the meaning set forth in Section 3.32.
"Treasury Regulations" means the regulations of the U.S.
Department of Treasury or any similar foreign, state, territorial, county,
provincial, local or other law, rule or regulation.
ARTICLE 2
PURCHASE OF STOCK
SECTION 2.1. Purchase and Sale of Shares. On the terms and subject to
the conditions set forth herein, at the Closing: (a) ▇▇▇▇▇▇ (Canada) and Delta
(Holland) shall sell, transfer, convey, assign and deliver to the Buyer, free
and clear of all Share Encumbrances, and the Buyer shall purchase, acquire and
accept from ▇▇▇▇▇▇ (Canada) and Delta (Holland), the Shares. At the Closing,
▇▇▇▇▇▇ (Canada) and Delta (Holland) shall deliver to the Buyer certificates
evidencing the Shares, duly endorsed for transfer and with all transfer stamps
attached and such other instruments as may be reasonably requested by the Buyer
to transfer full legal and beneficial ownership of the Shares to the Buyer, free
and clear of all Share Encumbrances.
SECTION 2.2. Consideration.
(a) At the Closing, the Buyer shall pay to the Sellers for the
Shares an amount in cash equal to Forty-Seven Million Five Hundred Thousand
Dollars ($47,500,000) (the "Purchase Price").
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(b) As promptly as practicable, but no later than 60 days
after the Closing Date, the Sellers will cause to be prepared and delivered to
the Buyer (i) a pro forma consolidated balance sheet of the Delta Companies, as
of the close of business on the last Business Day prior to the Closing Date (the
"Closing Date Balance Sheet"), and (ii) a written statement (the "Post-closing
Statement") setting forth each Computed Amount. The Closing Date Balance Sheet
shall be prepared in a manner that is consistent with the Delta Companies Pro
Forma Balance Sheet, except that the Closing Date Balance Sheet (i) will reflect
the actual cash balances of the Delta Companies as of the last Business Day
prior to the Closing, as adjusted to give effect to any dividends or other
distributions paid by ▇▇▇▇▇▇▇▇▇ Engineers to the Sellers after the closing of
business on that day but prior to the closing on the Closing Date (the "Closing
Date Cash Distributions"), (ii) will not reflect any intercompany accounts
transferred and assumed pursuant to Section 7.5 (and accordingly, will not
reflect any such pro forma adjustment), and (iii) will not reflect reserves
relating to the Seller Assumed Obligations (and accordingly, will not reflect
any such pro forma adjustment). In connection with the Sellers' preparation of
the Closing Date Balance Sheet, the Buyer and its Affiliates (including, after
the Closing, ▇▇▇▇▇▇▇▇▇ Engineers and the Delta Subsidiaries) will (i) provide
access, at reasonable times, to the Sellers and their representatives for
inspection and/or copying (as so requested by them) of all accounting and other
records that they may reasonably request and (ii) ensure that the accounting and
any other necessary personnel of ▇▇▇▇▇▇▇▇▇ Engineers and the Delta Subsidiaries
provide such assistance as the Sellers and their representatives may reasonably
request. The Buyer shall have 30 days from the date on which the Closing Date
Balance Sheet and the Post-closing Statement are delivered to the Buyer to
review such documents (the "Buyer Review Period"). In connection with such
review, the Buyer and its representatives shall be provided with full access to
the work papers of the Sellers prepared in connection with the preparation of
the Closing Date Balance Sheet. If the Buyer does not accept as correct any one
or more of the Computed Amounts set forth in the Post-closing Statement, the
Buyer may, on or prior to the last Business Day of the Buyer Review Period,
deliver a notice in writing to the Sellers setting forth in reasonable detail
each disputed item or amount and the basis for the Buyer's disagreement
therewith (the "Buyer Dispute Notice"). If no Buyer Dispute Notice is received
by the Sellers on or prior to the last Business Day of the Buyer Review Period,
the Closing Date Balance Sheet and each of the Computed Amounts set forth in the
Post-closing Statement shall be deemed accepted by the Buyer and shall be final
and binding on the parties hereto.
(c) The parties hereto shall endeavor to resolve any dispute
indicated in a Buyer Dispute Notice by negotiation between the Sellers and the
Buyer within 15 days of the Sellers' receipt of the Buyer Dispute Notice. If
such dispute cannot be amicably settled within such 15-day period, then the
Sellers and the Buyer shall jointly retain ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP in Calgary,
Canada (or such other accountant as the Sellers and the Buyer may mutually agree
to) (the "Accountant") to resolve the differences of the Sellers and the Buyers
with respect to the Computed Amounts, which differences shall be set forth in
their respective proposals to be provided to the Accountant concurrently with
the retention of the Accountant. The Accountant shall conduct such review of the
Closing Date Balance Sheet and any supporting documentation as the Accountant in
its sole discretion deems necessary. The Accountant shall, as promptly as
possible and in no event later than 45 days following the date of its retention,
deliver to the Sellers and the Buyer a report (the "Accountant's Report"), in
which the Accountant shall set forth its determination of each of the Computed
Amounts. In the Accountant's Report, the
12
Accountant may only choose between the alternative Computed Amounts proposed by
the Sellers and the Buyer and may not substitute a Computed Amount other than
one proposed by the Sellers or the Buyer. The Accountant's Report and the
determinations of the Computed Amounts set forth therein shall be final and
binding on the parties hereto. The Accountant's Report shall be deemed a final
arbitration award that is enforceable pursuant to applicable law. The Sellers
shall pay one-half and the Buyer shall pay one-half of the fees and expenses of
the Accountant incurred in connection with the matters referred to in this
Section 2.2.
(d) If a Negative Adjustment is determined with finality under
this Section 2.2, the Sellers will, no later than five Business days after that
determination, pay that Negative Adjustment in cash to the Buyer, together with
interest thereon at the rate of 8% per annum from (and including) the Closing
Date to (and excluding) the date of payment, in accordance with their respective
pro rata ownership interests in ▇▇▇▇▇▇▇▇▇ Engineers immediately prior to the
Closing (as reflected in Schedule 3.9). If a Positive Adjustment is determined
with finality under this Section 2.2, the Buyer will, no later than five
Business Days after that determination, pay that Positive Adjustment in cash to
the Sellers, together with interest thereon at the rate of 8% per annum from
(and including) the Closing Date to (and excluding) the date of such payment, in
accordance with their respective pro rata ownership interests in ▇▇▇▇▇▇▇▇▇
Engineers immediately prior to the Closing (as reflected in Schedule 3.9). Any
Positive Adjustment or Negative Adjustment paid under this Section 2.2 shall be
treated by the parties for all Tax purposes as an adjustment to the Purchase
Price.
SECTION 2.3. Closing. The consummation of the transactions contemplated
by this Agreement shall take place at a closing (the "Closing") at the offices
of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
on the date of this Agreement, or such other date to which ▇▇▇▇▇▇ and the
Sellers may agree in writing (the "Closing Date").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES REGARDING THE DELTA COMPANIES
As inducement to ▇▇▇▇▇▇ and the Buyer to enter into this Agreement and
to consummate the transactions contemplated herein, the Sellers, jointly and
severally, represent and warrant to each of ▇▇▇▇▇▇ and the Buyer that, as of the
date hereof:
SECTION 3.1. Title to Shares. ▇▇▇▇▇▇ (Canada) and Delta (Holland) own
the Shares free and clear of all Share Encumbrances; and each of ▇▇▇▇▇▇ (Canada)
and Delta (Holland) has the full and unrestricted right, power and authority to
sell and transfer the Shares it owns to the Buyer. Upon delivery of certificates
evidencing the Shares to the Buyer, duly endorsed for transfer, and payment by
the Buyer to ▇▇▇▇▇▇ (Canada) and Delta (Holland) pursuant to the terms hereof,
the Buyer will acquire good and marketable title to and complete ownership of
the Shares, representing all the issued and outstanding capital stock of
▇▇▇▇▇▇▇▇▇ Engineers.
SECTION 3.2. Corporate Existence and Power of the Sellers. Each of the
Sellers is a corporation or other entity duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and has all
corporate power and authority to enter into this Agreement and to consummate the
transactions that this Agreement contemplates each of the
13
Sellers will consummate. Each of the Sellers is duly qualified to do business as
a foreign corporation or other entity in each jurisdiction where the character
of the property owned or leased by it or the nature of its activities makes such
qualification necessary to carry on its business as now conducted, except for
those jurisdictions where the failure to be so qualified is not, and would not
reasonably be expected to become, material to the ability of either of the
Sellers to consummate the transactions that this Agreement contemplates each of
the Sellers will consummate. ▇▇▇▇▇▇ (Canada) is a resident of Canada, as such
term is defined by Section 248 of the Income Tax Act (Canada). Neither of the
Sellers has any operations or business other than the ownership of the Shares
and neither of the Sellers has any debts, liabilities or obligations as of the
date hereof, other than (i) any of the intercompany items referred to in Section
7.5 and (ii) such debts, liabilities and obligations as would not, singly or in
the aggregate, have a Material Adverse Effect.
SECTION 3.3. Corporate Existence and Power. ▇▇▇▇▇▇▇▇▇ Engineers is a
corporation duly formed, validly existing and in good standing under the laws of
its jurisdiction of formation and has all corporate power and all licenses,
authorizations, consents and approvals required to own or lease its properties
or carry on its business as now conducted, except where the failure to hold any
such licenses, authorizations, consents or approvals would not, singly or in the
aggregate, have a Material Adverse Effect. ▇▇▇▇▇▇▇▇▇ Engineers is duly qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities makes such qualification necessary, except for those
jurisdictions where the failure to be so qualified would not, singly or in the
aggregate, have a Material Adverse Effect. The Sellers have heretofore delivered
to ▇▇▇▇▇▇ true and complete copies of the charter documents of ▇▇▇▇▇▇▇▇▇
Engineers as currently in effect. The transfer of the Shares provided for in
this Agreement has been duly authorized by all necessary action on the part of
▇▇▇▇▇▇▇▇▇ Engineers.
SECTION 3.4. Subsidiaries. Schedule 3.4 contains a true and complete
list of each of the direct and indirect subsidiaries of ▇▇▇▇▇▇▇▇▇ Engineers as
of the date hereof (collectively, the "Delta Subsidiaries"). Such list sets
forth the jurisdiction of incorporation, the authorized capital stock, the
number of shares duly issued and outstanding, the number of such shares owned by
▇▇▇▇▇▇▇▇▇ Engineers or another of the Delta Companies and the name of any third
parties, including, but not limited to, any Person holding such shares as a
nominee of, or in trust for, ▇▇▇▇▇▇▇▇▇ Engineers or one or more of the Delta
Subsidiaries, who own any of such shares and the number of shares so owned.
Except as otherwise indicated on Schedule 3.4, all shares of capital stock of
the Delta Subsidiaries are validly issued, fully paid and nonassessable, and are
owned by ▇▇▇▇▇▇▇▇▇ Engineers, directly or indirectly through other Delta
Subsidiaries, free and clear of any Share Encumbrances. Except as set forth on
Schedule 3.4, ▇▇▇▇▇▇▇▇▇ Engineers (i) does not have any direct or indirect
subsidiaries other than the Delta Subsidiaries, and (ii) other than in the
ordinary course of business of the Delta Companies does not own any securities
of or other equity interests in, any Person other than the Delta Subsidiaries.
Each of the Delta Subsidiaries is a company duly organized, validly existing
and, except as set forth on Schedule 3.4, in good standing under the laws of the
jurisdiction of its formation, has the requisite power to own or lease its
properties and carry on its business as now being conducted, and is duly
qualified as a foreign corporation or other entity to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or
14
the nature of its activities makes such qualification necessary, except where
the failure so to qualify would not, singly or in the aggregate, have a Material
Adverse Effect.
SECTION 3.5. Authorization. The execution, delivery and performance of
this Agreement by each of the Sellers and the consummation by the Sellers of the
transactions contemplated hereby are within the Sellers' respective corporate
powers and have been duly authorized by all necessary action on their parts,
including all necessary shareholder action on the part of their respective
shareholders. This Agreement has been duly and validly executed and delivered by
each of the Sellers and constitutes a legal, valid and binding agreement of each
of the Sellers enforceable against each of them in accordance with its terms,
except (a) as rights to indemnity hereunder may be limited by federal or state
securities laws or the public policies embodied therein, (b) as such
enforceability may be limited by any applicable bankruptcy, insolvency,
fraudulent transfer, moratorium, reorganization or similar laws affecting the
enforcement of creditors' rights generally and (c) as such enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.6. Corporate Records. The minute books, transfer books and
stock ledgers of each of the Delta Companies are complete and accurate in all
material respects and contain accurate and complete records of all actions
previously taken by the board of directors and committees of the board of
directors and the shareholders of the Delta Companies, except where the failure
of those records to be accurate and complete would not, singly or in the
aggregate, have a Material Adverse Effect. Since January 1, 1996, the Delta
Companies have maintained their respective books, records and accounts in
accordance with sound business practices.
SECTION 3.7. Governmental Authorization. The execution, delivery and
performance of this Agreement by each of the Sellers do not require any of the
Sellers to obtain any action by, or consent or approval of, or make any filing
with, any Governmental Authority other than the actions, consents, approvals or
filings required under the Foreign Antitrust Laws (each, a "Required
Governmental Approval" and collectively with the Required Contractual Consents,
the "Required Consents"). To the knowledge of the Sellers, there are no facts
relating to the identity or circumstances of the Sellers that would prevent or
materially delay obtaining any of the Required Consents.
SECTION 3.8. Non-Contravention. Except as set forth on Schedule 3.8,
the execution, delivery and performance of this Agreement by each of the Sellers
do not and will not (a) contravene or conflict with the respective charter
documents of the Sellers or the Delta Companies; (b) assuming receipt of the
Required Consents, violate or conflict with any provision of any Applicable Law
binding upon or applicable to the Sellers, the Business or the Shares, except
for any such violations or conflicts as would not, singly or in the aggregate,
have a Material Adverse Effect; (c) result in the creation or imposition of any
Lien (other than Permitted Liens) or any Tax on any of the assets of any of the
Delta Companies; or (d) result in a violation or breach of, or constitute a
default under, or give rise to a right of termination, amendment, cancellation
or acceleration of any right or obligation of any of the Delta Companies or to a
loss of any benefit to which any of the Delta Companies is entitled under any
provision of any note, bond, mortgage, indenture, lease, agreement, contract or
other instrument binding upon any of the Delta Companies or to which any of the
Delta Companies is a party or by which any of them
15
is affected or any license, franchise, permit or other similar authorization
held by any of the Delta Companies or to which any of the Delta Companies is a
party or by which any of them is affected, except for any such violations,
breaches, rights or losses as would not, singly or in the aggregate, have a
Material Adverse Effect.
SECTION 3.9. Capitalization.
(a) The authorized capital stock of each of the Delta
Companies and the number of such shares that are issued and outstanding are set
forth on Schedule 3.9.
(b) All issued and outstanding shares of capital stock of each
of the Delta Companies have been duly authorized and validly issued and are
validly outstanding, fully paid and nonassessable and were not issued in
violation of any preemptive rights of third parties. Except as set forth in
Schedule 3.9, none of the Delta Companies holds any of its issued and
outstanding shares of capital stock in their respective treasuries and there are
not outstanding (i) any options, warrants, rights of first refusal or other
rights to purchase from the Sellers, or any of the Delta Companies, any capital
stock of any of the Delta Companies, (ii) any securities convertible into or
exchangeable for shares of such stock or (iii) any other commitments of any kind
for the issuance of additional shares of capital stock or options, warrants or
other securities of any of the Delta Companies (such shares, options, warrants,
rights of first refusal or other rights, convertible securities, exchangeable
securities or other commitments are referred to herein collectively as "Equity
Securities"). Except as set forth in Schedule 3.9, (i) there is no contract,
right or option outstanding to require any of the Delta Companies to redeem,
purchase or otherwise reacquire any Equity Securities of any of the Delta
Companies and (ii) there are no preemptive rights with respect to any Equity
Securities of any of the Delta Companies.
(c) Except as set forth in Schedule 3.9, there are no
shareholders agreements, investors' rights agreements, voting trusts or other
agreements or understandings to which any of the Sellers, or any of the Delta
Companies is a party or by which any of them is bound relating to the voting of,
or placing any restrictions on, any shares of the capital stock of any of the
Delta Companies.
SECTION 3.10. Delta Companies' Reports and Financial Statements.
(a) Schedule 3.10 contains true and complete copies of the
consolidated balance sheets and related consolidated income statements of
▇▇▇▇▇▇▇▇▇ Engineers and its subsidiaries (including, for purposes of this
Section 3.10(a) and Section 3.10(b), the Delta Subsidiaries and the Excluded
Entities) as of and for the nine (9) month period ended December 31, 1999 and as
of and for the year ended December 31, 2000 (the "Annual Statements"), and the
consolidated balance sheet and related consolidated income statement of
▇▇▇▇▇▇▇▇▇ Engineers and its subsidiaries as of and for the six (6) month period
ended June 30, 2001 (the "Interim Statements" and, together with the Annual
Statements, the "Financial Statements"). Such June 30, 2001 balance sheet is
referred to herein as the "▇▇▇▇▇▇▇▇▇ Engineers Balance Sheet."
(b) Each of the Financial Statements has been prepared based
on the books and records of ▇▇▇▇▇▇▇▇▇ Engineers and its subsidiaries in
accordance with accounting
16
principles generally accepted in the United States (subject, in the case of the
Interim Statements, to closing adjustments and, in the case of all the Financial
Statements, to the absence of footnotes), consistently applied (except as stated
therein or in the footnotes thereto), and present fairly in all material
respects the financial condition and results of operations of ▇▇▇▇▇▇▇▇▇
Engineers and its subsidiaries as of the dates or for the periods indicated
therein. The Annual Statements were the financial statements of ▇▇▇▇▇▇▇▇▇
Engineers and its subsidiaries that were used, without material change (other
than intercompany eliminations), in the preparation of the consolidated audited
financial statements of Parent as of and for the nine (9) month period ended
December 31, 1999 and as of and for the year ended December 31, 2000, as filed
by Parent with the U.S. Securities and Exchange Commission.
(c) Schedule 3.10 contains a true and correct copy of the pro
forma consolidated balance sheet of the Delta Companies at June 30, 2001 which
has been prepared on the same basis as the ▇▇▇▇▇▇▇▇▇ Engineers Balance Sheet
except that it has been adjusted to remove (i) intercompany balances between the
Delta Companies and the Sellers or their Affiliates (other than the Delta
Companies), (ii) cash balances in excess of the amounts required to be
maintained pursuant to client contracts or required for payment of outstanding
checks and drafts, (iii) the Transferred Stock and (iv) certain specified
liabilities of the Delta Companies set forth on Schedule 3.10 (the "Seller
Assumed Obligations"). Such June 30, 2001 pro forma balance sheet is referred to
herein as the "Delta Companies Pro Forma Balance Sheet."
(d) Except as disclosed in Schedule 3.10, since December 31,
2000, each of the Delta Companies has (i) discharged its accounts payable and
other current liabilities and obligations relating to its business and
operations consistent with its past practices, but in any event in all cases
before becoming past due, except where the failure to do so would not, singly or
in the aggregate, have a Material Adverse Effect, and (ii) purchased and
maintained inventory in an amount and of a type and character consistent with
its past practices and the reasonable requirements of its business and
operations and intended to facilitate the sound operation of its business with
regard to its current requirements and expectations.
(e) Except as set forth in Schedule 3.10, the Delta Companies
have no outstanding Debt.
(f) As a result of the Closing Date Cash Distributions and the
transfers to the Sellers disclosed in Schedule 3.14, the Sellers do not expect
the Positive Adjustment, if any, to exceed $2,500,000. This representation is
based on a good faith determination of the Sellers as of the date hereof and
shall not be deemed to impose any limit on the Positive Adjustment, if any.
SECTION 3.11. Accounts Receivable and Unbilled Work in Process. All
accounts receivable and unbilled work in process of the Delta Companies that are
reflected in their respective books and records as of the Closing Date represent
(or, in the case of unbilled work in process, when billed will represent) valid
and enforceable claims arising from bona fide transactions in the ordinary
course of business. Except as set forth in Schedule 3.11, to the knowledge of
the Sellers, (i) such accounts receivable and unbilled work in process are not
subject to any defenses, claims or rights of setoff and (ii) such accounts
receivable are, and when billed the unbilled work in process will be, fully
collectible in all material respects (net of all
17
allowances for bad debts and project reserves that are reflected in the books
and records of any of the Delta Companies as of the Closing Date) in the
ordinary course of business without material out-of-pocket costs in collection
efforts therefor. Except as set forth in Schedule 3.11, as of October 22, 2001,
(i) no account debtor in respect of any such account receivable is currently
delinquent in its payment by more than sixty (60) days from the due date of the
original invoice, (ii) no account debtor in respect of any such account
receivable has refused in writing to pay its existing obligations for any
reason, (iii) no account debtor in respect of any such account receivable is, to
the knowledge of the Sellers, insolvent or bankrupt and (iv) no such account
receivable is pledged to any third party.
SECTION 3.12. Absence of Undisclosed Liabilities. Except for (i) the
liabilities and obligations referred to in Schedule 3.12 and (ii) the
liabilities and obligations which are accrued or reserved against in the Delta
Companies Pro Forma Balance Sheet (or reflected in the notes thereto) or which
were incurred after the date of the Delta Companies Pro Forma Balance Sheet in
the ordinary course of business and consistent with past practices, the Delta
Companies do not have any liabilities or obligations (whether absolute, accrued,
contingent or otherwise) which would singly or in the aggregate, have a Material
Adverse Effect.
SECTION 3.13. Permits. Schedule 3.13 sets forth all material approvals,
authorizations, certificates, consents, licenses, orders and permits and other
similar authorizations of all Governmental Authorities necessary for the
operation of the Business as currently operated (other than permits under
Environmental Laws and Intellectual Property Rights, which are the subjects of
Sections 3.21 and 3.30, respectively) (the "Permits"). Except as set forth in
Schedule 3.13, each Permit is valid and in full force and effect and none of the
Permits will be terminated or become terminable or impaired as a direct result
of the consummation of the transactions contemplated hereby, except where the
failure to be valid and in full force and effect or where such termination or
impairment would not, singly or in the aggregate, have a Material Adverse
Effect.
SECTION 3.14. Absence of Certain Changes. Except as described in
Schedule 3.14, since June 30, 2001, the Delta Companies have conducted their
respective businesses in the ordinary and usual course and, except as
specifically contemplated by this Agreement, there has not been:
(a) any event, occurrence, state of circumstances or facts or
change in the Delta Companies, other than events, occurrences, circumstances,
facts or changes occurring in the ordinary course of business and such matters
as have generally affected the engineering and construction services industry or
changes in general economic conditions, that has had or that would reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect;
(b) any incurrence, assumption or guarantee by the Delta
Companies of any outstanding amount of indebtedness (other than intercompany
debt that will be retired or otherwise discharged pursuant to Section 7.5) for
borrowed money or, except in the ordinary course of business, any other
liabilities of any nature, whether or not accrued, contingent or otherwise;
18
(c) any (i) payments by the Delta Companies in respect of Debt
of the Delta Companies or in satisfaction of any Liabilities of the Delta
Companies, other than for any such payment in the ordinary course of business or
pursuant to Section 7.5, or (ii) creation, assumption or sufferance of the
existence of (whether by action or omission) any Lien on any assets reflected on
the Delta Companies Pro Forma Balance Sheet, other than Permitted Liens;
(d) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of any of the
Delta Companies, or any repurchase, redemption or other acquisition by any of
the Delta Companies of any outstanding shares of capital stock or other
ownership interests in, any of them;
(e) any material damage to or loss of any asset or property
material to the operation of the Business, whether or not covered by insurance;
(f) any material transaction or commitment made, or any
contract or agreement entered into, by the Delta Companies relating to their
respective assets or businesses (including the acquisition or disposition of any
asset material to the operation of the Business) or any loss or relinquishment
by the Delta Companies of any material contract or other material right, other
than transactions and commitments in the ordinary course of business in
accordance with their past practices;
(g) any material change by the Delta Companies in their
accounting principles, methods or practices or in the manner they keep their
books and records or any material change by the Delta Companies of their current
practices with regards to sales, receivables, payables or accrued expenses,
except as required by accounting principles generally accepted in the United
States;
(h) any increase in (or commitment, oral or written, to
increase) the rate or terms (including, without limitation, any acceleration of
the right to receive payment) of compensation payable or to become payable by
any of the Delta Companies to their respective directors, officers, employees or
consultants, except increases effected in the ordinary course of business;
(i) any increase in (or commitment, oral or written, to
increase) the rate or terms (including, without limitation, any acceleration of
the right to receive payment) of any bonus, insurance, pension or other employee
benefit plan or contract, payment or arrangement of the Delta Companies or their
Affiliates made to, for or with any director, officer, employee or consultant of
the Delta Companies (in each case, in such person's capacity as such), except
increases effected in the ordinary course of business;
(j) any loan by any of the Delta Companies to, or guarantee or
assumption by any of the Delta Companies of any loan or obligation on behalf of,
any director, officer, stockholder or employee of any of the Delta Companies,
except for such loans or obligations as should be discharged in accordance with
the provisions of Section 7.5;
(k) to the knowledge of the Sellers, any change in relations
between the Delta Companies and their respective employees which has had, or
would reasonably be expected to have singly, or in the aggregate, a Material
Adverse Effect;
19
(l) any notification by any significant customer of the
Business setting forth any intention to change its current business relationship
with the Delta Companies in a manner that would reasonably be expected to have
singly, or in the aggregate, a Material Adverse Effect; or
(m) any commitment or agreement by or on behalf of the Sellers
to do any of the things described in this Section 3.14.
SECTION 3.15. Litigation. Except as set forth in Schedule 3.15, there
is no action, suit, claim, investigation or proceeding (each a "Legal
Proceeding") pending or, to the knowledge of the Sellers, threatened against or
affecting any of the Delta Companies or any of their respective assets before
any court or arbitrator or any Governmental Authority which, singly or in the
aggregate, would have a Material Adverse Effect or which in any manner
challenges or seeks to prevent, enjoin, alter or delay the transactions
contemplated hereby. To the knowledge of the Sellers, no event has occurred and
no circumstances or set of facts exist which would constitute a valid basis for
the assertion by any Third Party of any claim or Legal Proceeding, other than
those listed in Schedule 3.15, which, singly or in the aggregate, would have a
Material Adverse Effect. Except as set forth in Schedule 3.15, there is no
outstanding or, to the knowledge of the Sellers, threatened judgment (other than
any judgment that has been satisfied), injunction, order, consent or decree of
any Governmental Authority that is effective against the Delta Companies or any
of their respective assets. Schedule 3.15 sets forth a description of the
damages or other relief sought in all Legal Proceedings described therein.
SECTION 3.16. Employee Benefit Plans.
(a) Schedule 3.16 sets forth a list of all Contracts providing
for employment, consulting, severance pay, continuation pay, termination pay,
director, officer or employee indemnification, nondisclosure, noncompetition or
other similar agreements of any nature whatsoever, and a written summary of any
oral Contracts (other than employment at-will arrangements) covering such
matters (collectively, the "Employment Agreements") between any of the Delta
Companies, on the one hand, and any current or former stockholder, officer,
director or employee of the Delta Companies, on the other hand, that are
currently in effect. Except as set forth in Schedule 3.16, there are no
Employment Agreements or other similar agreements to which any of the Delta
Companies is a party under which the transactions contemplated by this Agreement
(i) will require any payment by any of the Delta Companies or the Buyer or any
consent or waiver from any Person who is a party thereto or (ii) will result in
any change in the nature of any rights of any Person under any such Employment
Agreement (except as contemplated by this Agreement). To the knowledge of the
Sellers, there are no noncompetition or nondisclosure agreements or similar
agreements between any employee, officer or director of any of the Delta
Companies, on the one hand, and any third party, on the other hand, or by which
any such employee, officer or director is bound that has been breached, or may
reasonably be expected to be breached, by the activities of such employee,
officer or director on behalf of the Delta Companies.
(b) Schedule 3.16 sets forth all Benefit Plans of the Delta
Companies. With respect to each such Benefit Plan, the Sellers have made
available to the Buyer or ▇▇▇▇▇▇ true and correct copies of (i) all governing
instruments and related agreements, including a written
20
description of any Benefit Plan not set forth in writing, (ii) any reports
required to be filed since January 1, 1998 with any Governmental Authority and
any accountant's opinions, if applicable, for each Benefit Plan, (iii) any
qualifications, determination or similar letters or authorizations obtained from
any Governmental Authority with respect to each Benefit Plan and (iv) if
applicable, the most recently prepared financial statements of each Benefit
Plan.
(c) Except as set forth in Schedule 3.16, none of the Delta
Companies sponsors or, within the last five (5) years, has sponsored,
maintained, contributed to or incurred an obligation to contribute to, any
employee pension plan. Except as set forth on Schedule 3.16, none of the Delta
Companies sponsors or has ever sponsored, maintained, contributed to or incurred
an obligation to contribute to any Multiemployer Plan or Multiple Employer Plan.
(d) Except as set forth in Schedule 3.16, no individual shall
accrue or receive additional benefits, service or accelerated rights to payments
of benefits under any Benefit Plan, including the right to receive any parachute
payment, or become entitled to severance, termination allowance or similar
payments as a direct result of the transactions contemplated by this Agreement.
(e) Each Benefit Plan has been maintained, in all material
respects, in accordance with its terms and in operation, in accordance with
Applicable Law, and there has been no violation of any reporting or disclosure
requirement imposed by Applicable Law that would result singly, or in the
aggregate, in a Material Adverse Effect.
(f) The Delta Companies have made full and timely payment of
all amounts required to be contributed or paid as expenses under the terms of
each Benefit Plan and Applicable Law, except where the failure to make such
payments would not, singly or in the aggregate, have a Material Adverse Effect.
SECTION 3.17. Labor and Employment Matters.
(a) Except as set forth in Schedule 3.17, no collective
bargaining agreement or similar labor agreement exists that is binding on any of
the Delta Companies and, except as set forth in Schedule 3.17, since January 1,
1998, no petition has been filed or proceedings instituted by an employee or
group of employees with any labor relations board or similar authority under
Applicable Law seeking recognition of a bargaining representative. Schedule 3.17
sets forth any organizational effort that, to the knowledge of the Sellers, is
currently being made or threatened or has been made since January 1, 1998 by or
on behalf of any labor union to organize any employees of the Delta Companies.
(b) Except as set forth in Schedule 3.17, (i) there is no
labor strike or organized work slowdown or stoppage pending or, to the knowledge
of the Sellers, threatened, against or directly affecting the Delta Companies,
(ii) no material grievance or arbitration proceeding arising out of or under any
collective bargaining agreement or similar labor agreement is pending, and, to
the knowledge of the Sellers, no claims therefore exist, and (iii) none of the
Delta Companies has received any notice or has any knowledge of any threatened
labor or employment dispute, controversy or grievance or any other unfair labor
practice proceeding or breach of contract claim or discrimination complaint or
charge or action
21
with respect to claims of, or obligations to, any employee or group of employees
of the Delta Companies, except for such disputes, controversies, grievances,
proceedings, claims, complaints, charges or actions as would not, singly or in
the aggregate, have a Material Adverse Effect.
(c) Each of the Delta Companies has complied with all
Applicable Laws, rules and regulations relating to the employment of labor and
those relating to hours, wages, collective bargaining and the payment and
withholding of Taxes and other sums as required by appropriate authorities,
except where the failure to so comply would not, singly or in the aggregate,
have a Material Adverse Effect.
(d) Schedule 3.17 sets forth a list of the names of all
employees of the Delta Companies currently employed who receive One Hundred
Thousand Dollars ($100,000) or more per year in base salary compensation and
indicates the current salary or wage rate of each such employee. All of the
salaries, wages and benefits of all employees of the Delta Companies have been
paid by the Delta Companies when due and payable for all periods since January
1, 1998 through the date hereof.
SECTION 3.18. Taxes. Except as disclosed on Schedule 3.18:
(a) The Delta Companies have timely filed all Tax Returns
required to have been filed by them, and all such Tax Returns are true, correct
and complete in all material respects; each affiliated group with which any of
the Delta Companies files a consolidated or combined Tax Return has filed all
such Tax Returns that it was required to file for each taxable period during
which any of the Delta Companies was a member of the group and all such
consolidated or combined Tax Returns were correct and complete in all material
respects; and none of such Tax Returns contains a disclosure statement under
Section 6662 of the Code (or any predecessor statute) or any similar provision
of state, provincial, local or foreign law.
(b) With respect to any open tax years, all Taxes due and
payable by any of the Delta Companies prior to the date hereof (whether or not
shown on any Tax Return) have been paid in full or either (i) have been
reflected as a reserve on the Delta Companies Pro Forma Balance Sheet or (ii)
have accrued subsequent to the date of the Delta Companies Pro Forma Balance
Sheet with respect to operations subsequent to such date.
(c) The charges, accruals and reserves for Taxes (including
deferred Taxes) currently reflected on the Delta Companies Pro Forma Balance
Sheet were adequate to cover all unpaid Taxes accruing or payable by the Delta
Companies in respect of taxable periods that ended on or before the date of the
Delta Companies Pro Forma Balance Sheet.
(d) There are no audits or administrative proceedings, court
proceedings or claims pending against any of the Delta Companies with respect to
any Taxes, and no material assessment, deficiency or adjustment has been
asserted or, to the knowledge of the Sellers, proposed with respect to any Tax
Return of or with respect to any of the Delta Companies which has not been paid
or otherwise resolved prior to the date hereof, and there are no liens for Taxes
upon the assets or properties of any of the Delta Companies, except for liens
for Taxes that are not yet due and delinquent.
22
(e) Since January 1, 1996, no written claim has been made by
an authority in a jurisdiction where any one of the Delta Companies currently
does not file Tax Returns that it is or may be subject to taxation by that
jurisdiction.
(f) The Delta Companies have withheld and paid over all
material amounts of Taxes required by Applicable Law to have been withheld and
paid over in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(g) None of the Delta Companies is required to include in
income any adjustment pursuant to Section 481(a) of the Code (or similar
provisions of any other applicable Tax law or regulation) by reason of a change
in accounting method nor do the Sellers have any knowledge that the IRS (or
other taxing authority) has proposed, or is considering, any such change in
accounting method.
(h) None of the Delta Companies has been included in any
consolidated, combined or unitary Tax Return provided for under the laws of the
United States, any state or locality with respect to Taxes for any taxable
period for which the statute of limitations has not expired. None of the Delta
Companies has any liability for the Taxes of any Person under Treasury
Regulation Section 1.1502-6 (or any similar provision of provincial,
territorial, county, state, local or foreign law), as a transferee or successor,
by contract or otherwise.
(i) None of the Delta Subsidiaries is a party to or bound by
any affiliated group consolidated return tax allocation agreement, tax sharing
agreement or tax indemnification agreement, other than among the Delta
Companies.
(j) As of the Closing Date, there will be no excess loss
accounts, deferred intercompany gains or losses, or other like items pertaining
to the Delta Companies.
SECTION 3.19. Compliance With Laws. Except as set forth in Schedule
3.19, since January 1, 1996, none of the Delta Companies has violated or
infringed, and none of them is currently in violation or infringement of, any
Applicable Law or any order, writ, injunction or decree of any Governmental
Authority, except for such violations and infringements as would not, singly or
in the aggregate, have a Material Adverse Effect.
SECTION 3.20. Finders' Fees. Except for ▇▇▇▇▇▇▇ ▇▇▇▇ & Company L.L.C.,
the fees and expenses of whom will be paid by the Sellers or one of their
Affiliates (other than the Delta Companies), there is no investment banker,
broker, finder or similar intermediary which has been retained by or is
authorized to act on behalf of the Sellers who would be entitled to any fee or
commission upon consummation of the transactions contemplated by this Agreement.
SECTION 3.21. Environmental Compliance.
(a) Except as disclosed in Schedule 3.21, each of the Delta
Companies has obtained all approvals, authorizations, certificates, consents,
licenses, orders and permits or other similar authorizations of all Governmental
Authorities that are required under any Environmental Law that is applicable to
it or its operations, except where the failure to obtain such approvals,
23
authorizations, certificates, consents, licenses, orders or permits would not,
singly or in the aggregate, have a Material Adverse Effect.
(b) Except as set forth in Schedule 3.21, (i) each of the
Delta Companies is in compliance with the terms and conditions of all Permits
required under all Environmental Laws applicable to it or its operations, except
where the failure to comply would not, singly or in the aggregate, have a
Material Adverse Effect, and (ii) each of the Delta Companies is also in
compliance with all other limitations, restrictions, conditions, standards,
requirements, schedules and timetables required or imposed under all
Environmental Laws applicable to it or its operations, except where the failure
to comply would not, singly or in the aggregate, have a Material Adverse Effect.
(c) Except as set forth in Schedule 3.21, there are no past or
present events, conditions, circumstances, incidents, actions or omissions
relating to or in any way affecting any of the Delta Companies, the Business, or
any facilities or real property ever owned, operated or leased by any of the
Delta Companies that (i) violate any applicable Environmental Law, except for
any such violations as would not, singly or in the aggregate, have a Material
Adverse Effect, or (ii) may give rise to any Pre-Closing Environmental Matters
or other liability that would have singly, or in the aggregate, a Material
Adverse Effect, or (iii) may otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, study or investigation (A) under any
applicable Environmental Law or applicable common law relating to the protection
of human health or safety or the environment, (B) based on or related to the
manufacture, processing, distribution, use, treatment, storage (including,
without limitation, underground storage tanks), disposal, transport or handling,
or the emission, discharge, release or threatened release of any Hazardous
Substance or (C) resulting from exposure to workplace hazards that, in any such
case described in clause (A), (B) or (C) would have singly, or in the aggregate,
a Material Adverse Effect.
(d) The Sellers have made available to the Buyer or ▇▇▇▇▇▇ all
environmental studies and reports prepared on behalf of the Parent, ▇▇▇▇▇▇▇▇▇,
the Sellers or any of the Delta Companies since January 1, 1996 that relate to
(i) any facilities or real property ever owned, operated or leased by any of the
Delta Companies, (ii) any Pre-Closing Environmental Matters or (iii) any other
material liability of any of the Delta Companies under any Environmental Law.
(e) Except as set forth in Schedule 3.21, no underground
storage tanks, asbestos-containing materials, polychlorinated biphenyls or urea
formaldehyde foam insulation are or have ever been located on property currently
or formerly owned, operated or leased by the Delta Companies, except for any
such occurrences as would not, singly or in the aggregate, have a Material
Adverse Effect.
SECTION 3.22. Insurance; Bonds.
(a) Schedule 3.22 contains a complete list accurately
describing (i) all insurance policies, currently covering the Delta Companies or
concerning their respective businesses and properties, including all casualty,
errors and omissions, marine, pollution, property, equipment insurance and
officers' and directors' liability insurance policies that cover the Delta
Companies or any of their respective officers or directors, but excluding excess
liability
24
and officers' and directors' liability insurance policies maintained on a group
basis through Parent or ▇▇▇▇▇▇▇▇▇ (the "Group Policies"), and (ii) all material
outstanding bonds, letters of credit and other surety arrangements issued or
entered into in connection with the businesses, assets and liabilities of the
Delta Companies. Except as disclosed in Schedule 3.22, all such insurance
coverage is in full force and effect, provides coverage as is required to be
obtained by any of the Delta Companies under any material Contract to which any
of the Delta Companies is a party and has been issued by insurers of recognized
responsibility. There are no pending material claims or incidents against such
insurance by the Delta Companies as to which the applicable insurers have denied
coverage. Since January 1, 1998, none of the Delta Companies has been refused
any insurance coverage by any insurer from which any of the Delta Companies has
sought coverage.
(b) All material claims that have been made by any of the
Delta Companies under any of the policies set forth in Schedule 3.22 or any of
the Group Policies, have been properly filed with the applicable insurers and
the applicable insurers have been notified by the Delta Companies of all
incidents known to the Sellers that may be covered by one or more of such
policies and that reasonably could have a Material Adverse Effect.
SECTION 3.23. Takeover Statutes. No "fair price," "moratorium" or
"control share acquisition" or other similar antitakeover statute or regulation
of any Governmental Authority, whether foreign or domestic (each a "Takeover
Statute") is applicable to this Agreement or the transactions contemplated by
this Agreement, except in all cases where an exemption under such statute or
regulation is applicable, and no anti-takeover provision in the charter
documents of any of the Delta Companies is applicable to this Agreement or the
transactions contemplated by this Agreement.
SECTION 3.24. Material Contracts.
(a) Schedule 3.24 sets forth a complete list of the following
Contracts of the Delta Companies (the Contracts on that Schedule that are
referred to therein as Scheduled Contracts are, collectively, with the
Employment Agreements, referred to herein as the "Scheduled Contracts"):
(i) each agreement or arrangement of the Delta
Companies that (A) requires or permits the other party thereto to
require the payment or incurrence of liabilities by the Delta Companies
subsequent to the date of this Agreement of more than One Hundred
Thousand Dollars ($100,000) and (B) cannot be terminated or canceled
without liability, premium or penalty if written notice is given thirty
(30) days prior to the effective date of the notice;
(ii) each agreement or arrangement of the Delta
Companies involving the obligation of any of the Delta Companies to
render services subsequent to the date of this Agreement involving
payments to the Delta Companies in excess of One Hundred Thousand
Dollars ($100,000), with an additional designation of those agreements
under which the Sellers believe that there is a reasonable probability
that direct costs relating to the contract will exceed revenue by at
least Twenty-Five Thousand Dollars ($25,000);
25
(iii) all performance bonds, completion bonds, bid
bonds, suretyship agreements and similar instruments and agreements and
any letters of credit and related reimbursement agreements issued with
respect to the Scheduled Contracts referred to in clauses (i) and (ii)
of this Section 3.24;
(iv) each agreement for the acquisition or
disposition of a material amount of assets (other than inventory or
assets procured for customers in the ordinary course of business) and
all partnership or joint venture agreements, teaming arrangements or
other similar Contracts entered into by the Delta Companies since
January 1, 1998 or currently in effect;
(v) each agreement, arrangement, contract, commitment
or obligation of the Delta Companies restricting or otherwise affecting
the ability of the Delta Companies to compete in the Business or
otherwise in any jurisdiction subsequent to the date of this Agreement;
(vi) all material license or other agreements
relating to the use of Intellectual Property Rights that currently
remain executory in whole or in part, except any of the foregoing
related to the use of generally available computer software;
(vii) forms of all standard warranty agreements,
product guarantees or indemnity agreements currently in effect with
respect to any of the services rendered by the Delta Companies;
(viii) all material license, sale, distribution,
sales representative, commission, marketing, agent, franchise,
technical assistance or similar agreements relating to or providing for
the marketing and/or sale of products or services that currently remain
executory in whole or in part to which the Delta Companies are parties
or by which they are otherwise bound;
(ix) written contracts and other written agreements
with: (A) any individual who is a current or former officer, director,
employee or consultant having a remaining term of more than six (6)
months from the date hereof that cannot be cancelled on notice of 30
days or less and either (1) providing for an obligation to pay and/or
accrue compensation of One Hundred Thousand Dollars ($100,000) or more
per annum to such officer, director, employee or consultant, or (2)
providing for the payment of fees or other consideration in excess of
One Hundred Thousand Dollars ($100,000); or (B) any foreign agent or
representative;
(x) all contracts relating to, or evidences of, or
guarantees of, or providing security for, Debt that is currently
outstanding (other than intercompany Debt that is being discharged
concurrently with the Closing pursuant to the provisions of Section
7.5);
(xi) contracts and other agreements for the purchase
or sale of inventory, equipment or services that (A) contain an
escalation, renegotiation or redetermination clause and (B) cannot be
terminated or canceled without liability,
26
premium or penalty if written notice is given thirty (30) days prior to
the effective date of the notice;
(xii) contracts and other agreements that currently
remain executory in whole or in part and provide for (A) the sale of
any assets or properties of any of the Delta Companies other than in
the ordinary course of business and for a sale price exceeding One
Hundred Thousand Dollars ($100,000) in any one case (or in the
aggregate, in the case of any series of related contracts or other
agreements) or (B) the grant to any person of any preferential rights
to purchase any assets or properties of any of the Delta Companies; and
(xiii) all other existing contracts or agreements,
not otherwise covered by clauses (i) through (xii), the loss of which
would result in a Material Adverse Effect.
(b) The Sellers have made true and correct copies of all
Scheduled Contracts available to the Buyer or ▇▇▇▇▇▇. Except as disclosed in
Schedule 3.24, each Scheduled Contract is a legal, valid and binding obligation
of the Delta Companies and, to the knowledge of the Sellers, each other party
thereto, enforceable against each such party thereto in accordance with its
terms, except as such enforceability may be (i) limited by any applicable
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or
similar laws affecting the enforcement of creditors' rights generally and (ii)
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Except as
disclosed in Schedule 3.24, there is no existing or asserted material default of
any of the Delta Companies under any Scheduled Contract or, to the knowledge of
the Sellers, of any other party thereto. Schedule 3.24 sets forth all Required
Contractual Consents.
(c) Except as set forth on Schedule 3.24, to the knowledge of
the Sellers, there is no intent by any party to any Scheduled Contract to
terminate or amend the terms thereof or to refuse to renew any such Scheduled
Contract that contains a renewal provision that has not yet been exercised, upon
expiration of its current term. The Delta Companies are not currently paying
liquidated damages in lieu of performance under any Scheduled Contract.
(d) Schedule 3.24 also sets forth a complete list, as of
October 22, 2001, of all outstanding proposals to customers of the Delta
Companies that the Sellers reasonably consider to be active and all proposals
currently being prepared for customers of the Delta Companies, in each case
involving a contract with estimated contract revenues in excess of Five Hundred
Thousand Dollars ($500,000).
SECTION 3.25. Related Party Transactions. Except as set forth in
Schedule 3.25, and except as described in Sections 3.32 and 3.33, neither
Parent, nor ▇▇▇▇▇▇▇▇▇, nor any of the Sellers or the Delta Companies, nor, to
the knowledge of the Sellers, any of the officers or directors of any of them
(or any family member of any such officer or director), now has or at any time
subsequent to January 1, 1998, either directly or indirectly, has had a material
interest in:
(a) any Person which furnishes or sells or during such period
furnished or sold services or products to the Delta Companies or purchases or
during such period obtained
27
from the Delta Companies services, or otherwise does or during such period did
business with the Delta Companies; or
(b) any contract, commitment or agreement to which the Delta
Companies are or during such period were parties or under which they are or were
obligated or bound or to which any of their properties are or have been subject.
SECTION 3.26. Real Estate.
(a) The Sellers have delivered or otherwise made available to
the Buyer or ▇▇▇▇▇▇ and its representatives a complete and accurate list of the
following:
(i) all real property and interests in real property
and the buildings, structures and improvements thereon (the "Owned
Property") which any of the Delta Companies own, a list of which is set
forth on Schedule 3.26;
(ii) all leases (the "Leases") of real property and
interests in real property and the buildings, structures and
improvements thereon (the "Leased Property" and, together with the
Owned Property, the "Facilities") pursuant to which any of the Delta
Companies are the lessee, a list of which is set forth on Schedule
3.26;
(iii) all contracts or options (and all amendments,
extensions and modifications thereto) currently held by any of the
Delta Companies, or contractual obligations (and all amendments,
extensions and modifications thereto) currently obligating any of the
Delta Companies, to purchase or acquire any interest in real property;
(iv) all contracts or options (and all amendments,
extensions and modifications thereto) currently held by any of the
Delta Companies, or contractual obligations (and all amendments,
extensions and modifications thereto) currently obligating any of the
Delta Companies, to sell or dispose of any interest in real property;
and
(v) all policies of title insurance issued to the
Delta Companies with respect to the Facilities that are currently in
effect.
The Facilities are sufficient for the conduct of the Business as it is now being
conducted. With respect to all Owned Properties, the Delta Companies have
received all required approvals of Governmental Authorities (including, without
limitation, any necessary permits and certificates of occupancy or other similar
certificates permitting lawful occupancy of the Facilities) required in
connection with the operation thereof and are being operated and maintained in
accordance with Applicable Laws, except where the failure to so comply would
not, singly or in the aggregate, have a Material Adverse Effect. Except as set
forth on Schedule 3.26, the improvements constructed on the Facilities,
including, without limitation, all leasehold improvements situated in or on the
Leased Property and owned by the Delta Companies, and all material fixtures and
equipment and other material tangible assets owned, leased or used by the Delta
Companies at the Facilities are (i) subject to no known material defects, (ii)
in good operating condition and repair, subject to ordinary wear and tear, and
(iii) in compliance with all
28
Applicable Laws, except where the failure to so comply would not, singly or in
the aggregate, have a Material Adverse Effect. The Owned Property located within
the Province of Alberta is located fully within an incorporated city or town
within said province and the restrictions on ownership of controlled land
contained in the Foreign Ownership of Land Regulations (Alberta) have no
application to such Owned Property.
(b) Except as set forth in Schedule 3.26, (i) each Lease is,
to the knowledge of the Sellers, in full force and effect, (ii) the Delta
Companies are not in default in any respect of their respective obligations
under any Lease, except for such defaults as would not, singly or in the
aggregate, have a Material Adverse Effect, and (iii) none of the Sellers have
any knowledge of any restriction or any asserted restriction that does or could
reasonably be expected to impair in any material respect the use of any of the
Facilities in the Business as now used.
(c) Except as set forth in Schedule 3.26, and except for
matters disclosed on any policies of title insurance issued to the Delta
Companies with respect to the Owned Properties which have been made available to
▇▇▇▇▇▇, none of the Owned Properties are subject to any Liens, other than
Permitted Liens.
SECTION 3.27. Government Contracting.
(a) Except as set forth in Schedule 3.27, (i) none of the
Delta Companies and none of their respective directors, officers or employees,
and to the knowledge of any of the Sellers, none of the Delta Companies' agents
or consultants, is (or for the last five years has been) under administrative,
civil or criminal investigation (including as a result of a qui tam or similar
action brought under the Civil False Claims Act or any similar foreign, state,
territorial, provincial, county or local law, rule or regulation), indictment or
information, audit or internal investigation with respect to any alleged
irregularity, misstatement or omission arising under or relating to any
contract, bid or proposal with any Governmental Authority or is (or for the last
five years has been) in violation of any statute or regulation relative to
prohibited practices with respect to contracting with Governmental Authorities;
(ii) none of the Delta Companies has made a voluntary disclosure to any
Governmental Authority with respect to any alleged irregularity, misstatement or
omission arising under or relating to any contract, bid or proposal with any
Governmental Authority that has led or would reasonably be expected to lead,
either before or after the Closing Date, to any of the consequences set forth in
(i) above or any other material damage, penalty assessment, recoupment of
payment or disallowance of cost.
(b) Except as set forth in Schedule 3.27, none of the Delta
Companies and, to the knowledge of the Sellers, none of Delta Companies'
respective directors, officers or employees is (or for the last five years has
been) suspended or debarred from doing business with any Governmental Authority.
None of the Sellers know of any circumstances that would warrant the institution
of suspension or debarment proceedings by any Governmental Authority against any
of the Delta Companies in the future.
(c) Except as set forth in Schedule 3.27, the Delta Companies'
cost accounting and procurement systems with respect to any contracts with a
Governmental Authority are in compliance with all Applicable Laws, except where
the failure to be in compliance would not, singly or in the aggregate, have a
Material Adverse Effect.
29
SECTION 3.28. Foreign Corrupt Practices. None of the Delta Companies
and no director, officer or employee of any of the Delta Companies, and, to the
knowledge of the Sellers, no other Person acting on behalf of any of the Delta
Companies, has, directly or indirectly, since January 1, 1996: (a) given or
agreed to give any gift or similar benefit to any customer, supplier,
governmental official or employee, representative of a political party or other
person who is or may be in a position to help or hinder the Delta Companies (or
assist the Delta Companies in connection with any actual or proposed
transaction) which (i) is in violation of applicable federal, state,
territorial, provincial, county, local or foreign law, (ii) for any of the
purposes described in Section 162(c) of the Foreign Corrupt Practices Act, or
any similar foreign country, state, territorial, provincial, county or local
law, rule, regulation or treaty, or (iii) for establishment or maintenance of
any concealed fund or concealed bank account; or (b) acted in a manner which
would be unlawful under any Applicable Law pertaining to the export or import of
technical data, restrictive trade practices or boycotts, or the regulations
under any such Applicable Law.
SECTION 3.29. Relations with Suppliers and Customers. To the knowledge
of the Sellers, the Delta Companies' relationships with their respective
material customers and suppliers, and the relationships of each such supplier to
its suppliers, are good and there are no facts or circumstances of which the
Sellers have knowledge that would lead the Sellers to conclude that any such
relationship may be in jeopardy.
SECTION 3.30. Intellectual Property. The Delta Companies own, or are
validly licensed or otherwise have the right to use all (i) Canadian, other
foreign and United States federal and state patents, trademarks, trade names,
service marks and copyright registrations, (ii) Canadian, other foreign and
United States federal and state patent, trademark, trade name, service ▇▇▇▇ and
copyright applications for registration, (iii) common law claims to trademarks,
service marks and trade names, (iv) claims of copyright which exist although no
registrations have been issued with respect thereto, (v) fictitious business
name filings with any Governmental Authority and (vi) inventions, concepts,
designs, improvements, original works of authorship, computer programs,
know-how, research and development, techniques, modifications to existing
copyrightable works of authorship, data and other proprietary and intellectual
property rights (whether or not patentable or subject to copyright or trade
secret protection), in each case which are used in the Business and are material
to the conduct of the Business (collectively, the "Intellectual Property
Rights"). There are no outstanding and, to the knowledge of the Sellers, no
threatened material disputes or disagreements with the Delta Companies with
respect to any Intellectual Property Rights. Set forth on Schedule 3.30 is a
list of the Intellectual Property Rights which are used in the Business and are
material to the conduct of the Business, other than Intellectual Property Rights
related to the use of generally available computer software, indicating which
such rights are owned or licensed by the Delta Companies.
SECTION 3.31. Title to Assets. Except as set forth in Schedule 3.31,
each of the Delta Companies has good and valid title to all of the assets (other
than real property and Intellectual Property Rights, which are the subjects of
Sections 3.26 and 3.30, respectively) purported to be owned by it, whether
tangible or intangible. Except as set forth on Schedule 3.31, all such assets
are owned by one or more of the Delta Companies free and clear of all liens,
other than Permitted Liens.
30
SECTION 3.32. Transfer of Stock. Prior to the Closing, one or more of
the Delta Companies transferred, sold, conveyed, granted and delivered to ▇▇▇▇▇▇
(Canada) (the "Transfer") all of such companies' right, title and interest in
the outstanding stock (the "Transferred Stock") that they owned in the following
entitles: (i) Trispec Technical Services Ltd., and (ii) Delta ▇▇▇▇▇▇
International, Inc. (collectively the "Excluded Entities"). The Transfer was
made for good and valuable consideration the adequacy of which was acknowledged
by the parties to the Transfer. As of the Closing Date, the Delta Companies are
not liable, or subject to, any ongoing costs, liabilities or obligations with
respect to the Transferred Stock or any of the Excluded Entities.
SECTION 3.33. Assumption of Claims. Prior to the Closing, the Delta
Companies transferred to the Sellers, and the Sellers assumed and have become
responsible for the Seller Assumed Obligations.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE BUYER
As an inducement to Parent, ▇▇▇▇▇▇▇▇▇ and the Sellers to enter into
this Agreement and to consummate the transactions contemplated herein, the Buyer
hereby represents and warrants, as of the date of this Agreement and as of the
Closing Date, to each of Parent, ▇▇▇▇▇▇▇▇▇ and the Sellers as follows:
SECTION 4.1. Organization and Existence. The Buyer is a corporation or
other entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of formation and has all corporate power and authority
to enter into this Agreement, to consummate the transactions contemplated hereby
to carry on its business as now being conducted and to own and operate its
business now owned and operated. The Buyer is duly qualified to do business as a
foreign corporation in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities makes such qualification
necessary to carry on its business as now conducted, except for those
jurisdictions where the failure to be so qualified is not, and would not
reasonably be expected to become, material to the ability of the Buyer to
consummate the transactions contemplated by this Agreement.
SECTION 4.2. Corporate Authorization. The execution, delivery and
performance of this Agreement by the Buyer and the consummation by the Buyer of
the transactions contemplated hereby are within its corporate powers and have
been duly authorized by all necessary corporate action on the part of the Buyer.
This Agreement has been duly and validly executed and delivered by the Buyer and
constitutes a legal, valid and binding agreement of the Buyer, enforceable
against it in accordance with its terms, except (i) as rights to indemnity
hereunder may be limited by federal or state securities laws or the public
policies embodied therein, (ii) as such enforceability may be limited by any
applicable bankruptcy, insolvency, fraudulent transfer, moratorium,
reorganization or similar laws affecting the enforcement of creditors' rights
generally and (iii) as such enforceability may be subject to general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
31
SECTION 4.3. Governmental Authorization. The execution, delivery and
performance of this Agreement by the Buyer requires no action by, consent or
approval of, or filing with, any Governmental Authority other than (i)
compliance with any applicable requirements of any applicable Foreign Antitrust
Law and (ii) any actions, consents, approvals or filings otherwise expressly
referred to in this Agreement. To the knowledge of the Buyer, there are no facts
relating to the identity or circumstances of the Buyer or any of its Affiliates
that would prevent or materially delay obtaining any of the Required Consents.
SECTION 4.4. Non-Contravention. The execution, delivery and performance
by the Buyer of this Agreement does not and will not (i) contravene or conflict
with the charter documents of the Buyer, a true, correct and complete copy of
which has been delivered to the Sellers by the Buyer, (ii) contravene, conflict
with or constitute a default under any material agreement to which the Buyer is
a party or to which any of its properties or assets are subject or (iii)
assuming compliance with the matters referred to in Section 4.3, violate or
conflict with or constitute a violation of any provision of any Applicable Law
binding upon or applicable to the Buyer.
SECTION 4.5. Litigation. There is no Proceeding pending or, to the
knowledge of the Buyer, threatened against, the Buyer before any court or
arbitrator or any Governmental Authority, agency or official that in any manner
challenges or seeks to prevent, enjoin, rescind, alter or delay the transactions
contemplated by this Agreement.
SECTION 4.6. Finders' Fees. There is no investment banker, broker,
finder or similar intermediary which has been retained by or is authorized to
act on behalf of the Buyer who would be entitled to any fee or commission upon
consummation of the transactions contemplated by this Agreement.
SECTION 4.7. Limitation on Representations and Warranties. The Buyer
has not relied, in connection with the transactions contemplated by this
Agreement, upon any representation or warranty of or by the Sellers, Parent or
▇▇▇▇▇▇▇▇▇ or any of their Affiliates other than the representations and
warranties that this Agreement expressly sets forth; and the Buyer acknowledges
that neither the Sellers, Parent or ▇▇▇▇▇▇▇▇▇ nor any of their Affiliates have
made any representations or warranties in connection with the transactions
contemplated by this Agreement other than those expressly set forth in Article 3
and Article 5.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ▇▇▇▇▇▇▇▇▇
As an inducement to ▇▇▇▇▇▇ and the Buyer to enter into this
Agreement and to consummate the transactions contemplated herein, each of Parent
and ▇▇▇▇▇▇▇▇▇ hereby represents and warrants, as of the date of this Agreement
and as of the Closing Date, to each of ▇▇▇▇▇▇ and the Buyer as follows:
SECTION 5.1. Organization and Existence. Each of Parent and ▇▇▇▇▇▇▇▇▇
is a corporation duly organized, validly existing and in good standing under the
laws of its
32
jurisdiction of organization and has all corporate power and authority to enter
into this Agreement and to consummate the transactions that this Agreement
contemplates Parent and ▇▇▇▇▇▇▇▇▇ will consummate. Each of Parent and ▇▇▇▇▇▇▇▇▇
is duly qualified to do business as a foreign corporation in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary to carry on its business as now
conducted, except for those jurisdictions where the failure to be so qualified
is not, and would not reasonably be expected to become, material to the ability
of either Parent or ▇▇▇▇▇▇▇▇▇ to consummate the transactions that this Agreement
contemplates Parent and ▇▇▇▇▇▇▇▇▇ will consummate.
SECTION 5.2. Corporate Authorization. The execution, delivery and
performance of this Agreement by each of Parent and ▇▇▇▇▇▇▇▇▇ and the
consummation by each of Parent and ▇▇▇▇▇▇▇▇▇ of the transactions that this
Agreement contemplates Parent and ▇▇▇▇▇▇▇▇▇ will consummate are within their
respective corporate powers and have been duly authorized by all necessary
corporate action on the part of each of Parent and ▇▇▇▇▇▇▇▇▇. This Agreement has
been duly and validly executed and delivered by each of Parent and ▇▇▇▇▇▇▇▇▇ and
constitutes a legal, valid and binding agreement of each of Parent and
▇▇▇▇▇▇▇▇▇, enforceable against each of them in accordance with its terms, except
(i) as rights to indemnity hereunder may be limited by federal or state
securities laws or the public policies embodied therein, (ii) as such
enforceability may be limited by any applicable bankruptcy, insolvency,
fraudulent transfer, moratorium, reorganization or similar laws affecting the
enforcement of creditors' rights generally and (iii) as such enforceability may
be subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 5.3. Governmental Authorization. The execution, delivery and
performance of this Agreement by Parent and ▇▇▇▇▇▇▇▇▇ require no action by,
consent or approval of, or filing with, any Governmental Authority other than
(i) compliance with any applicable requirements of any applicable Foreign
Antitrust Law and (ii) any actions, consents, approvals or filings otherwise
expressly referred to in this Agreement. To the knowledge of either Parent or
▇▇▇▇▇▇▇▇▇, there are no facts relating to the identity or circumstances of
Parent and ▇▇▇▇▇▇▇▇▇ or any of their Affiliates that would prevent or materially
delay obtaining any of the Required Consents.
SECTION 5.4. Non-Contravention. The execution, delivery and performance
by Parent and ▇▇▇▇▇▇▇▇▇ of this Agreement do not and will not (i) contravene or
conflict with the respective charter documents of Parent and ▇▇▇▇▇▇▇▇▇, (ii)
contravene, conflict with or constitute a default under any material agreement
to which either Parent or ▇▇▇▇▇▇▇▇▇ is a party or to which any of their
respective properties or assets are subject or (iii) assuming compliance with
the matters referred to in Section 5.3, violate or conflict with or constitute a
violation of any provision of any Applicable Law binding upon or applicable to
either Parent or ▇▇▇▇▇▇▇▇▇.
SECTION 5.5. Litigation. There is no Proceeding pending or, to the
knowledge of either Parent or ▇▇▇▇▇▇▇▇▇, threatened against, either Parent or
▇▇▇▇▇▇▇▇▇ before any court or arbitrator or any Governmental Authority, agency
or official that in any manner challenges or seeks to prevent, enjoin, rescind,
alter or delay the transactions contemplated by this Agreement.
33
ARTICLE 6
REPRESENTATIONS AND WARRANTIES
OF ▇▇▇▇▇▇
As an inducement to Parent, ▇▇▇▇▇▇▇▇▇ and the Sellers to enter into
this Agreement and to consummate the transactions contemplated herein, ▇▇▇▇▇▇
hereby represents and warrants, as of the date of this Agreement and as of the
Closing Date, to each of Parent, ▇▇▇▇▇▇▇▇▇ and the Sellers as follows:
SECTION 6.1. Organization and Existence. ▇▇▇▇▇▇ is a corporation or
other entity duly organized, validly existing and in good standing under the
laws of its jurisdiction of formation and has all power and authority to enter
into this Agreement, to consummate the transactions contemplated hereby to carry
on its business as now being conducted and to own and operate its business now
owned and operated. ▇▇▇▇▇▇ is duly qualified to do business as a foreign
corporation in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualification necessary
to carry on its business as now conducted, except for those jurisdictions where
the failure to be so qualified is not, and would not reasonably be expected to
become, material to the ability of ▇▇▇▇▇▇ to consummate the transactions
contemplated by this Agreement.
SECTION 6.2. Corporate Authorization. The execution, delivery and
performance of this Agreement by ▇▇▇▇▇▇ and the consummation by ▇▇▇▇▇▇ of the
transactions contemplated hereby are within its powers and has been duly
authorized by all necessary corporate or other action on the part of ▇▇▇▇▇▇.
This Agreement has been duly and validly executed and delivered by ▇▇▇▇▇▇ and
constitutes a legal, valid and binding agreement of ▇▇▇▇▇▇, enforceable against
it in accordance with its terms, except (i) as rights to indemnity hereunder may
be limited by federal or state securities laws or the public policies embodied
therein, (ii) as such enforceability may be limited by any applicable
bankruptcy, insolvency, fraudulent transfer, moratorium, reorganization or
similar laws affecting the enforcement of creditors' rights generally and (iii)
as such enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
SECTION 6.3. Governmental Authorization. The execution, delivery and
performance of this Agreement by ▇▇▇▇▇▇ requires no action by, consent or
approval of, or filing with, any Governmental Authority other than (i)
compliance with any applicable requirements of any applicable Foreign Antitrust
Law and (ii) any actions, consents, approvals or filings otherwise expressly
referred to in this Agreement. To the knowledge of ▇▇▇▇▇▇, there are no facts
relating to the identity or circumstances of ▇▇▇▇▇▇ or any of its Affiliates
that would prevent or materially delay obtaining any of the Required Consents.
SECTION 6.4. Non-Contravention. The execution, delivery and performance
by ▇▇▇▇▇▇ of this Agreement does not and will not (i) contravene or conflict
with the charter documents of ▇▇▇▇▇▇, a true, correct and complete copy of which
has been delivered to the Sellers by ▇▇▇▇▇▇, (ii) contravene, conflict with or
constitute a default under any material agreement to which ▇▇▇▇▇▇ is a party or
to which any of its properties or assets are subject or (iii) assuming
34
compliance with the matters referred to in Section 6.3, violate or conflict with
or constitute a violation of any provision of any Applicable Law binding upon or
applicable to ▇▇▇▇▇▇.
SECTION 6.5. Litigation. There is no Proceeding pending or, to the
knowledge of ▇▇▇▇▇▇, threatened against, ▇▇▇▇▇▇ before any court or arbitrator
or any Governmental Authority, agency or official that in any manner challenges
or seeks to prevent, enjoin, rescind, alter or delay the transactions
contemplated by this Agreement.
ARTICLE 7
COVENANTS OF PARENT, ▇▇▇▇▇▇▇▇▇ AND THE SELLERS
SECTION 7.1. Use of Names. Notwithstanding anything in this Agreement
to the contrary, from and after the Closing, Parent and ▇▇▇▇▇▇▇▇▇ shall not use,
nor shall they permit any Affiliate of Parent controlled by Parent, any
successor to all or part of Parent's business (other than the Buyer and ▇▇▇▇▇▇)
or any other third party to use the trademarks and trade names set forth on
Schedule 7.1. Parent and ▇▇▇▇▇▇▇▇▇ agree that promptly, but not later than
ninety (90) days following the Closing, they will take all necessary steps to
eliminate the names set forth on Schedule 7.1 and variations thereof from the
name of any of their Affiliates that they control (except as otherwise provided
in Schedule 7.1).
SECTION 7.2. Noncompetition.
(a) As further provided in Section 7.2(b), Parent shall not,
directly or indirectly:
(i) own, lease, manage, operate or control any Person
that engages in any business in Canada that competes with the onshore
gas processing and refinery engineering and construction business being
conducted in Canada by the Business as of the date hereof, for a period
of five years from the Closing Date, except to the extent necessary to
meet the obligations with respect to the Seller Assumed Obligations; or
(ii) solicit the employment of any Hired Employee for
a period of three years from the Closing Date, unless such employee is
terminated by the Buyer or the Delta Companies after the Closing Date;
provided, however, that Parent and its Affiliates may engage in general
employment advertising or solicitation not specifically targeting any
Hired Employee and may hire any Hired Employee who responds to such
advertising or solicitation or who approaches Parent or any of its
Affiliates for employment.
Notwithstanding the foregoing, Parent may, directly or indirectly, own and hold
up to 5% of the outstanding capital stock of a competing entity if that class of
capital stock is listed on a national stock exchange or included in the Nasdaq
National Market.
(b) The prohibition in Section 7.2(a) shall apply in all
provinces or territories of Canada. Parent agrees that, in connection with the
purchase by the Buyer of the Shares, the
35
time and geographic restrictions set forth above are reasonable. Parent agrees
that the remedy at law for any breach of this Section 7.2 by Parent will be
inadequate and that the Buyer shall be entitled to injunctive relief, or other
equitable relief, without the necessity of actual monetary loss being proved, in
order that a breach or threatened breach of this Section 7.2 may be effectively
enjoined. The Buyer and Parent intend that the unenforceability or invalidity of
any term or provision of this Section 7.2 shall not render any other term or
provision contained herein unenforceable or invalid. If the activities described
in Section 7.2(a) or the period of time or the geographical area covered by this
Section 7.2(b) should be deemed too extensive, then the Buyer and Parent intend
that this Section 7.2 be construed to cover the maximum scope of business
activities, period of time and geographical area (not exceeding those
specifically set forth herein) as may be permissible under Applicable Law.
SECTION 7.3. Resignation of Directors and Officers. On the Closing
Date, the Sellers shall cause those directors and officers of the Delta
Companies listed on Schedule 7.3 to resign as directors and/or officers of the
Delta Companies.
SECTION 7.4. Parent and ▇▇▇▇▇▇▇▇▇ Guaranty. Parent and ▇▇▇▇▇▇▇▇▇, as
primary obligors and not as sureties only, irrevocably and unconditionally
undertake and guarantee the full, prompt and complete performance by the Sellers
of all their obligations under this Agreement, including their post-Closing
obligations under this Agreement, and agree with ▇▇▇▇▇▇ and the Buyer that, if
the Sellers after the Closing shall default in the performance of any such
obligations under this Agreement, Parent and ▇▇▇▇▇▇▇▇▇ shall forthwith on demand
by ▇▇▇▇▇▇ or the Buyer perform such obligations or cause the Sellers to perform
such obligations.
Each of the foregoing guarantees is a continuing guarantee and shall
remain in force until all the obligations (including post-Closing obligations)
of the Sellers have been fully performed.
The obligations of Parent and ▇▇▇▇▇▇▇▇▇ under this Section 7.4 shall
not be affected by any act, omission, matter or thing which, but for this
provision, might operate to release or otherwise exonerate Parent and ▇▇▇▇▇▇▇▇▇
from their obligations or affect such obligations, including, without
limitation, and whether or not known to Parent and ▇▇▇▇▇▇▇▇▇:
(a) any time indulgence, waiver or consent at any time given
to any of the Sellers;
(b) any abstention from perfecting or enforcing any right or
remedies against any of the Sellers;
(c) any legal limitation, disability, incapacity or other
circumstances relating to any of the Sellers; and
(d) the dissolution, amalgamation, reconstruction or
insolvency of any of the Sellers.
SECTION 7.5. Intercompany Agreements. The Sellers shall cause all
agreements and arrangements representing ongoing rights or assets (including
accounts and notes receivable) or obligations or liabilities (including accounts
and notes payable) between or among any of the Delta Companies, on one hand, and
Parent, ▇▇▇▇▇▇▇▇▇, the Sellers or any other direct or indirect
36
subsidiary of Parent (other than any of the Delta Companies), on the other hand,
other than any agreement entered into on the Closing Date and delivered pursuant
to Article 10, to be terminated or otherwise discharged at or prior to Closing.
SECTION 7.6. Directors and Officers Insurance. Parent will use
commercially reasonable efforts to provide officers' and directors' liability
insurance for three years after the Closing in respect of acts or omissions
occurring prior to the Closing covering each of the present and former officers
and directors of the Delta Companies on terms with respect to coverage and
amounts at least as favorable as the coverage and amounts currently provided by
Parent's policy, provided that such insurance remains commercially available
without a material increase in policy premiums during such three-year period.
ARTICLE 8
COVENANTS OF THE BUYER AND ▇▇▇▇▇▇
SECTION 8.1. Use of Names. Notwithstanding anything in this Agreement
to the contrary, from and after the Closing, neither ▇▇▇▇▇▇ nor the Buyer shall
use, nor shall either of them permit any Affiliate of ▇▇▇▇▇▇ controlled by
▇▇▇▇▇▇ (including, without limitation, after the Closing, the Delta Companies),
any successor to all or part of their respective businesses or any other third
party to use the trademarks and trade names set forth on Schedule 8.1. ▇▇▇▇▇▇
agrees that promptly, but not later than ninety (90) days following the Closing,
it will take all necessary steps to eliminate the names on Schedule 8.1 and
variations thereof from the name of any of its Affiliates that it controls.
SECTION 8.2. Employees.
(a) The parties intend that there shall be continuity of
employment with respect to all employees of the Delta Companies as of the
Closing Date (collectively, the "Hired Employees"). The Buyer will recognize any
union with which any of the Delta Companies has a collective bargaining
agreement and will bargain in good faith the subsequent terms and conditions of
employment for employees in any bargaining unit represented by any such union,
to the extent required by Applicable Law. The Buyer and Jacobs shall give all
Hired Employees credit for their service with the Delta Companies or any of
their controlled Affiliates for purposes of eligibility to participate and
vesting under any employee benefit plan, policy or arrangement sponsored,
maintained or contributed to by ▇▇▇▇▇▇ or any of its controlled Affiliates and
for which the Hired Employees are eligible. The Buyer and Jacobs shall also give
all Hired Employees credit for their vacation and holiday accumulations. Nothing
contained in this Section 8.2 or elsewhere in this Agreement shall be deemed to
limit or otherwise affect in any manner any right of the Buyer, Jacobs or any of
their Affiliates to terminate the employment of any Hired Employee or to
otherwise deal with the employment or compensation of the Hired Employees to the
extent not inconsistent with the provisions of this Section 8.2(a).
(b) No later than March 31, 2002, Jacobs shall pay or cause to
be paid to all Hired Employees who were employed on December 31, 2001 a bonus
for the year ended December 31, 2001 at least equal to the bonus such
individuals would have earned under the applicable incentive compensation plans
sponsored by Parent, ▇▇▇▇▇▇▇▇▇ and/or any of the
37
Delta Companies if the transactions contemplated by this Agreement had not
occurred, multiplied by a fraction, the numerator of which is the number of
whole and partial months from January 1, 2001 to the Closing Date and the
denominator of which is 12.
SECTION 8.3. Records Retention; Cooperation. Following the Closing, the
Buyer shall (i) retain all the books and records of the Delta Companies for not
less than seven years following the Closing Date or such longer period of time
during which any claim for indemnification pursuant to Article 11 could be made
or, if made, remains unresolved, (ii) make those books and records available for
inspection and/or copying by the Sellers and their representatives at reasonable
times and at the Sellers' expense and (iii) cause the appropriate personnel of
the Delta Companies to respond to appropriate inquiries of, and otherwise
provide reasonable cooperation to Parent, ▇▇▇▇▇▇▇▇▇ and the Sellers to assist
them in (A) recording the final settlement of the intercompany account balances
being terminated or discharged pursuant to Section 7.5 and the execution and
delivery of appropriate release documentation relating thereto and (B) the
preparation of financial reports and tax returns that, in either case, reflect
the results of or investments in any of the Delta Companies or the Excluded
Entities for any period prior to the Closing. Notwithstanding the foregoing, in
lieu of retaining any specific books or records, the Buyer may offer in writing
to the Sellers to deliver such books or records to the Sellers and, if such
offer is not accepted within 90 days, the offered books or records may be
disposed of at any time.
SECTION 8.4. Agreements in Respect of the Seller Assumed Obligations
and Certain Delta Subsidiaries.
(a) From and after the Closing, the Sellers will control and
have the authority to resolve, in its sole discretion, all actions, claims,
causes of action, suits, investigations, inquiries or proceedings relating to
any of the Seller Assumed Obligations; provided, however, that the Sellers will
not enter into any settlement with respect to any Seller Assumed Obligation that
purports to limit the activities of, or otherwise restrict, Jacobs or any of its
Affiliates without the prior written consent of such Person (which consent shall
not be unreasonably withheld or delayed). The Buyer will provide the Sellers
with prompt notice of any claim, notice or other communication (and will
promptly forward to the Sellers the originals of any written claims or other
materials) received by the Buyer or any of the Delta Companies after the Closing
with respect to any Seller Assumed Obligation. From and after the Closing,
Jacobs, the Buyer and the Delta Companies shall provide the Sellers with such
cooperation as the Sellers may reasonably request in the defense of or other
response to any action, claim, cause of action, suit, investigation, inquiry or
proceeding relating to any of the Seller Assumed Obligations; provided, however,
that the Sellers shall pay the reasonable out-of-pocket expenses incurred by
▇▇▇▇▇▇, the Buyer or any of the Delta Companies in providing such cooperation.
(b) As promptly as practicable following the Closing, the
Buyer will cause the dissolution of each of 404385 Alberta Ltd., an Alberta
corporation, and Catalytic Maintenance Limited, a Cyprus company, to be
completed.
SECTION 8.5. Removal of Guaranties. The Buyer will use its commercially
reasonable efforts to ensure that, within 30 days after the Closing Date, either
(i) the outstanding guaranties or other support arrangements by Parent,
▇▇▇▇▇▇▇▇▇ or any of their respective Affiliates with
38
respect to any of the Debt listed on Schedule 3.10 (which guaranties and support
arrangements are listed on Schedule 8.5) are terminated or (ii) the Debt to
which those guaranties or support arrangements relate is retired; provided,
however, that if the Buyer is unable to effect the termination of any of those
guaranties or support arrangements or the repayment of any of that Debt, the
Buyer will indemnify and hold harmless Parent, ▇▇▇▇▇▇▇▇▇ and each of their
respective Affiliates from and against any liabilities, claims, demands,
judgments, losses, costs, damages or expenses whatsoever (including reasonable
attorneys' fees that any of them may sustain, suffer or incur and that result
from or arise out of or relate to any of those guaranties support arrangements
or that Debt, as the case may be.
SECTION 8.6. Jacobs Guaranty. Jacobs, as a primary obligor and not as a
surety only, irrevocably and unconditionally undertakes and guarantees the full,
prompt and complete performance by the Buyer of all its obligations under this
Agreement, including its post-Closing obligations under this Agreement, and
agree with the Seller that, if the Buyer after Closing shall default in the
performance of any such obligations under this Agreement, Jacobs shall forthwith
on demand by Seller perform such obligations or cause the Buyer to perform such
obligations.
This guarantee is a continuing guarantee and shall remain in force
until all the obligations (including post-Closing obligations) of the Buyer has
been fully performed.
The obligations of Jacobs under this Section 8.6 shall not be affected
by any act, omission, matter or thing which, but for this provision, might
operate to release or otherwise exonerate Jacobs from its obligations or affect
such obligations, including, without limitation, and whether or not known to
Jacobs:
(a) any time indulgence, waiver or consent at any time given
to the Buyer;
(b) any abstention from perfecting or enforcing any right or
remedies against the Buyer;
(c) any legal limitation, disability, incapacity or other
circumstances relating to the Buyer; and
(d) the dissolution, amalgamation, reconstruction or
insolvency of the Buyer.
ARTICLE 9
MUTUAL COVENANTS
The parties hereto agree that:
SECTION 9.1. Further Assurances. Jacobs, the Buyer and the Sellers
shall execute and deliver such other documents, certificates, agreements and
other writings, and shall use all commercially reasonable efforts to take, or
cause to be taken, such other actions as may be reasonably necessary or
desirable (including, without limitation, obtaining the Required Consents and
making necessary filings with appropriate Governmental Authorities), in order to
consummate or implement expeditiously the transactions contemplated by this
Agreement.
39
SECTION 9.2. Publicity. The Buyer and the Sellers will consult with
each other and will mutually agree upon any press release or public announcement
pertaining to this Agreement and the transactions contemplated thereby and shall
not issue any such press release or make any such public announcement prior to
such consultation and agreement, except that either party and its Affiliates may
issue any such release or make any such public announcement as it determines, in
its reasonable discretion, is required by Applicable Law or by obligations
pursuant to any listing agreement with any national securities exchange, in
which case such party shall, and shall cause its Affiliates to, use reasonable
efforts to consult in good faith with the other party before issuing any such
press release or making any such public announcement.
SECTION 9.3. Section 338 Election. Jacobs (or an Affiliate of Jacobs)
may elect to make the election provided by Section 338(g) of the Code (the
"Election") in connection with the purchase of the Shares hereunder. If Jacobs
(or an Affiliate of Jacobs) elects to make the Election, (a) the Election will
be made with respect to each of the Delta Companies for which the Election could
be made and (b) Jacobs shall, promptly after filing with the IRS the appropriate
form or forms to effect the Election, deliver copies of such form or forms to
Parent and ▇▇▇▇▇▇▇▇▇.
ARTICLE 10
CLOSING DELIVERIES
SECTION 10.1. Closing Delivery Obligations of the Sellers. The Sellers
shall be obligated to deliver the following documents to the Buyer on the
Closing Date:
(a) Opinion of counsel to the Sellers, Parent and ▇▇▇▇▇▇▇▇▇,
dated as of the Closing Date, substantially in the forms of Exhibits ▇-▇, ▇-▇,
▇-▇ and A-4 hereto;
(b) Certificate dated as of the Closing Date and signed on
behalf of the Sellers by the President, a Vice President, a Managing Director or
an authorized representative of each of the Sellers, to the effect that:
(i) The representations and warranties of the Sellers
set forth in Article 3 are true and correct as of the Closing (except
to the extent that any change therein is as a result of the
transactions contemplated hereby); and
(ii) The Sellers have performed in all material
respects all obligations required to be performed by them under this
Agreement prior to the Closing.
(c) Certified copies of each of the Sellers' charter documents
and resolutions of the board of directors or other governing body of each of
them, in form reasonably satisfactory to the Buyer, approving the execution and
delivery of this Agreement and the transactions contemplated hereby;
(d) Certified copies of resolutions of the board of directors
of ▇▇▇▇▇▇▇▇▇ Engineers, in form reasonably satisfactory to the Buyer, approving
the transfer of the Shares to the Buyer;
40
(e) The resignations required by Section 7.3;
(f) Copies of all Required Governmental Approvals and all
Required Contractual Consents obtained by the Sellers;
(g) A Software License Agreement, in substantially the form of
Exhibit B hereto, executed by J. ▇▇▇ ▇▇▇▇▇▇▇▇▇, S.A., a Panamanian corporation
and Delta ▇▇▇▇▇▇ Engineering Ltd., a Canadian corporation;
(h) A Support Services Agreement, in substantially the form of
Exhibit C hereto, executed by Delta ▇▇▇▇▇▇ Engineering Corporation, a Texas
corporation;
(i) A tax certificate from Delta Holland issued to the Buyer
pursuant to Section 116 of the Income Tax Act (Canada); and
(j) A Transition Services Agreement, in substantially the form
of Exhibit D hereto, executed by ▇▇▇▇▇▇▇▇▇ and Delta ▇▇▇▇▇▇ Engineering Ltd., a
Canadian corporation.
The form and substance of all certificates, instruments, opinions and
other documents delivered to the Buyer under this Section 10.1 shall be
reasonably satisfactory to the Buyer.
SECTION 10.2. Closing Delivery Obligations of the Buyer. The Buyer
shall be obligated to deliver the following documents to the Sellers on the
Closing Date:
(a) Payment of the Purchase Price in accordance with Section
2.2, to be paid by wire transfer in accordance with the instructions set forth
on Schedule 10.2;
(b) Opinion of counsel to the Buyer and Jacobs, dated the
Closing Date, substantially in the form of Exhibit E-1 and Exhibit E-2 hereto;
(c) Certificate dated as of the Closing Date and signed on
behalf of the Buyer by the Chief Executive Officer or Chief Financial Officer of
Jacobs, to the effect that:
(i) The representations and warranties of the Buyer
set forth in Article 4 are true and correct as of the Closing (except
to the extent that any change therein is as a result of the
transactions contemplated hereby); and
(ii) The Buyer has performed in all material respects
all obligations required to be performed by them under this Agreement
prior to Closing.
(d) Certified copies of the Buyer's charter documents and
resolutions of their respective boards of directors, in form reasonably
satisfactory to the Sellers, approving the execution and delivery of this
Agreement and the transactions contemplated hereby; and
(e) Copies of all Required Governmental Approvals and any
other consents to be obtained by the Buyer.
41
The form and substance of all certificates, instruments, opinions and
other documents delivered to the Sellers under this Section 10.2 shall be
reasonably satisfactory to the Sellers.
SECTION 10.3. Closing Delivery Obligations of Parent and ▇▇▇▇▇▇▇▇▇.
Parent and ▇▇▇▇▇▇▇▇▇ shall be obligated to deliver the following documents to
the Buyer on the Closing Date:
(a) Certificates dated as of the Closing Date and signed on
behalf of Parent or ▇▇▇▇▇▇▇▇▇, as applicable, by its respective President or a
Vice President, to the effect that the representations and warranties of Parent
or ▇▇▇▇▇▇▇▇▇, as applicable, set forth in Article 5 are true and correct as of
the Closing (except to the extent that any change therein is as a result of the
transactions contemplated hereby); and
(b) Certified copies of the resolutions of the board of
directors of Parent and ▇▇▇▇▇▇▇▇▇, in form reasonably satisfactory to the Buyer,
approving the execution and delivery of this Agreement and the transactions
contemplated hereby.
The form and substance of all certificates, instruments, opinions and
other documents delivered to the Buyer under this Section 10.3 shall be
reasonably satisfactory to the Buyer.
SECTION 10.4. Closing Delivery Obligations of Jacobs. Jacobs shall be
obligated to deliver the following documents to the Sellers on the Closing Date:
(a) Certificates dated as of the Closing Date and signed on
behalf of Jacobs by its respective President or a Vice President, to the effect
that the representations and warranties of Jacobs, as applicable, set forth in
Article 6 are true and correct as of the Closing (except to the extent that any
change therein is as a result of the transactions contemplated hereby);
(b) Certified copies of the resolutions of the board of
directors of Jacobs, in form reasonably satisfactory to the Sellers, approving
the execution and delivery of this Agreement and the transactions contemplated
hereby; and
(c) A Support Services Agreement, in substantially the form of
Exhibit C, hereto executed by ▇▇▇▇▇▇.
The form and substance of all certificates, instruments, opinions and
other documents delivered to the Buyer under this Section 10.4 shall be
reasonably satisfactory to the Sellers.
ARTICLE 11
INDEMNIFICATION
SECTION 11.1. Agreement to Indemnify.
(a) Subject to all the applicable provisions of this Article
11, the Sellers covenant and agree that they will indemnify each Buyer
Indemnitee against, and hold each Buyer Indemnitee harmless from and in respect
of, any and all Losses incurred by any Buyer
42
Indemnitee (i) as a result of, relating to or arising from any inaccuracy or
misrepresentation in or breach of any representation, warranty, covenant or
agreement made by the Sellers in this Agreement or (ii) as a result of any Third
Party Claim relating to or arising out of (A) the Seller Assumed Obligations,
(B) the prior ownership of any of the Excluded Entities or the Transferred Stock
by any of the Delta Companies or (C) the ownership or operation of the business
of 404385 Alberta Ltd. ("404385") or Catalytic Maintenance Limited ("CML") prior
to the Closing, the liquidation of 404385 into Delta Catalytic Industrial
Services Ltd. ("DCIS") in or around 1989 and the dissolution of 404385 and CML
after the Closing (including all liabilities of DCIS and 404385 under the Income
Tax Act (Canada)), in excess of amounts with respect to such companies reserved
on the Delta Companies Pro Forma Balance Sheet.
(b) Any indemnification or reimbursement payments to be made
to the Buyer Indemnitees by the Sellers pursuant to Section 11.1(a)(i) shall be
paid by the Sellers as follows: (i) ▇▇▇▇▇▇ (Canada) shall pay for 50.0000042%;
and (ii) Delta (Holland) shall pay for 49.9999958%.
(c) Subject to all the applicable provisions of this Article
11, the Buyer covenants and agrees that it will indemnify each Seller Indemnitee
against, and hold each Seller Indemnitee harmless from and in respect of, any
and all Losses incurred by any Seller Indemnitee as a result of, relating to or
arising from any inaccuracy or misrepresentation in or breach of any
representation, warranty, covenant or agreement made by the Buyer in this
Agreement.
(d) Subject to all the applicable provisions of this Article
11, Parent and ▇▇▇▇▇▇▇▇▇ covenant and agree that they, jointly and severally,
will indemnify each Buyer Indemnitee against, and hold each Buyer Indemnitee
harmless from and in respect of, any and all Losses incurred by any Buyer
Indemnitee as a result of, relating to or arising from any inaccuracy or
misrepresentation in or breach of any representation, warranty, covenant or
agreement made by Parent or ▇▇▇▇▇▇▇▇▇ in this Agreement.
(e) Subject to all the applicable provisions of this Article
11, Jacobs covenants and agrees that it will indemnify each Seller Indemnitee
against, and hold each Seller Indemnitee harmless from and in respect of, any
and all Losses incurred by any Seller Indemnitee as a result of, relating to or
arising from any inaccuracy or misrepresentation in or breach of any
representation, warranty, covenant or agreement made by ▇▇▇▇▇▇ in this
Agreement.
(f) The indemnification provided for in Section 11.1 shall not
apply unless and until the aggregate Losses for which one or more Buyer
Indemnitees or Seller Indemnitees, as the case may be, seeks or has sought
indemnification hereunder exceeds a cumulative aggregate (without duplication)
of One Million Dollars ($1,000,000) (the "Floor"), in which event the
Indemnifying Party shall be liable to the Buyer Indemnitees or the Seller
Indemnitees, as the case may be, for the amount of the Losses that exceeds the
Floor; provided, however, in no event shall the aggregate liability of (i)
Parent, ▇▇▇▇▇▇▇▇▇ and the Sellers, on the one hand and (ii) the Buyer and
Jacobs, on the other hand, for Losses under this Section 11.1 exceed Twenty
Million Dollars ($20,000,000) (the "Cap"); provided, however, that the Floor and
the Cap shall not be applicable to indemnification sought by Buyer Indemnitees
under Section 11.1(a)(ii).
43
(g) Notwithstanding any other provision of this Agreement, no
Indemnified Party shall be entitled to any consequential damages (including any
loss of earnings or profits) to the extent such damages are indirect,
speculative, contingent or future (including, without limitation, damages that
arise out of, relate to or result from any (i) loss of earnings or profits from
collateral or ancillary transactions, (ii) loss of use of any asset, (iii) loss
of business or reputation, (iv) loss of business opportunity, (v) loss of
management or employee productivity, (vi) wage or salary increase or other
inflationary cost of labor, (vii) increase in the cost of funding or (viii)
corporate overhead) or to any exemplary, punitive, special or treble damages
(collectively, the "Excluded Losses") suffered by an Indemnified Party;
provided, however, that an Indemnified Party shall be entitled to recover
Excluded Losses if and to the extent the Excluded Losses (i) were incurred by a
third party and are the subject of a Third Party Claim asserted by that third
party after the Closing Date and (ii) are otherwise recoverable as Losses
pursuant to this Article 11, provided that such recovery shall be limited (A) to
the extent those Excluded Losses exceed the associated reserves, if any,
reflected on the Delta Companies Pro Forma Balance Sheet and (B) as otherwise
provided in this Article 11. Subject to the exception set forth herein, each of
the Buyer and Jacobs hereby releases each of Parent, ▇▇▇▇▇▇▇▇▇ and each of the
Sellers, and each of Parent, ▇▇▇▇▇▇▇▇▇ and each of the Sellers hereby releases
each of the Buyer and Jacobs, in each case to the fullest extent permitted by
Applicable Law, from liability for any Excluded Losses.
(h) The amount of any Losses as to which indemnification is
provided under this Agreement to the Buyer Indemnitees shall be reduced by: (i)
the amount recovered or recoverable by any of them under any applicable
insurance coverage: (A) maintained at the time of the Closing by any of the
Delta Companies (the "Delta Coverages") and thereafter continued (including
being continued through policy extensions or renewals or through the purchase of
new or replacement policies by any of the Delta Companies or any of their
affiliates); provided, however, that the amount of any reduction pursuant to
this clause (i)(A) shall not exceed the applicable coverage limits in effect as
of the Closing Date; or (B) purchased by the Delta Companies, Jacobs or its
Affiliates as extended reporting period policies covering pre-Closing errors and
omissions of the Delta Companies (net of deductibles and incidental expenses
resulting therefrom); (ii) the amount, if any, actually recovered by any of them
under any applicable insurance coverage maintained at the time of the Closing on
behalf of the Delta Companies by ▇▇▇▇▇▇▇▇▇ or any of its Affiliates (the
"▇▇▇▇▇▇▇▇▇ Coverages"); and (iii) the amount (but without duplicating amounts
under clause (i)), that in the event any of the Delta Coverages are not
continued or are modified to reduce their scope after the Closing, that would
have been recoverable by any of them under such Delta Coverages, had such
discontinuation or modification not occurred (net of deductibles existing prior
to such discontinuation or modification), unless any such coverage was
discontinued or modified because either (A) the Buyer was not able through
commercially reasonable efforts to continue or to not modify such coverage or
(B) such coverage was not commercially available to Buyer without material
increase in the policy premiums applicable to the Delta Coverages as a whole;
provided, however, that the foregoing provisions of clauses (i) and (iii) shall
not apply to any insurance proceeds that would have been recoverable under the
Delta Coverages as a result of any claim made, or incident occurring, prior to
the Closing and as to which the Delta Companies have failed to file a claim
properly under such insurance policy or otherwise have failed to comply with the
policy terms and conditions prior to the Closing, if, as a result of that
failure, those proceeds are not recoverable.
44
(i) The right to indemnification under this Article 11 will
not be affected by any investigation conducted, or any knowledge acquired (or
capable of being acquired), by the party seeking such indemnification.
SECTION 11.2. Survival of Representations, Warranties and Covenants;
Exclusive Remedy.
(a) All representations, warranties, covenants,
agreements and obligations of each Indemnifying Party contained herein and all
claims of any Buyer Indemnitee or Seller Indemnitee in respect of any breach of
any representation, warranty, covenant, agreement or obligation of any
Indemnifying Party contained in this Agreement, shall survive the Closing and
shall terminate and expire on November 15, 2003, except that:
(i) the covenants contained in this Agreement which
by their terms shall be performed after the Closing Date shall survive
the Closing and not expire unless otherwise provided in this Agreement,
including, without limitation, in this Section 11.2(a); provided,
however, that obligations of the Indemnifying Parties set forth in this
Article 11 shall be limited to the obligations to provide indemnity
only in respect of claims for indemnification for which written notice
as provided in Section 11.3 has been given by a Buyer Indemnitee or
Seller Indemnitee prior to expiration, as provided in this Section
11.2(a), of the representations, warranties, covenants, agreements and
obligations upon which such claims for indemnification are based;
(ii) the representations and warranties of the
Sellers set forth in Section 3.21 shall survive the Closing and expire
on the fifth anniversary of the Closing Date; and
(iii) each of the following representations and
warranties shall survive the Closing and shall expire thirty (30) days
after the expiration of all applicable statutes of limitations,
including extensions thereof:
(A) the representations and warranties of
the Sellers set forth in Sections 3.1, 3.5, 3.7 and 3.18;
(B) the representations and warranties of
the Buyer set forth in Sections 4.2, 4.3 and 4.4, of the
Parent and ▇▇▇▇▇▇▇▇▇ set forth in Sections 5.2, 5.3 and 5.4
and of Jacobs set forth in Sections 6.2, 6.3 and 6.4; and
(C) any claim of any Buyer Indemnitee or
Seller Indemnitee in respect of any breach of any
representation or warranty made in this Agreement arising out
of fraud.
(b) After the Closing, the right to indemnification set forth
in this Article 11 (subject to all limitations provided for herein) shall be the
sole and exclusive remedy of the parties and all Indemnified Parties under or by
reason of this Agreement (including for any breach of any representation,
warranty, covenant or agreement set forth in this Agreement), other than
injunctive relief with respect to the breach of a covenant or agreement set
forth herein, and each party covenants and agrees not to seek or assert any
other remedy, other than injunctive
45
relief with respect to the breach of a covenant or agreement set forth herein,
following the Closing. Notwithstanding anything herein to the contrary,
indemnification for any claim for which written notice as provided in Section
11.3 has been timely given prior to the expiration of the representation,
warranty, covenant, agreement or obligation upon which such claim is based as
provided herein shall not expire, and such claim for indemnification may be
pursued, until the final resolution of such claim in accordance with Section
11.3.
SECTION 11.3. Notice and Procedure. All claims for indemnification by
any Indemnified Party against an Indemnifying Party under this Article 11 shall
be asserted and resolved as follows:
(a)(i) If any claim or demand for which an
Indemnifying Party would be liable for Losses to an Indemnified Party
is alleged or asserted by a Person other than any Buyer Indemnitee or
any Seller Indemnitee (a "Third Party Claim"), the Indemnified Party
shall deliver a Claim Notice with reasonable promptness to the
Indemnifying Party, together with a copy of all papers served, if any,
and specifying the nature of and alleged basis for the Third Party
Claim and, to the extent then feasible, the alleged amount or the
estimated amount of the Third Party Claim. Except as provided in
Section 11.2, if the Indemnified Party fails to deliver the Claim
Notice to the Indemnifying Party promptly after the Indemnified Party
receives notice of such Third Party Claim, the Indemnifying Party will
not be obligated to indemnify the Indemnified Party with respect to
such Third Party Claim, if and only to the extent that the Indemnifying
Party's ability to defend the Third Party Claim has been irreparably
prejudiced by such failure. The Indemnifying Party will notify the
Indemnified Party within 15 days after receipt of the Claim Notice (the
"Notice Period") whether the Indemnifying Party intends, at the sole
cost and expense of the Indemnifying Party, to defend the Indemnified
Party against the Third Party Claim.
(ii) If the Indemnifying Party notifies the
Indemnified Party within the Notice Period that the Indemnifying Party
intends to defend the Indemnified Party against the Third Party Claim,
then the Indemnifying Party will have the right to defend, at its sole
cost and expense, the Third Party Claim by all appropriate proceedings,
which proceedings will be diligently prosecuted by the Indemnifying
Party to a final conclusion or settled at the discretion of the
Indemnifying Party, and the Indemnified Party will furnish the
Indemnifying Party with all information in its possession with respect
to that Third Party Claim; provided, however, that the Indemnifying
Party will not enter into any settlement with respect to any Third
Party Claim that purports to limit the activities of, or otherwise
restrict in any way, any Indemnified Party without the prior consent of
that Indemnified Party. The Indemnifying Party will have full control
of such defense and proceedings; provided, however, that the
Indemnified Party may file until the expiration of the Notice Period,
at the sole cost and expense of the Indemnified Party, any motion,
answer or other pleading that the Indemnified Party may deem necessary
or appropriate to protect its interests and that is not irrevocably
prejudicial to the Indemnifying Party (it being understood and agreed
that the Indemnified Party shall endeavor, if practicable, to provide
the Indemnifying Party with advance notice of its intention to file any
such motion, answer or other pleading, and an opportunity to comment
with respect thereto, and except as provided in Section 11.3(a)(iii),
if an Indemnified Party takes any such
46
action that is irrevocably prejudicial and conclusively causes a final
adjudication that is materially adverse to the Indemnifying Party, the
Indemnifying Party will be relieved of its obligations hereunder with
respect to that portion of the Third Party Claim prejudiced by the
Indemnified Party's action); provided, further, however, that, if
requested by the Indemnifying Party, the Indemnified Party shall
cooperate, at the sole cost and expense of the Indemnifying Party, with
the Indemnifying Party and its counsel in contesting any Third Party
Claim that the Indemnifying Party elects to contest or, if appropriate
in the judgment of the Indemnified Party and related to the Third Party
Claim, in making any counterclaim or cross-claim against any Person
(other than the Indemnified Party). The Indemnified Party may
participate in, but not control, any defense or settlement of any Third
Party Claim assumed by the Indemnifying Party pursuant to this Section
11.3(a)(ii) and, except as provided in the immediately preceding
sentence, the Indemnified Party will bear its own costs and expenses
with respect to such participation. Notwithstanding the foregoing, if
(A) the named parties to any such action (including any impleaded
parties, include both the Indemnifying Party and any Indemnified Party
and (B) such Indemnified Party has been advised by counsel that
representation of both such Persons by the same counsel would be
inappropriate due to actual or potential differing interests between
them, such Indemnified Party shall have the right to defend the claim
against it and, in connection with that defense, employ counsel at the
expense of the Indemnifying Party. In such case, it is understood that
the Indemnifying Parties shall, in connection with any action or
separate but substantially similar or related actions in the same
jurisdiction or arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only
one separate firm of attorneys (in addition to appropriate local
counsel) at any time for all Indemnified Parties.
(iii) If the Indemnifying Party fails to notify the
Indemnified Party within the Notice Period that the Indemnifying Party
intends to defend the Indemnified Party against the Third Party Claim,
or if the Indemnifying Party gives such notice but fails to diligently
prosecute or settle the Third Party Claim, then the Indemnified Party
will have the right (but not the obligation) to defend, at the sole
cost and expense of the Indemnifying Party, the Third Party Claim by
all appropriate proceedings, which proceedings will be diligently
prosecuted by the Indemnified Party to a final conclusion or settled at
the discretion of the Indemnified Party. The Indemnified Party will
have full control of such defense and proceedings, including any
compromise or settlement thereof.
(iv) Notwithstanding Section 11.3(a)(iii), if the
Indemnifying Party notifies the Indemnified Party within the Notice
Period that the Indemnifying Party disputes its obligation to indemnify
the Indemnified Party against the Third Party Claim, and if such
dispute is resolved pursuant to Section 11.3(c) in favor of the
Indemnifying Party, the Indemnifying Party will not be required to bear
the costs and expenses of the Indemnified Party's defense pursuant to
Section 11.3(a)(iii) or of the Indemnifying Party's participation
therein at the Indemnified Party's request, and the Indemnified Party
will reimburse the Indemnifying Party in full for all such costs and
expenses. The Indemnifying Party may participate in, but not control,
any defense or settlement controlled by the Indemnified Party pursuant
to Section 11.3(a)(iii), but the Indemnifying
47
Party will bear its own costs and expenses with respect thereto if such
participation is not at the request of the Indemnified Party.
(b) In the event any Indemnified Party should have a claim
against any Indemnifying Party that is not a Third Party Claim, the Indemnified
Party shall deliver an Indemnity Notice with reasonable promptness to the
Indemnifying Party specifying the nature of and specific basis for the claim
and, to the extent then feasible, the amount or the estimated amount of the
claim. The failure by any Indemnified Party to give timely notice referred to in
the preceding sentence shall not impair such Person's rights hereunder except to
the extent that an Indemnifying Party demonstrates that it has been irreparably
prejudiced thereby. If the Indemnifying Party does not notify the Indemnified
Party within 30 days following its receipt of the Indemnity Notice that the
Indemnifying Party disputes its obligation to indemnify the Indemnified Party
hereunder, the claim will be conclusively deemed a liability of the Indemnifying
Party hereunder.
(c) If the Indemnifying Party timely disputes its liability
with respect to a claim described in a Claim Notice or an Indemnity Notice, the
Indemnifying Party and the Indemnified Party shall proceed promptly and in good
faith to negotiate a resolution of such dispute within 60 days following receipt
of the Claim Notice or Indemnity Notice and, if such dispute is not resolved
through negotiations during such 60-day period, it may be resolved through
appropriate proceedings in accordance with the provisions of Section 12.8.
SECTION 11.4. Treatment of Indemnity Payments. All indemnity payments
made under this Agreement shall be treated by the parties for all Tax purposes
as adjustments to the Purchase Price.
SECTION 11.5. Subrogation. If an Indemnifying Party makes any payment
under this Article 11 in respect of any Losses, the Indemnifying Party shall be
subrogated, to the extent of such payment, to any and all rights of the
Indemnified Party against any insurer or other Person with respect to such
Losses. The Indemnified Party shall execute any required documents or
instruments, serve as a named plaintiff, or take any other similar steps
necessary to effectuate such subrogation.
ARTICLE 12
MISCELLANEOUS
SECTION 12.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
48
if to Jacobs or the Buyer, to:
c/o Jacobs Engineering Group Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(for personal delivery
and overnight courier)
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(for United States mail)
Attn: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to any of the Sellers,
Parent or McDermott, to:
c/o McDermott International, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. Paris, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or such other address or facsimile number as such party may hereafter specify by
notice to the other parties hereto. Each such notice, request or other
communication shall be deemed to be delivered and received (i) if personally
delivered or if delivered by telex, telegram, facsimile or courier service, when
actually received by the party to whom notice is sent or (ii) if deposited with
the United States Postal Service (whether actually received or not), at the
close of business on the third business day next following the day when placed
in the mail, postage prepaid, certified or registered with return receipt
requested, addressed to the appropriate party or parties, at the address of such
party or parties specified in this Section 12.1 (or at such other address as
such party may designate by written notice to the other parties in accordance
with this Section 12.1).
49
SECTION 12.2. Amendments; No Waivers.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by all parties hereto, or in the case of a waiver, by the party
against whom the waiver is to be effective.
(b) No waiver by a party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any subsequent default, misrepresentation or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any subsequent occurrence. No failure or delay by a party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
SECTION 12.3. Expenses. Except as otherwise provided for herein, all
costs and expenses incurred in connection with this Agreement and in closing and
carrying out the transactions contemplated hereby shall be paid by the party
incurring such cost or expense. Without limiting the generality of the
immediately preceding sentence, (i) the fees, costs and expenses of the
accountants, attorneys and other financial advisors to the Sellers in connection
with the preparation or negotiation of, or the consummation of the transactions
contemplated by, this Agreement shall be borne by the Sellers, and none of such
fees, costs or expenses shall be paid by the Delta Companies and (ii) the
Sellers shall pay all stamp, documentary, sales, use, transfer, value added and
other similar Taxes resulting from the transfer of the Shares.
SECTION 12.4. Entire Agreement/No Third Party Beneficiaries. This
Agreement (including the Schedules and Exhibits referred to herein (which are
hereby incorporated by reference) and the other agreements executed concurrently
herewith) constitutes the entire agreement between the parties with respect to
the subject matter hereof and supersedes all prior agreements, understandings
and negotiations, both written and oral, expressed or implied, between the
parties with respect to the subject matter of this Agreement. Except as
specifically provided in Article 11 with respect to indemnification provided to
the Indemnitees identified therein, no provision of this Agreement shall create
any third party beneficiary rights in any Person, including any employee or
former employee of the Delta Companies, the Sellers, the Buyer or any Affiliate
thereof (including any beneficiary or dependent thereof).
SECTION 12.5. Further Assurances. Each of the parties agrees to
cooperate fully in the effectuation of the transactions contemplated hereby and
to execute any and all additional documents or take such additional actions as
shall be reasonably necessary or appropriate for such purpose.
SECTION 12.6. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
(except by operation of law) without the prior written consent of the other
parties hereto.
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SECTION 12.7. Governing Law. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of New York,
without giving effect to any choice or conflicts of law provision or rule
thereof that would result in the application of the laws of any other
jurisdiction.
SECTION 12.8. Consent to Jurisdiction; Waiver of Jury Trial . Each
party hereto, by its execution hereof, hereby (i) irrevocably submits to the
jurisdiction of the United States District Court located in the Southern
District of Texas for the purpose of any action, claim, cause of action or suit
(in contract, tort or otherwise) or other proceeding (each a "Proceeding")
between or among any or all of Parent, McDermott and the Sellers, on one hand,
and either or both of Jacobs and the Buyer, on the other hand, arising out of or
based on this Agreement or relating to any of the transactions contemplated
hereby, (ii) waives any objection to venue with respect thereto, (iii) agrees
that all claims in respect of any such Proceeding shall be heard and determined
in such court and that such court shall have exclusive jurisdiction over any
such claim or Proceeding, (iv) hereby waives to the extent not prohibited by
Applicable Law, and agrees not to assert by way of motion, as a defense or
otherwise, in any such Proceeding that it is not subject personally to the
jurisdiction of the above-named court, that its property is exempt or immune
from attachment or execution, that any such Proceeding brought in the
above-named court is improper, or that this Agreement or any provision hereof
may not be enforced in or by such court, and (v) agrees not to make any motion
or take any other action seeking or intending to cause the transfer or removal
of any such Proceeding to any court other than the above-named court, whether on
the grounds of inconvenient forum or otherwise. Each of the parties hereby
consents to service of process in any such Proceeding in any manner permitted by
Texas law, and agrees that service of process by registered or certified mail,
return receipt requested, at its address specified pursuant to Section 12.1 is
reasonably calculated to give actual notice. TO THE EXTENT NOT PROHIBITED BY
APPLICABLE LAW WHICH CANNOT BE WAIVED, EACH PARTY HERETO, BY ITS EXECUTION
HEREOF, HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN RESPECT OF ANY
ISSUE OR ACTION, CLAIM, CAUSE OF ACTION OR SUIT (IN CONTRACT, TORT OR OTHERWISE)
OR OTHER PROCEEDING between or among any OR ALL of THE Parent, McDermott and the
Sellers, on ONE hand, and either or both of JACOBS AND the Buyer, on the other
hand, ARISING OUT OF OR BASED ON THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 12.9. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.
SECTION 12.10. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule or law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order
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that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
SECTION 12.11. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 12.12. Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against
either party. Whenever required by the context, any gender shall include any
other gender, the singular shall include the plural and the plural shall include
the singular. Whenever the word "including" is used in this Agreement, it shall
be deemed to mean "including, without limitation," "including, but not limited
to," or other words of similar import such that the items following the word
"including" shall be deemed to be a list by way of illustration only and shall
not be deemed to be an exhaustive list of applicable items in the context
thereof. As used in this Agreement, the words "herein," "hereof" and
"hereunder," and words of similar import refer to this Agreement as a whole and
not to any provision of this Agreement, and the words "Article," "Section,"
"Schedule" and "Exhibit" refer to Articles and Sections of, and Schedules and
Exhibits to, this Agreement unless otherwise specified. The phrase "to the
knowledge of the Sellers" or phrases with similar wording, when used in this
Agreement to qualify any representation or warranty contained in Article 3,
means the collective actual knowledge of the Persons listed on Schedule 12.12.
[signature page(s) follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the date first above
written.
▇▇▇▇▇▇▇▇▇ INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
▇▇▇▇▇▇▇▇▇ INCORPORATED
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
▇▇▇▇▇▇ ENGINEERING (CANADA) LTD.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President and
Chief Financial Officer
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DELTA CATALYTIC (HOLLAND) B.V
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Managing Director and Attorney-in-Fact
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▇▇▇▇▇▇ ENGINEERING GROUP INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Senior Vice President, Finance and
Administration
JACOBS CANADA INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
Treasurer
55